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Income Tax - Case Laws
Showing 341 to 360 of 173317 Records
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2025 (4) TMI 1124
Addition u/s 68 - Unsecured loans - identity, creditworthiness was not established - HELD THAT:- Based on the overall facts and evidence placed on record we note that the assessee has provided details on the record to prove the identity [PAN number and confirmation], genuineness [ bank statement and ITR ] and capacity [ ITR ] so the made u/s. 68 is not correct and is directed to be deleted. See Jaikumar Bakliwa [2014 (8) TMI 685 - RAJASTHAN HIGH COURT] wherein held it is an admitted position that all the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts.
Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then, in our view, such an addition cannot be sustained and has been rightly deleted by both the two appellate authorities. There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to none but the assessee himself. The action of the AO appears to be based on mere suspicion. Decided in favour of assessee.
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2025 (4) TMI 1095
Reopening of assessment under old regime - scope of new regime - scope of TOLA - as argued notice has been issued on the basis of the provisions which have ceased to exist and are no longer in the statute - As decided by HC [2024 (5) TMI 1557 - BOMBAY HIGH COURT] as informed by counsel for Petitioner/s that these Petitions will be covered by the judgment in Hexaware Technologies Limited. [2024 (5) TMI 302 - BOMBAY HIGH COURT] Counsel for Respondent/s concur. Therefore, the notices and orders impugned in these petitions are quashed and set aside. In case any re-assessment order is passed, the same also will stand quashed.
HELD THAT:- Special Leave Petition is dismissed as it does not survive for further consideration.
In this regard, reference could also be made to paragraph 19(e) and (f) in the case of Union of India vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] under which the learned Additional Solicitor General for India has made a concession insofar as the assessment year 2015-16 is concerned.
Pending application(s), if any, shall stand disposed of.
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2025 (4) TMI 1094
Accrual of income - income from the interim dividend - year of assessment - HELD THAT:- There is no dispute that when the income from interim dividend was declared on 14.03.2002 by the Company during Financial Year 2001-2002 relevant to the Assessment Year 2002-2003, the interim dividend referred to in Section 115(o) was exempt from tax in the hands of the Appellant/Assessee. The fact also remains that dividend tax was also paid by the aforesaid Company on 22.03.2002.
The facts on record indicate that the income accrued from the interim dividend was unconditionally made available by the Company to its shareholders during the Financial Year 2001-2002 relevant to the Assessment Year 2002-2003 itself, though the amount accruing as income from the interim dividend was actually paid to the Appellant/Assessee by way of cheque only on 23.04.2002 during the Financial Year 2001-2002 relevant to the Assessment Year 2002-2003. This is evident from a reading of Section 8(b) of the Act as it stood during the period in dispute.
When Section 10(33) and 115(o) of the Act are read in conjunction with Section 8(b) of the Income Tax Act, 1961, it is clear that for the purpose of total income of an assessee, any interim dividend shall be deemed to be the income of the previous year in which, the amount of such dividend was unconditionally made available by that company to the member who is entitled to it.
Merely because the Appellant/Assessee has received the aforesaid interim dividend on 23.04.2002 during the Financial Year 2002-2003, assessable during the Assessment Year 2003-04, by which time the exemption under Section 10(33) of the Act was deleted would not mean that the aforesaid interim dividend income has to be taxed in the hands of the Appellant/Assessee as such dividend had already suffered tax on 22.03.2002 in the hands of the Company.
The exemption for income occurring from interim dividend under Section 10(33) of the Act was available to the Appellant/Assessee during the Financial Year 2001-2002 relevant to the Assessment Year 2002-03 as the right to receive the interim dividend had accrued in the hands of the Appellant/Assessee, even though the amount was actually received only on 23.04.2002 during the Financial Year 2002- 03 relevant to the Assessment Year 2003-04.
Validity of reopening of assessment - The subsequent Assessment Order dated 28.06.2007 passed under Section 143(3) r/w Section 147 of the Act was contrary to the decision of Kelvinator of India [2010 (1) TMI 11 - SUPREME COURT] wherein as held Assessing Officer has power to reopen the assessment of income of the Assessee only if there is tangible material to come to a conclusion that income has escaped from assessment.
Assessee appeal allowed.
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2025 (4) TMI 1093
Assessment of Insurance business - Profit on sale of investment - HELD THAT:- The issues are to be answered in favour of the assessee by virtue of judgement of United India Insurance Co. [2020 (5) TMI 755 - SC ORDER (LB)] affirming the decision of this Court in United India Insurance Co. [2019 (7) TMI 387 - MADRAS HIGH COURT] as held prior to 1st April, 2011, there was no provision which required the Revenue to disallow the deduction of loss on sale of investments.Decided against revenue.
Disallowance u/s 14A - Tribunal has concluded the issue adverse to the assessee holding that Rule 5(a) militates against the grant of expenses, which are not for the purposes of insurance business and, directing that the same are to be added back -Section 14A states that no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. However, in framing of assessments in the case of insurance companies, it is purely Section 44 read with Rule 5 of the First Schedule that would apply.
This position is made clear by Section 44 itself which says that the methodology for computation shall be as per Rule 5 of the First Schedule that excludes specifically the application of Sections 28 to 43B and Section 199 of the Act. We are thus of the considered view that in a specialised assessment of this nature, where the methodology for computation is not as stipulated under Section 28 to 43B, there is no role for Section 14A at all.
The fact that such an assessment would stand outside the ambit of application of Section 14A is made clear by the non-obstante clause contained in Section 44 which states that notwithstanding anything to the contrary contained in this Act relating to the computation of income chargeable under the heads of interest on securities, house property, Capital gains or other sources, or Section 199 or Sections 28 to 43B dealing with the computation of business income, the assessment of insurance business would be in accordance with the Rules contained in the First Schedule alone.
Barring the aforesaid adjustments, there can be no other adjustments contemplated to the scheme of computation of profits and gains of other insurance businesses. Reference to Section 14A thus does not arise in the context of such computation. In the scheme as we have set out above, the legislative intent is clear, to put in place a distinct and different scheme for computation of profits from other insurance businesses. The substantial question of law in relation to this issue is thus answered in favour of the assessee and against the revenue.
Disallowance of the provisions made on account of the expenditure ‘incurred but not reported (IBNR)’ and ‘incurred but not enough reported (IBNER)’ - The scheme of taxation that governs Insurance Companies has its genesis in Section 44 of the Act, a special provision touching upon the taxation of the Insurance business.
Incidentally, the IRDA had issued Insurance Regulatory and Development Authority of India (Assets, Liabilities and Solvency Margin of General Insurance Business) Regulations, 2016 (in short ‘IRDA 2016 Regulations), effective from 01.04.2016 where there are procedural differences in the reporting of claims and creation of claim reserves.
However, there is no effective difference, as far as the appellant companies are concerned, in that, the mandate to have a transparent disclosure of the claims and the manner in which such claims are to be crystallized continues to be the same even in the 2016 Regulations. Thus, for all practical purposes, the appellants would be equally entitled to the grant of provision both under the 2002 as well as 2016 Regulations.
Ultimately, the assessment and valuation of risk has been made by a Registered Actuary, and in our view this would amount to a sound and scientific basis for the claim of expenditure. Hence, we find that there is a scientific basis for the claim of the provisions based on the stipulations under the applicable statutory and other prescriptions. We answer the substantial questions of law in regard to claim in regard to IBNR and IBNER in favour of the assessee and against the Revenue.
Disallowance of payments made to Motor vehicle dealers -Statements had been recorded from the employees of those companies to the effect that no service had been rendered by them, based on which the expenditure claim was disallowed.
That very issue, being the claim of input tax, had been the subject matter of adjudication by the service tax authorities that had travelled before the Customs, Excise and Service Tax Appellate Tribunal (in short, CESTAT), which had held that the motor vehicle dealers had, indeed, rendered services. That order of the CESTAT had been produced before the Tribunal relying on the factual findings therein that services had been rendered by the automobile manufacturers.
Tribunal has thus remitted the matter to the file of the Assessing Officer, since the order of the CESTAT is dated 24.02.2021, which order was not available before the Assessing Officer when the orders of assessment had been passed. In fact, the Tribunal has, in remanding the matter, stated that the remand was for the limited purpose of enabling the Assessing Authority to verify the issue with reference to the CESTAT order.
We find nothing untoward in the order of remand and hence the conclusion of the Tribunal in this regard is affirmed. This substantial question of law is answered against the assessee.
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2025 (4) TMI 1092
Allowability of expenditures claimed as deductions by the assessee engaged in coal mining operations - Education Expenses - HELD THAT:- Tribunal noted that the assessee had been incurring expenditure on running of the institutions by three bodies which are running pan India schools i.e. Kendriya Vidyalaya Sangathan, DAV School Society and DPS Society and also that the liability to discharge the obligation towards education fell on the assessee in terms of National Coal Wage Agreement entered into with the employee union and the assessee which was enforceable under law both under the Indian Contract Act as well as Industrial Disputes Act and also that it was not a voluntary expenditure incurred by the assessee but was incurred to discharge its obligation in terms with National Coal Wage Agreement which bound the assessee statutorily to honour the said agreement arrived at with the union and therefore, the expenses incurred towards Education amounted to revenue expenses in running of the business of the assessee.
We find that the aforesaid logic and justification given by the Tribunal does not suffer from any infirmity or illegality in view of the obligations upon the assessee in terms of National Coal Wage Agreements, and therefore, the expenses are in the nature of business expenses. Therefore, this issue is answered in favour of the assessee and against the Revenue and the order of the Tribunal is upheld whereby deduction towards education expenses has been allowed to the assessee.
Community Development Expenses - The twin grounds considered by the Tribunal in the present case on the present question, i.e. commercial expediency to carryout welfare activities to reduce resentment and resistance to its coal mining activity and also that the welfare activities could not be carried out in piecemeal manner when some of the staff of the assessee was residing in these villages, in our considered opinion for both these reasons the expenditure incurred on the Committee development would lead to an expenditure incurred solely as business expenditure and is allowable as such.
The liberty already granted by the Tribunal in the present case, to examine each item on case to case basis also saves the rights of the revenue because the assessing officer can verify each claim raised by the assessee on item to item and case to case basis subject to general principle that the expenses incurred to reduce resentment and resistance to the project by carrying out welfare activities and also that some of the staff for residing in the said villages, the deduction of expenditure cannot be faulted with. Therefore, this question is also answered in favour of the assessee and against the revenue.
Sports and Recreation Expenses - Tribunal correctly held that the expenditure was necessitated by the National Coal Wage Agreement entered into between the management and the Union of employees. And further that so far as the incurring of the expenditure is concerned, that has already been accepted at the time of audit by statutory auditors including Comptroller and Auditor General of India (CAG). The Tribunal held that such expenditure incurred on indoor and outdoor games, sport kits, shoes, prizes, awards to participants, participation charges, hiring charges, tents, lightings, fitments, etc. are in accordance with para 10.8.0 of National Coal Wage Agreement and the assessee was under obligation to spend towards sports and recreation facilities to its employees and thus, the Tribunal held that upon principle such expenses is allowable as deduction from the gross income of the assessee. Expenses are having nexus with assessee’s business, because good physical health and mental condition of employees would improve business output and a happy employee would do a better job than another employee and therefore, there was commercial expediency in incurring the said expenses. This question is also answered in favour of the assessee and against the revenue.
Environmental Expenses - Tribunal held that such expenditure cannot be treated to be capital expenditure with closed eyes because a tax authority must appreciate the manner and circumstances under which such expenditure is required to be incurred. So long as the expenditure has nexus with assessee’s business, then the next step is to test the expenditure on the touch-stone of capital or revenue expenditure. Tribunal held that since the Commissioner has not given any reasoning while disallowing the said expenditure as deduction, therefore, the matter was remitted by the Tribunal to the Assessing Officer to take a decision on merits. We do not find any error or perversity in the said approach adopted by the Tribunal.
Social Welfare Expenses of Employees - Tribunal held that the expenditure had been necessitated by National Coal Wage Agreement and the expenditure had been audited by the statutory auditors as well as by CAG. Therefore, the Tribunal allowed the expenditure for which the details and evidence were placed before the Assessing Officer and disallowed that part for which no evidence was placed before the Assessing Officer nor before the Tribunal. The said allowance of expenditure in-principle does not suffer from any illegality or perversity and so far as allowing of part expenditure is concerned, it is purely in the realm of facts and does not amount to any substantial question of law. Therefore, we answer this question in favour of the assessee and against the revenue.
Expenditure Towards providing LPG, Medical Camp, Transit Camp, etc. - Tribunal held that the expenditure incurred in providing LPG to the employees in lieu of coal, medical camp, transit camp expenses etc. have been incurred on account of obligations as per National Coal Wage Agreement. Tribunal also held that the expenses towards transit camp being revenue or capital nature and whether these are business expenses or these are the expenses, which can be said to be incurred on acquiring the lease or acquiring the rights on land so as would amount to capital expenditure need to be re-examined by the Assessing Officer to take a decision de-novo on merits after examining all the relevant material. As there is no mandatory order against the revenue or in favour of assessee at this stage and the matter has only been remanded to the Assessing Officer to re-examine the claims whether the amount to capital or revenue expenditure, after hearing learned counsel for the parties. Therefore, we find that no substantial question of law arises in the matter on this issue.
Additional Depreciation for Machineries - Tribunal has correctly held that the assessee was entitled to additional depreciation, because the Nigahi Project of assessee was a separate industrial undertaking engaged in production of article or thing, i.e. Coal and such production during the year had increased for more than 20% and therefore, the assessee was entitled for additional depreciation, which was found to be as per the decision of Sesa Goa Ltd [2004 (11) TMI 14 - SUPREME COURT] and Textile Machinery Corporation Ltd [1977 (1) TMI 3 - SUPREME COURT] Decided against the revenue.
Overburden Removal - Though Coal may be available in the Coal mine, but once a seam/layer of Coal has been extracted, then the mine stands exhausted and it has to be revived by removing the overburden, therefore, for the resumption of actual mining work. Therefore, it is a preparatory activity to resume mining, and not mining, per se.
Removal of layer of overburden to expose the next coal seam after the mine has closed upon exhausting earlier coal seam amounts to revival and extension of business because otherwise the business has to be closed down. It is not an expenditure in the nature of extraction of coal or working of mine but it is an expenditure in the nature of further development of mine or extension and revival of mine.
In our opinion, the distinction accepted by the Tribunal in treating overburden expenses incurred till the stage of mine reaching 25% of its annual rated capacity, has no sanctity in law and is an artificial distinction only based on accounting practice of the respondent assessee and nothing else. Therefore, we answer this substantial question of law in favour of the revenue and against the assessee and hold that expenses for removal of overburden at any stage of mine after it has been allotted to the mining company would amount to an expenditure in the nature of capital expenditure and not an expenditure in the nature of revenue expenditure and therefore, it would be allowed only as a capital expenditure. Decided in favour of the Revenue by holding it to be an expenditure of capital nature irrespective of the stage of mining.
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2025 (4) TMI 1091
Refusing to grant registration u/s 12A - delay in filing the application for registration u/s 12A - as argued registration u/s 12A was not required until its gross receipts exceeded Rs.1 crore (the threshold limit u/s 10(23C)(iii ad)) - whether appellant could not had been granted registration with a retrospective effect from 1989 onwards or even from the previous financial year?
HELD THAT:- From perusal of the pleadings there seems to be only two grounds that the appellant have raised seeking for condonation of delay and for grant of registration w.e.f. 15.05.1989.
One can easily reach to the conclusion that the assessees therein had made application seeking registration u/s 12A of the Act belatedly giving cogent and justifiable reasons in the delay that took place in applying for registration.
However, when we look into the facts of the present case, what can be visualized is that in the present case though the appellant has tried to give certain explanation, but what is required to be considered is whether the grounds raised were cogent and strong enough to justify the delay in seeking for registration.
As would be seen from the order passed by the Director of Income Tax (Exemptions) so also the order passed by the ITAT, it clearly reflects that the appellant has taken contradictory stand justifying the delay. The appellant, on the one hand, submits that because of the rush of work on account of frequent expansion of the educational society they were not able to apply for registration under Section 12A of the Act. At the same time, they also try to take a stand that since they had an exemption under Section 10(23C) (iii ad) of the Act, therefore they were not required to seek another registration under Section 12A of the Act and, once when they crossed the limit that was prescribed u/s 10(23C) (iii ad) of the Act, they had immediately moved an application. This again is not-sustainable and acceptable as compared to the first ground giving explanation for the delay; as the two do not match each other and are self-contradictory in itself. Appeal dismissed.
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2025 (4) TMI 1090
Denial of exemption u/s 11 and 12 - non-production of registration certificate issued u/s 12AA - HELD THAT:- The factum of the registration of the petitioner trust u/s 12A of the Act by issuance of the certificate u/s 12AA is an undisputed fact. The respondent authority has also not disputed regarding the loss of certificate of the petitioner in the year 2012.
The respondent authorities are therefore required to issue copy of the certificate u/s 12AA of the Act by reconstructing their own file as it is reported that the old records have been lost and the respondent authorities are unable to trace the original file.
The only remedy available is to direct the respondent to reconstruct the file of original records on the material available with the respondent with the help of the petitioner and issue a copy of registration certificate u/s 12AA of the Act with Registration Certificate so as to enable the petitioner to claim the exemption u/s 11 and 12 of the Act without any hindrance. Such exercise shall be completed within a period of 12 weeks from the date of receipt of copy of this order. The petition is accordingly disposed of.
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2025 (4) TMI 1089
Validity of reopening of assessment - purchase of crypto currency - As submitted petitioner had filed return of income for the year under consideration as well as provided details of source of funds along with bank statement of the father of the petitioner - as argued AO did not make any addition considering the reply filed by the petitioner - HELD THAT:- It is evident that the impugned order dated 30.03.2022 passed under section 148A (d) of the Act is a classic example of order passed without application of mind by the respondent Assessing Officer ignoring the fact on record. Even on perusal of the order the same is self contradictory as is evident from para nos. 1 and 4 of the order. The respondent Assessing Officer has recorded in para no. 1 that the petitioner has filed return of income however in para no.4 it is recorded that no return of income is filed. It is also not in dispute that the petitioner has filed bank statement of his father from whom he had borrowed funds to purchase crypto currency which is available on record and not disputed by the learned advocate for the respondent.
We are therefore, of the opinion that impugned order dated 30.03.2022 passed under section 148A (d) of the Act is liable to be quashed and set aside and is hereby quashed and set aside. Assessee appeal allowed.
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2025 (4) TMI 1088
Order of the Income Tax Settlement Commission granting immunity to the private respondents from prosecution and penalty - HELD THAT:- For the Commission to grant immunity under Section 245H there are three requirements:- (i) full and true disclosure of the income not disclosed to AO; (ii) the manner in which the income was derived and (iii) that the applicant cooperated in the proceedings before the Settlement Commission. The Commission on being satisfied that applicant cooperated during the proceedings coupled with the fulfillment of two conditions as required under Section 245C may grant immunity to the applicant from prosecution and penalty subject to the conditions it may deems fit.
The proceedings filed by the private respondents were admitted u/s 245D(1) and by order the application was declared not to be invalid. The application culminated in order dated 31.03.2013 whereby the terms and conditions for settlement were determined. It would be relevant to mention that the portion of the order fixing the terms and conditions of the settlement has attained finality.
The acceptance of the application bring us to the obvious conclusion that the first two conditions of section 245H which are common to the pre-requisite of section 245C(1) have been complied with.
The contention of counsel for the petitioner that there was failure of the private respondents to make a full and true disclosure under Section 245C, deserves rejection. The revenue accepted the order of the Commission whereby the applications have been allowed and the challenge is limited to grant of immunity. Meaning thereby the satisfaction of Commission that two pre-conditions of Section 245C(1) were complied is not in dispute.
Commission has recorded a satisfaction that the applicant cooperated during the settlement proceedings and there is no challenge to this finding. In absence of challenge to fulfillment of three conditions required under Section 245H, the argument that there was no true and full disclosure of income does not arise. WP Dismissed.
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2025 (4) TMI 1087
Income deemed to accrue or arise in India - amounts paid by the Indian hotels for marketing contribution and reservation fees - "Royalty" or "Fees for Included Services" - addition u/s 9 (1) (vii) of the Act as well as under Article 12 (4) (a) and Article 12 (4) (b) of the DTAA - HELD THAT:- Admittedly, the said issue is covered in favour of the Assessee and against the Revenue by several decisions of this court including Sheraton International Inc. [2009 (1) TMI 27 - DELHI HIGH COURT], Sheraton International LLC [2023 (5) TMI 1435 - DELHI HIGH COURT], Westin Hotel Management [2024 (4) TMI 1250 - DELHI HIGH COURT] and Shangri-La International Hotel Management Pte Ltd.[2023 (9) TMI 1683 - DELHI HIGH COURT]
In the case of Radisson Hotel International Incorporated [2022 (11) TMI 641 - DELHI HIGH COURT] this court had referred to the earlier decisions and dismissed the case holding that no substantial questions of law arise for consideration by this court. The present appeal must bear the same fate. No substantial questions of law.
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2025 (4) TMI 1086
Disallowance being provision for non-performing assets - HELD THAT:- We have also perused the books of accounts, balance sheet and the Profit and Loss account of the assessee for the Financial Year 1995-96, which is relevant for the assessment year 1996-97, in respect of which respondent had filed a return of income u/s 139 (1) of the Income Tax Act on 11.06.1997.
The specific case of the appellant-Income Tax Department is that mere provision in the Books of Accounts viz., Balance Sheet and Profit and Loss Account is not sufficient to claim deduction u/s 36(i) (vii) and 36/29. It is specifically contended that the assessee had not debited the amount to the Profit and Loss account.
A reading of the order of the Appellate Commissioner and the impugned order of the Appellate Tribunal, impugned herein does not disclose examination of the books of accounts in the light of the decision of the Supreme Court in Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT].
In the impugned order, it is not indicated whether the assessee had debited the amount in the balance sheet as contemplated, apart from debiting the amount from its Profit and Loss Account. This exercise was to be completed in the light of the earlier remand order of the Tribunal.
Tribunal has merely relied on the Chartered Accountant’s certificate dated 11.07.2005 and arrived at the conclusion based on the treatment given under similar circumstances for the subsequent assessment year.
Matter restored back before AO for fresh assessment.
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2025 (4) TMI 1085
De novo assessment proceedings - requirement of affording a personal hearing - Long term capital gains on sale of land - applicability and effect of Section 50-C - tax liability of child selling property as given power of attorney by other siblings after fathers death - HELD THAT:- Appellate Tribunal had remitted the matter to the file of the assessing officer for de novo assessment after affording due opportunity of hearing to the appellant. The expression “de novo assessment” had been explained in Headstrong Services India (P) Ltd. [2020 (12) TMI 1086 - DELHI HIGH COURT] held that once the ITAT directed the assessing officer to decide the matter de novo, it meant that a new hearing of the matter had to be conducted, as if the original hearing had not taken place, consequently, the assessing officer had to decide the matter in accordance with the procedure mentioned in the statute.
A mere look at the impugned order would show that the assessing officer had taken into account the materials gathered on the earlier occasion. Though the assessing officer was expected to proceed on the premise that the slate was wiped clean, such an approach was not adopted.
The acknowledgement generated by the department itself indicates that the assessee had requested the authority to grant hearing through video conference before passing any order. Admittedly, the assessing officer had not granted any opportunity of personal hearing to the assessee.
As per the statutory provision and as per the order of the Income Tax Appellate Tribunal, due opportunity of hearing should have been given to the assessee. Admittedly, such an opportunity of hearing was not given to the assessee.
The learned single Judge had not taken note of these twin aspects. In this view of the matter, the order impugned in this writ appeal is set aside.
Applicability and effect of Section 50C - The sale consideration declared in the sale deed dated 26.02.2007 is not relevant and that the value has to be determined u/s 50-C of the Income Tax Act. If the guideline value is more than the value declared in the document, then guideline alone is relevant for payment of tax. What the executant of the sale deed received is of no consequence. Though the petitioner is bound by the valuation made by the department in terms of Section 50-C of the Act, he is entitled to be heard on the question of his share of tax liability. This is because Samuel was not the exclusive owner of the property.
The matter is remitted to the file of the assessing officer who has to act as per law . Writ appeal allowed.
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2025 (4) TMI 1084
Deduction u/s 80P(2)(d) - interest received from co-operative bank - HELD THAT:- We find that grounds of appeal raised by the assessee is in fact covered by a series of decision by this Bench as well as other Co-ordinate Benches of Tribunal wherein it has been consistently held that Co-operative Banks are primarily co-operative society and the interest or dividend earned from such Co-operative Bank are eligible for deduction under section 80P(2)(d). Similar view was taken in Sai Ankur Co-operative Housing Society Limited [2025 (2) TMI 115 - ITAT MUMBAI] and Totagars Co-operative sales Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT]. No contrary facts or law is brought to our notice to take other view. Thus, the grounds of appeal raised by the assessee are allowed.
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2025 (4) TMI 1083
Disallowing compensation for the inordinate delay in payment of interest on refund - HELD THAT:- CIT(A) has dismissed the appeal holding that Section 244A of the Act entitles assessee to receive simple interest on the refund due, but does not provide for compensation for any delay in payment of such interest.
AR has relied on various case laws. However, we find that none of these case laws are relevant to present case. In the case of CIT vs. H.E.G. Ltd [2009 (12) TMI 35 - SUPREME COURT] has only answered the meaning of the words “refund of any amount becomes due to the assessee” in Section 244A of the Act.
The case of Sandvik [2006 (1) TMI 55 - SUPREME COURT] prior to insertion of section 244A for granting interest on refunds, when there was no provision for granting interest for delayed payment of refund. Appeal filed by the assessee is dismissed.
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2025 (4) TMI 1082
Validity of reopening of assessment - scope of extended time limit by TOLA, 2021 - HELD THAT:- By taking the date of 26.05.2022 from the show cause notice in the present case, period of two weeks ended on 09.06.2022 for the assessee to furnish its reply. On this very date, when time limit of two weeks expires, assessee moved an application before the AO seeking adjournment for 2 to 3 weeks.
AO accepted the same and granted adjournment on the same date, asking the assessee to submit the reply by 24.06.2022. Assessee did not comply with the extended time limit and furnished its response on 28.06.2022. On these given set of facts, one has to bear in mind the legal fiction within which one has to operate and the same has to be construed strictly. Since assessee did not file its response to the show cause notice within the permissible two weeks expiring on 09.06.2022, except for moving an application seeking adjournment, the clock started ticking for the Revenue on expiry of permissible two weeks, i.e. on 09.06.2022.
Surviving time period calculated by the ld. Counsel for the assessee in the above extracted table is one day whereas according to the ld. CIT DR, it is zero. Ld. Assessing Officer has issued the impugned notice u/s 148 on 28.07.2022 which does not meet the criteria of ‘surviving time limit’ laid down by the Hon'ble Supreme Court, whether one or zero day is considered.
Thus, we hold that notice for A.Y. 2014-15 issued on 28.07.2022 u/s 148 of the new regime is barred by limitation and hence bad in law, liable to be quashed, resulting in impugned reassessment proceedings as well as the impugned reassessment order bad in law. Accordingly, ground nos. 1 and 2 raised by the Revenue are dismissed.
Notice issued beyond period of six years in A.Y. 2015-16 - Since the notice issued u/s.148 is dated 28.07.2022, period of six years expired on 31.03.2022 and is thus barred by limitation. Accordingly, notice so issued and re-assessment completed thereafter u/s. 147 is liable to be quashed, in view of the decision of Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] which was followed by Hon'ble Delhi High Court in the case of IBIBO [2024 (12) TMI 1269 - DELHI HIGH COURT]
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2025 (4) TMI 1081
Nature of receipt - tax treatment of sales tax subsidies received from the State Governments of Punjab and Haryana - whether the sales tax subsidy should be treated as a capital or revenue receipt? - subsequent impact on depreciation computation and Minimum Alternate Tax (MAT) liability u/s 115JB - HELD THAT:- Vide [2018 (5) TMI 1738 - SC ORDER] the Hon’ble Supreme Court dismissed the Revenue’s appeal, thereby affirming the classification of the sales tax subsidy as capital in nature.In light of the Apex Court’s ruling, the characterisation of the subsidy stands conclusively determined.
Treatment of the subsidy in relation to the cost of fixed assets, its impact on depreciation computation u/s 43(1) of the Act, and its implications for the determination of book profits under Section 115JB - The fact that the incentive was structured as a deferment of statutory liability, later converted into a capital reserve, does not alter its fundamental nature. Non-payment of a statutory liability is functionally equivalent to a direct inflow of funds, making the subsidy fall squarely within the ambit of Explanation 10 to Section 43(1) of the Act. Consequently, the subsidy must be deducted from the cost of fixed assets for the purpose of depreciation computation. We also take note of the ruling in Kinfra Export Promotion Industrial Parks Ltd. [2022 (4) TMI 809 - KERALA HIGH COURT] where it was held that even financial assistance without reference to a specific asset must be apportioned and deducted from the cost of the assets under Explanation 10 to section 43(1) of the Act.
Thus, we hold that the sales tax deferment incentive received by the assessee qualifies for reduction from the actual cost of assets under Explanation 10 to Section 43(1) of the Act. The fact that the subsidy was received after the commencement of production does not alter its fundamental character, as its eligibility was directly tied to the assessee’s fixed capital investment.
We reject the assessee’s contention that the mode of receipt determines the applicability of Explanation 10. The statutory liability retained by the assessee is equivalent to an inflow of funds, and thus, the benefit derived from it must be adjusted against the asset cost. Once the asset is merged into the block of assets, its individual character is lost, making the proportionate reduction of subsidy from the block cost mandatory.
Thus, as the capital nature of the subsidy is undisputed, and once classified as such, its reduction from the cost of fixed assets follows as a natural consequence under Explanation 10 to section 43(1) of the Act.
We direct the AO to recalculate depreciation in accordance with Explanation 10 to Section 43(1). The AO shall reduce the proportionate amount of subsidy from the actual cost of fixed assets, in line with the findings of the Co-ordinate Bench and re- compute depreciation on the revised cost of assets, following the provisions of Section 32 of the Act.
Appeals filed by the Revenue are dismissed, and the directions issued to the AO by the Co-ordinate Bench for re-computation of depreciation are upheld.
Computation of book profit u/s 115JB - We find merit in the argument of the AR that the AO has no power to tinker with the book profits unless the accounts are not prepared in accordance with Part II & III of Schedule VI of the Companies Act, 1956. The Hon’ble Supreme Court in Apollo Tyers Ltd [2002 (5) TMI 5 - SUPREME COURT] has categorically held that the AO has no authority to alter the book profit unless there is a violation of accounting standards or provisions of the Companies Act.
The assessee's treatment of the subsidy is, therefore, in compliance with AS-12 and the Companies Act, 1956. The contention of the DR that the subsidy should be included in book profit due to its impact on depreciation is not supported by any express provision in Explanation 1 to Section 115JB.
Since the sales tax subsidy was directly credited to the capital reserve and was never debited to the Profit & Loss Account, the AO was not justified in making an addition to book profit under Section 115JB. The AO’s adjustment in this regard is not justified.
Accounts of the assessee were not prepared in accordance with Part II & III of Schedule VI of the Companies Act, 1956 because the subsidy was not appropriately accounted for in book profits and AO, based on this observation, sought to re-compute book profit under Section 115JB - Hon’ble Supreme Court in Apollo Tyers [2002 (5) TMI 5 - SUPREME COURT] has held that once the accounts are certified by the auditors and approved by shareholders, the AO cannot make adjustments unless there is fraud, misrepresentation, or non-compliance with Schedule VI of the Companies Act. There is no finding in the CIT(A)’s order that the accounts were not in accordance with the Companies Act, apart from the difference in accounting treatment of the subsidy. A mere difference in accounting interpretation cannot be a reason to modify book profits under Section 115JB. Therefore, we hold that the accounts of the assessee were correctly prepared, and the AO’s adjustment was beyond his jurisdiction.
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2025 (4) TMI 1080
Estimation of income - bogus purchase - applying GP rate of 12.5% - HELD THAT:- Assessee has given details of purchases and also the source of purchases were from the books and made through account payee cheques. On similar facts in the original quantum proceedings u/s. 143(3) CIT (A) has applied GP rate of 12.5%. Before this Tribunal in the appeal for A.Y.2011-12, similar matter had come up wherein ld. CIT (A) has restricted the disallowance by applying GP rate of 12.5% on alleged bogus purchases, however, ld. AO has added the entire bogus purchases in the proceedings u/s.154 while computing book profit.
Tribunal had deleted the said addition on book profit stating that it is beyond the scope of u/s.115JB. In any case, application of GP rate on bogus purchases has now been upheld in the case of Mohammad Haji Adam & Co. [2019 (2) TMI 1632 - BOMBAY HIGH COURT] Accordingly, appeal filed by the Revenue is dismissed.
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2025 (4) TMI 1079
Penalty u/s 270A - allegation of defective notice u/s 274 - assessee claimed that the AO in the show cause notice for levying penalty did not specifically pointed out as to whether the penalty was w.r.t. concealment of income or furnishing inaccurate particulars of income - HELD THAT:- Since the issue in hand which basically hinges on the alleged defective show cause notice issued in terms of section 274 of the Act, is exactly similar, following this Bench’s decision in the case of Raj Kumar Agrawal [2024 (8) TMI 1531 - ITAT RANCHI] we, therefore, set aside the penalty order and direct the AO to delete the penalty imposed on the assessee. Appeals of assessee are allowed.
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2025 (4) TMI 1078
Rejecting the application of appellant for registration u/s 80G(5)(iii) - CIT(E) was of the view that the objects of the trust were composite in nature i.e. were charitable and religious and hence, they clearly contravene the main conditions of section under section 80G(5) which is to the effect that none of the objects of the Trust should be “religious” in nature - CIT(E) was of the view that section 80G(5) of the Act applies to donations made to any institution or fund, but only if that institution or fund is established in India for charitable purposes. This means that the institution or fund must have “only” charitable objectives, and religious purposes cannot be included
HELD THAT:- CIT(E) had cited only two of the objects out of various objects of the assessee/applicant trust come to conclusion that the applicant trust could not be granted registration since two of its objects were of a religious in nature. We observe that there were several other objects of the trust, which were not taken into consideration by CIT(E) while dismissing the application of for grant of registration u/s 80G(5).
The assessee had also specifically submitted that it’s expenditure on religious activities was within the threshold limit of 5% as specified under section 80G(5) however CIT(E) did not call for the necessary details with regards to expenditure incurred by the assessee on religious purposes to ascertain whether the expenditure incurred by the assessee was falling within the 5% exemption limit provided under section 80G(5).
The matter is restored to the file of Ld. CIT(E) to consider the grant of registration u/s 80G of the Act afresh and to carry out necessary verification whether the assessee/applicant trust has expended/utilized less than 5% of it’s total income towards “religious purposes”. If that be the case, the assessee/applicant trust may be granted registration, in accordance with law. Appeal of the assessee / applicant trust is allowed for statistical purposes.
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2025 (4) TMI 1059
Applicability of provisions of the Interest Tax Act 1974 - ITAT treating appellant is a 'credit institution' as defined in Section 2(5A) r.w. Clause (va) of Section 2(5B) of the Interest Tax Act - Whether Appellate Tribunal is right in law in concurring with the views of the Commissioner (Appeals) and holding that mere acceptance of monies as deposits without any 'scheme or arrangement' as contemplated in the Reserve Bank directions/notification will attract the provisions of the Interest Tax Act?
HELD THAT:- Amendments to the 1974 Act in 1991 have not authorized a levy of interest tax on the interest paid or the liability incurred by a “scheduled bank” or “credit institution” under Section 4 of the 1974 Act.
Even if the Appellant/Assessee is covered under the ambit of the definition of “credit institution” in Section 2(5A) of the 1974 Act read with Section 2(5B) of the 1974 Act as it includes any other “financial company” as defined in Section 2(5B) of the 1974 Act, would not mean that the Appellant/Assessee was liable to pay interest tax on the interest paid on deposits collected from its Directors, Shareholders or its Group Companies.
Only if the amounts were lent by the Appellant/Assessee and interest were charged on the amount lent by the Appellant/Assessee, interest tax would be payable at the rate prescribed under Section 4(2) of the 1974 Act up to 31.03.2000 by the Appellant/Assessee.
In our view, no interest tax referred to in Section 4 of the 1974 Act is chargeable on the interest paid either by the “scheduled bank” or by a “credit institution” to its creditors/lenders.
In our view, there was no question of the Appellant/Assessee being held liable to pay interest tax under the 1974 Act on the interest paid on the deposits collected from its Shareholders, Directors and Group Companies.
Consequently, invocation of Section 8, Section 9 and Section 10 of the 1974 Act were without jurisdiction. The interest charged under Section 12A of the 1974 Act was also without jurisdiction.
Assessing Officer, the Commissioner of Income Tax (Appeals) III, Chennai and the ITAT have failed to consider the provisions of the 1974 Act and have wrongly held that the interest paid by the Appellant/Assessee as “credit institution”, its Directors, Shareholders and Group Companies was liable to tax under the 1974 Act.
Unfortunately, the Assessment Order dated 08.11.1999 has seen two rounds of litigation, from the stage of assessment up to ITAT. Neither the Assessing Officer nor the Tribunal have examined the provisions before concluding that the interest tax was payable on the interest paid on the amounts received from deposits/loans by the Appellant/Assessee from its Directors, Shareholders and Group Companies.
We answer the second substantial question of law raised in these Appeals in favour of the Appellant/Assessee and against the Income Tax Department.
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