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Income Tax - Case Laws
Showing 61 to 80 of 7776 Records
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2021 (12) TMI 1378
Disallowance u/s 14A r.w.r 8D - CIT-A restricted disallowing to exempt income earned by the assessee - HELD THAT:- We find that the total exempt income earned by the assessee during the year was Rs.382/-. Ld. AO noted that assessee has huge investments mainly on unquoted strategic investments in subsidiary companies and proceeded to make a disallowance u/s 14A at Rs.21,15,14,527/- u/s 14A of the Act read with Rule 8D(2) of the Income-tax Rules, 1962.
CIT (A) referring to the judgments of Hon’ble Delhi High Court in case of Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COURT] and CIT vs. Holcim India Pvt. Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT] held that disallowance u/s 14A cannot exceed the exempt income. The aforesaid finding of the ld. CIT (A) is in accordance with law as propounded by the Hon’ble Delhi High Court. So, we do not find any infirmity in the findings returned by the ld. CIT (A) and the same is accordingly upheld. Consequently, the appeal filed by the Revenue is hereby dismissed.
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2021 (12) TMI 1369
TDS u/s 194H - Demand u/s 201(1) and 201(1A) - TDS recovery mechanism regarding the alleged commission paid to pre-paid mobile distributors in its telecom services - as vehemently contended that there exists no principal to agent relation between the assessee and its distributors giving rise to commission element qua the pre-paid recharge coupons - HELD THAT:- We find no merit in the assessee's instant former substantive grievance since the CIT(A) has duly taken note of hon’ble jurisdictional high court decision in M/s. Vodafone Essar South Ltd. [2013 (10) TMI 934 - ANDHRA PRADESH HIGH COURT] - Their lordships have upheld the departmental stand pertaining to applicability of section 194H involving identical prepaid recharge coupons issued to the distributors. It further appears that the said assessee was the assessee’s group concern only. We thus adopt their lordships foregoing detailed reasoning mutatis mutandis and reject the instant former substantive grievance.
As the legislature has itself incorporated section 201(1) first proviso in the Act vide Finance Act, 2012 w.e.f. 1.7.2012 that an assessee shall not be treated to be the assessee in default for having not deducted TDS provided it furnishes the accountant’s certificate qua its payee to have furnished the latter return of income u/s. 139; taking into account such sum for computation followed by payment of due taxes thereupon; respectively.
Case law CIT Vs. Ansal Landmark Township [2015 (9) TMI 79 - DELHI HIGH COURT] holds the foregoing proviso r.w.s. 40(a)(ia) second proviso (inserted in the Act vide Finance Act, 2012 w.e.f. 1.4.2013) to be carrying retrospective effect being curative in nature. We thus restore the instant issue for the Assessing Officer’s factual verification in the very terms. This identical first and foremost substantive grievance is partly accepted for statistical purposes.
Applicability of “royalty” for the purpose of TDS deduction on domestic auto-roaming charges paid to other telecom operators - applicability of the impugned royalty provision 9(1)(vi) - HELD THAT:- We find no merit in the Revenue’s instant stand. It is made clear that section 194J (1)(c) of the Act stipulating TDS deduction on royalty makes it clear in Explanation (ba) that “royalty” shall have the same meaning as in Explanation 2 clause (i) to (vi) of sub-section (1) of section 9 of the Act.
There is no indication in the Assessing Officer’s TDS recovery order or in the CIT(A)’s findings as to whether the assessee's impugned payments made to the spectrum holder(s); as the case may be, satisfies any of the foregoing clauses defining royalty or not. All the assessees have availed is a standard facility without any customisation. The Revenue’s case is that the assessee fails to dispute the Govt. of India’s action collecting royalty qua spectrum (supra). We observe that the said stipulation between assessee's payee(s) and Govt. to this effect does not in any way mean that it itself has made any royalty payment to very payee(s) for utilizing/uplinking the spectrum in question.
The Revenue’s last argument invoking TDS mechanism going by the assessee suo moto deduction in Assessment Years 2015-16 and 2016-17 (supra) does not ipso facto attract the impugned statutory provisions. We lastly conclude that the specific definition prescribed by the legislature in the Act regarding payment of royalty would override the agreements and corresponding terminology employed between the Govt. of India, Telecom Department with the corresponding spectrum allottees going by stricter interpretation as per hon'ble apex court’s decision in Commissioner of Customs Vs. Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT] We accordingly proceed to decide the assessee's instant identical latter substantive ground in both these appeals against the department.
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2021 (12) TMI 1368
Deduction u/s 80IC - whether the process undertaken by the assessee in its industrial unit at Parwanoo amounted to ‘manufacture’ or ‘production’ of the Anchors so as to qualify the requirements? - HELD THAT:- Petitioner seeking permission to withdraw the appeal. Ordered accordingly.
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2021 (12) TMI 1360
Taxable income to tax u/s 44BB v/s Section 44DA read with section 9(l)(vii) - services provided by the assessee in respect of core pressure & wellbore studies, post stack inversion studies, data processing & maintenance services etc which are prima facie backend activities in the nature of technical services - Assessee argued as Activities are in the nature of ‘mining or like project’ and thus not in the nature of ‘fees for technical services. The services provided by the appellant, were used in the exploration/exploitation of mineral oils - HELD THAT:- As respectfully relying upon the decision of Hon’ble Supreme Court in the case of ONGC [2015 (7) TMI 91 - SUPREME COURT] it is held that the receipts of the Assessee on account of post-stack inversion study, core pressure and wellbore study, data processing and maintenance services were taxable under section 44 BB of the Act.
Contention of the revenue that the amounts have to be taxable u/s 44DA - We hold that to invoke the provisions of Section 44DA, the revenue has to prove that the receipts are indeed or in the nature of FTS taxable u/s 9(1)(vii).
Reimbursement of equipment lost in hole - revenue or capital receipt - HELD THAT:- As the name signifies lost in hole means destruction and loss of capital assets like drilling equipment which are provided by the assessee to oil exploration and. production companies. Therefore, the revenue received on account of loss of equipment does not form income in the hands of the assessee rather it is a mere reimbursement of the cost of equipment destroyed in the process of oil extraction.
As reliance on the decision of the Hon’ble Uttarakhand High Court in the own case of the assessee [2009 (7) TMI 51 - UTTARAKHAND HIGH COURT] wherein the Hon’ble Court held that the receipts on account of equipment lost in hole being in the nature of capital receipts cannot, be included in the revenues chargeable to lax u/s 44BB - We find considerable cogency in assessee's submission as above. Hence, we hold that the Assessing Officer has erred in including the sum received by the assessee as reimbursements for determining the taxable income of the assessee. - Decided against revenue.
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2021 (12) TMI 1359
Income accrued In India - amount derived by the Appellant on account of distribution revenue from Turner International India Private Limited (‘TIIPL’) as royalty under Section 9(i)(vi) of the Act and also as per the provisions of India-USA Double Taxation Avoidance Agreement (‘DTAA’) - Permanent Establishment (‘PE’) - HELD THAT:- Issue decided in favour of assessee as relying on own case [2020 (10) TMI 245 - ITAT DELHI]
Non allowance of the credit of taxes deducted at source wrongly withheld on revenue not chargeable to tax in India as per Section 9 of the Act - HELD THAT:- Undisputed fact is that the revenue derived from Apalya Technologies Pvt. Ltd. and Parragon Publishing India Pvt. Ltd. are not taxable in India as per Section 9 of the Act. It is also not in dispute that since the income does not form part of the total income of the assessee the credit of TDS was denied. The credit was also denied in A.Y.2013-14 as mentioned elsewhere. The assessee can claim the credit of TDS in the country in which the related income is offered to tax. We, therefore, do not find any reason to interfere with the findings of the DRP. Ground No.7 is accordingly dismissed.
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2021 (12) TMI 1354
Disallowance u/s 40A(2) - payment to related party - Addition made as Ms. Anjali Lall does not possess the required qualification to undertake the job of interior decoration, repair and maintenance and secondly, the payment is unreasonable and excessive - HELD THAT:- Expression “the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities” as used in section 40A(2) of the Act makes it abundantly clear that the opinion of the Assessing Officer cannot be formed in vacuum and without any cogent evidence. It is the Assessing Officer who has to establish on record that the payment made to the related party is unreasonable and excessive having regard to the market value of the goods, services or facilities for which payment is made. In the facts of the present case, admittedly, except stating that the related party is not technically qualified to undertake the work and the payment made is unreasonable and excessive, the Assessing Officer has not brought any material on record to demonstrate that the payment made is excessive and unreasonable having regard to the market value of the services for which such payment was made. Thus, the disallowance made under section 40A(2) without being back by cogent evidence and purely on conjectures and surmises, cannot be sustained. Accordingly, we delete the disallowance made - Decided in favour of assessee.
TDS u/s 195 - disallowance u/s 40(a)(i) - failure to withhold tax at source on payment made to various persons/entities outside India towards professional/technical fee - HELD THAT:- Payments made to non-resident attorneys cannot be regarded as FTS under section 9(1)(vii) of the Act. Further, a conjoint reading of section 40(a)(i) and 40(a)(ia) brings out a clear distinction between FTS and fees for professional services. Though, section 40(a)(ia) encompasses, both, FTS and fees for professional services, however, section 40(a)(i) is applicable only in case of failure to deduct tax on payments made for FTS. As rightly submitted by learned counsel for the assessee, this could be for the reason that payment of legal/professional fee to a non-resident does not accrue or arise in India or is not deemed to accrue or arise in India as per section 5 and section 9 of the Act. It is relevant to observe, in the case of NQA Quality Systems Registrar Ltd. Vs. DCIT [2004 (12) TMI 323 - ITAT DELHI-F] the coordinate Bench has held that professional services are a category distinct from technical services.
Thus we hold that the payments made to non-resident attorneys being not in the nature of FTS, there was no obligation on the assessee to deduct tax at source.
Payments made to foreign attorneys are not chargeable to tax under the provisions of the Act, in terms of section 195 of the Act. Therefore, the assessee was not required to withhold tax on the payments made. Accordingly, we delete the disallowance made under section 40(a)(i) of the Act. - Decided in favour of assessee.
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2021 (12) TMI 1352
TP adjustment pertaining to the Manufacturing segment -Treating subsidy received by the assessee as a revenue receipt or capital receipt - operating revenue for determining the ALP of the Manufacturing segment - Manufacturing segment which comprises of Import of raw material, Sale of manufactured goods, Payment of technical license fees/Royalty and Payment of one time technology transfer fees - HELD THAT:- The assessee received subsidy under Package Scheme of Incentives (PSI) given by the Government of Maharashtra which was treated as an item of revenue receipt and at the same time, it was also included in the operating revenues for determining the ALP of the Manufacturing segment. In a note given to its balance sheet.
Primary contention of the assessee is that the subsidy is in the nature of capital receipt and hence, should be excluded - When we apply such a test on the facts and circumstances of the case, it demonstrably emerges that the purpose of subsidy is industrial growth; it is linked with the setting up of industrial units; and the amount of subsidy is linked with the amount of investment made in the eligible unit. Simply because the subsidy has been disbursed in the form of refund of VAT and CST, it will not alter the purpose of granting the subsidy, which is nothing but establishment of new industrial units in less developed areas of the State. The authorities below have been swayed by the fact that the subsidy was granted post commencement and is in the nature of refund of VAT and CST and overlooked the purpose of its granting, which is nothing but momentum in industrial pace in less developed parts of the State. Testing the factual panorama on the touchstone of the ratio laid down by the Hon’ble Supreme Court in the above referred cases, we are of the considered opinion that the subsidy of Rs.89.73 crore is a capital receipt and not chargeable to tax.
It is relevant to mention that we are concerned with the A.Y. 2014-15. The Finance Act, 2015 has inserted clause (xviii) to section 2(24) w.e.f. 01-04-2016 providing that the assistance in the form of subsidy or grant of cash incentives etc., other than the subsidy which has been taken into consideration in determining the actual cost of the asset in terms of Explanation 10 to section 43(1), shall be considered as an item of income chargeable to tax. Since the amended provision of section 2(24)(xviii) is not applicable to the year under consideration, the sequitur is that the subsidy received by the assessee would not form part of its total income. We, therefore, overturn the impugned order and direct to treat the subsidy as an item of capital receipt not chargeable to tax.
In view of the fact that the subsidy has been held to be a capital receipt, obviously, it cannot form part of operating revenue of the Manufacturing segment of the assessee company for the purpose of determining the ALP under the TNMM.
AR contended that in the hue of the amendment to section 2(24) of the Act, the assessee offered the subsidy as a revenue receipt chargeable to tax for the A.Y. 2016-17 and also claimed it as operating revenue for the purpose of the ALP determination, which issue is sub judice before the Tribunal. We desist from commenting on the treatment of subsidy as an item of operating revenue or otherwise because it is not required for the disposal of the present appeal, for which the subsidy has been held to be a non-operating revenue on the ground that it is a capital receipt and does not form part of the total income of the assessee.
To sum up, the subsidy is capital receipt not chargeable to tax and at the same time it will not be included in the operating revenue for determining the ALP of the Manufacturing segment - we hold that the profit margins of the comparables cannot be reduced by the difference in the amount of Custom Duty because there is no evidence of any difference in the Custom Duty rates paid by the assessee as well as the comparables. Respectfully following the precedent, we uphold the impugned order on this score. This ground fails.
Comparable selection - Inclusion of Bharat Earth Movers Limited and JCB India Limited in the list of comparables - TPO included Bharat Earth Movers Limited in the list of comparables despite the assessee’s objections - AR submitted that the comparable was there in the immediately preceding assessment year and the Tribunal has directed to exclude the same from the list of comparables. Relevant discussion has been made in para 7 of the Tribunal order. After considering the relevant material, the Tribunal has directed to exclude Bharat Earth Movers Limited. The ld. DR could not controvert the argument of the assessee. Respectfully following the precedent, we order to exclude this company from the list of comparables. This part of the ground is, therefore, allowed.
Next comparable assailed by the assessee is JCB India Limited, which was included by the TPO in the list of comparables - No relief was allowed by the DRP. The ld. AR fairly submitted that the inclusion of JCB India Limited in the list of comparables was challenged by the assessee for the immediately preceding assessment year as well but the Tribunal has upheld the decision of the authorities below in this regard. We have perused the order passed by the Tribunal on this issue for the immediately preceding assessment year. Relevant discussion has been made in para 8 of the order. After elaborate analysis of the factual and legal position, the Tribunal has finally held that JCB India Limited was rightly included in the list of comparables. Following the same view, we countenance the inclusion of this company in the list of comparables. This part of the ground is, therefore, dismissed.
Transfer pricing adjustment on entity level as against the proportionate adjustment - AR submitted that similar issue was raised in the assessee’s appeal for the immediately preceding assessment year and the Tribunal was pleased to direct the AO/TPO to restrict the transfer pricing adjustment to the extent of international transactions under the Manufacturing segment. The ld. DR also fairly admitted the position. Respectfully following the precedent, we direct the AO/TPO to restrict the transfer pricing adjustment to the extent of international transactions under the Manufacturing segment.
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2021 (12) TMI 1351
Assessment u/s 153A - Addition u/s 68 - unexplained share capital received from 24 persons - neither the creditworthiness of these creditors nor the genuineness of transactions were established as submitted by the AO in Assessment Order and Remand Report - CIT(A) was convinced that the assessee has successfully discharge the onus cast upon it by provisions of Section 68 of the Act and deleted the addition - HELD THAT:- On these facts ratio laid down by the Hon'ble High Court of Delhi in the case of Kabul Chawla .[2015 (9) TMI 80 - DELHI HIGH COURT] which was followed in the case of Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT] squarely apply where.has held that where no incriminating material was unearthed to show that there was violation by the assessee to disclose income/additions made by the Assessing Officer was not justified. - Decided in favour of assessee.
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2021 (12) TMI 1350
Assessment order u/s 143(3) making additions under Section 69-A - petitioner has filed appeal before the CIT-A against addition and said appeal is presently pending for hearing - meanwhile demand notices were issued to the petitioner which were followed by garnishee notices - HELD THAT:- After hearing learned counsel for the parties and on due consideration, we are of the view that it would meet the ends of justice if a direction is issued to the Appellate Authority i.e., respondent No.1 to take up the stay petition of the petitioner dated 05.04.2021 and pass appropriate orders thereon in accordance with law. We are of the further opinion that the said stay petition should be decided within a period of six weeks from the date of receipt of a copy of this order. Till such time, the demand pursuant to assessment order dated 21.12.2019 shall remain stayed.
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2021 (12) TMI 1349
Late filing fee under section 234E - liability to pay late fee for non filing of any statement of tax deduction at source - scope of provisions of section 200A(1)(e) - HELD THAT:- As brought to our attention the decision in M/s.Sarala Memorial Hospital v. Union of India and Another [2018 (12) TMI 1818 - KERALA HIGH COURT] wherein an identical question arose for consideration. After considering the statutory provisions and the implications of the amendment brought in to the Act, it was held that the amendment would take effect only with effect from 1st June, 2015 and is thus prospective in nature. It is submitted that the aforesaid judgment has become final and is binding upon the authorities.
In view of the above, the demand in Ext.P1 for the period from 2011-12 to the first quarter of 2015-16 is bereft of authority and cannot be legally sustainable.
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2021 (12) TMI 1348
Assessment u/s 153A - Undisclosed/Unexplained income - withdrawal shown in the seized documents belonging to the partners in their personal capacity or firm - whether withdrawals in the name of the partners of the firm represents the unaccounted income of the firm? - whether these documents belong to the assessee? - HELD THAT:- We find that the seized document was containing the name of the firm and the partners which was duly dated & signed by all of them along with the witnesses.
Thus, it appears that the firm is the owner of the documents and thus it is safe to infer that the document in question belongs to the assessee as envisaged under section 153C of the Act.
Withdrawal shown in the seized documents represents the amount belonging to the partners in their personal capacity - Onus lies upon the assessee to prove that the transactions shown in the seized paper do not represent the true contents.
On examination of the seized document, we note that it was duly signed and dated not only by all the partners but also by three witnesses. The name of the partnership firm along with partners was appearing. It was discernible from the seized document that there was withdrawal of money from the partnership firm. Generally, the withdrawal from the firm represents the withdrawal of the capital by the partners. This capital can either be in the form of money contributed by the partner or maybe the share of profit/remuneration/interest on the capital of the partner generated from the partnership firm. Likewise, all these transactions should have been duly recorded in the books of accounts of the firm as well as in the individual ledger of the partners maintained by the firm. But, on perusal of the financial statement of the firm and the capital account of the partners, we note that such figures are not appearing herein. The necessary details of the financial statement of the assessee and capital account of the partners. Thus, we find difficult to believe the version of the assessee that the impugned withdrawal represents the settlement of the partners account in their individual capacity.
Addition was not made solely on the basis of the statement recorded in the course of search of Shri Lialchand Patel the father-in-law of Shri Himanshu Patel one of the partner of the firm. Therefore, it is not necessary to provide the opportunity of cross examination to the assessee of statement as discussed above.
As there is nothing brought on record that such amount of transactions were recorded in the books of accounts of the individual partners we find that the assessee has not brought anything on record even in the present proceedings which is the 2nd innings. The assessee cannot escape from its liability in discharging the onus cast upon it under the provisions of law in the garb of the matter sub-judice in the court of law. In view of the above, we are of the opinion that the assessee failed to discharge its onus imposed under the provisions of law by furnishing the necessary documentary evidence. Thus, in such facts and circumstances, we are constrained and have no alternative except to confirm the order of the authorities below. Hence the ground of appeal of the assessee is dismissed.
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2021 (12) TMI 1347
Rectification u/s 254 - challenging the validity of selecting the case of the assessee under compulsory scrutiny based on incomplete survey dated 06.01.2021 - AO has initiated the compulsory scrutiny without any prior approval of the competent authority and therefore, the question arises whether the initiation of the compulsory scrutiny by the Assessing Officer is in accordance with the criteria prescribed by the CBDT or not? - HELD THAT:- It is settled proposition of law that the scope and jurisdiction of this Tribunal under section 254(2) is very limited and circumscribed to rectify a mistake apparent from record. Therefore, the Tribunal cannot review its own order in the proceedings under section 254(2). The case law relied upon by the DR on this point are binding and there is no quarrel on this issue however, the failure to consider an important fact or contention raised during the hearing would certainly be a mistake apparent from record as the said relevant fact is likely to effect the decision on an issue.
Non consideration of such a crucial and relevant fact and point out which is going to influence the decision is an apparent mistake from record requires to be rectified under section 254(2) - DR has also relied upon the various decisions on the point that the assessee has not raised any objection regarding jurisdiction of the AO during the assessment proceedings and therefore cannot be permitted to raise this issue. It is pertinent to note that those decisions are only on the issue of jurisdiction of the AO to assess the assessee and not on the validity of the initiation of compulsory scrutiny. Therefore, even if the AO is having jurisdiction to assess the assessee, he may not have the authority to initiate the compulsory scrutiny if the prescribed criteria for such selection of compulsory scrutiny are not satisfied. Hence the decision relied upon by the learned DR on the jurisdiction of the AO are not relevant for the issue under consideration. As there is an apparent mistake in the impugned order and particularly while deciding the additional issue which goes to the root of the matter then, in the facts and circumstances of the case and in the interest of justice, the impugned order dated 21st October, 2021 of this Tribunal is recalled for deciding the appeal of the assessee afresh. Mis application allowed.
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2021 (12) TMI 1340
Proceedings initiated u/s 276C(2) - main contention before this Court that the amount has already been paid. Therefore, there cannot be any prosecution - HELD THAT:- These are all factual aspects which cannot be gone into at this stage. It is the matter for evidence before the trial Court. At this stage, learned counsel for the petitioner submitted that compounding petition is pending before the authority and the authority has to take decision immediately. Be that as it may. If the compound petition is pending before the authority, the authority shall act as per law and take decision within a period of two months from the date of receipt of copy of this Order. In such a view of the matter the Criminal Original Petition is liable to be dismissed.
As far as the trial is concerned, the presence of the Petitioner is dispensed with except for receiving copies, answering the charges and questioning under Section 313 Cr.P.C. or any other date that may be fixed by the trial court.
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2021 (12) TMI 1337
Delayed payments of employees contribution to ESI and PF by invoking the provisions of section 36(1)(va) - addition on the basis of the amendment effected by the Finance Act, 2021, to section 43B of the Act by insertion of Explanation-5 and to section 36(1)(va) of the Act by insertion of Explanation-2 - HELD THAT:- This issue has been dealt with and adjudicated by the ITAT in a number of cases, consistently ruling in favour of the assessee, holding that the amendment to section 43B of the Act by insertion of Explanation-5 and to section 36(l)(va) of the Act by insertion of Explanation-2, by the Finance Act 2021 is prospective and the issue otherwise stands decided by the jurisdictional high court in favour of the assessee
As decided in AJAY PIPLANI, VERSUS THE ASSISTANT DIRECTOR OF INCOME TAX, BENGALURU [2021 (10) TMI 1280 - ITAT] that the claim of employees contribution to ESI and PF as per section 36 (1) (va) of the Act cannot be denied in the impugned year, i. e. 2019 - 20 on the basis of amendment made to the section by Finance Act 2021. The order of the Ld. CIT(A) upholding the said disallowance to the is therefore set aside and the AO is directed to allow the claim of the assessee. Also see M/S JUPITER AQUA LINES PVT. LTD. VERSUS THE D.C.I.T., CIRCLE-6 (1) , MOHALI. [2021 (11) TMI 761 - ITAT CHANDIGARH] - Decided in favour of assessee.
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2021 (12) TMI 1336
Delayed payments of employees contribution to ESI and PF by invoking the provisions of section 36(1)(va) - Scope of amendment - HELD THAT:- This issue has been dealt with and adjudicated by the ITAT in a number of cases, consistently ruling in favour of the assessee, holding that the amendment to section 43B of the Act by insertion of Explanation-5 and to section 36(l)(va) of the Act by insertion of Explanation-2, by the Finance Act 2021 is prospective and the issue otherwise stands decided by the jurisdictional high court in favour of the assessee.
As decided in AJAY PIPLANI, VERSUS THE ASSISTANT DIRECTOR OF INCOME TAX, BENGALURU [2021 (10) TMI 1280 - ITAT] that the claim of employees contribution to ESI and PF as per section 36 (1) (va) of the Act cannot be denied in the impugned year, i. e. 2019 - 20 on the basis of amendment made to the section by Finance Act 2021. The order of the Ld. CIT(A) upholding the said disallowance to the is therefore set aside and the AO is directed to allow the claim of the assessee. Also see M/S JUPITER AQUA LINES PVT. LTD. VERSUS THE D.C.I.T., CIRCLE-6 (1) , MOHALI. [2021 (11) TMI 761 - ITAT CHANDIGARH] - Decided in favour of assessee.
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2021 (12) TMI 1335
Deemed dividend u/s 2(22)(e) - transactions of loans/advances are made through journal entries even when the loans/advances were reflected in the balance sheets of the respective companies - HELD THAT:- On appraisal of the mentioned finding, we noticed that the CIT(A) has directed the AO to verify the ledger account of M/s. WWIL/EIL in the books of six related group of companies and re-compute the amount of deemed dividend u/s 2(22)(e) after excluding the amounts related to journal entries and considering only those amounts wherein actual payments have been made/received. We nowhere found these directions as illegal or against law and facts. The facts are not distinguishable at this stage. Moreover, we noticed that the issue has duly been covered by the decision of the Hon’ble ITAT in the assessee’s own case for the A.Y. 2007-08 & 2009-10 [2021 (8) TMI 894 - ITAT MUMBAI]
Therefore, taking into account of all the facts and circumstances, we are of the view that the CIT(A) has passed the order judiciously and correctly which is not liable to be interfered with at this appellate stage. Accordingly, we affirm the finding of the CIT(A) on this issue and decide these issues in favour of the assessee against the revenue.
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2021 (12) TMI 1332
Employees’ share of contribution to ESI to the extent not paid on or before the due date as mentioned in Sec 36(1)(va) - HELD THAT:- Hon’ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., (supra) [2014 (3) TMI 386 - KARNATAKA HIGH COURT] has taken the view that employee’s contribution under section 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee’s share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon’ble Karnataka High Court.
In this case there is no dispute that the assessee made payment of the Employees share of PF/ESI on or before the due date for filing return of income for AY 2017-18 u/s.139(1) of the Act. The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also.
We find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act, deserves to be deleted. Appeal of assessee allowed.
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2021 (12) TMI 1331
Disallowing the late deposit of employee’s contribution towards ESI and EPF - contribution though the same was deposited before the due date of filing of return of income under section 139 - amendment by Finance Act, 2021 in Section 36(1)(va) and Section 43B - HELD THAT:- There is no dispute that prior to the amendment by Finance Act, 2021 in Section 36(1)(va), Section 43B, the issue of allowability of the employee’s contribution deposited belatedly as per the due date of the respective Acts however, before the due of filling of return of income under Section 139(1) is covered by the decisions of Hon'ble jurisdictional High Court as well other High Courts. The Hon'ble Jurisdictional High Court in the case of Sagun Foundry Private Limited [2016 (12) TMI 1479 - ALLAHABAD HIGH COURT] decided this issue in favour of the assessee.
Revenue has not disputed the fact that the Employee’s contribution towards EPF and ESI was deposited by the assessee before the due date of return of income u/s 139(1) which was extended by the CBDT upto 31st October, 2018. Therefore, the claim of assessee is allowed.
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2021 (12) TMI 1326
Validity of Faceless Assessment - petitioner contended that it was unaware of the completion of the proceedings relating to the assessment year 2017-18 under the faceless scheme - Denial of natural justice - failure of an opportunity to contest the assessment proceedings - HELD THAT:- This Court is of the opinion that, though the assessing officer cannot be faulted, petitioner did not get an effective opportunity to put forth his response for the year 2017-18. Since the assessment order is the platform from which the rights and obligations of not only the assessee but also of the department arise, it is essential that such a platform is built upon strong foundations, especially when the amount involved is large. The burden of an assessment order issued without hearing the assessee will fall, not only upon the petitioner alone but even upon the system itself and may create further waste of resources.
It is relevant to bear in mind that the principles of natural justice cannot be cribbed or cabined in a straitjacket formula. The concept of natural justice depends on the context and the circumstances of each case.
When the tax department of the Country is in a transition phase, with conventional and traditional notices being replaced by e-notices or intimations in the web portal, the technological inadequacies and incompetence of the litigants cannot be brushed aside lightly, especially when the prejudice to the litigant is enormous. As the tax department and the assessees are both passing through the transition phase and shifting to electronic modes, a rigid consideration and application of rules of natural justice do not augur well for the system. The principles of natural justice are flexible enough to adapt to situations like the present, to insist for an effective opportunity for the assessee.
This Court is of the opinion that an effective opportunity of hearing could not be availed of by the petitioner in its full sense and therefore there has been a violation of the principles of natural justice while issuing Ext. P6 order of assessment.
The fact that if a fresh opportunity is granted to the petitioner to reply to the notices issued and also to consider same in a time bound manner would not cause any prejudice to the department. On the contrary, it will cater to the advancement of the cause of justice for both sides.
Ext.P6 is liable to be set aside and a fresh opportunity of hearing be granted to the petitioner. While setting aside Ext.P6 order of assessment dated 22.04.2021, the petitioner is given an opportunity to respond to all the notices issued to the petitioner on or before 14.01.2022 and the assessing officer shall consider the objections of the petitioner and pass fresh orders thereon, after hearing the petitioner on or before 31.01.2022.
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2021 (12) TMI 1324
TP adjustment in respect of international transactions of Intra Group Services provided by the assessee to its Associated Enterprises (AE) - HELD THAT:- Revenue intends to keep issues alive, however, could not controvert view taken in respect of these issues as there has been no contrary observation/material evidences brought out on record by ld. CIT DR. It has been admitted by him that facts and circumstances of the services received by assessee for the year under consideration are same vis-à-vis assessment year 2010-11, and other preceding assessment years. We are therefore inclined to follow the same view. Respectfully, following view taken by this Tribunal in assessment year 2010-11 and other preceding assessment years, orders of which are placed in paper book, addition made by Assessing Officer stands deleted.
To maintain the rule of consistency, we follow the earlier order of Tribunal and decide the issue in favour of the assessee and the addition made being T P adjustment on account of intra group services provided by the assessee to its AE is deleted.
TP adjustment of interest payment on loan - HELD THAT:- This Tribunal for the assessment years 2011-12 to 2014-15 [2018 (7) TMI 1955 - ITAT NEW DELHI] remitted this issue to the record of the TPO for undertaking benchmarking analysis in accordance with the directions of this Tribunal for the assessment year 2010-11.
Disallowance of branch office expenditure and expenditure incurred due to non-producing of production sharing contracts - HELD THAT:- We fail to see any such provision in the act that if the other party in the joint-venture do not agree to share the particular cost, the cost incurred by one of the partners of that joint-venture becomes the expenditure not for the purpose of the business of that partner. No such provision has also been brought to our notice by the revenue. It is also not the case of the revenue that details of those expenditure are not available before them or Assessee has furnished incomplete information for its allowability. Further, no judicial precedent was cited before us by revenue, which says that such expenditure are not allowable to the Assessee. Accordingly, these grounds raised by the assessee stands allowed.
Disallowance of head office expenses - HELD THAT:- The fact that business model has not undergone any change since the AY 2010-11 and by following the decision rendered by the coordinate Bench of the Tribunal in taxpayer's own case for AY 2010-11, we are of the considered view that the cost of services availed of by the taxpayer required by PSC with regard to its standard of operation including the quality of execution of work, access to latest industry information and global updates, safety of its employees and the environment etc., cannot be disallowed merely on the ground that the said expenses have not been borne by the joint venture partner, particularly when it is not disputed by the Revenue that the expenditure were made for commercial expediency.To maintain the rule of consistency, we follow the earlier order of Tribunal and decide the issue in favour of the assessee and allow this ground of assessee's appeal.
Disallowance of depreciation and depletion - HELD THAT:- We deem it proper to restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate its case. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the assessee on this issue is allowed for statistical purposes - To maintain the rule of consistency, we follow the earlier order of Tribunal and restore this issue to the record of Assessing Officer with the same directions for deciding the same afresh after giving a reasonable opportunity of hearing to the assessee. Accordingly, this ground of appeal is allowed for statistical purposes.
Disallowance of inventory written off - HELD THAT:- After hearing both the sides and considering the totality of the facts of the case, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate his case. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the assessee on this issue is allowed for statistical purposes.
Disallowance of deduction of Education Cess - assessee claimed deduction on account of education cess paid before the due date of filing the return of income - AO disallowed the claim of the assessee being part of the Income-tax which is not an allowable deduction - HELD THAT:- The dispute under consideration is purely legal in nature, as the facts are not in dispute. As in the case of Chambal Fertilizers and Chemicals [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT], wherein after considering the CBDT Circular, it has been held that the assessee is eligible to claim the deduction of the 'cess' as per the provisions of Section 37 of the Income Tax Act. In the absence of any contrary decision of jurisdictional High Court or any other high Court, the decisions relied upon by the ld. Sr. counsel are binding on this Tribunal. Respectfully following the above decisions, this issue is decided in favour of the assessee and the claim of deduction on account of education cess is allowed.
Short credit of TDS - HELD THAT:- Assessing Officer is directed to verify the correct TDS credit available to the assessee and then to allow the same.
Interest on refund u/s. 244A - HELD THAT:- We note that the refund of tax is consequential to the outcome of the appeal filed by the assessee. Therefore, the Assessing Officer is directed to consider the consequential effect of the refund and interest there upon u/s. 244A of the Act.
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