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Income Tax - Case Laws
Showing 181 to 200 of 163734 Records
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2024 (4) TMI 884 - ITAT PATNA
TDS u/s 194H - Commission paid to Primary Agriculture Cooperative Society (PACS) - Non deduction of TDS - Higher rate of TDS @20% in absence of PAN - HELD THAT:- Since assessee corporation is paying commission to PACS which are working as agents, we are inclined to hold that commission paid by assessee to PACS is liable for deduction of tax at source u/s 194H of the Act. We, however, notice that assessee did not get proper opportunity of hearing before the assessing officer and even before ld. CIT(A). We also note that the assessing officer has calculated the TDS at the maximum rate of 20% on account of non-availability of PAN even though all PACS are having bank accounts.
We also note that commission has been calculated by applying the rate of Rs. 31.25/- on the transaction for F.Y. 2011-12 but the said rate of Rs. 31.25/- was finalised on 26.07.2013 which indicates that correct amount of commission has not been calculated by the ld. AO. It is also observed that deductee, PACS are having banking facility and certainly must be having PAN and had the details of the same been made available to the assessing officer, TDS may not have been calculated at the maximum rate of 20%.
Therefore, considering all in order to compute the correct amount of commission paid and in order to ascertain the correct amount of tax to be deducted at source u/s 194H of the Act, the matter is restored to the file of the AO for carrying out necessary verification and calculation. Assessee is also directed to provide full co-operation to the assessing officer by placing all relevant material in order to get the needful information about correct amount of commission and correct amount of TDS u/s 194H of the Act. Accordingly, effective grounds of appeal raised are allowed for statistical purposes.
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2024 (4) TMI 883 - ITAT VISAKHAPATNAM
Validity of assessment order u/s. 147 r.w.s 144 - AO proceeded to complete the assessment by treating the difference amount between the SRO value and the actual sale consideration paid as income from other sources - HELD THAT:- AO ought to have considered the submissions, explanations and the evidences submitted before him while making the addition. It is also pertinent to mention here that during the assessment proceedings, if at all the AO is not convinced with the submissions made by the assessee with regard to the valuation of the property, AO is supposed to refer the matter to the Valuation Cell to obtained the market value of the property purchased by the assessee which was not done by the Ld. AO in the present case. Appeal filed by the assessee is allowed for statistical purposes
DRP ought to have considered the submissions and the evidences produced before the Ld.AO, which were stated to be not properly appreciated by the Ld. AO, while rejecting objections raised by the assessee.
Considering the prayer and the submissions of the AR and the nature of issues involved in the appeal, in the interest of justice, we hereby remit the matter back to the file of Ld. AO for de-novo consideration thereby providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (4) TMI 882 - ITAT MUMBAI
Estimation of income - bogus purchases - CIT(A) confirmed disallowance/ addition to the extent of 12.5% - HELD THAT:- As apparent that assessee has purchased material from party A and procured bogus bills of the same material from party B. In this circumstance all the judicial precedents cited before us shows that only profit element embedded therein should be added.
Therefore, AR has submitted that the profit element in case of assessee in Steel and Pipe business is merely 2 to 3 %. Therefore, over and above the normal profit earned by the assessee, there are certain other expenses and credit of the taxes and duties which is required to be added to the total income of the assessee. We deem it appropriate and fit to adopt the addition to the extent of 4% of bogus purchases in the hands of the assessee. Appeal of the assessee is partly allowed.
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2024 (4) TMI 881 - ITAT AHMEDABAD
Denial of deduction u/s. 10(23C) - Form 10B essential for claiming exemption was not furnished - intimation u/s. 143(1) - no exemption u/s. 11 of the Act was claimed rather the assessee had claimed exemption u/s. 10(23C)(iv) - as argued while filing the return, the above exemption was wrongly claimed u/s. 10(23C) of the Act instead of Section 11 in the return of income and as issue was debatable in nature and did not fall within the purview of “prima-facie adjustment”, as envisaged u/s. 143(1) - According to the Ld.AR, the claim of exemption u/s. 11 of the Act was maintainable and the Audit Report in Form 10B necessary for claiming this deduction was subsequently filed during the appellate proceedings before the Ld. JCIT(A) and, therefore, the denial of the genuine claim was not justified.
Additional claim of deduction u/s. 11 of the Act made before the Ld.JCIT(A) was not entertained, who while rejecting the claim had directed the assessee to avail the remedy u/s. 119
HELD THAT:- There is no denial to the fact that the claim for deduction u/s. 11 of the Act was not made in the return of income. The assessee had claimed deduction u/s. 10(23C) of the Act in the return. As the Form 10B essential for claiming exemption u/s. 10(23) was not furnished, the CPC had rightly rejected the claim. Therefore, the adjustment as made by the CPC, while processing the return, cannot be faulted. The contention of the assessee that the issue was debatable has no substance. The matter was only factual in nature and the CPC had made the adjustment u/s. 10(23C) as the mandatory Form 10BB was not available. As no deduction u/s. 11 of the Act was claimed in the return, the CPC never had the opportunity to examine the admissibility or rejection of this claim.
Exemption u/s. 11 of the Act claimed in the appellate proceedings before the Ld.JCIT(A) was not entertained - It is seen from the intimation u/s. 143(1) of the Act that Form 10B was filed along with the return of income. However, no exemption u/s. 11 of the Act was claimed rather the assessee had claimed exemption u/s. 10(23C)(iv) of the Act as appearing at Sl.No.1 of the intimation. It is found from the Sl.No. 5 and 6 of the intimation that there was a common column for claim of exemption u/s. 10(23C)(iv) of the Act as well as for exemption u/s. 11 of the Act. Therefore, it was not apparent as to whether the total exemption as appearing in Sl.No.6 of intimation was in respect of section 11 or u/s. 10(23C)(iv) of the Act.
CPC did not allow the claim of the assessee, but in the notes there is no mention as to why the claim of the assessee as made in the return was disallowed. However, there was a note at Sl.No.5 which stated that if the assessee considered that any part of the intimation was required to be rectified, then rectification u/s. 154 of the Act may be filed. Assessee in place of filing the rectification, preferred an appeal before the Ld.JCIT(A) and claimed for deduction u/s. 11. As already mentioned earlier, the Ld.JCIT(A) did not allow the claim of the assessee and advised to avail the remedy u/s. 119 of the Act.
As already mentioned earlier, it is not clear from the intimation as to why the adjustment of Rs. 12,16,737/- was made while processing the return u/s. 143(1) of the Act. The exact reason for disallowing the claim of the assessee has also not been mentioned in the intimation. The audit report in Form 10B is a common audit report for deduction u/s 10(23C) and for section 12A of the Act, which entitles for deduction u/s 11 of the Act. Therefore, the CPC may have made a query as to under which section the deduction was claimed before disallowing the claim of the assessee.
Revenue is, therefore, directed to intimate the exact reason for disallowing the claim of the assessee while processing the return. Thereafter, the assessee may file an application u/s. 154 of the Act to rectify the mistake in the intimation, as deemed proper. The assesse is also free to avail the remedy u/s. 119 of the Act, if he so desires. Appeal filed by the assessee is partly allowed.
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2024 (4) TMI 880 - ITAT COCHIN
Rectification u/s 154 - Characterization of receipts - Exemption of interest on enhanced compensation from tax denied u/s. 10(37) - HELD THAT:- Sections 56(2)(viii) and 57(iv) came on the statute w.e.f. 01.04.2010, i.e., AY 2010-11 onwards. The decision in Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] is for AY 1999-00. The said decision by the Hon'ble Apex Court thus has no bearing on the said provisions, invoked by the AO in bringing the impugned interest to tax.
Even as observed by the Bench during hearing, it is only where a Constitutional Court declares the same as ultra vires the Act (i.e., on a view that interest u/s. 28 of LAA is capital in nature), that would entitle the assessing authority to disregard the same.
The Hon'ble Apex Court per it’s Constitutional Bench decision in Punjab Distilling Industries Ltd. [1965 (2) TMI 6 - SUPREME COURT] explained that there is no conflict between a receipt being capital in nature and, by fiction of law, an income chargeable to tax under the Act. That is, the nature of the receipt as capital, which is the purport of the decision in Ghanshyam (HUF) (supra), would not per se preclude interest from being, at the same time, subject to tax.
Further, per it’s larger bench decision in Sham Lal Narula (Dr.)[1964 (4) TMI 10 - SUPREME COURT], not referred to in it’s later decision in Ghanshyam (HUF)(supra), the Apex Court held the provisions of s. 28 and 34 of LAA as analogous, i.e., compensatory, and, thus, not part of compensation.
The decision in P.V. Kurien [1962 (3) TMI 123 - KERALA HIGH COURT] holding interest on enhanced compensation as capital in nature, was negated by the Hon’ble Court. The upshot thereof is that even de hors s. 56(2)(viii), applied by the AO, it may not be possible to say that interest u/s. 28 of LAA is not income, much less of it being regarded as so by him as ‘mistaken’, liable to be rectified u/s. 154. Assessee’s appeal is dismissed.
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2024 (4) TMI 879 - ITAT DELHI
Reopening of assessment u/s 147 - absence of valid approval to be obtained u/s 151 - who is competent authority for approval in this case? - notice issued beyond period of four years - Principal Chief Commissioner of Income Tax/ Chief Commissioner of Income Tax Principal Commissioner of Income Tax/ Commissioner of Income Tax OR Additional Commissioner - HELD THAT:- The erstwhile provisions of Section 151 postulates permission of Pr.CCIT/CCIT/Pr.CIT/CIT before issuance of notice u/s 148 of the Act after the lapse of 4 years. Ostensibly, the re-assessment proceedings u/s 147 r.w. Section 148 in the instant case has been initiated without valid approval u/s 151 of the Act.
Needless to say, Section 151 of the Act serves as a cardinal safeguard for valid initiation of re-assessment proceedings and requires to be strictly followed. The satisfaction on an escaped income by Principal Chief Commissioner / Chief Commissioner / Principal Commissioner / Commissioner of Income Tax u/s 151(1) is thus incumbent before the proceedings u/s 147 is set in motion.
In the instant case as noted, the approval has been obtained from Addl. CIT not competent for granting requisite approval u/s 151 of the Act. Such remissness on the part of the AO have rendered the entire re-assessment proceedings invalid and bad in law.
As held in the case of Dr. Sashi Kant Garg [2005 (8) TMI 81 - ALLAHABAD HIGH COURT] the irregularity in obtaining the sanction of the competent authority is the substantive defect incurable under the provisions of the Act. Consequently, the re-assessment order stands quashed as pleaded on behalf of the assessee at the threshold. In view of such conclusion, other aspects of grievances are thus not required to be addressed. Appeal of the assessee is allowed.
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2024 (4) TMI 878 - ITAT DELHI
Revision u/s 263 - taxability of interest received by the Assessee on the enhanced compensation u/s 28 of the Land Acquisition Act - scope of debatable issue - AO while passing the order u/s 154 of the Act by accepting one of the views, deleted the addition - HELD THAT:- As the taxability of interest received by the Assessee on the enhanced compensation u/s 28 of the Land Acquisition Act is a debatable issue, wherein two views are plausible. The A.O. while passing the order u/s 154 of the Act by accepting one of the views, deleted the addition. It is well settled law that when two views are plausible and the issue is also a debatable one, the PCIT cannot assume jurisdiction as held by the Jurisdictional High Court in the case of CIT Vs. Hindustan Coca Cola Beverages Pvt. Ltd.[2011 (1) TMI 138 - DELHI HIGH COURT] in view of the above discussion, we find no error in the order made under Section 154 of the Act by rectifying the mistake apparent from the record and the Ld. PCIT committed error in quashing the said order by invoking the provision of Section 263 of the Act. Accordingly we quash the impugned order of the Ld. PCIT by allowing the Grounds of appeal of the Assessee.
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2024 (4) TMI 877 - ITAT VISAKHAPATNAM
Deduction u/s 80P2(a)(i) - allowance of interest on deposits earned by the cooperative society from fixed deposits in various bank accounts - HELD THAT:- On similar set of facts, this Tribunal in the case of The Kakateeya Mutually Aided Thrift and Credit Coop Society Ltd. [2023 (9) TMI 211 - ITAT VISAKHAPATNAM] held in favour of the assessee, relying on the decision of Vavveru Co-operative Rural Bank Ltd [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] as held assessee has invested surplus funds out of the activities carried out as per the provisions of section 80P(2)(a) of the Act. We therefore are of the view that interest income should be allowed as deduction U/s. 80P(2)(a)(i) of the Act and thereby the Ld. CIT(A)- NFAC has rightly held by deleting the addition made by the Ld. AO and hence we find no infirmity in the order of the Ld. CIT(A) -NFAC. Appeals of the assessee are allowed.
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2024 (4) TMI 840 - MADRAS HIGH COURT
Validity of Faceless assessment u/s 144 r.w.s.144B - Gross non-compliance with the procedure contemplated u/s 144B - HELD THAT:- Whether the proceeding is traceable to Section 144B(1)(xi) i.e., show cause notice or 144B(1)(xvi) of the Act i.e., draft assessment order, it was submitted that this must be treated as a proceeding u/s 144(2)(1)(xi). Assuming it to be so, the absence of any proceeding u/s 144B(1)(xvi) of the Act, i.e., a draft assessment order having been passed the impugned order of assessment cannot be sustained. It may be relevant to note that this Court in [2023 (9) TMI 1460 - MADRAS HIGH COURT] had held that it is impermissible to combine show cause notice and draft assessment order and failure to issue draft assessment order would vitiate the proceeding.
Thus, the impugned order of assessment is set aside inasmuch there is a gross non-compliance with the procedure contemplated under Section 144B - liberty is granted to the appropriate Authority to proceed from the stage of Section 144B(1)(xi)(i) of the Act, by treating the proceeding as one traceable under Section 144B(1)(xi) and complete the assessment in compliance with the procedure laid down in Section 144B.
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2024 (4) TMI 839 - BOMBAY HIGH COURT
Validity of reopening of assessment u/s 147 - shorter period to reply to notice - effectively only six working days were given to reply and hence Petitioner was unable to file a reply - as argued that if Petitioner is given an opportunity to reply to the notice u/s 148A(b) she is confident that she will be able to satisfy the AO that the notice u/s 148A(b) will have to be dropped - HELD THAT:- Considering the facts and circumstances of the case that Petitioner is a Public Trust and running a school, in our view, Petitioner should be given an opportunity to reply to the notice.
In the circumstances, without expressing any opinion on the merits of the matter, we hereby quash and set aside the impugned order passed u/s 148A(d) of the Act and remand the matter for de novo consideration. The consequent notice dated 25th March 2022 u/s 148 of the Act also hereby quashed and set aside.
Within four weeks of this order being uploaded, Petitioner shall reply to the notice issued u/s 148A(b) - To the reply, Petitioner may also annex documents which have to be taken into account while deciding the matter.
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2024 (4) TMI 838 - ITAT MUMBAI
Penalty u/s 271(1)(c) - charge was not made specific - concealing income or furnishing inaccurate particulars - return of income was filed only in response to notice u/s 148 - as alleged assessee has concealed particulars of income by not filing the return of income and provided inaccurate particulars during the assessment by not proving the authenticity of the expenses and not disclosing the income - HELD THAT:- No doubt the assessee has submitted before us many judicial precedents wherein where there is an ad hoc disallowance of the expenditure; it is held that penalty cannot be levied. Though this cannot be a universal principle. We find that had the case is that the assessee is unable to substantiate the amount of expenditure; the learned assessing officer should have disallowed 100 % percent of such expenditure by giving a sufficient reason.
By disallowing 50% and allowing 50% of that expenditure, the learned assessing officer is also not clear whether the assessee has concealed income or has furnished inaccurate particulars of income. In the assessment order the charge is not specific. In the penalty order, twin charges are invoked for the levy of the penalty.
When there is no specific charge raised by the AO at the time of assessment as well as in the notice and assessee has not been confronted with the same specific charge for furnishing reply before the assessing officer, AO levying a penalty on both the charges, without proving that both the charges apply, is not proper. The various judicial precedents cited before us are also support the case of the assessee that in case of ad hoc disallowance penalty u/s 271(1)(c) does not survive unless there are specific reasons. Accordingly, we reverse the order of the lower authorities and direct the learned assessing officer to delete the penalty u/s 271(1)(c) - Decided in favour of assessee.
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2024 (4) TMI 837 - ITAT VISAKHAPATNAM
Reopening of assessment v/s assessment u/s 153C - reliance placed by the Ld. AO on the seized material - AR argued that since th AO has acted based on the seized documents in the premises of the searched party, the assessment ought to have been framed u/s. 153C - HELD THAT:- In the instant case, AO has relied upon the agreement of sale (unregistered) dated 6/1/2016 which was seized by the search party. Relying on such information and the seized material, the Ld.AO initiated the proceedings u/s. 147 of the Act. Even though in the order of the Ld. AO, in para 5, the Ld. AO has mentioned about the material available on record for a belief that was formulated for reopening of proceedings u/s. 147 of the Act.
No detailed discussion was found in the order of the Ld. AO regarding the material available on record for a belief that was formed enabling the Ld.AO warranting reopening of proceedings u/s. 147 of the Act. The Ld. AO has fully relied on the seized agreement of sale dated 6/1/2016.
We find merit in the argument of the AR that section 153C of the Act overrides section 139, 147, 148 and 151 of the Act.
Decision of the jurisdictional Coordinate Bench of the Tribunal at Visakhapatnam in the case of Smt. Samanthapudi Lavanya vs. ACIT [2021 (5) TMI 26 - ITAT VISAKHAPATNAM] wherein the Tribunal by relying on various High Court decisions has held that in the absence of any fresh information collected by the Ld. AO or no information has come to the notice of the Ld. AO in the normal course other than the information collected during the course of search from the search person, the Ld. AO ought to have made the assessment u/s. 153C of the Act and not u/s. 147.
AO in the instant case ought to have resorted to make the assessment u/s. 153C of the Act whereby heavy reliance placed by the Ld. AO on the seized material. Further, the Ld. AO has not recorded about any information that has come to the notice of the Ld. AO and has solely relied on the seized documents from the premises of the searched person. We are therefore inclined to quash the assessment order as void-ab-initio and thereby allow the Ground No.2 raised by the assessee.
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2024 (4) TMI 836 - ITAT DELHI
Addition u/s 68 - enhancement of income u/s 56(2)(viib) - funds received in the form of share premium through undisclosed sources - identity of investors and creditworthiness of the investors and genuineness of the transaction not proved - CIT enhancing the income of the assessee u/s 56 (2)(viib) - HELD THAT:- As decided in DAYALU IRON & STEEL PVT. LTD [2022 (7) TMI 625 - ITAT DELHI] he authorities below without verifying the veracity of the documents from the publically available data on the web site of MCA IT Department. Once the assessee provided the names, addresses and Pan, particulars and ROC details of the investors. The Ld. A.O ought to have made further enquiry. Once the assessee furnishes the documents to prove the identity, creditworthiness and genuineness of the transaction. The same cannot be denied in the absence of material contrary brought by the Assessing Officer.
The present case, the assessee has substantially provided materials to prove the genuineness of the share holders apart from giving the Pan Card, name and ROC details. CIT(A) has erred in confirming the addition u/s 68 of the Act on account of unexplained share premium and share capital. The ratio laid down in the aforesaid decision of the Tribunal squarely applies to the facts of the present captioned appeals.
Enhancement made by the Ld. CIT(A) u/s 251(1) r.w.s. 56(2) (viib) - AO substituted fair market value determined by the assessee through his own valuation - Assessees have submitted the Valuation Report duly signed by the auditor by following NAV/DCF Method as required under Rule 11UA(2) of the Rules - As per relevant provisions of Rule 11UA of the Rules, fair market value of unquoted equity shares for the purposes of sub-clause (i) of clause (a) of Explanation to clause (viib) of sub-section (2) of section 56 shall be determined under clause (a) or clause (b), at the option of the assessee. The Assessees having the choice to opt for one of the methods enumerated in the above provision and the appellant has chosen to opt for clause (b) in most of the abovementioned cases for valuation of unquoted equity shares and based on the same, the value of the share had been computed. Accordingly, the new shares were issued and allotted to the investors during the captioned assessment year. During the assessment proceedings, computation of Fair Market Value of shares as per Rule 11UA(2) was submitted before the Ld.AO to justify that the shares issued by the appellants were at Fair Market Value (FMV) which was computed in accordance with Rule 11UA(2) of the Income Tax Rules, 1962. But the AO has not given any reasoning for rejecting the valuation of shares nor have they furnished any material to the contrary which justified the rejection of the valuation of shares.
When the statute provides for a particular procedure, the authority has to follow the same and cannot be permitted to act in contravention of the same. It has been hitherto an uncontroverted legal position that where a statute requires to do a certain thing in a certain way, the thing must be done in that way only. Other methods or modes of performance are impliedly and necessarily forbidden. The aforesaid settled legal proposition is based on legal maxim "Expressio unis est exclusio alterius", meaning thereby that if a statute provides for a thing to be done in particular manner, then it has to be done in that manner and in no other and following other course is not permissible.
Thus as Assessees have issued the shares at fair market value computed in accordance with Rule 11UA of the Rules and no fault has been found in the method applied by the assessees and thus the enhancement of the income by Ld.CIT(A) u/s 56(2)(viib) of the Act on protective basis is purely based on conjectures which has no basis in law and is liable to be deleted.
Further, as the assessee has provided document to prove the identity, creditworthiness and the genuineness of the transaction of each shareholder, which has not been controverted by the Department and in the absence of any contrary material on record to disprove the same in our considered opinion, the addition of income made under section 68 of the Act as well as the enhancement of income u/s 56(2)(viib) of the Act is bad in law accordingly, the additions/enhancement made by the A.O/CIT(A) are hereby deleted. Decided in favour of assessee.
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2024 (4) TMI 835 - ITAT CHENNAI
Reopening of assessment of assessee trust - denial of exemption u/s. 11 on the ground of Trust as violates provisions of Sec. 13(1)(c) - failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of assessment in respect of rental income received on let out of premise which is clearly evident from Form No.10B filed by the assessee for all assessment years, where, the assessee has not disclosed the details with regard to income or properties of the Trust was made or continued to be made available for the use of any such persons during the previous year referred to u/s. 13(3) of the Act.
HELD THAT:- Re-opening of assessments for AYs 2012-13 to 2014-15 is bad in law and are liable to be quashed, because, the assessments have been re-opened without there being any allegation as to failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment year and for that assessment years. The Ld.CIT(A) without appreciating relevant facts simply upheld re-opening of assessment.
For AYs 2015-16 & 2016-17 assessments have been re-opened for these two assessment years on the basis of fresh tangible material which suggest escapement of income on account of under assessment rental income and said escapement of income was noticed during the course of survey conducted u/s. 133 of the Act. In our considered view, new tangible materials found during the course of survey constitute a fresh material and as per said material, there is escapement of income. The AO has formed reasonable belief of escapement of income and thus, in our considered view, re-opening of assessments for AYs 2015-16 & 2016-17 are valid.
Denial of exemption u/s. 11 - Charitable activity u/s 2(15) - The assessee objects and activity of running Kalyanamandapam is incidental to the attainment of main objects, and is covered by provisions of Sec. 11(4) of the Act. Since, the assessee Trust is maintaining separate books of accounts for the activity of running of Kalyanamandapam and said activity is in the nature of attainment of main objects, in our considered view, provisions of Sec. 11(4A) of the Act, is not applicable to the assessee, and thus, the AO and the Ld.CIT(A) erred in rejecting exemption u/s. 11 of the Act. Thus, we reversed the findings of the Ld.CIT(A) on this issue and direct the AO to allow the benefit of exemption u/s. 11 of the Act, to the assessee for the AY 2012-13 to 2018-19.
Addition towards difference between the rental income received by the assessee from M/s.CFD, a partnership firm and rental income received by the partnership firm, M/s.CFD from three tenants - Assessee has filed financial statement of partnership firm to prove that the firm has spent huge amount for re-construction/renovating the building from time to time since 1975 onwards and if you consider the amount of money spent by the partnership firm to make the schedule of property for let out, in our considered view, the rent received by the partnership firm from three tenants is commensurate with what was let-out by the partnership firm.
Assessee has also filed relevant evidences to prove that the prevailing market rate of rent for all these assessment years is comparable with Fair Market Value of the property as per municipal authorities, where the municipal authorities have determined the Fair Market Value of the property for the purpose of municipal taxes which is lesser than the amount of rent received by the assessee from the partnership firm.
As it was not the case of the AO that the prevailing market rate of rent for similar kind of property for these assessment years is higher than the rent received by the assessee from the partnership firm. In fact, the AO has not made any attempt to find out the fair market rent of the property in the adjoining areas during relevant period. But, the AO simply took rent received by the partnership firm and compared with rent received by the assessee from the partnership firm and held that rent received by the assessee from partnership firm is lesser than the fair market rent only on the ground that partnership firm is related to the assessee as per the provisions of Sec. 13(3) of the Act.
In our considered view, provisions of Sec. 13(1)(c) r.w.s.13(2) of the Act will come into operation only in a case where any Trust or Institution allows the income or property of a Trust to the benefit of persons referred to u/s. 13(3) of the Act, without any adequate consideration or compensation. In case, said property has been allowed to use by any person by paying consideration or compensation which is commensurate with prevailing market rent, then provisions of Sec. 13(1)(c) r.w.s13(2) of the Act, cannot be applied. Therefore, we are of the considered view that the AO and the Ld.CIT(A) are completely erred in invoking provisions of Sec. 13(1)(c) r.w.s.13(2) of the Act, and made additions towards difference between rental income.
Disallowance of depreciation on fixed assets the cost of which has been claimed as application of income - Since, the assessee Trust is a registered u/s. 12AA of the Act, and also claiming exemption u/s. 11 of the Act, in our considered view, depreciation on fixed assets should be allowed as application of income up to AY 2014-15. Thus, we direct the AO to delete additions made towards disallowance of depreciation on fixed assets for AYs 2012- 13 to 2014-15. In so far as AYs 2015-16 to 2018-19, the law has been amended by the Finance Act, 2014 to provisions of Sec. 11(6) of the Act and as per said provisions, where any income required to applied or accumulated or set part for application, then, for such purpose, the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as application of income under this section in the same or in any other previous year. From the amendment provisions of Sec. 11(6) of the Act, by the Finance Act, 2014, which is applicable from AY 2015-16 onwards, depreciation on fixed assets cannot be allowed as application of income, in case, the cost of acquisition of said fixed assets has been allowed as application of income in the same year or in any earlier year. Thus, we are inclined to uphold the findings of the Ld.CIT(A) for AYs 2015-16 to 2018-19 and reject ground taken by the assessee.
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2024 (4) TMI 834 - ITAT MUMBAI
Disallowance of set off - sale of equity shares (STT) - short-term capital gains (STCG) on sale of derivatives and short-term capital loss (STCL) - difference in rate of taxation - determining the tax liability without setting off of STCG loss taxable at the rate of 15% against the STCG on sale of derivatives taxable at the rate of 30% u/s 70(2) - HELD THAT:- In the case of VEMF-A, LP [2017 (4) TMI 721 - ITAT MUMBAI] wherein on identical issue and similar fact the ITAT has decided the issue in favour of the assessee. It is clearly held that under the provisions of section 70(2), STCL arising from any asset can be set off against STCG arising from any other asset under a similar computation made irrespective of different rate of tax. Therefore, the issue in appeal in the case of the assessee is squarely covered by the decision of the ITAT. Thus, we allow the appeal of the assessee.
In the result, the appeal of the assessee is allowed.
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2024 (4) TMI 808 - SC ORDER
Assessment barred by limitation - delay of 340 days in filing the present special leave petition - HC [2023 (1) TMI 1368 - CALCUTTA HIGH COURT] held provisions of Section 153(3)(ii) of the Act are not attracted in the facts and circumstances of the case on hand - HELD THAT:- We are not satisfied with the reasons given for the delay.
Accordingly, the application for condonation of delay, as well as, the special leave petition are dismissed.
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2024 (4) TMI 807 - SC ORDER
Condonation of delay - gross delay of 597 days in filing the special leave petition - Exemption u/s 11 allowed on activity of the assessee of letting out gallery frequently for a price as merely because a small percentage of the income of the Assessee is from letting out of its premises and sale of paintings, the essential activity of the Assessee would not cease to be charitable for the purposes of Sections 11 and 12
HELD THAT:- The explanation offered is not to our satisfaction as no sufficient cause to condone the delay has been made out. Hence, the application seeking condonation of delay is dismissed. Consequently, the Special Leave Petition is dismissed on the ground of delay keeping open the question of law, if any, which arises in this matter.
Pending application(s) shall stand disposed of.
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2024 (4) TMI 806 - SC ORDER
Allowable expenditure of "Education Cess” - HELD THAT:- As respondent very fairly states that in view of the subsequent amendments in the Income Tax Act, 1961, “Education Cess” cannot be allowed as an expenditure.
In view of the statement made, the impugned judgment is set aside and the appeal is allowed, holding that the “Education Cess” cannot be allowed as an expenditure.
However, the assessing officer while implementing and giving effect to this order, will examine the question of the quantum/amount of “Education Cess”, if any, claimed by the respondent – SESA Goa Ltd., as an expenditure in the returns or in the proceedings.
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2024 (4) TMI 805 - MADRAS HIGH COURT
Waiver of interest u/s 234A, 234B and 234C - marginal delay in filing the returns - HELD THAT:- The stand of the petitioner that the petitioner was entitled for waiver of interest u/s 234A for the AY 2008-2009 and 2009-2010 on similar for the AY 2005-2006 and 2007-2008 deserves to be accepted, as there is only marginal delay in filing the returns after the Audit Report was received by the petitioner from the Office of Joint Director of Cooperative Audit on 22.03.2011 for the AY 2008-2009 and on 31.01.2012 for the AY 2009-2010. The returns for these years were filed by the petitioner on 31.05.2011 and 02.04.2012, respectively. Therefore, to the extent of rejection of waiver of interest u/s 234A is concerned, the impugned order warrants interference, by granting waiver to the petitioner. Therefore, the interest u/s 234A deserves to be waived and therefore, this Writ Petition deserves to be allowed to that extent.
Interest u/s 234B and 234C - They pertain to belated payment of advance tax under Section 210 within the stipulated period under Section 211 of the Income Tax Act, 1961. No case is made out by the petitioner for waiver of interest notwithstanding the reason stated by the petitioner in the affidavit. CBCT Circular No.400/129/2002-IT(B), dated 26.06.2006, does not specifically deal with waiver of interest u/s 234B and 234C of the Income Tax Act, 1961.
There were no impediments operating against the petitioner from paying the advance tax within the time line under Section 211 of Income Tax Act, 1961. The decision of this Court in Tvl.Sanmac Motor Finance Ltd. case [2020 (2) TMI 1182 - MADRAS HIGH COURT] which was relied by the learned counsel for the petitioner as also by the learned Senior Standing Counsel for the respondents, has not given a complete waiver of interest under any of the provisions although partial waiver was allowed.
That apart, the payment of interest on the tax that was payable on the date specified in Section 211 is axiomatic in the sense it has to be paid by the due date prescribed under the Statute and therefore, there cannot be any waiver either on the ground of equity or on a reading of the above Circular dated 26.06.2006, bearing reference No.400/129/2002-IT(B) or on a reading of the decision of this Court in Tvl.Sanmac Motor Finance Ltd. case [cited supra] or on a reading of the decision of the Hon'ble Supreme Court in Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala and others [2001 (10) TMI 4 - SUPREME COURT]
Writ Petition is partly allowed.
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2024 (4) TMI 804 - MADRAS HIGH COURT
Validity of assessment order - as argued without giving the petitioner an opportunity to reply by granting adjournment, the second respondent has now passed the assessment order by adding a further sum towards addition u/s 68 - petitioner requested for adjournment in response to the earlier show cause notice which was denied - HELD THAT:- Without giving the petitioner an opportunity to reply by granting adjournment, the second respondent has now passed the assessment order by adding a further sum towards addition u/s 68 of the Income Tax Act, 1961. Thus, the impugned order has been passed in violation of principles of natural justice. Therefore, it is liable to be interfered with under Article 226 of the Constitution of India.
Accordingly, the impugned order passed by the first respondent is quashed and the case is remitted back to the first respondent to pass fresh orders within a period of 90 days from the date of receipt of a copy of this order. It is made clear that the impugned order and the show cause notice shall be read compendiously and a reply to the same shall also be filed by the petitioner within a period of 30 days from the date of receipt of a copy of this order
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