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Income Tax - Case Laws
Showing 261 to 280 of 9304 Records
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2022 (12) TMI 1074
TP adjustments - adverse effect of forex due to depreciation of Indian Rupees resulting in incremental import costs which is not attributable to the transfer pricing of its purchase of raw materials from its AEs - HELD THAT:- As relying on assessee’s own case for AY 2011-12 [2022 (10) TMI 474 - ITAT BANGALORE] this issue is remitted to the AO/TPO with a direction to consider the foreign exchange fluctuation adjustment for computing the ALP.
Excluding the additional custom duty costs as a result of increased import costs of raw materials due to forex impact of depreciation of the Indian Rupee - As relying on assessee’s own case for AY 2011-12 [2022 (10) TMI 474 - ITAT BANGALORE] to bring uniformity, the customs duty was to be eliminated from the comparable price also to arrive at correct PLI. Accordingly, we remit the issue to the file of AO for fresh consideration.
TP Adjustment - international transactions of the Assessee - HELD THAT:- We notice that the coordinate bench of the Tribunal in the case of IKA India (P.) Ltd [2018 (10) TMI 49 - ITAT BANGALORE] considered a similar issues and held that section 92 of the Act can be applied only in respect of international transactions i.e., transactions with AE.
Recomputation of operating profit margin pursuant to the MAP resolution - This issue was considered in assessee’s own case for AY 2011-12 [2022 (10) TMI 474 - ITAT BANGALORE] thus we remit this issue to the AO with a direction to re-compute the operating margins pursuant to the MAP resolution.
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2022 (12) TMI 1073
TP adjustment - Selection of MAM - rejecting RMP - value of international transactions pertaining to the import of spare parts and cranes/ machines for trading purpose entered - Non granting the excise duty adjustment and closing stock adjustment sought - HELD THAT:- Appellant had received service commission from AEs in Austria, Germany, France and Switzerland under separate contracts. The international transactions under consideration are of different nature. In the two immediately preceding assessment years the appellant had furnished segmental working for commission segment, service segment and trading segment, and the International Transactions pertaining to trading segment were benchmarked using RPM. Vide Letter, dated 28.10.2015, filed during the assessment proceedings the Appellant has expressed the apprehension that reliable data may not be available from publicly available database to facilitate application of RPM and that hidden differences in accounting of direct costs can lead to distorted results.
Given the fact that the Appellant had adopted RPM in the immediately two preceding assessment years and not faced such hindrances, we are not persuaded to accept the aforesaid apprehension of the Appellant as a genuine reason for rejecting RMP
Trading segment of the Appellant involves import of spares and machinery from AEs for sale to customers in India without making any value addition. The Appellant had adopted RPM as most appropriate method for benchmarking international transactions pertaining to trading segment during the Assessment Year 2010-11 and 2011-12. It is admitted position that there is no change in the facts and circumstances during Assessment Year AY 2012-13 as compared to AY 2010-11 and 2011-12. Revenue was justified in rejecting the aggregation approach adopted by the Appellant and in adopting RPM to benchmark international transactions pertaining to trading segment.
Economic adjustments sought by the Appellant - We are of the view that the TPO/AO/DRP were correct in rejecting the same as the Appellant has failed to establish how the economic adjustments claimed by the Appellant could “materially affect‟ the amount of gross profit margin in the open market as per the requirements of Rule 10B(1)(b) of the Income Tax Rules, 1962.
Impact of the custom duty adjustments and closing stock adjustment sought by the Appellant can be discerned on the basis of the standalone computation provided by the Appellant. Further, as rightly noted by the DRP, closing stock adjustment claimed by the Appellant was not required in view of the fact that the financials of the Appellant as well as the comparable companies were prepared in accordance with the Accounting Standard – 2.
Where the higher import content is reflective of the difference in business models of the assessee and the comparables, adjustments can be made for functional differences. Therefore, in our view, the DRP was justified in not granting the excise duty adjustment and closing stock adjustment sought by the Appellant.
Deduction as travelling and conveyance expenses - We note that during the assessment proceedings for relevant assessment year disallowance of 100% of travelling and conveyance expenses has been made in identical facts and circumstances. In appeal for the earlier years such disallowance has been restricted to 10% of the travelling and conveyance expenses by the Tribunal - Thus we restrict the disallowance of travelling and conveyance expenses to 10% of the amount debited to Profit & Loss account during the relevant previous year.
Appeal filed by the Appellant is partly allowed.
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2022 (12) TMI 1072
TP Adjustment - selection of MSM - RPM or TNMM - Transaction pertaining to purchase of goods for the purpose of resale in India - TPO objected to the arm’s length margin computed in relation to trading segment, by rejecting RPM adopted by the assessee for the trading segment and applied Transactional Net Margin Method (‘TNMM’) to benchmark the trading segment - HELD THAT:- We have no hesitation to hold that the assessee is a pure trading company involved in the distribution activity without adding any value to the purchased product and hence the RPM is the most appropriate method. We, accordingly, direct the Assessing Officer/TPO to accept RPM as the most appropriate method and decide the issue accordingly.
Since we have held that RPM is the most appropriate method, on the facts of the case in hand, all the other issues raised by the assessee will be decided accordingly.
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2022 (12) TMI 1071
Maintainability of appeal before ITAT - Commissioner (Appeals) need to be approached first - as pointed this appeal is filed against the penalty order u/s 270A of the Income Tax Act, 1961, passed by the AO directly before us whereas the assessee ought to have approached Commissioner (Appeals) first - assessee, submits that Section 246A, which lists out the appealable orders before the CIT(A) does not refer to an order passed by the Assessing Officer under section 270A, whereas Section 253(1)(a), which sets out provisions for appeals before the Income Tax Appellate Tribunal, does specifically refer to the orders passed under section 270A.HELD THAT:- The objection taken by the learned Departmental Representative is indeed correct. Section 246A(1)(q) specifically includes, in orders appealable before the learned Commissioner (Appeals), “an order imposing a penalty under chapter XXI”, and chapter XXI of the Income Tax Act, 1961 covers Sections 270 to 275- Section 270A, dealing with underreporting and misreporting of income, is thus covered by the said provision. Clearly, therefore, the appeal against an order imposing penalty under section 270A, as passed by the AO, is appealable before the Commissioner (A). As for the reference to the order passed under section 270A being appealable before this Tribunal, u/s 253(1)(a), is specifically with reference to such orders being passed by the Commissioner (Appeals), and that is the limited extent to which general provisions of the Section 246A(1)(q) must make way for the specific provisions of the Section 253(1)(a). The order sought to be impugned in this appeal is passed by the AO and, therefore, this exception does not come into play. Learned counsel’s understanding of the legal position, even if bonafide- particularly considering his young age and limited experience, is clearly incorrect. The appeal filed before us is thus indeed not maintainable in law.
Thus learned counsel to file the appeal, alongwith condonation petition setting out the requisite details resulting in the delay in filing of appeal before the CIT(A), as soon as possible now, and it is for the learned CIT(A) to take a call thereon in accordance with the law, by way of a speaking order and after giving a due and reasonable opportunity to the assessee.
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2022 (12) TMI 1070
TP Adjustment - adjustment on account of TP study pertaining to interest on outstanding receivables - TPO returned a finding that the outstanding receivables in the case of the assessee constitute an international transaction which is liable to be benchmarked separately - argument was advanced on behalf of the assessee was that the outstanding receivables arising from intercompany services transactions (included in the definition of ' international transaction' vide Finance Act 2012) was duly benchmarked by the assessee by undertaking working capital adjustment during assessment proceedings and the same is subsumed in the working capital adjustment - HELD THAT:- In view of the sequence of events, it would be noted that the decision of Hon’ble Delhi High Court in the case of Kusum Healthcare [2017 (4) TMI 1254 - DELHI HIGH COURT] is still the binding precedent on the issue of interest on outstanding receivables. Needless to mention that the law laid down by the Hon’ble High Court in the case of Kusum Healthcare was followed by the ITAT in case of Global Logic India Ltd.[2021 (11) TMI 1090 - ITAT DELHI], [2020 (6) TMI 712 - ITAT DELHI], [2020 (9) TMI 572 - ITAT DELHI] and [2017 (12) TMI 1052 - ITAT DELHI]
Hence, keeping in view, the established position, we hereby deleted the addition made by the Assessing Officer. Appeals of the assessee are allowed
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2022 (12) TMI 1024
Validity of assessment order - undue haste and failure to give adequate opportunity to the appellant to put forth its submission - HELD THAT:- As we find that the assessment had been completed by the officer with utmost haste without affording a reasonable opportunity for the appellant to put forth its contentions especially when the allegation was one of “mismatch”. The undisputed facts are that show cause notice was issued on 14th September, 2022 at 6.31 p.m. communicated to the appellant / assessee via email.
The show cause notice is an elaborate show cause notice running to more than 18 pages. In the penultimate page, it has been stated that the appellant / assessee has to give his response through online mode by 17.29 hours on 19th September, 2022. At first blush, it appears that the appellant / assessee has five days time to respond but however, when we look at the calendar, we find that the time granted was only two days, as we have to exclude 14th September, 2022, the date of issuance of show cause notice and 17th September, 2022 and 18th September, 2022 have to be excluded as they are being Saturday and Sunday and especially on 17th September, 2022, it was an auspicious day where pujas were being celebrated through the State of West Bengal.
This would be sufficient for us to set aside the assessment order on the ground of undue haste and failure to give adequate opportunity to the appellant to put forth its submission.
The interim reply given by the appellant / assessee has been verbatim extracted in the order and the assessing officer states that the reply of the assessee is not found acceptable. In paragraph 4.5.3 of the assessment order, the assessing officer says that the show cause notice was served on 14th September, 2022 and five days were given to the assessee to submit its reply.
As pointed out earlier, the assessee had not been given 5 days time and effectively, they had only 48 hours to submit its reply. With regard to the details regarding the GSTR-1 returns of the other parties is concerned, the assessing officer would state that the portal was kept open. There was nothing on record to indicate that the assessee was put on notice that the portal was kept open and it could do verification so as to reconcile any discrepancy. Thus, we are fully satisfied that there is total violation of principles of natural justice, which would be a good ground to interfere with the assessment order despite an appellate remedy existing over such an order.
Appeal is allowed and the order passed in the writ petition is set aside.
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2022 (12) TMI 1023
Maintainability of appeal before High Court - Intimation of demand made u/s 200A - Income Tax liability demanded from bank of the petitioner - mechanism for redressal of grievances - notices issued by the respondent No. 3 u/s 226 (3) of the Income Tax Act calling upon the Jammu and Kashmir Bank, who holds money for and on account of the Assessee, to make the deposit of the outstanding liability standing against the petitioner - HELD THAT:- There was failure on the part of the petitioner to meet the demand and deposit the outstanding tax. Accordingly, Section 226(3) of the Income Tax Act was pressed into service, and a direction was issued to the banker of the petitioner to pay out of the accounts of the petitioner, a sum equivalent to the Income Tax liability standing against the petitioner. The petitioner in this petition is seeking to contest the demand on merits, in that, it is argued on behalf of the petitioner that the entire Tax deducted at source stood deposited, and, therefore, the demand raised by the respondent no. 3 was non-est in the eye of law. Without going into the merits of the demand and adjudicating the disputed question of facts, we are of the view that the petitioner, if aggrieved by the intimation of demand issued by respondent no. 3 under Sub-Section 1 of Section 200A is well within its rights to file an appeal before the jurisdictional Commissioner (Appeals), and cannot straightway approach this Court by invoking its extraordinary writ jurisdiction under Article 226 of the constitution of India. The notices issued by the respondent, no. 3 under Section 226(3) of the Income Tax Act, are dependent on the sustainability of the demand.
When a statute provides a mechanism for redressal of grievances, the person aggrieved must go through the mechanism so provided. He cannot be permitted to rush to invoke the extraordinary writ jurisdiction of the High Court under Article 266 of the Constitution of India, moreso when the statutory mechanism itself provides for filing of statutory appeals and revisions. The legal position in this regard is well settled and does not call for any reiteration.
We find this petition which is directed against the notices issued by respondent no. 3 under Section 266 (3) of Income Tax Act, not maintainable in the absence of challenge to the intimation of demand issued under Sub-Section 1 of Section 200A. There is inseparable causal connection between intimation of demand under Sub-Section 1 of Section 200A and recovery proceedings under Section 226 of the Income Tax Act. In the presence of subsistence of cause, the effect cannot be effaced or avoided. As observed above, any order passed by the Income Tax Authority under Sub-section 1 of Section 200A is appealable before the Commissioner (Appeals) and, therefore, it is up to the petitioner to work out his remedy or accept the demand.
We find no merit in this petition, and the same is accordingly dismissed.
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2022 (12) TMI 1022
Provisional attachment to protect revenue in certain cases u/s 281B - Orders provisionally attaching the subject fixed deposits of the petitioner for a period of six months - allegation was made by FEMA authorities against the petitioner in the proceedings - HELD THAT:- A perusal of the impugned order will indicate that except for stating that there is likely addition of the amount mentioned in the order, no reasons, much less valid or cogent reasons are assigned by the 1st respondent as to how and why he has formed an opinion that it was necessary to provisionally attach the fixed deposits of the petitioner for the purpose of protecting the interest of the revenue. The requirements and parameters preceding passing of a provisional attachment order came up for consideration before the Apex Court in the case of Radha Krishan Industries’ case [2021 (4) TMI 837 - SUPREME COURT]
In the light of existence of a legal mandatory pre-requirement and precondition of recording of formation of opinion which is in pari materia with “reasons to believe” in Section 281B of the I.T.Act, it was incumbent upon the 1st respondent to arrive at his own satisfaction and not borrowed satisfaction by proper application of mind and consequently, the impugned order which is bald, vague, cryptic, laconic, unreasoned and non-speaking order deserves to be set aside, particularly having regard the undisputed fact that except for stating that he was of the opinion that it was necessary to attach the fixed deposits for the purpose of protecting the interest of the revenue, no other reasons have been assigned by the 1st respondent in the impugned order.
A perusal of the impugned order will also indicate that there is no finding recorded as to why a provisional order of attachment had to be passed against the petitioner; it is significant to note that there is no finding recorded by the 1st respondent that the petitioner was a ‘fly by night operator’ from whom it was not possible to recover the likely demand. The impugned order also does not state that the petitioner was either a habitual defaulter nor that he was not doing any business at all or that the petitioner did not have sufficient funds to satisfy the demand. In other words, in the absence of any reasons as to why and how the demand would be defeated by the petitioner, mere apprehension that huge tax demands are likely to be raised on completion of assessment was not sufficient to constitute formation of opinion and existence of proximate and live link for the purpose and necessity of provisional attachment which implicate the doctrine of proportionality. Under these circumstances also, the impugned order deserves to be quashed.
A perusal of the approval also indicates that the same is silent on the aspect of necessity and does not satisfy the jurisdictional precondition / requirement for passing a provisional attachment order. It is trite law that grant of approval should not be a mechanical act and should reflect independent application of mind and this important safeguard of taking prior approval of the Commissioner under Section 281B of I.T.Act is not a mere empty formality and cannot be taken lightly. As stated supra, the approval granted by the 3rd respondent also reflects complete non-application of mind and is a non-speaking and unreasoned approval which is contrary to law and consequently, the impugned order based on the said approval deserves to be quashed.
The contention of the respondents that in addition to the reasons contained in the impugned order, the other material on record comprising of email correspondence, investigation reports, statements recorded during the course of investigation, etc., are sufficient to satisfy the requirements contemplated in law cannot be accepted in view of the well settled legal position as held in Mohinder Singh Gills’ case [1977 (12) TMI 138 - SUPREME COURT] wherein the Constitution Bench held that when the respondent passed the impugned order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in a shape of an Affidavit or otherwise.
Orders are not like old wine becoming better as they grow older. Under these circumstances, the said contention of the respondents cannot be accepted.
Thus the impugned order passed by the 1st respondent is illegal, arbitrary and contrary to law and the same deserves to be quashed.
In the interest of justice, it would be just and appropriate to direct the petitioner not to make payment in the form of royalty or any other form to any entities outside India till conclusion of assessment proceedings by the respondents. However, interest of justice would also be met if the petitioner is reserved liberty to take / obtain overdrafts on the subject fixed deposits and make payments from such overdrafts from the respective banks to foreign entities in accordance with law.
During the pendency of the present petition, the 1st respondent passed a draft assessment order under Section 144C(1) of the I.T. Act after concluding the proceedings. It is needless to state that the petitioner would be entitled to contest the said draft assessment order and proceedings pursuant thereto before the respondents.
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2022 (12) TMI 1021
Assessment u/s 153A - Valid approval under Section 153D - Prior approval necessary for assessment in cases of search or requisition - as argued Approving Authority granted approval under Section 153D of the Act in a mechanical manner which vitiated the entire proceedings - HELD THAT:- The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment orders under Section 153A.
In the instant case, the draft assessment orders in 123 cases, i.e. for 123 assessment years placed before the Approving Authority on 30.12.2017 and 31.12.2017 were approved on 31.12.2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 123 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record.
As the facts are admitted before us, the questions of law framed on the factual issues related to the findings recorded by the Assessing Officer are not open to agitate within the scope of the present appeals being in the nature of second appeal. No substantial question of law arises for consideration before us. Appeals are dismissed being devoid of merit.
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2022 (12) TMI 1020
Reopening of assessment u/s 147 - deemed escapement of income chargeable to tax - principal allegation against the petitioner is that the petitioner, which is a foreign company incorporated under the laws of Mauritius, had sold shares of an Indian company going by the name Bharti Infotel Pvt. Ltd, against which TDS was not deducted - HELD THAT:- There is no dispute that the petitioner/ assessee has not filed its return for AY 2016-2017. Therefore, in our opinion, the objections raised by the petitioner/assessee with regard to the aspects referred to hereinabove, can be dealt with by the AO.
We have put this aspect to Ms Sethna; Ms Sethna says that while the matter can be remitted to the concerned AO, she/he should deal with the objections which have been articulated in detail in the writ petition.
Apart from anything else, it is Ms Sethna’s contention that the broad aspects referred to hereinabove with regard to the fact that the petitioner has in its possession a tax residency certificate, which allows it to take benefit of Article 13 of the DTAA, is a facet which is required to be dealt with by the AO.
Given this position taken by the respondents/revenue, as indicated AO will take a decision with regard to whether or not this is a fit case for triggering reassessment proceedings.
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2022 (12) TMI 1019
Deductions u/s 80IB(10) - delayed filing of return - omission on the part of tax consultant due to severe ill health of his son - intimation issued u/s 143 (1) by application of Section 80AC for the reason that the return of income had been filed beyond the time permitted u/s 139 (1) - condonation of delay in filing the application under Section 119 (2)(b) - HELD THAT:- The affidavit of the income tax consultant which has neither been disputed nor controverted by the respondents is sufficient cause for condonation of delay in filing the application under Section 119 (2)(b) of the Act. Besides it is not in dispute that the return for AY 2011-12 was in fact filed by the petitioner albeit 365 days later on 30th September, 2012. That in respect of the other years from 2010-11 to 2013-14 except 2011-12, the income tax authorities have allowed the deduction under Section 80 IB (10) through the petitioner.
Substantial injustice would be caused to the petitioner if the order dated 7th May, 2021 is not set aside. This is clearly a case falling within the phrase “genuine hardship”. As mentioned above.
Technical consideration above cannot come in the way of substantial justice. It is neither an allegation of malafide nor an allegation that the delay has been deliberate. We do not find that the omission to file petitioner’s return by the income tax consultant to be an act of negligence. Any person in his situation would have been mentally disturbed. The very fact that not only the petitioner’s ITR was not filed in time, there were also 28 others whose return filing was delayed beyond the due date. The authorities should refrain from over analysis which leads to paralysis of justice. We are, therefore, of the view that the impugned order dated 7th May 2021 deserves to be set aside and is hereby set aside.
The income tax authority to act accordingly and consider the claim for deduction under Section 80 IB(10) for AY 2011-12 made by the petitioner in accordance with law, as if there was no delay in filing the return. The authorities under the DTVSV Act also to act in accordance with the said findings and amend Form 3 in respect of the amounts to be paid by the petitioner.
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2022 (12) TMI 1018
Maintainability of appeal on low tax effect - Whether case falls within purview of circular of Central Board of Direct Taxes No. 3 of 2018 dated 11.7.2018? - HELD THAT:- In view of the actual extent of the tax effect, it was submitted, the case did not fall within the purview of circular of Central Board of Direct Taxes No. 3 of 2018 dated 11.7.2018 - further submitted that unless the appeal is permitted to be revived and appellant review applicant is permitted to submit on the proposed substantial questions of law, serious injustice would cause to the appellant.
The aspect that the appeal was disposed by the court on the ground of low tax effect, whereas factually there was no low tax effect and the disposal of the appeal did not fall within the ambit of circular of the Central Board of Direct Taxes in that regard, can be said to be constituting an error apparent on the face of record justifying the review of the order.
In the above view, order [2018 (7) TMI 2291 - GUJARAT HIGH COURT] is revived and recalled.
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2022 (12) TMI 1017
Reopening of assessment u/s 147 - validity of order as passed u/s 148A - As contended by the petitioner that it was not given an opportunity of hearing as contemplated under Section 148A(b) before passing the impugned order under clause (d) of Section 148A - HELD THAT:- Though the impugned order at Annexure – D records that an opportunity of being heard as per provision of Section 148A(b) of Income Tax Act was provided to the assessee with a prior approval by the competitive authority, the advocate appearing for the respondents is not in a position to state whether the said opportunity was granted or not and there is no material on record to show as to an opportunity of being heard is granted to the petitioner, which is mandatory as per Section 148A(b) of the Act before passing of the impugned order under Section 148A(d) of the Income Tax Act, 1961.
Under the circumstances, this is a matter which deserves to be remanded on the short question of petitioner not being given an opportunity of being heard.
Hence order under Section 148A(d) and Notice u/s 148 is set aside. - Decided in favour of assessee.
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2022 (12) TMI 1016
Reopening of assessment u/s 147 - reason to believe - Reliance on information received through independent sources - Addition towards commission income - HELD THAT:- No merit in the grounds raised by the assessee, since the case of the assessee was reopened based on information received through independent sources by the A.O about unexplained receipts in the bank account. We, therefore, dismiss.
Addition towards undisclosed income computed @0.5% of the bank credit entries carried out in the bank account - A.O has estimated the income based on his observation that the inflow and outflow in the bank account are not akin to any business activity but the same are being carried out for the purpose of earning commission, we, therefore, fail to find any infirmity in the finding of the ld. CIT(A) confirming the addition made by the A.O based on facts and circumstances of this particular case. We, however, like to make it clear that our decision in confirming the finding of ld. CIT(A) of estimating commission income @0.5% of inflow and outflow of funds in the bank account should not be taken as a precedent in other similar cases as this is purely based on the facts of the instant case. Therefore, Ground Nos.3 & 4 raised on merits are dismissed.
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2022 (12) TMI 1015
Revision u/s 263 - Eligibility of deduction u/s 80G - Deduction u/s 80G for which no evidence in support of payment of donation is produced to ascertain its veracity AND Deduction u/s 80G on account of CSR expenses which is not allowable in terms of Explanation to section 37 of the Act and is required to be added back in the computation of income - HELD THAT:- We note that assessee has rightly claimed deduction of CSR expenses u/s 80G of the Act, more importantly, in the light of the fact that it has suo moto added back the amount of CSR expenditure while computing the income under the head income from business. There is no express provision u/s 80G which prohibits allowance of CSR expenses in the form of donation to approved trust except under two instances referred in section 80G(2)(iiihk) and (iiihl) for contribution to Swacha Bharat Kosh and Clean Ganga Fund respectively.
Explanation 2 to section 37(1) which denies deduction for CSR expenses by way of business expenditure is applicable only to the extent of computing business income under Chapter IV-D and it cannot be extended or imported to CSR contribution which was eligible for deduction under Chapter VI. Thus in our considered understanding, donation made by the assessee on account of CSR expenses to a trust which is duly registered u/s 80G(5)(vi) is allowable as deduction u/s 80G - Having so held, which is also fortified by the decision of JMS Mining Pvt. Ltd [2021 (7) TMI 907 - ITAT KOLKATA] we find that ld. PCIT has not been able to make out a case on the issue raised by him that the order of ld. AO is erroneous in so far as prejudicial to the interest of the revenue.
Deduction u/s 80G for donation made to Ramkrishna Mission Ashram, ld. PCIT took an adverse view for want of donation receipts and certificate of registration of the donee. Assessee has furnished all the relevant documentary evidences to substantiate its claim which ld. PCIT has failed to consider himself. As already noted above, we do not ascribe to the action taken by the ld. PCIT on this issue also.
As in the case of DG Housing Projects Ltd [2012 (3) TMI 227 - DELHI HIGH COURT] held that in cases of wrong opinion for finding on merit, the CIT has to come to the conclusion and himself decide that order is erroneous, by conducting necessary enquiry, if required and necessary before the order u/s 263 of the Act is passed. In such cases, the order of the AO will be erroneous because the order passed is not sustainable in law and the said finding must be recorded by CIT who cannot remand the matter to the assessing officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/enquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the AO, making the order unsustainable in law.
Both on facts and applicable law along with documentary evidences placed on record and judicial precedents relating to the issues raised by the ld. Pr. CIT in invoking the revisionary proceedings, we have no hesitation in quashing the revision order passed by the ld. Pr. CIT u/s 263 of the Act. Accordingly, grounds raised by the assessee are allowed.
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2022 (12) TMI 1014
Addition u/s 69A/68 - unexplained credit - Onus to prove - CIT(A) treated the addition as unexplained money u/s 69A and confirmed the addition - HELD THAT:- Section 68 of the Act deals with “unexplained Credit” in the books of the assessee and section 69A of the Act deals with “unexplained money, bullion, jewellery or other valuable article”. Both are entirely different. Though the AO has not mentioned the section 68 of the At in his order, the very fact that he calls it “unexplained credit” and not “unexplained money” as done by the ld. CIT(A), while he invoked section 69A of the Act, it proves that the AO invoked section 68 of the Act.
We find merit into the contention of assessee that there is no power conferred upon the ld. CIT(A) to assess a particular item under different provision of the Act what the AO had done without giving a specific notice to the assessee regarding such action. Law does not permit for such change of provision of law. As per section 250 of the Act, the ld. CIT(A) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the ld. CIT(A). As per section 251(1)(a) of the Act, in appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that ld. CIT(A) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, CIT(Appeals) could not have treated the addition made under section 69A of the Act. Therefore, the addition made by the ld. CIT(A) under section 69A of the Act is liable to be deleted.
AO found credit in the bank statement and the assessee’s husband Shri S. Sekar has furnished confirmation by way of duly notarized affidavit, the assessee has discharged the onus cast upon her. On perusal of the orders of authorities below, both the AO and the CIT(A) failed to discharge their onus by getting the details from the bank under section 133(6) of the Act. Considering the entire facts and circumstances of the case, the addition made by the ld. CIT(A) under section 69A of the Act is deleted.Appeal filed by the assessee is allowed.
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2022 (12) TMI 1013
Revision u/s 263 - Deduction u/s 80P - deducting proportionate amount of interest expense while computing taxable interest from the nationalized banks - HELD THAT:- Interest income received from Nationalized Bank is not eligible for deduction u/s. 80P - In the Case of State Bank of India Vs CIT [2016 (7) TMI 516 - GUJARAT HIGH COURT] wherein it was held that interest derived by depositing surplus funds with bank not being attributable to business carried on by society, cannot be deducted under section 80P(2(a)(i). Hence, ground no. 1 is dismissed.
Proportionate amount of interest expenses following in the case of Totagars Co-operative Sales Society Ltd. [2015 (4) TMI 829 - KARNATAKA HIGH COURT] wherein it was held that net interest income that is interest income reduced by administrative expenses and other proportionate expenses to said income had to be brought to tax u/s 56. Assessee is entitled for deduction of proportionate expenditure which it has incurred and the same needs to be calculated by the Assessing Authority. We therefore deem it fit to remit the matter back to the file of the AO, who will examine the case of the assessee and quantify the proportionate expenditure and pass appropriate orders by giving due opportunity to the assessee. Therefore we partly allow this ground of appeal.
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2022 (12) TMI 1012
Revision u/s 263 by CIT - justification for claim of deduction u/s. 54B and also conditions required to be fulfilled to claim deduction under 54B - HELD THAT:- Though the A.O. asked the assessee to justify the deduction claimed in computation of capital gain along with supporting evidences through notice issued u/s. 143(2) of the Act and the assessee made simple reply without proper evidences and nature of cultivation or any agricultural income derived from the above lands in any other previous assessment years.
Thus in our considered opinion, the Assessing Officer has not made necessary inquiry before allowing deduction u/s. 54B but grossly allowed claim made by the assessee. Section 54B of the Act is not applicable, if the land was not used for agricultural purposes in the two years preceding the date of transfer. Thus without applications of the provisions of law, the assessing officer has granted the relief to the assessee which otherwise the assessee is not eligible for the claim of deduction u/s. 54B of the Act.
PCIT has invoked the provisions of Section 263 thereby set aside the erroneous assessment order passed by the Assessing Officer and directed the A.O. to pass a fresh assessment order, after allowing adequate opportunities to the assessee in accordance with law following the prescribed procedure and duly examining the issue of allowability of deduction u/s. 54B of the Act. We do not find any infirmity in the order passed by the ld. PCIT - Decided against assessee.
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2022 (12) TMI 1011
Revision u/s 263 - 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:- Coming to the cases of eligibility of deduction u/s.80P(2)(d), the respective assessees are Cooperative credit societies engaged in providing credit facilities to its members. The ld. PCIT has held the assessment order to be erroneous and prejudicial to the interest of the Revenue only on the ground that the claim of deduction u/s.80P on interest income was not in order.
As observed 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 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) 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.
Similar view has been taken by the Pune Benches of the Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. Vs. ACIT [2022 (12) TMI 959 - ITAT PUNE]
Pune Benches of the Tribunal in series of decisions have held that the assessees are entitled to deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, we hold that the impugned orders cannot be sustained. All the orders are, therefore, overturned. All the appeals are allowed.
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2022 (12) TMI 1010
Unaccounted income u/s 68 - unexplained share capital and share premium - unaccounted income of the appellant assessee company from Share Capital and Share Premium raised - HELD THAT:- Assessee has successfully discharged its primary onus by explaining the source of share capital and share premium received during the year. In the remand report, AO has confirmed that all the investor companies were PAN holders and has filed the returns regularly. No cash was found to be deposited in the bank accounts maintained by the investor companies.
All the companies are regularly filing returns with the Registrar of Companies. Books of account are regularly maintained and duly audited. Companies had sufficient funds and decision of investment was made by Board of Directors. AO has also stated that statement of the director was verified from information contained in paper-book in respective assessment. As observed by the AO that transactions and credit of capital including premium are found in order and there is no deficiency in supporting evidence.
The remand report of AO is loud and clear that the source of share capital and share premium has been successfully explained to the best possible extent by the assessee furnishing all evidences and none of them were found to be incorrect and no defect has been pointed out. We fail to find any justification in the finding of ld. CIT(A) confirming the action of the AO making addition u/s 68 - Decided in favour of assessee.
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