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Income Tax - Case Laws
Showing 201 to 220 of 9304 Records
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2022 (12) TMI 1204
TP Adjustment - determination of the arm’s length price of ‘deemed international transactions’ of television content production fees received from the broadcasters - HELD THAT:- For determination of arm’s length price of the deemed international transactions, it is important to go through the agreement entered between the AE and domestic third-party. The said agreement and confirmation have been filed for first time before us, which being crucial and important for adjudicating the issue dispute, same are admitted as additional evidence in terms of Rule 29 of ITAT Rules, 1963 and issue-in-dispute involved in relation to adjustment to the deemed international transactions is restored back to the file of the Ld. AO/TPO for deciding afresh after providing adequate opportunity of being heard to the assessee. The ground of the appeal of the assessee accordingly allowed for statistical purposes.
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2022 (12) TMI 1203
TP adjustment made in respect of interest on delayed receivables - As submitted that the assessee has received advances from the AE in some cases, which should have been netted off - HELD THAT:- We are of the view that there is merit in his contentions. As rightly submitted by Ld A.R, the Arm’s Length Price of transactions have to be determined by following any one of the methods prescribed under the Income tax Rules. Admittedly, the TPO/DRP, in the instant case, has not followed the same. Accordingly, we deem it proper to restore this issue to the file of AO/TPO for determining the ALP, i.e., interest on delayed receivables by following the rules. The assessee is free to raise all the contentions before the AO/TPO. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (12) TMI 1172
Condonation of delay in e-filing the audit report in Form No.10B has been rejected - whether respondent committed an error in passing the order by not condoning the delay in filing Form No.10B along with the return filed? - HELD THAT:- In the decision of this Court in Sarvodaya Charitable Trust vs. Income Tax Officer (Exemption) [2021 (1) TMI 214 - GUJARAT HIGH COURT] this Court has observed that furnishing of audit report along with return filed is to be treated as a procedural requirement.
It is though mandatory in nature the substantial compliance is required to be made. In the case of Sarvodaya Charitable Trust [2021 (1) TMI 214 - GUJARAT HIGH COURT] the assessee had produced the audit report after processing the return under Section 143(1). This Court in the said order has observed that the approach of the authority in these type of cases should be equitable, balancing and judicious. Technically speaking, respondent No.2 might be justified in denying the exemption under Section 11 of the Act by rejecting such condonation application, but an assessee, which is a public charitable trust for past 30 years which substantially satisfies the conditions for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay.
Applying the said principle, the petition is allowed. The impugned order passed by respondent dated 12.3.2021 is quashed and aside. The impugned order of rectification under Section 154 of the Act dated 25.1.2019 is also quashed and set aside. The application for condonation of delay filed by the petitioner before the respondent is allowed.
Respondent is now directed to process the return in accordance with law. It is noticed that no assessment is framed and only an intimation under Section 143(1) of the Act was issued. No scrutiny could be carried out by the respondent since the audit report under Section 10B was not on record. Learned advocate for the petitioner Mr. B.S.Soparkar fairly submitted that the issue of benefit of exemption may be examined by issuance of notice u/s 143(1)/ 143(2) and the petitioner shall not object to the said proceedings by taking the ground of limitations.
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2022 (12) TMI 1171
Unexplained income u/s 69A - writ petitioner has deposited huge sums of money after demonetisation regime kicked in - As argued writ petitioner had in fact responded to the Section 142 (1) notice dated 30.11.2017 by way of return on 15.04.2019 but the respondent has not taken note of that - contention of the respondent that the respondent could not look into the responses of the writ petitioner solely because of technical glitch at the respondent's end - HELD THAT:- The question as to whether an opportunity should be given to the assessee by the assessing officer by giving a notice and calling upon the assessee to show cause when Section 142(1) notice has been issued is left open as in the case on hand the respondent had admitted in the counter affidavit that notice has been issued and the responses of the writ petitioner could not be looked into solely owing to technical glitch at the respondent's end. Therefore, this order is being made in the unique fact setting and circumstances of the present case.
It is also to be noted that the writ petitioner further contends that the writ petitioner is running a petrol bunk and there is a window available in this regard qua demonetisation. Therefore, this order will obviously not serve as precedent for Best judgment assessment orders under Section 144 where Section 142 (1) notice has been issued. In other words, this order is in the light of the admitted position of the respondent in paragraph 4 of the counter affidavit.
Matter restored back for denovo assessment.
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2022 (12) TMI 1170
Reopening of the assessment - Necessity of grant of approval u/s 151(ii) - Competent authority u/s 151(ii) to grant approval - HELD THAT:- It appears from record and instruction submitted by Mr. Dutt that in this said case approval has been granted by principal CIT -9, Kolkata who is not the authority falls u/s 151(ii) of the Act as such the approval in this case is not an authority authorized under the law and such approval is not sustainable in law and in view of this factual and legal position the impugned notice under Section 148A(b) of the Act and all subsequent proceedings are not sustainable in law and accordingly quashed.
Quashing of the impugned notice and subsequent proceedings will not be a bar on the part of the Income Tax authorities concerned to initiate any fresh proceeding in future in accordance with law.
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2022 (12) TMI 1169
Capital gain Computation - AO worked out the capital gain u/s 50C - Charging capital gain tax on the very same land on the basis of final execution of sale deed - CIT (A) deleted the addition made by the AO on the ground that the stated transaction had already been treated as transfer in A.Y.2009-2010 and capital gain earned thereon was brought to tax in hands of the assessee and had been accepted by the assessee also - HELD THAT:- No error in the Tribunals findings because undisputedly the issue relating to transfer of land to M/s. Aanya Developers in A.Y.2009-10 had attained finality and against the additions made no appeal has been preferred by the assessee and, therefore, the Tribunal is right in observing that the issue has been examined and taxed in A.Y.2009-10 on the basis of Banakhat (agreement to sale) dated 24.7.2008. The department has also considered the same as transfer in the Assessment order in A.Y.2009-10.Charging capital gain tax on the very same land on the basis of final execution of sale deed amounts to taxing the same twice over, which is not permissible.
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2022 (12) TMI 1168
Addition u/s 68 - genuineness and credit worthiness of the transaction in question - HELD THAT:- Under Section 68 of the Income Tax Act, if any sum is found credited in the Books of account of the assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, the sum so credited may be charged to income tax as to the income of the assessee of that previous year. Therefore, what has to be inquired into by the AO is about the nature and source of the deposit. If the explanation with regard to the nature and source is found unsatisfactory, only then the amount so credited may be treated is income.
It is evident that the assessee though has disclosed the source of the deposit but could not establish the nature thereof. Three conditions which are required to be proved by the Assessee as per Section 68 of the Income Tax Act, 1961, could not be proved by him. The burden would, therefore, not shift on the revenue, as the assessee has failed to discharge her burden.
The assessee has failed to prove the transaction as per Section 68 - No substantial question of law, arises in the instant appeal for consideration.
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2022 (12) TMI 1167
Reopening of assessment - Validity of reasons to believe - Whether reasons to believe were based on some non-extent material or extraneous and irrelevant material? - HELD THAT:- Firstly, the Petitioner did not bother to file any returns during Assessment Year 2015-16. Secondly, the Petitioner did not bother to file any response to the notice dated 27.03.2021 seeking to reopen the assessment within the time limit allowed to the Petitioner. The Petitioner filed returns only after eight months at the stage when the time limit for completing the reassessment proceedings was almost due to conclude. In these circumstances, the Assessing Officer rightly invoked the principle in Union of India V/s. Major General Madan Lal Yadav [1996 (3) TMI 472 - SUPREME COURT].
Discretion apart, we find that this is a matter where the explanation (2) to Section 147 of the IT Act would apply. This explanation inter alia provides that where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded with a maximum amount which is not chargeable to income-tax, the same shall also be deemed to be a case where income chargeable to tax has escaped assessment.
Petitioner has not explained the amount of ₹2,15,107/-. The Petitioner may have its own version about the receipt of the amount of ₹6.74 crores. However, these are matters which can be looked into at the stage of reassessment. Based on the material available with the respondents, we cannot say that they either had no reason to believe or that their reasons to believe were based on some non-extent material or extraneous and irrelevant material.
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2022 (12) TMI 1166
Reopening of assessment u/s 147 - procedure followed for reassessment under Section 147 after newly inserted Section 148A - HELD THAT:- This is a case of proposed reassessment. In view of the newly inserted Section 148A in the Act, there has been a paradigm shift in the procedure followed for reassessment under Section 147 of the Act. Prior to issuance of notice under Section 148 of the Act, a notice under Section 148A(b) of the Act is required to be issued enabling the person concerned to submit reply, whereafter the assessing authority upon receipt of approval from the specified authority is mandated to pass an order under Section 148A(d) of the Act, whether the case is fit for reopening or not. Once it is decided that it is a case fit for reopening, consequential notice under Section 148 of the Act is issued.
Thus the order under Section 148A(d) of the Act is at a stage prior to issuance of notice under Section 148 of the Act. Unless glaring omissions are demonstrated or the conditions precedent for exercise of the power to reopen assessment are not complied with, a writ Court would not ordinarily interfere with an order passed under Section 148A(d) of the Act inasmuch as the proceedings is at a very nascent stage even prior to issuance of the statutory notice under Section 148 of the Act.
We are of the view that contentions raised by the petitioner can very well be raised in the reply to the notice issued under Section 148 of the Act. At this stage, preempting the authorities from proceeding further on the grounds urged in the writ petition would not be proper. We, therefore, decline to interfere in the matter.
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2022 (12) TMI 1165
Addition of interest from banks on the deposits made by it out of the maintenance deposit/ fund received from its members - obligation on the income earned by the Appellant out of the deployment of the maintenance deposit - assessee as a Trust or Co-operative Society - concept of mutuality - as submitted that the Appellant is required to maintain the society and incur common expense of the society out of the income received from the maintenance deposits, and thus, there is an overriding charge - HELD THAT:- As noted from the Balance Sheet the maintenance deposit is excessively used for maintenance of the residential premises and therefore, the collection of maintenance deposits are kept as fixed deposits in Axis Bank and HDFC Bank. From the sale deed also the said element of maintenance deposits has been collected from the owners of the flat.
The decision of the Ahmedabad Tribunal in case of Manekbuag Co-op. Housing Society Ltd. [2010 (3) TMI 1083 - ITAT AHMEDABAD] has clearly given the guidelines that when the main object of the society is to manage, administer, operate, supervise and make available the common facilities and maintains of its members to meet the expense on account of maintenance the housing society collected deposits from its members made deposits and earned interest thereon from banks which is squarely covered by the decision Adarsh Co-operative Housing Society Ltd. [1994 (10) TMI 32 - GUJARAT HIGH COURT] which was cited by the Ld. A.R. at the time of hearing.
The decision of Hon’ble Bombay High Court in case of Sind Co-op. Hsg. Society [2009 (7) TMI 15 - BOMBAY HIGH COURT] is squarely applicable in the present case as the income earned by the society on account of interest on Fixed Deposits from its members for the purpose of maintenance will attract the concept of mutuality and accordingly the income will be subject to exemption if any surplus is there. Thus, Ground No. 1 & 2 are allowed.
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2022 (12) TMI 1164
Revision u/s 263 - assessees claimed deduction u/s.80P in respect of interest from cooperative banks and nationalized banks which got allowed by the AO - HELD THAT:- Insofar as the allowability of deduction u/s.8P(2)(a)(i) is concerned, we find that the Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [2019 (4) TMI 682 - ITAT PUNE] has decided the question of availability of deduction u/s 80P on interest income by noticing that the Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed in Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] allowing deduction u/s. 80P on interest income and that of Mantola Cooperative Thrift Credit Society Ltd. [2014 (9) TMI 833 - DELHI HIGH COURT] not allowing deduction u/s.80P on interest income earned from banks. Both the Hon’ble High Courts took into consideration the ratio laid down in the case of Totgar’s Cooperative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT].
No direct judgment from the Hon’ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. We thus hold that no exception can be taken to the granting of deduction on interest income by the AO u/s 80P(2)(a)(i) of the Act.
Deduction u/s.80P(2)(d) of the Act, it is crystal clear from the language of the provision that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative societies registered under the Act and hence qualify for the grant of the deduction. Similar view has been taken by the Pune Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. [2022 (12) TMI 959 - ITAT PUNE]
We hold that the impugned orders questioning the grant of deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, cannot be sustained. Appeals are allowed.
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2022 (12) TMI 1163
Disallowance for bad debt - Allowable business loss - AO requires the assessee to explain the genuineness of claim of bad debt as required under the provision of 36(1)(iii) of the Act i.e. the amount claimed represents debt arising out of business transaction, the amount has been included in the computation of income and the amount has been written off in the books of accounts - HELD THAT:- It is the trite law that the nomenclatural given by the assessee for making a claim is not a decisive factor. The claim of the assessee whether allowable or disallowable has to be seen in the light of the provisions of the Act. Thus, we are of the view that no disallowance can be made for the claim made by the assessee which was wrongly classified as bad debts. As such, it was the duty of the authorities below to verify the nature of the claim based on the documents whether such bad debts can be classified as business loss and allowable under the provisions of section 28 or 37 of the Act. Though, the assessee before the authorities below has contended that the impugned claim of the assessee represents the business loss but we note that no one has verified the agreement filed by the assessee in support of its claim which is available on record. Thus we are of the view that the claim of the assessee needs to be re-verified at the level of the AO de-novo as per the provisions of law. Therefore, we hereby set aside the issue to the file of the AO for fresh adjudication. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
TDS u/s 194J - Disallowances of production expenses - Addition u/s 40(a))(ia) - HELD THAT:- As coordinate bench of Hyderabad Tribunal in case of BBR Project (P.) Ltd [2020 (8) TMI 69 - ITAT HYDERABAD] where the bench set aside the issue to file of the AO for fresh adjudication with a direction to verify whether the assessee is an assessee in default under the provision of section 201(1) of the Act or not - In view of the above and in the interest of justice and fair play, we are inclined to restore the issue to the file of the AO for de novo assessment as per the provisions of law and in the light of the documents available on record. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
Non-deduction of tax at source - Studio Renewal charges includes addition of new facilities such mike, sound system and lighting in recording studio in which no labour was included - HELD THAT:- we note that the assessee before the learned CIT(A) contended that legal expenses of Rs. 5 lakh and studio renewal expenses of Rs. 6.5 lakh include reimbursements of certain expenditure where the provisions of TDS are not applicable. The assessee in support of its contention has also filed necessary documentary evidence besides raising its contentions before the authorities below. However, the documents filed by the assessee have not been verified by the Authorities below. The learned AR for the assessee at the time of hearing also contended that recipients of the impugned amount are regular tax filing assessee and paying taxes on the income earned by them. Therefore, in such circumstances, the assessee should be provided with the benefit available under second proviso to section 40(a)(ia) of the Act. In this regard we find the coordinate bench of Hyderabad Tribunal in case of BBR Project (P.) Ltd [2020 (8) TMI 69 - ITAT HYDERABAD] where the bench set aside the issue to file of the AO for fresh adjudication with the direction to verify whether the assessee is an assessee in default under the provision of section 201(1).
Disallowances of cash payment - addition under the provision of section 40A(3) - AR for us contended that the payment made for the purchase of the capital assets exceeding the threshold limit provided under section 40A(3) of the Act cannot be made subject to the disallowance in pursuance to the circular issued by the CBDT bearing number 34 [F. No. 13A/92/69/-IT(A-II)] dated 05-03- 1970 - HELD THAT:- As the assessee has filed necessary documentary evidence besides raising its contentions before the authorities below to justify that provisions of section 40A(3) of the Act are not applicable. However, the documents filed by the assessee have not been verified by the AO during the assessment proceedings. Therefore, in the interest of justice and fair play, we are inclined to restore the issue to the file of the AO for de novo assessment as per the provisions of law and in the light of the documents available on record. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
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2022 (12) TMI 1162
Revision u/s 263 - allowing of the deduction by the AO(s) u/s 80P is contrary to law - grant of deduction u/s.80P by the AO in respect of interest income earned from other credit cooperative societies or Nationalised banks led to the passing of erroneous assessment orders prejudicial to the interest of the Revenue - HELD THAT:- Grant of deduction u/s.80P by the Assessing Officer (AO) in respect of interest income earned from other credit cooperative societies or Nationalised banks led to the passing of erroneous assessment orders prejudicial to the interest of the Revenue - HELD THAT:- Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [2019 (4) TMI 682 - ITAT PUNE] has decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction.
No direct judgment from the Hon’ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd [2015 (2) TMI 995 - KARNATAKA HIGH COURT] The position continues to remain the same before this Tribunal also. We thus hold that no exception can be taken to the granting of deduction on interest income by the AO u/s 80P(2)(a)(i) of the Act.
Coming to the other cases involving deduction u/s.80P(2)(d) of the Act, it is crystal clear from the language of the provision that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative society registered under the Act and hence qualify for the grant of the deduction. Similar view has been taken by the Pune Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. [2022 (12) TMI 959 - ITAT PUNE].
We hold that the impugned orders questioning the deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, cannot be sustained. Appeal allowed.
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2022 (12) TMI 1161
Reopening of assessment u/s 147 - ITO Raipur jurisdiction over the case of the assessee - addition of bogus purchases - HELD THAT:- ITO-1(3), Raipur at the time of issuance of notice u/s.148 was not vested with any jurisdiction over the case of the assessee, which as per the Notification No.1/2014-15 dated 15.11.2014 remained with the ITO-1(1), Raipur, therefore, as the notice u/s.148 issued by the ITO-1(3), Raipur was nothing short of a notice issued by an A.O who lacked inherent jurisdiction, thus, the provisions of Sec. 124(3) could not have been triggered to fasten an obligation upon the assessee to call in question the jurisdiction of the said officer, i.e., ITO- 1(3), Raipur.
The reliance placed by the Ld. DR on the judgment of the Hon’ble High Court of Delhi in the case of Abhishek Jain Vs. ITO, Ward-55(1), New Delhi [2018 (6) TMI 211 - DELHI HIGH COURT] being distinguishable on facts would also not assist its case.
As the ITO-1(1), Raipur had framed the impugned assessment u/s.143(3) r.w.s. 147 on the basis of a notice u/s.148 of the Act, issued by the ITO-1(3), Raipur, i.e., an A.O who at the time of issuance of the aforesaid notice lacked inherent jurisdiction over the case of the assessee, therefore, the assessment so framed cannot be sustained and is liable to be quashed. Accordingly, quash the assessment framed by the ITO-1(1), Raipur vide his order passed u/s.143(3) r.w.s. 147 for want of valid assumption of jurisdiction on his part. Decided in favour of assessee.
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2022 (12) TMI 1160
Estimation of income - bogus purchases - assessee has made an alternate plea that when the purchases are held to be bogus and only certain percentage only to be disallowed - HELD THAT:- By relying on the decision of the Hon'ble Bombay High Court in the case of Pr. CIT v. M/s. Mohommad Haji Adam & Co [2019 (2) TMI 1632 - BOMBAY HIGH COURT] we are in agreement with the above submissions, the Coordinate Benches are disallowing only 12.5% of the total purchases as reasonable in these type of cases. We observe in the present case that assessee has already declared profit @ 9% (confirmed by AO) the net difference of 3.5% (12.5 - 9) should be considered for disallowance. Accordingly, we direct Assessing Officer to disallow @ 3.5% of the alleged bogus purchases. Appeal filed by the assessee is partly allowed.
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2022 (12) TMI 1159
Long term capital gain - sub-tenancy right was held for more than 3 years as required by section 2(29B) - assessee claimed to have surrendered such sub-tenancy right and received a sum as consideration vide Memorandum of Understanding (MOU) - AO held that the assessee was not having any kind of sub-tenancy right and the long-term capital gain declared in the return was just a managed capital gain to claim exemption u/s. 54F, accordingly, Ld. AO rejected the claim of long-term capital gain and assessed the income as income from other sources - HELD THAT:- MOU clearly provides complete details of Rs. 5,00,00,000/- paid by owners to all parties including Rs. 3,25,00,000/- paid to the assessee.
AR has also demonstrated that the assessee has received the sum of Rs. 3,25,00,000/- through banking channel in ICICI Bank.
AR has pointed out that the fact of filing reply by the owner, Shri Dipesh Khandelwal, in response to the notice u/s. 133(6) issued by Ld. AO, as recorded in the assessment-order is not very credible because the Ld. AO has neither supplied a copy of the reply to the assessee nor narrated the contents of reply in the assessment-order. Even during hearing before us, Ld. DR has not been able to rebut or defend this submission of Ld. AR.
We also find merit in the submission of Ld. AR that FMG is an existent-company and the Ld. AO could have made enquiry from FMG but the same was not made - revenue has allowed deduction of Rs. 5,00,00,000/- in the assessment of owner, Shri Dipesh Khandelwal, which proves, without saying anything more, that the revenue authorities have accepted the factum of receipt by assessee from the said owner. Lastly, we also find merit in the contention of Ld. AR that revenue authorities have doubted the receipt of Rs. 3,25,00,000/- in the case of this assessee only. But they have not taken any adverse view in the assessments of other co-tenants who have received remaining consideration of Rs. 1,75,00,000/-, out of total payment of Rs. 5,00,00,000 to all co-tenants. We agree to Ld. AR's submission that the authorities cannot reject transaction in the hands of assessee while accepting it in the hands of other co-tenants.
We are persuaded to hold that the assessee had a sub-tenancy right in the property and upon surrender thereof, the assessee received a sum which was rightly offered as long-term capital gain in terms of section 45(1), 48, 55(2) and 2(29B) of the Income-tax Act, 1961. AO was wrong in rejecting the claim of long-term capital gain and assessing the same as income from other sources. We do not find any infirmity in the order of Ld. CIT(A) who has, after mindful consideration, reversed the action of Ld. AO and allowed claim of assessee. Accordingly, we dismiss Ground No. 1 and 2 of the Revenue.
Exemption u/s. 54F - HELD THAT:- No strength in the findings of AO and the contentions raised by Ld. DR. After a careful consideration, we are in agreement with the submission of AR that the Ld. CIT(A) has carefully dealt with facts, figures, evidences and legal position at length and rightly concluded that the assessee was entitled to exemption u/s. 54F. We do not find any infirmity in the action of Ld. CIT(A). Therefore, we uphold his action and dismiss the Ground No. 3 of Revenue.
Addition on account of shares-transactions - HELD THAT:- The assessee has also filed a copy of Account with Aditya Birla Money Ltd. for the previous year 2014-15 relevant to the assessment-year 2015-16 to the lower authorities and the same is also placed in the Paper-Book, which is duly sealed and signed by broker and clearly demonstrates that no single transaction was done during the year by assessee and the opening balance B/F as on 01.04.2015 is carried forward as such as closing balance on 31.03.2015. Thus, the evidences placed by the assessee clearly demonstrate that no transaction had been done. During hearing, Ld. DR is not able to controvert these submissions of assessee. In this view of matter, we are inclined to agree with Ld. CIT(A) that the assessee has not done any transaction of shares as alleged by Ld. AO. Therefore, the Ld. CIT(A) has rightly deleted addition and we uphold his action. Ground No. 4 of the Revenue is thus dismissed.
Disallowance of interest expenditure u/s. 57(iii) - HELD THAT:- The assessee has filed evidences in the form of (i) Ledger A/c of Interest Expenditure which shows date-wise party-wise interest-payments; (ii) Ledger A/c of BEPL which shows the loans given to BEPL from time to time on which interest has been received; and also (iii) a detailed Statement showing a co-relation of the amounts borrowed from different persons and investment made in BEPL - By means of these clinching evidences on record, the assessee has sufficiently proved that the interest expenditure has been incurred to earn interest-receipt disclosed in the return. On test-check of these evidences, we are satisfied with the explanation given by the assessee. Therefore, the assessee deserves deduction of interest expenditure, which the Ld. AO has wrongly disallowed but the Ld. CIT(A) has rightly allowed. Accordingly, we dismiss Ground No. 5 of the Revenue as well.
Allowability of long-term capital loss from sale of shares - HELD THAT:- AO has not denied the authenticity of these statutory documents, but he had simply formed a view about bogus claim on the footing that the buyer is a relative of assessee and substantial portion of the consideration had been received after 2 years of sale. We observe that the company was a loss making company and the buyer was also sister of assessee, therefore there is a justification in the deferred receipt of consideration by the assessee.
We also agree with the observations of Ld. CIT(A) that even otherwise such trivial considerations should not be a basis to deny the transaction, which has a statutory backing, supported by statutory documents and acted upon by parties. We observe that the Ld. AO has treated the loss claimed by assessee as bogus on mere suspicion and assumption as against the various documentary evidences. It is an accepted law that suspicion and presumption, how so ever strong, cannot be a basis for drawing any conclusion. Therefore, considering the documentary evidences on record in support of assessee's claim which could not have been disputed by Ld. AO, we do not find any merit in the action of Ld. AO.
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2022 (12) TMI 1158
Expenses incurred during the intervening period between setting up and actual business - pre-operative expenses - deductibility of the expenditure incurred between set-up business and actual commencement of business, set off of such expenses against the interest income earned on FDs made out of idle funds or not - HELD THAT:- The admitted facts of the case are that in the immediate preceding previous year, the appellant company had sold its business, however, it was in the process of setting up a new business by identifying some distribution business. In the process, incurred certain revenue expenditure in the form of salary, etc other expenses.
AO as well as the ld. CIT(A) simply discussed the legal principle without adverting to the material facts on record and had not really decided whether the appellant company had set-up of business and ready to commence the business or not. On perusal of the Profit & Loss Account placed at Paper Book indicates that certain expenditure was incurred in connection with business which was sold were also debited to the Profit & Loss Account.
Therefore,AO as well as the ld. CIT(A) had failed to examine the nexus of the expenditure incurred and the new business stated to have been set-up. In these circumstances, we are of the considered opinion that the matter requires remission to the file of the AO to decide the issue in appeal with reference to the material on record whether the appellant company had set-up a new business or not.
In case, on examination of the material on record,AO formed an opinion that new business had been set-up, the expenditure incurred during the interval period of setting up of a new business and its commencement of business can be allowed as deduction and can be set-off against the interest income earned on fixed deposits by the assessee assessed under head “Income from the other sources”. Grounds of appeal raised by the assessee stands partly allowed for statistical purposes.
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2022 (12) TMI 1157
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) - unexplained credits introduced in garb of share application money addition u/s 68 - as argued AO did not specify any limb or charge for which the notice was issued i.e. either for concealment of particulars of income or furnishing of inaccurate particulars of such income - HELD THAT:- Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT]. while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness.
Ratio of this full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued.
Thus we are of the opinion that, the penalty order passed u/s 271(1)(c) of the Act by the Assessing Officer and the order of the CIT(A) in confirming the penalty order are erroneous. Accordingly, the penalty order passed by the A.O for Assessment Year 2007-08 is hereby quashed. Accordingly, Assessee’s Grounds of Appeal are allowed.
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2022 (12) TMI 1156
Disallowance in respect of provision for leave encashment - HELD THAT:- We find that the issue with respect to applicability of provisions of Section 43B(f) is decided by the Hon’ble Supreme Court in the case of M/s. Exide Industries Ltd [2020 (4) TMI 792 - SUPREME COURT] in favour of the Revenue
Since the Hon’ble Supreme Court has decided the provisions of Section 43B(f) is constitutionally valid and operative for all purposes, therefore, respectfully following the Judgment of Hon’ble Supreme Court in the case of Union of India & & Others vs., M/s. Exide Industries Ltd., & Anr. (supra), we dismiss grounds of appeal No.1 of the assessee.
Disallowance of claim of sales tax incentive - HELD THAT:- Supreme Court in the case of Union of India vs., Kamlakshi Finance Corporation Ltd [1991 (9) TMI 72 - SUPREME COURT] has held that ‘ mere fact that the order of the appellate authority is not “acceptable” to the Department and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. We find that since the order of the Special Bench of the Tribunal is still holds the field and in absence of any contrary decision brought to our notice by the Ld. D.R, and the order of the Ld. CIT(A) in deleting the addition made by the A.O. is in accordance with law, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and, therefore, we hold that the amount of incentive is not a revenue receipt, but, it is a capital receipt and, therefore, we direct the A.O. to delete the addition. The Revenue fails in its grounds of appeal Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are dismissed.
Adding back the excise duty exemption - Capital receipt - After analyzing the Office Memorandum dated 14-06-2002 behind the grant of Incentive has held that Excise Duty refund granted with the object of creating avenues for Perpetual Employment, to eradicate the social problem of unemployment in the State by accelerated industrial development was a capital receipt. Further, the Departmental Appeal filed against the said High Court decision of Shree Balaii Alloys [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] has also been dismissed by the Hon'ble Apex Court [2016 (4) TMI 1161 - SC ORDER] So, this issue has attained finality. Since we find no infirmity in the order of the Ld. CIT(A) and the Ld. D.R. failed to put forth any contrary decision, we confirm the order of the Ld. CIT(A) on this issue and dismiss the grounds of appeal no.2(i) to 2(v) of the Revenue.
Swap loss - loss on derivatives in the P/L account which includes mark to market loss in respect of the LIBOR hedging with ICICI Bank, Currency Swap Transaction with ICICI Bank and Currency Swap Transaction with Centurion Bank of Punjab [presently known as HDFC Bank] - AO disallowed the claim on the contention that the swap loss arose on account of conversion of foreign exchange on the balance sheet date and such conversion was basically a mark to market loss and not the actual loss & hence it was purely notional in nature - A.O. treated the swap loss arose on account of conversion of foreign exchange basically a mark to market loss and not the actual loss and hence, the A.O. disallowed the claim of loss on foreign exchange - CIT(A) has allowed the issue in favour of the assessee - HELD THAT:- We find that the Hon’ble Supreme Court in the case of CIT vs., Woodard Governor India Pvt. Ltd [2009 (4) TMI 4 - SUPREME COURT] has held that "loss" suffered by assessee on account of the exchange difference as on the date of the balance sheet is an item of allowable expenditure/s under section 37(1) and has taken consistent view in an another appeal in the case of ONGC Ltd. [2010 (3) TMI 81 - SUPREME COURT] Since the order of the Ld. CIT(A) is in accordance with settled legal position of law, we, therefore, find no infirmity in his and in absence of any contrary decision/ material brought on record by the Ld. D.R, we dismiss the ground of appeal no.3 of the Revenue.
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2022 (12) TMI 1155
Adjustment u/s 143(1) - Set off of brought forward long term capital loss - HELD THAT:- We find that, as evident from a copy of the income tax return for the assessment year 2010-11 that the assessee had duly filed the income tax return, for the assessment year 2010-11, well within the time permitted u/s. 139 (i) i.e. on 31st July 2011. In this view of the matter, the very foundation of impugned adjustment under section 143(1) is wholly unsustainable in law. We, therefore, vacate the impugned action of the AO to allow the set off of loss brought forward from the assessment year 2010-11. The assessee, accordingly, get the relief for set off of long term capital loss. Assessee appeal allowed.
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