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Income Tax - Case Laws
Showing 1 to 20 of 163867 Records
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2024 (5) TMI 507 - ALLAHABAD HIGH COURT
Faceless Assessment Center u/s 144-B - territorial jurisdiction - Determination of geographical location of the assessing authority - petitioner's PAN is mapped to ITO Ward 4(1)(1), Aligarh i.e. the jurisdictional assessing authority of the assessee - objection raised by revenue that the present petition may not be entertained by this Court as the assessee filed its return from outside the State of U.P. and the assessment order has been passed by the Faceless Assessment Center, is misconceived - HELD THAT:- In the scheme faceless assessment being implemented by the revenue under the Act, the concept of geographical location of the assessing authority has been rendered largely irrelevant for the purpose of determining the territorial jurisdiction of the High Court to which such assessing authority may abide. Faceless Assessment Center located at place 'A' may therefore remain simultaneously amenable to the writ jurisdiction of different High Courts exercising their territorial jurisdiction over different assessees residing within the territories of different States, whose assessment case may be handled by such Faceless Assessment Center.
To determine the issue of territorial jurisdiction, the residence of an assessee in the PAN registration details may remain vital and decisive. Once it is not disputed to the revenue that the petitioner-assessee continues to be registered inside the State of U.P. on its PAN registration, the preliminary objection being raised as to territorial jurisdiction cannot be accepted. Vital part of the cause of action has arisen to the petitioner inside the U.P. upon service of assessment order etc.
On merits, the petitioner would submit, the assessment order dated 27.03.2024 exceeds and thus departs from the show cause notice preceding the order, being notice dated 15.03.2024. The additions proposed in the notice dated 15.03.2024 do not match with the additions made. In fact, the additions exceed the enhancement proposed.
In view of the above, we find, inadvertent mistake crept in the assessment order as may not allow the impugned order dated 27.03.2024 to be sustained.
Accordingly, no useful purpose may be served in keeping the present petition pending or relegating the petitioner to the forum of alternative remedy, as submitted by revenue. Once the mistake cannot be disputed and it goes to the root of the matter, no fruitful purpose may ever arise in remitting such a matter to the forum of alternative remedy wherein in any case, power to remand to the assessing authority has been done away by virtue of the amendment made to Section 251 of the Act. Accordingly, the second preliminary objection as to availability of alternative remedy is also rejected.
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2024 (5) TMI 506 - DELHI HIGH COURT
Non-jurisdictional AO proceeding with the assessment - absence of any order of transfer u/s 127 - whether, in the absence of any decentralization order or transfer order made under Section 127 of the Act, the case of the assessee can be transferred from the board of one AO to another? - HELD THAT:- As legislative mandate enshrined under Sections 120, 124 and 127 of the Act and the judicial pronouncements mentioned above, it is clear that Section 124 of the Act deals with the jurisdiction of the assessing officers, whereby, the AO has been vested with the jurisdiction over any person carrying on business or profession over any prescribed territorial limit or where the principal place of business of persons is within such area and any person residing within such prescribed territorial limits.
However, in cases where the case was transferred from one AO having jurisdiction over the assessee to another AO who otherwise did not have jurisdiction in terms of the direction of the Board under Section 120 and 124 of the Act, then transfer order under Section 127 is mandatory, without which the jurisdiction of the AO cannot be conferred to pass any assessment order.
It is imperative to point out that the underlying objective of such a statutory procedure is to avoid chaos and to ease the administrative convenience on the part of the Revenue for coordinated investigation.
The word ‘case’ includes the umbrella or class of all cases related to the assessee, wherein, the order has been passed under Sections 120 and 127 of the Act. Section 127 of the Act is a machinery provision and it must be construed in a manner to finally effectuate a charging section and for the purpose of effective collection of tax.
Considering the case in hand, vide order of centralization dated 16.07.2008, the case of the assessee was transferred from the jurisdictional AO to the DCIT, Central Circle-16, New Delhi. It be noted that since AY 2008-09 to AY 2015-16, the assessee was being assessed by the office of DCIT, Central Circle-16/20, New Delhi. Furthermore, as the record would reflect that the case of the assessee was transferred to ITO Ward 21(1), New Delhi without any transfer order passed under Section 127 of the Act, which is a pre-requisite before transferring the case.
As noted that till date no decentralization order has been placed before us which may evidence a legitimate transfer of the assessee’s case from DCIT, Central Circle-16/20, New Delhi to ITO Ward 21(1), New Delhi. Furthermore, we find no merit in the contention of the Revenue that by virtue of an order dated 15.11.2014 passed under Section 120 of the Act under the pen of ACIT read with CBDT notification dated 22.10.2014, the office of ITO Ward 21(1), New Delhi has inherent jurisdiction over the assessee. Such a position if accepted would lead to confusion and chaos as it would lead to a position where at one point, one or more assessing officers not only will have jurisdiction over the assessee but also can proceed with the assessment proceedings simultaneously. Such a situation cannot be countenanced in the law.
Once the case of the assessee is centralized, then the transfer of the case of the assessee to another AO would not be permissible without a decentralization order or transfer order under Section 127 of the Act as contrary to such a position dehors the underlying objective which the Act seeks to achieve by virtue of powers enshrined under Section 127 of the Act. We accordingly set aside the impugned orders
Writ petition is allowed.
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2024 (5) TMI 505 - DELHI HIGH COURT
Validity of assessment u/s 153C - alternate efficacious remedy exists - whether before passing the impugned order, an opportunity of hearing was given to the assessee and if the answer is in the affirmative, then whether the AO has duly considered the assessee’s reply? - HELD THAT:- This Court can exercise the writ jurisdiction, in the presence of an alternate efficacious remedy, on the quartet of exigencies namely where:
(a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution;
(b) there has been a violation of the principles of natural justice;
(c) the order or proceedings are wholly without jurisdiction; or
(d) the vires of legislation is challenged. However, it is crystal clear that the present is not the case where the principles of natural justice have not been met or the AO has not duly applied his mind before passing the impugned order. Therefore, there is no occasion for this Court to exercise the extraordinary powers enshrined under Article 226 of the Constitution as none of the exigencies noted above have been met in the instant case.
Therefore, we find ourselves unable to invoke writ jurisdiction to set aside the impugned order. Writ petition is dismissed and disposed of, along with pending applications, if any.
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2024 (5) TMI 504 - ALLAHABAD HIGH COURT
Reopening of assessment - two simultaneous assessments proceedings initiated against the same transaction amount - penalty notice u/s 271 AAC issued on an uncertain Assessment Order - as submitted by petitioner that in case of search of premises/offices of Omaxe Group, some papers have been discovered by the authorities then Section 153A and 153C would apply and not Section 147 and 148 - HELD THAT:- This Court is of the opinion that the impugned notice for AY 2019-20 u/s 148(A) (d) and the Final Order passed u/s 148(A) (d) on 27.03.2023 for AY 2019-20 can both be looked into in appeal that is pending before the Commissioner of Income Tax. The protective Assessment Order that has been issued u/s 147 read with Section 144 B, has also been challenged in an appeal before the CIT. A show cause notice issued for imposing penalty for AY 2019-20 which has been challenged could not have been issued unless the Assessment Order for the AY 2019-20 had been finalised in appeal.
We have come to this conclusion on the basis of observations made in Bhailal [2014 (10) TMI 621 - GUJARAT HIGH COURT]
The show cause notice does indeed say that in case the petitioner has filed an appeal or has filed objections, copy of such appeal/objections be submitted along with the answers by the Assessee but the time limit for such submission has already expired. The petitioner has not submitted any reply to the show cause notice for imposing penalty as the petitioner had challenged the jurisdiction of the Assessing Officer in issuance of such show cause notice only on the basis of a protective Assessment Order.
We have not been shown any document to say that even after time limit i.e. 25.04.2024 has expired, any final penalty has been imposed u/s 271AAC therefore, this Court is of the opinion that no such final orders imposing penalty should be passed till the appeal of the petitioner is decided by the CIT - Petitioner is at liberty to approach the AO and file a detailed reply along with documents to the notice issued u/s 271 AAC (1).
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2024 (5) TMI 503 - BOMBAY HIGH COURT
Levy of interest u/s 234B - HELD THAT:- In view of the decision of Manasarovar Commercial (P) Ltd. v. CIT (2023 (4) TMI 419 - SUPREME COURT) the first question is answered in favour of the Revenue and is not pressed by Appellant.
Deduction u/s 80-O - brandishing newspaper cuttings as proof to show 'information concerning commercial knowledge and experience'- Appellant was obliged to provide information to Arianespace regarding current regulations and market conditions in India - Deduction denied as information provided by Appellant pursuant to the said agreement comprised only of newspaper cuttings freely available and hence, cannot be treated as 'information concerning commercial knowledge and experience', there were no written reports of any analysis, Appellant had no experience in Satellite business and there was nothing to indicate that the information was utilized outside India - HELD THAT:- It is clear that approval was accorded by the CCIT on the basis of specific statements made by Appellant that information to be shared pursuant to the agreement was that collected and collated from User Departments and analysis and assessments were to be done during quarterly meetings. Newspaper cuttings are not precluded from being shared as information but by themselves they do not constitute any commercial expertise.
AO is well within his rights to request Appellant to furnish proof of sharing the information with Arianespace for which approval was granted by the CCIT. From the replies of Appellant to the AO, it is quite clear that Appellant has not provided material to Arianespace as represented by it before the CCIT while seeking approval as newspaper cuttings are not information collected or collated from User Departments. The application form for approval specifies providing commercial assistance to Arianespace as contemplated under Section 80-O of the Act based on which approval was procured. Thus, we have no hesitation in accepting the decision of the AO in rejecting this claim of Appellant.
AO is well within his jurisdiction to verify whether the information shared is attributable to the information or service contemplated by the provision. The AO is in fact required to make such an enquiry and for that purpose the assessee is required to place on record requisite material supporting its claim for deduction and on the basis of which approval was procured from the CCIT.
The present case displays an obvious attempt on the part of Appellant in creating an illusion of acting in aid of the agreement, on the basis of the approval granted by the CCIT, while at the same time refusing to produce any evidence in respect of which relief is being sought. Merely brandishing newspaper cuttings does not amount to proof of sharing commercial expertise with its French counterpart as mandated by Section 80-O of the Act. Decided against assessee.
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2024 (5) TMI 502 - BOMBAY HIGH COURT
Condonation of delay in filing of revised return of income - CBDT rejecting petitioner’s application u/s 119 - delay in filing the returns of Income based on the recasted accounts - Resignation by the statutory auditors happened before completing their term and reference made to unauthorised and undisclosed transactions - order passed by which the NCLT was pleased to grant permission to applicant, i.e., MCA for reopening of the books of account and recasting of financial statements of Respondent No. 1, i.e., petitioner herein and its subsidiary companies for past five years
HELD THAT:- By a letter dated 2nd December 2022 the PCCIT strangely advised that the condonation of delay application be rejected. This appears to have been made on the prompting made by the Board because by a letter dated 30th November 2022 the Board called upon the PCCIT to submit once again the specific comments/recommendations on the merits of petitioner’s application with reference to Board Circular No. 9 of 2015 dated 9th June 2015 governing condonation of delay under Section 119 (2) (b) of the Act. There is no explanation whatsoever why there was a change in the stand taken from what was taken earlier.
We fail to understand when the order under Section 130 (2) of the Companies Act has been passed by the NCLT to recast the accounts on an application filed by the MCA, Government of India and the accounts have been recasted and accepted by the NCLT and also filed with the RoC under the Ministry of Corporate affairs, how could the Income Tax Department raise such frivolous objections that the delay in filing the returns of Income based on the recasted accounts should not be even condoned.
This Hon'ble Court pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, order or direction under article 226 of the Constitution of India directing the Respondent Nos. 1 to 5 to allow the Petitioner to file revised returns of income and revised computations of income prepared in accordance with/based on the re-casted/revised books of account and financial statements for assessment years 2015-16 to 2020-21 and to assess the Petitioner's income chargeable to tax based on the same.
Petitioner shall file physical returns of income based on books of account, revised/recasted under Section 130 (2) of the Companies Act, 2013, as taken on record by the NCLT for A.Y. 2015-16 to A.Y. 2020-21 before the JAO within 30 days from the date this order is uploaded.
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2024 (5) TMI 501 - MADHYA PRADESH HIGH COURT
Bogus LTCG - bogus penny stock script purchases - exemption u/s 10(38) denied - ITAT deleted addition - HELD THAT:- The shares of Sunrise Asian Ltd. are listed on Bombay Stock Exchange, shares have been purchased through D-mat Account and payment have been received through Banking Channel and Security Transaction Tax has been paid by Stock Exchange. Thus, all the conditions for availing exemption have been fulfilled.
As truly contended that under Income Tax Act there is no provision which requires the Assessing Officer to investigate the genuiness of the shares because these share are listed, issued by the Company and records are maintained with the Register of Companies. Thus, these shares cannot be said to be bogus shares as have been issues and subscribed under the Companies Act. The revenue has failed to appreciate that how these shares can be termed as Bogus Shares, when these shares have been issued by the Company incorporated under the Companies Act by following the provisions and procedures prescribed under the Companies Act, 1956
Thus it is incorrect notion of the Revenue that these shares are bogus shares, on the contrary these shares are genuine and lawfully issued share by the company by following the law and procedure in this regard. The Assessing Officer has heavily relied upon report of Investigation Wing of Income Tax Department which was conducted in Kolkata in case of some of the Companies including M/s. Sunrise Asian Limited.
This report has never been provided to the respondent at any stage of the proceedings nor filed by the department before ITAT or before this Court. It is settled law that no material can be used against the assessee without providing the assessee to examine it and, if required, to cross examine. Thus, there was violation of principles of natural justice. That on similar set of facts and in respect of the same share script of M/s Sunrise Asian Ltd. the Mumbai Bench of ITAT in case of (1) Narayan Ramchandra Rathi[2019 (8) TMI 1520 - ITAT MUMBAI] (2) Dipesh Ranmeshchandra Vardhan [2020 (8) TMI 405 - ITAT MUMBAI] and, (3) Anraj Hiralal Shah[2019 (9) TMI 719 - ITAT MUMBAI] has dealt with the identical issue and decided in favour of the assessees.
Thus no substantial question of law arises from the order of the ITAT requiring consideration by this Court.
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2024 (5) TMI 500 - KERALA HIGH COURT
Assessment completed u/s 144C against a petitioner/Non-Resident Indian - definition of an "eligible assessee" - HELD THAT:- Section 144 C is not a substantive provision. It is machinery provision which has been incorporated for the benefit of the assessees including the eligible assessee. The NRI has been included in the definition of "eligible assessee" under Section 144C (15) (b) (ii) w.e.f. 01.04.2020 and, therefore, the assessment proceedings in respect of an NRI undertaken after the said date are to be governed under the provisions of Section 144C.
The objection of the petitioner that the petitioner ought not to have been proceeded under Section 144 C does not have merit. The assessment proceedings have been finalised u/s 144 C which is a machinery provision and in fact beneficial to the assessee. Therefore, find no substance in the 1st objection raised by the petitioner.
Question of limitation - timeline has been given in the statement which would clearly state that the final order of assessment has been passed strictly in accordance with the provisions of Section 144C and the general provision of Section 153 or 153B would not be applicable in the present case . Therefore, the 2nd objection also does not have merit and substance. Further, the petitioner has never raised objection in respect of the petitioner not being covered within the provisions of Section 144C before the assessing authority, which is evident from the assessment order itself. WP dismissed.
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2024 (5) TMI 499 - KARNATAKA HIGH COURT
Stay petition - interim order staying the enforcement of the demand pursuant to the respective demand notices in the light of the submission that 20% of the demand has been deposited - HELD THAT:- The net effect of the submissions is that the petitioner’s appeals as against the relevant assessment orders will have to be considered by the Commissioner of Income Tax [Appeals]-12 in the light of the Division Bench’s order in [2023 (7) TMI 1164 - KARNATAKA HIGH COURT] and there cannot be precipitation for recovery of the demand especially with the petitioner having deposited 20% thereof.
It would not be out of place to record that where the assessment orders have been called in question by the assessees in the writ petitions on the ground of jurisdiction, those writ petitions are being disposed of in the light of the Division Bench’s order [supra] but with liberty to the concerned assessees to seek revival of the petitions in the event the Revenue succeeds in the proceedings commenced before the Hon’ble Supreme Court as against the Division Bench’s order. This liberty is reserved wherever, apart from the ground of jurisdiction, the ground such as violation of principle of natural justice and other grounds are urged.
As it would be just to reserve liberty to the petitioner to seek early disposal of the pending appeals before the Commissioner of Income Tax [Appeals]-12. If the reason for the assessment and the present petition is the demand notices for recovery of 100% demand based on the impugned assessment orders, and if 20% of the demand is already deposited, it cannot be gainsaid that with the Division Bench’s order there cannot be further precipitation
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2024 (5) TMI 498 - ITAT VISAKHAPATNAM
Exemption u/s 10(23C)(iiiad) - Threshold limit of Rs. 1 Crore - denial of exemption as gross receipts of the assessee exceed the stipulated limit of Rs. 1 crore - DR argued that the assessee society is running educational institutions with single PAN, therefore, the gross receipts of the assessee required to be considered for the purpose of section 10(23C)(iiiad) and assessee neither has registration u/s 12A nor any approval u/s 10(23C)(vi) of the Act to claim exemption u/s 10(23C)(iiiad) of the Act as the gross receipts of the assessee exceeded Rs. 1 crore - HELD THAT:- The gross receipts of the society from Degree college was Rs. 84,81,714/- and the junior college was Rs. 18,66,811/-, which has not exceeded the threshold limit of Rs. 1 crore individually or even put together, if the receipts pertaining to F.Y.2015- 16 amounting to Rs. 10,82,585/- were excluded from the gross receipts of Rs. 1,03,48,525 and the balance comes to Rs. 92,65,940/-.
Thus as the gross receipts of the assessee society did not exceed the threshold limit of Rs. 1 crore. Hence, respectfully following the decision of St.Mary’s English Medium School Society [2020 (2) TMI 1139 - ITAT VISAKHAPATNAM] we hold that the assessee is entitled for exemption u/s 10(23C)(iiiad) of the Act - Decided in favour of assessee.
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2024 (5) TMI 497 - ITAT DELHI
Denial of deduction claimed under Chapter VI-A i.e. Section 80G/80GGA read with Section 35AC - donations paid to the eligible institutions - as argued appellant right since AY 1993-94, was computed in the status of AOP and deduction u/s 80GGA r.w.s. 35 AC was granted year after year - HELD THAT:- We find that admittedly the assessee has not claimed the benefit of Section 11 and 12 of the Act as it is reflecting the AO, CPC’s intimation order issued u/s 143 (1) of the Act.
If that be so, then we find that the assessee is entitled to deduction u/s VI-A/80G/80GGA r.w.s. 35 AC of the Act. We also note that the assessee has been granted relief as claimed for since 1993-94 and even also in the scrutiny assessment for Assessment Year 2013-14 which is also on record. In fact, such claim of the assessee has not been able to be controverted by DR by producing any evidence contrary to the same at the time of hearing of the instant appeal. As considered the order passed by the coordinate bench on the identical facts and circumstances of the case wherein the said assessee trust has been granted relief u/s 80GGA r.w.s. 35AC of the Act.
Paper book filed before us contains the details of donations made by the assessee to Janki Bajaj Gram Vikas Sansthan along with other donations made by the assessee to the other trusts. Veracity of the donations made by the assessee on which the claim u/s 80GGA r.w.s. 35AC of the Act has been made, has not been done by the authorities below.
We are disposing of this appeal with the direction upon the Ld. AO to verify the details of donations made by the assessee and grant relief to the assessee in the light of the observations made hereinabove.
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2024 (5) TMI 496 - ITAT AHMEDABAD
Penalty u/s 271(1)(c) - unexplained expenditure u/s 69C and unaccounted cash receipt - HELD THAT:- Tribunal’s finding vide order [2022 (1) TMI 1328 - ITAT AHMEDABAD] clearly reveals that the assessee has disclosed all the relevant material before the AO during the assessment proceedings and, therefore, the element of concealment of income or furnishing of inaccurate particulars of income will not arise in the present scenario. In respect of disallowance of interest incurred on unsecured loan, the assessee has not prayed this ground and, therefore, the addition was sustained. Thus, this cannot be stated as concealment of income or furnishing of inaccurate particulars of income. Thus, CIT(A) has rightly granted partial relief to the assessee and there is no need to interfere with the same. Appeal filed by the Revenue is dismissed.
Penalty u/s 271D - Directors of the Company given cash loans in order to enable the Company to incur various expenses including the investment in land - CIT(A) confirmed the penalty u/s 271D of the Act and deleted the remaining amount relatable to share application/investment - HELD THAT:- The very objection of the CIT(A) appears to be contradictory when documents shown by the assessee and the findings given by the Tribunal [2022 (1) TMI 1328 - ITAT AHMEDABAD]. Since the addition itself was deleted by the Tribunal and the Assessing Officer has taken partial penalty proceedings u/s 271(1)(c) and 271D, AO has not segregated the findings independently and has not pointed out how the violation of Section 269SS has taken place in the present 271D proceedings. Thus, appeal of the assessee is allowed.
Penalty u/s 271E - It is pertinent to note that the assessee has given explanation before the AO as to how the loan was repaid and that explanation in fact was accepted by the Tribunal vide order dated 13.01.2022. Thus, the very finding given by the Tribunal confirms that the assessee has categorically given the explanation related to the repayment of loans which was paid through directors/Preet Patel and Pravin Patel. In fact, Ghanshyam Gandhi also have repaid the loan. Thus, the imposition of penalty u/s 271E of the Act will not sustain.
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2024 (5) TMI 495 - ITAT AHMEDABAD
Application seeking approval u/s 80G(5)(vi) rejected - assessee trust was granted provisional registration u/s 80G in Form 10AC - application for regular registration was rejected stating that some of the objects of the applicant/assessee are religious in nature - HELD THAT:- It is evident that the assessee trust is granted registration u/s 12A by the CIT(E) with the same objectives as enlisted in the trust deed.
Though the assessee trust is established with some of the objectives involved in certain religious activities, on perusal of the audited financial statements, more particularly from the Income& Expenditure account for the periods, submitted as a part of paper book and also as submitted to Ld. CIT(E), it is not emanating that the assessee trust had incurred any expenditure on religious activities.
No show cause notice was issued to the assessee before rejecting the application u/s 80G by Ld. CIT(E). The show cause notice holds immense significance in income tax proceedings, ensuring procedural fairness and safeguarding the rights of taxpayers. There are many judicial pronouncements which have reinforced the indispensability of this notice, emphasizing that orders issued without its adherence may be deemed invalid.
On perusal of financials, facts, and circumstances of the present case, after thoughtful deliberations, we are of the opinion that the order passed by CIT(E) is bad at law. We are of the considered view that the assessee trust having not spent any money on religious purposes, is eligible for grant of approval u/s 80G(5) of the Act - Appeal of the assessee is allowed.
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2024 (5) TMI 494 - ITAT AHMEDABAD
Disallowance of employees' contribution to provident fund u/s. 43B - HELD THAT:- Issue decided against assessee in the light of decision of Hon’ble Apex Court in the case of Checkmate Services (P.) Ltd [2022 (10) TMI 617 - SUPREME COURT]
Disallowance u/s. 35D - AR submitted that the CIT(A) has not at all considered the alternative plea of the assessee while deciding the issue/ground and in fact has given his dismissal for which the Ld. AR requested that the matter may be remanded back to the file of the CIT(A) for proper adjudication of the issues - HELD THAT:- It is pertinent to note that in fact while deciding this issue, the CIT(A) has not given any independent finding and in fact has not considered or adjudicated the assessee’s alternative plea. Therefore, it is appropriate to remand back this entire issue to the file of the CIT(A) for proper adjudication of the same in consonance with the assessee’s plea before the CIT(A) and the issue be decided as per the Income Tax Statute. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. Ground no.1 is partly allowed for statistical purpose.
TP Adjustment - Selection of MAM - CIT(A) affirming TPO’s action of rejecting most appropriate method (MAM) adopted by the assessee - AR submitted that the rejection of CUP method for benchmarking purchase transaction was not justified on the part of the TPO as the TPO himself has accepted CUP as most appropriate method for the same set of transactions carried with the Associated Enterprise (AE) in preceding years - HELD THAT:- CIT(A) has totally failed to take into account profit margins as well as how the comparables which were selected by the TPO are not as per the filters given by the TPO himself. The product is manufactured by the assessee as per the specification and quality needed by the AE for which necessary technical assistance for setting up, commissioning and running of plants and training of the Indian Technicians was provided by the AE.
All the functions of manufacturing are performed by the assessee according to the needs of the AE and in case the AE is unable to purchase the product, the AE will be liable to pay the entire amount equivalent to interest and instalment to the Bankers of the assessee. The risk factor was upon the AE and, therefore, the assessee while calculating the gross profit margin of the comparable has taken into consideration only the cost incurred in manufacturing process.
All these aspects including that of adjustments and other comparables in respect of actual rate of cost along with capacity utilisation adjustment were much below to that of assessee’s units. The TPO has not looked into these aspects along with the appropriate method taking into consideration the assessee’s manufacturing activities and its sale transactions. The assessee is 100% export unit (98%). Thus, the TPO as well as the CIT(A), both the Authorities have failed to take cognisance of the same and was not right in rejecting the contentions of the assessee. Therefore, the TPO is directed to look into the same. Matter is remanded back to the file of the TPO for proper adjudication.
Appeal of the assessee is partly allowed for statistical purpose.
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2024 (5) TMI 493 - ITAT AHMEDABAD
Revision u/s 263 - Bogus LTCG/Share transaction - as per CIT AO failed to make necessary enquiries to ascertain the actual strength of the company, investment profile of the assessee - assessee entered into transaction of only scrip (Suchak Trading Ltd) and the examination and inquiry of five entities, who purchased the shares sold by assessee, were left open without appropriate conclusion - as argued PCIT has not initiated this review on his own and therefore he was not right in assuming the jurisdiction - HELD THAT:- DR, in reply, explained that the review proposal sent by AO to PCIT is part of their internal procedure and Ld. PCIT has carried independent inquiry of the subject matter of review.
It is also clear from the material available on records that the AO in his proposal itself has stated that the assessment order is passed without proper examination of the facts.
We also take into consideration the fact that LD. PCIT, in his order, has distinguished the judicial pronouncements on which the assessee relied on.
Clause (a) of the Explanation 2 to section 263 empowers PCIT to invoke section 263. Clause (a) talks about the inquiry or investigation having not been made by the A.O., which ‘should have been made’. The phrase ‘should have been done’ as provided in this clause means the verification/ enquiry which ought to have been done. Considering this provision coupled with the observations recorded by the Ld. PCIT as mentioned in the facts of the case above, we are of the opinion that the Ld. PCIT has exercised his discretion reasonably. Ld. PCIT has applied his mind to the record his reasons for assuming the jurisdiction - no infirmity in the order of the Ld. PCIT in directing the AO to pass a fresh assessment order after allowing adequate opportunities of being heard to the assessee. Appeal filed by assessee is dismissed.
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2024 (5) TMI 492 - ITAT MUMBAI
MAT provision applicability on banking company u/s 115JB - HELD THAT:- Whether the provision of Section 115JB of the Act is applicable to a banking company has already been decided in case of Union Bank of India [2019 (5) TMI 355 - BOMBAY HIGH COURT] wherein it has been held that prior to its amendment by Finance Act, 2012, the provision of the computation of book profit tax u/s 115JB of the Act would not be applicable to banking company governed by the provision of Banking Regulation of 1949.
It is not in dispute that assessee is a banking company. Accordingly, we do not find any infirmity in the order of the learned CIT (A), who relied upon the decision of the Hon'ble Bombay High Court and also the decision of the co-ordinate Bench in assessee’s own case. Accordingly, as such impugned assessment year i.e. A.Y. 2005-06, we do not find any reason to hold that provision of Section 115JB of the Act applies to the assessee company prior to 1st April, 2013. Accordingly, ground Nos., 1 and 2 of the appeal are dismissed.
Allowability of interest u/s 244A(1A) - HELD THAT:- Admittedly, in this case, the co-ordinate Bench has passed the order on 30th March, 2016. The order giving effect of such order was passed by the learned Assessing Officer on 19th March, 2021. This order was served to the assessee on 3rd September, 2021, therefore, apparently the assessee is entitled to interest from the date of receipt of the order by PCIT till the order is received by the assessee.
Therefore, the assessee is held to be eligible for interest from 1st January, 2017 to 3rd September, 2021. The appeal effect order is passed after the introduction of this section and therefore, despite the assessment year being 2005-06, the assessee is eligible for the above interest because of the reason that when appeal effect order was passed, such provision was there on the statute book. - Decided against AO.
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2024 (5) TMI 491 - ITAT MUMBAI
Disallowance u/s 14A - Mandation to record satisfaction - assessee has computed a suo moto disallowance of administrative cost and Demat charges - HELD THAT:- According to Section 14A (2) of the Act, it is the duty of the AO to first record his satisfaction that why the claim of the assessee is not correct according to him on verification of the accounts of the assessee. There is no whisper in the assessment order about examination of claim of the assessee, holding such claim as not correct on examination of accounts of the assessee. Thus, The AO has failed to record his satisfaction as provided under that section.
Thus without recording of the satisfaction about the correctness of the claim of the assessee, the learned Assessing Officer does not have any authority to compute the disallowance by application of Rule 8D. The learned CIT (A) is also incorrect in holding that the learned Assessing Officer has recorded any satisfaction as provided under Section 14A (2) of the Act. Decided in favour of assessee.
Charging of interest u/s 234D - HELD THAT:- We direct the AO to verify whether the provision of Section 234D is applicable or not in this case and, if no such interest is chargeable, delete the demand of interest to that extent.
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2024 (5) TMI 490 - ITAT NAGPUR
Addition u/sec. 56(2)(vii) - Difference in value of agricultural land purchased from value of property for stamp duty purpose - HELD THAT:- DR failed to rebut the clinching fact that the foregoing differential amount nowhere 10% of the actual sale price as per sec. 56(2)(vii)(b) 3rd proviso adopting the tolerance margin given in sec. 50C(1) 3rd proviso mutatis mutandis.
As argued that the tolerance margin of 10% in sec. 50C(1) 3rd proviso substituting 5% by the Finance Act, 2020 is applicable w.e.f. 01.04.2021 whereas the impugned assessment year herein is 2014-2015. No merit in the Revenue’s instant arguments in light of C. Maria Fernandes vs. ITO [2021 (1) TMI 620 - ITAT MUMBAI] holding the foregoing tolerance margin as carrying retrospective effect. We delete the impugned addition made u/sec. 56(2)(vii) in very terms since falling within the statutory tolerance margin of 10% - Assessee’s appeal is allowed.
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2024 (5) TMI 489 - ITAT BANGALORE
Denial of 80P(2)(a)(i) deduction - interest income earned on its investments amount made with SBI out of internal fund (Share Capital plus other Funds) constituting its income from the business of providing credit facilities to the members - allowing the proportionate interest paid to the members of the society as well as administrative expenses u/s. 57(iii) - HELD THAT:- As relying on Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd [2022 (1) TMI 1309 - GUJARAT HIGH COURT] interest received on such investments by assessee is not eligible for deduction u/s. 80P(2)(a)(i)/80P(2)(d) on such interest received from State Bank of India (SBI). Since the interest income received on such investments from State Bank of India is not attributable to main business of the appellant, hence needs to be assessed as “income from other sources”.
Since the interest income received by the appellant was not attributable to the main business of the appellant the same should not be allowed as deduction u/s 80P of the Act. We further note that the revenue authorities have treated the entire income as income from other sources. The entire interest income cannot be taxed if the assessee has incurred expenses towards earning of such income.
We further note from the financial statement as on 31.03.2016 that FD with SBI is Rs. 4,36,328,811, however the internal fund is Rs. 5,17,72,069/- which is more than investments made with SBI, it shows that the assessee has not utilized external funds for investment with SBI. Therefore, relying on the judgment of Totgars’ Co-operative Sales Society Ltd [2015 (4) TMI 829 - KARNATAKA HIGH COURT] the assessee is eligible for claim of its expenditure towards earning of such interest income. Accordingly, the assessee is directed to provide the details of expenditure for earning interest income before the assessing officer. Therefore for allowing expenditure, we are remitting this issue to the assessing officer for determining the cost of funds for earning interest income. Appeals of the assessee are partly allowed for statistical purposes.
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2024 (5) TMI 488 - ITAT KOLKATA
Revision u/s 263 - setting aside assessment order passed u/s 147 of the Act for de-novo assessment - HELD THAT:- We note that for reopening of the assessment u/s 147 r.w.s. 148 of the Act, the Assessing Officer must have reasons to believe that the income of the assessee for the relevant assessment year has escaped assessment. The said reasons to believe could be based on any tangible material or information received by the Assessing Officer. In this case, the letter written by the assessee to the AO was nothing else, but an information received by the Assessing Officer of escapement of income of the assessee for the year under consideration. However, merely because the information of escapement of income was received from the assessee itself that itself did not give any jurisdiction to the AO to surpass the mandate of the statutory provisions as provided u/s 151 of the Act to get the necessary approval from the competent authority before issuing notice u/s 148 of the Act. Therefore, the reopening of the assessment u/s 147 r.w.s. 148 of the Act in this was bad in law for want of jurisdiction of the Assessing officer to reopen the assessment without approval of competent authority u/s 151 of the Act.
Thus since the base order passed u/s 147 r.w.s. 148 of the Act was bad in law being without jurisdiction for want of approval of the competent authority, therefore, the subsequent proceedings/orders which were on the basis of the said order passed u/s 147 of the Act are also held as bad in law. In view of the above discussion, the assessee succeeds on the legal ground.
PCIT exercised his revision jurisdiction in respect of order passed u/s 147 wherein the issue of share subscriptions was not the subject matter of reassessment - As assessment was reopened on a particular issue of the escapement of income earned by the assessee as profit on share dealing. The Assessing Officer examined that particular issue and made addition in respect of the said profits earned by the assessee. The issue relating to any other transaction i.e. share application money received by the assessee, was not the subject matter of the reassessment proceedings. Since, the issue of share application money on which the ld. PCIT has sought to revise the order was not the subject matter of the reassessment order, therefore, in the light of the decision of Alagendran Finance Ltd [2007 (7) TMI 304 - SUPREME COURT] it cannot be said that the reassessment order passed by the Assessing Officer was erroneous, therefore, the revision jurisdiction exercised by the ld. PCIT, in this case, cannot be held to be justified. In view of the discussion, since, the revision order passed by the Ld. PCIT u/s 263 of the Act was without jurisdiction, therefore the consequential assessment order passed by the Assessing Officer u/s 143(3) r.w.s. 263 of the Act was also not sustainable.
Addition u/s 68 - assessee had failed to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction - Assessing Officer to get the identity and creditworthiness of the said share subscribers verified, had issued notices u/s 133(6) of the Act, which were duly complied with by all the share subscribers during the remand proceedings and they furnished the necessary details. Not only this, the Assessing Officer also issued summons u/s 131 of the Act and all the directors of the share subscribing companies personally appeared and their statements were recorded. Copies of the bank accounts of all the share subscribers were also furnished and all the share subscribers duly confirmed that they had made share subscription in the assessee company. The ld. CIT(A) has also noted that the Assessing Officer, himself, has admitted that the directors of the share applicant companies and source of such investor companies belonged to the same family and he produced the family tree to prove that funds were coming from the same companies with common family members. The ld. CIT(A) observed that this fact, itself, establishes that the share subscribers were interested parties for promotion of the assessee company and therefore, justification of premium was also proved.
CIT(A) had discussed the creditworthiness and financials of each of the 9 shareholders and has also observed only a part of their net worth was invested by the share subscribers into assessee company. The ld. CIT(A) has also relied various case laws including that of Sagun Commercial P Ltd. [2011 (2) TMI 1555 - CALCUTTA HIGH COURT] CIT(A), thereafter, impugned order has concluded that the identity, creditworthiness and genuineness of the transactions were duly established in this case. Decided in favour of assessee.
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