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Income Tax - Case Laws
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2022 (11) TMI 1480 - ITAT MUMBAI
TP Adjustment - Comparable selection - Cosmic Global Ltd., Informed Technologies India Ltd. and Infosys BPO Ltd.- HELD THAT:- We observe from the submissions of the Ld.DR that the assessee itself has selected the above said three comparables. As a prudent way and accepted principal that each year the comparable has to be analysed and compared. Therefore, the selection or rejection in the earlier or subsequent year cannot be a basis to consider in the present assessment year. Therefore we direct the Assessing Officer to exclude the three comparable and recompute the ALP for the present assessment year. Ground No. 2(d) raised by the assessee allowed.
Rejecting of segmental data use of the assessee to compute the PLI and adopting the entity level PLI by the TPO - HELD THAT:- Assessee has submitted separate operational results for twelve (12) months which is relevant for comparable purpose before the TPO. TPO has not considered this information and proceeded to use the financial results submitted by the assessee for fifteen (15) months and accordingly, he rejected the same. Since assessee has preferred to accept the comparability study made by the TPO and finalized by the DRP and submitted objections only relating to three comparable which we have considered and adjudicated in our above discussion in this order. Therefore, we do not find any reason to adjudicate this ground at this stage.
Unexplained cash deposits u/s. 69 - HELD THAT:- We observed from the record that DRP has accepted the submissions of the assessee and gave a clear direction that assessee has furnished statement of concerned bank account for the relevant period and AO was asked to obtain the clarification from the above bank regarding the error in reporting and take a necessary action.
Since the AO issued the notice to the concerned bank and no clarification received from the bank he proceeded to sustain the addition as made in the draft assessment. This is clearly a violation of direction given by the DRP. We direct the AO to delete this addition considering the fact that assessee has filed all the bank statements in support of their claim that assessee has not made any cash deposits. It is the responsibility of the AO to substantiate the information reported in the AIR and reconcile with the relevant bank. This wrong reporting by the relevant bank cannot be a reason to punish the assessee without establishing a proper evidence. Accordingly, Ground No. 3 raised by the assessee is allowed.
Denial of TDS credit and short credit of self-assessment tax paid by the assessee - HELD THAT:- Considering the overall merits on the submissions made by the assessee we are inclined to remit this issue back to the file of AO with a direction to verify the records submitted by the assessee on merit and as per law. It is needless to say that assessee may be given a proper opportunity of being heard. In the result the issue under consideration is remitted back to the file of AO for statistical purpose.
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2022 (11) TMI 1478 - BOMBAY HIGH COURT
Validity of reopening of assessment - reason sought by the Petitioner for reopening was not supplied - HELD THAT:- In the response fled by the revenue, it is admitted that the reasons sought for by the Petitioner were not furnished despite having fled the return in response to the notice u/s 148 and, therefore, under those circumstances, it is stated that the Order of assessment be set aside. Be that as it may, in view of the specifc averments, which remained un-controverted and rather admitted by the Respondents, the assessment Order is set aside and the matter remanded to jurisdictional assessing offcer for passing Orders afresh in accordance with law. WP allowed.
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2022 (11) TMI 1475 - ITAT JAIPUR
Estimation of income/GP determination - unexplained sales - difference in the sale amount as appeared in the delivery memo / sale bill issued by the assessee and purchase amount stated by the customers in reply to notices issued u/s 133(6) - difference in term of percentage was of 12.15% - HELD THAT:- Suppression of sale, it is seen that such an enhancement was not justified which is not based on any cogent material placed on record and in the light of rival contentions - we find that looking to the quantum of sale of Rs.40 cr and no. of customers 1459, the sample size of 113 cases, is grossly insufficient so as to draw a justifiable inference to be applied on all the cases.
As carefully pursued the chart submitted before us and also the related material and find that except a minor variation, there is no case successfully made out by the AO of suppression of sale. Behind the minor variations there may be various reasons however, merely based on some small cases, without anything more, the AO was not justified in enhancing the sale to a huge Rs. 7.58 cr.
There was no difference between the total amount as accounted for by the assessee and those paid by the customer hence there is no suppression at all - Except a minor variation, there is no case successfully made out by the AO of suppression of sale. Behind the minor variations there may be various reasons however, merely based on some small cases, without anything more, the AO was not justified in enhancing the sale. We find nothing on the record to justify the case of suppression of sale i.e., though amount was received but was not recorded. To effect the sale to such an extent, corresponding purchases of the vehicles are also required by the assessee, however, neither the claimed purchases have been discussed nor it is alleged so. At the best, it was a case of mere suspicion which was not substantiated with the help of strong evidences, wherein the revenue has completely failed. The authorities below this year also alleged the deferment of the sale which is not justified.
Correctness of the application of the GP rate of 3.25% by the AO - We find that the AO in this year, taking the declared GP rate at 0.05% and considering the case of Rellan Motors Pvt. Ltd for AY 2013-14 which has declared GP rate of 3.92%, applied 3.25%. Firstly, we find that it was a case of AY 2013-14 which is later to the year under consideration. Needless to say that the result of the subsequent year cannot be applied in the preceding year. Otherwise also the case of Rellan Motors could not be used against the assessee because a perusal of the orders does not show that the assessee was ever confronted with the material used against him hence no reliance can be placed on the so called comparable case. Secondly, we find force in the contention of the ld. AR that the correct and revised GP rate stood at 4.20% and not mere 0.05% because the assessee has been consistently considering the target incentives, turnovers, cash discounts, warranty etc. as a part of the receipts directly related to the trading activities and accordingly such direct income credited to the P/L account should have been considered with the declared turnover resulting into the revised gross profit of Rs.1,70,55,357/- and 4.20% in terms of percentage to Sales.
As decided in the case of Gotan Lime Khaniz Udyog [2001 (7) TMI 19 - RAJASTHAN HIGH COURT] that where the accounts are rejected, it is not always necessary for the AO to make addition over and above the declared income, if considering the books of accounts, past history and material collected by the AO, no interference is warranted. Thus, we don’t find any justification on the application of enhanced GP rate of 3.25% which is completely without furnishing any justified grounds hence, the trading results as declared by the assesseeare hereby accepted.
Therefore, the authorities below were completely unjustified in applying higher GP rate of 3.25%. Thus, the enhancement of the sale (due to suppression and deferment) and application of GP rate of 3.25% is not approved and the resultant addition to the extent of Rs.2,26,41,521/- is hereby deleted. However, in the peculiar facts of the case and the reasoning adopted by the authorities below, we upheld the rejection of the accounts and taking an overall view of the entire matter it is felt justified that an ad hoc addition of Rs. 2,00,000/- shall cover up the possible leakage of the income, if any. This ground of the appeal No. 1 is therefore partly allowed.
Addition of advances taken from customers - no corresponding sale have been shown either in the current year or in the subsequent years - HELD THAT:- Admittedly vide letter assessee had furnished the complete name and address of all the 7 persons. However, as stated, no sale of vehicle could be effected to these customers and ultimately the amount had to be refunded back. It is not uncommon in this trade that some of the customers for one reason or other take back the amount of advance.
Looking to the declared turnover which is of more than Rs.40 cr, the advances are of very small amount simply because the amount had to be refunded in absence of sale, could not have been considered as undisclosed income of the assessee, more particularly, when admittedly complete name and address of all such customers are already on record and no contrary material has been brought on record by the AO after making enquiries. Hence, all the advances are to be considered as trade advances. Moreover S.68 uses the word ‘may’ which confers a discussion to be exercised judiciously the amount received. The AO was having some doubt, he could have made enquiries, which he has not done therefore, we do not find any justifiable reason and the subjected addition is directed to be deleted.
Disallowance of Expenses - CIT(A) restricted part addition - HELD THAT:- As some disallowance out of various expenses was required to be made by the AO. However, the disallowance made by the AO appears to be on higher side. CIT(a) is of considered view that it would be fair and reasonable to restrict the disallowance out of these expenses Hence the disallowance sustained by the ld. CIT(A) is hereby confirmed.
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2022 (11) TMI 1474 - ITAT JAIPUR
Disallowance of Prior Period Expenses - CIT(A) confirmed the disallowance alleging that there is no evidence showing that such liability crystalized this year - HELD THAT:- There is no dispute that in the accrual basis of accounting the expenditure may pertain to an earlier year but corresponding liability relating thereto has crystallized during the current year, wherein such expenditure can be booked and claimed. However, the evidence supporting the fact of crystallization of the liability in a particular year has to be produced by the assessee. But in the instant case, there appears no evidence placed on record to support this contention and therefore, we are in agreement with the CIT(A) who rightly confirmed the disallowance. Thus Ground No. 1 of the assessee is dismissed.
Unexplained customer Advanced - onus to prove - HELD THAT:- There was no valid ground for making the impugned addition for more than one reasons. Though the AO has not specifically mentioned S.68, at the same time however, he has not citied the provision of law conferring jurisdiction in absence of which he was not legally justified to make the addition. But otherwise also considering the issue in the light of the provision of S.68, no doubt the law is well settled it is that only initial onus lay upon the assessee, but he is not required to prove to the hilt and the moment such initial onus is discharged the same then gets shifted to the AO.
The facts are not disputed that the assessee acted as a dealer of Maruti Suzuki for Ajmer District and as per usual practice, it was in receipt of advances towards booking of various vehicles of Maruti Suzuki. We find the advances so received have been adjusted towards the sale of the vehicle, sometime within the year or sometime in the later year/s. In some cases, it is claimed that the advance was refunded back to the customer. Looking to nature of transaction, thus, it the case of trade creditor but not a case of cash creditors hence, to prove the capacity of the customer is neither practicable nor desirable under law. But otherwise also we are satisfied that the identity, the capacity of the creditor and also the genuineness of the transactions in the facts of the present case, are fully established and evident from the material available on record in as much as copies of the ledger accounts and sales bill raised against the customer, were submitted in more than 1400 cases
We also find that there is no merit in the allegation of deferring the sale of the current year to the later years for the reasons that though such allegation has been made by the AO in all the three years however, the figures were arrived at in other two years only. Such working could not be considered as full proof or beyond reasonable doubts, because mostly such working has been done merely on estimate basis and the assessee was never confronted of estimations made of the figures towards deferment of sale. Therefore, the conclusion that the sales of the current year were deferred in later years cannot be accepted on the face value.
It is also noticed, that the assessment was made hastily as apparent from the record that even though return of income was filed on 08.11.2011, the assessment proceedings were commenced sometime in January 2013 and assessment was completed on 28.03.2013 which means that within a short span of 3 months only the AO completed the assessment. It appears difficult as to how one can make enquiries w.r.t. 1500 customers from whom advances were received. And reach to a just conclusion to burden the assessee with a huge tax liability. Such approach on part of the AO cannot be approved.
Thus the subjected amount of advance receive from the customers cannot be considered in-genuine and the lower authorities erred in making addition of the entire amount. Therefore, the impugned addition is directed to be deleted. Thus Ground No. 2 of the assessee is allowed.
Disallowance on account of commission expenses - HELD THAT:- We find that the disallowance under challenge was rightly made in view of the contradictory facts in case of Smt. Kamlesh Devi, hence the authorities below were justified in making the disallowance.. Thus Ground of the assessee is dismissed.
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2022 (11) TMI 1472 - BOMBAY HIGH COURT
Alternate remedy of appeal against penalty/recovery proceedings - notices are issued under Section 274 r/w Section 271F - case of the petitioner is that the assessment in question pertain to the period, during which the winding up proceedings against the petitioner was at large and subsisting when the petitioner was under the control of the Official Liquidator - HELD THAT:- As petitioner is well conscious as clearly seen from prayer clause (c), that an alternate remedy of appeal is available to the petitioner which needs to be filed before the CIT(Appeals) as per the provisions of Section 246 of the Income Tax Act. However, as the immediate concern of the petitioner is with regard to the penalty and recovery proceedings thereof, the present petition was moved contending that the alternate remedy is not an efficacious remedy. However, considering the peculiar facts of the case, we are of the opinion that the petitioner needs to avail of the alternate remedy as available to the petitioner in law i.e. by filing appeal before the Commissioner of Income Tax (Appeals).
Insofar as the apprehension of the petitioner in regard to the penalty/recovery proceedings are concerned, in our opinion, it would be appropriate that the said proceedings shall not be taken forward till the Appellate Authority decides the appeals.
The petitioner is permitted to file an appeal assailing the impugned re-assessment orders before the Appellate Authority (Commissioner of Income Tax (Appeals)). The Appeals be filed within a period of two weeks from today.
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2022 (11) TMI 1465 - ITAT DELHI
Addition u/s 56(2)(viib) representing share premium received on sale of shares - Substitution of value of shares - rejection of the valuation done by the assessee from prescribed expert as per the prescribed method - whether the premium charged by the assessee on the face value of share is in excess of the fair market value of share as on the date of sale, so as to, come within the mischief of section 56(2)(viib) of the Act.? - HELD THAT:- On a reading of section 56(2)(viib) of the Act, it becomes clear that fair market value of share as on date of sale has to be determined by applying the methodology provided under rule 11UA. A reading of rule 11UA(2)(b) would make it clear that the fair market value of equity shares has to be determined by applying the methodology as provided under clause (a) or clause (b), at the option of the assessee. Rule 11UA (2)(b) applicable to the relevant assessment year provided an option to the assessee to get fair market value of the shares determined by a merchant bank or an accountant. In the fact of the present case, admittedly, the assessee has got the fair market value of the shares determined through an accountant. Thus, the assessee has acted as per the mandate of section 56(2)(viib) read with rule 11UA. Whereas, the Assessing Officer has substituted fair market value determined by the assessee through his own valuation.
As decided in M/s. Dayalu Iron & Steel Pvt. Ltd [2022 (7) TMI 625 - ITAT DELHI] as held that Income Tax Department cannot sit in the armchair of businessman to decide what is profitable and how the business should be carried out. Commercial expediency has to be seen from the point of view of businessman. Here in this case if the investment has made keeping assessee’s own business objective of projection of films and media entertainment, then such commercial wisdom cannot be questioned. Even the prescribed Rule 11UA (2) does not give any power to the Assessing Officer to examine or substitute his own value in place of the value determined or requires any satisfaction on the part of the Assessing Officer to tinker with such valuation. Here, in this case, Assessing Officer has not substituted any of his own method or valuation albeit has simply rejected the valuation of the assessee. If law provides the assessee to get the valuation done from a prescribed expert as per the prescribed method, then the same cannot be rejected because neither the Assessing Officer nor the assessee have been recognized as expert under the law.
Revenue authorities have committed an error in rejected the valuation done by the assessee from prescribed expert as per the prescribed method. Thus addition made is unsustainable. Decided in favour of assessee.
Disallowance of expenses - business was not fully functional - as assessee has not carried out any business during the year and the interest income is assessable under the head ‘income from other sources’, AO disallowed the expenses - HELD THAT:- As observed that the assessee is in the process of setting up of its business of beauty parlor. However, the business was not fully functional. Irrespective of that, the assessee had to incur certain expenditure to maintain its corporate status. From the details of expenses furnished before me, it is observed that the expenses incurred by the assessee relate to salaries, staff welfare, bank expenses, accounting charges, office expense, rent, audit fee, convenience expenses, electricity expenses, telephone expenses, ROC fees, preliminary expenses etc.
While disallowing expenses, AO has not gone into the details to identify the items of expenditure which is ought to be incurred by the assessee for maintaining the corporate status. The nature of interest income has to be verified to come to a definite conclusion, whether it has any proximate nexus with assessee’s business. Since, these aspects have not been properly examined by the departmental authorities, remit the issue back to the Assessing Officer for fresh adjudication. This ground is allowed for statistical purposes.
Addition u/s 68 by way of enhancement of income made by learned Commissioner - HELD THAT:- As it is a fact on record, all the entities investing in shares of the assessee are companies registered with ROC having active status. Documentary evidences, including, audit report, balance-sheet, confirmation, bank statement, Income Tax return copies etc. of the investors were submitted before the AO. Even, after thorough inquiry, AO did not find anything adverse or deficient in the documentary evidences furnished by the assessee, hence, accepted the investments to be genuine.
As could be seen, without making any further inquiry independently, simply based on the documents available on record, Commissioner (A) has held that the investments made are not genuine, as, the creditworthiness and genuineness is not established. When the assessee has discharged the initial onus by furnishing all documentary evidences to establish the identity and creditworthiness of the investors and also furnished all documentary evidences to establish the genuineness of the transaction done through banking channel, merely on presumption and surmises the investments made cannot be treated as unexplained cash credit. Decided in favour of assessee.
Penalty u/s 271(1)(c) - HELD THAT:- While deciding the quantum appeal of the assessee in the earlier part of the order, couple of additions have been deleted and the addition relating to disallowance of expenses has been restored back to the Assessing Officer. Thus, presently there is no surviving addition which formed the basis for imposition of penalty u/s 271(1)(c) of the Act. Decided in favour of assessee.
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2022 (11) TMI 1464 - ITAT INDORE
Correct head of income - rental income from letting out of properties - Categorizing the income derived from the activities of the Shopping Mall - “income from business” or “income from house property” - HELD THAT:- Main object of carrying out of business of the assessee is of constructing, owning, acquiring, developing, managing, running, hiring, letting out, selling or leasing multiplex, cineplex, cinema halls, theatres, shops, shopping malls, etc. as per the Memorandum of Articles and Associations. The above facilities and amenities provided by the assessee is for carrying out the business of Shopping Mall in a systematic and organized way for earning profit and not particularly letting out the property on rental basis. Considering that particular aspect of the matter the First Appellate Authority accepted the categorization of the income derived from such Shopping Mall of the assessee under head income from “Income from Business” under Section 28.'
Hon’ble Apex Court in the judgment passed in the matter of Chennai Properties & Investment Ltd. [2015 (5) TMI 46 - SUPREME COURT] categorically held that where an income has been derived by the assessee for the commercial exploitation of the properties and in lieu of its professed objects then the same is required to be recorded as business income and not income from house property. The same view has been reiterated in the case of Rayala Corporation Pvt. Ltd. [2016 (8) TMI 522 - SUPREME COURT] by the Apex Court. The Hon’ble Kerala High Court in the case of CIT vs. Oberon Edifices and Estates Pvt. Ltd., [2019 (3) TMI 1468 - KERALA HIGH COURT] on an identical facts and circumstances of the case has been pleased to hold that income derived by the assessee by letting out of the shops in the Mall has to be assessed as income from business and not income from house property.
Thus no irregularities and/or ambiguity in the order passed by the Ld. CIT(A) considering the income derived by the appellant company from leasing out properties in the mall falls under the head income from business and not under the head income from house property so as to warrant interference.
Addition on determining gross rent - CIT(A) deleted addition - HELD THAT:- Admittedly, the AO has made estimation of rent on ALV upon invocation of provisions of Section 23 of the Act which can only be invoked if the income is computed under Section 22 of the Act. As we have already seen in the earlier ground that the income from leasing out of properties in the mall has been held to be chargeable to tax under the head “Income from Business or Profession” under Section 28 of the Act which has also been confirmed by us, the rental income estimated under the provision of Section 23 of the Act by the Ld. AO is bad in law and thus liable to be quashed in the present facts and circumstances of the case. Hence, the order passed by the Ld. CIT(A) as above is according to us is just and proper so as to warrant interference. Ground filed by the Revenue dismissed.
Restricting depreciation on fixed assets - Asset put to use - AO held that rental income from leasing out the areas in the Mall was assessable as “Income from House Property” and therefore, the depreciation in respect of those areas was disallowed - HELD THAT:- The income from leasing out properties in the Mall has been held to be chargeable to tax under the head “Income from Business”. In that view of the matter the appellant is eligible for claim of depreciation of all the business assets which were either actually put to use or were ready to be put to use by the appellant for the purpose of its business of leasing out the properties.
The entire property including the right of leasing were owned by the appellant and the same were put to use for business purposes or ready to put use. The assessee has restricted the claim of depreciation at 50% of the prescribed rate of depreciation as the assets were put to use for a period of less than 180 days.
For the purpose of allowance of depreciation under Section 32 of the Act actual user of the property is not the precondition and depreciation can be allowed even for a passive user of the property if it is ready for use for the intended purpose the claim of depreciation of such assets, since has been made at the rates and on the prescribed manner, the claim of the appellant of depreciation of 50% of the building Phase-1 has been rightly allowed by the Ld. CIT(A) which is found to be just and proper, without any ambiguity so as to warrant interference. Hence, the order passed by the Ld. CIT(A) is hereby upheld. This ground of appeal preferred by the Revenue is found to be devoid of any merit and thus dismissed.
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2022 (11) TMI 1463 - ITAT CHENNAI
Revision u/s 263 - revision was done with a view to withdraw excess deduction allowed to the assessee u/s 36(1)(viia) and to examine the assessee’s claim on issue of OTS-interest waiver with reference to the records of the assessee - HELD THAT:- We are of the considered opinion that the order passed by Ld. AO was an appealable order before Ld. CIT(A). Accordingly, as first appellate authority, independent findings should have been rendered by Ld. CIT(A) by way of speaking order considering all the aspects. However, Ld. CIT(A) has chosen to follow the directions given in Sec.263 which is not the correct approach.
Be that as the case may be, remitting the matter back to the file of Ld. CIT(A) would not serve much useful purpose considering the fact the issue of deduction u/s 36(1)(viia) has already been decided by Tribunal in assessee’s own case [2021 (4) TMI 1374 - ITAT CHENNAI] AY 2014-15 wherein as clear ratio laid down that to claim deduction making of provision for bad and doubtful debt equivalent to an amount claimed as a deduction in account books is necessary for claiming deduction u/s. 36(1)(viia) of the Act. Thus we confirm the disallowance made by Ld. AO u/s 36(1)(viia). The corresponding ground stand dismissed.
The issue of OTS-interest waiver has apparently been not contested by the assessee before Ld. CIT(A) and therefore, no findings have been rendered in the impugned order in that respect. Since, the assessee has contested this issue before us, we admit the issue and restore this issue back to the file of Ld. CIT(A) for adjudication by way of speaking order. The grounds thus raised stand allowed for statistical purposes.
Appeal stand partly allowed for statistical purposes.
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2022 (11) TMI 1459 - ITAT SURAT
Revision u/s 263 - estimation of value of asset - case of the assessee for the year under consideration was reopened on the basis of information received by assessing officer from sub-registrar concerned that the assessee has sold her land during the relevant financial year - as per AO assessee has shown the cost of acquisition on higher side to reduce the capital gain and made a reference to DVO under section 55A for estimation of value of the land as on 01.04.1981 - HELD THAT:- We find that the AO while passing the assessment order which was rectified on receipt of DVO’s report is a reasonable, plausible and legally sustainable, which cannot be branded as erroneous. Since, AO has accepted the explanation of assessee, which was coupled with evidence; the assessing officer may not have thought to pass detailed order on the issue examined by her. In our view, once the contention of the assessee on a particular issue is accepted by assessing officer, the order is not appealable order and no appeal would be filed, against such accepted position as an assessee will not feel aggrieved with it, it is not necessary to give reasons of acceptance of such pleas.
So far as the observation of ld PCIT that the assessing officer did nothing to sort out the enquiry to verify the assertion of the assessee and there was failure on the part of AO to bring on record the even correct facts or non-conduct of enquiry verification of facts, is concerned, we find that the assessing officer made requisite investigation before allowing relief to the assessee. The investigation conducted and the view adopted by the assessing officer in the present case, if not accepted by the Ld. PCIT, in nothing but change of opinion. It is settled position in law that no revision of assessment order is permissible on mere change of opinion.
Therefore, we are of the view that on the basis of material before the assessing officer, she took reasonable, plausible and legally sustainable view, which cannot be branded as erroneous. There is no doubt that while accepting the claim in the assessment, there may be some loss of revenue, tax can be levied only with the authority of law, and every loss of revenue as a consequence of an order of the AO, cannot be treated as prejudicial to the interests of the revenue unless the view adopted by assessing permissible in law. Once the assessing officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the assessing officer is unsustainable in law. Grounds of appeal raised by the assessee are allowed.
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2022 (11) TMI 1455 - ITAT INDORE
Disallowance of various expenses and disallowance u/s 40A(3) and Section 40(a)(ia) of the Act - HELD THAT:- AO did not point out any defects in the books of accounts of the assessee. It is also an undisputed fact that payment towards most of these expenses was made by the assessee through banking channels after deduction of TDS, wherever applicable. Further, all the expenses have been incurred by the assessee for the purpose of business. Merely because increase in turnover from 19.15 crores in the preceding year to 23.55 crores during the year, such expenses could not have been doubted.
As noticed that the turnover of the assessee increased resulting into increase in expenses during the year. However, the Ld. AO allowed credit of increase in expenses only to the extent of percentage increase in turnover which was not correct since the turnover of the assessee was in crores whereas the various expenses incurred by the assessee were in thousands or lacs only. Documentary evidences in support of its contention that all the expenses incurred and debited in the profit and loss account were genuine and incurred exclusively for the purpose of business were duly filed by the assessee.
The assessee further demonstrated that it did not make any payment in cash to a single person in a single day in excess of Rs.20,000/- so as to warrant the invoking of the provisions of Section 40A(3) of the Act. The assessee also explained that it was not liable to deduct TDS on several other payments made during the year and consequently, no disallowance was called for under Section 40(a)(ia) of the Act.
We further find that the Co-ordinate Bench in the case of the assessee itself for the A.Y. 2009-10 approved the net profit rate of 5% in the business carried on by the assessee whereas the net profit rate declared by the assessee for the A.Y. 2010-11 was 5.88% which was higher than the accepted net profit rate of 5%. Accordingly, additions made by the Ld. AO on account of disallowance of various expenses were not justified even on this count. Thus, considering the entire aspect of the matter, we are of the considered opinion that there was no justification for making additions on account of disallowance of various expenses and also on account of disallowance u/s 40A(3) and Section 40(a)(ia) of the Act.
Addition of amount deducted by PWD for delay in completion of work - assessee itself debited such payment in its books of accounts under the head ‘Penalty’ - HELD THAT:- On perusal of bills and correspondence made, it is clear that amount deducted by PWD was towards compensation for delay in completion of work and that such amount as deducted was not penal in nature.
We have also gone through the assessment passed u/s 147 of the Act in the case of the assessee for the A.Y. 2015-16 wherein the then Assessing Officer did not make any addition to the total income of the assessee and duly accepted the fact that amount deducted by PWD was compensatory in nature and not penal in nature. Thus, considering the entire aspect of the matter, we find no justification for sustaining addition on account of amount deducted by PWD for delay in completion of work particularly for the reason that the assessee has categorically explained with the help of ample documentary evidences that such deduction of amount was compensatory in nature and not penal in nature. Hence, disallowance of the amount deducted by PWD is not sustainable and, thus, deleted. Decided in favour of assessee.
Estimation of net profit at the rate of 6% - AO during the course of assessment proceedings observed that the assessee did not produce its books of accounts and that some of the expenses could not be fully vouched and were open to verification - CIT(A) deleted addition - HELD THAT:- AO himself accepted the amount of loss declared by the assessee in the subsequent year i.e. A.Y. 2012-13 which further strengthens the contentions of the assessee that its book results ought to be accepted for the year under consideration as well. In light of the factual matrix of the case, we are inclined to accept the book results declared by the assessee and we are in agreement with the findings of the Ld. CIT(A) in deleting the addition made by the Ld. AO on account of estimation of net profit.
Thus there was no justification for making addition on account of estimation of net profit. The addition made by the Ld. AO on account of estimation of net profit cannot be said to be justified in view of the observations made hereinabove. Further, we find that the above findings of the Ld. CIT(A) have not been controverted by the Ld. CIT-DR by bringing any contrary material on record. Hence, we do not find any infirmity in the findings of the Ld. CIT(A) and accordingly, the deletion of addition.
Addition u/s 68 - share application money received - HELD THAT:- In the case in hand, the Ld. AO accepted the amount of Rs. 95,00,000/- received from the same investor company during the A.Y. 2010-11 as genuine and no addition was made to the total income of the assessee on this count. Hence, in our considered opinion, there was no justification for doubting the genuineness of the amount of share application money received from the same investor company during the A.Y. 2011-12. We also find that in the instant case by producing various documents, the assessee had proved that balance of convenience was in its favour.
Thus, considering the entire aspect of the matter, we are of the considered opinion that there was no rationale for making addition to the total income of the assessee on account of share application money received from M/s SKS Ispat and Power Limited more so when the assessee by filing ample documentary evidences has satisfactorily discharged the primary onus cast upon it under Section 68 of the Act to justify the identity and creditworthiness of the investor company and genuineness of the transactions entered into with the said company. Further, the findings of the CIT(A) have not been controverted by the Ld. CIT-DR by bringing any contrary material on record. Decided against revenue.
Validity of Reopening of assessment - maintainability of reassessment proceeding on account of change of opinion and on account of initiation of reassessment proceedings after the expiry of four years - HELD THAT:- Assessing Officer during the course of assessment proceedings raised a specific query requiring the assessee to reconcile the difference in receipts shown in the profit and loss account as compared to receipts reflected in Form 26AS.
As evident that the assessee duly explained the reason for difference in receipts shown in the profit and loss account as compared to receipts reflected in Form 26AS at the time of original assessment proceedings itself. Hence, in our considered opinion, case of the assessee reopened subsequently for examination of the same issue tantamounted to change of opinion which is impermissible as per Section 147 of the Act. The AO has the ‘power to reassess’ but not the ‘power to review’ under Section 147 of the Act since otherwise in the garb of reopening the assessment, review would take place.
Reopening after the expiry of a period of four years from the end of the relevant assessment year - we are of the considered opinion that reassessment proceedings initiated in the case of the assessee suffer from legal infirmity and deserve to be quashed on this count also since case of the assessee was reopened after the expiry of four years from the end of the relevant assessment year even though original assessment was completed under Section 143(3) of the Act and there was no failure on the part of the assessee either to furnish his return of income or to disclose fully and truly all the material facts necessary for his assessment.
Non disposing off the objections raised by the assessee by passing a speaking order - Order passed by the Ld. AO under Section 143(3) r.w.s. 147 of the Act cannot be sustained since the Ld. AO proceeded with the reassessment proceedings without following the mandatory procedure of disposing off the objections raised by the assessee by passing a speaking order.
Thus reassessment proceedings initiated in the case of the assessee were illegal, bad in law and void-ab-initio - Decided in favour of assessee.
Mobilization advance - Addition on account of amount received from GSPPL not shown as income during the year - HELD THAT:- There was no justification for making addition to the total income of the assessee on account of amount received from GSPPL not shown as income more so when the assessee categorically explained that the said amount of advance was duly offered as income in the subsequent year i.e. in A.Y. 2013-14 when the work was actually performed by the assessee. The addition made by the Ld. AO cannot be said to be justified in view of the observations made hereinabove. Further, the findings of the Ld. CIT(A) have not been controverted by the Ld. CIT-DR. Hence deletion of addition made by the Ld. CIT(A) is confirmed. Decided against revenue.
Accrual of income - gross income v/s net income - difference between gross receipts and receipts actually accounted for as income from SCCPPL - HELD THAT:- Assessee had correctly offered the net amount received from SCCPPL as its income during the year. It is an undisputed fact that the amount of labour cess was directly deposited by SCCPPL and only the balance amount was remitted to the assessee. Hence, the assessee could not have been expected to offer the gross amount mentioned in the bill as its income since the actual amount received by the assessee after deducting the amount of labour cess only which had already been offered for tax by the assessee.
There was no justification for making addition to the total income of the assessee on account of difference between gross receipts and receipts actually accounted for as income from SCCPPL. The addition made by the Ld. AO on account of difference between gross receipts and receipts actually accounted for as income from SCCPPL cannot be said to be justified in view of the observations made hereinabove. Decided in favour of assessee.
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2022 (11) TMI 1454 - CALCUTTA HIGH COURT
Bogus LTCG - undisclosed income in the garb of Long Term Capital Gain [LTGC] to claim exemption u/s 10[38] - off line transaction of purchase and sale of shares of penny stock companies - ITAT deleted addition - HELD THAT:- Tribunal that the assessee’s appeal had allowed following the decision of the Coordinate Bench of the learned Tribunal in the case of Ritin Lakhmani & Ors. [2020 (11) TMI 768 - ITAT KOLKATA] and allowed the appeal filed by the assessee. The revenue had preferred the appeal against the said order before this court in [2022 (11) TMI 1177 - CALCUTTA HIGH COURT]. Decided against revenue.
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2022 (11) TMI 1448 - CALCUTTA HIGH COURT
Revision u/s 263 set aside by ITAT - computation of capital gain - findings recorded by the PCIT that no enquiry was conducted by AO - Tribunal deciding the appeal against the Revenue by holding that the Assessment Order is neither erroneous nor prejudicial to the interest of the Revenue
HELD THAT:- After considering the submission made by the assessee to all the notices issued by the AO the computation of capital gain as done by the assessee was accepted by the AO That apart the assessee has also reckoned the findings recorded by the PCIT alleging that the computation of capital gain is prejudicial to the interest of revenue.
Assessee has submitted all details in a tabulated form and has demonstrated that if the view taken by the PCIT is to be accepted it would result prejudice to the interest of revenue.
Unfortunately, the PCIT though extracted the elaborate submissions made by the assessee to the show-cause notice issued u/s263 of the Act, has not dealt with any of the contentions raised but merely concluded that the assessing officer has not made due enquiry. This aspect of the matter is factually incorrect, as the PCIT has committed a serious error in assuming jurisdiction under Section 263 of the Act.
Tribunal has re-appreciated the facts and circumstances and has held that the assessing officer did conduct enquiry, which in our opinion was an elaborate enquiry conducted by the assessing officer. Tribunal had also considered the calculation of capital gain in the manner observed by the PCIT and has recorded a categorical factual finding that if the said method is adopted it will be prejudicial to the interest of revenue.
Tribunal rightly granted relief to the assessee - Decided against revenue.
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2022 (11) TMI 1447 - ITAT DELHI
Disallowance being amortization of lease payment - HELD THAT:- Finding parity on facts, respectfully following the findings of the co-ordinate bench, amortization portion of the lease taken from Noida authority is decided against the assessee and the challenge in respect of land at Vishakapatnam and Tuticorn is restored to the file of the Assessing Officer to be decided as per directions given in Assessment Year 2012-13.
Disallowance u/s 14A - Assessee has not earned any tax free income which may trigger application of provisions of section 14A - HELD THAT:- Facts on record show that during the year, the assessee has not earned any tax free income which may trigger application of provisions of section 14A of the Act. Such issue has now been decided in favour of the assessee and against the Revenue by the decision of Era Infrastructure [India] Pvt Ltd [2022 (7) TMI 1093 - DELHI HIGH COURT] wherein following the decision in the case of IL & FS Energy Development Company Ltd.[2017 (8) TMI 732 - DELHI HIGH COURT] held that no disallowance u/s 14A of the Act can be made if the assessee had not earned any exempt income.
Disallowance of deemed tax credit - HELD THAT:- This issue was also decided in assessee’s own case [2017 (4) TMI 1035 - DELHI HIGH COURT] as held tax exemption on dividend is granted with the objective of promoting economic development within Oman by attracting investments.
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2022 (11) TMI 1446 - ITAT DELHI
Disallowance of deduction claimed u/s 80IA - six projects executed by the contractee companies are neither Central Government nor State Government or a local authority nor any other statutory body and therefore, the assessee is not entitled for deduction u/s 80IA - HELD THAT:- Assessee filed all the agreements entered into by it in respect of various projects with various undertakings for developing the infrastructural projects and made elaborate submissions as to why the assessee fulfills the conditions specified in Section 80IA(4) of the Act.
Assessee contended that the Corporations with which it had entered into agreements are public sector undertakings of State/Central Governments, therefore, fulfills the basic condition u/s 80IA(4) of the Act. The assessee also explained the various clauses of the agreements entered with various entities to prove that assessee is a developer and not merely a contractor. The basic objection of the AO in denying the claim u/s 80IA was that the enterprise with which the assessee entered into agreement for developing the projects are not statutory bodies. The submissions and evidences placed on record suggest that these Companies/Entities were formed under various Ministries of Government of India and, therefore, the contention of the AO that the basic condition of provisions of Section 80IA(4) of the Act was not fulfilled by the assessee is not correct.
Asessee is only an EPC contractor for carrying out work awarded by NHAI to Mokama-Munger Highway Ltd. and, therefore, the basic condition of sub-section (4) of Section 80IA is not fulfilled - LOA clearly specifies that assessee JV shall promote and incorporate the concessionary as a Limited Liability Company under the Companies Act as the NTT which shall undertake and perform the obligations and exercise the rights of the builder under LOA including the obligation to enter into the concession agreement pursuant to the LOA for executing the project. This clearly shows that MokamaMunger Highway Ltd. was incorporated as a pre condition for execution of the project as per the terms of LOA issued by NHAI to the assessee JV. Therefore, since NHAI through LOA has put a condition for incorporation of Limited Liability Company under the Companies Act for the purpose of undertaking and performing the obligation and exercise the rights of the builder under LOA and also to enter concession agreement pursuant to LOA for executing the project we are of the view that the assessee fulfills the basic condition under sub-section (4) of Section 80IA of the Act.
Assessee is only a contractor and not a developer - Assessee is liable for all risks for loss, damage to physical property, personal death insurance in consequence of performance of contract liable for liquidated damages to the employer due to delay in execution of contract, liable for cost of repairs for the loss or damages to the works or materials. Assessee is responsible for whole work from the date of takeover of the site till completion responsibility for maintenance of the road portion including the portions where the work is not started. All these clauses goes to show that the assessee is not a simplicitor contractor rather the assessee is a developer of the project. Therefore, the contention of the AO that the assessee is not a developer but only a contractor is misconceived.
Thus we hold that the assessee is entitled for deduction u/s 80IA(4) in respect of projects executed by the assessee and awarded by DFCCIL, IRCON, PGCIL.
TP Adjustment - interest receivables on the advance given to AE of the assessee JV - HELD THAT:- As held in Kusum Healthcare (P) Ltd [2017 (4) TMI 1254 - DELHI HIGH COURT] very item of “receivables” appearing in accounts of entity which may have dealings with foreign AE would not automatically be characterized as an International Transaction. As observed that there has to be a proper enquiry by the TPO by analyzing the statistics for a period of time to discern a pattern which would indicate that vis-à-vis the “receivables” for the supplies made to an AE, the arrangement reflects an International Transaction intended to benefit the AE in some way.
On perusal of the TPO’s order, we find that no such exercise has been carried out by the TPO in benchmarking the interest on “receivables”. Further, we observed from the order of the DRP none of the submissions or additional evidences were considered nor is there any finding by the DRP though the assessee has produced additional evidences before the DRP and made its submissions which were not made before the AO. Therefore, in the interest of justice, we are of the view that this matter should go back to the AO/TPO for deciding this issue afresh.
TP adjustment being Arm’s length Price of interest on loan received from Mr. B. Krishnaiah - When once the bankers do not provide loans towards working capital requirements to the JV Companies the interest rate cannot be compared to the base rate of State Bank of India. At the same time, we are in agreement with the TPO that Arm’s Length Price of specified domestic transactions need to be determined as per Section 92 & 92C of the Act w.e.f. the AY 201314.
TPO did not bring in any comparables for benchmarking the ALP interest on loan received from Mr. B. Krishnaiah. We further find that the TPO has not examined the CUP submitted by the assessee in its transfer pricing study. Therefore, in the interest of justice, we restore this issue also to the file of the AO/TPO to determine the ALP of the interest on the loan taken from B. Krishnaiah by bringing on record the comparables in similar circumstances and after analyzing the CUP adopted by the assessee in benchmarking the ALP on the interest paid to B. Krishnaiah and also keeping in view the observations in Kusum Healthcare (P) Ltd [2017 (4) TMI 1254 - DELHI HIGH COURT] after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purpose.
Late deposit of Employees contribution to Provident Fund - deposits beyond the due date specified in the PF Act but before the due date of filing the Income tax return - HELD THAT:- We find that this issue is decided against the assessee in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] Respectfully following the said decision, we uphold the disallowance. This ground is dismissed.
Disallowance on account of retention money released by the employer of the assessee - assessee submits that this amount has already been disallowed by the assessee in its revised return of income filed and if the AO makes the final computation of total income taking into account the income shown in the revised return no separate disallowance is called for - HELD THAT:- Considering the rival contentions, we direct the AO to verify the claim of the assessee with reference to the revised return of income filed and in case if the Assessee had already considered the retention money for disallowance in its revised return no separate disallowance once again is called for. AO is thus directed to verify the claim of the assessee and act accordingly.
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2022 (11) TMI 1445 - ITAT MUMBAI
Taxability of interest on income tax refund received - CIT(A) upholding the assessment order taxing the interest on income tax refund as business income u/A 7 of the India- Malaysia DTAA @40% + surcharge @ 5% + cess @ 3% - contention of the assessee is that such interest is taxable under Article -11(2) of the DTAA @10%.
HELD THAT:- We find that issue of taxability of interest on income tax refund was considered by the Special Bench in the case of Clough Engineering Ltd. [2011 (5) TMI 562 - ITAT, DELHI] held that interest on income tax refund would be taxable under Article-11 and not as business profits connected with the PE of assessee. Also see Hon'ble Bombay High Court in the case of DIT vs. Credit Agricole Indosuez [2015 (6) TMI 974 - BOMBAY HIGH COURT].
We find merit in ground of appeal by the assessee. Accordingly, the Assessing Officer is directed to tax interest on income tax refund under Article 11(2) of India- Malaysia DTAA. Consequently, ground no.1 to 3 of appeal are allowed.
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2022 (11) TMI 1443 - ALLAHABAD HIGH COURT
Reopening of assessment u/s 148 - Period of limitation - review application has been filed praying for review of the judgment and order dated [2022 (5) TMI 1614 - ALLAHABAD HIGH COURT] on the ground that the Assessing Officer has also put signature on the notice under Section 148 of the Income Tax Act, 1961 - HELD THAT:- We have perused our judgment and order above we find that it was passed after affording opportunity of hearing to the applicants, i.e. the Department. Departmental counsel argued the matter after obtaining instructions dated 04.05.2022 from the concerned authority.
We have also noted in our aforesaid judgment and order dated 06.05.2022 that in the aforesaid instructions it is admitted that the impugned notice through e-mail was sent to the petitioner on 01.04.2021. Thus, it was admitted by the respondents that the impugned notice under Section 148 of the Income Tax Act, 1961 was issued to the petitioner on 01.04.2021 i.e. after expiry of limitation on 31.03.2021.
In view of the aforesaid, we do not find any manifest error in our judgment dated 06.05.2022. We find no merit in this review application.
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2022 (11) TMI 1441 - DELHI HIGH COURT
Validity or reassessment order u/s 148A(d) passed without considering the reply filed by the assessee - Petitioner further states that the impugned notice u/s 148 has been issued beyond the limitation period of six years stipulated in erstwhile Section 149 and the additional timeline prescribed under The Taxation and Other Laws Act, 2020 i.e., till 31st March, 2021 - HELD THAT:- As revenue states that as the impugned order has been passed without considering the reply dated 1st June, 2022, he has no objection if the impugned order u/s 148A(d) and notice u/s 148 both dated 18th July, 2022 are set aside and the matter is remanded back for a fresh decision by the AO. He, however, prays that the petitioner should file a copy of its reply before the Jurisdictional Assessing Officer ("JAO") being Ward 72(1), Delhi instead of Ward 70(1), Delhi.
The argument that the notice under Section 148A(b) has been issued beyond limitation has already been rejected by this Court in Touchstone Holdings Pvt. Ltd. Vs. Income Tax Officer, Ward 25(3), Delhi and Ors [2022 (9) TMI 892 - DELHI HIGH COURT]
Keeping in view the aforesaid, the impugned order u/s 148A(d) of the Act and notice under Section 148 of the Act are set aside and the matter is remanded back to the AO for a fresh decision. AO is directed to consider the replies dated 1st June, 2022 and 2nd June, 2022 filed by the petitioner.
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2022 (11) TMI 1440 - ITAT JAIPUR
Application of enhanced GP rate - correctness of the application of the GP rate of 3.25% by the AO - HELD THAT:- Generally the result of the subsequent year cannot be applied in the preceding (current) year. Interestingly, whereas Rellan Motors declared GP of 3.92% in that year, the assessee declared (revised) GP rate of around 4%. Secondly a perusal of the orders does not show that the assessee was ever confronted with the material used against him. Hence no reliance can be placed on so called comparable case. Before the CIT(A), we find that the assessee has furnished detailed reason at pages 4 onwards pointing out several facts making the said case of Rellan Motors as completely distinguishable.
On the other hand the trading results as declared in AY 2010-11 were accepted. The Hon’ble Rajasthan HC in the case of CIT v/s Gotan Lime Khaniz Udyog [2001 (7) TMI 19 - RAJASTHAN HIGH COURT] has held that where the accounts are rejected, it is not always necessary for the AO to make addition over and above the declared income, if considering the books of accounts, past history and material collected by the AO, no interference is warranted. Thus, we don’t find any justification on the application of enhanced GP rate of 3.25% which is completely without furnishing any justified grounds hence, the GP rate as declared by the assessee at 1.68% is hereby accepted. Therefore, the authorities below were completely unjustified in applying higher GP rate of 3.25%.
Suppression of sale - We find nothing on the record to justify the case of suppression of sale i.e., though amount was received but was not recorded. Moreover, to effect the sale to such an extent, corresponding purchases of the vehicles are also required by the assessee, however, neither the claimed purchases have been discussed nor it is alleged so.
At the best it was a case of mere suspicion which was not substantiated with the help of strong evidences, wherein the revenue has completely failed. Thus, the enhancement of the sale (due to suppression) and application of GP rate of 3.25% is not approved and the resultant addition to the extent of Rs. 2,26,41,521/- is hereby deleted. However, in the peculiar facts of the case and the reasoning adopted by the authorities below, we uphold the rejection of the accounts and taking an overall view of the entire matter it is felt justified that an ad hoc addition of Rs. 2,00,000/- shall cover up the possible leakage of the income, if any. This ground No. 1 of the appeal is therefore partly allowed.
Estimation of sales - Estimating and considering advance from customers as ‘’SALES’’ & applying ‘’GROSS PROFIT %’’ thereon - HELD THAT:- Before us, the ld.AR vehemently contended the contradictory approach by the AO in different years even though the facts & circumstances are the same and the method & manner of the receipts of the sale proceeds and accounting thereof, are same being consistently followed by the assessee. He also strongly contended that is was not a case of deferred sale and further contended that because of the different approach adapted by the AO in the years under consideration, it has resulted into distorted picture of the income of not only of the given year but also of the other years and also resulted into multiple additions because suitable credit of the sale already booked has not been given. We are in agreement with these contentions however, the ld. CIT(A) rejected the contentions mechanically. It is noticed that similar allegation of deferment of sale was made by the AO in AY 2010-11 also though no quantification was made however, in our order dated 09-11-2022 in ITA no.396/JP/15,we have rejected such contention and the approach. Similarly, the allegation of suppression of sale and enhancement made of 4.14% and application of GP rate of 3.25% have also been rejected by us deleting the resultant addition for the reasoning given in ground of appeal no.1. Since the facts of the case are identical in this year also hence, our findings and the decision therein shall equally apply here also. Accordingly, the impugned addition of Rs. 62,98,437/- is hereby deleted. This ground No. 2 of the appeal is therefore allowed.
TDS u/s 194A - Disallowance of Interest u/s 40(a)(ia) - interest expenses for repayment of loan -AO observed that the assessee has not deducted TDS on the payments made to the said parties - HELD THAT:- Though various contentions have been raised to convince that it was not a case of making disallowance u/s 40(a)(ia) r/w S.194A however we shall confine ourselves to only one argument that where the payee had already paid the taxes, no further disallowance can be made. It is noticed that all the payees are public limited companies or corporations being M/s Maruti Udhyog Ltd. is the Public Limited Companies. Moreover, M/s Sundaram Finance, AU Finance and Mahindra & Mahindra Finance are Non-Banking Finance Corporation, which are renowned companies of their field. They must have already filled the return of income and paid tax due thereon considering the subjected amount paid to them of Rs. 6,96,201/- in their respective declared income.
Therefore, no disallowance should have been made in view of the binding decision of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. [2007 (8) TMI 12 - SUPREME COURT] which, has very categorically held and rather prohibited the department to make recovery of the taxes again.
Now, the second proviso to S.40(a)(ia) has taken care of a situation where payee has already paid taxes, no disallowance should be made. We are satisfied that the authorities below were not justified in making the impugned disallowance hence the same is directed to be deleted.
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2022 (11) TMI 1439 - ITAT CHANDIGARH
TDS u/s 194C - Assessee in default u/s 201(1) & 201(1 A) for not deducting tax at source on payment made as External Development Charges to Greater Mohali Development Authority (GMADA) - HELD THAT:- We find that an identical issue has been decided by the Coordinate Chandigarh Benches in the case of M/s Sukham Infrastructure Pvt Ld. Chandigarh [2018 (6) TMI 1847 - ITAT CHANDIGARH] held that GMADA has been authorized to collect the EDC charges as per the policy decision of the Government and not out of free consent of the parties to the contract which has been executed between the assessee and the Govt. and therefore, it cannot be said that assessee has paid the EDC charges to GMADA out of any contractual obligations and liability towards GMADA. Though the developer contributes towards the proportionate cost of infrastructure development by way of EDC Charges, the work so carried out by the local authority is not in consequence of specific performance of the contract but out of its own obligations and duties towards the public and thus, the contract cannot be said to be a work/service contract and thus, on both accounts, the provisions of section 194C are not attracted.
Nothing has been brought on record or to our notice during the course of hearing that the aforesaid findings of the Coordinate Benches have been disturbed by an order of a Higher Court and therefore, taking the same into consideration and following the principle of consistency, we are of the considered view that the provisions of section 194C are not attracted on payment of EDC charges to GMADA and thus, the demand raised u/s 201(1) read with Section 201(1A) of the Act are hereby set aside. Decided in favour of assessee.
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2022 (11) TMI 1432 - CALCUTTA HIGH COURT
Revision u/s 263 - Tribunal setting aside an order passed by the Commissioner u/s 263 which is a second proceedings initiated under the said provision - addition u/s 68 - HELD THAT:- After the first order was passed u/s 263 of the Act, AO has conducted a de novo reassessment proceedings, issued summons to the directors and the shareholders as well as the assessee and examined the books of accounts, bank statement and the other documents produced by them to discharge the onus on them about the identity, creditworthiness and genuineness of the transaction and the assessing officer has recorded their statement during the reassessment proceedings where he has questioned an elucidated answer about all these factors.
Tribunal has elaborately discussed the factual position and noted as to how the enquiry was conducted by the assessing officer after the first order was passed under Section 263. The learned Tribunal, after noting various decisions of the tribunal, also noted the decisions of this Court in the case of Dataware Pvt. Ltd. [2011 (9) TMI 175 - CALCUTTA HIGH COURT], Roseberry Mercantile (P) Ltd. [2011 (1) TMI 190 - CALCUTTA HIGH COURT], M/s. Nishan Indo Commerce Ltd. [2014 (3) TMI 895 - CALCUTTA HIGH COURT] and Leonard Commercial (P) Ltd. [2011 (6) TMI 955 - CALCUTTA HIGH COURT] In all those decisions, this Court considered the similar factual issue and decided in favour of the assessee - No substantial question of law.
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