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Income Tax - Case Laws
Showing 421 to 440 of 175845 Records
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2025 (6) TMI 1538
Unexplained income u/s. 68 - huge loans and even loans were given without charging any interest - A.R. argued that the onus on the assessee lies only to the extent of establishing the identity of the lenders, whereas in the present case the assessee has submitted the evidences to establish prima facie, the name of the lender, PAN Number, full Address, unsecured loan received during the year, contra confirmations, bank statements, Income-tax returns, interest amount, opening balance, loans received during the year and closing balance which proves that the assessee has duly discharged his primary onus to prove identity of lender, credit worthiness and genuineness of the transactions - CIT(A) deleted addition -
HELD THAT:- The addition made by the AO invoking Section 68 does not hold it good, since the assessee has filed the confirmation letter from the lender, Bank statements, Income Tax Return and statement of total income of the lender. Thus the assessee has discharged its initial onus namely identity of the creditors, genuineness of the transactions and creditworthiness of the creditor.
AO has disbelieved the same, but has not doubted the partial repayment of loan by the assessee during this assessment year and subsequent assessment year with appropriate TDS. Therefore the addition made by the AO u/s. 68 of the Act is not sustainable in law.
No hesitation in confirming the order passed by the Ld. CIT(A), who deleted the addition made by the AO u/s. 68 of the Act - Assessee appeal allowed.
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2025 (6) TMI 1537
Validity of reassessment proceedings - case of the assessee is re-opened after a period of four years - tangible material - eligibility of reasons to believe - HELD THAT:- CIT(A) as correctly as not a case of an assessee who has failed to furnish full and true particulars at the time of assessment. Where the assessee has discharged his duty and the assessment completed u/s 143(3) is to be reopened within the period of 4 years from the end of the assessment year, the assessing officer has to either show that the disclosure by the assessee was not full and true or he has come into possession of some "tangible material", to come to the conclusion that there is escapement of income.
The tangible material must have a live link with the formation of the belief regarding escapement of income. When there is no failure on the part of the assessee to furnish full and true particulars and there is no tangible material on the basis of which the assessing officer can allege escapement of income, the only consequence would be that the assessing officer was exercising the power of review on the very same materials which he is presumed to have examined. The first proviso to section 147 can be resorted to only if the assessee has not discharged the duty. This is not allowed by the statute and higher courts. With these observations no other alternative but to annul the assessment - Appeal of the Revenue is dismissed.
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2025 (6) TMI 1536
Validity of reopening of assessment - as argued no notice u/s 143(2) was issued by assessing officer before passing assessment order - HELD THAT:- We find neither the assessee raised non-issuance of notice during the assessment nor such issue was raised before the Ld. CIT(A) while filing first appeal. Similarly, no grounds of appeal was raised before the CIT(A) against validity of reopening.
Both such legal issues are raised for the first time before the Tribunal. The assessee has not filed any application for seeking permission to the raise grounds of appeal either on validity of re-opening or notice under section 143(2). Even while filing additional ground on non issuance of notice, the assessee in its application dated 26.08.2024, simply contended that they are attaching additional ground of appeal the same being purely legal and goes to root of the case. No basis of filing such application is disclosed, whether it requires the investigation of fact or not.
We find that the assessee has is challenging assessment proceeding for the first time before the Tribunal on the ground of issuance of notice under section 143(2). Thus, considering the overall facts of the present case, the additional ground of appeal on non-issuance of notices as well as validity of reopening are admitted and matter is remitted back to the file of the Ld. CIT(A) for considering and adjudication of both the grounds of appeal in accordance with law.
On merit we find that the addition in account of business income as well as unexplained credit u/s 68 by lowers authorities for the want of evidence. Thus, on merit the appeal is restored back to the file of the CIT(A) to adjudication both the issue afresh. Appeal of the assessee is allowed for statistical purposes.
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2025 (6) TMI 1535
Disallowance of deduction u/s 80P(2)(a)(i) - interest earned by the assessee society from nominal members / B class members - AR submitted that as per the said Act, “members” include “nominal members” and therefore the assessee has rightly claimed deduction under section 80P(2)(a)(i) - HELD THAT:- As on perusal of the relevant provisions of the Maharashtra Cooperative Societies Act, 1960 find that the members under the said Act include non-members, thereby making the assessee eligible for its claim of deduction under section 80P(2)(a)(i) of the Act.
We find that the impugned issue is no more res-integra and covered in favour of the assessee by the decision of Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] it is relevant to note that the term “Member” has been defined u/s 2(19) in the Maharashtra Act to mean: “a person joining in an application for the registration of a Cooperative society which is subsequently registered, or a person duly admitted to membership of a society after registration and includes a nominal, associate or sympathizer member”. On going through the above definition of “Member”, it becomes overt that the term “Member” also includes a Nominal Member. Once it is accepted that the assessee, governed by the Maharashtra Act, made advances to certain Nominal Members from whom interest income was earned, there can be no doubt whatsoever that the deduction u/s 80P(2)(a)(i) has to be allowed.
Thus, assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act on the impugned interest earned by it from the nominal members/B class during the relevant AY 2017-18.
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2025 (6) TMI 1534
Royalty receipts - receipts from providing data transmission services - DTAA with Netherlands - HELD THAT:- It is undisputed fact that the issue is recurring issue and the AO following its earlier orders has been holding that the receipts from providing data transmission services was held to be royalty u/s 9(1)(vi) of the Act and Article 12(4) of the DTAA with Netherlands.
We find that the issue is squarely covered by the various decisions of the Tribunal and also the High Court in assessee’s own case for the assessment years 2006-07 to 2020-21. The latest order of the Tribunal for the AY 2021-22 [2024 (6) TMI 1475 - ITAT DELHI] the Tribunal following earlier years order and also the decision of the Hon’ble High Court deleted the addition as held the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word "royalty" in Asia Satellite 59, when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so that such income automatically becomes royalty. Assessee appeal allowed.
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2025 (6) TMI 1533
Addition u/s 68 as Bogus Purchase - Estimation of income - addition at the rate of 12.50% of the total circular transactions made by the assessing officer based on the alternatively plea taken by the assessee, during the assessment proceedings - Counsel stated that the net profit of 0.39% as declared by the assessee, duly takes care of the income from the circular trading activities and same is in line with the various decisions of the Hon'ble High Court of Gujarat and Ahmedabad ITAT wherein in case of circular trading 0.30% profit margin is upheld to be appropriate
HELD THAT:- As evident from the audited Profit &Loss account of the proprietary concern of the assessee, the assessee has earned net profit from trading of Rs. 18,12,319/-, on sale of Rs. 45,78,16,189/- which works out to 0.39% of the turnover. The net profit of 0.39% as declared by the assessee, duly takes care of the income from the circular trading activities and same is in line with the various decisions of the Hon'ble Ahmedabad ITAT wherein in case of circular trading 0.30% profit margin is upheld to be appropriate.
Accordingly, even if the assessing officer's version of circular trading is accepted, then also there is no case of the assessing officer for making any such huge and abnormal addition of 12.50% of the total purchases. Such kind of profit margin can never be possible in case of Circular Trading Activities, particularly when the AO himself has held the transactions of the assessee are of circular trading, for that reliance can be placed on the judgement of Jt. Cit (Osd), Circle-3(1)(1) vs M/S. Pradip Overseas Ltd, [2021 (9) TMI 976 - ITAT AHMEDABAD] wherein looking to the above facts and finding, we do not find any infirmity in the decision of Id. CIT(A) in estimating the disallowance @ 0.30% of circular trading purchases. Also see KFC Exports (P.) Ltd [2025 (1) TMI 1571 - GUJARAT HIGH COURT] - Assessee appeal allowed.
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2025 (6) TMI 1532
TP Adjustment - comparable selection - HELD THAT:- Tata Elxsi Limited is engaged in providing diversified activities including software development services for automotive, communications, consumer products, health-care and retail. It also provides animation and Visual Effects (VFX) services for feature films and episodic television. Therefore, we are of the considered view that, Tata Elxsi Limited cannot be compared with the appellant company which is engaged in providing software development services to it’s AE on cost+ mark-up basis.
Tata Elxsi Limited has been excluded in the case of ADP Private Limited. [2022 (2) TMI 1281 - ITAT HYDERABAD] where Tata Elxsi Limited has been excluded on two folds i.e., on turnover filter and also on functional dissimilarity. Therefore, we direct the Assessing Officer/TPO to exclude Tata Elxsi Limited from the list of final set of comparables.
Persistent Systems Limited deleted from the final set of comparables on account of functional dissimilarity, diversified activities, turnover filter and considering the activities being a giant company.
Aspire Systems (India) Private Limited be excluded from the final set of comparables with the appellant’s company taking into consideration of extraordinary event of amalgamation, turnover filter and being a giant company.
Exclude Infosys Limited from the final set of comparables with that of appellant’s company cannot be compared with appellant company which is a capitive service provider to it’s AE on cost plus mark-up.
Thirdware Solutions Limited is functionally different and also owns intangible assets and that it’s segmental financial information is not available.
Cybage Software Private Limited cannot be considered as comparable to the appellant company which is engaged in providing software development services to it’s AE on cost plus mark-up basis. Thus, we direct the Assessing Officer/TPO to exclude Cybage Software Private Limited from the list of final set of comparables.
Larsen & Toubro Infotech Limited - Since the appellant-company itself has selected Larsen & Toubro Infotech Limited as comparable in it’s TP documentation, therefore, in our considered view, there is no reason to exclude Larsen & Toubro Infotech Limited from the list of comparables. Thus, we are inclined to uphold the order of the learned Assessing Officer/DRP and reject the arguments of the appellant-company.
Infobeans Technologies Limited be excluded - we are of the considered view that the finding recorded by any Appellate Authority or Court has to be read in conjunction with the facts to make it applicable to another case. Since the appellant-company itself has selected Infobeans Technologies Limited as comparable in it’s TP documentation, therefore, in our considered view, there is no reason to exclude Infobeans Technologies Limited from the list of comparables. Thus, we are inclined to uphold the order of the learned Assessing Officer/DRP and reject the arguments of the appellant-company.
Determination of operating margin of comparable companies - provision for bad debt is not an ascertained liability unlike actual write-off of bad debt - We are of the considered view that, there is no merit in the arguments of the assessee that bad debt is operating in nature and needs to be considered for the purpose of computation of PLI. This view is supported by the decision of Thyssen Krupp. Industries India Pvt. Ltd. [2013 (11) TMI 930 - ITAT MUMBAI] Similar view has been taken by the ITAT, Hyderabad Bench in the case of Foursoft India Limited [2011 (9) TMI 634 - ITAT HYDERABAD] Therefore, we are of the considered view that, at any stretch of imagination, the provision of bad debt cannot be considered as operating in nature. DRP after considering all the relevant facts has rightly rejected the objections raised by the appellant company. Thus, we are inclined to uphold the findings of the DRP and reject the ground taken by the appellant company.
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2025 (6) TMI 1531
TP Adjustment - seeking of exclusion of nine companies from the set of comparables - HELD THAT:- In our considered view, the findings of this Tribunal in the case of M/s. Wave Crest Payment Technology Pvt. Ltd. [2021 (12) TMI 1528 - ITAT HYDERABAD] will be applicable to the assessee if the functional profile of that company are comparable to the assessee.
Thus, following the decision of this Tribunal in the case of M/s. Wave Crest Payment Technology Pvt. Ltd. we also hold that, Tata Elexis Limited (Seg), E-Infochips Ltd, Larsen and Tourbo Infotech Limited, Infosys Ltd, Persistent Systems Limited, Infobeans Technologies Limited and Thirdware Solutions Limited are not good comparables for the assessee. Accordingly, we direct the Ld. AO/TPO to exclude Tata Elexis Limited (Seg), E-Infochips Ltd, Larsen and Tourbo Infotech Limited, Infosys Ltd, Persistent Systems Limited, Infobeans Technologies Limited and Thirdware Solutions Limited from the set of comparables.
Exclusion of R S Software (India) Limited - As rightly pointed out by the Ld. DR, the absence of segmental financials, combined with the fact that 100% revenue is from SDS, leads to a reasonable conclusion that R S Software is functionally comparable with the assessee. The Tribunal in multiple decisions has held that unless it is shown that the alleged functional difference translates into differential margins or risk profiles demonstrable through segmental results, mere reference to technical capabilities or internal intangibles cannot be the basis for exclusion.
Assessee has failed to establish any decisive functional difference backed by financial evidence, we are of the considered view that R S Software is functionally comparable to the assessee and deserves to be retained in the final list of comparables. Accordingly, the assessee’s plea for exclusion of R S Software from the list of comparables is rejected.
Exclusion of Mindtree Limited is engaged in diverse and high-end service offerings. The fact that multiple verticals are disclosed, without a clear demarcation of revenues attributable to each segment, indicates that the company’s functional profile is not limited to SDS. Moreover, the lack of reliable and segment-specific financial data makes it unfeasible to reasonably benchmark Mindtree with the assessee’s captive SDS operations. Accordingly, in view of the functional dissimilarity and absence of reliable segmental data, Mindtree Limited is directed to be excluded from the final set of comparables.
Akshya Software is a good comparable and accordingly, we direct the Ld. AO / TPO to include the same in the list of comparables.
Maveric System is not comparable to the assessee.
Sankhya Infotech Limited is not comparable to the assessee due to it's R&D expenditure of 5.9 % of turnover. Accordingly, the request of the assessee for inclusion of Sankya Infotech in the list of comparable is rejected.
Sagar Soft cannot be excluded from the set of comparables on the basis of persistent loss making filter. Accordingly, we direct the Ld. AO /TPO to include Sagar Soft in the set of comparable.
Denial of working capital adjustment (“WCA”) by the Ld. TPO while determining the ALP - difference in levels of working capital between the tested party and the comparables have an affects on the margins and profitability. Therefore, TPO’s approach in insisting upon daily/monthly working capital cycle data of third-party comparables is, in our considered view, unjustified, particularly when such data is admittedly not available in the public domain. Assessee cannot be expected to obtain information which is beyond its reach. Therefore, we are of the considered opinion that, WCA cannot be denied merely due to the absence of detailed working capital cycle data and the adjustment should be granted based on average of opening and closing balances. Hence, we direct the Ld. TPO to grant appropriate WCA to the assessee while determining the ALP, by adopting the average of opening and closing working capital balances of comparables, as available from their annual reports. Accordingly, the ground No. 8 of the assessee is allowed for statistical purpose.
Benchmarking of interest on outstanding trade receivables - AR contended that no separate benchmarking is required in respect of interest on trade receivables, as the same forms part of the working capital and is subsumed within the overall pricing of the international transaction - HELD THAT:- As including the statutory amendment to Section 92B of the Act, we are unable to accept the contention of the Ld. AR that no separate benchmarking is required for outstanding receivables. Accordingly, we hold that the interest on trade receivables constitutes a separate international transaction requiring independent benchmarking, and thus, the assessee’s ground on this issue is liable to be rejected.
Allowability of credit period and applicability of rate of interest for the purpose of benchmarking of interest on trade receivables - HELD THAT:- Tribunal has adopted LIBOR rate for benchmarking the transactions of outstanding receivables from the AEs. Therefore, respectfully following the decision of HARSCO India Private Ltd. [2025 (4) TMI 388 - ITAT HYDERABAD] we hold that, the justice will be served by applying LIBOR + 200 basis points on trade receivables in the case of the assessee. Therefore, we direct the Ld. AO/TPO to apply LIBOR + 200 basis points for benchmarking of interest on trade receivables.
Allowability of credit period - We found that the Ld. TPO has allowed credit period of only one month. In our considered view, the justice would be met by allowing a credit period of 60 days. Accordingly, we direct the Ld. AO/TPO to allow the credit period of 60 days for the purpose of benchmarking of interest on trade receivables.
Disallowance of MAT credit - Eligible MAT credit worked in accordance with the Act must be available to the assessee, which is subject matter of factual verification. Therefore, we direct the Ld. AO to grant the MAT credit to the assessee in accordance with the law after verification from the records of the assessee. Accordingly, the ground of the assessee is allowed for statistical purpose.
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2025 (6) TMI 1530
Taxability of royalty - Nature of expenditure - holding it as capital expenditure and also denying depreciation thereon or revenue expenditure - principle of res judicata - assessee, engaged in the business of manufacture and sale of oil seals to automobile sector (Oil seals are used in automobile components and other machinery to prevent leakage of oil and other fluids running through machineries, etc) - HELD THAT:- We find merit in the arguments of the Ld. Sr. DR. The factual matrix of the case has been thread bare in details from all angles in the assessee’s own cases by the Tribunal. All the above arguments of the Ld. Counsel had been dealt except that of principle of the consistency.
Before us, the Ld. Counsel did not bring copy of any scrutiny assessment order passed under section 143(3)/144 of the Act by the AO wherein the AO had given the categorical finding that the royalty expenditure was revenue expenditure. Further, the principle of res judicata does not apply to income tax cases. Thus, we hold that the argument of consistency does not have much force and thus, the same is of no help to the assessee.
It is not profitable to build a case by quoting some part/sentence, etc. of the decision out of context without bringing full facts on the record. The case has to be appreciated in totality. Appeal of the assessee stands dismissed.
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2025 (6) TMI 1529
Validity of Assessment u/s 153C - absence of any incriminating material having a bearing on the income for the year under consideration - characterization of benefits arising under a Joint Development Agreement (JDA) - HELD THAT:- The incriminating material which was seized had to pertain to the A.Y in question for which the Assessing Officer has issued notice u/s 153C and in the absence of the document which were seized have any co-relation document wise and A.Y-wise, with the income assessable to tax has escaped assessment the requirement u/s 153C of the Act is not satisfied.
It is a mandatory condition for initiation of proceedings u/s 153C of the Act that the AO is satisfied that the seized document is an incriminating material and also having a bearing on determination of total income for a particular A.Y or for all the A.Ys.
In the case in hand, what is referred by the AO is JDA which is otherwise duly recorded in the books of account as the amount received by the assessee as refundable security is reported in the balance sheet of the assessee as well as in the cash book and bank account of the assessee.
Therefore, at the first stage, the JDA would not constitute an incriminating material as the amount received on account of refundable security would not be held as income even in case of transfer of immovable property as defined u/s 2(47)(v) r.w.s. 53 of Transfer of Property Act as held in case of Smt. Shanta Vidya Sagar Annam [2025 (1) TMI 460 - TELANGANA HIGH COURT]
In the case in hand, the JDA is not an agreement to sell and further the AO has not disputed the fact that the assessee has treated the land in question as stock-in-trade and therefore, the receipt of refundable security under the JDA would not ipso facto be an income much less an undisclosed income or income assessable to tax has escaped the assessment.
Accordingly, satisfaction recorded by the AO is very vague without specifying the linkage between the seized material and bearing on the income of a particular assessment year or more than one particular assessment year and therefore, the same is not in accordance with the provisions of the Act and consequently, the proceedings initiated by the AO u/s 153C on the basis of invalid satisfaction are also not sustain able in law and liable to be quashed. Assessee appeal allowed.
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2025 (6) TMI 1528
Penalty levied u/s 271C - disallowance of LTC/LTA u/s 10(5) - assessee had failed to deduct tax at source in respect of reimbursements of LTC/LFC paid to the employees for travelling abroad - HELD THAT:- As found that there is no dispute that the assessee was required to deduct tax at source in respect of reimbursement of LTC/LFC paid to employees in respect of foreign travel. It is also found that the assessee could not provide any reasonable cause u/s 273B for the failure to deduct tax at source in respect of the aforesaid reimbursements.
The only explanation furnished by the assessee before the learned CIT(A) was that the assessee was under bonafide belief that tax was not deductible at source. The assessee advanced no other pleading to explain how the assessee was prevented by reasonable cause from deducting tax at source.
In the course of appellate proceedings in Income Tax Appellate Tribunal also, no reasonable cause has been advanced from the assessee's side, within the meaning of section 273B of the Act for failure to deduct tax at source in respect of reimbursement of LTC/LFC paid to employees in respect of foreign travel.
The assessee, State Bank of India, is a leading corporate entity of India; having no dearth of intellectual resources knowledgeable in the field of Income Tax Act; and the concerned person(s) in the assessee could have easily received knowledge inputs either from within the organization or from outside, if required.
Failure to observe due diligence in deducting tax at source, despite informed resources easily available to the assessee, pleading and for such that it failed to deduct tax at source due to lack of knowledge or due to bona fide belief that tax was not deductible at source, cannot be accepted as a reasonable explanation.
No material has been presented by either side to persuade us to interfere with the impugned appellate order of CIT(A), whereby CIT(A) confirmed the levy of penalty u/s 271C. Therefore appeal filed by the assessee is dismissed.
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2025 (6) TMI 1527
Addition u/s 68 - cash deposit during demonetization in bank account unexplained - HELD THAT:- CIT(A) has acknowledged that the cash deposits in the bank account made by the assessee were partly out of business sales and partly out of opening cash balance.
CIT(A) has not brought on record any material to doubt the genuineness of business sales and the genuineness of opening cash balance. Without any reference to any material to doubt the genuineness of business sales and the opening cash, the CIT(A) has still confirmed an addition on ad hoc and estimation basis. However, there is no material to support the aforesaid estimation.
CIT(A) has stated in his order that he was confirming the aforesaid addition to safeguard the interest of Revenue. This approach, that the CIT(A) was to protect the interest of Revenue is disapproved. It is no job of the CIT(A) to protect the interest of Revenue. His job is to decide the appeal in accordance with law. When, in the present case, there is no material to support the addition or to doubt either the opening cash balance or business sales, there was no basis for confirming the addition - Assessee appeal allowed.
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2025 (6) TMI 1526
Protective addition u/s 68 - cash was credited on various dates as received from Chairman of the Trust - scope of substantive addition - HELD THAT:- At the time of completion of the assessment in the hands of assessee trust, in which the protective additions were made, there was no substantive assessment/addition made in the hands of Managing Trustee as on that date.
Protective addition was made in the assessment order of the assessee dated 29.12.2018 whereas reassessment proceedings in the hands of the Managing Trustee commenced only on 29.1.2020 and thus, on the date of protective addition there was no substantive addition. We are of the considered opinion that such a course of action in making a protective addition first and substantive assessment later is not sustainable in the light of apex court's judgement in the case of Lalji Haridas [1961 (7) TMI 8 - SUPREME COURT] and Suresh K. Jajoo [2010 (3) TMI 874 - ITAT MUMBAI] supporting assessee's case that a protective addition comes to play then there arises a doubt in the mind of the assessing officer regarding taxability of an income in case of more than one assessee, he could indeed make a substantive addition followed by the protective one and not vice versa. Faced with situation, we deem it fit to delete the impugned protective addition u/s 68 of the Act in very terms. Accordingly, this ground of appeal is allowed.
Disallowance of travel expenses incurred by the trustee, for his multiple trips to Hyderabad, to attend training sessions conducted by NIIT - CIT(A)/NFAC has confirmed the disallowances on the ground that assessee failed to produce evidence of expenditure such as air tickets, vouchers etc. and also fails to furnish the outcome and productivity of the business and how it was related to the work of the trust - HELD THAT:- As in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we remit these two issues to the file of ld. CIT(A)/NFAC to decide afresh in accordance with law after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to produce the above evidence of expenditure and justify the outcome and productivity of the business and demonstrate how it is related to the work of the trust. It is ordered accordingly.
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2025 (6) TMI 1525
Disallowance u/s. 14A r.w. rule 8D - Sufficiency of own funds - assessee submitted that it did not earn any income exempt under the Act, during the year and therefore, there cannot be any disallowance u/s.14A r.w. rule 8D and there is no satisfaction arrived at by the AO as required u/s.14A for the purpose of invoking and making the disallowance - HELD THAT:- The issue in hand is no longer “res integra” as assessee did not earn any exempt income during the year and therefore, no disallowance can be made u/s. 14A r.w. rule 8D for the year under consideration i.e. AY 2012-13.
The amendment brought in Section 14A by way of explanation in this regard is effective from 01.04.2022 i.e. AY 2022-23, as held in the case of Era Infrastructure (India) Ltd. [2022 (7) TMI 1093 - DELHI HIGH COURT] Considering the facts on record and the said judicial precedent as well as the position of law, we do not find any reason to interfere with the findings arrived at by the ld. CIT(A) who deleted the disallowance made by the AO u/s. 14A r.w. rule 8D. Accordingly, ground no. 1 raised by the revenue is dismissed.
Unexplained income towards share capital and share premium u/s. 68 - as per revenue mere filing of confirmation letter, PAN, bank statement will not discharge the assessee's onus in this case where AO has established non- existence of credit worthiness of the applicant companies - HELD THAT:- As going by the records placed by the assessee of both the share subscribing companies, it can be safely held that the assessee has discharged its initial burden and the burden shifted on the ld. AO to enquire further into the matter which he failed to do so. It is also noted from their audited financial statements that all the investing companies have sufficient own funds available with them to make investment in the assessee.
From the perusal of paper book and documents placed therein, it is vivid that both the share applicants are (i) income tax assessees, (ii) they are filing their income tax returns, (iii) share application form and allotment letter is available on record, (iv) share application money was made by account payee cheques, (v) details of the bank accounts belonging to share applicants and their bank statements, (vi) in none of the transactions there are any deposit of cash before issuing cheques to the assessee, (vii) all the share applicants having are substantial represented by their capital and reserves.
In the course of assessment proceeding. ld. AO directed the assessee to produce the subscriber companies along with relevant documentary evidences and details which was not complied with. Ld. Counsel submitted that mere non-appearance of directors is no basis for invoking provisions of section 68. See Orissa Corporation (P) Ltd. [1986 (3) TMI 3 - SUPREME COURT] Decided against revenue.
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2025 (6) TMI 1524
Rejection of Application for registration u/s 12A(1)(ac)(iii) and u/s 80G(5) - assessee has non-complied during the hearing before the CIT(E) - HELD THAT:- On perusal of the documents, we find that no notice was ever received by the assessee. Accordingly, the compliance could not be made by the assessee.
AR requested that in the interest of justice the matter should be remanded back to the CIT(E) for fresh order. DR did not have any objection on this issue. Accordingly, this appeal is remanded back to the CIT(E) for fresh order.
In our considered view the reasonable opportunity was not given to the assessee for submission of his evidence and documents. We are, therefore, of the view that in the interest of justice would be served if the impugned order is set aside and the matters are remitted back to the file of the ld. CIT(E) for consideration there of afresh. We are not expressing any views on the merits of the case so as to limit the proceeding before the ld. CIT(E).
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2025 (6) TMI 1523
Rejecting renewal of permanent registration u/s 12AB and/ or 80G(5) - revenue submits that assessee was require to apply for regular approval of fund or for registration of trust, strictly in accordance, the procedure prescribed in this statute and the rules framed thereunder, otherwise it will become chaotic position for consideration of such application
HELD THAT:- We find merit in the submissions of the ld AR of the assessee that the grounds of appeal in his appeal is squarely covered by the decision of this Tribunal [2025 (2) TMI 1200 - ITAT SURAT] held that assessee-trust had been granted provisional registration which was valid till assessment year 2026-27 and assessee and applied for final registration before expiry of said period but Commissioner rejected same on ground that application of assessee was premature, since there was no bar to move an application before period of six months from expiry of provisional registration, matter was to be remanded back for consideration of application on merits.
Pune Bench of Tribunal in Avileen Education Foundation [2025 (1) TMI 1168 - ITAT PUNE] also held that where issue of grant of registration u/s 12A(1)(ac)(iii) has already been remanded back for de novo adjudication, it would be appropriate to remit issue of grant of approval u/s 80G(5) as well, being consequential, for de novo adjudication.
Thus, appeal is allowed for statistical purpose. CIT(E) is also directed to consider the plea of ld AR of the assessee for allowing registration under section 12A/12AB or approval of funds u/s 80G(5) from the date of respective application and to pass order in accordance with law. Appeals of the assessee are allowed for statistical purposes.
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2025 (6) TMI 1522
Exemption u/s. 11(1)(d) - intimation issued u/s.143(1) denying exemption - allegation of “income” as contemplated u/s. 2(24) as funds received by the assessee society under the various government schemes from Government of India - HELD THAT:- Assessee society is an implementing agency set up by the State Government of Chhattisgarh, i.e a simpliciter pass-through entity, wherein the funds received by it from the Government of India are to be utilized as per the stipulations in the sanction letters in accordance with broad guidelines of the scheme of “Rashtriya Gokul Mission” and, thus, it has neither any control over the funds nor any right to retain the unutilized amounts or the interest accrued on the same, if any, therefore, the factual position supporting the said claim would require necessary verification.
If the aforesaid claim of the assessee society is found to be in order, then, the funds claimed by the assesse society to have been received as an implementing agency i.e a pass-through entity from the Government of India under the “Rashtriya Gokul Mission” cannot be brought with the meaning of “Income” u/s 2(24) of the Act and subjected to tax in its hands.
Accordingly, we restore the matter to the file of the CIT(Appeals) with a direction to verify the factual position and redecide the appeal.
Also, the CIT(Appeals) is directed to verify in the course of the set-aside proceedings that as to whether or not the AO/CPC, Bengaluru while making the adjustments vide his intimation issued u/s 143(1) had complied with the statutory obligation that was cast upon him as regards putting the assessee society to notice about the proposed adjustment and called for his objections, as is required per the mandate of “1st proviso” and “2nd proviso” of Section 143(1) of the Act. - grounds of appeal raised by the assessee society are allowed for statistical purposes.
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2025 (6) TMI 1521
Validity of reopening of assessment u/s 147 - allegation of non-application of mind by the AO in taking approval from the appropriate authority u/s 151 - HELD THAT:- Perusal of Form for recording the reasons for initiating proceedings u/s 148 and for obtaining approval of the Pr. CIT, Delhi-8, New Delhi which is placed at Paper Book page 20 suggests that the AO mentioned the provisions under which the assessment was reopened as 147(b) of the Act. It is observed that the provisions of section 147(a)/147(b) have seized to be in the statute book from 1.4.1989.
Therefore, mentioning all these incorrect and non-existent sections for obtaining approval for recording the reasons for initiating proceedings u/s 148 is a clear case of non-application of mind by the AO and also by the authorities providing satisfaction u/s 151 of the Act. See Shyam Products P. Ltd2023 (1) TMI 1437 - ITAT DELHI as held there is non-application of mind by the AO while filling up the proforma for obtaining the approval from Commissioner u/s 151 of the Act and the ld. CIT also has granted approval in a mechanical manner.
Reassessment order passed u/s 147/143(3) of the Act for the AY 2009-10 is quashed - Decided in favour of assessee.
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2025 (6) TMI 1520
Reopening of assessment - period of limitation - notice beyond three years - as alleged assessee has bought scrips and sold the same scrips immediately within few seconds at a higher rate and huge profit has been booked on such transactions which according to the AO is non-genuine profit - HELD THAT:- A perusal of the assessment order shows that the Assessing Officer has no evidence in his possession of any asset which could or did represent income having escaped assessment since the profit so earned and credited to the Profit and Loss Account has already been utilized for repayment of loan.
Similarly, there is no evidence on record before the Assessing Officer that any expenditure in respect of a transaction or in relation to an event or occasion has escaped assessment. Thus, the first 2 conditions are not satisfied.
So far as the third clause i.e. an entry or entries revealing income chargeable to tax has escaped assessment is concerned, it is an admitted fact that the entry relating to trading in derivatives is already reflected in the books of account and the same has also been credited to the Profit and Loss Account and disclosed as income whereby the said entry does not reflect any income having allegedly escaped assessment. Thus the 3rd condition is also not satisfied.
Since the notice has admittedly been issued beyond a period of three years and since the Assessing Officer does not have any evidence in his possession of any asset which represents income having escaped assessment and since the entry relating to trading in derivatives has already been disclosed in the books of account by crediting the profit to the Profit and Loss Account, therefore, the mandatory requirements of time limit for issue of notice u/s 148 of the Act has not been satisfied.
Therefore, we agree with the contention of assessee that the notice in question is barred by limitation keeping in view of the specific and express provisions of section 149(1)(b) of the Act. Therefore, the notice u/s 148 being not in accordance with law is liable to be quashed. We, therefore, quash the notice issued u/s 148 of the Act being barred by limitation. Assessee appeal allowed.
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2025 (6) TMI 1519
Bogus purchases - purchases from the three tainted parties - CIT(A) deleted addition - HELD THAT:- On a perusal of the order of the CIT(Appeals), it transpires that the assessee had joined as a partner in M/s. Gauri Construction in A.Y. 2011-12, the year in which M/s Gauri Construction was converted into a firm from a proprietorship concern.
CIT(Appeals) further opined that when the bogus transactions of M/s Gauri Construction for the year A.Y.2010-11 were noticed by the Commercial tax Department subsequently, they were tagged alongwith the PAN of the partner, which by that time was the assessee. It was also observed by the CIT(A) that the notices of the A.O were addressed to M/s Gauri Construction but the PAN was used that of the assessee.
When all the evidences placed before the A.O were in the name of M/s. Gauri Construction, therefore, there was no justification on the part of the A.O to have drawn adverse inferences in the hands of the assessee.
CIT(Appeals) who had rightly vacated the addition and, thus, uphold the same. Assessee appeal allowed.
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