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Showing 481 to 500 of 1484 Records
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2025 (3) TMI 1004
Entitlement to condone delay in filing a corrected return condoned u/s 119(2) - petitioner had committed a mistake in showing the correct information in column-15 and column-18 and have clubbed the dis-allowance of expenditure claimed under Section 37 in column-23 which was pointed out by the CPC while analyzing the return as per the Centralized Processing of Returns Scheme, 2011
HELD THAT:- CPC issued the intimation dated 03/09/2019 pointing out the mistake in the return and therefore the petitioner was called upon to submit the response thereto. The petitioner having found such mistake has therefore rightly filed a corrected/revised return u/s 119 (2) (b) of the Act as the time to file the revised return had already expired on 31/03/2019 as per the provision of Section 139 (5).
The respondent was therefore only required to consider such revised return as there was only a correction of the mistake in the presentation of the correct figures in the column-15 and column-18 instead of clubbing the same in column-23 of the return and instead thereof, the respondent has enlarged the scope of Section 119 (2) (b) by not redressing such minor corrections to be made in the return of income and has rejected the same on the ground of genuine hardship and advising the petitioner to avail the other legal resources u/s 254 or Section 154 unmindful of the fact situation that there was no impact on the corrected return on the taxable income of the petitioner and it was only to facilitate the CPC to process the return so that the petitioner is entitled to the refund, if any, so as to compute the taxable income of the petitioner in accordance with law as provided under Section 143 (1) (a) of the Act.
The respondent no.2 ought to have allowed the applications to condone the delay in filing the corrected/revised return which was a formality only as only the correct presentation in Form-ITR-6 was not made by the petitioner which has prevented the CPC from processing the return.
These petitions succeed and are accordingly allowed. Impugned order dated 24/08/2023 passed u/s 119 (2)(b) is hereby quashed and set aside and the delay in filing the revised return is hereby ordered to be condoned and respondent no.1 is directed to process/transmit the revised return filed by the petitioner on 06/09/2019 to CPC to process the same in accordance with law.
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2025 (3) TMI 1003
Review petition - proviso to Section 2(15) not applicable to the respondent - ITAT has allowed the appeal and has held that the proviso to Section 2(15) is not applicable to the respondent / review petitioner and has set aside the order passed by CIT (E) u/s 263 by which the matter was remanded back to the AO for fresh assessment.
Whether the factual aspect as available in the present case and the ground which has been agitated is available to exercise the power of review? - HELD THAT:- This Court is of the view that since the Co-ordinate Bench has passed order on the concession given by the learned counsel appearing for the review petitioner and the matter has been remitted before the authority to decide afresh in view of the judgment passed by the Hon’ble Apex Court, hence, this case is not coming under the fold of the power which is to be exercised under the jurisdiction of review.
On the basis of the discussion made herein above and taking into consideration the ratio laid down by the Hon’ble Apex Court in the case of Sanjay Kumar Agarwal Vrs. State Tax Officer (1) & Anr. [2023 (11) TMI 54 - SUPREME COURT] and in the case of Rimpa Saha [2025 (1) TMI 1525 - SUPREME COURT]] is of the view that no ground is available to review the order passed.
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2025 (3) TMI 1002
Writ of Mandamus directing the respondents/Income Tax Department to invoke a detailed investigation based on representation made - one Srinivasan, (who was an ex-employee of the petitioner) has lodged a complaint alleging that the petitioner owes a sum of Rs.5 crores to him, which, according to the petitioner, is utter fallacious, as the said Srinivasan does not even had a source of income to pay such huge amount to the petitioner
HELD THAT:- The said Srinivasan does not even had a source of income to pay such huge amount to the petitioner, therefore, in this regard, he made a representation to the respondent-Income Tax Department to find out the source of income of the said Srinivasan, whether he is an income tax assessee; whether he is filing any return of income; whether he is capable of having such huge amount with him, such other informations. Thus, this Writ Petition is nothing but an attempt made by the petitioner to collect information from the respondent-Income Tax Department as regards the source of income of the sixth respondent, which, cannot be considered by this Court. If it is the grievance of the petitioner that the said Srinivasan had lodged a false complaint against the petitioner and that, the said Srinivasan cannot afford to give such huge sum of money to the petitioner, it is for the respondent-Police Department to act upon based on such complaint made by the sixth respondent and if the respondent-Police finds such complaint to be genuine and files any chargesheet and passes any final orders, only in such case, the respondent-Income Tax Department may come to the rescue of the petitioner to find out the source of income of the sixth respondent.
Thus, as rightly pointed out respondent-Income Tax Department, unless and until any chargesheet is filed and final orders is passed based on the complaint lodged by the sixth respondent, the respondent-Income Tax Department would not come to the rescue of the petitioner to find out the source of income of the sixth respondent, in the absence of the same, the respondent-Income Tax Department cannot be expected to act upon based on such complaint. WP dismissed.
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2025 (3) TMI 1001
Nature of expenditure - expenditure incurred on replacement of old machinery by new machinery - Revenue or capital expenditure - HELD THAT:- In view of this admitted position, we propose to decide this issue, based on the factual position that the production capacity has not increased. In fact, the Departmental Representative accede to the fact that the production capacity has not been enhanced, but only states that that is not the sole relevant parameter.
Schedule M establishes categorically that there is no increase in the production capacity either in RR Nagar factory or in Jayanthipuram factory which remain constant at 7, 50, 000 and 11, 00, 000 tonnes per annum respectively both pre and post the year of replacement. In the RR Nagar factory in fact, the actual production for the year ending 1996-97 is in excess of the installed capacity. This is attributable, according to the learned assessee counsel on instructions, to improved technology and better production efficiency.
Thus, seeing as the installed capacity has remained constant over the years in question without there being any increase thereof, we are of the considered view that the expenditure incurred would be revenue in nature. Decided against the revenue.
Eligibility for benefits u/s 35(i)(iv) while the matter is pending before the competent authority - HELD THAT:- This very issue has come up for consideration in [2024 (12) TMI 1542 - MADRAS HIGH COURT] we have decided the question adverse to the assessee following an order of the Tribunal for AY 1996-97 that has not been agitated by the assessee but accepted. Hence, and in the interests of consistency, this substantial question of law is answered in favour of the revenue.
Allowance of 100% depreciation to fly ash silo treating it as a pollution control equipment - HELD THAT:- We are of the considered view that the assessee must succeed. It is true that the entry in question reads 'Ash handling system and evacuation system'. The grant of 100% depreciation is thus for a process that must both contain and evacuate fly ash that pollutes the air. It is nobody's case that the silos installed in the factory do not achieve the purpose of handling/containing the pollutant.
The mode and manner of disposal is irrelevant so far as it is efficient and achieves the object of removal from the atmosphere. Needless to say, the use of fly ash in the manufacturing process has effectively rid the premises of the pollutant, and in a gainful manner. We wonder what could be a better mode of evacuation. We hence agree with the conclusions of the Tribunal that the method followed by the Assessee for containment and use of fly ash effectively achieves the twin objects of both handling/containing the fly ash as well as evacuates it from the premises by channelising it into the production process. Assessee is entitled for the grant of 100% depreciation in this regard. Decided against revenue.
Payment of interest to IFCI - claimed the same as deduction under Section 43B on the ground that the payment had been made prior to the due date - Tribunal has reversed the orders of the lower authorities returning a finding that the claim was in order, since the amount had actually been paid by the assessee - HELD THAT:- We are unable to glean any support for the above conclusion by the Tribunal from the records. Findings of the assessing authority are contrary insofar as the assessee was specifically asked to provide materials in support of the submission that the loan had been disbursed, which it had been unable to do. We too sought such a clarification from the assessee requiring it to produce some material, either by way of bank statement or letter of corroboration from the bank to no avail.
Findings of the Tribunal that the amount had actually been paid by the assessee is sans any material to support the same. The provisions of Section 43B, insofar as they relate to the condition of actual payment, call for a strict satisfaction and the failure of the assessee to have produced any material in this regard is fatal to its case. Decided against the assessee.
Deduction u/s. 80HHC - excise duty, customs duty, windmill power receipts etc. form part of the total turnover for the purpose of calculating the benefit u/s. 80HHC or not? - HELD THAT:- This issue is to be answered in favour of the assessee by virtue of Sudharshan Chemicals Industries Limited [2000 (8) TMI 73 - BOMBAY HIGH COURT] Section 80HHC which is a separate code by itself. Hence, the general definition of the word turnover or the case law dealing with the said definition under the Sales Tax Act which is a State levy, cannot be imported into Section 80HHC of the Income-tax Act. Decided against the revenue.
Depreciation on the dumpers - no evidence adduced that they had used it for more than 180 days, or even received the same in their site prior to 180 days - ITAT allowed full claim - HELD THAT:- As no evidence has been produced by the assessee before the authorities to establish that the dumpers had been received in its premises and put to use prior to 01.10.1995. This could very easily been done either by showing gate pass at the time of receipt of vehicles or any other documentation to indicate receipt and use of the same prior to 01.10.1995.
Since the assessee has admittedly not done so, we are of the view that the Tribunal ought not to have reversed the orders of the lower authorities. Tribunal proceeds on the concept of passive user which is not applicable to the fact and circumstances of the present case. The benefit of depreciation to a passive user would require the user to establish that it was in possession of the asset but was unable to use the asset for a certain period on account of factors beyond its control.
In the present case, even the assessee being in possession of the asset prior to 01.10.1995 is in doubt and has not been established. Hence, we reverse the order of the Tribunal - Decided against the assessee.
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2025 (3) TMI 1000
Writ of Certiorari to quash an impugned order u/s 250 - opportunity of personal hearing to appear through Video Conferencing has not been provided to the petitioner - HELD THAT:-In the present case, the first respondent provided an option to opt for personal hearing either in person or through Video Conferencing. The petitioner has opted for personal hearing through Video Conferencing. However, the respondents have failed to provide an opportunity to the petitioner to appear through Video Conferencing to present the case. Without providing an opportunity of personal hearing to the petitioner, the impugned order was passed on 19.06.2024.
If any order is passed without providing an opportunity of personal hearing, it is clearly amounts to violation of principles of natural justice.
When the respondent intended to pass orders against the petitioner, it is the bounden duty of the respondent to provide an opportunity of the personal hearing through Video Conferencing, as the petitioner opted to appear through Video Conferencing to present his case.
When the Video Conferencing option was opted by the petitioner, such option was not provided by the respondent. Thus, it violates the principles of natural justice, and on this score alone, the present impugned order is liable to be set-aside.
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2025 (3) TMI 999
Reopening of assessment u/s 147 - Addition u/s 68 - reopening notice beyond more than four years - HELD THAT:- The assessee has furnished clinching evidences before the AO during the course of the original assessment proceedings to prove the transactions. Therefore, by no stretch of imagination it can be said that the assessee failed to disclose truly and fully all material necessary for its assessment for the year under consideration.
No hesitation in setting aside the impugned notice u/s 148 thereby quashing the resultant assessment order.
We would now address to the merits of the case. As mentioned elsewhere the assessee has furnished all the documentary evidence thereby establishing the identity, creditworthiness and genuineness of the transactions and discharging completely the initial onus cash upon it by the provisions of Section 68 of the Act.
The assessment orders of the two companies M/s. Tremendous Mining & Minerals Pvt. Ltd and M/s. Sur Buildon Private Limited are also discussed hereinabove by which the impugned transactions have been accepted in the respective cases. Therefore, the same transactions cannot be treated as bogus and colourable in the hands of the assessee. Even on the merits of the case, the additions do not stand and, therefore, we direct the AO to delete the impugned additions. Appeal of the assessee is allowed.
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2025 (3) TMI 998
Denial of exemption claimed u/s 10(26BBB) - HELD THAT:- Respectfully following the order of the Tribunal [2019 (1) TMI 1267 - ITAT DELHI] and in view of identical facts for the present Assessment Year also, the assessee’s claim for exemption u/s 10(26BBB) is rejected by the AO is confirmed.
Further, in view of Form No.8 declaration filed u/s 158A of the Act by the assessee, the assessee/the AO after receipt of the order of the Hon’ble Uttarakhand High Court in the aforesaid [2020 (10) TMI 1398 - UTTARAKHAND HIGH COURT]in assessee’s own case may furnish suitable application in terms of section 158A(5) of the Act and as per the procedure laid down in section 158A of the Act. Decided against assessee.
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2025 (3) TMI 997
Disallowance of interest earned during the set-off of business - Addition under the head ‘Income from other sources’ concluding interest earned prior to the commencement of the business is taxable as ‘Income from other sources’ - CIT(A) deleted addition - HELD THAT:- We find that there is no case of department as to how disputed interest is not inextricable linked with the setting up of the plant. The nature of deposits have been duly examined in AY2018-19 and found to be inextricable linked with the setting up of the plant. Since, the above fund inextricable linked with the setting up of the plant, the decision of Bokaro Steels Limited [1998 (12) TMI 4 - SUPREME COURT] is clearly applicable in applicant’s case and ld. CIT(A) has not erred in relying the same. The grounds have no substance.
Disallowance of premium received on the shares issued - AO made addition of book share premium of shares @Rs.2/- as excessive share premium per share due to the reason that, identity, genuineness and creditworthiness of the investor was not proved - CIT(A) deleted addition - HELD THAT:- Conclusion of ld. CIT(A) that the allotment of shares to an existing shareholder cannot be construed to be an investor whose identity and creditworthiness were not proved, needs no interference.
We find that ld. CIT(A) has also held that during the immediate preceding year, the same share premium of Rs. 2/- per share has been received from the said shareholder. It is also observed from the submission of the appellant that, the said value of Rs. 12 per share has been arrived by way of DCF method as prescribed by the Reserve Bank of India which is a prescribed method of valuation in the instant case and the AO also has not found fault with the said method of DCF valuation.
Thus disallowance made by the AO u/s 56(2)(viib) on the said receipt of the share premium was not sustainable and direction of deletion by ld.CIT(A) needs no interference. Decided against revenue.
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2025 (3) TMI 996
Addition u/s 68 - Sundry Creditors who failed to respond to the notices u/s 133(6) - as argued no addition could be made under section 68 of the Act, in respect of credit balances at the end of the financial year, if, the purchases from those parties and trading results had been accepted - estimation of Net Profit @ 8% on total turnover
Unconfirmed Sundry Creditors - Credit balances do not represent loans or advances taken by the assessee where creditworthiness to extent the advances are essential point for examination. Rather these represent sundry creditors for purchases and the purchases have not been called into question. Therefore, merely because some part of the expenditure for the purchases have not been met during the concerned financial year, is not ground to hold that those credits are bogus, unless it can be shown that those purchases were never made at all. As the Ld. AO has not conducted any exercise to determine the bogus nature of the purchases, in view of the decision of Pancham Dass Jain[2006 (8) TMI 582 - ALLAHABAD HIGH COURT] and Ritu Anurag Agarwal [2009 (7) TMI 1247 - DELHI HIGH COURT] the decision of the Ld. CIT(A) to delete the additions made on account of unconfirmed Sundry Creditors is upheld. Accordingly, ground no. 1 of the Department appeal is dismissed.
Difference in balances reported by Sundry Creditors - As this is a matter of re-conciliation, we restore this matter back to the file of the Assessing Officer so as to give the assessee of the opportunity to re-concile the differences and order that in the event of such re-conciliation being made to satisfaction of the AO, addition should not be made on this account. This ground of appeal is allowed for statistical purposes.
Estimation of net profit rate @ 8% - CIT(A) has himself recorded the fact that VAT Authorities have examined and confirmed the sales and purchases of the assessee. In the circumstances, in the absence of finding any fault in the accounts of the assessee, in our opinion the rejection of the books and estimation of the profit @ 8% would not be justified. In any case, the 8% profit is presumptive tax for civil contractors having turnover less than of Rs. 2 crores. The turnover of the assessee is over Rs. 7 crores. In the circumstances, a rate not bearing any relation to the history of the assessee’s case or any comparable case cannot be justified. In the circumstances, we find it fit to delete the addition made on account of estimation of net profit and to restore the rate of net profit to that disclosed by assessee in the return.
Failure of CIT(A) to consider the VAT assessment and the fact that the assessee supplied only to PSUs, which was the reason for higher estimation of income by him - As already observed that the Ld. CIT(A) has considered the VAT assessment and we observe that he has also recorded the fact of the purchases of the assessee being verifiable as they were from PSUs. However, since the estimation of income by him is at variance with these findings recorded by him in his order, the same is not maintainable. Accordingly, this ground of appeal is allowed.
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2025 (3) TMI 995
Reassessment beyond period of limitation - notice u/s 148A(b) of the Act having been initiated after six years from the assessment year - scope of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA)
HELD THAT:- Admittedly the notice u/s 148 of the Act was issued on 30.06.2022 i.e. beyond the TOLA period and such a notice under the old regime could have been issued only up to 31.03.2022 and the benefit of extension of due date as per TOLA would be applicable only to the notices issued between 01.04.2021 to 30.06.2021 if the limitation for issuing such notices was expiring between 20 March 2020 and 31 March 2021.
The limitation for A.Y. 2015-16 was expiring on 31.03.2022, i.e. beyond the period of 20.03.2020 to 31.03.2022, therefore, the benefit of TOLA would not be applicable. Further, in view of the first proviso to section 149(1) of the Act. The time limit for reopening assessments has been reduced from four years to three years. However, in cases where income that escaped assessment amounts to ₹50 lakhs or more, assessments can be reopened within ten years. The new regime prohibits reopening of assessments that were time-barred under the old regime.
In this case the notice u/s 148 of the Act was earlier issued on 09.04.2021 which was treated as show cause notice u/s 148A(b) of the Act but the order u/s 148A(d) of the Act has been passed on 30.06.2022 and as per the old provisions of reassessment, the notice u/s 148 of the Act after complying with the procedural requirement as per the amended provisions ought to have been issued by 31.03.2022 after excluding the period granted to file the reply in response to the notice u/s 148A(b) of the Act. Since the limitation for issue of notice u/s 148 of the Act expired on 31.03.2022 under the old regime and for AY 2015-16 of the assessment order the notice u/s 148 has been issued on 30.06.2022, the benefit of TOLA for extending the limitation for issue of notice u/s 148 of the Act will not be available to the Revenue.
Thus notice issued u/s 148 of the Act on 30.06.2022 is barred by limitation and the assessment order is hereby quashed and appeal of the assessee is allowed.
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2025 (3) TMI 994
Validity of approval granted u/s 153D - as alleged same was done in a mechanical manner - HELD THAT:- Only one approval u/s 153D was granted by letter and by marking check mark ("✔") for each year the approvals are shown to have been issued for each year, but, as a matter of fact, there is no change in the No. of letter being F.No.Addl.CIT/CR-7/2021- 22/634 under which the approval u/s 153D of the Act was issued by the competent authority. Thus, there is no dispute that a composite approval was sought and granted in the case of the assessee for assessment years 2014-15 to 2020-21.
Approval seems to be some sort of mechanical exercise only because in the corresponding letter from the ld. AO dated 27.09.2021 (supra) only draft orders were submitted for examination. There is no reference that appraisal report or seized documents were also forwarded. In fact, it is pertinent to observe that vide letter dated 27.09.2021 (supra), the AO had made a request that “online approval u/s 153D may kindly be accorded.” This shows that certainly, the assessment records were not forwarded, what to talk of appraisal report and relevant seized documents.
As no data was seized in electronic format from hard drive/CDs/pen drives/mobile data so as to necessitate making these observations by the ld. competent authority. The aforesaid observations and directions only indicate that in a perfunctory manner without application of mind post completion of assessment, on the draft orders the approval has been granted.
It is now settled proposition of law that the approval so granted without taking into consideration the assessment record, incriminating evidences and the approval not exhibiting the reasons for granting the approval independently on the draft assessment order cannot be sustained.
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2025 (3) TMI 993
Reassessment proceedings u/s 147 - Valid sanction u/s 151 - “prescribed authority” as to whether it should be the jurisdictional commissioner or Principal Commissioner under section 151(i) or the Principal Chief Commissioner under clause (ii) of the Act, as the case may be - HELD THAT:- Section 151(ii) approval in the instant case involving escaped income of Rs. 50 lakhs or more, had to be obtained under the “new regime” from the “Principal Chief Commissioner” etc. We accordingly adopt the foregoing detailed discussion mutatis mutandis to conclude that the impugned section 148 proceedings herein are not sustainable in law for want of valid section 151(ii) approval in very terms. The impugned reopening/reassessment stands quashed therefore. Appeal of assessee allowed.
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2025 (3) TMI 992
Penalty u/s 271D - Period of limitation - HELD THAT:- In the instant case, the AO has issued reference to the JCIT on 31.07.2019, and therefore, following the decision of Mahesh Wood Products [2017 (5) TMI 433 - DELHI HIGH COURT] the penalty order should have been passed within six months i.e. 31.01.2020. As the JCIT has passed order u/s 271D of the Act on 28.2.2020, we are of the considered opinion that the same is outside the prescribed limit u/s 275(1)(c) of the Act and therefore, time barred.
Regarding the second proposition that penalty is time barred as the demand notice was required to be submitted alongwith penalty order, which was not done in the present case, the same is rendered academic as the penalty order itself has been held as time barred and the assessee has succeeded on first ground itself. Decided in favour of assessee.
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2025 (3) TMI 991
Exempt income u/s.10(10AA) - leave encashment on retirement - Benefit of enhanced limit - Assessee was denied the benefit of Notification No.31/2023/F.No.200/3/2023- ITA-1 dated 24-05-2023 which revised the leave encashment limit - HELD THAT:- The Co-ordinate Jaipur Bench decision in the case of Govind Chhatwani [2023 (10) TMI 1509 - ITAT JAIPUR] recently the Central Board of Direct Taxes Suomotu revised the limit for deduction u/s 10(10AA) and the revised limit now stood at Rs. 25, 00, 000 as specified vide notification no. 31/2023 issued by the ministry of finance.
Since the leave encashment amount as claimed by the assessee which is below the revised limit of leave encashment exempt prescribed by the Board, the assessee is eligible to claim of deduction of said. Based on these observations the AO is directed to allow the claim of the assessee u/s. 10(10AA) within the revised limit as prescribed. In terms of these observations the appeal of the assessee is allowed.
We held that the assessee is entitled to get the deduction as claimed in the return of income u/s 10(10AA) as the limit has been increased from 3 lac to 25 lacs. Appeal filed by the Assessee is hereby allowed.
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2025 (3) TMI 990
LTCG - Tax on gift of movable or immovable property by means of transfer - levy of tax based on the holding period - "transfer" under Section 2(47) - Computation of Capital Gains pertaining to the settlement executed by the assessee in favour of his brother by reckoning the guideline value / stamp duty value as the sale consideration of the each of the property settled while taking the book value as the cost of acquisition - HELD THAT:- Gift transaction that had occurred between relatives (Brothers in the present case) should be reckoned as settlement so as to reckon the same as not a transfer for the purpose of settlement in Section 2(47) r.w.s 45/48. This above fact could not be disputed by the ld. DR when the same was brought to their attention.
This Tribunal is of an opinion that attempt of the CIT(A) in clubbing both the settlement deeds (one by the assessee in favour of the brother and the other by the brother in favour of the assessee) was legally erroneous for the consequential erroneous conclusion reached by further reckoning the transaction as exchange for the purpose of justifying the levy of Capital Gains tax.
We find force in the argument of the Ld. AR that transaction of settlement between the assessee and his brother for preventing future disputes and transaction of settlement between the brother and the assessee executed simultaneously is to be considered as independent transactions by the stamp duty authority and hence in the light of the stamp duty authority reckoning the deeds as settlement deeds not as exchange, the presumption of altering the legally executed settlement deed as exchange was not permissible in law.
The settlement deed(s) as such executed as per the process known to law would definitely fall within the ambit of the exception of Section 47(iii) of the Act and consequently levy of Capital Gains tax would get negated /vitiated.
In deciding the issue of settlement deed between the brothers in the case on hand, we take note of the decision of SS Pillai vs. KS Pillai [1972 (5) TMI 60 - SUPREME COURT] wherein it was held observed that if in the interest of the family, properties and family peace, the close relatives settle their dispute amicably, this court will be reluctant to disturb the same.
Hon’ble Madras High court in the case of CIT vs. R. Ponnammal [1986 (1) TMI 26 - MADRAS HIGH COURT] members of a joint family may, in order to maintain peace and bring about harmony in the family, enter into a family arrangement and if the arrangement is entered into bonafide and the terms thereof are fair, courts will normally give assent to such an arrangement rather than avoid it. Even if a party to the settlement has no title under the arrangement but the other party relinquishes all his claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed, and the family arrangement will be upheld.
Therefore, we cannot agree with the CIT(A) for taxing the settlement deeds of the assessee with his brother considering it as ‘transfer’ under section 2(47) and hence we are inclined to delete capital gains added by the AO. Assessee appeal allowed.
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2025 (3) TMI 989
TP Adjustment - AMP expenses - application of Bright Line test - HELD THAT:- AMP expenditure quantum alone assessee cannot be said to have benefitted the AEs’ brand. Brands are not product or services centric, but, more of customer centric. In exercise of brand building or enhancement, it is essential to establish as to how the AMP expenses generated awareness of the brand which was more useful to the foreign AE than to help the assessee in procuring its share of market.
AO was, thus, required to establish that the AMP expenses were not for tearing into the local market alone, but, were made at the instance of foreign AE for enhancement and creating a brand value beyond the local market. In the absence of any such facts coming out of a concerted action of the assessee with its foreign AE, or in absence of independent inquiry on the basis of nature of product, services or retail brands catered by the assessee the AO cannot draw any presumption on the basis of AMP expenses quantum or sales that the expenses must have resulted into any benefit to the AE.
Therefore, we are inclined to accept the case of assessee that in the given facts and circumstances, Tax authorities were unable to demonstrate that AMP expenses incurred by the assessee were in any way beneficial to the brand of foreign AE requiring TP adjustment. Thus this issue is decided in favour of the assessee.
Payment of royalty - If the tax authorities have erred in rejecting the transfer pricing documentation maintained by the assessee in respect of payment of royalty and erroneously determined arm’s length royalty rate at 2% of the sales of the assessee - HELD THAT:- The comparable agreements selected by the assessee in its TP documentation maintained for the subject year were rejected by the ld. TPO on account of different geographical reasons, but, the issue was considered in favour of the assessee and further comparable agreements selected by the assessee and the ld. TPO belong to same industry i.e., kitchenware and home furnishing items. Therefore, the rejection of comparable companies selected by the assessee was held to be unjustified.
Addition on account of payment of management service, fee -HELD THAT:- Representatives of both the sides submitted that there is no change in facts and circumstances and, in fact, we find that when in the final order passed by the ld. AO, the DRP directions have been followed wherein only in reference to earlier year orders the DRP had re-asserted any directions. Accordingly, the grounds No.8 and 9 before us are also restored to the file of the ld. AO to proceed in accordance with the law as per the directions issued by the coordinate Benches in AY 2013-14 and 2014-15. The ground is sustained for statistical purposes.
Interest on outstanding receivable - HELD THAT:- As we find that there is no case of the ld. AO that the AE was charging any interest on account of trade payables from the assessee. We find that the DRP has dealt with this issue observing that the assessee has merely put legal arguments and no submissions on facts and the computation made by the TPO has been presented and, thus, relying in the case of Cotton Naturals, upheld the enhancement done by the ld. TPO.
Since the case of assessee is that post undertaking working capital adjustment of comparable companies selected in TP documentation, the margins earned by appellant are more than that of comparable companies. We consider it appropriate to remit the issue with the ld. AO/TPO to examine the issue afresh on the basis if post undertaking working capital adjustment the assessee selected the comparable companies and ratio of judgment in the case of Kusum Healthcare Pvt. Ltd. [2017 (4) TMI 1254 - DELHI HIGH COURT]. The ground is sustained for statistical purposes.
Payments made to ‘Dart’ alleged to be royalty - In assessee’s own case for AY 2013-14, the issue has been dealt by the Bench in [2023 (1) TMI 12 - ITAT DELHI] and the facts before us are not in any way different. Thus we restore the issue to the files of ld. AO/TPO to determine the same afresh. Accordingly, this issue is sustained in favour of the assessee for statistical purposes.
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2025 (3) TMI 988
Adjustment made u/s. 43B - Intimation issued u/s 143(1) - HELD THAT:- A perusal of the Computation Sheet shows that the adjustment made while processing return of income u/s 143(1) have been incorporated. Therefore, in the facts of the present case, it cannot be said that the grievance raised by the Assessee in appeal before the CIT(A) does not rise from the Assessment Order, dated 25/10/2022, passed under Section 143(3) r/w/s 144B of the Act. Accordingly, we accept the contention of the Assessee that in the facts and circumstances of the present case the doctrine of merger would apply. Therefore, we reject the contention of the Revenue that the CIT(A) erred in entertaining and adjudicating the grounds raised by the Assessee in appeal before the CIT(A) challenging the adjustments made while issuing intimation under Section 143(1) of the Act. Accordingly, Ground No. 1 raised by the Revenue is dismissed.
CIT(A) had proceeded to grant relief to the Assessee without providing any opportunity to the AO to verify (a) the factual averments made on behalf of the Assessee and (b) the documents filed by the Assessee in support of the same - We do find some merit in the aforesaid contention. The adjustments were initially made u/s 143(1).
Admittedly, no submission/documents in relation to the adjustment were filed during the regular assessment proceedings. CIT(A) has proceeded to allow the grounds raised without calling for a remand report. It was contended on behalf of the Assessee that no new evidence was filed by the Assessee during the appellate proceedings before the Tribunal and therefore, the question of calling for a remand report does not arise.
Arguendo, even if the aforesaid submission of the Assessee is accepted as correct, we find that the CIT(A) has not recorded any reasoning for accepting the contention of the Assessee. After reproducing the assessment order and the submissions of the Assessee, the CIT(A) has concluded in favour of the Assessee. However, no reasoning has been recorded. The order passed by the CIT(A) is silent as the discrepancy or inadvertent error, if any, in the audit report, financial statements and/or the return of income.
The claim of the Assessee could, at best, be regarded as additional claim made by the Assessee in appellate proceedings before the CIT(A). The aforesaid additional claim has been adjudicated on the basis of the material on record by the CIT(A) without any fresh inquiry into facts. Therefore, we do not find any infirmity in the approach adopted by the CIT(A). It is admitted position that updated Form 26AS reflected aggregate TDS credit of INR.12, 76, 37, 773/- for the Assessment Year 2021-2022. In our view, the Assessee is entitled to claim additional TDS credit provided corresponding income has been offered to tax during the Assessment Tear 2021-2022. Accordingly, we direct the Assessing Officer to allow credit for additional TDS of INR.27, 40, 247/- as reflected in updated Form 26AS after verifying that the corresponding income has been offered to tax as income for the Assessment Year 2021-2022. The Assessee is directed to file a statement showing reconciliation statement in support of the contention that the additional TDS credit claimed pertains to income already offered to tax. Accordingly, to his extent the order passed by the CIT(A) is confirmed. In view of the aforesaid, Ground No. 2, 3 and 4 raised by the Revenue are partly allowed. In terms of the aforesaid, Ground No. 5 seeking set-aside of the order passed by the CIT(A) is partly allowed.
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2025 (3) TMI 987
Rejection of application u/s 80G - error regarding the relevant clause u/s 80G(5) - instead of mentioning clause (iii) of first proviso to section 80G(5) in the application in Form No.10AB, the assessee mentioned clause (ii) of first proviso to section 80G(5), which is applicable to the trusts which already have regular approval and the application is made for the renewal of the same
HELD THAT:- We are of the considered view that the error committed by the assessee is merely inadvertent and clerical, as the facts and circumstances of the case only require filing the application under clause (iii) of first proviso to section 80G(5). We find that the impugned order is completely silent on any opportunity being granted to the assessee to rectify the error and file the revised application in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act.
Accordingly, we restore the matter to the file of the learned CIT(E) to grant an opportunity to the assessee to file the revised application in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act and decide the same in accordance with law. With the above directions, the impugned order is set aside and grounds raised by the assessee are allowed for statistical purposes.
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2025 (3) TMI 986
Taxability of the payments received under consideration, i.e., hire charges for bareboat dredgers - AO classified the said income of the Appellant as “Royalty” as well as “Business Income” - HELD THAT:- Appellant merely supplies dredger to ISDPL on hire on bareboat basis. As evident from Article 12 of India-Netherlands DTAA that term ‘Royalty’ does not include payments for the use or right to use industrial, commercial or scientific equipment, as mentioned by the AO in the SCN.
The judgment in the case of Van Oord ACZ Equipment BV [2014 (11) TMI 605 - MADRAS HIGH COURT] and Tribunal in the case of DDIT v. Nederlandsche Overzee Baggermaatsehappiji BV [2010 (5) TMI 674 - ITAT MUMBAI] and M/s International Seaport Dreding Ltd. [2016 (7) TMI 1699 - ITAT CHENNAI] also strengthen the argument of the assessee that hire charges of bareboat charter would not constitute “Royalty’ and hence, not taxable as ‘Royalty’ under Article 12 of India-Netherlands DTAA.
We also note that the word ‘plant’ in India-Beligium DTAA under Article 12 is a typographical error for word ‘plan’. This factual error has been acknowledged in the Notification S.O.54 [NO.20 (F.NO.505/2/89-FTD] Dated 19.01.2001. Hence, we are of the considered view that hire charges of bareboat charter does not fall under the garb of definition “Royalty’ and hence, not taxable as ‘Royalty’ under Article 12 of India-Belgium DTAA.
We have gone through the judgments in the cases of R.D. Aggarwal [1964 (10) TMI 9 - SUPREME COURT], Carborandum Co. [1977 (4) TMI 2 - SUPREME COURT] Ishikawajma-Harima Heavy Industries Ltd. [2007 (1) TMI 91 - SUPREME COURT], Metror Sattellite Ltd. [1979 (6) TMI 25 - GUJARAT HIGH COURT] and Netherlandsche Overzee Baggermaatsehappiji BV [2010 (5) TMI 674 - ITAT MUMBAI] and also taking guidance therefrom, it is clear from the above facts that the appellant has no business connection in India or PE. We also find that the AO without adherence to the principles laid by the Hon’ble Courts in above referred cases has held that assessee has business connection and PE in India is devoid of merit.
Since, assessee does not constitute a PE in India, therefore attribution of profits to PE does not arise.
The issues in controversy revolve and hinges upon the survey carried out on M/s International Seaport Dredging Private Limited on 17.02.2017 and statements recorded. It is settled in the case of CIT v. S. Khader Khan Son [2013 (6) TMI 305 - SC ORDER] affirming the decision of the materials collected and the statement recorded during the survey u/s 133A are not conclusive piece of evidence by itself. We also find that the persons whose statements were recorded by the revenue have not passed the muster of cross examination by the assessee. Hence, what has been stated in the statement made u/s 133A of the Act in the case of other assessee cannot be treated as gospel truth. Therefore, we refrain ourselves to endorse the same.
Before parting with the order, we must make it clear that we have somehow avoided reproducing the sections, case laws and facts again. We have already narrated the sections, case laws and facts while dealing with submissions of the parties. Appeal of the assessee is allowed.
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2025 (3) TMI 985
Revision u/s 263 - wrong application of provisions of section 194I - HELD THAT:- It is pertinent to note that the tax to be deducted at source u/s 194I is 10%, whereas the tax to be deducted at source u/s 194C of the Act is 2%.
PCIT says the AO ought to have applied the provisions of section 194C as per the decision of PURI CONSTRUCTIONS [2024 (2) TMI 756 - DELHI HIGH COURT].
We find that the AO had erred on the revenue side by charging 10% TDS rate as per section 194I of the Act in the instant case and hence there cannot be any prejudice that could be caused to the interest of the revenue in the instant case. The order passed by the Learned AO is prejudicial to the interest of the assessee and the revision order passed by the CIT is prejudicial to the interest of the revenue.
Hence the mandatory twin conditions for initiation of revision proceedings u/s 263 does not get satisfied in the instant case and respectfully following the decisions in the case of Malabar Industrial Co [2000 (2) TMI 10 - SUPREME COURT] and Max India Ltd [2007 (11) TMI 12 - SUPREME COURT] we have no hesitation to quash the revision order passed by CIT u/s 263 of the Act. Accordingly, the grounds raised by the assessee are allowed.
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