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Income Tax - Case Laws
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2021 (12) TMI 1257 - ITAT MUMBAI
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.
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2021 (12) TMI 1256 - ITAT MUMBAI
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.
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2021 (12) TMI 1255 - ITAT MUMBAI
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.
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2021 (12) TMI 1254 - ITAT MUMBAI
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.
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2021 (12) TMI 1253 - ITAT DELHI
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.
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2021 (12) TMI 1252 - ITAT DELHI
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.
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2021 (12) TMI 1251 - ITAT DELHI
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.
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2021 (12) TMI 1250 - ITAT DELHI
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.
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2021 (12) TMI 1249 - ITAT DELHI
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.
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2021 (12) TMI 1248 - ITAT DELHI
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.
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2021 (12) TMI 1247 - ITAT SURAT
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.
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2021 (12) TMI 1246 - ITAT JABALPUR
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.
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2021 (12) TMI 1245 - ITAT AHMEDABAD
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.
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2021 (12) TMI 1244 - ITAT AHMEDABAD
Rectification of mistake u/s 154 - Addition u/s 14A determining the book profit under the provisions of section 115JB - HELD THAT:- We hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the I.T. Rules, cannot be applied to the provisions of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. [2014 (11) TMI 1169 - CALCUTTA HIGH COURT]
From the above it is revealed that there is no ambiguity to the fact that no disallowance can be made while computing the book profit under the provisions of section 115JB of the Act in the manner as provided under section 14A read with rule 8D of income tax rules. Thus, the issue on hand cannot be rectified in the proceedings initiated under section 154 of the Act being a debatable issue. Hence, we set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Thus the ground of appeal of the assessee is allowed.
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2021 (12) TMI 1220 - SC ORDER
Validity of Section 194A(3)(ixa) - tax deducted at source on the interest payable under an award of the Motor Accident Claims Tribunal (“MACT”) - petitioner had filed a writ petition initially before the High Court of Delhi which was disposed of by granting him liberty to move the Central Board of Direct Taxes (“CBDT”) in a representation - fresh writ petition challenging the decision of the CBDT was dismissed both on the grounds of locus and delay with liberty to file a public interest litigation.
HELD THAT:- The petitioner is not personally aggrieved by the award of the MACT. A challenge of this nature would have to be brought before the Court by a person aggrieved. We see no reason to entertain a petition which is styled one filed in public interest. In the circumstances, this Court is not expressing any opinion on the question of law raised. The petition is dismissed on the grounds which are set out above.
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2021 (12) TMI 1219 - BOMBAY HIGH COURT
Validity of assessment u/s 144B - main contention of the Petitioner as denied the opportunity of personal hearing before passing the assessment order - HELD THAT:- As Petitioner had made an oral request for personal hearing. However, the said request was turned down without assigning any reason. It is, in these circumstances and to comply with Section 144B the Petition deserves to be allowed and remitted back to the Respondent No.1.
The following order is passed Assessment Order dated 17/8/2021, passed under Section 143(3) r/w Section 144B of the Income Tax Act, 1961 passed by the National Faceless Centre is, hereby, quashed and set aside. The matter is remanded to the Respondent No.1 to complete the assessment proceedings by following due procedure as contemplated by Section 144B of the the Income Tax Act, 1961.
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2021 (12) TMI 1218 - KARNATAKA HIGH COURT
Exemption u/s 10(10C) - seeking for condonation of delay to file a revised return by an application u/s 119(2)(b) - Period of limitaiton of 6 years - Earlier the request for rectification of mistake was rejected - HELD THAT:- Taking note of the peculiar facts of the case, the fact remains that the entitlement of exemption under Section 10(10C) of the Act was noticed by the Assessing Officer. In fact the petitioner had also sought relief of rectification by way of letter dated 18.03.2008. As no order appears to have been passed on the letter of 18.03.2008, the petitioner decided to seek for condonation of delay to file a revised return by an application u/s 119(2)(b) of the Act. If an order had been passed as regards the rectification application, the assessee may have got relief at that end itself. As no order was passed, the assessee then decided to explore the possibility of filing a revised return.
Unfortunately, the assessee’s application u/s 119(2)(b) has been rejected on the ground that the same was filed beyond the period of 6 years, while observing that the Circular 9/2015 dated 09.06.2015 does not permit condoning the delay beyond 6 years.
Letter that could be construed to be a rectification application is not decided, noticing the merits of the claim for exemption, a fit case is made out for consideration of the revised return on its merits.
Accordingly, it would be appropriate to set aside the order of 119(2)(b) and condone the delay. It is also to be noticed that the reasons assigned while seeking condonation of delay are also satisfactory.
Accordingly, the impugned order at Annexure-G dated 17.02.2017 is set aside, the delay is condoned and the application under Section 119(2)(b) of the Act is allowed. It is however clarified that as regards to the grant of refund, eventually in light of the delay, there would be exclusion of interest on the amount of refund. It is also clarified that the order is passed taking note of the peculiar facts and circumstances of the case and accordingly, may not be considered to have laid down the law as regards the aspect of condonation of delay under Section 119(2)(b) of the Act or on other issues dealt with herein.
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2021 (12) TMI 1217 - ANDHRA PRADESH HIGH COURT
Revision u/s 263 by CIT - Violation of principles of natural justice - no opportunity of hearing to the assessee given - HELD THAT:- The procedure followed by the Principal Commissioner in passing the impugned order without giving an opportunity of hearing to the assessee is in clear violation of Section 263 of the IT Act and in breach of principles of natural justice. Thus, on this score alone, we allow this Writ Petition by setting-aside the impugned orders and remand the matters before the Principal Commissioner of Income-Tax (Central), Visakhapatnam, who is directed to give an opportunity of hearing to the assessee and pass appropriate orders in accordance with law. Such exercise shall be concluded within three (3) months from the date of communication of this order and the assessee shall not seek un-necessary adjournment in the matter. We further make it clear that we have not expressed any opinion with regard to merits of the case, which is kept open to be decided by the respondent-Principal Commissioner, independently
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2021 (12) TMI 1216 - KERALA HIGH COURT
Reopening of assessment u/s 147 - income of Assessee escaped assessment in the subject Assessment year - HELD THAT:- It is not the case of Revenue that the subject matter of the notice under Section 147 was not the subject matter before the Appellate Authority. Therefore, in all fours, the second proviso is attracted to the case on hand.
After the reading of the second proviso to Section 147 of the Act and the consideration by the CIT(Appeals) and the Tribunal, we are of the view that the distinction sought to be introduced by the Standing Counsel fails, for the very reasons recorded by the Authorities in the orders under appeal. We are of the view that the re-assessment proceedings in the subject assessment year, has been initiated contrary to second proviso to Section 147 (1) of the Act. For the above reasons and expressing full agreement with the the findings recorded by the CIT(Appeals) and Tribunal, we answer the question against Revenue and in favour of the Assessee.
Addition on electricity duty and short provision of interest on Government loan made u/s 43B - HELD THAT:- Question No.2 is covered by the judgment of this Court in Kerala State Electricity Board V. Deputy Commissioner of Income Tax [2019 (8) TMI 727 - ITAT COCHIN] against the Revenue and in favour of Assessee.
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2021 (12) TMI 1215 - MADRAS HIGH COURT
Reopening of assessment u/s 147 - assessment as reopened beyond a period of four years - Availability of tangible material to initiate reopening - HELD THAT:- Mere availability of tangible material would be sufficient for the purpose of invoking the powers under Section 147 of the Act. This failure on the part of the petitioner was considered for reopening of assessment and the finding is given that the assessee company has misleading the assessing authorities by furnishing incorrect particulars. However, this Court cannot arrive a finding in this regard. It is for the assessee to establish his case during the course of reassessment proceedings. The writ petition is filed, challenging the reopening proceedings.
Objective satisfaction would be sufficient for the purpose of allowing the Assessing authority to proceed with the reopening proceedings. Once, the materials are available and such materials were not taken into consideration by the original assessing authority, or any findings are given in the assessment order, which would be sufficient for the purpose of reopening of assessment and once such reopening is made based on tangible materials, then the assessee has to defend his case by furnishing further particulars or explanations or documents during the course of reopening proceedings.
High Court cannot form any opinion in respect of such findings to be made. Only endeavour of the High Court is to ensure that, whether the conditions stipulated and the process adopted for the purpose of reopening of assessment in consonance with the provisions of the Act and in accordance with the Directives of the Hon’ble Supreme Court of India in the case of GKN Driveshafts [2002 (11) TMI 7 - SUPREME COURT] are not. If the conditions are fulfilled, then it is for the assessee to defend their case in the manner known to law.
The reasons furnished in the case of the petitioner would be sufficient for the purpose of reopening of assessment as the case of the petitioner is initiated beyond a period of four years and therefore, the petitioner is bound to participate in the reopening proceedings for the purpose of defending their case by availing the opportunities to be provided by the authorities in accordance with law.
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