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Income Tax - Case Laws
Showing 341 to 360 of 7776 Records
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2021 (12) TMI 804
Revision u/s 263 by CIT - Income from other source in respect of profit and loss account under the caption “profit and loss account” in share trading of the assessee company was not properly verified by the AO - HELD THAT:- CIT has not commented on the nature of the business and the offer of the assessee of the rental income as the business income and totally ignored the assessee’s submission before the Assessing officer at the time of assessment proceedings u/s 143(3). CIT cannot say that there was inadequate enquiry or no enquiry at all. The decision of the Hon’ble Apex Court SHREE MANJUNATHESWARE PACKING PRODUCTS AND CAMPHOR WORKS [1997 (12) TMI 4 - SUPREME COURT] relied by the Pr. CIT is not applicable in the present case.
CIT while passing the order under Section 263 of the Act has not shown any new material or has not come to the conclusion that there is escapement of income during the assessment proceedings. The order passed by the Pr. CIT in capacity of Section 263 is merely a second opinion and does not fall in the category of prejudicial to the interest of Revenue. In the present case the AO has taken cognizance of all the material provided by the Assessee during the Assessment Proceedings and after verifying the same has passed just and proper order. Thus, the Pr. CIT’s observation that no inquiry/insufficient enquiry made by AO, is incorrect and does not sustain. Thus, merely having a different opinion upon the treatment of any receipt cannot be the reason of invocation of section 263. Thus the appeal of the assessee is allowed.
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2021 (12) TMI 803
Deduction u/s 10A - Proof of new unit to set up - AO was of the view that though the approval for software technology Park has been taken however, the requisite condition as stipulated u/s 10A for claiming exemption does not satisfy even after considering the facts and documentary evidences submitted during the flash assessment proceedings - assessee has converted an existing export unit to an STPI unit with the same office premises, computers, and staff and mere purchase of new equipment, computers, and employing more staff will not prove the contentions that the new unit was set up - HELD THAT:- On careful examination of the details furnished before us we find that the assessee has set up a new unit, which was in different premises, it has a different staff, different nature of business, different service line. The assessee has also shown the setting up of the new business by showing us the various detailed contained in the financial records of the assessee such as invoices, its remittances, the existence of domestic unit earlier et cetera. The assessee has also shown the approval of the STPI unit dated 28th of March 2000, which states that there is a specific reference to the unit located at the new premises - The assessee has also shown the investment in the fixed assets separately maintained for STPI unit.
We find that the no infirmity is pointed out. The conditions laid down were also shown to have been fulfilled for claiming deduction u/s 10 A of the act by the assessee. In view of this, we do not find any merit in the solitary ground raised by the learned assessing officer. Accordingly we uphold the order of the learned CIT – A and grant deduction u/s 10 A of the income tax act to the assessee. - Decided against revenue.
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2021 (12) TMI 802
Exemption u/s 11 - rejection of applications seeking registration u/s 12AA and approval u/s 80G - No appearance by assessee - HELD THAT:- We find that there is no dispute with regard to the fact that the impugned order was passed in the absence of the assessee. It is seen from the records that Ld.CIT(E) had given opportunity vide letters dated 20.01.2020, 19.06.2020 & 04.09.2020. In ordinary circumstances, these opportunities would have been sufficient for the assessee. However, looking to the fact that there has been wide spread of Covid-19 pandemic and on some occasions, the Government had also issued instructions for imposing lockdown.
To sub-serve the interest of principle of natural justice and to provide meaningful opportunity for effective representation, the impugned order deserves to be set aside. We hereby, set aside the impugned order and restore the application u/s 12AA of the Act dated 09.12.2019 to the file of Ld. CIT(E) to decide it afresh - Grounds raised by the assessee are allowed for statistical purposes
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2021 (12) TMI 801
Penalty u/s 271(1)(c) - search action u/s 132 under the head income from other sources - introduction of share premium and the share capital in the company - income as disclosed during the search and seizure action u/s 132(1) to the tune since not found declared in the original return of income has been added to the total income of the assessee - HELD THAT:- As identical cases in deleting penalty imposed by the authorities below and the order passed in the case of PCIT (Central), Nagpur vs. Rajkumar Gulab Badgujjar [2019 (1) TMI 656 - BOMBAY HIGH COURT] we find no ambiguity in the order passed by the Ld. CIT(A) in deleting the penalty against the assessee. Hence, the appeal preferred by the Revenue is found to be devoid of any merit and, thus, dismissed.
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2021 (12) TMI 800
Exemption u/s 54F - investment made in the constructed area comprising of multiple residential flats (more than one in number), which was received by the assessee - AO restricted the exemption u/s. 54F claimed only to the extent of investment in one residential flat and denied on the other residential flats - HELD THAT:- Issue decided in KONDAL RAO VADDEPALLY, SUDARSHAN RAO INENI, VADDEPALLY DAMODAR RAO [2021 (12) TMI 730 - ITAT HYDERABAD] as held that assessee is eligible to claim deduction u/s 54F of the Act in more than one house. - Decided in favour of assessee.
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2021 (12) TMI 799
Addition of different amounts made towards amount received for sale of Transferable Developmental Rights (TDR) - Income or current liability - why the amount received from sale of TDR should not be treated as income of the assessee in the respective assessment years? - assessee submitted that since it is following percentage completion method for recognizing the revenue from the SRA project and since 25% of the total estimated project is not completed till date, TDR cannot be treated as income but has to be shown as a current liability - whether the amount received by the assessee from sale of TDR granted in respect of the SRA project is taxable in the year of receipt or the assessee’s method of revenue recognition following percentage of completion method is acceptable? - HELD THAT:- Tribunal in [2019 (3) TMI 1942 - ITAT MUMBAI] held that the percentage completion method followed by the assessee is a well recognized method as per ICAI guidelines and judicial precedents - the sale of TDR cannot be considered in isolation of assessee’s obligation under the SRA agreement to complete the SRA project. On analyzing the agreement with SRA, the Bench has observed that the assessee was under obligation to complete the project as per the agreement. The Bench has also observed that the TDR was granted to provide finance to the assessee to complete the project. Thus, assessee’s income from TDR cannot be considered independently without taking the corresponding expenses, more so, when the TDR receipts are directly linked to the execution of the project. The Bench has held that since income from TDR is inextricably linked to the project and its cost, the cost of building has to be deducted against the income from sale of TDR.
Though, the assessee has earned income from sale of TDR, however, no income from the SRA project, as yet, has been offered to tax. It is a fact that while deciding the appeals against the orders passed u/s 263 of the Act in assessment years 2012–13 and 2013–14 the Tribunal [2019 (3) TMI 1942 - ITAT MUMBAI] has recorded certain finding touching upon the merits of the issue, which, indeed, are favourable to the assessee. Admittedly, aforesaid order of the Tribunal was not available either before the Assessing Officer or learned Commissioner (Appeals). Therefore, applicability of the aforesaid order of the Tribunal to the facts of the present case needs to be examined. This is so because, the order passed by the Tribunal was in the context, whether the revisionary authority has correctly exercised jurisdiction under section 263 of the Act to revise the assessment orders. In view of the aforesaid, we set aside the impugned order of learned Commissioner (Appeals) and restore the issues back to the Assessing Officer for fresh adjudication - Assessee appeals are allowed for statistical purposes.
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2021 (12) TMI 798
Delayed payment of employees’ contribution to PF & ESI - Addition on the ground that this was not paid within prescribed due date and deposited late in the light of provision of Section 2(24)(x) read with section 36(1)(va) relying upon the information given by the Auditor in Form 3CD - HELD THAT:- Since in the instant case the assessee admittedly has deposited the employees’ contribution to PF & ESI before the due date of filing of the income tax return, therefore as relying on INSTA EXHIBITIONS PVT. LTD, C/O. CHACHAN & LATH [2021 (8) TMI 1235 - ITAT DELHI] AND PRO INTERACTIVE SERVICE (INDIA) PVT. LTD. [2018 (9) TMI 2009 - DELHI HIGH COURT] CIT(A) is not justified in sustaining the adjustment made by the A.O-CPC on account of belated payment of employees’ contribution to PF & ESI. - Decided in favour of assessee.
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2021 (12) TMI 797
Reopening of assessment u/s 147 - ‘reasons to believe’ and ‘reasons to suspect’ - violation of mandatory jurisdictional conditions stipulated under the Act - bogus purchases - HELD THAT:- AO had only an information that the assessee M/s. Dove Consultants Pvt. Ltd. has made a transaction with M/s. Bhola Trading Company. However, there was no reliable information that the said transaction was a sham transaction. The assessee admittedly is engaged in the business of Electric Contractor. The assessee purchased electric cables from the said M/s. Bhola Trading Company - AO however, doubted the said transaction - as been noted by the AO himself that during the investigation, ledger account of M/s. Bhola Trading Company in the books of assessee company was reflecting the aforesaid transaction.
The purchase invoices were also produced before the investigation wing. Assessing Officer further mentioned about the gross turnover of the assessee and observed that the income of the assessee company has considerably increased from AY 2008-09 to AY 2009-10. The Ld. Counsel, in this respect has submitted that the assessment year under consideration is AY 2009-10 and the assessee’s income as per the reasons recorded has considerably increased. The sales / consumption of the material by the assessee has also not been doubted by the Assessing Officer. There is no mention of any evidence available before the AO to show that the aforesaid transaction was a bogus transaction.
Merely on the basis of suspicion observed that the aforesaid entry might be a bogus entry and that the assessee might have purchased the material from outside. A perusal of the reasons recorded by the Assessing Officer does not show that the Assessing Officer had any credible information or evidence to believe that the aforesaid transaction made by the assessee was bogus, rather, a reading of the whole of the contents of the document containing reasons for reopening of the assessment would reveal that the reopening of the assessment has been made merely on the basis of suspicion.
Reopening of the assessment cannot be made on mere suspicion in the absence of any reliable information or evidence to form the belief that the income has escaped assessment. In this case, there is no mention of any such reliable document / evidence which may be sufficient to form the belief that the transaction in question was a bogus transaction or that the income of the assessee had escaped assessment. - Decided in favour of assessee.
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2021 (12) TMI 785
High Court jurisdiction u/s 260A - Application for condonation of delay - objection as raised on the ground that the order impugned in all these appeals have been passed by the Delhi Tribunal over which this Court would not have any jurisdiction - correctness of the orders impugned which were admittedly passed by the Tribunal located at Delhi - HELD THAT:- This issue is no longer res integra and has been answered by the Division Bench of this Court in A.B.C. India Limited [2002 (3) TMI 35 - CALCUTTA HIGH COURT] revenue's reference application under Section 256(1) of the Act was rejected by the Tribunal at Guwahati. Subsequently, the assessments were transferred to the Commissioner under the jurisdiction of the High Court at Calcutta. The High Court at Calcutta passed order under Section 256(2) and the assessee prayed to recall of the said order contending that the said order was passed without jurisdiction. The said submission made by the assessee was sustained by the Division Bench holding that the question of cause of action would be irrelevant since the Court would be determining the question since determined by the Tribunal of another State which, according to law, is bound by the decision of the Supreme Court at the first place and then by the decision by the jurisdictional High Court.
The decision in ABC India Ltd. [2002 (3) TMI 35 - CALCUTTA HIGH COURT] was followed in J.L. Morrison India [2004 (6) TMI 17 - CALCUTTA HIGH COURT] and it was pointed out that if the High Court of Calcutta was to exercise jurisdiction over the order passed by the Tribunal located outside the jurisdiction of this Court, which would create a judicial anomaly with regard to the precedence that the order passed by the Court, would be binding upon the Tribunal of another State and this would create an anomalous situation with regard to pure question of law.
It was held assumption of jurisdiction of such a case would amount to judicial impropriety and irregularity. To the same effect is the decision of Akzo Nobel India[2014 (3) TMI 1191 - CALCUTTA HIGH COURT] which followed the decision in ABC India Ltd. and J.L. Morrison India Ltd. In the said decision, it was pointed out that Section 260A provides that appeal shall lie to the High Court from an order passed by the Appellate Tribunal.
Appellate Tribunals are located in every State except these cases where an Appellate Tribunal may have been entrusted with the jurisdiction of more than one state. It was further pointed out that the word "High Court" used in Section 260A has to be understood in the light of Section 269 which provides that the "High Court" means in relation to any State, the "High Court" for that State.
We hold these appeals are not maintainable before this Court as submitted by the learned Counsel appearing for the respondent/assessee in respect of an appeal filed in the assessee's group company's case [2020 (1) TMI 1541 - CALCUTTA HIGH COURT] - Similar objection was raised by the assessee and the same was sustained by order dated 28th January 2020 and the appeal was dismissed as not entertainable on the ground of lack of jurisdiction. In the light of the above, we hold that all these appeals are not maintainable and consequently, the applications for condonation of delay as well as the appeals are rejected as not maintainable. However, we grant liberty to the appellant/revenue to file the appeals before the appropriate High Court.
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2021 (12) TMI 784
Levy of late fee u/s. 234E prior to 01.06.2015 - scope of amendment - Conflicting views/decisions - HELD THAT:- We are inclined to follow the ratio decidendi of the Hon’ble Karnataka High Court in the case of Fatehraj Singhvi [2016 (9) TMI 964 - KARNATAKA HIGH COURT] and Shri Ayappa Educational Charitable Trust [2018 (1) TMI 90 - KARNATAKA HIGH COURT] in the light of the Hon’ble Supreme Court decision in Vegetable Products [1973 (1) TMI 1 - SUPREME COURT] that if there is no jurisdictional High Court’s decision on an issue then the view taken in favour of the assessee can be followed. Therefore, we are inclined to hold that the demand raised by the Income Tax Authorities for levying late fee u/s. 234E of the Act for the period prior to 01.06.2015 cannot be sustained and we order accordingly.
However, we hasten to add that Hon’ble Karnataka High Court while passing the order had held the order to be prospective in operation and had clarified that if an assessee had made payment of fees u/s. 234E as per the demand/intimation u/s. 200A of the Act for the period prior to 01.06.2015 then it cannot claim the refund since the Hon’ble Karnataka High Court has held its order to be prospective in operation. - Decided in favour of assessee.
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2021 (12) TMI 783
TP Adjustment - Foreign/AE selected by the assessee having been rejected as a tested party - HELD THAT:- It is seen that such issue also came up for consideration before the Tribunal in the assessee's appeals for the assessment years 2010-11 and 2011-12 [2019 (12) TMI 374 - ITAT PUNE] has directed that the transfer pricing addition should be restricted to the transactions with AEs and not unrelated or non-AEs. Respectfully following the precedent, we set-aside the impugned order on this score and remit the matter to the file of AO/TPO with a direction to confine the transfer pricing addition only qua the international transactions under the Manufacturing segment and not the entity level transactions of the segment.
Disallowance of IT Support Service fee paid to N.V. Bekaert SA u/s. 40(a)(ia) - Sub-licensing/licensing of software having been treated as Royalty and Provision of support and maintenance services in relation to such sub-licensed/licensed software having been treated as Fees for technical services - one of the international transactions declared by the assessee was Reimbursement of SAP software cost to its Associated enterprise (AE), viz., N.V. Bekaert SA. - What for the payment was made? - HELD THAT:- AR tried to make out a case that the assessee did not use any IT infrastructure equipment but availed only IT services for which the payment was made. This contention runs contrary to the stand taken by the assessee before the authorities below as has been discussed above threadbare, which ardently proves that the assessee paid for the use of the IT Infrastructure facility set up by its AE and not for availing any separate IT services. Still, in order to provide an opportunity to substantiate his stand that the assessee paid for the IT services, the Bench directed the ld. AR to file details of the total costs incurred by NV Bekaert SA during the year on the IT Infrastructure facility and then the basis of charge to the assessee. Since such details were not readily available with him, the matter was adjourned for a later date.
On the next date of hearing, again, the ld. AR failed to file any such details. In fact, our attention has not been drawn towards any specific IT service provided to the assessee by NV Bekaert, SA. Going with what the assessee stated before the authorities below, including the price mechanism as reproduced above, there remains no doubt whatsoever that it is a clear-cut case of allocation of total costs on the basis of extent of user of the IT equipment and not of paying for availing any IT service from the AE. Self user of an equipment by a person for an output and, simultaneously, another person also providing that very output through his services to the first person, is practically not possible. Presence of one ousts the other. As the extant is a case of user of the IT equipment by the assessee, it cannot be a case of provision of service by the AE.
Is the payment Reimbursement? - The reimbursement issue has rightly not been pressed because the Transfer pricing study report of the assessee, at internal page no. 79, categorically states that: 'The cost sharing arrangement is pertaining to IT support services which are required for all Group companies and allocation of cost is in accordance with reasonable allocation keys that commensurate with the usage/benefit to the beneficiary group entities (including BIPL). Certain IT support services are charged to Group entities at cost plus 5% mark-up basis. However, while charging for the said services to BIPL, AE has merely recovered the proportionate costs from BIPL and has not charged any mark-up on the costs'. Albeit, it has been stated that the AE did not recover any mark-up from the assessee, but no evidence was placed on record to substantiate this argument before the TPO as well as the DRP. Position continues to remain the same before the Tribunal as well.
Is the payment Royalty or Fees for technical services? - Tribunal observed that the software licenses were purchased for installation in the IT Infrastructure facility of the non-resident assessee and RIPL was given only access to that IT facility, similar to what has happened in the case under consideration. Vide its order dated 21.10.2021, which was duly confronted to both the sides during the course of hearing of the extant appeal, the Tribunal held ₹ 3.88 crore was not different from ₹ 20.04 crore and was hence chargeable to tax in India in the hands of the non-resident assessee. The facts of the instant case are on all fours with Rieter Machine Works Ltd. [2021 (11) TMI 37 - ITAT PUNE] insofar as the taxability of the amount received by foreign entity from the Indian entity for allowing access to its IT Infrastructure facility, is concerned.
DRP was not justified in compartmentalizing the payment made by the assessee into three broad categories and then allowing the assessee's claim in respect of the (c) category, being consideration for other support services, while rejecting for (a) and (b) categories of sub-licensing/licensing of software and its support and maintenance services. Legally speaking, the amount paid by the assessee on this count is chargeable to tax in entirety in the hands of the non-resident. Failure of the assessee to deduct tax at source should have met its logical consequences. Since the part of the direction of the DRP, providing relief under category (c) has not been challenged by the Revenue, the same will remain intact and the consequences of non-deduction of tax at source would visit only the payment for categories (a) and (b), for which the disallowance has been made - We accord our imprimatur to the impugned order to this extent.
Scope of powers of Tribunal in appeal - Tribunal can disallow a claim on a ground different from that of the AO, if it is rightly disallowable under the latter. As the subject matter of claim in both the cases remains the same, no fetters can be imposed on the power of the Tribunal to examine the subject matter in appeal from another point of view by applying another provision to the same issue, that was not applied by the AO. This view also gets fortified on reading the exception clause contained in rule 11 of the Income-tax Appellate Tribunal Rules, 1963,
It can be seen from the discussion supra that the Tribunal did not decide the issue of royalty from a different standpoint on any non-existing legal or factual position but took cognizance of the correct legal position and the material already available on record from the orders of the authorities below qua the transaction under consideration. It is only on consideration of such material that the subject matter in appeal has been approached from a different perspective and decided on a legally tenable angle.
AO was justified in making disallowance u/s. 40(a)(ia) on failure of the assessee to deduct tax at source from the payment to NV Bekaert SA, which is chargeable to tax in the hands of the foreign entity. Appeal is partly allowed for statistical purposes.
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2021 (12) TMI 782
Accrual of income - Receipt of conversion charges - addition as expenditure in the relevant assessment year and consequently confirming the inclusion of income in the hands of the Assessee - HELD THAT:- Under the Income-tax Act, liability to pay Income-tax arises on the accrual of income and it is not from the computation made by the assessee or AO. The section 4 of the Income-tax Act, is the charging provision in the Income-tax Act. The charge arises when the person earns income and computation of income there upon to be made
To bring the receipt of conversion charges to be income as mentioned in sec.2(24) of the Income-tax Act, it is necessary that it should be computed in accordance with method of accounting regularly employed by the assessee
In the present case, the assessee, admittedly following the mercantile system of accounting and in such a method, deduction for expenses allowed irrespective of fact where such an amount has been actually paid or remained unpaid at the end of the financial year. In the similar manner, the income, under such a method of accounting is required to be recognized on accrual basis - when the assessee following mercantile system of accounting and right to receive such an income is accrued, then it is chargeable to tax and receipt of such amount, whether before or after accrual is of no consequences. In the similar way, some amount has been received, which does not represent income accrued for the year, it shall not be charged to tax and will assume the nature of liability till the time of its accrual. Only when such amount accrues as income, the earlier liability will get converted into income. Till that time, it will continue as liability, despite the fact that it was received. Thus, receipts relevant to tax under mercantile system of accounting are the fact of accrual of income during the financial year and actual receipt of income is irrelevant.
The explanation of assessee is that it has not received that income. The explanation offered by the assessee has been perused and found against the facts of the case. As per Clause-K, SMEORE is agreeable to pay to SMPPL a conversion fee to be determined in two parts, namely, fixed cost per month to meet manpower, administration, finance cost etc., and a variable cost per tonne of ferroalloy produced. Conversion costs payable as determined on the date of execution of this agreement is at ₹ 40 lakh per month towards fixed costs and ₹ 20,000 per tonne towards variable costs. From this, it is evident that the SMIORE has to pay fixed conversion fee of ₹ 40.00 lakh per month to the assessee to meet manpower, administration, finance cost etc. irrespective the ferroalloy produced.
Receipt of fixed conversion fee of ₹ 40.00 lakh per month does not depends on production as explained by the assessee. Again, it is also evident from the statement of receipt that the assessee has done processing/production for the month of April-12 and Sept. 12 to March 2013 - in all 8 months. Under this circumstances, the assessee failed explain as to why fixed conversion fee at least for 8 months has not been recognized in the books. Similarly, revised conversion agreement entered into on 24/04/2013, after the end of relevant previous year, with retrospective effect from 01/10/2012, could be afterthought and hence cannot be relied upon.
AO can, by applying s. 5 of the Income-tax Act, in the background of proviso to sub-s. (1) of s. 145 of the IT Act, compute income on accrual basis. The statute must be read as a whole and one provision thereof should be construed with reference to another provision, so as to make a consistent enactment of the whole statute. It is a rule now firmly established that intention of the legislature must be found by reading the statute as a whole. If the interpretation suggested by the counsel for the assessee is accepted, the very charging section would be rendered inoperative and ineffective, which is impossible to be done. The machinery provisions cannot be interpreted as to restrict the scope of the charging section. As a matter of fact, authorities are expected to construe the machinery provisions in such a manner that a charge to tax is not defeated. The CIT(A) was therefore correct in law in concluding that AO has rightly made computation of the income on accrual basis, rejecting the income of the assessee income of the assessee.
It cannot be said that fixed income of ₹ 4 crores not accrued to the assessee. As per this agreement cited supra, the said income of ₹ 4 crores has accrued to the assessee. The assessee has the right to receive it, if it is not actually received, which cannot go out of the total income of the assessee to say that it is not accrued to the assessee. The said amount has been accrued to the assessee under the mercantile system of accounting as per the provisions of sec. 145(2) of the Income-tax Act and the same has to be brought to tax.
The other contention of the assessee is that there was revised agreement dated 24/4/2013 with retrospective effect on 1/10/2012, which cannot be given any importance which is entered after the end of financial year 31/3/2013 and it is only self serving document so as to facilitate to tax payable by the assessee. - Decided against assessee.
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2021 (12) TMI 781
Assessment u/s 153A - Proof of incriminating material found in search - HELD THAT:- AO could not have made any addition in AY 2008-09 since no incriminating material relating to this addition was unearthed during the course of search. A perusal of the assessment order of AY 2008-09 would show that the assessing officer has found out this discrepancy only during the course of assessment proceedings upon comparing the Balance Sheets of the assessee and M/s DLC. We have held earlier that this addition could not be sustained, since it is not based upon any incriminating material. Accordingly, this addition was deleted on legal ground discussed above. We noticed earlier that the AO was fair enough to exclude this amount of ₹ 1,51,44,860/- in AY 2009- 10. Since this addition has been deleted in AY 2008-09, the corresponding reduction of income made by AO in AY 2009-10 is liable to removed.
Addition of payments made to Shri Basavaraj Banni - HELD THAT:- It is an admitted fact that the assessing officer has disbelieved the payments made to M/s Banni Mines and Minerals Ltd. The fact remains that the purchases from the above said concern has been duly recorded and further the assessee has also sold them. The sale transactions have been accepted by the AO. It is also a fact that M/s Banni Mines and Minerals have filed VAT returns under Sales tax Act and it has reported the sales made by it to the assessee. Further Shri Basavaraj Banni has filed revised return of income disclosing the sales made to the assessee. His return of income has been accepted by the department in an order passed subsequent to the date of search. Shri Basavaraj Banni has later accepted that he has given wrong statement earlier and has given reasons for doing so. We notice that Shri Basavaraj Banni is changing his stands and is non-co-operative with the department. Hence we are of the view that his statements could not be relied upon. The fact remains that the materials available on record disproves his earlier statement. We do not find any reason to disbelieve the purchases as well as payments made to M/s Banni Mines and Minerals. Accordingly, we are of the view that the addition made in AY 2008-09 cannot be sustained.
Payment made to M/s Banni Mines and Minerals - Since the assessee did not claim payment as expenditure, there is no question of disallowing any expenditure. Accordingly, the addition cannot be sustained.
Transportation payment made to Shri Jagadish Devadiga - AO has placed full reliance on the statement given by Shri Jagadish Devadiga at the time of search, where as the assessee has provided evidences in the form of invoices raised by the above said person along with the trip details, income tax returns filed by above said person along with tax audit report. Shri Jagadish Devadiga has also subsequently furnished affidavit to the AO retracting from the statement given earlier. Thus, it is the witness who has retracted his statement. Since the AO did not accept the retraction statement, the assessee has asked for an opportunity to cross examine Shri Jagadish Devadiga, but the said opportunity was not given to the assessee by the AO, which has resulted in violation of Principles of natural justice. In any case, there was no material available with the AO to show that the transportation services were not provided to the assessee. On the contrary, various materials furnished by the assessee support the case of the assessee - addition deleted.
Assessee appeal allowed.
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2021 (12) TMI 780
Disallowing deduction claimed u/s 80P(2)(a)(i) - interest was received on term deposit from SBI - HELD THAT:- On a perusal of the order of the Tribunal for the A.Y. 2012-13 [2018 (11) TMI 1883 - ITAT MUMBAI] it is observed that the issue in Ground No. 2 and 3 are already covered in favour of the assessee. The Tribunal while allowing the claim of the assessee u/s. 80P(2)(a)(i) of the Act in respect of interest income from SBI and also commission income from MSEB - Decided in favour of assessee.
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2021 (12) TMI 772
Reopening of assessment u/s 147 - Disallowance u/s 14A - HELD THAT:- When the appeal had been preferred by Petitioner before the ITAT, and disallowance u/s 14A of the said Act is the subject matter of that appeal, the AO could not have assessed or reassessed such income. Moreover by issuing the notice u/s 148 the AO in fact is sitting in appeal over the decision of CIT(A) to disallow only under Section 14A of the said Act. If he was aggrieved by the decision of CIT(A) to disallow only ₹ 1,82,207/- under Section 14A of the said Act, Revenue could have filed an appeal before ITAT. Having missed the bus, the Assessing Officer cannot adopt the route of re-opening and issue notice under Section 148. - Decided in favour of assessee.
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2021 (12) TMI 771
Reopening of assessment u/s 147 - sanction required u/s 151 has not been validly obtained - HELD THAT:- The reasons recorded have to be final and it cannot be a draft submission for approval of the Principal CIT or Addl.CIT. The Assessing Officer has to record the final reasons as to why according to him a notice has to be issued under Section 148 and only if the Principal CIT / Addl.CIT is satisfied with the reasons so recorded, they can grant sanction and by applying their mind. The sanction cannot be given mechanically. It is based on the reasons on which a sanction has to be given for issuing the notice. Reasons cannot be submitted in a draft form for approval. The reasons have to be that of the Assessing Officer and the Commissioner cannot improve upon those reasons.
Moreover, even while conveying the approval for re-opening, Addl.CIT has displayed non-application of mind. The non-approval is given for re-opening the assessment of Petitioner but in the reference it pertains to another entity by the name Laxmi Organic and a communication dated 07/08/2017 is referred to. This also indicates that the Addl.CIT has granted sanction without even reading the letter. The notice under Section 148 has to be set aside and the same is hereby set aside - Decided in favour of assessee.
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2021 (12) TMI 770
Disallowance of depreciation - assessee failed to furnish any details either before AO or before him and failed to produce any reliable and convincing material to reverse the findings of the AO and therefore confirmed the findings of the AO - HELD THAT:- The documents referred to by the assessee were taken note of by the tribunal and after carefully considering the computation of total income for all the three Assessment Years, found that the depreciation claimed in the profit and loss account was depreciation claimed as per the Companies Act 1956 and that depreciation has been added to the profit and loss as per profit and loss account and depreciation as admissible under the provisions of section 32 was claimed by providing the relevant depreciation schedule which was given as annexure to the computation of total income in all the three years. In this regard the tribunal noted the depreciation chart which was filed by the assessee before the tribunal containing the records which were already available on file. On going through the records, the tribunal was satisfied that the assessee has added back the depreciation as per profit and loss account to the loss as per the profit and loss account and thereafter claimed depreciation which is permissible under section 32 - Thus, the tribunal concluded that the action of the AO in disallowing the claim is based on the premise that the assessee has made a double claim which was found to be factually incorrect by the tribunal. Accordingly, the disallowance was directed to be deleted.
IICM contribution - CIT-A while considering the said issue held that it was not ascertainable as to how and under what circumstances such big amounts have been debited as IICM contribution in the profit and loss account, and it is not ascertainable as to whether claim of such expenses was incidental to the business activities carried on by the assessee or not as per relevant provisions of section 40 A (9) and therefore the expenditure was not allowable - HELD THAT:- The assessee pointed out that the said observation/findings of the Assessing Officer and CIT-A is factually incorrect and the tax auditor has not reported that the said sum has to be disallowed under section 40 A (9) - Assessing Officer and the CIT-A failed to take note of the vital facts that IICM is not a firm/trust/association/company set up for the general welfare of the employees - amount paid by holding company to IICM and subsequent payment made by the assessee company represent fee for participation in training programmes, organised by IICM - contribution made by the assessee company towards training has direct nexus with the nature of business of the assessee and therefore allowable as expenditure wholly and exclusively for the purpose of business of the assessee.
The tribunal examined the factual position as well as the documents which were placed by the assessee and held that the said sum paid to IICM was crystalised as liability of the assessee during the relevant previous year and the sum in question is revenue expenditure incurred for training of the employees/executives and the sum is not hit by the provisions of Section 40 A (9) of the Act. Therefore, the contention advanced by the assessee was accepted and the deduction was directed to be allowed.
Addition on account of closing stock of coal - CIT-A confirmed the order of the AO on the ground that the assessee failed to produce any evidence to prove their contention that there is no saleable value or realizable value of the closing stock of coal - HELD THAT:- As tribunal held that the value of the coal as determined by the Assessing Officer does not have any basis and accordingly accepted the contention advanced by the assessee - tribunal pointed out that the technical evaluation based on which the coal mixed with Matti etc. has been valued at NIL by the assessee has not been challenged as incorrect by the revenue authorities - as pointed out that in the event of the coal being mixed with Matti, and any sum realized by the assessee on such sale the same would be offered to tax by the assessee under section 28 of the Act or the same sum brought to tax by the revenue under section 41 (1).
As perused the findings recorded by the tribunal on the other issues as well. The tribunal has proceeded to deal with the issues one after another. As noted above while dealing with each of the issue the tribunal has given the gist of the findings of the CIT-A who concurred with the Assessing Officer thereafter took note of the submissions of the assessee and decided the same for its correctness. While dealing so the tribunal considered the factual position in its entirety and granted relief to the assessee wherever admissible and permissible - we are fully satisfied that the case before us is entirely factual and the materials which were available on record were re-examined by the tribunal and relief has been granted to the assessee. The revenue cannot dispute the position of law that the tribunal is the last fact finding authority and this court exercising jurisdiction under section 260 A of the Act is not expected to re-examine the facts and record a different conclusion merely because it may be of the view that different conclusion would be appropriate.
Though the expression “substantial questions of law” is not defined in the Act, the tests laid down by the Constitution Bench of the Hon’ble Supreme Court in Sir Chunilal V. Mehta and Sons Ltd. [1962 (3) TMI 77 - SUPREME COURT] for determining whether a question raised in a case is a “substantial questions of law” or not could be applied. On going through the entire facts placed before us, we find that none of the five tests laid down therein stand satisfied in the case on hand. Thus we concluded, that there are no “substantial questions of law” arising in this appeal.
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2021 (12) TMI 769
Reopening of assessment u/s 147 - Eligibility of reasons to believe - Addition u/s 69A - Notice issued after expiry of four years from the end of the relevant assessment year - HELD THAT:- The test to be applied is whether there was reason to believe that income had escaped assessment and whether the AO has tangible material before him for the formation of that belief. Once tangible basis has been disclosed for re-opening the assessment, it would not be appropriate for this court to prevent an enquiry whatsoever by the AO. In this case, the reasons indeed disclose what is that tangible material.
We find that the petitioners have filed detailed information called for by the AO under Section 142(1) and 143(2) of the Act and thus participated in the assessment proceedings. This having been done, it is not open for the petitioners to now contend that this Court should exercise its extra-ordinary jurisdiction and prohibit the Authorities from proceeding further with the impugned notice. This is particularly so as the question of jurisdiction has been raised by the petitioners before the AO during the assessment proceedings under the Act. In the present facts, the petitioners have participated in the proceedings before the AO.
The objections to the reasons recorded by the AO in support of the impugned notice during the assessment proceedings is to point out to him the reassessment proceedings are bad as the requirement of Sections 147 and 148 are not satisfied. It would be completely different scenario where the petitioners have not participated in the proceedings before the AO and object to exercise of jurisdiction by the Assessing Officer at the very threshold and not while participating in the reassessment proceedings. In such cases, it is not a case of a party seeking identical relief by two parallel modes. The orders passed by the Assessing Officer are subject to effective, efficacious alternative remedy under the Act. Therefore, we see no reason to exercise our extra-ordinary jurisdiction in the facts of this case.
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2021 (12) TMI 768
Validity of Revision order passed u/s 263 by CIT - period of limitation - ITAT to declare the impugned revision assessment order of the Assessing Officer as non-est and is allowing the appeal of assessee against order u/s 263 in technical ground - MAT credit allowability u/s 115JAA - HELD THAT:- As decided in M/S. APEEJAY SHIPPING LIMITED [2021 (12) TMI 262 - CALCUTTA HIGH COURT] the order passed by the CIT u/s 263(2) is hopelessly barred by limitation. The Tribunal rightly held that the period of limitation has to be reckoned from the date of the order passed by the AO under Section 143(3) read with Section 263 and not from the date of the order passed by the AO under Section 143(3) read with Section 263 and 251. Thus, we find that the Tribunal rightly allowed by the appeal filed by the assessee.
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2021 (12) TMI 767
Revision u/s 263 - As per CIT assessee’s claim for deduction under Section 80IB ought to have been rejected by the Assessment Officer but the same had been allowed - merger of order of CIT with tribunal - Consequently levy of concealment penalty under Section 271(1)(c) - HELD THAT:- AO in proceedings under Section 143(3) of the said Act was pleased to disallow the amount that was claimed towards recovery of amount written off in the earlier year as well as amount being towards receipt of commission disallowed these deductions under Section 80IA of the said Act. This order was challenged by the assessee before the Commissioner of Income Tax (Appeals) and on 31/01/2007 the aforesaid two deductions that were disallowed by the AO came to be permitted.
A finding was recorded that the deduction as claimed by the assessee under Section 80IA/80IB was in accordance with law and was hence granted. This appellate order was challenged by the Revenue before the Tribunal. In the judgment dated 29/10/2007 the Tribunal subsequently considered the aforesaid two heads of disallowances and proceeded to dismiss the appeal preferred by the Revenue on merits. It was thus clear from the aforesaid sequence of events that the order passed by the Commissioner of Income Tax (Appeals) dated 31/01/2007 merged in the order passed by the Tribunal on 29/10/2007 and attained finality.
Thus as the order of the Commissioner Income Tax (Appeals) having merged with the order of the Tribunal, there was no scope for the Commissioner of Income Tax to initiate proceedings under Section 263 - As on merger of the order passed by the Commissioner with that passed by the Tribunal, the jurisdiction under Section 263 (1)(c) of the said Act could not have been invoked is settled in view of judgment of this Court in Slum Rehabilitation Authority[2019 (4) TMI 64 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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