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Income Tax - Case Laws
Showing 201 to 220 of 7776 Records
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2021 (12) TMI 1087
Expenditure on replacement of dies and moulds allowed as current repairs - HELD THAT:- As decided in M/S. TVS MOTORS LIMITED [2014 (2) TMI 522 - MADRAS HIGH COURT] Expenditure on replacement of dies and moulds are to be allowed as cur rent repairsReplacement of the new dye in the place of old dye would qualify for current repairs under Section 31 of the Act - The decision in CIT Vs. Sri Mangayarkarasi Mills P.Ltd[2009 (7) TMI 17 - SUPREME COURT] followed - what is allowable as revenue expenditure under Section 37 of the Act are those expenditure other than one falling for consideration under Sections 30 to 36 of the Act - when the picture tube in a television set is replaced, such repairs would come within the connotation of the phrase "current repairs" – thus, the claim being considered as current repairs, the same would fall under Section 31 of the Act as current repairs - Decided against revenue.
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2021 (12) TMI 1086
Reopening of assessment - Addition u/s 68 - Nature of addition made in order u/s 143(3) r.w.s. 147 - ITAT has observed that the transaction recorded in the books of accounts in the regular course of business is to be accepted as true and correct unless there is a strong evidence to rebut the same and the burden of proof that the transaction is not genuine is on the person who alleges so - HELD THAT:- No substantial question of law is involved in the instant appeal. ITAT has observed that the transaction recorded in the books of accounts in the regular course of business is to be accepted as true and correct unless there is a strong evidence to rebut the same and the burden of proof that the transaction is not genuine is on the person who alleges so. ITAT has further held that the existence of M/s Swift Tie Up Pvt. Ltd. is not disputed.
Without bringing any adverse evidence on record, simply on assumptions and presumptions, has held that the transactions of the assessee with M/s Swift Tie Up Pvt. Ltd. are bogus. The ITAT has also observed that the determination of income of ₹ 2,43,59,629/- made by the Assessing Officer is hypothetical and there is no basis for the said determination. The ITAT has held that the Assessing Officer has erred in not allowing the loss of ₹ 11,75,857/- to the assessee as of NCDEX/MCX loss. It was held that the CIT(A) has rightly allowed the said loss to the assessee in the facts and circumstances of the case. ITAT has further observed that the CIT(A) has rightly deleted the addition of ₹ 75,00,000/- to the assessee made under Section 68 as transaction between the assessee and M/s Swift Tie Up Pvt. Ltd. is clearly evident from the documentary evidence produced by the assessee. The ITAT has also upheld the deletion of disallowance donation expenses and disallowance expenses claimed in the P & L account by the CIT(A).
On a careful scrutiny of the material available on record, the findings recorded by the appellate authorities, we are of the opinion that in the facts and circumstance of the case, the evidence has properly been appreciated by the CIT(A) as well as the ITAT and in the absence of any clinching adverse evidence on record, the said finding of facts are not liable to be interfered with. - Decided against revenue.
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2021 (12) TMI 1085
Lower deduction certificate u/s 197 - Applications u/s 197 for “Nil‟ rate of withholding tax as per under Articles 8 and 12 of the India Ireland Double Taxation Avoidance Agreement (“Tax Treaty‟), they were liable to pay tax only in Ireland - HELD THAT:- We find force in the submission of Mr. Jolly that the aspects – which the Assessing Officer is obliged to take into consideration, while considering an application under Section 197 of the Act, have not at all been adverted to. The reasons proceed only on the basis of the liability, if any, which may, or may not, be fastened upon another group company, i.e. CAT-9. That, by itself, cannot be a justification for denying the “Nil‟ rate certificates to the petitioner. The reasons now brought out by Mr. Agarwal do not form part of the reasons contained in the impugned order and the respondents are precluded from citing those as reasons to justify the impugned order issued to the petitioner.
We, accordingly, quash and set aside the impugned order dated 07.09.2021 and remand the matter back to the Assessing Officer, who may pass a fresh order within four weeks from today. The petitioner is directed to provide whatever relevant information is called for by the Assessing Officer without any delay, so that the order is passed within the time frame fixed by us.
In the interim, the petitioner will be entitled to avail of the “Nil” rate of withholding Tax, as has been the position in the past several years consistently.
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2021 (12) TMI 1084
Deduction u/s 80P(2) - AO claimed inclusion of interest income earned by the assessee from the deposit of idle funds with co-operative bank and treasury treating the said income as business income falling within the admissible ambit of deduction u/s 80P(2) (a)(i) - AO treated the interest income as income from other sources and also that the interest income does not come within the purview of Section 80P(2)(d) - HELD THAT:- Substantial question covered by the judgment of the Supreme Court in Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] the assessee since is a registered Co-operative Society and the deduction claimed is interest earned from loans lent to members and amount invested with Co-operative Bank and Treasury, so the threshold eligibility of deduction is admissible to assessee and accordingly the income earned by way of interest from members is eligible for deduction under Section 80P(2)(a)(i) of the Act. Accordingly the questions can be answered against the Revenue and in favour of the assessee. Statement is placed on record. Substantial question nos.1 to 4 are answered in favour of the assessee and against the Revenue.
Interest income earned from the deposits the assessee has made with District/State Cooperative Banks and Treasury - Whether the interest income earned by the assessee from the deposits made with District/State Cooperative Banks and Treasury, firstly, would fall as business income of the assessee, and, alternatively, whether the interest income is eligible for deduction under Section 80P(2)(d)? - HELD THAT:- Supreme Court in Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] on the construction of Section 80P(2)(a)(i) read with sub-section 4 of Section 80P. Now provision in Section 80P(2)(a)(i) is read without reference to an activity viz. Primary Agriculture etc. It is noted that Section 80P provides for deduction in respect of income of Co-operative Societies and Section 80P(2) allows a straight deduction from the computation of total income of the assessee/Co-operative Society to the extent mentioned in respect of incomes referred therein. Under Section 80P(2)(a)(i) the whole of profits and gains from business of banking or providing credit facilities to the members of the Society is entitled to deduction. Clauses (ii) to (vii) are unnecessary for the purpose of this judgment, hence not included in the narrative. A Division Bench of High Court of Telangana and Andhra Pradesh in Vavveru Co-operative Rural Bank Ltd [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] has succinctly tabulated the Societies and the benefits to which each one of the category of Societies is entitled to.
In the case on hand, there is no dispute that it is not from a Co-operative Society registered under Kerala Co-operative Societies Act. The interest income earned from District Co-operative Bank/State Co-operative Bank, in the facts and circumstances of the case, do come within Section 80P(2)(d). Therefore, the income constitutes income from other sources and the only eligible deduction is covered by Section 80P(2)(d) viz. Interest or dividend derived by the assessee from its investments with any other Co-operative Society. The source of interest income is from Bank and Treasury, interest income received from Treasury be included in the computation of total income of the assessee. In other words, interest earned from Treasury is inadmissible for deduction and interest income from Co-operative Societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of Commissioner of Income Tax (Appeals) and the Tribunal is incorrect and liable to be modified as stated above. Hence, it is held that the interest income earned by the assessee does not come within the ambit of Section 80P(2)(a)(i) and permissible deduction of interest income is limited to Co-operative Societies/Banks registered under Kerala Co-operative Societies Act under clause (d) of the Act and effect order on the above lines is made by the Assessing Officer. The questions are accordingly answered.
Deduction u/s 80P(2)(d) - Interest income earned by the Society comes with the category of income from other sources and Section 80P(2)(d) deals with the eligible deduction in this behalf. It has been held in the connected cases that the assessee is entitled to deduction of interest income earned from Co-operative Banks/Societies/ Federation registered under the Co-operative Societies Act and the income earned from Treasury is not included in Section 80P(2)(d) and is not entitled for deduction from computation of income.
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2021 (12) TMI 1083
Reopening of assessment u/s 147 - deduction claimed under Section 10B,deduction under Section 80HHC - HELD THAT:- We find that the appellant wanted extension of time for the respondent to pass appropriate orders, since the appellant was in the process of collating details of all pending litigations, which were initiated/pending prior to the acquisition of the appellant company by Ms/.Dhanuka Laboratories Ltd. This petition was considered and the learned Single Bench extended the time and subsequently, the appellant had filed this appeal before this Court and the appeal was not numbered immediately because, change of cause title has to be ordered and when the appeal was in the process of being numbered, it appears that the appellant had made an oral mention before the learned Single Bench for further extension of time. From the affidavit filed in support of the Miscellaneous Petition, seeking extension of time, which was filed during July 2021, we find that the appellant was agreeable to cooperate in the proceedings before the respondent
The appellant cannot be of disadvantageous position, if they are not permitted to canvass the issue regarding validity of the reopening proceedings more so when, the learned Writ Court has not out rightly rejected the contentions raised by the appellant questioning the validity of the reopening. We had appreciated the said submission of the learned counsel for the appellant, as observed, a prima facie finding has been recorded by the learned Writ Court, but we do not find any conclusive finding on the validity of the reopening of the assessment after taking note of the objections, which have been raised by the appellant questioning the reopening.
Therefore, we are of the view that the appellant should not be put to prejudice while filing an appeal before the CIT(A) as against the assessment order wherein, they should be permitted to also raise the issue regarding the validity of the reopening, which can be decided by the CIT(A) as first among the several issues. For such reason, we are inclined to vacate all findings, which have been recorded by the learned Single Bench touching upon the validity of the reopening proceedings.
Writ appeal is partly allowed and the observations and findings recorded by the learned Single Bench touching upon the validity of the reopening of the assessment are vacated and the appellant is granted liberty to file appeal before the Commissioner of Income Tax (Appeals) questioning the correctness of the assessment order dated 01.10.2021 canvassing all factual and legal grounds including the validity of the reopening of the assessment and in the event, the appellant does so, the CIT(A) shall consider the issue relating to the validity of the reopening as first among the several issues, which may be raised before the said authority
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2021 (12) TMI 1082
Proceedings u/s 220 (2A) - applications for waiver of interest levied on the tax demanded from the appellant by the respondents - HELD THAT:- We are of the view that the report of Assessing Officer is considered or would be constituting the basis for recording the reasons under sub-section (2A) of Section 220 of the Act, or for rejecting the applications of appellant, it would be in the fitness of things as well as would be conforming to the requirement of affording an opportunity of being heard, if a copy of Assessing Officer's report is also made available to the representative of the assessee or to the assessee.
Upon such copy being made available to the assessee or his representative, the effectiveness with which the assessee would have presented a case before the second respondent is different from presenting the case without a copy of the report submitted by the Assessing Officer or appreciating the circumstances stated against the assessee. After perusing the operative portion of the order impugned in Ext.P11 series, we are of the view that the case of appellant under sub-section (2A) of Section 220 of the Act has not been considered in the manner in which the jurisdiction has been conferred on the second respondent and for the said reason alone, orders in Ext.P11 series are liable to set aside and accordingly set aside.
Writ appeal is allowed by this Judgment, by setting aside the judgment of learned Single Judge - Matter remitted to second respondent for consideration and disposal afresh in accordance with law. The second respondent on receipt of a copy of this judgment, furnishes a copy of Assessing Officer’s report within two weeks thereafter to the assessee by Registered Post Acknowledgment Due/EMS speed post.
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2021 (12) TMI 1081
MAT computation u/s 115JB - Bad and doubtful debts inclusion to the book profits for computation of MAT liability u/s 115JB - Whether the ITAT has committed the gross error of law in not upholding the addition on account of the provision for doubtful debt made by the assessing officer to the book profit u/s. 115JB? - HELD THAT:- Judgment laid down by the Full Bench in case of Vodafone Essar Gujarat Limited [2017 (8) TMI 451 - GUJARAT HIGH COURT] relied upon by the ITAT in the impugned order, wherein the issue with regard to the bad and doubtful debts to the book profits for computation of MAT liability in the light of the Explanation (1) to section 115JB of the Act was considered.
The issue having already been duly considered by the ITAT following the decision of the Full bench of this Court, the Court is of the opinion that the question proposed by the appellant in the present Appeal could not be said to be substantial question of law within the meaning of Section 260A of the said Act. It may be noted that the Appeal under Section 260A could be admitted only on the High Court being satisfied that the case involves a substantial question of law.
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2021 (12) TMI 1080
Estimation of income - bogus purchases - HELD THAT:- Assessee was indulged in obtaining accommodation entries/ bogus purchases and had not cooperated before the A.O. by providing the relevant details, some addition has to be made. However, 25% of the bogus purchases estimated by the Ld. CIT(A) under the facts and circumstances of this case appears to be on higher side - restrict the same to 12.5% of the bogus purchases made by the assessee which is to be added to the total income of the assessee. Thus, the order of the Ld. CIT(A) is modified and addition is restricted to 12.5% of the bogus purchases - Decided in favour of assessee in part .
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2021 (12) TMI 1079
Exemption u/s 54 - assessee has invested in three residential house properties at three different places - scope of amendment - whether exemption is available in respect of one residential house or more than one? - case of the assessee is that the expression “a residential house” is to be understood in a sense that the building should be residential one and the word “a residential” should not be construed as a singular number - HELD THAT:- As decided in SYED ALI ADIL [2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT] Even after the amendment of Section 54 and 54F, providing for exemption from long-term capital gains tax, only if the investment is made in one residential house property, one can still invest in more than one house and claim the lax: exemption, provided the taxpayer can prove that all such flats are used as a single residential nit by the family, in the abovementioned case, two residential units were purchased, which were separated by a strong wall and were purchased from two different vendors under two separate Sale deeds - The exemption was still granted to the tax payer, because both the flats were capable of being used as a single residential unit.
Therefore the letter 'a' in the context it is used should not be construed as meaning "singular." But, being an indefinite article, the said expression should be read in consonance with the other words 'buildings' and 'lands' and, therefore, the singular 'a residential house' also permits use of plural by virtue of Section 13(2) of the General Clauses Act.”
Since there are favourable judgments in support of the contention raised by the assessee, therefore, we hold that assessee is eligible for claim of exemption u/s 54 in respect of purchase of 3 different residential houses and amendment brought in the Finance Act, 2014 w.e.f. 01.04.2015 will not be applicable in AY 2013-14. - Decided in favour of assessee.
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2021 (12) TMI 1078
Addition u/s 68 - sale of Quoted shares of Premiere Capital Services Limited by relying on various third party documents and statement of third parties - Addition u/s.69 towards the commission paid to entry provider - HELD THAT:- As relying in the case of Shri Amit Mafatlal Shah [2020 (4) TMI 894 - ITAT MUMBAI] are neither able to persuade ourselves to subscribe to the adverse inferences drawn by the lower authorities in respect of the share transactions of the assessee by referring to the stand alone statement of Sh. Mukesh Choksi, as the same as observed by us hereinabove, suffer from serious infirmities, and as such cannot be summarily accepted, nor are able to dislodge the genuineness of the purchase and sale of shares which we find had been duly substantiated by the assessee on the basis of material made available on record, which we find had not been dislodged by the lower authorities. We thus in the backdrop of the totality of the facts of the case are unable to find ourselves to be in agreement with the view arrived at by the lower authorities. We thus set aside the order of the CIT(A), and delete both of the addition made u/s.68 and u/s. 69 - Decided in favour of assessee.
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2021 (12) TMI 1077
Disallowance of expenditure reimbursed - reimbursement of expenses to a non-resident placed at Dubai and South Africa - Addition u/s 40(a)(i) - addition on account of diversion of income - HELD THAT:- As reimbursement of expenses of both the entities were for carrying out market research for feasibility and expansion of market in neighboring countries particularly in Gulf and African region and day-to-day coordination in activities for the assessee, negotiation and procurement of orders, securing of materials, supply and distribution of materials to destination sites, logistic support and follow up and liaisoning for projects under execution etc. - as also undisputed fact that these firms were actually carrying out these activities as it has secured work order of more than ₹ 35 crores for the assessee. The copy of work orders were filed before the AO along with various documents and relied upon the correspondence which shows that the efforts were made for getting the new business there.
Sans any adverse material, AO cannot question the wisdom and business expectancy in which wake of such evidences and record which has been duly appreciated and taken note of by the ld. CIT (A). The documents which have been referred to in the first appellate order, as incorporated above, clearly show that both the entities i.e. Dubai based and South Africa based has assisted in the business development as well as procurement of huge business orders which was in line with the assessee’s business i.e. supply, installation, commissioning and maintenance of DG sets, power equipment and its spares/accessories. There is no adverse material on record to rebut the aforesaid documents as highlighted by the ld. CIT (A) above. Therefore, we do not find any reason to uphold the addition on the ground that there are no commercial activities. Accordingly, the finding of ld. CIT (A) is confirmed.
Disallowance made u/s 40(a)(i) - AO held that the said payment of reimbursement of expenses is in the nature of fee for technical services - As noted by the ld. CIT (A), there is no FTS clause in the India UAE DTAA regarding fee of technical services and, therefore, there cannot be any question of withholding of tax. Accordingly, disallowance u/s 40(a)(i) cannot be made. The aforesaid finding of ld. CIT (A) is accordingly confirmed.
Addition on account of diversion of income - We are unable to subscribe to the view taken by the AO that it is a paper entity and, therefore, there was diversion of profit. First of all, Chadha Projects JLT, Dubai is an independent entity incorporated under the laws of UAE and was carrying out various activities helping, assisting and getting contracts and procurements of orders for assessee firm and has also disclosed profits in its balance sheet of AED 7,92,674 including mark-up. If the non-resident entity has shown profit, then same cannot be added in the hands of the assessee company as income in India. Firstly, there is no evidence to prove that this was some kind of sham arrangement of profits along with markup and secondly, catena of documents and evidences were filed that the said entity is working there and for which mark-up of 10% of management fees is given, therefore, it cannot be held that all those documents are bogus or sham without any material information on record. Accordingly, findings of ld. CIT (A) on this score are also confirmed. - Decided against revenue.
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2021 (12) TMI 1076
Late remittance of employees’ contribution to PF and ESI u/s 139(1) - contribution paid by the assessee before the due date of filing of return of income u/s 139(1) - HELD THAT:- The Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees’ contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1).
As the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration - the employees’ contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee
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2021 (12) TMI 1075
Late filing fee u/s 234E - TDS returns filled in Form 26Q and Form 24Q for various quarters belatedly - HELD THAT:- In the instant case, out of 21 quarters, for 8 quarters the CIT(A) held that the assessee has not brought out sufficient cause for delay. Admittedly, for 8 quarters the issue is directly covered in favour of the assessee by the judgment of the Hon’ble jurisdictional High Court in the case of Sri Fateharaj Singhvi v. Union of India & Ors.[2016 (9) TMI 964 - KARNATAKA HIGH COURT] - assessee has filed application for condonation of delay. However, the CIT(A) without commented on above applications, states that the assessee had not brought out sufficient reasons to condone the delay (for only 8 quarters out of 21 quarters). Therefore, we hold that the CIT(A) has erred in dismissing the appeal pertaining to 8 quarters on the ground of delay in filing the appeal before him.
The assessing Officer cannot make any adjustment other than one prescribed in section 200A of the Act. Prior to 01.06.2015, there was no enabling provision in section 200A of the Act for making adjustment in respect of statement filed by the assessee with regard to tax deducted at source by levying fees u/s 234E of the Act. The Parliament for the first time enabled the Assessing Officer to make adjustment by levying fees u/s 234E of the Act with effect from 01.06.2015. The Hon’ble jurisdictional High Court in the case of Sri Fateharaj Singhvi v. Union of India & Ors. [2016 (9) TMI 964 - KARNATAKA HIGH COURT] has held that adjustment cannot be made by the A.O. for the respective assessment year prior to 01.06.2015. Therefore, for the relevant assessment years, namely, A.Ys 2013-2014, 2014- 2015 and 2015-2016, the levy of tax u/s 234E of the Act is impressible going by the dictum laid down by the Hon’ble jurisdictional High Court in the case of Sri Fateharaj Singhvi v. Union of India & Ors. (supra). - Decided in favour of assessee.
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2021 (12) TMI 1074
Addition u/s 69A - difference in the amount charged by the assessee from sale of office space in Siddh Icon project, Baner - HELD THAT:- Section 69A of the Act provides that where in any financial year an assessee is found to be the owner of any money, bullion, jewellery etc., which is not recorded in the books of account and the assessee offers no explanation about the nature and source of its acquisition or the explanation offered is not found by the AO to be satisfactory, the money and the value of such bullion, jewellery etc., may be deemed to be the income of the assessee for such financial year.
AO simply took peak sale rate for the two periods under consideration and applied the same to the other properties sold by the assessee during such periods for making the addition. There is no material on record to substantiate that the assessee, in fact, received some thing over and above the declared consideration. Per contra, the assessee tendered host of reasons justifying difference in the rates charged. Secondly, section 69A can be invoked only for such financial year in which the assessee is found to be the owner of the unexplained money, bullion, jewellery etc. Admittedly, section 69A is not applicable to the first two periods which do not fall in the previous year relevant to the assessment year under consideration. We, therefore, hold that the ld. CIT(A) was justified in deleting the addition.
Addition u/s.43CA - Reference to stamp value OR amount realized in respect of some other flats sold by the assessee during the period - HELD THAT:- Section 43CA has been inserted by the Finance Act, 2013 w.e.f. 01-04-2014. The assessment year under consideration is 2014-15 and the same is, therefore, applicable. Section 251 of the Act does not empower the CIT(A) to restore any matter to the AO for reconsideration inasmuch as he can only confirm, reduce, enhance or annul the assessment in an appeal filed against the order of assessment. From that angle, the decision of the CIT(A) cannot be countenanced, Howbeit, it is seen that the provision of section 43CA r.w.s.50C govern the situation under consideration. Though technically, we set-aside the view of the ld. CIT(A) in restoring the matter to the file of AO, we direct the AO to compute the amount of addition u/s.43CA with reference to stamp value and not the amount realized in respect of some other flats sold by the assessee during the period. In case the assessee disputes, a valid reference u/s.50C(2), may be ordered by the AO. This ground is disposed off accordingly.
Addition u/s.36(1)(iii) - interest bearing loans were found to have been advanced on which no interest was charged - HELD THAT:- The balance in the Reserves and Surplus account at the beginning of the year was at ₹ 2.35 crore, which at the end of the year shot up to ₹ 6.68 crore. Note No.2 gives bifurcation of such amount as indicating that the increase in the Reserves and Surplus was only because of profit during the year at ₹ 4,33,62,794/-. If we exclude the amount of profit during the year, the amount of Share Capital and Reserves and Surplus is short of the fresh loans advanced during the year. As the amount of share capital and the opening balance in the reserves and surplus account is less than the amount of fresh loans given during the year, the presumption as countenanced in Reliance Utilities [2009 (1) TMI 4 - BOMBAY HIGH COURT] does not ipso facto apply fully to the facts of the case. On a pertinent query, the ld. AR could not point out the dates on which such fresh loans were advanced during the year so as to find out the amount of shareholders fund existing on such dates. We, therefore, set-aside the impugned order and remit the matter to the file of the AO for deciding this issue afresh in the light of the judgment of Hon’ble Jurisdictional High Court in the case of Reliance Utilities (supra). Needless to say, the assessee will be allowed reasonable opportunity of hearing.
Deemed dividend u/s 2(22)(e) - HELD THAT:- As seen that the protective addition has been made in the hands of the assessee, who advanced the loans to its sister concerns. The assessee is not the one to have received loans. Section 2(22)(e) applies only when a loan is received which is treated as deemed dividend. As the assessee did not receive any amount from its related companies, the provisions of section 2(22)(e) cannot be applied. We, therefore, uphold the impugned order on this legal issue.
Addition as annual letting value of unsold commercial units of the real estate project Siddha Icon - HELD THAT:- It implies that where any building or land appurtenant thereto, held as stock in trade, is unsold at the end of the year, the annual letting value is required to be determined in terms of section 23(5) after a period of one year from the end of the relevant financial year in which the construction is completed. This amendment came into effect from 01-04-2018. The assessment year under consideration is 2014-15 and hence, the insertion will not apply to the instant case. The question as to whether notional rent on the unsold flats lying as stock in trade can be charged to tax as Income from the property came up for consideration before the Pune Tribunal in Kumar Properties and Real Estate (P) Ltd. Vs. DCIT [2021 (4) TMI 1163 - ITAT PUNE]. After considering the decisions - both for and against -, the Tribunal decided the issue in favour of the assessee. Respectfully following the aforesaid precedent in Kumar Properties (supra), we set-aside the impugned order and order to delete the addition sustained in the first appeal.
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2021 (12) TMI 1073
Revision u/s 263 - claim for deduction u/s 54B came to be allowed by the Assessing Officer without verification and enquiries - distinction between “lack of enquiry” and “inadequate enquiry” - HELD THAT:- We are of the considered opinion that the Assessing Officer had allowed the claim for deduction u/s 54B of the Act after due verification and examination of the details filed before the Assessing Officer and it cannot be said that there is total lack of enquiry on the part of the Assessing Officer while allowing the claim of the assessee. Therefore, the assessment order cannot be termed as “erroneous”. There is no material on record indicating that the appellant had not satisfied the conditions laid down under the provisions of the Act for claiming exemption u/s 54B of the Act. Therefore, the assessment order cannot be branded as “erroneous” and “prejudicial to the interests of the revenue”. Thus, the ld. Pr.CIT is not justified in exercising the power of revision u/s 263 of the Act and order passed u/s 263 by the ld. Pr.CIT is hereby set-aside. Accordingly, the grounds of appeal raised by the assessee stand allowed.
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2021 (12) TMI 1072
Revision u/s 263 by CIT - as per CIT AO had failed to verify applicability of the provisions of Section 56(2)(viia) - HELD THAT:- AO had applied his mind to the information and details furnished by the assessee and after considering the information, the AO did not proceed to make any addition on account of purchase of unlisted equity shares, which according to us is a possible view - Before us, no material has been placed by the Revenue to demonstrate that the view taken by the AO was wholly unsustainable in law or the AO has not examined the issue which he was required to examine in a limited scrutiny matter.
The order of the AO cannot be branded as erroneous if the Commissioner is not satisfied with the conclusion arrived by the Assessing Officer. The order can be brought within the purview of an erroneous order only if it involves an error by deviating from law or upon erroneous application of the legal principle. It is a settled law that the power of revision can be exercised only where no inquiry as required under the law is done and it is not open to enquire in cases of inadequate inquiry. In the present case, as noted above, the AO had raised various queries and the same were also replied by the Assessee. In such a situation it cannot be said that there was lack of inquiry from the end of AO.
Co-ordinate Bench of Tribunal in the case of M/S Pawansut Media Services Pvt. Ltd. [2021 (11) TMI 924 - ITAT DELHI] on identical facts and relying on the decision of Hon’ble Delhi High Court in the case of Pr. CIT vs. Brahma Center Development P. Ltd.[2021 (7) TMI 347 - DELHI HIGH COURT] held that PCIT was not justified in assuming the jurisdiction.
As far as the invocation of Explanation 2 to Section 263 by PCIT in the present case is concerned, we are of the view that only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional power so conferred can be exercised to invalidate the action of AO. PCIT was not justified in invoking the provisions of Section 263 of the Act to set aside the assessment order passed by AO u/s 143(3) of the Act. We therefore setaside the order of PCIT. Ground of the assessee are allowed.
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2021 (12) TMI 1071
Late deposit of employees share of PF & ESI which were deposited after the due date but before the due date of filing of return of income - AO made the additions of the impugned amounts for the reasons that the assessee did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) - HELD THAT:- As decided in RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED VERSUS THE ITO, WARD 5 (2) , CHANDIGARH [2021 (11) TMI 370 - ITAT CHANDIGARH] assessee deposited the contribution of PF & ESI belated in terms of section 36(1)(va) of the Act, however, the said deposits were made prior to filing of return of income u/s 139(1).
Impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee
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2021 (12) TMI 1070
Addition u/s. 68 - Unexplained share application money - Unexplained Share Capital and Share Premium - HELD THAT:- In this case, the impugned additions have been made because of the reason that the assessee was not able to produce the necessary evidences to prove the genuineness of the transactions relating to the share capital, share premium and unexplained loans. The assessee had duly explained the reasons for his inability to produce the relevant documents during the assessment proceedings as well as in the quantum appeal proceedings before the Ld. CIT(A) - assessee has been able to procure the evidences from the concerned parties including the confirmations and details of bank account etc. to prove the creditworthiness of the investor and genuineness of the transactions, which evidences have been duly considered by the Ld. CIT(A) in penalty appeal and he has deleted the penalty so levied by the AO in respect of the impugned additions made by the Assessing officer.
Under the circumstances, it seems that the assessee has a fair case on merits. In our view, interest of justice will be well served, if the assessee is given an opportunity to produce the relevant evidences before the Assessing officer.The impugned order of the CIT(A) is set aside and the matter is restored to the file of the Assessing officer for decision afresh. Appeal of the assessee is treated as allowed for statistical purposes.
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2021 (12) TMI 1069
Late payments towards EPF and ESI under section 36(1)(va) - Payment before furnishing the return of income u/s 139(1) - HELD THAT:- As relying on RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED VERSUS THE ITO, WARD 5 (2) , CHANDIGARH [2021 (11) TMI 370 - ITAT CHANDIGARH] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2021 (12) TMI 1068
Exemption u/s 11 - Expenditure on distributing prize, Honorarium to jury, Event management expenses and Employee benefits - Whether expenditure incurred directly or indirectly in connection with the objects of the Trust? - sole objective of the Trust is the running of Infosys Prize annual award to honor outstanding achievements to scholars / scientists - HELD THAT:- The objects of the Trust has also been accepted by the Ld.AO which is to institute prizes which are meant to achievers in various fields and endeavors to elevate the prestige of scientific research in India and inspire young Indians to choose a vocation in scientific research. Since its inception, the assessee focused solely on the governance and running of Infosys Prize, annual award to honor outstanding achievements to scholars / scientists.
The contention of the Ld.AO that the expenses are routine expenses incurred for the day to day activities of the Trust is not correct.
The expenditure comprised of Honorarium to Juries for selection of prize winners, event management expenses incurred for Infosys Prize ceremony, travelling and conveyance expenses, memento and souvenir expenses, professional charges and service tax thereon, employee benefits and other expenses. These expenses were incurred in connection with the Infosys Prize ceremony held during the year. During the previous year 2015-16 relevant to AY 2016-17, the Infosys Prize was announced on 16.11.2015 and the awards ceremony was held at New Delhi on 13.2.2016. Thus, there is no merit in the contention of the Ld.AO that the expenditure was held towards the routine activities of the trust and hence the same cannot be considered as utilised from the amounts accumulated u/s 11(2) towards a specific activity.
The application of income for charitable purpose includes any expenditure incurred directly or indirectly in connection with the objects of the Trust. To treat only direct expenditure incurred as application for objects of the Trust would be too narrow a view. In the present case, the sole objective of the Trust is the running of Infosys Prize annual award to honor outstanding achievements to scholars / scientists. There is no other objectives for which the Trust carried on its activities. Thus, the entire expenditure incurred during the year was towards the purpose of carrying on the aforesaid charitable activity.
Income of the current year and income accumulated u/s 11(2) are parked in deposits and SB account with scheduled banks which are permitted as per section 11(5). The maturity proceeds are again reinvested in deposits. Thus, the identity of monies as current year's income and income accumulated u/s 11(2) is not possible. Consequently, the expenditure of ₹ 5,31,43,622 incurred towards the objectives of the Trust should be treated as application of income out of earlier years’ accumulation of income as declared by the assessee.
We are of the opinion that when the expenditure can be treated as application of amount from current year's income, there is no reason as to why the same should not be treated as spent out of earlier years’ accumulation - no justifiable reason for separating and treating expenditure of ₹ 5,31,43,622 differently from the Prize Money expenditure - Decided in favour of assessee.
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