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Income Tax - Case Laws
Showing 21 to 40 of 676 Records
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2022 (1) TMI 1372 - JHARKHAND HIGH COURT
Disposal of the appeal expeditiously - appellant apprehends that proper opportunity of hearing may not be granted to him to place his submission before the appellate authority - petitioner submits that urgency for taking up the writ petition has arisen on account of notice issued u/s 250 by C.I.T (Appeal) dated 17th January, 2022 requiring the appellant to furnish written submission and documents electronically on or before 28th January, 2022 at 03:00 p.m.- HELD THAT:- We have taken note of rival submission of learned counsel for the parties on the limited prayer of the petitioner. The apprehension expressed by the petitioner has been allayed by learned counsel for the Revenue also pointing out to the text of the notice dated 17th January, 2022.
C.I.T (Appeal) appears to be inclined to dispose of the appeal in an expeditious manner and has also asked the appellant to furnish ground-wise written submission along with supporting documentary evidence and clarifications/information etc., as per Annexure. Open for the petitioner to appear before the C.I.T (Appeal) electronically on the date fixed i.e., 28th January, 2022 and if so advised, seek some more time to submit their written submissions/documents.
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2022 (1) TMI 1369 - RAJASTHAN HIGH COURT
TP adjustment - adjustment of Corporate Guarantee - HELD THAT:- As pointed out to us that the issue is squarely covered by a detailed judgment of this Court [2017 (12) TMI 583 - RAJASTHAN HIGH COURT] concerning this very assessee. Under the circumstances these questions are not considered.
Write off of loss on account of investment made in equity shares of one of its subsidiary - HELD THAT:-This issue is covered by a recent order [2021 (12) TMI 1407 - RAJASTHAN HIGH COURT] which also concerned this very assessee held that assessee had made investment in its subsidiary company in order to expand its business with a view to earn higher profit. The investment was thus driven by business expediency. The tribunal therefore committed no error as opined that such investment being in the nature of revenue expenditure was to be allowed under Section 37.
MAT computation - Write off of investment n the subsidiary company for the purpose of computing “book profit” u/s. 115JB - HELD THAT:- Full Bench of the Gujarat High Court in the case of CIT Vs. Vodafone Essar Gujarat Ltd. [2017 (8) TMI 451 - GUJARAT HIGH COURT] held that with insertion of clause (i) to the explanation with retrospective effect, any amount or amounts set aside for provision for diminution in the value of the asset made by the assessee, would be added back for computation of book profit under section 115JB - if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset aside of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the explanation to section 115JB.
ITAT justification to remit back the issue of disallowance out of provision for doubtful loans and disallowance out of bad debts provision claimed in MAT to the file of the AO for verification - HELD THAT:- The questions as arise out of the order of the Income Tax Appellate Tribunal remanding certain issues to the assessing officer for fresh consideration. Being a pure remand and we are informed that decisions have also been rendered in such remand, no question of law arises.
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2022 (1) TMI 1367 - ITAT DELHI
TP Adjustment - specific domestic transaction as the case is covered u/s 92 BA - HELD THAT:- The undisputed fact is that as per sub-clause (r) of section 92 BA the assessee has undertaken the transaction which has exceeded the prescribed limit. It is also not in dispute that vide Finance Act,2017 w.e.f. 01.04.2017 the said sub-clause (r) of section 92BA has been omitted.
We find that an identical issue came up for adjudication before the coordinate bench, Bangalore in [2017 (12) TMI 1719 - ITAT BANGALORE] held court is to look to the provisions in the rule which has been introduced after omission of the previous rule to determine whether a pending proceeding will continue or lapse. If there is a provision therein that pending proceedings shall continue and be disposed of under the old rule as if the rule has not been deleted or omitted then such proceeding will continue.
We, therefore, set aside this issue to the file of the Assessing Officer. The Assessing Officer is required to adjudicate the issue in accordance with law, after affording sufficient opportunity of being heard to the assessee.
Disallowance of deduction u/s 80IA - rate for eligibility of deduction - AR stated that the rate applied by the assessee is not correct and it is the say of the counsel that the rate charged by the electricity board to its consumers should be taken as rate for eligibility of deduction under section 80IA of the Act - HELD THAT:- We are of the considered view that this contention of the ld. counsel for the assessee is correct. The counsel has applied the rate which it has charged to the electricity board whereas the rate should have been the rate charged by the electricity board to its consumers. We, therefore, set aside this issue to the file of the Assessing Officer. The assessee is directed to furnish the rates charged by the electricity board to its consumers and the Assessing Officer is directed to verify the same and decide the issue afresh. Ground No. 4 is allowed for statistical purposes.
Claim of education cess as deductible u/s 37 - HELD THAT:- This issue has been extensively considered by the Hon’ble High Court of Bombay in the case of Sesa Goa [2020 (3) TMI 347 - BOMBAY HIGH COURT] We find that the co-ordinate bench has followed the decision of the Hon’ble Supreme Court in the case of K Srinivasan [1971 (11) TMI 2 - SUPREME COURT] However, the issue before the Hon’ble Supreme Court was whether the surcharge is part of tax or not. Whereas the issue before the Hon’ble Bombay High Court in the case of Sesa Goa [2020 (3) TMI 347 - BOMBAY HIGH COURT] was whether education cess is allowable as expenditure or not. Therefore, the decision of the Hon’ble Bombay High Court is directly on the claim of the assessee and respectfully following the same, we direct the Assessing Officer to allow the claim of deduction in respect of education cess paid by the assessee. Ground number 5 and additional ground is allowed.
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2022 (1) TMI 1365 - ITAT CHANDIGARH
Disallowance as prior period expenses - as argued expense was paid at a later date due to pending negotiation with the landlord - HELD THAT:- The factum of negotiation between the assessee and the landlord and an agreement towards the revised licence fee as happened in the month of Aug 2009 is clearly borne out of records and the liability towards the rent/licence fee though pertaining to the earlier period has crystallized during the year and is allowable in the hands of the assessee.
We therefore find that these expenses are duly allowable in the hands of the assessee as settled during the year and in any case, there are no changes in the tax rates and thus, no prejudice is caused to the Revenue and as held by the Courts, such an exercise of disallowing otherwise allowable expenses treating as mere prior period expenses will only result in an academic discussion without any tangible results.
Also aforesaid expenses in nature of rental payments are subject to TDS u/s 194I and the provisions of section 40(a) (ia) are equally attracted which provides for the allowability of expenses in the year in which the TDS has been deducted and paid.
In the instant case, it is a matter of record that the assessee has paid and accounted for these expenses in the books of accounts in the financial year relevant to the impugned assessment year and has deducted and deposited TDS in the financial year relevant to the impugned assessment year and not in the earlier assessment year. Therefore, even from the perspective of harmonious construction of all relevant provisions, the assessee deserves an allowance towards these expenses in the year under consideration. Decided in favour of assessee.
TDS u/s 194C - assessee has not deducted TDS under the head “Advertisement and publicity” on certain transactions - Disallowance u/s 40(a)(ia) - HELD THAT:- Assessee has filed relevant invoices/documentation in support of its contentions before the ld CIT(A) and therefore,CIT(A) findings that the assessee has not filed any evidence in support of his contention that the said payment does not require any TDS, is not borne out from the records.
Given that the material available on record has not been examined and no findings on merits of the additions have been recorded by the ld CIT(A) , we deem it appropriate that the matter be set-aside to the file of the ld CIT(A) to examine the same on merits after providing reasonable opportunity to the assessee. The contentions advanced on the merits have been left open and the assessee is free to advance the same before the ld CIT(A) as so advised. In the result, the ground no. 3 is allowed for statistical purposes.
Expenses debited under the head “general charges” - HELD THAT:- Going by the nature of expenses such as assets written off , provisions for expenses and old balances written off , it is prima facie not very clear whether these expenses can be claimed as revenues expenses and allowable under section 30 to 37 of the Act. Since these contentions have been raised for the first time and in absence of any findings of the lower authorities, we deem it appropriate to set-aside the same to the file of the ld CIT(A) who shall examine the aforesaid contentions so raised - ground no. 4 is allowed for statistical purposes.
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2022 (1) TMI 1363 - ITAT BANGALORE
Validity of Assessment u/s 144C - mandatory for the AO to pass Draft Assessment Order in accordance with the procedure laid down - intent of the AO while passing the draft assessment order - HELD THAT: In the present case, the Ld.AO passed the draft assessment order u/s. 143(3) r.w.s. 144C (13) of the Act on 23.03.2016 which is accompanied with demand notice issued u/s. 156 of the Act dated 23.03.2016 and it is also noticed that in the draft assessment order itself, the AO recorded the statement as Demand notice issued accordingly. Penalty proceedings u/s. 271(1)(c) are initiated separately for the additions made.
Being so, it is observed that the draft assessment order passed by the AO is without following the due process of law as enumerated in the judgment in the case of Vijay Television [2014 (6) TMI 540 - MADRAS HIGH COURT]
Since the order passed by the AO is without following the due process of law and it cannot survive in the eyes of law, accordingly we quash the impugned assessment order before us - Decided in favour of assessee.
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2022 (1) TMI 1362 - ITAT BANGALORE
Validity of Assessment u/s 144C - mandatory for the AO to pass Draft Assessment Order in accordance with the procedure laid down - intent of the AO while passing the draft assessment order - HELD THAT:- In the present case, the Ld.AO passed the draft assessment order u/s. 143(3) r.w.s. 144C (13) of the Act on 28.12.2018 which is accompanied with demand notice issued u/s. 156 of the Act dated 21.12.2016 and it is also noticed that in the draft assessment order itself, the AO recorded the statement as Demand notice issued accordingly. Penalty proceedings u/s. 271(1)(c) are initiated separately for the additions made.
Being so, it is observed that the draft assessment order passed by the AO is without following the due process of law as enumerated in the judgment in the case of Vijay Television [2014 (6) TMI 540 - MADRAS HIGH COURT]
Since the order passed by the AO is without following the due process of law and it cannot survive in the eyes of law, accordingly we quash the impugned assessment order before us - Decided in favour of assessee.
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2022 (1) TMI 1361 - ITAT PUNE
Income from house property - Addition on account of notional income in respect of the unsold flats - unsold 37 flats shown as stock in trade - assessee filed return showing income from such business and also engaged in the business of property development - HELD THAT:- In the present case that there is no dispute that the profits of the business of construction by the assessee are chargeable to income-tax. Therefore, in our view that the unsold 37 flats are occupied by the assessee are as owner; business of construction is carried on by the assessee; the occupation of the flats is for the purpose of business; and profits of such business are chargeable to Income-tax.
Thus, in our opinion, all the four conditions provided in exclusion clause in section 22 of the Act are to be excluded, therefore, we hold that no addition on account of deemed rent on unsold 37 flats can be made in the hands of the assessee. DR did not dispute that the assessee recognized the unsold flats as stock-in-trade but however relied on the order of CIT(A). Thus, the order of CIT(A) is not justified and it is set aside. Thus, the grounds raised by the assessee are allowed.
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2022 (1) TMI 1358 - ITAT MUMBAI
Additions u/s.68 - sale proceeds of shares unexplained - addition made as considering it Pre-arranged transactions, Sale of scares and unusual rise in the price through rigging not backed by, Failure of the assessee to discharge its onus to prove that the LTCG claimed by it is genuine - as vehemently pleaded by the DR that AO in the remand report had only stated that the evidences submitted by the assessee are proper and genuine and had not stated that the transactions carried out by the assessee are proper and genuine
HELD THAT:- As entire evidences are filed by the assessee only in support of the transactions carried out by the assessee, we are unable to persuade ourselves to accept to the narrow argument of the revenue. When the evidences are accepted as proper and genuine, that too after due enquiries and examination thereon, obviously the transactions carried out by the assessee also would be proper and genuine. Hence the only logical conclusion would be that the ld. AO had indeed accepted the entire transactions together with its evidences as proper and genuine. We deem it unnecessary to go into the merits of the addition made herein.
The entire remand report of the ld. AO had already been reproduced herein supra. We hold that when the ld. AO had given a favourable report in his remand proceedings, then fairly the Revenue ought not to have preferred any further appeal before this Tribunal as there could not be any grievance for them.
We draw support in this regard on the decision of the Hon’ble Madras High Court in the case of Smt. B.Jayalakshmi [2018 (8) TMI 208 - MADRAS HIGH COURT] as categorically held that when the Assessing Officer had accepted the contentions of the assessee in the remand report, the Revenue could not be aggrieved by filing further appeal and since this fact had not been taken cognizance by the Tribunal in that case, the Hon’ble Madras High Court had remanded the matter back to the Tribunal for fresh consideration.
Admittedly, such conclusion was drawn by the ld. AO after carrying out detailed investigations and enquiries carried out with various parties as mandated. We find that the ld. CIT(A) granted relief based on the said remand report apart from giving relief on merits. We are not giving any opinion on the merits of the case. We find that at the threshold itself, this appeal is required to be decided against the Revenue by following the decision of the Hon’ble Madras High Court referred to supra in view of the fact that the ld. AO had accepted the entire contentions of the assessee in the remand report. We also find that the Revenue had not raised any grounds before us stating that remand report of the ld. AO is incorrect. Accordingly, the grounds raised by the Revenue are dismissed.
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2022 (1) TMI 1357 - ITAT SURAT
Assessment order u/s 144 r.w.s 147 treating assessee as AOP - HELD THAT:- We find that before the ld. CIT(A), the assessee filed copy of Satakhat. On perusal of the contents of said Satakhat, we find that it has direct relevance to the grounds of appeal raised by the assessee and the same require consideration. Therefore, instead of the fact that the copy of Satakhat was filed independently on not in the record of assessment for the year under consideration before AO or not, we admit the same as relevant evidence for real determination of issue in hand and remit the issue to the file of CIT(A) to adjudicate the issue afresh by considering the Satakhat dated 04.04.2011 and pass the order in accordance with law. In the result the ground No. III is allowed for statistical purpose.
Addition is made on estimation of income/project - The issue relevant to estimation of income of AOP is interlinked and also remitted back to CIT(A) to adjudicate the same after adjudication of ground of appeal in A.Y. 2011-12. The assessee is given liberty to file evidence / additional evidence to substantiate the ground of appeal and move appropriate application in case fresh/new evidence is filed to substantiate its ground of appeal or its contention.
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2022 (1) TMI 1356 - BOMBAY HIGH COURT
Validity of Reopening of assessment u/s 147 - notice has been issued after expiry of four years from the relevant Assessment Year - penny stock transactions - Change of opinion - HELD THAT:- As held in Aroni Commercials Limited[2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment.
It is not necessary that an assessment order should contain reference and / or discussion to disclose its satisfaction in respect of the query raised. As noted earlier, the very issue of Petitioner entering into transactions, relating to the scrip of Confidence Finance & Trading Ltd., was a subject of consideration by the AO during the original assessment proceedings. It would, therefore, follow that re-opening of the assessment by the impugned notice is merely on the basis of change of opinion of the AO from what held earlier during the course of the assessment proceedings, leading to the assessment order. This change of opinion does not constitute justification and/ or reason to believe that income chargeable to tax, has escaped assessment. Decided in favour of assessee.
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2022 (1) TMI 1354 - ITAT DELHI
Unaccounted and unexplained of Cash deposit out of the cash withdrawals - HELD THAT:- Addition as made and confirmed by the authorities below, is not justified. No reason is assigned for not accepting the contention of the assessee that deposit was made out of cash withdrawal. AO has failed to bring any evidence suggesting that the cash so withdrawn from the account was expended for any other purpose. Therefore, in the absence of such material the findings of authorities below cannot be sustained. AO is hereby directed to delete the addition. The ground is allowed.
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2022 (1) TMI 1353 - TELANGANA HIGH COURT
Assessment u/s 144C - AO empowered u/s 144C to frame draft assessment order - depreciation claimed on goodwill disallowed - Respondent No. 1 while passing the draft assessment order had completely overlooked the decision in the petitioner's own case [2019 (11) TMI 803 - ITAT HYDERABAD] - petitioner seeks quashing of the order passed by respondent No. 1 and seeks a direction to respondent No. 1 to pass a speaking and reasoned order dealing with all the objections raised by the petitioner - HELD THAT:- Dispute Resolution Panel is a high-powered body constituted under the Act as an oversight body for the guidance of the AO. The object behind constitution of the Dispute Resolution Panel appears to be to ensure that the assessment proceedings are kept within the bounds of law while adhering to the principles of natural justice. Though the Assessing Officer has been empowered u/s 144C to frame draft assessment order, the same is however subject to confirmation by the Dispute Resolution Panel.
As already noticed that under sub-section (5), the Dispute Resolution Panel has the mandate to issue directions for guidance of the AO while framing the assessment and under sub-section (8) the Dispute Resolution Panel may confirm or reduce or enhance the variations proposed in the draft assessment order. Both sub-sections (5) and (8) have to be read together, and from a conjoint reading of the two provisions it is clearly discernible that the final say, in so far as the assessment is concerned, rests with the Dispute Resolution Panel.
The approach of the AO as manifest in clauses (a) to (d) as extracted above, to our mind is problematic. In so far as the decision of the Income-tax Appellate Tribunal, Hyderabad "A" Bench, Hyderabad in respect of petitioner's own case for the assessment year 2014-15 [2019 (11) TMI 803 - ITAT HYDERABAD], the Assessing Officer has stated that the Department has not accepted the said decision. The views of the Income-tax Appellate Tribunal is not acceptable to the Department, and therefore, it has been appealed before the High Court. As such, the issue of addition of depreciation claimed on goodwill has not attained finality.
We are afraid such a view taken by the Assessing Officer can be justified. Rather, it is highly objectionable for an Assessing Officer to say that the decision of the Income-tax Appellate Tribunal is not acceptable ; and that since it has been appealed against, the issue of allowability of depreciation on goodwill has not attained finality. Unless there is a stay, order/decision of the jurisdictional Income-tax Appellate Tribunal is binding on all Income-tax authorities within its jurisdiction.
Giving a restricted meaning to the above words would intrude into, rather curtail, the jurisdiction of the Dispute Resolution Panel which could not have been the intent of the Legislature. While the Dispute Resolution Panel shall not set aside any proposed variation, it certainly has the power and jurisdiction to reduce the variations proposed in the draft order.
Following the above decisions of the Supreme Court KRISHNA SALES (P) LTD. [1993 (9) TMI 124 - SUPREME COURT] a Division Bench of the Bombay High Court in Ganesh Benzoplast Ltd. v. Union of India [2020 (9) TMI 180 - BOMBAY HIGH COURT] held that non-compliance of orders of the appellate authority by the subordinate original authority is disturbing to say the least as it strikes at the very root of administrative discipline and may have the effect of severely undermining the efficacy of the appellate remedy provided to a litigant under the statute.
The second view expressed by the Assessing Officer vis-a-vis the decision of the Supreme Court in Smifs (2012 (8) TMI 713 - SUPREME COURT] is still more problematic. It is not open to the Assessing Officer to try to evade from the binding effect of a Supreme Court decision by trying to find out "distinguishing features". Though unnecessary, we are still compelled to refer to article 141 of the Constitution of India which says that the law declared by the Supreme Court shall be binding on all courts within the territory of India. Therefore, it is the bounden duty of all authorities whether administrative or quasi judicial or judicial to follow the law declared by the Supreme Court.
While we agree with the learned standing counsel that the draft assessment order has not yet attained finality as it still has to be placed before the Dispute Resolution Panel and therefore, in the circumstances, we feel that interfering at this stage may not be justified as it would pre-empt decision-making by the high-powered Dispute Resolution Panel. However, we hope and trust that the Dispute Resolution Panel shall look into all aspects of the matter, more particularly, the discussions made above while passing appropriate order(s) under sub-section (8) of section 144C of the Act, and if necessary further personal hearing shall be afforded to the petitioner.
DRP shall look into and consider the objections raised by the petitioner more particularly, about the decision of the Income-tax Appellate Tribunal in its own case for the assessment year 2014-15 and the judgment of the Supreme Court in Smifs (supra) keeping in mind the discussions made above.
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2022 (1) TMI 1351 - ITAT COCHIN
Assessment u/s 153A - Undisclosed income - Credits Transferred from Nagaland based entities - sufficient incriminating material found n search or not? - HELD THAT:- As AR submitted that in the absence of any incriminating material on record, no such additions could have been made by AO. This plea could not be accepted since this is not a case wherein no incriminating material has been found. Rather, it is the finding of CIT(A) that several incriminating materials were seized which include blank letter head of Nagaland based persons / entities, blank cheques, notes / diaries containing details of payments received and transferred. The evidence relating to unexplained investment made in cash towards purchase of immoveable properties was also seized. Thus, this is a case where sufficient incriminating material has been found by investigation team which indicates undisclosed income of the assessee - Decided against assessee.
Best judgement basis u/s 144 - As alleged by assessee no notice u/s 143(2) was issued - Assessment Proceedings for AY 2018-19 - HELD THAT:- As it was to be held that none of the conditions for invoking jurisdiction u/s 144 was satisfied by Ld. AO which would vitiate the assessment proceedings. Further, the assessee has filed valid return of income and no notice u/s 143(2) has ever been issued before making assessment. The non-issuance of notice u/s 143(2), in non-curable defect and therefore, assumption of jurisdiction and subsequent order passed u/s 144 becomes bad-in-law. The case laws as cited above clearly support the legal ground raised by the assessee. Therefore, we hold that the assessment order passed for this year fails on legal grounds and the consequential additions made therein become unsustainable. We order so. This being so, no further adjudication is required in the appeal for AY 2018-19. The assessee’s appeal stand allowed on this ground alone.
Addition based on statements recorded by investigation wing during the course of search operations from various persons - HELD THAT:- The pre-existing statements recorded by the Investigation Wing could not form the sole basis of assessment. It could also be seen that Shri G.K. Rengma retracted the statement vide affidavit dated 01.04.2019 wherein he clarified that the statement was recorded incorrectly. The said retraction was supported by the audited financial statements of Shri G.K. Rengma as placed on record. The total turnover of Shri G.K. Rengma as reflected in these financial statements is much higher than the figures recorded in the statement. Under these circumstances, the third-party statements recorded from Shri G.K. Rengma as well as from other persons would lose evidentiary value. The statements of remaining persons i.e., land owners / various other contractors have never been independently examined by Ld. AO. The copies of statement were never confronted to the assessee and no opportunity of cross-examination was ever provided to the assessee. Accordingly, the ratio of decision of Hon’ble Apex Court in Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] would apply to the facts of the case and support the case of the assessee. Considering the same, no much weightage could be given to such statements and the same, on standalone basis, would not be sufficient to support the impugned additions.
Addition under provisions of Sec.68 or 69 or 69A to 69D - as argued additions have been made merely on the basis of surmises, conjectures and on borrowed satisfaction without specifying the relevant sections under which additions have been made - HELD THAT:- The onus of the assessee has to remain confine to the extent of credits received by the assessee in his own books of accounts and not any further. To hold any contrary position, Ld. AO must establish this fact otherwise no such debits / credits appearing in bank accounts of other parties could be deemed to be the income of the assessee. The assessee’s onus u/s 68 in respect of entries in books / bank accounts of other persons is only secondary i.e., consequential upon the successful discharge of the primary onus by the A.O of establishing the assessee to be the actual owner of the books of account / bank accounts held in the names of other persons. This position has been held by Hon’ble Supreme Court in the case of CIT Vs. Daulat Ram Rawatmull [1972 (9) TMI 9 - SUPREME COURT].Therefore, the credits appearing in the other bank accounts could not be held to be income of the assessee.
Adjudication on Merits - Credit Entries Received from Nagaland bases entities / individual - HELD THAT:- As we find that the debit / transfer entries aggregating to Rs.243.19 Crores have been treated to be the assessee’s income on the allegation that assessee’s unaccounted income has been routed through these accounts for the benefit of group as a whole. However, in para 7.10, we have already taken a position that the credit transfer received by the other family members and group concerns could not be assumed to be assessee’s undisclosed income since it is nowhere been established by the lower authorities that the assessee was de-facto owner of either Nagaland based bank accounts or the owner of bank accounts of various recipients. The other family members and group concerns of the assessee were separate Income Tax assessee and subjected to separate assessment. Therefore, the credit received in those accounts could not be held to be the assessee’s income. Under these circumstances, the assessee’s onus would remain confine to explain the credit received by it in his own bank accounts. Further, the assessment proceedings for AY 2018-19 have already been quashed by us on legal grounds. Therefore, at the outset, the addition, to that extent, could not be sustained in the hands of the assessee.
Assessee’s onus to prove the ingredients of Sec.68 with respect to unsecured loan received from Shri G.K. Rengma and M/s Excellence Associates - Undisputedly the transactions have taken place through banking channels. On the basis of all these documentary evidences, it could be said that the requisite onus as required to be discharged u/s 68 was duly discharged by the assessee and it was the onus of the revenue to dislodge the same - upon perusal of orders of lower authorities, we find that no cogent material or evidences are on record to dislodge the claim of the assessee rather the additions are based more on allegations, surmises, conjectures and mere suspicion. In such a case, these amounts could not be considered to be the assessee’s undisclosed income. We order so. In the result, the addition to the extent of Rs.5,44,90,000/- is sustained under this head and the balance additions stand deleted. The corresponding grounds raised by the assessee in all the years stands partly allowed.
Cash deposit in the bank accounts of the assessee - Since the assessee group has incorporated the alleged cash payment of Rs.16.10 Crores for purchase of immoveable properties in these cash flow statements, the separate addition made to that extent would also not be sustainable. Even otherwise, the properties have not been purchased by the assessee rather this addition is subject matter of consideration in other family members / entities which are separate taxable entities and therefore, the addition for those entities would not be sustainable in the hands of the assessee.
Other Credit Entries in Bank Account of the assessee and other family members / entities - Since the assessment for AY 2018-19 has been quashed by us, the additions to that extent are otherwise not sustainable. The remaining credit entries for Rs.353.64 Lacs pertain to AYs 2012-13 & 2017-18. Out of this amount, the assessee has identified amount of Rs.88.50 Lacs being the entries which are lacking complete details / supporting evidences. The remaining entries are either not in the nature of income and a part of these entries has already been disclosed under IDS 2016. Few of the entries have already been disclosed in the Income Tax Returns of the assessee. The complete details of these entries have been placed by the assessee on page numbers 58 and 59 of Paper Book No.3A. We have perused the same. We find that all the other credit entries are in the nature of maturity proceeds of LIC, Chit money received by the assessee, directors loan withdrawn, mutual funds proceeds from UTI, refunds etc. These entries are not in the nature of assessee’s income. Therefore, the additional amount of Rs.88.50 Lacs as worked out by the assessee is found to be correct and therefore, sustained in the hands of the assessee. The remaining addition stands deleted since the same is not the in nature of income.
Credit for income disclosed under IDS 2016 has not been given to the assessee - We find that this credit was not given in the absence of requisite declarations / certificates forthcoming form the assessee. The assessee has now placed all these documents in the paper book which has been detailed in Table 35 of written submissions. Further, the assessee has already considered such declaration while working out additional income which has also been accepted by us. Therefore, the assessee is left with no grievance on this account.
Non consideration of additional evidences / documents as filed by the assessee before Ld. CIT(A) on 15.03.2021 and 16.09.2021 - Since, we have substantially accepted the working of the assessee which has been considered after incorporating all these evidences, the assessee is left with no grievance on this issue. The remaining grounds are either general or consequential in nature which does not require any specific adjudication on our part.
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2022 (1) TMI 1349 - KARNATAKA HIGH COURT
Allowable deduction u/s 37 - donation given to Bellary DC for construction of ring road - assessee is a company engaged in the business of extraction of minerals such as bauxite and limestone etc. - HELD THAT:- The substantial questions of law involved in this appeal have already been answered in favour of the assessee by Supreme Court in 'SRI.VENKATA SATYANARAYANA RICE MILL CONTRACTORS CO. VS. COMMISSIONER OF INCOME TAX' [1996 (10) TMI 2 - SUPREME COURT]mere fact that making of a donation for charitable or public cause or in public interest results in the government giving patronage or benefit can be no ground to deny the assessee a deduction of that amount u/s 37(1) of the Act when such payment had been made for the purpose of assessee's business - Also see KARNATAKA STATE INDUSTRIAL INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., [2021 (3) TMI 1343 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2022 (1) TMI 1348 - CALCUTTA HIGH COURT
Unexplained credits - reliance on statement recorded from the CFO - HELD THAT:- From the statement recorded from the CFO the tribunal found on facts that the reconciliation and the explanation was duly supported by evidence which were on record. That apart, the assessee was called upon to explain various details which formed part of the addition made u/s 68 by AO and the Tribunal has recorded that the assessee has explained before it in entirety the reconciliation and also explained all the discrepancies.
Tribunal said that the AO ought to have asked to produce the bills and evidence of delivery of materials such as road challan and accepted challan copy etc. and no enquiry was made by the assessing officer in this regard and he has been swayed entirely by the statement of the CFO who was not allowed to be cross-examined.
Tribunal on facts, concluded that the reconciliation is supported by evidence which is on record and there is no difference in the balance sheet and in the books of accounts of the assessee and accordingly dismissed the appeal filed by the revenue.
The above factual discussion has been set out by us in the preceding paragraphs to demonstrate that the case on hand involves adjudication and re-adjudication into facts. This exercise has been done by the CIT(A) as well as the tribunal and we are precluded from doing such an exercise in an appeal filed u/s 260A of the Act where we are required to decide the question of law which in our considered opinion does arise in the instant case. Appeal filed by the revenue is dismissed.
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2022 (1) TMI 1346 - GUJARAT HIGH COURT
Reopening of assessment u/s 147 - notice issued to a dead assessee - HELD THAT:- The issue raised in the present writ application is no longer res integra in view of the decision of this High Court in the case of Bhupendra Bhikhalal Desai Vs. Income Tax Officer [2021 (3) TMI 892 - GUJARAT HIGH COURT] - We are informed that the aforesaid decision of this Court has been affirmed by the Hon’ble Supreme Court with the dismissal of Special Leave Petition filed by the Revenue [2021 (9) TMI 1474 - SC ORDER]
This writ application succeeds and is hereby allowed. The impugned notice is hereby quashed and set aside. Decided in favour of assessee.
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2022 (1) TMI 1345 - ITAT BANGALORE
Eligibility of exemption as per section 10(2A) - share of profit received from the partnership firm - assessee (LLP) is deriving income from business in the form of running of plant and machineries and share of profit from partnership firm - HELD THAT:- Assessee (LLP) is a partner in M/s. M.S. Enterprises and assessee has claimed exemption u/s 10(2A) of the Act on the share of profit received from M/s. M.S. Enterprises. The section 10(2A) of the Act grants exemption to a person being a partner of firm which is separately assessed as such, his share in the total income of the firm. The firm has been defined in section 2(23) of the Act, which includes LLP also. The Act is very clear that the LLP is to be treated as a firm. A firm can be a partner in other partnership firms. There is no restriction in the income tax Act for becoming partner by firm in other partnership firms. The assessee is a LLP and has received share of profit from other partnership firm which has been claimed as exempt income.
As relying on case of Radha Krishna Jalan [2007 (8) TMI 42 - HIGH COURT , GAUHATI] we hold that the assessee is eligible for exemption u/s 10(2A) of the Act from the share of profit received from the partnership firm. No much weightage on the case law relied by the ld. DR. Accordingly, allow the appeal of the assessee.
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2022 (1) TMI 1338 - ITAT BANGALORE
TP adjustment - grant of mark-up on recovery transactions - assessee argued before the lower authorities that there was mark-up on these expenses which are incurred at the instance and behest of the AE and expenses by the assessee for administrative convenience are recovered on a cost to cost basis - AR alternatively argued the additional grounds stating that as per OECD guidelines and Indian Transfer Pricing provisions, aggregation of transactions could be made - HELD THAT:- As considering the alternative submissions of the ld. AR, the issue is covered by the Pune Bench of the Tribunal in the case of Cummins India Ltd. [2015 (1) TMI 520 - ITAT PUNE] export value was less and these parties were one of customers and therefore, the risk involved was high. Further, the frequency of such transactions was very low. In view of the above facts and circumstances, the comparison between the export to associated enterprises and export to third parties would not provide accurate results as economic value of the transactions, risk involved were different. We find merit in the plea of the assessee in this regard. We uphold the aggregation of transactions in the TP study carried on by the assessee where the said transactions after benchmark were at arm's length price, no adjustment was to be made. In view thereof, we find no merit in the analysis carried out by the TPO by benchmarking the transactions of exports to third parties with exports to associated enterprises resulting in addition. In view of our discussion herein above, we delete the addition.
Deduction u/s. 10AA - travelling and conveyance expenses and other expenditure incurred in foreign currency from the export turnover while computing the deduction u/s. 10AA of the Act and making a corresponding reduction in the total turnover - HELD THAT:- This issue is covered in favour of the assessee in the case of CIT v. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] wherein it was held that when object of formula in section 10A for computation of deduction is to arrive at profit from export business, expenses excluded from export turnover have to be excluded from total turnover also; otherwise, any other interpretation makes formula unworkable and absurd and hence, such deduction shall be allowed from total turnover in same proportion as well. Hence this issue is decided in favour of the assessee and against the revenue.
Short grant of MAT credit u/s. 115JAA - HELD THAT:- AO is directed to give appropriate tax credit.
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2022 (1) TMI 1337 - ITAT MUMBAI
Short Term Capital Gains - premium received by assessee for transferring Redeemable Cumulative Convertible Preference Share and Fully Compulsory Convertible Preference Shares to equity shares during the year - AO allowed the appeal filed by the assessee on this issue and held that the transfer in respect of preference shares is in the hand of the shareholder - HELD THAT:- As in case Anarkali Sarabhai [1982 (6) TMI 50 - GUJARAT HIGH COURT] redemption of preference shares will result in transfer within the meaning of section 2(47) of the Act was held to be in the hands of the shareholder, which in the present case is M/s Satguru Constructions. The Hon’ble Supreme Court in Anarkali Sarabhai [1997 (1) TMI 5 - SUPREME COURT] upheld the aforesaid findings of the Hon’ble Gujarat High Court. Further, the aforesaid decision of the Hon’ble Gujarat High Court was followed in Kartikeya V. Sarabhai [1981 (8) TMI 36 - GUJARAT HIGH COURT] which was affirmed by the Hon’ble Supreme Court in Kartikeya V. Sarabhai vs CIT, [1997 (9) TMI 2 - SUPREME COURT] relied upon by the learned DR.
In the present case, it is to be appreciated that the conversion of preference shares into equity shares is in the hands of the shareholder, i.e. M/s Satguru Constructions. Thus, gain, if any, arising from such a conversion will only be taxable in the hands of the shareholder. Therefore, in view of the above, we find no infirmity in the findings of the learned CIT(A) on this issue. As a result, ground No. 1 raised by the Revenue is dismissed.
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2022 (1) TMI 1333 - CALCUTTA HIGH COURT
Condonation of delay - Delay of 1084 days in filing the appeals before High Court - HELD THAT:- On perusal of the affidavits filed in support of the condone delay petition we find that sufficient causes have not been shown for not preferring the appeals within the period of limitation. Further we note that decision to file these appeals was taken much after the decision of this Court in PCIT-5 SWATI BAJAJ [2022 (6) TMI 670 - CALCUTTA HIGH COURT] Thus we are not persuaded to exercise any discretion in favour of the appellant/revenue.
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