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2025 (1) TMI 1557
Petition seeking Direction to release/ provide the original copy of documents seized by the Respondent from the premises of the Petitioner during various searches conducted - HELD THAT:- We are not inclined to disturb the impugned order passed by the High Court, however with a clarification that the respondent authorities are hereby directed to return the certified copies of the documents which according to them are not relied upon for proceeding further and on receipt of the said certified copies from the department concerned within a period of two weeks the necessary reply, if any, be filed by the petitioner-assessee and upon receipt of the said reply necessary proceedings further make one. The petitions stand disposed of accordingly.
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2025 (1) TMI 1556
Suit for declaration of title and permanent injunction - Trial Court dismissed application under Order 18 Rule 17 of CPC - seeking recall and re-examination of the defendant witness on the points of demarcation and diversion of the disputed land - Validity of order passed by the learned Trial Court - HELD THAT:- On perusal of the evidence of defendant Abhayraj Singh (DW-1), it is apparent that he was examined-in-chief on 20.11.2024. He was cross-examined at length by the counsel for the plaintiff. After his cross-examination by counsel for the plaintiff, plaintiff himself who is an advocate sought permission to cross examine defendant. As counsel appearing for the plaintiff did not raise any objection, the Trial Court permitted the plaintiff to cross-examine the defendant and thereafter a lengthy cross-examination was made by the plaintiff himself who is a practicing advocate. His evidence was closed after examining and cross-examining him fully. Plaintiff moved application under Order 18 Rule 17 of CPC stating that he wanted to cross-examine defendant further on the points of demarcation and diversion.
The learned Trial Court after hearing the parties in its impugned order made it clear that in para 8, 9, 10 and 14 of the cross-examination of the defendant, specific questions have been put about demarcation and diversion of the disputed land and dismissed the application. On perusal of the impugned order and the cross-examination by the counsel for the plaintiff and plaintiff himself who is a practicing advocate, it appears that defendant Abhayraj Singh was cross-examined fully and only thereafter he was discharged. Therefore, it is apparent that application under Order 18 Rule 17 of CPC filed by the plaintiff is nothing but an attempt to prolong the trial and fill up lacuna. Thus, no impropriety, illegality or incorrectness is visible in the impugned order passed by the learned Trial Court.
Consequently, this petition being devoid of merits is dismissed.
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2025 (1) TMI 1555
Maintainability of appeal on low tax effect - monetary limits for filing Income Tax Appeals by the department before the High Court - HELD THAT:- As monetary limit (tax liability) in the present case is less than Rs. 2 Crores, therefore, in light of aforesaid circular (Para-5) dated 17/09/2024, the instant Tax Case stands disposed of.
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2025 (1) TMI 1554
Addition u/s 68 - respondent-companies herein above are conduit companies and merely a entry providers - protective assessment carried out by the AO in all the captioned appeals relating to additions u/s 68 of the Act towards accommodation entries - additions in the hands of so-called beneficiaries of the entry receipts on substantive basis - HELD THAT:- The onus is always on the assessee to discharge the burden placed u/s 68 of the Act. While returning the finding by the Ld.CIT(A) that the ownership of the entries do not belong to the assessee, it was incumbent upon the Ld.CIT(A) to satisfy himself that the ultimate so-called beneficiaries have been assessed on substantive basis and the tax has been realized on such bogus entries.
CIT(A) has dealt with the issue without consideration of this vital fact. The onus lays on the assessee companies to establish that entries routed through the bank account of such companies are not owned by them. The corporate veil cannot be lifted cursorily. The onus has not been discharged by the assessee at all. In the absence of any finding on the taxability of entries in the hands of beneficiaries, we are not in a position to either sustain the action of the Ld.CIT(A) or dislodge the action of the Ld.CIT(A). It will thus equitable to restore the appeal to the file of the Ld.CIT(A) for adjudication afresh in accordance with law. It shall be open to the assessee to place arguments and adduce evidences as may be considered expedient to defend the stand of the assessee on the subject matter of dispute.
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2025 (1) TMI 1553
Taxability of income in India - Taxability of amount received for Consulting Engineering Services as Fees for Technical Services (FTS) - HELD THAT:- As decided in assessee’s own case for the A.Y. 2012-13 [2019 (4) TMI 605 - ITAT MUMBAI] held the amount received towards consulting engineering services to be not in the nature of fees for technical services, the reasoning of the departmental authorities with regard to cost recharge would also fail, since, they have treated it as ancillary and incidental to consulting engineering services. The, contention of the learned Departmental Representative that the cost recharge fails various tests, such as, need test, benefit test etc. is unacceptable, it is contrary to the finding of the Departmental Authorities.
Once, the Departmental Authorities have treated the amount received towards cost recharge to be in the nature fees for technical services, it implies rendering of service by the assessee. Therefore, applying the very same reason on the basis of which we have held the amount received towards consulting engineering services to be not in the nature of fees for technical services as discussed above, we hold that the amount received towards cost recharge cannot be brought to tax in India in the absence of PE. Assessee appeal allowed.
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2025 (1) TMI 1552
The Supreme Court of India, through Hon'ble Mrs. Justice B.V. Nagarathna and Hon'ble Mr. Justice Satish Chandra Sharma, granted leave and condoned delay in the matter. The order is succinct, with no detailed legal reasoning provided in the excerpt. Key procedural actions include "Delay condoned" and "Leave granted."
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2025 (1) TMI 1551
Levy of service tax - Construction of Complex Service - constructing houses for Tsunami-affected people - HELD THAT:- The appellant had constructed individual houses numbering more than 12 houses, which fact has not at all been disputed by the Revenue. The facts therefore are clear inasmuch as the Appellant undertook the construction of individual residential units, which activity was not included within the scope of ‘Construction of Complex Service’ as defined under Section 65(30a) ibid.
Reliance placed on the order of Chennai Bench of the Tribunal in the case of Macro Marvel Projects Limited Vs CST Chennai [2008 (9) TMI 80 - CESTAT, CHENNAI] is apt wherein, the Bench held that 'Admittedly, in the present case, the appellant had constructed individual residential houses, each being a residential unit, which fact is also clear from the photographs shown to us. In any case, it appears, the lawmakers did not want construction of individual residential units to be subject to levy of service tax.'
The above ratio squarely applies to the facts of the present case and hence, the demand of service tax in the impugned order cannot sustain for which reason, the same is set aside.
Appeal allowed.
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2025 (1) TMI 1550
Maintainability of writ petition - Levy of service tax - respondent-University being an ‘educational institution’ - taxability of income from affiliation and allied functions - it was held by High Court that 'The respondent-University answers the definition of educational institution since it provides services that fall into sub-clause (ii) of clause (l) of section 66D of the Finance Act, 1994. In fact, the education catered by the University broadly fits into the definition of auxiliary educational services. He is also right in pointing out that an otherwise interpretation of this Exemption Notification would defeat the very purpose for which it has been issued' - HELD THAT:- There are no reason to interfere with the impugned order passed by the High Court - SLP dismissed.
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2025 (1) TMI 1549
Validity of the impugned assessments on the issue of limitation prescribed u/s 153 (3) - HELD THAT:- We wish to make it clear that there is no dispute between the parties that such a consequential assessment ought to be framed with the period of 9 months from the end of the financial year in which the order u/s 254 is passed, which in the facts of the present case, expired on 31st December, 2019. The impugned assessments in all these cases have admittedly been framed on 23rd April, 2021. It is further clear that the tribunal’s remand directions stood duly dispatched not only to office of the learned departmental representative but also to the authorities concerned, as the case may be.
We are of the considered view that once their lordships have made it clear that time clock in section 260A starts ticking from the copy of the tribunal’s order received by the CIT (Judicial) etc. than the officers “concerned”, as the case may be, the legislature has used identical legislative expressions in section 153 (3) of the Act as well i.e. “received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or”.
We thus invoke the very analogy herein as well to conclude that once the tribunal had pronounced first round remand order of 28.02.2019 followed by the compliance to the necessary procedural aspects of dispatching a copy thereof to the CIT-DR’s office and other authorities (including the Assessing Officer), the time limit started from that point of time onwards, and, therefore, the assessment herein framed on 23rd April, 2021 are very well beyond the prescribed time period u/s 153 (3) of the Act.
We indeed reiterate that neither the learned CIT (A) in lower appellate discussion nor any other documents filed at the Revenue’s behest throw any light that the authorities concerned had not received the tribunal’s first round remand order immediately after it was pronounced in open court. We thus place strong reliance on their lordships “Full Bench” decision; as upheld in Revenue’s Special Leave Petition [2018 (7) TMI 1151 - SC ORDER] to quash all the impugned assessments as time barred in very terms. Ordered accordingly.
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2025 (1) TMI 1548
Reopening of assessment u/s 147 beyond period of limitation - contention of the assessee is that the said notice is barred by limitation as per the first proviso to the un-amended provisions of section 149(1) as has been confirmed by the decision of the Hon'ble Supreme Court in the case of Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] - HELD THAT:- The test for checking the validity of notices issued u/s 148 under new regime for AYs 2021-22 or prior years is whether the period of six years has expired at the time of issue of such notice and in that case the notice under section 148 becomes invalid.
These observations also makes it clear that the time limit of ten years as per the amended provisions of section 149(1)(b) can be applied only prospectively. In assessee's case when we apply this test for AY 2015-16, the period of six years has expired on 31.03.2022 and therefore the notice u/s 148 of the Act for AY 2015-16 is invalid since it is barred by limitation. Accordingly the assessment completed under section 147 of the Act is liable to be quashed.
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2025 (1) TMI 1547
Validity of reassessment notices/ proceedings - scope of notices issued under Section 148 of the new regime between July and September 2022 - Application of TOLA to the Income Tax Act after 1 April 2021 - Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021? - HELD THAT:- Having regard to the concession made by the petitioner-Department in the case of Union of India vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] this Special Leave Petition would not survive for further consideration.
Special Leave Petition is dismissed.
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2025 (1) TMI 1546
Rejecting application for final approval as per the provisions of section 80G(5)(iii) - HELD THAT:- The present appeal of the assessee is not maintainable as the assessee has already been granted final/regular registration (not provisional), which is valid from 2022-23 to AY 2026-27. Therefore, there is no requirement of applying for final registration. The present appeal of the assessee, thus, is infructuous and not maintainable and the same is accordingly dismissed. However, it is made clear that the dismissal of the above appeal of the assessee will not in any manner tantamount to effect the registration granted to the assessee vide order dated 28.05.2021 which is valid up to AY 2026-27. Appeal filed by the assessee is dismissed.
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2025 (1) TMI 1545
Addition on account of cash deposits in bank account - HELD THAT:- We have also given consideration to the argument of the DR to remand the matter to examine the opening balance of the cash in hand perpetually shown by the assessee. The assessee since expired and the case was represented through legal heir. We have given our considerable thought about the entire fact and find that no useful purpose would be served to enquire into the amounts deposited or withdrawn 12 years back. At the same time, the entire cash deposits also cannot be considered as undisclosed income keeping in view the earning of income to the tune by the assessee and it is also a fact that the assessee had agricultural income to the tune of Rs.10 lakhs.
The assessee has also received cash as part of sale consideration pertaining to the agricultural land. We are not in agreement with the cash flow submitted by the assessee as cash flow for the period from 10.12.2012 to 29.03.2012 cannot be accepted as the same cash was deposited in the year 2016 in the un-rebuttable evidence that the assessee has been continuously withdrawing cash in the year 2013-14, 2014-15 and 2015-16 also.
No further enquiries are feasible as the assessee stand deceased. Hence, keeping in view the entire contents and facts specific to the instant case, we deem it appropriate to determine that the assessee could have had cash in hand of Rs.30 lakhs and the remaining can be treated as undisclosed income.
Invocation of provision of section 115BBE - As relying on the case S.MI.L.E Microfinance Limited [2024 (11) TMI 1444 - MADRAS HIGH COURT] the ground of appeal of the assessee on the issue of Section 115BBE of the Act is hereby allowed.
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2025 (1) TMI 1544
Seeking grant of bail - Money Laundering - scheduled offences - illegal sand/mineral mining operations conducted by the present applicant - HELD THAT:- From the perusal of the grounds of arrest and the reasons to believe appended along with petition as Annexure P-34 and P-35 respectively, it is evident that the Enforcement Directorate had received formal complaints and intelligence inputs indicating illegal sand/mineral mining being done by the applicant in the case at hand. Based on the aforesaid, discreet inquiries were got conducted, details whereof are contained in the panchnama report dated 17.06.2024.
By virtue of an amendment made in the year 2019, proviso in Sub-Section1 of Section 17 of the 2002 Act which required that no search shall be conducted unless in relation to the scheduled offence a report has been forwarded to a Magistrate under Section 157 of the 1973 Code or a complaint has been filed before a Magistrate in regard of such offence stands omitted.
The argument raised on behalf of the applicant that relevant material has been ignored i.e. out of six FIRs mentioned in the grounds of arrest, four stand cancelled, the 5th does not pertain to the applicant and the 6th FIR does not deal with any scheduled offence, prima facie is of no consequence at this stage. The aforesaid FIRs were only indicative of the fact that there is rampant illegal mining in the area in question. Besides the aforesaid, quashing of the order of stoppage of one of the stone crushers of the National Green Tribunal (NGT) by the Hon’ble High Court is also of no avail to the applicant at this stage.
The facts, in the case at hand, made out from the grounds of arrest and reasons to believe prima facie reflect that the officer, in the case at hand, had material in his possession, on the basis of which in writing reasons to believe were recorded, that the applicant, who is to be arrested is guilty of the offence under the Act. As is the requirement of law, grounds of arrest and reasons to believe were supplied to the applicant upon his arrest. The conclusion drawn prima facie appears to logically flow from the facts. Prima facie neither there exists any error of nor there appears to be any improper exercise of power.
Conclusion - No case for grant of bail has been made out in terms of Section 45 of the PML Act, as there exist reasonable grounds for believing that the applicant is guilty of such offence. Moreover, taking into account the antecedent of the applicant, his propensities, the way and manner in which the applicant is alleged to have committed the offence, the applicant is likely to commit similar offences, if enlarged on bail in the future.
Bail application dismissed.
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2025 (1) TMI 1543
Challenge to SCN - authority to issue showcause notice or initiate any inquiry - HELD THAT:- The present petition has been filed after a period of more than 3 months of issuance of the show-cause notice on the premise that a representation dated 09.12.2024 has been sent to the respondent No.4, namely the Director General of Foreign Trade, bringing to his notice the factum of issuance of an illegal show-cause notice.
Considering the fact that the petitioner has straightaway approached this Court after a period of more than 3 months of issuance of the show-cause notice without submitting any reply to respondent No.3 raising an issue of jurisdiction of respondent No.3 to issue such a notice, we do not find any good ground to interfere.
The present petition is accordingly dismissed with a liberty to the petitioners to approach the respondent No.3 by submitting a reply to the notice dated 09.09.2024, inasmuch as, it is the contention of the learned counsel for the petitioners that no further proceedings pursuant to the show-cause notice dated 09.09.2024 has so far been initiated.
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2025 (1) TMI 1542
Seeking grant of Regular bail - Money Laundering - scheduled/predicate offence - proceeds of crime - illegally collecting commissions and supplying unaccounted liquor to the government liquor shops - satisfaction of twin test under Section 45 of the PMLA, 2002 or not - HELD THAT:- In the present case, the applicant was involved in the criminal acts of the syndicate and that he received commission from the liquor suppliers. However, no recovery of unaccounted money has been made in this regard and as per the investigating agency, the investigation is pending, hence, a conclusive determination of their role is yet to be made. On perusal of the records, it appears that the co-accused Trilok Singh Dhillon was a liquor.
In the case in hand, considering the fact that the charges levelled against the applicant are grave and a serious threat to societal harmony. On perusal of the aforesaid provisions of law and judgment passed by the Apex Court in the matter of Vijay Madanlal Choudhary Vs. Union of India and Others [2022 (7) TMI 1316 - SUPREME COURT (LB)], it is clear that the offence under PMLA, 2002 is a separate and distinct offence. PMLA 2002 deals with the proceeds of crime which has been obtained by the accused by committing schedule offences. Accused possess, conceals and acquire tainted property or money claiming it to be untainted and use the proceeds of crime. Said act of accused in dealing with ill gotten money or property constitutes separate and distinct offence from earlier offence committed to acquire money.
It is important to note that the twin conditions provided under Section 45 of the 2002 Act, though restrict the right of the accused to grant of bail, but it cannot be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the principles of law as provided under Section 45 of the Act, 2002.
What is required is to prima facie, consider the material available on record to satisfy itself and to enable it to reasonably form an opinion, to believe, that the applicant is not guilty of the offence and that he is not likely to commit any offence on bail as enshrined in Section 45 of the PMLA. It is also required to consider the nature and gravity of the accusation, severity of the punishment in the event of conviction, danger of the accused absconding or fleeing, character, behaviour means, position and standing of the accused, the likelihood and reasonable apprehension of the witnesses being influenced and danger, of course, of justice being defeated by grant of bail.
Conclusion - The applicant is in possession of the Proceeds of Crime of about 27.2 crores which was used in creation of various Fixed Deposits of principal amount totalling to Rs. 27.2 crores in the name of his companies ie. M/s. Petrosun Bio Refineries Pvt. Ltd. and M/s. Dhillon City Mall Pvt. Ltd. It is in the aforesaid backdrop, considering the material available on record including the money transactions in the FDR accounts of the applicant and its use by the applicant through his firms/companies, for all the reasons aforesaid, this Court is unable to persuade itself to form a prima facie, satisfaction in terms of Section 45 of the PMLA, at this stage, and further that the prosecution complaint has been filed against the applicant, this Court is not inclined to grant regular bail to the applicant.
The prayer for bail made by the applicant under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 (BNSS) read with Section 45 of the PMLA, 2002 for the offences under Section 3 & 4 of the PMLA, 2002, is hereby rejected - bail application dismissed.
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2025 (1) TMI 1541
Eligibility of exemption u/s 11 - assessee formed for the development of the twin cities of Ayodhya and Faizabad by the Government of Uttar Pradesh under the provisions of the Uttar Pradesh Urban Planning and Development Act, 1973 - AO observed that in the Uttar Pradesh Urban Planning & Development Act, 1973, words like charity or charitable, poor, economically weaker, subsidy / subsidized, assistance, upliftment were not mentioned - AO observed that the activities of the assessee were in the nature of real estate business and the provisions of the first proviso to section 2(15) were applicable to its case
Whether the assessee is justified in not including funds collected and grants received on account of infrastructure activities in its income and expenditure account but carrying it directly to the balance-sheet on account of the plea that such income stood diverted by overriding title and could not be included in its own income? - HELD THAT:- The question of whether a development authority can be regarded as a body indulged in objects of, ‘general public utility’ is no longer res integra after the decision of the Hon’ble Supreme Court in the case of ACIT (Exemption) vs. Ahmedabad Development Authority [2022 (10) TMI 948 - SUPREME COURT] wherein the Court held that bodies which carry out statutory functions and whose income was eligible to be considered for exemption u/s 10(20A) prior to 1.04.2003, but thereafter ceased to enjoy that benefit after deletion of that provision, are not ipso facto precluded from claiming benefit as a GPU category charity under section 11 r.w.s. 2(15) of the Act.
Statutory corporations, Boards, authorities, commissions etc., by whatever named called in the fields of housing development, town planning, industrial development sector etc., were involved in the objects of, “general public utility” and therefore were entitled to be considered as charities in the GPU categories.
First issue raised viz that the activities of the appellate authority carried on as per its objects as laid down in section 7 of U.P.U.P.D.A., 1973 were not charitable activities, do not hold any water after this decision of Hon’ble Supreme Court which categorically states that statutory bodies engaged in Housing Development Term Planning etc., are involved in objects of, ‘general public utility’ and therefore, are entitled to be considered as charities in the GPU category.
It is observed that the Hon’ble Allahabad High Court in the case of CIT vs. Lucknow Development Authority & others (including the assessee authority) [2013 (9) TMI 570 - ALLAHABAD HIGH COURT] has already held that the Development Authorities in appeal before it, were carrying out their activities on non-commercial lines with no motive to earn profits and therefore, would not be hit by section 2(15) of the Act, as the aims and objects of the said authorities were admittedly charitable in nature. Therefore, once the finding has been rendered by the Hon’ble Supreme Court, that the statutory bodies involved in Housing Development Town Planning etc., are involved in the objects of, ‘general public utility’ and the earlier finding of the Hon’ble Allahabad High Court, after examination of the objects of the authorities set up under the U.P.U.P.D.A., 1973, that their activities are charitable activities not hit by section 2(15) of the Act, the orders of the ITAT Amritsar Bench in the case of Jammu Development Authority and Jalandhar Development Authority will have no application to the facts of the assessee’s case or be a justification for the denial of exemption to it under sections 11 and 12 of the Income Tax Act, 1961.
The fact that the appellant authority has been constituted for the specific purpose of planned development, and not for profit is evidenced both from the provisions of the Act under which it is constituted, as also from the fact that the funds of the authority may not be utilized for any purpose other than the expenses incurred by the authority in the administration of the U.P.U.P.D.A., 1973. Furthermore, as per section 58 of the Act, upon dissolution of the authority, such funds as are left over with the authority would be transferred to the State Government for the specific purpose of carrying out development which has not been fully carried out by the Authority. Thus, the authority seems to satisfy the test laid down by the Hon’ble Supreme Court in AUDA, that it is a general public utility charity and there is no merit in the observation of the ld. Assessing Officer or the ld. CIT(A) that the sale and purchase of land renders it a commercial organization, because the same are seen to be done for furtherance of its objectives of ensuring planned development of its development area and neither the ld. Assessing Officer nor the ld. CIT(A) have brought on record any facts that would suggest that these sales and purchases take place with a huge markup or at rates other than what have been prescribed under the UPUPDA 1973 or the Govt Orders issued under that Act, that may render it ineligible for being regarded as a GPU charity that is eligible for exemption under section 11.
AO or the CIT(A) or the Ld CIT(DR), have not till now brought on record any single instance of profiteering activity or pricing outside the ambit of the statute or the Govt orders issued thereunder, while we have seen that almost all the valuation and pricing has been done on the basis of Govt Orders and instances of cross subsidization as envisaged of the AUDA order, have been brought on record. Thus, denial of exemption under section 11 is not justified and the additions made by the AO on account of the surplus in the income and expenditure account are hereby deleted.
Addition on the issue of Infrastructure Development Reserve Fund (IDRF) - After analysis of the various legal pronouncements, the provisions of the U.P.U.P.D.A. 1973 and the O.M. dated 15.01.1998, the plea that the assessee did not have any right, title or interest over the said infrastructure fund and that it was merely a Nodal agency for implementing the projects of the State Government, is fit to be rejected. The Learned AR has pointed to some inconsistencies in the order of the Delhi Bench and also pointed out that the Adityapur Development Authority ( whose case was followed by the Hon High Court) was seeking exemption under another section as also the fact that one of the items of receipt ie stamp duty was collected by the state Govt, but to our mind those arguments are not material because the specific provision of the U.P.U.P.D.A. 1973 render diversion of income to the state prior to the dissolution of the authority as an impossibility and the Govt Order dated 15.01.1998 could not be read as being issued for a purpose that was vires of the Act. It could only be read as issued under section 41 of the U.P.U.P.D.A. 1973 for better administration of the Act by channelizing some portion of the funds to certain preferential areas of the assessee’s objects and nothing more. Therefore, following the Judgment of Mussoorie Dehradun Development Authority [2022 (5) TMI 1389 - UTTARAKHAND HIGH COURT] we hold that the Infrastructure Development and Reserve Fund is also the fund of the Assessee authority and liable to be considered in its hands.
Alternative argument against routing this amount through the income and expenditure account, pointing out that because of the effect of the OM, the receipts to the fund were capital receipts and were therefore to be considered as accretion to the corpus of the Authority rather than its income - We observe that the receipts listed the OM dated 15.01.1998 are not voluntary contributions with specific directions, within the meaning of section 11 (1)(d) of the Act, but it is also noted that the OM dated 15.01.1998, issued under section 41 of the UPUPDA 1973, earmarks certain portion of receipts to the infrastructure fund for capital expenditure and the Hon. Supreme Court has held, in the case of Padmaraje. R. Kadambande [1992 (4) TMI 215 - SUPREME COURT] that it is settled law, that in order to find out whether a receipt is a capital receipt or a revenue receipt, one has to see what it is in the hands of the receiver and not its nature in the hands of the payer. The nature of the receipt is determined entirely by its character in the hands of the receiver and the source from which the payment is made has no bearing on the question. Therefore, we deem it appropriate to restore this matter back to the file of the assessing officer to analyze the nature of the receipts with reference to the OM dated 15.01.1998, and thereafter take an appropriate decision.
Addition on account of receipts shown in the 'Tourism Development Grant UP -Since the authority is an independent entity having its own funds and further that, as per the provisions of section 20 of the U.P.U.P.D.A. 1973, all Grants received by the authority also constitute its funds and, the power to divert the funds to the state Govt only arises upon dissolution of the authority under Section 58 of U.P.U.P.D.A. 1973, we hold that the funds received by way of tourism grant are the funds of the authority and not the state Govt. However we agree with the assessee, that before any portion of the same could be held to be its income and added to surplus, the expenditures incurred against the same have to be have to be allowed as application against that receipt. However, we also note the assessee’ s submissions that the grants were received from the state Govt for setting up certain specific tourism projects in Ayodhya & Faizabad. If true, that would make them capital receipts, which are not income as per section 2(24) and therefore the funds would form part of the corpus, whether specifically mentioned or not. Since the grants have been received for execution of certain specific projects and creation of facilities for development of tourism. Therefore, they cannot be added back to the assessees income and must be held to be part of the corpus.
Claim of prior period expenditures - As observed after consideration of arguments of both Parties, that the issue is linked to the allowance of exemption under section 11. Since the exemption under section 11 has been held to be allowable, amounts expended during the year towards the objectives of the Authority, have to be held as application in the present year, no matter that they pertained to earlier years, especially because the authority maintains its accounts on cash basis and has not claimed them as application in a previous year. The Addition made in this regard is deleted.
Depreciation, which pertain to assessment years 2017-18 & 2018 -19 - CIT(A) had granted the assessee relief on this account, as its income had been assessed under the provisions of “income from Business or profession”. However, now that the Authority is to be assessed as per the provisions of section 11, depreciation would clearly be disallowable in its hands under section 11(6), unless the authority could show that it had not claimed expenditure on acquiring the asset as application of income. To enable the assessee to present the necessary evidences in this regard, we restore the matter to the file of the assessing officer for this purpose.
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2025 (1) TMI 1540
Levy of surcharge @ 37% - Whether assessee is liable to be taxed at the ‘Maximum Marginal Rate’ (MMR) along with surcharge @ 37% on income from other sources? - assessee contended that surcharge should not be levied over and above the MMR of 30%, for the reason that Section 2(29C) of the Act provides that MMR rate shall include surcharge on the income tax payable by the assessee - HELD THAT:- As the proviso categorically state that the amount of income-tax computed in accordance with provisions of Section 111A, 112, 112A, 115A, 115AB, etc. “shall be increased by a surcharge” and further enumerates the rate of percentage for each slab of income. It is quite apparent that the MMR rate has to be in addition to the surcharge and therefore is not inclusive of surcharge.
The coordinate bench in the case of Tayal Sales Corporation [2001 (2) TMI 877 - ITAT HYDERABAD] held that the provisions of Section 2(29C) is worded in such a way that surcharge is to be included along with ‘Maximum Marginal Rate’ and by no stretch of imagination is MMR inclusive of surcharge. This proposition has been reiterated in various decisions of the Tribunal. Thus, we are not in agreement with the ld. AR’s argument on the first issue that ‘Maximum Marginal Rate’ includes surcharge as the same is not in accordance with the provisions of the Act.
Surcharge is applicable only to income which surpasses the threshold limit, here in this case, it begins with the threshold limit of income exceeding Rs. 50 lacs but not exceeding Rs. 1 Crore would be 10% of such income tax and 15% for income exceeding Rs. 1 crore but not exceeding Rs. 2 Crore and thereon, it is evident that there is no surcharge leviable when the total income does not exceed Rs. 50 lacs and in the present case, the returned income is only Rs. 4,42,960/- which is very much below the predetermined threshold limit. The intention of the legislature was to extend marginal relief on the surcharge on income tax for various class of persons intended to reduce the tax burden on individuals and other classes of persons. It is also a settled position of law that no surcharge is leviable on the income tax, which is lesser than Rs. 50 lacs as the same has been reiterated by various decisions of the Tribunal wherein deleted the surcharge levied on income, where the monetary limit of Rs. 50 lacs has not been exceeded. As this issue is no longer res-integra and by taking a consistent view, we direct the ld. AO to delete the surcharge levied in the case of the assessee.
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2025 (1) TMI 1539
Additions made u/s 69C - as alleged that the assessee paid an amount which is in excess of the amount stated in the statement - HELD THAT:- We find that apart from the aforesaid statements and documents as noted above, there is no further examination by the Revenue to link the assessee to the material/statements found/recorded during the search proceedings. In order to support its contention, the AO has also placed reliance upon the transfer order dated 07/08/2020 passed by the Government of Maharashtra, transferring the assessee from District Satara to District Nashik. However, we are of the considered view that the transfer order cannot by itself be said to fall within the category of “independent evidence”, which can be said to corroborate the documents found during the search as the said transfer order does not implicate the assessee. We are of the considered view that the documents found during the search proceedings, which were found at the premises of the third party and not the assessee, only raise suspicion against the assessee and, therefore, such a suspicion requires further corroboration by independent evidence, which may be in the form of an independent departmental enquiry, and the same is completely absent in the present case. Thus, it is evident that the sole basis for making the addition in the hands of the assessee were the statements recorded of the third party and documents found from the third party.
Additions made u/s 69A - unexplained cash transaction made by the assessee - as on the basis of the chat between the assessee and Shri Shailendra Rathi found from the mobile the AO held that Shri Shailendra Rathi clearly stated that as per the instruction of the assessee, he had to deliver the amount of Rs.5 lakh to the assessee - HELD THAT:- It is evident from the record that during the assessment proceedings, the assessee sought a complete set of statements of Shri Shailendra Rathi to examine the same and also sought the opportunity to cross-examine Shri Shailendra Rathi.
It is evident that the addition was made merely on the basis of the document found during the search on the third party and there was no attempt by the AO to link the same with the assessee by way of an independent evidence. Accordingly, we are of the considered view that the addition of Rs.5 lakh made under section 69A of the Act has rightly been deleted by the learned CIT(A).
CIT(A) also took into consideration the decisions wherein it was held that the presumption u/s 132(4A) of the Act could only be taken in the case of the person from whose possession the document or material has been found and since, in the present case, the documents were found from the possession of the third party, such a presumption cannot be extended to the assessee.
Appeal by the Revenue is dismissed.
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2025 (1) TMI 1538
Levy of service tax - declared service - deduction of an amount from the bills of the contractors in lieu of tolerating the various acts like poor performance or not meeting the obligations in full - period of dispute in the present appeal is from April 2013 to March 2016 - HELD THAT:- The Tribunal in South Eastern Coalfields Limited [2020 (12) TMI 912 - CESTAT NEW DELHI] observed that 'It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards “consideration” for "tolerating an act” leviable to service tax under section 66E(e) of the Finance Act.'
Thus, as the matter has been settled by decisions of the Tribunal and the Central Board of Indirect Taxes & Customs has also issued a Circular wherein the views expressed by the Tribunal have been accepted, it is not possible to sustain the order dated 15.05.2019 passed by the Commissioner (Appeals).
Conclusion - The retention of amounts through forfeiture and penalties did not constitute a "declared service" under section 66E(e) of the Finance Act, 1994.
The impugned order is set aside - appeal allowed.
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