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Income Tax - Case Laws
Showing 121 to 140 of 8298 Records
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2023 (12) TMI 1120
Income taxable in India - existence of dependent agent PE - amount received by the assessee from supply of software and automated services - HELD THAT:- The issue in question in AY 2017-18, the Co-ordinate Bench of the Tribunal in assessee own case [2023 (1) TMI 14 - ITAT DELHI] as held we find that the issue of attribution to profit when the transaction has been found to at Arm's Length between foreign party and the Indian AE, then no further attribution is required has already been decided by the decision of the Hon'ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007 (7) TMI 201 - SUPREME COURT]
As it follows that the finding of PE is also without cogent basis. Be that as it may issue of PE becomes academic and we are not engaging further into it. We have already found that functions performed by Adobe India are actually not different than the agreement and transfer pricing documentation.
There is no gainsaying that factually the issue stands on identical footing in relation to preceding assessment years, as, both the Assessing Officer and learned DRP have decided the issue following their earlier decisions. That being the case, respectfully following the decision of the coordinate Bench, as referred to above, we hold that the amount received by the assessee from supply of software and automated services, are not taxable in India. The Assessing Officer is directed to delete the additions.
Levying tax on interest on the income-tax refund received by the Appellant during the year under consideration - India-Ireland Double Taxation Avoidance Agreement - Revenue has not brought to our notice any binding precedent on this issue. Therefore, the Assessing Officer is directed to tax the interest @10% as prescribed in the Indo-Ireland Tax Treaty.
Credit of TDS whilst computing the tax liability of the Appellant for the year under consideration - We hereby direct the Assessing Officer verify the claim and grant the credit of taxes deducted at source in accordance with law.
Levying interest u/s 234A whilst computing the tax liability of the Appellate for the year under consideration - When the return of the income has been held to be validly filed then all consequent action related to levy of interest u/s. 234A would follow as prescribed under the law. We therefore direct the AO to verify and levy the interest u/s. 234A as per the provisions of the Act as if it is a valid return. This ground of the assessee appeal is allowed in terms indicate above.
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2023 (12) TMI 1119
Disallowance u/s 14A - if there are funds available with the assessee as a common pool of interest free and interest bearing funds, the assessee cannot be granted the benefit of the presumption - HELD THAT:- We find that on the issue of applicability of Section 14A of the Act, the co-ordinate Bench had decided the issue that when the assessee is holding investment as stock-in-trade, no disallowance under Section 14A of the Act can be made.
The co-ordinate Bench decided the issue for A.Y. 2012-13, relying on the decision of PCIT Vs. Punjab National Bank [2022 (6) TMI 85 - DELHI HIGH COURT] where in it has been held that where the assessee bank is holding investment as stock-in-trade no disallowance under Section 14A of the Act can be made. Decided in favour of assessee.
Refund adjusted first against the interest payment and then on taxes - HELD THAT:- This issue has been decided by the learned CIT (A) in favour of the assessee by relying upon several judicial precedents of the co-ordinate Benches. No contrary decision was produced before us. Therefore, we uphold the order of the CIT (A).when the refund is due to the assessee, the amount refunded has to be adjusted towards interest payment to assessee first and the balance any shall be adjusted towards tax - Decided in favour of assessee.
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2023 (12) TMI 1118
Excess depreciation claimed on crawler cranes - depreciation @ 30% OR 15% - assessee–company is engaged in the business of material handling and erection of heavy equipment on contract basis and providing equipment on hire during the year under consideration - whether the cranes are to be considered as 'Motor lorries' and be allowed depreciation @ 30% or be treated as machinery and allowed depreciation @ 15%? - HELD THAT:- As relying on Gujco Carriers vs. CIT [2002 (2) TMI 48 - GUJARAT HIGH COURT] assessee can claim higher depreciation on cranes @ 30%, therefore, we do not find any infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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2023 (12) TMI 1117
Scope of limited scrutiny - mandation of recording satisfaction before extending/expanding scope of scrutiny - case of the Assessee was selected for ‘limited scrutiny’ for the purpose of verifying Large interest expenses relatable to exempt income (u/s 14A) and High interest expense as compared to business turnover, but the additions have been made other than the reasons for which the limited scrutiny has been selected for, which is not only illegal, arbitrary but also contrary to the circulars of the CBDT - HELD THAT:- As found that the AO travelled beyond the issues involved in the “limited scrutiny” and made enquiries and the additions u/s 68 on account of unsecured loan, on account of unaccounted expenditure and further made addition on account of interest expenses.
We find it handy to refer the instructions of CBDT issued in respect of examination of issue other than the reasons taken up in limited scrutiny case.
Assessment order passed by the Assessing Officer disregarding the instructions of the CBDT are liable to the set aside and no substantial of law arises. CBS International Projects Pvt. Ltd. [2019 (2) TMI 1748 - ITAT DELHI] and Best Plastics Pvt. Ltd. [2006 (4) TMI 53 - HIGH COURT, DELHI]
Considering CBDT Circular and the Judicial Precedents, we hold that the Assessing Officer can widen the scope of scrutiny even the case is selected for limited scrutiny under CASS, however, the condition precedent for such widening of the scope is that the Assessing Officer has to seek prior approval of the authorities mentioned. Such prior approval and the permission of the PCIT is lacking in the instant case. There was no satisfaction about the merits of the issue which necessitated complete scrutiny in the instant case. Hence, the Assessment framed by the Assessing Officer on the issues which are not inconsonance of the instruction of CBDT are liable to be quashed. The additions made by the Assessing Officer being beyond the scope of the limited scrutiny and the same is deleted. Decided in favour of assessee.
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2023 (12) TMI 1116
Addition u/s 68 - receipt was not declared in the ROI and the receipt remain unexplained - taxation of additional income u/s 115BBE - additional income disclosed during the course of Survey in the revised return - Counsel stated that assessee did not have any other source of income other than the income which is generated from the hospital owned by the assessee company - HELD THAT:- In spite of offering this additional income found undisclosed during the course of Survey, the assessee returned loss in both the revised returns only because of claim of deduction u/s 35AD of the Act. Thus, if the assessee has already offered the additional income disclosed during the course of Survey in the revised return filed, there was no reason to add the same again in the assessment.
AO has brought it to tax u/s 68 r.w.s 115BBE of the Act. During the course of Survey in the hospital premises, unaccounted receipts of the hospital in the name of certain doctors were found. As the receipts in question are relating to the business operations of the assessee's hospital. Therefore, such income should be brought to tax as the business income u/s 28 of the Act. Therefore, we note that additional income earned in the course of business ought to be taxed as regular income and not u/s 68.
CIT(A) has rightly noted that the assessee is in the business of running of the hospital. During the course of survey u/s 133A of the Act, some loose papers were found showing unaccounted hospital receipts. Since the hospital receipts are part of the business receipts, therefore CIT(A) held that the provisions of section 68 cannot be made applicable, in view of the decision of Shilpa Dying & Printing Mills Pvt. Ltd [2015 (7) TMI 691 - GUJARAT HIGH COURT].
Section 68 of the Act can be invoked only if no explanation is offered by the assessee about the nature and source of income / receipts and such explanation is not found to be satisfactory in the opinion of the AO. However, in the instant case, the loose papers found during the course of Survey and the statements of the directors recorded during the course of Survey showed that the undisclosed receipts were pertaining to the undisclosed income of the hospital ran by the assessee- company.
CIT(A) held that the undisclosed hospital receipts found during the course of Survey need to be taxed as income from business and are to be brought to tax as per the normal provisions of the Act. The said income is already offered in the revised return, therefore has to be taxed as income from business, and therefore the provisions of section 115BBE of the Act are not applicable with reference to the said income. Based on above reasoning, the ld CIT(A) deleted the addition made by the assessing officer - We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal Nos.1 and 2 of the Revenue are dismissed.
Disallowance of deduction of capital expenditure u/s 35AD - We note that during the course of Appellate Proceedings, the assessee submitted all the details of capital expenditure. As the capital expenditure details were not furnished before the assessing officer, the details furnished during Appellate Proceedings were in the nature of additional evidence under Rule 46A and hence, were forwarded by CIT(A) to the assessing officer for verification and remand report. The assessing officer vide letter dated 05.09.2018 has submitted the remand report wherein he has stated that the assessee has only 92 beds as against 100 beds as required for eligibility u/s 35AD of the Act.
The assessee submitted a rejoinder dated 10.10.2022 before ld CIT(A). In the said rejoinder, the assessee has stated that the Inspector from the assessing officer's office who visited the hospital has not counted the second beds in the twin sharing rooms under the presumption that the second bed is for the patient's attendant. The assessee has also submitted before ld CIT(A), the photographs of the twin sharing rooms with bed numbers in support of his claim. It was further submitted sharing rooms the attendants are provided small sofas and not the beds. The assessing officer during remand proceedings has recorded the statement of Mr. Kirit N Panchal, from Yogesh Surgicals, the firm which has supplied the beds and other equipments to the assessee's hospital. In the said statement, Mr. Kirit Panchal has stated that he has supplied 64 semifaller beds and 36 ICU beds and 3 hydraulic emergency trolley beds. Thus, the supplier has also confirmed that he has supplied more than 100 beds to the assessee hospital which fulfills the eligibility that the assessee has more than 100 beds to claim deduction u/s 35AD of the Act. All these beds and other capital goods to the tune of Rs. 3,16,29,353/- were purchased by the assessee before the date of commencement of the hospital and hence, was found to be eligible for deduction u/s 35AD of the Act.
Whether the claim of deduction u/s 35AD of the Act, which is not made in the original return can be made in the revised return filed? - In the assessee's case, as the assessee has filed the original return in time as per the provisions of section 139(1) of the Act, the revised return filed as per the provisions of section 139(5) of the Act, claiming the deduction u/s 35AD of the Act for the first time needs to be allowed to the assessee. Therefore, the deduction u/s 35AD being 150% of the capital expenditure incurred before the commencement of business has to be allowed to the assessee. Therefore, ld CIT(A) has allowed the deduction u/s 35AD of the Act. No valid reason to interfere with the decision and findings of the Ld.CIT(A), hence we dismiss ground Nos. 3 to 8 raised by the Revenue.
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2023 (12) TMI 1115
Unaccounted interest receipts - Survey action u/s 133A of the Act was carried out in the premises of one Vatika Group/ third party - AO on the basis of the seized documents, it emerged that the assessee company alongwith the other group entities had actually entered into the loan agreements with the entities of Vatika Group, whereas such transactions were otherwise camouflaged as transactions of sale and purchase of properties - CIT(A) deleted addition - HELD THAT:- Evidences relied upon by the AO could not be considered to indicate that the property transactions between the Vatika group and the assessee were actually loan transactions. Thus, the Tribunal has upheld the action of the CIT(A) in deleting the addition made by the Assessing Authority on account of interest income as being misplaced. In view of the similarity of the case set up by the AO in the present case viz-a-viz that in the case of M/s SEH Realtors Pvt. Ltd, following the decision of our Coordinate Bench [2023 (4) TMI 1276 - ITAT DELHI] we hereby affirm the findings of the CIT(A) on the issue in dispute and accordingly the Appeal of the Revenue for Assessment Year 2006-07 is hereby dismissed.
Assessment u/s 153A - disallowance u/s. 14A - CIT(A) deleted addition as observed that there is no incriminating material unearthed during the search, on the basis of which, the said disallowance has been made by the AO - HELD THAT:- In our view, in the absence of any material to dislodge the factual finding of the CIT(A) that the disallowance u/s. 14A is not based on any incriminating material found during search, the action of the CIT(A) in applying the ratio of the judgement of the Hon’ble Delhi High Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] cannot be faulted. Moreover, the judgment in the case of Kabul Chawla (supra) has since been approved by the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. [2023 (4) TMI 1056 - SUPREME COURT] Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed.
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2023 (12) TMI 1094
Application for condonation of delay u/s 119(2)(b) - mismatch between the PAN number reflected in the income-tax return and the name of the company - primary grounds raised was Petitioner’s application came to be rejected without even giving a personal hearing - name of Petitioner had been changed with the approval and sanction of the Ministry of Corporate Affairs - HELD THAT:- As the notices issued u/s 139(9) of the Act were sent on Mr. Prasad Sathe’s official ID, none of the other members of the company had any access to the same. Admittedly, no physical copy of notice was sent to company’s registered address. All this came to light when the new team including one Mr. Kapil Bhakre (Director) and Mr. Dinesh Pande (Director-Finance), found out the error during the finalization of accounts for AY 2018-2019 and immediately took remedial action by submitting an application dated 5th November 2019 to the office of the DCIT, Circle-3, Pune. Petitioner immediately provided details about the invalid return and requested him to activate the action on the Income Tax Portal so as to enable Petitioner to rectify the return of income for AY 2017-2018.
We are satisfied that the delay in not responding to the notice is received under Section 139(9) of the Act, was neither deliberate nor on account of culpable negligence or any mala-fides. The issue is only of correcting the name of Petitioner in the returns so that there is no mismatch between the PAN number and name of the company.
We, therefore, direct Respondents to permit Petitioner to correct its name in the returns for AY 2017-2018 from ‘Optra Technologies Private Limited’ to ‘Optra Health Private Limited’. Therefore, we hereby quash and set aside the impugned order dated 23rd December 2022. Within two weeks of this order being uploaded, the required portal will be opened for Petitioner to do the needful, under advice to Petitioner.
We hasten to add that we have not examined the contents of the returns filed by Petitioner or claims which have been made in the returns. That will be subject of appropriate assessments/proceedings under the Act.
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2023 (12) TMI 1093
Validity of assessment order passed w/o affording fair opportunities to the petitioner to put forth their contentions - denial of principles of natural justice - main grievance expressed by the petitioner is that no fair opportunity of hearing was granted to the petitioner before passing the impugned order and the opportunity that was granted to the petitioner cannot be deemed to be fair opportunity, since within a short span of time - HELD THAT:- As respondent-Department has concluded the assessment proceedings hurriedly inasmuch as, the show cause notice itself was issued only on 27.03.2022 and within two days the petitioner was called upon to file their reply on 29.03.2022 and immediately on the very next day, i.e. on 30.03.2022 at 3.30. p.m the petitioner was asked to appear for hearing through video conference within one hour, i.e. at 4.30 p.m. and on the very same day,, the impugned assessment order has been passed. Therefore, impugned order suffers from violation of principles of natural justice.
As decided in M/s. Gemini Film Circuit Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax.[2023 (10) TMI 1040 - MADRAS HIGH COURT] provision of fair opportunity of hearing, held that minimum of 21 days has to be granted to an assessee to enable him to file reply in an effective manner, and the opportunity granted to the assessee should be nominal in nature and should not be an empty formality.
This Court is inclined to set aside the impugned order passed by the respondent, since, in the present case, opportunity that was granted to the petitioner was not realistic in nature rather appears to be a nominal one and further, the petitioner has been deprived away of their rights to appear in person to put forth their contention as the petitioner was heard only through video conferencing, which lasted only for five to six minutes and thereafter, the Portal was closed and within a short span of time, no assessee can be expected to put forth their contention in an effective manner. Therefore, this Court holds that the impugned order is in gross violation of principles of natural justice and liable to be aside.
Writ Petition is allowed, the impugned order is set aside and the matter is remanded back to the first respondent for re-consideration, in which case, the respondent is directed to provide an opportunity of personal hearing to the petitioner, which can be fixed by the respondent at any date granting 15 days' time after the receipt of a copy of this order
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2023 (12) TMI 1092
Refund claim with Interest u/s 244A - Withholding of refund without recording an opinion on whether grant of refund would likely affect the revenue adversely u/s 241A - HELD THAT:- As consideration falls short of the requirements under the provisions of Section 241A of the IT Act, which stipulate that the Assessing Officer, having regard to the fact that notice has been issued under sub-section (2) of Section 143, must record in writing an opinion with reasons on how the revenue’s interest would be adversely affected if refund is allowed. The withholding of the refund in the manner as now considered by the Assistant Commissioner of Income Tax, ReAC (AU)-1(2)(1), Surat cannot be accepted, and there must be interference by this Court.
This Court must record that it is undisputed that the petitioner has claimed refund for the Assessment Years prior to the Assessment Year 2021-22. The Principal Commissioner of Income-tax (AU)-1 has granted approval recording the details of the carry forward losses for the corresponding years, and consequentially, the petitioner is admitted to refund for the Assessment Years 2018-19, 2019-20 and 2000-21 respectively. The petitioner has reported a carry forward loss to the tune of Rs. 3,325.85/- Crores for the present Assessment year. The Revenue as against the principal sum of Rs. 29,35,11,360/- will have to pay interest in excess of Rs. 2,00,00,000/-, imposing a burden on the exchequer, if there is a delay.
Further, if indeed a reference to the transfer pricing officer is under investigation, it would suffice for this Court to observe that if the adjudication, after due process, results in a demand, the petitioner will have to answer the demand, but in anticipation of a conclusion for a demand without even recording the reasons, the petitioner cannot be denied the refund. There are overwhelming circumstances as established by the undisputed facts. In the light of the above, the petition must be allowed directing the respondents to refund a sum along with interest as is permissible in law within a timeframe without prejudice to recover demand on the conclusion of the pending proceedings.
The petition is allowed. The first and the fifth respondents [National Faceless Assessment Centre through the Commissioner of Income Tax-1 and Central Processing Cell through the Commissioner of Income Tax], are directed to take appropriate action for refund of a sum of Rs. 29,30,46,736/- along with permissible interest under Section 244A.
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2023 (12) TMI 1091
Addition u/s 56(2)(viib) read with Rule 11UA - assessee issued shares at the face value of Rs. 10 with the premium at 990.00 per share - FMV determination - CIT(A) deleted the above additions - HELD THAT:- As per section 56(2) (viib) of the Act, the amount exceeding the Fair Market Value of shares has to be treated as income. As per the Explanation, the Fair Market Value shall be as per the value determined in accordance with the method prescribed or as substantiated by the company based on the value of the shares, goodwill etc. whichever is higher.
The working provided as per Rule 110A(2) has 2 limbs either FMV of unquoted equity share as per formula (A-L)* (PV) / (PE) or as p the FMV worked out for the unquoted shares determined by merchant banker as per discount free cash flow method. It is at the option assessee to choose between two. In the present case, the assessee opted for the second option for working out the fair market value shares duty supported by report of a Chartered Accountant.
As also observed by the CIT(A) that AO has not provided any sound reasoning or not brought on record any material to counter the argument or to negate the submissions of the appellant. He has only taken the book value for the fair market value, though it is at the option of the appellant. Since appellant has adopted the higher value, therefore, it cannot be denied the working without any reasoning.
Considering the factual position in this case and valuation report etc. It has been rightly held by the Ld. CIT(A) that that there is no case by the AO to take the FMV @ Rs. 25/- per share, on the basis of book value, disregarding the projected value, especially when it is provided in the Act that fair market value can be taken by the assessee to its option and at a higher amount. CIT(A) committed no error in deleting the addition. Accordingly, the Ground No.1 of the Revenue is dismissed.
Addition u/s 68 after making addition u/s 56(2) - CIT(A) deleted addition - HELD THAT:- AO conducted the probe regarding share application money and the assessee provided due confirmation from each of the parties along with ITR which has been neither doubted nor proved as bogus. The assessee also provided the share application Form and its allotment with ROC.
As found by the Ld. CIT(A) that the out of total share application money received by the assessee during the year under consideration, the AO made addition u/s 56 (2)(viib) for a sizable portion and for the balance amount the provisions of Section 68 has been invoked. When the AO considers the very same applicants u/s 56(2)(viib), then the AO cannot question their identity, creditworthiness and the genuineness of the transaction, that too when the assessee has satisfied the initial burden cast upon him u/s 68 of the Act. In our considered opinion, CIT(A) has rightly deleted the addition made by the AO u/s 68 of the Act with requires no interference at the hands of the Tribunal. Accordingly, ground No.2 of the Revenue is dismissed.
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2023 (12) TMI 1090
Deduction u/s. 80G - amount incurred for the purpose of Corporate Social Responsibility - DRP held that, as per section 80G(2) a deduction is admissible in respect of any sums, which is paid by the assessee in the previous year as donations to various bodies/institutions indicated in that section - HELD THAT:- As per the Companies Act 2013, it is mandatory for certain specified companies to spend 2 percent of their average profits to CSR. CSR expenses incurred by companies are now specifically treated as for non business purposes and hence are disallowed for Income tax purposes.
Finance Act 2014 mandated that “CSR Expenditure” shall not be allowed as “Business Expenditure” u/s 37 of Income Tax Act 1961. The ‘ Memorandum of Finance Bill 2014’ had also clarified that this initiative is primarily to ensure that companies share the burden of providing social services and granting deduction for CSR expenditure would amount to the Government effectively bearing one third of that expenditure. This same Memorandum also added that if CSR expenditure is of the nature which is covered by specific deductions contained in Sections 30 to 36, the expenditure by virtue of being governed by a specific provision (of Income tax) shall be granted a deduction if the conditions prescribed are satisfied. No specific tax exemptions have been extended to CSR expenditure. The Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure.
Thus we hold that no deduction u/s. 80G is allowable on the amount incurred for the purpose of Corporate Social Responsibility.
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2023 (12) TMI 1089
Rectification of mistake - Benefit of brought forward loss - CIT(A) directed the AO to recompute the income of appellant for A.Y. 2009-10 after taking into consideration the brought forward loss for A.Y. 2008-09 as determined by AO by replacing the disallowance of loss - HELD THAT:- It can be appreciated that consequent to the order of the Tribunal however, for A.Y. 2008-09 the effect giving order was passed by Ld. AO on 12.12.2018 by which the total loss for A.Y. 2008-09 was recomputed at Rs. 4,92,05,810/- . That thus made available loss for set off or carry forward in the subsequent years. Same has been taken into consideration by Ld. CIT(A) while passing the direction in the impugned order. The appeal has no merit. Same is dismissed.
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2023 (12) TMI 1088
Deduction u/s. 80IB - compensation received by the assessee from the insurance company - CIT(A) upheld the addition made by the ld. A.O. on the ground that the insurance/compensation claimed cannot be considered for computing the eligible profit and gains derived from the industrial undertaking of the assessee - HELD THAT:- The assessee in the present case has received compensation for destroyed and lost goods from the insurance company and from the franchisees which the Revenue claims to be not from the industrial undertaking and shall not be the profits and gains of the business of the assessee.
The Hon’ble Gujarat High Court in SHREE RAMA MULTI TECH LTD. [2013 (10) TMI 306 - GUJARAT HIGH COURT] after duly considering the decision of Sportking India Ltd. [2009 (8) TMI 29 - DELHI HIGH COURT] has held that such compensation received from insurance company for the damage incurred by the assessee would be the profit/loss from such industrial undertaking, for the reason that if not for such loss, the assessee would have earned income which is otherwise eligible for deduction u/. 80IB,
It is evident that on identical facts, the Hon'ble High Court has held that the assessee is eligible for deduction u/s. 80IA/80IB of the Act on compensation received due to destruction of goods before sale had taken place. We find that on destruction of raw materials, the assessee was paid insurance claim, the cost of raw material is already considered as ‘cost’ while working out the profit of eligible undertaking and the claim tantamount to sale of raw materials.
As regards to loss of goods at franchisee and the amount paid by such franchisee would also be sale of goods. Thus, both the above sums are profits derived from industrial undertaking business eligible for deduction. Hence, we direct the ld. A.O. to allow deduction u/s. 80IB on both the amounts. We, therefore, allow the appeal filed by the assessee.
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2023 (12) TMI 1087
Addition u/s 68 - undisclosed cash credit found in the books of the assessee - unexplained share application money in the form of share capital - HELD THAT:- We find that the assessee which is regularly carrying on business activity of manufacturing sponge iron, registered under the Excise Act, holds fixed assets, having considerable amount of stock in hand and has successfully discharged the burden of proof primarily casted upon it to explain the identity and creditworthiness of investor company i.e., Bhillai Holdings Pvt. Ltd., which is group concern having common directors and shares issued at face value and no share premium has been charged.
Genuineness of the share transactions and correctness of such details has not been disputed by the Revenue Authorities except making general observations. Therefore, considering the evidences placed by Ld. A/R to explain the nature and source of the alleged share application money, we find no reason to interfere with the findings of the ld. CIT(A) deleting the addition made u/s 68 of the Act. Appeal of the revenue is dismissed.
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2023 (12) TMI 1086
Treating intimation u/s “143(1) as "non-est" - intimation u/s 143(1) of the Act was never communicated - whether CIT (A) exceeded his jurisdiction in entertaining appeal against intimation where no adjustment of income was carried out resulting in demand? - demand raised on the basis of book profit u/s 115JB as disclosed in the schedule 7 of return of the return of income for A.Y. 2008-09 - HELD THAT:- The entire quarrel revolves around the following findings of the Hon'ble High Court of Delhi – Court on its Own Motion [2012 (9) TMI 163 - DELHI HIGH COURT] as held onus to show that the order was communicated and was served on the assessee is on the Revenue and not upon the assessee. We may note in case an order under Section 143(1) is not communicated or served on the assessee, the return as declared/filed is treated as deemed intimation and an order under Section 143(1). Therefore, if an assessee does not receive or is not communicated an order under Section 143(1), he will never know that some adjustments on account of rejection of TDS or tax paid has been made. While deciding applications under Section 154, or passing an order under Section 245, the Assessing Officers are required to know and follow the said principle.
Thus the onus is on the Revenue to show that the TDS or tax credit had been fraudulently claimed by the assessee. Facts on record show that the Revenue has grossly failed in showing that the intimation u/s 143(1) of the Act ever served upon the assessee as the Revenue failed to give any proof of service of such intimation to the assessee. Therefore, intimation u/s 143(1) of the Act has to be treated as non-est or invalid.
Coming to the observations of the Hon'ble High Court, again the onus is on the Revenue to show that the claim of TDS is fraudulent. A perusal of the computation sheet shows that inadvertently the assessee has mentioned the tax payable at normal rates at Sl. No. 3 instead of tax payable of deemed total income u/s 115JB of the Act.
This by any stretch of imagination, cannot be considered as fraudulent activity of the assessee to deny the benefit of the decision of the Hon'ble Jurisdictional High Court of Delhi [supra]. Decided against revenue.
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2023 (12) TMI 1085
Penalty u/s 271(1)(c) levied - AO held that assessee had concealed his income by not filing the return of income and not showing his income and paying due taxes thereon - concealment has come to notice as a result of scrutiny assessment proceedings only as had the case not been re-opened u/s 147/148 assessee would have succeeded in tax evasion - HELD THAT:- We note that assessee did not conceal the income and was in the bona fide believe that the said income, which was taxed u/s 147 of the Act, was not assessable under the Act. We note that there is no finding of the AO in the assessment order that assessee has concealed his income; rather Assessing Officer has accepted the returned income filed by assessee, as it is, (in response to notice u/s 147 of the Act).
We note that in the case of CIT v. K.R. Chinni Krishna Chetty [1998 (6) TMI 5 - MADRAS HIGH COURT] has held that u/s 271(1)(c) of the Act the authority is given the discretion to levy a penalty if there is concealment of particulars of income and even as regards the quantum of the penalty there is a discretion. Of greater importance is the necessity for a definite finding that there is concealment, as without such a finding of concealment, there can be no question of imposing any penalty. In the assessee’s case, the AO has not given any finding in assessment order that the assessee had concealed any income or furnished inaccurate particulars of such income. He had simply accepted the returned income u/s 148 - penalty u/s 271(1)(c) will not be imposable. Decided in favour of assessee.
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2023 (12) TMI 1084
Estimation of income - bogus purchases - CIT(A) noted that in absence of visibility on correctness of the amount paid/ payable to creditors, the possibility of purchasing the goods from grey market at lower rates and recording the same at inflated price in books of accounts cannot be ruled out. However, if the entire purchases are disallowed, the corresponding sales also need to be ignored but the assessing officer has not done so - HELD THAT:- As observed by ld CIT(A) that the assessee's business is recently started and it is into second year of its operations. During the year under consideration the gross profit earned by assessee is 13.05%. Therefore, ld CIT(A) restricted the addition to Rs. 9,80,121/- (Rs.75,10,503/- X 13.05%). We have gone through the above findings of CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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2023 (12) TMI 1048
Validity of revision u/s 263 - Allowability of Maintenance expenses and depreciation - Validity of order passed u/s 143(3) by AO confirmed by ITAT and setting aside revisional order of the Commissioner on the question of disallowability maintenance expenses and depreciation - HELD THAT:- Assessee is engaged in business of chartering flights and had derived chartering income which evidences the business nexus of use of aircrafts owned by the respondent/assessee. This being the finding of fact and not disputed by the revenue even before us, it can be safely concluded that the aircrafts were utilised for business purpose.
Even if officers of the assessee i.e. directors have used the aircrafts for business meetings in different locations, it cannot be said to be a personal use. The assessee is a company and thus an artificial juristic person. Therefore, even if directors on some occasion have been allowed to use the aircrafts for their personal use, neither the expenses incurred in maintenance of the aircrafts nor the depreciation of the aircrafts can be disallowed, inasmuch as then, at the best, the value of use of the aircrafts on such occasion is perquisite in the hands of the user. On that account, neither depreciation nor maintenance can be disallowed, even partially.
Tribunal has found that the aircrafts have been used for chartering business. Substantial receipts from chartering business has been shown by the assessee. Therefore, the view taken by the Tribunal in the impugned order, does not suffer from any error of law. Hence, the substantial question of law No.(i) is answered against the revenue and in favour of the assessee.
Since the revenue/appellant themselves have conceded on the question of admissibility of the maintenance expenses and depreciation of the aircrafts, in full, in the matter of the present assessee in other assessment years, therefore, the revenue cannot be allowed to take a contrary stand in the present appeal. Therefore, for this reason also, the afore-quoted substantial question of law is answered in the manner as afore-stated i.e. against the revenue and in favour of the assessee.
Deduction of lease rent for vehicle obtained on lease by the Assessee permitted - Relying upon the judgment of IM/S ICDS. LTD. VERSUS COMMISSIONER OF INCOME TAX. MYSORE & ANR. [2013 (1) TMI 344 - SUPREME COURT] and Rajshree Roadways v. Union of India & Ors. [2003 (3) TMI 50 - RAJASTHAN HIGH COURT] Tribunal held that the issue of lease rent is covered by the aforesaid judgment of the Hon’ble Supreme Court and hence the order passed by the Assessing Officer by taking one possible view, cannot be termed as ‘erroneous’ warranting initiation of revision proceedings under Section 263 of the Act, 1961. The Tribunal also found that in own case of the respondent/assessee for the assessment year 2011-12, the issue was accepted by the revenue, pursuant to the directions of the DRP.
The impugned order of the Tribunal on the point of lease rent cannot be said to suffer from any illegality. Hence, the substantial question of law no. (ii), is answered against the revenue and in favour of the assessee.
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2023 (12) TMI 1047
Income from business u/s 28(iv) - Valuation of shares on scheme of amalgamation - actual market and/or valuation of the Shares of the transferee company being more than face value, the differential valuation of such shares issued representing the value of the net identifiable assets accruing to the transferee constitutes a profit and/or taxable benefit accruing to the transferee company within the meaning of Section 28(iv) - HELD THAT:- To invoke Section 28(iv) of the Act 1961, the necessary requirement is that firstly there should be a benefit and secondly the benefit should arise from business. In the present set of facts, there was neither any benefit nor any benefit arising from business to attract Section 28(iv) of the Act 1961. Under the circumstances, Section 28(iv) of the Act 1961 has no application at all, on the present set of facts. The findings recorded by the Tribunal are findings of fact based on consideration of relevant evidences on record. The findings recorded by the Tribunal do not suffer from any illegality or perversity.
No merit in this appeal. The substantial question of law answered against the revenue and in favour of the assessee.
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2023 (12) TMI 1046
Reopening of assessment u/s 147 - period of limitation - Unexplained deposits - HELD THAT:- An order u/s 148A (d) of the Act of 1961 had been passed and a notice under Section 148 of the Act of 1961 was issued as against the appellant.
The impugned order dated July 28, 2022 had been passed u/s 148A (d) of the Act of 1961 and relates to the Assessment Year 2015-2016. The issue of limitation has been dealt with in the impugned order. It has been held that the case of the appellant would fall under definition of asset as laid down under the provision of Clause b of Section 149 (1) of the Act of 1961.
The impugned order has found that, for the relevant financial year a sum had been deposited with ICICI bank by the appellant in his account and that the appellant had failed to produce any supporting documentary evidence to explain such deposit. Such deposit has not been reflected in the relevant assessment year. Therefore, by the impugned order, the authorities had come to a finding that, there was an escapement of income tax chargeable to tax for the relevant assessment year. Consequently, the authorities, by the impugned order have decided that it was a fit case to issue a notice u/s 148 of the Act of 1961 for the relevant assessment year.
Issue of limitation had been taken by the appellant before the authorities. Appellant had also taken the point of limitation and contended that the authorities wrongly assumed jurisdiction by deciding the issue of limitation erroneously before the learned Single Judge. Contention of the appellant with regard to lack of jurisdiction has revolved around the new regime of limitation that had been introduced with effect from April 1, 2021 by the substituted provisions of Sections 147 to 151 particularly Section 149 of the Act of 1961 by the Finance Act, 2021.
In the facts of this case, the appellant had suffered a notice under Section 148 of the Act of 1961 on April 30, 2021. Such notice had been set aside by the High Court on February 22, 2022. The appellant and the department are governed by the directions of Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] which had issued directions relating to all notices issued under Section 148 after April 1, 2021. The department by a letter dated May 23, 2022 had provided the materials based on which the proceedings had been initiated. To that the appellant had submitted a response dated June 5, 2022. The impugned order dated July 28, 2022 passed under Section 148A (d) of the Act of 1961 had dealt with the response of the appellant dated June 5, 2022 in extensor. In fact, the impugned order dated July 28, 2022 of the Authorities had set out the entirety of the response of the appellant dated June 5, 2022 in its body and arrived at the finding that, the reply given was not tenable. The impugned order has also ascribed reasons why the reply of the appellant was not found to be tenable.
The impugned order of the authorities under Section 148A (d) of the Act of 1961 cannot be said to be vitiated by breach of principles of natural justice. The appellant had been heard before passing of the order. Appellant had submitted a response to the show-cause notice and filed written submissions which were considered by the Authorities. The impugned order, as noted above, cannot be said to without reasons for arrival at the decision recorded.
Learned Single Judge has exercised discretion not to entertain the writ petition. Learned Single Judge has proceeded to hold that there was no violation of the principles of natural justice or that there was any procedural defect in arriving at the impugned decision dated July 20, 2022 of the Authorities - No ground to interfere in the appeal
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