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Income Tax - Case Laws
Showing 281 to 300 of 7776 Records
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2021 (12) TMI 929
Eligibility of deduction u/s 80P(2)(a)(i) - Receipt of interest income from non-members - HELD THAT:- It is only the interest derived from the credit provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the State Bank of India is not being attributable to the business as envisaged under the provisions of the Act. Thus the same cannot be deducted under section 80P(2)(a)(i) of the Act. Thus, there remains no ambiguity that income received by the assessee from non-members is not eligible for deduction under section 80P(2)(a)(i) - the profits and gains attributable to non-members arising as a result of advancement of loans was held to be not an allowable deduction under Section 80P(2)(a)(i) of the Act. In view of the above, we do not find any merits in the argument advanced by the learned counsel for the assessee.
Determine the income which is not eligible for deduction under section 80P(2)(a)(i) - Assessee is not maintaining any separate books of accounts qua the income from nonmembers as discussed above. The income on the deposits from the non-members has been treated as income from other sources but the gross income cannot be excluded from the deduction available to the assessee under the provisions of section 80P(2)(a)(i) of the Act. It is the net interest income on the deposits from the non-members which needs to be excluded from the amount of deduction claimed under section 80P(2)(a)(i) of the Act and the same should be brought to tax under the head income from other sources under the provisions of section 56 of the Act. To determine, the net income from the non-members, amount of expenses incurred in generating such interest income should be allowed as deduction from the gross income of interest in pursuance to the provisions of section 57 - The above provisions require to deduct the expenses from the income which have been incurred wholly and exclusively for the purpose of earning such income
Thus we direct the AO to work out the interest income from the non-members after deducting the corresponding expenses incurred by the assessee in generating the interest income. To our understanding such expenses have to be brought on record by the assessee based on cogent materials. Furthermore, if the assessee has made deposits in the banks out of the money borrowed from the members, then the corresponding interest cost borne by the assessee should be allowed as deduction.
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2021 (12) TMI 928
Disallowance u/s.14A in respect of strategic investments made by the assessee - CIT(A) applied the provisions of Section 36(1)(iii) of the Act and held that since investments were made out of borrowed funds by the assessee company, the interest paid on borrowings would be disallowed u/s.36(1)(iii) - HELD THAT:- CIT(A) is bound to adjudicate only that issue which is before him and not consider a new source of income which is disallowance of interest u/s.36(1)(iii) of the Act as it is not the subject matter of the appeal before him. In any case, in the absence of exempt income derived by the assessee during the year, the disallowance made by the ld. AO u/s.14A of the Act has been deleted by the ld. CIT(A). The matter ends there.
CIT(A) could not have looked into a new source of income i.e. disallowance of interest u/s.36(1)(iii) of the Act. We also find that from the perusal of the entire CIT(A)’s order, there is not even a whisper about proposal to enhance the assessment by issuing proper enhancement notice to the assessee in terms of Section 251 of the Act.
In any case, the undisputed fact is that the borrowed funds has been utilized by the assessee for making investment in the group company which is made in the ordinary course of business and hence, once the borrowed funds are utilized for the purpose of business, the interest paid thereon would be squarely allowable as deduction u/s.36(1)(iii) of the Act. The law is very well settled on this issue by series of judicial pronouncements including various decisions of the Hon’ble Supreme Court - we direct the ld. AO to delete the disallowance of interest u/s.36(1)(iii) - Appeal of the assessee is allowed.
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2021 (12) TMI 927
Revision u/s 263 by CIT - Assessments passed u/s.201(1) and 201(1A) in incorrect name of assessee - Name of the assessee has been mentioned inadvertently as - "M/s Vodafone South Limited (VSL - Hyd)" instead of mentioning the name of the assessee as – M/s.Vodafone Mobile Services Limited. - HELD THAT:- PCIT’s detailed discussion in issue before us has itself acknowledged that the Assessing Officer had passed the necessary corrigendum dt.22-01-2018 rectifying the name of the assessee-company from M/s.Vodafone South Ltd., (VSL-Hyd) to M/s.Vodafone Mobile Services Limited. There could hardly be any dispute that such corrigendum forming part of the PCIT’s discussion in para 2.2 dates back to the main orders as on 27-02-2017 only.
This tribunal’s common order in assessee’s corresponding quantum appeals [2018 (5) TMI 2104 - ITAT HYDERABAD] has rejected the assessee’s corresponding pleas as well.
Once learned PCIT’s revision directions in view of the issue, treat the alleged error committed by the Assessing Officer in incorporating the foregoing name to be only clerical and rectifiable in nature we fail to understand in this clinching factual backdrop as to how the impugned assessment/order(s) passed by the Assessing Officer could be erroneous ones, causing prejudice to the interest of Revenue; simultaneously as held in Malabar Industrial Co. Vs. CIT[2000 (2) TMI 10 - SUPREME COURT] - PCIT has nowhere concluded that the Assessing Officer’s orders in issue attract assumption of Section 263 revision jurisdiction in the given facts after the assessing authority had issued corrigendum and the same involved only a clerical mistake; as the case may be (supra).
We thus conclude that the PCIT herein has erred in law and facts in invoking his Section 263 revision jurisdiction - Decided in favour of assessee.
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2021 (12) TMI 926
Validity of assessment u/s 153C - seized assets/documents belonging to a person other than a searched person - relevant date for applying the provisions of Section 153A - HELD THAT:- AO has considered six assessment years from 2005-06 to 2010-11 for assessment under section 153C of the Act corresponding to search period in the case of M/s SDS Group of Companies, i.e., six assessment years corresponding to the previous years immediately prior to the previous year in which search was conducted. Whereas, the Hon’ble Delhi High Court in the case of RRJ Securities Ltd. [2015 (11) TMI 19 - DELHI HIGH COURT] held that wherever seized documents belonging to third-party have been found during the course of the search, then for assessment u/s 153C of the Act has to be taken for six assessment years corresponding to the previous years prior to the previous year in which such seized material/document along with satisfaction note of the Assessing Officer of the search person are received by the Assessing Officer of the assessee.
In the case of the assessee, relevant seized document belonging to the assessee along with satisfaction note of the Assessing Officer of the searched person, have been received on 05/04/2013 and therefore assessment proceedings u/s 153C should have been initiated only from assessment year 2008-09 to assessment year 2013-14. Thus, assessment year under consideration was not to be completed u/s 153C of the Act. In our considered opinion, there is no error in the order of the Ld. CIT(A) in following the binding precedent of the jurisdictional High Court.
Profit earned from sale of land transaction - development agreement between the assessee company and another associated company M/s Parasvnath Developers Ltd., the assessee purchased certain lands at Jodhpur in the assessment year 2006-07, which were subsequently developed and sold by M/s Parasvnath Developers Ltd. - HELD THAT:- We find that the Assessing Officer has not disputed the fact that M/s Parasvnath Developers Ltd. has declared profit in their books of account on sale of the land developed by them under the development agreement with the assessee, though the land remained registered in the name of the assessee. This profit declared has been assessed in substantive capacity in the case of M/s Parasvnath Developers Ltd. The Assessing Officer has simultaneously assessed income in the hands of the assessee for profit on the sale of the same land and that too on substantive basis in the case of the assessee also. In our opinion, this action of the Assessing Officer of assessing same income on substantive basis in the hands of two assessess is not justified.
If the income in the hands of M/S Parasvnath Developers has been accepted by the Department, assessing again the same income in the hands of the assessee, amounts to taxing same income twice. Further, the Assessing Officer has failed to bring on record any evidence that said developed land has been sold by the assessee. In view of the above facts and circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute, and accordingly, uphold the same. The grounds raised by the Revenue are, accordingly, dismissed.
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2021 (12) TMI 925
Eligibility of deduction u/s 80P(2)(a)(i) - Receipt of interest income from non-members - HELD THAT:- It is only the interest derived from the credit provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the State Bank of India is not being attributable to the business as envisaged under the provisions of the Act. Thus the same cannot be deducted under section 80P(2)(a)(i) of the Act. Thus, there remains no ambiguity that income received by the assessee on the money deposited with the bank is not eligible for deduction under section 80P(2)(a)(i).
Thus, the profits and gains attributable to non-members arising as a result of advancement of loans was held to be not an allowable deduction under Section 80P(2)(a)(i) of the Act. In view of the above, we do not find any merits in the argument advanced by the learned counsel for the assessee
Deduction under section 80P(2)(c) - The expression 'profits and gains' in clause (c) of sub-section (2) of section 80P of the Act is not confined to 'Profits and gains of business'. Thus, in case of co-operative credit society, income to which benefit of section 80P(2)(a)(i) is not allowed, e.g., rental income, interest income from surplus funds kept in FDs' of banks, etc., basic exemption of ₹ 50,000 as provided for in section 80P(2)(c)(ii) must be granted.
It also appears that, though the word 'activity' is not defined, yet the investment activity, activity of renting of immovable property, etc., and the consequent income attributable to such activities would be covered under section 80P(2)(c). Hence, we direct the AO to allow the deduction under section 80P(2)(c) of the Act. Thus the ground of appeal of the assessee is allowed.
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2021 (12) TMI 924
Estimation of income - bogus purchases - HELD THAT:- We agree with the view of the lower authorities that there should be an estimation of profit element from these purchases and should be estimated reasonably as the assessee could not conclusively prove that the purchases made are from the parties as claimed, especially in the absence of any confirmations from them. Taking the totality of facts and circumstances, keeping in view the nature of business of the assessee i.e. trader in Ferrous and non-Ferrous Metals, it would be justified if the profit element embedded in those purchases are estimated at 4%. Accordingly, we direct the Assessing Officer to estimate the profit element from the non- genuine purchases at 4% for the Assessment Year under consideration
Non maintainability of appeal as filled manually - Mandation of appeal filled electronically - HELD THAT:- An identical issue had come up before the Coordinate Bench in the case of All India Federation of Tax Practitioners v. ITO[2018 (6) TMI 1171 - ITAT MUMBAI] and the Tribunal held that non-filing of appeal in the electronic form is only a procedural defect which can be cured and the Tribunal restored the appeal back to the file of the Ld.CIT(A) for disposal on merits and the assessee was directed to file appeal in electronic form within ten days on receipt of order. Similar view has been taken by the Coordinate Bench in the various decisions. Following the above decisions, this appeal is restored to the file of the Ld.CIT(A) and assessee is directed to e-file the aforesaid appeal within a period of Fifteen (15) days from the date of receipt of this order, consequent to which delay in e-filing shall stand condoned and the Ld.CIT(A) shall dispose off the appeal on merits. Needless to say that the Ld.CIT(A) shall give adequate opportunity of being heard to the assessee.
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2021 (12) TMI 923
Estimation of income - Bogus purchases - estimation of gross profit at 12.5% - HELD THAT:- As relying in assessee's ow case [2021 (12) TMI 52 - ITAT MUMBAI] we direct the Assessing Officer to estimate the Gross Profit element from tainted purchases at 1% as against 12.5% estimated by the Ld.CIT(A). Accordingly, the grounds raised by the assessee are partly allowed.
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2021 (12) TMI 922
Deemed dividend addition u/s 2(22)(e) - ICD given to the assessee-company in which the shareholders have substantial interest and thus, the ICD given by the JP Iscon was treated as deemed dividend in the hands of the assessee - HELD THAT:- We find that the fact that the assessee is not a shareholder in the lender-company, which is first and foremost condition for application of section 2(22)(e) of the Act, has been duly considered. Further that, the transaction is not in the nature of advance or loan, but simply an ICD and the appellant had further provided for the interest expenditure on the said deposits borrowed, and the fact of deducting necessary TDS was considered. Factum of paying back of said ICD along with interest during the financial year 2008-09 by the assessee to the lender-company which was brought to the notice of the ld.CIT(A), has duly been considered.
The judgment on this aspect passed by the Special Bench, ITAT Mumbai Benches in the case of ACIT Vs. Bhaumik Colours P.Ltd. [2008 (11) TMI 273 - ITAT BOMBAY-E ]and the judgment of jurisdictional High Court in the matter of CIT Vs. Daisy Packers P.Ltd.[2015 (7) TMI 253 - GUJARAT HIGH COURT] as have been relied upon by the ld.AR before us, have also been duly considered by the ld.CIT(A). In fact, the judgment passed by the Hon’ble Delhi High Court in the case of Anitech P.Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT] was also taken into consideration while deleting the addition.
On perused the judgments passed by different judicial forums as relied upon by the Ld. AR. The ratio laid down therein is that, in a case, in which an amount is received from a person, other than the shareholder, provision of section 2(22)(e) of the Act cannot indeed be invoked. In the instant case, the appellant company was not a registered shareholder of the lender-company viz. JP Iscon Ltd. from which the assessee-company has obtained ICD during the year under consideration, and therefore, the addition made by the Ld. AO by invoking provisions of section 2(22)(e) of the Act, has rightly been deleted by the ld.CIT(A) without any ambiguity so as to warrant interference. Hence, appeal preferred by the Revenue is found to be devoid of any merit and thus stands dismissed.
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2021 (12) TMI 921
Initiation of assessment proceedings u/s. 147 r.w.s. 148 - according to the assessee ought to have been initiated u/s. 153C - whether the details of seized material found during the course of search were belonging to assessee so as to issue notice u/s. 153C of the Act.? - HELD THAT:- In the present case, it is not possible for the AO to assume jurisdiction u/s. 153C of the Act since the pre-requisite is that any money, bullion, jewellery or other valuable article or things or books of account or documents seized or requisitioned belong or belongs to a person other than the person in whose case search is conducted u/s. 132 of the Act. Therefore, initiation of section 153 of the Act for framing assessment u/s. 153C r.w.s. 143(3) of the Act is not satisfied. The only way to frame assessment is by way of issue of notice u/s. 148 invoking the provisions of section 147 of the Act which was rightly exercised by the present AO. Accordingly, we do not find any infirmity in the action of the AO for issuing notice u/s. 148 - this ground of the assessee is dismissed and the reopening of assessment is confirmed.
Addition u/s 69A - unexplained money - In course of search of PDP certain Compact Discs(CD) were found which contained data pertaining to unaccounted receipts and payments by PDP - seized document AK/PDP/06 and DTTE which was owned up by PDP and CHDC and determined income arising out of the same and taxed the same - Assessee reiterated his stand that the Assessee was only acting as liaison and the ledger was an imprest account where sums were spent on behalf of PDP and CHDC and Assessee has no interest whatsoever except as agent of PDP - HELD THAT:- SC in the case of CHDC that the entries arising from DTTE were offered to tax by the peak credit method. This has been accepted by the CIT(A). The CIT(A) has however gone on the premise that expenditure of PDP or CHDC would be income in the hands of the Assessee. This is contrary to the claim of PDP that the Assessee was acting as liaison for and on behalf of the Assessee that the ledger account was imprest account meaning thereby that whatever is found in the ledger is entries of PDP and CHDC and the Assessee has no interest whatsoever in respect of the sums reflected in the ledger account. It is undisputed that the entire entries in DTTE were considered in the proceedings before SC in determining the income of PDP and CHDC.
Therefore the claim of the Assessee ought to have been accepted by the CIT(A). Even before the AO the Assessee has taken a stand regarding the entries in the ledger account being subject matter of proceedings before SC by PDP and CHDC. The fact that the Assessee disowned the entries in one AY and claimed that it is part of receipts disclosed in another AY cannot be the basis to reject the claim of the Assessee. Admissions are good piece of evidence but are not conclusive. The person making the admission is entitled to show that admission is incorrect or was made under erroneous belief or owing to other circumstances. The circumstances of the present case clearly demonstrate the correctness of the plea raised by the Assessee. We therefore direct that the addition made in this regard deserves to be deleted and is hereby deleted.
AY 2007-08 - Addition made in the hands of the Assessee cannot be sustained. It is clear from perusal of the ledger account based on which the addition has been made is in the name of D.N. Associates. Though the description in the relevant entries for a sum of ₹ 86 lacs has reference to “Anand Nadig” i.e., the Assessee, it cannot be attributed to the Assessee in his individual capacity. The Assessee is partner of D.N. Associates and if at all any addition is to be made it can be only in the hands of the firm. D.N. Associates had declared additional income of ₹ 3.64 Crores in AY 2007-08 and ₹ 50 lacs in AY 2008-09 thus total sum of ₹ 4.14 crores were offered in the return of income of D.N. Associates. With regard to the remaining sum of ₹ 86 lacs, there is no mention in the order of Assessment for AY 2007-08 in the case of D.N. Associates, a copy of which is placed at page-162 to 164 of the Assessee’s paper book. The Assessee has disowned the transaction in his individual capacity to the extent of ₹ 86 lacs even before the AO. In such circumstances, the addition made is unsustainable and hence the same is directed to be deleted.
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2021 (12) TMI 920
Reopening of assessment u/s 147 - assessee has made transactions in commodities exchange during the impugned assessment year and had not filed its return of income - assessee neither responded to the notice issued under section 148 nor responded to the notice issued under section 142(1) therefore, the A.O. estimated the profit @ 0.5% and added an amount to the total income of the assessee under section 69 - As submission of Assessee that no reasonable opportunity was given to the assessee to explain the source of margin money and notice was never served on the assessee from the side of the A.O. for which there was no compliance and the A.O. had passed the order under section 144- HELD THAT:- In the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to the file of A.O. with a direction to give one more opportunity to the assessee to substantiate its case and decide the issue as per fact and Law. The assessee is also hereby directed to appear before the A.O. and substantiate its case without seeking any adjournment under any pretext, failing which, the A.O. is at liberty to pass appropriate order as per Law. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2021 (12) TMI 891
Assessment u/s 144C - reference to the Dispute Resolution Panel (DRP) - Petitioner’s case is that Section 144C (2) requires assessee to choose to file reference before the Dispute Resolution Panel (DRP) to file such objection before DRP within 30 days from the receipt of Draft Assessment Order - HELD THAT:- The section enquires assessee to file a copy of the reference with the Assessing Officer within the time limit prescribed. Section 144C (4) of the Act requires Assessing Officer to pass a final order within one month from the end of the month in which the period of filing of objections before DRP and AO expires.
According to petitioner though Section 144C of the Act requires petitioner to communicate the reference filed it before the DRP to the AO, petitioner was under a reasonable belief that, with the assessments being faceless and completely electronic, the reference filed by it would automatically communicated to Respondent No.2 by Respondent No.5 which is the DRP. Unfortunately, petitioner’s belief was not correct and the Assessing Officer not being aware of petitioner having filed reference before DRP, after expiry of prescribed period of 30 days proceeded to pass the Assessment Order dated 28th June, 2021 which is impugned in this petition.
The reference before DRP is still pending. It is also not disputed that petitioner had filed to directly communicate the reference to DRP to the Assessing Officer.
We have considered the petition, reply, rejoinder, sur-rejoinder and sur-sur-rejoinder and also heard Mr. S. Sriram and Mr. Suresh Kumar.
Since petitioner had already filed a reference raising his objections to the DRP and Section 144C (4) of the Act requires the Assessing Officer to pass the final order including the view expressed by the DRP, we will be justified in setting aside the order of the Assessing Officer dated 28th June, 2021 which is impugned in this petition. We would also observe that the AO cannot be faulted for passing the impugned order. At the same time, the Assessing Officer will also have benefit of considering the views of DRP while passing a fresh Assessment Order.
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2021 (12) TMI 882
Regular assessment or not - Waiver of levy of interest u/s 215 - delay in finalisation of the assessment was not attributable to the Appellant - whether tribunal was right in holding that a fresh assessment which has been made by the Assessing Officer to give effect to the directions of the Commissioner of Income Tax under Section 263 of the Act setting aside the original assessment, would constitute a ‘regular assessment’ for purposes of section 215 of the Act ? - HELD THAT:- For assessment year 1985-86, returned total income of Appellant was ₹ 1,63,41,650/-. In the regular assessment proceeding completed on 28/03/1988, the total income was determined at ₹ 2,74,47,780/- and interest under Section 215 of the said Act amounting to ₹ 13,67,999/- was charged. In the Appeal filed by the Assessee, the amount of interest was reduced to ₹ 8,53,650/-. In the facts of the case, since the interest under Section 215 was charged in the regular assessment order, the Assessing Officer had the power to charge interest under Section 215 of the Act, while carrying out reassessment.
Section 215(4) empowers the Assessing Officer to waive or reduce the amount of interest chargeable under section 215 under circumstances prescribed in rule 40 of the Income Tax Rules, 1962.
Deputy Commissioner of Income Tax, Bombay, by order dated 20/03/1989 in the exercise of power under Rule 40 of Income Tax Rules, held that delay in finalization of assessment is not attributable to Assessee and therefore the Assessee is not liable to pay interest under Section 215 of the Act beyond the period of one year from the date of filing of return. Accordingly, the Appellant was held to be liable to pay an amount of ₹ 4,40,020/-. The order of Dy.CIT, Bombay, dated 20/03/1989, has not been challenged by Revenue or Appellant, with the result said order attained finality. In the absence of challenge to the order under Rule 40(1) of IT Rules, the Appellant is not entitled to the benefit of Judgment of Division Bench of this Court in the case of CIT Vs. Bennett Coleman & Co. Ltd. [1993 (6) TMI 3 - BOMBAY HIGH COURT]
Therefore Appellant is not entitled to waiver of interest for a period of one year. Appellant is entitled to the benefit of order dated 20/03/1989 passed under Rule 40(1) only to the extent stated therein.
Appellant was liable to pay an amount of ₹ 4,13,630/-as per order dated 20/03/1989 annexed to this Appeal at Exh.C. The questions are answered accordingly.
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2021 (12) TMI 881
Reopening of assessment u/s 147 - Taxability of income of a non-resident by way of capital gain - HELD THAT:- The reassessment proceedings are initiated purely on change of opinion with regard to the rate of tax payable by petitioner on the long term capital gain made by it on the sale of shares of Hindustan Lever Ltd. The issue of applicability of first proviso to Section 48 as well as rate of tax under Section 112 were discussed and considered at the time of the said assessment proceedings under Section 143(3).
As held in First Source Solutions Limited V/s. The Assistant Commissioner of Income Tax – 12(2) (1) [2021 (9) TMI 248 - BOMBAY HIGH COURT] reasons of re-opening the assessment has to be based / examined only on the basis of reasons recorded at the time of issuing a notice under Section 148 of the Act seeking to re-open the assessment. These reasons cannot be improved upon and/or supplemented much less substituted by an affidavit and/or oral submissions.
Once a query has been raised by Assessing Officer through the assessment proceeding and the assessee has responded to that query, it would necessarily follow that Assessing Officer has accepted petitioner's submissions so as not to deal with that issue in the assessment year. Even if, the assessment order passed under Section 143(3) of the Act does not reflect any consideration of the issue, it must follow that no opinion was formed by Assessing Officer in the regular assessment proceedings - once all the material was placed before Assessing Officer and he chose not to refer to the deduction / claim which was being allowed in the assessment order, it could not be contended that Assessing Officer had not applied his mind while passing the assessment order.
When a query has been raised, as has been done in this case, with regard to a particular issue during regular assessment proceedings, it must follow that Assessing Officer had applied his mind and taken a view in the matter as is reflected in the assessment order - once a query has been raised in the assessment proceedings with regard to rate at which capital gains should be taxed under Section 112(1)(c)(ii) and petitioner has responded to the query to the satisfaction of Assessing Officer as is evident from the fact in the assessment order dated 15th November 2006, accepts petitioner's submissions as to why taxation should be only 10% under Section 112 read with Section 148 of the Act, it must follow that there is due application of mind by Assessing Officer to the issue raised. Non rejection of the explanation in the assessment order would amount to Assessing Officer accepting the view of petitioner, thus taking a view / forming an opinion. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. - Decided in favour of assessee.
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2021 (12) TMI 880
Reopening of assessment u/s 147 - Eligibility of reasons to believe - claim of unabsorbed depreciation and business loss - HELD THAT:- Perusal of the reasons record by respondent No.1 indicates that the notice of reassessment proceeds on the basis of material which was available during original assessment and is not based on fresh tangible material received. The record indicates that a specific query was raised during original assessment and Petitioner had submitted details of unabsorbed depreciation and business loss. Petitioner had disclosed the figures of unabsorbed business loss and unabsorbed depreciation in ITR Form-6. Petitioner had also filed computation of income under provisions of the said Act. Petitioner had also disclosed in Schedule relating to MAT in the said Form giving details of working of book profit including specific disclosures under the head "Loss brought forward or unabsorbed depreciation, whichever is less". From the reasons recorded by Respondent No.1, it appears that there was no tangible material for Respondent No.1 to conclude that income had escaped assessment.
For the aforesaid reasons the Assessing Officer has acted in excess of the limit of his jurisdiction to reopen the assessment in the exercise of powers under Section 147 read with Section 148 of the said Act. Accordingly, Petitioner would be entitled to succeed in this proceeding. - Decided in favour of assessee.
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2021 (12) TMI 879
Prosecution u/s 276C(1) - allegation against Petitioner is of evasion of tax and, therefore, ingredients of the offence alleged against Petitioner are, prima facie, satisfied - order of sanction at Ex. ‘D-3’ stating that Petitioner has failed to substantiate the claim of purchases to be treated as bogus - HELD THAT:- It is well settled that before granting sanction the authority must have before it the necessary report and the material facts which prima facie establish the commission of offence alleged for and that the sanctioning authority would apply its mind to those facts. The order of sanction is only an administrative act and not a quasi-judicial one nor is a lis involved. Therefore, the order of sanction need not contain detailed reasons in support thereof. But the basic facts that constitute the offence must be apparent on the sanction order and the record must bear out the reasons in that regard. A perusal of the sanction order clearly indicates that the sanctioning authority appears to have applied its mind to the facts placed before it and considered them and then granted sanction.
Perusal of the complaint launched against Petitioner also disclose allegations that Petitioner failed to substantiate the claim of purchases amounting to ₹ 2,74,03,016/- and the assessing officer held the purchases to be bogus and made an addition of ₹ 34,25,377/(12.5% of the bogus purchases). On Appeal by Petitioner, CIT (A) vide order dated 19.12.2016 confirmed the addition. ITAT also confirmed said order. It is stated that, therefore, Petitioner has willfully and intentionally evaded his tax liability.
Taking into consideration accusations in the complaint and material on record, we are satisfied that, prima facie, the ingredients of the offences under Section 276C(1) of the said Act are satisfied. Assessee Petition dismissed.
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2021 (12) TMI 878
Late remittance of employees’ contribution to PF and ESI - Payment prior to the due date of filing of the return of income u/s 139(1) - HELD THAT:- Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT [2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down 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) - It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory.
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 and the disallowance made by the AO is deleted. - Decided in favour of assessee.
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2021 (12) TMI 877
Reopening of assessment u/s 147 - taxation as fees for technical services at the rate of 10% under Article 12 of the India Sweden DTAA - HELD THAT:- On going through the relevant material on record, it becomes emphatically clear that the assessee disclosed fully and truly all material facts necessary for the assessment during the course of original proceedings completed u/s.143(3) and there was nothing which was withheld by it. What inference the AO draws from the material placed before him is a secondary question and matter of concern for the Department only. Insofar as the proviso to section 147 is concerned, the same gets immediately magnetized when it is proved that the original assessment was completed u/s.143(3) and a period of four years has elapsed form the end of the relevant assessment year and further there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.
Adverting to the facts of the instant case, we find that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment completed u/s. 143(3). Since the period of four years from the end of the relevant assessment year expired at the time when the AO issued notice u/s. 148, we hold that such a notice and the consequential assessment order are bad in law and hence vitiated.
A.Y. 2013-14 - Proviso to section 147 mandates that no reassessment can take place after four years from the end of the relevant assessment year when the original assessment was completed u/s. 143(3) and there is no failure on the part of the assessee to disclose fully and truly all material facts necessary facts for reassessment. Here again, we find that the AO inquired about the amounts received by the assessee not offered for taxation during the course of original assessment proceedings by means of a notice u/s. 142(1) of the Act. The assessee furnished details of income of ₹ 9.26 crore not offered for taxation in its reply with the necessary justification.
As evident that the AO initiated reassessment proceedings by means of notice u/s. 148 dated 29-03-2019 after four years from the end of the relevant assessment year when the original assessment was completed u/s. 143(3) and there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment - we quash the notice u/s. 148 and the consequential assessment order - Decided in favour of assessee.
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2021 (12) TMI 876
Disallowance of interest expenses on perusal of the financials of the assessee - CIT(A) to allow deduction of interest expenses on loan taken in computation of capital gain by holding that the interest expenses is an expenditure incurred wholly and exclusively in connection with the transfer of commercial property - Whether CIT(A) was right in deleting the disallowances of interest expense and other revenue expenditure, without giving proper opportunity under Rule 46A to the AO for verifying the additional evidences - final accounts of relevant AYs, submitted during appeal proceeding, based on which relief has been given by the Ld. CIT(A)? - HELD THAT:- We have perused the assessment order passed under section 143(3) r.w.s. 147 of the Act and find that the para 3 and 4 clearly speaks the reply submitted before the Assessing Officer that the interest paid on loans has been included in the cost of acquisition and not claimed as revenue expenditure.
All the details furnished before the ld. CIT(A) were already furnished before the Assessing Officer in their letter dated 23.12.2013 and after examining the materials available on record, the ld. CIT(A) has held that the interest expenditure had been capitalized and not claimed as revenue expenditure, which was not disputed by the Assessing Officer in his remand report against the submissions of the assessee. In view of the above, we find no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the Revenue stands dismissed.
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2021 (12) TMI 875
Disallowance of cash payments in excess of prescribed limit u/s. 40A(3) - HELD THAT:- In case of payments made for purchase of river sand in a village, it was an explanation of the assessee that said payments is made for purchase of product manufactured or processed without aid of power. Since, the processing of river sand is without aid of power and further such industry is in the nature of cottage industry, payment made for procurement of river sand comes under Clause (f) of Rule 6DD of IT Rules, 1962, and thus, same cannot be disallowed u/s. 40A(3).
Remaining payments made which are not covered under any exception, we find all these payments are made to the traders which are supported by necessary evidence, and further such payments have been made at the instances of traders, that too in an emergency situation which compelled the assessee to make payments in cash - even though few payments is covered u/s. 40A(3) of the Act, because of peculiar nature of business of assessee, we find that those payments cannot be considered for disallowance u/s. 40A(3) of the Act. To sum up, all payments made by the assessee for purchase of materials in excess of prescribed limit provided u/s. 40A(3) of the Act cannot be disallowed. Hence, we direct the AO to delete the additions made towards disallowance of cash payments u/s. 40A(3)
Additions towards unsecured loans received by the assessee u/s. 68 - assessee has failed to prove identity, genuineness of transaction and credit worthiness of the parties - HELD THAT:- Assessee has filed necessary evidences to prove identity, genuineness of transactions and creditworthiness of parties - once assessee discharges its burden, then the AO cannot make additions towards unsecured loans u/s. 68 of the Act as unexplained credit, unless he proves otherwise - it is a matter of fact that such unsecured loans has been treated as cessation of liability and offered to tax u/s. 41(1) of the Act for the assessment year 2014-15. This fact has not been disputed by the AO. Therefore, once a particular sum is considered for taxation in subsequent years then, said loan cannot be once again treated as income of the assessee for the impugned assessment year - AO has completely erred in making additions towards unsecured loans received from M/s. Park Field Developers & Builders Pvt. Ltd., u/s. 68 - CIT(A) without appreciating facts as simply confirmed additions made by the AO. Hence, we set aside the order passed by the Ld. CIT(A) and direct the AO to delete additions made towards unsecured loans u/s. 68 - Decided in favour of assessee.
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2021 (12) TMI 874
Exemption u/s 11 - assessee claimed accumulation of income for application for charitable purpose at 15% of the gross receipts - AO was of the view that accumulation will be allowed only to the extent of 15% of the income after revenue expenditure - HELD THAT:- . We find that this issue is no longer res integra as held by the Special Bench of the Mumbai in the case of Bai Sonabai Hirji Agency Trust [2004 (9) TMI 300 - ITAT BOMBAY-E] - Also in the case BHAGWAN MAHAVEER MEMORIAL JAIN EDUCATIONAL AND CULTURAL TRUST, BANGALORE AND (VICE-VERSA) [2019 (8) TMI 1194 - ITAT BANGALORE] to hold that the accumulation u/s. 11(1)(a) of the Act should be allowed as claimed by the assessee and the AO is directed to do so - Decided in favour of assessee.
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