|
Advanced Search Options
Income Tax - Case Laws
Showing 101 to 120 of 641 Records
-
2021 (3) TMI 1189 - ITAT KOLKATA
Unexplained deposits in bank accounts - HELD THAT:- The addition was sustained by the ld. CIT(A) for the reason that compliance was not made during the original assessment proceedings and at remand stage. This cannot be a ground of making addition for the reasons that the Assessing Officer had made the addition on the ground that the deposits in bank accounts are not explained. Without a copy of the bank account, the Assessing Officer cannot come to a conclusion that the deposits made in a bank account are unexplained. All details including copies of bank accounts were furnished by the assessee.
The evidence given by the assessee is not disputed by the revenue. The addition was confirmed in a summary manner, without reference to the facts. In view of the above discussion and finding of the Assessing Officer in the remand report extracted above, the addition in question, is hereby deleted.
Disallowance of commission and development charges - HELD THAT:- When the land is converted into plots by laying roads, building drains, developing common areas etc., as per the norms of the Urban Development Authority, and when plots are sold only after such development expenditure is bound to be incurred. It cannot be said that dry land of 10.69 acres can be sub-divided into house plots after development and sold as house plots without incurring any expenditure. The evidence in the form of development agreement dt. 15/06/2003, and payments made through account payee cheques and the fact of the development of the land into plots is sufficient evidence to prove the incurring of expenditure. Except for disbelieving the claim of the assessee, there is no adverse material collected by the assessing authorities. Confirmation letters from Shivaji Estates & Constructions by Smt. Dantuluri Gita Kumari, wherein she had stated that the amount in question was offered to tax in her Income Tax Return and confirmation letters from one Mr. U. Prabhakar Rao, on the commission of ₹ 47,400/-, received/receivable by him, support of the contentions of the assessee. Thus, we uphold the contention of the assessee and allow the claim of the assessee of having been incurred development expenditure - Decided in favour of assessee.
-
2021 (3) TMI 1182 - DELHI HIGH COURT
Disallowance u/s 14A - correctness of claim of the Respondent in respect of such expenditure in relation to income which does not form part of the total income under this Act - HELD THAT:- Issues as covered by the judgement of the coordinate Bench of this Court rendered in Joint Investments (P.) Ltd. vs. Commissioner of Income-tax [2015 (3) TMI 155 - DELHI HIGH COURT]
Nature of expenditure - license fee paid to the Department of telecommunication by the assessee - revenue or capital expenditure - HELD THAT:- This issue covered by the judgement of the coordinate Bench of this Court in Commissioner of Income-tax vs. Bharti Hexacom Ltd., [2013 (12) TMI 1115 - DELHI HIGH COURT]
Exemption under section 10A - whether to be computed after excluding telecommunication expenses and foreign currency expenditure from the export turnover? - HELD THAT:- Issue covered by the judgement of the Supreme Court rendered in Commissioner of Income-tax, Central - III vs. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT]
Disallowance of unrealized foreign exchange loss on account of reinstatement of assets and liabilities - whether this is a notional loss and not allowable to be set off against the taxable income in view of the CBDT’s instruction no. 3 of 2010 dated 23.03.2010? - HELD THAT:- the power invested in this Court under Section 260A of the Act is to adjudicate upon the substantial question(s) of law. The revenue, having not laid an edifice concerning the purported non-fulfilment of any of the conditions, stipulated by the Supreme Court in Woodward Governor India P. Ltd. [2009 (4) TMI 4 - SUPREME COURT] cannot, for the first time, without even taking a ground in the instant appeal, argue before us that the loss which accrued to the assessee on account of the foreign currency fluctuation cannot be claimed by it as a business loss.
-
2021 (3) TMI 1177 - DELHI HIGH COURT
Reopening of assessment u/s 147 - validity of sanction-order passed u/s 151 - whether it was a fit case in which sanction should be accorded for issuance of notice under Section 148 of the Act and, thus, triggering the process of reassessment under Section 147? - HELD THAT:- There is no explanation by the revenue as to why approval of ACIT was taken in the instant case. Even if we were to assume for the moment that the approval of the ACIT was rightly taken, a bare perusal of the endorsement would show that there is no application of mind as to whether the information received by the AO had any nexus with the formation of honest belief that the assessee's taxable income had escaped. What is glaring is that the ACIT notes that income to the tune of ₹ 27,60,838/- had escaped taxation whereas, in the order recording reasons, the taxable income has been quantified as ₹ 26,93,500/-. As noted above, based on the arguments of Mr. Singh that the escaped income should be related to unsecured loans, there is in play a third figure which is ₹ 25,95,277/-.
In the instant case, because of the failure on the part of respondent no.1 to correlate the information received with the ostensible formation of belief by him, respondent no.2 attempted to connect, via her counter-affidavit, that the escaped income with the “suspicious” unsecured loan entries reflected in the assessee's returns for AY 2010-2011 and 2011-2012. As correctly argued by Mr. Kochar, the counter-affidavit and the submissions made across the bar cannot be used to sustain the impugned actions. The order recording reasons and the order granting sanction should speak for themselves. See GORDHANDAS BHANJI. [1951 (11) TMI 17 - SUPREME COURT] and MOHINDER SINGH GILL & ANR. [1977 (12) TMI 138 - SUPREME COURT]
Notice issued under Section 148 was barred by limitation - This submission advanced on behalf of the assessee is not sustainable. As noticed above, the limitation provided under Section 149 of the Act for issuance of notice commences from the date when the notice is issued and not when the notice served. The record presently, before us shows that the notice was issued on 31.03.2018. Therefore, this submission made on behalf of the petitioner is rejected.
Notice under Section 148 was issued by an AO Ward No.22(4) while the order recording reasons was issued by another officer is not borne out from the record.
Huge time lag between the issuance of the impugned notice under Section 148 of the Act and the date when the order recoding reasons was furnished to the authorized representatives of the petitioner - While the assessee is, in our view, right in contending that if the time lag is huge, it does point in the direction that the order was ante-dated, a final view on this aspect could have only been taken if the original record was examined by us. Since the revenue has denied the allegation levelled against it and Mr. Kochar did not press this issue during the hearing, we can't reach a definitive view on this aspect of the matter based on the record available before us Therefore, this submission, made on behalf of the assessee, cannot be accepted.
Since respondent no.1 was unable to link the information received with the formation of belief, a jurisdictional error did occur, which, this Court, is empowered to correct, by exercising its powers under Article 226 of the Constitution of India (See: Calcutta Discount Co. Ltd. vs. Income Tax Officer, Companies District I Calcutta and Another [1960 (11) TMI 8 - SUPREME COURT]
Relegating a party to an alternative remedy is a selfimposed limitation which, however, does not denude the court of its powers under Article 226. The Court is duty-bound to exercise its powers under Article 226 where ever it finds that a statutory authority has exercised its jurisdiction either irregularly or acted in a matter in which it had no jurisdiction or committed a breach of the principles of natural justice.
Conclusion - We are inclined to quash the impugned notice dated 31.03.2018 issued under Section 148 of the Act as well as the order granting sanction issued by respondent no.2.
-
2021 (3) TMI 1176 - GUJARAT HIGH COURT
Exemption u/s 11- details as regards the registration of Trust under Section 12A / 12AA not furnished - HELD THAT:- We are at one with Revenue that in the absence of the registration number, to be mentioned in the course of E-filing of the return, the benefit of exemption under Section 11 of the Act cannot be granted, but, at the same time, we find it difficult to accept the stance of the department that as the record is not available with the Trust as well as with the department, it should be presumed that at no point of time, the certificate of registration under Section 12A of the Act was granted.
We take notice of the fact that there is contemporaneous record available with the Trust, which should be looked into minutely by the department so as to satisfy itself that the Trust had been issued a registration certificate under Section 12A and had been availing the benefit of exemption over a period of time under Section 11 of the Act. The department is expected to undertake some homework in this regard seriously. The Trust should not be denied the benefit of exemption under Section 11 of the Act only on account of its disability to produce the necessary records, which got destroyed during the floods of 1978. We do not find anything doubtful or fishy as regards the Trust.
We are of the view that whatever record is available with the Trust, as on date, should be produced before the department and the department should look into the records minutely and also give an opportunity of hearing to the Trust or its legal representative and take an appropriate decision in accordance with law.
We dispose of this writ application with a direction that the writ applicant – Trust shall produce the entire record available with it as on date before the department and the department shall look into the entire record closely and threadbare and ascertain whether the Trust being a registered charitable Trust had been issued the registration certificate under Section 12A.
-
2021 (3) TMI 1174 - GUJARAT HIGH COURT
Reopening of assessment u/ 147 - surrender value of pension plan claimed as exempted from tax u/s 10(10D) - as per revenue interest/bonus on premature of surrender of pension plan / annuity plan is not exempted as per the provisions of Section 80CCC(2) or under any other sections of the I.T. Act. - tangible material necessary to reopen an assessment made without scrutiny under Section 143(1) - HELD THAT:- From the reasons assigned by the Revenue it is not clear as to how the basic conditions are not fulfilled so as to even prima facie suggest that the benefit of Section 10(10D) of the Act is not available to the assessee. The only thing, which seems to have weighed heavily with the Revenue, is that the assessee has not offered the amount being the excess sum received over and above the premium paid for tax. In view of this, this amount is nothing, but, bonus, which is otherwise covered under Section 10(10D) of the Act. However, for this amount to be taxable, the Revenue has to prima facie indicate as to which of the conditions of Section 10(10D) of the Act are not fulfilled. In other words, how the amount in question is not exempted under Section 10(10D)
The reference to Section 80CCC(2) is thoroughly misconceived for two reasons: first, Section 80CCC deals with annuity plans whereas we are concerned with life insurance policy; secondly, Section 80CCC(2) of the Act makes any sum received by the assessee from the insurer towards contract for any annuity plan, taxable provided premium paid for such plan is claimed as allowable deduction under Section 80CCC(1) of the Act. In the facts of the present case, there is no such averment or findings that the amount of premium paid has been claimed and allowed as deduction under Section 80CCC(1) of the Act.
Where the original assessment is without scrutiny i.e. under Section 143(1), even in such cases tangible material is necessary to reopen the assessment.Explanation 2 to Section 147 is more elaborate and cover those cases where the assessments have been completed (called as the scrutiny cases) as well as those cases where no assessments have been completed (called as the nonscrutiny cases). As per the aforesaid Explanation 2, no distinction has been made between the cases where assessment has been made after scrutiny and those cases where no assessment has been made viz. cases where assessment has been made under Section 143(1) only. From the aforesaid Circular of the CBDT, it is quite evident that no distinction under Section 147 is contemplated between the assessment under Section 143(3) called as the scrutiny assessment and the assessment accepted under Section 143(1) called as the nonscrutiny assessment. Therefore, a tangible material is necessary to reopen even an assessment made without scrutiny under Section 143(1) of the Act.
Even where the proceedings under Section 147 of the Act are sought to be initiated with reference to an intimation under Section 143(1), the ingredients of Section 147 are required to be fulfilled. Therefore, even in such a case there should exist “reason to believe” that income chargeable to tax has escaped assessment. Hence, in the absence of any tangible material in possession of the Assessing Officer, subsequent to the intimation under Section 143(1), the reopening will not be sustainable. In other words, even an assessment under Section 143(1), in the form of an intimation, cannot be reopened under Section 147 unless some new / fresh tangible material comes into possession of the Assessing Officer, subsequent to the intimation under Section 143(1) of the Act. - Decided in favour of assessee.
-
2021 (3) TMI 1173 - GUJARAT HIGH COURT
Reopening of assessment u/s 147 - no valid service of notice on the assessee strictly in terms of Section 148 read with Section 282(1) - HELD THAT:- In the case on hand, the pivotal question is whether Section 148 notice was actually served upon the writ applicant or not. The Revenue itself has conceded that it was not served upon the writ applicant at any point of time. In such circumstances, this decision in the case of Rajesh Sunderdas Vaswani [2016 (6) TMI 701 - GUJARAT HIGH COURT] is hardly of any avail.
In the case on hand, the assessee has no PAN. As noted above, this is a case of NonPAN. The picture is now abundantly clear. The Revenue may be justified in taking cognizance of the sale transaction of the agricultural land, which, at one point of time, was owned by the assessee herein. This agricultural land we are talking about is situated at Kalol, District : Gandhinagar. The only mistake that the department committed was to dispatch the notice under Section 148 of the Act to the address at Kalol, Gandhinagar and not to the residential address of the writ applicant at village : Khorsam, Taluka : Chanasma, District : Patan. In such circumstances, it is obvious that the writ applicant could never be said to have receive such notice. - Decided in favour of assessee.
-
2021 (3) TMI 1172 - MADRAS HIGH COURT
Assessment u/s 153A - Time limit for authorizations for search under Section 132 or for requisition under Section 132A - whether the provisions of Section 132(9A) are mandatory or directory? - HELD THAT:- The provisions of Section 153B set out the limitation by when an order of assessment under Section 15A is to be passed as being twenty-one months from the end of the month when the last of the authorizations for search under Section 132 or for requisition under Section 132A was executed. The period set out under Section 132(9A) is a measure to enable the respective parties to adhere to the process in an orderly fashion facilitating the completion of the assessment in time. It is relevant to note that there is no time stipulated for the issuance of notice under Section 153A and instances are rife when notices are issued long after the seized material is handed over to the AO. The integrity of the assessment process would thus be dependent upon the principles of natural justice being observed and proper sequence of procedure being followed. Time limits set out under Section 132 (9A) are not only for the purposes of Section 132 (8) & (9) but also to facilitate reasonable time to the AO to complete the assessment where the identity of the IO and AO is different.
The undisputed position in this case is that the IO and AO are not one and the same. The last of the authorisations in this case is on 04.09.2018 and the seized materials ought to have been handed over, in terms of Section 132(9A) on or before 03.11.2018. Admittedly, the handing over has been only on 20.08.2019, more than nine months beyond the stipulated date. Though this constitutes a gross procedural irregularity, it does not, in my considered view, vitiate the notices issued, as assuming a situation where the handover had been within time, the notices might still have been issued only on 01.11.2019. Thus, the jurisdiction assumed cannot be faulted on this score.
-
2021 (3) TMI 1171 - GUJARAT HIGH COURT
Reopening of assessment u/s 147 - assessment beyond the period of 4 years - sanction of the competent authority as provided under Section 151 granted or not? - bogus transactions -HELD THAT:- As during the course of previous assessment proceedings, the assessee failed to disclose material particulars with regard to alleged transactions and the true facts of the transactions having been discovered by the Assessing Officer on the basis of the information received from the concerned department. Law in this regard has been settled by various decisions of this Court as well as the Apex Court that burden is on the assessee to make true and full disclosure. Therefore, where the transaction itself on the basis of the subsequent information is found to be a bogus transactions, mere a disclosure of said transaction at the time of original proceedings, cannot be said to be a disclosure of “true and full” facts in the case.
As assessee was aware that the transaction with M/s. Agni Pvt Ltd was not business transaction but in the form of bogus purchase, it was only an accommodation entries and the company was one of the beneficiaries of the transactions, despite of this, the assessee failed to disclose true and correct facts at the relevant time and therefore, the Assessing Officer is entitled to initiate reassessment proceedings on the basis of tangible material came in his hand, which tends to expose the untruthfulness of the entry of purchase made in the books of accounts.
Whether reassessment proceedings could be said to have been initiated mechanically on the basis of third party information? - Assessing Officer has verified the information and after application of mind and upon due satisfaction, he formed an opinion that income has escaped assessment.
While according the sanction under Section 151 of the Act, the authority concerned has not applied his mind properly and mechanically accorded the sanction - As perused the papers of the approval, which shows that the competent authority has given the satisfaction in hand writing and has expressed his satisfaction with regard to reasons recorded and accorded the sanction to issue impugned notice. Therefore, the approval for reassessment was granted on the date on which the impugned notice was issued. In this circumstances, the contention raised by the learned advocate for the writ applicant that sanction was not obtained before issuance of the notice cannot be accepted.
It cannot be said that there was no tangible material before the Assessing Officer and that he proceeded mechanically based on the sole information and the impugned notice is without jurisdiction and contrary to Section 147 - Decided against assessee.
-
2021 (3) TMI 1170 - MADRAS HIGH COURT
Intra-court appeal against rejection of Contempt proceedings against the IRS officer / Deputy Commission of Income Tax - Prosecution for offence punishable under Section 276C - undisclosed deposit in a foreign bank account - appellant filed a petition under Section 279(1) of the I.T.Act for compounding the offence - HELD THAT:- Admittedly, the learned Contempt Court found that there is no merit in the contempt petition and in order to maintain an appeal under Section 19 of the 1971 Act, the party on whom a punishment has been imposed alone could have approached the Court. In the instant case, the appellant was the petitioner in the contempt petition and he sought for punishing the respondents for wilful disobedience of the order in the writ petition. The learned Contempt Court found that there is no violation, rather the portions of the order passed in the writ petitions, which were heavily relied on by the appellant, were held to be observations made by the learned Writ Court.
The informant, who is the appellant before us, does not have a right of filing an appeal under Section 19 of the 1971 Act or against an order refusing to initiate contempt proceedings or disposing of the application or petition filed for initiating such proceedings and he cannot be called an aggrieved party. Therefore, the appellant could not have maintained an appeal under Section 19 of the 1971 Act. If such is the situation, can the appellant invoke Clause 15 of the Letters Patent and seek for maintaining this intra-court appeal. The answer to the question should be answered in the negative and against the appellant. To put it plainly, the appellant is seeking to indirectly achieve what he could not achieve in terms of the provisions of the 1971 Act. The facts in the decision in Ashis Chakraborty [1991 (12) TMI 289 - CALCUTTA HIGH COURT] which was referred to in Tamil Nadu Mercantile Bank Shareholders Welfare Association [2008 (12) TMI 676 - SUPREME COURT] is couched on an entirely different factual background and would not be applicable to the case of the appellant. That apart, if the appellant's role is only that of an informant and upon information given, the Court is convinced that no proceedings for contempt is required to be initiated, then the appellant cannot be heard to say that he should be permitted to maintain an intra-court appeal against the finding of the Contempt Court especially when, his role terminates the moment the information is placed before the Court.
Intra-court appeal filed by the appellant is not maintainable and consequently, the objection raised by the Registry is sustained and the writ appeal is dismissed as not maintainable in the SR stage itself.
-
2021 (3) TMI 1169 - ITAT DELHI
Bogus LTCG - addition u/s 68 - long term on sale of equity share and 3% commission on sale value of shares through registered stock exchange - eligibility for exemption u/s 10(38) denied - HELD THAT:- As the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act and such discharge is purely a question of fact. We, accordingly, direct the Assessing Officer to accept the long term capital gain declared as such and allow exemption u/s 10(38) of the Act. In light of the above, we delete the impugned addition made on account of unexplained cash credits u/s 68 - Decided in favour of assessee.
-
2021 (3) TMI 1163 - ITAT MUBMAI
Revision u/s 263 - AO made no extensive verification of all the documents and had made no requisite enquiries thereon - HELD THAT:- PCIT does not in any manner suggest as to what enquiries the ld. AO should have conducted. In fact, the ld. PCIT does not bring out any basis for arriving at the conclusion as to how the order of the ld. AO dated 02/05/2018 in granting reliefs to the assessee is erroneous. We find that the ld. PCIT had merely directed the ld. AO to directly withdraw the reliefs given by him in the order dated 02/05/2018 in respect of five issues as tabulated.
We find that this action of the ld. PCIT is grossly unsustainable in the eyes of law in view of the fact that the impugned grievance of the ld. PCIT is that the ld. AO had not carried out proper enquiries on the aforesaid 5 issues as tabulated supra. While it is so, how and on what basis the ld. PCIT comes to a conclusion that those five issues deserve to be decided against the assessee by way of withdrawal of relief. At best, the ld. PCIT could have only directed the ld. AO to conduct enquiries even if he is of the opinion that enquiries were not carried out properly by the ld. AO.
The entire action of the ld. PCIT goes to prove that the entire issue has been addressed with a pre-conceived notion in order to reach a pre-conceived destination by forgetting the legal tenets, factual verifications, verification of documents carried out by the ld. AO, improperly applying provisions of Explanation-2 to Section 263, not respecting the judicial hierarchy by ignoring the order of this Tribunal dated 14/01/2019 wherein the Tribunal had already quashed the assessment order dated 15/03/2016 but also granting relief to the assessee on merits on each of the five issues that were subject matter of revision proceedings, thereby proving his highhandedness. Hence, it could be safely concluded that proper and requisite enquiries were indeed carried out by the ld. AO while passing the order dated 02/05/2018 giving effect to the order of the ld. CIT(A) dated 28/06/2017 and hence, the ld. PCIT grossly erred in invoking revisionary jurisdiction u/s.263 of the Act on the ground that the order of the ld. AO is erroneous and prejudicial to the interest of the revenue because proper enquiries were not carried out by the ld. AO.
No hesitation in quashing the revision order passed by the ld. PCIT u/s.263 - Decided in favour of assessee.
-
2021 (3) TMI 1162 - ITAT PUNE
Transfer pricing addition on account of Corporate guarantee - TPO observed that the assessee gave Corporate guarantee for its Associated Enterprises (AEs) but just reported in its Transfer Pricing report that it had not incurred any costs in providing guarantees - Whether furnishing of Corporate guarantee is an international transaction ? - HELD THAT:- On going through the ambit of “Shareholder activity” as given in the OECD guidelines on a general perspective, it becomes imminent that such activities are certain acts performed by a company SOLELY because of its shareholding in other group companies, which is obviously not the case here. Au contraire, the effect of furnishing Corporate guarantee directly percolated to the principal debtor, namely, the AEs for whom the assessee stood surety. Thus, the ground urging that the act of furnishing guarantee be treated as a shareholder’s activity, is devoid of merits. Moreover, now with the statutory amendment specifically treating `guarantee’ as an international transaction, there remains no doubt whatsoever that the furnishing of corporate guarantee by an assessee is an international transaction. This ground is thus dismissed.
Performance guarantee vs. Corporate guarantee - A corporate guarantee is ordinarily a legal agreement between a principal debtor, creditor and guarantor, whereby the guarantor takes responsibility for the debt repayment in case of repayment by the principal debtor to the creditor. A performance guarantee provides an assurance of compensation in the event of inadequate or delayed performance on a contract. If performance guarantee entails financial consequences, that is, on the failure of the other party to perform his obligation and the guarantor becoming liable to pay some amount, then it cannot be placed at a pedestal different from the regular corporate guarantee given for obtaining loan by the AE. In that sense, performance guarantees in the instant case are a specie of the genus of corporate guarantee and cannot be given a treatment different from the corporate guarantee as urged by the assessee. Ex consequenti, we hold that the so-called performance guarantee transactions at sr. nos. 3 and 4 are in the nature of corporate guarantee transactions and do not require any separate treatment vis-à-vis the remaining eight transactions, which we will discuss infra.
ALP of the Corporate guarantee transactions - As observed that when commercial banks issue bank guarantee, which is easily encashable in the event of default, higher commission is justified. On the other hand, where a Corporate guarantee is issued, the guarantor needs to make good the amount and repay the loan if the subsidiary defaults. It further observed that the considerations which apply for issuance of Corporate guarantee are distinct and separate from Bank guarantee. It, therefore, approved the rate of 0.5% as arm’s length rate of Corporate guarantee fee.
We have seen above that in some of the cases in which the assessee stood guarantor, it had to incur certain charges varying between 0.75% to 1.75%, whilst in other cases, nothing was required to be paid. Drawing support from Everest Kento Cylinders Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] we hold that the arm’s length price of the international transaction of rendering service of furnishing guarantee is 0.5%.
All out-of-pocket expenses incurred by the assessee guarantor in furnishing guarantee will go to swell the ALP accordingly. In other words, where the assessee has not incurred any cost in furnishing guarantee, the ALP of the international transaction of furnishing guarantee will be 0.5%. If however, the assessee has incurred expenses at, say, 1.75%, then ALP will be 2.25% (consisting of compensation for rendering service of giving guarantee at 0.5% plus out of pocket expenses incurred at 1.75%).
The effective arm’s length rate of guarantee transaction is 0.50% plus actual expenses incurred by the assessee in furnishing the guarantee. The impugned order in confirming uniform rate of 2% as arm’s length guarantee fee is set aside and the matter is restored to the AO to decide the issue in the terms held above. The assessee will be allowed a reasonable opportunity of hearing in this exercise.
Transfer pricing addition in the ‘Manufacturing activity’ - HELD THAT:- The position would be entirely different if the AO invokes Explanation 5 to section 32 and allows full depreciation as per the original return. In that scenario, the contention of the assessee for considering only the reduced amount of depreciation in the revised return for the ALP determination would fail. As the AO in the instant case has computed the total income by considering the reduced claim of depreciation by ₹ 19.11 crore, we hold that only such reduced amount of depreciation be included in the operating cost base for determining the ALP of the transaction of `Manufacturing activity’.
We want to clarify that the position as discussed hereinabove is about the effects of a suo motu disallowance offered by the assessee and not a disallowance made by the AO.
CIT(A) not considering bank charges and commission/brokerage as non-operating cost - We find that the break-up of `Bank charges and commission/brokerage’ has been given on page 29 of the TPO’s order, which comprises of Brokerage and commission on fixed deposits – ₹ 10.42 lakh; Bank charges – ₹ 178.48 lakh; Loan processing fee – ₹ 338.32 lakh; and SBLC commission – ₹ 216.26 lakh. On a perusal of the detail of ₹ 743.48 lakh, it is discernible that this expenditure is nothing but part and parcel of the overall Finance cost. It is rather an extension of the Finance cost.We, therefore, hold that the ld. CIT(A) was justified in excluding ₹ 743.48 lakh from the operating costs base. The ground fails.
Proportionate transfer pricing adjustment allowed by the ld. CIT(A) - TPO, while computing the transfer pricing adjustment, took into account the entity level figures and not the transactions with the AEs. The ld. CIT(A) directed to restrict the transfer pricing adjustment in respect of transactions with AEs alone - This issue is fairly settled by judgment of Hon’ble jurisdictional High court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd. [2018 (7) TMI 798 - SC ORDER], holding that the transfer pricing adjustment made at entity level should be restricted to the international transactions only. It is pertinent to mention that the Department’s SLP against this judgment has since been dismissed by the Hon’ble Supreme Court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd - Similar view has been taken by the Hon’ble Bombay High Court in CIT Vs. Thyssen Krupp Industries Pvt. Ltd. [2015 (12) TMI 1076 - BOMBAY HIGH COURT] and CIT Vs. Tara Jewels Exports (P). Ltd.[2015 (12) TMI 1130 - BOMBAY HIGH COURT] - We, therefore, uphold the impugned order on this score.
-
2021 (3) TMI 1161 - ITAT VISAKHAPATNAM
Addition of unexplained cash credit - Addition u/s 68 r.w.s. 115BBE - AO did not believe the sources of agricultural income in the absence of corroborative evidence - HELD THAT:- In this case, the assessee submitted before the AO, that the assessee is looking after the entire agricultural operations and managing the agricultural operations, which was not disputed by the AO. There is no dispute that the assessee along with his family members own more than 16 acres of agricultural land, where the mango crop was grown . The AO also did not dispute that 16 acres of agricultural land yield the crop worth ₹ 5,00,000/-.
AO did not examine the family members with regard to deposit of sale proceeds of mango garden in his account, though assessee had furnished the details of land owned along with pattadar passbooks copies of which are furnished in page No.3 of the paper book. The assessee had explained the source of deposits of cash and the AO did not discharge the burden by examining the family members. Since the assessee stated that he looks after the entire agricultural operations which is common in joint families, we, do not find any reason to suspect the source of cash deposits in the bank account and the same stands explained, hence, we set aside the orders of the lower authorities and delete the addition made by the AO. Assessee’s appeal on this ground is allowed.
Unexplained deposits in the bank account - AO found mismatch of dates mentioned in the sale deed and withdrawals made by the vendor from his bank account and disbelieved the payment to the assessee and accordingly made the addition - HELD THAT:- In the instant case, the vendor has confirmed the payment of ₹ 37,50,000/- on various dates and also filed rectification deed before the Ld.CIT(A). The AO and the Ld.CIT(A) were of the view that it was an afterthought. However, the rectification deed was registered before the SRO which is a valid piece of evidence.
AO landed in a wrong confusion without considering the rectification deed. In the rectified deed, the vendor has clearly mentioned that a sum of ₹ 30,75,000/- was paid on 26.12.2013 and ₹ 6,75,000/- was paid on 13.1.2014 and the balance amount was paid on date of registration. The total sum paid by the vendor to the assessee was ₹ 49,47,000/- for sale of land.
AO did not examine the vendor and made the addition brushing aside the explanation offered by the assessee. Since, the assessee has admitted the total sale consideration for capital gains and paid the taxes and furnished the evidence with regard to receipt of the amount by confirmation as well as rectification deed, we find no reason to disbelieve the contention of the assessee that a sum of ₹ 30,75,000/- was paid to the assessee on 26.12.2013 and ₹ 6,75,000/- was paid on 01.01.2014. In the instant case, though the assessee has discharged his burden, the AO did not make any enquiry and bring evidence to controvert the submission of the assessee. Therefore, we set aside the orders of the lower authorities and delete the addition made by the AO and allow the appeal of the assessee.
-
2021 (3) TMI 1160 - ITAT KOLKATA
Government subsidy receipt - revenue or capital - HELD THAT:- Since no change of facts or law could be pointed out by the Revenue on this issue which has been decided in assessee’s own case for A.Y 2011-12 wherein the Ld. CIT(A) has held that sales tax incentive enjoyed by the assessee was for setting up industry in the backward areas in the State and hence it is a Capital Receipt not taxable as per the provisions of the Act and the case law relied by the A.O in the case of Sahany Steel & Press Works Limited [1997 (9) TMI 3 - SUPREME COURT] has also been considered by the Tribunal in the above case of assessee on this issue, we respectfully follow the order of the Tribunal in assessee’s own case for A.Y 2011-12 , we confirm the order of Ld. CIT(A) and dismiss both grounds of appeal.
Employee’s contribution to PF/ESI which was not paid before the due date - HELD THAT:- We note that the Ld. CIT(A) allowed the grounds of appeal of the assessee on this issue by relying on the decision of the Hon’ble Jurisdictional High Court in the case of Vijay Shree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] - We confirm the order of the Ld. CIT(A) and dismiss the ground of the Revenue.
Interest on delay payment of excise duty and payment of service tax - HELD THAT:- We note that he Ld. CIT(A) has given relief to the assessee by relying on the decision of the Tribunal in the case of Narayani Ispat Pvt. Ltd. [2017 (10) TMI 67 - ITAT KOLKATA] which he did so correctly. And since the relief has been given by relying on the ratio of decision of the Tribunal in the case of Narayani Ispat Pvt. Ltd. (supra), we find no infirmity in the order of the ld. CIT(A), therefore, we confirm the order of the Ld. CIT(A) and dismiss the grounds of Revenue.
Delay payment of lease rent - HELD THAT:- Since Revenue could not demonstrate that the interest on delay payment of lease rent of Haldia plant was in the nature of penalty or an infraction of law, the Ld. CIT(A)’s view was plausible view and we find no infirmity in the order of the Ld. CIT(A) and so we confirm the order of the Ld. CIT(A), therefore, this ground of the Revenue is dismissed.
Prior period expenses disallowance - CIT-A deleted the addition - HELD THAT:- According to the assessee, all these expenses are genuine expenditure otherwise deductible from the income of the assessee. It is also noted that for the AY 2013-14 & AY 2014-15 the assessee has paid tax under MAT and the tax rate under MAT is same for both the year, hence it is noted that the assessee will not gain any benefit by deferring the tax liability. The assessee had relied on the decision of Hon’ble Delhi High Court in the case of CIT vs. Vishnu Industrial Gases (P) Ltd. [2008 (5) TMI 636 - DELHI HIGH COURT] and CIT vs. Shri Ram Pistons & Rings Ltd. [2008 (5) TMI 631 - DELHI HIGH COURT] It was held by the Hon’ble Delhi High Court that unless it is noticed that the assessee has deliberately claimed prior period expenses by deliberate deferment to reduce tax liability in the subsequent years, there is no reason to disallow the prior period expenses in a summary manner. In the light of the aforesaid discussion, we find no infirmity in the order of the Ld. CIT(A) and we confirm the order of the Ld. CIT(A), therefore, this ground of the Revenue is dismissed.
-
2021 (3) TMI 1159 - ITAT DELHI
Assessment u/s 153A - Addition on the basis of statement recorded u/s 132(4) - Revenue has challenged finding of the Ld. CIT(A) that no addition could be made under section 153A of the Act on the basis of the statement recorded under section 132(4) of the Act as there was no incriminating material found during the course of the search - HELD THAT:- No assessment was pending as on the date of the search - the assessee had filed his original return of income on 30/09/2009 declaring total income of ₹ 1,89,72,710/-. No notice under section 143(2) of the Act was issued till 30/09/2010, which was the limitation under which notice u/s 143(2) of the Act could have been issued. The search action in the case of assessee was carried out on 09/10/2014, therefore, no assessment proceeding was pending in the case of the assessee as on date of the search. This position has not been disputed by the Revenue also.
Incriminating material found during the course of the search - We find that Hon’ble Delhi High Court in the case of PCIT Vs Best Infrastructure Private Limited, [2017 (8) TMI 250 - DELHI HIGH COURT] has held that statement under section 132(4) in the itself does not constitute incriminating material.
As per HARJEEV AGGARWAL [2016 (3) TMI 329 - DELHI HIGH COURT] statement of Sh. Mulchand Malu under section 132(4) of the Act alone cannot be considered as incriminating material unless any corroborating incriminating material is found during the course of the search from the premises of the assessee.
We do not find any error in the order of the Ld. CIT(A) on the issue in dispute. Following the finding of the Hon’ble Delhi High Court in the case of Kabul Chawal [2015 (9) TMI 80 - DELHI HIGH COURT] we, accordingly, uphold the same. The ground No. 1 of the appeal of the Revenue is accordingly dismissed.
-
2021 (3) TMI 1158 - ITAT DELHI
Income from house property - expenditure for which deduction @ 30% is allowed - CIT (Appeals) as well as ITAT did not consider the fact that there are several expenditure for which deduction @ 30% is allowed under the income from house property as well as the expenses claimed by the assessee under the head business income are over-lapping - HELD THAT:- In assessee’s own case in the previous year did not consider the fact that the expenses allowed as a deduction at the rate of 30% and many other expenses claimed by the assessee for maintenance are overlapping. However he failed to exhibit that what are those expenses are overlapping. Even, the judicial discipline also requires us to follow the order of the coordinate bench. Even otherwise the learned departmental representative could not show us any reason to deviate from the order of the coordinate bench in assessee’s own case for earlier years where the identical issue has been decided.
Where the order of the coordinate bench was not shown to us is decided on incorrect facts or incorrect law, we are duty-bound to follow the same - Decision of the coordinate bench in assessee’s own case in earlier years, we hold that assessee has correctly offered the income as income from house property and it is not chargeable to tax as income from business and profession as held by the learned and CIT – A. CIT – A was not justified in rejecting the claim of the standard deduction u/s 24 in respect of income from letting out of the property by the classified the same Under the head income from business and profession.
The maintenance and service income are backed by the agreement with reference to the left out properties, the characterization of the same cannot be disturbed without any cogent reasons. CIT – A has also and hence the income of the assessee without giving a notice u/s 251 of the income tax act, which is not in accordance with the law. Thus, we reverse the orders of the lower authorities. In the result ground number one – three of the appeal of the assessee are allowed.
-
2021 (3) TMI 1153 - ITAT HYDERABAD
Disallowance u/s 43B on interest expenditure - HELD THAT:- It is not in dispute that the CIT(A) herein has granted part relief to the assessee qua interest payments made to “APRDC” and “APCSC” only that they fall in the exemption mechanism in Section43B(d) of the Act. Since the payees are already covered by his order in said preceding assessment year and also they fall in the exempt category of recipients only. We make it clear that the Revenue is fair enough in its grounds in not disputing the status of the twin recipients hereinabove. We thus quote the hon'ble apex court’s larger bench’s decision in CIT Vs. K.Y.Pilliah[1966 (10) TMI 35 - SUPREME COURT] that the tribunal need not record independent findings on its own if it expresses its complete agreement with the first appellate authority’s conclusion(s) under challenge. We hold in this factual backdrop that the CIT(A) has rightly deleted the impugned 43B disallowance pertaining to these twin payees/corporations. The Revenue’s sole substantive grievance fails accordingly.
-
2021 (3) TMI 1152 - ITAT PUNE
Exemption u/s 11 - rejecting the application filed seeking registration u/s. 12AA - HELD THAT:- We note from the impugned order as rightly pointed by the ld. AR that the CIT(Exemption) did not point out the activities of the assessee are non-genuine and he rejected only on the ground that the assessee accumulated funds and kept the same in FDs not utilizing the same for the objects of the trust.
This Tribunal in the case of Sant Zolebaba Sansthan Chikhali [2021 (1) TMI 999 - ITAT PUNE] held the issue of grant of registration and the assessment of income of trust are distinct and separate, by placing reliance in the case of Ananda Social and Educational Trust [2020 (2) TMI 1293 - SUPREME COURT] held the mandate of the provisions u/s. 12AA of the Act is to examine whether objects of the trust are charitable in nature are not and the activities of the trust are genuine.
In the present case as discussed above the CIT(Exemption) did not point out anything against the objects and genuineness of the activities of the trust but however rejected the registration on examination of financial statements of the assessee for the last four years by holding the assessee has made surplus and no taxes paid thereon on such surplus funds. We find that it is a settled principle that the grant of registration and the issue of assessment or exemption u/s. 11 of the Act are separate and distinct. The process of registration is not on occasion for deciding the issue of exemption of donation u/s. 11 of the Act. The issue of exemption cannot be examined during the process of registration. Therefore, in our opinion, the order of CIT(Exemption) in denying the registration u/s. 12AA of the Act cannot be sustained and the impugned order is set aside.
The assessee is entitled to have registration u/s. 12AA - Decided in favour of assessee.
-
2021 (3) TMI 1151 - ITAT PUNE
TP adjustment - Inappropriately combining of export of service spare and export of parts and components in global sourcing segment - HELD THAT:- Tribunal in assessee's own case for assessment year 2008-09 [2014 (12) TMI 1 - ITAT PUNE] after going through the findings for assessment year 2006-07 observed and held that in relation to the international transactions of export to the associated enterprises relating to the spares and components required in servicing of vehicle manufactured and sold by the assessee, the Tribunal found that even on an application of internal TNM mechanism the international transactions undertaken with associated enterprises was at an arm's length price.
Even in the present assessment year i.e. 2013-14, the same position holds good as can be seen from the tabulation enumerated by the TPO at Para 6 of his order. Therefore, following the aforesaid precedent, the adjustment computed by the TPO with regard to the export to associated enterprises of spares and components required for the purpose of servicing of vehicles sold by assessee is untenable, as the transactions undertaken with third-party distributors are comparable to the transaction with the associated enterprises.
Other part of the transactions relating to export of spares and components which are required by the associated enterprises for manufacture of two and three wheelers undertaken by them and the components which are required by the overseas associated enterprises for manufacture of four wheelers, namely, New, Quadracycle Poker. For these two categories of transactions, the Tribunal negated the invoking of internal TNM mechanism by the TPO and instead remanded the matter back to the file of the Assessing Officer to examine the plea setup by the assessee.
We restore the issue back to the file of the Assessing Officer who shall carry requisite verification/exercise and re-adjudicate the matter while complying with the principles of natural justice. We direct the Assessing Officer to redetermine the ALP of the impugned international transaction of export of spares and components on the basis of the decision of the Tribunal in assessee's own case for assessment year 2006-07 (supra.). Thus, Ground Nos. 2, 3 and 4 raised by the assessee are allowed for statistical purposes.
Whether education cess can be allowed as deduction? - HELD THAT:- this additional ground in respect of 'Education cess' is also remanded to the file of the Assessing Officer to adjudicate the issue in view of the principles laid down by the Hon'ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax, Kota Vs. Sesa Goa Limited Vs. JCIT [2020 (3) TMI 347 - BOMBAY HIGH COURT] and M/s. Chambal Fertilizers and Chemicals Ltd.[2018 (10) TMI 589 - RAJASTHAN HIGH COURT]. Thus, additional ground No. 1 raised in appeal by the assessee is allowed for statistical purposes.
Verification in respect of the various DTAA agreements - HELD THAT:- Taking totality of facts and circumstances into consideration wherein the DTAA agreements has to be looked into and factual aspects needs to be verified. Therefore, these additional grounds are also remanded to the file of the Assessing Officer who shall adjudicate these issues while complying with the principles of natural justice. Thus, Additional Ground Nos. 8.1 & 8.2 raised in appeal by the assessee are allowed for statistical purposes.
-
2021 (3) TMI 1150 - ITAT DELHI
Addition invoking the provisions of Section 40A(3) - payment made in cash on account of vehicle expenses be disallowed - Assessee submission that incurring of such expenses in cash are necessary because such drivers/running staff are unable to avail banking facilities during the transit period and that such persons are illiterate and not exposed to routine banking activities - HELD THAT:- The assessee in terms of its contract is bound to deliver the goods within the stipulated time. In the course of such transportation, the assessee is bound to incur expenses for putting fuel in the vehicle, payment of toll gate charges, incurring of expenses for routine and exceptional repairs and maintenance apart from fooding expenses of the staff.
Since the AO has not doubted the genuineness of the expenses as no such disallowance has been made and the AO has made only disallowance u/s. 40A(3) of the Act on the basis of the bills/vouchers/ledger account produced before him, we are of the considered opinion that the disallowance u/s. 40A(3) made by the AO under the facts and circumstances of this case is not justified and the provisions of 6DD(k) will come to the rescue of the assessee. In this view of the matter, we set aside the order of the CIT(A) and direct the AO to delete the addition. The grounds raised by the assessee are accordingly allowed.
............
|
