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2023 (6) TMI 1290 - BOMBAY HIGH COURT
Reopening of assessment - migration to new PAN from old PAN - undisclosed time deposits - What was procedure for the cancellation of PAN that the Petitioner failed to follow? - HELD THAT:- The Counsel were unable to point out any regulation, circular or a procedure that could help the assessee cancel the PAN. We also examined the record which evinced that, the Petitioner has filed their returns under the new PAN. The perusal of the notice also indicates that the Respondent No. 1 has failed to acknowledge the correspondence by the Petitioner with the Respondent No. 1.
It was the duty of the Respondent No. 1 to have examined and verified the contentions of the Petitioner in respect of cancellation of the old PAN and the returns filed under the new PAN before the issuance of the impugned Order and the impugned notice.
A failure of duty of Respondent No. 1 has led to filing of this Petition which in our view could be easily avoided along with its cascading effect on the Courts which are already overburdened. This is yet another in the case of Bhavna Steel v ITO-5(1)(1) [2023 (6) TMI 402 - BOMBAY HIGH COURT] where the assessee has sought to cancel the old PAN and the IT department has failed to do it. The Respondents ought to prominently display the steps for cancellation of a PAN on their website apart from sending a link for cancellation in the covering letter when a PAN is provided to an assessee.
In the absence of any clear answer to the query and any clear stand of the department, we are prima facie of the view that the Petition deserves to be allowed without further procrastination.
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2023 (6) TMI 1289 - BOMBAY HIGH COURT
Reopening of assessment u/s 147 - notice after a period of four years - Reasons to believe - Whether case reopened on account of ‘change of opinion’? - Reopening based on the order of SEBI in cases of reversal trades and accommodation entries - HELD THAT:- The criteria for reopening of assessment after a period of four years are no longer res integra in view of the judgment of this Court in the case of Ananta Landmark P. Ltd [2021 (10) TMI 71 - BOMBAY HIGH COURT] wherein this Court held that, where assessment was not sought to be reopened on the ‘reasonable belief’ that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income, but was a case wherein assessment was sought to be reopened on account of ‘change of opinion’ of AO the reopening was not justified.
Where primary facts necessary for assessment are fully and truly disclosed the AO is not entitled to reopen the assessment on a change of opinion. Also held that while considering the material on record, when one view is conclusively taken by AO, it would not be open for the AO to reopen the assessment based on the very same material and take another view.
In the present case, the Respondent No. 1 has received information from ITO (I & CI) Unit 2(3) Mumbai, that SEBI passed orders in cases of reversal trades and accommodation entries. Even though the Petitioner has explained the transactions done, through note No. 17 submitted along with the Profit and Loss Account and other supporting documents, the Respondents have mindfully taken a stand, that at this stage, they are not required to look into the sufficiency and correctness of the information and can consequently reopen the case.
Once the Petitioner provided the all the details, explanations and documents against the reasons for reopening. AO considering the principle of ‘shifting of onus’ under the evidence act, must necessarily carefully examine the material and then give particulars and reason/s to disbelieve the assessee, whilst rejecting the objections, to shift the onus on the assessee, as failure to do so, does not discharge the onus shifted upon him (AO) by the assessee by submitting all documents and explanations, and provides no reason for the Court to disbelieve the assessee.
There is an essential distinction between burden of proof and onus of proof: burden of proof lies upon a person who has to prove the fact and which never shifts. Onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. See R V E Venkatachala Gounder v Arulmigu Vishwesaraswami & V. P. Temple & anr. [2003 (10) TMI 639 - SUPREME COURT]
As evinced that there is no live link or nexus with the alleged orders passed by SEBI as alleged by the Respondent. Besides the Respondent has failed to aver the particulars of the information available which has led to the belief that income has escaped assessment. There appears no new tangible material available on record to conclude that income had escaped assessment. In our view it is clearly a ‘change of opinion’. Decided in favour of assessee.
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2023 (6) TMI 1288 - BOMBAY HIGH COURT
Reopening of assessment in the name of deceased assessee - Whether a curable defect u/s 292B? - HELD THAT:- The impugned notice for reopening the assessment was issued on a dead person. There are several judgments of different High Courts holding that the notice issued on a dead person or reopening of assessment of a dead person is null and void in law and the requirement of issuing a notice to a correct person is not merely a procedural requirement but a condition precedent for a notice to be valid in law.
In the case of Principal Commissioner of Income Tax, New Delhi vs Maruti Suzuki India Ltd. [2019 (7) TMI 1449 - SUPREME COURT] the Apex Court has held that the notice issued and the order passed in the name of an old entity is bad in law and that such error was not curable u/s 292B of the Act as the same constitutes a substantive illegality and not a mere procedural violation.
This Court holds that the notice and all consequential proceedings in the name of a deceased assessee are null and void - Decided in favour of assessee.
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2023 (6) TMI 1287 - GUJARAT HIGH COURT
Rejection of ITR by the CPC as defective u/s 139(9) - Condonation of delay in filing the application for rectification of error committed in the return of income - removal of defects in return of income - Return of income filed u/s 44ADA declaring the professional income as well as income from trading in shares - HELD THAT:- As decided in ADCC Infocom (P.) Ltd [2023 (4) TMI 245 - BOMBAY HIGH COURT] wherein the expression ‘genuine hardship’ has been discussed, if the facts of the present case are examined, we are of the view that the petitioner has pointed out genuine hardship caused to the petitioner as a result of which the mistake committed in the return could not be rectified, as suggested by the CPC within the stipulated period.
As in the present case one of the authorities of Revenue i.e. PCIT-1 passed an order on 07.09.2021 in favour of the petitioner, wherein as specifically observed by the said authority that, ‘in view of the genuine hardship faced due to lockdown in Ahmedabad city due to the corona pandemic, the assessee could not comply with the notice issued by the CPC, Bangalore within the stipulated period’ and by giving the said finding, the order was passed by the said authority in favour of the petitioner.
As observed hereinabove, the said authority was not having jurisdiction to pass said order and therefore the same was withdrawn. Be that as it may, the fact remains the one of the authorities of the Revenue considered the case of the petitioner and thereby granted relief in favour of the petitioner.
Thus, in view of the aforesaid facts and circumstances of the present case, the case of the petitioner deserves consideration. Hence, petition is allowed.
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2023 (6) TMI 1286 - MADHYA PRADESH HIGH COURT
Reopening of assessment - income of the petitioner HUF be not made subject matter of re-assessment - petitioner while taking exception to the impugned notice and order inter alia submits that subsequent to allotment of new PAN Card in the year 2016 it has all along been filing returns of the income for the succeeding assessment years including 2016-17 with new PAN Card number and amount allegedly deposited in the bank maintained by the petitioner has been well reflected in the return filed for the assessment year 2016-17 and assessed
HELD THAT:- There is no jurisdictional error on the part of the Assessing Officer while he passed the impugned order under clause (d) of Section 148A. Nevertheless, it is apposite to observe that the order passed under clause (d) of Section 148A is not the substitute of the order of assessment if any to be passed by the AO during the course of the re-assessment proceedings. AO is statutorily obliged to look into the entire material placed before him before he reaches the conclusion that the income found has escaped assessment warranting re-assessment and tax thereupon.
Consequently, we though decline to interfere but direct the Assessing Officer to extend liberty to the petitioner to file complete documents with reference to and in context of the amount found deposited in the bank account of the petitioner mentioned above and such other documents as he may be advised to file. The Assessing Officer is hereby directed to process reassessment with due advertence to the record placed before him, pursuant to the notice under Sec.148.
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2023 (6) TMI 1285 - ITAT DEHRADUN
Unexplained investments made by the payment in cash - assessee could not specifically explain the source of making payment to Sh. Jagat Bhushan Batra - HELD THAT:- AR had placed on record a copy of the assessment order framed in the hands of Sh. Rameshwar Havelia u/s 153A(1)(b) r.w.s.143(3) by DCIT, Central, Circle, Dehradun (who is the same officer assessing the assessee also), wherein, the AO of Sh. Rameshwar Havelia had categorically stated that it is Sh. Rameshwar Havelia, who had made cash payment of Rs. 1 crore to Sh. Jagat Bhushan Batra.
Hence, the receipt of money in cash by the assessee from Sh. Rameshwar Havelia is proved beyond doubt by the orders of the Income Tax Department itself. Hence, the source for making payment to Sh. Jagat Bhushan Batra of Rs. 1 crore in cash stands clearly proved and explained. Hence, in our considered opinion, there cannot be any unexplained investment made by the assessee in the sum of Rs. 1 crore in the facts and circumstances of the instant case.
Since the search assessment order of Sh. Rameshwar Havelia for assessment year 2015-16 could not be placed on record by the assessee before the CIT(A) as it was obtained by him after passing of order of learned CIT(A), this fact could not be addressed by the assessee before the learned CIT(A). These are only orders of the Income Tax Department, which clearly shows a divergent stand taken by the very same AO for the very same assessment year for two different assessees on the very same transaction. Hence, we direct the learned AO to delete the addition made in the sum of Rs. 1 crore paid in cash to Sh. Jagat Bhushan Batra. Decided in favour of assessee.
Capital gain computation - denial of deduction on account of cost of acquisition and expenses incurred in connection with transfer of property - HELD THAT:- A sum as paid by the assessee to Sh. Sandeep Kumar towards demarcation of land would be construed as cost of improvement eligible for deduction while computing capital gains. Further, the commission payment to Sh. Sandeep Kumar for sale of two plots is to be construed as expenses incurred in connection with transfer and eligible for deduction while computing capital gains.
Payment as commission to Smt. Rajni Aswal for sale of third plot, we find that the assessee has placed on record the confirmation from Rajni Aswal together with her income tax return and computation of total income evidencing the fact of offering the commission income in her hands. These documents are enclosed - We hold that this commission payment is to be construed as expenses incurred in connection with transfer of land and accordingly eligible for deduction while computing capital gains.
Thus out of the total disallowance made by the AO while computing capital gains expenses incurred for performing Puja of the land as this has got nothing to do with the property and cannot be construed as an expenses incurred in connection with the transfer of the property and sum paid to a civil contractor, Sh. Sandip Kumar from whom the work of demarcation and construction of partition for three plots sold was carried out need to be disallowed and remaining amounts should be allowed as deduction while computing capital gains.
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2023 (6) TMI 1284 - ITAT JAIPUR
Addition u/s 143(3) - rejecting the books of accounts of the assessee u/s 145(3) - HELD THAT:- As during the appellate proceedings assessee has not furnished any evidences, where the ld. CIT(A) relied on the detail findings and reasons given by the ld. AO in his assessment order which have not been explained by the assessee and no evidence to the contrary has been submitted either at the stage of assessment or appellate.
Before us taking into consideration the facts and circumstances of the case and the submissions by the ld. DR, the Bench confirm and uphold the order of the ld. CIT(A) as per rejection of books of accounts of trading of bullions and jewellery of the assessee u/s 145(3) of the Act by invoking the provisions of Section 145(3) of the Act as the assessee did not produced books of account, bills/vouchers of all the expenses even before us and the addition made by the AO amounting is hereby confirmed - Decided against assessee.
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2023 (6) TMI 1283 - ITAT DELHI
Mis-match in the Form No. 26AS - Mis-match arises due to TDS deposit under wrong major head - denial of credit of TDS - HELD THAT:- As deductor has deducted the tax at source and deposited the same which is appearing in the challan status in TIN Website but the same is not appearing in 26AS of the assessee. It is the case of the assessee is that these TDS deposits belongs to him on the basis of manual form No. 16 issued by the employer, therefore, because these TDS amounts do not reflect in 26AS of the assessee.
Since there is a mis-match of amount deposited by Texl Export Pvt. Ltd. and TDS reflected in 26AS of the assessee, the CIT(A) has remanded the matter to the file of A.O. for de-novo verification. No reason to interfere with the direction of the CIT(A) to the A.O. for the de-novo verification, accordingly, find no merit in the grounds of Appeal of the assessee. We deem it fit to direct the A.O. to comply with the directions of CIT(A) and pass order in accordance with law within six months from the date of the receipt of this order. Thus, the Grounds of Appeal of the assessee are dismissed.
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2023 (6) TMI 1282 - ITAT DELHI
Addition u/s 56(2)(viib) - share capital and premium received by the assessee - revenue dismissing the DCF method of valuation as adopted by assessee - HELD THAT:- Usage of DCF method for the purpose of valuation of shares is an approved method in Rule 11U and 11UA of the Income Tax Rules. On perusal of the said Rules, an option is given to the assessee to choose either of the methods prescribed therein.
Hence, the rejection of valuation report submitted by the assessee using DCF method by the lower authorities is hereby dismissed. As per DCF method of valuation, the fair market value of the shares have been arrived at Rs. 1136.92 and Rs. 992 per share by Chartered Accountant namely Sh. A.K. Agarwal and Sh. Deepak Kumar Agarwal respectively.
Assessee had ultimately issued shares to the aforesaid five share holders at a price below the fair market value of shares determined by the valuers in the valuation report. Obviously, the fair market value determined in the valuation report by the valuers represent the maximum value beyond which the shares could not be issued by any company. Hence, we do not find any justification in the action of the lower authorities in dismissing the DCF method of valuation and substitute it with any of the method of valuation and making addition u/s 56(2)(viib) of the Act.
Issue in hand is squarely covered by the decision of this Tribunal in the case of Cinestaan Entertainment (P.) Ltd.[2019 (6) TMI 1367 - ITAT DELHI] wherein it was held as per section 56(2)(viib) of the Act read with Rule 11U and 11UA of the Rules, the assessee has an option to do valuation of shares and determine fair market value either using DCF method or NAV method and Assessing Officer cannot examine or substitute his own value in place of value determined.
When shares were issued at premium based on valuation report from prescribed expert using DCF method of valuation, the said sum cannot be disregarded merely because the projection of revenues thereon did not match with actual revenues of subsequent years.
We direct the Ld. AO to delete the addition made u/s 56(2)(viib) - Ground raised by the assessee is allowed.
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2023 (6) TMI 1281 - ITAT DELHI
Income tax demands post approval of resolution plan - treatment to remaining demands and liabilities consequent to the NCLT approved Resolution Plan - HELD THAT:- As decided in Ghanshyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd.[2021 (4) TMI 613 - SUPREME COURT] NCLT order approving the Resolution Plan is binding upon the Central Government including the statutory authorities like the Income-tax Department and all claims pertaining to the period prior to the date of order of NCLT stand extinguished.
Thus statutory demands of the Revenue stand extinguished consequent to approval of Resolution Plan and vesting of the Management of the company in the hands of Successful Resolution Applicant. The provision of subsection (1) of Section 31 of the IBC and judgment of Hon’ble Supreme Court relied upon by the learned AR leave no doubt that all the claims of Revenue for the period prior to institution of CIRP stand extinguished. Moreover, in the case in hand even demands of Department have been considered, adjudicated and payments have been made to the Income-tax Department consequent to the Resolution Plan. Consequently, appeals of Revenue are left with no merit and the same are dismissed.
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2023 (6) TMI 1280 - ITAT DELHI
TP Adjustment - comparable selection - TPO included APITCO Ltd. as comparable for bench marking the international transaction - assessee is primarily engaged in the business of providing integrated range of Project Management, Cost Management and Management Consultancy Services to any entity engaged in the field of construction projects - HELD THAT:- APITCO provides numerous services which are not provided by the assessee, the assessee is not involved in to skill development entrepreneurship development and training, research studies, asset reconstruction and management Services, Energy Related Service, Tourism Infrastructure Development and Environmental Management. By going through the financial statement of the company for the Financial Year 2011-12, it is found that the APITCO is held by public share holder whereas the assessee is held by Private Limited Company.
Services description suggests that APITCO works predominantly on government initiative project.
More than 75% of the Revenue earned by the APITCO in the Financial Year 2011-12 was from the activities like Skill Development, Cluster Development, Research Studies, Micro Enterprises Development, Environmental Management etc. But the assessee is only engaged in providing Project Management, Cost Management and Management Consultancy Services. Thus, functionally APITCO is not a comparable company to the assessee.
We are of the opinion that APITCO is functionally different and the same should be excluded from the list of comparables selected by the TPO.Appeal of the assessee is allowed.
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2023 (6) TMI 1279 - ITAT PUNE
Denying the exemption u/s. 11 - non-filing of Auditor’s Report in Form No. 10B along with the return of income - HELD THAT:- In the present case clearly shows the audit report itself was dated 21-11-2018 which demonstrates that at the time of filing return of income audit report was not ready, consequently we can say the claim u/s. 11 was not quantified.
We note that it is a substantial failure of the assessee in getting the books of account audited before prescribed due date and also before filing the return of income. Thus, there is no dispute, the audit report was not ready before filing return of income, in the absence of which the assessee however, claimed exemption u/s. 11 of the Act without auditor’s quantification.
Thus, no infirmity in the order of NFAC, Delhi in confirming the intimation issued by the CPC, Bangalore u/s. 143(1) of the Act denying the exemption u/s. 11 of the Act. Thus, the grounds raised by the assessee fails and are dismissed.
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2023 (6) TMI 1278 - ITAT MUMBAI
Revision u/s 263 - as per CIT(A) interest income earned by the assessee out of surplus funds is not eligible for deduction in terms of provisions of section 80P(2)(d) - HELD THAT:- We are of the considered view that section 80P(4) is of relevance only in a case where the taxpayer, who is a co-operative bank, claims a deduction u/s 80P which is not the facts of the present case. Therefore, we find no merits in the aforesaid reasoning adopted by the PCIT vide impugned order passed u/s 263.
Claim of deduction u/s 80P(2)(d) it is also pertinent to note that all co-operative banks are co-operative societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the co-operative banks is allowable as a deduction under section 80P(2)(d) of the Act.
AO has rightly allowed the claim of deduction under section 80P(2)(d) of the Act in respect of the interest earned from the co-operative banks and thus the assessment order cannot be held to be erroneous.
As in Malabar Industrial Co. Ltd.[2000 (2) TMI 10 - SUPREME COURT] held that in order to invoke section 263, the assessment order must be erroneous and also prejudicial to revenue, and if one of them is absent, i.e., if the order of the Income-tax Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263 of the Act.
Since both the conditions for invoking the provisions of section 263 of the Act are not satisfied in the present case, therefore the impugned order passed by the learned PCIT under section 263 of the Act is quashed - Decided in favour of assessee.
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2023 (6) TMI 1277 - ITAT CHENNAI
Deduction u/s. 80P - income derived from business activities including interest income earned from fixed deposits with other cooperative banks - HELD THAT:- As relying on assessee own case [2020 (12) TMI 341 - ITAT CHENNAI] we are of the considered view that the assessee is entitled for deduction u/s. 80P(2)(a)(i) in respect of income derived from its business activity including interest income earned from fixed deposits with other cooperative banks/societies.
CIT(A), after considering relevant facts has rightly directed the AO to delete additions made towards disallowance of deduction claimed u/s. 80P(2)(a)(i) and thus, we are inclined to uphold the findings of the ld. CIT(A) and dismiss appeals filed by the revenue.
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2023 (6) TMI 1276 - ITAT KOLKATA
Addition u/s 14A - notional expenses incurred for earning of exempt income - Scope of newly inserted explanations to Section 14A - HELD THAT:- Where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A of the Act.
Recent decision in the case of PCIT Vs. Era Infrastructure (India) Ltd [2022 (7) TMI 1093 - DELHI HIGH COURT] wherein, it has been held that the aforesaid explanation inserted to Section 14A of the Act is applicable prospectively. Appeal of assessee allowed.
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2023 (6) TMI 1275 - ITAT KOLKATA
Revision u/s 263 - as per CIT(A) assessment order passed u/s 147 of the Act as erroneous and prejudicial to the interest of the revenue - As assessee company had a balance of investments in unquoted shares on which it had earned a dividend income which the assessee company had claimed as “exempt income” in the return filed in response to the notice u/s 148, but AO had not made any disallowance u/s 14A of the Act r.w.r. 8D - HELD THAT:- Assessment was reopened on a particular issue of having received of Rs. 10,00,000/- as accommodation entry from entry provider, whose statement was recorded in a search action exercised in the case of some third party. AO examined that particular issue and made addition in respect of the said entry received by the assessee.
The issue relating to any other transaction was not the subject matter of the reassessment proceedings. Assessment in this case was reopened to examine a particular issue and that issue was examined by the Assessing Officer and the addition was made and ultimately the matter was settled by the assessee by availing Vivad Se Viswas Scheme.
The items/issue on which the PCIT has sought to revise the order were not the subject matter of the reassessment order, therefore, in the light of the decision of Alagendran Finance Ltd [2007 (7) TMI 304 - SUPREME COURT] it cannot be said that the reassessment order passed by the AO was erroneous, therefore, the revision jurisdiction exercised by the ld. PCIT, in this case, cannot be held to be justified. Decided in favour of assessee.
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2023 (6) TMI 1274 - ITAT DELHI
Addition of share application money u/s 68 - Valuation of shares u/s 56(2)(viib) - Addition made based on the bank statements and lack of creditworthiness of the applicant parties - CIT(A) held that the assessee has received Part in the earlier years and held that no addition u/s 68 called for in the current year and part amount be treated u/s 56(2)(viib) - HELD THAT:- CIT(A) has not brought out any defect in the methodology and summarily rejected the valuation made under the prescribed rules. Hence, we cannot support the decision of the ld. CIT(A) on this issue. The appeal of the assessee on this ground is allowed.
Additions u/s 68 - Low profit ratio - HELD THAT:- With regard to Rs. 9,00,000/- received on 04.09.2014 by the assessee during the year which has been confirmed by the ld. CIT(A) u/s 68, we find that the assessee has discharged his onus before the revenue authorities. AO and the ld. CIT(A) rejected the explanation of the assessee solely based on the limited issue of low profit - There were no enquiries made nor any evidence to reject the documents/evidences filed by the assessee. Hence, we hold that no addition u/s 68 is called for in this case.
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2023 (6) TMI 1273 - ITAT KOLKATA
Deduction u/s. 80P(2)(a)(i) - interest income earned from the credits given to its members and interest income earned from the funds parked/invested in the commercial bank i.e United Bank of India - claim denied on interest income earned from the funds invested in the United Bank of India stating that the said interest income was not earned by the assessee from the activity of providing credit facilities to its members but the same was an interest income from the funds deposited with commercial bank - HELD THAT:- The interest which accrues on funds not required immediately by the assessee for its business purposes and which have been invested as investment in commercial banks cannot be said to be attributable either to the activity mentioned in section 80P(2)(a)(i) of the Act or in section 80P(2)(a)(iii) of the Act and that the said interest income is liable to be taxed u/s 56 - the claim of the assessee that the said interest income earned by the assessee from its funds deposited in commercial bank is eligible for deduction u/s 80P(2) of the Act, has rightly been rejected by the lower authorities.
Interest income be treated as business income of the assessee has also been rightly rejected by the lower authorities in the light of the aforesaid decision of the hon’ble Supreme Court in the case of Totgar’s Co-operative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT].
Interest earned on the bad debt fund and reserve fund maintained as per the provisions of section 81 & 82 of the West Bengal Co-operative Societies Act, 2006 - As in South Eastern Railway Employees Cooperative Credit Society Ltd [2016 (9) TMI 814 - CALCUTTA HIGH COURT] held that the expenditure incurred for earning of interest income from the funds parked in the commercial bank is liable to be set off/deducted from the said income, which is the amount of interest paid for that funds to the members. Such interest expenditure held to be deductible out of the interest income earned from deposits in the commercial bank, is further liable to be deducted from the business expenditure of the eligible business and after subtracting the said interest expenditure related to the deposits in the commercial bank, the business profits of the assessee would increase which would be accordingly eligible for deduction u/s 80P of the Act.
Thus the matter is remanded to AO with a direction (a) to work out the interest earned on the bad debt fund and reserve fund maintained as per the provisions of section 81 & 82 of the West Bengal Co-operative Societies Act, 2006 and to allow benefit u/s 80P on that interest income and (b) to ascertain the interest paid to the members for the purpose of earning the interest on the funds deposited in the commercial bank and to allow deduction of such interest from the interest income earned by the assessee from investment in the commercial bank and (c) to subtract/deduct such interest from the expenses of eligible business and the consequent increased amount of profits of eligible business will be eligible as deduction u/s 80P of the Act. Thus, Ground Nos.1 to 3 are accordingly partly allowed in favour of the assessee.
Income from holiday homes - Whatever the income earned by the assessee from the activity of providing of credit facilities to its members, is eligible for deduction u/s 80P - if such income is further invested for any other activity, the income generated from such an activity cannot be said to be attributable to the activity of providing credit facilities to its members. Therefore, this contention of the ld. counsel is not tenable. In view of this, it is held that the income from holiday homes is to be treated as business income of the assessee but the same will not be eligible for deduction u/s 80P - However, the assessee will be entitled to claim the deduction of admissible expenditure/depreciation etc. on such business income from holiday homes.
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2023 (6) TMI 1272 - ITAT DELHI
Estimation of income - Bogus purchases - commission expenditure u/s 69C of the Act @ 3% - HELD THAT:- As it is not in dispute that the assessee had made bogus purchases from Giriraj Global Limited and bogus sales to Barsana Fabtex Pvt. Ltd. Hence, to that extent two accommodation entries had indeed been obtained by the assessee, i.e., one for purchase and one for sales. It is not in dispute before us that the average rate of commission for obtaining accommodation entry is 1.5% per transaction. Hence, we hold that the ld.CIT(A) was justified in upholding the addition made on account of commission expenditure u/s 69C of the Act @ 3% - We do not deem it fit to interfere in the said order of the ld.CIT(A) in this regard.
We are in agreement with the observation of the ld.CIT(A) that out of bogus purchase made from Giriraj Global Limited, the assessee had made bogus sales to Barsana Fabtex Pvt. Ltd., i.e., bogus sales has been made out of bogus purchases. When both the transactions are bogus, only the profit element embedded thereon could be brought to tax. This has been rightly done by the ld.CIT(A).
Determination of gross profit @ 11.69% on the corresponding purchases of Rs. 27,22,028/- attributable to genuine sales made to Anirudh & Raj Builders Pvt. Ltd. - We find that though the purchases made from Giriraj Global Limited is bogus, the sale made to Anirudh & Raj Builders Pvt. Ltd. is genuine and this fact is not doubted by the Revenue. Hence, it would be just and fair to bring to tax only the profit embedded in the value of such disputed purchases. This profit has been consistently estimated by this Tribunal @ 12.5% on the value of disputed purchases which has been approved by the Hon’ble Bombay High Court and the Hon’ble Gujarat High Court.
Hence, we deem it fit and appropriate, in the facts and circumstances of the instant case, to estimate the profit element embedded in the value of disputed purchases at 12.5% instead of 11.69% made by the ld.CIT(A). Accordingly, the grounds raised by the assessee as well as the Revenue on merits are disposed of in the aforesaid manner.
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2023 (6) TMI 1271 - ITAT DELHI
Penalty u/s 271(1)(c) - Non specification of clear charge - HELD THAT:- There is no dispute with regard to the fact that the notice issued by the AO does not disclose the specific charge.
As in the case of Pr.CIT vs M/s. Sahara India Life Insurance Company Ltd. [2019 (8) TMI 409 - DELHI HIGH COURT] has decided the issue in favour of the assessee. Thus facts are not under dispute regarding the notice being defective. Therefore, we, hereby delete the impugned penalty imposed u/s 271(1)(c) - Decided in favour of assessee.
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