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Showing 101 to 120 of 1526 Records
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2023 (10) TMI 1426
Disallowance of interest expenditure u/s 40A(2)(a) - asessee paid interest to the tune of 9% to 18% on unsecured loans availed by it and assessee also did not bring any material on record to rebut the allegation of the Revenue that SM Edible Pvt. Ltd. is a related party - interest at the rate of 18% paid to SM Edible Pvt. Ltd. on an unsecured loan is excessive and accordingly disallowed interest paid in excess of 12% - HELD THAT:- AO considered the rate of interest as allowed under section 40(b)(iv) of the Act, wherein payment of interest to any partner is allowed up to 12%, as the fair market value of the rate of interest. It is pertinent to note that it is not anybody's case that the interest has been paid by the assessee to its partner, rather it is the claim of the assessee that in order to meet the short-term finance, the assessee borrowed money on a short-term basis from SM Edible Pvt. Ltd. and repaid the loan taken during the year with interest @18%.
Thus we are of the considered view that without finding the comparative fair market value of the rate of interest for the loan taken by the assessee, AO proceeded to make the part disallowance by drawing an analogy to the section which does not apply to the facts of the present case. As evident from the record that the AO has not disallowed the interest of 18% paid to SM Edible Pvt. Ltd. by comparing the same with the interest paid by the assessee to other parties @9% to 18%.
AO while partly disallowing the interest paid by the assessee has not followed the provisions of section 40A(2)(a) which requires comparison with the fair market value of the goods, services or facilities, which in the present case is the loan taken by the assessee. Accordingly, we find no basis in upholding the part disallowance of interest payment made by the assessee, and the same is directed to be deleted - Decided in favour of assessee.
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2023 (10) TMI 1425
Disallowance on account of delayed payment of employees’ contribution to Provident Fund (P.F) and Employees State Insurance Corporation (E.S.I.C) u/s 36(1)(va) - HELD THAT:- We find that the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd [2022 (10) TMI 617 - SUPREME COURT] held that the payment towards employees’ contribution to P.F. and E.S.I.C., after the due date prescribed under the relevant statute is not allowable as a deduction u/s 36(1)(va) of the Act.
In the present case, from the record, it is evident that the employees’ contributions to P.F. and E.S.I.C. were deposited after the due date prescribed under the relevant statute. Thus, in Checkmate Services Pvt. Ltd the grounds raised by the assessee are dismissed.
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2023 (10) TMI 1424
Penalty u/s 271(1)(c) - disallowance of deduction u/s 80P(2)(d) - disallowance on account of interest income earned from State bank of India and interest earned - HELD THAT:- Merely the assessee claimed expenditure which was not accepted to the revenue that itself would not attract penalty. The assessee requested to drop the penalty. The reply of assessee was not accepted by AO. AO held that the assessee willfully admitted to evade tax on the income to the extent by furnishing inaccurate particulars of income. On appeal before the ld. CIT(A), the action of AO was upheld.
We find that in the computation of income attached with the return of income, the assessee furnished all the details. The deduction regarding interest earned from DGVCL and State Bank of India was not allowed as deduction u/s 80)(2)(d) of the Act, though before us the assessee claimed that no such claim was made by the assessee.
Thus, we find that neither there was concealment of income nor furnishing inaccurate particulars of income rather it was the Assessing officer who has not accepted the claim of assessee.
Thus, the ratio of decision of Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] is clearly applicable on the facts of the present case, wherein as held that mere filing incorrect claim which is not allowed by the AO, that by itself would not attract penalty under section 271(1)(c). Thus, we direct the AO to delete the entire penalty. Appeal of assessee is allowed.
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2023 (10) TMI 1423
Seeking stay of recovery - Request for adjournment due to pending related appeals - Determination of bona fide reasons and reasonable cause for adjournment - HELD THAT:- Merely because an appeal is pending in some other assessee’s case, it cannot be a ground for seeking adjournment or showing reluctance to conduct the matter in assessee’s own case especially when stay has been granted to the assessee. If such a ground is considered to be bonafide and reasonable, then always on similar issues the cases may be pending at any of various benches of tribunal or at the stage of Honourable high courts and Honourable Supreme court, but because of that, in absence of any binding precedent, even if the nature of expenses are arising out of some circular, the work of court cannot come to standstill.
Further, nothing was shown to us that how the decision in case of NSEIL will have a bearing on the appeal of assessee. At one point of time, Assessee argued that, such decision may have some value but issues in case of assessee are to be decided independently. Thus, it cannot be said to be a bona fides reason for seeking adjournment or even a reasonable cause for granting adjournment, with continuation of stay.
We have no hesitation in following our own order of granting stay to the assessee, and following the conditions laid down for stay of demand , therefore, we are constrained and forced to vacate the stay granted to the assessee forthwith.
As mentioned in the order sheet we have carefully noted and are conscious of the facts that though assessee is constantly thwarting attempt of the bench to know about the similarity of the facts, circumstances and issues in case of National stock exchange Ltd with the assessee to trace out whether there is a bona fides reason for seeking or there is a reasonable cause for granting this adjournment with continuation of stay. This attempt continued throughout the period during which at least on five occasions the coordinate bench constantly requested the assessee to produce the evidence to show that there is identical case at least on the facts and circumstances of the issue to grant assessee adjournment without vacating the stay. Assessee has constantly adopted defiant attitude by not producing any evidence to substantiate its claim. Against this, the LD CIT DR and LD AO have supported their case with Grounds of Appeal of both the parties , Annual accounts of both parties i.e. NSEIL and assessee and stated on affidavit that there are distinguishing features.
In view of the above facts and circumstances, we vacate the stay granted to the assessee against recovery of outstanding demand for Ay 2015-16 and 2017-18 forthwith.
We are conscious of the fact that assessee is a clearinghouse of National stock exchange where millions of investors across the globe trade into securities through huge number of brokers and intermediaries; therefore, on vacation of stay, the revenue may proceed to take coercive action against the assessee. We will not put assessee in to such a situation.
As we have vacated the stay granted to the assessee, we grant one more facility to the assessee and direct it to pay the outstanding taxes in three equal instalments on 10/10/2023, 15/10/2023 and 20/10/2023. Assessee is directed to produce proof of such payments to ld AO on next day of such payments.
We also give liberty to the assessee that if on any of the dates mentioned above, assessee faces any financial difficulty for payment of above instalments, assessee may immediately approach us with appropriate evidence, the necessary relaxation would be considered immediately.
As the assessee is constantly harping upon the appellate order of coordinate bench in case of NSEIL, we requested the parties that can these appeals be adjourned sine die to wait for the order in case of NSEIL; LD AR objected and asked for a specific date of 05/12/2023. Thus, we accede to his request, appeals are adjourned to 05/12/2023.
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2023 (10) TMI 1422
100% EOU - remission of duty on capital goods destroyed - only argument put forth by the revenue is that the appellant was bound to take the necessary precautions to ensure the safety of the goods as per the provisions of the N/N. 52/2003 and the goods should have been insured not only for the value but for the duty forgone also - HELD THAT:- In the present appeal the fact that the fire accident took place and intimation given to the department is not under dispute.
The issue is squarely covered by the judgement of this Tribunal in the case Symphony Services Corp. India Pvt. Ltd. V/s Commissioner of Customs, Bangalore [2009 (1) TMI 692 - CESTAT, BANGALORE] where this tribunal has taken a view that 'in terms of Section 68, when there is relinquishment of title to the goods imported before their clearance, no duty can be demanded. In these circumstances, in our view, the impugned order cannot be sustained.'
The appellant is eligible for the remission of duty - Appeal allowed.
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2023 (10) TMI 1421
Disallowance u/s.36(1)(va) - late deposit of employee's contribution to ESI and EPF - intimation u/s.143(1) - HELD THAT:- The net effect of the amendments made to sections 36(1)(va) and 43B, which are patently clarificatory in nature, is that deduction in respect of employees’ share of ESI/EPF etc. will be allowed to the employer only if it is actually paid by the stipulated date under the respective Acts.
In case, such an amount is paid beyond the due date under the respective Acts but before the due date u/s.139(1)the deduction is lost forever. Notwithstanding the above, the share of employer’s contribution to recognized provident fund etc. continues to get deducted in the same previous year even if it is paid beyond the due date under the respective Acts but before the due date for filing of return u/s.139(1). Thus, hold that the authorities below were justified in not allowing deduction u/s.36(1)(va) in respect of employee’s contribution to ESI/EPF.
AR submitted that while making the disallowance, the CPC, Bengaluru considered not only the contribution by the employee’s to these funds but also the contribution made by the employer as well - As we agree with the contention of the ld AR that deduction towards the employer’s share of ESI/EPF etc. needs to be allowed in the year under consideration if the payment is made before the time granted u/s.139(1) of the Act for filing of the return. Therefore, set- aside the impugned order to this extent and remit the matter to the file of the AO for examining the details and restricting the disallowance in above terms. Appeal is allowed for statistical purposes.
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2023 (10) TMI 1420
Condonation of refiling delay of 65 days - HELD THAT:- Sufficient ground for condonation of refiling delay has been shown. Refiling delay is condoned.
Condonation of inordinate delay - HELD THAT:- This Appeal has been filed against the order of the Adjudicating Authority dated 10.06.2022. The Appeal has been e-filed only on 09.07.2023. The jurisdiction to condone delay is limited to only 15 days as per Section 61(2) proviso - such an inordinate delay in filing the Appeal is condoned. Delay Condonation Application is dismissed.
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2023 (10) TMI 1419
Withholding of GST liability payment in part - Revenue has no objection if petition is disposed of with a direction to the competent authority to decide the said claim for release of the balance amount - HELD THAT:- If a fresh representation is made by petitioner within a period of 15 days from today along with copy of this order to respondents No.2, 3 & 4, the same shall be considered and decided in regard to the said balance amount of GST.
Petition disposed off.
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2023 (10) TMI 1418
LTCG - deduction claimed u/s 54B - assessee has purchased all the four lands on 25/11/2014, 09/12/2014 and 30 / 03/2015 at village Dhanelli whereas the assessee has sold the land at Sejbahaar on 31/03/2015 thereby has proved that the land was purchased either before or on the date of transfer of land at Sejbahaar
HELD THAT:- From the details of advance received for sale of land and cost of investment incurred towards purchase of land, it is evident that all the payments towards investment in new agricultural land were made after receipt of the advances on sale of land, therefore, in terms of the clarification by CBDT in its Circular No. 359 [F. No. 207/8/82-IT(A-II)], dated 10-5-1983, respectfully following the various judicial pronouncements, also on perusal of the findings by the Ld. CIT(A) wherein, it is observed that the money on sale of Sejbahaar land was received by the assessee on various dates from 02/09/2014 to 15/09/2016, assessee has also taken loan which is invested in new land and since loan was repaid afterwards out of the sale consideration received therefore deduction u/s 54B cannot be denied.
Reliance was placed on case of Inshar Singh Chawada [2010 (3) TMI 1116 - ITAT MUMBAI] and Dr. P. S. Pasricha [2009 (10) TMI 898 - BOMBAY HIGH COURT] Ld. AO’s contention that the Sahmati / Kabja Patra was not notarized can be treated as an irregularity but cannot term the document as false or vain, so as to deny the deduction u/s 54B, dehors any supporting material to prove that the said document was a bogus document, while the assessee’s contentions are supported with the fact that advances were received through banking channel duly recorded in the Sahmati / Kabja Patra as well as in the registered sale deed, therefore, we are convinced with the submission of the assessee. Accordingly, as per settled position of law, we are of the considered opinion that assessee has appropriately claimed the deduction u/s 54B and Ld. CIT(A)’s decision and deleting the addition made by Ld. AO is found to be a rational conclusion. Resultantly, ground No. 1 to 5 of the revenue are dismissed.
Addition u/s 68 - assessee has received on secured loan - HELD THAT:- In the present case, the assessee has further substantiated by submitting the information pertaining to repayment of all the loans in the following AY 2016-17 along with copies of bank statement of the assessee showing all such repayments, such facts shows that the doubt of Ld. AO with respect to genuineness of the transaction was excessive, without proper independent enquiries, based on surmises/presumptions, thus, the assessee cannot be penalised for the same.
In absence of any contrary decision or material brought on the surface by the department against the contentions of the assessee, respectfully following the principle of law laid down under the various judgments referred to supra, there was no infirmity found in the order of CIT(A) which needs to be corrected. However certain facts pertaining to repayment of the loans are new facts which were not there before the revenue authorities, thus, the same are subject to verification from the corroborative evidence, thus the same needs examination by the AO.
Thus, ground of the revenue though have no forceful merits, restored back to the files of Ld AO for the limited purpose of verification of the correctness and veracity of facts pertaining to repayment of loans submitted by the assessee. Ground of the revenue is partly allowed for statistical purposes.
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2023 (10) TMI 1417
TP Adjustment - treating project office of the appellant as PE in India, in respect of supply contract and computation of profit attribution to Indian PE - HELD THAT:- We find that this issue is squarely covered in favour of the revenue by the decision of ITAT, Chennai Benches in assessee’s own case for assessment years 2013-14 & 2014-15 [2023 (2) TMI 1321 - ITAT CHENNAI] where the Tribunal held that contracts entered into by the appellant with Indian clients is single composite contract and income arising there from was to be assessed in the hands of the assessee, because the project office of the appellant constitute a PE in India.
Computation of profit attribution to Indian PE and elimination of duplication income in respect of service contract - Tribunal after considering relevant facts held that the assessee has failed to provide basic information and other details to prove that computation of profit attribution was erroneous. Accepting the plea of the assessee has set aside the issue of computation of profit attribution, and elimination of duplication of income in respect of service contract revenue, to the file of the AO/TPO.
Assessee has failed to provide necessary information to justify his arguments that, there is an error in computation of profit attribution to PE in India and also failed to substantiate his arguments that there is a duplication of income in respect of service contract revenue. The appellant failed to provide basic information, considering the plea of the assessee and also consistent with view taken by the co-ordinate bench in assessee’s own case for assessment years 2013-14 & 2014-15, we set aside the issue of computation of profit attribution and duplication of income in respect of service contract revenue to the file of the AO for the limited purpose of computation of income. The assessee is directed to provide the requisite details to ascertain correct amount of profit attributable to Indian PE. Appeal of allowed for statistical purposes.
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2023 (10) TMI 1416
Denial of Exemption u/s 11 - appellant Trust is having composite object and not a Trust with the sole object of advancement of General Public utility - HELD THAT:- The objects and activities of the Trust are GPU in nature and thus, proviso to Sec.2(15) of the Act is applicable for the assessee’s Trust. Since, the assessee is a GPU Trust and gross receipts from said activities is in excess of prescribed limit provided under proviso of Sec 2(15) for these assessment years, in our considered view, the AO has rightly rejected exemption u/s.11 of the Act, for these assessment years.
CIT(A) after considering relevant facts rightly upheld the reasons given by the AO to reject exemption u/s.11 and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee for all assessment years.
Additions towards depreciation on fixed assets - Since, the assessee’s Trust has been denied exemption u/s.11 of the Act, income of the Trust needs to be computed under normal commercial accounting principles and further, depreciation, if any, needs to be allowed as per the provisions of the Act. Further, before amendment, depreciation is an allowable deduction even if the cost of asset acquired during the relevant previous year, has been allowed as application of income u/s.11 of the Act. Therefore, we are of the considered view that the AO needs to verify these facts and consider the issue of allowability of depreciation in accordance with law.
We find that an identical issue has been considered by the decision of co-ordinate Bench in the case of Veeravel Trust [2021 (7) TMI 1084 - ITAT CHENNAI] wherein, the issue has been considered in light of provisions of Sec.11, 12 & 12A of the Act, and after considering relevant facts and also by following the decision of M/s. U.P. Forest Corporation & Anr. [2007 (11) TMI 303 - SUPREME COURT] held that voluntary contribution received by a Trust with a specific direction that forming part of corpus of the Trust is income of the trust, when the Trust is not entitled for exemption u/s.11 of the Act.
As in the case of Veeravel Trust [2021 (7) TMI 1084 - ITAT CHENNAI] we are of the considered view that ‘corpus donations’ received by the assessee’s Trust would fall under the definition of income and includable in the total income of the Trust. In so far as case relied upon by the counsel for the assessee, although ITAT Mumbai has taken view and held that corpus donation is capital receipt and not taxable, but fact remains that the ITAT Chennai Bench after considering ITAT Mumbai bench decision has taken a view and held that corpus donation is income when section 11 benefit is not applicable, we prefer to follow jurisdictional ITAT decision and thus, we are inclined to uphold the findings of the AO and the CIT(A) and reject the ground taken by the assessee for these assessment years.
Additions towards donations paid - assessee has claimed exemption towards donations paid to other Trust as application of income u/s.11 of the Act - AO has denied exemption u/s.11 and taxed excess of income over expenditure, he has disallowed donation paid for charitable purpose on the ground that said expenditure has not been incurred for earning income - HELD THAT:- Since, the AO has denied exemption u/s.11 of the Act, and computed income as per provisions of Sec.2(15) of the Act, and proviso provided therein, in commercial lines after denying exemption, any expenditure incurred towards earning of income including donations, if any, paid in the course of carrying on activities needs, to be allowed as deduction. Since, the assessee has incurred expenditure in the course of carrying out its trade or commerce, the AO is directed to delete additions made towards disallowance of donations for both assessment years.
Additions towards accumulation of income u/s.11(2) - HELD THAT:- AO has made additions towards accumulation of income for AY 2016-17 u/s.11(2). Since, the AO has rejected exemption u/s.11 of the Act and taxed excess of income over expenditure as per income and expenditure account for relevant assessment year, in our considered view, accumulation of income u/s.11(2) of the Act, by filing form No.10 and set off of said income to subsequent years to be applied for charitable purpose becomes academic in nature.
Denial of benefit of exemption u/s.11 in accordance with provisions of Sec.2(15) - In addition to taxation of excess of income over expenditure, the AO has disallowed expenses incurred for maintaining Kulod Bhawan on the ground that said expenditure is in the nature of personal expenses. Since, the assessee’s Trust is maintaining Kulod Bhawan exclusively for the benefit of Sahuwala family members, said expenditure cannot be considered as expenditure incurred wholly and exclusively for the purpose of earning of income and further said expenditure is in the nature of personal expenses.
Therefore, we are of the considered view that there is no error in the reasons given by the AO and the CIT(A) to disallow expenses incurred for maintaining Kulod Bhawan for both assessment years and thus, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the assessee.
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2023 (10) TMI 1415
TP Adjustment - comparable selection - turnover filter application to choose comparables - HELD THAT:- As following the foot prints of Obopay Mobile Technology India Private Ltd [2018 (7) TMI 2129 - KARNATAKA HIGH COURT] we hold that the turnover is a relevant criteria for choosing companies as comparables in determining the ALP in Transfer Pricing cases.
A consistent view is taken that the application of tolerance range of turnover of ten times on both sides of assessee’s turnover was proper. Following the same, we direct the AO to adopt the same for a fresh search. With this view of the matter, we set aside the findings of the authorities below and direct the AO/TPO to take the range of turnover filter at ten times on both the ends and conduct search afresh to take a plausible view. Grounds No. 3 to 8 are accordingly treated as allowed for statistical purposes.
Management fee - We deem it just and proper to set aside the findings and restore the issue to the file of the AO/TPO to re-examine the issue in the light of the findings on this issue in [2021 (10) TMI 1358 - ITAT HYDERABAD]
Adhoc disallowance of 20% of foreign outward remittances - AR submitted that the learned DRP did not consider the submissions of the assessee, and this necessitates the set aside of the findings of the learned DRP and restoration of the issue - HELD THAT:- We find the request of the AR reasonable and restore the issue to the file of learned Assessing Officer/learned TPO for considering the above enumerated discrepancies. Ground is accordingly treated as allowed for statistical purposes.
Non-grant of credit of the tax deducted at sources attributable to the Infor (Bangalore) Pvt. Ltd., which was amalgamated with the assessee attributable to the assessee - HELD THAT:- We direct the AO to verify the record and allow the same, if it is found to be correct and proper. Appeal of the assessee is accordingly treated as partly allowed for statistical purposes.
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2023 (10) TMI 1414
Denial of approval u/s.80G filed u/s.10AB - assessee has not furnished the details regarding share transaction and the documentary evidences of the charitable activity carried out by the assessee - HELD THAT:- The assessee is carrying out charitable activities which are not in dispute and it has also been granted registration u/s.12A as providing social welfare services.
From the bare perusal of these documents it is seen that assessee has given donations for various charitable activities and to students for their scholarships and other aids and it is seen that it is genuinely carrying out its activities towards charitable objects. Therefore, it cannot be said that assessee has not filed any evidences for the charitable activities carried out by it. Apart from that, in so far as allegation that assessee has not submitted the details of share transaction is also incorrect, because as pointed out by the ld. Counsel equity shares of Valiant Organics Ltd. were sold and the assessee company / trust has received the shares in the form of donation and the copy of share donation letter has also been placed before us. The entire details of the shares sold and received by the company towards its corpus for carrying out charitable activities is evident from the record. Thus there is nothing adverse on this point.
Thus the order of the ld. CIT (A) is set aside and approval u/s.80G of the Income Tax is granted to the assessee. Assessee appeal allowed.
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2023 (10) TMI 1413
Denial of deduction u/s 10(23B) - approval was granted for more than three assessment years, i.e. 5 years - assessee admittedly, is a society registered under the societies, registration act and is also registered with the Khadi and Village Industries Commission and is engaged in the promotion and development of khadi - HELD THAT:- We find that the issue is squarely covered by the decision of the Tribunal in the case of “Barapur Gram Udyog Samiti” [2022 (6) TMI 444 - ITAT DELHI] wherein, under similar facts and circumstances has observed that the time period for which the certificate has to be granted is not within the control of the assessee. That, in any case, it was only a technical violation for which the assessee could not be penalized by denying the exemption, which otherwise is allowable to the assessee as held reason for denying the exemption by the AQ is that the Commission has given certificate to the assessee for more than three years. It is pertinent to note that the time period for which the certificate has to be granted is not within the control of the assessee. In any case it is only a technical violation for which the assessee could not be penalized by denying the exemption otherwise allowable to the assessee. Thus, hold that the assessee is entitled for exemption u/s 10(23B) - Decided in favour of assessee.
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2023 (10) TMI 1412
Validity of Revision order passed without quoting DIN - HELD THAT:- Neither the order u/s 143(2) of the Act nor the communication dated 30/12/2019 spell out the reasons for not either generating the DIN or quoting the same in the order dated 20/12/2019. Circular categorically mentions that subsequent to 01/10/2019, the computer generated DIN not only be allotted but be duly quoted in the body of the communication itself.
In the communication dated 23/03/2020 any reference to DIN is conspicuously absent. To meet the events where the computer generated DIN could not be generated on the date of issuance of communication, five exceptions are provided by paragraph 3 of the circular. It is also specifically stated that if the case of the Revenue falls in any of these exceptions, the said fact has to be recorded in the communication itself in the prescribed format.
Neither the reasons nor the statement in the prescribed format is to be found in the order passed under section 143(3) r.w.s. 263 of the Act, spelling out the particular category of exception that prevented allotting the DIN on that day. It is yet another violation.
In the case of CIT vs. Brandix Mauritius Holdings Ltd. [2023 (4) TMI 579 - DELHI HIGH COURT] addressed this issue where the Revenue pleaded that is only a mistake, and held that to such case circular No. 19/2019, dated 14/08/2019 would apply. As referred to by us, paragraph 4 of the circular clearly reads that any communication which is not in conformity with paragraph 2 and paragraph 3 shall be treated as invalid and shall be deemed to have never been issued. It is, therefore, clear that any reason what-so-ever other than the exceptions mentioned in paragraph 3 would save the communication issued without DIN.
We are of the considered opinion that for want of generation/quoting the DIN in the order dated 20/12/2019, such an order shall be treated to have never been issued and, therefore, shall not take any affect - Appeal of Revenue is dismissed.
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2023 (10) TMI 1411
Reopening of assessment u/s 147 - additions u/s 69A - cash deposit in the bank - HELD THAT:- On perusal of the aforesaid reasons supplied to the assessee and copy of the reasons recorded by the AO as per assessment records were found to be exactly the same, therefore, the case laws relied upon by the assessee that reasons were not provided or there was a difference in the reasons supplied and reasons recorded which were approved u/s 151 are of no help to the assessee, in deciding the assumption of valid jurisdiction u/s 147 of the Act.
Where the complete reasons were not provided to the assessee, instead only extract were provided i.e., also after expiry of a reasonable time, under such circumstances respectfully following the judgment in the case of Haryana Acrylic [2008 (11) TMI 2 - DELHI HIGH COURT] the assessment proceedings u/s 147 are liable to be held as bad in law.
As incumbent upon the assessing officer to provide the assessee any other document or a letter or a report a/w the reasons recorded, which in the present case admittedly was not adhered to by the AO, since the copy of approval u/s 151 which has a reference to the reasons recorded and, thus, are to be mandatorily provided to the assessee, in absence of which the assumption of jurisdiction by the AO in initiating the proceedings u/s 147 was found to be invalid. Accordingly, the assessment order passed u/s 147, dehors the obedience of the settled position of law pertaining to compliance of the procedures is liable to be quashed, and we do so. In the result ground no. 1 of the assessee in terms of our aforesaid observations is allowed.
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2023 (10) TMI 1410
Assessee in Default u/s 201(1)/ 201(1A) - non deduction, short deduction, short payment and non remittance of TDS on alleged medical insurance premium made on behalf of the employee by the deductor, as per various sections of Chapter XVII and TDS to be made on contract payments made to co-insurance companies - HELD THAT:- In this case, the assessee could not file any evidence or explanation with regard to the TDS to be deducted towards medical insurance premium paid on behalf of the assessee as well as TDS to be deducted on contract payments made to co-insurance companies before the AO
AO held the assessee to be an ‘assessee in default’ and raised the demand for both the assessment years. The assessee has not even filed any explanation/evidence either before the ld. CIT(A) or even before the ITAT.
There was absolutely no response against the show cause notice issued by the AO u/s 201(1)/ 201(1A) of the Act. In order to meet the ends of natural justice, we are of the considered opinion that the assessee shall be afforded one more opportunity of being heard to furnish the details. Accordingly, we set aside the order of the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to afford one more opportunity of being heard to the assessee. Appeals filed by the assessee are allowed for statistical purposes.
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2023 (10) TMI 1409
Nature of expenses - payment of non-compete fees - HELD THAT:- Particular clause of non-compete agreement clearly demonstrate that non-compete fees cannot be considered on standalone basis.
We note that non-compete fee paid by the assessee forms part of initial outlay on the acquisition of business by the assessee and in the combined reading of the asset purchase agreement and non-compete agreement suggest that non compete agreement was very much part of the entire part of the purchase of business of GE India Pvt Ltd by the assessee.
Hence, by virtue of non compete agreement assessee has acquired the right to carry on business unfettered by any competition which results in the protection for business as a whole and will help appreciate the whole of the capital assets. Hence, we find no force in the argument of assessee.
We agree with the alternative argument of the ld. Counsel that since it was held as capital expenditure, the assessee is entitled for depreciation u/s.32 (1)(ii) of the Act. We direct the AO to allow depreciation on payments made on non- compete fees and customer and other contracts, backlog orders, customer and suppliers lists u/s.32(1)(ii) of the Act. This issue of the assessee is party allowed as indicated above.
Disallowing the provision made towards litigation and sales tax matters - assessee had created a provision towards litigation and sales tax matters - AO disallowed the claim, since assessee neither furnished any satisfactory reply nor submitted any scientific working to the estimate of provision for this expenditure - HELD THAT:- The assessee had filed the complete details and explanation which was not available before with the AO nor the CIT(A). Hence for better adjudication, we remit the issue back to the file of the Assessing Officer who will allow the claim in case assessee files satisfactory reply or produce scientific mode for the estimates. The assessee will file complete details of provisions list before the AO based on scientific basis as held in the case of Rotork Control India Pvt. Ltd. [2009 (5) TMI 16 - SUPREME COURT] Hence, this issue of assessee is remitted back to the file of the AO for fresh consideration and the orders of the ld. Assessing Officer and ld. CIT(A) on this issue is set aside.
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2023 (10) TMI 1408
Revision u/s 263 - Lack of proper enquiry - unexplained investment in equity shares and unsecured loans - as per CIT no reasonable return on such investment by way of dividend is visible in these cases, thus no prudent investor would like to block such huge amount of money, that too borrowed money, in shares of the assessee company where no return on investment appeared forthcoming
HELD THAT:- PCIT has correctly observed that there was an evident lack of enquiry by the Assessing Officer into the source of investment, which should have been made by the Ld. AO, looking into the facts of the instant case.
Also, we observe that in the case of Umesh Krishnani [2013 (8) TMI 79 - GUJARAT HIGH COURT] has also given a specific finding that when immediately before the issuance of funds to the assessee company there was immediate credit in the bank accounts of some of the investors, for which there is no plausible explanation, then addition under Section 68 of the Act is liable to be made.
Even in the present facts, the principal CIT observed that in some of the cases prior to making the investments in the assessee company, there was immediate credits in the bank accounts of some of the investors, for which no explanation has been provided by the assessee during the course of assessment proceedings.
As decided in case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] case that if due to an erroneous order of ITO, Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to interests of revenue.
Further, if due to an erroneous order of Assessing Officer, revenue is losing tax lawfully payable by a person, it should be certainly prejudicial to interest of revenue.
In our considered view, the enquiry made by the Assessing Officer was not adequate and he simply accepted the version of the assessee without application of mind. Principal CIT has not erred in facts and in law in holding that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the revenue. Decided against assessee.
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2023 (10) TMI 1407
Disallowance u/s 14A r.w.r. 8D - disallowance u/s 36(1)(iii) - adjustment made u/s. 115JB on disallowance u/s. 14A and foreign exchange fluctuations - ITAT allowed assessee grounds of appeal - HELD THAT:- This Appeal pertains to Assessment Year 2011-12. Identical questions of law were proposed (except figure differed) in [2020 (3) TMI 552 - BOMBAY HIGH COURT] pertaining to Assessment Year 2010-11. That appeal came to be dismissed by order dated 4th March 2020.
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