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Income Tax - Case Laws
Showing 241 to 260 of 9304 Records
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2022 (12) TMI 1094
Capital gain computation - Jantri rates v/s DVO’s report - scope of invoking provisions of section 50C - AO empowered to reject the report of the valuation officer - AO to ascertain the fair market value, referred the matter to the Department Valuation Officer’s (DVO) but rejected the DVO’s report, on the ground that the sale instance of A.Y.2008-09 were considered when the old Jantri rates were prevalent - HELD THAT:- Since, section 50C provides the rate adopted or assessed by the Stamp Duty Authorities is to be considered for the purpose of Section 50C - AO was not correct in adopting the market value assessable for the purpose of stamp duty, as said the provision has been inserted in the section 50C with effect from 01/10/2009, and applicable from A.Y.2010-11.
Tribunal has rightly observed that once valid reference to the valuation officer is made under section 50(C)(2) of the Act, assessing officer is not empowered to reject the report of the valuation officer. This finding of the Tribunal is supported by the decision of coordinate bench in the case Ravjibhai Nagjibhai Thesia [2016 (9) TMI 645 - GUJARAT HIGH COURT]
Therefore, we could not find any error in the findings of the Tribunal that the A.O. is not justified in adopting the value other than as adopted by the stamp duty authority. No substantial question of law.
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2022 (12) TMI 1093
Jurisdiction to initiate Reopening of assessment - validity of order under Section 148A(d) - Petitioner also challenges the order passed by the CIT (International Taxation–2), Mumbai, in purported exercise of powers under Section 127 - Notices u/s 148 A(b) and the consequent notice u/s 148 of the Act are challenged on the ground that the said order and notice could be sustained only, if the initial notice under Section 148 A(b) of the Act had been issued by the concerned A.O. at Delhi.
HELD THAT:- In the present case, it is stated that while notice under Section 148 A(b) of the Act was issued by the officer at Bombay, the order under Section 148A(d) as also the notice 148 of the Act were issued by the A.O. at Delhi, which thus cannot be upheld.
Prima facie, we are satisfied with the argument of Mr. Mistri, learned Senior Counsel that a part of cause of action has accrued to the Petitioner within the territorial jurisdiction of this Court, inasmuch as the initial notice under Section 148 A(b) of the Act was issued by the A.O. in Mumbai and that this Court would have the jurisdiction to entertain the present writ petition, more so when this Court had proceeded to exercise jurisdiction in the case of the Petitioner while entertaining a challenge to the initial notice under Section 148 of the Act, issued under the unamended provisions of Section 148 of the Act as it existed before 01st April, 2021.
Issue notice to Respondent Nos. 2, 4 and 5, returnable on 13th January, 2023. Objections be fled within six weeks from today.
There shall be ad-interim relief in terms of prayer clause ‘d’ of the petition.
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2022 (12) TMI 1092
Assessment u/s 153A - addition of penny stocks LTCG - incriminating material found during search or not ? - HELD THAT:- We find that this is an unabated assessment. Hence, de hors incriminating material, addition is not sustainable in assessment u/s 153A. This issue is duly decided by Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] - Other decisions referred by ld. CIT (A) are also germane. Accordingly, following the precedent, we do not find any infirmity in the order of the ld. CIT (A). Accordingly, we uphold the same. Appeal filed by the Revenue stands dismissed.
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2022 (12) TMI 1091
Income deemed to accrue or arise in India - Amount received by on account of transfer of trademark and brand name - Whether be treated as royalty under Article 12 of India – Turkey Double Taxation Avoidance Agreement (DTAA), instead of capital gains under Article 13 of the DTAA - assessee is a non-resident corporate entity incorporated under the laws of Turkey and a tax resident of Turkey - HELD THAT:- As relying on Hilton Roulunds Ltd. case [2018 (4) TMI 1485 - DELHI HIGH COURT] licensee acknowledges the licensor’s rights and title over the trademark, the manner of use of trademark/brand name is specified and restricted in the TLA and the licensee is bound by such conditions/restrictions. TLA authorizes the licensor to terminate the agreement in case of any breach of the conditions. That being the case, it has to be held that it is a case of licence conferring right to use the trademark/brand name and not assignment/transfer of brand name/trademark in favour of the licensee.
Thus we have no hesitation in holding that the consideration received by the assessee for permitting the right to use of brand name/trademark under TLA is nothing else but in the nature of royalties as defined under section 9(1)(vi) read with Article 12(3) of India – Turkey tax treaty. Therefore, we concur with the view expressed by learned DRP. Grounds are dismissed.
Taxation of royalty income at the rate of 15% as per the treaty provision instead of applying the lower rate of tax as per the provisions of the domestic law - HELD THAT:- We find, the claim of the assessee has neither been examined by learned DRP, nor by the AO. Therefore, we restore this issue to the Assessing Officer for examining assessee’s claim with reference to the provisions of treaty and section 90(2) of the Act. Needless to mention, the assessee must be provided reasonable opportunity of being heard before deciding the issue.
Set off of royalty income against the long term capital loss - HELD THAT:- Having heard the parties, we find, this issue also has not been addressed either by the DRP or by the Assessing Officer. Therefore, we restore this issue to the Assessing Officer for examining assessee’s claim, keeping in view the provisions of section 71(3) of the Act. Before deciding the issue, the assessee must be given a reasonable opportunity of being heard. This ground is allowed for statistical purposes.
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2022 (12) TMI 1090
Addition of trade payables above on lakh - addition to the income of the assessee company - CIT-A deleted the addition - HELD THAT:- Appreciating the matter on record it can be observed that primarily on the basis of no adverse observations on the purchases the Ld. CIT(A) had deleted the additions at the same time perusal of the order of Ld. CIT(A) took into consideration the fact that assessee had only submitted part evidences of confirmation - Bench is of opinion, if assessee was not having sufficient time for filing confirmations before Ld. AO, an attempt could have been made to file those before Ld. First Appellate Authority. However, Ld. CIT(A) instead of proceeding to make an inquiry on this own or to given opportunity to the assessee, deleted the additions made by the Ld. AO.
AO was proceeding with assessment on limited scrutiny as to mismatch in sale and large current liability in comparison to total assets, then only for the reason for not questioning purchases the opinion of Ld. AO could not have been interfered, when otherwise before Ld. CIT(A) there was no additional material or evidences. That being so, the grounds raised by revenue are sustained. The Appeal of Revenue is allowed and impugned order of Ld. CIT(A) is set aside and one of Ld. AO is restored.
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2022 (12) TMI 1089
Exemption u/s 11 - assessee could not produce its books of account during the assessment proceedings without appreciating that the books of account could not be produced before the Ld. AO as the same were impounded by the DGIT(Exemption) under section 131(3) - AO traversed beyond the direction of the Tribunal to verify whether expenses incurred by the assessee were utilized for the purpose of the Trust, and all other conditions relating to allowability of deduction under section 11 were satisfied or not which has been upheld by the Ld. CIT(A) - On examination of the books of account and comments/opinion of FSL, the Ld. AO came to the conclusion that books have not been written on day to day basis but in a few sittings - HELD THAT:- The above allegation alone is not sufficient to make ad hoc disallowances of 50% of expenses in the absence of any adverse finding even after examining the books duly supported by the bills and vouchers. Not even single instance has been brought on record to suggest that expenses were incurred for purposes other than the purposes to fulfill the objects of the assessee Trust. There is clear cut finding that payments were made through account payee cheques. No defect has been found in any item of receipts and expenditure. Explanation as to why income from all centers showed vast difference in comparison to expenditure was given by the assessee which explanation has not been considered nor adversely commented by the Ld. CIT(A). We, therefore, delete the ad hoc 50% disallowances out of the expenses in both the years.
There is nothing in the order of the Ld. AO to show that the conditions for claiming exemption under section 11 have not been satisfied in the AYs under consideration. Moreover in CIT vs. Indian Institute of Engineering Society [2012 (11) TMI 1243 - ALLAHABAD HIGH COURT] and Indian Institute of Banking and Finance [2018 (4) TMI 197 - BOMBAY HIGH COURT] have held that benefit under section 11 cannot be denied on the ground that the assessee has not obtained exemption from prescribed authorities under section 10(23C) of the Act.
Denial of exemption under section 11 of the Act to the assessee Trust in these two AYs is not justified. Exemption under section 11 of the Act deserves to be allowed to the assessse in both the years.
Accordingly, the assessee succeeds in all its effective grounds of appeals in both the AYs involved i.e. AYs 2006-07 and 2008-09 relating to denial of exemption under section 11 and disallowances out of expenses claimed. - Decided in favour of assessee.
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2022 (12) TMI 1088
Exemption u/s 11 - Application of provisions of "Accumulation of income" for Notional Income (Rent) - annual value of any property is to be determined - two properties leased out by assessee are not the fair market value of rental income and it is only nominal value and he compared the prevailing market rent in the area - As per AO assessee charitable trust owns land leased out the same and the two tenants are specified persons u/s.13(3 hence, provisions of section 13(1)(c) of the Act are applicable to the case of the assessee - HELD THAT:- As going through the CBDT Circular No.005P (LXX-6) dt. 19th June, 1968 cited above, which has been considered in the case of Rao Bahadur Calavala Cunnan Chetty Charities [1979 (8) TMI 17 - MADRAS HIGH COURT] and Ganga Charity Trust Fund [1985 (10) TMI 67 - GUJARAT HIGH COURT] we are of the view that the ‘accumulation’ or ‘application’ in section 11(1)(a) of the Act must be of real income and as per the CBDT circular No.005P(LXX-6) cited above, makes it clear that the word ‘income’ in section 11(1)(a) must be understood in commercial sense. The entire income of the trust in the commercial sense has been spent for the purpose and not the notional income. But in the present case before us, the assessee has violated the provisions of section 13(1)(c) r.w.s. 13(1)(b) of the Act, as the assessee has received rent from two tenants who are specified persons u/s.13(3) of the Act and hence, clear violation of provisions of section 13(1)(c) r.w.s. 13(1)(b) of the Act. Therefore, the assessee is not entitled for claim of deduction.
Accordingly assessee trust cannot be assessed on notional rental income in term of CBDT Circular No.005P(LXX-6) dt. 19th June 1968
AO will deny exemption u/s.11 of the Act, in regard to the income declared by assessee and will assess the same to tax in term of section 164(1) of the Act.
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2022 (12) TMI 1087
Deduction u/s 80IA - deduction denied on non-filing of Form 10CCB along with the return of income - HELD THAT':- As assessee filed the audit report in Form 10CCB for claiming deduction under section 80IA of the Act on 13.11.2017. The processing of return under section 143(1) of the Act was done by the CPC, Bengaluru and issued intimation dated 16.03.2019, which is much after the filing of audit report.
This being the case, this issue is squarely covered by the decision of AKS Alloys (P.) Ltd. [2011 (12) TMI 39 - MADRAS HIGH COURT] which was duly affirmed by CIT v. G.M. Knitting Industries (P.) Ltd. [2015 (11) TMI 397 - SC ORDER] as held that even though necessary certificate in Form 10CCB has to be filed along with the return of income, but, even if the same was filed before the final order of assessment was made, the assessee is entitled to claim deduction under section 80IB of the Act.
Thus we are of the considered opinion that once the assessee has filed an audit report in Form 10CCB on 13.11.2017 and processing of return under section 143(1) was done by the CPC, Bengaluru on 16.03.2019, which is an event much after, the assessee is fully entitled to claim deduction under section 80IA of the Act. Accordingly, we set aside the orders of authorities below on this issue and direct the Assessing Officer to allow the claim of deduction under section 80IA of the Act. Thus, the ground raised by the assessee is allowed.
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2022 (12) TMI 1086
Approval u/s 80G(5) - application for registration in Form No.10AB rejected on non submission of mandatory information - HELD THAT:- It is apparent from the records that the assessee has submitted most of the information asked for in the notice of hearing such as PAN, Society Registration Certificate, Bye Laws, Details of Members of the Society, copies of income tax returns, financial statements at the time of submission of application for registration u/s 80G itself before the Ld.CIT(E).
On perusal of the written submissions filed in the paper book and the medical reports submitted by the assessee, we find that it is a fit case to grant one more opportunity of being heard to the assessee to furnish all the details / information sought by the Ld.CIT(E) - We set aside the order passed by the Ld.CIT(E) and remit the matter back to the file of the Ld.CIT(E) with a direction to grant one more opportunity of being heard to the assessee. Appeals of the assessee are allowed for statistical purpose.
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2022 (12) TMI 1085
Revision u/s 263 - deduction u/s 80P(2)(d) on the interest received from the cooperative banks - whether assessee is eligible to claim deduction on interest earned from Co-Operative Banks u/s 80P(2)(d) of the Act ? - HELD THAT:- As in the case of Surat Vankar Sahakari Sangh Ltd. [2016 (7) TMI 1217 - GUJARAT HIGH COURT] held assessee-cooperative society was eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank.
In the case of Surendranagar District Co-op. Milk Producers Union Ltd. [2019 (9) TMI 978 - ITAT RAJKOT] held that assessee-co-operative society could not claim benefit of section 80P(2)(d) in respect of interest earned by it from deposits made with nationalised/private banks, however, said benefit was available in respect of interest earned on deposits made with co-operative bank.
In the case of Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] held that the interest income earned by a cooperative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.
In view of the aforesaid decisions of Honourable High Court of Gujarat and other cases cited above, Principal CIT erred in holding that the order passed by AO is erroneous and prejudicial to the interest of the Revenue on account of allowability of interest earned by the assessee on interest earned by the assessee from cooperative banks, coupled with the fact that Ld. AO had made due enquiries on this issue during the course of assessment proceedings.Appeal of the assessee is allowed.
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2022 (12) TMI 1084
TP adjustment - upward adjustment on notional interest on advance made to wholly subsidiaries/associated enterprises of the assessee - HELD THAT:- We noted that this issue is covered in the case of CIT v. Everest Kanto Cylinder Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] wherein, the Libor + 200 bps point is accepted at the bench mark and hence, respectfully following the same, we upheld the order of the AO/TPO. This issue of the assessee is dismissed.
Disallowance of expenses relatable to exempt income by invoking provisions of Sec.14A r.w.r.8D and making disallowance of interest u/r.8D(2)(ii) and u/r.8D(2)(iii) - HELD THAT:- We noted that the AO simpliciter given his findings that the disallowance computed by the assessee is not correct, but he has not examined the accounts of the assessee and disallowance made even though offered by the assessee. We noted that the AO could not find any fault as to how this disallowance is not correct. There is no satisfaction recorded by the AO in regard to this disallowance and hence, there is no satisfaction recorded by the AO in terms of sec.14A of the Act. This issue of the assessee is allowed.
Disallowance of claim of deduction u/s.80JJAA - AO required the assessee as to whether any of the regular workmen as mentioned in Column No.7 was employed for a period of less than 300 days during the previous year - HELD THAT:- The Hon'ble High Court of Karnataka in the case of Texas Instruments India (P.) Ltd. [2021 (4) TMI 1049 - KARNATAKA HIGH COURT] has considered the issue of amendment brought in Sec.80JJAA of the Act, by bringing proviso which has relaxed condition in regard to number of days of employment of new employees. Once, one has interpreted the provision and held the same as retrospective, no contrary decision was pointed out by the Revenue before us. We in principle allow the claim of the assessee, but subject to verification by the AO. The AO will carry out the verification in terms of amendment bringing the provisions of Sec.80JJAA and then will consider the eligibility of claim of deduction. Accordingly, appeal is allowed, but for verification purpose remanded back.
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2022 (12) TMI 1083
Calculation of exact amount of interest payable to the assessee on the amount of refund granted under section 244A - HELD THAT:- The amount of refund granted to the assessee, first, has to be adjusted against the interest payable to the assessee in the given facts and circumstances.
We are also conscious to the fact that the AO has made a reference in his order to the judgment of Gujarat Flouro chemicals [2012 (8) TMI 740 - SUPREME COURT] in the case on hand before us, the facts are altogether distinguishable from the facts of the case which were there before the Hon’ble Supreme Court as discussed above. In our humble understanding, we find that there was no question before the Hon’ble Supreme Court whether the amount of refund granted by the Revenue first has to be adjusted against the interest or the principal.
Accordingly, no benefit can be derived by the revenue based on the judgment of Hon’ble Supreme Court cited above. As such, the issue on hand is identical to the controversy which was there before the Mumbai tribunal in [2016 (8) TMI 688 - ITAT MUMBAI] and the same has been resolved. The relevant extract of the order of the ITAT has already been reproduced somewhere in the preceding paragraph. In view of the above and after considering the facts in totality, we set aside the finding of the learned CIT (A) and direct the AO to allow the amount of interest to the assessee in the light of the aforesaid discussion and as per the provisions of law. Hence, the ground of appeal of the assessee is allowed.
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2022 (12) TMI 1082
Foreign Tax Credit - Denial of deduction on the ground of belated filing of Form 67 - whether mere late fling of Form 67 would result incomplete denial of tax which has been deposited by the assesse in USA where services were rendered? - HELD THAT:- We have perused the Article 25 in the applicable DTAA between India and USA and also Rule 128 of the rules and provisions of Section 90(2) of the Act. Rule 128(9) of the rules provides that Form 67 should be filed on or before the due date of return of income however we also observe that the said Rule nowhere states that in case of late filing of Form 67 the credit of FTC which is deposited by the assesse in foreign country would be denied.
In our considered view the FTC can not be denied to the assesse merely for late filing of Form 67 as the it is procedural formality on the part of the assesse.We have also perused the various decisions filed before us by assesse in defence of his argument that FTC cannot be denied merely on the basis of late filing of Form 67.
We have perused the decision of Co-ordinate Bench of Bangalore in the case of M/s Brinda Rama Krishna [2022 (2) TMI 752 - ITAT BANGALORE] and find that similar issue has been decided in favour of the assessee.
We also note that similar issue also has been decided [2022 (9) TMI 926 - ITAT JAIPUR] wherein the Co-ordinate Bench has allowed FTC by holding that the filing of form 67 is a procedural formality and could not the basis for denial of FTC to the assessee. Appeal of the assessee allowed.
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2022 (12) TMI 1081
TDS u/s 195 - disallowance u/s 40(a)(i) - payments were made to US and Australia based entities as commission towards procurement and solicitation of business - HELD THAT:- The impugned payments made by the assessee are in the nature of selling commission for procurement of orders outside India for the assessee. Upon examination of contractual terms, these payments could not be termed as ‘fees for technical services’. Further, none of the payee is shown to have any PE in India. Therefore, the findings of Ld. CIT(A), in that regard, could not be faulted with.
AO has invoked Explanation-2 to Sec.195(1) as inserted by Finance Act, 2012 w.r.e.f. 01.04.1962. However, the assessee could not be expected to deduct tax at source in this year by foreseeing such a future amendment to law. In the impugned year, there was no such obligation on the assessee to deduct TDS but such obligation has arisen out of subsequent amendment to law which assessee could never anticipate.
As relying on M/S RANE ENGINE VALVES LTD. case [2022 (3) TMI 1022 - ITAT CHENNAI] assessee could not be expected to deduct Tax at source on payment made to non-residents on the basis of subsequent amendment to the law with retrospective effect from earlier date because the assessee cannot foresee the amendment and deduct TDS. Therefore, the disallowance made u/s 40(a)(i) would be unwarranted. Similar is the situation before us. No contrary decision is on record. Therefore, following this decision, we confirm the stand of Ld. CIT(A). The corresponding grounds raised by the revenue stand dismissed.
Disallowance u/s 14A - AOapplying Rule 8D(2)(iii), computed indirect expense disallowance - CIT(A) directed Ld. AO to consider those investments which actually yielded exempt income during the year - HELD THAT:- We find that the directions of Ld. CIT(A) are in accordance with the decision of Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] - Therefore, the impugned order could not be faulted with. We order so. The corresponding grounds raised by revenue stand dismissed.
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2022 (12) TMI 1080
Validity of assessment - non issuance of notice u/s 143(2) - Whether curable defect u/s 292BB? - HELD THAT:- As decided in Laxman Das Khandelwal case [2019 (8) TMI 660 - SUPREME COURT] for section 292BB to apply, section 143(2) notice must have emanated from the department and it is only infirmities in the manner of service of notice that the section seeks to cure and it is not intended to cure the complete absence of notice under section 143(2) of the Act itself.
Thus the entire reassessment proceedings under section 143(3) read with section 147, in the present case, stood vitiated as the AO lacked jurisdiction in absence of notice u/s 143(2) of the Act. Hence, the assessment order passed under section 143(3) read with section 147 of the Act is quashed. - Decided in favour of assessee.
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2022 (12) TMI 1079
Penalty u/s. 271D - assessee has repaid loans/ deposits from various sister concerns through journal entries, i.e., otherwise than account payee cheques/draft, thereby violating the provisions of section 269T - assessee has not shown the reasonable cause u/s. 273B of the Act for entering into such transactions through journal entries - CIT-A deleted the penalty levy - HELD THAT:- As decided in assessee’s group company i.e. Lodha Builder Pvt. Ltd [2021 (12) TMI 1174 - ITAT MUMBAI] there is no adverse finding by the AO in the regular assessment. AO has not made out in the -assessment that any of the impugned transactions is aimed at non commercial reasons and outside the normal business’ operations? As such, the provisions of ss. 269SS and 269T of the Act shall not be attracted where there is no involvement of the ‘money’.
Therefore, in the fact of the present case, in our opinion, though the assessee has violated the provisions of ss. 269SS/269T of the Act in respect of journal entries, the assessee has shown reasonable cause and, therefore, the penalty imposed u/s 271D/271E of the Act are not sustainable. Regarding an amount of 'money' said to have been paid in violation of the said provisions, the same needs to be deleted. Appeal filed by the Revenue is dismissed.
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2022 (12) TMI 1078
TP adjustment on AMP expenditure - TPO show caused the assessee as to why 1% of gross sales be not considered as brand building exercise for AE as done in last year - HELD THAT:- From the facts, it emerges that this adjustment made by Ld. TPO is primarily guided by adjustment made in the earlier years. Similar issue, in AY 2012-13, has been adjudicated by this Tribunal in assessee’s favor for the reason that determination as done by Ld. TPO at 1% of gross sales is adhoc figure and not a figure arrived by calculation or method as provided in Sec. 92C(1) much less Rule 10AB of Income Tax Rules, 1962. Therefore, the adjustment so made without following any prescribed method is not sustainable and accordingly, deleted.
We find that similar factual matrix exist in this year. TPO has merely presumed that there exist an arrangement between the assessee and its AE for promotion of the brand. No such arrangement has been shown to us. Therefore, taking a consistent stand in the matter, the impugned adjustment stand deleted. The corresponding grounds stands allowed.
Disallowance u/s. 14A u/r 8D(2)(iii) - AO rejecting assessee’s plea that it had not availed any loan for investment and the investments were out of own funds - HELD THAT:- We find that similar issue in AY 2012-13 thus the issue of disallowance u/r 8D(2)(ii) as well as u/r 8D(2)(iii) stand restored back to the file of Ld. AO on similar lines - AO shall take consistent view as taken on AY 2012-13 on this issue. This ground stand allowed for statistical purposes.
Disallowance u/s. 40(a)(ia) - short deduction of tax - assessee paid connectivity expenses for dedicated leased lines provided by various vendors and deducted TDS @ 2% - A.O opined that the tax should have been deducted at 10% - HELD THAT:- The Tribunal, in latest decision for AY 2012-13 relying upon decision for AY 2009-10 [2015 (12) TMI 1328 - ITAT CHENNAI] held that disallowance u/s 40(a)(ia) is not attracted in case of short deduction of tax at source. Respectfully following the consistent view of Tribunal, the impugned disallowance stand deleted.
Disallowance of provision for inventory - assessee created provision towards provision for inventories which was stated to be towards slow moving and obsolete traded goods on account of diminishment in the value of stock held in the course of business - HELD THAT:- From the financial statements of the assessee, it could be ascertained that the assessee is valuing the inventories at lower of cost price or net realizable value which is prescribed method of valuation of inventories.
When the valuation is done on lower of cost or net realizable value then any decrease in value of obsolete or slow moving stock on valuation date would automatically take care of the loss suffered by the assessee on this account. Accordingly, a separate provision made, in this regard, could not be allowed to the assessee. The Ld. AR has cited many case laws to support this deduction. However, in the given factual matrix, the same are not applicable. Therefore, the adjustment made by Ld. AO, in this regard, could not be faulted with. The corresponding grounds raised by the assessee stand dismissed.
Depreciation on software - @60% or 25% - HELD THAT:- The bench, noticing the entries in Appendix I of Income Tax Rules, 1962, held that the rate of depreciation mentioned at III(5) for computers including computer software would be 60%. Considering the same, we direct Ld. AO to allow depreciation of 60% on software.
Provision for VAT assessment demand - HELD THAT:- From the fact, it emerges that this liability pertains to earlier years. In such a case, the same could be allowed to the assessee only upon crystallization of the liability. From assessee’s submissions, it is quite clear that the liability has been crystalized only on 04.04.2013 and therefore, the deduction of mere provision in this year could not be allowed to the assessee. It is very clear that this is a prior period item and the liability, in this respect, has not crystallized during this year. Therefore, the corresponding grounds stand dismissed. No other ground has been urged in the appeal.
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2022 (12) TMI 1077
Estimation of income - bogus purchases - HELD THAT:- There is always an element of guesswork on the quantum of disallowance that should be made in case in the case of purchases made from parties whom the assessee is unable to identify.
It would not be justifiable to disallow the entire purchases when the corresponding sale of finished product (in which such which the purchases so made were utilised for making the final finished product) have been subject to tax. Accordingly, in light of the judicial precedents cited above, a certain percentage of such alleged bogus purchases may be disallowed, keeping into consideration the profit offered to tax by the assessee.
Accordingly, in the interest of justice, we are of the view that in the instant set of facts 10% of the above purchases may be disallowed and added back to the income of the assessee.
Unexplained deposit on the basis of a AIR information - HELD THAT:- In light of the facts placed before us, in the interests of justice, the matter is being restored to the file of the Ld. Assessing Officer to verify the correctness of the claim made by the assessee. The assessee may file the necessary confirmation given by the Bank of India, the assessee’s banker, to the effect that the deposits made with the bank are duly tallying with the assessee’s books of accounts.
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2022 (12) TMI 1076
Nature of receipt - amount received by the assessee firm as a compensation for pre-closure of its BOT projects - Revenue or capital receipt - whether taxable as a revenue receipt in the hands of the assessee firm since it represented the net present value of the future cash flows to be received by the assessee? - HELD THAT:- Revenue’s vehement arguments supporting the learned lower authorities’ action treating the impugned compensation as a revenue receipt fail to evoke our acceptance. This is for the reason that the Government of Maharashtra herein had acquired the assessee’s BOT project(s); lock, stock and barrel by way of gazette notification(s) dated 27.06.2014 thereby rescinding it’s earlier notification dated 08.04.2000 introducing the toll scheme in issue.
We conclude in the light of these clinching facts and settled legal proposition that the hon’ble Calcutta high court’s view [1989 (12) TMI 362 - CALCUTTA HIGH COURT] would squarely apply since not only the assessee’s business stood closed but also it’s intangible asset(s) by way of right to collect the toll u/s.32(i)(ii) and building, plant and machinery, as the case may be, vested with the government.
Legislature has also inserted clause (e) in section 28(ii) of the Act by the Finance Act 2018 w.e.f. 01.04.2019 wherein any compensation or such payment received “at or in connection with termination or the modification of the terms and conditions, if any, contract relating to his business” is assessed has seem held taxable as profits and gains of business or profession. This latter amendment is applicable w.e.f. 01.04.2019 whereas we are in AY 2015-16 only.
We also take note of the explanatory memo thereof that this latter amendment proposes to invoke section 28 of the Act qua any compensation; including both revenue as well as capital u/s.28 of the Act. We thus conclude that both the learned authorities have erred in law and on facts in invoking section 28(ii)(d) qua assessee’s impugned compensation thereby holding it as a revenue receipt. The assessee succeeds.
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2022 (12) TMI 1075
Levy of penalty u/s 271 (1 )(b) - non compliance of notice issued u/s 142(1) - HELD THAT:- As is not in dispute that notice under section 142(1) of the Act along with the questionnaire has been issued, but the assessee has failed to file any reply in response to the said notice. It is also not in dispute that the assessment order has been passed under section 142(1) of the Act not under section 144 of the Act, wherein the Ld. A.O. considering the subsequent compliance made by the assessee and by considering the said compliance as good compliance, ignored the default committed earlier. The said fact has been corroborated with the assessment order dated 22.11.2018 passed under section 143(3) of the Act by the A.O. See case of Akhil Bhartiya Prathmik Shamshak Sangh Bhawan Trust [2007 (8) TMI 386 - ITAT DELHI-G] - Penalty order set aside - Decided in favour of assessee.
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