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Income Tax - Case Laws
Showing 241 to 260 of 163734 Records
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2024 (4) TMI 666
Levy of penalty - Penal proceedings for misreporting of income u/s 270A - Excess exemption claimed on Gratuity u/s 10(10)(i) and Leave Encashment receipts u/s 10(10AA)(ii) - HELD THAT:- Levy of penalty in this case in our considered view was not warranted for the reasons that; (i) admittedly for part of the service the appellant was State Government employee whose employment by enforcement of electricity Act, 2003 and MSEDCL employee Service Regulation 2005 was converted into nongovernmental service/employment. Therefore, the belief under which full exemption of retirement benefit claimed in the ITR filed was in first not incorrect in its entirety and certainly it was bonafied and not synthetic one (ii) secondly, the explanation offered by the appellant in support of his mistaken but bonafied belief and disclosed all material facts of his service & the circumstance which swayed to claim full exemption in his ITR in our considered view squarely falls within clause (a) of s/s (6) of section 270A of the Act, therefore pardonable (iii) and finally, the imposition of penalty is at the discretion of Ld. AO, since s/s (1) of section 270A of the Act, refers to the word 'may' and not as ‘shall’.
However, the tax authorities below in our considered view were failed to appreciate the facts and circumstance of the present case holistically and further in right spirit of law, but dealt therewith without application of mind and perfunctory imposed / confirmed the penalty @ accelerated rate of 200% u/s 270A of the Act in unwarranted case like this.
As in respect of penalty in fiscal laws the principle followed is more like the principle in criminal cases. That is to say the benefit of doubt is more easily given to the assessee, and this finds expounded in VV. IYER VERSUS COLLECTOR OF CUSTOMS [1972 (9) TMI 52 - SUPREME COURT]. In view of this, we set-aside the impugned order of Ld. NFAC and quashed the order of penalty. Appeal of assessee allowed.
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2024 (4) TMI 665
Reassessment proceedings against company dissolved / insolvent - Jurisdiction or authority to reopen or assess income for any period prior to the approval of the Resolution Plan - petitioner is the corporate debtor and the Resolution Plan in respect of which came to be approved by NCLT - HELD THAT:- The successful resolution applicant cannot be foisted with any liabilities other than those which are specified and factored in the Resolution Plan and which may pertain to a period prior to the resolution plan itself having been approved. See GHANASHYAM MISHRA AND SONS PRIVATE LIMITED [2021 (4) TMI 613 - SUPREME COURT] and COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT]
We allow the instant writ petition and set aside the impugned order under Section 148A(d). Decided in favour of assessee.
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2024 (4) TMI 663
Validity of order passed by the ITSC - Settlement of a case - Bogus purchases and Accommodation entries - ITSC allowed certain amounts to be capitalized with depreciation - ITSC also granted immunity from penalties and prosecution - scope of intervention by a High court, in its jurisdiction u/Article 226 of the Constitution of India - HELD THAT:- As in Jyotendrasinhji [1993 (4) TMI 1 - SUPREME COURT] Hon’ble Apex Court held that the High Court under Article 226 can interfere with an order of the ITSC only when the order is contrary to provisions of the Act and that such contravention has prejudiced assessee.
ITSC is empowered to pass, after hearing the applicant and the Commissioner, and after examining such further evidence as may be placed before it or obtained by it, such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner under Sub Section (1) or (3) of Section 245C of the Act.
ITSC also has power to grant immunity from penalty and prosecution, with or without conditions. The ITSC need not give any reasons and even if it gives any reason the scope of enquiry cannot go beyond - The court should be concerned with the legality of procedure followed and not with the validity of the order. The judicial review is concerned not with the decision but with the decision making process.
Even if the interpretation placed by the ITSC on documents is not correct, it would not be a ground for interference since a wrong interpretation of documents cannot be said to be a violation of the provisions of the Act. There are no allegation of bias or fraud or malice alleged in the petition against the Commission.
The Hon’ble Apex Court in Kotak Mahindra Bank Ltd. [2023 (9) TMI 1231 - SUPREME COURT] held that the High Court cannot sit in appeal as to the sufficiency of the material and particulars placed before the Commission, based on which the Commission proceeded to pass its orders.
While discussing the legislative intent on the provisions of Chapter XIX-A, the Hon’ble Apex Court in Kotak Mahindra Bank Ltd. [2023 (9) TMI 1231 - SUPREME COURT] held that frequent interference with the orders or proceedings of the ITSC should be avoided and the High Court should not scrutinize an order or proceeding of the ITSC as an appellate court.
The conspectus of the law therefore would be that the court could not interfere with the order if otherwise proper on the ground that the decision appeared erroneous. Wrong or right decision was binding, if it be reached fairly after giving adequate opportunity to the parties to place their case in the manner provided by the Act. The court should be concerned not with the decision but the decision making process. If grave procedural defect such as violation of the mandatory procedural requirements of the provisions of Chapter XIX-A and/or violation of rules of natural justice is made out or if it is found that there is no nexus between the reasons given and the decision taken only then the court may interfere.
Claim of deduction u/s 80IB(10) - As undisputed the projects carried out by assessee at Vasundhara, Samarpan and Country Park III qualified for deduction u/s 80IB(10) and that disallowance of expenditure by way of bogus purchases and towards business promotion and travelling expenses on Adhoc basis would go to increase the profits of the eligible projects - additional deduction as also noted in the impugned order for A.Y. 2009-10 comprises of additional income arising on account by disallowance of bogus purchases and additional income arising on account of Adhoc disallowance of expenses made by the Revenue for A.Y. 2005-06, 2006-07, 2007-08, 2008-09 in the Assessment Order passed u/s 143(3) r.w.s. 153A of the Act for those years. Detailed working and explanation in respect of the same was already available as a part of the settlement application and submissions made before the ITSC. The issue raised being question of fact as to the quantum of deduction to be allowed under Section 80IB(10) of the Act can never qualify as ground for interference by this court under jurisdiction of Article 226 of the Constitution of India.
Capitalization - According to Revenue, the ITSC, before allowing capitalization of the expenditure incurred by assessee on acquisition of fixed assets by way of civil work, furniture and air conditioning system at its office premises on the 10th floor at Atrium benefits the assessee ought to have conducted an enquiry or investigation on the issue as these factual issues required verification to ascertain whether the amount was spent on the assets as stated, its actual cost, year of purchase, etc. - It does not appear that any such request for verification of these aspects were made by the Revenue in the reports or statements that were filed before the Commission. Moreover, the discretionary power under Section 245D(3) discussed above will apply here also. Further, the Revenue had accepted that the seized diary discloses the correct facts in respect of the cash generated by assessee on account of bogus purchases. In view thereof, Revenue should also accept utilization of such cash as narrated in the said diary/document seized at the time of search. It is assessee’s case that assessee has its office on 10th Floor at Atrium and the expenses have been incurred on civil work, furniture and air conditioning system at the said office and the said office premises has been used in the previous year relevant to A.Y. 2011-12. Assessee has been allowed deduction by way of depreciation on the other capital expenditure incurred with respect to the said office premises. The ITSC has accepted the issue of capitalization of expenditure incurred and granted the relief.
Seized diary showed that part of the cash generated by the company from bogus purchases was utilized for the purposes of incurring capital expenditure at its office premises on the 10th Floor in Atrium - Such expenses incurred on civil work, furniture and air conditioning system. Further enquiry or investigation on the utilization of the amount need not be entertained because Revenue has, relying upon the same documents, accepted the fact of generation of cash by way of bogus purchases. Therefore, the manner of utilization of the cash as noted in the seized diary also has to be accepted as correct. This is the position prevailing as per Section 132 (4A) and 292C of the Act which mandates that the contents of seized documents are true.
The enquiry under Section 245D(3) of the Act was subjected to discretion of the ITSC as it relates to question of fact and is not amenable to the jurisdiction of this court.
ITSC was entitled to exercise discretion and has rightly exercised its discretion. We find nothing wrong in the judicial decision making process of the Commission. When the department relies on the seized records for estimating the undisclosed income, we see no reason why the expenditure stated therein should be disbelieved. We find support in P. D. Abraham Alias Appachan And Another [2014 (6) TMI 15 - KERALA HIGH COURT] Moreover there was no justification for doubting the entries found in seized records pertaining to expenditure while accepting the income found recorded therein.
There is neither violation of any mandatory procedure prescribed under any of the sections of Chapter XIX-A of the Act nor any violation of any of the Rules of natural justice. Further, it cannot be said that the reasons assigned by the ITSC for granting relief sought for by assessee have no nexus to the decision taken.
Apex Court in Kotak Mahindra Bank Ltd. [2023 (9) TMI 1231 - SUPREME COURT] interference with the orders of the ITSC should be avoided, keeping in mind the legislative intent. The scope of interference is very narrow and certainly the High Court should not scrutinize an order of the ITSC as an appellate court. Rule discharged. Petition dismissed
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2024 (4) TMI 662
Deduction u/s 10 B - New Undertaking or The units were formed by the transfer of previously used machinery - Assessee company is engaged in the business of garlic powder, ginger powder, madras curry powder including pickles and spices, etc. and also claimed deduction u/s 10B - Whether the assessee is entitled to deduction u/s 10 B of the income tax act with respect to the eligible profits of eligible units at the Nasik and Ratlam? - whether the assessee manufacturing pickles by purchasing raw fruits and vegetables, using masala and different process can be said to engaged in manufacturing activity or not ? - HELD THAT:- Identical issue arose in case of Sterling Agro Products Processing (P.) Ltd [2011 (8) TMI 460 - ITAT CHENNAI] wherein as held assessee is entitled to the deduction under section 10B of the Act as the assessee is manufacturing gherkin pickles from gherkin for the purpose of deduction u/s 10B.
No reason to hold that the assessee is not engaged in manufacturing activities. Thus, we hold that the process of manufacturing pickles from raw vegetables and fruits, masala and other ingredients has different marketable commodities than the raw materials which are a different value addition, and a new product emerges therefrom.
With respect to the realization of the export proceeds it has been stated that the assessee has produced bank realization certificates, bank certified statement of the Forex receipt, and certificate of the auditor, therefore we do not find any infirmity in the order of the CIT – A in allowing the claim of the assessee u/s 10 B to the extent of foreign exchange received during the specified period.
With respect to the conversion of the firm into a company and use of plant and machinery, it is a fact that both the units of the assessee became hundred percent export-oriented units in 2001 – 01. The first year of claim of deduction under section 10 B was assessment year 2001 – 02. With respect to the use of plants and machinery the CIT – A gave a categorical finding about acquisition of the machinery in different years. This is held after the obtaining of the remand report. Thus, the finding of the learned assessing officer was in consequence of nonproduction of detail by the assessee. When the assessee has produced the details before the learned CIT – A, the remand report is obtained; there is no reason to sustain the disallowance.
Difference of stock submitted to the banker and book stock - AO has noted that there was a difference of stock shown in the books of account in the statement shown to the banks and that the difference to the total income of the assessee of ₹ 21,909,800 - CIT – A held that a similar issue arose in the case of the assessee for assessment year 2003 – 04 and on the basis of reconciliation the addition was deleted as difference to explained - HELD THAT:- We do not find any infirmity in the order of the CIT – A because addition could not be made on the basis of difference between the closing stock declared in the statement submitted by the banker is less than the book stock. Accordingly, we dismiss this ground of appeal of the AO also.
Allowability of loss in trading and spices - assessee explained that it was on account of trading operations however the learned assessing officer without verifying the details filed is held that the trading activities nothing but a speculation loss which the appellant is not entitled to get set of against the normal business income - HELD THAT:- On careful consideration of the argument of the parties it was found that that it is a loss arising from the sale of goods and high seas. Therefore, it cannot be said to be a speculation loss. Accordingly, the order of the learned CIT – A holding it to be a regular trading loss is upheld. Ground of the appeal is dismissed.
Addition on account of difference in closing stock which could not be reconciled by the assessee and therefore rejecting the books of accounts estimated the profit at the rate of 26% - HELD THAT:- We find that when the assessee has shown higher stock in books of accounts and shown lesser stock to the bank, we do not find any reason to make any addition in the hence of the assessee. Thus, the order of the learned CIT – A is reversed to the extent of confirmation of the addition.
Disallowance in respect of provident fund and ESIC payment - When the matter reached before the learned CIT – A the assessee submitted that there is a double disallowance of the same amount - CIT – A rejected the same holding that the learned assessing officer has started the computation from the net profit as per profit and loss account and thereafter made the disallowance. Before us also the same argument was advanced - HELD THAT:- We do not find any infirmity in the order of the learned CIT – A as the computation by the learned assessing officer started from the net profit as per profit and loss account there cannot be any question of double disallowance. Thus, ground of the appeal of the assessee is dismissed.
Suppression of profit by rejecting the books of accounts - CIT- A considering the average gross profit shown by the assessee held that by showing the valuation of the closing stock of inventory at higher amount by ₹ 1 20 crores the appellant has offered higher gross profit/net profit for taxation and not vice versa. The charge regarding the suppression of profit by the AO was without pointing out any defect in the books of account maintained by the assessee company. Further the manner of making an addition was also not correct - HELD THAT:- On careful consideration of the rival arguments, we find no infirmity in the order of the CIT – A wherein the addition was deleted. We do not find any reason to sustain the rejection of the books of accounts by invoking the provisions of section 145 (3) of the act when the assessee has maintained the details of the accounts and the gross profit and net profit are also comparable. The rejection of the book profit and the books of accounts which are audited without pointing out latent, patents and glaring defects are not sustainable. Accordingly ground of the appeal of the AO is dismissed.
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2024 (4) TMI 661
Denial of exemption u/s 11 & 12 - Assessment of trust - Rate of Tax - Maximum Marginal Rate (MMR) - Charging the assessee as per the provisions of section 164(1) or 164(2) - assessee argued that beneficiary are the general public so there is no share of beneficiaries whether known or unknown as the assessee is trust so charging the assessee as per the provisions of section 164(1) as held by the CIT(A) is incorrect and the relevant facts has not been appreciated - HELD THAT:- Section 13(1)(c) deals where the money spent for the related party and 13(1)(d) deals religious trust or institution. The ld. AR of the assessee submitted that the assessee subsequently already registered u/s. 12A with effect from 22.03.2022 and thus it does not come under the provision of section 13(1)(c) and (d) of the Act and therefore, based on that set of facts the assessee trust shall be charged to tax u/s. 164(2) at the rate as applicable to Individual and AOP.
The decision of the ld. CIT(A) to charge the assessee u/s. 164(1) is not correct it should be charged based on the specific provision of the Act u/s. 164(2) of the Act and the tax rate as applicable to that 164(2) will apply to the rate of the AOP/Individual and the initial exemption is also available to such assessee. Ground no. 2 raised by the assessee is allowed.
Amount claimed to had been used for the purposes of the trust - CIT(A) has not granted the benefit of deduction of expenditure only on the reason that the assessee is not registered u/s. 12 A of the Act. Assessee placed on record the registration certificate issued to the trust on 22.03.2022 and therefore, considering that aspect of the matter we direct the ld. AO to grant the benefit of the deduction of the expenditure claimed by the as per object of the trust. Based on these observation ground no. 1 raised by the assessee is allowed.
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2024 (4) TMI 651
Adjusting or attempting to adjust any portion of the refunds receivable by the petitioner against the stayed outstanding demand - condoned revised ITRs were submitted in respect of each of the Assessment years but refunds have not been received - petition may be disposed of directing respondent No. 4 to consider and decide his aforesaid representation expeditiously within the stipulated period fixed by this Court - HELD THAT:- Having considered the facts and circumstances of the case and considering the limited prayer made by the learned counsel for the petitioner, this petition is disposed of directing the respondent No. 4 to consider and decide the representation dated 18-8-2023 (Annexure P-2) and Annexure P-23 dated 8-12-2023 filed by the petitioner within a period of 60 days from receipt /submission of copy of this order.
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2024 (4) TMI 650
Reopening of assessment u/s 147 - as argued documents submitted by the petitioner were not taken into consideration while drawing up the assessment order - HELD THAT:- Findings were recorded that the assessee failed to submit export bills, proof of customs clearance, remittance proof, copy of purchase bills and confirmation of payment made to agriculturists. Out of these, export bills were certainly attached with the petitioner's reply on 15.02.2024. As regards purchase bills, the purchase ledger and the GSTR annual returns were filed. It is likely that much of the information requested for would be contained in these documents. However, it should be recognised that the petitioner does not appear to have submitted all necessary documents. Nonetheless, since the documents submitted by the petitioner were not discussed and no reasons are recorded for confirming the proposed variations, the impugned order calls for interference. Besides, it should be noticed that tax was imposed not only on deposits but also on withdrawals.
For reasons set out above, the impugned order is set aside and the matter is remanded to the 1st respondent for reconsideration. The petitioner is permitted to submit any additional documents within a maximum period of 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the 1st respondent is directed to provide a hearing through video-conference to the petitioner and issue a fresh assessment order within a maximum period of two months from the date of receipt of additional documents from the petitioner.
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2024 (4) TMI 649
Rectification u/s 154 - disallowance of carrying forward of the loss - HELD THAT:- Since on account of disallowance of carrying forward of the loss for the financial year 2016-17 the petitioner would be denied to carry forward the said loss any further. By implication, the petitioner would suffer a loss and therefore, it is in that situation Sub-Section (3) of Section 154 stipulates issuance of notice and an opportunity of hearing. The said Sub-Section (3) otherwise has a mandatory force of law and it is this statutory requirement which has not been complied with as would be evident from the contents of paragraph No. 12 of the counter-affidavit (extracted above).
Thus, we are of the firm view that the impugned order of rectification passed by the 1st respondent is in violation of the statutory provision of Section 15393) of the Act, and therefore, the same is unsustainable. Accordingly, the same is set aside. The Writ Petition stands allowed.
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2024 (4) TMI 648
Determining the jurisdiction of appellate forum - jurisdiction of this Tribunal - HELD THAT:- Although certain benches of the Tribunal exercise its jurisdiction over more than one state, the explanation 4 to Standing Order dt. 01/10/1197 issued under rule 4(1) of Income Tax Appellate Tribunal Rules, 1963 prescribes that; the ordinary jurisdiction of the Tribunal should be based on the location of the Assessing Officer. The Hon’ble Supreme court’s decision in ‘PCIT Vs ABC Papers Ltd.’ [2022 (8) TMI 863 - SUPREME COURT], has put the issue of jurisdiction of appellate forum to rest by holding that, the ‘situs of the assessing officer’ is the only key factor for determining the jurisdiction of appellate forum irrespective of any administrative order passed u/s 127 of the Act in relation to transfer of cases.
Thus since the situs of the AO who framed the assessment is beyond the territorial jurisdiction of this Tribunal, therefore without offering our comments on threefold issue dilated at para 3 hereinbefore, we deem it fit to dismiss the present appeal of the Revenue and the cross objection of the assessee as are not maintainable, however with leave to file them before appropriate bench of the Tribunal which exercises the jurisdiction over the Ld. AO who framed the assessment. Appeal of the Revenue and Cross-Objection of the assessee stands DISMISSED.
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2024 (4) TMI 647
Eligibility of the assessee for exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) - interest income earned by a cooperative society from the schedule banks - appellant is a cooperative society engaged in the business of providing credit facilities to its members and accepting deposits from its members. It does not enjoy any license to carry on the business of banking from Reserve Bank of India.
HELD THAT:- Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] and Vaveru Co-operative Rural Bank Ltd [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s 80P(2)(a)(i) of the Act. Similar view has been taken by the Hon’ble Calcutta High Court in the case of PCIT vs. Gunja Samabay Krishi Unnayan Samit [2023 (1) TMI 783 - CALCUTTA HIGH COURT] and Chennai Central Cooperative Bank Ltd. [2023 (1) TMI 1088 - MADRAS HIGH COURT]
The interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) and section 80P(2)(d) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed.
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2024 (4) TMI 646
Revision u/s 263 - "lack of enquiry” or “lack of investigation” - correct appreciation of conclusion that “interest on enhanced compensation during the assessment year under consideration ought to be treated as income from other sources u/s. 56(2)(viii) of the Act” - HELD THAT:- We find plausible reasons in the contention of the Ld. AR that that the issue under consideration is no longer res integra, in as much as that identical issue arises into the case of other individuals namely Gulshan Kumar S/o Mohari Ram [2024 (2) TMI 748 - ITAT DELHI] wherein exactly similar and identical order has been has decided the issue in favour of assessee as held since the order of the Ld. AO is based on the decision of the Hon’ble Supreme Court in Ghanshyam HUF [2009 (7) TMI 12 - SUPREME COURT] on the issue of taxability of interest received by the assessee under section 28 of Land Acquisition Act. it can at best be said to be a debatable issue on which two views are possible and the Ld. AO accepts one of the views. In this view of the matter too, the Ld. PCIT cannot assume revisional jurisdiction held by the Hon’ble Delhi High Court in CIT Vs. Hindustan Coca Cola Beveraces P Ltd. [2011 (1) TMI 138 - DELHI HIGH COURT]
Revenue has not pointed any change into facts and circumstances of the present case. We therefore, respectfully following binding precedent (Supra), hereby allow the appeal of the assessee by quashing the impugned order of the Ld. PCIT - Assessee appeal allowed.
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2024 (4) TMI 645
Validity of reopening of assessment - reasons to believe - assessee has claimed huge amortization expenses on goodwill - HELD THAT:- As undisputed fact that in the reasons AO has recorded the escapement of income on account of amortization of goodwill which was not claimed by the assessee in computation of normal provisions of the Act and with regard to adjustment in book profit computed u/s 115JB of the Act AO has not disturbed the same in the order passed u/s 143(3) r.w.s. 147 of the Act. So it is very clear that the reasons recorded are without verification of the records and accordingly, without application of mind.
AO has not bothered to even verify the information received with the assessment folder whether any such depreciation has been claimed by the assessee or not. It clearly reflects that the AO has mechanically recorded the reasons and issued the notice without applying his own mind. Ld. PCIT has also accorded approval u/s 151 of the Act based on the reasons recorded by the AO without ascertaining the actual facts of the case. Hon’ble Bombay High Court in case of Sharvah Multitrade Compant P Ltd. [2022 (1) TMI 372 - BOMBAY HIGH COURT] dealt with similar case and held that reassessment initiated based on reasons recorded on irrelevant facts and without application of mind cannot survive.
This, in our considered opinion, it is against the settled principles of law, as reopening of an assessment is an extraordinary power available to the ld AO and it should not be done in a cavalier manner. That is why the legislature in its wisdom had put lot of restrictions by imposing conditions for seeking approval and sanction from a superior officer in terms of section 151 of the Act.
AO recorded wrong facts on many count in the reasons recorded for reopening of the assessment i.e. AO recorded incorrect fact that assessee has claimed huge amortization expenses on goodwill and disallowed the same in the assessment order u/s 32 of the Act which was deleted by Ld CIT(A) by stating that no such expenses actually claimed by the assessee. The AO in the reasons also recorded incorrect fact that no assessment has been completed in this case u/s 143(3) but assessment u/s 143(3) r.w.s. 153C completed on 29/12/2017 as recorded by the AO.
AO also incorrectly stated that provisions of section 147(2)(b) are applicable, whereas in the facts of the case provisions of section 147(2)(c) are applicable where the onus on AO is higher to prove escapement of income. The AO, therefore, recorded wrong, incorrect and non-existing reasons for reopening of the assessment. It makes clear that there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment - Thus Reopening of the assessment is invalid and bad in law - Decided in favour of assessee.
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2024 (4) TMI 644
Disallowance of total job work charges paid to sister concern - invocation of section 40A(2) - HELD THAT:- Lower Authorities failed to make comparative study of the job work charges with any third party, therefore A.O. is not correct in making disallowance u/s. 40A(2)(b) of the Act. Thus the disallowance made by the Lower Authorities are hereby deleted. Thus Ground Nos. 1 to 4 raised by the assessee are hereby allowed.
Disallowance on adhoc basis on the job work charges - Addition at Rs. 2 per Kg for 16710 Kgs. on estimated basis on the job work carried out - HELD THAT:- CIT(A) confirmed the disallowance only on the ground that the smallness of the disallowance which is not excessive. However the Assessing Officer has not justified the above disallowance with proper evidence, but only on misconception of the correct facts. Therefore the adhoc disallowance made by the Assessing Officer is not sustainable in law. Therefore we direct the A.O. to delete the above disallowance.
Addition of duty drawback incentive which is offered for taxation on cash receipt basis in subsequent year - D.R. submitted that the assessee is not aggrieved by this issue and the CIT(A) already given relief to the assessee, hence this ground is liable to be dismissed - HELD THAT:- We find that the Ld. D.R. is correct in stating that the assessee is not aggrieved on this issue and there is already a direction given by Ld. CIT(A) to verify this issue and rectify the assessment accordingly. Therefore this ground raised by the assessee is hereby dismissed
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2024 (4) TMI 608
Eligibility of Vivad se Vishwas scheme - Denial of claim as prosecution proceedings u/s 276CC of the Act were instituted for the aforesaid assessment years before the date of filing of the declarations and the proceedings were pending - As decided by HC [2022 (7) TMI 286 - TELANGANA HIGH COURT] prosecution against petitioner No.1 is u/s 276 CC which pertains to failure to furnish return under Sections 139 (1) or under Section 153 A etc., of the Act. Such delayed filing of income tax returns cannot be construed to be a ‘tax arrear’ within the meaning of Section 2 (1) (o) of the Vivad se Vishwas Act. Therefore, such pending prosecution cannot be said to be in respect of tax arrear though it may be relatable to the assessment years in question and cannot render petitioner No.1 ineligible. Thus, rejection of the declarations of petitioner No.1 by the respondents cannot be sustained
HELD THAT:- Having considered the matter in detail we dismiss this Special Leave Petition. However, we keep the question of law open.
Pending application(s), if any, shall stand disposed of.
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2024 (4) TMI 607
Addition u/s 68 - unexplained credit brought to tax - Addition u/s 2(2)(e) - amounts secured as loan were treated as “deemed dividend” - HC [2018 (2) TMI 2113 - DELHI HIGH COURT] deleted both the additions as done by ITAT and decided the appeal in favour of assessee.
HELD THAT:- As we are of the view that the judgment of the High Court does not warrant interference. Hence, the Special Leave Petition is dismissed.
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2024 (4) TMI 606
Addition u/s 14A r.w.r.8D - expenditure incurred on earning exempt income - Effect of section 14A amendment - ITAT deleted addition - HELD THAT:- The issue is squarely covered by an order of the Supreme Court in Essar Teleholdings Ltd [2018 (2) TMI 115 - SUPREME COURT] as held Rule 8D is prospective in operation and could not have been applied to any assessment year prior to Assessment Year 2008-09. - Decided against revenue
Addition made on account of income from interest - assessee is following mercantile system of accounting were the interest income would be considered on accrual basis - ITAT deleted addition - as per revenue Tribunal has erred in granting the benefit of Section 43D of the Act to the assessee - HELD THAT:- In absence of any doubt as to the status of the assessee as a State Financial Corporation and in face of the statutory scheme allowing it to account for recovery of interest on bad debts on cash basis, primarily, there is no error seen in the order of the Tribunal having allowed the benefit to the assessee to account for interest of bad debts on cash basis.
The revenue has not brought on record any material fact as may raise a genuine doubt as to the entitlement of the assessee to account for interest of bad debts on cash basis. Therefore, suggestion made by Shri Mahajan that the matter may be remitted to the Tribunal to pass appropriate order in accordance with the scheme of the Act, is declined. In absence of any basis shown to make such an order of remand, we are of the opinion that that exercise may remain purely academic and may therefore serve no real purpose. Here, we may note that the Tribunal has not recorded any independent finding in the order impugned in the present appeal. It has rather followed its earlier order inter party for the Assessment Year 2001-02.
Revenue as fairly states that the revenue does not appear to have assailed that order inasmuch as despite making efforts to obtain instructions in that regard, those are not forthcoming.
We find that the findings recorded by the Tribunal are findings of fact based on material evidence on record.
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2024 (4) TMI 605
Characterization of receipt - amount received by the appellant upon retirement from the partnership - taxability as capital gains under the Income Tax or not? - department, was of the firm stand that the right of the appellant in the partnership firm is a capital asset and the extinguishment of the right in the said firm is in fact a transfer of the receipt against capital asset - Appellant as contended that receipt of the share value of goodwill cannot be subjected to capital gains tax as there was no transfer of goodwill to the firm by the appellant - Whether the Income Tax Appellate Tribunal was correct in law in holding that the receipt of the share in value of goodwill by the appellant is taxable as capital gains under the Act ?
HELD THAT:- Coming to the impugned order passed by the Tribunal in SMT. GIRIJA REDDY, P HYDERABAD [2012 (7) TMI 652 - ITAT HYDERABAD] would give a clear indication that the principles laid down by the Division Bench of this High Court in Chalasani Venkateswara Rao [2012 (9) TMI 12 - ANDHRA PRADESH HIGH COURT] has been accepted by the Tribunal while making the aforesaid observations. However, while concluding, the Tribunal took a different view altogether which, therefore, would not be in the opinion of this Bench, proper, legal and justified.
Therefore, the respondent-Department cannot tax the amount received by the appellant upon retirement from the partnership as capital gains as there is no specific transfer of a capital asset affected when the appellant had retired from the partnership firm. So also, the finding of the Tribunal holding that the receipt of share in value of goodwill by the appellant is taxable as capital gains is not proper. Therefore, the impugned order passed by the Tribunal is unsustainable and the same deserves to be and is accordingly dismissed. Assessee appeal stands allowed.
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2024 (4) TMI 604
Reopening of assessment - reasons to believe - reopening beyond period of four years - disallowance u/s 40(a)(ia) - non deduction of tds on stake money paid by the petitioner to the horse owners u/s 194B or Section 194BB - as argued receipt on behalf of the horse - owners and the debits affected on their instructions disclosing that the financials are prepared from the primary accounts and without claiming any expenditure in the regard, thus there cannot be any allegation of failure to truly and fully disclose material facts - HELD THAT:- The second respondent, while deciding on the petitioner’s objections to the reasons offered to initiate re-assessment, has overlooked that the question of failure to deduct TDS for the amounts paid as Stake Money and the amounts deducted from the Stake Money on the instructions of the horse-owners to the credit of the horse-trainers and jockeys was examined after scrutiny of the petitioner’s book while considering disallowing these amounts under Section 40(a)(ia) of the IT Act.
In the light of the above, this Court must opine that there was no failure on the petitioner’s part to disclose primary facts and the reasons for re-assessment are recorded arbitrarily without considering all the circumstances. Hence, the second question framed is answered in favour of the petitioner holding that the re-assessment that is initiated after four years on the ground that there is failure to disclose primary facts is barred in law. Decided in favour of assessee.
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2024 (4) TMI 603
Rejection of DTVsV application - petitioner/assessee was seeking to settle only a part of the dispute obtaining between them - HELD THAT:- Given the fact we have concluded, while disposing of MUFG BANK LTD VERSUS COMMISSIONER OF INCOME TAX 2 & ANR. [2024 (4) TMI 530 - DELHI HIGH COURT] that an applicant can choose to settle one or more appeals or SLPs that may emerge from a given assessment year under the VSV Act, the issue raised in this writ petition stands covered by a decision in the said matter.
Accordingly, the prayer made in the writ petition is allowed. The impugned order rejecting the declaration and undertaking made by the petitioner/assessee along with the communication are set aside.
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2024 (4) TMI 602
Validity of Reopening of assessment - as argued notices were not served on the petitioner - HELD THAT:- The documents that are relied on by the petitioner disclose that respondent had issued various notices to the petitioner calling upon him to file his returns for the year 2014-15. Even though it is contended that notices were not served on the petitioner, the same cannot be accepted, in view of the specific averment made in the assessment order regarding service of notices. Therefore, the contention taken by the petitioner is that, he was not given sufficient opportunity of being heard and the order in question is an ex-parte order, also cannot be accepted.
Annexure-D was came to be passed on 19.03.2022 and before passing the order, several notices were issued to the petitioner. In spite of that, he has not chosen to appear before the authority and not complied the demand made therein. The next ground urged by the petitioner that the order in question was passed during Covid-19 also cannot be accepted.
Under such circumstances, even though we do not find any reason to entertain the petition, only to afford one more opportunity to the petitioner of being heard, we deem it appropriate to quash the assessment order produced, and petitioner is directed to file income tax returns for the assessment year 2014-15 with respondent No. 3 within 30 days from today and to cooperate in compliance of the procedure in terms of the Act.
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