|
Advanced Search Options
Income Tax - Case Laws
Showing 101 to 120 of 7776 Records
-
2021 (12) TMI 1281
Correct head of income - rental income from letting out building space along with inbuilt infrastructure and other amenities - income from other sources or income from house property - HELD THAT:- On careful analysis of the facts and circumstances, we find that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in assessee”s own case for Assessment Year 2011-12, [2021 (6) TMI 538 - ITAT DELHI] wherein, on identical facts and circumstances, issue has been decided by coordinate bench and it held that income earned by the assessee form letting out of the building space and other amenities is chargeable to tax under the head “income from other sources”.
Thus we decide ground in favour of the assessee holding that such composite rental income is chargeable to tax in the hands of the assessee under the head “Income from other sources”. - Decided against revenue.
-
2021 (12) TMI 1267
Depreciation on demerger - AO has disallowed depreciation on the ground that the assessee had received assets free of cost from the Government of UP - AO noticed that the assessee took over the assets on transferred from UPJVNL but for the liability side did not take over the loans transferred in full form UPJVNL - AO had concluded that the assessee had only taken over the assets for which the liabilities were not ascertained till date - HELD THAT:- We have gone through the entire contents and the history of the assessee. In this case, the assets have been transferred from Uttar Pradesh Government (UPJVNL) to Uttaranchal Government (UJVNL). There is no claim of the depreciation twice by both the Governments. The demerger led to division of assets in a fixed ratio and the same was duly accounted for both the entities as per the written down value (WDV) as on that date. The depreciation on de-merger cannot be a forgone benefit owing to de-merger, which is the result of state reorganization. Hence, we decline to interfere with the reasoned order of the Ld. CIT (A). - Decided against revenue.
-
2021 (12) TMI 1262
Refund claim - Adjustment of amount against outstanding demand - stay on recovery of outstanding tax demand subject to fulfillment of appropriate conditions - HELD THAT:- Refunds have been adjusted against the outstanding tax demand by the Authority without following the procedure prescribed under Section 245 of the Act, inasmuch as no notice or opportunity of pre-decisional hearing had been provided to the Petitioner prior to such adjustment of refund in excess of 20%, this Court is of the opinion that the Petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands. (See: Glaxo Smith Kline Asia Pvt. Ltd. vs. The Commissioner of Income Tax & Ors.,[2007 (1) TMI 113 - DELHI HIGH COURT] and The Oriental Insurance Co. Ltd. vs. Deputy Commissioner of Income Tax & Anr. [2014 (10) TMI 746 - DELHI HIGH COURT]
This Court directs the Respondents to verify the facts stated in the writ petition and if they find them to be true and correct then refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Year 2016-17 to the Petitioner within six weeks.
-
2021 (12) TMI 1261
Assessment u/s 153C - non issue of notice u/s 142 - notices under Sections 142(1) and 143(3), were in all probability sent to the earlier e-mail address of the petitioner, which had become defunct - violation of the principles of natural justice, as he was not served with the requisite statutory notices, leading to passing of the assessment order - HELD THAT:- Though respondent No.1 has stated that he had sent the notice under Section 142(1) of the Act, firstly on 30.08.2021, and thereafter on 17.09.2021 with corrigendum on 27.09.2021, nothing has been stated regarding service of notice. All that is stated is that the assessee did not respond to any of the notices. If this is read in conjunction with the averments made in paragraph No.4 of the counter affidavit filed by the respondents, it becomes evident that the notices were sent by the respondent to the earlier e-mail address of the petitioner, which has now become defunct.
Petitioner has now a new e-mail account being ‘[email protected]’, which was duly informed to the Income Tax Department on 15.08.2019.
That being the position, we are of the view that petitioner was not heard before passing the impugned order of assessment. There is thus violation of the principles of natural justice.
The impugned assessment order should be set aside with a direction to respondent No.1 to pass fresh assessment order for the assessment year 2019-20 in accordance with law,
-
2021 (12) TMI 1260
Benefit of carry forward losses - assessee has filed its return of income beyond the stipulated due of 30.09.2013 - HELD THAT:- It is an undisputed fact that assessee had filed the return of income for A.Y. 2013-14 on 22.11.2013 whereas as per Explanation 2(a) to Section 139, the last date for filing the return of income was 30.09.2013. It is also an undisputed fact that assessee had filed Form 3CEB. The perusal of Form 3CEB placed in the paper book reveals that it has been certified by the Chartered Accountant on 30.11.2013 and further as per the aforesaid form, the value of international transactions or specified domestic transactions is reported at Rs. Nil.
Return of income has been filed by assessee on 22.11.2013 meaning thereby that the Form 3CEB has been obtained after the filing of return of income - the perusal of the Form 3CEB also reveals that there is no mention of the amount received on capital account nor does it state any reason for not reporting the receipt amount on capital account in the Form 3CEB. Considering the totality of the aforesaid facts, we find that the CIT(A) was fully justified in holding that since assessee has filed its return of income beyond the stipulated due of 30.09.2013, the assessee was not eligible to claim the carry forward of the losses. We thus find no infirmity in the order of CIT(A) and therefore we uphold the order of CIT(A). Thus the grounds of assessee are dismissed.
-
2021 (12) TMI 1259
Exemption u/s. 80P(2)(a)(i) in respect of interest on fixed deposits with Bank of Baroda - AO denied the exemption of interest treating it under the head ‘income from other sources’ not as ‘income from business' - CIT(A) upheld the contention that the said interest income should be assessed as ‘income from business’, however he denied the claim of exemption u/s. 80P(2)(a)(i) on the ground that the assessee lends money to nominal members - AO as well as the CIT(A) were of the opinion that the interest earned from third parties or non-members does not quality for exemption u/s.80P - HELD THAT:- It is an admitted position that the interest so earned should be taxed as ‘income from other sources’ There is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. [2016 (12) TMI 560 - PUNJAB AND HARYANA HIGH COURT] took a view that the income arising on the surplus invested in short term deposits and securities cannot be attributed to the activities of the society and, therefore, not eligible for exemption u/s.80P(2)(a)(i) of the Act. However, the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT]took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s.80P(2)(a)(i)
The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit [2018 (12) TMI 1926 - ITAT PUNE] has taken view in favour of the assessee following the judgment of Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Respectfully following the decision of the Coordinate Bench, we hold that the interest income earned on the investment of surplus money with banks is also eligible for exemption u/s.80P(2)(a)(i) of the Act. Thus, the grounds of appeal No. 1 & 2 stands allowed.
Claim for exemption of interest earned on the securities held with RBI - We allow these grounds in favour of the assessee and direct the AO to exempt the interest earned on securities held with RBI under the provisions of section 80P(2)(a)(i) of the Act
Denial of exemption u/s.80P(2)(a)(i) - whether the nominal members are also the members of the Cooperative societies or not? - HELD THAT:- The term “members” is not defined in the Income Tax Act, 1961. Under the provisions of Maharashtra Cooperative Societies Act, 1960, the term “members” include nominal members and extraordinary members and in the circumstances, we hold that the CIT(A) was not justified in denying the exemption u/s.80P(2)(a)(i) of the Act. This ground is also allowed.
-
2021 (12) TMI 1258
Reopening of assessment u/s 147 - addition on account doubtful debt while computing the book profits u/s 115JB - rectification proceedings u/s 154 initated - HELD THAT:- We find that during the original assessment proceedings, vide query letter dated 20.10.2015 at Point No. 23, the Assessing Officer raised a specific query asking the assessee to furnish a detailed note on book profit as per section 115JB of the Act and vide query No. 24, details in respect of exempt income earned, alongwith details of expenses incurred for earning such income and quantify the disallowance u/s 14A r.w.r 8D of the Rules was asked by the AO.
Issuing notice u/s 148 of the Act, the Assessing Officer had already initiated rectification proceedings u/s 154 of the Act and the assessee had furnished detailed reply as mentioned elsewhere. We find that no rectification order has been framed by the Assessing Officer u/s 154 of the Act and yet, for the same reasons, reassessment proceedings were initiated.
Once rectification proceedings have been initiated, then for identical reasons, reassessment proceedings cannot be initiated unless the rectification proceedings culminate into an order, duly framed as per the provisions of law - there is no evidence brought on record by the Revenue that the proceedings initiated u/s 154 of the Act are concluded or communication to that effect has been sent to the assessee. Therefore, under these circumstances, it cannot be said that the assessment proceedings were completed as the order passed u/s 154 is also an order which can be subjected to appeal and revision and as the proceedings have not been completed on record, it cannot be said that income has escaped assessment.
Similar view has been taken by the co-ordinate bench at Mumbai in the case of Jet Speed Audio Pvt Ltd [2012 (8) TMI 332 - ITAT, MUMBAI] and Yasmin Texturing Pvt Ltd I [2012 (5) TMI 724 - ITAT MUMBAI] - Considering the totality of the facts as mentioned elsewhere, notice u/s 148 of the Act is bad in law and deserves to be quashed.- Decided in favour of assessee.
-
2021 (12) TMI 1257
Penalty levied u/s 271B - assessee not got her accounts audited u/s 44AB - HELD THAT:- We do not find any discussion on the aspect of provisions of section 273B of the Act which provides that no penalty shall be imposed if the assessee proves that there was a reasonable cause for the failure to comply with the law. In the present case, we find that the profit & loss account of the assessee submitted before us does not have any gross receipts, turnover. The cost of the project is shown as work-in-progress.
The assessee follows project completion method. Therefore, the claim of the assessee was that she was under a bonafide belief that provisions of section 44AB of the Act does not apply and hence, no audit under section 44AB of the Act was got done. We find that this is a reasonable cause which has resulted into failure of the assessee to comply with the law - we find that penalty under section 271B of the Act cannot be levied for the reason that there was a failure on the part of the assessee to obtain tax audit report because of a bonafide belief that there is no turnover, gross receipts, etc. The revenue could not show that the belief of the assessee was malafide.
We find that in the present case, the assessee has shown the cost of the project as work-in-progress. Therefore, whenever the assessing officer would like to examine the income earned by the assessee, naturally, he will have to examine the composition of total work in progress also. He would be entitled to further considering the allowability or disallowability of expenses included in work in progress for the reason that the assessee would be claiming deduction of the same in the year in which project is complete. In view of this, we reverse the orders of the lower authorities and direct the learned assessing officer to delete the penalty levied under section 271B - Decided in favour of assessee.
-
2021 (12) TMI 1256
Revision u/s 263 - period of limitation - reopening of assessment u/s 147 - assessee had claimed accumulation u/s.11(2) for which the assessee had not submitted Form No.10 and hence, the said accumulation should be disallowed - receipt of consultancy fees - HELD THAT:- Admittedly, the receipt of consultancy fees has been duly reflected in the income and expenditure filed by the assessee along with the original return of income filed on 25/03/2009. So, the Assessing Officer had two innings - once during the original scrutiny assessment proceedings and again during the re-assessment proceedings to examine the aspect of receipt of consultancy fees. In the re-assessment proceedings whatever that was sought to be verified by the ld. AO had been duly verified in the final re-assessment order. Hence, there cannot be any error that could be attributed in the order of re-assessment of the ld. AO.
In the instant case, the receipt of consultancy fee does not fall within the ambit of expression “income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of proceedings under this Section”, as the consultancy receipts was very much disclosed by the assessee in the income and expenditure account which was filed along with the original return of income itself. If at all there is any error in the assessment order framed by the ld. AO, it can only be in the original scrutiny assessment order u/s.143(3) of the Act dated 13/12/2010 and not in the re-assessment order framed u/s.143(3) r.w.s. 147 of the Act dated 22/02/2016. Hence, the show-cause notice issued by the ld. CIT(Exemptions) dated 28/02/2017 is squarely beyond the period of two years from the end of the financial year in which the 143(3) assessment was completed as per Section 263(2) of the Act. Hence, it could be safely concluded that the re-assessment framed by the ld. CIT(Exemptions) on 21/03/2018 is squarely barred by limitation. See ALAGENDRAN FINANCE LTD. [2007 (7) TMI 304 - SUPREME COURT] - Decided in favour of assessee.
-
2021 (12) TMI 1255
Non-apportionment of expenses in respect of its share with holding company - CIT-A deleted the addition - assessee is a public limited company engaged in the business of merchant banking - HELD THAT:- As the assessee had only parted the net profit from the collaboration project with its holding company. We find that the ld. AO had wrongly misunderstood the fact by stating that assessee had only shared the gross revenue and had claimed the entire expenses as deduction in its books. This is factually incorrect. Accordingly, the disallowance of ₹ 3,44,24,282/- ( being 50% of expenses incurred on collaboration project of ₹ 6,88,48,564/-) on account of non-apportionment of expenses is hereby directed to be deleted as the ld. CIT(A) had rightly understood the fact and modus operandi adopted by the assessee. Accordingly, the ground No.1 raised by the Revenue is dismissed.
Disallowance on account of apportionment of bad debts - CIT-A deleted the addition - HELD THAT:- As categorical factual finding of the ld. CIT(A) has not been controverted by the Revenue before us. Hence, we hold that there is no question of sharing of bad debts written off with the holding company. Once, it is found that assessee had indeed offered the fee income in earlier years in its entirety, any non-realisation of the said fee which resulted in bad debt would be eligible for deduction if the same is written off in the books of accounts. In the instant case a sum of ₹ 1,79,66,908/- remain irrecoverable and the same was duly written off by the assessee in its books in A.Y.2011-12, which becomes squarely eligible for deduction in the hands of the assessee company. There is no question of sharing the same with the holding company. This fact has been duly appreciated by the ld. CIT(A). Accordingly, the ground No.2 raised by the Revenue is dismissed.
Disallowance of bonus paid to employees including the key management persons - HELD THAT:- Certain employees who have been made Director or Managing Director of specific department inside the company. They are not the Directors of the assessee company as per the Companies Act. The assessee also furnished the list of Directors of the assessee company to justify this contention. Hence, the entire reliance placed on the provisions of Section 40A(2)(b) of the Act was totally unjustified. The ld. CIT(A) also observed that on perusal of the tax audit report, only one person namely Shri Tapasije Mishra, Group CEO, to whom bonus was paid figures in the list of related party transactions, specified u/s.40A(2)(b) - CIT(A) also observed that there is no tax arbitrage involved in the same as the said employee also suffers tax at the maximum marginal rate of 30%. In any case, the disallowance was made by the ld. AO only on an adhoc basis at the rate of 25% without rejection of books of accounts by pointing out some defects thereof. None of these factual observations controverted by the Revenue before us. We hold that the bonus was paid to the employees including the key management personnel only in the ordinary course of business and the same are squarely allowable as deduction u/s. 37 - ground No.3 raised by the Revenue is dismissed.
-
2021 (12) TMI 1254
Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction - HELD THAT:- Section 14A(2), read with rule 8D of the Rules provides that before applying the theory of apportionment in form of Rule 8D. Assessing Officer needs to record his satisfaction that having regard to the kind of the assessee, it is incorrect that assessee has not incurred any expenditure in relation to exempt income. Unless that satisfaction is shown from the assessment order, the ld AO cannot jump to the stage of apportionment by applying Rule 8 D.
As in present case Id AO has considered all the expenses debited in the profit and loss account including depreciation allowance for disallowance u/s 14A of the Act. In view of our finding that the learned assessing officer has failed to record any satisfaction about the correctness of the claim of the assessee, orders of lower authorities are reversed. Therefore, we direct the learned assessing officer to delete the disallowance made under section 14A of the Act. Accordingly, we reverse the order of the lower authorities and allow the appeal of the assessee.
-
2021 (12) TMI 1253
Income from house property - recognized basis for determination of the ALV - AO did not accept the declaration of ALV of Greater Kailash-II property as according to him the Municipal Corporation value did not represent the true market value of the property as per the section 23(1)(a) - HELD THAT:- The submission of the assessee that she was declaring income from business/profession during the Assessment Year 2014-15 and 2016-17, could not be controverted by the Ld. DR. - also that because of loss during the year, the same was ignored. Further, it is held in various decisions that municipal lettable value is recognized basis for determination of the ALV.
Identical issue had come up before the Mumbai Bench of the Tribunal in the case of Pankaj Wadhwa [2019 (1) TMI 937 - ITAT MUMBAI] wherein, the Tribunal held that where the assessee declared annual lettable value from house property having regard to municipal rateable value, in view of the fact that municipal rateable value is recognised for determination of ALV, there was no justification for action of Assessing Officer in disregarding the municipal rateable value for determination of ALV and substitution thereof by some expected rent to be received by the assessee.
Since, the assessee in the instant case has declared the deemed income from the ground and first floor on the bases of municipal rateable value and the basement was used for her profession/business activity, therefore, respectfully following the decision of the Mumbai Bench of the Tribunal in the case of Pankaj Wadhwa vs ITO cited (supra), hold that the ld. CIT(A) was not justified in confirming the action of the Assessing Officer - Decided in favour of assessee.
-
2021 (12) TMI 1252
Disallowance of setting off of the carried forward loss - return filed beyond the due date specified under subsection (1) of section 139 - It was argued that the delay has happened for the first time in the last 25 years for a situation totally beyond his control. - HELD THAT:- Assessee was not able to enter into the terrace portion of his flat in Vasant Kunj where all his business and financial documents were kept due to the restraint order passed by the court, in my opinion, cannot be a ground to enable the assessee to claim the benefit of set off of carried forward loss of AY 2017-18 since the said return was not filed on or before the specified date. The statute is very clear on this issue that for claiming the benefit of setting off of carried forward loss against the income of the subsequent year, the return for the assessment year in which loss was incurred has to be filed in time as specified u/s 139(1).
If the assessee was prevented from filing the return within the due date, the remedy lies elsewhere, but, definitely not before the Tribunal. Since the assessee, in the instant case, has not filed the return of income for AY 2017-18 within the due date returning the loss of ₹ 8,67,803, therefore, the same cannot be carried forward to the subsequent assessment year to be set off against the income of AY 2018-19. We not find any infirmity in the order of the CIT(A) upholding the intimation issued by the CPC, Bangalore rejecting the claim of set off of carried forward loss of ₹ 8,67,803/- pertaining to AY 2017-18 from the income of AY 2018-19. The order of the CIT(A) is accordingly upheld and the grounds raised by the assessee are dismissed.
-
2021 (12) TMI 1251
Delayed payment of employees contribution to Provident Fund (PF) and Employees State Insurance (ESI) - Scope amendment made to section 36(1)(va) by Finance Act 2021 w.e.f. 1.4.2021 and the corresponding amendment made to section 43B by inserting Explanation 5 - HELD THAT:- As per the settled legal principle, delayed payment of contribution to PF and ESI including employee’s contribution, is allowable as deduction under section 43B r.w.s 36(1)(va) of the Act if it is paid before the due date of return of income prescribed under section 139 (1) of the Act. Undisputedly, in the facts of the present appeal the employees’ contribution to PF and ESI were paid before the due date of return of income prescribed under section 139(1) of the Act. However, assessee’s claim has been disallowed by applying the amended provisions of section 36(1)(va) and 43B of the Act.
Though, the amendment to the aforesaid provisions restricting the applicability of section 43B to employee’s contribution to PF and ESI as well as explaining the due date of payment of the aforesaid dues have been brought into the statute by Finance Act 2021 w.e.f. 1.4.2021, however, Commissioner (Appeals) has applied them to the impugned assessment year by stating that the amendments will have retrospective operation as they are clarificatory in nature. However, as find this issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench in case of Mr. Vansh Jain vs DCIT [2021 (10) TMI 620 - ITAT DELHI] wherein as held that the amended provisions would apply prospectively w.e.f. assessment year 2021-2022.
Thus as assessee’s claim of deduction has to be allowed. - Decided in favour of assessee.
-
2021 (12) TMI 1250
TP adjustment to the Arm’s Length Price (ALP) of business support services - HELD THAT:- Based on materials available on record, we are not in a position to render a conclusive finding that the invoice raised by the assessee on AE also includes mark-up of 12% on business support cost. Thus, in absence of complete details to substantiate the aforesaid claim, we are unable to accept assessee’s claim at this stage - we are of the view that assessee’s claim cannot also be outrightly rejected. In case, the assessee, through a proper working and supporting evidence, establishes on record that all costs incurred by the assessee, whether direct or business support, has been remunerated with mark-up of 12%, no adjustment can be made.
Onus is entirely on the assessee to prove such fact. In view of the aforesaid, to provide an opportunity to the assessee to bring material on record in support of its claim that the invoice raised also includes mark-up of 12% on all types of cost, including business support cost, we restore the issue to the file of learned Commissioner (Appeals) for de novo adjudication after affording due opportunity of being heard to the assessee.
-
2021 (12) TMI 1249
Disallowance of Administrative Expenses - Closure of business activities - HELD THAT:- We find that in the earlier years, on similar facts and circumstances wherein there was no revenue from operations and assessee had incurred similar nature of expenditure debited to the profit & loss account, mostly under the heads, viz., salary and wages, employees benefit expenses and other expenses including statutory expenses and audit fees, were held to be allowable. One important fact noted by the Tribunal in the earlier years is that the fixed assets of the assessee company were subject matter of litigation u/s 18 of Land Acquisition Act and assessee was due to receive compensation of ₹ 460 crores which would be the income of the assessee in the year to receive.
Assessee was maintaining this establishment and corporate set up for which it had incurred certain expenditure. Tribunal allowed the expenditure stating when the possibility of the revival of the business activities or operation of the assessee are not ruled out once for all, it cannot be said that the assessee company had closed down its operations permanently so as to disallow the business expenditure. The temporary lull in the business during the lean period of transaction cannot be mistaken to be the permanent close down of the business. The clear indication is that the assessee has to maintain its status as company till the end comes and it has to perform certain legal obligations by incurring certain expenditure and more particularly to pursue the litigation as a result of which it has to receive ₹ 460 crores approximately which shall form part of the income of the assessee in the year in which it will be received.
In this year also, the aforesaid decision of the Tribunal will apply mutatis mutandis. Respectfully following the same, we direct AO to allow expenditure claimed in the profit & loss account. Ground No.1 raised by the assessee is allowed.
Depreciation of Fixed Assets - It is sufficient that on similar facts, asset’s depreciation was allowed in the earlier years, therefore, this year no different treatment can be given simply because the business could not be carried out in this year. Accordingly, depreciation amount of ₹ 7,93,830/- is also allowed.
-
2021 (12) TMI 1248
Addition u/s 36(1)(iii) - disallowance of interest expenses mainly on the basis that total available interest free funds in the hands of the Assessee as on 31st March, 2015 were less as the Assessee has invested in non-business assets - Assessee do not have available interest-free funds and/or not to the extent of investment then the addition can be made under Section 36(1)(iii) of the Act on account of disallowance of interest expenses - HELD THAT:- Hon’ble Apex Court in S. A. Builders Ltd. Case [2006 (12) TMI 82 - SUPREME COURT] dealt with the identical issue in broader terms and observed that ‘once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the Assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case.’
Coming to the contention of the Ld. D R that the Assessee was not having sufficient interest-free funds available to the extent of investment and therefore the addition made under Section 36(1)(iii) of the Act on account of disallowance of interest expenses is liable to be sustained. We find the Hon’ble Apex Court in S. A. Builders Ltd. Case (supra) itself dealt with deduction of interest on borrowed funds given to subsidiary company and held that ‘where it is obvious that a holding company has a deep interest in its subsidiary, and hence if the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purposes, the Assessee would, in our opinion, ordinarily be entitled to deduction of interest on its borrowed loans.’
Even Hon’ble Madras High Court in CIT Vs. Spencers & Co. Ltd. & Co. Ltd. [2014 (2) TMI 237 - MADRAS HIGH COURT] and in CIT Vs. Phil Corporation Ltd. & Anr. [2011 (6) TMI 187 - BOMBAY HIGH COURT] has allowed deduction of interest u/s 36(1)(iii) of the Act, paid on borrowings and overdraft which were utilized for investment in subsidiary company. Hence in view of the aforesaid judgments of the Hon’ble High Courts also,the contention of the Ld. DR is untenable. - Decided against revenue.
TP Adjustment on account of providing corporate guarantee by the Assessee to its overseas associated enterprises companies - ‘International Transaction’ or not - treating the interest rate of 1.3% based on average fees charged by State Bank of India - HELD THAT:- In identical issue in hand in the case of Pr. CIT Vs. M/s. Redington (India) Ltd.[2020 (12) TMI 516 - MADRAS HIGH COURT] and has clearly held that the ‘corporate guarantee’ is covered within the definition of ‘International Transaction’.
The Hon’ble High Court in the said case has also considered the Explanation introduced in Section 92B of the Act with effect from 1st April, 2002 by the Finance Act (2012) wherein it is clarified that the expression ‘International Transaction’ shall include ‘guarantee’ and held the same as retrospective.As per judgment of the Hon’ble Madras High Court, the addition can be made qua‘corporate and bank guarantee’.
Considering the undisputed fact to the effect that Hon’ble Bombay and Madras high Court in the cases referred above held the ‘Corporate Guarantee’ as ‘International Transaction’, we do not find any reason to interfere with the findings of the Ld. Commissioner for partly sustaining the addition under consideration and therefore the same is upheld. Consequently the Appeal of the Assessee is dismissed.
-
2021 (12) TMI 1247
Disallowance u/s 14A - interest from the partnership firm - HELD THAT:- We note that assessee has invested in partnership firm out of own funds alongwith some borrowed funds. These amounts have been invested in the partnership firm as a capital contribution. The assessee is getting interest from the partnership firm on his contribution @ 12% and such interest is assessable u/s. 28 of the Act, as a business income. Therefore, it should not be brought in the ambit of the provision of 14A of the Act, for that reliance can be placed on the judgment of the Co-ordinate Bench of Mumbai in the case of Asstt. Commissioner of Income-tax, Circle-19(2) Mumbai vs. Shri Harish P Shah [2011 (6) TMI 1009 - ITAT MUMBAI] - thus we allow ground no. 1 raised by the assessee.
Unexplained cash credits u/s. 68 - HELD THAT:- The assessee has received fresh loans from these two persons in the year. Both the lenders are assessed to tax. One of the two lenders (Shri Shailesh Savani) is since deceased, another lender, Smt. Sonalben Shah is alive. Smt. Sonalben Shah appeared before Ld. AO u/s. 131 and deposed that she has advanced the said amount to the assessee - AO found that there were cash deposits of exact amount in bank accounts of the two lenders just prior to the cheques being issued to the assessee. It is also seen that the existing bank balance prior to these deposits are kept as it is. One of the lender Smt. Sonalben Shah explained this cash deposits as loans received in cash from 6 persons. All loans are just below ₹ 20,000/- (the permissible limit) and all 6 are not income tax assessees. So Ld. AO arrived at conclusion that the creditworthiness of lender and genuineness of transaction is not established. In case of late Shailesh Savani, the cash deposits were not explained by his legal heir. We note that assessee has failed to discharge his onus of establishing creditworthiness and genuineness, therefore, we confirm the order of ld. CIT(A).- Decided against assessee.
-
2021 (12) TMI 1246
Delayed employee's contribution to the employee welfare funds u/s. 2(24)(x) r/w s. 36(va) - rectification of mistake - amount being deposited before the due date of filing the return of income u/s. 139 (1) - Scope of amendment - HELD THAT:- In view of the foregoing, no question of the said Explanations being read as retrospective, so as to apply for the relevant year, sustaining the impugned additions, which therefore fail. This is, however, subject to any decision/s by the Hon'ble jurisdictional High Court, which would, where so, hold, even justifying a rectification u/s. 154/254(2), even where rendered after the date of the order sought to be rectified. See SAURASHTRA KUTCH STOCK EXCHANGE LTD [2008 (9) TMI 11 - SUPREME COURT] and SMT. ARUNA LUTHRA. [2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT]
No such decision has been found, or otherwise pointed out by the parties, as was the case before the Tribunal in Nikhil Mohine [2021 (11) TMI 927 - ITAT JABALPUR] Any such decision, even if discovered later, may operate to amend this order, or the order giving appeal effect thereto, to bring it in conformity or agreement with the said decision/s, of course, after allowing a fair opportunity of hearing to the assessee.
the impugned additions, therefore, could not have been made under the given facts and circumstances of the case, and are directed for deletion. Decided in favour of assessee.
-
2021 (12) TMI 1245
Penalty u/s 271(1)(c) - non disclosure of capital gain on sale of land in the income tax return - Land sold by co-owners - HELD THAT:- Admittedly, the capital gain was not shown by the assessee in the income tax return. The land was sold by the assessee along with the co-owners. The impugned land was sold by the assessee along with the co-owners for ₹ 56 Lacs but the same was valued for the purpose of the stamp duty at ₹ 58.55 Lacs. The share of income of the assessee under the head capital gain was worked out by the authorities below taking the sale consideration of ₹ 58.55 Lacs under the provisions of section 50C of the Act which is a deeming provision.
Thus the amount of profit worked out, as attributable to the assessee, was containing 2 elements. One of the element was the actual sale consideration as per the sale deed i.e. ₹ 14 Lacs (56 Lacs/4) and deemed sale consideration of ₹ 63750 (2.55 Lacs/4) only. It is an admitted fact that there cannot be any penalty on the profit calculated for the assessee based on deeming section/fiction.
The land in dispute was acquired dated 25 April 1977 at ₹ 36,915.00 which was taken as the cost of acquisition for the purpose of computing the capital gain capital gain whereas the assessee was given option to take the fair market value of the impugned land as on 1 April 1981 as the cost of acquisition under the provisions of section 55(2)(b) of the Act. However we find that none of the authority below has pointed out in their respective orders whether the assessee was given the opportunity to take the value as on 1 April 1981 as the cost of requisition for the purpose of the capital gain.
Generally, the rate of the land increases year after year. Thus, the value of the property in dispute, acquired in the year 1977, should have increased as on 1 April 1981 which should have been taken as the cost of acquisition. Thus, no prudent assessee will take the cost of requisition as applicable for the year 1977 when the property was acquired until and unless the facts and circumstances suggest otherwise. But nothing is available on record, neither the revenue has carried out any exercise to find out the actual value of the property as on 1st April 1981. Thus, the revenue is not expected to derive any benefit out of the ignorance of the assessee.
We are of the view that there was no deliberate act on part of the assessee to conceal/furnish inaccurate particulars of income. Therefore, we are of the view that the penalty levied by the AO and sustained by the ld. CIT(A) is not maintainable. Hence we direct the AO to delete the penalty imposed u/s. 271(1)(c) - Decided in favour of assessee.
............
|
9911796707
