Home Case Index All Cases Income Tax Section Wise 2021 2021 (1) This

Law	-- All -- GST Income Tax Benami Property Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy FEMA Law of Competition PMLA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws
Court	-- Any -- Supreme Court SC Orders / Highlights High Court Appellate Tribunal Tribunal Appellate authority for Advance Ruling Advance Ruling Authority National Financial Reporting Authority Competition Commission of India ANTI-PROFITEERING AUTHORITY Commission Central Government Board DISTRICT/ SESSIONS Court Commissioner / Appellate Authority Other
Citation	--Year-- 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958 1957 1956 1955 1954 1953 1952 1951 1950 Upto 1949 - -Volume- 1 2 3 4 5 6 7 8 9 10 11 12 -
Landmark	Nil - N/A Referred in >= 2 Cases Referred in >= 4 Cases Referred in >= 5 Cases Referred in >= 10 Cases Referred in >= 15 Cases Referred in >= 25 Cases Referred in >= 50 Cases Referred in >= 100 Cases
Order by	TMI Citation Date of Decision

Advanced Search Options

Case Laws

Showing 421 to 440 of 1346 Records

• 2021 (1) TMI 927
  

  Validity of order passed by the Tribunal - Whether the order of the Tribunal is vitiated inasmuch as it fails to take into account relevant aspects viz. a. mode of annexation b. object of annexation c. beneficial enjoyment and thus stands vitiated? - Whether the first respondent ought to have allowed credit under the Capital Goods Scheme if not under the Inputs Scheme?

  HELD THAT:- In the light of the recent decision of the Hon'ble Division Bench of this Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX & THE COMMISSIONER OF CENTRAL EXCISE, [2015 (3) TMI 661 - MADRAS HIGH COURT] wherein an identical question was considered and the only difference being that the case arose under the CENVAT Credit Rules, which subsequently stood substituted by the MODVAT Rules.

  The substantial questions of law are answered in favour of the appellant/assessee.

  ---

• 2021 (1) TMI 926
  

  Levy of Entry Tax - petroleum based lubricating oil - Entry 67 of 3rd Schedule of Karnataka Tax on Entry of Goods Act, 1979 read with Entry 1(viii)(a) Notification bearing No. FD/11/CET/2002 dated 30.03.2002 - HELD THAT:- Section 3 of the 1979 Act is the charging Section, which mandates that there shall be levy and collection of tax on entry of any goods specified in First schedule into a local area for consumption, use or sale therein at such rates not exceeding 5% of the value of goods as may be specified retrospectively or prospectively by the State Government by a Notification. The aforesaid Section further provides that different dates on different rates may be specified in respect of different goods or different classes of goods or different local areas. First Schedule to the Act specifies the items or goods, on which tax is levied - Thereafter, the Finance Department of Government of Karnataka issued Circulars. By Circular dated 12.04.2006, it was provided that petroleum products, which are similar to ‘tar’ would be covered by the words ‘and others’. Similar view was taken in the Circular dated 02.05.2006 and it was provided that benzene, toluene and xylene are not covered under the Entry ‘tar and others’ or under any other sub entry, therefore, they are not petroleum products specified in the Notification. Thereafter, by Circular dated 09.04.2013, the Circular dated 12.04.2006 was withdrawn. However, the Circular dated 02.05.2006 issued by the I9nance Department of Government of Karnataka is in force.

  It is well established rule of interpretation of taxing statutes in words of Lord Simonds that subject is not to be taxed without clear words for that purpose and that every Act of Parliament must be read according to natural construction of its words - From perusal of the Entry 67 as well as Sl.No.1 of the Notification, it is evident that Entries seem to cover only petroleum based lubricating oil which entry tax is being paid by the appellant. The synthetic based lubricating oil is not a petroleum product and is therefore, not covered under the entry. Similarly, the grease and base oil have also not been specifically enumerated in the Notification and therefore, the same also cannot be subjected to entry tax. It is also pertinent to mention here that grease and base oil not being similar to tar cannot be classified within the expression ‘tar and others’ which are already been clarified by the revenue department vide Circular dated 02.05.2006. It is trite law that the Circulars issued by the department are binding on it.

  It is well settled in law that a decision of the court is only an authority for what it decides and not what can logically be deduced therefrom. It cannot be quoted for a proposition that may seem to follow logically from it and such a mode of reasoning assumes that law is necessarily a logical code, whereas it must be acknowledged that law is not always logical. It is equally well settled legal position, that court should not place reliance on a decision without discussing as to how the factual situation fits in with the fact situation of the decision, on which reliance is placed - the revisional authority could not have concluded in the fact situation of the case that the tribunal has failed to decide or has decided erroneously any question of law.

  Appeal allowed.

  ---

• 2021 (1) TMI 925
  

  Maintainability of application - writ applicant has preferred an Appeal under Section 107 of the Act challenging the order of the confiscation - HELD THAT:- As the appeal has already been filed and is pending before the appellate authority, there is no good or valid reason for us to entertain this writ application.

  Ms. Parikh, would submit that this writ application has been filed redressing the grievance with regard to the arbitrary action taken by the respondents. We may only say that while deciding the Appeal, the Appellate Authority can always go into the question as regards the legality and validity of the action taken by the authorities. We dispose of this writ application without expressing any opinion on the merits of the case, directing the Appellate Authority to immediately take up the appeal for hearing and decide the same in accordance with law.

  ---

• 2021 (1) TMI 924
  

  Deduction u/s 10 (10C) - applicant opted for Early Retirement Option (ERO), 2003 Scheme and received compensation - in the case of the writ applicant, he had not claimed such deduction - writ applicant was expected to prefer a revision application under Section 264 of the Act and not file a representation in that regard - HELD THAT:- We are of the view that, even if, the writ applicant had not claimed the exemption in his return of income for the year under consideration, he can always claim later in point of time.

  So far as the second ground on which the claim came to be rejected, Mr. Darshan Patel, invited the attention of this Court to the certain averments made in the Affidavit­in­ Rejoinder, writ applicant has tried to explain as above that it was an inadvertent mistake in labeling the application as a writ petition rather than a revision petition. We need not go into any further debate in this regard as the law has now been well settled by the Supreme Court in S. PALANIAPPAN VERSUS INCOME TAX OFFICER, CHENNAI [2015 (10) TMI 405 - SUPREME COURT]

  This writ application succeeds.Writ applicant is entitled to claim exemption under Section 10 (10 C) of the Act, 1961 for the amount received from the ICICI Bank Ltd. at the time of his voluntary retirement under the scheme, in accordance with law.

  ---

• 2021 (1) TMI 923
  

  Deduction u/s 35D - claim of the assessee with regard to stamp duty disallowed on the ground that the expenditure is capital in nature and not revenue expenditure - HELD THAT:- The expression 'in connection with issue for public subscription of shares in or debentures of the company' is an expression of wide import. The Supreme Court in 'INDIA CEMENTS LTD. Vs. CIT'[1965 (12) TMI 22 - SUPREME COURT] has held that expenditure on account of stamp duty even after introduction of 35D, is an admissible expenditure in connection with issue of public subscription. The aforesaid decision was relied upon in MAHINDRA UGINE AND STEEL CO. LTD [2000 (2) TMI 26 - BOMBAY HIGH COURT] and it was held that the aforesaid expression would improve stamp duty payable by the assessee on the debenture issue. In view of aforesaid enunciation of law, the expenses incurred by the assessee towards stamp duty in connection with issue for public subscription of shares in or debentures of the company is an allowable expenditure under Section 35D - Decided in favour of assessee.

  Deduction u/s 10A - assessee is engaged in the business of mobile added value services, which involve content development in its STP unit - HELD THAT:- Tribunal held that assessee has a dedicated studio in this STP unit where music related content is developed. The assessee procures music and other contents on the third parties. The assessee also uses its studios for content development - assessee is engaged in the activity of developing content and conversion of procured content into mobile readable format and the same would qualify to be classified as content development or data processing and the same would be covered under the notification dated 26.09.2000 issued by the Central Board of Direct Taxes.

  The High Court of Delhi in ML OUTSOURCING P. LTD [2014 (9) TMI 396 - DELHI HIGH COURT] and MCKINSEY [2015 (3) TMI 1226 - DELHI HIGH COURT] has interpreted the notification and has held that intention of the legislature is not to constrain or restrict but to enable the Board to include several services of products of similar nature in the ambit of Section 10A - notification covers within its ambit even the services which cannot be sent abroad. Thus, the Tribunal has rightly held that the assessee is entitled to benefit of deduction under Section 10A .

  Nature of expenditure - Expenditure incurred as legal and professional charges - AO held the same to be in the nature of capital expenditure - Tribunal, by following the decision of its co-ordinate Benches, has held that expenditure incurred by the assessee for conducting due diligence in report of a company which was to be acquired by the assessee is revenue in nature and has treated the same to be deductible expenditure under Section 37(1) - HELD THAT:- The aforesaid finding of the Tribunal is based on meticulous appreciation of material on record and does not call for any interference. In the result, the fourth substantial question of law is also answered against the revenue and in favour of the assessee.

  Depreciation on block of assets @60% - AO held that the media resource board is plant and machinery but is not a computer by holding it to be a telecom equipment and allowed depreciation at 15% as applicable to plant and machinery - HELD THAT:- The media resource boards work in conjunction and as part of computer servers and cannot be served as telecom equipment. In support of aforesaid finding, the Tribunal has relied the decision of special bench of Mumbai Tribunal in DCIT Vs. DATA CRAFT INDIA LTD. [2010 (7) TMI 642 - ITAT, MUMBAI] - Therefore, the Tribunal has rightly held that media resource boards cannot be treated as plant and machinery. The aforesaid finding cannot be termed as perverse. Thus, the fifth substantial question of law is also answered against the revenue and in favour of the assessee.

  Deduction under Section 80JJAA - assessee is providing telecom services and therefore, the assessee cannot be termed as an industrial undertaking - HELD THAT:- Tribunal by placing reliance on the decision of the TEXAS INSTRUMENTS (INDIA) P. LTD. allowed the claim of the assessee but it is pertinent to note that the decision of TEXAS INSTRUMENTS (INDIA) P. LTD. supra was challenged before this Court [2014 (3) TMI 150 - KARNATAKA HIGH COURT] and the matter was remitted to decide the matter afresh. However, we find that the Tribunal in paragraph 6.5.4 has rather recorded the conclusions and has failed to assign any reasons. Therefore, the matter insofar as it pertains to claim of the assessee for deduction under Section 80JJAA of the Act requires reconsideration by the Tribunal. Accordingly, the second substantial question of law is answered.

  ---

• 2021 (1) TMI 922
  

  Disallowance u/s 14A - larger disallowance proposed by the Assessee himself in the computation of disallowance under Rule 8D - HELD THAT:- As relying on M/S. MARG LIMITED VERSUS COMMISSIONER OF INCOME TAX CHENNAI [2020 (10) TMI 102 - MADRAS HIGH COURT] we dispose of the present appeal by answering question of law in favour of the Assessee and against the Revenue and by holding that the disallowance under rule 8D of the IT Rules read with Section 14A of the Act can never exceed the exempted income earned by the Assessee during the particular assessment year and further, without recording the satisfaction by the Assessing Authority that the apportionment of such disallowable expenditure made by the Assessee with respect to the exempted income is not acceptable for reasons to be assigned the Assessing Authority, he cannot resort to the computation method under Rule 8D of the Income-tax Rules, 1962.

  ---

• 2021 (1) TMI 921
  

  TP Adjustment - Comparable selection - Tribunal excluding M/s Vishal Information Technologies Ltd as comparable company of ITES segment in holding that M/s VITL outsources majority of its work ignoring the fact that outsourcing entails higher cost resulting in lower operating profit - Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding M/s Nucleus Netsoft & GIS (India) ltd., is not a comparable brushing aside the fact that it was taken as a comparable by the assessee on its own TP study and the fact that ITES is the primary business of the company? - HELD THAT:- From perusal of the relevant extract of the order passed by the tribunal, it is evident that the tribunal has neither considered evidence brought on record by the Transfer Pricing Officer and has neither considered the findings of the Transfer Pricing Officer as well as the dispute resolution panel and in a cryptic and cavalier manner has recorded a finding in favour of the assessee. No cogent reasons worth the name have been assigned by the tribunal for recording the findings. Therefore the order passed by the tribunal dated 23.06.2015 is hereby quashed. The substantial questions of law are answered accordingly. The matter is remitted to the tribunal for decision afresh in accordance with law by a speaking order.

  ---

• 2021 (1) TMI 920
  

  Condonation of delay in filing the returns - claim of deduction u/s 80P rejected - Appellant No.1 herein rejected the application filed under Section 119(2)(b) but the learned single Judge has set aside the said order and has remanded the matter to respondent No.3 for re-examination of the said application pertaining to condonation of delay in filing the returns for the assessment year 2018-19 - HELD THAT:- On perusal of the impugned order of the learned single Judge as well as the order of appellant No.1/respondent No.1 in the writ petition passed under Section 119(2)(b) of the Act, we find that the learned single Judge was right in setting aside the said order and remanding the matter - while remanding the matter, the same ought to have been remanded to respondent No.1 in the writ petition i.e., appellant No.1 herein. Therefore, with the aforesaid modification of the impugned order, the appeal stands disposed.

  Since a time frame of three months from the date of receipt of the certified copy of the impugned order was granted by the learned single Judge to complete the reconsideration of the application filed by the respondent herein seeking condonation of delay in filing the returns, we now extend the said time by three months from the date of receipt of certified copy of this judgment.

  ---

• 2021 (1) TMI 919
  

  Condonation of delay in filing the returns - claim of deduction u/s 80P rejected - Appellant No.1 herein rejected the application filed under Section 119(2)(b) but the learned single Judge has set aside the said order and has remanded the matter to respondent No.3 for re-examination of the said application pertaining to condonation of delay in filing the returns for the assessment year 2018-19 - HELD THAT:- On perusal of the impugned order of the learned single Judge as well as the order of appellant No.1/respondent No.1 in the writ petition passed under Section 119(2)(b) of the Act, we find that the learned single Judge was right in setting aside the said order and remanding the matter - while remanding the matter, the same ought to have been remanded to respondent No.1 in the writ petition i.e., appellant No.1 herein. Therefore, with the aforesaid modification of the impugned order, the appeal stands disposed.

  Since a time frame of three months from the date of receipt of the certified copy of the impugned order was granted by the learned single Judge to complete the reconsideration of the application filed by the respondent herein seeking condonation of delay in filing the returns, we now extend the said time by three months from the date of receipt of certified copy of this judgment.

  ---

• 2021 (1) TMI 918
  

  Addition u/s 68 - Bank statements of the lenders were not provided - HELD THAT:- Ledger account of both the creditors there are loans given to the assessee-company as well as assessee paid back the amounts to them. The debit of financial charges to the profit and loss account is not a relevant criteria to consider under section 68.

  Bank statements are part of the record which also did not show if any cash have been deposited in the bank accounts of the creditors for giving loan to the assessee-company. Their bank accounts clearly show that both the creditors have sufficient funds in their bank account and all the transactions are carried-out through banking channel only. Thus, the initial burden upon the assessee-company to prove the creditworthiness of the creditors and genuineness of the transaction have been established in the matter and burden upon assessee-company have been discharged

  A.O/CIT(A) did not do anything on the documentary evidences produced on record and no further enquiry have been made into the matter. Since the A.O. accepted the creditworthiness and genuineness of the transaction with the same creditors in subsequent assessment year as well, it’s stand proved on record that there were no justification for the authorities below to make any addition against the assessee-company. In view of the above discussion, we set aside the orders of the authorities below and delete the entire addition - Decided in favour of assessee.

  ---

• 2021 (1) TMI 917
  

  Disallowing u/s.43B - assessee could not explain the reasons for non-deposit before due date of filing the return of income, AO disallowed the same and added to the total income of the assessee - assessee explained that due to economic slowdown of infrastructure industry, the assessee company had suffered huge loss and as a result, all loan account from bank was declared as non-performing assets (NPA) thus could not deposit the amount before filing the return of income - HELD THAT:- In this case, the Assessing Officer disallowed the liabilities claimed by the assessee on the ground that same have not been paid before the due date of filing the return of income for the assessment year 2012-13. The assessee also could not produce any evidence regarding the payment before the lower authorities or before the Tribunal. Therefore, we do not find any infirmity in the orders of lower authorities in disallowing the liabilities. Hence, we uphold the disallowance and dismiss this ground of appeal of the assessee.

  TDS u/s 40(a)(ia) - Disallowance of interest u/s.40(a)(ia) - Benefit of second proviso to Section 40(a) (ia) - HELD THAT:- In this case, the assessee has furnished Certificates from Chartered Accountant in Annexure -A to Form 26A in respect of interest payment to NBFCs and the AO has not raised any objection or doubt regarding the certificate furnished from the Chartered Accountants regarding interest payment during the financial year 2011-12 but only basis for denying the benefit of second proviso to section 40(a)(ia) of the Act. Hon’ble Delhi High Court in the case of Ansal Land Mark Townships (P) Ltd., [2015 (9) TMI 79 - DELHI HIGH COURT]has held that the second proviso to Section 40(a) (ia) of the Act is declaratory and curative and has retrospective effect from 1st April 2005 being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. Respectfully following the same, we hold that the benefit of such proviso is available to the assessment for the transactions and payment made by it during financial year 2011-12 i.e. 1.4.2011 to 31.3.2012. Hence, we allow this ground of appeal of the assessee.

  Disallowance of interest on mobilization advance paid - assessee has paid interest to railway department towards mobilization advance, therefore, the AO disallowed the entire amount - HELD THAT:- Before the ld CIT(A), the assessee could furnish a Bill No.Con/SPTR/137 dated 10.5.2011 for ₹ 11,44,366/- issued by the Railway Department. CIT(A) restricted the disallowance to ₹ 34,40,315/- as the assessee could not furnish any documentary evidence. Before us also, the assessee could not furnish any documentary evidence in support of the partly disallowed claim of interest paid on account of mobilization advance from the Railway Department. Hence, we see no reason to interfere with the order of the ld CIT(A), which is hereby confirmed.

  ---

• 2021 (1) TMI 916
  

  Exemption u/s 80IC - initial assessment year - AO has rejected claim of the assessee of claiming 100% deduction under section 80-IC and allowed deduction only to the extent of 25% as per clause (ii) of sub-section 3 of section 80-IC - whether an assessee who sets up a new industry of a kind mentioned in sub-section (2) of Section 80-IC of the Act and starts availing exemption of 100 per cent tax under sub-section (3) of Section 80-IC (which is admissible for five years) can start claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit? - assessee contended that the Act does not create distinction between the old units i.e. units established prior to 7.1.2003 and new units established thereafter, which is being specifically highlighted by the Assessing Officer

  HELD THAT:- In Prl.CIT Vs. Aarham Softronics Civil [2019 (2) TMI 1285 - SUPREME COURT] the Hon’ble Supreme Court overruled its earlier decision in the case of Classic Binding Industries [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] by observing that it omitted to take note of the definition ‘initial assessment year’ contained in Section 80-IC itself and instead based its conclusion on the definition contained in Section 80-IB, which does not apply in these cases. The definitions of ‘initial assessment year’ in the two sections, viz. Sections 80-IB and 80-IC are materially different. The definition of ‘initial assessment year’ under Section 80-IC has made all the difference. The Court therefore held that judgement in the case of Classic Binding Industries (supra) does not lay down the correct law.

  An undertaking or an enterprise which had set up a new unit between 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh of the nature mentioned in clause (ii) of sub-section (2) of Section 80-IC, would be entitled to deduction at the rate of 100% of the profits and gains for five assessment years commencing with the ‘initial assessment year’. For the next five years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains. - in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become ‘initial assessment year’, and from that assessment year the assessee shall been entitled to 100% deductions of the profits and gains. Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6).

  If the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes ‘initial assessment year’ once again. However, this 100% deduction would be for remaining three years, i.e., 8th , 9th and 10th assessment years.

  In the light of the decision of the Hon’ble Supreme Court in Aarham Softronics that there is merit in this appeal by the assessee and the same is allowed.

  ---

• 2021 (1) TMI 915
  

  Revision u/s 263 - deduction of interest expenditure against the interest income was not in accord with the provisions of Sec. 57 - PCIT was of the view that allowing of the same by the A.O without verifying the records had rendered the order passed as erroneous in so far it was prejudicial to the interest of the revenue - HELD THAT:- At the first blush the claim of the assessee for setting off the interest paid on the loan raised (on security of the FDR’s) against the interest received on FDR’s appeared to be very convincing. However, we find that the issue is no more res integra and had been settled by the Hon’ble Supreme Court in CIT Vs. Dr. V.P Gopinathan [2001 (2) TMI 10 - SUPREME COURT] wherein had held, that interest on loan taken by the assessee from the bank on security of fixed deposit could not be reduced from his income by way of interest on the fixed deposit placed by him in the bank.

  In our considered opinion, the view taken by the PCIT in the case before us is absolutely in conformity with the aforesaid judgment of the Hon’ble Apex Court. Accordingly, finding ourselves in agreement with the view taken by the PCIT that the A.O had wrongly allowed the assessee’s claim for deduction of the interest paid on the loans against the interest received on the FDR’s, we uphold the order passed by him under Sec. 263 of the Act. - Decided against assessee.

  ---

• 2021 (1) TMI 914
  

  Deduction under Section 80IB(10) - non completion of the housing project for claiming deduction - HELD THAT:- In the present case, the assessee made an application on 30 November 2011; therefore, on this ground also the completion date is within the five years limitation - for assessment year 2013 – 14 identically the deduction u/s 80 IB 10 was disallowed by the learned assessing officer however on appeal before the learned and CIT- A allowed the claim of the assessee wide order dated 23 January 2018 - similarly for assessment year 2014 – 15 also the learned CIT appeal allowed the claim of the assessee as per order dated 10 May 2018. However, both these orders are in challenge before the coordinate bench - reasons given therein are required to be considered. An interesting fact has been recorded by the learned CIT – A for assessment year 2013 – 14 that during the financial year 2010 – 11 five of the units got registered in favour of the customers by the appellant company and another 291 units were transferred in financial year 2011 – 12 out of the total 346 units constructed by the assessee. Thus 86% of the total units were registered in the name of the ultimate customers before the end of the financial year 2011 – 12, which is also the cut-off date for getting the completion certificate. Therefore, it was held that that the project of the assessee was completed much before the cut-off date as per the provisions of the act i.e. 31st of March 2012. In view of this, we hold that the date of completion of the project has correctly been claimed that 21st of February 2011 and it is in accordance with the provisions of Section 80 IB (10) - we allow ground number [1] of the appeal of the assessee.

  Non-fulfillment of the condition laid down as per clause (f) of Section 80 IB (10) - AO has disputed the eligibility to claim deduction u/s 80 IB (10) on the ground that appellant has violated the provisions of clause (f) by allotting more than one residential unit to persons belonging to the same family - AR submitted that only proportionate disallowance could be made - HELD THAT:- This issue is now squarely covered in favour of the assessee by the decision of the honourable Bombay High Court in Kamat Constructions Pvt. Ltd. Vs ACIT , [2020 (12) TMI 90 - BOMBAY HIGH COURT]. Accordingly, we hold that only proportionate deduction to the extent of violation of the provisions of Section 80 IB (10) (f) can be made with respect to allotment of the units to the family members/relatives of the allottees. Accordingly, ground number 2 of the appeal of the assessee is allowed

  Charging of the interest u/s 234C and 234B - HELD THAT:- According to the proviso to provisions of Section 234C (1) (a) itself provides that nothing contained in the provisions of Section 234C shall apply to any shortfall in the payment of tax due on the returned income whereas such shortfall is on account of Under estimate or failure to estimate the amount of capital gain. Further, the case of the assessee is also supported by the decision of Smt. Premlata Jalani [2003 (7) TMI 62 - RAJASTHAN HIGH COURT] as well as Kumari Kumar Advani. [2016 (7) TMI 1600 - ITAT MUMBAI] assessing officer is directed to compute interest u/s 234C in accordance with the above decisions.

  As the assessee has earned capital gain as on 30th of March 2012, i.e. before the close of the year, the interest is chargeable u/s 234B of the act. Further, the interest u/s 234B of the act arises only at the close of the financial year, by that time the income from capital gain arose to the assessee and interest u/s 234B is chargeable to tax in accordance with the law.

  AO is directed to recompute the interest chargeable u/s 234C and 234B of the act.

  ---

• 2021 (1) TMI 913
  

  Assessment of trust - eligibility for any type of depreciation as the entire expenditure for the purchase of capital assets - HELD THAT:- This issue is covered in favour of the assessee by the judgment of Hon’ble Delhi High Court in the appeal for the Assessment Year 2008-09, wherein in the appeal preferred by the assessee in [2013 (9) TMI 451 - DELHI HIGH COURT] has allowed both the expenditure, i.e., capital expenditure and depreciation as application of income. This order of the Hon’ble High Court has been followed by the ITAT in assessee’s own case in the Assessment Yea₹ 2009-10, 2010- 11 and 2011-12.

  Addition of space rent income on the basis of disclosure in Notes to Accounts of the assessee - Rental income has not accounted in the books - assessee is following mercantile system of accounting - HELD THAT:- Long standing dispute between the Government Departments who are in possession of the Space in Pragati Maidan and assessee made endeavours for recovery of space rent - One of the organization viz. National Science Centre (NSC) had paid space rent to the ' assessee company @ ₹ 200/- per sq. mtr. p.a. in an earlier year. Subsequently, the rate of space rent was enhanced by the assessee company on year to year basis which was contested by the NSC. Accordingly, the assessee company has accounted for income @ ₹ 200/- per sq. mtr. per year in the Income & Expenditure Account as NSC had paid @ ₹ 200/- per sq. mtr. p.a., but contested the increase in rates.

  The element of enhanced space rent over ₹ 200/- per sq. mtr. p.a. (disputed amount) was kept out of books as "Contested dues not accounted for" and disclosed in the Notes to the Accounts. The assessee is essentially relying on the Accounting Standard 9 issued by the Institute of Chartered Accountants of India relating to Recognition of Income in accordance with para 10 which states that if at the time of raising any claim, it is unreasonable to expect ultimate collection, revenue recognition should be postponed.

  As regards the other department viz. Crafts Museum, they have not paid any space rent to the assessee company and are maintaining that they were in possession of the space even prior to the formation of the assessee company. On the same analogy of NSC and following AS 9, the assessee company has not raised any invoice for the space rent on Craft Museum any disclosed the disputed amount of space rent relating to the Assessment Year under reference, in the Notes to Accounts. Assessee has not recognised the licence fee pertaining to these departments as income in the books in accordance with para 10 of the Accounting Standard 9

  As decided in earlier years when income on account of space rent has not been accrued, as in the instant case due to dispute, there cannot be any rent even though entry in the books of account have been made on account of notional income. So, when the income would be received its taxability can be examined by the Revenue. Ld. DR for the Revenue has not brought on record any document if the dispute between the parties qua the space rent has been resolved. So, in these circumstances, we are of the considered view that there is no illegality or perversity in the findings returned by the ld. CIT (A) in deleting the addition - Decided in favour of assessee.

  ---

• 2021 (1) TMI 912
  

  Eligibility of deduction u/s 80P - assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959 - Denial of deduction as assessee was providing credit facilities to Non-members, namely, associate / nominal members - CIT(A) held that since nominal and associate members of assessee is more than 15% of the total membership, there has been a violation of provisions of Karnataka Co-operative Societies Act, 1959, and hence, the A.O. has correctly denied the claim of deduction u/s 80P(2)(a)(i) - HELD THAT:- In the instant case, admittedly, assessee has been accepting deposits and given loans primarily to associate / nominal members. the assessee-society is accepting deposits and also providing credit facilities to nominal / associate members far exceeding 15% of its total business. The A.O. has come to a categorical finding that regular members is less than 15%, whereas, non-members, i.e., nominal / associate members are exceeding 87% of the total members. This categorical finding of the A.O. has not been dispelled by the assessee before the Tribunal. Therefore, there is a clear violation of provisions dealing with non-members as per Karnataka Co-operative Societies Act, 1959. Therefore, the ratio of the judgment of the Hon’ble Supreme Court in the case of Citizen Co-operative Society [2017 (8) TMI 536 - SUPREME COURT] is clearly applicable to the facts of the instant case

  As decided in in the case of M/s.Vikasha Vividhoddesha Sahakara Sangha Niyamitha [2019 (11) TMI 1565 - ITAT BANGALORE]assessee could not controvert the categorical finding of CIT (A) regarding violation of the provisions of Karnataka Co Operative Societies Act, 1959 as noted above - Decided against assessee.

  ---

• 2021 (1) TMI 911
  

  TP Adjustment - comparable selection - TPO had rejected Jindal Intellicom Pvt. Ltd. and R System International Limited as non comparable companies while determining the Arm's Length Price (ALP) - HELD THAT:- Assessee is a captive entity (i.e. risk mitigated entity) mainly engaged in providing Information Technology (IT) enabled services in the nature of call center and low end back office support to its associated enterprises (AE) and billing them at cost plus 15%.

  Jindal Intellicom Private Limited company has been accepted as comparable company for assessment years 2011-12, 2012-13 and also 2014-15. That further, this company does not earn any revenue from sale of products. The only area of earning of revenue is from sale of services. This company is engaged in the call center business and hence, comparable company with that of the assessee. The TPO/AO is directed to include Jindal Intellicom Private Limited in the final list of comparables in respect of the assessee while determining the TP adjustment.

  R. System International Limited having different financial year cannot be a comparable company with that of the assessee company. It has been, therefore, rightly rejected by the TPO as well as DRP and that view is, hereby, sustained. Thus, ground raised in appeal by the assessee is partly allowed.

  Ninestars Information Technologies Limited company is functionally non comparable with that of the assessee company. That also, there is also non availability of reliable segmental report in respect of this company. We direct the TPO/AO to exclude this company from the final list of comparables with that of the assessee company.

  ---

• 2021 (1) TMI 910
  

  Not allowing business expenditure incurred against the business income - A.O not allowing cost of construction against the business income - appellant prays that cost of construction to be allowed against the amount received on issue of debentures - CIT(A) had refrained from adjudicating the aforesaid claim of the assessee, for the reason, that he held a conviction that now when he had vacated the treating of the proceeds received on issue of shares/debentures of ₹ 4.20 crores as the assessee’s income from business by the A.O, therefore, adjudication of the aforesaid alternative ground raised by the assessee would not be necessary.

  HELD THAT:- In our considered view, the piecemeal disposal of the appeal by the first Appellate Authority cannot be accepted. As per the settled position of law, the appellate authorities are obligated to dispose off all the grounds of appeal raised by the appellant before them so that multiplicity of litigation may be avoided.

  There can also be no escape on the part of the CIT(A) from discharging the statutory obligation cast upon him to deal with and dispose off all the grounds of appeal on the basis of which the impugned order has been contested by the assessee before him. We, thus, in all fairness and in the interest of justice, and in order to avoid multiplicity of litigation are of the considered view that the matter requires to be revisited by the CIT(A) for adjudicating the aforesaid alternative ground of appeal which was raised by the assessee in unequivocal terms before him, but had not been adjudicated by him - matter requires to be restored to the file of the CIT(A), with a direction to dispose off the aforesaid alternative ground of appeal that was raised by the assessee before him.

  ---

• 2021 (1) TMI 909
  

  Assessment u/s 153A - Validity of approval u/s 153D - order passed by the JCIT/Addl. CIT in the case u/s. 153D in determining the validity of the assessments framed under section 153A - Assessee submitted that approval under section 153D is based on non-application of mind and without any independent enquiry and overlooking/ ignoring important/significant aspect of earlier assessments being made in the hands of M/s. JIL etc - HELD THAT:- Assessments under section 153A have been framed by ACIT, Central Circle, New Delhi, therefore, prior approval of the JCIT in respect of each assessment year referred to under section 153A or 153B shall have to be obtained. Thus, no order of assessment or re-assessment shall be passed by the A.O. in the present cases in respect of each assessment years under section 153A/153B except with the prior approval of the Joint Commissioner

  Approval under section 153D have been granted by the JCIT without going through the seized material, appraisal report and other material on record. Thus, the approval is granted in a most mechanical manner and without application of mind. Therefore, same is invalid, bad in Law and void abinitio and as such all assessments under section 153A got vitiated and as such A.O. was not having jurisdiction to pass the assessment orders under section 153A.

  Granting approval under section 153D of the I.T. Act is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the JCIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D of the I.T. Act.

  While granting approval under section 153D, the JCIT shall have to peruse all the incriminating material and other seized material on record and proper procedure if have been adopted by the A.O. and appraisal report as well. The JCIT shall apply his mind to such material on record before granting his approval, otherwise, it will be invalid and bad in Law.

  AO passed the draft assessment order on 30.03.2015 and submitted the same for approval before the Addl.CIT who is stationed at a place 250 Kms away from Dehradun on 30.03.2015, the Addl. CIT gave the approval subject to certain modifications/amendments on 30.03.2015 and the AO passed the order on the same date i.e., 30th March, 2015. On a pointed query raised by the Bench as to whether any movement register is available to verify as to whether the files were sent to the Addl.CIT at Meerut, the Ld.CIT-DR submitted that there is no separate movement register for the purpose of sending for approval of the draft assessment orders by the AO to the JCIT/Addl.CIT, Central Range, Meerut. Thus the approval was given in a mechanical manner by the Addl.CIT to the draft assessment orders passed by the AO.

  It is not possible on the part of the Addl.CIT to go through the orders in about more than 100 cases on the very same day and give approval. Even if such approval has been given, it can be said that the same is nothing but a technical formality without application of mind. Further, as mentioned earlier, there is nothing on record to suggest that the files have in fact moved from Dehradun to Meerut for obtaining approval. Therefore, in our opinion, the mandatory provisions as required u/s 153D has not been complied with.

  When the approval given by the JCIT, Meerut is juxtaposed against the directions and provisions of the Income Tax Act pertaining to completion to assessment u/s 153B(1) of the Act, it can be said that the approval given by the JCIT is invalid. The Act envisages that the JCIT’s approval before passing of the final order. There is no provision to alter, change, modify, adjust, amend or rework the order once the approval has been accorded.

  We hold that there is no proper approval given u/s 153D in the instant case for which the assessment orders passed by the AO are not in accordance with law. We, therefore, have no hesitation in holding that the assessments completed by the DCIT do not stand in the eyes of law and, therefore, these orders are treated as null and void. - Decided in favour of assessee.

  ---

• 2021 (1) TMI 908
  

  TP Adjustment - comparable selection - Software Development services - HELD THAT:- Kals Information Technology System Ltd - Revenue from sale of products and development of software is concerned, the same has been combined under the segment "Application Software". The above discussion deciphers that this company is engaged in software products as well as Software Development services, income from both of which streams has been clubbed under the segment of "Application Software". Since the assessee in the instant case is involved only in rendering Software Development services to its AEs and is not into any software products, we hold that this company cannot be considered as a comparable. We, therefore, direct to exclude it from the list of comparables.

  Acropetal (Segmental) - It goes without saying that on-site services business model entails its own risks and rewards, which are incomparable to the services rendered from the business model of rendering services from own premises. One cannot construe both as one and the same. The assessee under consideration is not rendering on-site services - this company is also into Products, which is borne out from its balance sheet showing value of "Inventories and work in progress" at ₹ 3.37 crore. - This company has clubbed both the Product Development services and on-site services in one overall segment of "Information Technology services". Thus, it is overt that the IT services segment of this company, which has been construed by the TPO as comparable, cannot be so held as the assessee is neither rendering on-site services nor engaged in software products. We, therefore, direct to exclude this company from the list of comparables.

  Thirdware Solution Ltd. - this company, apart from rendering software services, is also engaged in software products. Segmental information has been given on the basis of geographical segments. Thus, it becomes crystal clear that no information regarding revenue from software services distinct from other activities is available on record. As the assessee is engaged only in rendering software development services, this company on the basis of figures available on record, cannot be considered as comparable. We, therefore, direct to exclude it from the list of comparables.

  Persistent Systems Private Ltd - Since the assessee has abandoned before the Tribunal the basis of turnover filter as was originally taken and harped on a new base of functional differences for exclusion of this company for the first time, we, being an appellate authority, cannot straight away accept or reject such contention unless the authorities below apply their mind to the functional differences as has been sought by the assessee. Without going into the merits, we set aside the impugned order and remit the matter to the file of AO/TPO with a direction to examine the assessee's contention on functional dissimilarities and then decide the question of its inclusion.

  Maveric Systems Ltd. - The assessee has placed on record a copy of the Annual report of the company for the year under consideration by claiming that the same is now available in the public domain. As regards the TPO's contention that the foreign exchange earnings of this company were less than 75%, we find from the Schedule 9 that it earned revenues from overseas at ₹ 34.86 crore as against Domestic revenue at ₹ 11.61 crore. Thus, it is evident that foreign exchange revenue of this company is more than 75%. Since the comparability or otherwise of this company has not been examined on merits because of the non-availability of the Annual report for the year under consideration, which has now been placed on record, we direct the AO/TPO to examine whether this company is comparable on merits.

  Quintegra Solutions Ltd.- except for incurring expenses in foreign currency, there is no mention of rendering on-site services. This company has also branches in certain countries outside India and the expenses in foreign currency were incurred by such branches. The Ld. DR also could not point out from the Annual report of this company that it rendered any on-site services. In such circumstances, we direct to include this company in the list of comparables.

  Silverline Technologies Ltd. - Since the expenses in foreign currency constitute a substantial percentage of its revenue and there is no reference to any foreign branch, it becomes evident that this company is engaged in rendering on-site services and the major component of its revenue is from such on-site services only. That being the position, this company loses its comparability tag with the assessee company. We, therefore, reverse the view of the DRP and direct to exclude it from the list of comparables.

  Thinksoft Global Services Pvt. Ltd. be excluded from the list of comparables and consequently reverse the view taken by the DRP on this issue.

  Accentia Technologies Ltd directed to exclude this company from the list of comparables.

  Coral Hubs Ltd. (Vishal Technologies Ltd.) this company is mainly engaged in outsourcing its business activities which is further proved from the fact that the Personnel cost is only ₹ 1.89 crore as against outsourcing cost of ₹ 54.47 crore. It goes without saying that outsourcing services is an altogether different business model vis-a-vis rendering services by engaging one's own employees and facilities - we direct to exclude this company from the list of comparables.

  Jeevan Softech (BPO segment) - The view point of the assessee that ITES segment is not comparable because of the inclusion of ERP revenue is, therefore, not sustainable because the figures of revenue and profit from the BPO segment is separately available and the nature of work admittedly matches with that of the assessee.

  The Directors' report unequivocally divulges that the nature of work under the ERP division is all in all different. It has been mentioned that: 'Your ERP division has also successfully completed the project implementation for various clients. For the current financial year, ERP division has chalked out new marketing strategies with a focused approach developing specialized vertical solutions for the prospects across India, standard horizontal markets and foray into the professional services segment for overseas clients'. Thus, it is palpable that the ERP division is not engaged in rendering any ITES. The same, therefore, cannot be clubbed with the BPO revenues of this company, for which separate figures are available in the "Segmental reporting'. We, therefore, countenance the inclusion of the BPO segment of this company with Revenue of ₹ 141.10 lakh and income of ₹ 52.99 lakh.

  Informed Technologies Ltd - assessee has challenged the inclusion of this company with the help of an additional ground - Several orders have been passed by various Benches of the Tribunal holding that an assessee is entitled to challenge a comparable for the first time before the Tribunal notwithstanding the fact that it remained uncontested before the TPO or the DPO. In view of the fact that the comparability of this company has not been examined by the authorities below, we direct the AO/TPO to scrutinize the comparability of Informed Technology and then decide on its inclusion or otherwise in the final tally of comparables.

  Not allowing working capital adjustment - not allowing working capital adjustment - HELD THAT:- We find from directions given by the DRP that the AO was directed to examine the computation of working capital adjustment worked out by the assessee - while giving effect to the directions of the DRP, this direction remained to be complied with. We, therefore, direct the AO/TPO to give effect to the direction given by the DRP .

  Risk adjustment - We remit the matter to the file of AO/TPO for computing the risk adjustment in the light of the directions given for earlier years.

  ---

1 ....181920212223242526........ 68