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Income Tax - Case Laws
Showing 141 to 160 of 641 Records
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2021 (3) TMI 1103 - ITAT BANGALORE
Reopening of assessment u/s 147 - Notice to be served within the limitation period or specified period - addition u/s 68 - HELD THAT:- The notice u/s. 148 of the I.T. Act was dispatched on 31.03.2018 in the address given by the assessee in the PAN portal. Since the notice was returned unserved, the same was served through affixture. The learned Standing Counsel has produced the assessment records to prove that the notice u/s. 148 of the I.T. Act was dispatched on 31.03.2018 itself. In this context, the judicial pronouncement relied on by the CIT(A) clearly states that it is not necessary that notice needs to be served within the limitation period, but only need to be dispatched within the specified period. Therefore, the technical grounds raised by the assessee are dismissed.
Addition u/s 68 - Assessee was not given any benefit of telescoping with regard to the withdrawals made by him. The assessee has also contended that he is deriving income from screen printing activities and the same were deposited in Kotak Mahindra Bank. It was stated by the assessee that the notice u/s. 142(1) was served on the assessee in the fag end of limitation period for completion of assessment, hence, was not in a position to furnish the necessary proof/evidences.
Admittedly, in this case, the assessment has been completed on a best judgment basis. Therefore, assessee should be provided with one more opportunity to explain the source of cash deposit. The assessee shall produce the necessary evidences/documents to prove the source of cash deposits. The assessee shall co-operate with the department and shall not seek unnecessary adjournment. The A.O. is directed to afford a reasonable opportunity of hearing to the assessee and pass an order in accordance with law. It is ordered accordingly. Appeal filed by the assessee is allowed.
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2021 (3) TMI 1102 - ITAT HYDERABAD
Maintainability of appeal - Assessing officer himself had filed remand report dated 19.09.2018 before the CIT(A) regarding commission payment(s) - CIT DR vehemently contended during the course of hearing that the CIT(A)'s order has erred in law and on facts in granting relief to the assessee despite the fact that the Maharashtra State Electricity distribution company had deposed in department's favour that there was no involvement of any commission component in the entire bidding process - Whether CIT(A) is correct in allowing the appeal of assessee by completely ignoring the fact that a Government authority viz. the Chief Engineer, Maharashtra State Electricity Distribution Company has clearly spelled out the process of e-tender, design, specification of a public utility product and confirmed that no third party was involved in any of the services as mentioned in the relied upon agreement? - HELD THAT:- We find no merit in Revenue's foregoing argument. It has already come on record that the Assessing Officer has himself verified the impugned commission activity/payment in the remand report.
Case law (2020) 426 ITR 119 (Kar) PCIT vs. DM Purnesh [2020 (9) TMI 731 - KARNATAKA HIGH COURT] and Smt. B. Jayalakshmi vs. ACIT [2018 (8) TMI 208 - MADRAS HIGH COURT] holds that the Revenue cannot be held to be an aggrieved party once the Assessing Officer himself finds assessee's explanation to be genuine. We thus hold in view of Assessing Officer's remand report that the Revenue's instant appeal deserves to be declined even on the ground of maintainability itself. Revenue's appeal is dismissed.
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2021 (3) TMI 1101 - ITAT MUMBAI
Disallowance of interest expenses u/s.36(1)(iii) - interest bearing funds were utilized for non-business purposes, i.e. investment in mutual funds - HELD THAT:- Hon'ble Bombay High Court in the case of CIT v. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] has held in the context of section 36(1)(iii) of the Act that "if there is interest-free funds available to an assessee sufficient to meet its investment and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available".
The above ratio laid down by the Hon'ble Jurisdictional High Court is to be examined in the instant case. Therefore, we set aside the order of the Ld. CIT(A) on the above issue and restore the matter to the file of the AO to examine the applicability of the ratio laid down in Reliance Utilities & Power Ltd.(supra). We direct the assessee to file the relevant documents/evidence before the AO. Appeal is allowed for statistical purposes.
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2021 (3) TMI 1100 - ITAT DELHI
Disallowance u/s 14A r.w.r. 8D - assessee had made suo motu disallowance on proportionate basis by taking proportion of personnel and administrative expenses which can held to be relatable for earning of the exempt income - HELD THAT:- Admittedly, no interest expenditure is attributable for earning of exempt income. The only dispute is with regard to indirect expenditure under Rule 8D (2)(iii). Once the investment has been made in the earlier years and only if the dividend amount has been credited, then the only rational basis at the most could be the proportion of salary and administrative expenses. AO thereafter having regard to the accounts maintained by the assessee and the nature of expenses incurred was required to record his satisfaction that expenditure claimed by the assessee for earning of exempt income is incorrect or the expense disallowed by the assessee is not reasonable.
It is only after recording of such satisfaction that Assessing Officer can proceed to make a disallowance under the prescribed method of Rule 8D and this is the mandate of Section 14A(2). In this case, the Assessing Officer has mechanically applied Rule 8D by stating that the expenditure incurred by the assessee towards exempt income, whether direct or indirect has to be disallowed in view of method provided under Rule 8D. There is no specific satisfaction of Assessing Officer as to how the claim made by the assessee is not tenable having regard to the nature of account maintained by the assessee and the nature of expenditure debited in the P&L account, especially when the dividend has come from old investments and not fresh investment.
Exactly on the same reasoning, this Tribunal in assessee's own case for all the earlier years right from Assessment Years 2005-06 to 2011-12 has deleted the disallowance made under Rule 8D(2)(iii). Thus, respectfully following the precedent in assessee's own case for the earlier years, we do not find any reason to sustain the disallowance which has been made by the Assessing Officer by mechanically applying Rule 8D. Accordingly, the appeal of the assessee is allowed.
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2021 (3) TMI 1099 - ITAT JAIPUR
Delay in filing the present appeals by 43 days - sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time - HELD THAT:- In the instant case, it has been stated by the assessee that due to the fact that the Principal of the school was busy in election duty, so cannot able contact to its C.A. for filing appeals but after election duty, he filed the appeals. Sawar is village where the school exists and it takes time to contact CA.
In case of Collector, Land Acquisition vs MST Katiji [1987 (2) TMI 61 - SUPREME COURT] has held that the expression 'Sufficient Cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts.
In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and it does not stand to benefit by resorting to such delay more so considering the fact that it has applied for settlement of present dispute and payment of appropriate taxes. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing the present appeal and as held by the Hon'ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred.
In exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeals as we are satisfied that there was sufficient cause for not presenting the appeals within the prescribed time and the appeals are hereby admitted for adjudication on merits.
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2021 (3) TMI 1098 - ITAT PUNE
Accrual of income - Addition made on account of accrued interest on NPA - HELD THAT:- We note that while deciding the said issue the Co-ordinate Bench of this Tribunal placed reliance in assessee's own case for A.Y. 2011-12 and opined, since there was no order contrary to the finding of this Tribunal held the chargeability of accrued interest on NPA is bad under law. Further, we note that the order passed by this Tribunal for A.Y. 2011-12 wherein by placing reliance on the order of this Tribunal passed in various other assessees on identical issue come to such conclusion that accrued interest on NPA is not an income.
We hold that the accrued interest on NPA is not chargeable to tax u/s. 43D r.w. Rule 6EA and we do not find any reason to interfere with the order of CIT(A) and accordingly it is justified. Thus, the grounds raised by the Revenue are dismissed.
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2021 (3) TMI 1097 - ITAT DELHI
Estimating income shown u/s 44AD as supported by return filed under VAT - estimate of the CIT(A) being without any material, ignoring the correct position of the case i.e. neither books of accounts are kept nor auditing was done and returns were even farzi for taking loan from bank - addition is sustained by the ld. CIT(A) based on the findings of the ld. CIT(A) in assessee's own case for assessment year 2010-11 [2018 (9) TMI 1759 - ITAT DELHI] wherein the profit @ 5% on the turnover was estimated - HELD THAT:- In para No. 8 the co-ordinate bench held that assessee should be given an opportunity to substantiate evidence to the satisfaction of the AO regarding the turnover and expenses with respect to the profit and loss account and the balance sheet as it as stated that those were farzi version of accounts. Considering the totality of the facts of the case the matter was restored back to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case directing the assessee to produce the books of accounts and audit report failing which the Assessing Officer shall pass an appropriate order as per law. In the present case the addition is also based on the order of the CIT (Appeals) for assessment year 2010-11. This order has now been restored back to the ld. AO for that year. When additions are confirmed on the basis of the order of ld. CIT(A) for earlier years which has already been sent back to the ld. AO for fresh decision, there is no reason that why this year should also not be restored back to the file of the ld. AO for fresh assessment. SO, we also set aside this appeal with similar direction to the file of the Assessing Officer.
Rejection of books of accounts - Addition of 5% of gross sales - HELD THAT:- In the return of income the assessee has filled up the figures only with some of the items, therefore, it is apparent that no books of accounts were maintained. During the assessment proceedings, the Assessing Officer did not dispute the turnover or the expenses as well as the cash on hand and amount of debtors. The only addition was with respect to the discrepancy in the opening stock. In assessment year 2010-11 AO rejected the books of accounts and made the addition whereas in the impugned year he has not disturbed the trading results of the assessee which has turnover of only ₹ 9,45,132/-. The Assessing Officer has merely added the difference in the opening stock as well as the closing stock. The stock of the assessee as on 1.04.2009 was ₹ 2,01,23,560/-.
The stock as on 31.03.2009 was shown at only ₹ 4,10,130/-. Therefore, the assessee has shown excess opening stock of ₹ 1,97,13,430/-. The Assessing Officer also did not care to consider that whether the assessee is having the above stock as actual stock with the assessee and if so what is the source of investment for the above stock. The Assessing Officer has not even examined the source of stock nor was such stock found during the course of survey on 17.09.2013 and 29.09.2013. No purchase vouchers or details were also found during the course of survey. In view of this, we do not find any infirmity in the order of the ld. CIT (Appeals) and thus, the solitary ground of appeal of the ld. Assessing Officer is dismissed.
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2021 (3) TMI 1095 - ITAT DELHI
Disallowance of interest paid to M/s GNIDA - AO disallowed the penal interest paid by the assessee on account of default in payment of installments to GNOIDA because Interest was not allowable as it was not on borrowed fund, As per the agreement there was no requirement to pay interest and No interest payment was allowable on acquiring a capital asset i.e. the lease rights of the land - CIT-A deleted the addition only on the ground that since the interest payment is not for violation of law or for the commission of an act purpose of which is an offence as contemplated in explanation 1 of Section 37(1) - HELD THAT:- CIT (A) has not adjudicated on the ground nos. 9 to 12 in the appeal filed before him for which the revenue filed appeal before us. The main contention of the revenue is that the addition needs to be examined broadly in the light of allowability of the interest in acquiring the lease rights on the land but not narrowly on the issue, whether such interest is penal in nature or not. Since, the ld. CIT (A) has not adjudicated on the core of the issue, we hold that the interest of justice would be well served by remanding the matter to the file of the ld. CIT (A) to adjudicate on the grounds unadjudicated.
Appeal of the revenue allowed for statistical purpose.
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2021 (3) TMI 1094 - ITAT DELHI
Applicability of Section 69A with regard to the cash deposits found in the bank statement of the assessee - whether the assessee has discharged his onus of explaining this deposit satisfactorily? - HELD THAT:- As gone through the statement of Sh. Mohinder Singh recorded by the revenue on 17.09.2013 wherein he has confirmed of payment of ₹ 58,00,000/- on execution of sale agreement and receipt of the same amount after cancellation of the said sale agreement. It is an undisputed fact that Sh. Mohinder Singh unequivocally stated that the money earned by him and belongs to him. In that case, it can be said that the assessee has discharged the onus casted upon him. Even after recording the statement wherein Sh. Mohinder Singh owned up the amounts as being from his own sources, the revenue ought to have examined as to the taxability of the amounts in the hands of Sh. Mohinder Singh.
Regarding the amounts received from Sh. Bhrama Nand, Sh. Surjeet Singh and Sh. Leela Ram, the matter is being referred to the file of the AO to examine the matter afresh duly following principles of natural justice and giving the details of the enquiries conducted by the revenue so that the assessee gets an opportunity to furnish their replies. Appeal of the assessee is partly allowed.
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2021 (3) TMI 1092 - SC ORDER
Carry forward of unabsorbed depreciation - HELD THAT:- In view of the judgments on the interpretation of Section 32(2) of the Income Tax Act delivered by Delhi High Court, Gujarat High Court, Madras High Court and Bombay High Court, upheld by this Court by special leave petitions being dismissed, we do not agree with the learned Additional Solicitor General that the question of law has to be determined in these special leave petitions.
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2021 (3) TMI 1089 - BOMBAY HIGH COURT
Direct Tax Vivad se Vishwas scheme - settlement in respect of tax arrear - ineligibility to file declaration - petitioner seeks a declaration that the clarification given by respondent No.2 to question No.73 vide circular No.21/2020 dated 04.12.2020 is violative of Article 14 of the Constitution of India and thus is arbitrary and ultra vires to the provisions of the Direct Tax Vivad se Vishwas Act, 2020 and the Direct Tax Vivad se Vishwas Rules, 2020 - debar to petitioner from filing a declaration for settlement of tax arrear - HELD THAT:- As discussed in detail section 9(a)(ii) and we have no hesitation to hold that either on a literal interpretation or by adopting a purposive interpretation, the only exclusion visualized under the said provision is pendency of a prosecution in respect of tax arrear relatable to an assessment year as on the date of filing of declaration and not pendency of a prosecution in respect of an assessment year on any issue. The debarment must be in respect of the tax arrear as defined under section 2(1)(o) of the Vivad se Vishwas Act. To hold that an assessee would not be eligible to file a declaration because there is a pending prosecution for the assessment year in question on an issue unrelated to tax arrear would defeat the very purport and object of the Vivad se Vishwas Act. Such an interpretation which abridges the scope of settlement as contemplated under the Vivad se Vishwas Act cannot therefore be accepted.
In so far the prosecution against the petitioner is concerned, the same has been initiated under section 276-C(2) of the Act because of the delayed payment of the balance amount of the self-assessment tax. Such delayed payment cannot be construed to be a tax arrear within the meaning of section 2(1)(o) of the Act. Therefore such a prosecution cannot be said to be in respect of tax arrear. Because such a prosecution is pending which is relatable to the assessment year 2015-16, it would be in complete defiance of logic to debar the petitioner from filing a declaration for settlement of tax arrear for the said assessment year which is pending in appeal before the Tribunal.
Considering the above, the clarification given by respondent No.2 by way of answer to question No.73 vide circular No.21/2020 dated 04.12.2020 is not in consonance with section 9(a)(ii) of the Vivad se Vishwas Act and, therefore, the same would stand set aside and quashed. Declaration of the petitioner dated 23.09.2020 would have to be decided by respondent No.1 in conformity with the provisions of the Vivad se Vishwas Act dehors the answer given to question No.73 which we have set aside and quashed.
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2021 (3) TMI 1088 - BOMBAY HIGH COURT
Exemption u/ 11 - declining to condone the delay in filing Form No.10B - Power of CBDT to condone delay u/s 119 - There was thus delay of more than 365 days in filing Form No.10B Commissioner expressed inability to condone the delay and hence rejected the application for condonation of delay - HELD THAT:- No error or infirmity in the view taken by the CBDT vide Circular No.2 / 2020 or by the Commissioner while passing the impugned order dated 19.02.2020. Fixing a period of one year’s delay i.e., 365 days of delay for condonation of delay in filing Form No.10B for the assessment year 2018-19 and onwards cannot be said to be arbitrary or irrational. Therefore the general order passed by the CBDT in this regard under section 119(2)(b) cannot be faulted. However, there is also nothing in section 119(2)(b) preventing or precluding CBDT from passing a special order in any given case from condoning the delay in filing Form No.10B beyond 365 days despite passing a general order.
That being the position and having regard to the mandate of section 119(2)(b), we feel that even at this stage, petitioner may approach CBDT under the aforesaid provision seeking a special order to the Commissioner of Income Tax (Exemptions), Mumbai to condone the delay in filing Form No.10B for the assessment year 2018-19 which is beyond 365 days and thereafter to deal with the said claim on merit and in accordance with law.
Order :-
Petitioner shall file an application before the CBDT under section 119(2)(b) of the Act to authorize the Commissioner of Income Tax (Exemptions), Mumbai to condone the delay in filing Form No.10B for the assessment year 2018-19 and to deal with the same on merit in accordance with law;
If such application is filed by the petitioner within a period of three weeks from today, CBDT shall pass an appropriate order in terms of direction No.1 above within a period of four weeks from the date of receipt of such application with due intimation to the petitioner.
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2021 (3) TMI 1082 - MADRAS HIGH COURT
Rectification u/s 154 - Transfer pricing adjustments - It is submitted that, under the guise of invoking his power under Section 154 of the Act, seeks to review the assessment order - Jurisdiction of TPO to conduct a transfer pricing adjustment once the assessment has been completed by the Assessing Officer under Section 143(3) - HELD THAT:- it is seen that the assessee, at no point of time, questioned the jurisdiction of the Assessing Officer to implement the directions of the TPO vide order dated 16.03.2006. The thin line of argument, which is now placed before us, is by referring to the printed notice form under Section 154, which was issued to the assessee.
The order passed by the TPO shows that the assessee had cooperated in the proceedings and their authorized representative, i.e. AGM (Finance) of the company, has attended the hearings on various dates.
The conduct of the assessee clearly demonstrates that they rightly understood the legal position and the present attempt of the assessee to question the jurisdiction of the Assessing Officer deserves to be rejected.
Even before CIT(A), no where the jurisdiction of the Assessing Officer has been questioned. - CIT(A) proceeded to decide the matter on merits and passed orders dated 30.09.2016. The assessee carried the matter on appeal to the Tribunal and once again, the assessee never raised any contention with regard to the validity of the notice dated 28.03.2006. Thus, considering this factual situation, we are of the clear view that the present attempt of the assessee is not tenable and accordingly rejected.
The assessment order dated 28.02.2006 is an order under Section 143(3) and not an order under Section 92C(3) of the Act. - The argument of the assessee before us is that the Assessing Officer has exercised jurisdiction under Section 92C(3) and the TPO parallely cannot exercise his power under Section 92CA. On facts, the assessee is wrong.
Thus, the assessee having been fully aware of the factual position, the faint attempt made before us alleging the question to be a substantial question of law is not sustainable.
We draw support to this conclusion from not only the decision in Samtel India Ltd.[2012 (9) TMI 806 - SUPREME COURT] but the decision in K.Ravindranathan Nair [2000 (11) TMI 3 - SUPREME COURT] wherein it was held that unless the finding of the Tribunal on facts is perverse, the question of considering the correctness of the order in an appeal under Section 260A of the Act would not arise. Substantial question of law No.1 is answered against the assessee.
Assessee is estopped from contending that the TNMM is the MAM after having adopted the CUP method in their TP study at the first instance - TPO has observed that from the steps listed down in his order, it is clear that the assessee company has adopted weighted average method for comparison of the transactions and Rule 10A of the Income Tax Rules, 1962 clearly gives the definition of uncontrolled transaction.
Assessee was not non-suited on the ground that he is estopped from raising the plea that TNMM method cannot be adopted as the MAM, but on facts, the TPO held that such plea is not tenable.
The matter went before the CIT(A), who took note of the report and then additional submissions were made by the assessee. No doubt, in one sentence, in the order passed by the CIT(A), there is an observation that the authorized representative of the assessee is resorting to approbate and reprobate and that is a species of estoppel and that substituting TNMM method for CUP method is an after thought.
If one reads these two sentences dis-juncted from the other portion of the order of the CIT(A), one may get an impression that the CIT(A) concluded that the assessee is estopped from raising a contention that they seek for adopting a different MAM. However, the order of the CIT(A) has to be read as a whole and in doing so, we have to read the order in its entirety, wherein the CIT(A) has referred to the earlier transactions, the grounds of appeal, the additional grounds of objections and then proceeded to adjudicate the matter - CIT(A) referred to the remand report in extenso and held that the order passed by the TPO has answered the assessee's arguments and he has accepted the findings recorded by the Assessing Officer in the remand report and the speaking order passed by the TPO and accordingly confirmed the additions made.
Therefore, it would be incorrect to pick out couple of sentences from the order of the CIT(A) and to state that the assessee has been shut out on the ground of estoppel, we are fully convinced that the assessee's case was dealt with on merits at every stage from the stage of the order passed by the CIT(A) as well as the remand report and the CIT(A) has recorded reasons as to why he is convinced on facts that the findings recorded by the TPO is an answer to the assessee's arguments.
Assessee has not been non-suited on the ground of estoppel, but the entire matter has been analysed on facts and a finding has been rendered. This finding has been reappreciated by the Tribunal, which can be seen from paragraph 8.0 of the order. No doubt, in paragraph 11.0, the Tribunal made an observation that the reopening of assessment is possible as per the provisions of Section 147 of the Act. In our view, such issue will not raise in the present case.
In the preceding paragraphs while answering the substantial question of law No.1, have assigned reasons as to why the assessee is precluded from raising any contention with regard to the jurisdiction of the officer to issue notice dated 28.03.2006 apart from rendering a finding as to the purport and scope of the notice qua the assessment order under Section 143(3), dated 28.02.2006 and the order dated 16.03.2006 under Section 92CA(3) of the Act.
We hold that there is no summary rejection of the assessee's plea that TNMM alone should be adopted, but findings of fact have been recorded and affirmed by the last fact finding forum, namely the Tribunal. Therefore, substantial questions of law 2 and 3 are answered against the assessee.
CUP method, necessary adjustments are required to be made in order to arrive at the ALP and under Rule 10B(1)(a)(ii), the price can be adjusted to account for any differences between the international transaction - We find that this issue has been elaborately dealt with by the TPO as well as examined for its correctness by the CIT(A) and the Tribunal. We remind ourselves that we are exercising jurisdiction under Section 260A of the Act and required to answer a substantial question of law and not reappreciate the factual position.Therefore, we find that there is no substantial question of law arising for consideration on this issue. Accordingly, the same stands rejected.
Tribunal fell in error in remanding the issue of trading segment to the CIT(A) when all the facts to adjudicate the issue were before it and applicability of CUP method itself was in question - As could be seen from the finding recorded by the Tribunal, it is the assessee, who had requested to remit the matter back to the CIT(A) for adjudication, for which the Revenue did not object and accordingly, the matter was remanded back to the CIT(A) to decided the same on merits.
Before us, the assessee does not state that no such request was made to the Tribunal, but rather seek to argue the matter on merits stating that comparison of SPCEN with SPCEN-HMI is not appropriate and that the assessee's case is supported by Mill Test Certificate produced for the imports made by the assessee.
These issues cannot be adjudicated by us in an appeal under Section 260A and the assessee, having pleaded before the Tribunal for a remand, which was not objected to by the Revenue, is precluded from now contending before this Court that the Tribunal fell in error in remanding the issue of trading segment to CIT(A). No substantial question of law.
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2021 (3) TMI 1073 - KARNATAKA HIGH COURT
Vivad Se Vishwas Scheme - petitioner’s application under the aforesaid scheme has been rejected noting non-compliance with the deposit of tax in terms of Section 249(4)(a) - HELD THAT:- Division Bench of this Court while noticing the conditions precedent under Section 249(a) of the Act has exercised its discretion while permitting assessee to pay the admitted amounts before the authority while directing the Commissioner appeals to consider the appeals on its merits.
Noting that the application of the petitioner under the direct tax Vivad Se Vishwas Scheme has been rejected solely on the ground of non-compliance for not having made deposit under Section 249(4)(a) of the Act it would be a fit case while taking note of the observations of the Division Bench referred to above to permit the petitioner to pay the remaining dues in terms of Section 249(4)(a) of the Act within a period of four weeks from the date of release of this order. While so permitting the order at Annexure-A is set aside and the appeal stands restored. Consequential order of setting aside endorsement at Annexure-L is also set aside and the application of the petitioner in Form-1 to be re-considered by the respondent No.1.
The respondent no.1 to consider processing of the petitioner’s application afresh in light of the restoration of the appeal as per the order passed herein.
It is made clear if the petitioner commits default in making payment within the time stipulated, the benefit of restoration of appeal and so also reconsideration by the respondent No.1 would stand revoked. Accordingly, the petition is disposed off.
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2021 (3) TMI 1072 - KARNATAKA HIGH COURT
Claim of depreciation @ 60% on switches and routers - HELD THAT:- The judgment delivered by the Delhi High Court in the case of CIT vs. BSES YAMUNA POWERS LTD[2010 (8) TMI 58 - DELHI HIGH COURT] has concluded the controversy as held that the computer accessories and peripherals such as printers, scanners and server etc., form an integral part of the computer system.
Thus it can be safely held that the switches and routers as they cannot be used without computer, they form part of peripherals of the computer and entitled to depreciation at 60%. The revenue has not been able to controvert the said finding of the Tribunal and therefore, in light of the judgment delivered by the Delhi High Court, the first substantial question of law is answered in favour of the assessee and against the revenue.
Disallowance of foreign exchange loss on forward contracts - allowable revenue expenditure u/s 37 - HELD THAT:- The issue stands covered by the judgment delivered by the Bombay High Court in the case of CIT vs. D.CHETAN & CO. [2016 (10) TMI 629 - BOMBAY HIGH COURT].
As carefully gone through the entire record and the case of the assessee is that the loss is on account of the restatement of debtors and creditors, book liability etc., which was incurred on account of the forward contracts which includes both realized and unrealized losses. The details of gain and loss on account of the fluctuations of foreign exchange were filed before the assessing officer. However, the assessing officer merely relying upon Instruction No.3/2010 issued by the Central Board of Direct Taxes concluded that it is a notional loss and has to be treated as a speculative loss in terms of Section 43(5) of the Act.
Assessing officer did not dispute the fact that the loss incurred by the respondent – assessee is in the ordinary course of its business and therefore, would fall within the exceptions provided in the proviso to Section 43(5) of the Act. Therefore, the judgment delivered in the case of D.Chethan and Co., (supra) squarely covers the present case.
As held that the assessing officer has not given a finding that the transaction entered into by the assesseee was a speculative in nature and the revenue at no point challenged the assertion of the assessee that the activity of entering into the forward contract was in the regular course of its business. Therefore, in the present case when the assessing officer has neither disputed the fact that the loss was in the regular course of business nor rendered any finding that the transaction was speculative in nature except making a bald statement, the Tribunal was justified in relying upon case of D.Chetan and Co., (supra). - In WOODWARD GOVERNOR INDIA P. LTD. & M/S HONDA SIEL POWER PRODUCTS LTD. [2009 (4) TMI 4 - SUPREME COURT] held the loss on account of foreign exchange fluctuation is allowable as a deduction under Section 37(1) - Decided in favour of assessee.
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2021 (3) TMI 1069 - GUJARAT HIGH COURT
Transfer of the proceedings u/s 127(2)(a) - Centralization of case under search - Faceless Assessment - whether the authority concerned committed an error in passing the order of transfer under Section 127 ? - jurisdiction of the Assessing Officer as per section 124 - HELD THAT:- It appears from the materials on record that the main purpose of transfer on the ground of centralization of cases is to investigate the dubious transactions of the writ-applicant with various related entities during the relevant period. At this stage, we may refer to the reasons assigned by the Commissioner of Income Tax (Exemption) for centralization while disposing of the objections raised by the writ-applicant.
The transfer order passed under Section 127 of the Act is more in the nature of an administrative order rather than a quasi-judicial order and the assessee cannot have any right to choose his Assessing Authority, as no prejudice can be said to have been caused to the assessee depending upon which authority of the department passes the Assessment Order. The assessee can only be concerned with getting an opportunity of hearing before the concerned Assessing Authority and adduce his evidence and make his submissions before the concerned Assessing Authority. The Income Tax department has recently introduced a scheme of Faceless Assessments with a view to avoid personal hearing and physical interaction of the assessee and the Assessing Authority altogether. The assessee need not even know the name of the Assessing Authority who will deal with his case.
We have also looked into the judgments relied upon by Mr.Darshan Patel, the learned counsel appearing for the writ-applicant. However, none of the judgments are of any avail to the writ-applicant.
We are convinced that no case is made out for interference.
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2021 (3) TMI 1067 - ITAT BANGALORE
Cessation of liability u/s. 41(1) - trading liability ceased to exist - HELD THAT:- In the present case, the assessee had received the amount in the course of its business, which are originally treated as an advance. These deposits neither claimed nor returned to the party concerned. There is no dispute that this impugned amount was received in the course of carrying on the normal course of business of the assessee, the amount was written off by the other party, who was given this to the assessee and there was no necessity of fulfilment of contract which was originally entered by the assessee as ILC Industry Limited has written of it.
Since the advance was taken in the course of normal business affairs of the assessee and it was unclaimed amount and not required to returned by the assessee will be its trade receipts. Because of the trading operation, the assessee had received it and it become richer by the amount on written of by the ILC Industry Limited in its books of account. Though the amount received originally were not of income nature, the amount remained with the assessee for a long period unclaimed by the third parties, i.e., ILC Industries Limited and become definite trade surplus and to be treated as taxable income.
If an amount received in the course of trading transaction, even though it is not taxable in the year of receipt as being the revenue character, the amount changes its character when the amount becomes assessee’s own money because of written of by ILC Industry Limited in its books of account and there was no contractual obligation on the part of the assessee to perform its obligation and it should be treated as income of the assessee. Being so, we are of the opinion that the lower authorities are justified in treating the amount as income of the assessee u/s 41 of the I.T.Act.
Where the assessee’s business profit was enhanced on account of addition by invoking the provisions of section 41(1), the assessee is entitled to deduction u/s 10B on the enhanced profit - In the case of Yahoo Software Development (P.) Ltd. [2020 ( 5) TMI 53 - ITAT BANGALORE]disallowance u/s. 40(a)(ia) was made and business income was enhanced, on this count exemption u/s. 10A was granted on the enhanced income. In the case of Anthelio Business Technologies (P.) Ltd. [2017 (1) TMI 257 - ITAT MUMBAI] deduction u/s. 10B was granted on account of enhancement of income due non-deduction of tax at source by invoking the provisions of section 40(a)(i).
The assessee received business income through convertible foreign exchange and as such reduced the same by claiming various expenditure without deduction of tax at source. Non-disallowance of expenditure increased business income of assessee in actual terms. In the present case, the assessee received amount from the local party, M/s. ILC Industries Ltd. and the assessee has not received the earnings in convertible foreign exchange. Being so, this cannot be equated with disallowance made u/s. 40(a)(i) or 40(a)(ia) of the Act. Therefore, we reject the alternative ground of the assessee also.
Appeal by the assessee is dismissed.
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2021 (3) TMI 1066 - ITAT DELHI
Assessment u/s 153C - Addition u/s 68 - bogus bogus share capital introduced - HELD THAT:- No grounds have been raised by the Revenue to challenge the Order of the Ld. CIT(A) in allowing the appeal of assessee because no satisfaction note have been recorded in the case of the person-searched for invoking jurisdiction under section 153C. Sufficient time was already granted to the Department to revise its grounds of appeal.
No steps have been taken by the Department. It is, therefore, clear that the findings of the Ld. CIT(A) as produced above, have not been challenged by the Revenue on any of the grounds of appeals. Therefore, the grounds of appeal raised by the Revenue on merit would not arise from the findings of the Ld. CIT(A). Thus, the appeal of the Revenue would not be maintainable in the absence of any challenge to the findings of the Ld. CIT(A) with regard to quashing of proceedings under section 153C in the absence of any satisfaction note recorded by the A.O. of the person searched. In view of the above, Departmental appeal is dismissed.
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2021 (3) TMI 1065 - ITAT DELHI
Penalty u/s 271(1)(c) - Defective notice - HELD THAT:- As relying on M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [2019 (8) TMI 409 - DELHI HIGH COURT] and M/S. BHARAT IMMUNOLOGICAL AND BIOLOGICAL CORPORATION LTD. [2019 (5) TMI 28 - ITAT DELHI] A.O. has not pointed-out as to for which limb of Section 271(1)(c) of the I.T. Act, 1961, penalty proceedings are initiated i.e., whether for concealment of particulars of income or for furnishing inaccurate particulars of income. Therefore, the penalty notice is invalid and bad in Law and as such the entire proceedings are vitiated and no penalty is leviable against the assessee - Decided in favour of assessee.
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2021 (3) TMI 1064 - ITAT DELHI
Unexplained cash deposits in syndicate bank account - HELD THAT:- Assessee has explained the total cash deposit in his Syndicate Bank account - CIT(A) has held that sale of car was not for ₹ 5 lakhs but ₹ 5.50 lakhs and therefore he has granted a relief of ₹ 50,000/- only and sustained the addition of ₹ 7,70,000/-.
In view of the fact that to deposit in the bank account of the assessee, assessee has received ₹ 550,000 on sale of car and further ₹ 517,397/- available with the assessee is an opening cash on hand, further the assessee has also cash flow generated during the year of approximately ₹ 320,000 out of his professional income justifies the deposit of cash into the bank account of the assessee of ₹ 1,320,000. In view of above uncontroverted facts, we do not find any justification for addition of all the above sum of ₹ 7,70,000/- in the hands of the assessee. In view this ground No. 2 of the appeal of the assessee is allowed.
Representative assessee u/s 160 or u/s 161 - Addition on account of long-term capital gain chargeable to tax on account of sale of property by non-resident - Addition holding assessee as an agent of the non-resident as he is holding a power of attorney and the property is sold by the assessee and the money is transferred to the non-resident owner - HELD THAT:- Provisions of Section 161 provides that every representative assessee as regards the income in respect of which he is a representative assessee shall be subject to the same duties, responsibilities and liabilities as if income is received by or accruing to or in favour of him beneficially and shall be liable to assessment in his own name in respect of that income but such assessment shall be deemed to be made upon him in his representative capacity only. The tax subject to other provisions of the income tax act be levied upon and recovered from him in like manner and to the same extent as would be leviable upon and recoverable from the person represented by him. Therefore, the assessing officer should have passed a separate assessment order from the income of the assessee with respect to the income of the non-resident holding the assessee as a representative of a non-resident.
In the present case, the assessing officer has passed an order in the name of the assessee without specifying that the above income is chargeable to tax in the hands of the assessee as a representative assessee of a non-resident i.e. not passing a separate order but adding the income of the non-resident in the hands of the assessee is not in accordance with the provisions of Section 161 - AO has also charged the tax in the hands of the assessee in the residential status of resident and not non-resident. On this score, the addition made by the learned assessing officer of the income of the non-resident Under the head capital gain is required to be deleted. Thus, ground number of the assessee is allowed.
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