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Income Tax - Case Laws
Showing 61 to 80 of 735 Records
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2021 (7) TMI 1286
TP Adjustment of royalty - HELD THAT:- As these services are ultimately benefitting the assessee in terms of increasing its turnover, sales of the assessee is taken as the basis for allocation. This method is consistently followed by the assessee over the years and by the group companies world over.
The royalty payment is based on the agreement between the assessee and its parent company. The agreement is dated 15.12.2001. This issue of payment of royalty was subject matter the appeal be fore the Tribunal for the assessment year 2005-06 [2020 (12) TMI 723 - ITAT DELHI] Thus AO is directed to delete the addition made on account adjustment of royalty.
Tax withholding u/s 192 on Global Accounting Manager (GAM) expenses - AO considered these expenses as payment of salary to non-resident and accordingly held that the same is liable to withholding tax under section 192 of the Act. In the absence of tax withholding, AO disallowed the expense under section 40(a) - HELD THAT:- We find that this issue stands adjudicated by the Coordinate Bench of the Tribunal in taxpayer’s own case for AY 2005-06 [2020 (12) TMI 723 - ITAT DELHI] upheld the order passed by the ld. CIT (A) while deciding the issue in assessee’s favour has given a finding that the payments made by the assessee as GAM charges cannot be treated as payment of salary to non-resident but were in the nature of reimbursement of expenses and there fore assessee was not required to deduct TDS on such payments. - Decided in favour of assessee.
TDS on payment of lease rent charges do not fall in the category of FTS - HELD THAT:- payment of lease rent charges do not fall in the category of FTS. In the absence of any material change in the factual as for A.Y. 2005-06 [2020 (12) TMI 723 - ITAT DELHI] as well as the legal aspect of the assessee, we hereby hold that the disallowance made by the AO is directed to be deleted.
Capital Advance - Assessee purchased software for the purpose managing fixed assets database, cheque preparation software, MIS etc. which was returned due to operational deficiencies - HELD THAT:- The software was at first instance capitalized by the assessee in. its books of accounts and after returning the software, the Assessee had written off the advances paid to Softline considering the same to be irrecoverable.Subsequent to this, during the AY 2011-12, the Assessee received half of the advance written off from Softline which was duly offered to tax by the Assessee under the head ‘other income' in the profit and loss account as evident from schedule 11 of the signed financial statements for the AY 2011-12.
From the facts, it can be concluded that the expense went into drain by de fault and the assessee could recover 50% of the expenses paid. Since, the expenses involved pertain to the purpose of the business and not in the nature of any capital expenditure in real sense, the same can be treated as allowable revenue expenditure. The ground of the assessee is treated as allowed.
TDS u/s 194H - Disallowance u/s 40(a)(ia) - disallowing bank guarantee commission charges and cash management charges under section 40(a)(ia) of the act on basis of Notification No. 56 - 2012 dated 31.03.2012 and holding that TDS was deductible on such payments - HELD THAT:- The Co-ordinate Bench of ITAT Mumbai Benches, Mumbai in the case of Kotak Securities Ltd. [2012 (2) TMI 77 - ITAT MUMBAI] had held that there was no principal agent relationship between a bank issuing bank guarantee and the taxpayer and hence the payment though termed as commission was not covered under section 194H - Thus the ground of appeal is decided in favour of the assessee by the ld. CIT (A). The addition made by the AO is dismissed.
Education cess paid on the income tax - Whether an allowable deduction for computing total income given the fact that the same was not hit by the provisions of Section 40(a)(ii)? - HELD THAT:- Education Cess is not of the nature described in sections 30 to 36, Education Cess is not in the nature of capital expenditure, Education Cess is not personal expense of the Assessee, it is mandatory for it to pay Education Cess and for the purpose of computation of Education Cess, the Income ‘Tax’ is taken as the criteria for computational purpose. Thus, the expense of Education Cess is mandatory expenses to be paid but does not fall under capital expense and personal expenditure and hence may be allowed as deduction.
Keeping in view the provisions of the Act pertaining to Section 40(a)(ii) and Section 115JB, Circular of the CBDT No. 91/58/66- ITJ(19), the orders of Co-ordinate Benches of ITAT and judicial pronouncements of the Hon’ble High Court of Bombay and Hon’ble High Court of Rajasthan, we hereby hold that the assessee is eligible to claim the deduction of the ‘Education Cess’ as per the provisions of Section 37 of the Income Tax Act.
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2021 (7) TMI 1284
Validity of reopening of assessment u/s 147 - adjudication be done by the High Court in a writ proceedings under Article 226 of the Constitution of India - petitioner made a submission that the regular assessment was made based on the materials, books of accounts and informations provided by the assessee and was concluded and the reopening of assessment proceedings were initiated on change of opinion and therefore, the petitioner has chosen to approach this Court - HELD THAT:- Mere violation of principles of natural justice is insufficient to entertain a writ proceedings under Article 226 of the Constitution of India, as every Writ Petition is filed based on one or the other ground stating that the principles of natural justice is violated or statutory requirements are not complied with or there is an illegality or otherwise. Thus, dispensing with an appellate remedy is to be granted cautiously in view of the fact that the very purpose and object of legislation providing an appellate remedy cannot be diluted nor the benefit be denied to the aggrieved person to exhaust the same. The statutory appellate authorities are the final fact finding authorities
Routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The appellate forums are the final fact finding authorities and more so, possessing expertise in a particular field.
Thus, the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a roving enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. Thus, the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law.
The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming.
This being the factum established, the petitioner is at liberty to prefer an appeal before the appellate authority having jurisdiction within a period of four weeks from the date of receipt of a copy of this order. In the event of filing any such appeal, the appellate authority is bound to adjudicate the same on merits and in accordance with law and by affording opportunity to the writ petitioner and dispose of the appeal as expeditiously as possible.
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2021 (7) TMI 1281
Denial of natural justice - petitioner did not have adequate notice or fair opportunity to represent his case - HELD THAT:- As the petitioner’s matter had been adjourned to 21st February, 2020 on 07th February, 2020, yet this Court is of the view that the petitioner did not have adequate notice or fair opportunity to represent his case as neither the daily order-sheets nor the revised cause list had been uploaded on the website of the ITAT. Consequently, the impugned order dated 27th February, 2020 passed by the ITAT in Miscellaneous Application is set aside and the ITAT is directed to hear the said Miscellaneous Application afresh.
This Court is also of the view that non-publication of daily order- sheets as well as the revised cause list on the website by the ITAT results in inconvenience to the litigants in general and to the lawyers in particular.
This Court directs the ITAT to upload the daily order sheets and revised cause list on its website. System in this regard be put in place by the ITAT, if not already there, as expeditiously as possible, preferably, within three months.
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2021 (7) TMI 1277
Addition u/s 68 - On-money received by the assessee - addition being 25% of on money plus accommodation entries - determination of profit element on the on-money receipts which has to be brought to tax - HELD THAT:- As per M/S. TULIP LAND & DEVELOPERS P. LTD. VERSUS DY. CIT, CENTRAL CIRCLE-6 (2) , MUMBAI [2021 (2) TMI 1170 - ITAT MUMBAI] it is not in dispute that the assessee had incurred certain business expenses out of such on-money which are kept outside the books of accounts. Hence, it will be just and fair that only the profit element embedded on any such undisclosed transaction could be brought to tax on an estimated basis. The assessee had already pleaded that onmoney transactions were offered by the assessee’s group concerns @12% of on-money receipts before the Hon’ble Income Tax Settlement Commission and the same has been accepted by the Settlement Commission. Hence, the data and information was indeed available with the ld. CIT(A) to have some rational basis to make profit estimation in the hands of the assessee herein by following 12% thereof from the order of Hon’ble Income Tax Settlement Commission. Accordingly, we direct the ld. AO to add only 12% of on-money receipts as undisclosed income of the assessee for the year under consideration.
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2021 (7) TMI 1276
TDS u/s 195 - Royalty - Treatment to receipts of assessee’s on account of sale of software to the Indian customers, as royalty - HELD THAT:- As relying on ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED [2021 (3) TMI 138 - SUPREME COURT] , we are of the view that Ld.CIT(A) erred in treating the receipts from sale of software with the support services as royalty.
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2021 (7) TMI 1275
Disallowance in respect of broken period interest - HELD THAT:- As both the leaned Counsels for the parties agreed that the identical issue raised in this ground by the assessee is now settled in favour of the assessee and against the Revenue by the decisions of the Tribunal rendered in assessee’s own case in assessment years 2008-09, 1996-97, 1995-96 and 1991-92. The relevant findings of the Tribunal in State Bank of India v/s DCIT [2020 (2) TMI 1350 - ITAT MUMBAI] Consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) by allowing the ground raised by the assessee. We also observe that the appeal filed by the Revenue before the Hon'ble Jurisdictional High Court for the assessment year 1996-97, was also dismissed vide its order dated 1st August 2016. Thus, ground no.1, is allowed.
Deferred payment guarantee commission - HELD THAT:- As deduction for the deferred payment guarantee commission of the assessment year 1984-85 to 1989-90 and 1996-97. However, both the leaned Counsels for the parties conceded that that identical issue raised in this ground by the assessee is now settled in favour of the assessee and against the Revenue by the decisions of the Tribunal rendered in assessee’s own case in as 2000-01, 1984-85, 1996-97, and 1999-2000 - we set aside the impugned order passed by the learned CIT(A) by allowing the ground raised by the assessee - assessee also brought to our notice that the Assessing Officer has given effect to the order of the Tribunal and has allowed the deduction for deferred payment guarantee commission for the assessment year 1984-85 to 1989-90 and 1996-97. Consequently, the ground raised by the assessee is decided in favour of the assessee.
Disallowance on account of depreciation on securities - HELD THAT:- We have heard both the parties and perused the material on record including the case laws relied upon by the parties. Both the parties agreed before us that identical issue has been decided by the Tribunal and has allowed the claim of depreciation on securities in the assessment year 2000-01, 1996-97, 1997-98, 1998-99, 1999-00. Consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) by allowing the ground raised by the assessee. Ground no.3, is allowed.
Disallowance in respect of payments for scientific research - HELD THAT:- Both the parties agreed before us that identical issue in respect of disallowance on account payments for scientific research is decided against the assessee and in favour of the Revenue by the decisions of the Tribunal rendered in assessee’s own case in assessment year 2000-01, 1997-98, 1998-99 and 1999-2000. Consistent with the view taken therein, we uphold the order of the learned CIT(A) by dismissing the ground raised by the assessee.
Disallowance for earning exempt income under section 10(15)(iv)(c), 10(15)(iv)(f), 10(15)(iv)(h), 10(23G) and 10(33) by applying provisions of section 14A - HELD THAT:- We notice that the provisions of rule 8D was introduced only from the assessment year 2008-09 and strictly the rules are not applicable in the current assessment year. However, following the findings of the Co-ordinate Bench decisions rendered in assessee’s own case which has directed the Assessing Officer to estimate the disallowance under section 14A of the Act at one percent of the exempt income. Keeping in view the consistency maintained by the Tribunal in assessee’s own case, we are also inclined to direct the Assessing Officer to estimate the expenditure under section 14A of the Act at the rate of one percent of the exempt income.
Depreciation on account of leased assets - HELD THAT:- As assessee submitted that the assessee has filed appeal against the order passed by the Tribunal, which has been admitted by the Hon'ble Jurisdictional, High Court and pending for hearing and yet no orders have been passed on merit. Keeping this in view and consistent with view taken by the Co-ordinate Bench of this Tribunal in assessee’s own case, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised by the assessee. Ground no.6, is dismissed.
Treating the amount received from Cardif S.A. as revenue receipt - HELD THAT:- We cannot agree that it will fall under non-compete fee or restrictive trade practice. Rather it is towards offering the branch network for the establishment of insurance business. In the changing business scenario, the banking business has huge shift from the traditional banking business. RBI has taken note of it and we noticed that so many banks has established its own insurance business along with the banking business. Some of them has utilised their own brand name. But some of the banks have entered Joint Venture with the international big players in the insurance business.
In this case, the assessee has selected Cardif S.A. The international players will look for readymade establishment to establish their business. The assessee is providing its huge network facility to establish this new line of business along with its regular banking business. The assessee received the onetime premium towards this additional facilities and advantage which it was willing to offer to the other partner. Therefore, in the changing business module in the banking sector, it can only be treated as charges for facilitation offer or advantage for establishing the insurance business in India. Therefore, it cannot be said that it is for non-compete but it is for the advantage offered for the Joint Venture business. Therefore, we are inclined to sustain the addition made by the AO. Thus, ground no.7, raised by the assessee is dismissed.
Disallowance on account of road show, legal expenses and advertisement expenses incurred in connection with the issue of India Millennium Deposits under section 40(1) of the Act on account of non-deduction of tax at source under section 195 - HELD THAT:- We find that identical issue has been decided in favour of the assessee and against the Revenue by the decision of the Tribunal rendered in assessee’s own case in the assessment year 1999-2000 [2018 (9) TMI 2054 - ITAT MUMBAI] -It was also brought to our notice that the learned CIT(A) has also while decided the issue for the year under consideration has relied upon the order of the first appellate authority for the assessment year 1999-2000 holding that the facts of the issue are similar to the assessment year 1999-2000. Consistent with the view taken therein as aforesaid, we set aside the impugned order passed by the learned Commissioner (Appeals) and allow the ground raised by the assessee.
Write-off of bad debts under section 36(1)(vii) of the Act in respect of non-rural advances - HELD THAT:- We find that the issue for our consideration is identical to the issue decided by the Co-ordinate Bench of this Tribunal rendered in assessee’s own case wherein the Tribunal has decided the issue against the assessee and in favour of the Revenue in assessment year 2008-09. Consistent with the view taken therein as aforesaid, we uphold the order passed by the learned CIT(A) by dismissing the ground raised by the assessee.
Disallowance on account of doubtful debts under section 36(1)(viia) - HELD THAT:- As it appears, the issue for our consideration is identical to the issue decided by the Co-ordinate Bench of this Tribunal rendered in assessee’s own case wherein the Tribunal has decided the issue against the assessee and in favour of the Revenue in assessment year 2000-01, 1996-97, 1997-98, 1998-99 and 1999-2000. The learned Sr. Counsel for the assessee further brought to our notice that the assessee had also filed appeal against the order passed by the Tribunal for the assessment year 1996-97, wherein the Hon'ble Jurisdictional High Court vide its order dated 23rd August 2016 [2016 (8) TMI 1441 - BOMBAY HIGH COURT] has decided the issue against the assessee. Consistent with the view taken therein as aforesaid, we uphold the order passed by the learned CIT(A) by dismissing the ground raised by the assessee.
Disallowance in respect of provisions made on account of foreign offices - HELD THAT:- Tribunal in assessee’s own case [2020 (3) TMI 1374 - ITAT MUMBAI] wherein the Co-ordinate Bench Para-26 of its order has restored the issue to the file of the Assessing Officer directing him to decide the issue afresh after following the directions given in the order dated 31st January 2018 passed in assessee’s own case for the assessment year 1999- 2000. Consistent with the view taken therein, we set aside the order of the first appellate authority and restore the issue to the file of the Assessing Officer for deciding the issue afresh.
Levy of interest under section 234D - HELD THAT:- This issue covered against the assessee and in favour of the Revenue by the decision of the Hon'ble Jurisdictional High Court in CIT v/s Indian Oil Corporation Ltd. [2012 (9) TMI 517 - BOMBAY HIGH COURT] wherein the Hon’ble Court has decided identical issue in favour of the Revenue and against the assessee.
Deduction for write-off of the bad debts under section 36(1)(vii) - HELD THAT:- Tribunal rendered in assessee’s own case as well as the decision of the Hon'ble Supreme Court in Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT] relied upon by the learned Counsel for the assessee, both the parties agree before us that identical issue has been decided by the Tribunal in assessee’s own case for the assessment year 1996-97 [2014 (1) TMI 1887 - ITAT MUMBAI], 1997-98, 1998-99, 1999- 2000 [2018 (9) TMI 2054 - ITAT MUMBAI] 2000-01 [2020 (3) TMI 1374 - ITAT MUMBAI], 2008-09 [2020 (2) TMI 1350 - ITAT MUMBAI] wherein the Tribunal has restored the issue to the file of the Assessing Officer adjudication afresh.
Recovery of bad-debts written-off should not be liable to tax under section 41(4) of the Act as the assessee had not claimed deduction under section 36(1)(vii) - HELD THAT:- Tribunal following the order 3rd January 2014, passed in assessee’s own case for the assessment year 1996-97 [2014 (1) TMI 1887 - ITAT MUMBAI] restored the issue to the file of the Assessing Officer and directed him to decide the controversy afresh by giving an opportunity of being heard to the assessee in accordance with law by following similar guidelines as given by the Tribunal in the aforesaid misc. application.
Addition on account of payment made to various schools for reservation of seats for children of the Officers of the Bank - HELD THAT:- The Tribunal in assessee’s own case in State Bank of India [2020 (2) TMI 1350 - ITAT MUMBAI] for the A.Y. 2008-09, has decided this issue in favour of the assessee and against the Revenue.
Allowing the taxing of interest on securities on due basis - HELD THAT:- Tribunal in assessee’s own case in State Bank of India v/s DCIT [2020 (2) TMI 1350 - ITAT MUMBAI] order dated 3rd February 2020, for the A.Y. 2008- 09, has decided this issue in favour of the assessee and against the Revenue.
Addition of net unrealized appreciation on account of change in accounting Policy of investments in the HFT category of income - HELD THAT:- DBOD circular guidelines clearly indicate that bank should not book the unrealized gain as profit or IFT. It is in fact the most Prudent method of accounting. Further, the banks are required to Prepare the financial statements only based on the guidelines and master circular. The whole financial results depend upon the master circular guidelines i.e., the guidelines on provision, valuation of investment, recording of bad debts, etc. The financial records and results depend upon the above uniform guidelines, across the banks. Therefore, the financial assets and liabilities are valued only based on the above master circular. The status of valuation will keep changing year on year. Therefore, there will be up and down on the book result of the banks, which will iron out over the period. It is not expected to revalue the opening and closing stock every year, which will give absurd results. This aspect was already considered by the RBI and the judiciary in the past. It was explained clearly in the decision of the Hon‘ble Karnataka High Court in CIT v/s Corporation Bank Ltd. [1988 (8) TMI 90 - KARNATAKA HIGH COURT] The bank’s financial results are completely different from the regular business results since they are bound by the guidelines of the RBI and the new method of valuation adopted by the banks, henceforth applied on a permanent basis in the later years. Therefore, the contention of the tax authorities are not proper and not as per judicial precedence. Accordingly, the ground raised by the assessee is allowed.
Disallowance of payment made to Federal Reserve Bank of New York and State of New York Banking Department due to the payment being penal in nature - HELD THAT:- The law of allowability of penalty is fully settled by the Hon‘ble Supreme Court in CIT v/s Ahmedabad Cotton Manufacturing Co. Ltd. [1993 (10) TMI 1 - SUPREME COURT] wherein it is held that as per Explanation to section 37, the expenditure incurred for any purpose which is an offence or which is prohibited by law is to be treated to have not been incurred for the purpose of the business and, hence, the payment which is punitive is not allowable. In case the Payment is compensatory in nature, the same is to be allowed. In the given case, the penalty was levied on the non-compliance of accounting procedure and reporting requirements. These are mere infringement of certain rules governing the banking sector. These cannot be treated as punitive in nature. Therefore, these can be classified under compensatory in nature. Therefore, we are inclined to allow these expenses as business expenditure. Hence, the ground no.9, raised by the assessee is allowed.
Deduction for write-off of the bad debts under section 36(1)(vii) - HELD THAT:- As in the light of the decisions of the Tribunal rendered in assessee's own case as well as the decision of the Hon'ble Supreme Court in Vijaya Bank v/s CIT [2010 (4) TMI 46 - SUPREME COURT] relied upon by the learned Counsel for the assessee, both the parties agree before us that identical issue has been decided by the Tribunal in assessee’s own case for the assessment year 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01, 2008-09, wherein the Tribunal has restored the issue to the file of the Assessing Officer adjudication afresh.
Recovery of bad-debts written-off should not be liable to tax under section 41(4) of the Act as the assessee had not claimed deduction under section 36(1)(vii) - HELD THAT:- As restored the issue to the file of the Assessing Officer and directed him to decide the controversy afresh by giving an opportunity of being heard to the assessee in accordance with law by following similar guidelines as given by the Tribunal in the aforesaid misc. application. Consistent with the view as aforesaid, we set aside the order passed by the learned Commissioner (Appeals) and restore the issue to the file of the Assessing Officer with similar direction. We order accordingly. Additional ground no.2, raised by the assessee is allowed for statistical purpose.
Treatment of income earned from foreign branches i.e., whether or not the income earned is liable to be taxed in India - HELD THAT:- Tribunal in assessee’s own case for the assessment year 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01 and 2008-09, wherein the Tribunal following the order 3rd January 2014, passed in assessee’s own case for the assessment year 1996-97 [2014 (1) TMI 1887 - ITAT MUMBAI] restored the issue to the file of the Assessing Officer and directed him to decide the controversy afresh by giving an opportunity of being heard to the assessee in accordance with law by following similar guidelines as given by the Tribunal in the aforesaid misc. application. Consistent with the view as aforesaid, we set aside the order passed by the learned Commissioner (Appeals) and restore the issue to the file of the Assessing Officer with similar direction.
Disallowance on account of staff welfare expenses, disallowance of deduction on account of loss in respect of amortization of securities held in HTM category and taxing of interest on securities - HELD THAT:- As identical issue has also been decided by in assessee’s own case for the assessment year 2001-02, vide Para-44 of this order, wherein, the issue has been decided in favour of the assessee and against the Revenue
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2021 (7) TMI 1272
Revision u/s 264 - HELD THAT:- As respondent has dismissed the petitioner’s revision petition without giving any reason on merits, except stating that the petition was premature, as according to the learned Commissioner, the Revenue still had time to file an appeal against judgment in the case of M/s Giesecke and Devrient India Pvt. Ltd. [2020 (10) TMI 750 - ITAT DELHI].
As it is apparent that the learned Commissioner has neither applied its mind to the controversy at hand nor passed a reasoned order. Accordingly, the impugned order dated 31st March, 2021 is set aside and the matter is remanded back to the respondent-PCIT, Delhi-7 for passing a reasoned order within six weeks after giving an opportunity of hearing to the petitioner. This Court clarifies that it has not expressed any opinion on merits of the controversy. All rights and contentions of the parties are left open. In the event the petitioner is aggrieved by the decision of the respondent, it shall be open to the petitioner to file appropriate proceedings in accordance with law, if permissible.
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2021 (7) TMI 1270
Reopening of assessment u/s 147 or assessment u/s 153C - HELD THAT:- In this case, the names of around 500 persons/entities figure in the IVMS data and the question of logistics or practicable application of the provisions cannot be lost sight of. If the law offers multiple options to an officer as to how to proceed in a matter, it is for that officer to determine and come to a conclusion as to the proper, appropriate and simplest method of proceeding further.
The provisions of Section 147 and 148 provide for assessment of income that have escaped assessment. Nowhere in Section 147 are the provisions of Section 153 excluded.
AO must, in choosing the provision to apply, bear in mind the statutory conditions set out and arrive at a decision having regard to the logistics and the efficacy of the provision chosen. In a case such as the present, the respondent has, in my view, arrived at the proper conclusion, bearing in mind the interests of revenue, to share the information found with the assessing officers of the third parties. He is in no position to arrive at statutory ‘satisfaction’ in all the cases as to whether the name of the third party in the IVMS data is genuine/germane or otherwise.
The decisions relied on by the petitioner proceed on the basis that the use of the non-obstante clause in Section 153C would limit the choice of the Assessing Officers only to a search assessment.
Certainly satisfaction cannot be thrust upon the Assessing Officer. The requirement of recording of ‘satisfaction’ requires independent application of mind by the officer upon his detailed examination of all relevant material.
These writ petitions are dismissed. The petitioner is permitted to file appeals, if it so desires, before the Commissioner of Income Tax (Appeals) agitating merits of the matter.
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2021 (7) TMI 1267
Condonation of delay - Rejection of Declaration filed under the scheme called Kar Vivad Samadhan Scheme - Revision / Appeal filed by the concerned Petitioner was time barred or was not valid - HELD THAT:- No shadow of doubt that appeal could be said to be pending, even if the delay occurred in filing the same was not condoned and even if it was allegedly irregular or incompetent. In the instant case therefore also, the Respondent could not have rejected the Declaration Form of the Petitioner filed under the said Act merely on the ground that the Appeal was not valid or competent, as the delay occurred in filing the Appeal was not condoned by the Appellate Authority. In the opinion of the Court, the Respondent had to only take into consideration, as to whether, the Petitioner had filed an Appeal, and the same was pending on the ‘specified date’ i.e. 31.1.2020. It was not for the Respondent to decide, as to whether, such Appeal was irregular or incompetent or invalid in the eye of law.
The impugned communication dated 22.2.2021, displayed on the Portal of the Department, rejecting the Declaration filed by the Petitioner under the said Act, deserves to be quashed and set aside, and is accordingly quashed and set aside.
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2021 (7) TMI 1265
Delay in remittance of employees contribution towards provident fund and ESI - assessee’s and Revenue’s plea that the same has been paid before the due date of filing sec. 139(1) return and after the due date prescribed in the corresponding statutes - HELD THAT:- Legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1.4.2021 only - as not an issue that the foregoing legislative amendments have proposed employers’ contribution/ disallowance u/s 43B as against employee’s contribution u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1.4.2021, we hold that the impugned disallowance is not sustainable in view of all these latest developments - The impugned ESI/PF disallowance is deleted therefore. - Decided in favour of assessee.
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2021 (7) TMI 1264
Withdrawal of exemption granted u/s 10(23C) - seeking for being notified under Section 10(46) - HELD THAT:- Basic difference between the two provisions of the Act viz., 10(23C)(iv) and 10(46) of the Act, is that, while under the first provision, it is only a grant of an approval making an assessee eligible to claim exemption without any certainty of exemption being allowed on any income, since it is subject to scrutiny, the latter provision confers benefit of automatic exemption in respect of the specified income of the assessee as notified by the Central Government in the gazette. Thus, under Section 10(46) of the Act, there is a certainty with regard to claim of exemption.
In the facts of the present case, though there are two different provisions of the Act under which the petitioners can claim the benefit, mere fact of petitioners being granted approval under one particular provision of the Act, namely Section 10(23C)(iv) of the Act, in our opinion, would not disentitle the petitioners/ assessees to seek for being notified under a different provision, as it is for the assessees/petitioners to choose as to which of the provisions would be more beneficial.
The respondents for the reasons best known did not take any action on the applications filed by each of the petitioners for being notified under Section 10(46) of the Act, nor communicated the reason for not considering the applications, for nearly three years, till the petitioners approached this Court by the present writ petitions. Thus, the action of the respondents in not processing the case of the petitioners and maintaining static silence, cannot be countenanced
The understanding of the 2nd respondent that the power to withdraw conferred under Section 293C or Section 10(23C)(iv) of the Act, to be undertaken only at the behest of the respondents and not at the request of the petitioners, does not appeal to this Court, as a correct understanding. As detailed herein above, the word ‘withdraw’ as used in both the Sections 10(23C)(iv) and 293C of the Act, encompasses in itself the exercise of power even at the behest of the assessee/petitioners, and the contrary view of the respondents is liable to be rejected.
It is also to be seen that the petitioners have not sought for grant of exemption under Section 10(46) of the Act either from the day the said provision was introduced or from the date of their initial grant of approval under Section 10(23C) of the Act. The petitioners sought for being notified under Section 10(46) of the Act only from the relevant previous year, having regard to the fact that the benefit of exemption under Section 10(23C) of the Act, was being denied regularly, and they felt that the provisions of Section 10(46) of the Act are more beneficial and are applicable more aptly.
In view of the conclusions arrived at by us as above, the petitioners are liable to succeed in these writ petitions.
Accordingly, the writ petitions are allowed; the 2nd respondent is directed to withdraw the approval granted to the petitioners under Section 10(23C) of the Act with effect from the date of applications made by the petitioners for being notified under Section 10(46) of the Act; and process the petitioners’ applications dt. 07.03.2017 and 08.03.2017 filed for being notified under Section 10(46) of Act in accordance with the provisions of the Act, from the previous year relevant to the date of applications, filed.
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2021 (7) TMI 1251
Addition on account of peak cash deficit worked out by the revenue authorities - Search proceedings - actual cash balance as per the books of account on the date of search when the same books of account was part of the seized material and the same was also not rejected and in fact relied upon the income tax authorities and consequently gave a perverse finding on the facts and circumstances of the case - HELD THAT:- Admittedly, during the course of the search at the residential premises of the assessee on 09.10.2009, cash was found and was seized. The assessee was unable to explain the source of cash and cash book was updated only upto 30.09.2009. The cash balance as per the cash book on the date of search i.e., 09.1.2009 reflects the cash balance of ₹ 1,51,66,209/-. The assessee was asked to explain the cash difference. The assessee was unable to offer any explanation and in his statement admitted that cash balance of ₹ 45,40,000/- was seized from his residence and was available at his residence.
The assessee was unable to explain the cash difference to the extent of ₹ 1,06,26,309/- and could not explain where the balance case of ₹ 1,06,26,309/- was kept. The Assessing Officer therefore, assessed the peak cash deficit in the cash book at ₹ 55,54,521/- and assessed the aforesaid amount to tax for 2010-11. The said order was affirmed in appeal by the Commissioner of Income Tax (Appeals) and it was held that the cash shown by the assessee in his books is not the real figure. The tribunal has held that despite opportunity being afforded to the assessee, the assessee did not explain the difference between the cash found and seized at the premises and the cash mentioned in the cash book. Thus, it was held that the CIT (Appeals) has rightly held that the addition has been made in respect of peak cash deficit subsequent to search and the cash balance after seizure of ₹ 45,40,000/- is ‘NIL’.
As further held that the addition has rightly been made for cash payments received in excess of cash receipts after the date of search and the amount was rightly brought to tax in the hands of the assessee.
The aforesaid findings are findings of fact recorded by the authorities under the Act and the same cannot be said to be perverse as the findings of fact are based on meticulous appreciation of evidence on record. In the result, the substantial question of law Nos.1, 2 and 4 are answered against the assessee and in favour of the revenue.
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2021 (7) TMI 1249
Validity of Draft assessment order passed u/s 143(3) read with Sections 144C - petitioner states that the impugned draft assessment order as been passed without issuance of a show cause notice, as mandated by Section 143(3A)/144B - HELD THAT:- Mr.Sanjay Kumar, Advocate accepts notice. He states that he does not wish to file any formal reply to the present writ petition. He further states that he has no objection if the petition is allowed and the matter is remanded back to the Assessing Officer for passing a fresh assessment order under Section 143(3) read with Sections 144B and 144C.
Learned counsel for the petitioner has no objection to the same.
Consequently, the impugned draft assessment order dated 25th March 2021 passed under Section 143(3) read with Sections 144C of the Act and the impugned Assessment order dated 24th May, 2021 passed under Section 143(3) r/w Section 144C(3) read with Section 144B of the Act are set aside and the matter is remanded back to the Assessing Officer for passing a fresh assessment order under Section 143(3) read with Sections 144B and 144C of the Act after giving a show cause notice to the petitioner under Section 144B(1) (xvi) of the Act.
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2021 (7) TMI 1248
Violation of Section 179 - Liability of directors of private company in Liquidation - whether action is permissible only if the company is a Private Limited company and in respect of a Public limited company, Section 179 of the Income Tax Act is not applicable? - HELD THAT:- The matter is to be remanded back for the purpose of fresh adjudication. In this regard, this Court has considered the scope of Section 179 of the Income Tax Act and its application [2021 (3) TMI 1232 - MADRAS HIGH COURT]
In view of the above facts and circumstances, the Show Cause Notice impugned passed by the 1st respondent in proceedings dated 28.02.2018 bearing reference no.AACCS9190G/Block Asst.92-93 is quashed and the matter is remanded back to the first respondent for fresh consideration.
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2021 (7) TMI 1246
Reopening of assessment u/s 147 - legality of the notice issued u/s 148 - No service of notice u/s 148 of I. T. Act 1961 within the period of limitation - as argued AO Noida had no jurisdiction to issue notice u/s 148 of the Act for re-opening of the assessment - HELD THAT:- This approach of CIT(A) is not proper and is against the settled principle of law. CIT(A) ought to have passed a speaking order considering the all submissions and averment made before him by the assessee or his counsel. Therefore, we set aside the impugned order and restore this issue to the file of Ld.CIT(A) to decide the issue after obtaining Remand Report from the AO as to when notice u/s 148 of the Act was issued to the assessee by the AO at Delhi i.e. ITO, Ward-63(3), New Delhi. - CIT(A) would give a clear finding about the reasons recorded by the AO at Delhi. Ld.CIT(A) would decide the issue raised before him regarding non-receiving of reasons by the Assessing Officer at Delhi and also issue of limitation qua issuance of notice u/s 148 of the Act by the Assessing Officer at Delhi.
Since, the impugned order is set aside therefore, all other grounds of assessee’s appeal are set aside to the file of Ld.CIT(A) for decision afresh. Appeal of the assessee is allowed for statistical purposes only.
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2021 (7) TMI 1245
Expenses of purchase of gold bars - HELD THAT:- Assessee is dealing in gold bullion which is purchased and sold at the market rates applicable on day to day basis. The quantity of gold bullion purchased was 16,469.09 grams and the quantity sold was 16,335.07 grams. This shows that the transactions were not just squaring up the balances but the actual transactions took place. Assessee had accounted for the profits and losses involved in the transactions and had paid the income tax applicable. Assessee and M/s N.K. Gold Medallion Pvt. Ltd. charged and paid VAT as applicable. Turnover declared for the F.Y. 2013-14 by M/s Swaran Traders, proprietorship concern of the assessee, proves the substantial sales to multiple parties. CIT(A) has given a detailed finding and there is no need to interfere with the finding of the CIT(A) and the Ld. DR could not controvert the same. Ground Nos. 1 to 5 are dismissed.
Addition u/s 68 - HELD THAT:- The dispute was pending in Company Law Board. There was no business in this company since 2011. Due to this dispute, requisite papers like balance sheet etc. were not filed with the Registrar of companies and income tax department. As regards, the source of the amounts received, the company had sold a property of the company for ₹ 12,15,000/-, out of which ₹ 10,00,000/- was received in the bank before days of the transaction with the assessee. The copy of the sale deed is attached. Out of the same sum ₹ 9,80,000/- was transferred to Mrs. Rekha Gupta for which copy of the bank statement was produced by the assessee before the CIT(A). These facts were not disputed by the AO at the time of filing remand report before the CIT(A).
As regards to the loan amounting from M/s Anant Shree Financial Services Pvt. Ltd., the Director of this company has mentioned about this loan to Rekha Gupta. Mr. Siddharth Gupta, the Director of this company filed memorandum and articles of association along with Income Tax Return. This is also one of the companies in which Mrs. Rekha Gupta is one of the Directors. The other Directors are family members. The assessee has again mentioned the dispute with her son pending in Company Law Board.
This company sold a property out of which was received in bank just before the day of transaction between the company and Mrs. Rekha Gupta. The copy of the sale deed was produced before the CIT(A). Out of the above amount was transferred to the assessee. Thus, these facts were also not disputed by the AO in the remand report. The findings of the CIT(A) do not need any interference - Ground No. 6 is dismissed.
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2021 (7) TMI 1244
Levy of penalty u/s 271(1)(c) - assessee’s claim of write off of brought forward unabsorbed depreciation was disallowed by the Assessing Officer while computing book profits under section 115JB of the Act on the premise that cumulative balance in the books of assessee for Financial Year 2002-03 show profits and Reserves & Surplus - HELD THAT:- The assessee made claim on the premise that business loss/unabsorbed depreciation were to be considered on year to year basis. The assessee in support of its computation of claim placed reliance on the decision of Tribunal in the case of Amline Textiles Pvt. Ltd. [2008 (11) TMI 438 - ITAT MUMBAI]. As against this, the Assessing Officer rejected the claim of assessee following aggregation approach, as reflected in the Balance Sheet. Per approach of Assessing Officer there would be no unabsorbed depreciation/business losses available for adjustment under section 115JB of the Act. There are two school of thoughts in computing set off of unabsorbed depreciation/business losses i.e. year to year basis vs aggregation. Both views are possible as per the language of Explanation- 1 clause (iii) to section 115JB (1) of the Act. This makes the issue debatable.
The method adopted by the assessee at the time of filing return was one of the acceptable view. Ergo, the assessee is able to furnish reasonable explanation in making a claim of unabsorbed depreciation while computing book profits u/s 115JB of the Act. In light of the fact discussed above coupled with the fact that divergent views have been expressed by the Tribunal on the issue of treating unabsorbed depreciation/business loss of preceding assessment years while computing book profits u/s 115JB, makes the issue debatable. Hence, no penalty under section 271(1)(c) of the Act can be levied on such disallowance
It is no more res-integra that levy of penalty is not automatic. Even if addition/disallowance made by Assessing Officer is accepted by the assessee and is not contested further, it would not result in levy of penalty. Assessment proceedings and penalty proceedings are separate and distinct. The Assessing Officer has to record satisfaction before initiating penalty proceedings and the penalty proceedings are subject to judicial scrutiny independent of additions/disallowances made under assessment proceedings. Therefore, levy of penalty for the reason that the addition/disallowance has been accepted by the assessee is not sustainable ground - Penalty levied under section 271(1)(c) of the Act is deleted - Decided in favour of assessee.
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2021 (7) TMI 1243
Assessment u/s 143 r.w.s 153A - Period of limitation - Exclusion of certain period - The assessee had filed a writ petition in the Hon’ble Allahabad High Court against the direction of Pr. CIT under section 142(2A) of the Act. This fact was communicated by the Assessee to the Auditor with a request to withhold the audit till the decision of the Court. - HELD THAT:- We find merit in the submission of the Assessee that as per the provisions of Section 142(2A) of the I.T. Act, 1961, the time period of 90 days plus further extension of 60 days expired on 21.08.2016. Whereas, the A.O. in the instant case has passed the assessment order on 28.10.2016 and, therefore, the order passed by the A.O. is barred by limitation.
Finding given by the Ld. CIT(A) that in view of provisions of Section 153B read with Explanation- (b) the time period starting with the date of filing of the writ petition and ending on the date of disposal of the writ petition is to be excluded is concerned, we do not find any merit in the same. Admittedly, the assessment proceedings have not been stayed by an order or injunction of any Court which fact was also brought on record by the A.O. himself at para-7 of the assessment order. Further, although such direction was challenged before the Hon’ble High Court, however, no order setting aside such direction has been received by Pr. CIT or CIT which is to be excluded.
CIT(A) has gone wrong by invoking the provisions of Explanation-(b) to Section-153B. We, therefore, set aside the order of the Ld. CIT(A) and quash the assessment order passed by the A.O. being barred by limitation. - Decided in favor of assessee.
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2021 (7) TMI 1242
Deduction u/s 80IC - existence of multiple “initial assessment years” - AO has disallowed the claim of deduction of 100% u/s. 80IC of the Act on the ground that the initial assessment year is A.Y. 2004-05 and therefore, for the year under consideration the assessee is eligible for only 30% deduction - HELD THAT:- We find that the AO has simply misunderstood the amendment brought u/s. 80IC and further misunderstood “the substantial expansion” brought by the assessee from A.Y.2009-10. In our considered opinion in the light of the notification issued by the Ministry of Commerce and Industry and in the light of the amendment brought in the Act u/s. 80IC of the Act, the eligibility of 100% deduction would start from initial A.Y. 2009-10.
We further find that the AO has allowed the deduction from A.Y.2009-10 to 2012-13 which is evident from the assessment orders of the relevant assessment years on record. In our considered view the AO was not correct in disturbing the claim in the 5th year when earlier assessment years has not been disturbed.
Hon’ble Supreme Court in the case of PCIT Vs. Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] has decided this controversy in favour of the assessee and against the revenue.
Disallowance u/s.14A - sufficiency of own funds - CIT(A) found that assessee had sufficient own funds to meet the investment and therefore, there was no reason for the disallowance of interest on borrowed capital and accordingly deleted the disallowance - HELD THAT:- As interest free funds (own funds) available with the assessee is far in excess of the investment in share. Therefore, following the ratio laid-down in the case of HDFC Bank Limited [2014 (8) TMI 119 - BOMBAY HIGH COURT] and Reliance Utilities and Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT], we do not find any error or infirmity in the findings of the CIT(A) ground No. 3 and 5 are dismissed.
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2021 (7) TMI 1241
Assessments in the name of non-existent entities - scheme of amalgamation conceived - assessee ceased to be in existence w.e.f. 29.11.2013 on account of amalgamation - HELD THAT:- Following the case of Maruti Suzuki India Ltd. case [2019 (7) TMI 1449 - SUPREME COURT] we are of the considered view that AO as well as ld. CIT (A) have erred in framing / confirming the assessments in the name of non-existent entities, namely, Haryana Gramin Bank and Gurgaon Gramin Bank which are not sustainable in the eyes of law being nullity, hence ordered to be quashed. Consequently, all the appeals filed by the assessee are allowed.
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