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Showing 401 to 420 of 1466 Records
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2024 (6) TMI 1066
Nature of receipt - Taxability of pre-payment of sales tax liability at discounted value - revenue or capital receipt - HELD THAT:- The assessee in the present case saved an amount of Rs. 15.23 crores on account of pre-paid sales tax. Such amount was sought to be taxed by the assessing officer as revenue receipt. Thus, as held by the Supreme Court in Balkrishna’s case (2017 (11) TMI 1626 - SUPREME COURT] such amount was required to be treated as a capital receipt. The first question of law as raised by the Revenue thus stands squarely answered. The Revenue’s contention on addition of the said amount as the assessee’s income needs to be rejected.
Taxability of benefits on account of DEPB License/Focus Market Licenses - HELD THAT:- The question is squarely covered by the decision of Excel Industries Ltd.” [2013 (10) TMI 324 - SUPREME COURT] Our attention is drawn to the contentions of the parties as also the observations as made by the Supreme Court wherein in similar circumstances, the Supreme Court has held that even if it is assumed that the assessee therein was entitled to the benefits under the advance licences, as well as under the duty entitlement passbook, there was no corresponding liability on the Customs authorities to pass on the benefits of duty free imports to the assessee until the goods are actually imported and made available for clearance. It was observed that the benefits represent, at best, a hypothetical income and which may or may not materialise and its money value therefore cannot be the income of the assessee. Considering all, the second question of law as framed would also not arise for consideration.
Loss of profit due to fire and repair and other expenditure incurred on account of fire, not received from insurance company - HELD THAT:- The parties are ad idem that this question would also stand covered by the decision of Leisure Wear Exports Ltd. [2010 (9) TMI 351 - DELHI HIGH COURT] also confirmed by [2011 (10) TMI 782 - SC ORDER] wherein held claim had not been approved as the insurance company had neither accepted the same nor given any assurance for making payment. Therefore, no income had "accrued" which could be taxed. Tribunal rightly held that ordinarily the income is said to have accrued to a person when he acquires the right to income and this should be enforceable right, though actual quantification or receipt may follow in due course. The mere claim to income without any enforceable right cannot be regarded as an accrued income for the purpose of Income-Tax Act.
Revenue appeal dismissed.
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2024 (6) TMI 1065
Petitioner's interest in the subject matter of the assessment or investigation - Petitioner seeks direction for action on representation regarding transfer of files related to S.R.S. Mining from DCIT Non-Corporate Circle 2 to DCIT Central Circle 2 - assessment proceedings were concluded in respect of a partnership firm called M/s.S.R.S.Mining, which was the assessee. He points out that the petitioner is a rank -third party, who is not related to the assessee or the assessment proceedings in any manner.
HELD THAT:- The petitioner has approached this Court seeking discretionary relief under Article 226 of the Constitution. From the averments in the affidavit, it is unclear as to how the petitioner has any interest in the subject matter of the assessment or investigation. As correctly contended by learned senior standing counsel, the petitioner appears to be complaining about M/s.S.R.S.Mining and its partners as also against a specific officer of the Income-Tax Department. None of these persons have been made parties to this writ petition. In these facts and circumstances, I decline to exercise discretionary jurisdiction in favour of the petitioner.
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2024 (6) TMI 1064
Condonation of delay in filing an appeal to HC - sufficient reason for delay Or not? - as submitted on receipt of the impugned order the Appellant was making enquires to get details of full-fledged interest statement from the government auditor and clarifications regarding the interest earned from other co-operative banks mentioned in the said order. On receipt of the same, the Appellant contacted the counsel briefed him about the facts and instructed him to file the appeal. This has resulted in a delay 14 days in filing the appeal
HELD THAT:- On going through the reason stated in Ext. P4, we find that the petitioner has stated sufficient reason in the application for condonation of delay.
2nd respondent has taken technical view in dismissing the application to condone the delay and in consequently dismissing the appeal. The 2nd respondent went wrong in dismissing the appeal at the threshold on technical grounds. Accordingly, set aside Ext. P5 order and direct the 2nd respondent to consider Ext. P3 appeal on merits, as expeditiously as possible, at any rate, within a period of three months from the date of receipt of a copy of this judgment. Till orders are passed on Ext. P3 appeal, there shall not be any recovery steps against the petitioner pursuant to Ext. P1.
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2024 (6) TMI 1063
Addition u/s 68 - unexplained cash credit - unaccounted income surrendered during the survey and offered to tax - ITAT deleted addition holding that the assessee is entitled for the telescopic benefit of the income surrendered during the year to the cash deposit in Bank account treating the same as maturity proceeds of hundies during the year - HELD THAT:- ITAT has accepted the fact that the respondent is entitled to the telescoping benefit of the surrendered income on which tax has been paid in the income tax return as the source which explains the cash deposited in the bank account, as there was a direct nexus between the cash deposited and the maturity proceeds of the hundis found during the survey proceedings. In coming to this conclusion the ITAT has also extracted the names of the persons to whom hundi loans were given as the hundis were seized during survey and the dates of maturity mentioned therein and the said recovery of loans was accepted as the source of deposits in the bank.
Thus, it is apparent that the ITAT's finding of telescoping benefit of surrendered income vis-à-vis subsequent bank deposits was reached only after due analysis of all the facts, circumstances, relevant documents and evidence, statements recorded during the survey. ITAT has accepted the contention of the respondent that the cash deposited in the bank accounts originated from the cash balance on hand as per the books of account. This cash balance was, in turn, derived from the loans recovered in cash from the individuals to whom the loans were advanced, against which hundis were seized from the assessee during the survey proceedings.
ITAT, being the final authority for fact-finding, has adjudicated the issue comprehensively, taking into account the relevant facts, circumstances, documents/evidence, and judicial rulings.
The finding of the ITAT as extracted, stand as matter of fact, with no discernible error of law. Moreover, the department has not highlighted or pointed out any factual inaccuracies or incorrect findings recorded by the ITAT. Consequently, the entitlement of the assessee to the telescopic benefit does not constitute any question of law, as the benefits of telescoping must be judged and allowed based on the facts and circumstances of the case, which has already been thoroughly examined by the ITAT.
Benefit of telescoping has been approved in Aliasgar Anvarali Varteji [2018 (7) TMI 2340 - GUJARAT HIGH COURT]wherein it was held that, when the entire unaccounted income discovered during the search was included in the overall disclosure, and the negative balance in the books of account was due to payments made from this unaccounted income, the assessee should not be denied the benefit of telescoping of the initial disclosure.
The argument of the counsel for the appellant that the assessee has not been able to establish or produce the persons to whom hundi loans were given is answered by the ITAT by extracting the names of the persons to whom loans were given and coupled with the fact that these hundis were seized by the department itself leading to surrender of income in the return shows that the department itself has accepted these hundis as such and the income surrendered there-for and thus now it cannot turnaround and argue that these persons are not genuine. Moreover the argument that source of deposits in bank account is because of Vypam scam has not been proved at any stage by the department as has been observed by the ITAT.
Substantial question of law or fact - Tribunal serves as the final authority for fact-finding, and to challenge such findings, there must be substantial evidence indicating a perverse finding of fact by the Tribunal. In the absence of any such substantial question having been raised to point out perversity in the order of the ITAT, it cannot be asserted that any question of law arises for consideration, let alone a substantial question of law, as envisaged under Section 260A of the Income Tax Act.
As in the instant case no substantial question of law arises from the order of the Tribunal as the appellant has raised all the question of facts and have disputed the fact findings of the ITAT in the garb of substantial questions of law which is not permitted by the statute itself. No intervention is required in this appeal - Decided against revenue.
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2024 (6) TMI 1062
Intimation order u/s 143 for Denial of exemption u/s 10(38) - claim not made in proper column of return of income - as contended that law is well-settled that AO is required to grant deduction/exemption if law so mandates - basis of dismissal of appeal is stated that the assessee ought to have filed application u/s 119(2)(b) if the return of income had been processed u/s 143(1)
HELD THAT:- The inadvertent mistake of the assessee should not fasten it with liability of tax qua gains which is otherwise, not-taxable under law. Therefore, CIT(A) ought not to have dismissed the appeal on hyper technical basis. The impugned order is hereby, set aside and the assessment is restored to the file of AO for verification. If the AO finds that the capital gains is exempt under law, he would allow the claim of the assessee. Grounds raised by the assessee are accordingly, allowed for statistical purposes.
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2024 (6) TMI 1061
Rectification order u/s 154 - MAT computation u/s 115JB on profit earned by the assessee on sale of agricultural land which is exempt from income tax - HELD THAT:- It is also not in dispute that the Assessing Officer has accepted the income earned by the assessee while assessing tax u/s 143(3) of the Act, however, raised the issue of taxable u/s 115JB of the Act under rectification proceedings.
As far as the issue under consideration is whether the profit earned by the assessee which is not a capital assets as per the normal provision of the Act and the same was allow to be claimed under normal provisions of the Act, whether the same income can be charged to tax under MAT. Since, the issue under consideration is very much covered in favour of the assessee. We do not see any reason to remit the issue back to the file of the Ld. CIT(A) and can be disposed off by considering the relevant material available on record. We considered the submissions of the assessee and observed various benches of the ITAT had considered the similar issue and decided the issue in favour of the assessee
See HARRISONS MALAYALAM LTD. AND ORS. [2009 (5) TMI 124 - ITAT COCHIN], GONTAK EXIMIS LTD. [2018 (5) TMI 1870 - ITAT DELHI] and NILGIRI TEA ESTATES LTD. [2012 (2) TMI 553 - ITAT COCHIN] wherein held once Assessing Officer has not treated the said gain for the purposes of book profit then by way of such ground the issue cannot be raised by the Department. Otherwise also when the income of agricultural land is exempt from tax, then the said exempt income cannot be added to the books profit while calculating the MAT u/s. 115JB - Decided in favour of assessee.
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2024 (6) TMI 1060
Disallowance u/s 14A - Expenses incurred earning exempt income - manadation to record satisfaction - HELD THAT:- We respectfully following the order of the Tribunal in assessee own’s case for the earlier years [2018 (7) TMI 209 - ITAT DELHI] this issue is allowed in favour of the assessee we find that in so far as disallowance of interest expenditure is concern, the same has rightly been deleted by CIT (A) after due verification of the records that none of the investments have been made out of borrowed funds and has been made by assessee's own fund. In view of such a clear cut finding, no disallowance of interest can be made.
With regard to other disallowance on account of administrative cost, we find that assessee has given a categorical explanation that no expenditure can be said to be attributable especially when all the investments were made in much earlier years and there is only one dividend cheque received during the year. Once assessee has produced all the relevant books of account, explained the nature of expenses debited and has explained that none of the expenditure can be said to be attributable to earning of exempt income, then onus shifts upon the Assessing Officer to examine the books of account and nature of expenditure debited and after recording his 'satisfaction' as per the mandatory requirement given in Section 14A(2) and (3) r.w.s. Rule 8D(1), then only he can proceed to make disallowance under Rule 8D, Accordingly, disallowance made by the AO is hereby directed to be deleted. Thus in the absence of any recording of mandatory satisfaction as per Section 14A (2) r.w.s. Rule 8D (1) Assessing Officer cannot mechanically apply Rule 8D for the purpose of disallowance. Accordingly disallowance made u/s. 14A by Assessing Officer is hereby deleted
Computation of book profit under Section 115JB - This matter has also been decided in favour of the assessee by the Tribunal and this issue is also covered by the judgment of Sobha Developers [2021 (1) TMI 378 - KARNATAKA HIGH COURT] Accordingly we hold that no disallowance u/s. 14A is made while computing the book profit. The ground no 2 is allowed.
Inclusion of self Cenvat Credit availment in the book profit u/s. 115JB - This issue has already been decided by the Tribunal in assessee’s own case so the self Cenvat credit cannot be treated as a part of book profit.
Deduction u/s 80IB and 80IC - HELD THAT:- Assessee has submitted that same were allowed in favour of the assessee by the Ld CIT(A) by the common order.
Failure to explain the source of cash seized from the assessee premise - HELD THAT:- Assessee has explained the nature and source of the impugned cash balance therefore addition made by AO was rightly deleted by the Ld CIT(A). The ground taken by revenue decided accordingly.
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2024 (6) TMI 1059
Interest income earned on Fixed Deposits pertaining to prior period commencement of business - treated as “capital receipt” OR "income from other sources" - HELD THAT:- There is no dispute to the fact that the business activities of the assessee-company had not commenced in the Financial Years (FYs) 2015-16 and 2016-17 as well. AO has given a categorical finding, in this regard, in the assessment order itself. Thus, the interest earned on FDs during the year was prior to commencement of business of the assessee-company and was in the nature of “capital receipt” as held in the assessee’s own case in the AYs 2013-14 & 2014-15.
The objection of the Department is that the assessee had not shown any nexus between the funds borrowed and the specific investment made by it, is not found relevant as such nexus has to be examined in the year in which the investments were made for the first time.
In the present case, the investments were made in the earlier years that is continuing in the current year and the assessee-company is deriving interest income on the Fixed Deposits made by it in the earlier years. Respectfully following the decision of the Co-ordinate Bench in the AYs 2013-14 & 2014-15 [2020 (3) TMI 1194 - ITAT AHMEDABAD] we hold that the interest income earned on Fixed Deposits pertaining to the prior period commencement of business was in the nature of “capital receipt”. As held in that year the preoperative expenses of the assessee has to be adjusted with this “capital receipt” and only the balance expense, if any, need to be amortized as per provisions of Section 35D of the Act. Accordingly, the CIT(A) had rightly allowed the claim of the assessee.
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2024 (6) TMI 1058
Penalty u/s 271(1)(c) - Exemption u/s 11 - additional income was added by the Ld.AO based on the admission made by the Managing Trustee, while recording statement u/s 132(4) - AO observed that in lieu of supply of labour, the assessee has received cash collection charges, which is a clear business activity and is not covered u/s 2(15) of the Act and also not covered under the objective of the Trust - additional income in the statement recorded u/s. 132(4) - CIT(A) considering the submissions made by the assessee concluded that the assessee has not deliberately concealed the income, but has only committed a mistake by claiming exemption, under the bonafide impression that it is exempt from tax and relying on the various judicial pronouncements allowed the appeal of the assessee -
HELD THAT:- During the search and seizure, it was found that the actual profit for the impugned assessment year, from it’s business operations. However, there is no restriction to the assessee to offer the income u/s. 44AD of the Act on presumptive basis. We also find that the Ld. AO has not disputed the gross collections nor found any incriminating material for concealment of income. Accordingly, the assessee has offered an amount of Rs. 5,35,688/- under the presumptive taxation.
AO proposed to tax the balance of Rs. 21,40,708/-, which the Managing Trustee, accepted to offer the same to tax, while recording statement u/s 132(4) of the Act.
From the above, discussions, we find that the assessee has disclosed the entire cash receipts and the business receipts, while filing the return of income, but has claimed exemption on the above income based on the provision for expenses. AR’s argument that even if the provision is excluded the trust has fulfilled 85% complying with section 11(1) of the Act was also not disputed by the Ld. AO. We have examined the above fact and are of the view that the trust has complied with section 11(1) of the Act.
Respectfully following the ratio laid down in CIT Vs. M/s Shakthi Industries [2014 (8) TMI 1248 - ANDHRA PRADESH HIGH COURT] we are of the view that mere admission of the additional income in the statement recorded u/s. 132(4) of the Act cannot be considered as concealment in the absence of any incriminating material disclosing such concealment of income. The case laws relied upon by DR is of no help to the revenue and distinguishable on facts. We, therefore, find no infirmity in the order of the Ld.CIT(A) and thereby dismiss the grounds raised by the revenue. Appeal of the revenue is dismissed.
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2024 (6) TMI 1057
Assessment of trust - tax levied on donations received for acquisition of capital asset - Donation amount has been shown as corpus fund - Treatment of donations as capital receipts or income from other sources - DR argued that the amount of contribution received by the assessee is not a capital receipts but is to be considered an income of any kind as defined u/s. 56(1) - HELD THAT:- We are convinced by the argument of Ld. AR in that regard because for attraction of Section 56(1) the amount has to qualify as an income, whereas the assessee has shown the donations as subsidy to be treated as capital assets in the books of accounts. Nothing has been brought on record or submitted by the Ld. DR that a trust registered under "the Act" cannot claim itself to be a business entity or that it cannot file return as business entity as has been done by the assessee since the A.Y. 2013-14. Since the assessee has rightly and lawfully considered the donations as subsidy which as per legal pronouncements has to be treated due to specific directions of the donor, as capital receipts, therefore, Section 2(24)(iia) is not attracted in the case of the assessee. For these reasons, the Section 56(1) is also not attracted and the arguments of the Ld. DR in that regard does not hold water and is outrightly rejected - we direct the Ld. AO to delete the addition made on account of donations. Decided in favour of assessee.
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2024 (6) TMI 1056
Addition u/s 68 - bogus LTCG - Disallowing deduction claimed u/s 10(38) - off market purchase in physical form by paying cash - exemption claimed on Long Term Capital Gain from transactions on which STT is paid - As argued the case in hand a perusal of the bills of purchase and sale shows that the shares have been held for more than one year, the same has been sold on the recognized stock exchange and necessary STT has been paid to Government treasury and therefore the exemption u/s 10(38) cannot be denied - as per DR that the purchase payments were made in cash and not through the normal banking channel, therefore, the same were non verifiable from the authentic supporting details, such as bank accounts/documents and assessee has failed to furnish the proof of source for the purchase transactions
HELD THAT:- Perusal of the order Ld CIT(A) reveals that assessee is an individual and he purchased the share M/s. Kappa Pharma Ltd in physical form and thereafter the same have been converted into electronic mode. The purchase payments were made in cash and not through the normal banking channel, therefore the same were not verifiable the authentic supporting details such as bank account /documents. The assessee is not a regular investor in shares. The assessee has failed to furnish the proof of source for the purchase transactions. The entire transactions are against human probability. See UDIT KALRA C/O DEV RAJ SHARMA [2019 (4) TMI 543 - ITAT DELHI].
CIT(A) has rightly confirmed the addition in dispute, which does not need any interference on our part. - Decided against assessee.
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2024 (6) TMI 1055
Accrual of income - Interest income received on the unutilised grants given by the Government of Karnataka - HELD THAT:- We have gone through the above said findings and found that the same is based on the earlier order of this Tribunal in which this Tribunal had held that the interest earned from the unutilised grant-in-aid is also a part of the grant-in-aid and therefore the same is not an income under the provisions of the Act.
The said orders are in respect of the assessee’s own case for AYs 2014-15, 2015-16, 2017-18 and 2018-19. We also find no materials to take a different view in the present appeal and also the department has not furnished any orders of the Hon’ble High Court or Supreme Court overruling the orders of the Coordinated Bench of this Tribunal. We, therefore, fully agreed with the view of the CIT(A) and confirm the order of the learned CIT(A) on the interest income issue.
Nature of income - expenditure incurred towards sponsorship by treating - capital expenditure or revenue expenditure - HELD THAT:- We find that the CIT(A) had given a finding that the sponsorship expenditure incurred by the assessee is in the nature of revenue expenditure since the same has been incurred in giving award, price, etc. pursuant to the objectives of the assessee and therefore there is a statutory obligation on the part of the assessee to promote solar energy for which the contribution was made and therefore the same would amounts to business expenses and eligible for deduction as revenue expenditure. In support of its finding the CIT(A) also relied on the judgement of the Hon'ble Supreme Court in the case of Lakshmi Ji Sugar Mills Co. Pvt. Ltd. [1971 (8) TMI 13 - SUPREME COURT] and the judgement of Raj Spinning and Weaving Mills Ltd [2003 (11) TMI 6 - RAJASTHAN HIGH COURT]. Decided in favour of assessee.
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2024 (6) TMI 1054
Reopening of assessment u/s 147 - gain on sale of property - real owner - determination of ownership of the property - land belonged to the firm or partners - AO had apparently proceeded on the premise that it is the assessee firm which had sold the land - notice issued in the address of the property which has already been sold
HELD THAT:- It is not in dispute that assessee’s case is non-PAN case and the assessee had not filed its return of income for AY 2011-12, even in response to notice issued u/s 148 of the Act. It is not in dispute that the notice u/s 148 has been issued by speed post in the address of the property which has already been sold. Hence the notice u/s 148 of the Act could not be served at all on the assessee.
Though the ld AO had stated that the said notice was duly served on the assessee, the same is factually incorrect. In view of the fact that the address mentioned in the notice is the very same property address which had already been sold even according to the ld AO. But the crucial fact remain is that the land never belonged to the firm and it was owned and belonged to the partners.
In fact, the notice issued u/s 148 of the Act has been returned unserved. The remark very clearly shows that the assessee firm existed in the said address and was merely using the property owned by the partners as the address of the assessee firm and that since the properties were sold by the partners prior to the issuance of notice u/s 148 of the Act, the assessee firm was not existent in that address and the notice u/s 148 of the Act had to be returned undelivered by the postal authorities.
The sale deeds were indeed executed only by few individuals who are partners in the firm. This fact was duly brought on record by the assessee before the ld AO himself in response to show cause notice which have been completely ignored by the ld AO.
The details of name of the persons who owned the property, together with the area owned by him, date of purchase of the property by that individual, value of purchase of property by that individual and the details of sale made by those individuals to third-party were duly tabulated by the CIT(A). All these facts very clearly goes to prove that the property was never owned by the firm and that it was owned only by the partners.
It is also not the case of the revenue that the subject mentioned property was brought as capital contribution by the partners in the assessee firm in terms of section 45(3) of the Act. It is also pertinent to note that the said property along with stone crusher machines were sold at ₹ 91,74,000/-, and the said sums were credited in the bank accounts of the concerned individuals. None of the credits were made in the bank account of the assessee firm. Hence, the entire facts recorded by the AO and the reasons recorded for reopening the assessment and the assessment order are factually incorrect.
Since, the reopening has been made on incorrect assumption of facts by the ld. AO, we have no hesitation in quashing the entire re-assessment proceedings. Decided in favour of assessee.
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2024 (6) TMI 1053
Condonation of delay - appeal filed by the assessee is delayed by 97 days - Cancellation of Registration u/s 12AA - It was the submission that the delay was on account of the period during which the writ petition was pending before the Hon’ble High Court - HELD THAT:- Considering the fact that the delay was on account of the assessee seeking alternate remedy before the Hon’ble High Court through writ petition, which was subsequently withdrawn and the permission had been granted by the Hon’ble High Court to file an appeal before the Tribunal, the delay in filing of the appeal is condoned and the appeal disposed off on merits.
Order passed u/s.12AB(4) did not contain the Document Identification Number (DIN No.) - Admittedly, the circular issued by CBDT is binding on the authorities below and the lCIT(Exemptions) is an authority under the CBDT. As the order passed by ld CIT(E) in the case of the assessee, has admittedly been passed without issuing a DIN, in view of the circular issued by CBDT, the order admittedly is non-est and is liable to quashed.
However, the issue having been stayed by the Hon’ble Supreme Court in the case of Brandix Maritius Holdings Ltd. [2024 (1) TMI 276 - SC ORDER] this finding of the Tribunal quashing the order of CIT(Exemptions) dated 20.6.2023 on account of non-availability of DIN in the said order would stand suspended till the issue is decided by the Hon’ble Supreme Court.
Cancellation of Registration u/s 12AA - Previous Show Cause Notices and Proceedings - Scope of New Show Cause Notice issued - the activity of the assessee is a business activity or charitable activity? - The provisions of section 12AB(4) provide for the time limit in regard to passing of an order in respect of cancellation of the registration but the said provision refers to the first notice to be issued on or after 1st April, 2022. There is no saving provision in regard to the proceedings initiated prior to 1st April, 2022 and which admittedly being not calumniated into an order being served on the assessee. A perusal of the show cause notice issued by the ld CIT(E) on 6.10.2022 admittedly also does not refer to a show cause notice having been issued on 18.10.2016 and, therefore, it cannot be treated as a continuation of the proceedings either.
The main crux of the cancellation of the registration is (i) whether the activity of the assessee is a business activity or charitable activity. Admittedly, this has reached finality for the assessment year 2009-10 to 2011-12, wherein, the Co-ordinate Bench of this Tribunal have held the issue in favour of the assessee. The second issue is in regard to donation to Aids Awareness Trust of Orissa and the questioned the existence of the trust. The assessee has produced the assessment order in the case of said trust and the assessment order passed also refers to its registration by the ld CIT(A). Therefore, the second issue could fall to the ground on account of the act of the department itself in regard to the assessment and in regard to registration by the ld CIT(E).
It is also admitted by ld CIT(E) that there are no common trustees nor any related trustee between the assessee trust and Aids Awareness Trust of Orissa. In any case, both the issue had been raised by the ld CIT(E) in its original show cause notice which had been culminated in the orders served on the assessee. A new issue which has been raised by the ld CIT(E) in the show cause notice dated 6.10.2022 is the details of the corpus donation. Admittedly, this was the subject matter of 263 proceedings and that the issue had been considered by the Hon’ble Jurisdictional High Court and the Hon’ble High Court had found the orders of ld CIT to be un-sustainable and also quashed the same.
Thus, all the issues on which the ld CIT(E) has raised the show cause notice for the purpose of cancellation of registration u/s. 12A have already been decided by the Appellate Authority and same has also reached finality. The ld CIT(E) by his order dated 20.6.2023 being the impugned order has tried to unsettle issues which are already settled in the case of the assessee. This is not permissible. This being so, as it is noticed that all the issues on the basis of which, ld CIT(E) has cancelled the registration u/s. 12A granted to the assessee has already been settled by various appellate authorities on earlier occasion and the issue had reached finality, same cannot be used for cancelling the registration of the assessee. This being so, on merits also, the order passed u/s. 12AB(4) by the ld CIT(E) on 20.6.2023 cancelling the registration granted to the assessee stands quashed.
As worthwhile to mention here that the ld CIT(E) mentions that the ITAT had sustained the order of the ld CIT(E) in respect of 263 order but this order of the Tribunal sustaining the order u/s. 263 by the ld CIT(E) has already been quashed by the Hon’ble Jurisdictional High Court [2023 (8) TMI 337 - ORISSA HIGH COURT], which is also extracted earlier. In these circumstances, the order cancelling the registration stands annulled on merits also.
Appeal filed by the assessee stands allowed
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2024 (6) TMI 1052
TP Adjustment - working capital adjustment - HELD THAT:- We note that the assessee has provided the details for working capital adjustment which is extracted supra. The ld. AR also relied on the decision of the coordinate Bench of Tribunal in Huawei Technologies India (P) Ltd. [2018 (10) TMI 1796 - ITAT BANGALORE] wherein held CIT(A) was not justified in denying adjustment on account of working capital adjustment. Since, the CIT(A) has not found any error in the TPO's working of working capital adjustment, the working capital adjustment as worked out by the TPO has to be allowed. We may also add that the complete working capital adjustment working has been given by the Assessee and a copy of the same of the Assessee's paper book. No defect whatsoever has been pointed out in these working by the CIT(A).
Accordingly, respectfully following the above judgment we restore the issue to the AO/TPO for fresh consideration with a direction to grant working capital adjustment to the assessee in accordance with law to be on par with comparable companies.
Credit for Self Assessment tax and Regular Assessment taxes - The Appellant has filed rectification application on 11.01.2024 but the same is not disposed till date. The AO is directed to verify and grant the same
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2024 (6) TMI 1051
Penalty u/s 271(1)(c) - precise charge brought against the assessee or not? - proper satisfaction recorded by the AO or not? - additional income offered during the course of search towards inflated expenditure under the head ‘marketing expenses’ - as argued absence of proper satisfaction recorded by the AO and also show cause ‘as to why’ penalty proceedings are initiated, the AO cannot levy penalty u/s.271(1)(c) - assessee has also challenged penalty levied on estimated addition towards additional income offered by the assessee for inflated expenditure under the head ‘marketing expenses’ on the ground that allocation of additional income for both assessment years was only on ad hoc basis and there was no evidence with the AO as regards ‘concealment of particulars of income or furnishing of inaccurate particulars of income’- HELD THAT:- In present case, there is no dispute with regard to the fact that there is no satisfaction from the AO in the assessment order which is clearly evident from the assessment order passed by the AO, where the AO simply initiated penalty proceedings u/s.271(1)(c) of the Act, without specifying a particular charge on the assessee i.e. whether it is ‘concealment of particulars of income or furnishing of inaccurate particulars of income’ and said lapse even continued in show cause notice issued u/s.274 r.w.s.271(1)(c) of the Act, where the AO has issued a printed form of notice without striking of inapplicable portion of the notice.
From the above, it is very clear that the AO has not arrived at satisfaction whether penalty is initiated for ‘concealment of particulars of income or furnishing of inaccurate particulars of income’. In absence of proper notice, it cannot be said that the AO has applied his mined to relevant facts and also arrived at satisfaction that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. In absence of specific charge under which limb the penalty proceedings has been initiated, the AO cannot levy penalty u/s.271(1)(c) of the Act. In our considered view, penalty proceedings initiated u/s.271(1)(c) of the Act by issuing a vague notice u/s.274 r.w.s.271(1)(c) of the Act, vitiates the whole proceedings, including consequent penalty order passed by the AO and thus, order passed by the Assessing Officer imposing penalty u/s 271(1)(c) on the basis of invalid notice cannot be sustained under the law.
Thus show cause notice issued by the AO notice u/s.274 r.w.s.271(1)(c) of the Act is vague in nature which does not specify under which limb penalty proceedings u/s.271(1)(c) of the Act are initiated. Therefore, we are of the considered view that show cause notice issued by the AO and consequent penalty order passed u/s.271(1)(c) of the Act is void ab initio and liable to be quashed - Decided in favour of assessee.
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2024 (6) TMI 1050
Rejection of application for final registration u/s 12A - application filed by the assessee on Form 10AB merely for selecting the wrong Section code - HELD THAT:- We find that the assessee had intimated ld. CIT (Exemption) about the inadvertent mistake committed at its end and also about the revised Form 10AB filed for the final registration. As seemed that CIT (E) failed to take note of the same and failed to provide opportunity to the assessee.
We therefore, under the given facts and circumstances of the case, in the interest of justice and being fair to both the parties, restore this issue of final registration to the file of ld. CIT (E) with a direction that the date of application for final registration should be considered as 26.05.2023. The final registration should be granted as per the revised application filed by the assessee incorporating the correct Section code. Needless to mention that proper opportunity of being heard should be provided to the assessee.
Rejection Application filed u/s 80G(5)(iii) solely on the ground that it is belated and is not maintainable - HELD THAT:- We notice that the assessee which is a charitable organization working for the relief of animals and protecting them from cruelty has filed an application for approval of the Trust u/s 80G(5)(iii) of the Act on Form 10AB under Rule 17A of the Rules dated 27.05.2023. As per ld. CIT (E) the last date to file such application relevant to the assessee is 30.09.2022. We however, notice that Section 80G(5)(iii) of the Act refers to the Institution or Trust which are carrying out charitable activities and maintains regular accounts of receipts and expenditure. Certainly, Section 80G(5)(iii) of the Act has a direct connection with Section 12A of the Act which refers to the registration of charitable organizations.
From perusal of the above circular which is binding upon the Revenue authorities, we notice that the extended time provided for filing the fresh application on Form 10AB is 30.09.2023.
Where the assessee had filed an application on Form 10AB on 27.05.2023 which is prior to the last date for filing such application i.e. 30.09.2023 which means that application of the assessee is not time barred. We therefore, find that CIT (E) grossly erred in rejecting the application as non-maintainable and also erred in cancelling provisional certificate issued to the assessee. We therefore, direct ld. CIT (E) to restore the provisional certificate issued to the assessee and also to admit the application on Form 10AB u/s 80G(5)(iii) of the Act and decide it on merits in accordance with law. Accordingly, all the grounds of appeal raised by the assessee are allowed for statistical purposes.
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2024 (6) TMI 1049
Exemption u/s 11 - assessment of Income from property held for charitable or religious purposes - income of such an Institution is to be computed in the absence of any application of income, i.e., if the allowance for 15% of the income from property held under trust is to be allowed u/s. 11(1)(a) of the Act or not? - HELD THAT:- Applicability of section 11(1)(a) of the Act in the absence of any application of its income for it’s objects by the assessee, a charitable trust, during the relevant year. We see no reason for it being not so, and neither has any been stated by the Revenue at any stage. The language of the provision is unambiguously clear, so that an assessee is not entitled to, save where an option is specifically exercised in its respect, and before expiry of the time allowed for furnishing the return of income u/s. 139(1) of the Act, accumulate or set aside for application in excess of 15% of it’s income from the property held under trust.
That is to say, it is necessarily to, save where an option is specifically exercised in its respect – which is not so in the instant case, apply 85% of it’s income for charitable purposed during the relevant year. The assessee, as afore-said, having not done so, it’s income is accordingly to be limited thereto, i.e., 85% of it’s total income. A reading of Explanation 1 to section 11(1), reproduced hereunder, makes it abundantly clear that in the absence of option being exercised, the deeming qua application of income, which extends to the shortfall w.r.t. eighty-five percent of income derived from property held under trust, shall not apply.
The application in the instant case being nil, the shortfall extends to the entire 85% We are conscious that the assessee did not file an appeal against the Intimation u/s. 143(1)(a) of the Act raising the impugned demand, preferring instead rectification thereof, scope of which is severely limited. This, to our mind, would not constrain us inasmuch as the Revenue itself has made the impugned adjustment under summary proceedings u/s. 143(1)(a), the scope of which is, again, limited to apparently incorrect claims, which is not the case. The assessee shall accordingly be assessed at the returned income of Rs. 87,430.
Even as observed by the Bench during hearing, the principal issue arising in the instant case, inasmuch as it is this that leads to the impugned demand, is the tax rate applied, which has been by the Revenue at the maximum marginal rate, duly raised by the assessee per its grounds of appeal before us. The assessee surely did not raise this issue before the ld. CIT(A), whose adjudication accordingly does not include the same. We, nevertheless, consider the same, being a legal issue, with the relevant facts available on record, adjudicating the same in disposal of the appeal.
Application of section 167B - prescribing the maximum marginal rate - Section 167B, as a reading of the provision would show, is only where the shares of the beneficiaries of the trust are not known. The assessee, registered as a charitable trust, is a public body and, accordingly, there is no question of it’s beneficiaries being individual members, whose shares have therefore to be defined. The application thereof in the instant case is wholly misconceived. The matter in fact stands clarified by the Board per it’s Circular No. 320, dated 11/01/1982, also binding on the Revenue. The tax rate accordingly is to be computed as per the normal rates as applicable to Association of Persons. The same, in our view, is again an apparent mistake and, where contested, outside the ambit of s. 143(1)((a) in the first instance, so that it could not have been effected there-under.
Assessee’s appeal is allowed.
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2024 (6) TMI 1048
Rejection of application for final approval u/s 80G(5)(iii) - time limit prescribed for making an application for final approval u/s 80G - DR observed that the assessee had already commenced its activities since long even prior to grant of provisional registration, and since the time period for making application mentioned in Clause (iii) to First Proviso to section 80G(5) had already expired, therefore, the assessee could not be granted final registration u/s 80G(5)
HELD THAT:- As relying on TOMORROW’S FOUNDATION VERSUS CIT (EXEMPTION) , KOLKATA [2024 (3) TMI 941 - ITAT KOLKATA] wherein held that after grant of provisional approval, the application cannot be rejected on the ground that the institution had already commenced its activities even prior to grant of provisional registration. Thus the date of commencement of activity will be counted when an activity is undertaken after the grant of provisional registration either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act. As ssessee admittedly has applied for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period.
The appeal of the assessee is allowed accordingly and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. The ld. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (6) TMI 1047
Rejection of application for approval of Trust u/s 80G(5) - assessee / applicant has mentioned in Form 10AB that it had incurred certain expenses which are “religious” in nature and such religious expenses incurred by the assessee amounted to Rs. 15.08% of it’s total receipts - HELD THAT:- In the instant facts, we observe that the Ld. CIT(E) has not asked for any specific details in the show-cause notice, while rejecting the application made by the assessee / applicant. Further, in the show-cause notice issued by Ld. CIT(E), he has also not asked for any specific details in connection with “religious” expenses incurred by the assessee. Accordingly, in the interest of justice, the matter is being restored to the file of Ld. CIT(E) for de-novo consideration after analyzing whether less than 5% of the total income has been incurred by the assessee trust towards religious activities. In case it is found that the less than 5% of the total income has been incurred as expenditure by the applicant trust towards religious purposes, then benefit of Section 80G(5) of the Act may be granted to the assessee if other conditions are satisfied, in accordance with law. Appeal of the assessee is allowed for statistical purposes.
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