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2020 (11) TMI 665
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Misdeclaration in SVLDRS-1 Form - rejection of benefit under the scheme on the ground that the amount of penalty had not been stated in the SVLDRS-1 form which makes it an incorrect declaration - HELD THAT:- The issue as to whether an inadvertent mistake as regards the penalty imposed being not correctly stated in the SVLDRS-1 form, it has been decided by this Court in its judgment [2020 (6) TMI 38 - GAUHATI HIGH COURT] where it was held that
This writ petition also stands disposed of by requiring the petitioner to submit an application before the respondent authorities for correction to be made in the information provided in the Form SVLDRS-1 as regards the penalty imposed and upon such application being made, the respondent authorities would pass a reasoned speaking order thereon - Petition disposed off.
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2020 (11) TMI 664
Maintainability of appeal - monetary amount involved in the appeal - HELD THAT:- The matters are covered by the Litigation Policy of the Government being F.No.390/Misc./116/2017-JC dated 22.08.2019. Since the quantum of dispute in the present appeals is well within the amount as notified in the Litigation Policy before the Tribunal, it is deemed appropriate to dispose of the appeals in terms of litigation policy vide Board’s instruction being F.No.390/Misc./116/2017-JC dated 22.08.2019.
The appeals are disposed off under the National Litigation Policy.
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2020 (11) TMI 663
CENVAT credit - electricity - captive consumption - common Cenvat availed inputs and input services in the generation of electricity without maintenance of separate records - Rule 6(3)(i) of the CCR - extended period of limitation - interest - penalty - HELD THAT:- The self-same issue had fallen for consideration of the Hon’ble Allahabad High Court in the GULARIA CHINI MILLS AND OTHERS VERSUS UNION OF INDIA AND OTHERS [2013 (7) TMI 159 - ALLAHABAD HIGH COURT] wherein the Hon’ble Court observed that electrical energy generated from Bagasse is not covered under Chapter 27 of the CETA and is therefore, non-excisable thereby not attracting the provisions of Rule 6 at all as observed from para 22, 26 & 32 thereof. The said decision has also been upheld by the Hon’ble Supreme Court in the UNION OF INDIA VERSUS DSCL SUGAR LTD. [2015 (10) TMI 566 - SUPREME COURT].
Even after the insertion of the Explanation 1 Rule 6 of the CCR with effect from 1 March 2015 equating non-excisable goods with exempted goods for the purpose of Rule 6 of the CCR, the factual position remains that no Cenvat availed inputs were used by the Appellant in the generation of electricity from Bagasse. Bagasse remains non-excisable and the question of availing any credit thereon does not arise. That the Appellant had maintained separate records and refrained from availing any credit on the other indirect inputs is also evidenced from the CA Certificate dated 22 February 2017 which has been sought to be refuted by the Adjudicating Authority on the ground that the same is limited to non-availment of credit on few inputs only. However, the adjudicating authority has not referred to any other inputs over and above, those mentioned in the CA Certificate. Therefore, the Certificate of the expert could not have been discarded without any specific and cogent evidence concerning the disputed period.
Time Limitation - HELD THAT:- The Adjudicating Authority himself has accepted that a Notice for the prior period was issued on the self-same issue for the period 2013-14 and the demand covering of 6% under Rule 6(3) was dropped by the Adjudicating Authority therein. Under these circumstances, the subsequent Notice could not have been issued invoking the extended period of limitation.
Appeal is allowed on merits as well as limitation
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2020 (11) TMI 662
Validity of impugned notice of default assessment of tax and interest and the impugned notice of default assessment of penalty - Section 137 of the Delhi Land Reform Act, 1954 - assessment years 2012-13, 2014-15, 2015-16 and 2016-17 - DVAT Act - HELD THAT:- Since the demands and penalties are the basis on which the impugned writ of demand dated 29th September, 2020 has been issued, this Court is of the view that petitioner must challenge the demands and penalties in accordance with the statutory mechanism.
At this stage, Mr. Rajesh Mahna, learned counsel for the petitioner states that petitioner shall withdraw the present writ petition and challenge the demands and penalties in accordance with the DVAT Act. The statement made by Mr. Rajesh Mahna is accepted by this Court and the petitioner is held bound by the same. To facilitate the filing of the said proceedings, the writ of demand dated 29th September, 2020 is stayed for a period of six weeks.
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2020 (11) TMI 661
Violation of principles of natural justice - Validity of assessment order - purchase omission committed by the petitioner - sales suppression - mismatch between the sales and purchases - TNVAT Act - HELD THAT:- Even though the petitioner has raised all the aforementioned contentions in the reply dated 07.03.2018 to the pre revision notice, dated 07.02.2018, the respondent under the impugned assessment order has not considered the same, but has passed the assessment order only based on the alleged sworn statements signed by the petitioner at the time of inspection by their Enforcement Wing Officials at the place of business of the petitioner. As seen from the impugned assessment order, no personal hearing was afforded to the petitioner before passing of the impugned assessment order.
This Court is of the considered view that principles of natural justice have been violated by the respondent before passing of the impugned assessment order and therefore, the Writ Petition is maintainable - the matter is remanded back to the respondent for fresh consideration and the respondent shall pass final orders on merits and in accordance with law after affording sufficient opportunity to the petitioner including granting them the right of personal hearing within a period of twelve weeks from the date of receipt of a copy of this order.
Petition allowed by way of remand.
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2020 (11) TMI 660
Validity of pre-assessment notices - alleged mismatch between the details contained in the annexures to the petitioners' returns - HELD THAT:- These Writ Petitions are pre-mature. It is true that the Officer has called upon the petitioner/assessee to appear and submit such details as may be available with it to substantiate the alleged mismatch between the details contained in the annexures to the petitioners' returns vis-a-vis the details contained in the annexures to the returns filed by the supplying/purchasing party dealers.
This Court in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [2017 (3) TMI 536 - MADRAS HIGH COURT] has held that cases of mismatch should be addressed in a scientific manner and has also directed the setting up of a central mechanism to facilitate sharing of data inter se assessing officers to rule out mismatch of factual particulars. It appears that this central mechanism is yet to be constituted.
What is relevant is that there should be a complete and total transparency in regard to the materials/data relied upon by the Department in framing of assessments and the sharing of the materials with the assessee prior to completion of assessment. I hardly need to reiterate that the ratio of the decision in JKM Graphics binds the Department strictly. The Commissioner has, in Circular No.3 of 2018 dated 18.01.2018 directed all assessing officers to keep assessments involving the issue of mismatch pending till such time a central mechanism is put in place.
In the present matter, Ms.Madhiri, on instructions, confirms that the details of third party dealers have, in fact, been, collated and are available with the Officer. In such circumstances, proceedings may well proceed and no longer await setting up of a central sharing mechanism, as its purpose stands achieved in this matter - Writ Petitions are dismissed as pre-mature.
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2020 (11) TMI 659
Summon Order - non-applicability of the Payment & Settlement Systems Act, 2007 - It was submitted on behalf of the petitioner that the prescribed procedure as provided under the Payment & Settlement Systems Act,2007, for determination of the aspect of liabilities for alleged commission of offences is provided thereunder and that the offences mentioned under the said enactment are not completely in pari materia with the provisions under the Negotiable Instruments Act, 1881 - HELD THAT:- Even the parties to CC No. 1566/2019, 1565/2019 (out of which the impugned order arises) and CC No. 1567/19, do not relate to the same parties and apparently no such common order as the order dated 11.3.2019 could have been passed in relation to CC No. 1565/19 with other cases 1566/19 and 1567/19. Furthermore, it was also essential for the learned Trial Court to consider the aspect of the applicability or otherwise of the provisions of the Payments & Settlement Systems Act, 2007, read with the terms of the contours of the complaint in CC No. 1565/19, in as much as it has been submitted specifically on behalf of the petitioner that the petitioner is entitled to be tried, if required, to be so tried under the appropriate provisions of law.
Matter remanded back to the learned Trial Court to consider the aspect of summoning or otherwise of the accused in CC No. 1565/19 in terms of the averments made in the complaint CC No. 1565/19 qua the applicability of the provisions of the Payment & Settlements Systems Act, 2007 read with the provisions of the Negotiable Instruments Act, 1881, which be so determined in accordance with law - petition allowed by way of remand.
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2020 (11) TMI 658
Grant of retrospective registration with effect from 01.07.2017 for petitioner's Registration Certificate dated 07.06.2018 - TNGST Act - HELD THAT:- Whether at all the petitioner is entitled for a relief sought for in his representation, dated 14.09.2020 is concerned, it is for the fifth respondent to consider the same on merits and in accordance with law. The petitioner relied upon two decisions of the Hon'ble High Court of Kerala in his representation, which according to him, enables the fifth respondent to validate the petitioner's registration from 01.07.2017 itself. The grounds raised by the petitioner in his representation, will have to be considered by the respondents on merits and in accordance with law and in the light of the decisions referred to by the petitioner. No prejudice will be caused to the respondents if the representation of the petitioner is considered by them, on merits and in accordance with law.
This Court directs the fourth and fifth respondents to consider the petitioner's representation, dated 14.09.2020 seeking for validation of his registration from 01.07.2017 itself and pass final orders on merits and in accordance with law - Petition disposed off.
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2020 (11) TMI 657
Principles of Natural Justice - Validity of assessment order - replies have not been considered by the respondents under the impugned assessment order - HELD THAT:- In the instant case, the objections raised by the petitioner through their various replies, in which they have reiterated that they are ready and willing to produce books of accounts, were not considered in the impugned assessment order. But the impugned assessment order only based on the alleged deposition made by the petitioner before the Inspecting Officials that they are not maintaining books of accounts without any independent assessment. This Court has also perused and examined the various replies sent by the petitioner and as seen from the said replies, there is no admission on the part of the petitioner that they were not maintaining books of accounts at the time when the Inspecting Offiicials visited the petitioner's place of business.
It is also the contention of the petitioner that they have claimed only the eligible input tax credit and there is no bogus claim. However, as seen from the impugned assessment order, as observed earlier, the respondents have mechanically and blindly accepted the alleged statement given by the petitioner before the Inspecting Officials without independently giving reasons after duly considering the objections raised by the petitioner, wherein, they have categorically pleaded that they are always ready and willing to furnish books of accounts to the respondent. The respondents have also not duly considered in the impugned assessment order with regard to the petitioner's claim of input tax credit as per GSTR-3B filed by him.
The impugned assessment order passed by the second respondent is arbitrary and is in violation of the principles of natural justice, since no sufficient opportunity was granted to the petitioner nor did the respondents consider all the objections raised by the petitioner - matter is remanded back to the second respondent for fresh consideration and the second respondent shall pass final orders on merits and in accordance with law - Petition allowed by way of remand.
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2020 (11) TMI 656
Grant of Anticipatory Bail - excise duty evasion case of ₹ 150 crores - It is submitted that investigation in the present case has already been concluded and the amount deposited by the applicant/accused is sought to be adjusted towards the final adjudicated amount - HELD THAT:- The applicant/accused is alleged to be involved in a duty evasion case of ₹ 150 crores. Even during the course of investigation, it is informed that he was not forthcoming on certain vital issues of investigation and he is giving evasive replies to the query of the investigating agency - Ld. SPP has informed the court that applicant accused is involved in the commission of an offence u/s 9 (b), (bb), (bbb) and (bbbb) of the Central Excise Act, 1944. It is further informed by Ld. counsel for department that applicant/accused is playing hide and seek and intends to take undue benefit of the fact that after five years of the commencement of investigation i.e. September 2020, as investigation commenced in September, 2015, the department would not be in a position to take the investigation to a logical conclusion
Considering the nature of allegations involved in the present case,this is not a fit case to grant anticipatory bail to the applicant/accused, hence, his bail application stands rejected.
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2020 (11) TMI 655
Stay of penalty demand subject to payment of 20% of the said amount - Petitioner also sought to restrain the respondents from initiating recovery of any demand of penalty imposed on the petitioner for the relevant assessment years - HELD THAT:- This Court is of the opinion that even if the present writ petition(s) are dismissed at this stage, the maximum amount that the petitioners can be directed to deposit pursuant to the impugned orders and circulars issued by the CBDT would be 20% of the remaining demand which can only be ₹ 1,71,03,416/-.
Keeping in view the aforesaid factual scenario, this Court is of the view that there is no reasonable ground for the revenue to hold the excess amount i.e. ₹ 8,28,96,584/- and the same is directed to be released to the petitioners within four weeks. With these directions, present writ petitions and pending applications stand disposed of.
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2020 (11) TMI 654
Computation of taxable income - interest accrued on non performing assets - addition made under Section 40(a)(ia) - assessee maintaining mercantile system of accounting - Tribunal held that the provision for non performing assets made by assessee is proper as it is done as per RBI guidelines - whether RBI guidelines cannot override the mandatory provision of Section 145 of the I.T. Act? - HELD THAT:- First substantial question of law has already been answered by a bench of this court vide judgment in The Urban Co-operative Bank Ltd [2014 (10) TMI 740 - KARNATAKA HIGH COURT ] and Special Leave Petition against the aforesaid order has been dismissed by Supreme Court keeping the question of law open. The aforesaid aspect of the matter could not be disputed by the learned counsel for the revenue. For the reasons assigned above the first substantial question of law is answered against the revenue and in favour of the assessee.
Deduction for provision for bad and doubtful debt - Benefit under Section 36(1)(viia) - assessee has to first set off the bad debt written off against the provision made under Section 36(1)(viia) of the Act - HELD THAT:- This court in Canfin Homes Ltd. [2011 (8) TMI 178 - KARNATAKA HIGH COURT] after taking note of Section 145 of the Act has held that once a particular asset is shown as non performing asset then the assumption that it is not yielding any revenue. When an asset is not yielding any revenue, the question of showing that revenue and paying tax would not arise. The contentions, which are sought to be raised by learned counsel for the revenue do not arise for consideration in the context of substantial question of law, which has been framed by this court. The concurrent findings have been recorded by the Commissioner of Income Tax (Appeals) as well as tribunal in this regard, which cannot be termed as perverse. - Decided in favour of the assessee.
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2020 (11) TMI 653
Deduction u/s.10A - assessee's activity of human resources services are IT enabled services - whether assessee was only making available the data base of qualified IT personnel and entitled to deduction u/s. 10A? - HELD THAT:- Section 10A of the Act deals with special provision in respect of newly established undertaking in Free Trade Zone (FTZ) and provides for deduction.
The assessee admittedly is involved in providing human resource services and from the perusal of the order passed by the AO it is evident that if the nature of activity of the assessee is maintenance of computerized database with regard to various types of qualified Information Technology personnel available in India and the company provides the customers with information to potential candidates, which would meet the requirements on the customers.
Role of the company is to create an electronic database of qualified personnel and transmit data through electronic means to the client. CIT (Appeals) has also found that the assessee is in the business of supply of manpower from India to its Foreign clients after their recruitment in India. Thus, irrespective of the fact whether or not the assessee provides training to its employees or to the employees who are recruited by its clients, since, the assessee is engaged in providing human resource services, its case is squarely covered by Notification dated 26.09.2000. Therefore, the assessee is entitled to the benefit of deduction under Section 10A of the Act. - Decided in favour of assessee.
In view of preceding analysis, the substantial questions of law framed by a bench of this court answered against the revenue
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2020 (11) TMI 652
TDS on interest on borrowings - Assessment of Trust - Tribunal upholding the order of the lower authorities that the share of the beneficiaries is indeterminate and therefore the appellant is liable for tax at maximum marginal rate? - Power of Tribunal when it disagree with earlier decision of Tribunal - as per assessee individual beneficiaries for whose benefit the funds have been borrowed do not have taxable income and are not liable to deduct tax at source - Application of principle of mutuality - HELD THAT:- The Substantial Questions of Law raised in this appeal were considered viz., in the case of Sarvodaya Mutual Benefit Trust, Thellar [2019 (7) TMI 1151 - MADRAS HIGH COURT] wherein held there are only two methods of dealing such a situation. Firstly, if the decision is per incurium, a finding to the said effect has to be given. Secondly, the Court or the Tribunal can refuse to follow the decision by distinguishing it on the factual matrix. If for other than these two reasons, the Court or the Tribunal is of the view that the decision rendered earlier is not acceptable to it, then the option is to refer it to a Larger Bench of the Court or the Tribunal.
The Methodology adopted by the Tribunal, while passing the impugned order, is incorrect. Therefore, we are inclined to remand the matter to the Tribunal for fresh consideration. We left it open to the Tribunal to take note of the decision in Sarvodaya Mutual Benefit Trust [2013 (11) TMI 1270 - ITAT CHENNAI] and if for reasons acceptable to it, the decision can be applied to the facts of the case which is well open to do so, or for if any other reasons, the decision is found to be not acceptable to the Tribunal, then the matter may be referred to the Larger Bench of the Tribunal for consideration in an appropriate manner.
Thus the appeal by the appellant / assessee is allowed, impugned order is set aside and the matter is remanded to the Tribunal for fresh consideration.
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2020 (11) TMI 651
TP Adjustment - comparable selection - Comparability analysis - HELD THAT:- Accentia technologies Ltd - Several judgments relied upon wherein this comparable is rejected on functionally being different and absence of any segmental data as well as occurring of any extraordinary events as discussed above did not happen in the case of this comparable for this year. In view of this, the decisions relied upon by the assessee does not help the case for exclusion of the above comparable. In view of this we confirm the order of the learned TPO/DRP in including the above comparable company for the comparability analysis of the profit margin of the assessee.
ICRA Techno analytics Ltd - This company is engaged in software development and consultancy as well as engineering services, Web development hosting and subsequently diversified into the domain of business analytics and business process outsourcing. Further though it is mentioned that company is engaged in consultancy business as also in software development, therefore this company cannot be compared with the assessee appellant which does not carry on such activity. Naturally the activity of software development and consultancy are altogether different from the functional profile of the assessee. Therefore we direct the learned transfer pricing officer to exclude the above comparable.
Eclrex services Ltd - In view of this fact that assessee is not a KPO, the above comparable is required to be excluded. Ld TPO is directed accordingly to exclude this comparable.
TCS E serve Ltd - We accept the argument of the assessee that such a large comparable cannot be used to determine ALP of an international transaction of the assessee. Therefore we direct the learned transfer pricing officer to exclude TCS E Serve Limited.
Infosys BPO Ltd, which is having the turnover more than 27 times, than the revenue of the assessee. Therefore, for the reasons given by us for exclusion of TCS E Serve Limited we also direct the learned transfer-pricing officer to exclude Infosys BPO Ltd from the comparability analysis.
R systems international Ltd with different accounting period compared to the assessee - Though R Systems International Ltd follows calendar year as its accounting year, its financial for the financial year can be recast by considering its quarterly financial results.
Several coordinate benches have taken this view therefore, we also direct the assessee to reconstruct the financial results of this comparable by producing credible information with respect to eliminating and includible quarter before the learned transfer-pricing officer.Ld TPO is directed to examine the same and if found in order, include this comparable in the comparability analysis.
Interest on overdue receivable from associated enterprise - Overdue receivable from associated enterprise as an international transactions - HELD THAT:- As working capital adjusted margin were considered with respect to all the comparables, therefore, we do not find any reason to further sustain any adjustment on account of interest on outstanding receivables from its associated enterprise.
As the outstanding of associated enterprise is shown as debtors and is covered in the working capital adjustment itself, it amounts to double addition. Had the working capital adjusted margin were not taken in case of comparable company, this addition/adjustment would have been worth considering. We direct the learned transfer pricing officer to delete the addition on account of interest on overdue receivable from associated enterprise. Accordingly ground of the appeal is allowed.
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2020 (11) TMI 650
Bogus LTCG - exemption u/s 10(38) on sale of shares denied - investigation carried out by the Investigation Wing, Kolkata wherein certain persons were found indulged in providing accommodation entries - assessment based on statement of third party - information so gathered by the AO were not made available or confronted to the assessee - HELD THAT:- AO has narrated the modus operandi of various entry providers which is a general statement so far as the indulgence of certain persons in providing the accommodation entry of bogus long term capital gains as well as other transactions. However, in the said narration of modus operandi, there is nothing against the particular transaction of purchase and sale of shares by the assessee.
AO has specifically mentioned that during the course of enquiry in certain cases it has come to light that large scale manipulation has been done in the market price of shares of certain companies listed on Stock Exchange by a group of persons working as a syndicate for the purpose of providing entry of tax exempt bogus long term capital gains to large number of beneficiaries in lieu of unaccounted cash.
These observations of the AO in the assessment order cannot constitute any tangible material or evidence to show that the transaction of the assessee is bogus being an accommodation entry.
No such information/documents/statementswas made available to the assessee thereby violating the basic principle of confronting the assessee with the documents which the Revenue wishes to rely against the assessee.
In the assessment order so passed, the AO has made reference to a statement of Shri Vipul Vidur Bhatt recorded u/s 132 during certain search operations by the Investigation Wing, Mumbai and has relied on the same for holding the transaction as bogus by availing the accommodation entry of long term capital gain and beneficiary of the bogus LTCG scam.
As the assessee was again not confronted with such statement during the show-cause notice and he came to know of the same from perusal of the assessment order, he raised the objection before the ld CIT(A) that no such statement of Shri Vipul Vidur Bhatt recorded u/s 132 was made available to him during the course of assessment proceedings and secondly, he deserves a right to cross-examine Shri Vipul Vidur Bhattwhose statement is being used against the assessee.
During the appellate proceedings, the assessee was not made available any such statement and even the right of cross examination was denied by the ld CIT(A) who exercises the co-terminus powers as that of the AO. Thus, in view of the decision of CIT vs A.L Lalpuria Construction (P) Ltd [2013 (10) TMI 316 - RAJASTHAN HIGH COURT] and CCE vs. Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] the assessment based on statement of third party without giving an opportunity to the assessee is not sustainable in law.
Therefore, the statement of a third party cannot be sole basis of the assessment without given an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. - Decided in favour of assessee
Claim u/s 10(38) - Assessee has discharged the necessary onus cast on him in terms of claim of exemption of long term capital gains u/s 10(38) of the Act by establishing the genuineness of transaction of purchase and sale of shares and satisfying the requisite conditions specified therein and the gains so arising on sale of shares therefore has been rightly claimed as exempt u/s 10(38) of the Act. Accordingly, in the facts and circumstances of the case, we set-aside the order of the ld. CIT(Appeals) and the claim of the assessee u/s 10(38) is allowed. The matter is thus decided in favour of the assessee and against the Revenue.
Disallowance of interest - AR submitted that the appellant had interest bearing funds - HELD THAT:- Firstly, it is noted that the assessee has interest free funds more than interest bearing funds and in such cases of mixed funds, the Courts have held and upheld the presumption that where any interest free advances have been given, the same are given out of interest free funds. The same is however subject to caveat where it is established that interest bearing funds have a direct nexus and have been utilized in interest free advances. In the instant case, the Revenue has not established any such direct nexus which establishes that interest bearing funds have been utilized for the purposes of making interest free advances. Secondly, the AO has held that assessee has not received any interest income from the partnership firm which we found factually not correct as the assessee has received interest from partnership firm - disallowance of interest is hereby deleted and the ground of appeal so taken by the assessee is allowed.
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2020 (11) TMI 649
Correct head of income - fixed deposit interest income - Income from Business & Profession or Income from Other Sources - HELD THAT:- We find that the facts of the assesee involved for the AY 2013-14 i.e the year under consideration are exactly identical with that facts prevailing in AY 2011-12 & 2012-13. We find that for the AY 2011-12, this Tribunal in assessee’s own case [2018 (6) TMI 1725 - ITAT MUMBAI] had already adjudicated the very same issue in dispute before us and had dismissed the appeal of the revenue as held interest earned by the assessee was obviously attributable and incidental to the business carried on by it, that it would not be correct to say that this interest was totally de hors the business carried on by it. It is well-settled that interest can be assessed under the head Income from other sources, only if it cannot be brought within one or the other of the specific heads of charge. In the case before us the interest income is clearly and justifiably assessed as business income. In short, the case under consideration is not a case of depositing unutilized and surplus money by the assessee to earn interest and, therefore, the interest earned by the assessee cannot be assessed as Income from other sources - Decided in favour of assessee.
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2020 (11) TMI 648
TDS u/s 195 - additions made u/s 40(a)(ia) - non-deduction of tax at source on payments made to tribals and non-tribals - violation of provisions of section 197(1) - HELD THAT:- Considering the binding decision of Hon'ble Jurisdictional Tribunal on identical issue in KOMORRAH LIMESTONE MINING CO. LEARNED [2019 (6) TMI 1558 - ITAT GAUHATI] disallowances of payment to tribals whose incomes are exempt u/s 10(26) is to be reversed. In respect of payment to non-tribals, assessee claim is that the recipients disclosed the payments in their respective returns of income. But no documentary evidence in this regard was filed. The non-tribals payees have to satisfy the condition laid down in first proviso to sub-section(l) of section 201. Since no evidence in this regard was furnished, the payments to non-tribals have to be disallowed.
We decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition in respect of payments made to individuals who are specified as Schedule Tribes and confirmed the addition in case of payments to Non-Schedule Tribes. His order on this issue is therefore upheld and the grounds of appeal of the Revenue are dismissed.
Disallowance on account of non-deduction of tax at source on payments made to non-tribals as sustained by ld CIT(A) - HELD THAT:- If above payees have included the receipts in their books of accounts and have offered for taxes then the disallowance on account of non- deduction of TDS will not arise. That is, if these payees have included the receipts in computation of the total income and return of income then it would be sufficient compliance of TDS provisions and no disallowance should be made under section 40(a)(ia) of the Act. Therefore, we direct the Assessing Officer to examine whether these above noted payees had included the receipts in their books of accounts/computation of total income. If they had included the receipts in the books of accounts/ computation total income, then in that situation, no any disallowance should be made. However, if these payees did not include the receipts in their books of accounts/ computation of total income, then the Assessing Officer may make the disallowance in accordance with law. Therefore, we restore this issue to the file of the Assessing Officer for statistical purposes.
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2020 (11) TMI 647
Reopening of assessment u/s 147 - purchase of the land was out of gifts/ loan received from relatives/ friend - Notice merely on the basis of presumption and on the basis of information received - whether any tangible material and live link of concealment of income? - contention of the assessee is that the assessing officer has not applied his mind before reopening of the assessment - HELD THAT:- No merit in this contention of the assessee as the material regarding purchase of property was not available before the assessing officer. As the claim of the assessee was before the assessing officer was that he received gift from his family members and friend. In the absence of material evidence supporting such claim the assessing officer was justified in reopening of assessment.
Admittedly, in response to notice issued before reopening of the assessment, it was stated that the source of investment was gift and loan from relatives and friend. But no evidence proving creditworthiness of persons was placed before assessing officer. It is noticed that grand-mother, mother, mother-in-law and wife of the assessee from whom he received gift are housewives. They do not have independent source of income except the gift received and savings made out of household expenses. The assessee did not place any evidence proving their independent source of income. Hence, no fault can be found in the action of assessing officer for reopening of assessment.
Addition and enhancement made by the Ld. CIT(A) invoking the provision of section 68 - HELD THAT:- Looking to the facts of the present case when the assessee is claiming that the source of investment was from the gifts given by the family members and considering the facts that the assessing officer has verified the factum of gifts received by the assessee and partly granted the relief. There was no credible evidence before the Ld. CIT(A) to rebut the findings of assessing officer. The assessee placed documents related to sale of property by father-in-law and mother-in-law - entire evidence could not be brushed aside without making proper verification. The Ld. CIT(A) was not justified enhancing the income. Therefore, we direct the assessing officer to delete the addition.
Addition on declaration made in the return - assessee had placed on record all evidences regarding receipt of gifts etc. from the family members - HELD THAT:- It is settled law that only the receipt that partake character of income is required to be taxed. If receipt is in the nature of gift which does not partake character of income would certainly be not taxable - issue related to gift/loan received from wife, relatives and friend is restored to the file of the assessing officer for verification of veracity of the claim of the assessee - AO is hereby directed to re-examine the issue of gift and loan of the aforesaid persons. If the claim of the assessee is found correct he would delete the remaining addition made in this respect. The grounds of the assessee are partly allowed in the terms indicated hereinabove.
Disallowance of opening balance of capital - As contended on behalf of the assessee that the ld. CIT(A) did not consider opening capital as out of gift from father and other family members - HELD THAT:- As the opening balance was part of the enhancement made by the ld. CIT(A) as we have deleted the enhancement. Therefore, this ground of the assesseee’s appeal is allowed.
Low marriage Expenses addition - HELD THAT:- Looking to the facts of the case, we do not see any infirmity into the finding of the authorities below. The addition made on account of low marriage expenses is hereby sustained.
Penalty u/s 271(1)(c) - HELD THAT:- In this case in quantum appeal substantial addition made by the assessing officer has been deleted and rest of the additions made has been set aside for verification of the assessing officer. Under these facts, we hereby set aside the penalty order and direct the AO to delete penalty in respect of additions deleted and additions in respect of issues which have been set aside to the file of Assessing officer for verification.
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2020 (11) TMI 646
Bogus LTCG - Non genuine Share Application Money (Share Capital) - notice u/s. 133(6) has not be responded - finding of the investigation wing of the Income Tax Department that assessee was receipt of bogus accommodation entries from Shri S.C. Shah Group of companies - HELD THAT:- Lower authorities have noted that notice u/s. 133(6) has not be responded. Assessee has submitted that the assessee was not required to produce the director of the investor company. We further note that the issue of additional evidence and additional ground are no more germane to the issue at hand as the assessee has himself produced affidavit from Shri S.C. Shah for the proposition that he is not providing accommodation entry.
Examination of the identity, creditworthiness and genuineness of the transaction - The same is not clear from the documents on record. The same is also cogently not brought out in the orders of the authorities below. As assessee submits that if the assessee is asked to produce representative/director of the investor company the same can be attempted - we deem it appropriate to remit this issue of addition u/s. 68 of the Act to the file of the Assessing Office who shall issue necessary notices to the assessee company and shall make the necessary examination with respect to identity, creditworthiness and genuineness of the transaction. He shall properly examine the documents and financial statement being submitted by the assessee company and pass a speaking order - With these directions we remit this issue to the file of the Assessing Officer. Decided in favour of assessee for statistical purposes.
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