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Income Tax - Case Laws
Showing 101 to 120 of 9304 Records
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2022 (12) TMI 1383
Delayed employees’ contribution in regard to PF/ESI - HELD THAT:- We uphold that the addition can be made in respect of the employees’ contribution in regard to PF/ESI, which has not been deposited within the stipulated date as per the respective Act, since in the case on hand, the assessee has not deposited the employees, contribution within the due date as per the respective Act. Therefore, the disallowance can be made as per section 36(1)(va) r.w.s. 2(24)(x) of the Act. Hence, respectfully following the judgment in the case of Checkmate Services (P.) Ltd. [2022 (10) TMI 617 - SUPREME COURT] the arguments of the assessee is not acceptable.
Disallowance/addition to be made u/s 143(1)(a) - As decided in AA520 VEERAPPAMPALAYAM PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LIMITED - [2021 (4) TMI 1169 - MADRAS HIGH COURT] scope of an 'intimation' under section 143(1)(a) of the Act, extends to the making of adjustments based upon errors apparent from the return of income and patent from the record, Thus to say that the scope of 'incorrect claim' should be circumscribed and restricted by the Explanation which employs the term 'entry' would, in my view, not be correct and the provision must be given full and unfettered play. The explanation cannot curtail or restrict the main thrust or scope of the provision and due weightage as well as meaning has to be attributed to the purposes of section 143(1)(a).- Decided against assessee.
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2022 (12) TMI 1379
Addition u/s 68 - unexplained cash credit - AO partly accepting assessee’s explanation accepted the source of investment, whereas, he treated the balance amount as unexplained cash credit - HELD THAT:- As in course of assessment proceedings, while the AO accepted the withdrawals from bank and past savings, he rejected the claim of loan from mother and brother as well as part of agricultural income, claimed to have been received from sale of potato. However, he accepted that the assessee received some amount from the sale of crops like sugarcane and maize.
In course of first appellate proceedings, Commissioner (Appeals) had directed the AO to examine the evidences including sale invoices of agricultural produce and in the remand report, AO has partly accepted assessee’s claim on sale of potato - He has rejected balance amount only because sale invoices were not produced by the assessee.
The fact that the assessee has sold agricultural produce, cannot be disputed because, even, the departmental authorities have accepted a part of assessee’s receipts from sale of agricultural produce. Only a part of amount claimed to have been received from sale of potato has been rejected due to alleged non-furnishing of evidence.
When the assessee has established on record that it had receipts from sale of agricultural produce, only because some invoices relating to sale are not available, assessee’s claim cannot be rejected. More so, considering the reasonable quantum of sale proceeds.
The assessee has furnished the details of agricultural land holdings, which clearly supports assessee’s claim of receipts from sale of agricultural produce. Thus, assessee’s claim that he received Rs.24,00,000 from sale of potato, can be accepted.
In such a scenario, the source of investment in purchase of land stands explained. That being the factual position emerging on record, the addition cannot be sustained.We delete the addition sustained by Commissioner (Appeals).
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2022 (12) TMI 1375
Addition u/s 68 - protective addition made on account of providing accommodation entries of exempt LTCG - protective addition made on account of commission earned for providing accommodation entries - assessee submitted that the entire transaction of the assessee i.e. Pawansut Holding Ltd. has been controlled by Mr. Pradeep Kumar Jindal and Mr. Pradeep Kumar Jindal has accepted that commission earned on accommodation entries given by the assessee as a part of taxable income of Mr. Pradeep Kumar Jindal in respect of the year under consideration - HELD THAT:- By considering the statement made by the Ld. A.R and also the letter of Sh. Pradeep Kumar Jindal filed by the Ld. A.R, wherein Shri. Pradeep Kumar Jindal has accepted that the commission earned on accommodation entries given by the assessee as a part of his income in respect of the year under consideration and the issue will be adjudicated in the appeals filed by Shri Pradeep Kumar Jindal we inclined to dismiss the appeal filed by the Revenue. Accordingly, the appeals filed by the Revenue are dismissed. However, in the event of any deletion in the hands of Shri Pradeep Kumar Jindal, wherein the substantial addition were made, the Revenue shall have liberty to take further steps against the assessee herein in accordance with law.
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2022 (12) TMI 1373
Income recognition - Addition of interest income on Non Performing Assets - As per AO provisions of sec. 43D r.w. Rule 6EA of I T Rules has prescribed a period of six months of irregularity for classifying loans as non-viable or sticky loan and period for determining an asset as NPA should be considered as 6 months or more and not 90 days - HELD THAT:- We notice that an identical issue has been adjudicated by the Tribunal in favour of the assessee in the assessee’s own case in AY 2010-11 [2022 (8) TMI 1346 - ITAT MUMBAI] bank had no option but follow the RBI guidelines to make a provision for unrealized interest on the NPA by debiting profit and loss account. In the case of DCIT Vs. Karur Vysya Bank [2017 (4) TMI 566 - ITAT CHENNAI] Chennai dated 29.03.2017 held that it becomes necessary to read down such rules so that it is in consonance with the RBI regulation or prudential norms for recognizing income -
Also decided in ROYAL BANK OF SCOTLAND N.V. AND VICE-VERSA [2016 (11) TMI 665 - ITAT KOLKATA] CIT(A) is not justified in substituting the limit for recognizing of interest on account of NPA to 180 days from 90 days in view of the clear provisions of Sec. 43D(a) that in the case of public financial institutions or schedule bank or a state financial corporation or a State Industrial Investment Corporation, the income by way of interest in relation to such categories of bad and doubtful debt as may be prescribed having regard to the guidelines issued by the RBI in relation to such debts - we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition.
Disallowance of claim of bad debts relating to Credit card business - As per AO credit card is essentially a kind of “payment service” offered by the assessee and hence it would not fall under the definition of banking business, thus cannot claim the bad debts in respect of credit card business as it fails to comply with the conditions prescribed in sec. 36(2) - CIT-A deleted addition - HELD THAT:- It can be noticed that the RBI itself states that the credit card dues are in the nature of unsecured loans or non-priority sector personal loans. When it is considered as a form of giving “loans”, it cannot be said that the credit card business does not form part of banking business. Hence it is a case of lending money in the ordinary course of business of money lending. Accordingly, it satisfies the condition prescribed u/s 36(2) of the Act and hence the same is allowable as deduction u/s 36(1)(vii) of the Act as “bad debts”, as it is written off in the books of account as bad. Accordingly, we do not find any infirmity in the decision taken by Ld CIT(A) on this issue.
Disallowance of interest paid on perpetual bonds - AO held that the perpetual bonds issued by the assessee is in the nature of “equity capital” and accordingly held that the interest claimed thereon is not allowable as deduction u/s 36(1)(iii) - CIT-A deleted addition - HELD THAT:- As decided in own case [2022 (8) TMI 1346 - ITAT MUMBAI] merely that RBI recognizes to treat the said debt instruments as additional Tier/Capital would not change the nature of Innovative Perpetual Debt Instruments which were of the nature of long term borrowings and the interest paid was debited to the profit and loss account. These debt instruments were also redeemed on different dates as discussed supra in this order, therefore, we don't find any reason to interfere in the decision of ld. CIT(A), accordingly, this ground of appeal of the revenue is dismissed.
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2022 (12) TMI 1362
Revision u/s 263 by CIT - ITAT held that the Ld. PCIT has no jurisdiction u/s 263 - As per CIT AO failed to make inquires or verification which should have been made on account of reduction in liabilities and no inquiries or verification on the disallowance of TCS amount - HELD THAT:- We are of the opinion that in view of findings of fact arrived at by the Tribunal as referred to here-in-above, and in view of settled legal position with respect to invoking jurisdiction under section 263 of the Act, 1961, there is no infirmity in the impugned order passed by the Tribunal so as to give rise to any question of law much-less any substantial question of law as proposed or otherwise.
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2022 (12) TMI 1361
Penalty u/s. 271DA - deposit of cash in the bank account of the assessee, directly by the party, at a different location - HELD THAT:- As we find that there exists a good and sufficient reason in terms of proviso to section 271DA for deleting the penalty imposed by the Ld. AO. The facts demonstrated before us are uncontroverted which makes us incline towards the contentions made by the ld. Counsel narrated above. Considering the nature of business of the assessee and one of such transaction of deposit of cash by a party to a remote location in the bank account of assessee against a sales volume of Rs.56.93 Cr., we direct to delete the penalty impose d u/s. 271DA of the Act. Before parting, we make it clear to the assessee that this relief should not be construed as precedence and a lee way for accepting the money in the manner as in the pre sent case. We direct the AO accordingly. The grounds taken by the assessee in this respect are allowed.
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2022 (12) TMI 1360
Deduction u/s 80IA - income included under the head “other income’ - HELD THAT:- During the year, the assessee has received rent, interest on fixed deposits receipt, interest on income tax refund balances written back and further miscellaneous income - All these income have been considered by the co-ordinate Bench in assessee’s own case as income eligible for deduction u/s 80 IA of The Act. Therefore, respectfully following the decision of co-ordinate bench in assessee’s own case [2019 (1) TMI 458 - ITAT MUMBAI] we direct the learned Assessing Officer to consider the interest on IT refund for set off against interest expenditure and to grant deduction u/s 80IA on all other income included under the head “other income’ . Accordingly, ground of the appeal of the assessee is allowed.
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2022 (12) TMI 1359
Assessment u/s 153C - Addition based on documents impounded during the course of survey under Section 133A - Addition u/s 69C - HELD THAT:- Evidences and documents based on which the addition is made were impounded from the place where survey action took place. Further, order u/s 133A (3)(ia) was also passed by the learned Assessing Officer on 2nd August, 2014, which clearly shows that the documents were impounded during the course of survey. There is no order required to be passed under Section 133A of the Act if the documents are found and seized during the course of search. Thus, apparently, the addition has been made in the hands of the assessee on the basis of material found during the course of survey and not search.
The factual report submitted by AO which also say so. Performa for recording satisfaction note under Section 153C in column no.5 (b) of the Act which shows description of the seized material also says that the material is impounded during the course of survey. In proforma, relevant details in Panchanama in column no. 5(d), the details of impounding order dated 2nd August, 2014 is mentioned. Further also it is clear that all the additions made in the hands of the assessee were arising out of the documents impounded during the course of survey under Section 133A.
Thus, no material was found during the course of search based on which addition u/s 153C of the Act is made. Merely because search and survey are carried out simultaneously at several places, material found during the course of survey does not authorize the LD AO to make assessment u/s 153C - Decided in favour of assessee.
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2022 (12) TMI 1358
Addition made u/s.50C in respect of transfer of leasehold rights in land and building - capital gain adopting of stamp duty value in terms of Section 50C - HELD THAT:- The asset that has been transferred by the assessee is leasehold right in land and building. In the case of CIT vs. Greenfield Hotels and Estates Pvt. Ltd. [2016 (12) TMI 353 - BOMBAY HIGH COURT] has held that the provisions of Section 50C will not be applicable while computing capital gains on transfer of leasehold rights in land and building. In the instant case, the capital gain has arisen only on account of adopting of stamp duty value in terms of Section 50C - Since, Section 50C of the Act is held to be not applicable on transfer of leasehold rights, the decision renderd by ld. CIT(A) gets support from the binding decision rendered by Hon‟ble Bombay High Court. Accordingly, the AO was not justified in invoking provisions of Section 50C for determining capital gain arising on transfer of lease hold rights in land and building. Accordingly, we do not find any reason to interfere with the decision of Ld CIT(A) rendered on this issue.
Determination of capital gain - Addition to long term capital gain by adopting sale consideration under NAV method as against DCF method adopted by the assessee - HELD THAT:- n the present case, the AO has not disputed the amount of sale consideration received by the appellant. There is no allegation whatsoever that the appellant had received or had accrued more than the stated amount of sales consideration. Further, the Reserve Bank of India has approved the said transaction after taking into consideration the relevant transactional documents, including the impugned valuation report dated 22/07/2009 issued by Deloitte Huskins & Sells. Still, the L AO has substituted the actual consideration with notional consideration calculated purportedly on the basis of the NAV method, which is in violation of the provisions of section 48 of the Act and therefore, the action of the Ld. AO is bad in law.
Also it is a well settled position in law that the AO cannot subject to tax any notional income unless there are specific provisions in relation thereto, allowing the substitution of the actual consideration with notional consideration.
The addition made by the AO is liable to be deleted on the above said legal contentions. When there is no provision in the Act to substitute Full value of consideration for computing Capital gain during the relevant point of time, then there is no scope for the AO to modify the full value of consideration without bringing any material on record which would compel such modification. Hence, we are of the opinion that the view taken by Ld CIT(A) on this issue does not require interference for the reasons mentioned by him and also on the legal propositions discussed above. Accordingly, we uphold the order of Ld CIT(A) on this issue also.
Appeal filed by the revenue is dismissed.
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2022 (12) TMI 1357
Assessment u/s 153A - Incriminating materials found during the search - HELD THAT:- In the entire proceeding, the revenue authority was unable to prove that the search was conducted against the assessee. In Panchnama, there is no assessee’s name. The revenue was unable to bring any such incriminating materials on basis of the addition was made U/s 153A.
AO had wrongly applied the jurisdiction for assessment u/s 153A of the Act. Also, there is no reference of incriminating documents in the assessment order. The order passed by the ld. AO is itself nullity. The addition which was made by the ld. AO is quashed.
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2022 (12) TMI 1356
Revision u/s 263 - non-verification of the genuineness of the brokerage expenditure incurred on new loans and renewal of loans taken for the purpose of business and Interest of free advances given by the assessee - HELD THAT:- AO has examined all the issues and made additions after calling for necessary information from the assessee as well as from the third parties u/s 133(6) of the Act and made additions accordingly. We find that the AO has elaborately discussed the issue passed u/s 143(3) r.w.s. 263 of the Act. Therefore we are of that view the power has invalidly been exercised by PCIT to set aside the order framed u/s 143(3) read with Section 263 of the Act dated 23.12.2019 which has been validly passed by the AO and is neither erroneous nor prejudicial to the interest of the revenue. We have perused several decisions as cited before us which stated above.
Assessment u/s 143(3) read with Section 263 was framed in accordance with directions by Ld. PCIT as contained in the order passed u/s 263 and accordingly the assessment so framed is neither erroneous nor prejudicial to the interest of the revenue. On this count alone, the invoking the jurisdiction u/s 263 of the Act bythe Ld. PCIT is wrong and cannot be sustained as the assessment framed pursuant to the order of ld PCIT u/s 263 of the Act is neither erroneous nor prejudicial to the interest of the revenue.This is the ratio which has been laid down in the case of Malabar Industrial Co. Ltd [2000 (2) TMI 10 - SUPREME COURT] wherein it has been held that in order to invoke jurisdiction u/s 263 of the Act the order passed by the AO has to be erroneous as well as prejudicial to the interest of the revenue and thus satisfaction of both conditions is sine non quo and mandatory before invoking the jurisdiction u/s 263.
Period of limitation - Issue on which the ld. PCIT proposed the revision of order framed u/s 143(3) r.w.s. 263 of the Act dated 23.12.2019, issue which was directed by the ld PCIT in the order u/s 263 of the Act dated 23.03.2022 was not the subject matter of revisionary proceedings in the first round. Therefore, the period of limitation has to run from the date of assessment as framed under section 143(3) dated 26.12.2016 i.e. from the end of financial year 31.3.2017. In view of this, we incline to hold that the revisionary jurisdiction exercised by the ld. PCIT is hopelessly barred by limitation - Appeal of assesee allowed.
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2022 (12) TMI 1355
Addition u/s 68 - unexplained deposits in bank account - HELD THAT:- The assessee was the employee of the Indian Railway and nature of income was salary. The cash was deposited in different dates in bank account but the assessee was unable to explain the same before the ld. AO. Before the CIT(A), the explanation was filed that source of deposit is related to sale of agricultural land. But the assessee was unable to bring the evidence before the CIT(A) and not able to take any cognizance material to substantiate its source of cash deposit in bank account.
In ITAT, the assessee reluctant to submit the relevant evidence before the bench, we find that the assessee was fully non cooperative from the end of completion of appeal proceeding. There is no substantial evidence for depositing cash in the bank account submitted on behalf of the assessee. Accordingly, the appeal of the assessee is dismissed.
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2022 (12) TMI 1354
Transfer of assessment record u/s 127 - transfer orders in the same city - HELD THAT:- ITO has the power to transfer within Ward as per the territorial jurisdiction, the above said transfer of record has been within the same Ward where the territorial jurisdiction where the case lies with ITO, Ward-3(3), Jaipur and transfer is done to ITO, Ward -3(3).The Citation where the ld. AR for the assessee submitted before us is not relevant to his case. We arrived at the conclusion that as per sec127(3) and the decision in the case Kashiram Aggarwalla V Union of India and Others [1964 (10) TMI 8 - SUPREME COURT]. Where the transfer of jurisdiction only involves Assessing Officer situated in the same city [Section 127(3)] Section 127(3) makes it clear that no opportunity is required to be given in respect of transfer of jurisdiction within the same city. It was held that the mandatory requirement of recording reasons was not to be applicable, as the transfer orders were in the same city and only wards were changed but the court did observe about the nature of transfer orders under section 127. Hence, ground No. 1 of the assessee appeal is dismissed.
Nature of property - Unexplained investment OR residential property - Assessee had duly submitted the valuation report of the registered valuer but Assessing Officer did not accepted the same nor referred the case to valuation Officer, which is bad in law - whether the property is commercial property or residential property? - HELD THAT:- We observed that the Registrar Department has made valuation for the property considering it be a commercial property, where as the same was residential property from the documents furnished. We observed that the assessee has sold the above property on 05.02.2015 where the valuation of same half portion of the property was made by the Registration Department at Rs. 17,17,516/-. Further perusing the calculation sheet of DLC value, the Assessing Officer failed to note that the valuation was made by the Registrar Department considering it to be a residential property
AO and CIT (A ) erred in not appreciating the facts that Valuation Report of sub registration was submitted and perused by the lower Authorities . The property was sold before the Assessment Year. On perusing the Sale deed which is mentioned of this order clearly mentioned has residential property. Ground No. 2 of the appeal of the assessee is allowed on merit.
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2022 (12) TMI 1353
Revision u/s 263 by CIT - unexplained money u/s.69A - HELD THAT:- We must mention here, it is unfortunate, that he has invoked the provisions of section 69A to treat the same as unexplained money when the amount has been drawn from the bank. The addition has been made because there is cash availability in the cash book. It is in the knowledge of the revenue that the petrol pump is on the highway and the amount of Rs.80,000/- has been drawn from the bank. It is only when necessity is there, money is drawn. It does not make any inference of unaccounted money. Be that as it may, insofar as the merit of the addition is not before us.
However, the addition is made. The addition having been made admittedly, the AO had the duty to invoke the provisions of section 115BBE insofar as he himself has invoked the provisions of section 69A of the Act. This, admittedly is an error in the assessment order and tax slab rate of 30% as against 60% caused prejudice to the interest of the revenue and on this issue, we are of the view that the order of the Pr. CIT is liable to be upheld and we do so.
Interest paid to Bajaj Finance ltd.- Assessee has been unable to produce Form 10BA before the Assessing officer or before the ld Pr. CIT. The nondeduction of TDS on the amount paid to Bajaj Finance Ltd., is clearly a violation of law which should have come to the attention of the AO. Failure on the part of the AO on this issue admittedly makes the order erroneous and prejudicial to the interest of the Revenue on that count. Consequently, in respect of issue of non-deduction of TDS in respect of payment made to Bajaj Finance ltd., we are of the view that the order of the Pr. CIT is on right footing and does not call for any interference.
Administrative expenses and general charges, interest paid to HPCL on delayed payment and in respect of solar machine as also the proposal in respect of non-examination of the low net profit and the loss account of leakage in respect of diesel and petrol - As it is noticed that in the course of survey, books of account have been impounded. Assessing Officer has made addition representing the cash withdrawal from the bank account and treating the same as unexplained money shows that even cash book was before the AO. AO has in his assessment order u/s.143(3) mentioned that he has examined the case and discussed the case. True,AO has not given any details of the various examinations and discussion done in the course of assessment proceedings does not per se make the assessment order erroneous and prejudicial to the interest of the revenue on the ground as raised by the Pr. CIT in respect of other issues. This being so, we are of the view that the order of the pr. CIT is liable to be sustained to a limited extent of the non-application of provisions of section 115BBE on the addition made u/s.69A of Rs.80,000/- and on account of non-deduction of TDS on the payment made to Bajaj Finance ltd. On the other issues, the order of the pr. CIT u/s 263 stands quashed.
Appeal of the assessee stands partly allowed.
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2022 (12) TMI 1352
Income of salary earned by the assessee in USA to tax in India - ‘resident alien’ in USA - Grant of foreign tax credit of the taxes paid by the assessee in USA in accordance with law - calculating the SPT in the context of US Tax resident - assessee replied that he was qualified to be a resident of two countries for the period between 17/10/2015 and 31/3/2016, he is entitled to avail the benefit under the Income Tax Act, 1961 or India-USA Double Taxation Avoidance Agreement (DTAA) and, therefore, in terms of Article 4 of DTAA and more particularly in terms of Article 4(2) thereof, his residency breaks to USA for the period between 17/10/2015 and 31/3/2016 and tackling him to claim exemption in terms of schedule EI of the Act - HELD THAT:- There is nothing before us to show that an internal transfer of an employee of Amazon is equivalent to fresh employment or that under the letter dated 03/06/2015 the assessee was offered a permanent employment straight away in USA, in which case it would have been but natural to mention the place of employment along with the designation. The continuity of employment from India to USA is evident from the contents of the letter dated 03/06/2015 wherein it is stated that save as otherwise provided in the letter all the terms and conditions of employment in India shall remain unchanged. It does not indicate that there is any need of permanent movement of the assessee to America by vacating the residence in India once for all.
It is also not clear whether the assessee moved to America at once with wife and children and severed all his connections with India on his first movement itself. Apart from that the assessee made an election under IRC section 7701(b)(4) to qualify as a resident in the resident of arrival in US, for which one of the conditions is that the assessee shall not meet the SPT in the current year. It is, therefore, clear that the election of the assessee under IRC section 7701(b)(4) shows that in the relevant year, he did not meet the SPT, which is mandatory to be considered as a tax resident in US.
It would be worth to note that for calculating the SPT in the context of US Tax resident consideration, it is enough if the assessee stays for 31 days in the current year or 183 days during the period of three years which includes current year and two immediately preceding years counting all the days of the current year, 1/3rd of the days of presence in the first year and 1/6th of the days of presence in the second year before the current year. This calculation does not automatically trigger the US residency for the period between 17/10/2015 and 31/03/2015 and that is the reason why instead of claim the status of ‘resident of USA’, the assessee opted to be a ‘resident alien’.
For the period between 17/10/2015 and 31/03/2016, the assessee was not taxed in USA not on the residence basis but on the basis of source. Article 4(1)(a) of DTAA clearly excludes a person who is liable to tax in USA in respect only on income from the sources in USA from the definition of ‘resident’ who is otherwise liable to be taxed by reason of his domicile, residence, citizenship, place of management, place of incorporation etc.
There is nothing before us to contradict the findings of the learned CIT(A) in respect of the tie breaker test, inasmuch as mere securing a house on rent in USA is not the conclusive fact that the assessee had become an USA resident the moment he moved from India to USA. Viewing from the angle of surrounding facts enumerated by the learned CIT(A) in the impugned order, we find it difficult to hold that tie breaks in favour of US residency, because it cannot be said that the moment he shifted to USA, he had no permanent residence whatsoever in India or that all his vital interests in the form of personal and economic relations ceased to be centered in India or that he will have no habitual abode at all in India more particularly when the assessee was not given to understand where exactly will his new place of work will be in USA in the letter dated 03/06/2015.
We are of the considered opinion that the impugned order does not suffer any illegality or irregularity and, therefore, decline to interfere with the same. We, however, deem it just and necessary to direct the AO to consider the request of the assessee in respect of grant of foreign tax credit of the taxes paid by the assessee in USA in accordance with law. Additional ground is accordingly allowed.
Appeal of the assessee is allowed in part.
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2022 (12) TMI 1351
Addition u/s. 40A(3) - cash payment more than Rs.10,000/- - HELD THAT:- AO disallowed 20% of the said payment on the ground that the royalty was paid by way of cash. The Hon’ble High Court of Rajasthan [2010 (11) TMI 797 - RAJASTHAN HIGH COURT] opined that the amount was paid to the contractor which was collected on behalf of the State Government as such no disallowance could have been made in view of Rule 6DD(b) of the Rules vide para 6 of the said judgment. Further, the Hon’ble High Court of Rajasthan was pleased to hold that the payment received by the contractor not in individual capacity but on behalf of the Government of Rajasthan and held no disallowance Rule 6DD(b) could have been made in view of Rules 6DD(b).
In the present case, MSEDCL which, is a wholly owned corporate entity of Maharashtra State, in turn, which is deemed licensee u/s. 14 of the Electricity Act, 2003, in turn, entered into an agreement with SNDL which is a subsidiary of Spanco with whom the MSEDCL entered into original agreement. The home page of SNDL shows that has been formed to look after power distribution to Nagpur city on behalf of the MSEDCL and the Spanco is answerable for its obligation towards MSEDCL, which clearly establishes that the SNDL performing its obligations in pursuance of contract entered with MSEDCL which is a State under Article 12 of the Constitution, as an agent of Maharashtra State for distribution of electricity in Nagpur city. Therefore, the payment made to the agent/franchisee of the State of Maharashtra is covered under Rule 6DD(b) of the I.T. Rules. Thus, the provisions u/s. 40A(3) are not attracted to the payments made to SNDL received on behalf of the MSEDCL. Therefore, the order of CIT(A) is not justified and the grounds raised by the assessee are allowed.
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2022 (12) TMI 1350
Revision u/s 263 - TDS u/s 195 OR 194LC - loan was in the nature of External commercial borrowings (ECB) - HELD THAT:- As gathered that the assessee was subjected to TDS inspection and demand was raised u/s 201(1) / (1A) in terms of Sec.194LC and 195. It could be seen that no tax was deducted by the assessee and demand was raised by Ld. AO in terms of statutory provisions after examining the relevant documents including terms of ECB.
The same would lead to a conclusion that Ld. AO had applied its mind that the provisions of Sec.194LC would apply to the case of the assessee and TDS would be required at rates mentioned therein. There was complete application of mind on the issue and the same was one of the possible views since as rightly argued by Ld. AR, foreign borrowings would always come in foreign currency notwithstanding the fact that in the relevant contracts, the terms of loan has been denominated in Indian Rupees. Nevertheless, the matter was duly examined by Ld. AO while finalizing the order and a plausible view was taken in the matter. This being so, the order could not be termed as erroneous and therefore, the impugned revision could not be sustained in law. Appeal stand allowed.
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2022 (12) TMI 1349
Royalty Payment - TDS on remittance to University of Cambridge, UK, which is for examination fee, books purchased and teacher’s training fee - HELD THAT:- We note that an identical controversy arose before ITAT, Delhi in ACIT, International Taxation, New Delhi Vs. M/s The Chancellor, Masters and Scholars of the University of Cambridge [2022 (10) TMI 450 - ITAT DELHI] treated the receipts (exactly same as paid by assessee) as “Royalty”, invoking the same legal provisions as in present appeal, and taxed in India. The matter travelled upto ITAT and the Hon’ble Delhi Bench, relying upon the decision of Hon’ble Supreme Court in the case of Engineering Analysis Center of Excellence Pvt Ltd. [2021 (3) TMI 138 - SUPREME COURT] was pleased to hold that the impugned receipts were not in the nature of “royalty”.
Thus, the view taken by Hon’ble ITAT, Delhi is quite clear that the impugned receipts were not in the nature of “royalty”. This view equally applies to the present assessee. For the sake of completeness and clarity, we may mention that the decision of ITAT, Delhi was in the matter of recipient i.e. M/s The Chancellor, Masters and Scholars of the University of Cambridge and the present-appeal before us is in the matter of payer. But that would not make any difference in the conclusion qua the nature of receipt/payment. Hence respectfully following the decision of Hon’ble ITAT, Delhi, we do hold that the payment made by assessee was not in the nature of “royalty” as claimed by revenue-authorities and hence does not attract TDS. Resultantly, the Ld. AO is directed to delete the demand of TDS and consequential interest created upon the assessee. Appeal of assessee is allowed
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2022 (12) TMI 1348
Reopening of assessment u/s 147 - Deduction u/s 54 - correct provision under which the deduction would be available to the assessee is Sec.54F and not Sec.54 since the assessee has parted with land and invested the same in residential properties. Therefore, the claim of the assessee would be ascertained at the threshold of provisions of Sec.54F - HELD THAT:- We find that the original return of income was never scrutinized. In fact, no capital gain was declared in the original return of income. Based on assessment proceedings of subsequent year, it transpired that certain capital gain would accrue to the assessee in this year. Accordingly, the case was reopened. The assessee sought reasons for reopening at fag- end. The reasons were also supplied to the assessee. Therefore, in our considered opinion, Ld. AO had rightly assumed jurisdiction u/s 147 and no infirmity could be found in the same from this angle. The adjudication in the impugned order, to that extent, does not require any interference on our part. The corresponding grounds urged by the assessee stand dismissed.
Deduction u/s 54F - Assessee was eligible to acquire 7 flats against transfer of 50% undivided share in the land. The assessee has not received any consideration in cash rather the consideration is in the shape of flats only. Therefore, on the date of entering into JDA with the developer, it could be concluded that the assessee made deemed investment to acquire the flats. The mere delay on the part of the developer to hand over the possession of the flat would not vitiate the claim of the assessee since it would be beyond the control of the assessee to ensure timely acquisition of the flat. The provisions of Sec.54F are beneficial provisions and the same should be given effect to in full and could not be denied to the assessee on such technicalities. Therefore, we would hold that the assessee would be eligible for deduction u/s 54F.
we direct Ld. AO to allow deduction u/s 54F on 7 flats acquired by the assessee under Joint Development Agreement. The corresponding ground raised by the assessee stand allowed.
Unexplained cash credit - HELD THAT:- AR pleaded for another opportunity to the assessee to substantiate source of cash deposit. The Ld. AR submitted that the deposits were out of past savings, cash withdrawals and out of sale proceeds of old jewellery as well as flat. The requisite details have been placed on record. Considering the same, this issue stands restored back to the file of Ld. AO for fresh consideration with a direction to the assessee to substantiate its case. The appeal stands partly allowed for statistical purposes.
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2022 (12) TMI 1347
Unexplained cash credit u/s. 68 - Bogus LTCG - penny stock Transaction - set off of short term capital loss from long term capital gain from the sale of shares - HELD THAT:- We find that the assessee has shown long term capital gain on sale of shares from M/s Unishire Urban Infra Ltd.and also short term capital loss from sale of shares of M/s SRK Industries Ltd. According to AO, both these shares are penny stocks. We find that the AO added the entire sale consideration realized from sale of shares of M/s Unishire Urban Infra Ltd. while the entire loss sustained on sale of shares of M/s SRK Industries ltd. was treated as bogus and no set off was allowed.
In our considered view, though the case of the assessee falls within the ambit of the ratio laid down by the Hon’ble Calcutta High Court in the case of Swati Bajaj (2022 (6) TMI 670 - CALCUTTA HIGH COURT] that the gains on the penny stocks are taxed and no exemption is available u/s 10(38) of the Act however the long term capital gain has to be computed in totality on all the shares as a whole and should be brought to tax accordingly. In our considered view, the authorities below cannot be allowed to treat one transaction as income and reject on the other on the ground that it has incurred loss and is bogus and suspicious.
Accordingly we set aside the order of Ld. CIT(A) and direct the AO to allow the set off of short term capital loss from long term capital gain from the sale of shares of M/s Unishire Urban Infra Ltd. and tax the net income from capital gain which is also in accordance with the provisions of Section 70(3) - Appeal of the assessee is allowed.
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