|
Advanced Search Options
Case Laws
Showing 341 to 360 of 1551 Records
-
2024 (2) TMI 1211
Provisional attachment of cash credit accounts of the petitioners - expiry of period of one year from the date it is made - petitioners submits that repeated attachment of cash credit accounts in exercise of power under Section 83 of the CGST Act is in breach of the provisions of Section 83(2) and such exercise could not have been undertaken - HELD THAT:- In view of the admitted position that the order, subject matter of these proceedings has ceased to operate, the petition is disposed of reserving the right of the petitioner to impugn the fresh attachment order dated 13.12.2023 in accordance with law. The question of validity of repeated issuance of attachment orders under Section 83 of the CGST Act is left open.
-
2024 (2) TMI 1210
Cancellation of GST registration of the petitioner with retrospective effect - notice does not specify any cogent reason - violation of principles of natural justice - HELD THAT:- The Show Cause Notice did not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
Show Cause Notice dated 31.08.2021 records that wrongful Input Tax Credit [ITC] was availed from M/S Jagdamba Enterprises, however, as per the petitioner, he did not have any dealing with M/S Jagdamba Enterprises and no ITC has been availed qua the said entity - Further, it may be noticed that the show cause notice directed the petitioner to appear for personal hearing on an appointed date and time whereas no date and time was mentioned in the said show cause notice.
The show cause notice and the impugned order are also bereft of any details accordingly the same cannot be sustained.
In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria - it is not considered apposite to examine this aspect but assuming that the respondent’s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
Further, there is no reasoning in the said show cause notice and in the impugned order as to why the cancellation has been done retrospectively.
The impugned show cause notice dated 31.08.2021, order of cancellation dated 27.12.2021 are accordingly set aside. The GST registration of the petitioner is restored. Petitioner shall comply with Rule 23 of the Central Goods and Service Tax Rules, 2017 - petition allowed.
-
2024 (2) TMI 1209
Validity of SCN seeking to create a demand under Section 73 Central Goods and Services Tax Act, 2017 - SCNs are bereft of any details and are not in inconsonance with law - violation of principles of natural justice - HELD THAT:- Reference may be had to the reply filed by the petitioner to the Show Cause Notice which shows that the reply is a detailed comprehensive reply adverting to each of the points raised in the Show Cause Notice.
Ex-facie it is apparent that the proper officer has not taken into consideration the reply filed by the petitioner while passing the cryptic order dated 31.12.2023. Consequently, the order dated 31.12.2023 cannot be sustained and is accordingly set aside. The matter is remitted to the proper officer to re-adjudicate the Show Cause Notice dated 29.09.2023 by taking into account the detailed reply filed by the petitioner thereto. In case any further detail or clarification is required from the petitioner, the proper officer shall intimate the petitioner qua the same and petitioner shall thereafter promptly furnish his explanation/reply/document to this query, if any raised.
The proper officer shall pass a speaking order after giving an opportunity of a personal hearing to the petitioner within four weeks - The issue of jurisdiction as well as validity of the Show Cause Notice dated 29.09.2023 is left open.
Petition disposed off.
-
2024 (2) TMI 1208
Extension of period of limitation for issuance of show cause notice - Challenge to N/N. 9 of 2023 dated 31.03.2023 whereby the limitation period for exercise of power under Section 73 of the Central Goods and Services Tax Act, 2017 has been extended - proceedings under Section 73 of the Act have been concluded and a demand has been created against the petitioner - HELD THAT:- The observation in the impugned order dated 31.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply - The proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or not. He merely held that no proper reply/explanation has been received which ex-facie shows that proper officer has not even looked at the reply submitted by the petitioner.
The impugned order dated 31.12.2023 is set aside. The matter is remitted to the proper officer for re-adjudication of the show cause notice issued under Section 73 of the Act within four weeks after giving an opportunity of personal hearing to the petitioner - challenge to Notification No. 9 of 2023 is left open - petition disposed off.
-
2024 (2) TMI 1207
Extension of period of limitation for issuance of show cause notice - Challenge to N/N. 9 of 2023 dated 31.03.2023 whereby the limitation period for exercise of power under Section 73 of the Central Goods and Services Tax Act, 2017 has been extended - proceedings under Section 73 of the Act have been concluded and a demand has been created against the petitioner - HELD THAT:- The observation in the impugned order dated 31.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply - The proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or not. He merely held that no proper reply/explanation has been received which ex-facie shows that proper officer has not even looked at the reply submitted by the petitioner.
The impugned order dated 31.12.2023 is set aside. The matter is remitted to the proper officer for re-adjudication of the show cause notice issued under Section 73 of the Act within four weeks after giving an opportunity of personal hearing to the petitioner - challenge to Notification No. 9 of 2023 is left open - petition disposed off.
-
2024 (2) TMI 1206
Levy of penalty of 200% u/s 129 of the WBGST Act - penalty levied on the ground that the e-way bill generated by the appellant for transporting the articles for export to Bangladesh had expired and, therefore, on the date and time when the vehicle was intercepted, the vehicle did not have a valid e-way bill - HELD THAT:- The authorities found that the e-way bill had expired at 12 midnight on 13.06.2022 and fresh e-way bill has not been generated. Consequently, it was held that the goods were transported without a valid e-way bill. Though the appellant had sought to explain the lapse on the ground that the vehicle met to the accident and there was a settlement made between the owner of the motorcycle and the owner of the truck carrying the goods, this also had added to the delay in the process and in any event on 15.06.2022 the second e-way bill was generated and at the time when the vehicle was intercepted, hardly 24 hours had expired from the time at which the first e-way bill had expired.
In similar matters court has taken a view that unless and until it is established by the department that the transporter of the goods or the owner of the goods had an intention to contravene the provisions of the Act, the question of imposing penalty under Section 129 of the Act that too 200% would not be justified. Each case has to be decided on the peculiar facts and circumstances and the court can definitely take into consideration the bona fide of the transaction and in the instant case the delay have been less than 24 hours.
It is not a case where penalty can be imposed that too 200%. The other factors which are also to be taken note of that the goods have been transported and the goods in question have been exported to Bangladesh.
I the instant case no penalty can be imposed on the appellant - Appeal allowed.
-
2024 (2) TMI 1205
Condonation of delay beyond condonable period - appeal rejected on the sole ground that the appeal filed by the appellant is beyond the condonable period i.e., 56 days - HELD THAT:- Admittedly the GST appellate tribunal has not been constituted in terms of Sec. 112 of APGST Act 2017 to carry out the matter to the said Tribunal. Therefore, this writ petition can be entertained by this Court.
In M/S. NARAYANPET MUNICIPALITY VERSUS THE SUPERINTENDENT OF CENTRAL TAX, THE JOINT COMMISSIONER (APPEALS - I) [2023 (4) TMI 306 - TELANGANA HIGH COURT] when GST Registration was cancelled and the same was challenged, the appeal was dismissed by the appellate authority on the sole ground that the appeal was filed beyond the condonable period. In that context, the Division Bench of High Court of Telangana has observed Though the lower appellate authority may be right in holding that while it may allow filing of an appeal beyond the limitation of three months for a further period of one month, but the delay beyond the extended period of one month cannot be condoned, such a stand taken by respondent No.2 may adversely affect the petitioner - The above decision applies to the case of the petitioner as in the instant case also the sole ground on which the appeal was rejected was because the same was filed beyond the condonable period.
In that case the impugned Order challenged in Appeal was the cancellation of Registration. Whereas, in the case on hand, the impugned order under challenge in Appeal is the Assessment Order. However, the principle in the cited decision being the condonation of delay beyond the condonable period, the same can be made applicable to case on hand also.
This writ petition is allowed by condoning the entire delay in filing the appeal before the appellate authority on the condition of the petitioner depositing costs of Rs. 20,000/- before the appellate authority within a period of one week from the date of receipt of copy of this Order.
-
2024 (2) TMI 1204
Provision for warranty in excess of 2.14 percent of sales - Tribunal allowing the provision for warranty even thought the assessee had not made the provision on a scientific basis - HC [2023 (4) TMI 1053 - KARNATAKA HIGH COURT] answered the question of law in assessee’s favour - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petitions are dismissed.
-
2024 (2) TMI 1203
TDS u/s 194I OR 194C - External Development Charges (‘EDC’) paid to Haryana Urban Development Authority (‘HUDA’) - HELD THAT:- Following the order of this Court in “Principal Commissioner of Income Tax (Central III) and Anr. vs. BPTP Limited” [2021 (2) TMI 623 - SC ORDER] and “Joint Commissioner of Income Tax vs. M/s Experion Developers Pvt. Ltd.” [2024 (2) TMI 894 - SC ORDER], these petitions also stand dismissed stating Petitioners in these petitions were required to deduct TDS from EDC under Section 194-I
Pending application(s), if any, shall stand disposed of.
-
2024 (2) TMI 1202
Delay in filling appeal before SC - Denial of claim for benefit of Section 10(38) of the Act and denial of an opportunity to cross examine the entry providers by revenue - substantial question of law or facts - as decided by HC [2023 (2) TMI 392 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO.
HELD THAT:- There is gross delay of 272 days in filing the special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed.
Consequently, the special leave petition is also dismissed keeping open the question of law, if any.
Pending application(s) stand disposed of.
-
2024 (2) TMI 1201
Revision u/s 263 - period of limitation - whether the assessment order for AY 2015-16, issued on 31st March, 2023, was barred by the limitation prescribed in Section 153B? - HC held [2023 (11) TMI 48 - DELHI HIGH COURT] since there is no jurisdictional error in the assessment order dated 31st March, 2023 pertaining to AY 2015-16, on the ground of limitation, we are not inclined to entertain the present petition.
HELD THAT:- During the course of submissions, as brought to our notice that the impugned HC order dated 19.10.2023 was passed without issuing a formal notice to the respondent-Department or calling for a response from the Department although the standing counsel for the Department was present in Court.
We dispose of this special leave petition by reserving liberty to the petitioner herein to raise the contentions regarding the jurisdictional error vis-a-vis the limitation period before the appropriate authority despite the impugned order being passed as against the petitioner herein. The reason for saying so is because the High Court had passed the impugned order without having the benefit of the response of the respondent-Department.
Since we are permitting the petitioner to raise the point regarding jurisdictional error in the context of limitation period, the appropriate authority before whom such a point is raised may not be influenced by the observations made by the High Court in the impugned order.
-
2024 (2) TMI 1200
Penalty proceedings u/s 271FA - late filing of the SFT statement Online by the appellant - appellant opted for the Vivad Se Vishwas Scheme and paid the due amount - HELD THAT:- As stated by assessee that the assessee had opted for “Vivad Se Vishwas Scheme” but Form No.4 could not be submitted electronically and same was submitted manually.
Therefore, CIT(A) ought to have accepted the submissions of the assessee and granted relief to the assessee. Thus hold accordingly. AO is directed to give benefit of “Vivad Se Vishwas Scheme” to the assessee upon furnishing of the requisite documents. Grounds raised by the assessee are accordingly, allowed.
-
2024 (2) TMI 1199
Validity of assumption of jurisdiction u/s. 153C - additions challenged on the ground that they are not based on any incriminating material - whether addition seized material does disclose any unaccounted/ undisclosed income of the assessee?
HELD THAT:- Admittedly, in the assessment order the AO has not made any addition with reference to seized material. In fact, said seized material does not disclose any unaccounted/ undisclosed income of the assessee. Therefore, in our view, assumption of jurisdiction u/s.153C of the Act based on such document is invalid.
Even, otherwise now it is fairly well settled that in case of unabated assessment no addition can be made in absence of incriminating material found during the search and seizure operation. As discussed earlier, the only incriminating material referred to in the satisfaction note is the trust deed of PGP charitable trust.
Though, in the assessment order the AO has made a number of additions, however, none of them are with reference to the incriminating material referred to in the satisfaction note. Whereas, the additions are based on some other material.
Thus, case of Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] squarely applies to the facts of the present case. Therefore, considering the totality of facts and circumstances of the case, we hold that not only the assumption of jurisdiction u/s.153C is invalid, but, the additions made are unsustainable as they are not with reference to any incriminating material. Accordingly, we delete the additions. Decided in favour of assessee.
-
2024 (2) TMI 1198
Computation of capital gain - conversion of Gold in stock in trade and income from other sources - assessee converted the gold into stock in trade on various dates and long term capital gain was paid on it - Difference between the sale value taken by assessee and fair market sale value - contention of the assessee that online platform rate is for buying and sell online without physical delivery whereas the rate of physical delivery always remain higher side and therefore, he has take the higher rate as the capital assets on conversion immediately forms part of stock in trade and that conversion is accepted by the revenue and only disputed the rate - HELD THAT:- Once the assessee has converted the capital asset into stock in trade, the revenue sum moto cannot changed the value adopted by the assessee on the ground that income under one head shown higher and on the other head less.
We found merits in the arguments of assessee that the rate of gold is higher for physical delivery and considering the facet of that matter we do not found any merits in the contentions of the revenue in disturbing gold disclosed under IDS, 2016 which was for an amount of Rs. 12,76,81,150/- and after conversion into stock in trade on various dates the total sale proceed was Rs. 15,63,62,967/- is to be considered as correct sale price considering the arguments of the assessee that the rate of gold for physical delivery is higher.
Not only that when there is no disputed regarding the overall income of the assessee in the year under consideration, the only difference disputed by the ld. AO and CIT(A) the head under which is to be calculated. Considering the material available on record and based on the arguments advanced before us we are of the considered view that the assessee has correctly computed the capital gain. Based on these observations ground raised by the assessee is allowed.
Unexplained money u/s 69A r.w.s.115BBE - cash sales recorded in the books of the assessee considered as unexplained - Sale of gold on the date of demonetization - HELD THAT:- Assessee has recorded the cash in their books of account and the source of the said cash being the sale of goods is duly recorded in the books of account and when there is no contrary material brought on recorded for the sales recorded by the assessee for an amount of Rs. 15,63,62,967/- the action of the lower authority considered the cash sales of Rs. 8,95,25,633/- as not genuine is against the evidence placed on record.
Since it was not under dispute that the assessee not sold the goods. Therefore, once the goods is supported by the Invoice recorded in the books and no defects found merely the same is recorded on the date of demonetization addition of cash receipt cannot be made in the hands of the assessee.
Thus, considering all the facets of the case the bench noted that the revenue did not pinpoint any defects in the books of accounts, quantitative records available with the assessee, cash book and invoice presented in the assessment proceedings. Merely the assessee has sold the gold on the date of demonetization it does not make the sale as non-genuine and we find support of this contention from the decision of the jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] holding that once the cash receipt is supported by invoice supported by the delivery of goods the source of that cash cannot be in doubt.
The cash is generated out of the stock already on record and thus the sales made by the assessee is genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. Based on the discussion so recorded herein above we consider the ground of the assessee and hold that the cash receipt from the cash sales cannot be added as income u/s. 69A - Decided in favour of assesee.
-
2024 (2) TMI 1197
Addition u/s 68 - unsecured loan - non verification of identity and creditworthiness of lenders and genuineness of transactions from whom the assessee has shown unsecured loans - HELD THAT:- We note that Hon’ble Apex Court in the case of CIT vs. Orissa Corporation Pvt. Ltd [1986 (3) TMI 3 - SUPREME COURT] held that when assessee furnished their complete address, PAN as well as confirmation and bank details of creditors/lender, the addition should not made in the hands of the assessee. We note that opening balance of the Lenders are not subject to disallowance in the current assessment year under consideration, if the AO wanted to disallow the same, he could disallow in the previous assessment year.
During the assessment year under consideration, the assessee took fresh loan and to substantiate the genuineness of fresh loan, the assessee submitted confirmation, bank statement, name, address and PAN number, moreover the transactions were through banking channel. On such fresh loan interest has been paid to the lenders, and TDS on interest has been paid hence genuineness of the fresh loan cannot be doubted. We also note that some of the Lenders have been fully repaid during the year under consideration. Once, the repayment is made and accepted by the department no addition for such loan is to be made in the hands of the assessee. Decided against revenue.
Estimation of income - bogus purchases - HELD THAT:- Under the Income tax proceedings, the disallowance of entire purchases is not justified when the assessee has furnished the details of purchases and payments made through banking channel. It is settled law under the income tax proceedings that only profit element embedded in such transaction, may be disallowed and not the substantial part of transaction. Keeping in view the nature of business activities of the assessee and profit margin in trading activities, 6% of impugned disallowance would be reasonable and justified to avoid the possibility of revenue leakage. Thus, the Assessing Officer is directed to restrict the addition to the extent of 6% of Rs. 1.01 crore. Decided partly in favour of assessee.
-
2024 (2) TMI 1196
Condonation of delay - delay of 280 days involved in preferring of the captioned appeal - scope of expression “sufficient cause” - distinction was drawn between normal delay and inordinate delay - contentions of the assessee that the accountant has left many things incomplete, and it appears that he intentionally delays the filing of the appeal although it was ready in all respect
HELD THAT:- The delay in filing of the appeals cannot be condoned in a mechanical or a routine manner since that would undoubtedly jeopardize the legislative intent behind Section 5 of the Limitation Act.
As the assessee appellant in the present case had come forth with any cogent explanation elaborating the acceptable reasons leading to the delay in filing the present appeal, and had adopted a lackadaisical approach, therefore, there can be no reason to condone the delay of 280 days involved in preferring of the captioned appeal.
As observed in the case of Ramlal, Motilal and Chotelal Vs. Rewa Coalfields Ltd. [1961 (5) TMI 54 - SUPREME COURT] that seeker of justice must come with clean hands, therefore, now when in the present appeal the assessee appellant had failed to come forth with any substantial clarification to support the application for condonation elaborating in the backdrop of sufficient reason that would justify condonation of the substantial delay involved in preferring of the captioned appeal, therefore, we decline to condone the same and, thus, without adverting to the merits of the case dismiss appeal of the assessee as barred by limitation.
-
2024 (2) TMI 1195
Disallowance of interest expenses - as alleged assessee has foregone interest by giving interest free advance to various parties - disallowance confirmed by CIT(A) - HELD THAT:- On perusal of the balance sheet of the assessee for the current year, we find that the assessee had sufficient interest-free surplus funds available with it. Therefore, as per the settled legal principles, it has to be presumed that the interest-free surplus funds have been utilized for interest-free advances. In any case, it is a fact on record that the loans in respect of which interest disallowance has been made were given in earlier assessment years - Thus we direct the assessing officer to delete the disallowance. Ground no. 1 and 2 are allowed.
Estimation of income - addition made by applying GP rate of 7.33% on account of alleged difference in stock as per books of account and as per stock statement for hypothecation with the bank - HELD THAT:- Hon’ble jurisdictional High Court [2017 (11) TMI 396 - DELHI HIGH COURT] AO in his order has only considered the closing stock of sugar as on 31.03.1999, as per the bank statement which is at 3,98,125 Qtls. and after comparing the same with that of the closing stock as on 31st March 1999 in the audited accounts i.e. 3,10,934 Otls. and gone on to add the difference in excess stock of 87,191 Qtls, as assessee's income for the year - when the AO has placed absolute reliance to the closing stock figures as per bank statement for making the above stated addition to income then he should have necessarily taken the figures of opening stock of sugar as well from the same source, namely the statement as on 31.03.1998 as furnished to the bank. This preposition is based on the principle of consistency in approach as it would be improper to place reliance on the book stock for opening balance and in the same breadth the bank statement for closing balance. Decided in favour of assessee.
-
2024 (2) TMI 1194
Key man insurance policy - Taxability of the sums received on maturity of life insurance policy - Assessee claimed it as exempt income - AO did not accept the contention of the assessee and treated the sum as taxable u/s 28(vi) of the Act, treating the proceeds under Keyman Insurance policy -
Assessee submitted that it was contended before the AO that the maturity proceeds were received in AY 2016-17. The insurance policy was under Keyman Insurance policy taken by M/s. Pratap Parikh Associates, a proprietorship concern in which the assessee was a Keyman. The proprietorship concern was dissolved and the assessee purchased the Keyman Insurance policy from M/s. Pratap Parikh Associates on 22.11.2008 after paying a surrender value. Thus, the assessee rightly claimed the amount as exempt u/s 10(10D) of the Act as a character of policy had changed wayback in the year 2008.
HELD THAT:- We find some merit in the contention of the assessee that if the policy is transferred before its maturity then it would lose its character. As decided in Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] as held that we have to bear in mind that law permits such an assignment even LIC accepted the assignment and the same is permissible. There is no prohibition as to the assignment or conversion under the Act. Once there is an assignment, it leads to conversion and the character of policy changes. The insurance company has itself clarified that on assignment, it does not remain a keyman policy and gets converted into an ordinary policy. In these circumstances, it is not open to the Revenue to still allege that the policy in question is keyman policy and when it matures, the advantage drawn therefrom is taxable. One has to keep in mind on maturity, it does not the company but who is an individual getting the matured value of the insurance.
No doubt, the parties here, viz., the company as well as the individual taken huge benefit of these provisions, but it cannot be treated as the case of tax evasion. It is a case of arranging the affairs in such a manner as to avail the state exemption as provided in Section 10(10D) of the Act. Law is clear.
Benefit inured owing to the combined effect of a prudent investment and statutory exemption provided under Section 10(10D) of the Act, the section does not envisage of any bifurcation in the amount received on maturity on any basis whatsoever. Nothing can be read in Section 10(10D) of the Act, which is not specifically provided because any attempt in that behalf as contended by Revenue would be tantamount to legislation and not interpretation.
We are of the considered view that the authorities below were not justified in denying the benefit of exemption to the assessee. We hold accordingly. The AO is directed to delete the addition. Appeal of assessee allowed.
-
2024 (2) TMI 1193
Estimation of income - bogus purchases - HELD THAT:- We find that neither any detail on TDS of alleged commission was furnished nor any substantive evidence in the form of confirmation of parties or agreement/agency agreement was placed on record. We find that the CIT(A) recorded that a profit element in similar bogus purchases can only be brought to tax.
Despite the fact that the CIT(A) restricted the addition to 0.50% without referring any material evidence available on record. We find that this combination in number of decisions wherein the purchases are shown from Gautam Jain, Bhanwarlal Jain or Rajendra Jain and Company, who were proved entry provider, similar addition was either restricted or enhanced to 6%.
We further find a similar order was followed in the case of ITO Vs Rajesh Kumar Pamecha [2023 (1) TMI 1321 - ITAT SURAT], ITO Vs Mukesh Mahavirprasad Sen [2023 (1) TMI 1321 - ITAT SURAT] and other cases dated 13/01/2023. Therefore, taking a consistent view, the order of ld. CIT(A) is modified and the disallowance restricted to the extent of 0.50% is increased to 6% of the impugned purchases.
We further find that in a similar case in PCIT Vs Surya Impex [2023 (1) TMI 835 - GUJARAT HIGH COURT] the Hon’ble Jurisdictional High Court affirms the decisions of this Tribunal on similar facts. Therefore, order of CIT(A) is modified and the assessing officer is directed to restrict the disallowance of purchases from there three parties be restricted to 6% of aggregate of purchase of Rs. 2.01 Crore. Grounds of appeal raised by the revenue are partly allowed.
-
2024 (2) TMI 1192
Disallowance of payments to related party u/s 40A(2)(b) - AO considered the payment of Royalty @0.5% of turnover as excessive and accordingly restricted the payment of Royalty to 0.3% of the turnover by disallowing 0.2% of Royalty payment - HELD THAT:- Tribunal in assessee’s own case in M/s Piramal Enterprises Ltd. [2018 (7) TMI 1887 - ITAT MUMBAI] deleted the disallowance made under section 40A(2)(b) of the Act in respect of payment of Royalty.
From the working of corporate service charges for the financial year 2005-06, we find that in the present case, the assessee paid a Royalty of Rs. 84 lakh, which is 0.05% of the turnover of Rs. 1449.40 crore and is even less than 0.3% of the turnover considered reasonable by the AO. Therefore, we find no basis in the disallowance of Royalty payment made by the AO and accordingly, the same is directed to be deleted.
Computation of book profit u/s 115 JB - AR submitted that in V.S. Dempo Pvt. Ltd. [2010 (10) TMI 711 - BOMBAY HIGH COURT] held that when the companies are in the same tax bracket and pay the same rate of tax, then there is no question of tax evasion. Accordingly, it was submitted that payment of consultancy and professional charges is neither in any manner device to circumvent the provisions of tax laws nor is a colourable device of diverting taxable income to the sister concern. During the hearing, reliance was also placed upon CBDT Circular No. 6P dated 07/06/1968. We find that the aforesaid aspect has not been examined by the lower authorities. Therefore, we deem it appropriate to restore this issue to the file of the AO limited to examination of the aforesaid submission of the assessee. If upon examination it is found that both the companies are in the same tax bracket, then the addition on account of payment of consultancy and professional charges be deleted in the light of the aforesaid decision.
We further agree with the submissions of DR that setting aside the matter to the file of the AO does not come within the purview of powers of the learned CIT(A) u/s 251 of the Act. For examination of the aforesaid aspect, the issue of part disallowance of payment of consultancy and professional charges is restored to the file of the AO. With these directions, the impugned order is set aside, and ground No. 1 raised in assessee’s appeal is allowed for statistical purposes.
Disallowance of legal and professional charges incurred for system development - HELD THAT:- The assessee has also placed on record the contract notes with Thundercloud Technologies alongwith certain invoices. However, we find that the nature of services rendered under these contract notes has not been examined by the lower authorities. We are of the view that the nature and scope of services rendered in respect of each invoice are required to be examined in order to come to the conclusion that the expenditure is for the maintenance of software.
Therefore, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication. The assessee is directed to furnish all the details in support of its claim, including the information regarding the nature and scope of services availed by it. If upon examination it is found that the expenditure was incurred by the assessee for the maintenance of software then the AO is directed to allow the expenditure to that extent. We further direct that to the extent the expenditure is found to be of enduring nature, the AO is directed to allow depreciation @60% to the assessee on the same. As a result, ground no. 2 raised in assessee’s appeal is allowed for statistical purposes.
Disallowance of Advertising and Business Promotion expenses - Freebies to doctors - whether the expenditure incurred by the assessee is in violation of the guidelines issued by the MCI and consequently, whether the expenditure is not allowable under section 37(1), in view of the Circular No.5 of 2012? - HELD THAT:- The expenditure incurred by the assessee on providing freebies, i.e. various gifts, travel facilities, etc., to the doctors is allowable under section 37(1) of the Act as the amendment to MCI Regulations is effective from 14/12/2009. Accordingly, the disallowance is directed to be deleted. As a result, ground no. 3 raised in assessee’s appeal is allowed.
Disallowance of weighted deduction u/s 35(2AB) in respect of the Chennai-Ennore Unit - approval by the prescribed authority in Form No.3CM is not available on the record - HELD THAT:- Since, in the present case, the assessee has also applied for approval before the DSIR, we deem it appropriate to restore this issue to the file of the AO to provide an opportunity to the assessee to furnish the approval of the prescribed authority in the prescribed manner for claiming deduction under section 35(2AB) of the Act. With the above directions, ground no. 4 raised in assessee’s appeal is allowed for statistical purposes.
Disallowance of depreciation on computer software - AO has restricted the claim of depreciation on software to 25% as against 60% claimed by the assessee - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case for the assessment year 2004-05 [2022 (6) TMI 1460 - ITAT MUMBAI] directed the AO to allow the depreciation at 60% and also directed the AO to consider computer and computer software as one block. Since the year under consideration is the third year of the claim of depreciation and the computation of depreciation in the current year is consequential to the preceding year, therefore we restore this issue to the file of the AO to compute the depreciation by considering the closing WDV of the preceding year as the opening WDV of the current year. Further, the AO is directed to allow depreciation on computer software at 60% in line with the directions of the coordinate bench in the preceding year. Grounds in assessee’s appeal are allowed for statistical purposes.
Addition on account of increase in the value of closing stock in relation to net unutilised MODVAT credit - HELD THAT:- Since in the year under consideration the working of the assessee is required to be verified, therefore, respectfully following the judicial precedents in assessee’s own case, we deem it appropriate to restore this issue to the file of the AO to decide in the light of the directions as rendered by the Tribunal in the preceding year.
Deduction u/s 80G - assessee made payments to various parties as donations - HELD THAT:- Since the rectification application filed by the assessee is already pending consideration before the AO and the assessee has also furnished the original donation receipts along with the exemption certificates of all the parties, we direct the AO to consider the plea of the assessee regarding the grant of deduction under section 80G of the Act as per law after necessary verification of all the details so furnished by the assessee. Accordingly, additional ground raised by the assessee is allowed for statistical purposes.
Depreciation in respect of assets transferred pursuant to the merger - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case in Piramal Enterprises Ltd [2020 (1) TMI 1200 - ITAT MUMBAI] decided issue in favour of the assessee as held DRP had directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal regarding slump sale vs. itemized sale. In the backdrop of the aforesaid fact situation, now when the matter as to whether the sale of the aforesaid two divisions by the assessee is to be treated as an itemized sale or a slump sale is pending in the case of the assessee for the preceding years, therefore, we find no infirmity in the order of the DRP who had rightly directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal.
Allowance of deduction u/s 80 HHC for the purpose of section 115 JB of the Act - HELD THAT:- As in view of the retrospective amendment in section 115 JB of the Act, vide Finance Act 2011, with retrospective effect from 01/04/2005, this ground of the Revenue be allowed even though during the course of assessment proceedings the assessee made a claim on the basis of the decision of Sincome Formulations (India) Ltd. [2007 (3) TMI 288 - ITAT BOMBAY-H] which was subsequently affirmed by the Hon’ble Supreme Court in CIT v/s Bhari Information Technology Systems (P) Ltd. [2011 (10) TMI 19 - SUPREME COURT] Therefore, in view of the aforesaid amendment, whereby clause (iv) to Explanation-1 to section 115 JB of the Act was omitted, ground raised in Revenue’s appeal is allowed.
Depreciation on technical know-how capitalised in the assessment year 2003-04 - HELD THAT:- Since the rectification application filed by the assessee is already pending consideration before the AO, we direct the AO to consider the plea of the assessee regarding the claim of depreciation on technical know-how capitalised as per law after necessary verification of all the details. Accordingly, additional ground raised by the assessee is allowed for statistical purposes, while groundsmraised in the present appeal is dismissed as infructuous.
Disallowance u/s 14A while computing the book profit of the assessee u/s 115 JB - HELD THAT:- We find that in ACIT v/s Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of the Income-tax Rules, 1962. Accordingly, we do not find any infirmity in the order passed by the learned CIT(A) on this issue. As a result, ground raised in Revenue’s appeal is dismissed.
............
|
9911796707
