|
Advanced Search Options
Income Tax - Case Laws
Showing 441 to 460 of 8298 Records
-
2023 (12) TMI 329
Addition u/s 40(a)(ia) - non deduction of TDS on expenses relating to rent reimbursed to holding company - AR submitted that the assessee is paying rent to its holding company and in respect of premises taken by the holding company on rent paid is claimed as reimbursement since several years. This position has been accepted by the department in the proceedings and subsequent assessment years and never disputed even when the provision for TDS inserted on the statute since 1994 by inserting section 194-I of the I.T. Act, 1961 was in Act w.e.f. 01.06.1994 - HELD THAT:- The assessee is a subsidiary of holding company entered into lease agreement and applicable tax deducted at source by depositing thereon. As the assessee was occupying part of the said rented property and reimbursing its holding company towards rent partially.
In the present case, the assessee is paying rent to the holding company as reimbursement since last couple of years. This position has been accepted by the department all through and it has been never disputed even when provisions for TDS were inserted on statute since 1994, section 194-I of the Act was inserted in Act w.e.f. 01.06.1994.
Similarly, this position was not disputed even after amendment in section 40(a)(ia) of the Act by the Taxation Law (Amendment) Act, 2006 which is w.e.f. 01.04.2006. On this issue, there is no material change in the facts and circumstances of the case as well as the law during the year under consideration.
AR placed before us the copy of lease deed which provided for use of the premises by subsidiary companies. The actual payments are made by the lessee (holding company) to the lessor and necessary tax was deducted there from. Further, the holding company also did not debit the whole rent to its books of account. It has only debited the rent which pertains to the part of the premises occupied by assessee.
In such a situation, in our considered opinion, there is no lessor and lessee relationship between the holding company and the present assessee where the provisions of section 194-I are applicable. Keeping in view, on the facts of the case and following the decision rendered in the case of ACIT, Circle-15(1) vs M/s. Result Service Pvt. Ltd. [2012 (7) TMI 217 - ITAT DELHI] - Accordingly, we direct the AO to delete the addition made u/s 40(a)(ia) - Appeal of the assessee allowed.
-
2023 (12) TMI 328
Maintainability of appeal in Tribunal - low tax effect - HELD THAT:- The Central Board of Direct Taxes, vide Circular No. 17/2019, dated 8th August, 2019, F. No. 270/Misc.142/2007ITJ(Pt.), has issued the direction in supersession of the Circular No. 3/2018 dated 11th July, 2018, F.No. 279 of Misc.142/2007-ITJ (Pt.), in consonance with the power entrusted under section 268A of the Income Tax Act, 1961 that no appeal should be filed before the Tribunal in case the tax effect does not exceed Rs. 50 lakhs.
In the backdrop of the CBDT Circular No. 17/2019, the Ahmedabad Bench of the Tribunal, in its recent order passed in Dinesh Madhavlal Patel, Ahmedabad and other [2019 (8) TMI 752 - ITAT AHMEDABAD] disposing of 628 appeals and COs.
It may be clarified that though every care has been taken by the Registry of the Tribunal in identifying the appeal, it may yet be that some error in working the tax effect may have occurred. It may also be that the appeal is otherwise saved by the exceptions listed at para 10 (scope of which stands widened vide amendment dated 20/8/2018) or para 11 of the Circular. Accordingly, liberty is hereby granted to the parties to move the Tribunal in this regard, in which case it shall, if satisfied on merits, recall the appeal for being heard on merits.
-
2023 (12) TMI 327
Undisclosed loans and advances - AO formed a belief that the assessee has given loans and advances outside the books of account - Basis the notings in this seized ledger AO made addition - HELD THAT:- It is true that presumption u/s 132(4A) /292C of the Act is that whatever is found and seized during the course of search proceedings has to be accepted as such but the contention of the ld. counsel for the assessee that if in the seized document the amount is written as “Loan”, then it should be accepted as loan and cannot be examined u/s 68 of the Act and cannot be accepted because it would make the entire scheme of Act redundant.
Moreover, in none of the cases referred to and relied upon by assessee have given any findings on the non applicability of section 68 on the seized document. The finding is in respect of presumption u/s 132(4A)/292C of the Act and there is no denial of such presumption but the issue under consideration is whether provisions of section 68 can be made applicable on such mentioning of “Loan” in the seized document.
Then, in our considered opinion, even if the mention is of ‘loan’ then also the assessee has to prove that it is a loan and, therefore, provisions of section 68 squarely apply on such notings and the onus is on the assessee to establish the identity, capacity of the lender and genuineness of the transaction as is applicable in normal assessment proceedings. Since the assessee has grossly failed in all the three counts, we decline to interfere with the findings of the ld. CIT(A). Accordingly, Ground No. 4 of the assessee’s appeal and Ground No. 1 of Revenue’s appeal are dismissed.
Addition on account of undisclosed interest - We direct the Assessing Officer to allow expenditure relating to payment of interest and bad debts and allocate balance interest income, if any, in the ratio 60:40 as done in earlier years between the assessee and his brother Shri Vinod Gupta. Accordingly, Ground No. 5 of the assessee’s appeal is allowed for statistical purposes.
Investment in jewellery - addition are that on the basis of seized documents - CIT(A) deleted addition - HELD THAT:- It is not in dispute that it is customary in affluent families to get jewellery on approval basis. All that we have to see is how much of the jewelry was purchased and whether the assessee has successfully demonstrated the source of investment.
Thus only jewellery of Rs. 67 lakhs was purchased with necessary entries in Day Book clearly explaining the source of investment. On these facts, we do not find any reason to interfere with the findings of the ld. CIT(A).
Undisclosed investment - CIT(A) deleted addition - HELD THAT:- The undisputed fact is that the impugned property was owned by Standard Enterprises which is a partnership firm having two partners, namely, Smt Madhu Gupta and Smt. Veena Gupta. It is also an undisputed fact that sale deed was executed on 06.07.2007 falling in F.Y. 2007-08 pertaining to A.Y 2008-09. On these undisputed facts, the ld. CIT(A) has rightly deleted the impugned addition, which calls for no interference. Accordingly, Ground is dismissed.
Undisclosed share purchases - blank share transfer deed found during the search - HELD THAT:- We find that the undisputed fact is that as on 31.03.2009, Shri V.K. Bansal of Sora Marketing Pvt Ltd was still the registered share holder of the impugned shares which means that the share transfer deal never materialized and the impugned transaction never took place. We, therefore, decline to interfere with the findings of the ld. CIT(A).
Interest u/s 234A for the period upto which the assessee was not provided copy of seized material - HELD THAT:- An identical issue was considered by the coordinate bench in assessee’s own case for assessment year 2006-07 and 2007-08 interest u/s 234A not to charged for the period upto which the assessee was not provided copy of the seized material and in our humble understanding of law, this conclusion of the Commissioner of Income Tax (Appeals) is in accordance with the provisions of the Act and, therefore, we are unable to see any valid reason to interfere with the same and hence, we uphold the same.
Income from trading commission - assessee explained that this entry was made forcibly by the search party on 01.08.2009 at 3.30 AM and contended that nothing emerges out of the said sheet as to from which trading commission of Rs. 1.02 crores has been earned by the assessee - CIT(A) deleted addition - HELD THAT:- The undisputed fact is that the entire addition is based upon the confession made by the assessee at the time of search. Other than this, there is no evidence brought on record to suggest that the assessee was doing some trading business from which he earned commission. It is also not in dispute that no excess cash or jewellery was found where this alleged unaccounted income must have been invested. Since the addition is not backed by any supporting evidences, the ld. CIT(A) has rightly deleted the said addition which calls for no interference.
-
2023 (12) TMI 294
Assessment u/s 153C - Whether CIT(A) considering block of six assessment years with reference to date of handing over of seized assets/documents to the AO of the assessee i.e. person other than the searched person, instead of the date of initiation of search on searched person and holding that AY 2011-12 to AY 2013-14 are outside the scope of section 153C? - HELD THAT:- We find that the first appellate authority has decided the appeal in favour of the assessee following the binding decision in the case of RRJ Securities Limited [2015 (11) TMI 19 - DELHI HIGH COURT] and subsequent amendment in the section 153C of the Act w.e.f. 01.04.2017.
We do not find any merit in the grievance of the revenue. If the revenue is aggrieved by the binding decision of the Hon’ble Jurisdictional High Court of Delhi (supra) the revenue may approach the Hon’ble Supreme Court but in no case the revenue can be aggrieved by the binding decision before this Tribunal.
-
2023 (12) TMI 285
Accrual of income - Income from Other Sources - rent on account of sub-lease agreement of the Appellant with IDBI - terminated the agreement - Appellant has not accepted the rent from IDBI post termination of the sub-lease agreement - cross-suits filed by the Appellant and the IDBI against each other are pending as of today before the Small Causes Court - assessee argued since the sub lease agreement with the IDBI has been terminated and a suit is filed against it, no amount is due from IDBI as lease rent and, therefore, question of taxing the same does not arise - HELD THAT:- Section 56 of the Act which deals with ‘Income from other sources’ provides for charging to income tax, income of every kind which is not chargeable for income tax under any of the heads specified in Section 14, items A to E. The Appellant is a company governed by the Indian Companies Act, 1956 (now Companies Act, 2013) and maintains its books of accounts on mercantile basis. Section 5(1)(b) of the Act provides for scope of total income to include all income which “accrues” or “arises” or “is deemed to accrue or arise” in India during such year.
The words ‘accrue’ or ‘arise’ have different meanings attributed to them while the former connotes the idea of a growth or accumulation, the latter connotes the idea of crystallization of the former into a definite sum that can be demanded as a matter of right. A person does not have a legal right to receive the income by merely earning of income. Although, earning of income is a necessary pre-requisite for accrual of income, mere earning of income without right to receive the same does not suffice. A person may be said to have “earned” his income in the sense that he has contributed to its production by rendering service and the parenthood of the income can be traced to him but in order that the income that may be said to have “accrued” to him an additional element is necessary that he must have created a debt in his favour. The phrase “accrue or arise” has been the subject matter of judicial debate from inception which we now propose to deal with some of them.
Whether sub-lease rent sought to be taxed accrues or arises to the Appellant in the assessment year 1986-87? - It is not disputed by the Revenue that the cross-suits filed by the Appellant and the IDBI against each other are pending as of today before the Small Causes Court. It is also not disputed that the Appellant has not accepted the rent from IDBI post termination of the sub-lease agreement in the year 1981. The Appellant, in its suit for eviction, has prayed for a declaration that sublease dated 22nd April 1980 is lawfully terminated and forfeited by the Appellant in addition to various other prayers, including a prayer that IDBI be ordered and decreed to pay arrears of rent or compensation for wrongful use and occupation of the property in a suit at the rate of Rs. 4,50,000/- per month as against Rs. 3,42,720/- per annum as per the sub-lease agreement.
The Small Causes Court has permitted IDBI to deposit the lease rent in the Court till the rights of the parties are decided and the order of deposit of the rent is without prejudice to the rights and contentions of the parties. In the light of these facts, whether the sub-lease agreement between the IDBI and the Appellant subsists post 1981 termination by the Appellant, is itself a subject matter of dispute between the Appellant and IDBI which is pending adjudication.
Thus it cannot be said that the Appellant is entitled to receive a sum under the sublease agreement with IDBI or a right is vested in the Appellant to that sum.
In our view, one cannot tax the amount having not accrued to the Assessee and not received by an Assessee on an assumption and presumption that in future the Small Causes Court will at least order the said sum in favour of the Appellant. The determination of the amount payable by the IDBI to the Appellant as prayed for by the Appellant in its suit is to be determined by the Small Causes Court and it is as and when the Court passes a final decree that one can say that right to receive the sum decreed by the Small Causes Court as having accrued to the Appellant. Till then, the right to receive any sum by the Appellant is in jeopardy and sub-judice before the Small Causes Court.
The Appellant had informed the Revenue and the IDBI that the garnishee proceedings are illegal because post-termination no rent is due and payable by IDBI to the Appellant. This fact has been missed out by the Tribunal in coming to its conclusion. Even otherwise, merely because a party to a civil dispute to protect its rights makes a payment to the Income Tax Department pursuant to garnishee proceedings, it would not amount to subsistence or existence of the sub-lease agreement between the Appellant and the IDBI for bringing to tax Rs. 3,42,720/- per annum as income for the assessment year under considerations. In our view, the Tribunal has not correctly appreciated the facts of the Appellant's case and the effect of the civil dispute pending between the Appellant and the IDBI on the income tax proceedings.
Revenue is not justified in bringing to tax sum as accrued income for the assessment year 1986-87 and for the other years, which are subject matter of appeal before this Court in appeal.
-
2023 (12) TMI 284
Reopening of assessment u/s 147 - Change of opinion - Machinal approval by CIT / PCIT - capital account transaction - difference between the consideration received by SIPL against the sale of the subject parcel of land and its value calculated based on the then prevailing circle rate was the income that had escaped assessment - reopening after the end of four (4) years from the date of the end of relevant AY and at the end of the cusp of the sixth (6) year - Whether AO committed an error in taking recourse to Section 50C of the Act - HELD THAT:- The subject land was treated as stock-in-trade in the hands of SIPL as well as STPL. Thus, the AO, according to us, committed an error in taking recourse to Section 50C of the Act.Because the AO took recourse to Section 50C of the Act, he proceeded to arrive at the escaped income by calculating the value of the land based on the then prevailing circle rate, after adjusting it against the sale consideration.This, according to us, was a fatal error.
What has emerged is that although reassessment had been triggered, concededly, after the end of four (4) years from the date of the end of relevant AY and at the end of the cusp of the sixth (6) year, i.e., on 31.03.2018, the AO did not allege that SIPL had failed to disclose fully and truly all material facts which were necessary for carrying out the assessment. This, according to us, was a grave folly. The reason, perhaps, why the AO did not allude to this aspect was because queries were raised during the original assessment, which included questions concerning the sale of the subject land. More particularly, answers were furnished by SIPL, along with the relevant documents and material sought by the AO, thusit cannot be said that the subject transaction was not scrutinized by the AO.
It is well-known that the AOs often issue questionnaires, seek answers to their queries and if satisfied, may decide to accept the explanation and consequently, the return. Therefore, in our view, it is correctly argued on behalf of SIPL by Mr Sinha that this was a case of change in opinion.
Whether the PCIT applied his mind while granting approval? - The form for obtaining approval is what appears to have been placed before the ACIT and PCIT. The mandatory entries were not made. Therefore, the weight of the evidence seems to suggest that the ACIT cleared the path without delving into the aspect that this was, indeed, a case of under-assessment and, likewise, the PCIT rubberstamped the request made by the AO for initiating the reassessment proceeding qua SIPL without applying his mind to the requisite aspects.
According to us, the reopening of the concluded scrutiny assessment is a serious business. The Act provides for a layered approach precisely for this reason. Senior officers like ACIT and PCIT are expected to apply their minds to such requests and, only after that, approve the initiation of reassessment proceedings. Several pitfalls that the Court's notice can be avoided if the concerned authorities were to look closely at the request made for re-opening. Clearly, in SIPL’s case, these aspects were not examined by the concerned AO or by the ACIT/PCIT.
Whether the impugned transaction was a sham and, therefore, reassessment was rightly triggered ? - A sham transaction is “something that is not what it seems”, i.e., a counterfeit document. [See Black’s Law Dictionary 8th Edition, page 1407]
It is no one’s case, not even the AO’s case, that SIPL had not executed the MOU/agreement with STPL. The burden of the AO's order is that the sale of the subject land was a capital account transaction and, therefore, Section 50C of the Act was applicable.
Thus, reliance on the observations made in the Phool Chand Bajranglal case [1993 (7) TMI 1 - SUPREME COURT] has no applicability. The facts therein are entirely distinguishable. That was a case wherein the appellant/assessee had claimed that he had borrowed a certain sum from an entity. Accordingly, the money borrowed was shown as a liability in the balance sheet. The appellant/assessee also claimed that the money had been borrowed and returned in cash, although interest was paid via cheque/bank draft.
Based on this broad assertion, the AO allowed a deduction of the interest claimed by the appellant/assessee to the lender company. However, the AO had doubts about the genuineness of the loan transaction, and therefore, he wrote to the AO of the lender company. AO of the lender company informed his counterpart that the director of the lender company had confessed that it was a dummy entity and had not advanced any loan to any person. This letter conveyed that the so-called lender company lends money to different companies to launder their unaccounted money. It is against this backdrop that the court sustained the action taken to reopen the reassessment proceedings. Given this backdrop, the Court observed that it was not a case where the AO sought to draw fresh inference, which it could have raised when he framed the original assessment order regarding the loan transaction based on the material placed before him. Therefore, the fresh information in that case, as observed by the Court, exposed the falsity of the statement made on behalf of the appellant/assessee when the original assessment order was framed.
Thus, we are of the opinion that for the reasons given above, this is not a case in which the reassessment proceedings ought to have been triggered against SIPL. Assessee appeal allowed.
-
2023 (12) TMI 283
Reopening of assessment - Exemption u/s 47 - conversion of the company into a Limited Liability Partnership Firm - whether Notice under Section 148A(b) can be issued for the purpose of re-assessment under Section 147? - HED THAT:- There is no dispute that the notice that were issued were under the old regime.
However, the Hon'ble Supreme Court in Union of India and others versus Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] as a result of which all notices issued under the old regime after 01.04.2021 were to be treated as a notice issued under section 148A of the Income Tax Act, 1961.
Thus, the Notice Issued under Section 148 of the Income Tax Act, 1961 to the petitioner on 30.06.2021 was to be decided in accordance with the newly inserted section 148A of the Income Tax Act, 1961. Thus, the Assessment was to be completed in accordance with the aforesaid provision.
Prior to issuance of Notice Issued under Section 148 of the Income Tax Act, 1961 to the petitioner on 30.06.2021, the Department had audited the accounts of the petitioner for the assessment year 2016- 17 after the Assessment was completed under Section 143(3) of the Income Tax Act, 1961.
The audit memo addressed to the Asst Commissioner of Income Tax dated 19.6.2019 indicates that the petitioner a Limited Liability Partnership Firm was earlier Private Limited Company. The 2 partners of the petitioner Firm were itsdirectors. The company was converted into petitioner firm only on 07.08.2015. As on 31.03.2015, one of the partner namely Ms Nina B. Kothari held 25,07,688 preference shares of Rs. 10/- each in the said company prior to its conversion into a Limited Liability Partnership Firm.
After, 31.03.2015, but before the conversion of the company into a Limited Liability Partnership Firm on 07.08.2015, the aforesaid preference shares were transferred to the other partner namely BHK Foundation (Discretionary Trust). Ms Nina B. Kothari thus merely held one equity share in the said company, prior to conversion on 07.08.2015.
The Trust, thus had 1,99,999 equity shares of Rs 10 each and 25,07,688 preference shares of Rs. 10 each in the company. This aspect was not brought to the notice of the Income Tax Department prior to scrutiny assessment that came to be completed/passed on 27.11.2018.
Prime facie, it appears that income had escaped assessment. The exemption that was claimed under section 47 (xiv) of the Income Tax Act, 1961 is available subject to the rider specified therein. The sales turnover or gross receipts from the business in the 3 preceding year prior to the previous year in which the conversion took place should not have been more than Rs. 60,00,000/-.
The petitioner firm has not disclosed all the above information to the assessing officer prior to the assessment order that was passed on 27.11.2018 under Section 143 (3) of the Income Tax Act, 1961. Therefore, the respondents were prima facie justified in re-opening the assessment under Section 148 of the Income Tax Act, 1961 for the Assessment year 2016-17.
The limitation stood which was to expire stood protected in view of the orders passed by the Hon'ble Supreme Court and in view of the Ordinance and the Act in the wake of out break of Covid-19 Pandemic. However, in the light of the decision of the Hon’ble Supreme Court in Union of India versus Ashish Agarwal, notices issued after 01.04.2021, were to be treated as notice issued under section 148A of the Income Tax Act, 1961.
Therefore, the challenge to the proceedings initiated in the light of the decision of the Hon’ble Supreme Court cannot be countenanced. Whether the petitioner is indeed entitled to succeed eventually in the re-assessment proceedings or not is to be decided by the 1st respondent. Intervention of this Court against the proceedings initiated cannot be countenanced as prime facie there are indications that income had escaped assessment.
The petitioner has also participated in the proceedings and has filed this writ petition only on 16.3.20 23. Therefore, the challenge to the impugned proceedings and show cause notices cannot be countenanced at this stage. Consequently, this writ petition is liable to be dismissed.
-
2023 (12) TMI 282
Scrutiny of ITR by the Faceless Assessment Officer - Rectification petition to rectify the mistake of double dis-allowance in the intimation - As argued though the respondent had not considered the reply filed by the petitioner, the said reply will be considered at the time of scrutiny by the Faceless Assessment Officers in accordance with law - HELD THAT:- A reading of section 143 makes it clear that if there is any corrections, errors, addition or reduction in the ITR of the Assessee, the Department has to intimate the same to the Assessee. In the present case, the respondent had intimated the error to the petitioner and also directed the petitioner to file his reply within a period of 30 days. Thereafter, as per the provisions of the Act, the respondent is supposed to have considered the said reply and make suitable modifications in his income tax returns as requested by the petitioner. However, though the reply was filed by the petitioner, the respondent not the said reply and issued the impugned intimation dated 29.07.2023.
As submitted by respondent that the reply filed by the petitioner will be considered at the time of scrutiny of ITR by the Faceless Assessment Officer, which means the Faceless Assessment Officer has to consider the reply and proceed the petitioner's case with double stands i.e., (1) based on the original returns filed by the petitioner; and (2) based on the modified returns after considering the reply of the petitioner, which would ultimately create unnecessary confusion.
Since the learned counsel for the respondent had submitted that the reply, which was rejected by the respondent will be considered at the time of scrutiny and for the interest of justice, this Court is inclined to pass the following orders:
i) The respondents are directed to consider the reply filed by the petitioner dated 23.04.2023 and accept the returns accordingly.
ii) Thereafter, the Faceless Assessment Officer shall proceed further by providing opportunity of hearing before passing orders in the scrutiny assessment.
-
2023 (12) TMI 281
Levy late fee u/s 234E - intimation u/s 200A - late fee imposed prior to 01.06.2015 - whether late fee u/s 234E can be levied prior to the amendment to the Section 200A(1)(c) of the Act vide Finance Act, 2015 w.e.f. 01.06.2015? - Reliance was sought to be placed upon the judgment of Fatheraj Singhvi & Ors. Vs. Union of India & Ors [2016 (9) TMI 964 - KARNATAKA HIGH COURT] wherein it was held that the amendment to Section 200A of the Act brought about with effect from 01.06.2015 whereby sub clause (c) to sub-section (1) to Section 200A of the Act was introduced is not merely a regulatory mechanism but is substantive in nature thus the amendment to Section 200A(1)(c) of the Act cannot be given retrospective effect.
HELD THAT:- Liability to pay, by way of fee gets attracted under sub-section(1) to Section 234E of the Act once a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section(3) of Section 200 or the proviso to sub-section (3) of Section 206C of the Act and the liability shall continue for every day during which the failure continues. Sub-section (3) to Section 234E of the Act provides that the fee referred to in subsection (1) to Section 234E of the Act shall be paid before delivering or causing to be delivered a Statement in accordance with sub-section (3) of Section 200 or the proviso to sub-section (3) of Section 206C.Importantly, sub-section (4) to Section 234E of the Act provides that the above provisions would apply to statement referred to in sub-section (3) to Section 200 of the Act which is to delivered or cause to delivered on or after 01.07.2012.
Section 234 E of the Act and on considering both the above views, it appears to me that the opinion expressed by the Gujarat High Court that [2017 (7) TMI 458 - GUJARAT HIGH COURT] Section 234E of the Act by itself creates a liability and the liability to pay the late fee is not dependent on Section 200A(1)(c) of the Act which only prescribes the recovery mechanism reflects the true intent and purpose of Section 234E of the Act. Section 234E of the Act which provides for late fee is the substantive provision and the levy is not dependent on Section 200A(1)(c) of the Act which only prescribes a recovery mechanism. A reading of Section 234E of the Act would make it clear that it gets attracted, the moment there is a failure on the part of a person to deliver or cause to be delivered a statement within the time prescribed in subsection (3) of Section 200 or the proviso to sub Section (3) of Section 206C of the Act.
Sub Section(4) to Section 234E of the Act also makes it clear that the above provision would be effective from 01.07.2012. Therefore the submission that 234E of the Act would not be operable / effective unless and until Section 200A(1)(c) was introduced overlooks the fact that Section 234E (1) of the Act is the substantive provision and Section 234E(3) of the Act provides for a self declaration / payment for the delay in complying with sub-section(3) of Section 200 or the proviso to sub -section(3) of Section 206C of the Act. With due respect I am unable to subscribe to the view expressed by the Karnataka High Court in view of the reasons stated supra.
Thus challenge to the order dated 26.02.2021 imposing the levy of late fee prior to 01.06.2015 stands rejected. The writ petition stands dismissed.
-
2023 (12) TMI 280
Validity of AO’s order with no DIN mentioned - scope of subsequent issue of DIN orders afterwards - HELD THAT:- A perusal of the AO’s order shows that it is clear in the body of AO’s order, no DIN number is mentioned nor there is any reason of not mentioning the DIN number in order of the AO. Is such a situation, the AO order will lose its validity. Subsequent separate communication of DIN is a superfluous exercise. As regards reference to the decision of the Hon’ble Jharkhand High Court and Hon’ble Allahabad High Court by the Ld. DR , we find that Hon’ble Supreme Court in the case of CIT v. Vegetable Products Ltd [1973 (1) TMI 1 - SUPREME COURT] has held that if two views are possible one in favour of the assessee is to be adopted. In this regard, we are referring to the decision of the Hon’ble Delhi High Court in the case of CIT vs Brandix Mauritius Holdings Ltd. [2023 (4) TMI 579 - DELHI HIGH COURT] communication relating to assessments, appeals, orders, etcetera which find mention in paragraph 2 of the 2019 Circular, albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular - thus given the language employed in the 2019 Circular, there is neither any scope for debate not is there any leeway for an alternate view.
Thus we hold that the impugned AO order is invalid and shall be deemed to have never been passed. Accordingly, we quash the impugned AO order. Further, the issue that a simultaneous DIN number was generated and communicated have considered in Abhimanyu Chaturvedi [2023 (8) TMI 378 - ITAT DELHI] forwarding of the intimation of generation of the DIN in ITBA is only a subsequent action and that is not part of assessment order. The manner in which the word ‘communication’ is defined shows every notice, order, summons, letter and any correspondence from Tax authorities should have a DIN quoted and it is for this reason that the Intimation issued about the DIN of assessment order itself has a DIN quoted on it.
The generation of DIN subsequently and generation of intimation to be sent to assessee are of no consequence for the purpose of assessment and raising the demand - Assessee appeal allowed.
-
2023 (12) TMI 279
Assessment u/s 153A pursuant to a search - assessee submitted that no addition in this case has been done by referring to seized material found during the search - HELD THAT:- We note that the additions are not based upon any incriminating material found during search. DR also could not dispute this proposition.
As per the decision of the Hon’ble Supreme Court in the case of PCIT vs Abhisar Buildwell Pvt. Ltd [2023 (5) TMI 587 - SUPREME COURT] no addition can be made the assessment framed u/s 153A dehors incriminating material found during the search. Since, the AO himself admitted that the addition is made dehors any seized incriminating material during the search, respectfully following the precedent of Hon’ble Apex Court, we set-aside the order of the Ld. CIT(A) and decide the issue in favour of the assessee.
-
2023 (12) TMI 278
Rectification u/s 154 - Disallowance of prior period expenses - Revenue has vehemently argued before us that the Assessing Officer had rightly initiated the impugned rectification process for the purpose of disallowing the assessee’s foregoing prior period expenses - HELD THAT: He fails to dispute the clinching fact emerging from the case records that the AO had very well issued sec. 142(1) notice seeking to disallow the same on 26.02.2016 i.e., prior to sec. 143(3) assessment which stood duly explained by the assessee on 08.03.2016.
These relevant documents duly form part of the case records. That being the case, we quote hon’ble apex court’s landmark decision in T.S. Balram, ITO vs. Volkart Brothers [1971 (8) TMI 3 - SUPREME COURT] that purpose of sec. 154 rectification is only to deal with apparent mistakes on record than those involving detailed roving enquiries and confirm the CIT(A)'s action reversing the AO’s impugned action to this effect. Appeal is dismissed.
-
2023 (12) TMI 277
Assessment/reassessment against deceased assessee - HELD THAT:- As decided in Alamelu Veerappan [2018 (6) TMI 760 - MADRAS HIGH COURT] there is no statutory obligation on the part of the legal representative of deceased to immediately intimate death of the assessee or take steps to cancel the PAN registration.
Before us, the facts are much stronger in favour of the assessee because the legal heir has duly informed the Assessing Officer about the death of Puja Shah which occurred much before the issuance of notice u/s 148 of the Act on 31/03/2017.
It is a settled principle that a notice issued in the name of a dead person is not enforceable in law and if such is the legal position then, the revenue cannot be held to be justified in contending that they have no knowledge about the death of the assessee. Similar view was taken by the Hon’ble Delhi High Court in the case of Savita Kapila vs. ACIT [2020 (7) TMI 441 - DELHI HIGH COURT].
Thus since the assessment order has been framed in the name of a deceased person even when information about the death of Puja Shah was provided to the Assessing Officer by her legal heir then, under such circumstances, the assessment order framed is non-est, bad in law and void ab initio - Appeal of the assessee is allowed.
-
2023 (12) TMI 276
Penalty u/s 271(1)(c) - assessee received proceeds of bogus LTCG - unexplained cash credit u/s 68 - HELD THAT:- Assessee has already offered the same for tax suo-motto as admitted during the course of survey. The AO has not discussed anything on merit as to how this constitute filing inaccurate particulars of income and simply imposed penalty for furnishing inaccurate particular of income.
In our opinion, the assessment proceedings are distinct and different from the penalty proceedings. In this case, the AO has only issued show cause notice to the assessee and then proceeded to impose the penalty by ignoring the fact that the assessee has made disclosure of income during survey and has also not contested the issue in appeal. AO has passed an order in a very cryptic manner. In our opinion, the addition is only on the basis of admission of the assessee and the AO nowhere demonstrated that the claim of the assessee was either found to be false either during assessment proceedings or during penalty proceedings
In the present case, the assessee has fully disclosed the particulars of the capital gain and claimed the same as exempt u/s 10(38) of the Act and thus fully disclosed all the facts qua the gain on sale of shares. The case of the assessee is also supported by the decision of Reliance Petroproducts (P.) Ltd [2010 (3) TMI 80 - SUPREME COURT] in which the as held that where the assessee has fully disclosed the particulars in the return of income then it is not liable to penalty proceedings on the ground that the disclosure made by the assessee are not as per the provision of the Act or not acceptable to the revenue. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the penalty. Decided in favour of assessee.
-
2023 (12) TMI 275
Denial of TDS credit - TDS is not reflected in Form No. 26AS of the assessee - HELD THAT:- We find that there is absolutely no dispute that the interest earned on advances of the contractors were part of business receipts and since the assessee had not commenced its business, the said interest income was duly reduced by the assessee from expenditure during the construction period in this balance sheet. It is not the case of the Revenue that the said interest income would be liable to be taxed under the head income from other sources.
Hence, when there is no obligation on the part of the assessee to offer the said interest income to tax as per the provisions of the Act, and the same have been duly reflected in the books of accounts and audited balance sheet of the assessee, the TDS claimed relatable to such interest receipts cannot be denied to the assessee. We find that the CPC had denied the TDS figure only on the ground that the said TDS figure was not reflected in the Form 26AS of the assessee.
We find from updated Form 26AS of the assessee, the very same TDS figure of Rs. 10,80,720/- is duly reflected and hence grievance of the CPC has been duly met. Hence, as per rule 37BA for the Income Tax Rules, the assessee shall be entitled for TDS credit - We further find that the similar issue came up in the case of Trikaal Mediinfotech Pvt. Ltd. [2023 (4) TMI 88 - ITAT MUMBAI] held that when TDS is made on a particular income which is otherwise not liable for tax, the assessee is entitled for the said credit of the TOS - when the assessee has earned interest on deposit mandatory for acquisition on installation of machinery then the interest was earned by the assessee and is directly incidental to the acquisition in respect of machinery and therefore the same has been rightly reduced from the cost of the machinery, In this way the assessee has indirectly disclosed income and has offered for assessment - Appeal of assessee allowed.
-
2023 (12) TMI 274
Enhancing Income from House Property under the head PGBP - rent received was offered for tax by the assessee under the head Income from House Property - Whether CIT (A) erred in not granting 30% deduction on the gross rent at the time of reducing the corresponding gross rental Income which was taxed under the head PGBP? - HELD THAT:- Prima facie on verification of the facts and evidences substantiating the claim, the total income as per the computation of income is Rs. 36,84,300/-. The Ld. AR demonstrated the Acknowledgement of ITR- 3 filed for A.Y 2020-2021 & A.Y 2021&22 along with the computation of income disclosing the rental income under “Income From house Property”.
Further the Ld.AR highlighted on the Tax Audit report U/sec 44AB of the Act along with the Form. 3CB&CD in support of the Income from business and profession and the total income cannot exceed Rs. 38,69,300/-. Prima facie, we find there is no dispute on the disclosure of income and cannot be taxed twice and the revenue has been accepting consistent accounting system adopted by the assessee. Accordingly, we considering the facts and circumstances, set-aside the order of the CIT(A) on the disputed issue of sustaining the addition made by the CPC and direct the assessing officer to delete the addition and allow the grounds of appeal in favour of the assessee.
-
2023 (12) TMI 273
TP Adjustment in respect of extension of performance/ corporate guarantee - Assessee is in the business of construction of infrastructure projects and in order to secure the contract for construction of a bridge in Dubai with Road Transport Authority in Dubai, it had found limited liability Company in Dubai called as Afcons Mideast LLC - HELD THAT:- As seen that the entire functions to carry out the work either in the form of sub-contract or executing the contract work by providing entire support services through its own infrastructure, man power, management, technological support, organizational support, etc. all has been done by the assessee. The function of the AE in the execution of work was only on paper and as a legal entity to comply with the domestic laws. In substance there is negligible function performed by the AE. Apart from that, even the assets deployed belonged to the assessee.
The entire risk lied upon the assessee that is the risk assumed for executing the contract and carrying out the entire work solely belonged to the assessee. Ergo the rewards of the risks were also entirely reaped by the assessee in the form of 99% profit. Thus, even if one does FAR analysis of the performance guarantee given by the assessee to FGB for execution of the contract where entire risk and rewards and the benefit was of the assessee only, then where is the question of making any adjustment of ALP in the hands of the assessee that any benefit has been passed on to the AE.
Even if it is reckoned as international transaction, then also on FAR analysis and looking to fact that the reward or profit to the AE is almost negligible, i.e. the ultimate profit is not even 1%, the adjustment if at all would also be negligible on the facts of the present case. Thus, on the facts of the present case we hold that no transfer pricing adjustment can be made on account of corporate guarantee. Accordingly, the addition made by the ld.TPO / ld. AO is deleted.
Disallowance of interest u/s. 36(1)(iii) - Adjustment in respect of receipt of interest on loan given to Afcons Mideast and Afcons Infrastructure International Ltd. - HELD THAT:- It has been informed that the issue stands covered by the decision of the ITAT from A.Y.2001-02 to 2008-09 [2018 (5) TMI 508 - ITAT MUMBAI] Since, the ld. DRP has followed the initial order of the Tribunal in A.Y.1997-98 [2016 (2) TMI 1372 - ITAT MUMBAI] which has been followed in subsequent years wherein it was held that interest disallowed should be in respect of incremental loans given from 31/03/1996. Once the position from the earlier years has been settled that the opening balance of the loan is to be excluded for making the loans, then we do not find any infirmity in the directions of the ld. DRP which is in accordance with the direction of the Tribunal in earlier year. Therefore, the ground raised by the Revenue is dismissed.
Disallowance of depreciation and written down value of speed boat - HELD THAT:- As decided in own case [2016 (7) TMI 1439 - ITAT MUMBAI] for the A.Y. 2001-02, A.Yrs. 2002-03 to 2005-06 and A.Yrs 2006-07 to 2008-09 machinery was purchased by the principal but the assessee had been vested with the possession of them and utilized them for its business.It is not disputed that the principal has debited the cost of machinery to the assessee's account and the assessee has capitalized it in its books of account. The Tribunal applying the ratio laid down in the decisions of Mysore Minerals Ltd [2000 (8) TMI 83 - SUPREME COURT] , Dilip Singh Sardarsingh Bagga [1992 (9) TMI 74 - BOMBAY HIGH COURT] and Varanasi Auto Sales [2010 (1) TMI 19 - ALLAHABAD HIGH COURT] dismissed the department's ground.
Disallowance of professional fees paid for arbitration award - HELD THAT:- The Tribunal in A.Y.2005-06 .[2018 (5) TMI 508 - ITAT MUMBAI] has held that, firstly, the professional fees was incurred in respect of arbitration award and therefore, same was for the business of the assessee. Secondly, assessee was justified in claiming the said amount as expenditure in its profit and loss account and lastly, the Tribunal declined the observation of the ld. AO that since the income from arbitration award is excluded from the total income, therefore, professional fees incurred in this should be disallowed. This exact observation of the ld. AO as made in the present assessment year also has been rejected and accordingly, the ground raised by the Revenue is dismissed.
-
2023 (12) TMI 272
Unexplained money u/s 69A - cash deposits in bank account - HELD THAT:- We find that the assessee itself has admitted shortage of source in their cash flow statement filed before the AO. Therefore, from the above, it is undoubtedly clear that the assessee could not explain source for cash deposits to the extent of Rs. 6,62,783/- and thus, we are of the considered view that, there is no error in the reasons given by the CIT(A) to sustain this additions made towards cash deposits.
Addition towards advance received from group concerns, it was an argument of the appellant that group concerns have paid advance in cash during demonetization period and deposited into IDBI bank account. In this regard, the appellant has filed necessary details including PAN nos. and confirmation letters from the group concerns to prove receipt of trade advance. AO has not disputed these facts, however made additions only on the ground that the assessee should not have accepted cash in specified bank notes after 08.11.2016.
We find that this issue is covered in favour of the assessee by the decision of ITAT, Chennai Benches in the case of M/s. Micky Fireworks Industries vs ACIT [2023 (8) TMI 217 - ITAT CHENNAI] where the Tribunal under identical set of facts deleted additions made by the Assessing Officer, asheld that cash so received by the assessee is backed by sales carried out by the assessee as recorded in the books of accounts. Therefore, the source of cash is duly explained. The provisions of Sec.68 could be invoked only in cases when there was unexplained cash credit in the books of accounts maintained by the assessee. However, the assessee has duly identified the debtors from whom the cash was received and the same could not be disputed by lower authorities. The PAN of respective debtors as well as quantum of cash realized from each of them has duly been detailed by the assessee before Ld. AO during assessment proceedings. No defect has been pointed out in the books of accounts. In such a case, the credit could not be held to be unexplained cash credit.
Appeal filed by the assessee is partly allowed.
-
2023 (12) TMI 271
Deduction u/s. 80P(2)(a)(i)/80P(2)(d) on the interest income received from the co-operative banks/bank deposits denied - Alternatively if the assessee is not eligible for claim of deduction u/s. 80P(2) then the cost of funds should be allowed to the assessee - HELD THAT:- Assessee has received interest from co-operative banks to which the revenue authorities have not been allowed deduction u/s 80P(2)(a)(i)/80P(2)(d) observing the latest judgment in the case of Totgars Co- operative Sales Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] in which it has been held that the income by way of interest earned by the assessee co-operative society during the Assessment Years 2007- 2008 to 2011-12 on the investments made in the co-operative bank are not eligible for deductions under Section 80P(2)(d) & character of the income does not change irrespective of the investments made in Co-operative Banks or otherwise and would always remain income from other sources and that only operational income would qualify for deduction u/s 80P.
We hold that the assessee is not eligible for deduction u/s 80P on the interest income earned on its investments with the Co-operative Banks.
Arguments of the ld. AR that the surplus funds or those funds invested by the assessee and interest income received on such deposits are eligible for deduction u/s 80P is also not sustainable because the income by way of interest earned by deposit or investment of idle or surplus funds does not change its character irrespective of the fact whether such income of interest is earned from a schedule bank or a co-operative bank and thus, clause (d) of Section 80P(2) of the Act would not apply in the facts and circumstances of the present case.
Since during the course of arguments, the Ld.AR of the assessee took alternative ground that the cost of funds for earning the interest income has to be allowed, we concur with the Ld.AR of the assessee, that benefit of the cost of funds towards earning of the interest income has to be allowed. We noted that entire interest received has been taxed as income from other source. We are of the view that the fundamental principle under Income-tax Act being that only net income has to be taxed and not the gross income.
Accordingly, the case is restored to the file of the A.O. with a direction to examine whether assessee has incurred any expenditure for earning interest income, which is assessed under the head `income from other sources’. If so, the same (cost of funds) shall be allowed as deduction u/s 57 of the I.T.Act. This alternative ground is partly allowed for statistical purpose.
-
2023 (12) TMI 270
Disallowance of foreign exchange loss u/s. 43A - assessee has incurred foreign exchange loss towards arrangement of the LoC on purchase of fixed assets - CIT(A) has treated it as a capital expenditure and not to be treated as a revenue expenditure - HELD THAT:- The loss suffered by the assessee is directly linked with the purchase of fixed assets which is capital in nature. Though forex gain/ loss is arising on account of assurance for payments of capital assets are capital in nature which cannot be charged to the profit and loss account.
Apex Court has held in the case of Tata Locomotive and Engineering Co. Ltd. [1966 (1) TMI 24 - SUPREME COURT] that the forex gain on money accumulated to purchase capital asset being the first step for acquisition of capital asset is capital in nature and cannot be taxed. The assessee made advance payments through Letter of Credit is the first step for acquisition of capital asset because there was a direct link of LOC towards purchase of the fixed assets, therefore it will be treated as capital in nature. Section 43(1) has defined the actual cost of the assets.
Therefore the actual loss suffered by the assessee cannot be charged to the profit and loss account. CIT(A) has rightly decided the issue in favour of the revenue. However, the AO is directed to give benefit of depreciation as per section 32 of the IT Act in the current year as well as in following years if there is effect on the following years. This issue is partly allowed for statistical purposes.
Addition u/s 14A r.w.r. 8D - As argued Only the investments yielding non-taxable income have to be considered and not all investments - HELD THAT:- CIT(A) has dealt with this issue in detail however he has not considered the issue completely as per Rule 8D(2)(iii). The disallowance should be calculated as per Rule 8D(2)(iii) considering only the investments in which the assessee has received exempt income.
In similar issue in the assessee’s own case for the AY 2014-15 [2023 (9) TMI 108 - ITAT BANGALORE] wherein held that while calculating disallowance under section 14A of the Act, only investment that have generated exempt income should be taken into consideration. This issue is allowed for statistical purposes.
............
|
9911796707
