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Income Tax - Case Laws
Showing 201 to 220 of 175810 Records
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2025 (6) TMI 1929
Bogus purchases - assessee has opted for presumptive taxation u/s 44AD - HELD THAT:- Admittedly in this case assessee has filed return of income u/s. 44AD of the Act. The return of income is accepted under that section. According to the provisions of the Act, if the assessee has opted for presumptive taxation u/s. 44AD, the assessee is not required to maintain the books of account as well as the details of purchases made.
This is relevant till the total turnover of the assessee does not exceed the prescribed limit u/s. 44AD of the Act. Thus, prima facie, the assessee could not have been asked the information of purchases. Further the assessee has provided information to the ld. AO in a chart of purchases from AR Enterprises.
AO merely on the basis of information received from GST Department made disallowance without making any enquiry about the purchases from AR Enterprises where the assessee has provided complete details of address and GST no. of that party. Thus, it is clear that the ld. AO has merely relied upon the information furnished by the GST department and did not gather any evidence on his own for making the addition.
As decided in Surinder Pal Anand [2010 (6) TMI 404 - PUNJAB AND HARYANA HIGH COURT] assessee was not under an obligation to explain individual entry of purchases unless such entry has nexus with gross receipts. In the present case the purchases do not have any nexus with the gross receipt as gross receipt shown by the assessee remained undisputed and was never tested by the Revenue to be beyond the specified limit. Therefore, direct the ld. AO to delete the impugned addition. Appeal of the assessee are allowed.
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2025 (6) TMI 1928
Rejecting the applications u/s 12A(1)(ac)(iii) r/w section 12AB(1)(b)(ii) and under section 80G(5)(iii) - applications were made under incorrect clauses, i.e., for “re-approval” instead of “renewal” - HELD THAT:- We find merit in the submission of the assessee that since the second applications were filed under the correct provisions and were within the extended compliance period stipulated by the CBDT, they ought to have been examined as if filed within time. The procedural context and the corrective conduct of the assessee establish its bona fides and entitle it to a fair adjudication on merits.
In our considered opinion, the CIT(Exemption) failed to appreciate the distinction between a defective application and a curative application and improperly treated the second application as non-maintainable. The error in quoting a wrong sub-clause initially was procedural in nature, and the subsequent filing under correct provisions rectified the same. There was no bar in law or under the CBDT Circular for the assessee to file such fresh applications.
We hold that the orders passed by the CIT(Exemption), Ahmedabad, rejecting the assessee’s applications u/s 12A(1)(ac)(iii) and clause (iii) of the first proviso to section 80G(5) as non-maintainable, are legally unsustainable and deserve to be set aside. The assessee had originally filed applications on 21.03.2024 under incorrect statutory clauses.
Upon realising this, the assessee filed corrective applications on 03.06.2024 under the correct provisions, within the extended compliance period notified by CBDT. These subsequent applications were filed to rectify a procedural defect and were not in the nature of repetitive or infructuous filings.
The impugned orders passed by the CIT(E), Ahmedabad in both appeals are hereby set aside, and the matters are restored to his file with following directions:
i. The CIT(Exemption) shall treat the assessee’s applications in Form No. 10AB u/s 12A(1)(ac)(iii) and section 80G(5)(iii) as valid, curative, and maintainable, and proceed to dispose of them on merits in accordance with law.
ii. The said applications shall be treated as having been filed within the period prescribed under the Act, taking into account the extended deadline allowed vide CBDT Circular No. 07/2024 dated 25.04.2024.
iii. The CIT(Exemption) shall also restore the provisional registration and approval granted earlier under section 12A and section 80G, and treat the earlier orders dated 02.09.2024 (u/s 12A) and 03.09.2024 (u/s 80G) as non- operative, thereby enabling the consideration of the fresh applications on merits as if no cancellation had taken place.
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2025 (6) TMI 1927
Tax rate applicable to the assessee @ 25% or 30% - Turnover determination - Computation sheet prepared by CPC ITD portal - turnover declared by the assessee whether it should be inclusive of excise duty are not so as to find the rate of tax in pursuance to the First Schedule of Finance Act, 2018 - HELD THAT:- The controversy is fully settled that the meaning of turnover as provided u/s. 145A of the Act cannot be adopted while determining the rate of tax in pursuance to Finance Act, 2018 based on turnover.
Respectfully following the case of Kluber Lubrication India (P.) Ltd. [2024 (7) TMI 1374 - ITAT BANGALORE] the order passed by the CIT(A) is hereby set-aside and direct the Assessing Officer to compute the rate of tax at 25% and pass appropriate orders in accordance with law.
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2025 (6) TMI 1926
Validity of order passed by CIT(A) - as alleged CIT(A) has dismissed the appeal of the assessee without providing any sufficient opportunity of being heard to the assessee - HELD THAT:- As assessee has not cooperated in the original assessment proceedings nor before the CIT(A) in the appellate proceedings. Ld. AR before us requested for one more opportunity to produce the documents before the ld.CIT(A) to substantiate its claim, to which Id. Sr. DR has no objection. Considering the prayer of the Id. AR and in the interest of justice, we restore the issues to the file of Id. CIT(A) for readjudicating the issues afresh after granting the assessee adequate opportunity of being heard, subject to a payment of cost. Appeal of the assessee is partly allowed for statistical purposes.
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2025 (6) TMI 1925
Disallowance of business loss - as per revenue loss on sale of listed scrips as pre-arranged transaction - HELD THAT:- We find that losses incurred by the assessee which the ld. AO has alleged to be bogus are losses incurred by it in the regular course of business considering corroborative material placed on record and the submission made. The said loss so incurred by the assessee deserves to be set off against its regular business profit.
AO completely overlooked various documents, supporting evidences and explanations furnished by the assessee. He has not analysed all these and merely proceeded to make the addition based on investigation reports. There is nothing brought on record to demonstrate that name of the assessee finds place in the investigation reports to hold that it is involved in price rigging of the alleged two scrips as penny stock.
Merely because some shareholders/operators colluded in the alleged rigging of share prices and merely because assessee was benefited indirectly, cannot be the reason to disallow the claim of loss by the assessee by alleging that assessee has participated in price rigging of the two scrips. Decided in favour of assessee.
Addition made on arbitrary basis towards alleged commission paid by the assessee for availing the above stated business loss - Since, we have already allowed the claim of assessee on the claim of business loss in the aforesaid two scrips, the addition made towards commission is in respect of this very business loss and consequently deserved to be deleted. Ground no.3 raised by the assessee is allowed.
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2025 (6) TMI 1924
Assessment framed u/s.143(3) by non-jurisdictional officer - Income Tax Officer (ITO), Ward-Mahasamund jurisdiction - HELD THAT:- It is obvious and trite that any action by the revenue authority without jurisdiction is bad in law, void ab initio and hence, liable to be struck down on the said count itself.
The issue is no more res-integra as per the judicial precedents that any right and liabilities specifically in a case of imposing liability for that matter whether it is income tax or any other financial burden on the assessee through legal dictate, the said action can only be pronounced as legally valid if it is exercised within parameter of correct jurisdiction.
Reverting to the facts of the present case as examined aforesaid, it is clearly evidenced that the return of income was filed by the assessee above Rs. 10 lacs, for which, the jurisdiction was vested only with the Dy./ACIT-3(1), Raipur and not with ITO, Ward-Mahasamund. That since in the present case, the assessment has been framed u/s. 143(3) of the Act dated 22.12.2018 by the ITO, Ward-Mahasamund who lacked inherent valid jurisdiction, therefore, the same is held invalid, void ab initio, and the order of assessment is quashed.
Assessment order is quashed. Appeal of the assessee is allowed.
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2025 (6) TMI 1923
Addition u/s. 68 - unexplained cash deposited in Specified Banking Notes (SBNs) during the period of demonetizations - AO rejected the books of accounts u/s 145(3) - assessee submitted that the sales were supported by proper documentation, including audited books, purchase and stock registers, cash and bank books, bills, and vouchers - CIT(A) deleted addition as the assessee had maintained proper books of accounts, including stock and purchase registers, and had substantiated the cash sales with sufficient documentation and audited VAT returns - HELD THAT:-Commissioner (Appeals), in our considered view has rightly noted that the amount in question was already recorded as sales in the books and that such sales were supported by supporting documentation.
Once the sales realization has been duly taxed, making an addition of the same amount u/s 68 would result in double taxation, which is impermissible under law.
This view is well supported including DCIT v. Damodardas Mohanlal Chokshi [2025 (1) TMI 1572 - ITAT AHMEDABAD] and Radhika Jewellers [2024 (6) TMI 1449 - ITAT AHMEDABAD]
Genuineness of the sales was supported by various documentary evidence submitted by the assessee, including audited financial statements, VAT returns, month-wise stock details, stock and purchase registers, purchase bills, sales register, cash book, bank statements, and break-up of cash sales. No specific defect was pointed out by the AO in the stock records or purchases corresponding to the sales. The cash deposits were linked to these documented sales, and there was no evidence brought on record by the AO to demonstrate otherwise.
CIT(A) also observed that the AO failed to substantiate the rejection of books under section 145(3) with any material defect or inconsistency in the accounting records. It was further held by CIT(Appeals) that the purchases were not doubted, the stock register was duly maintained, and the VAT returns were audited and accepted by the relevant authorities.
Therefore, once the AO accepted the sales as genuine for the purpose of determining profit, he could not invoke section 68 of the Act for taxing the same amount again as unexplained cash credit. Assessee appeal allowed.
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2025 (6) TMI 1922
Addition u/s 69A - cash deposited in bank account as unexplained - Onus to prove - quantum cash deposited by the assesse during the different periods of the year i.e. pre- demonetization and post demonetization - assessee did not maintain any books of accounts and filed return of income as per the presumptive scheme of taxation provided u/s.44AD - HELD THAT:- Assesse was a small trader in kirana items, with its customers mainly being small hawkers to whom undoubtedly all sales are made in cash, the preponderance of probability undoubtedly in the present case is that the majority sales made by the assessee or in fact entire sales made by the assesse during the impugned year was in cash. The assessee, we have noted also, explained that the entire sales made during the year was out of the old stock remaining since the business was originally run by her husband who had since deceased and she had taken over the business which ultimately was wound up in succeeding years
Having accepted the fact that the assesse was not required to maintain books of accounts as per law that and having accepted the turnover on which profits were returned by the assesse as per law and the facts demonstrating that the assessee's business was small and entirely done in cash and the cash deposited by the assesse in the bank account was less than the turnover of the assesse, there could not have been any adverse inference reached on the basis of the above facts so as to treat the cash deposits as being out of unexplained sources. On the contrary, the only reasonable conclusion that could have been drawn was that the cash deposits were out of the business receipts of the assessee. Appeal filed by the assessee is allowed.
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2025 (6) TMI 1921
Delay of 100 days in filing of present appeal by the revenue before the ITAT - “sufficient cause” of delay - HELD THAT:- The reasons given by the AO would not constitute the “sufficient cause”, the averments made by the AO are general in nature. This reminds us to the judgement of Living Media India Ltd., wherein [2012 (4) TMI 341 - SUPREME COURT] held Condonation of delay is an exception and should not be used as an anticipated benefit for government departments. The law shelters everyone under the same light and should not be swirled for the benefit of a few. Considering the fact that there was no proper explanation offered by the Department for the delay except mentioning of various dates, according to us, the Department has miserably failed to give any acceptable and cogent reasons sufficient to condone such a huge delay.
Recently, the apex court in the case of Mool Chandra Vs. UOI [2024 (8) TMI 1528 - SUPREME COURT] has held that it is not the length of the delay, rather the cause behind the delay, which is to be seen while condoning the delay. In view of these observations of the apex court, we are constrained to dismiss the present appeal of the revenue as barred by limitation.
Since we have already dismissed the appeal of the revenue.
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2025 (6) TMI 1920
Income from sale of REC (carbon credits) - deduction claimed u/s. 80IA - whether capital in nature and hence, the same are not taxable? - HELD THAT:- Similar issue came before the ITAT in the case of Satia Industries Ltd. [2023 (6) TMI 1025 - ITAT AMRITSAR] in which the Tribunal held that income earned from sale of RECs/ESCs (carbon credits) is a “capital receipt” and not business income since carbon credit is an offshoot from environmental concern and not an offshoot from business, thus, it will not be taxable.
Section 115BBG, which specifically taxes sale of carbon credits, was introduced in the Act w.e.f. 01.04.2018, we are of the considered view that the income from sale of REC is not taxable since the same qualifies as “capital receipt” for the impugned year under consideration.
Disallowance of partner’s remuneration - AO observed that the assessee had not claimed any expenditure against income earned from sale of power, on which deduction u/s 80-IA of the Act was claimed by the assessee - HELD THAT:- We observe that the assessee did not claim any expenses against the receipts from the sale of power, while claiming deductions on the entire income from these receipts. We are unable to accept the argument of the assessee that there was no requirement for the partners to dedicate any time and effort to the income-generating activities of the business on which exemption was being claimed.
Additionally, we are of the view that the AO / Ld. CIT(Appeals) have correctly observed that remuneration to the partners is payable as working partners in relation to the business as a whole and it cannot be accepted that such remuneration is not payable with respect to exempt income. AO observed that no portion of the remuneration had been allocated toward the exempt income, which seemed intentional to inflate the exempt income and reduce the taxable income.
In our view the AO is correct in taking the view that it is unreasonable to assume that the unit would generate income entirely on it’s own without any involvement of the partners. In our view, the AO has correctly held that given that the ratio of the total turnover to power income was 0.10%, this proportion was correctly treated as remuneration related to the power unit and was disallowed, thereby resulting in a disallowance to the total income of the assessee.
Disallowance of depreciation on solar building and machinery - AO was of the view that the income from solar power generation should have been allocated appropriately to the solar power business - HELD THAT:- CIT(A) did not adjudicate on this issue. We observe that since CIT(A) has not given any finding with respect to this addition made by the AO, despite the assessee taking a specific ground in the appeal filed before him, the matter is hereby restored to the file of the Ld. CIT(A), to adjudicate on this matter.
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2025 (6) TMI 1919
Order passed against a dead person - proceedings and assessments conducted against a deceased individual without bringing the legal representatives - Admission of additional evidence submitted by the legal representatives
HELD THAT:- CIT(A) issued all the 4 notices after the death of assessee at the email address given in Form 35. The AO was informed by the L/R as per letter dated 18.6.2018. The L/R went to the AO in response to letter written by the AO to Corporation Bank on 14.2.2019 intimating the outstanding demand.
AO was also submitted a copy of death certificate and Will of the assessee. It appears that the AO despite these, did not inform the ld. CIT(A) also about the death of assessee. CIT(A) passed an order in the name of assessee, Sri Madaiah Manjunath on 8.6.2023, when he has already passed away on 8.9.2018. Therefore, the order of the ld. CIT(A) passed on the dead person cannot be sustained. Further the notices issued are also after the death of assessee, therefore apparently the L/R of the assessee did not get an opportunity to present his case before the ld. CIT(A).
Before us the assessee has submitted an application under Rule 29 for admission of additional evidences, wherein the bank statement of the assessee, copies of sale deed, copies of the Will, etc. are furnished as additional evidence. In these peculiar circumstances, we admit the additional evidence as the ld. CIT(A) has decided the appeal holding that assessee does not want to prosecute the appeal and on merits nothing is presented before him, we restore the appeal back to the file of ld. CIT(A) with a direction to consider the additional evidence placed before us and to decide the issue afresh after giving reasonable opportunity of hearing to the L/R of the assessee. Appeal of the assessee is allowed for statistical purpose.
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2025 (6) TMI 1918
Taxability as income - amount credited to profit and loss account on prepayment of deferred sales tax liability at Net Present Value (NPV) by invoking section 2(24)(xviii) - appellant’s main argument is that the amendment to the section vide Finance Act 2015 does not in any way effect the non-taxability of the same on extinguishment of sales tax liability on prepayment at NPV and hence the action of Ld. AO treating the same as “income” and as confirmed by Ld. CIT(A) is contrary to the provisions of law
HELD THAT:- In the present case, there is a ‘benefit’ because the appellant company is paying the reduced amount to the Government as compared to the actual sales tax collected from its customers over a period of 10 years. Thus the waiver amount of Rs. 90,22,491/- comes within the ambit of section 28(iv) of the Act, to be brought under the head ‘profits and gains of business or profession’ which says that the value of benefit/perquisite/whether convertible into money or not, arising from business.
Appellant has filed a copy of Government of Maharashtra Industries Energy, and Labour Department Resolution No. IDL- 1088/6603/Ind-8 during the hearing before the ITAT and the same is perused. On the top of it, it is mentioned as “Dispersal of Industries – Package of “Scheme of Incentives”, which means the reduced amount paid by appellant is nothing but an “incentive” to come within the ambit of section 2(24)(viii). At page 12, this package scheme, Explanation (i) says, “where an ‘Eligible Certificate’ is issued in favour of a SSI Unit by Regional Department Corporation concerned, the eligible unit will continue to remain, for the purpose of ‘incentive’ (emphasis supplied) and the other connected matters, with the RDC even though after grant of eligibility certificate the eligible unit ceases to be as SSI Unit. Thus, the scheme which is applicable to appellant company also used word ‘incentive’ relating to the ‘eligibility certificate’ based on which appellant company paid reduced amount. Hence, invoking provisions of section 2(24)(xiii) is correct.
As noted that the appellant company’s audited accounts treats it as part of “Miscellaneous Income” under the head “other income” schedule-19 of profit and loss account with a narration of “during the year ended March 31, 2017, the company had paid an amount equal to the present value amounting to Rs. 93,37,509/- in lieu of the deferred sales tax liability amounting to Rs. 1,83,60,000/-. The resulting gain of Rs. 90,22,491/- on waiver of Deferred Sales Tax liability has been included under the head “miscellaneous income” and in the petrochemical segment.
In the present facts, it is noted that the waiver of differed sales tax liability is a benefit accrued to the assessee arising out of its business. Furthermore, such a waiver holds the character of revenue, as per the definition of income under Section 2(24)(xviii), effective from April 1st, 2015. Thus, said waiver amounts to a benefit in the hands of the assessee and the sum waived is taxable under section 28(iv) of the Act. We thus direct the Ld.AO to disallow the said waiver, under section 28(iv) of the Act. Decided against assessee.
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2025 (6) TMI 1917
Reopening of assessment - Period of limitation - AO had received an information that the assessee was beneficiary of accommodation entry in the form of fictitious short term capital loss in equity/derivative trading in penny scrip - HELD THAT:- As the notice u/s 148 was issued on 29.07.2022. In view of the principles laid down in the case of Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] as well as in the case of Deepak Steel and Power Limited [2025 (4) TMI 1367 - SC ORDER] it is held that the notice issued on 29.07.2022 under Section 148 in this case for the A.Y. 2015-16 was void ab initio and bad in law. As the notice was barred by limitation, accordingly, the entire reassessment proceeding and the assessment order passed u/s 147 read with Section 144B of the Act, is quashed. Appeal of the assessee is allowed.
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2025 (6) TMI 1916
Denial of deduction u/s 54 - said claim was not made either in the original return of income or by way of a revised return of income - HELD THAT:- As per provisions of sections 54 it does not mandate that for claiming deduction u/s 54 of the Act filing of the claim in the return is a mandatory condition. Further, without going into the controversy as to whether the above transaction regarding Long Term Capital Gain in respect of Lucknow property and the investment in Delhi property for claiming deduction u/s 54 of the Act was intentional or unintentional, the fact remains that as per the provisions of section 45 of the Act, the capital gains arising on the sale of Lucknow property shall inter alia be effected in the previous year save as otherwise provided in sections 54 of the Act.
Denial of deduction u/s 54 by the AO for the reasons as stated above and the finding of the CIT(A) that the Delhi property was acquired as purchased on 21.02.2005 is not correct.
As noted above that in the respect of the Long Term Capital Gains in respect of sale of property a sum of Rs.22,30,000/- was paid by the assessee for the purchase of the new property beingN-1, Kailash Colony, Delhi as per the requirement u/s 54 of the Act.
Therefore, as per the provision of section 45(1) and section 54(1)(ii) of the Act, the assessee will be entitled for deduction of Rs.17,13,015/- u/s 54 as claimed by him since the amount of Long Term Capital Gain of Rs.17,13,015/- is less than the purchase cost of Rs.22,30,000/- paid by the assessee for the new property being N-1, Kailash Colony, Delhi, which was paid one year prior to the purchase of the property being D-4, 1st Floor, Vivekanand puri, Lucknow, as required under the said provisions.
Accordingly, we hold that the assessee is entitled for deduction of Long Term Capital Gain u/s 54 and therefore the addition made by the AO and confirmed by the Ld. CIT(A) is deleted. Accordingly, grounds no.1 and 2 of the appeal is allowed.
Addition u/s 56(2)(vii)(b) - difference of stamp value and actual sale consideration - date of agreement for sale of the property at N-1 Kailash Colony, New Delhi i.e. 21.02.2005 and date of transfer i.e. 23.12.2013 are different - As agreement to sell the Delhi property in 2005 was admitted/confirmed by the Hon’ble Delhi High Court while delivering decision on specific performance of the contract is not correct. Further, the relief of Rs.86,66,666/- granted as above on the basis of available facts will be subject to the outcome of the decision of the Hon’ble Court, wherein, as noted by the Hon’ble Delhi High Court in the case no.CS(0S) No.193 of 2008, the merits of the case and/or the legality/validity of the Agreement to Sell dated 21.02.2005, relied upon by the plaintiff (assessee) and disputed by the defendant No.1(Shri R.N. Banerjee, S/o- Late Shri Shayam Pada Banerjee) is pending. The Assessing Officer will be at liberty to take necessary action as per law upon the receipt of the outcome of the Hon’ble Court on the legality/validity of the Agreement dated 21.02.2005 - Ground no.3 of the appeal is allowed with the above observations.
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2025 (6) TMI 1915
Gain on sale of land - nature of land sold - land sold was capital asset within the meaning of Section 2(14) or agricultural land - HELD THAT:- As on the date when the assessee had sold his land at Village: Manchirevula, vide sale deed dt.07.09.2007, the same was in “Gandipet Mandal” which was not a separate municipality (i.e unlike Rajendranagar), but an area falling in the periphery of GHMC i.e. erstwhile Hyderabad Municipal Corporation (HMC) – a Municipality notified by the Central Government vide its “Notification No. So.,dt. January, 06, 1994” for purpose of Section 2(14)(iii)(b) of the Act, therefore, no infirmity arises from the view taken by the CIT(A), who had rightly concluded that the subject agricultural land is to be held as a “capital asset” if the same was located within 8 Kms radius from the municipal limits of GHMC.
We are of the view that as the distance of the subject agricultural land at Village: Manchirevula from the municipal limits of GHMC is neither discernible from the record; nor any details establishing the same was there before the CIT(A), therefore, the matter requires to be restored to the file of A.O.
A.O. is directed to verify the distance of the subject agricultural land at Village: Manchirevula from the municipal limits of GHMC on the date of sale i.e. on 07.09.2007. In case, the agricultural land is found to be within the notified area limit of 8 Kms. from the municipal limits of Hyderabad Municipality (now known as GHMC), then the view taken by the CIT(A) that the same is a “capital asset” under Section 2(14)(iii)(b) of the Act will stand approved.
Exemption u/s 54B and 54F - investment made by the assessee in the new house property up to the date of filing of the delayed return of income under sub-section (4) of Section 139 - HELD THAT:- We find no infirmity in the view taken by the CIT(A) who had based on the documentary evidence as was available before him, viz. (i). registered sale deed and unregistered construction agreement had after observing that the assessee had invested an amount in the new house, allowed his claim of exemption under Section 54F of the Act to the said extent. At the same time, we are unable to concur with the CIT(A), who had observed that the payments made by the assessee towards investment in the new house property were to be allowed only to the extent the same were made by him before the “due date” for filing of his return of income. We say so, for the reason that Section 54F of the Act, inter alia, contemplates the utilization of the “net consideration” towards the purchase or construction of the new house before the “date of furnishing the return of income under section 139”, and does not mandate the utilization of the same before the “due date” for furnishing the return of income under Section 139 of the Act. Therefore, it can safely or rather inescapably be inferred that the same takes within its meaning the time available with the assessee for filing a delayed return of income under sub-section (4) of Section 139 of the Act.
Period available to the assessee for making the investment u/s 54 of the Act will be available up to the period contemplated under sub-section (4) of Section 139 of the Act. We thus, in terms of our aforesaid observations, direct the A.O. to allow the investment made by the assessee in the new house property up to the date of filing of the delayed return of income under sub-section (4) of Section 139 of the Act applicable in his case.
Exemption under Section 54B - No infirmity arises from the observation of the CIT(A). Although the CIT(A) had observed that as per the “agreements to sell” it was an established fact that the payments/investments made by the assessee in agricultural lands were higher than the sale consideration reflected in the sale deeds, but the value reflected in the registered sale deeds which were executed subsequent to the “agreements to sell” was only to be considered. Accordingly, we are of the view that the CIT(A) had adopted a fair approach and allowed the assessee’s claim for exemption under Section 54B viz.(i). agricultural lands purchased by the assessee in his own name (as per the value stated in the registered sale deed) and (ii). agricultural lands that were though purchased by the assessee from his own sources but the registered sale deeds were executed in the name of his wife. We thus, in terms of our aforesaid observations, uphold the view taken by the CIT(A), wherein he had restricted the assessee’s claim for exemption under Section 54B of the Act.
CIT(A) declining his claim for deduction of the Indexed cost of improvement - Although, the assessee had as per his computation of income claimed to have incurred expenditure towards the improvement of the subject lands, viz. (i) Financial Year 2001-02: Rs. 39,20,100/-; and (ii). Financial Year 2002-03: Rs. 15,80,000/-, but he had failed to place on record any material that would substantiate his aforesaid claim for deduction. As the assessee had raised the aforesaid claim based on the notings in his rough note book, therefore, the authorities below had declined to consider the same while computing the capital gain.
As thoughtfully considered the observations of the CIT(A) and find no infirmity in the same. Ostensibly, in the absence of any material based on which the authenticity of the aforesaid claim of the assessee of having incurred the subject expenditure towards the improvement of subject lands could be established, the authorities below could not have allowed the same. We thus, uphold the order of the CIT(A) on the aforesaid issue.
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2025 (6) TMI 1914
Additions u/s 68 - unexplained capital account difference and sale proceeds of diamonds - CIT(A) deleted addition - HELD THAT:- In the capital addition we find that the assessee had submitted a valid gift deed executed by her husband on the occasion of the first birthday of her son, whose PAN card was annexed to show the proof of date of birth. Thus, there was no dispute about the identity of the donor and the AO did not doubted about the creditworthiness or occasion for the gift.
Addition on the ground that the diamonds were not recorded in earlier balance sheet - Assessee has explained the omission as inadvertent, since the diamonds received as gift valuing to the extent of Rs. 1.15 crores were sold during the year [5440.2 carats] and the balance Rs. 1.35 crores [6359.8 carats] were still lying with the assessee as at the end of the year which is evident from the copy of the balance sheet as on 31-03-2016 which was submitted during the course of assessment proceedings.
Assessee also substantiated the claim by offering LTCG on their sale. The Ld AO neither doubted about the credit worthiness, identity of the donor nor the occasion for the gift, thus the assessee discharged its primary onus cast upon it clearly. Therefore, CIT[A] was correct in deleting the addition made u/s.68 of the Act on account of unexplained capital account difference.
Unaccounted sale proceeds - Assessee submitted a coherent reconciliation of buyerwise payments with matching bank entries and confirmation of Account with PAN details. The number of buyers was clarified to be 49 parties and not 56 parties as mentioned by the Ld AO.
Further their PAN, confirmation letters and banking trails were all submitted by the assessee. AO did not point to a single buyer who was found to be non-genuine or whose payment was found to be bogus. Assessee furnished the copy of the Valuation Report namely date of valuation on 15-04-2015 and the Rates prevailing as on 23-08-1988 which was not questioned by the Ld AO. It is the case of the assessee who offered the entire capital gain to tax.
The action of the Ld AO in rejecting the evidences without proper verification is against the principles laid down in CIT v. Orissa Corporation (P) Ltd [1986 (3) TMI 3 - SUPREME COURT] and reiterated in Mohanakala [2007 (5) TMI 192 - SUPREME COURT] Once the assessee has offered a satisfactory explanation with supporting evidences, the burden shifts on the Department to rebut the same with cogent materials, which has not been done in the present case by the Ld AO. Appeal of revenue dismissed.
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2025 (6) TMI 1913
Deduction u/s.80P(2)(d) or u/s.80P(2)(a)(i) - interest income earned from the scheduled banks - AO was of the view that the deposits made by the assessee was out of surplus funds and hence the assessee is not entitled for the deduction
HELD THAT:- We observe that similar issue has been decided by us in the case of Wadakkancherry Service Cooperative Bank Ltd. [2025 (4) TMI 1656 - ITAT COCHIN] as held court found that the interest earned by the Society through deposit of such receipts with banks in fact ought to have accrued to the benefit of the individual members and not to the Society itself; that in relation to the Society, it was to be treated as income from other sources since the interest income had lost its nexus with the principal income earned by the Society.
The facts in the instant cases are entirely different and the investment concerned was of amounts that had already attained the character of surplus profits in the hands of the assessee. On this issue, therefore, we find ourselves in agreement with the view taken in The Vavveru Cooperative Rural Bank Ltd. .[2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] and Tumkur Merchants Souharda Credit Co-operative Limited [2015 (2) TMI 995 - KARNATAKA HIGH COURT]. Appeal filed by the assessee is allowed.
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2025 (6) TMI 1912
Revision u/s 263 - CIT(E) was of the view that the AO has erred in treating the repayment of loan as application of income - "application of income" under sections 11 and 12 - HELD THAT:- It is an admitted position of fact that the assessee has borrowed some loan in assessment year 2013-2014, which was used by the assessee for acquiring the assets for carrying out the charitable activities. On this asset, the assessee has claimed depreciation u/s.32. Thereafter the assessee has repaid the loan in the impugned year, i.e., assessment year 2017-2018 and claimed that repayment of loan is application of income.
The claim of the assessee is fully justifiable in view of the judgment of Govindu Naicker Estate [2009 (1) TMI 114 - MADRAS HIGH COURT] Therefore, we are of the view that the order of the AO is neither erroneous nor prejudicial to the interest of revenue and the CIT(E) has erred in assuming the jurisdiction u/s.263 of the Act. Hence, we restore the order of the AO and quash the order of the CIT(E). Appeal filed by the assessee is allowed.
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2025 (6) TMI 1911
Addition u/s 115BBC - anonymous donations received by an assessee society registered u/s 12A - CIT(A) deleted addition - Revenue is aggrieved by the action of the CIT(A), admitting additional evidence for the first time before him without confronting to the AO - HELD THAT:- As in our view the matter requires fresh consideration at the end of the AO for examining the veracity of these documents filed by the assessee before the CIT(A).
DR also placed on record the judgment of Everest Education Society [2024 (6) TMI 822 - BOMBAY HIGH COURT] wherein under similar circumstances the Hon’ble Bombay High Court has affirmed the addition of anonymous donation received from 7145 donors.
Therefore, we direct the AO to examine the present case de novo in the light of the judgment of the Hon’ble Bombay High Court, cited supra. Needless to say, the AO shall afford meaningful opportunity of being heard to the assessee before passing any order. Appeal filed by the Revenue is allowed for statistical purposes.
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2025 (6) TMI 1910
Correct head of income - “interest income” and “miscellaneous income” earned by the assessee - to be taxed under the head “income from business and profession” or “income from other sources” - HELD THAT:- As in view of Tribunal’s observation in assessee’s own case for A.Y. 2015-16 [2023 (8) TMI 1438 - ITAT AHMEDABAD] wherein it has been held that such income qualifies as “business income”, it is held that such “interest income” and “miscellaneous income” earned by the assessee is liable to be taxed under the head “income from business and profession” instead of “income from other sources”.
Accordingly, on this issue the earlier order passed by the Tribunal [2024 (3) TMI 199 - ITAT AHMEDABAD] shall stand replaced with our above observations with regards to taxability of interest income, and miscellaneous income. Decided against revenue.
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