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Income Tax - Case Laws
Showing 241 to 260 of 173269 Records
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2025 (4) TMI 1263
Deduction u/s 80-IC - assessee's claim for 100% deduction based on substantial expansion - HELD THAT:- We noticed that the assessee, engaged in manufacturing in Himachal Pradesh, claimed 100% deduction u/s 80IC for the 10th year on the basis of substantial expansion. AO restricted the claim to 25%, but the Supreme Court in Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] has clearly held that units undergoing substantial expansion are eligible for 100% deduction for another five years, within the overall 10-year period.
It was also noticed that the assessee’s claim has already been accepted by the Coordinate Bench in earlier years i.e AY 2014–15 and 2015–16, therefore there is no reason to take a different view on this issue. Accordingly, we hold that the assessee is entitled to 100% deduction u/s 80IC for AY 2016–17, and the appeal of the assessee is allowed.
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2025 (4) TMI 1262
Unexplained investments u/s. 69 - HELD THAT:- To substantiate this claim, the assessee has submitted the bank statements from Cosmos Co-Op Bank evidencing the amounts received from Sanghvi Infotech as repayment of loan and the amounts paid to Sanghvi Infotech as a consideration against 28,00,000 Right Shares. These bare facts could not be disputed on facts or on any other material by the DR. We hold that no addition is called for on account of investments in shares. Appeal of the assessee on this ground is allowed.
Gift received from anonymous - HELD THAT:- We are still searching for appropriate words in the English dictionary to appreciate the dedication, neutrality, objectivity and judicious nature of the AO and CIT(A) while dealing with this issue. Having unable to find appropriate words, we at least found the reasons why the taxpayer detests the tax authorities. We hold that the Revenue Authorities have failed to appreciate the issue in the right perspective and hence we hold that no addition on account of gift of shares received by the assessee from his brother can be treated as unexplained investment u/s 69 of the Act. Appeal of the assessee on this ground is allowed.
Deduction u/s 57 - assessee has earned interest against the amount advanced (loans) to various parties - assessee has also paid interest from whom the amounts (loans) have been received - AO disallowed the deduction of interest claimed by the assessee u/s 57 - CIT(A) upheld the action - HELD THAT:- The details of the name, address and PAN numbers from whom the amounts have been received and interest paid has been duly given before the Revenue Authorities. The ledgers of all the 48 parties have been submitted before the Revenue Authorities. The ledgers reveal opening balances, payment of the principal made during the year, payment of receipt during the year and the interest payments. We also find on record, the flow of money as advances and extending of loans to other parties. Hence, it shall be treated as business activity of the assessee and claim of interest paid has to be allowed from the interest received. In the result, appeal of the assessee on this ground is allowed.
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2025 (4) TMI 1261
Disallowance u/s 28(iv) towards share application money - CIT(A) (NFAC) deleted the additions - as submitted though the share premium was received in the F.Y. 2011-12 & 2012-13, no shares were allotted against them as late as March 2021 - CIT(A) deleted addition - HELD THAT:- Assessee had received share application money from its existing shareholders. In this respect, provisions of section 68 were not urged upon by the AO. Thus, accepting the identity and creditworthiness of the investors and genuineness of the transaction, addition made by the ld. AO is by way of invoking provisions of section 28(iv) to bring this amount to tax under the head ‘profit and gains’ ‘business or profession’ on account of assessee receiving benefit or perquisite.
The most clinching fact for the assessee is that it has ultimately issued the shares and allotted the same to the respective investors which is not in dispute. This fact establishes that impugned transaction is on capital account and thus the receipt in the hands of the assessee is a capital receipt, not liable to be taxed under the provisions of section 28(iv).
No reason to interfere with the findings arrived at by the ld. CIT(A), deleting the addition made u/s 28(iv) by the ld. AO. Accordingly, ground raised by the Revenue in this respect is dismissed.
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2025 (4) TMI 1260
Undisclosed income - Difference between the business income as per the Profit & Loss Account submitted during the survey and the income declared in the return - use of approximate profit and loss account prepared during the survey - actual audited accounts were later on submitted which were different as income declared during the survey was based on incomplete accounts - HELD THAT:- As during the assessment proceedings and also before this Bench, the assessee submitted a reconciliation statement, explaining that the earlier declaration was based solely on information drawn from unaudited books of account.
Upon finalization of the accounts, the assessee observed a reduction in the turnover initially declared at the time of the survey. Specifically, the turnover was revised resulting in a difference of Rs. 38,04,310/-. AR confirmed that the assessee had declared a net profit rate of 7.76% during the relevant assessment year. It was fairly conceded by the Ld. AR that the net profit margin should be applied to the difference in gross receipts, since certain expenses were necessarily incurred to earn those receipts and cannot be disregarded.
The issue being entirely factual, and the turnover computed by the survey team having been duly accepted, the difference between the gross receipts declared in the return of income and those determined during the survey amounts to Rs. 38,04,310/-. Accordingly, applying the net profit rate of 7.76% to this difference, the resultant income to be added comes to Rs. 2,95,214/-, which is rounded off to Rs. 2,95,300/-.
Consequently, the addition made by the Ld. AO to the extent of Rs. 85,88,540/- is hereby deleted, and the addition is sustained only to the extent of Rs. 2,95,300/-, which is directed to be added to the total income of the assessee. Decided partly in favour of assessee.
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2025 (4) TMI 1259
Unexplained cash credit u/s 68 - bogus short term loss claimed by the assessee by way of transacting in penny stocks - HELD THAT:- We note that transactions were undertaken through the SEBI registered broker on the stock exchange platform on which STT was levied and the consideration was routed through normal banking channel. The entire flow of these transactions is corroborated by relevant documentary evidences placed on record.
While making the addition, there are no discrepancies pointed out by the AO in the documents and the details furnished by the assessee. Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the assessee. These evidences furnished have been neither controverted by the Ld. AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him.
Revenue has not brought on record any material about participation of the assessee with any such dubious transactions relating to accommodation entry, price rigging or exit providers. AO could have taken an adverse view only if he could point out the discrepancies or insufficiency in the evidence and details furnished in his office. Once the assessee has produced documentary evidence to establish the veracity of his claim, the burden would shift on the Revenue to establish its case.
AO had proceeded on the basis of analysis of the financials of the company. According to him, sharp movement in the share prices of the aforesaid scrip is not justified. He has relied upon the search and survey operations conducted by the investigation wing of the Department at various locations in respect of alleged penny stock which sets out the modus operandi adopted in the business of providing entries for bogus capital gains. The conclusion drawn by AO of implicating the assessee is un-supported by any cogent material on record. It is also a fact on record that assessee is a regular investor, transacting and holding shares in several scrips. The finding arrived at by the ld. AO is thus purely an assumption based on conjectures and surmises.
In our thoughtful considerations to the facts and circumstances of the case, it is not in controversy that assessee has discharged his burden by submitting the relevant documents, details of which are already noted above, forming part of the paper book.
Thus, we have no reason to interfere with the first appellate order whereby addition made towards short term capital loss on the share transactions of two scrips which was set off from the short-term capital gains on other scrips. Accordingly, grounds taken by the revenue in this respect are dismissed.
Addition on estimate basis towards commission for arranging alleged artificial capital loss - Since we have upheld the deletion of the said addition towards short-term capital loss on the aforesaid two scrips in terms of above stated observations and findings, this consequential addition also receives the same fate, affirming the finding of ld. CIT(A) to this effect. Accordingly, grounds taken by the revenue in this respect are dismissed.
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2025 (4) TMI 1258
Assessment u/s 153A/153C or 147 - documents found during the search on third party - HELD THAT:- As per the express scheme of the Act, where documents seized in a search pertain to or belong to a person other than the searched party, the appropriate and mandatory course of action is to proceed u/s 153C and not u/s 147.
The documents cited in the assessment order clearly form part of the material seized from the premises of the Ameya Group. No new or independent information was unearthed by the AO in the normal course of assessment proceedings.
AO, despite initiating the reassessment on the basis of alleged cash receipts, ultimately made additions on an entirely different ground, namely cash payments—thus deviating from the recorded reasons. Such divergence between the recorded reasons and the eventual addition undermines the very jurisdiction assumed under Section 147.
Thus, the assumption of jurisdiction u/s 147 by the issuance of notice under Section 148 dated 30.03.2019 is invalid and without legal sanction.
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2025 (4) TMI 1257
Penalty u/s 271(1)(c) - mistake in making of a claim in the return of income -assessee has claimed excess carry forward loss - Assessee in the revised return had claimed remuneration and interest paid to the partners twice which was rectified only in the return filed in response to the notice issued u/s 148 - HELD THAT:- A perusal of the computation statement shows that no such claim of carry forward of loss has been made by the assessee. What the assessee has done is that he has claimed the same without adding interest and remuneration paid to the partners and then claimed the same as has been done in the original computation of income. The assessee has inadvertently omitted to add the same in the revised return of income but claimed the salary and interest paid to the partners.
We, therefore, find some force in the arguments of assessee that it was an inadvertent human error and there is no deliberate attempt on the part of the assessee to evade taxes. It is also an admitted fact that the assessee has not claimed the benefit of carry forward of such loss on account of interest and remuneration paid to the partners. We are of the considered opinion that this is not a fit case for levy of penalty on account of human error. CIT(A) / NFAC and delete the penalty levied by the AO. The grounds raised by the assessee are accordingly allowed.
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2025 (4) TMI 1256
TP adjustment - interest payment on external commercial borrowing (“ECB”) - assessee company entered into three ECB transactions vide three separate loan agreements with its Associated Enterprises(“AEs”) - TPO has determined the ALP of interest on ECB by adopting LIBOR+200 basis points for bench marking the interest paid by the assessee at LIBOR+500 basis and consequently proposed adjustment - HELD THAT:- By following the earlier decisions of this Tribunal in the case of DCIT Vs. Devgen Seeds & Crop Technology (P) Ltd. [2017 (3) TMI 1333 - ITAT HYDERABAD] we hold that the interest payment of ECB @ LIBOR+500 basis is at arms length and consequently no adjustment is warranted. Hence, the TP adjustment made and confirmed by the DRP on this account is deleted.
TP adjustment on account of royalty payment - assessee owned and developed engineering and technical know-how and information, experience and expertise in respect of manufacture, marketing and sale of different kinds of high speed doors -only reason given by the TPO for determining the ALP at Nil is that the assessee failed to substantiate with any documentary evidence, the benefit derived by it in quantifiable term - HELD THAT:- A consistent view has been taken by the Tribunal on the point that when the payment is made as per the legally binding agreement between the parties, which is duly approved by the RBI for the purpose of remittance of royalty, then the tax authority cannot intervene in the realm of intricacies of commercial expedience involving in the arrangements between the parties. By following the order of M/s Aban Offshore Ltd [2016 (10) TMI 807 - ITAT CHENNAI] we hold that applying the benefit test by the TPO and determining the ALP of royalty at Nil is highly arbitrary and unjustified. Consequently, addition / adjustment made on this account is deleted.
TP adjustment towards interest on receivable - AR contended that when the payables are almost 4 times more than the receivables and the assessee is not paying any interest on the payables to the AE, then adjustment made by the TPO on account of trade receivables without considering the trade payables is not justified - HELD THAT:- The outstanding receivables and payables are not in dispute though the receivables and payables are from different AEs. The assessee has stated that the payables are in respect of the purchases made by the assessee from AEs, which was subsequently sold to another AE and therefore, the transactions are inter connected and when the assessee is not paying any interest on the payables to the AEs, which are more than the receivables from the AEs, then the adjustment made on this account is uncalled for.
Tribunal, in assessee’s own case [2021 (5) TMI 356 - ITAT HYDERABAD] held that it will be appropriate for netting off the notional interest with respect to debit and credit transaction with the assessee’s AEs and only on the net receivables, the notional interest can be benchmarked for transfer pricing purpose. We further note that when the assessee is purchasing raw material from the AEs and selling the goods to the AEs, then the transactions of purchase and sale are directly connected with each other. Therefore, it will be appropriate to consider both the trade receivables as well as payables from the AEs, while bench marking the transactions of notional interest on the receivables. By following the earlier order of this Tribunal, adjustment made by the TPO/AO on this account is deleted as the payable for the year under consideration is substantially higher than the receivables.
TP adjustment on account of trade receivables for the year under consideration - HELD THAT:- As it is clear that the trade payable in the year under consideration is 7 times more than the trade receivables from the AEs. This issue is common as raised the for the A.Y.2017-18 and in view of our finding on this issue for A.Y.2017-18, the addition made by the TPO/AO on this account is deleted.
Scrutiny assessment - adjustment made by the CPC while processing the return u/s 143(1) - suo-moto disallowance made by the assessee - HELD THAT:-The assessment was taken up for scrutiny by issue of notice u/s 143(2) on 23.09.2019, whereas, the CPC has processed the return u/s 143(1) vide order dated 02.12.2019 and therefore, once the assessment proceedings were already pending, the assessee was not supposed to challenge the intimation u/s 143(1) separately. Even otherwise, processing of return merges with the assessment proceedings and therefore, once the assessee has objected to the adjustments made by the CPC, the AO ought to have examined and verified the same from the relevant record. It is the duty of the AO to ensure that there should not be any double addition, even on account of adjustment made by the CPC. Therefore, in the facts and circumstances of the case and in the interest of justice, we set aside these non TP issues, where the CPC has made adjustment, to the record of the AO to verify about suo-moto disallowance made by the assessee and determine the correct amount of disallowance if any.
Disallowance made on account of belated payment towards employees contribution, though this issue is decided by the DRP in favour of the assessee, however, the AO has not given effect to the directions of the DRP. Now this issue is covered by the judgement of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] and therefore, the AO is directed to verify and decide this issue as per law.
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2025 (4) TMI 1255
Denial of foreign tax credit (FTC) u/s 90 - filing Form No. 67 after the due date for filing the return u/s 139(1) - HELD THAT:- We observe that Section 90, in conjunction with the India-Canada DTAA, confers a substantive right to claim FTC for taxes paid abroad, subject to conditions prescribed under the Income Tax Rules. Rule 128(9), as applicable for A.Y. 2022-23, required Form No. 67 to be filed by the due date of the return under Section 139(1).
Neither the Act nor the Rules explicitly mandate disallowance of FTC for delayed filing of Form No. 67. Consistent with decisions in Brinda RamKrishna [2022 (2) TMI 752 - ITAT BANGALORE] Sonakshi Sinha [2022 (10) TMI 107 - ITAT MUMBAI] and Nirmala Murali Relwani [2022 (12) TMI 395 - ITAT MUMBAI] we hold that filing Form No. 67 is a directory requirement, not mandatory, and a procedural lapse does not extinguish the substantive right to FTC, especially when the form was filed on 27.08.2022, well before the processing of the return on 26.10.2022. The amendment to Rule 128(9) effective from 01.04.2022, allowing filing until the end of the assessment year, further indicates a legislative intent to liberalize procedural compliance, though not directly applicable here. CIT(A)’s dismissal of non-jurisdictional precedents is not tenable, as these rulings reflect a consistent judicial interpretation favouring the assessee. Decided in favour of assessee.
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2025 (4) TMI 1254
Disallowance of Speculation loss - Addition u/s 68 by treating that the transaction was bogus - HELD THAT:- We can be said that commodity income made by the assessee cannot be treated as a bogus as there is no rules, regulations which states that the off market transaction needs to be reported to the exchange. As a result of, the order passed by the AO confirmed by the CIT(A) on speculation loss as well as addition u/s 68 of the Act cannot be said to be legal. Accordingly, the same is hereby directed to be deleted.
Addition u/s 56(2) - assessee received gift of the amount from M/s Anand Akash Sureka, being the father and a member of Hindu undivided family - AO disallowed by upholding that the father did not come under the definition of relatives - submission of the assessee is that family was HUF and each of HUF family members have a separate legal status so the father should be considered as a relative - HELD THAT:-We find force in the argument of assessee that the assessee is entitled to claim deduction u/s 56(2) of the Act even the gift received from the father. Accordingly, the order passed by the AO confirmed by the Ld. CIT(A) is set aside and addition made under the same section is hereby directed to be deleted.
Addition of amount from Aakash Sureka Educational Trust u/s 56(2) - HELD THAT:- The present facts of the case are concerned trust had duly filed its return of income and he paid taxes. The amount transferred to the beneficiary had already subjected to the taxation. The trust was formed as per the provision of Indian Trust Act. Once trust has paid taxes was earned in earlier years it means beneficiary has paid the said taxes and therefore, the addition made in the present case is liable to be deleted. Keeping in view, the above discussion the addition made by the AO confirmed by the Ld. CIT(A) is hereby deleted.
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2025 (4) TMI 1253
TP Adjustment - rejection of internal TNMM for the purpose of benchmarking the international transaction of the assessee-company with its AE - HELD THAT:- Assessee-company has not filed any evidence, except a Certificate from the Accountant to prove it’s claim. From the details filed by the assessee-company, we are of the considered view that, the assessee-company has failed to demonstrate that the AEs and Non-AEs are functionally comparable. Further, the nature of the transactions with AEs and Non-AEs along with terms were not produced to substantiate the functional comparability.
Non- Associated Enterprises transactions were predominantly from Indian operations, whereas Associated Enterprises transactions were outside India. No explanation was given for the assessee-company’s geographical differences in it’s transactions and how much material difference was adjusted for the purpose of comparability. The assessee- company failed to prove segmental allocation on actual basis. Therefore, we are of the considered view that, when there is no evidence to prove the argument of the assessee- company in respect of Internal-TNMM, it is difficult for us to accept the contention of the assessee-company that Internal-TNMM is an appropriate parameter for benchmarking the international transaction with it's AEs. Thus, we reject the argument of the assessee-company and reject ground nos.2 and 3 of the assessee’s appeal.
Rejection of TP study conducted by the assessee-company and fresh TP study conducted by the TPO - In the present case, going by the reasons given by the TPO and by the DRP, we find that TP study conducted by the assessee-company is not in accordance with provisions of sec. 92CA(3) of the Act, because, the assessee-company has failed to prove with relevant evidences that it applied appropriate filters while selecting comparable companies and also maintain relevant data to prove the comparability analysis of comparable companies. We further note that, Rule-10B in this regard requires to use of current year data, even if it is subsequently available at the time of determination of ALP during the course of assessment proceedings. From the words of Rule-10B(5), it is very clear that the current year data has to be necessarily considered for the purpose of comparable analysis. Since the assessee-company had not considered current year data for its comparability analysis, in our considered view, the filters adopted by the assessee- company for selection of comparable companies is not in accordance with sec. 92CA(3) of the Income Tax Act, 1961 and Rule 10B(5) of the Income Tax Rules 1962. Therefore, there is no merit in the grounds taken by the assessee-company challenging the reasons given by the TPO/DRP for rejection of TP analysis conducted by the assessee-company.
Exclusion of 13 comparables on the ground of functional dissimilarity, superior profit and turnover and other appropriate filter etc. - Although, the assessee-company contended for application of Rs. 0 to Rs. 200 crore turnover is appropriate turnover filter for exclusion of certain companies, but, in our considered view, going by the settled principle of law by the decisions of various Tribunals, application of 10 times upper and lower limit of turnover at a company is appropriate for exclusion of companies for the purpose of comparability of analysis. If we apply 10 times lower or upper turnover limits for companies, then, in our considered view, going by the revenue earned by the assessee-company of Rs. 34 crores approximately, in our considered view, the above 05 companies viz., Cybage Software Pvt. Ltd., Tata Elxsi Ltd., Persistent Systems Ltd., Larsen & Toubro Infotech Ltd., and Infosys Ltd., are having turnover of above the tolerance range fixed for inclusion of companies. Therefore, we are of the considered view, that Cybage Software Pvt. Ltd., Tata Elxsi Ltd., Persistent Systems Ltd., Larsen & Toubro Infotech Ltd., and Infosys Ltd., are definitely not comparable to assessee-company on turnover filter itself. Thus, we direct the TPO to exclude the above 05 companies for the purpose of benchmarking the ALP of international transaction of the assessee-company with its AE.
Coming back to Thirdware Solution Ltd., Aspire Systems (India) Pvt. Ltd., and Nihlent Ltd., although, the assessee-company seeks to exclude these 03 companies on Rs. 0 to Rs. 200 crore turnover filter, but, in our considered view, since we have applied 10 times upper and lower limit for exclusion of companies and if we apply the said limit, the above 03 companies are coming within the range of turnover fixed for comparable analysis and thus, on this ground, these 03 companies cannot be excluded from the list of comparables. Therefore, we reject the argument of the Counsel for the assessee-company.
When it comes to software development services, it has a bundle of services which includes project engineering, enterprise solution, independent testing services and application of support services and these are services comes under one segment of software development services, although, may be in a different business segments. Therefore, going by the description provided in the annual report of the relevant companies, it cannot be said that these 03 companies are engaged in a different or diversified activities and there is no segmental data available in respect of each segments. Since the functions performed by the assessee-company are similar that of the functions carried-out by the above 03 companies, in our considered view, the above 03 companies are functionally similar to the assessee-company and comparable to the assessee-company. We are, therefore of the considered view that the DRP has rightly included the above 03 in the list of final set of comparables. We, therefore, uphold the findings of DRP and reject the ground taken by the assessee-company.
Exclusion of R S Software (India) Ltd - Once the company is engaged in providing software development services which may be in respect of other segments of business, but, when said services comes under one umbrella of software development services, then, the question of segmental information for comparison purpose does not arise. Since the assessee itself has selected the company in it’s TP study and further the assessee failed to make-out a case that it is functionally dissimilar from the assessee-company, in our considered view, based on certain decisions, the said company cannot be excluded. Thus, we reject the arguments of the Counsel for the Assessee and uphold the reasons given by the DRP for inclusion of R S Software (India) Ltd., in the final set of comparables.
Inclusion of 08 companies which were earlier considered in the TP study of the assessee - Once the company is engaged in providing software development services, even if it is providing said services to multiple segments of business, in our considered view, once the services rendered by the companies is comes under one umbrella of software development services, then merely for the reason of said companies providing services to diversified segment businesses, those companies cannot be excluded for the purpose of comparison of analysis.
In the present case, going by the reasons given by the TPO, in our considered view, the TPO has given stereotype reasons for all companies even though the evidences filed by the assessee clearly demonstrates that the said companies are providing software development services and derived 100% revenue from one segment. Further, the assessee had also proved with evidences that all these companies have passed the filters applied by the TPO. Therefore, TPO was erred in excluding the said companies from the list of comparables. The DRP without appreciating the relevant facts, simply upheld the reasons given by the TPO and excluded the above 08 companies from the list of comparables. Thus, we set aside the order of DRP/TPO and direct the AO/TPO to include the above 08 companies in the list of final set of comparables for the purpose of comparison of international transactions of the assessee-company with it’s AEs.
Exclusion of Kals Information Systems Private Limited and Cigniti Technologies Limited from the final list of comparable companies - Although, the DRP has directed the TPO to exclude the above 02 companies, but, the Learned Counsel for the Assessee submitted that the TPO has not given full effect to the directions of the DRP to exclude the above 02 companies. In our considered view, once the DRP has given a direction to the TPO/AO to exclude or include any company, the Assessing Officer/TPO is bound to give full effect to the directions of the DRP without any modifications. Therefore, we direct the Assessing Officer/TPO to verify the fact and give effect to the order of the DRP in toto and exclude the above 02 companies viz., Kals Information Systems Private Limited and Cigniti Technologies Limited from the final list of comparable companies.
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2025 (4) TMI 1252
Denial of registration u/s. 12AB - assessee has not established whether this object is in compliance with any other law for the time being in force as are material for the purposes of achieving its objects - primary contentions of the Ld.AR was that, the assessee was granted provisional registration in Form 10AC, and therefore the assessee may be granted registration u/s. 12AB - HELD THAT:- According to Sub-section 4 and 5 of section 12AB inserted by Finance Act, 2022, with effect from 01/04/2022, Ld.PCIT/CIT may cancel the registration (after providing reasonable opportunity of being heard) if it is found that, the activities are not genuine or are not carried out in accordance with the objects of trust/institution. At this juncture, we note the fact that provisions of sub sections are applicable to the present assessee based on the date of application filed seeking registration under section 12B of the Act.
Registration will also stand cancelled u/s 12AB, if the authorities notice that, the activities of the trust or institution are carried out in a manner that the provisions of section 11 and 12 do not apply due to operation of section 13(1), or, the trust or institution has not complied with the requirement of any other law for the time being in force as is material for the purpose of achieving its objects etc. In case there is a specified violation as mentioned in Explanation to sub section 4, the Registration under section 12AB would be denied or stand cancelled, as the case may be.
One of the intention of Legislature to introduce sub clause (4) and (5) to the section 12AB is to address the issue related to the process of approval or cancellation or withdrawal thereof.
Thus, we do not agree with the argument advanced by the Ld.AR that since provisional registration is granted to the present assessee before u/s.12AB, final registration cannot be denied.
In the present facts, the assessee’s objects include clause 12, which is not in consonance with the main purpose to grant exemption u/s 11(1)(a) of the Act for sale of convenience, the relevant portion are excluded as under.
As noted that, the assessee was offered opportunity of being heard, is apparent from the paper book filed before us. However, nothing on record is filed, to demonstrate that, the assessee took necessary steps to amend the objects which is in contravention to section 11(1)(a) of the Act. Admittedly it is not the case that, the assessee has already applied its funds as per object clause 12 of the memorandum.
By insertion of sub section 4 & 5 inserted by Finance Act, 2022 widened the scope of violations by including violations specified in explanation therein. This was not the legal position u/s. 12A/12AA prior to amendment. The condition to satisfy that the objects of the trust are not in violation to compliance under any other law for time being in force towards achieving the material purposes of the objects is now become necessary to be established by the assessee at the time when its application is scrutinised for converting provisional to final registration. The explanation (f) to sub clause (4) of 12AB mandates compliance with the requirement of any other law as referred to item (B) of sub-clause (i) of clause (b) to subsection (1) of 12AB. With such compliance required at the stage of registration, pertaining clause 12 in the memorandum of the assessee trust will be an hurdle to grant final registration.
We therefore do not find any merit in the arguments advanced by AR and the same stands rejected based on the discussions and analysis of the relevant provisions and decisions on the issue. As a consequence, the application seeking 80G also stands rejected. Accordingly, the Grounds raised by the assessee in both appeal stands dismissed.
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2025 (4) TMI 1242
Adjustment of refund against the demand - payment of 20% of the demand for assessment year 2016-17 by the Petitioner - HELD THAT:- There is no dispute that the Petitioner has made payment of 20% of the demand for assessment year 2016-17 and the appeal for the said assessment year is pending as of today. As per the CBDT Circular once payment of 20% of the demand is made, the balance demand would be stayed till the disposal of the appeal.
Therefore, the adjustment of the refund for assessment year 2014-15 by the Respondent after the Petitioner has already paid 20% of the demand was not justified. This is contrary to their own Circular and the decision of this Court in the case of Mahesh Ganatra [2025 (2) TMI 1086 - BOMBAY HIGH COURT].
The Petitioner has raised this very specific ground in his reply to the proceedings u/s 245 of the Act and same has not been controverted. In our view, since the appeal for assessment year 2016-17 is pending and the Petitioner has made payment of 20%, the reasoning given by the Respondent that the balance demand has not been paid and therefore the adjustment is justified is erroneous and contrary to the decision of this Court.
Thus, adjustment of refund arising out of proceedings for assessment year 2014-15 against the demand for assessment year 2016-17 is unjustified and illegal. Respondent is directed to refund the erroneous adjustment made of refund.
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2025 (4) TMI 1228
Penalty u/s 271(1)(c) - disallowance of capital loss on dissolution of the HUF - AO has stated that he is satisfied that the assessee has furnished inaccurate particulars of the income by claiming the said amount as deduction - HELD THAT:- As the argument by relying upon Section 171 does not take the case of the revenue any forward. One more aspect which we have taken note of is that partition of the HUF completely was accepted by the AO while completing the assessment under Section 143 (3) of the Act and therefore, it will be too late for the revenue to now turn back and say that they will not recognize the partition of the HUF in full form.
As already noted, the reason for which notice was issued for initiating penalty proceedings, is different from the conclusion which was arrived at by the Assessing Officer while passing the penalty order dated 30.6.2017. This is also yet another incurable defect which is called for interference of the penalty order. At this juncture, we need to point out that the law is well settled that the penalty proceedings are separate and independent from the assessment proceedings.
Even assuming an addition has been made in the assessment proceedings, that will not automatically warrant levy of penalty. There is a mandate cast on the revenue to show with sufficient material that there was a concealment of income by the assessee and the assessee attempted to evade payment of tax.
In the instant case, the assessee upon partition of the HUF in full form mistakenly treated the assets in the hands of erstwhile coparceners to be a transfer. This was subsequently ascertained during the course of the assessment proceedings and the assessee put forth the case to be a one of genuine mistake. If that be the case on facts, it is also one more ground for not to levy any penalty on the assessee.
Thus, Tribunal was right in allowing the assessee’s appeal and setting aside the penalty order. Decided in favour of assessee.
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2025 (4) TMI 1227
Disallowing interest paid to the beneficiaries u/s 40(b) - status of the Appellant Trust was that of Association of Persons - HELD THAT:- The Supreme Court in INDIRA BALKRISHNA (1960 (4) TMI 7 - SUPREME COURT] has held that an association of persons must be one in which two or more persons jointly held common purpose or common action and as the word occurs in a section which imposes tax on income, the association must be one which produces income, profits or gains.
The scope of Appeal u/s 260A of the Act is well settled. This Court, in an Appeal under Section 260A, can interfere with the finding of fact only if when the same is shown to be perverse. [See: SYEDA RAHIMUNNISA VS. MALAN BI BY L.RS. AND ORS. [2016 (10) TMI 1233 - SUPREME COURT] and SOFTBRANDS INDIA P. LTD. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT].
AO by applying the aforesaid criteria to the facts of the case, has held that the beneficiaries have come together voluntarily by pooling their money in the trust with clear knowledge that the funds will be utilized by the trust for the business of project work undertaken and would result in profits for the trust and consequently for the beneficiaries.
AO has recorded a finding that the Trust is an Association of Persons. Accordingly, the interest claim to the beneficiaries has been disallowed. The aforesaid findings recorded by the Income Tax Officer as AO, has been upheld in Appeal. The Income Tax Appellate Tribunal has held that the assessee himself has declared the status as an association of persons and on that basis, the Assessing Officer has passed the order. It has further held that declaration by assessee is not a mistake which has been erroneously made, as no attempt has been made to rectify the aforesaid mistake. It is also pertinent to note that the assessee, while filing the return, had described itself as an Association of Persons for which neither any attempt has been made to correct the so called mistake nor any explanation has been offered for making such a mistake.
The order passed by the Assessing Officer as well as the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal is based on meticulous appreciation of evidence. The finding of fact recorded therein by no stretch of imagination can be said to be perverse.
Tribunal was justified in law in holding that the status of the Appellant Trust was that of Association of Persons and thus the lower authorities were justified in disallowing interest paid to the beneficiaries under Section 40(b) of the Income Tax Act, 1961.
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2025 (4) TMI 1226
Transfer of case u/s 127 - Transfer income tax assessment file of the petitioner from the Office of the Principal Commissioner of Income Tax, Coimbatore to the Central Circle, Kolkatta (Central Circle-) - this transfer order has been passed to centralize the case of the petitioner for effective and co-ordinated investigation along with other cases Whether the respondents have sufficient material for transfer of the case from Coimbatore to Central Circle, Kolkata? - HELD THAT:- If the transfer is being made for the purpose of co-ordinated investigation for the purpose of assessment and collection of tax in a more convenient or efficient way, then it will be a good ground for transfer.
In the present case, this Court does not find any irregularity or infirmity in passing the impugned Notification by the 1st respondent ordering transfer of the case of the petitioner to Central Circle, Kolkata along with other cases only for the purpose of co-ordinated investigation in Lottery Group. No doubt, transfer of a case from the place where the assessee has its place of residence or business to another place causes inconvenience but if it is necessary in the public interest then the transfer on the ground of proper and co-ordinated investigation cannot be held to be impermissible in law.
Moreover, do not find any prejudice that would be caused due to the present notification to the petitioner because no final assessment order adverse to the petitioner was passed, except the transfer of the petitioner's case by invoking Section 127 of the Act from Central Circle, Coimbatore to Central Circle, Kolkata. The Income Tax Act, being a taxing statute, very strict interpretation has to be given and in the absence of any prejudice caused to the petitioner, the challenge to the impugned notification has to be rejected.
The case laws referred to by petitioner would not persuade this Court to take a different view contrary to the decision of the 1st respondent and hence, the said case laws would not improve the case of the petitioner.
This Court is of the view that the Writ Petitions are liable to be dismissed.
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2025 (4) TMI 1225
Stay of demand - directing the petitioner to pay 20% of the disputed demand, pending disposal of the appeal before the Appellate Authority for the Assessment Year 2016-17 - As argued notice u/s 148 was issued by the jurisdictional Assessing Officer, whereas, as per the amended provision of the Act, that ought to had been issued in the Faceless manner - HELD THAT:- In the light of the subsequent amendments brought in the Act as also in the light of the decision rendered in the case of Union of India & ors., v. Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] the Assessing Authority ought to had granted interim protection to the Assessee till finalization of the appeal which the Assessing Authority has not considered.
The contention of the learned counsel for the petitioner so far as the 148 notice issued by the jurisdictional Assessing Officer not being in dispute by the learned Standing Counsel for the Department and also in the light of the aforesaid judgments rendered by this Court in the case of Kankanala Ravindra Reddy [2023 (9) TMI 951 - TELANGANA HIGH COURT] and in the light of the judgment of Ashish Agarwal (supra), we are of the considered opinion that the Assessing Authority in the course of deciding the petition under Section 220(6) of the Act, ought to have taken a more pragmatic view and should had kept the recovery proceedings in abeyance, pending the appeal before the Appellate Authority.
We dispose of the present writ petition at this juncture directing the Assessing Officer not to pursue with the recovery proceedings in terms of the impugned order dated 07.01.2025 till the appeal for the Assessment Year 2016-17 is finally decided.
Considering the fact that the appeal was filed in the year 2023, we expect that the Appellate Authority shall take up the appeal and decide the same at the earliest.
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2025 (4) TMI 1224
Availability of an "alternate remedy of appeal under the Income-tax Act, 1961" - HELD THAT:- Strangely, though, it is the procedural requirement, the petitioner has not made any averment in the Writ Petition regards alternate remedy. Paragraph 24 merely states that no similar petition is filed before any other Court including the Hon'ble Supreme Court of India or this Hon’ble Court.
There is no statement about no alternate or efficacious remedy not being available to the petitioner or an admission that such remedy is available but cannot be resorted to because the petition falls within the line of exceptions carved out by Judicial precedents. This suppression, according to us, is material.
That apart from since the petitioner has alternate and efficacious remedy to question impugned assessment order dated 26 February 2024, we see no ground to entertain this petition. The alternate statutory remedy cannot be bypassed so casually and without disclosing full and correct facts. This petition is accordingly dismissed with liberty however to the petitioner to avail of the alternate remedy available under the Income-tax Act.
All contentions of all the parties are left open should the petitioner choose to avail of the alternate remedy.
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2025 (4) TMI 1223
Validity of reopening of assessment - HELD THAT:- We issue Rule in this Petition. Respondents waive service after Rule.
Liberty to the parties to apply after appropriate orders are passed by the Hon’ble Supreme Court and/or final decision of the Hon’ble Supreme Court in the challenge to this Court’s decision in Hexaware Technologies Limited [2024 (5) TMI 302 - BOMBAY HIGH COURT]
As far as interim relief is concerned, we are not inclined to grant the same since we have noticed the delay in approaching this Court after the impugned order was passed and also in the wake of the fact that prior to issuance of the order under Section 148A(d), a show cause notice u/s 148A(b) was issued to which the petitioner has responded. However, pursuant to the assessment notice u/s 142(1) the petitioner once again sought to raise objection to the reassessement proceedings relying upon the decision of this Court in Hexaware Technologies Limited [2024 (5) TMI 302 - BOMBAY HIGH COURT] which is presently pending before the Apex Court.
We may observe that once an order u/s 148A(d) has already been passed deciding the objection raised, it is not permissible for the petitioner to keep on raising the objection. There is no explanation for the delay in approaching this Court after the order u/s 148A(d) was passed.
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2025 (4) TMI 1222
Reopening of assessment - Period of limitation - HELD THAT:- We find that in Union of India v. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] the Supreme Court had principally identified three block periods which were liable to be excluded for the purposes of examining a challenge based on the Proviso to Section 149 of the Act. The first of those periods was 20 April 2020 to 30 June 2021 and which essentially was the outcome of Section 3(1) of Taxation and Other Laws [Relaxation and Amendment of Certain Provisions] Act, 2021 [‘TOLA’].
Second period which the Supreme Court took into consideration was the date of the issuance of the original notice upto 04 May 2022, when it came to render judgment in Union of India & Ors. v. Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] The third period which was identified as being liable to be taken into account was that factored in by the Third Proviso to Section 148 of the Act, and which deals with the exclusion of time which is connected to the opportunity granted to the assessee to file a response to a notice under Section 148A(b).
Even if the period of 14 days and which represented the time within which the petitioner was called upon to furnish a response to the Section 148A(b) notice were to be added, the re-assessment notice which ultimately came to be issued on 23 July 2022, would not be within the period of limitation as prescribed. The aforesaid factual position is conceded to even by the respondents. We allow the instant writ petition and quash the notice under Section 148.
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