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Case Laws
Showing 321 to 340 of 1570 Records
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2024 (5) TMI 1250
Permission for withdraal of petition - Misapplication of notification dated 02.06.2021 - levy of GST - petitioner was providing services to the Indian Navy - HELD THAT:- The petition is dismissed as withdrawn with liberty as prayed for.
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2024 (5) TMI 1249
Seeking extension of waiver of late fee under a specific Amnesty Scheme due to delayed filing of annual returns - N/N. 7/2023-CT, dated 31.03.2023 as amended by N/N. 25/2023-CT, dated 17.07.2023 - HELD THAT:- This writ petition is disposed of with a direction to the respondent to consider the representation of the petitioner and take a decision in accordance with the N/N. 7/2023-CT, dated 31.03.2023 as amended by N/N. 25/2023-CT, dated 17.07.2023 within a period of three months from the date of receipt of a copy of this order.
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2024 (5) TMI 1248
Violation of principles of natural justice - order impugned was passed without giving the petitioners an opportunity of hearing as required under Section 75(4) of the said Act of 2017 - HELD THAT:- Section 75(4) of the said Act mandates that an opportunity of hearing shall be given where a request is received in writing, to the person chargeable with tax or penalty or where any adverse decision is contemplated against such person. The petitioners, therefore, are entitled to an opportunity of such hearing, accordingly the order impugned is set aside.
The respondent no.1 is directed to decide the show cause notice and the reply thereto afresh after giving the petitioners an opportunity of hearing.
Petition diposed off.
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2024 (5) TMI 1247
Maintainability of Advance Ruling application - want of deposition of requisite fee as mandated under the GST law - Classification of services - licensing services provided by the Appellant under the Franchise Agreement, for which a periodic royalty is charged - classifiable under Service Code 997336 or under Service Code 997339? - HELD THAT:- It transpires that the Appellant was mandated to deposit a total of Rs. 20,000/- as fee (Rs. 10,000/- CGST and Rs. 10,000/- HGST) as a mandatory statutory precondition for filing appeal against the order of the Authority for Advance Ruling, Haryana. However, it is found that vide challan No. 22010600033348 dated 11-01-2022, the Appellant has paid only 3 10,000/- as tax (Rs. 5000/- CGST and Rs. 5000/- as HGST), not the required fee. Since the appeal of the Appellant is incomplete for want of deposition of requisite fee (which is to be deposited in the manner specified in Section 49), the appeal of the Appellant is not admitted.
The application of the appellant, being incomplete for want of deposition of requisite fee as mandated under the GST law, deserves to be rejected. Therefore, the appeal filed by M/s. Subway Systems India Private Limited (Now Eversub India Pvt. Ltd.,) Gurugram-122002, Haryana, Is not admitted.
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2024 (5) TMI 1246
Payment of interest on the tax demand for the period subsequent to the commencement of the new Telecom Policy of the year 1999 - waiver of interest on tax demand post Telecom Policy 1999 - HELD THAT:- We have given our thoughtful consideration to the submissions advanced at the Bar. We find that since the judgment of this Court [2023 (10) TMI 786 - SUPREME COURT] and having regard to the Telecom Policy, which commenced from the year 1999, the payment of interest for the period for which the tax demand is now to be met in respect of these cases stands waived.
However, this order shall not be a precedent in any other case as we have passed this order bearing in mind the peculiar facts of this case and having regard to the lapse of time in litigation before the Delhi High Court and this Court. It is also brought to our notice that there are other identical matters pending before the High Courts, Tribunals and Statutory Appeals etc. While disposing of those appeals, the said Courts, Tribunals etc. may bear in mind this order vis-a-vis the interest aspect.
The Miscellaneous Application stands disposed of.
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2024 (5) TMI 1245
Nature of receipt - sales tax incentive received - capital or revenue receipt - Government of West Bengal brought “West Bengal Incentive Scheme, 2000” for promoting industrialisation in backward areas and to allure entrepreneurs to set up large, medium, cottage and small scale projects - main aim and purpose of the Scheme was “promotion of industries in the State of West Bengal” and for that purpose, it provided incentives - HELD THAT:- The scheme under which the subsidy was received was for promotion of industrialization in the state of West Bengal. In the respondent assessee’s own case for the assessment years 2007-08 and 2008-09, the controversy as to whether the subsidy received is a capital receipt or a revenue receipt; came for consideration in the case of Budge Budge Refineries Limited [2022 (2) TMI 533 - CALCUTTA HIGH COURT] and the Court dismissed the appeal of the revenue and held that the amount received is capital subsidy and Section 41 (1) of the Income Tax Act, 1961 could not be invoked.
Appellant has completely failed to distinguish the aforesaid judgment of the coordinate Bench of this Court in the respondent assessee’s own case relating to the same Scheme with respect to assessment years 2007-08 and 2008-09.
Thus issue in decided in favour of the respondent assessee and against the appellant revenue and it is held that the subsidy received by the respondent assessee under the Scheme-2000 was capital receipt.
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2024 (5) TMI 1244
Reimbursement of expenses towards software costs - addition made for purported “reimbursement of expenses” towards software costs to AE - Disproven “incurring of software costs” - failure of assessee to prove the actual receipt of such software and use thereof by the respondent in India in the subject AY for its business purposes - ITAT deleted addition - HELD THAT:- Issue clearly merit being answered against the Revenue bearing in mind the judgment rendered by the Supreme Court in Engineering Analysis Centre of Excellence (P) Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein as held that amounts paid by resident Indian end-users/distributors to nonresident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and were not liable to deduct any TDS u/s 195.
Reimbursement of salaries of expatriate employees who had been seconded - TPO found that the major beneficiary of the services rendered by the seconded employees was liable to be attributed to the activities of AE - ITAT deleted the addition - HELD THAT:- ITAT has in our considered opinion without assigning sufficient reasons upheld the aforesaid view that had been expressed. We would thus hold that question (iii) as proposed would merit further consideration.
Lease Registration charges - ITAT noted that registration charges incurred during the execution of an instrument under the Stamp Act, 1899, should not be amortized over the lease period - HELD THAT:- Dealing with the asserted argument of the appellant that registration charges incurred in the course of execution of an instrument which is presented for registration under the Stamp Act, 1899 and the said charges being liable to be amortized over the entire period of the lease, the ITAT has taken note of the consistent position which appears to have been taken by the High Courts of Bombay, Himachal Pradesh and others and which had held that there would be no justifiable logic for registration charges being amortized to run over the period of lease.
We are inclined to agree since undisputedly the payment of registration charges is a one time expenditure which is incurred at the time of execution of the instrument and when it is presented for registration. Even the Schedule to the Stamp Act, 1899 does not correlate the computation of stamp duty and registration charges to the period of the lease. In view of the aforesaid, we find no ground to disagree with the view as expressed by the ITAT in this respect.
We admit the appeals on the following question of law:-
Whether on the facts and in the circumstances of the case, the ITAT perversely and unlawfully deleted the additions made for purported reimbursement of expatriate salaries and payment for royalty, by failing to make an independent finding and determination on the “double deduction” nature of the claim for such purported expenses along with “reimbursement of software expenses” with near identical details, use, functions and purposes purportedly served?
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2024 (5) TMI 1243
Disallowance of interest expense - loan amount in question was used by the appellant for purchasing land which was an agricultural land and on which the appellant had cultivated tapioca - AO found that, in as much as the loan on which interest liability had arisen, was used for purchasing agricultural and earning agricultural income, the interest expense incurred on the loan amount availed could not be allowed as an expense u/s 36 since it was not used for business purposes - HELD THAT:- We find that there is no material produced by the appellant that would clearly suggest that the loan amount availed by it during the assessment year in question had been used for purchasing an asset, which it had used for the purposes of its business as a provider of asset management services. The evidence that was available before the authorities below clearly pointed to the acquisition of agricultural land valued at Rs.5,91,52,500/- and the earning of agricultural income through the sale of tapioca to the tune of Rs.1,93,540/- during the said period.
Thus, notwithstanding the fact that the land in question was shown as a business asset in the balance sheet of the company, the fact remains that there was no evidence to show that the land was used for the purposes of the business of the assessee.
As rightly noticed by the Tribunal in the impugned order, the evidence on record showed that the land in question was used for agricultural purposes, which yielded agricultural income, which in turn was exempt from income tax u/s 10(1) of the Income Tax Act. Admittedly, therefore, and in view of Section 14A of the IT Act, the expenses could not have been seen as incurred for the purposes of the business for the purposes of Section 36 (iii) of the IT Act. - Decided in favour of revenue.
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2024 (5) TMI 1242
Jurisdiction over the case of the assessee initiating reopening assessment - assessee is a private salaried employee - assumption of jurisdiction by order of transfer u/s. 127 - disallowance of claim of exemption of Leave Fare Concession - HELD THAT:- Admittedly, as per the Notification No.1/2014-15 dated 15.11.2014, the jurisdiction over the case of the assessee, i.e. a private salaried employee as on the date of issuance of notice u/s.148 of the Act dated 23.03.2020 was vested with ITO, Ward-2(2), Bhilai. However, pursuant to the order of the ACIT Tax-1, Bhilai u/s. 120 of the Act dated 24.09.2020, the jurisdiction over the case of the assessee got vested with ITO, Ward-1(1), Bhilai.
Thus Vesting of jurisdiction over the case of the assessee with ITO, Ward-1(1), Bhilai is based on the order u/s. 120 of the Act passed by ACIT-1, Bhilai dated 24.09.2020, therefore, there is no substance in the claim of the AR that assumption of jurisdiction by him dehors any order of transfer u/s.127 of the Act could not be sustained.
Thus in terms of our aforesaid observations uphold the order of the CIT(Appeals) who had rightly sustained the disallowance by the A.O of the assessee's claim for exemption of LFC - Thus appeal of the assessee is dismissed.
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2024 (5) TMI 1241
Addition u/s 68 - addition on account of the difference between the cash deposited and the submission reflecting deposit - HELD THAT:- There was no abnormal jump in any of the month in the sales, rather the highest sales in the month of January and the lowest sales were in the month of August. Hence, the addition made of Rs. 70,00,000/- on account of jump in the sales is found to be factually incorrect. The sales have been accepted by the revenue. The audited results have not been disputed. The profit derived out of the sale was not in dispute. The volume of sales during all months is accepted. Hence, we hold that no addition is called for on account of sales made in one month.
With regard to the difference mentioned by the Assessing Officer, we find that the amount of Rs. 2,65,000/- was deposited on 05.11.2016, Rs. 50,000/- was deposited on 05.11.2016 and 1,25,000/- has been deposited on 07.11.2016. Hence, the difference of the amounts stands tallied. Hence, no addition on this account is called for. Appeal of the assessee is allowed on this ground.
Disallowance u/s 40A(3) - cash purchases more than Rs. 20,000/- on any single day - AO held that the assessee was queried but no submission /documents have been uploaded on ITBA Portal till the date of passing the order - HELD THAT:- We find that the AO has not mentioned any single date/day on which the cash purchases have been made in excess of Rs. 20,000/-. The total cash purchases were to the tune of Rs. 43,00,000/- which are petty purchases made from neighboring shops to meet the immediate requirements of the customers with regard to small sanitary items which were not available in their store. The total cash purchases were to the tune of 2.6% over the turnover of Rs. 17.42 Cr. The audit report has also not mentioned any purchases made in contravention of provisions of Section 40A(3) of the Income Tax Act, 1961. The query of the AO dated 19.12.2019 and the reply of the assessee dated 21.12.2019 have been examined. As the AO has not brought any specific instance of purchases of more than Rs. 20,000/- on any single day, we hold that no addition on this account is called for.
Appeal of the assessee is allowed.
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2024 (5) TMI 1240
Revision u/s 263 - scope of amendment made to section 263 - order u/s 92CA challenged - as argued prior to amendment made to section 263 of the Act by Finance Act, 2022, the position of law was very clear that orders passed u/s 92CA could not be subjected to revision in terms of section 263
HELD THAT:- No infirmity in the above finding of the CIT. The explanatory notes clearly point out that the purpose of the impugned amendment to section 263 of the Act was only to clarify the officer with whom the jurisdiction to revise such orders lay. CIT, we hold, has rightly inferred therefrom that the power of revision of TPO orders always was available in law.
In fact, the explanatory notes addresses the lacuna noted in the case of Essar Steels Ltd. [2014 (4) TMI 809 - ITAT MUMBAI] wherein the CIT was noted to have no jurisdiction administratively over the TPO and therefore his order passed u/s. 263 revising TPO’s order, was held to be without jurisdiction and hence invalid.
The amendment to section 263 of the Act was merely clarificatory, made only to address the administrative irregularity in the provision, clarifying the correct jurisdictional officer to exercise jurisdiction for revision of orders passed by TPO’s u/s 92CA of the Act, a lacuna in the existing provision as noted by the ITAT in the case of Essar Steel Ltd. (supra).
We have no hesitation in confirming the order of the Ld.CIT holding the amendment to section 263 of the Act, including orders passed u/s 92CA of the Act for revision, a clarificatory/procedural amendment, and therefore retrospective in operation, in conformity with the principles laid down by the Hon’ble Supreme Court in the case of Hitendra Vishnu Thakur [1994 (7) TMI 343 - SUPREME COURT] & Shree Sankaracharya University [2023 (5) TMI 1246 - SUPREME COURT]
The exercise of jurisdiction u/s 263 of the Act in the present case by the Ld.CIT on an order passed u/s 92CA of the Act is not without jurisdiction, we hold. All arguments raised by the assessee in this regard are dismissed.
International transaction of interest paid on CCD’s at arms length and needed upward revision - Whether TPO had examined the transaction during TP proceedings and taken a plausible view of finding the transaction to be at arms length? - HELD THAT:- CIT’s finding of the CCD’s being in the nature of hybrid instruments, is based on appreciation of facts before him of the CCD’s being compulsorily convertible into equity after 10 years, that too at a predetermined rate, determined at the time of issue of CCD’s of Rs. 556/-. He has rightly noted the distinction between the CCD’s and debt instruments, of the reward in the case of debt in instruments being only interest earned while in case of CCD’s besides interest the reward by way of their conversion into equity at favourable terms, by way of the conversion rate being determined at the time of issue of CCD’s thus entitling the CCD holders to all earnings of the assessee prior to conversion into equity without an appropriate charge for the same.
The last attempt of assessee for demonstrating that the CCD’s were pure debt instruments by pointing out that subsequent events showed that the CCD’s were converted at the prevailing market rate of Rs. 27,154/- per share and the CIT had wrongly interpreted the conversion clause of the agreement to revealing their conversion at a predetermined price of Rs. 556/-, we hold, merits no consideration.
The addendum notes that it is clarificatory in nature so as to bring out the clear intention of the parties that the price at which the equity shares were issued upon conversion would be higher of the agreed price or the price determined as per the FEMA Regulations in force at the time of actual conversion. This addendum to the debenture subscription agreement dated 3.10.2013 is executed on 14.3.2023 which is the date of issue of the certificate of stamp duty issued. The order under section 263 of the Act was passed on 22.3.2023. The addendum therefore was entered into during and at fag end of the revisionary proceedings. This addendum was not before the ld.CIT when he passed his order, and more importantly was not even in existence when the TPO passed order u/s. 92CA of the Act. Therefore, there can be no question of considering the same for the purpose of adjudicating the correctness of the order passed by the ld.CIT under section 263 of the Act before us. The assessee, we may add, is at liberty to furnish these documents to the TPO in the set aside proceedings.
No hesitation in confirming the findings of the Ld.CIT, based on facts before him, that the instrument issued by the assessee, CCD, was a hybrid instrument and not a pure debt instrument.
The records reveal that the assessee had justified the ALP of interest paid on these hybrid instruments by adopting CUP as the most appropriate method and comparing the same with interest paid on pure debt instruments. There is no dispute vis-a-vis this fact.
Clearly the comparability exercise done by the assessee was incorrect and the Ld. CIT, we hold, has rightly found so.
CIT, we hold, was right in finding the TPO to have not conducted necessary inquiries on the issue and as a consequence wrongly accepted the transaction to be at arm’s length. The view taken by the TPO was not a plausible view.
The fact that in the preceding four years this instrument has been treated as hybrid instrument by the TPO and upward adjustment made to the ALP of the transaction of interest paid of CCD’s, in no uncertain terms, makes the TPO’s order passed in the impugned year erroneous causing prejudice to the Revenue for having accepted the transaction as being at arm’s length. The fact that the order for the four preceding year were passed subsequent to the TPOs order in the present case, does not alter the position and the fact remains that this identical transaction was found not to be at arm’s length by the TPO in the said four years and while in the impugned year was accepted to be at arm’s length without making necessary inquiry.
CIT has, we hold, rightly held the TPO’s order erroneous and causing prejudice to the Revenue. Decided against assessee.
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2024 (5) TMI 1239
Addition u/s 69A r.w.s. 115BBE - cash deposited in its bank account during the demonetization period treating the same as unexplained - Non rejection of books of accounts - deposits from sales - AO as well as the CIT(A) did not accept the explanation of the assessee that these cash deposits were made out of cash sales observing that the assessee did not file any explanation or evidences - HELD THAT:-On perusal of the assessment order, it is observed that though the assessee has furnished cash book, bank book, balance sheet, profit and loss account, details of cash deposited, sales account, etc. the AO did not reject the information filed by the assessee. AO did not reject the books of account of the assessee. As observed that the trading results of the assessee were accepted and the purchases, sales were not doubted at all. The AO accepted the credit purchases and credit sales and the explanation of the assessee that the cash deposits were made out of cash sales was rejected on the ground that assessee did not have any cash sales in earlier and subsequent years.
On the sole reason that there are no cash sales in the immediately preceding year and also subsequent year cannot be the basis for rejecting the explanation of the assessee that the cash deposits were made out of cash sales especially when the assessee produced cash book, sales, purchases, etc. to demonstrate that the cash deposited were made out of cash sales not rejected the books of account, not doubted the purchases, sales and further accepted the book results without rejecting the books of account.
In the case of Anantpur Kalpana [2021 (12) TMI 599 - ITAT BANGALORE] held that where AO made addition u/s 68 of the Act on account of cash deposited by assessee in its bank account post demonetization, since such cash deposit was towards assessee sale proceeds which was already offered to tax by the assessee and admitted by Revenue as revenue receipt, impugned addition made u/s 68 would result in double taxation and, therefore, is liable to be deleted.
In the case of Mukesh K. Waghasia [2022 (4) TMI 848 - ITAT SURAT] held that where assessee having explained that cash deposited in bank account was out of cash turnover as declared under 44AD and the assessee also having submitted memorandum of trading and profit and loss account and balance sheet impugned additions of such cash deposit were to be deleted.
Thus AO is directed to delete the addition made u/s 69A/68 - Decided in favour of assessee.
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2024 (5) TMI 1238
Assessment of trust - Application of income by the Trust - assessee argued that besides depreciation there was more than statutory required application of Income - as submitted that since there was application of income more than 85% of total income before depreciation, there would not be any tax liability, even if, depreciation was inadvertently claimed in the return.
HELD THAT:- Section 11(6) as inserted with effect from 1.4.2015 by Finance Act No. 2/2014, reads as under:
"(6) In this section where any income is required to be applied or accumulated or set apart for application, then, for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this section in the same or any other previous year."
Looking into the entire conspectus of section 11(6) of the Act and argument put forth by assessee, it is necessary to set aside this issue to the file of A.O. to look into the application of income by the Trust afresh. Accordingly, we set aside this issue to AO to look into afresh the application of income by the Trust and calculate tax liability, if any, as per law.
Appeal of the assessee is allowed for statistical purposes.
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2024 (5) TMI 1237
Addition u/s 68 - unexplained credit - assessee has failed to provide satisfactory explanation towards nature and source of credits received - onus of proof - CIT(A) granted relief to the assessee -DR assailed the order of the CIT(A) in not making any independent enquiry either himself or through AO and proceeded with the adjudication in haste without seeking further remand report necessary for determining the issue towards genuineness of transaction and creditworthiness of the parties.
HELD THAT:- It is indeed the duty of the AO as well as that of CIT(A) to make necessary enquiry. It is indeed the sacrosanct obligation of the first appellate authority to have ensured that the effective enquiry was carried out particularly in the face of the objections of the AO challenging the bona fides of the large money received in the form of share application. CIT(A), in our considered view, could not have summarily accepted the submissions of the assessee and outrightly discard the case of the AO without making requisite enquiry.
AO has categorically observed that creditworthiness of the share applicant was not proved at all. Despite such observations, the CIT(A) has merely found fault with the order of the AO without looking into the vital aspects such as the circumstances for granting heavy amounts by the applicants to a company having meagre capital and subdued income, allotment thereof in the subsequent years if any, capacity of the applicants and circumstances for making investment. We therefore find apparent fallacy in the action of the CIT(A).
The order of the CIT(A) on the issue involved therefore clearly warrants set aside and proper re-examination thereof is called for. Without reiterating the points raised in the preceeding paras, we set aside the order of the CIT(A) on the subject matter of appeal and restore the matter back to the file of the CIT(A) for de novo adjudication in accordance with law after making or causing proper enquiry as may be considered expedient.
Section 251 of the Act defines the power of the CIT(A) in widest possible terms including power to enhance the assessment. The powers conferred upon the FAA by the Income Tax Act are much wider than the powers of an ordinary court of appeal. FAA is not an ordinary court of law considering that only one party to the original decision taken is entitled to appeal. It is on account of this peculiar position that statute has conferred wide powers to the First Appellate Authority. Once the assessment comes before the CIT(A), his jurisdiction is not confined to only those points which have been raised by the AO.
CIT(A) can examine every process in connection to an issue. Legislature has thus conferred extraordinary power in CIT(A). Alongside the appellate powers conferred, the scope of power of CIT(A) being co-terminus with that of AO, he can do what the AO can do and also direct him to do what he has failed to do as held in CIT vs. Nirbheram Daluram [1997 (3) TMI 2 - SUPREME COURT]
CIT(A) thus ought to have exercised his power judicially and ought to have made requisite inquiries on the pertinent points. Transaction through banking channel alone is not sufficient to establish creditworthiness as observed in CIT Vs. Jansampark Advertising and Marketing. Pvt. Ltd. [2015 (3) TMI 410 - DELHI HIGH COURT] CIT(A) is thus under solemn duty to set the facts right and in perspective to determine the correct position of taxability on a given issue. Appeal of the Revenue is allowed for statistical purposes.
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2024 (5) TMI 1236
Payment of consultancy fee - Legal & Professional Fees paid - Allowable business expenditure or not? - appellant had not furnished copy of contract for consultancy services rendered by Dr. Abhishek Shukla - Before the CIT (A), assessee too filed certain details and explanations however, same has been disallowed holding that the payment is not for the business purpose - HELD THAT:- If the payment has been made during the course of the business even if the business did not result into revenue in that year, then also it is allowable, but onus is heavily upon the assessee to substantiate that the payment was for the purpose of business, and what was the scope of work and activity carried out by the professional. Since most of the documents were not before the ld. AO and CIT (A) therefore, in the interest of justice, this issue is restored back to the file of the ld. AO to examine this issue afresh after considering the documents. The onus will be on the assessee to substantiate the purpose of payment of professional fees for the business and nature of professional services rendered by the said person. Accordingly, this issue is remanded back to the ld. AO.
Disallowance u/s. 40(a)(ia) - Payment of subscription fee - Non-deduction of TDS - HELD THAT:- Disallowance as concerned, from the perusal of the invoice, it is seen that the same is for the purpose of renewal of some annual subscription. Since this document was not before the AO and CIT (A), accordingly, this issue is also restored back to the file of the AO and if it is in the nature of subscription fee, then no TDS is required to be deducted.
Appeal of the assessee is allowed for statistical purposes.
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2024 (5) TMI 1235
Addition on protective basis - loan amount received by the assessee from one of its director and his relatives - LTCG earned by the said loan creditors were out of share transactions done in penny stock companies - HELD THAT:- Admittedly, in this case, the additions have been made in the hands of the assessee on protective basis only. This fact itself shows that the Assessing Officer, himself, was convinced that the substantive additions were warranted in case of respective loan creditors and not in case of the assessee. All the loan creditors are Income Tax assessees.
As substantive additions have been made by the department in the case of 4 loan creditors, out of which, 3 loan creditors have accepted the additions and have availed Vivad Se Viswas Scheme and paid the due taxes. Therefore, the source of the loan in their hands stood explained as their unaccounted income, upon which they have paid the due taxes. The 4th loan creditor is also an Income Tax assessee, in whose case the addition has been made.
There is no allegation that the source of the income/LTCG in the hands of the said creditor namely Deepak Kumar Jain was out of any unexplained income of the assessee. The assessment in the case of other 3 persons already stood barred by limitation, no substantive additions have been made in their hands, therefore, the source of the amount/LTCG stands admitted by the department in their hands - Protective additions in the hands of the assessee are not sustainable - Decided in favour of assessee.
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2024 (5) TMI 1234
Validity of reassessment order u/s 147 in absence of statutory notice u/s 143(2) - HELD THAT:- As statutory notice u/s 143(2) has never been issued by the AO which is mandatory for assumption of jurisdiction, and the non-issue of statutory notice u/s 143(2) is an incurable defect which cannot be cured because the basic foundation of the assessment proceedings is bad in law. On this aspect of the mater, we respectfully rely on the judgment of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] and also Laxman Das Khandelwal [2019 (8) TMI 660 - SUPREME COURT]
Also see Cebon India Ltd. [2009 (7) TMI 26 - PUNJAB AND HARYANA HIGH COURT] and also Punnu Synthetics Private Limited [2023 (6) TMI 1378 - ITAT AMRITSAR]
As such we hold the assessment order invalid in absence of statutory notice u/s 143(2) of the Act 1961. Decided in favour of assessee.
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2024 (5) TMI 1233
TDS u/s 194LBC - assessee is a securitization trust - payments made to the ‘Originator’, as Excess Interest Spread (EIS) - HELD THAT:- FAA has noticed, and in our view rightly so, that two conditions have to be satisfied before the applicability of Section 194LBC and the consequent obligation for deduction of tax at source, viz. (i) the entity to whom the payment is made is an investor of the securitization trust and (ii) the payment is towards income accruing or arising out of the investment made in securitization trust. In our view neither of these conditions are satisfied in the present case.
FAA after perusal of the Assignment Deed dated 28.12.2017 has found on facts that the Originator in this case is neither a holder of any securitized debt instrument, securities or security receipts and thus, cannot be regarded as an investor.
FAA has also visited the reasoning articulated by the AO in holding otherwise. AO has opined that the Deed of Assignment dated 28.12.2017 is itself an instrument in the nature of a “securitized debt instrument” which has been negatived by the FAA - We find that the Deed of Assignment cannot be seen as a ‘securitized debt instrument’ as has rightly been held by the FAA.
There is a clear distinction between the Originator, which is the Assignor of the loan portfolio to the assessee, which is the Assignor and the PTC holders, who are the investors in the securitization trust. As noticed earlier, there may be a case where the Originator in order to comply with the MRR requirement, may be a holder of securitized debt instrument, securities or security receipts in which case for the payment made towards such instruments, the requirement of Section 194LBC of the Act may apply, which is not the factual position obtaining in the present case.
Thus, no reason to interfere with the impugned order. We find that the view which we are taking is fortified by the decision of the co-ordinate Bench of this Tribunal in M/s. Vivriti Cibus [2023 (12) TMI 806 - ITAT MUMBAI], which has also been followed by another Division Bench of this Tribunal in SME Pool Series [2024 (2) TMI 1383 - ITAT MUMBAI] - Appeal stands dismissed.
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2024 (5) TMI 1232
Addition u/s 56(2)(viib) read with rule 11UA (1)(c)(b) - difference in valuation of shares - applicability of the amendment introduced by CBDT notification 81/2023 dated 25.08.2023 - HELD THAT:- As per notification 81/2023 dated 25.08.2023 it is evident that where the difference between the issue price and value adopted by the AO is 10% or less, in such cases issue price will be deemed to be the fair value of shares for the purpose of Rule 11UA of the Income Tax Rules, 1962. In the present case the issue price is Rs. 15 per share and the value adopted by the AO is Rs. 14.68/per share, hence the difference between the issue price and value adopted by AO is Rs. 0.32 i.e. 2.21% (0.32/15) which is less the then the safe harbor of 10% variation in value introduced by CBDT notification 81/2023 dated 25.08.2023.
Hence, in view of above mentioned submission and curative amendment introduced by CBDT notification 81/2023 dated 25.08.2023, addition u/s 56(2)(viib) read with Rule 11UA is unsustainable.
Scope of amendment - The amendment brought in Rule 11UA of the Act was introduced to mitigate the hardship faced by taxpayers by the un-intended invocation of Section 56(2)(vlib) read with rule 11UA and therefore the same is a curative amendment.
Thus where an amendment which is inserted to remedy unintended consequences and to make the proviso workable, an amendment which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. Hence, in view of above mentioned submissions and judicial pronouncements curative amendment in Rule 11UA of the Income Tax Rules, 1962 introduced by CBDT notification 81/2023 dated 25.08.2023 will apply retrospectively and consequently, the addition of Rs. 50,77,334 u/s 56(2)(viib) read with rule 11UA is unsustainable as the difference between issue price and value adopted by AO is 2.1% i.e. less than 10%.
Appeal of the assessee is allowed.
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2024 (5) TMI 1231
LTCG - deduction u/s 54 - reinvestment of capital gains derived from transfer of original asset in more than one property - AO disallowed deduction on the ground that the assessee has invested in two distinct properties in the name of his wife contrary to provisions of Section 54 where it has been specified a residential house means one residential house - HELD THAT:- The law has been amended to clarify the meaning of ‘a house’ and as per said amendment ‘a house’ referred u/s. 54 of the Act means one residential house. Even the assessee purchased more than one residential house then deduction u/s. 54 of the Act cannot be claimed. In the present case, the assessee has purchased two residential houses, which are distinct and separate properties and further, said property has been purchased in the name of his wife. Therefore, we are of the considered opinion that the assessee is not entitled to claim deduction u/s. 54 of the Act and thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the assessee.
Disallowance of further investment claimed while computing LTCG derived from transfer of property - AO has not considered additional payment made by the assessee to the builder for construction of building and further improvement in the property on the ground that the assessee could not furnish any evidences including payment details and bills for improvement to the building - HELD THAT:- The assessee claimed that cost of new house includes a sum of Rs. 40,00,000/- paid to KK Builders for further improvement to the property. In this regard, the assessee has filed a copy of bill issued by KK Builders and the bank statement to prove that the said payment has been made through banking channel. These evidences were not before the A.O. Therefore, matter needs to go back to the file of A.O to give one more opportunity to the assessee to substantiate his claim of cost of new house including sum paid to Builder for construction of building including improvements to the property.
Appeal filed by the assessee is partly allowed for statistical purposes.
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