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Income Tax - Case Laws
Showing 21 to 40 of 8298 Records
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2023 (12) TMI 1379
Validity of reassessment proceedings against non existing entity - whether it is defect which is curable u/s 292B? - HELD THAT:- It is settled law that the said defect is not curable. This court in Alok Knit Exports Ltd. [2021 (8) TMI 777 - BOMBAY HIGH COURT] while dealing with submissions of Revenue held that human errors and mistakes cannot and should not nullify proceedings which were otherwise valid and no prejudice has been caused, relying on judgment of Maruti Suzuki India Ltd [2019 (7) TMI 1449 - SUPREME COURT] held that the basis on which jurisdiction is invoked is under Section 148 of the Act and when such jurisdiction was invoked on the basis of something which was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation, the notice is bad in law.
It has been time and again held that the notice issued to a non existing entity is not valid. Decided in favour of assessee.
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2023 (12) TMI 1378
Disallowance u/s 37(1) - expenses being contribution / donation to educational institutions, trust, local bodies - commercial expediency or not? - As decided by HC [2019 (8) TMI 1288 - GUJARAT HIGH COURT] correct test should be of commercial expediency and not whether the payment was compulsory for the assessee to make or not. ITAT has not erred in law and on facts in deleting disallowance u/s 37(1) in respect of expenses being contribution / donation to educational institutions, trust, local bodies, thus decided issue in favour of assessee - HELD THAT:- Upon hearing the counsel the Court made the following
Heard learned counsel for the petitioner-Department. Leave granted.
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2023 (12) TMI 1377
Reopening of assessment - absence of jurisdiction with the issuing authority for reopening - as alleged approval as required u/s 151 had not been obtained - four years had expired - scope of provisions of Section 151 came to be amended with effect from 01/04/2021 - As decided by HC [2023 (6) TMI 1221 - BOMBAY HIGH COURT] notice is liable to be set aside on the ground of absence of jurisdiction with the issuing authority - HELD THAT:- UPON hearing the counsel the Court made the following Delay in filing the special leave petition is condoned.
Issue notice to the respondent. Tag and list the matter along with SLP [2023 (5) TMI 1120 - SC ORDER]
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2023 (12) TMI 1376
Appeal against Assessment order completed u/s 143(3) r/w 144B - addition made u/s 68 assessed at a higher rate u/s 115BBE was against the provisions of the statute and in violation of the principles of natural justice - HELD THAT:-Instead of exhausting the remedy, the appellant rushed to this court with a writ petition. The appellant was put to notice, and after that, the assessment proceedings were completed. In exercising the power of judicial review under Article 226 of the Constitution of India, this court cannot consider the merits of the assessment order.
We do not find that the impugned assessment order is without jurisdiction or that there has been any violation of the principles of natural justice. Hence, the learned Single Judge was absolutely justified in relegating the appellant to the statutory appellate remedy. We find no reason to interfere with the said judgment.
The time granted by the learned Single Judge to prefer the appeal is already over. In these circumstances, we permit the appellant to file an appeal u/s 246A before the Appellate Authority against the impugned assessment order within a period of one week from today.
The appellant is also free to file an application for stay. If such an appeal and stay application are filed, the Appellate Authority is directed to consider and dispose of either the appeal itself or the stay application within a period of one month from the receipt of the same after hearing both sides. Needless to say, during the said period of one month, recovery proceedings against the appellant for recovery of the amounts confirmed by the assessment order shall be kept in abeyance.
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2023 (12) TMI 1375
Disallowance u/s 14A - Suo-motu disallowance - HELD THAT:- We find that the assessee is a Bank. As relying on SOUTH INDIAN BANK LTD. [2021 (9) TMI 566 - SUPREME COURT] we direct Ld. AO to examine this aspect of the matter and apply the ratio of the decision to the case of the assessee. If the disallowance as computed by Ld. AO falls below the suo-motu disallowance as offered by the assessee, no further disallowance would be called for.
Adjustment of this item u/s 115JB - As we find that this issue is covered in assessee’s favor by the decision of Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] - Respectfully following the same, we direct Ld. AO not to make any such adjustment u/s 115JB.
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2023 (12) TMI 1368
Validity of order u/s 201/201(1A) as barred by limitation - TDS not deducted on lease rent to New Okhla Industrial Development Authority (NOIDA) - HELD THAT:- As gone through the provisions of section 201(3) of the Act as it stood at the relevant point of time and applicable to AY 2011-12, wherein it states that assessment for TDS return could not be framed beyond two years from the end of the Financial Year for which the assessment is sought to be framed. Accordingly, assessment framed by the Ld. AO on 28/12/2017 is barred by limitation.
Further, we find that for the regular TDS returns filed by the assessee for AY 2011-12, the erstwhile TDS Officer had already framed an assessment u/s 201/201(1A) of the Act on 15/03/2012 accepting the claim of the assessee. Hence, the assessments stood completed for the AY 2011-12. This assessment was neither reopened by the Ld. AO nor subjected to any revision proceedings u/s 263 of the Act by the Ld. PCIT. While this is so, there is absolutely no need for the Revenue to have framed yet another assessment on 28/12/2017 for AY 2011-12 by taking a divergent stand with regard to applicability of TDS on lease rent paid to NOIDA. When this fact was brought to the notice of the Ld. CIT(A), the Ld. CIT(A) did not even bother to give any finding on the same. Hence, we have no hesitation to hold that the second assessment framed on 28/12/2017 deserves to be quashed as void ab-initio for more than one reason and it is also barred by limitation. Appeals of the assessee are allowed.
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2023 (12) TMI 1365
Penalty u/s 271(1)(c) - addition towards advance for sale of the land from the prospective purchasers - HELD THAT:- As noticed that the AO had specifically stated that the sale deeds as proffered by the assessee for the purpose of substantiating the advance received from prospective buyers was only to the extent of Rs. 5,74,000/-. The sale deeds proffered also did not show any advances having been received by the assessee prior to the execution of the sale deed. The assessee also had a claim that the balances of the advances received were refunded. There was absolutely no evidence proffered to show such refunds.
AO made the addition, which though modified by the First Appellate Authority was restored by the Tribunal and which restoration was upheld by this Court. In the penalty proceedings the Tribunal relied on the First Appellate Authority’s order and confirmed the penalty only with respect to the addition which was disallowed to be treated as advance for sale of land received from prospective buyers.
We find no appeal having been filed by the Revenue against the order of the Tribunal. Hence, the penalty can be only to the extent of that confirmed by the Tribunal, though the entire addition is confirmed in the quantum appeal.
Addition on account of difference of opening balance of capital as per the revised capital account - This court in the quantum appeal has found that this was reflected in the original returns filed before the block assessment and since there was no reopening of the assessment there can be no addition made in the block assessment. The penalty imposed hence has to be deleted.
Disallowance of claim u/s 54B and u/s 54 - The additions were sustained in the assessment order which was interfered with by the First Appellate Authority on the ground that they were declared in the regular return. Tribunal reversed the order of the First Appellate Authority in the quantum appeal and restored the additions made, since they were never claimed in the original return filed. The quantum appeal before this Court also has not dealt with the issue and Tribunal’s order stands confirmed.
Tribunal in the above circumstances found that the penalty is justified on this count also. However, we are of the opinion that if no deduction was claimed in the original return then definitely the capital gains would have been assessed to tax. If such assessment has already been made and deduction is now claimed under Section 54B and 54F in the block return and rejected there is no ground of imposition of penalty. We hence delete the penalty imposed on the ground of a wrong claim of Section 54B and 54F of the Act.
Receipt of gift from the assessee’s brother - AO, FAA , Tribunal and this Court in the appeal from the assessment order found that there is no evidence produced by the assessee to prove the amounts received as gift from his brother. Hence, the penalty imposed is justified and is upheld.
Appeal partly allowed.
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2023 (12) TMI 1364
Validity of Revision u/s 263 - substantial question of law or fact - there were discrepancies in the figure with regard to value of current assets and current liabilities shown in the balance sheet as on 31.03.2008 vis-à-vis the cash flow statement filed before the AO - Whether question of law admitted by this Court may not be treated as the substantial question of law as the ITAT has already answered the query of the appellant and the issue of difference in balance sheet and cash flow are factual issues which have already been considered by the revisional authority under the ambit of Section 263?
HELD THAT:- CIT(A) has dismissed the appeal exparte. Appeal had been filed before the Tribunal and the Tribunal had exparte restored the issue back to the file of CIT(A). CIT(A) also dismissed the appeal for non-compliance. Tribunal in the interest of natural justice had restored the issue to the file of the CIT(A) so that the, assessee could be granted the opportunity to substantiate its case. This clearly shows that the assessee is not interested in showing the reconciliation but is attempting to use technical reasons to avoid the responsibility. This scathing remark from the ITAT showcases the triviality of the matter at hand.
Additionally, the submissions made with regard to the section 255 of the Act showcases the intention of the petitioner to delay the case. While scrutinizing the documents at hand, it is clear that due compliance has been made with respect to the reassessment proceedings and all the subsequent appeals. Additionally, the petitioner has been provided with the regular chances to submit his representation. However, the petitioner has been delaying the same.
The submission of the petitioner cannot be entertained. ITA is hereby dismissed.
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2023 (12) TMI 1362
Validity of reassessment beyond period of limitation - notice issued under Section 148 mentioned only the period of 30 days instead of 90 days as per the provisions u/s 148 - HELD THAT:- As considering the provisions of Sections 148, 148A and 149, the notice u/s 148A(b) shall not be invalid and on that ground, the reassessment proceedings cannot be quashed and set aside.
In the case of Naveen Verma [2011 (2) TMI 248 - PUNJAB AND HARYANA HIGH COURT] in the facts of the case before it, upon issuance of notice u/s 158BD by the AO giving lesser period of 15 days for filing return, notice is duly served, the assessee can either avail of the statutory time for filing of the return irrespective of shorter period mentioned in the notice or can be given fresh opportunity if it is held that the assessee suffered prejudice on account of shorter period mentioned in the notice.
Therefore, not permissible to quash the impugned notice merely on the ground that the period specified u/s 148 when the notice was issued, more particularly, when such notice would relate back to the assessment period, the time period provided for filing return was admittedly for 30 days, admittedly, such period, as may be specified in such notice. Therefore, the period of 30 days mentioned in the notice u/s 148 cannot be said to be fatal to the assumption of the jurisdiction by the AO in the facts of the case. Therefore, this contention raised on behalf of the petitioner is rejected.
Assumption of jurisdiction by the AO while issuance of notice u/s 148A(b) - As notice dated 28th March 2023 along with the Annexures issued under Section 148A(b) of the Act cannot be said to be the notice requiring the assessee to provide an opportunity of hearing to show cause as to why the notice under Section 148 of the Act should not be issued on the basis of the information which suggests that the income chargeable is escaped assessment. The notice is only in the nature of inquiry as contemplated under Section 148A(a) of the Act, which provides that before issuance of any notice under Section 148 of the Act, the Assessing Officer shall conduct an inquiry, if required, with prior approval of the specified authority with respect to the information which states that the income chargeable is escaped assessment. Therefore, though the notice was issued under the provisions of Section 148A(b) of the Act, in fact, such notice is u/s 148A(a) of the Act as the ingredients of notice which requires as per the statutory provisions of Section 148A(b) are not mentioned. AO has not provided any details with regard to income which has escaped assessment, but has called for the details for the period from the Financial Year 2014-15 to 2015-16 without mentioning the income as escaped assessment for the relevant Assessment Year 2016-17.
AO for the first time, in the order passed under Section 148A(d) of the Act has mentioned about bifurcation of the total transaction of Rs. 791.22 Crores out of which credit entries amounting to Rs. 86,63,62,755/- was mentioned pertaining to the period from 1st April 2015 to 27th April 2015 in the Suspicious Transaction Report.
On perusal of the impugned order u/s 148A(d) AO did not consider any of the contentions raised on behalf of the assessee on merits and reiterated only extract from the Suspicious Transaction Report - assessee has been given the entire details of transaction in reply along with the annexures, however, the AO did not consider the same and only observed that the assessee did not adduce any supporting document establishing the identity of the parties, genuineness of transaction and creditworthiness of the counter parties justifying the bank account transactions carried out are related to the business parties of the assessee.
On perusal of the record, it appears that the petitioner – assessee has submitted all the details along with reply filed on 9th May 2023 in such circumstances, in view of the above facts, the impugned assessment order u/s 148A(d) of the Act is not sustainable as the AO has failed to set out any opinion on the basis of the available information and material on record to arrive at the finding that it is a fit case to reopen the assessment under Clause (b) of Section 148A - In the case on hand, we are not required to examine the correctness of the contentions qua the facts of the case as raised on behalf of the petitioner as it would be premature as the case of the petitioner is based upon the legal contentions that the notice u/s 148A(b) is in the nature of notice u/s 148A(a) and that the notice issued u/s 148A(b) is without considering the contentions raised by the assessee in the reply to the notice under Section 148A(b) as per Clause (c) of Section 148A - On perusal of the notice under Section 148A(b) of the Act, it is clearly seen that the annexures do not contain any information, it is a questionnaire requiring the petitioner to provide details as sought for and therefore, it was an intention of the Assessing Officer who was to conduct an inquiry after receiving information from the assessee and therefore, notice is deemed to be the notice under Section 148A(a) of the Act. Thus, there is a gross procedural error from the very inception of the procedure rendering the same is bad in law.
[39] For the reasons recorded as above, as the notice dated 28th March 2023, though stated to be issued under Clause (b) of Section 148A of the Act, the same is, in fact, a notice under Clause (a) of Section 148A of the Act can be treated as such. As the time to issue notice under Section 148A(b) of the Act has already expired, no purpose would be served by issuing direction to the AO to conduct an inquiry considering the reply of the assessee as to whether to issue notice under Section 148A(b) of the Act or not.
The impugned order passed u/s 148A(d) as well as the notice issued under Section 148 of the Act are hereby quashed and set aside.
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2023 (12) TMI 1356
Conditional stay order - petitioner has been directed to pay of 20% of the total tax demand raised - Not only the conditional stay on payment of 20% has been granted but the petitioner has also been given facility of payment of 20% in seven equal installments.
HELD THAT:- Petitioner has submitted that the assessment orders after survey under Section 133A of the Income Tax Act had been finalized merely on the basis of the statements of the Director and Managing Director who had retracted later on. This submission does not appear to be correct.
The assessment order would disclose that not only the statements of the Director and Managing Director were taken into consideration but the other incriminating material including the excel sheets and digital datas maintained in the computers and laptops had also been examined before adding the undisclosed income to the returned income of the petitioner. Therefore, no much substance in the present writ petition that the merit of the assessment orders have not been considered while passing the impugned Ext.P5 order granting conditional stay.
The present writ petition is dismissed. The petitioner was granted time to pay the first instalment on or before 25.09.2023, the said time is extended to 30.12.2023 and the last and final installment has to be paid on or before 30.06.2024. Needless to say that the observation made herein will not prejudice the appellate authority to consider the case of the petitioner on merit.
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2023 (12) TMI 1351
Belated remittance of employees contribution to PF/ESI - Case of the assessee is that belated remittance of employees contribution to PF/ESI would also not to be taxable having regard to sec. 43B provided the same has been paid before the due date of filing of return u/s 139 and aforesaid disallowance is not called for and assessee, prayed for remitting the matter to the file of ld.AO for fresh adjudication
HELD THAT:- We do not find any serious objection to this effect from the ld.DR as against the contention made by the assesee before the authorities below and before us too.
Thus, we find merit in the submission and case made out by the assesee. In that view of the matter, we under the present facts and circumstances of the case find it fit and proper to remit the issue to the file of the ld.AO to consider the details as provided by the assessee as summarized hereinabove and to pass speaking order in favour of the assesee after giving an opportunity of being heard to the assessee and to adduce evidence at the time of hearing the appeal before the ld.AO. Appeal of the assessee is allowed for statistical purposes.
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2023 (12) TMI 1350
Rejection of registration application u/s. 12AB - form filed by the assessee i.e form 10AB rather than form No. 10A - HELD THAT:- We noted that the ld. CIT( E) simpliciter rejected the assessee’s application for registration only on the issue that assessee has not furnished form No. 10AC/10AD and the present application u/s. 10AB of the Act was filed u/s. 12A(1) (ac)(iv) of the Act seeking registration is not maintainable and hence rejected.
We are of the view that assessee has not filed application in form 10A and filed form no. 10AB of the Act which is merely a technical breach which can be cured by allowing the assessee to file application in form 10A of the Act alongwith other details. Hence, we set aside the appeal and the matter is remitted back to the file of the ld. CIT (E) who will allow assessee to file application in form No. 10A along with other required details and the ld. CIT (E) will examine entire aspect relating to registration u/s. 12AB of the Act as well as u/s. 80G of the Act and then will decide the appeal accordingly - Appeal of the assessee allowed for statistical purpose.
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2023 (12) TMI 1348
Unexplained cash deposits - Addition u/s 68 - cash sales made before demonetization which was deposited in the bank account as alleged unexplained amount cash sales to unverifiable persons - HELD THAT:- For Cash receipts from the customers and against which delivery of vehicle was made to them cash is generated out of the stock already on record and thus the sales made by the assessee company is genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings.
Now on the part of the receipt of the cash from the customer the jurisdiction high court judgement in the case of Smt. Harshil Chordia [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] held that So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition would not arise.
We, therefore, hold that no addition was required to be made nwhich was found to be the cash receipts from the customers and against which delivery of vehicle was made to them.
When the revenue partly considered the sales on the same invoice for an amount of Rs. 16,00,000/- why not on the balance. Thus, the facts of the case are different considering the finding recorded here in above. Therefore, the contention of the revenue based on the facts and circumstance of the case is not accepted and we direct to delete the addition - Decided in favour of assessee.
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2023 (12) TMI 1346
Denial of exemption u/s 11/12 - audit-report (Form No. 10B) was filed after filing of return of income but before processing u/s 143(1) - HELD THAT:- In view of settled judicial rulings noted in foregoing paragraphs as in Indian Panel Board Manufacturer [2023 (3) TMI 1374 - GUJARAT HIGH COURT] we find that the assessee can’t be denied the benefit of exemption u/s 11/12 as claimed in return of income for mere delay in filing of audit-report (Form No. 10B), when the assessee has in fact filed such report though after filing of return. We, therefore, deem it fit to remand this matter back to the file of AO for a fresh assessment after considering audit-report (Form No. 10B) filed by assessee. The assessee succeeds in this appeal.
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2023 (12) TMI 1344
Dismissal of appeal by CIT(A) for want of payment of admitting tax due on the returned income - HELD THAT:- CIT(A) has referred to provisions of section 249(4)(a) of the Act which contemplates inter alia that no appeal under this chapter shall be admitted unless at the time of filing the appeal the assessee has paid the tax due on the income returned by him. Now the assessee has produced challans of payment of tax due on returned income.
Therefore, in the facts and circumstances of the case and in the interest of justice the matter is set aside to the record of the CIT(A) for deciding the same afresh after considering the payment made by the assessee as well as explanation for delay in making payment of due tax on returned income. Needless to say the assessee be given an appropriate opportunity of hearing before passing fresh order. Appeal of the assessee is allowed for statistical purposes.
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2023 (12) TMI 1341
Deduction u/s 80P(2)(d) - interest income earned from other co operative banks - HELD THAT:- The Hon’ble jurisdictional High Court in the case of PCIT Vs. Totagars Co-operative Sale Society Ltd. [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] had categorically held that interest income earned out of the surplus fund is to be taxed under the head “income from other sources” and is not entitled to deduction under section 80P(2)(a)(i) of the Act.
The Hon’ble jurisdictional High Court held that interest income received from co-operative banks cannot be equated with interest received from co-operative society and therefore is not entitled to deduction under section 80P(2)(d)
CIT (A) had relied on the order of Vasavamba Co-operative Society Ltd.,[2021 (8) TMI 706 - ITAT BANGALORE] considered the judicial pronouncements on the subject and had followed the judgment of the Hon’ble jurisdictional High Court in the case of PCIT Vs. Totagars Co-operative Sale Society Ltd.(supra).
Since the relevant finding of the Bangalore Bench of the Tribunal has been reproduced in the impugned order of the CIT(A), the same is not reiterated here. Therefore, hold that assessee is not entitled to deduction under sections 80P(2)(a)(i) or 80P(2)(d) of the Act with regard to the interest income that is received from the scheduled banks / co-operative banks - Appeal filed by the assessee is dismissed.
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2023 (12) TMI 1339
Taxability of income in India - services rendered for providing Supply Planning Services (SPS) - Royalty /FTS under the India – UK DTAA - services falls within the purview of “royalty” under Article 13(3) of India-UK DTAA and crediting services and DTC accreditation business as FTS under Article 13(4) or not? - HELD THAT:- From the perusal of the services, it is seen that what has been provided is intention to offer whereby assessee communicates in advance to every sight holder the aggregate value of each Box it intends to make available to the sight holder during the selling period. It also undertakes to use its reasonable efforts to ensure that, insofar as practicable, there is consistency as to the size, type, quality and colour of diamonds contained in each box in any category that it supplies during the intention to offer period.
This is purely service for providing diamonds to the sight holders and such service cannot be held that some kind of technical service is being provided by the assessee on this under Article 13 of DTAA or there is any managerial, technical or consultancy services even under the provision of section 9(1)(vii) of the Act.
Provision of extranet, it only accelerates efficiencies in the intention to offer process and provides a platform for sharing DTC information, propriety content plus tailored access to each sightholder to their own specific business information and processes via secured web-based, informationsharing and business platform. It is merely for providing information and there is no element of making available technical services and therefore, we are unable to appreciate as to how these can be treated as FTS. In so far as the provision of key account management, it is a kind of main point of contact between sightholder and assessee and assists in managing that relationship and to provide support in planning the intention to offer and delivery schedules. This account is related to supply of diamonds and nothing to do with providing any technical services.
So far as maintaining integrity of supplier of choice, assessee has engaged an organization to verify the accuracy of the information contained in sightholder submissions and information supplied or ought to be supplied by sightholders during the term of the contract. Thus, this has nothing to trigger FTS clause of DTAA. Accordingly, the finding and observation of ld. CIT (A) is upheld. Accordingly, this issue is decided in favour of the assessee.
Receipts being fees for SPS not falling under the purview of royalty under Article 13(4) - The receipt of SPS fees by the assessee cannot be said to be falling in the definition of Royalty by virtue of information concerning industrial, commercial or scientific experience as the information is provided based on experience and not for imparting of experience.
However, with regard to taxability of supply planning services under Article 13(4)(a), for use of brand "Nakshatra or "Forevermark to promote sale of branded diamond products, it has been stated that the Nakshatra brand which was owned by assessee from which it has earned royalty income, earlier was sold in AY 2008-09. Thus, this payment cannot be held in the nature of FTS or royalty. Albeit this is business income for assessee in India. However, if assessee does not have a PE in India, therefore, in the absence of PE, the receipts from supply planning services cannot be taxable in India.
Receipts being receipts/ fees received for grading services as business income of assessee and not as royalty - We find that this issue stands covered by the decision of the Hon”ble Jurisdictional High Court in the case of Diamond Services International (P) Ltd. [2007 (12) TMI 182 - BOMBAY HIGH COURT] and also it has been brought on record that assessee's group company, Forevermark Limited, also a tax resident of UK. The Tribunal for A.Y.2013-14 has held that grading services rendered by it is not taxable as royalty. Thus, we upheld the order of the ld. CIT(A) that grading services do not fall within the ambit of royalty as per Article 13.
Receipts/ fees received from DTC Accredited Business Programme (DTC-ABP) as not falling within the purview of royalty or FTS under the Indo - UK Treaty - AO in his draft assessment order treating the receipts from DTCABP as an extension of Value Added Services and accordingly, taxed the same as FTS and royalty under Article 13 which has been confirmed by the DRP also - HELD THAT:- We agree with the submissions with the ld. Counsel that once it is not a registered trademark, it does not have a sign or logo and it is not owned by the assessee, there is no question of taxing the same as royalty. Further, it cannot be held to be taxable as FTS also under Article 13 because there is no make available technical knowledge under this programme. Accordingly, order of the ld. CIT (A) is upheld and the grounds raised by the Revenue are dismissed.
It has been stated that in the appeals for A.Yrs. 2010-11 to 2012-13 have exactly similar issue under consideration with similar facts. However, they are assessee”s appeal, since post assessment order assessee has preferred DRP route and accordingly, the order of the AO has been upheld. Accordingly, our finding given in the A.Y.2009-10 will apply mutatis mutandis for these years also.
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2023 (12) TMI 1334
Penalty u/s 271(1)(c) - bogus LTCG on penny stock - CIT(A) deleted addition - HELD THAT:- As observed by the CIT(Appeals), and rightly so, as the assessee had offered LTCG on sale of 2500 shares of M/s. Blueprint Securities Ltd. as a part of her total income in the return of income filed in response to the notice u/s. 148 of the Act, therefore, the AO without establishing that the assessee had concealed her income, could not have saddled her with penalty u/s. 271(1)(c) of the Act. We, thus, concur with the view taken by the CIT(Appeals), who had rightly vacated the penalty u/s. 271(1)(c) of the Act and uphold the same. Decided against revenue.
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2023 (12) TMI 1331
TP adjustment - price of the power transferred by the captive power plant of the assessee eligible for deduction u/s 80IA to the non- eligible manufacturing units of the assessee and thereby reducing the claim of deduction claimed by the assessee u/s 80IA of the Income Tax Act - DR has strongly relied upon the observation made by the Transfer Pricing Officer and has submitted that for determination of arm’s length price in relation to power supply by the captive power plants of the assessee, the average market rates at which the other power generating units sell the power to distribution companies is required to be taken
HELD THAT:- Assessee’s main business is not of generating of power to further sell the same to the distribution companies/State Electricity Boards. The point to be noted here is that the respective captive power plants were established by the assessee for its own needs i.e. for the purpose of supply uninterrupted powers to its manufacturing units as well as to save the cost of power purchased from State Electricity Boards.
Here, in the facts and circumstances, in our view, the arm’s length price could not be determined by taking the average market rates of power supply units to distribution companies as the assessee is not into the said business of selling of power to distribution companies. The arm’s length price in this case, in our view, has to be determined taking into mind the business perspective of the assessee which was to get uninterrupted power and to save cost of electricity paid to the State Electricity Boards.
When we look into the facts in this perspective, the relevant factor in this case would be the market price of the power at which the assessee’s manufacturing units purchased the power from the market or from the State Electricity Boards. Moreover, as per the Electricity Act, 2003 the captive power plants are kept outside of the regulatory mechanism and are free to supply electricity to its associate enterprises/manufacturing units or to the contracting parties and consumers, at the rates mutually settled between them. The said captive power plants are not mandatorily required to supply the electricity to the distribution companies and even are exempt of other charges which the other generating companies/distribution companies has to pay to the Government/ State Electricity Boards. The captive power plants are required only to pay wheeling charges if they use the distribution lines of the State Electricity Boards/distribution companies.
Sale of electricity by the generating companies to the distribution company/state electricity board - The consumer /contracting parties will certainly want to purchase the electricity at somewhat lesser rate than the rates of the State Electricity Boards, whereas, the captive power plants/generating companies would try to get maximum rate on the sale of power in unregulated and uncontrolled transactions and under the circumstances, both the parties would settle at the mutually agreed rates, irrespective of the rates at which the State Electricity purchases power from the other generating units. When we consider this bargain power of captive units and other generating companies in uncontrolled and unregulated transactions, then market value to determine arm’s length price, in our view, would not be dependent upon of the average market value electricity sold by other generating units to the distribution companies in controlled and regulated transactions. As observed above, the very purpose and objective of the installation of captive units by an assessee is to supply of electricity to its own manufacturing units for uninterrupted power supply and saving of electricity expenses and whatever expenses are saved that certainly would be the profit of the captive unit which, in our view, will be eligible for deduction u/s 80IA of the Income Tax Act.
Considering this aspect, the contention of the Revenue that the rates determined by the Regulatory Commission for generating units for supply of electricity to the distribution companies should be taken as benchmark, in our view, would not be accurate benchmarking of the price.
Thus, as discussed in the preceding paras of this order in context to the provision of Electricity Act 2003, that the market value of the power in case of supply by generating units to the distribution units cannot be said to be an uncontrolled market conditions and under the circumstances, the aforesaid observations of the Hon’ble Supreme Court M/s Jindal Steel & Power Ltd.[2023 (12) TMI 417 - SUPREME COURT] is squarely applicable in this case also wherein held the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board’s rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under Section 80-IA of the Act.That being the position Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, the High Court was fully justified in deciding the appeal against the revenue.
In view of the above observations, we do not find any merit in the appeal of the revenue and the same is hereby dismissed.
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2023 (12) TMI 1330
Extension of stay of outstanding demand - assessee took us through the ITAT’s order [2023 (5) TMI 1349 - ITAT RANCHI] and submitted that on the last occasion, stay was extended on the ground that there is no change in the facts and circumstances - HELD THAT:- As the assessee has not sought any adjournment, rather applied for early hearing so that appeal could be disposed of on an early date. Due to certain unavoidable circumstances, namely non-functionality of the Bench or adjournment request at the end of the Revenue, this appeal could not be disposed of. Apart from the above fact, there is one more important fact brought to our notice, namely the assessee has filed a rectification application before the ld. DRP, whose disposal is still pending.
According to the assessee, if that application is allowed, then, instead of any payment, assessee will be entitled for a refund. Therefore, while earlier extending the stay, Bench has observed that adjudication of that application has a bearing on the ultimate disposal of the appeal. We allow this application and extend the stay on the recovery of demand for a period of 180 days or till the disposal of the appeal, whichever event occurs first. The assessee will not seek any adjournment without unavoidable circumstances. The appeal be listed on the date already fixed. Stay Application of the assessee is allowed.
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