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Showing 401 to 420 of 18020 Records
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2023 (12) TMI 1039
Rectification u/s 154 - case of the Petitioner is that in the course of re-assessment proceedings, the Assessment Officer have wrongly added ICDS while computing taxable income u/s 115JB - also stated that in terms of provisions of law, ICDS will be added in the normal course in determining the income, but in the present case on hand, the assessee is liable to pay the tax in terms of provisions u/s115JB of the Act and hence the Petitioner filed a Rectification Petition u/s. 154
HELD THAT:- While passing the reassessment order, the Respondents have added ICDS while computing income in terms of Section 115JB of the Act. There is no provision in law to add ICDS and therefore when there was no provision, the question of adding the said ICDS while calculating deemed income under Section 115JB would not arise.
In such view of the matter, the aforesaid error has to be rectified. As relying on MK VENKATACHALAM, INCOME-TAX OFFICER, AND ANOTHER [1958 (4) TMI 4 - SUPREME COURT] it is clear that in the event of any mistakes on the record both in law and on facts, it can be rectified. Following the same, this Court is inclined to set aside the impugned order.
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2023 (12) TMI 1038
Delay in filing the revised return of income u/s 139(5) - delay of 37 days in filing the revised returns - petitioner filed his return of income without claiming relief u/s 89 - petitioner is a Pilot - HELD THAT:- There was a delay of 37 days in filing the revised returns. Initially, the petitioner had filed his Income Tax Returns within the prescribed time limit. However, he has not availed the benefits available u/s 89 of the Income Tax Act. Petitioner is a Pilot, who has been travelling throughout India. That apart, he is also a Trainer for the Pilots. Therefore, by oversight, he had filed his returns without claiming the exemption, which is available u/s 89 of the Income Tax Act and there is no dispute on the aspect that the petitioner's entitlement to claim the said exemption.
In the present case, the petitioner should have filed the revised returns within the time limit prescribed under the provisions of the Income Tax Act. However, due to the nature of work, the petitioner was unable to file his revised returns in time.
No doubt, the petitioner is a Pilot, who has to travel throughout India and also he is a trainer of Pilots. As a Pilot, he cannot be excepted to reach home in time everyday. He may be compelled to stay away from his home town. Further, in this writ petition, the petitioner is asking for condonation of delay of 37 days. Therefore, this Court feels that for the interest of justice, the said delay of 37 days in filing the revised returns has to be condoned, since it is not a tax liability that the petitioner is not going to pay to the respondent, but it is an exemption, which he is entitled to claim under the provisions of Income Tax Act. The said entitlement cannot be deprived by citing the reasons of delay of 37 days in filing the revised returns.
Regarding the argument that Respondents that there must be some discipline in filing the returns, otherwise it would set an example to demoralise the work done by the Officers, who are in-charge of filing returns is concerned, this Court is of the considered view that the question of demoralisation of work will not come into picture here, since it is the duty of the Officers to scrutinize the returns and in the course of scrutinizing the returns, if anything is found, it is the duty of the Officers concerned to intimate the same to the Assessees and hence, while performing their duty. In fact, this Court expects that the officials should assist the Assessees and inform the defects in time, if any, noticed in the returns then and there.
This Court is inclined to set aside the impugned order passed by the respondent. Accordingly, the impugned order is set aside and the delay of 37 days in filing the revised returns is hereby condoned.
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2023 (12) TMI 1037
Unexplained investments - assessee alleged to have receipt it as gift - Non establish relation between the donor and the assessee with documentary evidence - addition made by the AO was non furnishing of requisite document during the assessment proceedings - DRP held that, since the basis of addition made by the AO was non furnishing of requisite document during the assessment proceedings, the panel, in the interest of natural justice and with the objective to arrive at true determination of taxable income of the assessee, considers it appropriate to take the additional evidence filed by the assessee on record - HELD THAT:- We have given credence to the following facts like Copy of UK passport of donor to prove his identity, date of birth and age of 72 years, Details of his personal residence and complete residential address, Copy of duly signed letter of confirmation from the donor stating that he had gifted a sum to his sister's son i.e. the assessee on 22.12.2015 to prove the genuineness of the transaction.
A perusal of the bank statement of the assessee showing receipt of funds, also showing the details of remittance received by the assessee in his NRE account on account of said gift. Documentary evidence to prove that the assessee and donor are both UK citizens and non-residents and thus the documentary evidence to support and substantiate documents generally applicable in India such as gift deeds were neither relevant nor executed between them. A signed letter of confirmation was submitted before the AO.
Details of PAN of donor in India to prove his identity and credit worthiness, Details of investments held by Donor in India in Bharti Airtel which were sold for approximately Rs. 2150 crores in 2005 to prove his credit worthiness. The relationship between the assessee's mother and the donor was established with a joint reading of the said affidavit along with the copy of Indian passport of the assessee's mother Smt. Sumi Malik.
Copy of assessment order u/s 147/143(3) framed by colleague of the Ld. AO himself duly scrutinizing and accepting the sale of investments by the donor in AY 2007-08. In the instant case, the sale of investment being considered was to the tune of Rs. 19,80,37,899 as against gift of Rs. 6.87 crores, to establish the credit worthiness of the donor. Copy of ITRs of the donor for AY 2016-17 and 2017-18 declaring income of Rs. 4,12,79,631 and Rs. 20,11,631 respectively to establish the credit worthiness of the donor.
Hence keeping in view in the facts narrated above, we hold that no addition is called for in this case.
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2023 (12) TMI 1036
LTCG - eligibility or claim of exemption of u/s. 54F - As per AO new asset cannot be considered as acquired within 02 years of transfer of original asset - HELD THAT:- The assessee sold residential property on 17.04.2014 for Rs. 70,00,000/- and the entire sale proceeds were invested from 01.05.2014 to 08.07.2014 in purchase of property named “ The Grands Arch” from the builder “Ireo”. - New property acquired vide Possession letter dated 04.07.2016 and conveyance deed dated 29.04.2016.
Since the assessee has invested the entire sale proceeds for the purchase of new house within three months of sale of the old house, the assessee is eligible for claim of exemption of u/s. 54F - Appeal of the allowed is allowed.
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2023 (12) TMI 1035
Shifting of income by client code modification - HELD THAT:- Addition cannot be made on the basis of DDIT report into the shifting of income through client code modification alone where the AO has not carried out any further independent verification into the matter. In the present case also the assessee has maintained all the books of account and also furnished all the documents qua the F & O segment done through the said broker.
We also note that the AO has not doubted the F & O transactions loss incurred to the tune of Rs. 18,16,26,178.83/- and has doubted only the transactions through M/s Indianivesh Securities Pvt. Ltd. registered broker that too on DDIT Report. Under these facts, we are not in a position to sustain the order of Ld. CIT(A) which has also discussed DDIT report by SEBI without giving any independent finding on the issue. Accordingly we set aside the order of authorities below and direct the AO to delete the addition.Appeal of the assessee is allowed.
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2023 (12) TMI 1034
Estimation of income - bogus purchases - HELD THAT:- Estimation of profit of the assessee @4% is reasonable - Therefore, direct the AO to estimate the profit of the assessee @4% instead of 5%. Grounds raised by the assessee are partly allowed.
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2023 (12) TMI 1033
Penalty u/s 271(1)(c) - disallowance u/s. 36(1)(iii) - Penalty imposed for furnishing inaccurate particulars of income - HELD THAT:- It is pertinent to note that the Hon’ble Supreme Court in case of Reliance Petro-Product Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] categorically stated that the word inaccurate particulars means that the details supplied in the return are not accurate not exact or correct and not according to truth or erroneous. In the absence of finding by the AO that any detail supplied by the assessee in its return were found inaccurate or false cannot attract section 271(1)(c) of the Act.
In fact, the assessee at the time of assessment proceedings has given a detailed calculation related to interest u/s. 36(1)(iii) on borrowed funds for acquiring capital assets and this very same amount was added by the AO and thus it cannot be said that the assessee furnished inaccurate particulars of income or concealed particulars of income though the assessee was under bonafide mistake did not state the same in its return of income.
The notice also lapses on the part of not specifying the particular of limb of section 271(1)(c) of the Act which was decided by the Hon’ble Apex Court in case of CIT vs. SSA’s Emerald Meadows [2016 (8) TMI 1145 - SC ORDER], hence the appeal of the assessee is allowed and the penalty does not survive. Decided in favour of assessee.
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2023 (12) TMI 1032
Revision u/s 263 - LTCG - admissibility of deduction u/s 54F - CIT broadly observed that the Assessing Officer has wrongly accepted the methodology of computation of capital gains and consequent deduction u/s 54F - HELD THAT:- As pointed out on behalf of the assessee, two pre-requisites must coexist before the designated authority could exercise the revisional jurisdiction conferred on him namely; the order should be (i) erroneous & (ii) the error must be such that it is prejudicial to the interests of the Revenue. However, an erroneous order does not necessarily mean an order with which the Pr.CIT is unable to agree. The AO while passing an order of assessment, performs judicial functions.
An order of assessment passed by the AO cannot be interfered only because some other view is also possible on the issue as held in CIT vs. Greenworld Corporation [2009 (5) TMI 14 - SUPREME COURT] If in given facts and circumstances of the case, two views are possible and one view as legally plausible has been adopted by the AO then existence of other possible view alone would not be sufficient to exercise powers under s.263 of the Act by the Pr.CIT /CIT concerned. Hence, there can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the AO. It is only when an order is erroneous and causing prejudice, that the Section will be attracted. An incorrect assumption of facts or incorrect application of law will satisfy the requirements of the order being erroneous.
In the instant case, it is sought to be demonstrated on behalf of the assessee that necessary inquiries were made towards computation of Long Term Capital Gains and deduction claimed u/s 54F of the Act. It was further pointed out that although two separate agreements have been executed due to demarcation of share in single property to different persons due to gift or bequeath by will, the property remains only one and therefore eligible for deduction under Section 54F - assessee has advanced justification for cost of improvement of Rs. 25 lakhs claimed under Section 54F of the Act.
Eligibility of deduction towards two units under two different agreements sought to be questioned by the Pr.CIT - Reasons are not far to seek. Both the agreements have been claimed to have been entered at the same time and in respect of same property. The kitchen continues to be only one and therefore, two different agreements will not give rise to different residential property. The electricity bill is also common as demonstrated. The background facts for division of property has also been narrated. These facts could have been easily appreciated by the Pr.CIT with some minimal inquiry.
CIT has simply shifted the burden on the AO and eventually on the assessee without discharging his judicial duties expected in law. Besides, such allegation does not appear in the show cause notice issued at the first instance. While it is true that the directions are not necessarily required to be restricted to the show cause notice alone but however in the same vein, opportunity must be given to the assessee in some form to meet the point in issue in the course of revisional proceedings. In the absence of notice to the assessee that the purchase of residential property is being considered as two different residential units, the assessee had no occasion to rebut the ground raised directly in the revisional order. The directions at this point given to the Assessing Officer without opportunity to assessee in the course of revisional proceedings thus requires to be set aside on this score too.
We hardly see any merit in the plea of the assessee that amount of Rs. 25 lakh set apart and kept in the Capital Gain Account Scheme towards cost of improvement of residential property acquired is eligible for deduction under Section 54F of the Act. Such cost of improvement can, at best, be treated as cost of improvement deductible at the time of sale of such property as and when happens. The direction of Pr.CIT on the point thus cannot be assailed.
Appeal of the assessee is partly allowed.
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2023 (12) TMI 1031
Approval u/s. 10(23C)(vi)(via) - Claim denied on the ground that the institution is engaged in the multi-objects apart from education - HELD THAT:- It is pertinent to note that the distinguishing facts which have been pointed out by the ld. A.R. does not stand in toto in light of decision of Hon’ble Apex Court in New Noble Education Society [2022 (10) TMI 855 - SUPREME COURT] and in fact after verifying the objects of the society which is placed before us clearly sets out that the assessee is not solely into the activity of education.
A.R. pointed almost 19 decisions, but the same will not be applicable in Assessee’s case as in Assessee’s case, the assessee is doing other activities and not exclusively dealing with education as explained and decided by the latest decision of Hon’ble Apex Court in case of New Noble Education Society (Supra). Therefore, there is no need to interfere with the findings of CIT (Exemption). Thus, both the appeals filed by the assessee are dismissed.
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2023 (12) TMI 1030
LTCG - Deduction u/s 54EC on account of investment in REC Bonds - whether exemption under Section 54EC can be denied on account of the fact that deeming fiction of short term capital gain was created u/s 50 ? - HELD THAT:- As decided in the case of Aditya Medisales Ltd. [2013 (11) TMI 576 - GUJARAT HIGH COURT] has held that exemption u/s 54EC of the Act could not be denied on account of the fact that deeming fiction of short term capital gain was created under Section 50 of the Act. In this case the assessee company sold automatic electric monitoring system. The company invested gain amount in Rural Electrification Bonds and claimed exemption under Section 54EC of the Act.
AO found that short term capital gain was offered by assessee under Section 50 of the Act and disallowed exemption under Section 54EC claimed by the assessee on the ground that same was not available on a short term capital gains. The High Court held that since capital gains arose out of long term capital asset and same was invested in specified assets, exemption under Section 54EC could not be denied on account of the fact that deeming fiction of short term capital gain was created - The aforesaid decision has also been followed by Ahmedabad Tribunal in the case of DCIT M/s. Liva Healthcare Ltd. [2019 (1) TMI 210 - ITAT AHMEDABAD]
Whether benefit u/s 54EC of the Act is available in case the assessee invested a sum of Rs. 50 lakhs in two Financial Years? - As decided in C. Jaichander [2014 (11) TMI 54 - MADRAS HIGH COURT] held that where assessee invested a sum of Rs. 50 lakhs each in two different Financial Years, within a period of six months from date of transfer of capital asset, he was eligible for deduction u/s 54EC - The facts in this cases were that the assessee sold a property vide sale agreement dated 18.02.2008 and invested a sum of Rs. 1 crores out of sale proceeds in certain bonds in two Financial Years 2007-08 and 2008-09.
AO held that assessee could take benefit of investment in said Bonds to a maximum of Rs. 50 lakhs only under Section 54EC(1) and accordingly, held that the other sum of Rs. 50 lakhs invested over and above ceiling prescribed did not qualify for exemption. However, the Madras High Court held that from a reading of Section 54EC(1) and first proviso, it was clear that time limit for investment was six months from the date of transfer and even if such investment felt under two Financial Years, benefit claimed by the assessee could not be denied and there was no cap on investment in Bonds. Accordingly, the Madras High Court held that the assessee was eligible for deduction under Section 54EC of the Act in respect of said investments.
The position becomes clear that for the impugned A.Y. 2014-15, as it stood at the relevant time, if the assessee made investment in REC Bonds for Rs. 50 lakhs each, the assessee would be eligible for deduction under Section 54EC of the Act, provided both the investments were made within a period of six months as prescribed under 54EC of the Act. In the present case, the assessee had sold the asset under consideration on 16.12.2013, whereas the second investment in REC Bond was made on 30.06.2014.
In the case of Alkaben B. Patel vs. ITO [2014 (3) TMI 842 - ITAT AHMEDABAD] held that in terms of General Clauses Act, 1897 the period of six months mentioned in Section 54EC has to be recorded as six British Calendar months. The issue for consideration before ITAT Special Bench was that whether for the purpose of Section 54EC, the period of investments should be calculated as six months after the “date of transfer” or to be reckoned as 180 days from “date of transfer”. The ITAT held that the term “month” is not defined in the Act and therefore, as per the definition of the term “month” as per General Clauses Act, 1897 shall mean of month recognized according to the British Calendar.
Again, in the case of Niamat Mahroof Virji [2016 (12) TMI 1081 - ITAT MUMBAI] held that in terms of General Clauses Act 1897, period of six months mentioned in Section 54EC has to be recorded as six British Calendar months. Accordingly, it was held that where assessee sold his ancestral property on 13.10.2010, investment of capital gain made in REC Bonds on 30.04.2009 was eligible for deduction under Section 54EC of the Act.
Thus we are of the considered view that investment of Rs. 50 lakhs in REC Bonds on 30.06.2014 falls within the period of six months as stipulated under Section 54EC of the Act and is hence eligible for deduction under Section 54EC of the Act. Appeal of assessee allowed .
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2023 (12) TMI 1029
TP Adjustment - US Transactions non US Transactions - scope of MAP agreement - associated enterprise of the assessee in the USA filed an application under mutual agreement procedure (MAP) with the competent authority of the US under article 27 of the India USDTAA and the settlement has been arrived at between the competent authority of India with respect to the adjustment on account of Transfer Pricing issues relating to the US transactions - DR vehemently stated that the same treatment should be given to the non US transactions as there is no difference in FAR of US transactions and non US transactions.
HELD THAT:- It is true that this is an appeal by the assessee but it is equally true that the other party i.e. the revenue can raise issue under rule 27 orally as settled in the case of Sanjay Sahney [2020 (5) TMI 441 - DELHI HIGH COURT] and respectfully following the same the oral request of the DR is accepted.
It would be better to refer to the settlement arrived between the competent authority of India and the competent authority of USA to resolve the cases relating to Hewitt India for A.Y. 2006-07 to 2010-11 by adopting the values relating to US related international transaction - No hesitation to direct the AO / TPO to adopt the same approach for the non US transactions as adopted in the MAP for US transactions and determine the TP adjustment, if any, after affording a reasonable and sufficient opportunity of being heard to the assessee. See J.P. Morgan Services India Private Limited [2019 (4) TMI 219 - BOMBAY HIGH COURT] Appeal of the assessee is allowed for statistical purpose.
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2023 (12) TMI 1028
Revision u/s 263 by CIT - excess claim of deduction u/s 80P - assessee stated to have earned income by way of interest from deposits made in Nationalized Banks - PCIT reveals that on scrutiny of the records of the assessee he noted that the assessee being a Co-operative Society engaged in providing credit facility to its members for agriculture it had been allowed excess claim of deduction u/s 80P of the Act in the assessment framed u/s 143(3) - PCIT noted that while the assessee had earned both exempt income and taxable income, the expenses had not been properly apportioned between two sets of income - HELD THAT:- We find merit in the contention of assessee that the basic premise of PCIT for arriving at finding of excessive claim of deduction u/s 80P(2)(a)(i) by the assessee, rested on assumption of incorrect and unverifiable facts. It is not clear to us as to how the Ld. PCIT arrived at the finding that the income of the assessee eligible to deduction u/s 80P(2)(a)(i) was only Rs. 36 Crore and not Rs. 41 Crore as claimed and allowed to the assessee.
While the assessee claim of deduction of Rs. 41 Crores of profit u/s 80P(2)(a)(i) emanated from the records including the financial statement, the tax audit report and computation of income filed by the assessee, all documents filed before us in Paper book, and was also examined during assessment proceedings by issuance of notice u/s 142(1) of the Act and replies filed by the assessee placed before us,the basis of the Ld. PCIT for holding that the assessee was eligible to only Rs. 36 Crores deduction under Section 80P(2)(a)(i) of the Act is not clear nor does it seen to arise from the records before us.
Therefore, we hold that the very basis for assumption of jurisdiction to revise assessment order fails on account of the error in the assessment order having been found by the Ld. PCIT on the basis of incorrect facts.
Records do not support the finding of the PCIT that the assessee had claimed excessive deduction u/s 80P(2)(a)(i) - And as long as the finding of error of PCIT is based on facts which palpably do not emanate from records, it is immaterial whether this fact is pointed out for the first time before us. In view of the same there is no error in the assessment border vis a vis quantum of allowance of deduction to the assessee u/s 80P - The revisionary order passed by the Ld. PCIT, therefore, needs to be set aside for having failed to fulfill one of the twin conditions , of the assessment order being both erroneous and prejudicial to the interest of the Revenue, necessary for invoking revisionary jurisdiction , as laid down in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] this ground alone.
Subsequently, after noting that as per records the assessee was eligible to lesser claim of deduction under Section 80P(2)(a)(i) of the Act, the Ld.PCIT has gone on a different tangent after receiving the assessee’s reply to the show cause notice. We find from the reply filed by the assessee during revisionary proceedings that the assessee stated to have earned income by way of interest from deposits made in Nationalized Banks. Picking this information he held that the assessee was not eligible to claim deduction on this interest income as per the provisions of law and having been allowed deduction on the same, the assessment order was in error causing prejudice to the Revenue.
We are not in agreement with the Ld. DR. Even if the Ld. PCIT had noted the fact of assessee having claimed deduction on an ineligible income from the assesses statement of facts before him, it was his bounden duty to confront the assessee that it was ineligible in law for deduction u/s 80P of the Act, before holding the assessment order being erroneous on having allowed the assessee’s claim of deduction under Section 80P(2)(a)(i) of the Act on the same. In the absence of any show cause notice being given to the assessee, the finding of error by the Ld. PCIT on account of the same is not sustainable in law and the revisionary order passed, therefore, is liable to be set aside for the same reason also.
PCIT is unclear and is not sure as what exactly is the error in the assessment order. He begins by noting error on account of excess claim of deduction under Section 80P(2)(a)(i) due to incorrect apportionment of expenditure to exempt income while assuming jurisdiction u/s 263 but goes on to hold the error to pertain to allowance of claim of deduction u/s 80 P to income which was otherwise not eligible in law to such claim, and then concludes by reverting back to his original finding of error on account of excessive claim of deduction on account of incorrect appropriation of expenses. The powers of revision being exercisable on a categorically finding of error in assessment order causing prejudice to the Revenue, this uncertainty in the finding of the error by Ld. PCIT renders the revisional order completely unsustainable in law. Decided in favour of assessee.
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2023 (12) TMI 1027
Addition towards limited return on share capital - limited return on share capital needs to be given out of reserves and cannot be debited to P & L Account as expenditure - DR submitted that the limited return on share capital at 1% on the share capital amount paid to the farmers is identical to the dividends and cannot be a charge to the P & L Account and it cannot be construed as a Finance Cost as claimed by the assessee - CIT(A) deleted the addition stating that it is legitimate business expenditure - assessee-company is a special category company under the Companies Act and is covered by the Part-IXA of the Companies Act, 1956 - HELD THAT:- The limited return is nothing but a maximum dividend payable / paid to the Members of the Producer Company as authorized by the Articles of Association and hence it cannot be considered as an expenditure and claimed as expenditure. It is not a charge to the P & L Account but only an appropriation of the profit and hence the Ld. AO has rightly disallowed the same. We therefore allow the Grounds No. 1 & 2 raised by the Revenue.
Disallowance towards withheld price / additional price - as per DR same is only application of income as the company makes payment towards additional price / withheld price of milk procured out of profit and therefore, the same cannot be debited to P & L Account as an expense and not an allowable deduction - CIT(A) deleted addition - HELD THAT:- We find that the assessee-company has paid withheld price to the milk suppliers even in the earlier assessment years and the same was allowed by the Ld. AO. The Coordinate Bench of the Tribunal in the assessee’s own case for the AY 2010-11 [2017 (11) TMI 1363 - ITAT VISAKHAPATNAM] has allowed the appeal of the assessee thereby directed the Ld. AO to delete the addition of payment of withheld price made to the milk producers. However, as pointed out by the Ld. DR, the Revenue is in appeal before the Hon’ble High Court of Andhra Pradesh contesting the order of the ITAT. In this connection, we hereby direct the Ld. AO to decide this issue based on the outcome of the decision of the Hon’ble High Court of Andhra Pradesh, in order to avoid multiplicity of litigation. Accordingly, this ground raised by the Revenue is disposed off for statistical purposes.
Allowability of expenditure incurred during the General Body meeting by way of payment of gifts to the Members of the Producer Company - CIT(A) deleted the disallowance made - as per DR distribution of gifts are not encouraged in AGM to curb cooperate misdoing and is against established practice of corporate governance - HELD THAT:- Admittedly these amounts of gifts were distributed at the time of AGM which is being gifted to the milk producers who were also Members of the assessee-company. We also find that these gifts are made to the Members who were also suppliers of milk and are also shareholders of the assessee-company. Hence we are of the considered view that these expenditures are in the nature of business promotion expenditure which shall be allowed as deduction U/s. 37 of the Act. We therefore find no infirmity in the order of the Ld. CIT(A) on this ground - Decided against revenue.
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2023 (12) TMI 1026
Disallowance of the standard deduction u/s 24(a) against the income declared by the assessee under the head Income from House Property - HELD THAT:- We are of considered opinion that judgement of the Hon’ble Supreme Court in the case of Suraj Lamps & Industries (supra) is in regard to transfer and conveyance of a title for civil consequences between private parties. However, with regard to the fiscal purposes, between assessee and Revenue, where on the basis of existence of an interest in an immovable property, certain rights or interest including those right to executed further convey the title are involved, the documents like GPA, sale agreement or Will have to be considered valid and effective for all purposes for creating a liability on assessee or to give benefit to the assessee. Although in the judgement relied by the ld. AR in the case of Rita Kuchal [2015 (5) TMI 1254 - ITAT DELHI] there is no specific discussion on this aspect, however, cognizance of the judgement of the Hon’ble Supreme Court in the case of Suraj Lamps & Industries [2011 (10) TMI 8 - SUPREME COURT] was taken, but, for the purpose of section 24(a), the right of an assessee to be entitled to receive the rental income was given precedence.
Thus, the judgement which the ld. AR has relied in CIT vs. Smt. Wiran Bai Jaggi [2002 (8) TMI 889 - DELHI HIGH COURT] wherein the judgement of the Hon’ble Supreme Court in case of CIT vs. Podar Cement [1997 (5) TMI 2 - SUPREME COURT] has been relied is still applicable to the case of the assessee. The observations of the Hon’ble Supreme Court in the case of Podar Cement Pvt. Ltd. (supra) are worth to be reproduced to understand how the law propounded in regard to section 22 of the Act is different from the one propounded for the purpose of section 17 of the Registration Act in Suraj Lamps & Industries [2011 (10) TMI 8 - SUPREME COURT].
Thus, furthermore, the ld. DR could not defend the argument that in the subsequent years the CIT(A) has deleted the addition made by the AO holding that the rent received by the assessee is to be assessed as ‘income from house property.’ Thus, we are inclined to allow this ground no 2.
Addition on account of business expenses - disallowance on the ground that appellant has no money lending business whereas assessee claims that the money lending business was dormant and the assessee was in litigation with the debtors to recover the principal and interest - HELD THAT:- As coming to the present assessment year, at the outset, we would like to reiterate the settled proposition of law that every assessment year is independent and there is no applicability of principle of res judicata, if the facts are distinguishable and there is evidence in that regard. In the present year 2015-16, the assessee is no more into subletting business, but, has earned income from property and has also claimed deduction u/s 24(a) of the Act which we have allowed in ground No.2. During the year, the assessee has changed the receipts from LIC India from one received in the capacity as a lessee who has created the sublease to an owner who has rented the premises. Thus, certainly the expenses of the description mentioned in the assessment order could not be attributed to the income from property as standard deduction u/s 24(a) of the Act stands allowed.
It appears that during assessment proceedings the assessee claimed that apart from leasing of property business the assessee is also engaged in money lending business. This was considered by the AO to be an afterthought, but, the CIT(A) has gone into the issue in a more detailed manner.
As in the present assessment year there is no interest income at all either under the heads, ‘Income from other sources’ or ‘business income.’ The claim of the assessee is that the lending business should be accepted on the basis of consistency. However, the same cannot be accepted as ld.CIT(A) has made a very specific observation on the basis of the financials. There are only two entries which the assessee claims to be money lending business.
Now, in regard to one of those the assessee has filed a copy of complaint u/s 138 of the Negotiable Instruments Act filed against Sunil Mantri Realty Ltd. and the averments of this complaint shows that the assessee had entered into an agreement on 01.01.2010 to purchase certain flats from Sunil Mantri Realty Ltd., for which payments were made, but, as that vendor could not supply the flats, the vendor had given a cheque of Rs. 4,10,00,000/- to the assessee to return the sale consideration and that cheque was dishonoured. Thus, the averments in the complaint do not at all indicate that the money claimed to have been standing as a loan was ever given as a loan for the purpose of money lending business. In fact, in AY 2012-13, there was an issue of undisclosed income of Rs. 12 lakhs wherein the AO had made an addition of Rs. 12 lakhs on the ground that the assessee has been showing interest income from M/s Sunil Mantri Realty Ltd. on accrual basis. M/s Sunil Mantri Realty Ltd., had paid interest and deducted tax which was reflected in 26AS, but, there was lack of reconciliation.
The order of ld.CIT(A) for AY 2012-13 show that there is a mention of cheque of Rs. 4,10,00,000/- given by the debtor on 01.09.2013 which could not be encashed and for which the assessee has filed the case and the ld.CIT(A) had confirmed the addition of Rs. 12 lakhs. Thus, we are of the considered view that what ld. AR has relied in regard to the previous or subsequent years about the money lending business of the assessee is not sustainable in the facts discussed above from the perspective of ld.CIT(A) and we do not consider that there is any error in the sustenance by ld.CIT(A). Accordingly, this ground is decided against the assessee.
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2023 (12) TMI 1025
Disallowance of claim u/s. 80P(2)(a)(i)/80P(2)(d) - assessee received interest from co-operative banks and other cooperative societies - AR submitted that the cooperative societies /cooperative banks with which assessee had made investments, are registered with the Karnataka Cooperative Societies Act and, therefore, the interest/dividend earned by the assessee from such investments, made with such cooperative banks are eligible for deduction u/s 80P(2)(d) - HELD THAT:- When we look at the decision of Hon’ble Supreme Court in case of Totgars Co-operative Sale Society's case [2010 (2) TMI 3 - SUPREME COURT] relied by the DR, SC was dealing with a case where the assessee therein, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such amount retained by the assessee therein was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or under Section 80P(2)(a)(iii) of the Act. On these facts Hon’ble Supreme Court held the assessing officer was right in taxing the interest income indicated above under Section 56 as income from other sources of the Act.
Further the adjudication by the Hon’ble Supreme Court in case of Totgars Co-operative Sale Society Ltd. vs. ITO(supra) was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a cooperative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a cooperative bank. Therefore, reliance was placed by the Ld. DR on the decision of Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (supra) is distinguishable on facts.
In the instant case, the amount which was invested with other co-operative societies and SCDCC bank to earn interest was not any amount due to its members. This is very clear from the submissions reproduced in the assessment order wherein the assessee has submitted that it is due to the statutory obligation to keep the reserve fund of the society in SCDCC Bank that such deposits are made, and therefore, such fixed deposit has to be maintained. Claim of the assessee in u/s 80P(2)(d) was not any liability due to its members. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to its members, as there were no takers. Therefore they had deposited the money in a co-operative bank/other co-operative societies against which interest/dividend was earned.
At this juncture, we refer to subsequent decision PCIT Vs. Totagars cooperative Sale Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] wherein held that, a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that in the case of PCIT & Anr. vs. Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank Of India [2016 (7) TMI 516 - GUJARAT HIGH COURT], held, that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act.
Hon’ble Supreme Court in case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd., KSCARDB [2023 (9) TMI 761 - SUPREME COURT] relied by the Ld.DR has elaborately analysed the requirement of a cooperative bank that could fall within the exception of section 80 P(4) of the Act. Based on such principle analysed by Hon’ble Supreme Court and respectfully following the view taken in the case of PCIT & Anr. Vs. Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank Of India [2016 (7) TMI 516 - GUJARAT HIGH COURT] we hold that, the interest income earned by a cooperative society on its investments held with a cooperative bank that do not have licence under section 22 of the Banking Regulation Act 1949, falls outside the definition the term, ‘Banking Company” as per section 2(c ) of the Banking Regulations Act, 1949, would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act.
AO is thus directed to carry out necessary verification in respect of the that same to consider the claim of deduction u/s. 80 P(2)(d) of the Act.
As directed that in the event it is found that the interest is earned by the assessee from such commercial/cooperative banks that fall within the definition of “banking company’ as per section 2(c ), Section 5(b) and holds license under section 22 of the Banking regulation Act 1949, such interest are to be considered under the head ‘income from other sources’ however, relief may be granted as available to the assessee u/s 57 of the Act in accordance with law. With the above directions, we remit this issue to the Ld.AO.
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2023 (12) TMI 1024
Nature of receipt - interest earned by the assessee from short term investments in unutilized funds - revenue or capital receipt - HELD THAT:- We notice that the co-ordinate bench in assessee’s own case for A.Y. 2013-14 to 2015-16 [2019 (3) TMI 1457 - ITAT MUMBAI] considered same issue thus we hold that the interest income received by the assessee is capital in nature and accordingly, not taxable under both the normal provisions of the Act as well as under section 115JB. Decided against revenue.
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2023 (12) TMI 1023
Benami Property Transaction - Scope of provisions of Section 5 of the Amended Act, 2016 - HELD THAT:- Today, when the matters were taken up for hearing, the learned counsel appearing for both sides in unison, submitted that a batch of appeals [2023 (12) TMI 620 - MADRAS HIGH COURT] cases, challenging the very same impugned order of the Appellate Tribunal, was disposed of, by this court, by passing a detailed judgment as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd. [2022 (8) TMI 1047 - SUPREME COURT] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced.
Further, it is to be noted that in the Review Petition (Civil)[2023 (1) TMI 1327 - SC ORDER] filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd. delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals.
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2023 (12) TMI 1022
Direction for issuance of a detention waiver certificate - It is submitted that the delay in releasing the goods is on account of detention of the goods by respondent Nos. 1 & 2 for the purpose of investigation which lasted for almost 2 months and, therefore, the delay in releasing the goods cannot be attributed to the petitioner - HELD THAT:- The procedure for issue of “Detention Certificate” is notified in Public Notice No. 111 of 1985 dated 29.07.1985 of the Bombay Custom House issued much prior to the Handling of Cargo in Customs Area Regulations, 2009. Paragraph 2 of the Public Notice No. 111 of 1985 sets out the circumstances under which a regular detention certificate could be issued by the Customs House for facilitating the importers to get remission of demurrage charges.
Section 46 (4A) provides that the importer shall ensure the accuracy and completeness of the information given therein and the authenticity and validity of any document supporting it and compliance with the restriction or prohibition, if any, relating to the goods. It appears that on account of price difference between the supplier invoice and manufacturer invoice, the respondents are contending that the petitioner has not ensured the accuracy and completeness of the information given therein - one cannot say that the petitioner has not given accurate and complete information with respect to the price difference. The petitioner has filed the documents in support of its explanation which has not been rebutted by the respondents, and therefore reliance placed by the respondent Nos. 1 & 2 on Section 46(4A) of the Customs Act is not appropriate to deny the issuance of detention waiver certificate.
In the instant case, the demurrage could have been avoided if after removing the goods for testing, same were directed to be shifted to warehouse under Section 49 of the Act. The petitioner on 13th January 2021 sought such permission and which was immediately granted but the same could have been done when the goods were detained for investigation. Therefore, respondent Nos. 1 & 2 were not justified in not responding to various letters of the petitioner seeking waiver certificate and now to justify the same in reply affidavit. In our view, the petitioner is therefore entitled to detention waiver certificate upto the period 13th January 2021.
The respondent no. 1 has relied upon the decision of the Supreme Court in case of JINDAL DRUGS LTD. & ANR. VERSUS THE UNION OF INDIA & ORS. [2018 (8) TMI 49 - SUPREME COURT]. The Supreme Court in this case held that the revenue cannot be made liable to pay demurrage charges unless the action of the detention is palpably wrong or wholly unacceptable.
Respondent Nos. 1 & 2 to issue detention waiver certificate within a period of four weeks from today - Petition disposed off.
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2023 (12) TMI 1021
Provisional release of perishable goods - apples - petitioner has submitted that N/N. 5/2023 was stayed by the Kerala High Court referring to some interim orders passed in other writ petitions, wherein although as fairly stated, the challenge in such petitions was not to the Notification No. 5/2023 concerning the import of apples, but to a notification on spices.
HELD THAT:- No case is made out by the review petitioner for this Court to exercise its review jurisdiction for more than one reason. The grounds as raised in the review petition, are quite alien to the orders passed by us on the proceedings of which a review is sought. Even otherwise such was not the case of the petitioner when we decided the writ petition. Further, the order passed by the Kerala High Court dated 11th July 2023 which is in the respondent’s (original petitioner’s) own case staying Notification No. 5/2023 continues to operate even today and the same has not been disputed by the review petitioner. The legal position as brought about by virtue of the stay to the notification is to the effect that the department can foist the said notification and refuse clearance of the goods (apples) by applying such notification.
Once the notification is stayed by the High Court, such order would be operational and binding on the department all over considering the well settled principles of law as laid down by the Supreme Court in KUSUM INGOTS & ALLOYS LTD. VERSUS UNION OF INDIA [2004 (4) TMI 342 - SUPREME COURT]. Thus the department could not be heard to say that the said order passed by the Kerala High Court is not binding on the department.
Perusal of order under review makes it clear that the department refused to clear the import of apples relying on the Notification No. 5/2023 which itself was stayed by the Kerala High Court in the petitioner’s own case. Once such position had continued to operate, the review petitioner cannot argue that such stay on the said notification ought to be considered to have been impliedly vacated in the Kerala High Court adjudicating on a similar notification in relation to spices. This would be a misconceived approach on the part of the Department.
There are no merit to review orders applying the well settled principles of law in the exercise of review jurisdiction under Order 47, Rule 1 of the Code of Civil Procedure, 1908 - The Review Petition is accordingly dismissed.
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2023 (12) TMI 1020
Non-imposition of penalty under section 114A of CA - not demanding interest from the respondent - HELD THAT:- The adjudicating authority has held that the goods are liable for confiscation and imposed redemption fine and penalty under section 112(a) of the Customs Act, 1962. Further, the adjudicating authority has relied on the judicial pronouncement of this Tribunal in the case of S.S.Impex where redemption fine was imposed @ 19.5% and penalty @ 7.8% on the value re-fixed.
There are no infirmity in the impugned order and the same is upheld - appeal dismissed.
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