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Income Tax - Case Laws
Showing 101 to 120 of 782 Records
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2022 (11) TMI 1306 - SC ORDER
Reopening of assessment u/s 147 - validity of second show cause notice - Section 129 as permits to continue with the earlier proceedings in case of change of the AO - Appellant feeling aggrieved and dissatisfied with the impugned judgment of High Court has not only quashed and set aside the reopening of the assessment but has also quashed and set aside the Assessment Order for the A.Y. 2008-09 - HELD THAT:- Section 129 of the Act permits to continue with the earlier proceedings in case of change of the Assessing Officer from the stage at which the proceedings were before the earlier AO - In that view of the matter, as such, fresh show cause notice dated 18.01.2016 was not at all warranted and/or required to be issued by the subsequent Assessing Officer. Still, for whatever reason, the subsequent Assessing Officer issued the fresh notice on dated 18.01.2016 which, as observed hereinabove, was not warranted and/or required at all. Section 129 of the Act is very clear.
The subsequent issuance of the notice cannot be said to be dropping the earlier show cause notice as observed and held by the High Court. The reasons to reopen the assessment for the A.Y. 2008-09 were already furnished after the first show cause notice which ought to have been considered by the High Court. However, the High Court has considered the reasons recorded after the second show cause notice which was not required to be considered at all.
The finding recorded by the High Court that the subsequent notice dated 18.01.2016 can be said to be barred by limitation is unsustainable.
It is required to be noted that the Assessment Order is passed on the basis of the first notice dated 23.03.2015 and not on the basis of the notice dated 18.01.2016.
Under the circumstances and in view of the above factual aspect, the High Court has erred in quashing and setting aside the reopening of the assessment for the A.Y. 2008-09. The impugned judgment and order passed by the High Court holding so is unsustainable and the same deserves to be quashed and set aside.
the impugned judgment and order passed by the High Court is set aside. - Decided in favor of Revenue
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2022 (11) TMI 1305 - DELHI HIGH COURT
Stay of demand - Recovery of demand - requirement of payment of twenty per cent of disputed tax demand as a pre-requisite - ‘Assessee-in-default’ for short deduction of tax at source - payment to the extent of 20% of total tax demand arising under Section 201(1) - HELD THAT:- This Court is of the view that the requirement of payment of twenty per cent of disputed tax demand is not a pre-requisite for putting in abeyance recovery of demand pending first appeal in all cases. The said pre-condition of deposit of twenty per cent of the demand can be relaxed in appropriate cases. Even the Office Memorandum gives instances like where addition on the same issue has been deleted by the appellate authorities in the previous years or where the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee.
As pointed out by the learned senior counsel for the petitioner, the Supreme Court in the case of PCIT vs. M/s LG Electronics India Pvt. Ltd [2018 (7) TMI 1905 - SC ORDER] has held that tax authorities are eligible to grant stay on deposit of amounts lesser than twenty per cent of the disputed demand in the facts and circumstances of a case.
In the present cases, the impugned orders are non-reasoned orders. Neither the AO nor the Commissioner of Income Tax have either dealt with the contentions and submissions advanced by the petitioner nor has considered the three basic principles i.e. the prima facie case, balance of convenience and irreparable injury while deciding the stay application.
The impugned orders and notices are set aside and the matters are remanded back to the respondent No.1-Commissioner of Income Tax for fresh adjudication in the application for stay.
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2022 (11) TMI 1304 - DELHI HIGH COURT
Scope of the DTVSV scheme - Requirement to settle all the pending appeals filed by the respondents-revenue for an assessment year - settlement any appeal under the DTVSV Act - what is the rule of interpretation that the Court must apply while interpreting the DTVSV Act? - whether the DTVSV Act is a taxing statute or an amnesty act or a beneficial/remedial act, one has to examine what is the objective and intent behind enacting the statute? - HELD THAT:- Every modern legislation is actuated with some policy. While the intent of taxing statutes is to collect taxes, the intent of amnesty acts like Voluntary Disclosure of Income Scheme (for short ‘VDI Scheme’) is to provide an opportunity to the assesses to declare their undisclosed income on fulfilling certain terms and conditions. There are also legislations which are directed to cure some mischief and bring into effect some type of reform by improving the system or by relaxing the rigour of the law or by ameliorating the condition of certain class of persons who according to present-day notions may not have been treated fairly in the past. Such welfare, beneficent or social justice oriented legislation are also known as Remedial statutes.
It is settled law that any ambiguity in a taxing statute enures to the benefit of the assessee, but any ambiguity in the amnesty act or exemption clause in an exemption notification has to be construed in favour of the revenue and amnesty/exemption has to be given only to those assesses who demonstrate that they satisfy all the conditions precedent for availing the amnesty/exemption. [See: Commissioner of Customs (Import), Mumbai vs. Dilip Kumar & Company and Ors [2018 (7) TMI 1826 - SUPREME COURT].
For determining whether the DTVSV Act is a taxing statute or an amnesty act or a beneficial/remedial act, one has to examine what is the objective and intent behind enacting the statute.
It is a statute which provides benefit as it recovers the taxes for the Department upfront without having to wait to succeed in the litigation which itself is uncertain. DTVSV Act also provides a sop to an assessee, as it puts an end to the litigation and the assessee is relieved of payment of interest and penalty if the same were to imposed. The DTVSV Act also benefits the society as it reduces litigation, acrimony, decongests the Courts and relieves the system of unnecessary burden. Consequently, this Court is of the view that DTVSV Act is neither a taxing statute nor an amnesty act. It is a remedial/beneficial statute.
The Courts have only to see that the particular case is within the mischief to be remedied and falls within the language of the enactment.” The words of such a statute must be so construed as “to give the most complete remedy which the phraseology will permit,” so as “to secure that the relief contemplated by the statute shall not be denied to the class intended to be relieved. Consequently, the appropriate principles of interpretation to be applied having regard to the entire conspectus of facts are the principles of purposive and liberal interpretation.
Applicability of judgment of the Supreme Court in Commissioner of Customs vs. Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT] which deals with interpretation of exemption notification - The benefit of the notification was denied to the assessee on the ground that the goods imported by the assessee contained chemical ingredient for animal feed and not animal feed/ prawn feed as such. Therefore, the question before the Supreme Court was whether the assessee who is seeking exemption from taxation under the provisions of the Act is covered by the said exemption notification. It was in this context that the Supreme Court held that the exemption notification is required to be construed strictly and any ambiguity in the exemption notification must enure to the benefit of the revenue. As already held hereinabove, the DTVSV Act is neither an amnesty act nor an exemption scheme as it does not provide for any exemption or benefit solely to the taxpayer.
While interpreting “Kar Vivad Samadhan Scheme”, the Supreme Court in Commissioner of Income Tax, Rajkot Versus Shatrusailya Digvijaysingh Jadeja, [2005 (9) TMI 362 - SUPREME COURT] held that the object of the said Scheme was to settle tax arrears locked in litigation at a substantial discount and it provided that any tax arrears could be settled by paying the prescribed amount of tax arrears, and it offered benefits and immunities from penalty and prosecution. The Supreme Court held that the “Kar Vivad Samadhan Scheme” was in substance a recovery scheme though it was nomenclatured as a "litigation settlement scheme" and was not similar to the earlier VDI Scheme. It further held that the object of “Kar Vivad Samadhan Scheme” was to put an end to all pending matters in the form of appeals, reference, revisions and writ petitions under the IT Act/Wealth Tax Act and the object was to put an end to litigation in various forms and at various stages under the IT Act/Wealth Tax Act and therefore the rulings on the scope of appeals and revisions under the IT Act or VDI Scheme will not apply. Consequently, the judgment of the Supreme Court in Dilip Kumar (supra) which deals with interpretation of exemption notification, has no application to the present case.
As under the DTVSV Act, 2020 each appeal, writ petition or SLP is treated as a separate dispute which is evident from Section 2(1)(j) read with Section 2(1)(a) of the Act - The unit for settlement of dispute under the DTVSV Act, 2020 is an appeal, writ petition or SLP and not the assessment year as had been canvassed by the revenue.
Even assuming that the DTVSV Act is a taxing statute, there is no restriction on an assessee to choose an appeal to be settled under the DTVSV Act as Section 2(1)(j) uses the words “any appeal” which even on a literal interpretation would mean any one or more appeals.
The issues raised by the Department in the SLP filed before the Supreme Court is in respect of deduction for salary paid to expatriates and the applicability of Section 115JB of the Act. However, this issue is not at all connected with the deemed appeal arising from the order of the Tribunal dated 16th September, 2019 wherein the issue of taxability of ECB interest and levy of interest under Section 234D of the Act is involved. Since, the issues involved in both the appeals are different and unconnected, this Court is of the view that the contention of the Department that the Petitioner ought to have settled the SLP pending in the Supreme Court, along with the deemed appeal of the Department is incorrect and bad in law.
Reliance on FAQ-7, 27, 11 and 14 is misconceived and untenable in law - FAQ - 27 is consequential to FAQ - 7, as it provides for the manner of computing disputed tax when the declarant files a declaration for settlement of issues which are remanded by an appellate authority to the AO. FAQ - 27 states that in the event the declarant decides to settle the issues remanded by an appellate authority, the declarant is also required to settle the issues which are not set aside by the appellate authority and further provides that the disputed tax for the issues remanded to the AO will be the same amount if the addition was to be repeated by the AO.
FAQ-27 has no application in the instant case as the Petitioner had filed a declaration with respect to a deemed appeal of the Department arising from the order of the Tribunal dated 16th September, 2019 and there were no issues pending before the AO for consideration.
This Court is of the view that FAQ No. 11 deals with cases where in one appeal a qualifying and a non-qualifying issue arise for consideration. However, the case of the Petitioner does not fall under any clauses of the section 9, which defines non-qualifying tax arrears. Consequently, FAQ-11 has no applicability to the present case.
This Court is also of the view that FAQ-14 supports the case of the Petitioner as it allows the assessee to make a declaration for settlement of a dispute with respect to "one" order and does not require the assessee to settle all the disputes arising from different orders for a particular year.
Option to the assessee to choose appeals for the same assessment year, which are pending before different forums, to be settled under the provisions of DTVSV Act - The contention of the respondents-revenue that the option is available to the petitioner only in a case where there are cross appeals arising from the same order is incorrect as FAQ-19 in unequivocal terms indicates that the assessee has an option to choose the appeals to be settled under the DTVSV Act and there is no obligation on the petitioner to settle all the appeals filed by the assessee for a particular assessment year.
This Court is of the view that an assessee is free to settle any appeal under the DTVSV Act and is not required to settle all the pending appeals filed by the respondent-revenue for an assessment year.
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2022 (11) TMI 1303 - BOMBAY HIGH COURT
Deduction u/s 80IB - some of the flats constructed in Tower ‘A’ of its housing project had exceeded the area of 1000 sq.ft. - structural changes noticed in the building as on the date of survey - Facts at all unearthed during survey proceedings which clearly suggest non compliance of the requirement of provision of section 80IB - HELD THAT:- We have also gone through the very comprehensive order passed by the CIT, which has discussed all the issues which have been flagged by the survey team point by point.
The statement of one Samir Makhani to the extent that he had purchased a single unit with one entrance, but under two agreements in regard to Flat No.1603 and 1604, also appears to have been subsequently changed when he stated that changes have been made in the said flats by merging the same and while Flat No.1603 was standing in his name, Flat No.1064 was in the name of his mother and that two separate agreements had been executed.
The conclusions drawn by the CIT (Appeals) based on the material on record goes to show that the view expressed and subsequently upheld by the Tribunal cannot be in any way said to be a view or a conclusion which is perverse.
The question essentially involved in the case, which had to be established beyond any doubt by the Revenue, ought to have been that the respondent had not only built but also sold the residential units, in respect of which the benefit of 100% deduction was claimed with an area of more than 1000 sq.ft., which only then could have justified the action of the Revenue in denying the benefit of 100% deduction under the said provision. In the present case, however, the revenue has failed to establish that fact. Not only this even the completion certificate could not have been issued by the competent authority, as rightly held by the Tribunal, if there was any violation of the approved plans by the municipal authorities.
No substantial question of law arises. Appeal is dismissed.
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2022 (11) TMI 1302 - DELHI HIGH COURT
Disallowance u/s 14A - necessity of recording satisfaction - as argued AO has failed to record proper satisfaction before rejecting the explanation offered for the disallowance made by the Assessee itself and proceeding to make the disallowance u/s 14A read with Rule 8D(2)(iii) - HELD THAT:- AO recorded his dissatisfaction with the computation of disallowance after examining the accounts of the Assessee. Section 14A read with Rule 8D(2)(iii) prescribes the method to be applied for determining the expenditure incurred for earning exempt income. AO and the appellate authorities, in the facts of this case, cannot be faulted for applying the statutory method for determining the expenditure and rejecting the Assessee’s suo moto disallowance.
Dissatisfaction of the AO is expressly recorded in the assessment order. The said dissatisfaction has been upheld by the appellate authorities after perusing the records of the Assessee. We do not find any merit in the submission of the Appellant that the AO has failed to record satisfaction. The Assessee has failed to point out any error in the findings of the appellate authorities except to state that the disallowance offered by the Assessee should be accepted as it was done in AY 2008-09 and AY 2009-10 on the principle of consistency. In this regard, we observe that this Court in its decision for AY 2008-09 while setting aside the deletion under Section 14A has not upheld the self devised method adopted by Assessee for making the allowance but adjudicated on the failure of the AO to record his proper satisfaction before invoking Section 14A.
We have already rejected the submission of application of principle of consistency and further, held that the disallowance offered by the Assessee in the assessment years under consideration being on an ad-hoc basis has been rightly rejected by the AO. We, therefore, do not find any reason to interfere with the said concurrent findings of the appellate authorities.
A perusal of the record reveals that the AO has applied his mind to the controversy as he firstly examined accounts, secondly duly invited the reply of the Assessee to explain the basis of the disallowance offered by the Assessee and thirdly after examining the explanation of the Assessee has recorded its dissatisfaction after observing that the ‘basis’ adopted by the Assessee for making such an estimate was unclear. CIT(A) and ITAT, which are the fact finding authorities upon examination of record, have concurred with the said finding of dissatisfaction of the AO. No substantial question of law arises.
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2022 (11) TMI 1301 - MADRAS HIGH COURT
Assessment u/s 153A - limitation for passing of the aforesaid orders u/s 153A - Period of limitation - HELD THAT:- The limitation for passing of the aforesaid orders under Section 153A of the Act, admittedly, expires on 31.03.2023 as the last date of the authorizations is dated 06.07.2021. To be noted that Section 153B provides for a limitation of one year from the end of the financial year in which the last of the authorization was issued for completion of the assessments under Section 153A.
As far as the order of assessment challenged is concerned, a regular assessment, limitation for completion of the same expires on 31.03.2023.
In light of the apparent violation in compliance with the principles of natural justice, all impugned orders of assessment are set aside. Let the petitioner be heard and orders passed de novo, in accordance with law and in strict adherence to the principles of natural justice and law, within the expiry of limitation.
To facilitate the commencement of the proceedings, let the petitioner appear before the authority on Friday, the 18th of November, 2022 at 10.30 a.m. without awaiting any further notice in this regard.
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2022 (11) TMI 1300 - MADRAS HIGH COURT
Party to writ petition - WP filed by the appellant espousing the cause of his wife for a simple mandamus - specific case of the petitioner is that the petitioner's wife has filed a suit against one P.M.Elavarasan - Parties to civil suit, and their wives or husbands. Husband or wife of person under criminal trial - suits have been transferred to the IV Additional City Civil Judge, City Civil Court, Chennai - single Judge, after considering the arguments, at the time of admission, has dismissed the writ petition and also imposed costs of on the ground that neither the petitioner's wife nor the said Ilavarasan has been made a party in the said writ petition - HELD THAT:- Only in a proceeding initiated before a Court of law or any authority, the appellant could appear and depose evidence on behalf of his wife. Therefore, the Writ Petition could not have been filed by the appellant as a witness of his wife. It was for the appellant's wife to have filed the said Writ Petition after impleading the proper and necessary parties.
We are in agreement with the views expressed by the learned Single Judge while dismissing the Writ Petition. Therefore, there is no merit in the present Writ Appeal. That apart, the appellant cannot rely on Section 120 of the Indian Evidence Act, 1872, to justify in filing of the Writ Petition
Only in a proceeding initiated before a Court of law or any authority, the appellant could appear and depose evidence on behalf of his wife. Therefore, the Writ Petition could not have been filed by the appellant as a witness of his wife. It was for the appellant's wife to have filed the said Writ Petition after impleading the proper and necessary parties.
We are therefore inclined to dismiss this Writ Appeal. We however expunge the cost imposed on the appellant, considering the fact that the appellant's wife may have a case against the said P.M.Ilavarasan.
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2022 (11) TMI 1299 - ITAT KOLKATA
Undisclosed sales - AO found difference between Tax Audit Report & Audited Accounts in local sales - CIT-A deleted the addition - HELD THAT:- CIT(A) considered the submissions of the assessee including the tax audit report and other details/particulars and based on the same deleted the addition stating that AO acted in an erroneous manner by comparing the particulars of sales to AEs reported u/s 40A(2)(b) with the sales figure reported in the Profit & Loss Account - also find merit in the appellant's case that the sales made was in the nature of deemed exports since the aforesaid body corporate is located in an SEZ and hence it was rightly reported by way of export sales. It is noted that once the sales made to M/s Pacific Jute Ltd is excluded, the sales to related entities within the territory of India (excluding deemed exports) which was lower than the overall local sales - In the circumstances impugned addition made by way of unrecorded local sales was untenable on the given facts of the case - Decided in favour of assessee.
Addition u/s 68 - unexplained increase in short term borrowings under the head ‘advance received from the parties’ and increase in liability under the had ‘trade payables for goods - CIT(A) considered the submissions of the assessee including the tax audit report and other details/particulars, deleted the addition - HELD THAT:- AO did not consider aspect while making additions of sundry creditor under Section 68 of the Income Tax Act there was no case for disallowance for corresponding purchase, no addition could be made under Section 68 inasmuch as it is not in dispute that the creditors outstanding related to purchases and the trading results were accepted by the AO. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case - AO was unjustified in adding the net increase in current liabilities invoking Section 68 of the Act. The Ld. AO is accordingly directed to delete the impugned addition in full. - Decided in favour of assessee.
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2022 (11) TMI 1298 - ITAT CHENNAI
Validity of assessment against company non existent - assessee company stands dissolved by NLCT - HELD THAT:- In the present case before us, the admitted facts are that the assessee company is dissolved and there is no successor for assessee company, SBQ Steels Ltd., in our view, no proceedings shall be continued against the assessee company because it is nonexistent as on date. In term of the above, we dismiss these appeals of Revenue as infructuous.
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2022 (11) TMI 1297 - ITAT AHMEDABAD
Addition of interest expenditure u/s 36(1)(iii) - lending business - non-charging interest or interest free loans given - AO held that the interest expenses incurred on loans obtained cannot be treated as business expenditure u/s 57 and the same cannot be allowable out of the income derived from partnership firm as there is no nexus between additions, in income and expenditures as no loans have been invested into a partnership firm as capital as stated by the assessee - HELD THAT:- CIT(A) has taken charging interest at 4.36% as compared to the interest charged at 6% on loans to friends and families but the assessee before us has demonstrated that rate of interest earned at 6% per annum for the time period of loans and advances is for particular set up of loans and advances. Similarly borrowed loan at 6% was also there in the relevant A.Y.
There was 0% return of income on borrowing of unsecured loan and the same was detailed before the AO as well as CIT(A). There was not a single case of non-charging interest or interest free loans while giving the loans by the assessee. Therefore, AO as well as the CIT(A) has made the addition on presumptive and assumptive percentage of charging of interest.
The expenditure incurred was wholly and exclusively for the purpose of business of land trading and the same was also explained by the assessee in respect of lands sold reflected in the opening stock and land which was not sold at the closing stock and various unsecured loans borrowed were utilised during the course of normal business of land trading and financial business. Thus, AO and the CIT(A) was not right in disallowing the interest and has not taken proper cognisance of the provisions of Section 36(1)(iii) - Decided in favour of assessee.
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2022 (11) TMI 1296 - ITAT SURAT
Capital gain computation - valuation of property by DVO - difference in sale value as estimated by DVO and declared value by assessee - value declared by assessee on 01.04.1981 is more than its fair market value - Scope of amendment in Section 55A - whether estimation of value of assets as on 01.04.1981 is required to be ignored? - HELD THAT:- As find that there is no dispute that assessee has sold both the properties / assets prior to the amendment in Section 55A. Therefore as per the decision in the case CIT vs. Gaurangiben S. Shodhan Indl. [2014 (2) TMI 78 - GUJARAT HIGH COURT] the amended provision in clause-(a) of Section 55A, which is inserted with effect from 01.07.2012 and the words “at variance with its fair market value”, is not applicable on the transaction of assessee.
Therefore, find merit in the submission of assessee direct the Assessing Officer to verify the computation of income furnished by assessee which is recorded in para- 7 of this order and grant appropriate relief to assessee. Needless to direct that before passing the order the Assessing Officer shall grant opportunity of hearing to assessee. In the result, the grounds raised by assessee are allowed.
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2022 (11) TMI 1295 - ITAT DELHI
Income deemed to accrue or arise in India - Taxability of the amounts received by the assessee on the sale of software licences - royalty receipts - HELD THAT:- As decided in own case A.Y. 2013-14 the amount received by the assessee from sale of software products/licenses to be not royalty as per Article 12(3) and as per Section 9(1)(vi) of the Act. Thus the grounds of the assessee are allowed.
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2022 (11) TMI 1294 - ITAT JAIPUR
Revision u/s 263 by CIT - mistake of non-initiation or incorrect initiation of penalty - assessment order that Penalty u/s. 271(1)(c) is initiated for concealment of income by way of issue of notice u/s. 274 r.w.s. 271(1)(c) - HELD THAT:- It is well-settled that once an appeal has been preferred against an order of assessment the entire assessment is open before the appellate authority. The appellate authority is entitled to do all that the AO could have done. The powers of the appellate authority are co-extensive and co-terminus with the powers of the AO. It is equally well-settled that PCIT cannot exercise revisional jurisdiction qua proceedings before an appellate authority. The order of assessment does not have any independent existence and stands merged with the order of the appellate authority.
Hence, to read s. 263 as being applicable only in case of an AO for the purposes of initiation and levy of penalty and not being applicable to the appellate authority, cannot be the legislative intent. To the contrary, the inherent indication u/s 271(1) makes it clear that the Pr. CIT / CIT does not have any powers to direct either of the authorities, the AO or the appellate authority, to initiate and levy penalty. The section requires the AO or the appellate authority to be satisfied in the course of ‘any proceedings’. This means, any proceedings before either of the specified authority
Pr. CIT / CIT cannot create proceedings. If he is not permitted to direct the appellate authority (and this is an accepted position) he cannot be permitted to substitute jurisdiction/powers of only the AO by his satisfaction by creating proceedings where none exist- assessment having already been completed.. The identical issue is directly covered by the binding decision in case of CIT vs Keshrimal Parasmal [1985 (5) TMI 34 - RAJASTHAN HIGH COURT]
As decided in Smt.Rekha Shekawat [2022 (8) TMI 791 - ITAT JAIPUR] on examination of assessment record, the PCIT cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. Thus, the PCIT’s revisionary decision relating to non-initiation/ incorrect initiation of penalty which without holding that assessment order passed by the AO as erroneous and prejudicial to the interest of revenue is vague and bad in law.
Being consistent, as there is no contrary finding serviced before us by the revenue we are of the considered view that the invocation of provision of 263 to correct the section under which the penalty is leviable or not is beyond the power vested under section 263 of the Act, when there are other options available with the ld. AO. Therefore, the appeal of the assessee is allowed.
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2022 (11) TMI 1293 - ITAT CHENNAI
Reopening of assessment u/s 147 - reason to believe - Reopening based on audit objection and also change of opinion - HELD THAT:- Thus in view of the above discussion and case law of Hon’ble Madras High Court in the case of Cholamandalam Investment & Finance Co. Ltd.[2018 (1) TMI 146 - MADRAS HIGH COURT] that the reasons recorded in the present case are verbatim what the audit objection is. It means that the AO has not applied his independent mind to the facts of the case before recording reasons and hence, the reason merely based on audit objection cannot be a basis of reopening. Therefore, we held that reopening is bad in law and hence, the reassessment framed is quashed. Appeal filed by the assessee is allowed.
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2022 (11) TMI 1292 - ITAT AHMEDABAD
Levying of penalty u/s 271(1)(c) - addition made on account of LTCG for furnishing of inaccurate particulars of income - HELD THAT:- As relying on CHINUBHAI AMBALAL PATEL [2017 (8) TMI 1685 - ITAT AHMEDABAD] we do not justify the imposition of penalty levelled against the assessee on the basis of the deeming provision of Sub-Section (2) to Section 50C of the Act. Thus, the order passed by the authorities below under Section 271(1)(c) of the Act is found to be erroneous and bad in law and hence, quashed. Assessee’s appeal is allowed.
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2022 (11) TMI 1291 - ITAT HYDERABAD
Disallowance of Expenses written off - M/s. Fortune Construction Pvt. Ltd. has refunded an amount from the security deposit paid by the assessee company under the project development agreement - HELD THAT:- The assessee abandoned the project due to commercial expediency and in terms surrendered the same in favour of the land owner M/s. Fortune Construction Pvt. Ltd. Further, the amount of Rs. 13 crores refunded to the assessee towards security deposits is out of the security deposit of Rs. 80 crores as on 31.03.2009 which reduce to Rs. 67 crores as on 31.03.2010. Nothing was produced by the revenue to controvert the submissions filed by the assessee before the ld. CIT(A) and the finding of the ld. CIT(A) on this issue.
Hon'ble Madras High Court in the case of Chemplast Sanmar Ltd. [2018 (9) TMI 75 - MADRAS HIGH COURT] has held that where assessee company set up a new project which was subsequently abandoned, since new project was managed from common funds, control over all business units was in hands of assessee and there was unity of control, it could not be said that pre-operative expenditure incurred by assessee was on a new line of business, thus, same was to be allowed as revenue expenditure.
Hon'ble Calcutta High Court in the case of Binani Cement Ltd [2015 (3) TMI 849 - CALCUTTA HIGH COURT] has held that expenditure incurred for construction/acquisition of new facility which was subsequently abandoned at work-in-progress stage was allowable in year of write off as incurred wholly and exclusively for purpose of assessee's business.
We do not find any infirmity in the order of the ld. CIT(A) on this issue. Accordingly, the same is upheld and the grounds raised by the revenue are dismissed.
Disallowance of Customers Settlement Claims - said amount did not crystallize in the year under consideration and therefore a contingent liability - direct and intimate connection between the claim and the business - HELD THAT:- It is an admitted fact that the direct and intimate connection between the claim and business is not in dispute before the lower authorities. The settlement of the claim by the assessee pursuant to the legal process arising out of the contractual liability is in the course of carrying on of its business and the same is also not in dispute - claim being revenue in nature is also not disputed by the AO. It is also relevant to mention here that the accounts were duly audited and signed by the auditor on 29.09.2013 before which the order of the State Consumers Disputes Redressal Commission was available and therefore, in view of the guidelines issued by the ICAI for events occurring after the balance sheet date and considering the fact that the tax rate of both the assessment years are same, we do not find any infirmity in the order of the ld. CIT(A) in deleting the addition. Accordingly, ground of appeal no. 1 by the revenue is dismissed.
Addition on account of deposits written off on surrender of land development rights - HELD THAT:- As find from the details so furnished that CASA I, project was implemented and carried. The development rights of project CASA II, were surrendered in terms of registered document dt. 31-10-2012, duly registered as Doc. No. 4758/2012 in the office of Sub-Registrar, Medchal. Pursuant to the cancellation of the development rights, as against the deposit amount of Rs. 17,80,61,366/- the developer returned only an amount of Rs. 14,17,10,000/-. The submission of ld. counsel for the assessee that the balance amount of deposit has not been returned by the developer has not been controverted by the revenue.
The deed of cancellation of surrender of rights is categorical in the preamble mentioned to the effect that the deposit amount refunded was only Rs. 13,67,10,000/-. Once the developer was sure that it is not possible to receive back any further amount of the deposit, as a commercial expediency the balance amount of Rs. 3,63,51,366/- has been written off, since it is arising out of the business exigency and commercial expediency. We uphold the order of the ld. CIT(A) in deleting the addition. The ground raised by the revenue is dismissed.
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2022 (11) TMI 1290 - ITAT VISAKHAPATNAM
Validity of valuation by the DVO u/s 142A - Estimation of value of assets by Valuation Officer - Applicability of provisions of section 142A(6) - CIT-A allowed the appeal of the assessee - HELD THAT:- The valuation officer shall send a copy of the valuation report to the AO within the period of six months from the end of the month in which reference was made under sub section (1) of section 142A - in this case, the DVO has submitted his report on 14.06.2018 based on the reference made by the AO on 12.09.2017. The due date of the report of the valuation officer is ending on March 2018. But the DVO has submitted the report with the delay of 3 months, beyond the due date prescribed under the Act. The Ld.DR also could not contest the argument of the AR that the DVO’s valuation report is non-est in the eyes of law, since it is submitted beyond the prescribed due date u/s 142A(6)
There is no material placed before us regarding any stay being granted on the operation of the order of the Hon’ble ITAT. In the absence of the same pending disposal of the appeal by decision of Hon’ble ITAT in [2019 (9) TMI 628 - ITAT VISAKHAPATNAM] is valid in law as on date. We are therefore, in concurrence with the CIT(A). We are of the considered view that the CIT(A) has rightly considered the provisions of the Act, hence, no interference is required in the order of the Ld.CIT(A). Accordingly, the appeal of the revenue is dismissed.
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2022 (11) TMI 1289 - ITAT MUMBAI
Addition u/s 43CA - substantial difference between the market value and the agreement value in respect of some immovable property sold - assessee-company entered into this transaction of cancellation of earlier purchase transactions - HELD THAT:- Sec. 43CA is applicable in the case of transfer of property in addition to other ingredients of the section. In this case what we observed assessee-company inadvertently entered into a transaction of purchase of agricultural land, which was void ab-initio. It means assessee was never a lawful owner of the said agricultural land as mentioned supra. When assessee is not an owner of any asset, there can’t be any question of transferring the same to someone else whether provisions of sec 43CA is complied with or not will be a secondary issue.
In this case assessee-company simply rectified its earlier mistake to safe-guard the financial interest of the company and to come out an unlawful transaction entered earlier. For ready reference we are reproducing herein below the relevant provisions of Maharashtra Tenancy and Agricultural Lands Act 1948 along with relevant provision of contract Act and Transfer of Property Act.
In view of the above action of AO in applying sec 43CA On the given facts of case was unlawful. AO and Ld. CIT(A) committed a mistake by ignoring the facts of the case and provisions of other civil laws applicable in the present case. In our considered opinion assessee being party of cancellation deed, do not tantamount to entering the transaction of sale /transfer. In absence of element of transfer sec 43CA can’t be applied. We therefore direct the AO to delete the addition to be deleted with consequential reliefs. Appeal filed by the assessee is allowed.
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2022 (11) TMI 1288 - ITAT BANGALORE
Revision u/s 263 - exemption u/s 10(1) - CIT setting aside the assessment order passed by the Ld.AO, with a direction, to carry out fresh examination of the claim of agricultural income claimed to be exempt by the assessee under section 10 (1) - HELD THAT:- Before us, the assessee has not filed any agreement, showing the lands being leased in favour of the assessee. It is submitted that these were the documents filed by the assessee in reply to the query raised by the AO at the time of original assessment proceedings. Even there are no agreements placed before us that reveals ownership in land by the assessee, on which farming was carried out.
From the materials placed before the Ld.AO it is prima facie inferred that the no details are filed by the assessee and the Ld.AO has not verified the exemption claimed by the assessee under section 10(1) of the Act. Thus, in our view, the original assessment is completed without proper enquiries, that necessitated the Ld.Pr.CIT to issue section 263 of the Act. We draw support from the decision of Hon’ble Karnataka High Court in case of CIT vs. Infosys Technologies Ltd. [2012 (1) TMI 76 - KARNATAKA HIGH COURT] Therefore in our view, the decisions relied by the Ld.AR are distinguishable on facts with that of assessee. We therefore do not fine any infirmity in the action of the Ld.Pr.CIT in invoking the provisions of section 263 - Decided against assessee.
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2022 (11) TMI 1287 - ITAT MUMBAI
Revision u/s 263 - As per CIT not declaring of deemed rent in the return of income and A.O. erroneously passed the order without considering the same - HELD THAT:- Section 23(5) of the Act is not applicable for the assessee for this assessment year. The assessee explained and replied to the revenue about the issues in response to the notices of the Ld. PCIT. The formation of the opinion and belief of the Ld. PCIT was changing time to time after receiving reply of the assessee.
We may also like to add here that section 23(5) of the Act has been inserted by the Finance Act, 2017 w.e.f. 01.04.2018 whereby notional annual value of the property held as stock in trade is sought to be brought to tax. The said amendment is only prospective in application.
PCIT in his third show cause notice had sought to consider the taxability of deemed rental income not u/s 23(5) but u/s 23(1)(a) - Assessee had duly submitted that rental income has been correctly offered in return of income - PCIT has not brought with cogent evidence on record as to how the submission made by the assessee is incorrect. All facts & submission with regard to offer of rental income is already on record before the Ld. PCIT. Nothing prevented the Ld. PCIT to just verify those facts which are staring on him, before invoking his revisionary jurisdiction u/s 263
A.O. is neither erroneous nor prejudicial to the interest of the Revenue and hence, Ld. PCIT action u/s 263 of the Act is beyond jurisdiction and the same order is quashed. Appeal of assessee allowed.
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