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Income Tax - Case Laws
Showing 481 to 500 of 7776 Records
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2021 (12) TMI 556
Levy of penalty u/s 272A(2)(e) - returns of income was filed belatedly after the due date specified u/s. 139(4A) and 139(4C) - reasonable cause as provided u/s. 273B - Delay due to Illness of Managing Trustee of the trust - HELD THAT:- The assessee has explained reasons for delay in filing return of income, as per which, the Managing Trustee Smt. Chitra Ganapathy, was falling ill from the year 2006 and was hospitalized for treatment to various illness. In her absence, no one was in a position to take care day to day affairs of the assessee which resulted in delay in finalization of accounts and filing return of income for all these assessment years. But, the delay in filing of return of income was neither intentional nor to derive any undue benefit.
Illness of Managing Trustee of the trust during the relevant period will definitely comes under reasonable cause as provided u/s. 273B of the Act for not filing return of income within due date specified under the Act. We further noted that the assessee neither intentionally filed return of income belatedly, nor derived any benefit by filing belated return. In fact, the assessee was having excess of expenditure over income for all these years and thus, by not filing return of income within due date specified under the Act, there is no loss of revenue to the Government - reasons given by the assessee for not filing return of income within due date specified u/s. 139(4A) of the Act comes under reasonable cause as provided under the Act for not levying penalty u/s. 272A(2)(e) - Decided in favour of assessee.
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2021 (12) TMI 555
Disallowance u/s 36(1)(va) - late remittance of employees’ contribution to PF and ESI under the respective Acts - scope of amended provisions of section 43B as well as 36(1)(va) - As contended that assessee has paid the employees’ contribution prior to the due date of filing of return under section 139(1) - HELD THAT:- On identical facts, 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 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) of the I.T.Act. 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.
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. By following the binding decision of the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), 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 554
Revision u/s 263 by CIT - interest income received from investments with Cooperative banks is entitled to deduction u/s 80P(2)(a)(i) - Alternatively as contended that if interest income is to be assessed as income from other sources, necessarily, the cost incurred for earning such interest income ought to be allowed as deduction u/s 57 - HELD THAT:- As we find in the case of Totagars Co-operative Sale Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] had categorically held that interest income received on investment of surplus funds with Co-operative banks is to be assessed as income from other sources and not income from business (Thereby denying the claim of deduction u/s 80P(2)(a)(i) of the Act) - as further held by the Hon’ble High Court that only those interest income received from Co-operative Societies alone (not from Co-operative Banks) is entitled to deduction u/s 80P(2)(d) of the Act.
For alternative claim of the assessee, we find an identical issue was considered by the Hon’ble jurisdictional High Court in the case of Totagars Co-operative Sale Society Ltd. [2015 (4) TMI 829 - KARNATAKA HIGH COURT]
The assessee has not raised the plea before the Income Tax Authorities that it has to be given deduction u/s 57 of the I.T.Act, in respect of expenditure for earning the interest income. However, inspite of such plea not being raised before the lower authorities, we are of the view that since the Act prescribes for taxing only the net income (i.e. total income minus the expenses incurred for earning such income), this plea of the assessee has to be necessarily entertained, especially in the light of the judgment of the Hon’ble jurisdictional High Court in the case of Totagars Sale Co-operative Society[supra].
Claim of deduction u/s 80P(2)(c)- W e noticed that the assessee is having income from distribution of food grains and kerosene under PDS scheme. The net profit arrived from PDS scheme is ₹ 1,08,554, which does not qualify for deduction u/s 80P(2)(a)(i) of the Act. However, the said income is allowable for deduction u/s 80P(2)(c) of the Act (u/s 80P(2)(c) the amount of deduction is restricted to ₹ 50,000). In the instant case, the A.O. had granted deduction u/s 80P(2)(c) of the Act by restricting it to ₹ 50,000. Therefore, the CIT(A) is not justified in directing the A.O. to deny the benefit of deduction u/s 80P(2)(c) of the Act (which the A.O. correctly granted deduction of ₹ 50,000).
Appeal filed by the assessee is allowed for statistical purposes.
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2021 (12) TMI 553
Disallowance of ESOP expenses - CIT-A deleted addition holding the notional discount on shares issued under ESOP scheme as revenue expenditure allowable u/s 37(1) - Whether allowability of expenditure u/s 37(1) of the Act cannot be determined on the basis of SEBI guidelines? - HELD THAT:- The issue of allowability of ESOP discount being the difference between the market value of shares and the value at which employees had been given the shares is covered, not only by the decision of Hon’ble jurisdictional High Court in CIT Vs. Lemon Tree Hotels Ltd [2015 (11) TMI 404 - DELHI HIGH COURT], but also by the judgement of the Special Bench in the case of Biocon Ltd. [2014 (12) TMI 838 - ITAT BANGALORE] also approved by the Hon’ble Karnataka High Court [2020 (11) TMI 779 - KARNATAKA HIGH COURT] and held that employees’ discount represents consideration for services rendered by employees and hence it is a deductible business expenditure and it cannot be equated with share premium and it is to be intended towards profit by securing employees’ consistent services.
As it is an ascertain liability since employees’ incurred obligation over the distinct period, notwithstanding the fact that exact amount as quantified at the time of exercising options - Decided against revenue.
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2021 (12) TMI 552
Validity of assessment - mandation of service of notice under Section 143(2) - Period of limitation to issue notice - non-service of notice under Section 143(2) on time - HELD THAT:- As notice u/s 143(2) has to be served on the assessee within the statutory time limit if he considers that there is any under-statement of income etc. in the return filed by the assessee. Thus, the Assistant Commissioner of Income Tax, Circle : 1, New Delhi, if he is scrutinizing the return of income then, if he considers necessary to vary the return income then he is suppose to send the notice and it is on the address mentioned in the return of income and that to be within the time prescribed under the first provision. If such a statutory requirement is not complied with, then the resultant effect is that assessment order itself is bad in law. This has been held so by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Hotline International Pvt. Ltd. [2007 (4) TMI 44 - DELHI HIGH COURT] and in CIT V. Lunar Diamonds Ltd. [2005 (3) TMI 33 - DELHI HIGH COURT]
The Hon’ble Delhi High Court in the case of CIT Vs. Lunar Diamonds Ltd. (supra) held that the burden is on the revenue to prove that notice was served within time and when assessee has filed an affidavit stating that it had not received the notice, then the burden was on the revenue to prove that notice was served upon the assessee within the prescribed limit. Here the revenue has failed to prove service on the assessee as stated above. Accordingly, we hold that failure to serve the notice on the assessee within the prescribed statutory time limit, assessment proceedings become void ab initio and consequently the assessment order is quashed - Decided in favour of assessee.
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2021 (12) TMI 551
Addition of payment made to subsidiary company - Whether profit earned by Hongkong Subsidiary of the assessee in fact is the profit of the assessee as the it was 100% subsidiary and this legal façade was created by the assessee and effective management and control of the subsidiary company was in India? - HELD THAT:- As it is evident that Hongkong entity was a separate legal entity and was registered in Hong Kong. There are enough evidences which show that the Hongkong entity was doing the business and was subject to Hongkong laws. Transfer Pricing Officer has found the transactions between the assessee company and Hongkong entity at arms-length which also establish that the transactions between the assessee company and Hongkong entity were genuine business transactions. There is no evidence brought on record to prove that the control and management of Hongkong entity was being done wholly from India.
Reading of the assessment order suggests that it was the finding of DDI that Hong Kong entity was not doing any actual activity which unfortunately has been followed by the assessing officer without adverting to the facts available on record which prove that exports were made by the assessee company to Hong Kong entity. Even the finding of Transfer Pricing Officer in AY 2010-11 cannot be ignored when he records that exports executed by the assessee company to its associated enterprise was short of arms length price by ₹ 3,64,43,842/-. Had there been no activity done by Hong Kong Entity, how could such finding be arrived at by TPO in the first place? Exports were made under the government policies and as per Import Export regulations and this cannot be ignored. There is nothing on record to suggest that the statement of Ms. Chanchal Bhutani was given to the assessee even. Thus, there is nothing before us to take a view different from the view taken by Commissioner of Income Tax (Appeal) and thus we dismiss all these grounds raised by Revenue in this regard.
Addition u/s 69C - unexplained purchases - addition based on document found in search from third party - HELD THAT:- Addition was made on the basis of the documents not found from the assessee’s possession and control but were made on the basis of the documents founds from Shri R.P.Yadav and these documents were owned up by him. This admission that these documents were owned and belonged to him only was admitted by Shri Yadav during the course of search and also in his statement recorded in the assessment. Name of another entity namely Jas Impex too is appearing on these documents and thus merely on some papers the name of the assessee is appearing does not mean that these documents or contents of these documents relate to the assessee. Statement of Vice President of the assessee company reproduced in the assessment order also mentions that 90% of the total purchases of the assessee company are through Jas Impex. No enquiry has been made from M/s Jas Impex and nothing has been shown to that effect to us. Statement of the son of Mr. R P Yadav has also been reproduced by the AO in the assessment order and there is nothing that he was made available for assessee’s cross examination. To rely on the statement of the son of Mr. Yadav more than on the statement of Mr. Yadav him self is quite strange. In our considered opinion, the addition made on the basis of the notings on the loose documents of Mr. R P Yadav in the hands of the assessee company cannot be sustained and was rightly deleted by the learned first appellate authority.
Addition as prior period expense - Assessment u/s 153C - HELD THAT:- We do not have any good reason to deviate from the decision of the learned first appellate authority, more particularly the smallness of the among involved and the tax rate being identical. Also, there is nothing which was found in this regard as a result of search as can be seen from the reading of the assessment order and hence in view of Hon’ble Delhi High Court’s decision in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] also, the disallowance made by the assessing officer could not be sustained and was rightly deleted by CIT(A). We therefore dismiss this ground of appeal of the revenue.
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2021 (12) TMI 550
Assessment u/s 153C - Mandation of recording satisfaction - Whether satisfaction note recorded by the AO has not brought out any seized material belonging to the assessee-company, in fact, there is no incriminating document? - HELD THAT:- It is an admitted fact that, firstly, the satisfaction note recorded by the AO does not mention or is based on any seized material belonging to the assessee company and consequently, the additions made by the AO has no co-relation with any seized material. The aforesaid finding of the CIT(A) has not been rebutted by any material placed on record. Therefore, the aforesaid findings of CIT(A) is based on legal principles upheld by the Hon’ble Jurisdictional High Court as well as Supreme Court in the case of PCIT vs. Sinhgad Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT] - Thus the ground of Revenue is dismissed.
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2021 (12) TMI 549
Addition on account of scrap - difference in valuation of scrap - Rejection of books of accounts - HELD THAT:- In the present case, having rejected the books of accounts maintained by assessee, Assessing Officer cannot rely upon on the same books of account for the purpose of making addition in respect of sale of scrap etc.
Thus, in the light of the above settled legal position, the approach of both the authorities is totally flawed and cannot be sustained in the eyes of law. Thus, the addition made by the Assessing Officer under the normal provisions of the I.T. Act as confirmed by the ld. CIT(A) cannot be sustained under the law. Accordingly, ground of appeal no.1 raised by the assessee stands allowed.
MAT computation u/s 115JB - income disclosed on account misclassification of scrap from excluding the book profits for the purpose of computing the tax liability u/s 115JB - whether the income surrendered to tax under the normal provisions of the I.T. Act/addition made to returned income is required to be added back to book profits for the purpose of computing the tax liability under the provisions of section 115JB of the Act or not? - HELD THAT:- Admittedly, in the present case, the additional income disclosed for the purpose of computing the tax liability under the normal provisions of the I.T. Act does not fall any of the items mentioned in clauses (a) to (j) of the Explanation. We have carefully perused the audited financial statements wherein we find no qualification by statutory auditors on financial statements. Further, we note that financial statements were duly approved in Annual body of the company. Therefore, the Assessing Officer is not justified in adding back the additional income offered to tax under normal provision of Act to book profits for the purpose of computing the tax liability u/s 115JB of the Act.
There is yet another reason to hold that mere admission in the statement recorded u/s 132(4) cannot form the basis of addition - addition of income disclosed under normal provisions of Act to book profits for the purpose of computing tax liability u/s 115JB is a pure question of law. The Hon’ble Supreme Court in the case of CIT vs. V. Mr. P. Firm, Muar [1964 (10) TMI 13 - SUPREME COURT] laid down that if a particular income is not taxable under the Act, it cannot be taxed on the basis of doctrine of estoppels, i.e. there is no estoppels against law/provisions of Statute. Therefore, in the light of settled position of law that mere admission of assessee cannot form the basis of assessment, addition of income disclosed under normal provisions of the Act, cannot be added back to book profits for the purpose of computing tax liability u/s 115JB of the Act. Thus, the ground of appeal no.2 raised by the assessee stands allowed.
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2021 (12) TMI 548
Disallowance of late remittance of employees’ contribution to PF and ESI under the respective Acts - difference between the returned income and the assessed income u/s 143(1) - as contended that assessee has paid the employees’ contribution prior to the due date of filing of return under section 139(1) - HELD THAT:- As decided in M/S SHAKUNTALA AGARBATHI [2021 (10) TMI 1196 - ITAT BANGALORE] 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).
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. By following the binding decision in the case of Essae Teraoka Pvt. Ltd Vs. DCIT [2014 (3) TMI 386 - KARNATAKA HIGH COURT]the em ployees’ 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 547
Deduction u/s 37 in respect of 15% of sale proceeds retained by the CEC [Central Empowered Committee] - sale proceeds of iron ore extractions as a compensatory payment towards damages caused to the environment and forest degradation on account of mining - assessee firm has credited an amount as iron ore sales through e-auction - HELD THAT:- ITAT in assessee’s own case [2021 (2) TMI 1145 - ITAT BANGALORE] had rejected the plea of the assessee that 15% of the sale proceeds retained by the CEC is to be excluded from the total turnover on the principle of diversion of income by way of overriding title. The Tribunal had categorically held that 15% of sale proceeds was payable to SPV account after it accrued to the assessee. However, the ITAT held that 15% of the sale proceeds constitute an allowable business expenditure u/s 37
Observation of the AO and the CIT(A) (ground No.5) that the contribution to SPV is nothing but CSR - As we find that the assessee is a partnership firm, which is not under the statutory obligation for complying with CSR provisions. The Bangalore Bench of the Tribunal in the case of Shri B.Rudragouda [2021 (4) TMI 1249 - ITAT BANGALORE] had held that the assessee being an individual and not a company, is not governed by section 135 of the Companies Act, 2013 and the impugned expenditure incurred by the assessee is not in the nature of CSR expenditure as mentioned in that section and it cannot be disallowed by invoking the provisions of Explanation 2 to section 37
We hold that the assessee is entitled to deduction u/s 37 of the I.T.Act in respect of 15% of sale proceeds retained by the CEC. It is ordered accordingly.
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2021 (12) TMI 546
Deductibility of the amount of service tax paid under VCES, 2013 - contention of the assessee is that the amount paid was a discharge of liability which got crystallized during the year and hence was an expenditure deductible for the year - AR raised an alternative argument that the amount of service tax should be allowed in terms of section 43B of the Income-tax Act, 1961 - HELD THAT:- A cumulative reading of the main part of the provision along with its proviso deciphers that if any tax, duty, cess or fee etc. is received, say, on 31st March of the financial year X, but is actually deposited on 5th of April of the financial year X +1, then going with the main provision, the deduction should be allowed in the year of payment that is X+1, but the proviso intervenes to provide for deduction of such an amount in the financial year X - there is a clear cut mandate that incurring of liability to pay tax, duty, cess or fee etc. in a particular previous year is not a relevant criterion for granting deduction. Rather it is only when the amount of such tax etc. is actually paid by the assessee that the deduction follows.
The position which ergo emerges is that an assessee is otherwise eligible for claiming deduction, in law, in the financial year of raising the invoice, even if the service tax is neither received nor deposited in such a year. If however, the assessee suo motu does not claim deduction of service tax in the financial year of raising invoice for not having received and deposited the amount of service tax, he can validly claim deduction u/s 43B in the later year on realizing the amount and paying the service tax. Reverting to the facts of the case, it is seen that the amount of service tax has actually been paid in the year under consideration but no deduction was claimed by the assessee in the earlier financial years when Incentives, impliedly including the amount of service tax, were received. As such, the same has to be allowed as deduction in the year in question in terms of the main provision of section 43B granting deduction at the time of actual payment.
When the assessee incurred liability in respect of service tax in earlier years for which deduction was otherwise allowable under this Act, the deduction will be allowed in computing the income of the year in which the amount is actually paid which is the year under consideration as no such deduction was claimed in earlier years.
On a relative reading of section 43B(a) in juxtaposition to section 145A(ii), it becomes explicitly unambiguous that any sum payable by way of tax, under any law for the time being in force, which essentially includes service tax also, is required to be considered for the purposes of section 43B. The fortiori is that the amount of service tax is includible in the total income in the first instance, which then qualifies for deduction or non-deduction u/s 43B of the Act. Thus, the contention of the Revenue that the amount of service tax is not includible in the total income at the time of collection is devoid of merits and hence jettisoned. Once it is held that the amount of service tax is includible in the total income of the assessee, the inevitable conclusion which follows is that its deduction will also result, which may be otherwise allowable or disallowable as per the facts and circumstances of a case.
Such payment during the year is nothing but, in a way, reversal of the original entry of receipt passed in the earlier years. Once receipt of the amount of service tax was included in the total income in earlier years, the obvious corollary is that its payment in the year in question will also qualify for deduction from the total income.
In view of the foregoing discussion thus hold that the sum paid by the assessee during the year as service tax relatable to earlier years should be allowed as deduction in the year under consideration. The impugned order is, therefore, overturned on this score. Appeal allowed.
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2021 (12) TMI 545
Revision u/s 263 by CIT - Assessment in the case of the appellant for the captioned Assessment Years so completed was on the basis of cost plus method on the salary of expat employees, wherein 25% of salary is attributable to operation in India and cost of 20% of salary was applied on the same to determine the profit taxable in India - HELD THAT:- As it is mandatory to follow the directions of the DRP by the Assessing Officer failing which the assessment order would become nonest. In our considered view, the Assessing Officer passed the impugned final assessment orders not carrying out the binding directions of the DRP which is a clear violation of the binding provisions of section 144C(13) of the Act. Therefore, in our humble opinion, the impugned assessment orders are non-est. We are of the further opinion that once the assessment orders have been held to be non-est, the ld. CIT could not have assumed jurisdiction u/s 263 of the Act over a non assessment order which can never be erroneous and prejudicial to the interest of the Revenue.
The contention of the ld. DR that the Assessing Officer has followed the directions of the DRP but somehow over looked the directions issued. We are of the considered view that there is no choice given to the Assessing Officer to follow one part of the directions of the DRP and not to follow the other part.
Whether the assessee can challenge the validity of the assessment order in collateral proceedings u/s 263? - In our considered opinion, the assessee can challenge the validity of the assessment order in the collateral proceedings u/s 263 of the Act since the assessment order itself is bad in law. Therefore, such an order cannot be revised u/s 263 of the Act.
Our view is fortified by the decision of Krishna Kumar Saraf [2015 (10) TMI 2168 - ITAT DELHI] AND Super Sonic Technologies [2018 (12) TMI 912 - ITAT DELHI] - Considering all we are of the considered opinion that the ld. CIT has erroneously assumed jurisdiction u/s 263 of the Act when the impugned assessment orders were non-est. - Decided in favour of assessee.
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2021 (12) TMI 544
Penalty order u/s 271(1)(b) - non-compliance of the notices - nonappearance before the learned assessing officer - Unexplained deposits to bank account - HELD THAT:- Assessee has made representation before the assessing officer in the month of February 2014 that the bank account for which the reopening of the assessment has been made in case of the assessee has not operated by the assessee but was lying dormant for almost 3 years - As stated that somebody is misusing the bank account of the assessee. It was further informed to the assessing officer that assessee has filed a complaint in police about the fraud conducted on the assessee. These facts were stated before the assessing officer. The fact also shows that assessee is an individual is about 63 years and having a very meagre sources of the income.
AO has mentioned in the penalty order that notices were issued to the assessee on 2 May 2013, 2 August 2013, 10 September 2013, 1 October 2013 and 17 October 2013 however it is disputed by the assessee that no such notices have been received by the assessee. Even otherwise the assessment order has been passed by AO u/s 144 of the income tax act - as the assessee itself has denied that he has entered into any such transaction of depositing some in cash or through clearing in his bank account for last two years naturally, assessee looking at his age as well as the smallness of the business, first approached the police authorities by making a complaint. In view of this we find that t
There is a sufficient and reasonable cause with the assessee, irrespective of the addition made in the assessment order, for failure to comply with the notices to appear before the learned assessing officer. In view of the above facts we allow the appeal of the assessee and direct the learned assessing officer to delete the penalty u/s 271 (1) (b) - Decided in favour of assessee.
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2021 (12) TMI 543
TDS u/s 195 - disallowance of non deduction of TDS on net profit charges and administrative support charges as well as addition on account of cash discount given to related parties - HELD THAT:- As in assessee own case [2021 (10) TMI 1005 - ITAT DELHI] Assessee availed IT Network facility from its non-resident group companies and third party domestic companies. The services/facility consists of internet proxy services and access charges. The services are standard services/facility provided to the assessee which do not require any human intervention. In fact, the assessee has given detailed description of the flow of services thereby substantiating that no human intervention was involved before the Assessing Officer. The assessee had entered into the agreements with the foreign group companies to promote sale of its products. The discounts were offered to increase the sales of certain category of products of the assessee and were in line with the regular business practices. These facts are identical to that of A.Y. 2011-12. No new or distinguishing facts were pointed out by the Ld. DR at the time of hearing. Hence, both the appeals of the assessee are allowed.
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2021 (12) TMI 542
Income from house property - determination of ALV of the property - HELD THAT:- As after considering the ALV of ₹ 35,000/- per month which was the benchmark value for FY 2009-10 after the order of the CIT(A) and after considering the incremental rise in rent. We find, the CIT(A) upheld the action of the AO, the reasons of which have already been reproduced in the preceding para - as submission of the ld. Counsel for the assessee that certain additional evidences have not been considered either by the AO or by the CIT(A) which have subsequently come to light and which have a bearing on the facts of the case - we find there is nothing on record to suggest as to what is the fate of the case after the ld. CIT(A) upheld the issue of annual letting value (ALV) of the property during FY 2009-10 by reducing the same to ₹ 35,000/- as against ₹ 40,000/- determined by the AO.
Thus finality of such order could not be explained by either side. Further, the fate of the case for AY 2012-13 and prior to that are also not available before us and the ld. Counsel for the assessee could not throw any light on the same.
We deem it proper to restore the issue to the file of the AO with a direction to adjudicate the issue afresh and after giving due opportunity of hearing to the assessee. He shall verify the record for the past years and also the various evidences filed by the assessee which were not considered by the CIT(A) as well as the AO and decide the issues as per fact and law - The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2021 (12) TMI 541
Benefit of exemption u/s 10(23C)(iiiac) to the assessee society - when the society is not substantially financed by the government in view of Rule 2BBB of the Income Tax Rules, 1962 - HELD THAT:- As in the light of the decision rendered in the case of CIT, Bangalore vs. Indian Institute of Management [2015 (2) TMI 360 - KARNATAKA HIGH COURT] and Rule 2BBB inserted by the IT (Thirteenth Amendment) Rules, 2014 prescribing the said percentage at 50% and by referring to the Rule 230(8) of the General Financial Rules, 2017.
As passed by the ld. CIT (A) by applying the relevant Rules and law laid down in case of CIT vs. Indian Institute of Management [2015 (2) TMI 360 - KARNATAKA HIGH COURT] as the percentage of grant-in-aid to the assessee to the year under consideration is at 50.85% (which is inclusive of interest). Even otherwise, Hon’ble High Court has held that the word ‘wholly and substantially financed by the Government’ cannot be confined only to annual grants, apart from providing annual grant, if Government granted land and invested money in building and infrastructure etc. all that has to be taken into consideration. So, the case of the assessee is clearly covered under Rule 2BBB of IT (Thirteenth Amendment) Rules, 2014 having total grant-in-aid to the tune of 50.85% - in view of the matter, we find no infirmity or perversity in the impugned order passed by the ld. CIT (A), hence the appeal filed by the Revenue is hereby dismissed.
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2021 (12) TMI 540
Disallowance of packing expenses and loading and unloading, cartage outward, general expenses and staff welfare expenses - HELD THAT:- There is no dispute that the additions confirmed by the ld. CIT(A) are on adhoc basis. It was incumbent upon the Assessing Officer/ld. CIT(A) to point out particular expenses which were not verifiable or which were not supported by bills and vouchers, which he has failed. Further, there is no dispute that the books of accounts are duly audited and no adverse remarks have been made by the auditors. The books of account have been accepted by the AO - Therefore, in our considered opinion, adhoc disallowances confirmed by the ld. CIT(A) are without merits and deserve to be deleted. We direct the Assessing Officer to delete the additions so made - Decided in favour of assessee.
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2021 (12) TMI 539
Disallowance u/s 14A read with rule 8D - assessee company has made suo motu disallowance - HELD THAT:- When we examine impugned order passed by the ld. CIT (A) it does not lead to any conclusive findings as per grounds raised by the assessee company that disallowance cannot be more than exempt dividend income earned by the assessee during the year under consideration. Rather ld. CIT (A) has confused the entire controversy sought to be decided by the assessee by partly following his own order passed in AY 2012-13 but has lost sight of all the facts brought on record by the assessee. Thus, the entire findings are cryptic and incomprehensible. In these circumstances, we are of the considered view that the issue has not been examined by ld. CIT(A) by thrashing the facts in the light of the law applicable thereto. Consequently, this issue is remitted back to the ld. CIT(A) to decide afresh in the light of the decisions rendered by Hon’ble Delhi High Court in the cases of as Joint Investments (P.) Ltd. [2015 (3) TMI 155 - DELHI HIGH COURT] AND MAXOPP INVESTMENT LTD., CHEMINVEST & OTHERS [2011 (11) TMI 267 - DELHI HIGH COURT].
Payment to its Associated Enterprise, M/s. Hero Global Design Ltd., for providing engineering services - HELD THAT:- The issue is identical and services have been rendered by M/s. Hero Global Design Limited, and since then business model has not been changed, and whose engineers were constantly available within the factory of the assessee company and have been regularly being paid for their services. So, following the order passed by the coordinate Bench of the Tribunal in assessee’s own case for AY 2012-13 [2020 (4) TMI 51 - ITAT DELHI] we find no infirmity or illegality in the impugned deletion made by the ld. CIT (A), hence grounds no.3 & 4 are determined against the Revenue.
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2021 (12) TMI 538
Disallowance of ESOP expenses - AO disallowed the claim holding that it is a notional loss - HELD THAT:-This issue is squarely covered in favour of the assessee by the decision of Biocon Ltd [2020 (11) TMI 779 - KARNATAKA HIGH COURT] as held assessee has incurred a definite legal liability and on following the mercantile system of accounting, the discount on ESOPs has rightly been debited as expenditure in the books of account.
Disallowance of interest on advance - interest free loan granted to a joint venture company - HELD THAT:- As the assessee has huge non-interest-bearing funds available with it against the amount advanced interest free to a joint-venture company, the issue is squarely covered in favour of the assessee by the decision of the honourable Supreme Court in case of CIT versus Reliance Industries Ltd [2019 (1) TMI 757 - SUPREME COURT] - thus we direct the learned assessing officer to delete the disallowance of interest expenditure.
Addition being provision of the gratuity expenditure Provision for gratuity liability - Provision being created in compliance with revised Accounting Standard-15 issued by the Institute of Chartered Accountants of India (ICAI), relating to accounting of employee benefits - HELD THAT:- The incremental provision on account of post-retirement gratuity to employees has been made in respect of liability in presenti, viz., entitlement earned by the employee while in service until the end of the relevant previous year, on the basis of actuarial valuation Since the aforesaid liability was quantified and recognized on a scientific and rational basis based on report of the actuarial valuer, the liability therefore crystallized and accrued in the relevant assessment year itself and was allowable deduction in that year.
As relying on M/S HEWLETT PACKARD INDIA (P) LTD. [2008 (3) TMI 23 - HIGH COURT OF DELHI] liability is considered as ascertained if the same is determined on actuarial valuation. The court held that the provision made for contingent liability was entitled to deduction if the provision was determined accurately and scientifically. In view of this we hold that provision of gratuity made in accordance with AS 15 and backed by actuarial valuation is an ascertained and current liability which cannot be added to the book profit while working MAT . Thus Ground is allowed.
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2021 (12) TMI 537
Disallowance of deduction claimed u/s 80IB(10) - assessee had offered additional income in the proceedings initiated under section 153C of the Act - Restriction on claim of deduction in view of provisions contained in section 80A(5) - receipt of on-money has also been accepted by the assessee as would be evident from additional income offered by the assessee in the returns of income filed in pursuance to notices issued under 153C - whether against the receipt of such on-money, the assessee can claim deduction under section 80IB(10)? - HELD THAT:- The departmental authorities have not disputed the fact that the receipt of on-money is in respect of the very same project from which the assessee has not only declared income in the original return of income but has also claimed deduction under section 80IB(10) - assessee’s claim of deduction under section 80IB(10) in respect of the very same project has been allowed in the original assessment proceedings. Therefore, the deduction claimed under section 80IB(10) of the Act in the returns filed under section 153C of the Act is in continuation to the claim made in the original returns of income.
The prohibitory conditions of section 80A(5) would not be applicable. In any case of the matter, the revenue does not dispute the fact that the assessee is otherwise eligible to claim deduction under section 80IB(10) of the Act in respect of the profit earned from the subject project. The additional income offered by the assessee because of receipt of on-money, undoubtedly, forms part of the profit earned from the subject housing project. Therefore, merely because the additional income is offered in a search related assessment proceeding under section 153C of the Act, assessee’s claim of deduction cannot be disallowed. See Malpani Estates vs ACIT [2014 (2) TMI 944 - ITAT PUNE]
Since the additional income offered by the assessee goes to enhance the business income derived from the eligible housing project, the assessee would be entitled for deduction under section 80IB(10) - Decided in favour of assessee.
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