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Income Tax - Case Laws
Showing 141 to 160 of 163527 Records
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2024 (4) TMI 542
Receipt of rental income from first floor - assessee has not rented the property on the ground floor and observed that the lease deed mentioned property let out in respect of basement and first floor - assessee submitted that there is no first floor constructed on the subject mentioned property at all as it contains only basement, ground floor and open terrace as basement and ground floor had been duly given on rent to the aforesaid tenant and rental income derived thereon had been duly offered to tax, assessee also placed evidence of the schedule of property from the sale deed to prove the aforesaid contention - AO did not agree to the aforesaid contentions and proceeded to add the alleged rental income for the first floor portion and made an addition in the assessment.
HELD THAT:- Assessee submitted the photographs of the building on record. The assessee also submitted the confirmation from the tenant stating that lease deed had wrongly mentioned the fact of first floor being leased out by way of typographical error. Physical inspection was sought to be carried out by the Inspector of Income Tax on the subject mentioned property who also categorically confirmed that there is no first floor at all in the property. The mezzanine floor was constructed in AY 2012-13 by the assessee which fact is evident from pages D to Q containing the details of amounts spent at construction together with the bills thereon.
Assessee also has filed an affidavit before us confirming all the aforesaid facts. When these documents are staring on us, we hold that there cannot be any addition that can be made on account of alleged rental income for first floor when factually there was no first floor at all in the subject mentioned building. Hence, the addition made on account alleged rental income for the first floor which was not in existence is hereby directed to be deleted. Accordingly, ground 1(i) raised by the assessee is allowed.
Unexplained cash credit u/s 68 - assessee has shown a receipt from a concern/company but assessee has neither supplied any goods nor rendered any services to the said party and no confirmation was filed from the said party proving the nature and source of credit thereon - HELD THAT:- Assessee had duly offered the receipt as its business income for AY 2014-15. We find however that a sum is found credited in the books of the assessee during the year under consideration. It is a fact that no satisfactory explanation has been given by the assessee before the lower authorities and before us also. Hence, the said receipt of money credited of Rs. 1,90,000/- which is found credited in the books of the assessee is to be added as unexplained credit u/s 68 for the year under consideration. However, in order to avoid double taxation, we hereby direct the ld AO to delete the very sum for AY 2014-15 which has been voluntarily offered to tax by the assessee in the return of income for AY 2014-15. Accordingly, ground No. 1(ii) raised by the assessee is disposed of in the above mentioned terms.
Disallowance made u/s 40(a)(ia) - assessee paid processing charges and closure charges without deduction of TDS - assessee submitted that the payees have duly included the receipts in their respective hands and paid due taxes and certificate from their Chartered Accountants to this effect were placed on record - CIT(A) had directed the ld AO to verify the aforesaid claim of the assessee in respect of all the payments and if the payees have shown the amount in their income tax returns and paid requisite tax, then the same should not be subject matter of disallowance - HELD THAT:- We find that the direction given by the ld CIT(A) is in consonance with 2nd proviso to section 40(a)(ia) of the Act which had got retrospective effect and accordingly we hold that if the payees have included the subject mentioned receipt in their respective returns and paid taxes, then no disallowances should be made in the hands of the assessee u/s 40(a)(ia) of the Act. Accordingly, the ground No. 1(iii) raised by the assessee is allowed for statistical purposes.
Addition made in respect of transactions with sister concern of the assessee - HELD THAT:- We find that despite the fact that the transaction has been carried out by the assessee with sister concern with a malafide intention of claiming refund of custom duty, the ld CIT(A) had been magnanimous enough to grant deduction of purchase value and disallow only the loss arising out of total purchase and sales transaction with sister concern. Once, the element of malafide intention or fraud is proved beyond doubt, then no further concession need to be given to the assessee. In the instant case, the assessee had already obtained more than eligible relief from the ld CIT(A). Hence, the ground No. 2 raised by the assessee is hereby dismissed.
Disallowance of salary u/s 40A(3) - salary paid to employee in cash - addition made as employee is related to the assessee stationed in Delhi and no business exigency of incurrence of the expenditure in cash has been demonstrated by the assessee - HELD THAT:- In the instant case, the identity of the payee is established and transaction with employee/Gaurav Babbar is hereby held to be genuine. But in order to make the assessee’s case fall under the exception provided in the proviso to section 40A(3) of the Act, the assessee is duty bound to explain that the place where the payee is stationed does not have bank facilities and the assessee had pressing emergency to make the said payment in cash out of business exigencies.
In the instant case, it is not in dispute that Gaurav Babbar (payee) is stationed in Delhi where bank facilities are available in every nook and corner of Delhi as rightly observed by the ld CIT(A). Further, the assessee was not able to demonstrate the business exigencies which warranted him to make payment of salary in cash. Hence, the assessee’s case does not fall under the ambit of exception provided in proviso to section 40A(3) - assessee’s case does not fall under any of the exceptions provided under Rule 6DD of the Income Tax Rules. Hence, the disallowances made u/s 40A(3) of the Act is hereby confirmed. Accordingly, ground No. 3 raised by the assessee is dismissed.
Disallowance of 20% of travelling expenditure, telephone expenditure, vehicle and maintenance expenditure, interest and depreciation - HELD THAT:- The entire travelling expenses are to be allowed as business expenditure and no disallowance should be made thereon.
With regard to disallowance of expenditure on account of telephone and vehicle related expenditure including interest on car loan and depreciation, in our considered opinion, the disallowance should be restricted to 10% as against 20% made by the ld CIT(A) on account of personal element. Partly in favour of assessee.
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2024 (4) TMI 530
Rejection of DTVsV application - Scope of the DTVSV scheme - Requirement to settle all or part of the pending appeals - revenue has rejected the Forms filed by the petitioner/assessee on the ground that the petitioner/assessee sought to settle only one of the matters pending adjudication - Can an applicant, under the VSV Act, choose to settle one or more of the appeals, while continuing to contest others?
HELD THAT:- As decided in MUFG Bank Ltd [2022 (11) TMI 1304 - DELHI HIGH COURT] after examining the provisions of the VSV Act, has, inter alia, concluded that an assessee has the leeway to settle any one appeal under the VSV Act and is not required to settle all the pending appeals filed by the respondents/revenue.
The coordinate Bench has categorically held that the unit of settlement under the VSV Act is not an ‘assessment year’ but “any appeal, writ petition or an SLP”. In this regard, the coordinate bench has referred, inter alia, to the provisions of Section 2(1)(j) read with Section 2(1)(a) of the VSV Act.
Thus revenue, cannot but accept that the issue raised in the present petition is covered by the decision of the coordinate Bench. Accordingly, the writ petition is allowed. The order rejecting the subject Forms and the communication are set aside.
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2024 (4) TMI 529
Bogus LTCG - Addition u/s 68 - Exemption u/s 10(38) denied - price manipulation or in providing entry of penny stock - HELD THAT:- We find that in the case of Himani M. Vakil [2012 (9) TMI 1099 - GUJARAT HIGH COURT] held that where assessee duly proved genuineness of sale transaction by bringing on record contract notes of sale and purchase, bank statement of broker and demat account showing transfer in and out of shares, Assessing Officer was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit.
Hon'ble jurisdictional High Court in the case of Parasben Kasturchand Kochar [2020 (2) TMI 1344 - ITAT AHMEDABAD] also held that when assessee discharged his onus by establishing that transactions were fair and transparent and all relevant details with regard to transfer furnished by Income Tax Authority and the Tribunal have also took the notice of fact that the shares remained in the account of assessee, the assessee also furnished demat account and details of bank transaction about the sale and purchase of shares, the addition was deleted.
As in the case of PCIT Vs. Indravadan Jain, HUF [2023 (7) TMI 1091 - BOMBAY HIGH COURT] also held that when AO nowhere alleged that transactions made by assessee with a particular broker or share broker was bogus, merely because investigation was done by SEBI against the broker or its activities, the assessee cannot be said to have entered into ingenuine transaction. We find that assessee made sale of shares through BSE and paid security transaction tax and there is no allegation against the share broker through whom assessee has made sales that they were indulging any price manipulation. Therefore, we do not find any justification in treating the LTCG as unexplained cash credit in absence of any cogent evidence.
So far as reliance in case of case of PCIT vs. Swati Bajaj [2022 (6) TMI 670 - CALCUTTA HIGH COURT] we find We find in the case of Himani M. Vakil [2012 (9) TMI 1099 - GUJARAT HIGH COURT] held that when the assessee proved genuineness of sale transaction by bringing on record contract notes of sale and purchase, bank statement of broker and demat account showing transfer in and out of shares, Assessing Officer was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit. Thus, the decision of jurisdictional high Court is binding precedent in the territory of Gujarat. In the result, the addition of undisclosed income under section 68 is deleted. In the result, the ground of appeal raised by the assessee is allowed.
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2024 (4) TMI 507
Delay in filling appeal before SC - Claim of long-term capital gains on shares in terms of Section 10(38) - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings but turned around and make such claim of wanting to cross-examine persons - Denial of principles of natural justice - denial of an opportunity to cross examine the entry providers - As decided by HC [2023 (2) TMI 392 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO.ITAT committed no error in concurring with the view of the CIT(A) and in dismissing the Revenue’s appeals
HELD THAT:- There is gross delay of 309 days in filing this special leave petition. The explanation offered is not sufficient in law to condone the delay.
Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed keeping open the question of law, if any.
In doing so, we have also followed the earlier order of this Court passed in Dipansu Mohapatra in [2024 (3) TMI 217 - SC ORDER]
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2024 (4) TMI 506
TP Adjustment - comparable selection - non-availability of segmental data - HELD THAT:- In view of the order passed by this Court in Microsoft India (R and D) Pvt Ltd [2023 (7) TMI 935 - SC ORDER] the Special Leave Petition is dismissed wherein held in the absence of segmental information provided by the companies in respect of the software services, comparables be deselected.
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2024 (4) TMI 505
Nature of expenditure - Commission paid to the Managing Director - Tribunal held that the expenditure incurred can be treated as Revenue expenditure and not as capital expenditure - as decided by HC [2022 (9) TMI 1576 - MADRAS HIGH COURT] methodology adopted by the Revenue is perfectly correct for the simple reason that it is not disputed that the amount has been shown as expenditure and that the payment has been made to the Managing Director and the amount has been received by the beneficiary only for the subsequent Assessment Year, which does not mean that as long as the Appellant has not shown the payment in the Books of Accounts in respect of liability, it cannot be stated that the expenditure was incurred during 2004-2005 as such expenditure would be ratified only after Board's meeting.
HELD THAT:- Having heard the learned counsel for the parties, the instant Special Leave Petition is permitted to be withdrawn in view of the statement in the counter affidavit that the petitioner can avail the benefit for the Assessment Year 2005-2006.
With these observations, Special Leave Petition is disposed of as withdrawn.
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2024 (4) TMI 504
Nature of receipts - subsidies - revenue or capital receipts - Whether Tribunal erred by not considering that subsides which may be used freely, are operational subsidies and not capital subsides and thus the same are taxable as revenue income? - HC [2024 (1) TMI 972 - CALCUTTA HIGH COURT] decided issue in favour of the revenue and against the assessee
HELD THAT:- As petitioner – Birla Corporation Limited submits that the issue regarding exemption granted under the Uttar Pradesh Trade Tax, 1948, and the effect thereof is pending consideration before this Court in [2018 (8) TMI 2138 - SC ORDER] titled “Tata Steel BSL Limited v. Commissioner of Income Tax Delhi”.
Issue notice on the present special leave petition as well as on the application for stay, returnable in the week commencing 29.07.2024.
Notice will be served by all modes, including dasti.
Liberty is granted to the petitioner – Birla Corporation Limited to approach this Court in case any urgent order is required.
Registry to tag all connected/similar matters.
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2024 (4) TMI 503
Exemption u/s 11 - denial of claim as Assessee-Trust had not furnished proper information to the Charity Commissioner and there was shortfall in making provision of Indigent Patients Fund (“IPF”) with huge generation of surplus as running a canteen in the hospital with profit motive and was not providing free meals - CIT(A) followed the orders of his predecessor for Assessment Years 2008-2009 and 2009-2010 and decided the issue in favour of Assessee which was upheld by ITAT and HC - HELD THAT:- Delay condoned.
No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is, accordingly, dismissed. Pending application also stands disposed of.
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2024 (4) TMI 502
Demand raised during the pendency of appeal before this court - denial of Exemption u/s 13A to Political party registered as such under Section 29A of the Representation of People Act, 1951 - whether Assessee INC is a political party registered under the RP Act and satisfies the description of a 'political party' for the purpose of Section 13A of the Income Tax Act, 1961? -
HC [2016 (3) TMI 879 - DELHI HIGH COURT] held that ITAT was correct in law in holding that the audited accounts filed by the INC before the CIT (A) could not be accepted as evidence since they were not audited till the assessment was framed and, therefore, the INC was not entitled to exemption u/s 13A of the Act and denying exemption to the INC u/s 13A of the Act and refusing to condone the delay that had occurred in the audit of some of the state units as INC failed to fulfil the three conditions envisaged under clauses (a), (b) and (c) of Section 13A of the Act.
HELD THAT:- In view of the submission by way of a concession made by the respondent, no coercive action of any nature shall be taken against the appellant(s) till the next date of hearing.
The aforesaid concession made by the learned Solicitor General on behalf of the respondent/Department is without prejudice to all rights and contentions that it may have as against the appellant(s) herein and vice versa. Hence, list these appeals including this application on 24.07.2024.
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2024 (4) TMI 501
Settlement applications u/s 245C (1) - statutory requirement of “full and true disclosure” under Section 245C of the Income Tax Act, 1961, pre-conditions associated with an application under Chapter XIX-A of the Act and effect of violation of the said pre-conditions on the jurisdiction of the Income Tax Settlement Commission [“ITSC”] as well as the fate of the application - ITSC accepted the Revenue’s contention that unaccounted money was introduced as bogus share capital by the respondent-assessee group and thus, it proceeded to make the aforesaid addition.
Whether the ITSC was justified in considering the application filed u/s 245C of the Act despite recognizing the absence of a full and true disclosure of income?”
HELD THAT:- ITSC to arrive at an unequivocal finding of full and true disclosure in the application. If the ITSC is not satisfied as to the “full and true disclosure” of the income in the application, it shall refrain from advancing with it, thereby, lacking jurisdiction to issue any orders pertaining to the subject matter outlined in the application.
Additionally, in the case of Om Prakash Mittal [2005 (2) TMI 16 - SUPREME COURT] the Hon’ble Supreme Court has held that the essential condition to proceed with the settlement through an application u/s 245C of the Act is the necessity for a complete and honest disclosure of income, including the method by which it was obtained. Following an enquiry into the authenticity of this disclosure, the ITSC may decide to either approve or dismiss the application.
As in the present case ITSC in its order has succintly noted that the respondent-assessee group failed to provide a convincing explanation regarding repurchase of the share capital. It observed that the evidence submitted by the respondent-assessee group regarding the purported investors lacked credibility, as the shares of the companies had already been repurchased at an extremely unreasonable price. It further noted that the transaction involving the repurchase of shares having a face value of INR 10/-, at a nominal value of 10 paise per paid-up share, cannot be deemed to be authentic. Later, the respondent-assessee group voluntarily agreed to relinquish the amount in question, i.e., the value of the shares repurchased at an unreasonably low price, which was under scrutiny.
Further, addressing the respondent-assessee group’s contention regarding the revision of the application, we are of the opinion that the statutory framework of Chapter XIX-A of the Act does not allow for any revision or amendment of an application under Section 245C of the Act, as this would essentially entail submitting a new application in the same case while withdrawing the previous one. Such a process would afford the respondent-assessee group an opportunity to retract their initial submission and make a fresh one.
Therefore, permitting the revision of the application would indirectly provide the respondent-assessee group a chance to accomplish something that they could not achieve directly. It would also severely affect the importance of the requirement of full and true disclosure at the first instance. The very foundation of a settlement proceeding lies at the bedrock of good faith and therefore, revision or amendment, which has the effect of concealing a misrepresentation made in the application, would be impermissible and de hors the scheme of Chapter XIX-A under the Act.
In the case of CIT v. ITSC [2013 (7) TMI 95 - DELHI HIGH COURT] this Court, while relying upon the decision of the Hon’ble Supreme Court in the case of Ajmera Housing Corporation [2010 (8) TMI 35 - SUPREME COURT] concluded that revising a disclosure made in a settlement application would clearly indicate that the original disclosure was neither truthful nor comprehensive.Thus ITSC ought not to have proceeded with passing of the order as the respondent-assessee had failed to make a true and full disclosure before the ITSC.
Granting immunity from penalty and prosecution u/s 245H - The grant of such immunity is subject to conditions that the ITSC may deem appropriate to impose. A prerequisite for granting immunity is that the applicant must have cooperated in the proceedings before the ITSC and made a "full and true disclosure" of its income and the manner in which such income has been derived.
Taking into account all above, it is imperative to highlight that the legal framework concerning applications u/s 245C (1) of the Act fundamentally requires a "full and true disclosure" of additional income. It must be noted that the procedure prescribed under Chapter XIX-A of the Act is a marked departure from the general procedure involving assessment by the AO and consequent action under the law. As briefly observed in the initial part of this judgment, this departure is meant to provide an opportunity for the assessee to come clean regarding the income and tax payable thereon.
However, the relief envisaged in Chapter XIX-A of the Act is wide in nature and apart from settlement and quantification of payable tax, it also protects the assessee from prosecution and penalties, if so ordered by the ITSC. At the root of this incentive, lies a commitment of the assessee to make a full, true and honest disclosure of the income, source of income and additional tax payable thereon. Once it is seen that the disclosure was not full and truthful, the ITSC loses its jurisdiction to entertain such an application as well as to provide any immunity to the applicant from prosecution and penalties.
Hence, in the present case, the ITSC has erred in law by approving the application of the respondent-assessee group under Section 245C of the Act. The ITSC further went on to grant immunity from the penalty and prosecution under Section 245H of the Act, which was contrary to the twin conditions stipulated herein above. Thus, the ITSC acted in excess of the jurisdiction conferred upon it under the Act. WP allowed.
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2024 (4) TMI 500
Condonation of delay in filing the revised return of income claiming refund - application filed u/s 119(2)(b) rejected - “genuine hardship” of the petitioner rejected - HELD THAT:- On perusal of the provisions contained in Section 119(2)(b) of the Income Tax Act read with circular no.09/2015 dated 09.06.2015 issued by CBDT, it appears that “genuine hardship” which the petitioner is required to establish is the hardship that would be caused to the petitioner if the delay is not condoned or the time limit is not extended.
The petitioner has clearly stated in its application filed u/s 19(2)(b) of the I.T. Act under Annexure-11 that at the time of filing of its return of income for assessment year 2021-22, it has inadvertently erred in claiming the past years’ deficit against the current year’s income under Section 11(1) as application of income and instead offered the total income as income chargeable to tax. Had the past deficit been claimed as application of income, the petitioner would have entitled to a refund
The time limit for filing revised return under Section 139(5) of the I.T. Act for the assessment year 2021-22 was 31.12.2022. The petitioner, after receipt of the intimation order under Section 143(1) of the I.T. Act for the assessment year 2021-22, initially filed an application under Section 154 of the I.T. Act before the Assessing Officer-opposite party no.2 for rectification on account of mistake of the total income being chargeable to tax without setting off the past deficit, which is apparent from the record. But the Assessing Officer-opposite party no.2, vide order rejected the said application.
The petitioner assailed the intimation order under Section 143(1) of the I.T. Act as well as the order passed under Section 154 of the I.T. Act before the First Appellate Authority under Section 250 of the I.T. Act, which was dismissed, with an observation that the petitioner has the remedy of making application under Section 119(2)(b) of the I.T. Act. Thereby, finding no other alternative, the petitioner approached opposite party no.1 by filing an application under Section 119(2)(b) of the I.T. Act. But opposite party no.1, without taking into consideration “genuine hardship” of the petitioner, mechanically rejected the said application, vide impugned order which cannot be sustained in the eye of law.
In view of the provisions contained in Section 119(2)(b) of the I.T. Act read with circular dated 09.06.2015 issued by CBDT, which stipulates that application for claim of refund/loss is to be made within six years from the end of the assessment year for which such application/claim is made. The last date for filing of revised return for the assessment year 2021-22 was 31.12.2022 and the petitioner made application under Section 119(2)(b) on 16.10.2023 for condonation of delay in filing revised return. Thereby, the application filed by the petitioner is well within six years time limit, as stipulated in the circular.
When the petitioner filed application indicating its “genuine hardship”, opposite party no. 1 could have considered the same in proper perspective, but, without doing so, it rejected such application vide impugned order which cannot be sustained in the eye of law.
This Court is of the considered view that the order passed by opposite party no.1 in rejecting the application filed by the petitioner u/s 119(2)(b) of the I.T. Act for condonation of delay in filing the revised return for the assessment year 2021-22 cannot be sustained in the eye of law. Therefore, the said order is liable to be quashed and is hereby quashed. Accordingly, this Court directs the authority concerned to take follow up action in accordance with law. WP allowed.
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2024 (4) TMI 499
Regular Approval u/s 80G(5) - application for approval denied as even within the extended time, the petitioner did not file Form No.10AB and applied belatedly - hardship faced by the trusts in digital filing of the respective forms - genuine hardship faced by new v/s old/existing trust - petitioner was granted provisional approval on 06.10.2021 and petitioner commenced its activities from 09.09.2021 and therefore, had to apply for regular approval/registration in Form No.10AB within six months from the date of commencement i.e., within six months from 09.09.2021, by it applied only on 22.03.2023
Whether or not the classification made by the respondents in the matter of grant of extension of time between the existing and new trusts and to apply for approval in respect of clause (i) of the first proviso to subsection (5) of section 80G of the Act is reasonable?
HELD THAT:- Petitioner trusts do not have any vested right to claim an extension of time. When the statute prescribes a time limit, the petitioner trusts are expected to apply within the said date to avail the benefits. The first respondent Board issues circulars enlarging the time limit even beyond the prescribed limit to mitigate the rigours of the statute and the hardship faced by the assessees. The same is in exercise of its powers under Section 119(2)(b) of the Act.
No discrimination or differentiation was made between the existing trusts and the new trusts at the first instance when Circular No.8 of 2022 was issued. When the impugned Circular No.6 of 2023 was issued, the reason stated by the first respondent was to mitigate genuine hardship
Thus, on a combined reading of the earlier Circular No.8 of 2022 and the impugned Circular No.6 of 2023, it can be clear that the only reason which is shown for the exercise of the powers is that these trusts faced hardship since they could not apply on time. No reason whatsoever is mentioned to omit "the clause (i) of the first proviso to sub-section (5) of Section 80G of the Act" in respect of the new trusts applying under Form No.10AB alone.
Except for reiterating that the petitioner trusts do not have any vested right, there is no other ground that is put forth by the first respondent. Even though the new trusts as well as the existing trusts have no right to demand for extension of time as a matter of right, when the respondents have thought it fit to extend the time, considering the hardship, there is no material which is placed before this Court nor any reasoning is contained in the impugned order that the new trusts did not face the hardship in respect of filing of the application under Section 80G5 of the Act alone. Therefore, leaving out the clause in respect of Section 80G5 of the Act alone that too only in respect of the new trusts does not in any manner relate to the object sought to be achieved by the impugned circular nor does it provide any basis for the discrimination/classification.
In the instant case, the differential treatment is not based on any substantial distinction that is real and pertinent to the object of the circular. The discrimination is artificial. The respondents are evasive and could not provide any rationale for such a classification. Accordingly, we hold that the impugned clause (ii) of the Circular, dated 24.05.2023 is arbitrary and violative of Article 14 of the Constitution of India and accordingly, would be ultra vires the Constitution.
Because we find that clause (ii) of the impugned circular is unconstitutional, we direct the first respondent to consider the applications of the petitioners as to the recognition/approval in respect of clause (i) of the first proviso to sub-section (5) of section 80G of the Act as within time and consider the same and pass orders thereon on merits as per law.
Writ Petitions are allowed on the following terms:-
(i) The clause 5(ii) of Circular No.6 of 2023 bearing F.No.370133/06/2023-TPL, dated 24.05.2023 of the first respondent is declared as illegitimate, arbitrary, and ultra vires the Constitution of India;
(ii) The respondents are directed to consider the applications submitted by the petitioners as to the recognition/approval in respect of clause (i) of the first proviso to sub-section (5) of section 80G of the Act as within time and consider the same and pass orders thereon on merits, in accordance with law within six months from the date of receipt of a copy of this order.
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2024 (4) TMI 498
Validity of revision u/s 263 against order u/s 143(3) r/w section 153A - authority of PCIT (Central), Bhopal challenged on the ground that the assessment order was passed u/s 143(3) r/w section 153A upon taking prior approval from the Assistant Commissioner, Income Tax (Central) – 1, Indore under Section 153D of the Act - ITAT held that the order passed by the PCIT is unsustainable due to lack of jurisdiction in invoking Section 263 - In this appeal, the tax effect is below than Rs. 1,00,00,000/-.
HELD THAT:- As decided in Ramamoorthy Vasudevan [2018 (11) TMI 1874 - ITAT PUNE] once the order under Section 143(3) r/w section 153A of the Act has been passed after taking prior approval of the ACIT under Section 153D of the Act, then the jurisdiction under Section 263 of the Act cannot be invoked. Therefore, the view taken by the Co-ordinate Bench of the Appellate Tribunal had attained finality. Hence, the ITAT, Indore has not committed any error of law by following the same view.
For passing any order under Sections 143(3) & 153A of the Act, prior approval of Joint Commissioner is required under Section 153A of the Act, or Principal Commissioner or Commissioner as the case may be. Therefore, once prior approval had already been taken by the Assessing Officer and accepted the return submitted by the assessee, then the same authority cannot exercise the power under Section 263 of the Act to reverse the order of AO.
Even otherwise, the total tax effect of this appeal is less than Rs. 1,00,00,000/-, therefore, we do not find any ground to interfere with the order passed by the Income Tax Appellate Tribunal, Indore. Decided against revenue.
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2024 (4) TMI 497
Validity of Show Cause Notice and the consequential order of assessment as it suffers from the vice of pre-determination - SCN says as noticed from the database of the department there exist an amount of Rs. 4,22,83,715 and sale of equity share is Rs. 37,000/- since there is no explanation offered why the same should not treated unexplained investment for the relevant period under consideration and taxed accordingly.
HELD THAT:- Though titled as Show Cause Notice the submission of the learned counsel for the petitioner that it is really not in the realm of show cause notice but one where it suffers from the vice of pre-determination has merit. Any order which suffers from the vice of pre-determination is arbitrary and would thereby fall foul of Article 14 of the Constitution of India. In this regard, it may be relevant to rely on the judgment in the case of Siemens Ltd v. State of Maharashtra and others [2006 (12) TMI 203 - SUPREME COURT] wherein, it was held that whenever there is a demand, the same may no longer be in the realm of notice and would suffer from the vice of pre-determination.
Further, the show cause notice does not even indicate the time limit within which the assessee / petitioner is required to respond to the same. The show cause notice is bad the order of assessment thus stands vitiated.
Considering the submissions of both sides and the facts of the case, this Court is inclined to set aside the impugned order. The petitioner shall submit its objection within a period of 8 weeks from the date of receipt of a copy of this order by treating the assessment order as show cause notice. The Respondent shall thereafter proceed to complete the assessment in accordance with law.
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2024 (4) TMI 496
Unexplained cash credit u/s 68 - onus to prove source of cash - Addition made on account of cash deposit made in the bank account - HELD THAT:- AO had only doubted the business model of the assessee and had resorted to make addition towards cash deposits as not properly explained by the assessee with sources. Hence arithmetically, the assessee is bound to explain the sources of cash deposits in the bank account. The ld. AR before us placed on record the extract of the cash book already forming part of the records and submitted the availability of cash balance in tabular form
The entire cash deposits made in the bank account stood properly explained. We have also gone through the cash book for the whole year which are already forming part of the records and there is absolutely no negative cash balance on any given day in the year. Hence the entire cash deposits made in the bank account stood properly explained by the assessee. In our considered opinion, given the business model of the assessee, the nature and source of credit within the meaning of section 68 of the Act stood properly explained in the instant case and accordingly no addition could be made as unexplained cash credit u/s 68 of the Act. Accordingly, the grounds raised by the revenue are dismissed.
Addition u/s 69C - Unexplained business Expenditure - HELD THAT:- We find that the entire business expenses had already been accounted in the regular books of accounts of the assessee and hence the sources for incurrence of the same are drawn from the books of accounts regularly maintained by the assessee. It is not the case of the ld. AO that the said expenditure had been met by the assessee out of its books. Hence in our considered opinion, the provisions of section 69C of the Act per se cannot be made applicable in the instant case and hence the addition made by the ld. AO in this regard had been rightly deleted by the ld. CIT(A).
Assessee appeal allowed.
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2024 (4) TMI 495
Deduction u/s 80IA - handling and cargo handling services provided by the assessee - claim denied as assessee was incorporated in the manner that it is only an reorganized business set up and assessee company has not entered into direct agreement with the Government of India - HELD THAT:- Perusal of the order of the Tribunal in assessee’s own case for the AY 2011-12 [2023 (11) TMI 859 - ITAT DELHI] issue decided in favour of assessee as held AO has fallen in error in considering Airport as a facility standing in isolation and giving a very restrictive interpretation to the scope of ‘developing, operating and maintaining’ Airport. Airport is a facility for transportation of passengers or cargo or both at the same time. The passengers may also travel along with their baggage and cargo may be accompanied by people handling that cargo. Thus the facilities of Airport is not restrict to the fixed structure or equipment connected with the Aircrafts’ maintenance, their running, flying or landing alone. The functionality of the Airport arise from all the facilities which bring utility or add utility to the premises, convenience to passengers, crew, ground staff. Facilities like cargo handling, ground handling, announcement crew, security, check-in counter, baggage management facility, the Airport crew, airlines crew, aircraft crew facility etc. collectively and independently use the premises, the fixed structures, the equipments etc.
The developing, operating and maintaining Airport, therefore, encompasses all these activities which are incidental or supplemental to the transportation of passengers or cargo or both together. These facilities of various kind may be provided by one company or different companies but in any way they operate in consortium and having interdependence. Learned AO has fallen in error in observing that different companies have developed the running of Banglore Airport and the assessee is merely providing utility services beyond the scope of Airport for the purpose of Section 80-IA. Thus, on the basis of aforesaid decision, the Bench is inclined to hold that ground handling and cargo handling services provided by the assessee are covered within the meaning of Explanation referred to Section 80-IA and assessee is entitled to claim the benefit of same. Decided in favour of assessee.
TDS u/s 194C on concession fee - Disallowance of provision for concession fee for the AY 2011-12 invoking the provisions of section 40(a)(ia), however, during the assessment years under consideration i.e. 2012-13 & 2013-14 the same was disallowed as contingent liability not allowable as deduction - CIT(A) considering the submissions of the averments of the AO in the assessment order deleted the disallowance - HELD THAT:- CIT(A) in the order stated that the facts are identical with those of the AY 2011-12 [2023 (11) TMI 859 - ITAT DELHI] and the Tribunal allowed the claim of the assessee wherein held provision as made by assessee did not as such create a debt in favour of BIAL as the concession fee did not arise out of any contract performed by BIAL but was more in the form of royalty with uncertainty of actual amount due and therefore no income can be said to have accrued or arisen to BIAL.
Methodology adopted for estimation of turnover / profits and subsequently creating the year-end provision and reversing the same in next financial year, remains the same in all subsequent years. Thus, given the fact that in AY 2014-15 the Department has now accepted that the disallowance is not required to be made under section 40(a)(ia) in respect of the year end provisions for concession fee, same sustains the claim of assessee.
As year end provisions were made for expenses on estimate basis in respect of which bills were yet to be submitted. The provisions were reversed upon receipt of invoice and expenses were booked as per the invoices and taxes were deducted there from and if income does not result at all, there cannot be a levy of tax even though a book entry is made. Decided against revenue.
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2024 (4) TMI 493
Penalty u/s 271(1)(b) imposed on minor - Clubbing of minor's income in parents hands - penalty imposed on Non-compliance of two notices issued by AO u/s 142(1) - assessee argued that assessee under consideration is a minor and assessment order was framed on the minor person without the consent of his guardian, which is not sustained in law, hence penalty sustained by ld CIT(A) is not sustainable in the hands of minor because minor does not have capacity to make contract.
HELD THAT:- We note that ld Counsel for the assessee argued that assessee under consideration is a minor and assessment order was framed on the minor person without the consent of his guardian, which is not sustained in law, hence penalty sustained by ld CIT(A) is not sustainable in the hands of minor because minor does not have capacity to make contract. The minor`s income is clubbed in the hands of one of the parents, therefore considering these facts, we note that penalty should not be imposed on the minor-assessee.
We note that during the assessment proceedings, assessee submitted all the necessary details and complied with all the notices issued by the AO from time to time. Regarding the non-compliance of notice of hearing requiring appellant to attend/furnish details appellant filed letter for adjournment. The non-compliance was due to Covid-19 pandemic, as the assessee was working with proper safety measures. Besides, it is also an admitted fact that no addition was made by the assessing officer in the quantum proceedings. That is, in the assessment order, the assessing officer did not make any addition in the hands of the assessee, therefore, there is no question to impose the penalty on the assessee and hence we delete the remaining penalty - Appeal filed by the assessee is allowed.
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2024 (4) TMI 492
Validity of 263 proceeding issued in the name of non-existing entities which got amalgamated during the assessment proceeding - HELD THAT:- Cause title itself speaks about the change of name of the Company. It is the fact that amalgamation though destroys outer shell of the corporate entity, the Corporate venture continues enfolded within the new or the existing transferee entity. The business and the adventure lives on but within a new corporate residence, i.e., the transferee company.
Therefore, at this juncture, it is essential to look beyond the mere concept of destruction of corporate entity which brings to an end or terminates any assessment proceedings. The scheme of amalgamation in which rights and liabilities of one company are transferred or devolved upon another company, the successor-ininterest becomes entitled to the liabilities and assets of the transferor company subject to the terms and conditions of contract of transfer or merger as it were. When two companies amalgamate and merge into one the transferor company loses its entity as it ceases to have its business. However, their respective rights and liabilities are determined under the scheme of amalgamation but the corporate identity of the transferor company ceases to exist w.e.f. the date of amalgamation is made effective. Though, such concept is absolutely correct but merely because the issuance of notice in the name of erstwhile company by the PCIT cannot be said to be without jurisdiction or nullity, particularly, when the said fact of amalgamation is mentioned in the cause title itself as in the case before us.
Thus case in hand before us the order has been issued clarifying the entire status of the appellant and the factor of amalgamation as it reflects from the cause title itself. We, thus, do not find any lacuna in the order issued by the Ld. PCIT on the issue of maintainability
Revision u/s 263 by CIT - addition of invocation of provision of Section 40(a)(i) for non-deducting TDS of payment made to non-resident and addition u/s 14A r.w. Rule 8D - HELD THAT:- As specifically pointed out by the Ld. PCIT that no details whatsoever was furnished in regard to the issue relating to non-payment of TDS before the Ld. AO, neither the Ld. AO has examined/verified the said issue. Appellant/assessee before us also failed to show any document which could establish that this particular issue was examined by the AO during assessment period or that the appellant furnished the documents before the said authority below.
Similarly, the issue relating to exempt income u/s 14A r.w. Rule 8D has not found to have been examined by the Ld. AO; the expenditure attributable to the exempt income must be worked out in accordance with the Rule 8D which would include direct as well as indirect expenditure attributable to the exempt income. In fact, such duty to examine the issues though cast upon the Ld. AO, that has not been performed by the said Revenue Officer and, therefore, the order passed by the PCIT setting aside the order passed by the AO upon considering it erroneous insofar as prejudicial to the interest of the Revenue and further directing the Ld. AO to reframe the assessment afresh is found to be just and proper without any ambiguity so as to warrant interference. Thus, the appeal filed by the appellant is found to be devoid of any merit and, hence, dismissed. Decided against assessee.
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2024 (4) TMI 491
Revision u/s 263 by CIT - cash deposit in the bank questioned - assessment in this case was completed u/s 143(3) r.w.s 147 - HELD THAT:- As relying on SHRI PARAMJIT SINGH VERSUS THE P.C.I.T., ROHTAK [2023 (12) TMI 1292 - ITAT DELHI] for exercise of power u/s 263 of the Act, it is mandatory that the order passed by the Assessing Officer should be erroneous and prejudicial to the interest of the Revenue. In the present case, the Assessing Officer did not make any addition for the reasons recorded at the time of issue of notice u/s 148 of the Act. This position is not disputed and disturbed by the Commissioner of Income Tax in his order u/s 263 of the Act. Sequitur is that the AO could not have made an addition on account of share application money in the assessment proceedings u/s 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner of Income Tax could not have exercised jurisdiction under Section 263 - Decided in favour of assessee.
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2024 (4) TMI 490
Addition u/s 69A - cash deposited during demonetization period - determination of net profit @8% - assessee is the registered dealer under VAT Act - HELD THAT:- AO with considering the earlier years net profit and the nature of business has determined the NP @8% which is unjustified. The cash deposit in demonetisation period is also the part of turn over. The turnover is declared in VAT return.
Taking power from the order of Surinder Pal Anand [2010 (6) TMI 404 - PUNJAB AND HARYANA HIGH COURT] and Rajinder Parshad Jain [2014 (12) TMI 567 - PUNJAB & HARYANA HIGH COURT] here we direct to restrict the net profit @3% on turnover declared by the assessee. AO without proper verification of fact wrongly determined the turnover of the assessee during the impugned assessment year.
DR was unable to place any contrary judgment against the submission of assessee. No challenge was made on veracity of the documents, submitted by the assessee. We set aside the appeal order.
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