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Income Tax - Case Laws
Showing 161 to 180 of 746 Records
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2023 (3) TMI 1152 - ITAT DELHI
Addition u/s 68 - Unexplained cash deposits - HELD THAT:- AO has noted that it was the contention of the assessee that the deposits of Rs.74,40,000/- in cash in his bank account was out of the sale proceeds of the agricultural land. AO has noted that the copy of the registered sale deed that was furnished by the assessee revealed that the agricultural land was sold for only Rs.22,01,000/-. He accordingly considered the balance cash deposits of Rs.52,39,000/- as unexplained and accordingly addition was made.
Before us, assessee had not placed any material on record to point out any fallacy in the findings of lower authorities. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of assessee is dismissed.
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2023 (3) TMI 1151 - ITAT BANGALORE
Denial of benefit of carry forward & setting off of loss and exemption u/s 11 r.w.s. 12 - Belated filing of ITR - excess of expenditure over income as per the financials for the year under appeal - CIT [A] upholding the disallowance of the exemption claimed u/s.11 on the ground that the return was not filed in accordance with the Provisions contained in Sec. 12A[1][ba] i.e. within the Due date u/s 139[4A] of the Act under the facts and in the circumstances of the appellant’s case - HELD THAT:- CPC has charged the income tax on the entire gross receipts without giving effect of the expenditures incurred by the assessee towards earning of the income. The income has been defined in section 2(24) of the Act., the income should be construed in its general meaning but not to the entire receipts, if the assessee has incurred any expenditure towards earning the income, in such case, the assessee is entitled for deduction of expenditure incurred as prescribed in the Income Tax Act. There may be disallowances of the expenditures, which are not in conformity within the provisions of the Income Tax Act.
Assessee filed return of income belatedly as per section 139(4) of the Act. The section 139(4A) of the Act prescribes that all other provisions of the Act shall apply as if it were a return required to be furnished under sub-section (1) of section 139 of the Act. The income is arrived after deducting the allowable expenditures as per the I.T. Act. 1961.
In the impugned case on hand, the total receipts declared by the assessee , we observe that there is excess expenditure over income which is loss suffered by the assessee during the year. Therefore, in this case, the claim of deduction from income under section 11 and 12(1) (ba) does not arise.
No doubt that the assessee has filed his return of income belatedly but he was required to compute his income and the income is below the threshold limit and in this case no tax shall be charged on the entire receipts. We also make it clear that the assessee will not get the benefit of carry forward & setting off of loss for the subsequent year as prescribed u/s 139(3) - we set aside the order of the CIT(A). Accordingly, appeal of the assessee is partly allowed.
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2023 (3) TMI 1150 - ITAT DELHI
Validity of reassessment proceeding u/s 147 v/s 153C - material found and seized during the course of search and seizure operation - whether AO should have invoked provisions of section 153C of the Act and not section 147/148? - HELD THAT:- As identical legal issue raised by the assessee was adjudicated in favour of the assessee by case of Vikram Munishwarlal Bajaj [2018 (10) TMI 1599 - ITAT PUNE] wherein hold that the re-assessment order passed u/s 148 of the Act in the present case does not stand and therefore the assessment framed by the AO to be null and void.
Re-assessment proceedings initiated against the assessee under section 147 / 148 of the Act are not warranted. The Assessing Officer after receipt of information belonging to the assessee should have invoked provisions of section 153C of the Act and not section 147 / 148 of the Act. Accordingly, we hold so - reassessment order passed under section 148 of the Act does not stand. The Assessing Officer is thus, directed to cancel the same - Decided in favour of assessee.
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2023 (3) TMI 1149 - ITAT DELHI
Reopening of assessment u/s 147 - addition on account of unsecured loan from 3 parties - source of information available with the AO was the letter of the DDIT, INV, New Delhi wherein it has been stated that the accommodation entries in the name of paper companies were debited - HELD THAT:- Accommodation entry was mentioned as purchase/ investment/ advance and the assessee was described as beneficiary from the above transactions. On going through the bank statement, it is noted that the assessee has made payment through RTGS to both the parties.
These demonstrative facts clearly show that the AO has reopened the assessment based upon wrong facts, wrong appreciation of facts and without any application of any mind, in as much as, the assessee has not taken any credit entry but, in fact, have made debit entries and, therefore, by no stretch of imagination provisions of section 68 of the Act can be applied.
A perusal of the reasons recorded for reopening of assessment clearly show that the Assessing Officer has reasons to belief that the assessee was beneficiary of accommodation entries.
AO has accepted the objections of the assessee, and has not assessed or reassessed the income, which was the basis of the notice. Therefore, in light of the judgment of Jet Airways [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] it would not be open to the Assessing Officer to assess income under some other issue independently.
No error or infirmity in the findings of the ld. CIT(A). Assessment order deserves to be quashed and has been rightly done so by the ld. CIT(A), which calls for no interference. Decided against revenue.
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2023 (3) TMI 1148 - ITAT JAIPUR
Addition u/s 68 - cash deposits in bank account - non rejection of books of accounts - HELD THAT:- opinion of the assessing officer is required to be formed objectively with reference to the material available on record. Hence, application of mind is sine qua non for forming the opinion. The only reason placed by the ld. AO in his order that the full name, address or/and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit has not been given. It is voluntary to the customer to provide their personal information to the assessee while goods being sold and even the law does not mandate to the assessee up to an amount of Rs. 2 lac.
The action of the ld. AO making an addition u/s 68 as unexplained cash deposit without rejecting the books of account is unwarranted. Even the ld.AO has not find any defects in the details submitted by the assessee and audited books were considered and accepted while finalizing the assessment.
As relying on SHRI CHANDRA SURANA [2022 (12) TMI 750 - ITAT JAIPUR] case we vacate the addition made under section 68 of the Act as the same cannot be made without rejecting the books of account of the assessee regularly maintained by the assessee and the said cash deposited is duly supported by the entries passed in the books of account and part of the sale accepted by the AO. Appeal of the assessee is allowed.
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2023 (3) TMI 1147 - ITAT JAIPUR
Reopening of assessment u/s 147 - addition of other receipts u/s. 68 r.w.s. 115 BBE - During course of search in the inquiry conducted it was gathered that that Dineshchandra R. Agarwal Infracon Private Limited has generated unaccounted money by way of booking bogus Sub-contractors Expenses and assessee is one of the entity who has received amount against expenses incurred by such concern as subcontractor expenses - HELD THAT:- No discussion in the assessment order about the tangible material or statement the addition made. It is based on the general information received the assessment was re-opened. Assessee demonstrated before us that he has discharged primary onus casted upon him and has proved the performance of the work and the same is supported by the tangible evidence placed on record. The records so produced was not disputed but also not tested for its correctness and in the absence of these exercise the documents placed on record cannot be placed a side and the decision be made merely based on some information on which there is no basis discussed or confronted to the assessee.
Allegation of work that is disputed by the revenue considering that the same are bogus in nature cannot be considered so because the assessee has demonstrated before us with the work order issued by M/s. Dineshchandra R. Agarwal Infracon Private Limited wherein the address of the work is mentioned as “Painting Runway Airfoce Station, Nal Site Bikaner” and work at “Runway resurfacing project AT Nal AF station Bikaner”. Both these work were required to be carried out at the Nation pride military organization and the entry and attention are strictly monitored and therefore, there is no reason to be believe that though M/s. Dineshchandra R. Agarwal Infracon Private Limited may be indulged in booking for some bogus expenditure but in this case the primary material does not suggest so and in spite of the relevant material placed by the assessee the revenue did not prove that the work has not been carried out - allegation made by the revenue is general in nature and the addition of the whole of the receipt is not warranted.
No hesitation to vacate the addition made by the ld. AO for an amount as the assessee has already declared profit @ 8 % of the receipt as it evident from the finding of the ld. AO. In terms of these observations the ground no. 2, 3 and 4 are allowed.
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2023 (3) TMI 1146 - ITAT DELHI
Disallowance of higher depreciation on Oil drilling rigs given on hire - AO disallowed the excess on the ground that the assessee is not a mineral oil concern - CIT-A deleted the addition - HELD THAT:- In the instant case, both the conditions are duly satisfied since the oil rigs being plant of ‘specific category’ are owned by the assessee and further it is used in drilling operations for the purpose of exploration and extraction of mineral oil in the field of mineral oil concerns.
As relying on M/S. HLS INDIA LTD. [2011 (5) TMI 322 - DELHI HIGH COURT] as confirmed by SC [2012 (2) TMI 669 - SC ORDER] as held that depreciation is allowable to mineral oil concerns @ 100% on the equipments used below the earth surface. If the same depreciation is not allowed to other business concerns on the ground that the owner of these equipments is not a mineral oil concern but it is just providing an assistance or leasing these equipments to a mineral oil concern then definitely this "other concern" will charge more for these services and consequently the mineral oil concerns will be commercially forced not to outsource wireline logging activities to other companies but to do it themselves - Accordingly, we dismissed the ground no. 1 of the Revenue.
Disallowance of leave encashment claimed on provisional basis - HELD THAT:- Since the Hon’ble Apex Court in the case of CIT Vs. HLS India Ltd. [2012 (2) TMI 669 - SC ORDER] decided against the Revenue, the Ld. DR has withdrawn the Ground No. 2. Accordingly, Ground No. 2 is dismissed as withdrawn.
TDS u/s 194C - disallowance of mobilization expenses u/s 40(a)(ia) - Addition on the ground that the payment debited to profit and loss account of mobilization charges are not covered under the provisions of section 194C(6) of the Act as the payment are not made to contracts for playing, hiring or leasing goods carriages - HELD THAT:- PAN of the parties have been submitted before the AO and the assessee had duly submitted TDS returns giving the details of the payments made to transporters on which no TDS was deducted and a statement showing expenses not in the nature of transportation expenses vide reply dated 01.03.2016. Even if there is violation of provisions of Sec. 194C(7), disallowance u/s 40(a)(ia) does not arise, if assessee had complied with the provision of Sec. 194C(6). In the instant case, the assessee had obtained PAN of the transporters and duly complied with the provisions of Sec. 194C(6) -TDS was not required to be deducted by the assessee.
Hon’ble Kolkata Tribunal in the case of Rani Ghosh [2018 (6) TMI 1812 - CALCUTTA HIGH COURT] held that if the assessee compliance with provision of section 194C(6), the disallowance u/s 40(a)(ia) of the Act does not arise just because there is a violation of provision of section 194C(7) of the Act. The section 194C(6), 94C(7) and section 194C(7) of the Act are independent of each other and cannot be read together to attract disallowance u/s 40(a)(ia) of the Act read with section 194C.
No error in the order of the CIT(A) in deleting the disallowance of mobilization expenses - Ground No. 3 of the Revenue is dismissed.
Disallowance of repair and maintenance (equipment expenses) - HELD THAT:- The above issue has also been decided in favour of the assessee on earlier years by the Tribunal [2022 (3) TMI 1333 - ITAT DELHI] as held AO has merely proceeded on a hypothesis of such expenditure being capital in nature without showing any justifiable grounds for doing so. AO has capitalized such expenditure without showing any reasonable grounds. On the contrary, we find merit in the conclusion drawn by the CIT(A) holding the same to be revenue expenditure on the face of such tell-tale facts. - Decided against revenue.
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2023 (3) TMI 1145 - ITAT AHMEDABAD
Validity of Revision u/s 263 - validity of transfer order u/s 127 - Validity of assessment order paased by non jurisdictional AO - as argued assessment order passed by AO is void, illegal and non-est - As per assessee initial notice of assessment was issued by the ITO Ward-4 Palanpur and without completing the procedure as laid out u/s 127 for transfer of jurisdiction without any prior intimation to the assessee, the case file of the assessee was transferred to ITO Ward 3(3)(2) Ahmedabad and therefore the assessment order itself was bad in law - HELD THAT:- DR has not been able to bring forth any material on record to substantiate that the procedure as envisaged under section 127 of the Act for transfer of files was fulfilled in the instant set of facts. It is a well-settled principle of law that power of transfer is a quasi-judicial function and was be exercised in a fair and reasonable manner and not in an arbitrary or mechanical way.
The opportunity of being heard must be given to the assessee not only when the case is to be transferred despite the objection of the assessee, but also when it is not to be transferred despite his request. Needless to say, the objections raised by the assessee must be appropriately dealt with by the Commissioner and an order that does not consider the objections is liable to be quashed.
As decided in case of Melco India (P.) Ltd. [2002 (1) TMI 11 - DELHI HIGH COURT] held that since no notice u/s 127 of the Act was issued to petitioners giving them an opportunity of being heard, impugned order passed by Commissioner was invalid and liable to be set aside - we are of the considered view that since the necessary procedure for transfer of case was not followed in the instant set of facts, the assessment order in the instant set of facts is null and void.
Also no fresh notice of assessment was issued by ITO Ward 3(3)(2) and for this reason also, the assessment order passed by ITO Ward 3(3)(2) is null and void since there is a legal requirement to issue a separate notice of assessment to the assessee.
Once it is held that the assessment order itself is null and void, can such assessment order be the subject matter of revision u/s 263? - It is a well-settled principle of law that once the assessment order passed itself is null and void, the same cannot be the subject matter revision under section 263 of the Act.
In the case of Inder Kumar Bachani (HUF) [2005 (12) TMI 240 - ITAT LUCKNOW-A] ITAT held that as the order of the Assessing Officer passed under section 147 / 143(3) was itself void, the order of PCIT passed under section 263 for quashing this order was without jurisdiction.
Thus we are of the considered view that since the assessment order passed by ITO Ward 3(3)(2), Ahmedabad itself was null and void, the same could not be the subject matter of revision under section 263 of the Act. Appeal of the assessee is allowed.
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2023 (3) TMI 1144 - ITAT JODHPUR
Revision u/s 263 - scope of revision proceedings initiated - Proof of erroneous order prejudicial to the interests of the Revenue - HELD THAT:- Possible view shall mean a issue, which is debatable and there could be more than one possible views. The consideration of the Commissioner as to whether an order is erroneous in so far it is prejudicial to the interests of Revenue must be based on materials on record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction.
The Commissioner cannot initiate proceedings with a view to start fishing and roving enquiries in matters or orders which are already concluded. Since the AO has already examined the case and made complete enquiry wherein no infirmity appears then in that case, the Ld PCIT was not justified in passing the impugned revision order. Appeal of the assessee is allowed.
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2023 (3) TMI 1143 - ITAT KOLKATA
TDS u/s 194A - failure to upload Form 15G/15H of the depositors in roper format - assessee in default u/s 201(1)/201(1A) - HELD THAT:- Assessee has acted within the four corners of law and did not deduct tax on such interest for which the depositors have filed Form 15G & 15H. Though the assessee is required to uphold the same in a proper format, but it failed to do so due to some technical defect but since the physical copies are available, revenue authorities should not have treated the assessee in default. See ALLAHABAD BANK case [2021 (4) TMI 14 - ITAT DELHI] and THE KARUR VYSYA BANK LTD. case [2017 (9) TMI 829 - ITAT BANGALORE]
Considering the fact that the assessee has not deducted tax at source u/s 194A of the Act after receiving the physical copies of Form 15G & 15H, it should not be considered as an assessee in default. Therefore, we delete the demand raised by the ld. AO for non-deduction of tax at source u/s 194A of the Act as well as interest levied thereon for AY 2016-17 and 2017-18 for non-submission of Form 15G & 15H, and allow the grounds raised by the assessee.
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2023 (3) TMI 1142 - ITAT KOLKATA
Disallowance u/s.14A r.w.r. 8D(2)(iii) - sufficiency of own funds - assessee submitted that he has earned no exempt income during the year and had its own funds which are more than the investment made by it in the unquoted shares - HELD THAT:- We find that the issue where assessee has earned no exempt income during the ye ar no disallowance is called for u/s. 14A of the Act has been addressed in the case of PCIT Vs. Era Infrastructure (India) [2022 (7) TMI 1093 - DELHI HIGH COURT] holding no disallowance is required to be made in the case of the assessee because it has not earned any tax-free income and allowed the appeal of the assessee by deleting the addition so made.
Further, the issue relating to assessee having own fund more than the investments made in the investments yielding exempt income has been dealt with in favour of the assessee by the Hon’ble jurisdictional High court of Calcutta in the case of REI Agro Ltd. [2013 (12) TMI 1517 - CALCUTTA HIGH COURT]. Decided in favour of assessee.
Disallowance u/s. 40A(2) - interest charged by one party at a rate of interest @16% compared to 10% by the remaining other parties - HELD THAT:- We note that there is no dispute on the payment of interest. The issue is in respect of rate of interest which has been charged @ 16% vis-à-vis 10% by the other parties. We note that the difference in terms and conditions with Carvan Creations Pvt. Ltd. which have been effectively brought on record and considered by the Ld. CIT(A), and also the fact that how this party is a related party within the meaning of sec. 40A(2)(b) for which nothing is brought on record to establish the said relationship. No reason to interfere with the finding given by the Ld. CIT(A) and accordingly, dismiss ground no. 2 taken by the revenue in this respect.
Disallowance of depreciation claimed on its speed boat - As per AO rental income from the said boat which is not allowable - HELD THAT:- CIT(A) noted that rental income from boat has to be assessed either as business income or income from other sources. It cannot be assessed as income from house property. Accordingly, depreciation was allowed on the boat even though it had earned rentals for three months - We do agree with the observations and findings of Ld. CIT(A) in allowing the claim of depreciation.
Undisclosed stock a property which was developed under a Joint Venture Agreement (JV) with Japna Estates - HELD THAT:- CIT(A) after going through the facts of the case and the terms and conditions of the JV Agreement, found that 4th floor of the building belonged to the developer in terms of the JV agreement and, therefore, there was no question of this floor being shown as part of stock of the assessee and, therefore, there cannot be any undisclosed stock on account of 4th floor of the building. He thus, deleted the addition made in this respect - Revenue has also raised the contention that Ld. CIT(A) should have called for a remand report in respect of additional evidence for which we note that Ld. CIT(A) has objectively analysed and gone through the JV agreement placed before him in accordance with coterminous power vested into him. On perusal of the facts and the observations made by the Ld. CIT(A), we do not find any reason to interfere with the findings given by ld. CIT(A). Accordingly, this ground of appeal of the revenue is dismissed.
Addition made towards bogus purchase relating to the issue of undisclosed stock detailed - HELD THAT:- As three floors of the building were with the assessee and the 4th floor and the roof rights was with the developer, there was no element of any bogus purchase on this account. Ld. CIT(A) by observing these facts has deleted the addition made on this account - We agree with the finding given by the Ld. CIT(A) and accordingly dismiss the ground of appeal of the revenue in this respect.
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2023 (3) TMI 1141 - ITAT KOLKATA
Addition of excess stock - Addition in the hands of assessee during the course of survey - HELD THAT:- Fact remain undisputed that the alleged stock is part of business income and the fact that it has been confirmed by the ld. AO in his order also. However, it is judicially settled principle that only profit element in such excess stock should be brought under the purview of the tax.
The gross profit rate and net profit rate disclosed by the assessee in the audited financial statements and also taking into consideration the submissions made the assessee is ready to offer 12% profit on excess stock and with a view to end of dispute between the parties sustained the addition on account of undisclosed stock @12% of undisclosed stock and partly allowed ground raised by the assessee.
TDS addition on freight charges - violation of provisions of section 194C(7) - HELD THAT:- As in the case of ACIT vs Mr. Mohammed Suhail [2015 (2) TMI 1187 - ITAT HYDERABAD] specifically held that provisions of section 194C(6) is independent of section 194C(7) and just because there is violation of provisions of section 194C(7) disallowance of u/s 40(a)(ia) does not arise if the assessee complies with the provisions of section 194C(6) of the Act.
We find that the assessee complies with the provisions of section 194C(6) disallowance u/s 40(a)(ia) does not arise just because there is violation of provisions of section 194C(7) of the Act - Authorities below are not justified in treating the expenses incurred by the assessee for freight charges as disallowable u/s 40(a)(ia) of the Act and adding back as claimed as expenses towards freight charges and such addition shall stand deleted. Appeal of the assessee is allowed.
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2023 (3) TMI 1140 - ITAT HYDERABAD
Exemption u/s 54F - Denial of claim as assessee has used a colourable device to claim exemption u/s. 54F - as per revenue there is artificial transfer of one house by way of gift deed just prior to the effective date - HELD THAT:- In the present case, as seen assessee was engaged in the artificial transfer of one house by way of gift deed just prior to the effective date - As u/s 23 and 24 of the Indian Contract Act, 1872, when the object is to defeat any provisions of law, and when consideration is of such nature that, if permitted, it would defeat the provisions of any law, the contract will be void. In the present case, per se gift deed was not executed on account of natural love and affection but was executed by the assessee to artificially avail the deduction u/s 54F.
We cannot countenance the assessee's conduct and allow the assessee to misuse and exploit the beneficial provisions of section 54F - Undoubtedly, as per the assessee, he is an individual having a high net worth and paying huge taxes. The assessee artificially created a gift deed of the property with a view to fit into the provisions of section 54F, so that he can claim the deduction against the sale of capital asset. The act of the assessee was prearranged step for execution, and it served no commercial purpose but was motivated to avoid paying taxes.
The orders passed by the assessing officer and ld.CIT(A) were within the four corners of law and do not require any interference. Appeal of the assessee is dismissed.
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2023 (3) TMI 1139 - ITAT CHENNAI
Correct head of income - Profit derived from transfer of property under the head capital gains or business income - reasons given by the AO to assess consideration received for transfer of property under the head capital gains, because the assessee could not justify claim of stock in trade in the books of accounts with any evidence - HELD THAT:- The intent of the assessee when the property has been purchased was to commercially exploit the property keeping in mind the locational advantage of the property - assessee had also made clear its intention by recording purchase of property as stock in trade in the books of accounts for the relevant assessment years. Therefore, assessee has rightly declared profit derived from transfer of property under the head profit and gains of business and profession. It was only the AO by wrong appreciation of facts has assessed profit derived from sale of property under the head capital gains by holding that income declared by the assessee under the head profit and gains from business or profession is afterthought.
Observations of the AO is nothing but suspicion and surmise, but not backed by any evidence. On the other hand, the evidences filed by the assessee clearly suggests that the impugned property sold for the assessment year is a stock in trade and profit derived from transfer of property is assessable under the head profit and gains from business or profession. AO and the CIT(A) completely erred in assessing profit derived from transfer of property under the head capital gains.
Application of provisions of section 50C - In this case, what was transferred by the assessee is a stock in trade, but not a capital asset. Therefore, we are of the considered view that provisions of section 50C cannot be applied when asset transferred is not a capital asset. Thus, we are of the considered view that the AO and CIT(A) erred in applying provisions of section 50C of the Act and determination of full value consideration to compute short term capital gains from transfer of property. Thus, we direct the AO to delete additions made towards computation of short term capital gains from transfer of property. Appeal filed by the assessee is allowed.
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2023 (3) TMI 1138 - ITAT BANGALORE
TP adjustment - Comparable selection - Functional dissimilarity - HELD THAT:- Auto Ignition Ltd.- On diversified business, export sale, incurring of expenditure on R&D activities and presence of intangibles, we are of the considered opinion that Auto Ignition cannot be considered as a comparable company. We, therefore, direct the A.O./TPO to exclude Auto Ignition from the list of comparables.
Chheda Electricals - Main ground on which the assessee is seeking exclusion of this company are capacity utilisation and Chheda claiming tax deduction u/s.80IC - The adjustment towards capacity utilisation has been contended as a separate issue by the assessee and hence the exclusion of this cannot be sought on this ground. Further the company enjoying the tax deduction u/s.80IC in our view is not a criteria for seeking exclusion. Further we notice that Chedda is functionally similar to the assessee. We, therefore, uphold inclusion of Chheda Electricals in the list of comparables.
Naina Semiconductors Ltd - In view of all these i.e., diversified business, export sale, and incurring of expenditure on R&D activities, we are of the considered opinion that Naina cannot be considered as a comparable company. We, therefore, direct the A.O./TPO to exclude Naina from the list of comparables.
Hind Rectifiers Ltd. - We notice that the comparable company has earned profits in FY 2012-13 and therefore following the ratio laid down in Affinity Express India P Ltd (2016 (3) TMI 1121 - ITAT PUNE] we hold that these companies should be included for the purpose of comparability and computation of ALP.
Incap Limited - TPO rejected the comparable on the ground that the same did not appear in search undertaken by TPO - We are of the view that identical directions as per PRISM NETWORKS PRIVATE LIMITED case [2022 (2) TMI 1296 - ITAT BANGALORE] it would be just and sufficient in the present case hence the regarding inclusion of the aforesaid company as comparable company is hereby set aside to AO/TPO for fresh consideration.
Continental Device India Private Limited - We are of the considered view that the exclusion of Continental Device should be upheld as the company is having spends on R&D and carry intangible whereas for the assessee the year under consideration is the first year of operation.
Working capital adjustment - We remit the issue to the file of AO/TPO to consider the working capital adjustment taking into consideration the details submitted by the assessee after allowing an opportunity of hearing to the assessee.
Denial of capacity utilisation - assessee had made an adjustment toward capacity utilisation on the ground that it is the first year of operation in the manufacturing segment - TPO denied the same by stating that the capacity utilisation adjustment can only be made for comparable and not in the hands of the tested party - HELD THAT:- We notice that the assessee has submitted the workings for the capacity utilisation of for the manufacturing segment . Considering the details furnished and respectfully following the above decision M/S. TOKAI RIKA MINDA INDIA PVT. LTD. [2023 (3) TMI 706 - ITAT BANGALORE] we remit the issue back to the AO/TPO with similar directions. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly.
TPO considering the incorrect operating cost - HELD THAT:- In the interest of justice to give one more opportunity to the assessee, we remit the issue to the TPO to verify and allow the correct operating expenses for the purpose of computing the operating margin of the assessee.
Additions made to building and plant & machinery - HELD THT:- AO in the remand proceedings has enhanced the disallowance for the reason that invoices were not enclosed for some of the additions and also purchase vouchers were not enclosed for certain other additions. We also notice that the assessee has submitted the full details pertaining to the additions before the lower authorities. Given these facts, in the interest of justice, we are of the considered view that the assessee should be given one more opportunity to substantiate the claim.
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2023 (3) TMI 1137 - ITAT BANGALORE
Deduction u/s 80P - interest received from BDCC bank - AO upheld that the income by way of interest earned on deposit or investment on ideal surplus funds does not change its characteristics irrespective of the fact that whether such interest income earned from scheduled bank or a cooperative bank, thus clause (d) of Section 80P(2) of the Act would not apply in the case of the assessee - HELD THAT:- The assessee is a primary agricultural credit society and its income is derived from trading in food grains, fertilizers and providing credit facilities to it members. It has received interest from BDCC bank on which it has claimed deduction under Chapter VIA but the AO has denied the claim and the CIT(A) has also confirmed the order of the AO that the assessee is not eligible to claim deduction under Section 80P(2) of the act on interest received from BDCC bank.
Respectfully following the above judgement in assessee’s own case [2021 (11) TMI 1145 - ITAT BANGALORE] the matter needs to be examined in the light of the above as observed in the above judgement. Therefore the case is remanded back to the file of the AO for a fresh consideration. Needless to say that reasonable opportunity be given to the assessee and the assessee is also directed not to seek unnecessary adjournments for early disposal of the appeal. Appeal filed by the assessee is allowed for statistical purposes.
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2023 (3) TMI 1136 - ITAT MUMBAI
Income from other sources u/s. 56(1) - gift of shares received by the assessee - AO held that receipt of shares as some kind of colorable device and therefore, taxed the market value of said shares as "income from other sources‟ - HELD THAT:- As gift of shares cannot be held to be sham transaction and the whole purpose of was correct legal rights and obligations and in accordance with the law. The receipt of gift by the assessee is neither chargeable to tax u/s. 56(1) or u/s. 28(iv) of the Act.
The gift received by the assessee in present case is in the capital field and can be brought to tax under the head capital gain. Accordingly, the provision of section 56(1) cannot be resorted to.
Whether the receipt of shares at nil consideration can construed as business income liable for tax u/s 28(iv)? - We agree with the findings and the observations of the CIT(A) that the benefit of perquisite as stipulated under clause (iv) of Section 28 that it should arise from business or profession, i.e., assessee must have performed some business activities or carried out business and he must have received any benefit or perquisite in the course of business or profession. The share of Dish TV as a gift does not arise out of business dealing and accordingly, rightly being held by the ld. CIT (A) that is not taxable under the said provision. Therefore, the said receipt is not taxable u/s. 28(4). Accordingly, the deletion of the addition made by the ld. CIT (A) is upheld and Ground No. 1 of the revenue's appeal is dismissed.
Receipt of share premium is concerned, the same is not chargeable to tax unless the provisions of Sections 56(2)(vii a) or (vii b) are invoked that it is in excess of fair market value of shares which provision will apply from A.Y. 2013-14 and not in A.Y. 2012-13 - finding of the ld. CIT (A) in deleting the said premium is confirmed.
CIT(A) has already dealt with the valuation of the shares which was done on Net Asset Value method based on the report of independent Chartered Accountant and assessee has considered the market value of asset being share of the listed company. There is categorical finding of the fact that the share of the Dish TV were purchase from the open market at Rs. 255 Crores and the fair value of the shares was taken at 260 Crores in the valuation report for the purpose of arriving of the fair value of the shares and therefore, the AO's observation in this regard has been found to be incorrect. Finding and observation of the ld. CIT (A) as incorporated in forging paragraphs are in consonance with fact and material on record as well as the provisions of law and accordingly, same is confirmed and consequently, the revenue ground is dismissed.
Disallowance u/s. 14A read with Rule 8D - HELD THAT:- Admittedly there is no exempt income during the year and therefore ld. CIT(A) rightly held that no disallowance can be made under this Section. Apart from that the reasoning given by the ld. CIT(A) has incorporated above is based on correct appreciation of facts and law and therefore the same is confirmed.
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2023 (3) TMI 1135 - ITAT MUMBAI
Income deemed to accrue or arise in India - receipts towards IT support services - 'Fees for Technical Services' ("FTS") as per India- Netherlands DTAA - whether be treated as fee for technical services under the Act as well as under the DTAA as has been done in earlier years - HELD THAT:- This Tribunal for A.Y.2017-18 in assessee’s own case had disposed of the appeal [2022 (8) TMI 1263 - ITAT MUMBAI] wherein by following its own order for A.Y.2016-17 [2020 (3) TMI 1417 - ITAT MUMBAI] held that the payment received for IT support services cannot be treated either as fee for technical services or as royalty both under the Act as well as under the DTAA.
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2023 (3) TMI 1134 - ITAT MUMBAI
TP Adjustment - MAM selection - TNMM or CUP method - TNMM method selected by the appellant to benchmark transaction - HELD THAT:- We hold that there was no justification in rejecting the TNMM method applied by the assessee as in the preceding year. Since as per the same computation the assessee's margin was found to be at arm's length.We set aside the order of authorities below and decide the issue in favour of the assessee. Since we have already allowed the assessee's appeal on this issue. For lack of justification in changing the method of bench marking we are not dealing with the arguments on other aspects of merits of application of CUP method computation of arm’s length price by the Transfer Pricing Officer in this case. Decided against revenue.
Addition u/s 69C - assessee was not able to establish the purchases - HELD THAT:- The assessee has possession of the purchased documents and the payment was made through banking channels. So, this addition cannot be sustained u/s 69C. The ld. Counsel has submitted the catena of judgments with corelated fact of the case. The identity was proved as payment was made by banking channel. Possession of invoice has never been challenged. We find no infirmity in the transaction of assessee. Accordingly, the addition made by the AO is liable to be quashed. Decided against revenue.
Disallowance of weighted deduction u/s 35[2AB] - difference between the amount claimed in the return of income and has approved by the DSIR in Form No. 3CL - HELD THAT:- In the terms of provision 35(2AB) needs to be approved by DSIR.Research and Development Facility is approved and prescribed by the authority, DSIR in Form 3 CM then the expenses incurred by the assesseehave to be allowed u/s 35(2AB) and the same cannot be curtailed. To the quantum approved in Form No. 3CL in the pre amendment period.
We are fully relied on the order of the coordinate bench. The first step was recognition of facility by the prescribed authority and entering an agreement between the facility and the prescribed authority. The ld. AO cannot curtail the expenses which was contributed to R & D in pre amended period. Accordingly, the addition made by the ld. AO amount is liable to be quashed. - Decided against revenue.
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2023 (3) TMI 1118 - CALCUTTA HIGH COURT
Validity of assessment order u/s 143(3) r.w.s.144B - difference between not proper dealing or sufficiently dealing with no reasoning or not dealing at all - as argued while passing the impugned assessment order, formalities under Standard Operating Procedure (SOP) concerned has not been adhered to by not dealing with the rebuttal by the petitioner point-wise - HELD THAT:- It is not a case that the AO has not at all adhered to or complied with the formalities of SOP. The said impugned order has elaborate discussion on the point-wise rebuttal. It seems that petitioner is not satisfied with the reasoning and the way of dealing points of the rebuttal by the petitioner. There is a difference between not proper dealing or sufficiently dealing with no reasoning or not dealing at all.
In this case it appears that petitioner is not satisfied with the reasoning and finding recorded by the AO in the impugned assessment order.
This case does not fall in those categories of cases where the impugned order is either without jurisdiction or is patently in contrary to any statutory provisions or there is violation of principle of natural justice or there is any procedural irregularities in course of impugned assessment proceeding.
So far as finding and the reasoning given by the AO /any adjudicating authority is concerned which is based on evidence, writ court in exercise of its constitutional writ jurisdiction under Article 226 of the Constitution of India should not act as an appellate authority over such assessment order and substitute the reasoning and finding by an Assessing Officer with its own finding and reasoning. WP dismissed.
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