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Showing 461 to 480 of 1182 Records
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2025 (2) TMI 722
Levy of GST - services provided by clubs to its members - mutuality of interest - reliance placed on Supreme Court's decision in the case of State of West Bengal & others vs Calcutta Club Limited [2019 (10) TMI 160 - SUPREME COURT], which addressed service tax applicability in the erstwhile regime - violation of principles of natural justice - HELD THAT:- Hon'ble Apex Court in the case of State of West Bengal V/s Calcutta Club Limited, ordered that service tax was not leviable on the services provided by a club to its member under erstwhile Service tax regime. Consequent to the said judgment, to bring the services provided by the clubs to its members in the net of GST, 39th GST council in their meeting dated 14.03.2020 recommended retrospective amendment in the GST Act, so as to explicitly include the transactions and activities involving goods and services or both, by, to its members, for cash, deferred payment or other valuable consideration along with an explanation stating that for the purpose of this section, an association or a body of persons, whether incorporated or not as taxable supply w.e.f 01.07.2017. It is also proposed that such an association or a body of persons, whether incorporated or not and member thereof shall be treated as distinct persons under section 7 (1) of the CGST Act. Consequently, para 7 of Schedule II of the CGST Act is proposed to be deleted.
GST laws expanded the scope of 'supply' to tax supplies between the club/association and its members, to overcome the principle of mutuality. The scope of supply clearly ascertains that supply made by a person registered under GST is exigible to GST if it falls under section 7(1) of GST Act - A retrospective amendment (w.e.f. July01,2017) has been made vide Finance Act, 2021 by inserting a new clause '(aa)' after clause (a), in Section 7 (1) of the CGST Act to widen the scope of term 'supply' by including therein activities or transactions of supply of goods or services or both between any person (other than individual) to its members or constituents or vice versa for cash, deferred payment or other valuable consideration. Consequently, Para 7 of Schedule II of the CGST Act has been deleted retrospectively (w.e.f. July 1, 2017) which was related to 'supply of goods by unincorporated associations or body of persons to a member thereof for cash, deferred payment or other valuable consideration' being activity/ transaction treated as supply of goods.
Further, an explanation is added to say that the person and its members or constituents shall be deemed to be two separate persons and overriding effect has been given to the said explanation over anything contained in any other law for the time being in force and even to the judgements of any Court, Tribunal or any other authority. Thus, the decision given by the Hon'ble Supreme Court in State of West Bengal & Ors.v. Calcutta Club Limited for erstwhile Service tax regime, is no more applicable on account of specific overriding effect over judgments.
Conclusion - The clause 7 (1) (aa) have been inserted and deemed to have been inserted w.e.f. 01.07.2017 by Finance Act, 2021. Thus, the Services provided by the Club to its members is taxable as per clause (aa) of sub-section (1) of Section 7 of the CGST Act, 2017 w.e.f. July 01, 2017.
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2025 (2) TMI 721
Classification and applicable GST rates - A hand-held multitool to replace battery in two-wheeler vehicles - A hand-held multitool for replacing automotive batteries - A hand-held multitool for replacing high-capacity batteries - Whether the classification of the multi-tool under the respective HSN Code with applicable tax rates is ascertainable?
Classification and applicable GST rates - A hand-held multitool to replace battery in two-wheeler vehicles - A hand-held multitool for replacing automotive batteries - A hand-held multitool for replacing high-capacity batteries - HELD THAT:- The multi-tools in which major component is spanner of different sizes integrated with some other tools viz. screwdriver, hex key etc. Further, 2 tools also have battery indicator (battery voltage level indicator) which provides real-time information about the condition and performance of batteries. As evident from the images of the tools submitted by the applicant, there are four light indicators on the tools indicting battery percentages viz. 25%, 50%, 75% & 100%.
It is found that hand-operated spanners are classified under chapter heading 8204. Further, screw drivers are classified under chapter heading 8205 and battery indicator (battery voltage level indicator), being an electrical equipment is classified under chapter heading 85. We find that the above tools are hand-operated multi-tools intended to be used for replacing two-wheeler, automotive and high capacity batteries having spanners as the major component integrated with battery indicator, screwdrivers, hex key to provide additional benefits viz. convenience, time and effort savings to their users. The integration of battery indicator in these tools provides an additional feature only and does not alter the key functionality of the tools. Accordingly, the above tools are classifiable under chapter heading 8204 and attract GST @ 18%.
Whether GST under ascertain the nature of the products Classification Multi-tool under of Hand Held respective HSN Code with applicable tax rates on the products comes? - HELD THAT:- The question is not clear and beyond the scope of sub-section (2) of the section 97 of the CGST Act, 2017, hence not answered.
Conclusion - The tools in question are classified under chapter heading 8204 and attract GST @ 18%.
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2025 (2) TMI 720
Exemption from GST - Whether the activity of the transportation of goods by the Applicant will be exempted under entry no. 18 of Notification no.12/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT:- On perusal of the meaning of the GTA, it is clearly seen that issuance of the consignment note is an essential condition for any person to act as GTA. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of GTA. If a consignment note is issued, it indicates that the lien on the goods has been transferred (to the transporter) and the transporter becomes responsible for the goods till it’s safe delivery to the consignee.
Interpretation of meaning of term “consignment note” - HELD THAT:- On perusal of the meaning of the term consignment note, it is conspicuous that the goods are received by the goods transport agency either from the consignor or the consignee of the goods, the details of which are mentioned in the consignment note along with the description of the goods being transported.
The service of transportation of goods is sub-contracted to the applicant by the Principal GTA. Effectively it appears that, the contract to undertake transportation of goods is given by the consignee/consignor to Principal GTA and not to the applicant. The consignee/consignor may not be aware that the transportation will be done by the applicant. It is also possible that such sub-contract may/can also be given to some other party by the Principal GTA - the applicant is giving only vehicles to Principal GTA and thus it is Principal GTA which has the transportation contract with the consignee/consignor. Thus the transaction in this case would be one of renting of vehicles and not that of a Goods Transport Operator.
In the transportation industry, as in the subject case, there are situations where one transporter takes the help of another transporter by way of sub-contracting the work. The other person bills the first transporter for sub-contracting service and the main transporter is the actual service receiver. It is generally seen that sub-contractor person is actually providing transportation service on behalf of the first transporter. As per the definition of GTA in the GST Laws, it is very clear that person who issues consignment note will be treated as goods transport agency. In the subject case, Principal GTA issues consignment note, which is further stamped by its consignee, on delivery of the goods and is therefore a GTA for this transaction. Any services by way of transportation of Goods by road other than through GTA would be exempt supply as per the entry of notification as quoted in the above paragraph. Hence, the activity of the transportation of goods by the Applicant is not eligible for exemption under entry no. 18 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017.
Conclusion - The applicant is desirous of opting the exemption available under entry no. 18 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, but this is merely by stretch of imagination on part of the applicant, as the activity or service purported to be rendered is wholly outside the scope of this notification, as the applicant’s business activity is only rental services of transport vehicles. Rental services of transport vehicles is notified under notification no.11/2017-Central Tax (Rate) dated 28.06.2017. The activity of the transportation of goods by the Applicant will not be exempted under entry no. 18 of Notification no.12/2017-Central Tax (Rate) dated 28.06.2017.
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2025 (2) TMI 719
Income accrued in India - Benefit of DTAA between India and USA - rightful owner of the remittances - fees for technical service (FTS) - Payment for certification of Diamonds - as per HC [2023 (8) TMI 296 - GUJARAT HIGH COURT] based on factual appreciation especially the condition in the customer service agreement, the bank invoice and the Bank remittance advice a finding of fact has been arrived at that the assessee’s case was protected under the India-USA DTAA and that mere rendering of services cannot be roped into FTS unless the person utilising the services is able to make use of the technical knowledge etc. Simple rendering of services as in the present case is not sufficient to qualify as FTS .
HELD THAT:- Having heard the learned Additional Solicitor General appearing for the petitioner and having gone through the materials on record, it appears that the tax effect of the subject matter of the Special Leave Petition is falling below the threshold contained in the circular dated 22nd August 2019 of the Central Board of Indirect Taxes and Customs.
Special Leave Petition is disposed of.
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2025 (2) TMI 718
Scrutiny assessment - Validity of notice u/s 143(2) - period of limitation - defects in return of income removed - as decided by HC [2019 (10) TMI 1583 - GUJARAT HIGH COURT] it is an admitted position that the impugned notice u/ss (2) of section 143 of the Act has been issued on 11.08.2018, which is much beyond the period of limitation for issuance of such notice as envisaged under that subsection. The impugned notice, therefore, is clearly barred by limitation and cannot be sustained.
HELD THAT:- We are not inclined to interfere in the matter having regard to the facts of the present case.
Hence, the Special Leave Petition is dismissed.
However, the question of law, if any, is left open to be agitated in any other appropriate case.
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2025 (2) TMI 717
Disallowance u/s 35(2AB) - clinical trial expenses incurred outside the approved facility - HELD THAT:- We set aside the impugned order only insofar as the issue of disallowance under Section 35(2AB) for clinical trial expenses incurred outside the approved facility is concerned. To this limited extent Appeal [2020 (3) TMI 345 - GUJARAT HIGH COURT] is remanded to the High Court of Gujarat at Ahmedabad.
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2025 (2) TMI 716
Denial of registration u/s 12AA - proof to indicate that the Trust was undertaking any charitable activities - HELD THAT:- We may agree to a certain extent with the learned ASG that the very purpose for any assessee to seek registration under Section 12AA is to claim exemption u/s 10 and 11 respectively of the Act, as the case may be. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature.
To the aforesaid extent there is no problem. We may only say that mere registration under Section 12-AA automatically does not entitle any charitable trust to claim exemption u/s 10 and 11 respectively of the Act, 1961.
When a return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed genuinely or not. If the assessing officer is not convinced it is always open for him to decline grant of exemption.
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2025 (2) TMI 715
Appeal maintainable against the communication/order amounting to a cancellation of BCCI's registration under Section 12A - Denial of benefit of registration granted u/s 12A available to the amended objects - Petitioner/BCCI is a society established under the Tamil Nadu Societies Registration Act with the aim of promoting sports, particularly cricket - HELD THAT:- Based on the contention that the impugned communication/order dated 28 December 2009 was not statutory and that it was only an advisory or further, that the impugned communication/order dated 28 September 2012 was not an order cancelling or withdrawing the BCCI’s registration, the Revenue even persuaded the ITAT in holding that the BCCI’s Appeal against the impugned communication/order was not maintainable. At the same time, based on such advisory/non-statutory exercise, the Revenue cannot proceed on the premise that the BCCI’s registration stands cancelled or that the BCCI is not entitled to any exemption under Section 11 of the IT Act, 1961. The impugned communication/order dated 28 December 2009 cannot be non-statutory or an advisory to defeat an assessee’s right of appeal. Still, based upon the same non-statutory order or advisory, the assessee's rights cannot be affected, or a situation created in which the assessee cannot claim an exemption or is liable to have its registration cancelled. The revenue cannot adopt such contradictory stances or blow hot and cold in the same breath.
Again, we emphasise that these matters could be independently considered whilst deciding the issue of exemption or even the issue of cancellation of registration. However, decisions on such vital matters cannot be solely based on some advisory or non-statutory communication, such as the impugned communication/order dated 28 December 2009.
Revenue could not have issued the impugned communication/order, which it agrees, was only an advisory or a non-statutory exercise.
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2025 (2) TMI 714
Adjustment of the refundable amount which was adjusted towards the penalty order - writ of mandamus to direct the first respondent to issue a refund due along with interest u/s 244A (1) till the date of grant of refund - HELD THAT:- We agree with Petitioner, that based upon an order which was digitally signed on 22 May 2024, the Respondents were not entitled to issue the order dated 16 February 2024 adjusting an amount of Rs. 16,81,893/- against the alleged dues arising out of this order which was digitally signed only thereafter i.e. on 22 May 2024. As of 16 February 2024, we cannot reasonably hold that any amount was due and payable by the Petitioner which could have been adjusted from out of the refunds that had to be made to the Petitioner.
On this short ground, we set aside the order and direct the Respondents to refund to the Petitioner within four weeks from today. If the amount is not refunded within four weeks from today, it will carry interest as provided under the law. This shall be without prejudice to any action under the Contempt of Courts Act, 1971.
If so advised, the petitioner is free to challenge the penalty order digitally signed on 22 May 2024 and communicated to the Petitioner in these proceedings following law. All parties’ contentions in this regard are kept open to be decided by the appellate authority in the first instance.
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2025 (2) TMI 713
Order passed by section 197 - payment after withholding Tax Deducted at Source (TDS) at the rate of 2% (excluding cess and surcharges) - whether the impugned order and the impugned certificate are liable to interfered with AO rejecting the petitioner’s request for allowing SFDC India to make payments at Nil rate of withholding tax? - petitioner claimed that its income was not chargeable to tax as fees for technical services or royalty
HELD THAT:- In the present case, there is no prima facie finding by the AO that SFDC India habitually exercises authority to conclude contracts in the name of the petitioner. There is also no finding that SDFC India without authority habitually maintains a state of stock of goods or merchandise and regularly delivers the same on behalf of the petitioner or habitually secures orders.
As apparent from above, it is not necessary for the AO to finally determine the tax chargeable. As essential for the AO to form an opinion regarding the taxability of the income on a prima facie basis before rejecting the assessee’s application u/s 197 (1) of the Act.
The impugned order proceeded on the basis that the petitioner had empowered SFDC India to enter into contracts with customer on its behalf within the territory of India.
AO had also noted that although the petitioner had appointed SFDC India as a non-exclusive reseller, the petitioner had not appointed any other entity as the reseller of its products. But SFDC India had appointed sub-resellers.
Additionally, the AO had found that SFDC India had a role to play in the process of determining the price of the SFDC Products.
Petitioner denies that it has empowered SFDC India to enter into any contract on its behalf. The Reseller Agreement, which governs the relationship between the petitioner and SFDC India, explains the relationship between the parties and expressly provides that neither party would have the power to bind the other party to any contract or the performance of any other obligation. Neither party can represent to a third party that it has the right to enter into any binding obligation on behalf of the other party.
Given the unambiguous terms of the Reseller Agreement, the conclusion that SFDC India is empowered to bind the petitioner or enter into contracts on its behalf cannot, absent any other definitive material establishing to the contrary, be sustained.
Contention that SFDC India has a role in price determination of the SFDC Products also appears to be without sufficient foundation. The petitioner emphasises that SFDC Products are standardized products and SFDC India does not determine the said prices.
AO had reasoned that the involvement of SFDC India in price determination points towards the dependency of SFDC India over the petitioner. This observation is also unsustainable as even if SFDC India is involved in providing any inputs for determination of pricing, the same would not render SFDC India as a dependent PE.
Undisputedly, SFDC India is an affiliate of the petitioner, its transaction would be benchmarked on arm’s length basis.
In the present case, we do not find that there is any material or a finding, which would justify denial of the petitioner’s application on the ground that its income is chargeable to tax in India.
We are unable to sustain the impugned order as in the given facts, there is little indication at least at this stage, that amounts paid by SFDC India to the petitioner as consideration for sale of SFDC Products are chargeable to tax under the Act. It is also important to note that the AO has not returned any findings, which indicate to the contrary. There is no express finding on a prima facie basis that the petitioner has a PE in India. And, the impugned order does not disclose sufficient grounds, which would substantiate this assumption.
We set aside the impugned order and direct the AO to issue the certificate u/s 197 (1) of the Act for nil withholding tax, bearing in mind the observations made in this order.
The observations made in the present order are confined to the question of issuance of a certificate u/s 197 (1) of the Act. This order will not preclude the AO from examining and framing an assessment in accordance with law, uninfluenced by this order.
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2025 (2) TMI 712
Reimbursement of Global Account Management charges received by assessee taxable as FTS/FIS and reimbursement of Leaseline charges received by assessee is taxable as Royalty u/s 9 (l) (vi) - HELD THAT:- Insofar as questions ‘B’ and ‘C’ are concerned, it could not be disputed before us that those also formed the subject matter of [2009 (8) TMI 1258 - DELHI HIGH COURT] ITA 475/2009 and the decision on which came to be followed in [2010 (7) TMI 1218 - DELHI HIGH COURT] ITA 751/2010 wherein appellant could not dispute that question of law proposed to be raised is covered by the judgment in Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT] and judgment of this Court in Skycell Communications Ltd. [2001 (2) TMI 57 - MADRAS HIGH COURT] which has been followed in Bharti Celluar Ltd. [2008 (10) TMI 321 - DELHI HIGH COURT] The appeal is accordingly dismissed.
Income deemed to accrue or arise in India - Freight Logistic Support services provided by the assessee is in the nature of Fee for Technical Services/Fee for Included Services as per Section 9 (1) (vii) of the Income Tax Act, 1961 and Article 12(5) of the India-US Double Taxation Avoidance Treaty - HELD THAT:- As we had explained in International Management Group, FTS is firstly concerned with rendition of specialized knowledge, skill, expertise and know-how. It is principally concerned with a transfer of knowledge, skill and expertise. Those three attributes must be those which are possessed by the service provider and are distinctive and special qualities that it possesses.
The second facet of FTS is the “make available” condition and which envisions an enablement or transfer of specialized knowledge and skill. As was explained in International Management Group, the mere furnishing of service would not be sufficient to categorise the service as FTS. It would have to be necessarily accompanied by a transfer of expertise and which would consequently enable the recipient of service becoming skilled in its own right and empowered to perform those functions independently.
When tested on those precepts we firstly find that rules and regulations pertaining to clearance of customs frontiers was clearly not specialized skill or knowledge acquired or possessed by the assessee. These rules are in the public domain and have been framed by competent authorities operating in different jurisdictions. A fortiori, imparting instructions in respect of those statutory regulations would also not qualify FTS. Similarly, we fail to appreciate how the creation of a global ethos or a workforce which is expected to follow a common code could be said to constitute FTS.
Insofar as the question of the development of software is concerned, we need not render any independent observations except to remind the appellant of the principles which the Supreme Court had come to authoritatively lay down in Engineering Analysis Centre of Excellence (P) Ltd. [2021 (3) TMI 138 - SUPREME COURT] - Decided against revenue.
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2025 (2) TMI 711
Validity of Reopening of assessment u/s 147 - reasons to believe - what income as escaped assessment for the relevant year - transaction pertaining to immovable property - HELD THAT:- Reasons for the formation of opinion cannot be of changing hues.
We find ourselves unable to sustain the commencement of reassessment action for AY 2019-20 in light of the abject failure on the part of the AO, even at this stage and before us, to have placed any material which may have even remotely indicated or sustained the formation of belief that income pertaining to AY 2019-20 had escaped assessment. While the AO does appear to have also doubted the acquisition of various other assets in the previous years, that surely would not sustain or commend to us as constituting material that would be pertinent or relevant to AY 2019-20.
While the other material which has now come or fallen into the hands of the AO may, hypothetically speaking, constitute information which may warrant examination as to whether a concluded assessment for any previous AY is liable to be reopened, surely that material which was wholly unconnected with AY 2019-20, would not sustain the invocation of Section 148 for that year.
Thus, allow the instant writ petition and quash the order u/s 148A (d) as well as the notice under Section 148 of the Act.
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2025 (2) TMI 710
Treating liabilities as unascertained or contingent - ITAT justification in deleting the addition made by the AO on account of provision for uncertain liability of an insurance company other than Life Insurance Company - HELD THAT:- Liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources and in respect of which a reliable estimate of the amount of obligation is possible.
The fact that Rotork Controls [2009 (5) TMI 16 - SUPREME COURT] concerned an army of items of sophisticated goods manufactured and sold by the assessee or Metal Box Company [1968 (8) TMI 53 - SUPREME COURT] pertained to an army of employees due to retire in future or Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] was concerned with the provision made by the Assessee for meeting the liability incurred under Leave Encashment Scheme, are no grounds not to follow the principle laid down in such binding presidents. Provisions based upon actuarial valuation are well accepted in several decisions.
Hon’ble Supreme Court has explained the difference between accrued and contingent liabilities in the above decisions. Merely because these decisions may have dealt with the issue of leave encashment for employees or payment of bonus to the employees or warranties provided by the assessee, we cannot agree with Mr Chhotaray’s contention that these decisions are entirely irrelevant or do not apply to the facts of this case.
The ratio decidendi of the above precedents is not much coloured by the factual aspects of how those decisions were delivered. However, the principle involved is important, and this principle has been followed to reject the Revenue’s contention that the provisions or expenditures were toward some unascertained liability or contingent liability.
Besides, in the present case, since the assessee is obliged to maintain its accounts in terms of the IRDA directives or to adopt the actuarial method of valuation, there was no error in the first appellate authority and the ITAT holding that no additions could have been made in respect of the provisions made by the assessee entirely consistent with the IRDA directives and the methods of valuation prescribed by IRDA. The approach of the AO in this case was contrary to the law laid down in General Insurance Corporation [1999 (9) TMI 3 - SUPREME COURT]
As far as in the precise factual context which obtains in the present case, the Division Bench of the Delhi High Court concluded that it would be wholly incorrect to treat the IBNR (incurred but not reported) provisioning to be a contingent liability. The Court noted that the IRDA regulations, which provided for adopting the actuarial method of valuation, was a scientific method that the assessee involved in the insurance business was mandated to apply.
We are satisfied that this Appeal is not required to be admitted on question (A) as same, cannot be regarded as any substantial question of law. This is a mixed question of law and fact. The first appellate authority and the ITAT, have, both on facts and law, correctly decided the matter. No case of perversity is made out. The ITAT has also referred to circumstances, such as how consistently the revenue has assessed identical provisioning made by the assessee for the past assessment years.
ITAT has also noted that though principles of res-judicata may not apply to the tax proceedings, in the absence of any change circumstances, the AO was not justified in treating liabilities as unascertained or contingent.
Accordingly, this Appeal is admitted only on substantial question of law at (B) above - ITAT justification in allowing u/s 14A r.w. Rule 8D (2) (ii)
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2025 (2) TMI 709
Reopening of assessment u/s 147 - failure of the petitioner to disclose fully and truly all material facts necessary for assessment - HELD THAT:- As Hindustan Lever Ltd. [2004 (2) TMI 41 - BOMBAY HIGH COURT] thus holds that the AO must disclose all the reasons for reopening the assessment. This would include a reference to the facts or materials which were allegedly not disclosed by the assessee for the relevant assessment year.
The Court held that the AO in case of a challenge to the reasons, must be able to justify the same based on the material on record. The AO must disclose the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessing that assessment year to establish a vital link between the reasons and the evidence.
Court emphasised that this vital link safeguards against the arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavits or making oral submissions. Otherwise, the reasons lacking in material particulars would get supplemented by the time the matter reaches the Court on the strength of the affidavit or oral submissions advanced.
Thus, relying on the issue in Hindustan Lever Ltd. [2004 (2) TMI 41 - BOMBAY HIGH COURT] and applying it to the facts in the present case, including the fact that the Assessing Officer, in the reasons furnished to the petitioner, has not bothered to disclose which material facts, according to the Assessing Officer, were not fully and truly disclosed by the Petitioner for the relevant assessment year, we quash the impugned notice.
In any event, this is a case of reopening beyond the prescribed period of four years. Therefore, unless a case of failure to disclose fully and truly all the material facts by the assessee was made out, there is no question of overcoming the statutory bar in seeking to reopen the assessment beyond four years.
In Shrenik Kumar Baldota [2025 (1) TMI 1067 - BOMBAY HIGH COURT] we had to reject a similar objection because the reasons furnished to the assessee in the Petition did not mention the audit objections as one of the reasons for reopening.
Accordingly, we held it was the settled position that the reopening restrictions must be tested on the touchstone of the reasons as recorded. Nothing could be added or subtracted there. Since neither the reasons recorded nor the order deciding the objections stated that the reopening was done based on the audit objections, the reopening notice could not be sustained.
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2025 (2) TMI 708
Reassessment proceedings in the name of a non-existing entity - Notice in the name of company as already amalgamated - HELD THAT:- Although we have granted the Rule in this petition, we are not inclined to stay the assessment proceedings. This is because though the Section 148A (b) notice dated 11 March 2023 was issued in the name of DDB Marketing Services Private Limited, the final order u/s 148A (d) dated 10 April 2023 was issued in the name of the petitioner, into which the earlier company had amalgamated.
The impact of citing the wrong PAN number can always be considered at the final hearing stage. The affidavit filed on behalf of the respondents explains why this was required. In the petition, we also did not find any serious averments regarding prejudice on account of the issue of preliminary notices under the name of DDB Marketing Services Private Limited.
Petitioner did rely upon the decision of the co-ordinate bench in UBER India Systems (P.) Ltd. [2024 (10) TMI 1001 - BOMBAY HIGH COURT] However, we find that in the said case, both the notices u/s 148A (b) and the order under Section 148A (d) were issued in the name of the non-existent amalgamating company. To that extent, we will have to decide whether the decision in UBER India Systems (P) Ltd. (supra) is distinguishable.
While we decline interim relief, we clarify that the reassessment proceedings will abide by the final orders in this petition.
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2025 (2) TMI 707
Section 115JA Applicability to Banking company - HELD THAT:- The issue raised in the appeal is covered by the decision of this court in the case of Union Bank of India [2019 (5) TMI 355 - BOMBAY HIGH COURT] against which the leave is granted by the Supreme Court [2020 (3) TMI 58 - SC ORDER]. There is no dispute that the issue is covered by the decision of this Court in the case of Union Bank of India (supra). Therefore, looked from any angle, the appeal filed by the Revenue is not maintainable.
Book profit has been computed u/s 115JA in the assessment order. In the grounds of appeal before this Court, there is a reference of Section 115JA/115JB which in our view is incorrect, since the section which was involved in the assessment order is 115JA and not 115JB.
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2025 (2) TMI 706
Addition u/s 69A - unexplained money - Nature of the banking transactions and cheques deposited by the appellant - HELD THAT:- The assessee has submitted due evidences to explain that the transaction in the bank statement reflect post dated cheque issued and cross barer cheque against the cheques received. The cheques received were deposited on the same day. On the due date the post dated cheques were being credited. It is a system of obtaining loans by issuing post dated cheques which are encashed within 90 to 110 days for availing credit.
With regard to finance obtained from Radhe Corporation, Shankar Corporation and Krishna Enterprise, the Ld.AR submitted all details such as PAN, Bank Statement extract reflecting the finance received substantiating the Genuineness of the said Party, ITR Acknowledgement of the return filed by the said Party for AY 2013-14 substantiating the Creditworthiness of the said Party, Ledger Confirmation of the said party substantiating the Identity, PAN, Sample copy of cheques issued to the said Party which are obtained from Bank.
The three kay ingredients being Identity, Genuineness and Creditworthiness of the said parties being proven, the said transactions cannot be said to be bogus. All the documents prove that the assessee have received short term finances and also repaid the amounts. Hence, we hold that no addition in this is called for. Appeals of the assessee are allowed.
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2025 (2) TMI 705
Exemption u/s 11 - Whether the Pharmacy Division of the assessee hospital is an integral part of the dominant purpose of hospital itself ? - HELD THAT:- We have noticed that the case of the Ld.AO as well as the CIT(A) hinges around the belief that the provisions of section 11(4A) were attracted in case of the assessee and since the separate books of account are not maintained, the assessee is not entitled for benefit of exemption u/s 11(1) because the the pharmacy business is not integral and dominant part of philanthropic activity of the hospital.
DR has made a submission that the assessee has not brought on record any documents/material to show that the surplus of the pharmacy business income has been spent for the philanthropic purpose of the trust.
For this, once again, AR submitted that the assessee hospital had always been spending this surplus income from the pharmacy division for the philanthropic purpose of the trust. Moreover, in case there is any violation of registration u/s 12A by the Trust, the revenue authorities are always at liberty to take action as permitted by law in case it is found that the assessee is not spending the surplus funds for philanthropic purpose of the trust/hospital.
We are of the considered opinion that the case of the assessee hospital is very well covered by the judgement of the co-ordinate bench in the case of M/s Jaslok Hospital & Research Centre [2016 (6) TMI 1486 - ITAT MUMBAI].
Income from the Chemist division for A.Y. 2017-18 wherein similar issue for income from pharmacy division has been dealt with and decided in favour of the assessee.
It is not in dispute that the assessee is running a hospital and is also having in-house patients. Medicines are essential for the treatment of the patients.
Assessee is also giving treatment to the OPD patients, who are at liberty to purchase the medicines from the chemist shop of hospital. It has been vehemently argued on behalf of the assessee by the Ld.AR that for saving the life and proper treatment of the in-house patients, running of pharmacy division is the most essential requirement for running the assessee hospital and for fulfillment of the dominant purpose of the assessee trust. We, therefore, are of the considered opinion that the facts and circumstances of the assessee’s case are fully covered by the judgement of the co-ordinate benches cited supra.
We find that the appellant/assessee fulfills all the requirements which necessitates the running of pharmacy and chemist division in the hospital to achieve the dominant purpose of the trust for which the revenue authority have given approval u/s 12A to the assessee hospital and, therefore, the assessee hospital is entitled for the benefit u/s 11(1) of the Act and the income from the pharmacy and chemist division of the assessee cannot be treated as business income from a separate and independent activity carried out by the assessee.
Thus, on the basis of summarized grounds the points of determination enumerated in the beginning of the order are accordingly decided in the affirmative and in favour of the assessee. We accordingly direct the AO to delete the addition.
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2025 (2) TMI 704
Black Money - notice issued under section 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMIT Act) - Adopting the conversion rate AO determined the value of undisclosed foreign income and asset accordingly - AO assessed 50% of the above said amount on substantive basis and remaining 50% on protective basis in the hands of both the assessee’s in AY 2018-19 - assessee contending that the assessment order has been passed without a valid notice -
HELD THAT:- We have noticed earlier that the assessing officer has issued more than one notice u/s 10(1) of the Act. The contention of the assessee is that the AO has not issued a valid notice for initiating assessment proceedings for assessment for AY 2018-19 and hence the assessment order passed by him for that year is not valid.
In respect of undisclosed foreign assets acquired or made prior to the commencement of the Act and if no declaration has been made under Chapter VI, such asset shall be deemed to have been acquired or made in the year in which a notice under sec.10 is issued by the assessing officer. This deeming fiction would show that it is mandatory to issue notice u/s 10(1) of the Act in respect of undisclosed assets acquired prior to the commencement of the Act and which was not voluntarily declared, since the date of acquisition of that asset shall be deemed to be the year in which notice u/s 10 was issued.
Deeming provisions mentioned in sec.72(c) of BMIT Act - In the instant cases, the impugned foreign assets have been acquired by both the assessee’s prior to the commencement of the BMIT Act and further they have also not filed any declaration u/s 59 of the Act voluntarily. Hence the deeming provisions mentioned in sec.72(c) of BMIT Act shall apply to the facts of the present cases. Accordingly, the “assessment year” for assessing those foreign assets would have to be determined on the basis of date of notice issued by the AO u/s 10(1) of the Act. We noticed earlier that the proviso to sec.3(1) of the BMIT Act stated that the undisclosed asset located outside India shall be charged to tax on “its value in the previous year in which asset comes to the notice of the Assessing officer”.
There should not be any dispute that a notice u/s 10(1) of the Act is issued in order to acquire jurisdiction for making assessment in the hands of the assessee u/s 10(3). In the instant case, we have held that the provisions of sec.10(1) have to be read along with of sec.72(c) also. Accordingly, we have held that, in the facts of the present cases, issuing of notice u/s 10(1) is mandatory. Hence, the AO has to acquire jurisdiction to assess the undisclosed asset by issuing a valid notice. Accordingly, without acquiring proper jurisdiction, the AO cannot acquire jurisdiction and pass any assessment order.
The question that arises is whether the AO can modify the “assessment year” in the notice issued u/s 10(1) in order to acquire jurisdiction. It was contended by the Ld DR that the provisions of sec.81 of BMIT Act, which is akin to sec.292B of the Income tax Act, will protect the validity of notice, since mentioning of wrong previous year and assessment year was a mistake, defect or omission in the notice, which could be.
The next notice issued by the AO u/s 10(1) of the Act is the notice dated 27-04-2018 issued for AY 2018-19. The Ld CIT(A) has also held that this is the notice, which has given jurisdiction to the AO to assess the undisclosed assets for AY 2018-19. In this notice, the AO has clearly stated that the earlier notice dated 07-08-2017 was issued incorrectly for AY 2017-18 and hence he is issuing the fresh notice dated 27-04-2018 for AY 2018-19.
We notice that the notice dated 27-04-2018 is issued for AY 2018-19 and the same is contrary to the provisions of sec.72(c) of the BMIT Act. We noticed that section 72(c) is a deeming provision as per which the undisclosed assets are deemed to have been acquired during the previous year in which such notice is issued. Since the second notice is issued on 27-04-2019, the impugned undisclosed assets are deemed to have been acquired during the previous year 2018-19 and accordingly they have to be assessed in assessment year AY 2019-20 only. Hence the AO could not have passed the assessment order for AY 2018-19 on the strength of notice dated 27-04-2018. Accordingly, the said notice would not also validate the assessment order passed for AY 2018-19.
AO has also issued two more notices u/s 10(1) of the Act, viz., on 10-07-2018 and 09-11-2018. On the strength of those notices, the AO could have framed assessment order for AY 2019-20 only in view of the deeming fiction enshrined in sec.72(c) of the Act and not for AY 2018-19.
The foregoing discussions would show that the assessing officer did not acquire jurisdiction in accordance with law for assessing the undisclosed assets and income in Assessment year 2018-19 by issuing a valid notice. In the absence of a valid notice issued for the impugned assessment year, we have to quash the orders passed by the tax authorities in the hands of both the assessee’s herein. We order accordingly.
Since we have quashed the orders on the legal issue relating to jurisdiction, there is no necessity to adjudicate other grounds urged by the assessee and accordingly, they are left open.
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2025 (2) TMI 703
Assessment u/s 153A - propriety of approval u/s 153D to the respective draft assessment orders placed before him by the AO - HELD THAT:- As discernible from the combined approval memo, the sanctioning authority (Addl. CIT) has, in fact, relegated his statutory duty to the subordinate AO, whose action the Addl. CIT, was supposed to supervise as per the scheme of the Act. Manifestly, the Addl. CIT, without any consideration of factual and legal position in proposed additions and without the availability of incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a symbolic approval to meet the statutory requirement. This approach of the Addl. CIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and is thus incapable of being sustainable in law.
Assessee has also demonstrated glaring lapses in the respective assessment orders which could easily be detected on a bare reading of such orders. Impliedly, the Addl. CIT has not even cared to read the assessment orders while entrusted with the task of approval of such orders. A common approval for all assessment years in complex matters of search without identifying or discussing any issue in relation to any assessment year further shows no semblance of any application of mind to any aspect of any assessment years.
CIT(A) has brushed aside the legal objection summarily merely on an inept & indifferent premise that the assessment order makes mention of the approval from Addl. CIT under 153D of the Act and such powers are in the nature of administrative powers and a purely internal matter. The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made are not tenable in law.
We are unhesitatingly disposed to hold that the integrity and propriety of impugned assessments under captioned appeals based on such combined approval memo u/s 153D in question cannot be countenanced in law. Decided in favour of assessee.
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