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Showing 101 to 120 of 1466 Records
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2024 (6) TMI 1366
Disallowance of deduction claimed u/s 80P - interest income on by assessee from other cooperative banks - HELD THAT:- Cooperative banks are also a co-operative society. Only difference is that those cooperative societies are doing the business of banking as per the banking companies act 1949. Therefore, merely because these cooperative societies cooperative bank they do not lose their status as a co-operative society.
The assessee’s investment of earning interest income from such cooperative banks which are also cooperative societies whole of such income is deductible under this section. It is not in dispute that assessee is not a cooperative bank and therefore provisions of section 80P(4) of the act does not apply to it.
Thus the assessee is eligible for deduction under section 80P(2)(D) of the act on its income received from all the above cooperative banks. Hence assessee is eligible for that deduction - Appeal of assessee allowed.
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2024 (6) TMI 1365
Addition due to difference in sale consideration and stamp duty - assessee sold 3 flats out of which there was a difference in sale consideration & stamp value stated - AR on this issue stated that the first proviso to section 43C of the Act wherein leverage of 10% has been allowable - HELD THAT:- As perusing the material available on record find that the first proviso to section 43C of the Act wherein leverage of 10% is allowed by the statute and in the present case a difference of value of property of only 2.5%. Therefore, alleged addition made in the hands of assessee is not sustainable. Accordingly, the addition made in the hands of assessee is hereby deleted.
Addition as entire sale value of two flats - assessee submitted that the assessee has included the sale consideration of both the flats in the next year in its books of account which fact is not in dispute - as argued when the income was duly included in the next year, the addition during the year will be taxed neutral - HELD THAT:- We after hearing the rival submissions of the parties and perusing the material available on record find that tax neutrality is essential to prevent double addition and ensure that income is tax fairly and equitable. In the context of Income-tax Act this principle is applying law consistent rules, adhering to judicial precedent and ensuring that income is added to the total income only once double addition is generally contrary to the principles of equity in taxation. The tax authorities must ensure that the same income is not taxed in different hands or periods.
From the facts as stated by the parties, we find that assessee had shown the alleged income the next financial year as the income of assessee. Therefore, applying the principle of neutrality the addition cannot be sustained in the hands of assessee. Accordingly, we direct the AO to delete the alleged addition in the hands of assessee since assessee has already shown the alleged income in the next financial year for the purpose of calculating tax applying the analogy has held in the case of Realest Builders & Services Ltd. [2008 (5) TMI 6 - SUPREME COURT] that when the addition is tax neutral than no double addition should be made. Accordingly, instant ground is allowed directing the AO to delete the addition in the hands of assessee.
Appeal of the assessee is allowed.
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2024 (6) TMI 1364
Estimation of income - bogus purchases - CIT(A) restricted Addition to 12.5% - HELD THAT:- CIT(A) has considered the detailed submissions of the parties in very meticulous manner and has returned a well-reasoned and legally sustainable finding. The reason given by the Ld. CIT(A) are cogent and also appeals to the conscience of this Tribunal. Moreover, the Ld. DR on behalf of revenue has failed to produce any contrary material which may lead us to consider the material on record differently from the considering of it by the Ld. CIT(A).
Nothing is brought before us as to why the present A.Y. should be dealt with separately from the two previous A.Y. 2009-10 and 2010-11, wherein the concerned Ld. CIT(A) as discussed in earlier part of this order, has restricted the additions to the extent of 12.5% on account of alleged bogus purchases.
There is no illegality and perversity in the impugned order of the Ld. CIT(A) and we find no merit in the appeal and accordingly decides the grounds of appeal against the appellant by dismissing the same.
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2024 (6) TMI 1363
Rejection exemption u/s 11 - as the assessee has not filed the registration certificate u/s 12A of the Act and observing that assessee is not a registered Trust - HELD THAT:- Even though the assessee has claimed exemption u/s 11 without proper documentation and it is admitted fact that assessee is not registered u/s 12A of the Act, therefore, the claim of the assessee in its return of income u/s 11 are rejected by the tax authorities. As per the records submitted before us, the assessee is a non profit-no loss company registered under the Companies Act, 1913.
This institution is in existence since then and no records were filed before us relating to previous method of accounting and claim made by the assessee. However, as per the fact available on record, as observed that the AO has rejected the claim made by the assessee in return of income claiming exemption u/s 11 of the Act and proceeded to make the addition only the gross receipts earned by the assessee as their income, however, as per law the gain/profit earned by the assessee alone should be brought to tax and not the gross receipts.
Thus we are inclined to remit this issue back to the file of Jurisdictional Assessing Officer to re-do the assessment denovo after giving proper opportunity of being heard. We direct the AO to bring on to tax only net profit/margin earned by the assessee from the operation and not the gross receipts. Even, the Assessing Officer may consider the concept of mutuality in this case as per law considering the fact that it is non profit-no loss entity, serving its own members. Accordingly, ground No.3 raised by the assessee is allowed for statistical purposes.
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2024 (6) TMI 1362
Levy of penalty u/s 271(1)(c) - disallowance of prior period expenditure, ad hoc disallowance of non filing of relevant documents in relation to valuation on costs of construction improvement and as per the statements of the assessee, assessee has inadvertently claimed the higher share of indexed costs of construction and improvement - HELD THAT:- As submitted that the assessee has not benefited by inadvertently claiming the excess indexed costs of improvement. In this regard, he brought to our notice that assessee has made investment in capital gain and whatsoever the additional interest earned by the assessee are being utilized only in purchasing new assets.
As relying on RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] it is clear that mere claim does not sustainable in law by itself will not amount to furnishing of inaccurate particulars of income, therefore, additions made by the Assessing Officer relating to prior period and ad hoc disallowance are concern, it is merely claimed by the assessee as allowable expenses and, however, was rejected by the Assessing Officer, therefore, this cannot be a reason for levy of penalty.
Additional construction indexed costs of improvement by the assessee - As noticed that assessee having 1/4th share in the property has claimed inadvertently and additional amount of Rs. 15,82,909/-. From the records, as observed that assessee has not availed any benefit by such inadvertent claim; therefore, no reason to levy of penalty by treating that as inaccurate particulars of income, Assessing Officer has to bring to record, how the assessee has benefited by such furnishing of inaccurate particulars. Accordingly, the appeal filed by the assessee is allowed.
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2024 (6) TMI 1361
Unexplained money u/s 69A - cash deposits in the bank account during the demonetization period - Additional documents were filed by the assessee before the Ld.CIT(A) rejected - HELD THAT:- From the findings of the Ld. CIT(A), it is transpired that the Ld. CIT(A), without applying his own mind and without exercising the power granted under the statue has dismissed the application for the admission of the additional evidence on the behest of the AO which is contrary to the provision of law. As such, we are of the view that the Ld. CIT(A) was to exercise his power within the provision of law for admission of the additional documents instead of getting guided by the comment of the AO in the remand report.
Also perused the bank statement filed by the assessee and on verification of the bank entries of the demonetization period, we note that such cash deposits were primarily used for making payment to Gujarat Agro Industries which is a State Government Organization and dealing in the agricultural produce.
Thus, prima facie it appears to us that the cash deposits during demonetization period was representing business transactions and therefore we are of the view that the same cannot be made subject to tax under the provisions of section 69A of the Act. We are making this observation that the cash deposits during demonetization period represent the business transaction to arrive at an opinion that the assessee has very meritorious case which could not be dismissed due to technical lapses as held in the case of S.R. Koshti [2004 (12) TMI 62 - GUJARAT HIGH COURT] as revealed that the income of the assessee should not be over assessed even there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income.
Thus we deem it fit to direct the Ld. CIT(A), to admit the additional evidence filed by the assessee under rule 46A of the Income Tax Rule and adjudicate the issue on merit afresh as per the provisions of law. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
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2024 (6) TMI 1360
Deduction u/s. 80P(2)(a)(i) - deduction denied as the assessee co-operative society was carrying on the business of banking and providing credit facilities to its members, therefore, it being a co-operative bank was disentitled from claiming deduction as per mandate of Section 80P(4) - HELD THAT:- Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors. [2022 (3) TMI 75 - ITAT RAIPUR] had after drawing support from the judgment of Tumkur Merchants Souharda Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] on the basis of its exhaustive deliberations concluded, that interest income earned on the surplus funds which were parked as deposits by the co-operative society in the normal course of the business of providing credit facilities to its members, i.e., at a point of time when there were no takers for the said funds was duly entitled for deduction under Sec. 80P(2)(a)(i).
As stated by the Ld. AR, and rightly so, as the facts and the issue involved in the present appeal i.e, allowability of the assessee’s claim for deduction under Sec. 80P(2)(a)(i) on the interest on bank deposits remains the same as were there in the aforesaid case we direct the AO to allow the assessee’s claim for deduction under Sec. 80P(2)(a)(i). Decided in favour of assessee.
Paddy Procurement Business - Tribunal while disposing off the appeal in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors [2022 (3) TMI 75 - ITAT RAIPUR] while dealing with the assessee’s claim for deduction of the income from paddy procurement business u/s.80P(2)(a)(iii) of the Act, had remanded the issue to the file of the A.O as held now when only a small fraction of the procurement of paddy was made by the assessee-society in the course of its paddy procurement business from non-members, therefore, restricting of its claim for deduction u/s. 80P(2)(a)(iii) of the Act to 35% of the profits earned from the said business activity was not justified. Be that as it may, we are of the considered view that as the compilation of the paddy procurement by the assessee-society has been filed before us as additional documentary evidence, and the same was not there before the lower authorities, therefore, the matter in all fairness requires to be re-visited by the Assessing Officer.
Thus, in all fairness on the same terms be restored to the file of the AO for fresh adjudication. In the course of the set-aside proceedings the AO shall re-adjudicate the assessee’s claim for deduction under Sec. 80P(2)(a)(iii) after verifying and determining as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by non-members, and thus, restrict it’s claim for deduction u/s. 80P(2)(a)(iii) only to the extent of the profit relatable thereto.Decided in favour of assessee for statistical purposes.
Dividend Income - dividend income received on the investments declined for the reason that as the same was not a co-operative society, hence, the dividend income received therefrom would not be eligible for deduction under Sec. 80P(2)(d) - HELD THAT:- Admittedly, in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors. [2022 (3) TMI 75 - ITAT RAIPUR] Tribunal, had observed, that the dividend income received by a co-operative society on the shares of a co- operative bank held by it would be eligible for deduction under Sec. 80P(2)(d) of the Act. Thus we vacate the disallowance of the assessee’s claim for deduction of the dividend received on shares of a co-operative bank, viz. Jila Sahakari Bank u/s 80P(2)(d) . Decided in favour of assessee.
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2024 (6) TMI 1359
Nature of land sold - LTCG - land was converted into non-agriculture prior to date of sale but assessee has been carrying on agricultural activities right the date of sale of land - DR submitted that as per revenue records, the land was a non-agricultural land as on the date of sale, hence, AO had correctly invoked the provisions of Section 50C - as argued land qualified as agricultural land since it was situated beyond the prescribed municipal limits
HELD THAT:- Firstly, the Department has not disputed/contested the claim of the assessee that the assessee has been carrying on agricultural activities right the date of sale of land. Secondly, we agree with the argument of the assessee that once the assessee is carrying on agricultural activities right up to the date of sale, then the land continues to be agricultural land respective of conversion of such land into non-agriculture land.
The mere fact that land use was converted to non-agricultural prior to date of sale would not convert the land as agricultural land, as held by the VAJULAL CHUNILAL (HUF) [1979 (2) TMI 45 - GUJARAT HIGH COURT]
Whether the land sold qualifies as agricultural land within the meaning of Section 2(14) of the Act has not been analysed by the Tax Department. AO has made a reference at page 2 of the assessment order that the land sold by the assessee is situated at the distance of 4 km from Deesa and hence the land should be taxed at Jantri value of Rs.3,73, 32,000/-. Therefore, it is not clear from the facts available on record whether land qualified as an agricultural land within the meaning of Section 2(14) of the Act.
Accordingly, in the interest of justice, the issue is being set aside to the file of AO with the view to verify whether the conditions of Section 2(14) of the Act are being met in the instant set of facts. The assessee would be at liberty to produce all supporting documents to show that land is situated as per prescribed limits given under Income Tax Act so as to qualify as agriculture land and also file copies of any notification etc. in respect of this land which support the fact that the land is an agriculture land and is situated as per the prescribed municipal limits under Section 2(14) of the Act.
Claim of deduction and Section 54F/54B - As we observe that Ld. CIT(Appeals) had already directed the Assessing Officer to allow the claim of deduction under Section 54B/54F after due verification about the fulfillment of conditions, contained therein. Accordingly, to that extent, we find no infirmity in the order of Ld. CIT(Appeals) to call for interfere.
Appeal of the assessee is party allowed for statistical purposes.
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2024 (6) TMI 1358
Exemption u/s 11 - non utilization of 85% of the total grants-in-aid received during the year - assessee invested an amount in the equity shares and continuing the investment so made, and thereby contravened the provisions of section 13(1)(d) read with section 11(5) - HELD THAT:- Assessee is a statutory body and a registered society assessee is a statutory body and a registered society AND has been following the accounting procedure as defined in GFR 230(5) of the Government of India and the directions of the Integrated Financial Division of Ministry of Agriculture, Government of India (IFD) over the years and treating all the grans as liabilities and only when the grants are utilised by the implementing agencies they are treated as income and when utilisation certificates are received, they are treated as expenditure.
Case of AO that the claim of expenses incurred out of grant released in earlier years and the corresponding claim of receipt cannot be allowed in the current year failed to appreciate what exactly the amount the assessee has been treating as income and what the amount the assessee is treating as expenditure. Assessee has been treating only such part of grants that are utilized by the implementing agencies as income and only such part of the funds released to the implementing agencies in respect of which the utilization certificates are received as expenditure. This method of accountancy followed by the assessee in treating the income and expenditure irrespective of the year of receipt of grant has not been appreciated or referred to by the learned Assessing Officer so as to find out any defects or reasons to reject the same.
No illegality or irregularity in the method of accountancy followed by the assessee in treating the funds utilized by the implementing agencies as income and the funds covered by the utilization certificate as expenditure. According to us, learned CIT(A) was right in his approach in holding that on an incorrect appreciation of the accounting policies followed by the assessee, the learned Assessing Officer rejected the books, without actually bringing on record any defect in the audited accounts of the assessee.
Principle of Res judicata - It is true that the principle of res judicata is not applicable to the income tax proceedings and every year is a separate and independent, and merely because the learned Assessing Officer has not made any addition or rejected the claim of exemption under section 11 of the Act, preferred by the assessee in the earlier years, such an erroneous order of the learned Assessing Officer cannot be made to be perpetuated.
Since the assessee, in the instant case, is consistently treating the grants received from the Government of India and utilised by the implementing agencies as income and the grants released to the State Government, as and when the utilization certificates are received as expenditure, in compliance with the accounting procedure defined in GFR 230(5) of Government of India and the directions of IFD, we are of the considered opinion that the assessee in the instant case has spent 85% of the income in the current assessment year also.
Investment in equity shares contravenes the provisions of section 13(1)(d) - As aspect of 13(1)(d) of the Act, there is no contradiction to the plea taken by the assessee that such an investment was made in Sasoon Dock Matsya Shakari Samstha Ltd., in the financial year 2008-09 and not during the current year and never in the earlier years any objection on that aspect is taken. It is also not in dispute that registration u/s 12AA granted by the authorities in favour of assessee is continuing. In these circumstances, the ground raised by the Revenue cannot be countenanced and is liable to be rejected.
Appeal of the Revenue is dismissed.
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2024 (6) TMI 1357
Assessment u/s 153A OR 153C - As argued adjustments in the instant appeal is either subject matter of regular assessment or probably can be assessed u/s 153C with no reference to any incriminating material found in the course of search from the premises of the assessee with reference to impugned additions.
Whether, while making assessment u/s153A, the Revenue is entitled to interfere with unabated assessment which stood concluded either under section 143(1) or under section 143(3) and not pending at the time of search in the absence of any incriminating material unearthed as a result of search in the case of assessee? - HELD THAT:- It is manifest that additions/disallowances have been made without reference to any specific incriminating material/document found as a result of search and seizure action under section 132 of the Act and such additions are solely based on appraisal report against the subscribers of the assessee in the course of search in that case. Some additions have been made in the course of routine inquiry at the time of assessment u/s 153A without showing any correction to the incriminating material unearthed in the course of search.
Guided by the principles laid down in Abhisar Buildwell (P.) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] as followed by the Co-ordinate Benches in numerous cases, we find force in the legal plea raised on behalf of the assessee. Hence, in the absence of any incriminating material in an unabated assessment additions / disallowances made by AO in the captioned appeal require to be quashed. Assessee appeal allowed.
Addition u/s 69C - disallowance towards bogus purchases - HELD THAT:- We take notice of the fact that the expenditure incurred in the instant case are capital expenditure and therefore, no addition as proposed could be made to the taxable income towards such capital expenditure. Secondly, as pointed out on behalf of the assessee and corroborated by the copy of invoices and the ledger account, it is evident that the impugned purchases relate to financial year other than F.Y. 2011-12 relevant to A.Y. 2012-13 in question. Therefore, disallowance if any is not permissible in the A.Y. 2013-14 under adjudication.
Inapplicability of Section 69C as well as Section 68 - A bare reading of Section 68 suggests that there has to be credit of amounts in the books maintained by the assessee and such credit has to be of sum during the year for which the assessee either offers no explanation about the nature of source of such credit or the explanation offered towards source of such credit is not found to be satisfactory in the opinion of the AO. When objectively seen with reference to material available on record, it is evident that the present case relates to outgo or payment on account of expenditure which is squarely opposite to the credit in the books of account. Apparently, Section 68 would not apply in the absence of any credit in the books of account in relation to impugned additions.
On the similar footings, Section 69C also do not apply since Section 69C is confined to a situation where source of expenditure incurred could not be objectively explained to the satisfaction of the AO. In the instant case, what being disallowed is the expenditure incurred and not the source of payment towards such expenditure. Neither Section 68 nor Section 69C is applicable in the present case. CIT(A) has modified and broadened the charge to encompass application of Section 68 of the Act. While doing so, no opportunity was given to the assessee to counter such proposal. The exercise of purported coterminus power in such manner is not permissible in law. On this ground also, the action of CIT(A) needs to be set aside.
In summation, the impugned additions cannot be countenanced where neither the expenditure has been claimed as revenue expenditure nor such expenditure relates to assessment year in question and such action is impermissible on the contours of Section 68 as well as Section 69C invoked by the Revenue Authorities. Assessee appeal allowed.
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2024 (6) TMI 1356
Revision u/s 263 - Deduction u/s 80P on interest income from company- operative banks should be disallowed - HELD THAT:- An inquiry made by the AO, considered inadequate by the CIT, cannot make the order of the Assessing Officer erroneous. In our view, the order can be erroneous if the AO fails to apply the law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the AO. It is AO’s prerogative to make inquiry to the extent he feels proper. The CIT by invoking revisionary powers under Section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various High Courts in this regard.
This is not a fit case for invocation of provisions of Section 263 of the Act. This is for the reason that firstly, we observe that the assessing officer had examined the issue in detail during the course of assessment proceedings, and it is not a case where there was any apparent lack of enquiry on this aspect by the assessing officer. Secondly, the assessing officer had taken a view which is a legally plausible view and it is a well settled law that 263 proceedings cannot be resorted to by the PCIT only with the view to supplant his own view with the view taken by the assessing officer.
Further, the decision of Katlary Kariana [2022 (1) TMI 1309 - GUJARAT HIGH COURT] was on the aspect of reopening of assessment under Section 147 of the Act and not directly on the issue of claim of reduction under Section 80P of the Act. Therefore, once it is seen from the records that the assessing officer had made due enquiries during the course of assessment proceedings on this aspect and had taken a view, which is a legally possible view, then, in our considered view PCIT cannot resort to 263 proceedings only to supplant his own view with the view taken by the Assessing Officer. Decided in favour of assessee.
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2024 (6) TMI 1355
Unexplained cash credit u/s 68 - Bogus share capital and share premium received - onus to prove - HELD THAT:- AO simply issued notice u/s 131 of the Act to the assessee requiring to appear personally along with all the Principal Officers, directors of all the investor companies and individual investors, as the case may be, to verify the transactions without going through the details, evidences furnished by the assessee which included the details of the share subscribers, their creditworthiness and also the books of account and bank statements etc. furnished by the assessee to prove the genuineness of the transaction.
AO without examining any of the documents, simply made the addition on account of failure of the assessee to produce share subscribers and has not pointed out in the Assessment Order as to what were the discrepancies in the documents furnished by the assessee and what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence.
Assessee, on the other hand, has explained that the observation of the Assessing Officer that there was very high premium received by the assessee as compared to the market value of the shares was wrong. He has submitted that the book value on the date of issue of shares was Rs. 191/- per each share and the shares were sold at Rs. 200/- each and therefore, the observation of the Assessing Officer simply on the basis of assumptions and presumptions was not justified.
AO has not pointed out any specific doubt about the identity and creditworthiness of any of the share subscribers. Also further submitted that the assessee was having share subscription from the said subscribers for the last 10 years and all the details were furnished before the Assessing Officer. That it was beyond the control of the assessee to produce all the shareholders/directors of the corporate entities before the AO. The Assessee in this case, as noted above, explained about the identity, creditworthiness and financials etc. of each of the share subscriber company.
AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the assessee could not produce the directors of the subscriber companies before the Assessing Officer, even then, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO.
As decided in Paradise Inland Shipping Pvt. Ltd. [2017 (11) TMI 1554 - BOMBAY HIGH COURT] that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case.
Assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon the Assessing Officer to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, even applying the ratio laid down in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd. [2019 (3) TMI 323 - SUPREME COURT] impugned additions are not warranted in this case. - Decided in favour of assessee.
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2024 (6) TMI 1354
Set off of the carried forward losses against current year profit in view of the change in the shareholding pattern of the assessee - Applicability of section 79 - HELD THAT:- It could be seen from the impugned order that the assessee had taken the plea that section 79 of the Act has no application to the facts of this case and it had taken a specific plea by way of additional grounds that section 79 of the Act refers to business loss only and it has nothing to do with the giving the credit for set off of carry forward unabsorbed depreciation loss. Whether or not section 79 of the Act applies to the carry forward of unabsorbed depreciation loss is only a question of law, and would have been decided by the learned CIT(A) even in the absence of the assessee, because the decision of the higher forum equally binds the learned CIT(A) as it binds all the authorities before that forum.
The Hon’ble Apex Court in Subhulaxmi Mills Ltd.[1995 (9) TMI 2 - SUPREME COURT] is clear on this aspect and in the case of Shri Subhlaxmi Mills Ltd. [1976 (1) TMI 2 - GUJARAT HIGH COURT] expressly approved the view taken by the Hon’ble Gujarat High Court that when section 79 of the Act speaks of loss, it does not include unabsorbed depreciation or unabsorbed development rebate. Since it is neither a pure nor mixed question of fact, it does not admit of any further factual findings of the learned CIT(A), but involves only interpretation of the provision by the learned CIT(A). When the Hon’ble Supreme Court speaks on the non-applicability of section 79 of the Act to the unabsorbed depreciation loss, any opinion of learned CIT(A) on this aspect is immaterial, and suffice it to cause verification whether the carry forward losses of assessment year 2012-13 sought to be set off against the future losses by the assessee including the assessment year 2013-14, include any unabsorbed depreciation. If it is so, it is eligible for set off against the profits of the future years.
We direct the Assessing Officer to verify whether the carry forward losses of assessment year 2012-13 sought to be set off against the future losses by the assessee including the assessment year 2013 -14, include any unabsorbed depreciation, and if it is so allowed, it to be set off against the profits of the future years. Subject to this observation, appeal is allowed.
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2024 (6) TMI 1353
Penalty levied u/s 271(1)(c) - Defective notice on non specification of clear charge - Estimation of income on bogus purchases - HELD THAT:- The assessee after reading the notice was guessing as to what fault it has committed for which the AO proposed to levy penalty; and since both faults figured in the notice, as such the assessee was handicapped in defending/explaining against the proposed penalty. Therefore, since show-cause notice itself does not spell out clearly as to what fault assessee is being proceeded against for levy of penalty, the notice itself is bad in law, and consequently the penalty levied is vitiated.
Same issue has come up for consideration before the Full bench of Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] wherein their Lordships has held that the show cause notice issued prior to levy of penalty without specifying the fault/charge against which the assessee would vitiate the penalty itself.
Also we find that in the quantum assessment estimated addition of 100% of purchases was made by AO, which was reduced to 30% of purchase by the Ld. CIT(A). In such a scenario, penalty u/s 271(1)(c) of the Act was not warranted because estimated addition has inherent subjectivity involved. Therefore, no penalty is warranted. Therefore, we direct the deletion of penalty.
Refund of the excess fees paid bonafide by the assessee - assessee claims to have inadvertently remitted fees of Rs.10,000/- towards fees of this penalty appeal, whereas according to assessee, the correct fees was only Rs.500/- - HELD THAT:- As noted that Section 253 of the Act, prescribes the appeal fees an assessee has to remit while filing an appeal before the Tribunal. The assessee’s submission is that since the captioned appeal is penalty appeal, fees need to be deposited as per sub-clause (d) of sub-section (6) of section 253 of the Act. As per sub-clause (d) of sub-section (6) of section 253 of the Act, while filing the penalty appeal before the Tribunal, the assessee need to have remitted Rs.500/- for an appeal. In the light of the aforesaid discussion, the AO is directed to refund this amount either by way of adjusting the same against the outstanding demand, if any, or by way of grant of refund within a reasonable period.
Appeal of the assessee is allowed.
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2024 (6) TMI 1352
Re-computation of long term capital gain - Determination of cost of improvement for construction of a concrete bridge on the rivulet in front of the shop for the purpose of providing more accessibility to the shop from the road - HELD THAT:- From the record, it is evident that the Ld. CIT(A) ignored the fact that the disputed cost was used for construction of bridge/rivulet in front of the shop for improvement of the shop and that the CIT(A) failed to appreciate the vital fact that the amount spent for construction of the bridge was a capital expenditure and was essential to provide access to the shop from the road and to provide improved accessibility to the shop to facilitate greater footfall and capital value addition in turn. We appreciate the contention of the Ld. AR that there is no bar to incur the capital expenditure while the business is running.
In the present case, the capital expenditure would not become revenue expenditure merely for the reason that it was incurred in connection with cost of improvement to promotion of business activities which ultimately resulted in efficiently carrying on day-to-day business. The facts of cost of construction of bridge have been supported with the site plan and the photograph which is a matter of record, which has never been controverted either by the AO or by the CIT(A) or the CIT(DR), to disprove that the cost of improvement/construction incurred in 2009-10 has never been incurred by him. Such, disallowance, of the cost of construction by the AO, merely based on presumption is not tenable in the eyes of laws.
Considering the factual matrix, and judicial precedents, we accept the grievance of the appellant as genuine. Accordingly, we hold that the cost of improvement to shop by construction of rivulet was capital expenditure and the cost of in taxation of rivulet would be allowable deduction as claimed by the appellant. We, therefore, delete the addition. Appeal filed by the assessee is allowed.
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2024 (6) TMI 1351
Rejecting the application for registration u/s 12A(1)(ac)(iii)- mismatch in name as per PAN database/Form No. 10AB vis-à-vis Certificate of Registration, PTR and audited accounts - HELD THAT:- It was wholly erroneous on the part of the ld CIT(E) to reject the assessee`s application on account of mismatch of name. The mismatch in name may be rectified and corrected and the corrected name may be accepted. It should not be a reason to deny registration of the assessee-trust. As Counsel submitted before us, the correct name, which is to be adopted as “SURAT HALAI MEMON JAMAT AND HALAI MEMON JAMAT KABARSHATN”. We have also noted that the assessee has already taken steps to correct the above name in the PAN database, therefore above name should be treated as a correct name. Hence, we direct the ld. CIT(E) to consider the above stated name of assessee-trust and registration should not be denied to the assessee - trust, on this ground.
So far objects and activities are concerned, we note that assessee-trust is now ready to submit the entire list of objects and genuineness of its activities and these objects and activities may be verified by ld CIT(E). In these circumstances, we are of the view that one more opportunity should be given to the assessee to plead its case and to explain all documents and evidences before ld CIT(E). Appeal is allowed for statistical purposes.
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2024 (6) TMI 1350
Admission of additional evidence by CIT(A) - Test of enquiries in assessment proceedings - Procedures in accepting the additional evidences by CIT(A) - CIT(A) erred in not allowing the A.O. to examine the additional evidence admitted by him as per the provisions u/s. 46A(3) of the I. T. Rules, 1962 - Addition of unsecured loans and advances from customers u/s 68 - whether allegation of not providing opportunity to the AO by Ld. CIT (A) is really exists or not?
HELD THAT:- Information furnished by the assessee before the Ld. CIT (A) is mostly available on record before the AO also. It is also observed that addition u/s. 68 of the Act on account of Unsecured Loan may be treated as such but as far as advance received from customers is concerned it’s a settled position of law, same can’t be considered as income for the purposes of section 68 of the Act. So, addition made u/s. 68 on account of customer’s advance treatment by AO was void-ab-initio and Ld. CIT (A) rightly handled the issue by analysing the same in the light of the fact that same has been duly reflected in the books of account as per the accounting system followed by the assessee under the head sales, advance and booking amount returned.
The job which ought to have been done by the AO on amount received by assessee as customer’s advance, same has been carried out by the Ld. CIT(A) and due assessment has been carried out.
As far as amount involved on account of unsecured loans are concerned as mentioned (supra) most of the documents were available before the AO and practically AO may have grievance that due procedure was not followed as prescribed under Rule 46A (3) of the Rules, but same was not required as the powers of Ld. CIT (A) was coterminous with that of AO, and what an AO can do the same action, can be taken by him also.
We found the order of Ld. CIT (A) to be reasonable and logical on the given set of facts and other than the issue of giving opportunity to AO under 46A (3) of the Rules, AO is not able to make out the case how it is prejudicial to the interest of revenue or what anomaly is there in the order of Ld. CIT (A).
No infirmity in the order of Ld. CIT (A), especially when a substantive justice has been delivered within the scope of powers given to him by the statute and confirmed over the period by the Superior Courts. In view of above, grounds raised by the Revenue are dismissed. Revenue appeal dismissed.
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2024 (6) TMI 1349
Disallowance of deduction u/s 35(1)(ii) - donations for undertaking scientific research - Trust has raised substantial donations over the last six years on the basis of forged document, since obtained, wherein the appellant was found to be one of the beneficiaries - assessee as mentioned hereinabove has been denied by the assessee but no documents and/or corroborative evidence in respect of the deduction claimed u/s 35(1)(ii) has been filed before the Ld. AO in the re-assessment proceeding. Thus, the expenditure has been disallowed as unexplained expenditure u/s 69C
HELD THAT:- We have carefully considered the entire aspect of the matter and we find that it appears practically and factually the entity, namely, M/s. Shri Arvindo Institute of Applied Scientific Research Trust having PAN No. AAFTS7349D with whom the donation to the tune of Rs.20,00,000/- was made by the appellant and claimed weighted average deduction u/s 35(1)(ii) of the Act for A.Y. 2016-17, though earlier was approved u/s 35(1)(ii) the same was expired on 31.03.2006. Thus, the entity is not recognized for the purpose of Section 35(1)(ii) and neither eligible to raise donations for undertaking scientific research.
Expenditure was disallowed as unexplained expenditure u/s 69C - In this regard, CIT(A) observed that the same expenditure is unexplained and how the source of the same is unexplained, has not been able to be specified by the Ld. AO while invoking Section 69C of the Act while rejecting the claim of the appellant.
Keeping in view the entire aspect of the matter, the claim made by the appellant on a wrong footing, particularly, when the donation made to the entity which is not eligible to raise donation u/s 35(1)(ii) CIT(A) upheld the order of disallowance of the claim made by the appellant by the AO which, in our considered opinion is just and proper. Appeal preferred by the appellant is dismissed.
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2024 (6) TMI 1348
Denial of claim for exemption u/s.11(2) - Form 10B a/w. return of income were not furnished electronically within the “due date” specified u/s.139(1) - HELD THAT:- The assessee trust had obtained the “audit report” in Form 10B on 10.08.2016, i.e. prior to filing of its return of income on 10.10.2016, but the third limb/condition provided in Para 4(i) which requires that the audit report in Form 10B should be filed before the date specified u/s.139 of the Act is not found to be satisfied. We say so, for the reason that the date specified u/s.139 in the case of the assessee society for filing of its return of income for the year under consideration, i.e., A.Y.2016-17 was 17.10.2016 (as was extended from 30.09.2016).
As the date specified u/s. 139 of the Act for filing of return of income in the case of the assessee society before me for A.Y.2016-17 was 17.10.2016 while for it had e-filed/uploaded the “audit report” in Form 10B on 06.12.2018, which is much beyond the said specified date, therefore, it’s case would clearly fall beyond the scope and gamut of Para 4(i) of the CBDT Circular No. 10 dated 22.05.2019. On the basis of the aforesaid facts, the case of the assessee society before me would not fall within the meaning of Para 4(i) of the CBDT Circular (supra.).
As the assessee’s case with respect to condonation of delay in filing of Form 10B would not be covered by Para 4(i) (supra), therefore, the same would fall within the sweep of Para 4(ii) of the CBDT Circular No.10 (supra), which, as observed by me hereinabove, would be applicable to all other cases prior to A.Y.2018-19 where Form 10B is belatedly filed. Accordingly, I am of the considered view that the case of the assessee due to non-satisfaction of the conditions contemplated in Para 4(i) of CBDT Circular No. 10 would fall within the sweep of Para 4(ii) of the said circular (supra.).
As the assessee-society does not cumulatively satisfy the set of conditions specified in Para 4(i) of the CBDT Circular No.10 and also had not filed any application for condonation of delay u/s.119(2)(b) of the Act as provided in Para 4(ii) of the said circular therefore, there remains no occasion for condoning the delay involved in filing of Form 10B by it beyond the stipulated time period. Thus, no infirmity in the view taken by the lower authorities who had rightly declined the assessee’s claim for exemption u/s.11 of the Act.
Disallowance of the assessee’s claim for salary expenditure - assessee had claimed to have paid a salary of Rs.6 lacs to Dr. Ashish Dubey, cardiologist (trustee of the assessee society) - No justification for disallowance of the entire salary paid by the assessee society to Dr. Ashish Dubey as the rendering of professional services by him to the assessee society had admittedly been accepted by the department while framing assessment in the case of the assessee society for the immediately preceding year, i.e., A.Y.2015-16. As per Section 13(2)(c) r.w.s.13(3) of the Act, it is only the amount which is, inter alia, paid in excess to a trustee/member of the society as against what may reasonably be paid for the services rendered by him that is to be deemed to have been used or applied for the benefit of the person referred to in Section (3) of Section 13 of the Act, therefore, find no justification in declining of the assessee’s entire claim for deduction of salary expenditure of Rs.6 lacs.
Though the assessee society had not placed on record supporting documentary evidence to substantiate the authenticity of its claim of salary expenditure of Rs.6 lacs paid to Dr. Ashish Dubey, but at the same time we cannot remain oblivion of the fact that the A.O had not called upon the assessee society to furnish any specific details with respect to its aforesaid claim of expenditure. In my considered view the matter in all fairness requires to be restored to the file of the A.O who is directed to verify the authenticity of the aforesaid claim of the assessee society.
Appeal of assessee is partly allowed for statistical purposes.
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2024 (6) TMI 1347
Unexplained cash credits u/s. 68 - Deposits in bank accounts jointly held by the assessee and his father [Shri Devidas Keshwani i.e. primary account holder] - HELD THAT:- We find substance in the claim of the Ld. AR that as the aforesaid bank account and interest income accruing on the same had been accounted for/offered for tax in the hands of Father i.e. primary account holder, therefore, in absence of any material proving to the contrary there was no justification for the A.O to have made addition of the cash deposits made during the year in the said bank account; or the interest income accruing therefrom in the hands of the assessee.
At the same time, we cannot remain oblivion of the fact that the assessee had adopted a lackadaisical approach and failed to participate in the course of the assessment proceedings, which, thus, had led to framing of the assessment by the A.O u/s. 144 r.w.s. 147 dated 20.10.2018. Accordingly, as the aforesaid documents which had been pressed into service by the assessee before us were not there before the A.O in the course of the assessment proceedings, therefore, we are of the view that the matter in all fairness requires to be restored to the file of the A.O for the limited purpose of verifying the correctness of the aforesaid claim of the assessee. In case, the claim of the assessee is found to be in order and also, to the satisfaction of the A.O, the addition made in his hands to the said extent shall stand vacated.
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