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Showing 61 to 80 of 1484 Records
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2025 (3) TMI 1424
Presumptive taxation scheme of section 44BB v/s Fee for Technical Services (FTS) u/s 115A - services related to well engineering and other related activities - HELD THAT:- We make it clear first of all that section 44BB is indeed in the nature of a special provision for computing profits and gains in connection with the business of exploration etc. of mineral oils which is not even doubted by the both learned lower authorities in their respective findings. This being the clinching factual backdrop, it is noticed that in Oil & Natural Gas Corporation Ltd [2015 (7) TMI 91 - SUPREME COURT] has already settled the instant issue in assessee’s favour.
As per CBDT Circular No. 1862, dated 22.10.1990 to conclude that the learned lower authorities have erred in law and on facts in rejecting the assessee’s impugned claim seeking assessment under section 44BB of the Act in very terms. Assessee appeal allowed.
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2025 (3) TMI 1423
Revision u/s 263 - lack of enquiry regarding genuineness of the source of cash deposit and in old SBNs during demonetization period - HELD THAT:- No information has been brought on record that the figure of SBNs that was obtained by the AO from the assessee, was inaccurate or incomplete. Nothing has been brought on record to show that the assessee did not make the sales that it claimed to have made.
Assessee, in the course of its reply to the Ld. PCIT had submitted that the nature of the trade is such that sales are unverifiable being mostly made in cash and bills are not drawn up and even if bills are drawn up the names and address of the parties are not recorded in such bills and it has brought on record instances of the cases where the Hon'ble Courts and Tribunal have held that since liquor trade is a controlled commodity, lack of bills will not make a difference to determining sales because the sales are determined with regard to the quantity of purchases and the closing stock.
We observe that the AO has verified the purchases from the figure recorded in Form 26AS and also obtained statement of closing stock from the assessee.
Thus, failure to produce sales vouchers does not materially alter the fact that sales were duly explained by the utilization of stock. Therefore, we are not able to agree with the PCIT that the AO had not done enquiries with regard to the genuineness of the cash deposits that were sought to be explained out of cash sales.
AO did not enquire about the details of licences issued to the assessee for trading of liquor - As license fees were duly recorded in the books of account of the assessee and these books of accounts have been produced before the AO. Thus, the source of payment of licence fees stood explained from the books of accounts, in which no infirmity has been pointed out. As observed that the payment of licence fee for the running of excise shops is not immediately relevant to the reasons for selection of the case for scrutiny. Therefore, even though, the books of accounts have been produced and examined and to that extent the license fee has been considered by AO, this observation of the PCIT would not, in our opinion, constitute an item of lack of inquiry, given the reasons for selection of case for scrutiny.
AO had failed to obtain the ledgers/confirmation from the parties through which the assessee had made purchases - The assessee has submitted that the liquor is a controlled commodity and all purchases were made from distilleries and excise was paid by the assessee to the distilleries during the purchases of liquor from them. It was the distiller which was deposited the excise to the credit of the Government on the amount of liquor distilled/manufactured. Since the entire extent of purchases stood confirmed by Form 26AS of the assessee, further verification from the distilleries with regard to the extent of purchase was not necessary. We would agree that, for this reason, the failure to cross verify the purchases from the distilleries cannot support the conclusion of the PCIT, that the purchases stood unverified.
PCIT has held that enquiries have not been made was the failure to examine the genuineness and creditworthiness of persons who have been given unsecured loans to the assessee and sundry creditors - Examination of expenses primarily pertains to the second issue on which account the case was picked up for scrutiny i.e. “abnormal increase in sales with lower profitability” and we find that the AO vide his notice dated 24.03.2019 has examined the gross profit/net profit shown in corresponding turnover for the current year and the past year, wherein he has asked the assessee to furnish details of turnover, gross profit, G.P ratio, net profit, and N.P ratio and after such examination, the AO has observed that net profit ratio of the assessee was much higher than previous years and therefore, the AO has not drawn any adverse inference on this account. Therefore, we are not able to agree with the PCIT that the AO has not examined the major expenses incurred by the assessee.
Payment of rent expenses in cash stating that the said issue had not been examined by the AO - We note that vide his notice dated 04.07.2019, the AO had asked for details of TDS liability discharged on payment of rent & salary and vide his notice dated 20.12.2019, he has asked the assessee to furnish a copy of rent agreement and the details of TDS made along with documentary evidences. We, further, notice that in response to these notices, the assessee furnished copies of rent agreement to the AO along with ledger accounts and stated that TDS, wherever necessary, was deducted and deposited in Central Government Account.
This is not a case where Explanation-2(a) of Section 263 of the Act is applicable because all enquiries which in the opinion of the Ld PCIT ought to have been made, were made by the Assessing Officer, albeit in not exactly the same manner as desired by the Ld. PCIT, but very substantially and towards verifying the very same set of facts.
After considering the facts of the case and the law as laid down by the courts, we hold that the Ld. PCIT was not justified in holding that the order of the AO was erroneous and prejudicial to revenue and therefore we quash the order of the Ld. PCIT u/s 263 of the Act and restore the order of the Ld. AO passed u/s 143(3) of the Act. Accordingly, all the grounds of appeal of the assessee are allowed.
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2025 (3) TMI 1422
TP Adjustment order passed in the name of a non-existing company - HELD THAT:- We find an identical issue had come up in the case of M/s. Allscripts (India) LLP (As a successor in interest of Allcripts India Pvt. Ltd.) vs. NFAC [2023 (5) TMI 1044 - ITAT AHMEDABAD] wherein the Tribunal while deciding the issue of validity of the order passed by the TPO on a non-existing company. The Tribunal after relying on the various decisions held that the order passed on a non-existing company is a nullity.
We find some force in the arguments of the Ld. Counsel for the assessee that the TPO is not given any concession under the Act to pass any order as per his choice and once he fails to do so, it is a nullity. The provisions of section 292BB of the Act in our opinion cannot come to the rescue of the TPO this being a jurisdictional issue. Since in the instant case, despite number of letters addressed by the assessee to the TPO to drop the proceedings on the ground that the same are being proposed on a non-existing company, the TPO passed the order in the name of a non-existent company, therefore, we hold that such order of the TPO passed in the name of a non-existing company is a nullity. Decided in favour of assessee.
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2025 (3) TMI 1421
Foreign tax credit for state taxes paid in the United States under Section 91 - existence of a Double Taxation Avoidance Agreement (DTAA) between India and the USA - HELD THAT:- We find no merit in the Revenue’s either of the twin vehement contentions raised herein. This is for the precise reason that this tribunal’s in Tata Sons Ltd. [2011 (2) TMI 1528 - ITAT MUMBAI] has already rejected the Revenue’s case seeking to invoke section 91.
We find that the same is no more res-integra in light of M/s. Wipro Ltd. [2015 (10) TMI 826 - KARNATAKA HIGH COURT] deciding the very issue in assessee’s favour and against the department that for the purpose of such foreign tax credit claim, both federal as well as state taxes stand on an identical footing.
Faced with this situation, the Revenue quotes Manpreet Singh Gambhir [2008 (9) TMI 411 - ITAT DELHI-B] that a learned coordinate bench has already settled the issue in the department’s favour as well. We are of the considered view that the given fact that hon’ble Karnataka high court has already adjudicated the issue in assessee’s favour, the tribunal’s foregoing order must make way for the hon’ble higher judicial forum’s wisdom by following judicial discipline. We accordingly accept the assessee’s instant sole substantive grievance in principle and direct the AO to frame his consequential computation as per law. Assessee appeal allowed.
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2025 (3) TMI 1420
TP Adjustment - Comparable selection - HELD THAT:- Exclusion of Cosmic Global from the final list of comparables company earns overseas revenue only from medical transcription, translation and consultancy services. Hence, it is clear that revenue from BPO is only from domestic operations. Thus, Cosmic's export revenue from BPO services is 0%, therefore, fails Ld. TPO's own filter of having at least 75% export sales. In fact, Cosmic was rejected by the co-ordinate bench in assessee’s own case for AY 2009-10 [2023 (2) TMI 1103 - ITAT DELHI] on the ground that it fails export filter of 75% and hence cannot be considered.
Eclerx Services excluded on the ground of functional dissimilarity.
TCS e-Serve company is functionally comparable. We, therefore, direct the Assessing Officer to include this company in the set of comparables.
Recomputing the profit level indicator of the assessee by erroneously considering foreign exchange gain/loss as a non-operating item, even though the same has been considered as operating in prior assessment years - We are of the considered view that considering the business profile of the assessee, this contention raised on behalf of the assessee about inclusion of foreign exchange gains in operating revenue finds merit. We are inclined to agree with the assessee that the foreign exchange gain earned by the assessee is in relation to the revenue earned from its AE in connection with provision of ITES. We find that foreign exchange gain directly results from consideration received from rendering ITES to AE and therefore, we fail to understand how such foreign exchange fluctuation gain should be considered as non-operating.
Thus, we allow this ground of appeal raised by the assessee and direct the Assessing Officer/TPO to treat the forex gains as operating income of the assessee. Ground No. 5 is allowed.
Computation of working capital adjusted margins of comparable companies - We find that the CIT(A) even directed TPO to consider the correct working capital adjusted margins but this was not done by the TPO in the appeal effect order. We accordingly, direct the Assessing Officer/TPO to examine and consider the correct margins of Interglobe in the case of the assessee. Ground No. 6 is allowed for statistical purposes.
Inclusion of comparables rejected by the TPO viz. Axis-IT & T Ltd. & ICRA Online - ICRA passes the export earnings filter of 75%. The earnings from 'outsourced services fees' segment as on March 31, 2010 is Rs. 128,046,000 and the export earnings are Rs. 111,409,000 which are almost 87% of the total revenue from the BPO services. Therefore, ICRA should be retained as a suitable comparable. This Ground No. 2 is dismissed.
Motif India Infotech - Annual report of the company is available. The TPO has not put forward any other argument for the rejection of this comparable. Accordingly, Motif India Infotech Pvt Ltd should be considered for the purposes of TP analysis. Therefore, we are of the considered opinion that the ld. CIT(A) rightly directed inclusion of Motif India Infotech Pvt. Ltd.
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2025 (3) TMI 1419
Revision u/s 263 - Setting aside the assessment order U/s 147 r.w.s. 144B - assessee was reopened u/s 147 on the basis of information that the assessee had received as interest on enhancement of compensation on compulsory acquisition during the year which he had claimed exempt income 10(37) - whether the interest received under section 28 of the Land Acquisition Act on enhanced compensation for acquisition of land, is exempt u/s 10(37) or will be exigible to tax under the "income from other sources" in view of amendment w.e.f 01.04.2010 in the provisions of section 56(2)(viii) and 57(iv) of the Act. ?
HELD THAT:- From the perusal of the facts and circumstances of the case and the position of law as on date, we are of the considered view that the language in section 56(2)(viii) and 145B(1) are plain, simple and unambiguous and that the correct legal position is that the interest received during the year on enhanced compensation under section 28 of the Land Acquisition Act, 1894 is exigible to tax u/s 56(2)(viii) r.w.s 145B(1). The assessee’s claim of the same as exempt u/s10(37) of the Act is unsustainable as the provisions of section 10(37) deals with ‘compensation’ only and not “interest on compensation or enhanced compensation”.
The argument of the Ld. DR that the AO’s order which ignored the decisions of Mahender Pal Narang [2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] and Puneet Singh [2019 (1) TMI 1068 - PUNJAB AND HARYANA HIGH COURT] becomes erroneous and prejudicial to the revenue as per the clause (d) of Explanation 2 to section 263 of the Act, needs to be endorsed.
Thus, we are of the considered opinion that the AO's order is not legally compliant and is clothed with flawed appreciation of law. The AO has not made any inquiry into the legal position regarding taxability of the said receipt. We further hold that the PCIT has correctly held that the AO order is erroneous and prejudicial as it has defied the binding decisions of Mahender Pal Narang [2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] and Puneet Singh [2019 (1) TMI 1068 - PUNJAB AND HARYANA HIGH COURT]
We further hold that the ld. PCIT was within his legal competence and has validly assumed jurisdiction u/s 263 to order re-computation of the interest on enhanced compensation in accordance with section 2(28A)r.w.s.56(2)(viii) and 145B(1) and allowing deduction u/s 57(iv).We also find that the order of the Ld. PCIT is in accordance with the ratio laid down in the cases of Sham Lal Narula [1964 (4) TMI 10 - SUPREME COURT] and Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] and Mahender Pal Narang (supra), Puneet Singh (supra) and Inderjit Singh Sodhi (HUF) [2024 (4) TMI 408 - DELHI HIGH COURT]
Thus, we decline to interfere with the impugned order passed by the PCIT under section 263 of the Act holding that the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Grounds raised by the assessee are, accordingly, dismissed.
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2025 (3) TMI 1418
Adjustment in absence of approval u/s 12A and 10(23C)(i) rws 10(23C)(vi) done in the processing of ITR u/s 143(1) - HELD THAT:- In principle, we are in agreement of the finding of the Ld. Addl/JCIT(A)-9, Mumbai as the impugned order is well reasoned. But the anomaly has arisen after the approval vide order dated 08.07.2024 under section 10(23C)(i) rws 10(23C)(vi) of the Act for the relevant year as the assessee’s entire income having derived from the educational institution is fully exempted even after the said adjustment as the tax cannot be levied on the exempted income.
We have no option except to restore the matter back to the AO to give effect to the order passed u/s 10(23C)(i) rws 10(23C)(vi) of the Act for relevant year as the assessee is entitled for claiming exemption under section 10(23C). We, therefore, direct the AO to allow the benefit of section 10(23C) of the Act and allow consequential relief to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2025 (3) TMI 1417
Assessment of trust - Additions of surplus raised through commercial activities - Addition on account of credited infrastructure Development fund Addition on account of depreciation
HELD THAT:- CIT(A) has examined the issues in the correct prospective and rightly deleted the additions made by the A.O as held AO has made the addition by a very cryptic and non-speaking order without mentioning anything about the issue involved, facts of the matter or any legal and accounting provision under which the same has been added. Appellant has tried to bring to my knowledge the inference drawn from the assessment order, pointing the para that might be relevant for the basis of this addition.
A perusal of the para shows that AO has in fact calculated sum in every column, incorrectly. In fact if it is presumed that the table made by AO is correct then appellant has in fact credited more in P&L Account and not less. Secondly even if it is to be held that the accretion to his fund namely Infrastructure fund received can be added to the income of the assessee then also the same shall be free of taxation because of the fact that appellant enjoys the exemption u/s 11A.O has denied the claim of depreciation holding that assessee is enjoying exemption u/s 11 since inception and the assets was created out of exempt Income and thus claiming depreciation on such assets which was acquired from exempted income is amount to double deduction. Claim made for depreciation is for use of the assets while claim of capital outgo as an application is on a different footing, just because capital expenditure was considered as application of income, it could not be said that the assessee would not be entitle to claim of depreciation thereon.
A.O has denied the claim of depreciation holding that assessee is enjoying exemption u/s 11 since inception and the assets was created out of exempt Income and thus claiming depreciation on such assets which was acquired from exempted income is amount to double deduction. Claim made for depreciation is for use of the assets while claim of capital outgo as an application is on a different footing, just because capital expenditure was considered as application of income, it could not be said that the assessee would not be entitle to claim of depreciation thereon.
The reasoning and findings of the Ld. CIT(A) granting relief is on proper appreciation of law expounded by the judicial dicta. We do not find any reasons to interfere with the findings of the Ld. CIT(A). The appeal of the revenue is liable to be dismissed.
Appeal of the revenue is dismissed.
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2025 (3) TMI 1416
Eligibility for exemption u/s 11 and 12 - HELD THAT:- The grounds raised by the assessee are decided in the favour of the assessee.
Addition on account of infrastructure funds - HELD THAT:- In the instant case the Infrastructure Funds are received by the assessee under the order of Government of Uttar Pradesh which was required to use as per the directions of the high-powered committee. The case of the assessee is squarely covered from the above sited case and the infrastructure funds are not taxable in the hands of the assessee. We decided the grounds in the favour of the assessee.
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2025 (3) TMI 1415
TP Adjustment - addition made by AO concerning the variation in the arm's length price of power, where the AO, following the directions of the Dispute Resolution Panel (DRP), reduced the sales value of power from the assessee's reported value - AR submitted that the price at which surplus power is supplied by producers to the Indian Energy Exchange (IEX) is determined by state regulations and contracts and, therefore, cannot be considered the market value for the purposes of Section 80-IA(8) - HELD THAT:- We are of the considered view that the method adopted by the Assessee for determining the arm's length price was correct, and the adjustments made by the AO were not in line with the applicable provisions of the Income Tax Act. Therefore, in this situation, and in our opinion, the addition made by the AO on this account cannot be sustained. Accordingly, the Assessee's appeal on this issue is allowed.
Arm's length price of steam - MAM selection - TPO in his order, has held that the Cost-Pius Method (CPM) is the most appropriate method for determining the arm's length price for the transaction pertaining to the transfer of steam, as opposed to the Transactional Net Margin Method (TNMM) adopted by the assessee - HELD THAT:-We are of the considered view that the AO's approach to the adjustments regarding the transfer of steam and the arm's length pricing is not consistent with the facts and circumstances of the case. Moreover. A.O. erred in reducing the loss @ 20.50% which have already been considered by Assessee. Therefore, in this situation, and in our opinion, the addition made by the Assessing Officer on this account cannot be sustained. Accordingly, the Assessee's appeal on this issue is allowed.
Deduction u/s 80G for CSR contributions - As we are of the considered view that CSR contribution / expenditure, if claimed u/s 80G would defeat the very basic requirement of CSR expenditure (on total amount), Therefore, claim of 80G on CSR expenditure is not tobe allowed as per se. Accordingly, AO’s action of rejecting the claim of 80G on CSR expenditure is justified. Hence, Assessee’s appeal on this Ground is dismissed.
Deemed income u/s 41(1) - HELD THAT:- We find that as the Assessee itself has deducted the same amount in the next years return of income, therefore, disallowing the same in this year would be tantamount to double taxation. Accordingly, Assessee’s appeal on this ground is allowed.
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2025 (3) TMI 1414
Addition u/s 56(2)(x) - difference between stamp duty and transaction value - Assessee submitted that the provisions of section 56(2)(x) as quoted by the AO are applicable to the purchasers whereas the assessee in the instant case is the seller - As argued since the AO has not given any finding on this issue and CIT(A) / NFAC has merely sustained the addition made by the AO without giving any finding regarding the applicability of the said provisions, therefore, he has no objection if the matter is restored to the file of the AO
HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make his submissions, if any, before the Assessing Officer on the appointed date.
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2025 (3) TMI 1413
Reopening of assessment u/s 147 - addition u/s 69 of the Act as unexplained source of income and taxed as per the provision of section 115BBE - AO made the addition under consideration on the reason that there is difference in the claim of the Assessee in original and new return filed in response to notice u/s 148 and no proof regarding the same was submitted, whereas the Assessee has claimed that he has duly submitted the relevant details as submitted before the Tribunal - HELD THAT:- Assessee no doubt is entitled to get the statutory deductions under chapter VIA of the Act as per limit prescribed and cannot be denied benefit of the same simply on the reason that earlier in the original return of income, the Assessee has claimed lower amount than the claimed amount in the subsequent return of income filed in response to notice u/s 148 of the Act, especially when the subsequent return is accepted. And therefore in order to cut short the controversy and for substantial justice, the addition is also deleted, however, subject to verification of the relevant documents and clarification pertaining to the issue under consideration, by the AO. Appeal filed by the Assessee is allowed.
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2025 (3) TMI 1412
Revision u/s 263 - lack of proper inquiry and verification regarding the deduction of Tax Deducted at Source (TDS) and the classification of income - HELD THAT:- It is clear from the order u/s 143(3) r.w.s 144B of the Act that the AO has passed a cryptic order in a perfunctory manner. He has not passed a speaking order containing the conclusion and the reasons that have led to such conclusion; especially considering the fact that the case was selected for complete scrutiny. The assessee was engaged in the business of construction of water supply projects and underground drainage projects. The main issues of the complete scrutiny were refund claim, contract receipts or fees and income from house property.
The main issues of the complete scrutiny were refund claim, contract receipts or fees and income from house property. The assessee had filed two submissions vide letters dated 03.02.2021 and 02.03.2021. The details as per reply dated 03.02.2021 include unsecured loans, sundry creditors, other liabilities, interest payments details of expenses party-wise such as sub-contractor purchases, labour charges and wages etc. In the reply dated 02.03.2021, the assessee had furnished reply in respect of unsecured loan, other liabilities, professional fees etc. It is, therefore, clear that details of TDS on various expenses, as pointed out by the PCIT in the show cause notice and the order u/s 263, have not been called for by the AO.
He has not examined as to whether TDS provisions u/s 194C, 194J and 192 of the Act were duly complied with by the assessee. The AO has not even seen the audit report of the assessee, where in the Annexure to Form No.3CD, all the columns of details of deduction or collection of tax as per provisions of Chapter XVII-B or XVII-BB of the Act are blank. It is, therefore, evident that the AO has not conducted even the basic inquiry and verification before passing the assessment order. He was required to put specific query to the assessee on the issue of TDS because huge expenses of more than Rs. 31 crore has been claimed by the assessee on various expenses, which are prima facie covered under provisions of section 194C, 194J and 192 of the Act.
It is well settled that the AO performs dual role, i.e., he is not only an adjudicator but also an investigator. He is supposed to carry out proper inquiry and investigation and pass the order after confronting the assessee about the result of enquiry, which emerge from the investigation and scrutiny carried out by him during the assessment proceedings. As discussed earlier, the AO has not properly inquired about the non-compliance of the assessee regarding the provisions of Chapter XVII-B and XVII-BB.
He has also failed to examine the issue in terms of provisions of section 40(a)(ia) of the Act. It is also seen that the assessee has shown income from house property, which was actually required to be offered as capital gain u/s 45 of the Act.
The difference between the value determined by the SVA and declared consideration which was 9.02% and was more than the tolerance limit of 5% for the subject assessment year. The assessment order and the details called for and submitted during assessment proceedings are totally silent on these issues. In view of these facts, the order of the AO was certainly erroneous in so far as it is prejudicial to the interests of revenue within the meaning of section 263 of the Act. The ld. PCIT has rightly invoked provisions of section 263 of the Act, which is upheld.
Whether the direction issued by the ld. PCIT to disallow 30% of various expenses due to alleged failure of assessee to deduct TDS and addition u/s 50C is correct in the given facts and circumstances of the case? - It is not clear from the submission of the appellant that the daily wages and labour charges were for daily wage labourers or labour on contract basis. Therefore, the direction of the ld. PCIT is modified accordingly. In other words, the order of ld. PCIT to set aside the assessment order of AO is upheld but the AO is directed to verify requirement of TDS deduction on daily wage and labour charges. If there is no requirement of deduction due to the amount being less than the threshold limit of Rs. 30,000/- for single payment or Rs. 1 lakh in aggregate during the financial year, then such expenses should be allowed and only the remaining expenditure should be disallowed and added to the total income. This ground is partly allowed.
Difference between the stamp duty value and sale consideration - The percentage of variation is 9.02% [(16,06,112 / 1,78,06,112) x 100]. The appellant submitted that the variation is less than 10% and hence no addition is needed. We find that during the subject AY.2018-19, the permissible limit was 5% and not 10%. The words “five per cent” were substituted by the words “ten per cent” by the Finance Act, 2020 w.e.f. 01.04.2021. Hence, it is applicable for AY.2021-22 and the subsequent assessment years. The order of ld. PCIT on this issue is accordingly upheld. This ground is dismissed.
Appeal of the assessee is partly allowed.
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2025 (3) TMI 1411
Rejection of application for grant of final registration U/s 12A(1)(ac)(iii) and 80G(5)(iii) for want of proper submission - HELD THAT:- The principle of audi alteram partem which envisage that parties be are eligible for fair hearing or that no one should be condemned unheard.
Thus, considering the prayer of assessee that he undertook on behalf of assessee-trust to be more vigilant in future in making compliance, this appeal of assessee is restored back to the file of ld. CIT(E) to pass the order afresh in accordance with law. Needless to direct that before deciding the application afresh, the ld. CIT(E) shall grant reasonable and fair opportunity of hearing to the assessee - Appeal of assessee is allowed for statistical purposes.
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2025 (3) TMI 1410
LTCG - valuation of the property as on 01.04.1981 - valuation of the property as determined by the Departmental Valuation Officer (DVO) - HELD THAT:- The Government approved valuer has considered nearest data comparable considered by him was 10.04.1981 whereas the DVO has considered from the period January 1990 to March 1990 and he dragged back rates from 31.03.1990 to 01.04.1981.
There is basic difference of valuation adopted by the DVO which is clearly visible that he has considered leasehold property against the freehold property and we observed that ld. CIT (A) has tabulated the various variation for the purpose of valuation adopted by the DVO which are – (a) adopted properties involving leasehold property; (b) considered the comparables for the leasehold properties dated 31.03.1990 and dragged back the valuation to 01.04.1981 i.e. 9 years later than the date of valuation; (c) ignored size of the property; (d) ignored the location advantage and frontage of the existence of the property and date of inspection of the property is 13.11.2017 on which the property was not in possession of the assessee and building was demolished at the time of valuation.
Considering the major issues involved in valuation report submitted by the DVO, ld. CIT (A) gave relief to the assessee by observing that the fair market value of the property determined by the Government approved valuer is closer and correct fair market value and can be adopted for computation of capital gain. Therefore, he directed the AO to delete long term capital gain and rejected the fair market value of the property by the DVO in its report on 01.12.2017 - Decided against revenue.
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2025 (3) TMI 1409
Rejection of books of accounts - estimating the total income of the assessee - HELD THAT:- Once the books of account are rejected by invoking the provisions of section 145 of the Act and the income is estimated to the best of judgment as per the provisions of section 144 of the Act, the said estimate is made in substitution of the business income that is to be computed in accordance with the provisions contained in sections 30 to 43D as laid down in section 29 of the Act. Consequently, all the deductions which are referred to in sections 30 to 43D of the Act are deemed to have been taken into account while making such an estimate.
Useful reference in this regard may be made to the decision of Indwell Constructions [1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] and Banwari Lal Banshidhar [1997 (5) TMI 37 - ALLAHABAD HIGH COURT] For these reasons, we do not agree with this plea of the Revenue.
No infirmity in the order of the Ld. CIT(A) in rejecting the books of accounts and estimating the total income of the assessee. We accordingly uphold the same.
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2025 (3) TMI 1408
Approval granted u/s 153D - as argued that the approval obtained was done in a "mechanical manner," i.e. approval was granted without due application of mind and without reviewing the essential documents by the approving authority - HELD THAT:- We are of the considered view that the approval has not been granted in a mechanical manner by the Approving Authority, and therefore, this legal ground of the assessee is hereby rejected.
Assessment u/s 143(3) r.w.s. 153A/153C must strictly be based on "incriminating material" that is found during the course of a "search in case of unabated assessment year - The legal proposition, that in case of search cases relating to unabated assessment years, addition can be made only on the basis of “incriminating material” found during the course of search, is a well-settled / well-accepted legal proposition. There is no dispute so far as this legal proposition is concerned. Therefore, this brings us to the question whether in the instant case, the additions have been made on the basis of “incriminating material” found during the course of search or not. Assessee has stated that all the additions for all the assessment years before us (seven in total) have not been made on the basis of any incriminating material found during the course of search. It has stated that all the additions have been made only on the basis of recommendation of special auditor and therefore, no addition is liable to be sustained.
Addition made in absence of any incriminating material found during the course of search - Additions have been made during the course of assessment in the case of the assessee, and evidently some of which is on the basis of incriminating material found in the course of search as pointed out by us in the preceding paragraphs, in interest of justice, the matter is restored to the file of CIT(Appeals) so as to allow one more opportunity to the assessee to file documentary evidence in support of its case and thereafter, in light of the evidence produced by the assessee, decide each of the disallowances/additions on merits of the case.
If however, with respect to any particular addition/disallowance, the assessee is able to substantiate/ demonstrate that the particular addition does not have any reference to any incriminating material found during the course of search, then keeping in view the legal principle that in case of search cases for unabated assessment years, no additions can be made in absence of any incriminating material found during the course of search, such addition may be deleted in the hands of the assessee.
Once books of accounts were rejected u/s 145 (3) no addition can be made in respect of items reflected in the books of accounts - As in light of these facts, certain information was sought from the assessee during the course of assessment proceedings by the Special Auditor, but the assessee was found to be absolutely non-cooperative. The assessee took every step to thwart/stonewall the assessment proceedings, including filing of writ petition challenging the validity of search proceedings as well as challenging the validity of appointment of special auditor in this case.
Taking into consideration the assessee’s particular set of facts, dismissed both the writ petitions filed by the assessee, thereby validating the initiation of search proceedings as well as appointment of special auditor, looking into assessee’s particular set of facts. As mentioned above, the additions have not been made only taking into consideration the books of accounts of the assessee but also taken into consideration the incriminating material found during the course of search. Therefore, the above legal argument does not come to the support of the assessee and the case laws/judicial precedents on which reliance has been placed by the assessee are found to be distinguishable on facts. This legal argument of the assessee is hereby rejected.
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2025 (3) TMI 1407
Challenge to non-grant of relief in terms of drawback under Instruction No. 4/2019 issued by Central Board of Indirect Taxes and Customs - Petitioner’s case is as soon as the Instruction No. 4/2019 was issued, within a period of three months, the representations have been made - HELD THAT:- The reason for rejection, if any, ought to be spelt out and the order cannot be simply a cryptic order stating that the same has not been considered favourably.
This Court is of the opinion that the CBIC, Drawback Division ought to look into the matter and pass a reasoned order on the representations of the Petitioner while considering the purpose and the rationale behind issuance of the said Instruction No. 4/2019 dated 11th October 2019.
Conclusion - The CBIC, Drawback Division, must reconsider the Petitioner's applications and issue a reasoned order.
The present writ petition may be treated as a representation and a reasoned order may be passed by the CBIC, Drawback Division within three months - Petition disposed off.
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2025 (3) TMI 1406
Entitlement to duty drawbacks when exporting mobile phones, which have been unlocked and accordingly they had availed of the drawbacks - HELD THAT:- As per the judgement in M/s AIMS Retail Services Private Limited v. Union of India & Ors. [2025 (2) TMI 596 - DELHI HIGH COURT], this Court has held that duty drawback may be claimed in respect of unlocked mobile phones being exported, as the mere act of unlocking does not constitute the phones being “taken into use” within the meaning of the applicable provisions. Given that a mobile phone is capable of being utilized in several ways, the mere unlocking thereof cannot be deemed as the Petitioners having “taken it into use.”
Furthermore, this Court has observed that with the expansion of mobile phone manufacturing and assembly in India, the volume of exports is expected to increase. The mere fact that the said products are configured for use in foreign jurisdictions cannot operate as a ground to deprive the Petitioners of their rightful claim to duty drawback under the prevailing legal framework. The present case also pertains to the Respondents’ rejection of the Petitioner’s request for duty drawback on unlocked mobile phones being exported.
Conclusion - The unlocking of mobile phones for export does not constitute "use" under the Duty Drawback Rules. Exporters are entitled to duty drawbacks unless explicitly restricted by law.
Petition disposed off.
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2025 (3) TMI 1405
Refund of the Countervailing Duty (CVD) and Special Additional Duty (SAD) paid after failing to fulfill export obligations under the Advance Authorization and Export Promotion Capital Goods (EPCG) schemes - failure to fulfill export obligation - HELD THAT:- On perusal of Section 142, it is apparent that the respondent authorities could not have referred to and relied upon the provisions of section 142(8)(a) as the same would not be applicable to the facts of the case as the petitioners did not deposit the amount of duties in any recovery proceedings but the petitioners had voluntarily deposited the amount of duties on reconciliation of the imports made by the petitioners with the Advance Authorisation and EPCG license entitlement. Therefore, the case of the petitioners would be squarely covered by provisions of section 142(3) of the CGST Act which provides for considering the refund claim of the petitioners as per the existing law at the relevant time when import was made in the year 2016.
As held by Telangana High Court in case of Principal Commissioner of Customs v. M/.s Granules India Limited [2024 (12) TMI 725 - TELANGANA HIGH COURT], the respondents were required to process the refund claim under section 142(3) read with section 142(6)(a) of the CGST Act. The Hon’ble Telangana High Court held that 'The Tribunal, by taking into account the provisions of sub sections (3), (5) and (8A) of Section 142 of the CGST Act, has held that the assessee is entitled to claim refund of CVD and SAD paid after the appointed day. Accordingly, the assessee had been held to be entitled to refund of central value added tax credit of Rs. 3,28,75,733/-.'
This Court in case of Indo-Nippon Chemicals Co. Ltd. v. Union of India [2002 (2) TMI 136 - GUJARAT HIGH COURT], has also held that assessee would be entitled to the refund claim as per the proviso of section 11B of the Central Excise Act, 1944 and clause(c) of proviso could not be construed as enlarging the scope of the main provision in sub-section (1) of section 11B read with Cenvat Credit Rules,2004.
Conclusion - Refund claim filed by the petitioners is required to be processed under the provisions of Central Excise Act, 1944 read with Cenvat Credit Rules, 2004 as per the provisions of section 142(3) read with 142(6)(a) of the CGST Act,2017. Therefore, without disturbing the order rejecting Form TRAN-1 passed by the respondent authorities, so far as order-in-original dated 10.10.2019 rejecting the refund claim of the petitioner for Rs. 45,84,371/- is concerned, is herby quashed and set aside and the matter is remanded back to the respondent authorities so as to decide the refund claim of the petitioners on merits as per the provisions of Central Excise Act, 1944 read with Cenvat Credit Rules, 2004 in view of provisions of section 142(3) read with section 142(6)(a) of the CGST Act, 2017
The petition is partly allowed by way of remand.
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