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2022 (6) TMI 1283
Reopening of assessment u/s 147 - Time limit for notice - maximum time limit for issuance of notice under section 148 - HELD THAT:- As the issuance of notice under section 149 is complete only when the same is issued in the manner as prescribed under section 282 r/w rule 127 of the Income Tax Rules prescribing the mode of service of notice under the Act. The signing of notice would not amount to issuance of notice as contemplated under section 149 - the requirement of issuance of notice under section 149 is not mere signing of the notice under section 148, but is sent to the proper person within the end of the relevant assessment year. Concededly, the notice dated 31.03.2018 issued by the respondent was served on the appellant through mail, only on 18.04.2018. Though the learned senior panel counsel appearing for the respondent produced t....... + More
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2022 (6) TMI 1282
Reopening of assessment u/s 147 - Scope of amended Sections 148 and 148A - mandation of prior approval of specified authority - conducting of enquiries or issuance of show-cause notice or passing of order under section 148A - revenue submitted that by virtue of the order passed by the Apex Court [2022 (5) TMI 240 - SUPREME COURT], all such impugned notices under un-amended Section 148 of the Income Tax Act are deemed to have been issued u/s 148A as substituted by the Finance Act, 2021 and construed and treated to be show cause notices in terms of Section 148A (b) - HELD THAT:- The requirement of conducting any enquiry, if required with the prior approval of specified authority under Section 148A(a) has been dispensed with as a onetime measure vis-a-vis those notices which have been issued under Section 148 of the un-amended Act from 01.04....... + More
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2022 (6) TMI 1281
Reopening of assessment u/s 147 - scope of new section u/s 148A - principles governing exercise of writ jurisdiction by the High Court - Surprisingly the petitioner has challenged the assessment on the ground that no documents have been provided to him before passing the impugned order but there is no prayer in the present petition seeking those documents - HELD THAT:- Admittedly, in the present case the petitioner was provided with reasons for issuing notice to which the petitioner failed to respond. Request was made for providing information qua certified copies of the documents w.r.t. notice under Section 148-A(b) of the Act even though the information already stands furnished as Annexure to notice under Section 148-A(b) of the Act. Once, the petitioner has opted not to respond to the reasons accompanying notice under Section 148-A(b) ....... + More
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2022 (6) TMI 1280
Disallowance of interest paid on debit balance of the assessee-partner’s capital account in the partnership firm - HELD THAT:- Proviso to section 36(1)(iii) stipulates that the amount of interest paid in respect of capital borrowed for acquisition of an asset “for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which the asset was first put to use, shall not be allowed as deduction”. This proviso makes a pitch for disallowance of interest only when the asset acquired with the borrowed funds is not put to use. No disallowance can be made if the borrowed funds are utilized for acquiring an asset which does not produce any income albeit it has been put to use. The relevant criterion for disallowing interest is to examine the date up to which the asset acquir....... + More
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2022 (6) TMI 1279
Validity of assessment order passed in the name of non-existent entity - merger - amalgamated company - whether the assessment framed in the name of a non-existent company is valid or suffers from the vice of illegality or this is just a curable procedural mistake on the part of the AO as per sec 292B - HELD THAT:- The assessment order in the name of non-existent company suffers from the substantive illegality and is invalid in the eyes of law. The case of the assessee is squarely covered by the decision of Hon’ble Supreme Court in the case of PCIT vs Maruti Suzuki India Limited [2019 (7) TMI 1449 - SUPREME COURT] wherein it has been held that the assessment order in the name of non existent entity is to be set aside as this is a substantive illegality and not procedural irregularity of the nature as referred to in section 292B. Mer....... + More
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2022 (6) TMI 1278
Disallowance with regard to foreign exchange loss arising on restatement / revaluation of foreign currency loans due to adverse foreign exchange fluctuations claimed u/s 37(1) - HELD THAT:- We infer that the assessee has extended loans / advances facility to its subsidiaries only for the purpose of business, as the nature of assessee’s business relates to constructions and development of real estate properties. The contention of the Revenue that the impugned loss was only notional loss does not hold good. The reasoning that since there was no settlement of loan as on 31/03/2017 will not entitle the assessee to claim as per method of accounting followed and the provisions of section 43AA read with Income Computation Disclosure Standard (ICDS)-VI has been countered by the assessee stating that assessee has been following AS-11 which s....... + More
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2022 (6) TMI 1277
Addition made u/s.43CA - difference between the stamp duty value and the reported sale consideration - AO applied the stamp duty value prevailing in February 2011 and since the said value was more than the registered value in 2014 by the assessee AO brought to tax the differential sum as an addition u/s.43CA - HELD THAT:- As there is a proviso introduced by the Finance Act 2018 w.e.f. A.Y.2019-20 onwards and which was later amended by the Finance Act 2020 applicable from A.Y.2021-22, which states that if the difference between the stamp duty value and the reported sale consideration is not more than 10% then, the reported sale consideration shall have to be accepted and no addition in terms of 43CA is required to be made. We find that this amendment has been held to be retrospective in operation by the Co-ordinate Bench decision of this T....... + More
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2022 (6) TMI 1276
Scope of limited scrutiny - Securities premium reserve which stood transferred by the erstwhile company to the assessee-LLP upon conversion as a taxable profit - Whether Assessing Officer travelled beyond the scope of limited scrutiny or not? - HELD THAT:- Once a case is selected for limited scrutiny, though the role of the ld. Assessing Officer is confined to examine the issues for which the case is selected for limited scrutiny but then the AO has to go into the depth of such issue and minutely examine the facts attached thereto. AO just cannot casually examine the issue and come to the conclusion because the reasons are just indicative in nature and to reach the depth of the issue raised in the limited scrutiny, AO has to make the examination deeper and deeper examining all the aspects linked to such reason. In case of the complete scr....... + More
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2022 (6) TMI 1275
Addition u/s 69A - unexplained cash deposits - as submitted deposits made in to the bank out of collections from various members of Co-operative Credit Society - HELD THAT:- We find that before both the AO as well as before the Ld. CIT(A), the explanation of the assessee in respect of cash deposits is not on record due to non-compliance on the part of the assessee. Before us, the Ld. counsel of the assessee has given an undertaking that assessee is willing to submit necessary evidence in support of source of cash deposits and co-operate in appellate proceedings before the Ld. CIT(A). Thus in the interest of substantial justice, we restore this matter back to the file of the Ld. CIT(A) for deciding afresh in accordance with law after providing adequate opportunity of being heard to both the assessee as well as the Assessing Officer. The grounds raised by the assessee are accordingly, allowed for statistical purposes.
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2022 (6) TMI 1274
Reopening of assessment u/s 147 - reopening beyond four years - HELD THAT:- We note that during the course of assessment proceeding, the assessee furnished before the AO all the documents as desired including the audited annual accounts. and accordingly framed the assessment u/s 143(3) of the Act. Besides the assessee has made full disclosure of these transactions in the books of account which have been examined at length by the AO during the course of original assessment proceeding. Therefore, the reopening of assessment u/s 147 in the present case, without any reference to failure on the part of the assessee to disclose all facts regarding the items in the return of income or books of account during the assessment proceeding, is not justified and is in violation to proviso to section 147. Thus reopening of assessment is invalid and is accordingly quashed. Decided in favour of assessee.
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2022 (6) TMI 1273
LTCG - FMV detrmination - AO computed assessee’s share being 1/4th of the long term capital gain - scope of section 9B of the Act which was brought on the Statute book by Finance Act, 2021 w.e.f 1.4.2021 - A.R. vehemently submitted before us that the AO should have referred the matter tothe DVO for ascert aining the fair market value as on the date of sale as well as on 1.04.1981 and as the calculation made by the AO is just a guess work which is based on presumptions and assumptions without any reasonable and rationale basis and therefore the same may to be sent back to the file of the AO for assessing the correct amount of capital gain after making necessary reference to the DVO for ascertaining the fair market value of the plot as on the date of sale as well as on 1.4.1981 - HELD THAT:- We find merits in the contentions of the as....... + More
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2022 (6) TMI 1272
Revision u/s 263 - claim of depreciation at higher rate/higher rate for claim of additional depreciation - HELD THAT:- The assessee has not provided the details relevant to the assets, which it is claiming as part of plant & machinery. The assessee itself accepted that electrical installation are chargeable to depreciation @ 10%, but claimed the same at higher rate of depreciation. Onus is on the assessee to explain and prove the same with detail about such claim. Since no such specific reply was given by the assessee, the enquiry made by the ld. AO remained incomplete and it ought to have been addressed in the assessment order and Ld. AO should not have allowed the assessee’s claim without examining the issues. This factual aspect remains unverified. Assessee merely kept referring to the decision that an enquiry was made by the....... + More
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2022 (6) TMI 1271
Income from house property - notional rent from house property in respect of flats held as ‘stock in trade’ by the assessee - deemed rental income on unsold flats / units held by the assessee as ‘stock in trade’ - assessee is in the business of real estate construction and development in India - AO noted that assessee had certain flats as ‘unsold finished stock’ in its balance sheet and these represented the house properties owned by the assessee - HELD THAT:- It is not in dispute that the unsold flats lying in the balance sheet with the assessee were held as stock in trade by the assessee. It is not in dispute that the sale of flats shall be assessable as business income in the hands of the assessee, being stock in trade. We find that the provisions of Section 23(5) of the Act had been introduced in th....... + More
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2022 (6) TMI 1270
Correct head of income - arbitration award received by the assessee - Special income - as per AO arbitration award was not awarded only with reference to the retirement of the assessee from the partnership firm but was in lieu of relinquishment of all her rights, claim and demand of any nature whatsoever against the partnership firm M/s P.N.Writer & Co. and all other entities owned and controlled by the firm and partners and for withdrawing all the Suits against all the entities - As per AO assessee's rights and claims were converted into money terms through mutually agreed consent terms of Arbitration award and, hence, the amount was held as taxable u/s 28(iv) - CIT(A) deleted the addition made by A.O under the head 'Income From Other Sources' - HELD THAT:- We observed that exactly similar issue was considered and decided....... + More
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2022 (6) TMI 1269
Disallowance of remuneration paid by the assessee to its Working Partner u/s 40A(3) - Cash payment of expenditure in excess of specified limit - Scope of separate identity for the firm and its partners - HELD THAT:- It is trite that the partnership firm is not a juristic person and there is no separate identity for the firm and its partners. The partnership is only a collective of separate persons and not a legal person in itself. For the purpose of the Act, a firm is considered as a unit of assessment by special provisions. The Hon’ble Supreme Court in the case of CIT v. R.M. Chdambaram Pillai (1976 (11) TMI 2 - SUPREME COURT]while holding that payment of salary to a partner represents a special share of the profits and the salary paid to the partner retains the same character of the income, observed that remuneration paid to the p....... + More
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2022 (6) TMI 1268
Disallowance of claim of bad debts - Amount written off in the books of accounts as non-recoverable loan out of the loan advanced during the regular course of business claimed as bad debt u/s 36(1)(vii) r.w.s 36(2) - Alternative prayer being that if the same is not allowed u/s 36(1)(vii) r.w.s. 36(2) it was allowable u/s 37(1) - HELD THAT:- As admitted facts are that the assessee is carrying on money lending business and has been taxed so under the head business for the last 9 years which has been overlooked by the authorities. If the assessee is not in money lending business it cannot lead to the conclusion that when money advanced by the assessee becomes bad, it cannot be written off. Even if the assessee advanced money without money lending business, if the advance becomes bad, it should be allowed as a bad debt in terms of s. 36(1)(vi....... + More
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2022 (6) TMI 1267
TDS u/s 194I - Disallowance of expenditure representing reimbursement thereon u/s.40(a)(ia) - renting of equipments - assessee Company is in the business of providing Marine Seismic Services used for Research and Development to explore the utilisation of recourses available in sea and also provide complete Survey Solution including Bathmetry, Fishing Managements, Chase Boats and other related logistic services for data processing services required - As pleaded that the said mobilization charges are nothing, but reimbursement of expenses incurred by the owner of a vessel such as Fuel, Survey, arrangement of Expat Seismic Crew, Port charges, and various clearing charges from Naval & custom authorities to upgrade the Vessel so as to qualify as per Seismic norms prescribed under the contract - HELD THAT:- AO submitted before the lower aut....... + More
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2022 (6) TMI 1266
TP Adjustment - Arms Length Price adjustment on account of payment of Royalty - Admittedly, the royalty was paid @ 5% of domestic sales and 8% of the export sales in consideration of receipt of technology in the form of know-how, technical training and technical assistance for the purpose of manufacturing the compressors. The TPO determined the ALP of the royalty payment at 3% of the sales by taking it as appropriate benchmark - HELD THAT:- TPO adopted this benchmark considering the transaction of payment of royalty by it’s A.E. i.e., Wuxi Atlas Copco Compressor Co Ltd., which is undisputedly controlled transactions, and the difference between two and the actual price was suggested as TP adjustment u/s 92CA of the Act without even going into the issue whether the approval of payment of RBI will constitute a CUP method or not. The is....... + More
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2022 (6) TMI 1251
TDS u/s 195 - application for 'Nil TDS Certificate' has been rejected and the petitioner has been directed to deduct tax at source at the applicable rate - Deduction u/s 195(2) on the 'sum chargeable under this Act' - Whether the petitioner is required to deduct TDS under Section 195(2) read with Article 12(4) of the convention between Government of United States of America and the Government of Republic of India for the avoidance of Double Taxation and the prevention of FISCAL evasion? - Whether the application of the petitioner dated 15.01.2020 filed under Section 195(2) of the Income Tax Act was not maintainable? - HELD THAT:- Keeping in mind that the determination under Section 195(2) or under Section 197 by grant of Certificate being tentative in nature, the assessee must be permitted to invoke such provision and seek....... + More
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2022 (6) TMI 1250
Nature of receipts - Treatment to carbon credit receipt - Revenue or capital receipts - proceeds realized by the assessee on sale of certified emission reduction credit, which the assessee had earned on the clean development mechanism in its wind energy operations - HELD THAT:- As decided in S.P. SPINNING MILLS PVT. LTD.[2021 (1) TMI 1081 - MADRAS HIGH COURT] the receipts from sale of carbon credit is a capital receipt and cannot be included in the taxable income Technology Upgradation Fund (TUF) subsidy and compensation receivable on non performance of the energy generation - revenue or capital receipt - HELD THAT:- This substantial question of law is covered in favour of the assessee, by the decision of the Division Bench of the Punjab and Haryana High Court in the case of Commissioner of Income Tax v. Sham Lal Bansal [2011 (1) TMI 409 ....... + More
