Advanced Search Options
Case Laws
Showing 121 to 140 of 1343 Records
-
2023 (5) TMI 1223 - ITAT DELHI
Penalty imposed u/s. 271(1)(c) - delay in compliance with Regulation 8(3) of SAST Regulations, 1997 - amount paid to SEBI - HELD THAT:- In any case of the matter, whether the payment made to SEBI for violation of certain SEBI Regulations is on account of any offense or is prohibited by law, as per the language of Explanation 1 to section 37 of the Act, in our view, is a highly debatable issue as there are judicial precedents holding that penalty paid for delay in various obligations to SEBI/Stock Exchange/RBI does not amount to infringement/infraction of any law.
Therefore, merely because assessee accepted the disallowance, it will not lead to the conclusion that the assessee has furnished inaccurate particulars of income. Penalty imposed u/s. 271(1)(c) in the facts of the present appeal is unsustainable. Accordingly, we delete the penalty imposed. Appeal of assessee allowed.
-
2023 (5) TMI 1222 - ITAT DELHI
Reopening of assessment u/s 147 - accommodation entry receipts - reason to believe - HELD THAT:- It is pertinent to mention that even at the time of initiating the reassessment proceedings the AO himself was not sure about the mode of accommodation entry/allege transactions therefore reason to believe had no legs to stand. Therefore ground of assessee deserve to be allowed.
Valid approval u/s. 151 - HELD THAT:- As relying on M/S N.C. CABLES LTD. [2017 (1) TMI 1036 - DELHI HIGH COURT] in the present case also the exercise of approving powers u/s. 151 of the Act appears to have been only ritualistic and formal rather than based on application of mind to the material placed by the AO before the approving authority which could lead to a valid and meaning full approval. Therefore notice u/s. 148 of the Act without obtaining valid approval u/s. 151 of the Act and all consequent reassessment and first appellate order are not validly sustainable and deserve to be quashed - Decided in favour of assessee.
-
2023 (5) TMI 1221 - ITAT DELHI
Addition on account of services rendered by the assessee to its AE in India - fees for the services rendered by the assessee from outside India to BTPL - whether FTS under the provisions of Article 13(4)(c) of the India-UK DTAA? - Satisfaction of “make available” clause - HELD THAT:- It is an undisputed fact that the assessee is a tax resident of UK and therefore has opted to be governed by the provisions of India-UK DTAA being more beneficial to it under the provisions of section 90 of the Act.
Services provided by the assessee includes administrative services, accounting services, legal services and other support services that are ancillary to the functioning of corporate management function of BTPL. These services are thus essentially in the nature of managerial services which are in our considered view outside the scope of the meaning of FTS under Article 13(4) of the India-UK DTAA.
A mere provision of service may require technical knowledge by service provider but that would not per se mean that such technical knowledge has been made available to the service recipient. Therefore, the assistance, support or advice provided by the assessee to BTPL shall not per se be considered to make technology available since the assessee did not make available any technical knowledge, experience or skill to BTPL by way of rendering the above support services to BTPL. Article 13(4) of the India–UK DTAA does not apply to the assessee’s case and hence the consideration could not be included in FTS.
Services rendered by the assessee to BTPL do not satisfy “make available” clause as envisaged under Article 13(4)(c) of the India-UK DTAA to fall within the scope of FTS. Hence, the fees for the services rendered by the assessee from outside India to BTPL are not in the nature of FTS as per the provisions of Article 13(4)(c) of India-UK DTAA. Decided in favour of the assessee.
-
2023 (5) TMI 1220 - ITAT PUNE
Deduction u/s 80IC - income earned from sale of scrap - According to the AO, the words “derived from” pertains to sale of the goods manufactured in the eligible unit and scrap sales are not byproduct of the assessee - HELD THAT:- We observe that the same issue had come up before the Pune Tribunal for A.Y. 2016-17 [2021 (12) TMI 821 - ITAT PUNE] and there also, by placing reliance on the earlier decision of Pune Tribunal in assessee’s own case in [2017 (12) TMI 1826 - ITAT PUNE], Tribunal had provided the relief to the assessee. The ld.DR also, on principle, conceded that the issue is covered in favour of the assessee.
Unable to demonstrate any contradicting facts with those already on record nor could furnish any judgment of higher forum favouring the Revenue on this issue. As per principle of consistency, on the same parity of reasoning, deduction u/s. 80IC shall be allowed for the sale of scrap. Ground of Revenue are dismissed.
Disallowance u/s. 14A - CIT(A) placing reliance in assessee’s own case in [2017 (11) TMI 1929 - ITAT PUNE] observed that since the facts were identical to the year with the appeal following the same, he allowed relief on this issue also to the assessee - HELD THAT:- The principle of res judicata are not applicable in the income tax proceedings and, therefore, as a quasi-judicial authority, the ld. CIT(A) should have examined the facts for this year and then compared them with the facts in a definite manner as appearing in the Pune Tribunal’s decision which was relied on by him.
Such exercise has not been done as is evident in his order. On the contrary, it is evident from the order of the AO that after considering the submissions filed by the assessee, he has categorically stated why disallowance u/s. 14A is warranted in this case and that he was not satisfied with the calculation of the assessee. It is clearly evident that the AO has recorded his reasons and satisfaction specifically in his order while addressing this issue and invoking sec.14A r.w.r. 8D. Decided in favour of revenue.
TP adjustment - Allocation of certain corporate expenses to the 80IC unit at Roorkee - HELD THAT:- Admittedly, in this case, the allocation of corporate expenses was done for both the units on the basis of sale for the year under consideration. It is not a case of cost allocation for rendering any services by one unit to the other, which otherwise would have required the ALP determination by applying an arm’s length mark-up. Here is a case where common administrative expenses, such as, directors' salary and audit fee etc., have been shared between both the units on the basis of revenue earned by them de hors such expenses culminating into rendition or receipt of any services or property by/from one unit to another. We thus uphold the view taken by the ld. CIT(A). Accordingly, grounds of the Revenue stands dismissed.
-
2023 (5) TMI 1219 - ITAT DELHI
Penalty u/s 271(1)(c) - debatable issue arises - partial income not offered to tax - assessee earned revenues from two streams i.e. web hosting and domain registration charges and offered revenue from web hosting services only to tax in the return filed - assessee did not offer to tax its income from domain registration services for the reason that it was under a bonafide belief that this income is not chargeable to tax under the provisions of the Act - HELD THAT:- As said income has been held to be taxable as “royalty” by the appellate authorities including the Tribunal in the quantum appeal of the assessee before the Hon’ble Delhi High Court, the Hon’ble Court has framed a substantial question of law - We are, therefore, of the view that the issue involved in the present appeals is a debatable issue and the position in law is not yet settled. The impugned penalty in both the AYs is therefore not exigible.
CIT(A) has rightly deleted the penalty. Accordingly, we reject the appeals of the Revenue.
-
2023 (5) TMI 1218 - ITAT PUNE
Revision u/s 263 - Deduction u/s 80P - interest income derived from parking of surplus funds in fixed deposits - HELD THAT:-This tribunal’s recent order in Solapur Zilha Prathamik Shikshah Sahakari Sanstha Niyamit [2023 (1) TMI 1254 - ITAT PUNE] observed that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction u/s.80P(2)(d) of the Act.
AO while framing the assessment had taken a possible view, and allowed the assessee’s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same - No justification on the part of the Pr. CIT, who in exercise of his powers u/s 263 of the Act, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set-aside his order and restore the order passed by the A.O under Sec. 143(3) - Assessee appeal allowed.
-
2023 (5) TMI 1217 - ITAT CHANDIGARH
Exemption u/s 11 denied - exemption in the previous years had been allowed by the ITAT and approved by P&H High Court - whether CIT(A) ought to have allowed this exemption as a judicial discipline - whether the activities of the Assessee-Trust are charitable in nature, entitling the Assessee to exemption u/s 11? - Tribunal held that the activity of the appellant was in the nature of trade, commerce or business and hence it cannot be regarded as activity for charitable purpose in view of the proviso to section 2(15) of the Income-tax Act, 1961?
HELD THAT:- As w.e.f. 1.4.2004, a new section, i.e., section 10 (46A) is slated to be incorporated in the Income Tax Act, so as to exempt any income arising to a body or authority, or Board or Trust or Commission, not being a company, which has been established or constituted by or under a Central of State Act with one or more of the following purposes, i.e., dealing with and satisfying the need for housing accommodation;planning, development or improvement of cities, towns and villages; regulating, or regulating and developing, any activity for the benefit of the general public; or regulating any matter, for the benefit of the general public, arising out of the object for which it has been created
We find that our view is supported by the decision in the case of ‘CIT (Exemptions) vs. Gujarat Industrial Development Corporation’ [2023 (4) TMI 392 - GUJARAT HIGH COURT] wherein, the Hon'ble Gujarat High Court, following the decision of the Hon'ble Supreme Court in the case of ‘Ahmedabad Urban Development Authority’ [2022 (10) TMI 948 - SUPREME COURT] has dismissed the appeal filed by the Revenue, holding that the matter is squarely covered by the decision of the Hon'ble Supreme Court and no question of law, much less any substantial question of law arises for consideration.
It is relevant to note that in the said case, the Senior Standing Counsel appearing for the Revenue fairly submitted that the decision rendered in the case of ‘Ahmadabad Urban Development Authority’ (supra) would govern the case of the assessee. We, therefore, find that the Revenue has also accepted the decision of the Hon'ble Supreme Court as applicable in the case of Gujarat Industrial Development Corporation, which is also a statutory corporation constituted under the Gujarat Industrial Development Act for the purpose of securing and assisting rapid and orderly establishment and organisation of industrial areas and industrial estates in the State of Gujarat.
Conclusion:
(a) For A.Y. 2011-12, the Hon'ble High Court has granted exemption to the Assessee trust under section 11 of the Income Tax Act.
(b) The Civil Appeal of the Department against the said High Court judgement has been rejected by the Hon'ble Supreme Court.
(c) The Hon'ble High Court has held the Assessee’s activity of sale of plots and premises, even at market price, not to be a commercial or business venture per se, but to be necessitated by the statutory mandate of the Punjab Town Improvement Act, 1922, i.e., the mother statute qua the Assessee trust.
(d) Facts for the year under consideration, i.e., A.Y. 2016-17, not having undergone any change at all from the facts in A.Y. 2011-12, the judgement of the Hon’ble High Court for A.Y. 2011-12, as approved by the Hon'ble Supreme Court in ‘Ahmedabad Urban Development Authority’ [2022 (10) TMI 948 - SUPREME COURT] is squarely applicable to the year under consideration, that is, A.Y. 2016-17.
(e) Therefore, the second proviso to section 2 (15) and, consequently, section 13 (8) of the Income Tax Act are held not applicable to the Assessee’s case, and so, the aggregate receipts of the Assessee trust from its activities of sale of plots, flats and commercial booths and also its income earned form non-construction fee, transfer fee, penal interest and compounding fee, etc., are held to be entitled for exemption under section 11 of the I.T. Act. Such exemption is allowed to the Assessee.
(f) The Order under appeal is, thus, reversed and cancelled on accepting the grievance of the Assessee. Assessee appeal allowed.
-
2023 (5) TMI 1216 - ITAT DELHI
Determination of commission income of the proven accommodation entry operator - CIT (A)’s reducing the commission income to 1.04% against the AO’s determination @ 2% - HELD THAT:- identical issue was considered by the coordinate Bench of the Tribunal in the case of the brother of the assessee, Anand Kumar Jain [2023 (1) TMI 1254 - ITAT PUNE] the rate of commission in the present cases is determined at 0.47%. AO is accordingly directed to follow the direction in the aforesaid ITAT order.
Protective addition - HELD THAT:- We note that the Ld. CIT(A) has held that the impugned amount can at best be treated as obtained out of assessee’s undisclosed commission income which has already been brought to tax. We note that on identical issue, the Tribuna l[2023 (5) TMI 1186 - ITAT DELHI] in the case of Sh. Anand Kumar Jain, observed that such receipt form part of accommodation entries and that the AO may verify the same. Following the aforesaid precedent, we direct the AO to verify the same as stated above.
Apropos DVO Report - difference in the value of property purchased by assessee and his wife during the year under consideration - immovable property purchased by the appellant was referred for valuation to the DVO - HELD THAT:- As CIT(A) has given a finding transaction was not below the circle rate. We note that the ld. CIT(A) has passed a well reasoned order, which does not need interference.
-
2023 (5) TMI 1215 - ITAT DELHI
Penalty u/s 271B - AO was not satisfied with the claim of exemption for the purpose of Section 10(23C)(iiiab) r.w.r. 2BBB - AO observed that the assessee university has not audited its account as per Clause (b) of sub-section (1) of section 12A despite the fact that its total income as computed under the Act without giving effect to the provisions of Section 12 exceeds the maximum amount which is not chargeable to Income Tax in F.Y. 2017-18 - whether violation of main part of the Section 44AB confirmed?
HELD THAT:- Proviso of Section 44AB is not a default or charging provision rather is a beneficial provision for the any assessee whose accounts are audited under any other law other than the Act and such audited accounts if furnished with return will be considered as compliance of Section 44AB - AO has considered it to be a default Clause and erroneously introduced the default of audit u/s 12A(1)(b) to fall in the Proviso to Section 44AB. While in case there is a failure of audit for the purpose of Section 12A(1)(b) of the Act, then there is no penalty provision except that the Act provides that the concerned assessee shall not be entitled to the benefit of exempt income u/s 11 or 12.
If the impugned order of CIT(A) is considered it appears that he introduced his own case as the Ld. AO had not found violation of main part of the Section 44AB for the reasons that the assessee university had gross receipts for the year under consideration above the prescribed limit of Rs. 60,00,000/- for mandatorily getting books of accounts audited as per provisions of Section 44AB of the Act but Ld. AO had taken shelter of Proviso to section 44AB and assumed as assessee University has not got the accounts audited for the purpose of Section 12A(1)(b) of the Act, this is a violation of Section 44AB of the Act.
Tax Authorities below have fallen in grave error on facts and law while invoking the penalty provisions. Decided in favour of assessee.
-
2023 (5) TMI 1214 - ITAT DELHI
Reopening of assessment - validity of notice u/s 148 - Information received by the AO under Project Falcon from DGIT(Investigation), Mumbai about trading on the United Stock Exchange of India by engaging in reversal trades in illiquid stock options resulting in non-genuine business loss/gains to the beneficiary assessee and that the present assessee is a party to such manipulation - HELD THAT:- Reasons derived by the AO on the alleged ground of income escaping assessment which consists of claim of artificial loss from trade reversal on Stock Exchange and the belief that the assessee has incurred an amount as commission paid for obtaining a loss of is beyond logic and not borne out of any record. Hence, the order passed by the Assessing Officer u/s 147 dated “Nil” is to be treated non est in the eyes of law. Appeal of the assessee is allowed.
-
2023 (5) TMI 1213 - ITAT SURAT
Addition toward estimated gross profit by rejecting books of accounts - Unexplained cash credits - HELD THAT:- Where AO rejected books of account u/s 145(3) and made estimated addition on turnover, then such books of accounts should not be relied to make addition on account of sundry creditors/ trade creditors. Thus, respectfully following the judgment of BAHUBALI NEMINATH MUTTIN [2017 (1) TMI 1375 - KARNATAKA HIGH COURT] the addition made by the Assessing Officer, in case of assessee under consideration, on account of creditor/ temporary loan taken for trading purpose should be deleted.
Addition u/s 68 - creditors/person who gave the temporary loan, did not turn up before him, as discussed in the assessment order - We note that assessee has produced sufficient documents and evidences before the assessing officer and the solitary reason of not serving of summons on few creditors cannot be relied only by ignoring the other relevant material produced by the assessee. The judicial pronouncement in the case of D.&H Enterprises [2016 (8) TMI 510 - GUJARAT HIGH COURT] in which it was held that the solitary reason of not serving of summons cannot be relied only by ignoring the other relevant material produced by the assessee.
As noticed that in the case of the assessee, the confirmation with the name, address, copy of ledger account, copy of bank statement and PAN number in respect of the parties were filed before the Assessing Officer, therefore addition should not be made in the hands of assessee.
Assessee has proved the source of money and the assessee need not to prove ‘source of the source’, as held in the case of Prayag Tendu Leaves Processing Co, [2017 (12) TMI 932 - JHARKHAND HIGH COURT] - assessee`s case is covered by the judgment of Gopal Heritage (P.) Ltd, [2021 (10) TMI 422 - GUJARAT HIGH COURT] wherein the Court held that where assessee had taken unsecured loans from some persons and Assessing Officer made addition under section 68 on ground that assessee had not been able to prove immediate source of cash-in-hands of party, since all ingredients contemplated under section 68 had been duly satisfied in aspect of identity of creditors, genuineness of transactions and their creditworthiness, said addition was to be deleted
As evident that the assessee had produced all relevant details and documents in its possession, namely, names and addresses, PAN numbers, confirmations, bank statements and copy of ledger accounts. The amounts in question had been received by way of account payee cheques.
As permanent account numbers and the income tax returns of all the creditors had been furnished by the assessee,AO could have easily verified the same, hence there is no failure on the part of the assessee to furnish relevant documents and evidences before the AO.
Onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, AO is dissatisfied about the source of the amount deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). Therefore, AO was not justified in treating it as unexplained cash credit. The assessee has satisfactory explained the source. Ground of assessee’s appeal is allowed.
-
2023 (5) TMI 1212 - ITAT DELHI
Assessee in default u/s 201(1) - non-deduction of TDS on provision for expenses made at the end of the year u/s 194C, 194I and 194J - AO observed that the provision had been made on ad hoc basis in respect of various expenditures by the assessee - HELD THAT:- It is a fact on record that such provisions were made in view of accrual method of accounting followed by the assessee and the same were reversed in the books of account on the first day of the immediately succeeding year. Not in dispute that as and when the invoices are received by the assessee in the succeeding year with date of invoice falling in the succeeding year, the same are processed for payment wherein due deduction of tax at source have been made and remitted to the account of the Central Government within the prescribed time. This is a consistent practice followed by the assessee on year-to-year basis.
The fact of the assessee deducting the tax at source in the succeeding year and remitting the same to the account of the Central Government on various dates are enclosed. See case UCO BANK VERSUS UNION OF INDIA & OTHERS [2014 (11) TMI 412 - DELHI HIGH COURT]
We find that in the absence of an ascertainable amount and identifiable payee, the machinery provisions of recovering tax deducted at source falls flat because in either way, it does not aid the charge of tax u/s 4 of the Act, but, takes a form of separate levy independent of other provisions of the Act. Similar view was also taken in yet another decision of the Hon’ble Jurisdictional High Court in the case of DCIT vs. Ericcson Communications Ltd. [2015 (9) TMI 507 - DELHI HIGH COURT].
Thus we hold that the assessee cannot be treated as an ‘assessee in default’ for mere book entries passed within the meaning of section 201(1) and consequentially interest u/s 201(1A) is also directed to be deleted.
Assessee in default u/s 201(1) and interest u/s 201(1A) levied - short-deduction of tax at source on certain expenditures - HELD THAT:- We find that the assessee had explained before the lower authorities that some of the payees had furnished low tax deduction certificate obtained u/s 197 of the Act from their TDS Officer and had furnished the same to the assessee. Accordingly, the assessee had deducted the tax at source in accordance with the rates prescribed in the low tax deduction certificate u/s 197 with effective date mentioned thereon. Hence, it was the case of the assessee that there was no short-deduction of tax made by the assessee at all and that all the taxes have been duly deducted and remitted in accordance with the provisions of Chapter XVII-B of the Act.
CIT(A) had merely directed the AO to examine the same and decide the issue accordingly. The assessee is directed to produce the certificates obtained u/s 197 before the ld. AO to justify its case. Accordingly, the issue in respect of short-deduction of tax at source is hereby remitted to the file of the ld. AO.
Assessee in default u/s 201(1) and liable for interest u/s 201(1A) - professional expenses incurred by the assessee - HELD THAT:- We find that a sum has been transferred by the assessee to ‘Professional charges’ separately. This clearly acts to prove that the professional expense as already included in the aggregate retainership fee. Hence, the contentions of the Revenue that professional expenses had not been subjected to deduction of tax at source, is factually incorrect. Direct the ld. AO to delete the demand raised on account of professional expenses both u/s 201(1) and u/s 201(1A) of the Act.
Assessee in default in respect of rent expenses, retainership fee and search engine marketing expenses - HELD THAT:- As stated earlier some of the parties to whom payments were made had furnished lower tax deduction certificate u/s 197 of the Act and some of the parties to whom payments were made were not liable to be subjected to TDS provisions as per the Act. In the interest of justice and fair play, we deem it fit and appropriate to restore this issue to the file of the ld. AO for denovo adjudication qua this aspect of the expenditure.
-
2023 (5) TMI 1211 - ITAT DELHI
Penalty u/s 271B - failure to get his books of account audited by a qualified Chartered Accountant, thereby violating the provisions of section 44AB - as explained that the assessee is engaged in the business of supply of milk (Amul) on behalf of Gujarat Co.op Milk Marketing Federation Ltd. known as “Amul Milk” in the assigned area - HELD THAT:- During assessment proceedings as also before the Ld. CIT(A) in penalty proceedings the assessee explained, inter alia that it was his first year of business and that he was under the bonafide belief that the provisions of section 44AB as inapplicable to him as he was only a commission agent supplying milk on behalf of “Amul Milk” in the assigned area and was entitled to fixed commission only. In our opinion, the explanation offered by the assessee constitutes ‘reasonable cause’ and the assessee is eligible to the protection envisaged under section 273B.
It is an admitted position that during the course of assessment proceedings, the assessee got the tax audit done and submitted the tax audit report before the Ld. AO when he was made aware that initial receipts having been deposited by him in the bank account maintained by him necessitated tax audit as per the provisions of section 44AB. This factual position has altogether been ignored by the Ld. AO/CIT(A) and the impugned penalty has been levied/confirmed.
As during the course of assessment proceedings, the assessee got the tax audit done and submitted the tax audit report before the Ld. AO when he was made aware that initial receipts having been deposited by him in the bank account maintained by him necessitated tax audit as per the provisions of section 44AB. This factual position has altogether been ignored by the AO/CIT(A) and the impugned penalty has been levied/confirmed.
The contention of the assessee before the AO/CIT(A) has been that the assessee is only an agent of Amul. The assessment order passed on 28.12.2019 reveals that the assessee explained in detail the modus operandi of his business which after examination has been accepted by the Ld. AO.
The explanation offered by the assessee has been discarded by the Ld. CIT(A) without any valid and cogent reasons. As following the decision in Mohd. Javed’s case [2023 (3) TMI 1364 - ITAT DELHI] we hold that the impugned penalty is not sustainable which we hereby vacate. Decided in favour of assessee.
-
2023 (5) TMI 1210 - ITAT HYDERABAD
Unaccounted income - income from film distribution - difference between the amount being the collection as per document impounded and as shown by the assessee on account of assessee’s share received from the film distributor on account of the movie “Pokiri” - HELD THAT:- A perusal of the fax received from Asha Film Distributor, clearly shows the share of the assessee on account of the picture “Pokiri”. The above amount is for 91 days.
The said fax clearly gives all the details and was recovered from the office of the assessee which was received in his Fax number only. When the said document gives the time, date, name of the Centre with whom the assessee is doing business giving full details of the share of the assessee, it cannot be said that it is a dumb document.
Although film distributor has stated that he has given only Rs.1,40,00,000/-, however, he did not produce any books of account to support his claim nor he has given any explanation as to how and why the fax was sent from his office to the assessee. Since the impounded document clearly gives full details of the share of the assessee and since the learned CIT (A) out of the above has allowed certain expenses towards commission, therefore, in absence of any contrary material brought to our notice, the order of the learned CIT (A) is upheld and the grounds raised by the assessee on this issue are dismissed.
CIT (A) power in directing AO to enhance the income - HELD THAT:- As held in various decisions that the power of the CIT (A) is co-terminus with that of the power of the AO and the CIT (A) can do which the Assessing Officer has failed to do. Since CIT (A) has already deleted an amount and another amount subject to certain verification, therefore, by directing the AO to rectify the mistake amounting to Rs.31.00 lakhs does not amount to any enhancement of income. Therefore, he is not required to issue any notice for enhancement of income. In any case, the learned CIT (A) has given a simple direction to rectify the mistake which the AO has committed by not adding the amount which has attained finality . Therefore, the order of the CIT (A) on this issue is justified. The grounds raised by the assessee on this issue are accordingly dismissed.
-
2023 (5) TMI 1209 - ITAT HYDERABAD
Depreciation on goodwill - goodwill as acquired during business acquisition - Company has entered into a business acquisition agreement to acquire the business of four Soft Limited ('Four Soft'), as a going concern on slump sale basis - consideration paid in excess of the book value of the assets acquired inter alia consists of the attributes of goodwill.
HELD THAT:- We find merit in the argument of assessee that the purchase consideration was attributed to the business acquired from Four Soft which is a bundle of the components and described in Clause 6.2.2. of the BTA. Details furnished by assessee in the paper book that with the above benefits accrued on transfer of business, the business of the assessee has increased substantially from financial year.
As the transfer of IP from Blujay India to Blujay UK cannot question the benefits accrued from the bundle of assets transferred in the course of acquisition as IP was just a part of the assets acquired from Four Soft. Therefore, argument of the Revenue that the underlying asset consisting goodwill is transferred cannot be accepted as IP in entirety did not result in creation of goodwill and the goodwill is a sum paid for acquisition of all the assets and rights i.e. the “Business Commercial Rights” acquired from Four Soft.
As find from the details furnished by the assessee that post transfer of IP to Blujay UK, IP platform & licence access was provided back to Blujay India which is in turn providing software development support & distribution services in India to domestic third parties.
50% of such income has also been offered to tax in India. From the details furnished by the assessee, we find it is only the ownership of the IP that is transferred to Blujay UK and Blujay India is still benefitting out of the other assets acquired namely business contracts, employees, business permits, policies, readymade business etc. - Transfer of IP to UK was on back-to-back basis without any capital gains and the assessee has not claimed any depreciation on the IP transferred during the year.
We find merit in the argument of assessee that the net balance of purchase consideration paid, and the value of net assets acquired is Goodwill and the transfer of IP to BluJay UK cannot affect the value of goodwill as the Goodwill is rightly attributed to all the assets acquired from Four Soft and benefits accrued to BluJay India. Once the existence of Goodwill is established, Depreciation on such goodwill cannot be questioned further.
As following the decision of Avis Hospitals India Ltd [2022 (7) TMI 268 - ITAT HYDERABAD] we are of the considered opinion that the assessee is entitled to claim depreciation on goodwill. Decided against revenue.
-
2023 (5) TMI 1208 - ITAT HYDERABAD
Rectification u/s 154 - apparent mistake in the order passed by the AO in the year 2009 - whether after finalization of the assessment proceedings up to the level of the Tribunal and after dismissing the M.A. can assessee file an application under section 154 before the AO on the same issue? - HELD THAT:- Whether the income tax authorities mentioned u/s 116 can rectify any mistake in its order which is though not apparent but will have any effect of setting aside the order passed by the superior authorities. No doubt that the income tax authority can rectify any apparent mistake in its order however, when the order of the AO, has been upheld by the ld.CIT(A) and thereafter by the Tribunal, in that eventuality, AO is denuded from rectifying any such mistake, as it would lead to giving unbridled power to AO/ ld.CIT(A) to unsettled the settled position of fact and law and will lead to chaos and anarchy.
In the present case, after the Tribunal had dismissed the appeal of the assessee on merit, AO has rightly dismissed the rectification application filed by the assessee as the AO was duty bound to implement the order passed by the Tribunal.
After approval of the order without modification by the superior authority, the order of the lower authority ceases to exist.
The order of the Tribunal/superior authority passed by it can only be modified, set aside and annulled by process known to law. Admittedly, the Tribunal has neither recalled its order nor an appeal has been preferred against the order passed by the Tribunal before the hon’ble High Court.
Order passed by the Tribunal has attained finality and is required to be executed / enforced by the Assessing Officer. We cannot subscribe the view of the ld. AR that by rectification, the alleged jurisdictional issue can be looked into by the Assessing Officer or ld.CIT(A) thereby annulling the entire assessment proceedings, more particularly, when the assessment proceedings have already attained finality by virtue of the order of the Tribunal. There cannot be two contradictory orders of the Tribunal one by upholding the assessment and other quashing the assessment based on the jurisdictional error.
A mistake which can be rectified is required to be apparent and should be known to the Assessing Officer without any in-depth analysis. The Hon'ble Supreme Court in the case of Volkart Brothers [1971 (8) TMI 3 - SUPREME COURT]had elaborately discussed the scope of section 154 , hence the mistake pointed by the assessee can not be said to be apparent in nature.
Examining the issue either from the prospective of finality of the first order or from the scope of section 154, we allow the appeal of Revenue and accordingly, the appeal of the Revenue is allowed.
-
2023 (5) TMI 1207 - ITAT CHENNAI
Validity of reassessment proceedings - assessment of shipping freight income in India - documentation charges and vessel handling charges assessed as the income of the assessee - HELD THAT:- Assessee is a Singapore based shipping entity and is governed by India-Singapore DTAA. The assessee claim that shipping income thus earned by the assessee is covered by Article-8 of DTAA which provide that only the resident country would have taxation right to tax the same. Accordingly, the assessee has availed the benefit of Article-8 and filed its return of income by taking benefit of DTAA on freight income.
Whole dispute stem from the fact that the agent was subjected to survey action u/s 133(2A) wherein statement of key persons was recorded. The main issue emerged out of document / vessel handling charges stated to the received by the agent independently. The copies of statement taken during survey proceedings are on record and we have perused the same. The same has also been extracted in the reasons recorded by Ld. AO to reopen the case of the assessee.
The fact of escapement of income is sine qua non to acquire this jurisdiction. Until and unless there is escapement of income, the reopening could not be resorted to under law. We find that in the present case, there are no reasons before Ld. AO to reach such a belief that documentation / vessel handling charges belonged to the assessee and the agent wrongly offered the same to tax. Secondly, there is no escapement of income since the income has already been offered to tax by the agent. Merely because tax rate was higher for principal, the same could not lead to a conclusion that there was escapement of income unless it was conclusively shown that the income of the principal was erroneously offered to tax by the agent. We find that there is no such material before Ld. AO to reach such a conclusion.
There is no material to reach a conclusion that the aforesaid income belonged to the assessee. This being the case, reassessment jurisdiction, as acquired by Ld. AO, could not be said to be valid in the eyes of law and the same is, therefore, liable to be termed as bad-in-law. The fulfilment of primary conditions viz. reasons to believe and escapement of income is sine qua non to acquire the reassessment jurisdiction. If the same are not fulfilled, no valid jurisdiction could be said to have been acquired by Ld. AO.
Simply because tax rate was higher for principal assessee, the same could not be a ground to tax the same in the hands of the assessee unless it was demonstrated that the said income was collected by the agent on behalf of the principal and this income belonged to principal only. We find that there is no material before Ld. AO to reach the said conclusion. Therefore, the assessment framed by Ld. AO is liable to be quashed on this score only.
For every new issue coming before AO during course of proceedings of assessment or reassessment of escaped income and which he intends to take into account, he would be required to issue a fresh notice under section 148. If no disallowance was made for items which led to formation of belief of escapement of income then the reasons for initiation of reassessment proceedings would cease to survive and therefore, there was no justification to make addition on other account. This decision follows the ratio of decision of Hon’ble Bombay High Court in Jet Airways (I) Ltd. (2010 (4) TMI 431 - HIGH COURT OF BOMBAY). These case laws are binding on us. Therefore, in the absence of any contrary decision shown to us, it was to be held that since the reassessment fails on recorded reasons, the assessment of shipping freight income would be out of reassessment jurisdiction of Ld. AO and therefore, liable to be deleted.
The reassessment proceedings as well as consequential assessment framed therein are unsustainable in law and accordingly, liable to be quashed - Decided in favour of assessee.
Whether shipping income is taxable only in Singapore as per Article 8 of the India-Singapore? - DTAA Article 24 would have no application in the case of the present assessee but Article 8 would apply and the assessee would be eligible to claim the benefit of the same since it is more beneficial vis-à-vis statutory provisions of Income Tax Act, 1961. The conditions of Article 24, in our considered opinion, have not been fulfilled in the present case and therefore, the invocation of the same against the assessee could not be held to be justified.
Another line of agreement was that DTAA do not provide for double non-taxation of the income. However, we find that the provisions of Sec. 13F of the Singapore Income Tax Act were already in existence since 01-04-1991 whereas DTAA between the two countries has been signed subsequently on 27-5-1994. Despite that, both the authorities chose not to alter the taxation right of shipping income which is generally available to the country of residence. The DTAA is in the nature of bilateral agreement wherein the two countries have specifically agreed on the taxing rights of particular streams of income. The same has to be given effect to in full, whatever the consequences may be.
Any income of a non-resident shipping company which is a tax resident of Singapore is liable to be taxed only in Singapore but not in India. The provision of Article-24 would apply to income which is exempt from tax as per the tax treaty which is not the case since the international shipping income earned by the assessee is not exempted in India. Therefore, the exclusive right of taxation in one contracting state is not the same as the specific exemption being available in other contracting state.
Shipping income as dealt by Article-8 states that profits derived by an enterprise of a contracting state by operation of ships in international traffic shall be taxable only in the State of residence. The word 'only' debars the other contracting state to tax the shipping income so earned by the assessee even if it is sourced from India. When India does not have any taxation right on a shipping income of non-resident entity, exemption or reduced rate of taxation in the source state is of no relevance because once the taxing right has been given-off, the other conditions like exemption or reduced rate of tax has no bearing on the taxability of particular income in other contracting state. Therefore, the assessee being tax resident of Singapore, shipping income so earned from India on international waters is taxable only in Singapore on accrual basis.
-
2023 (5) TMI 1206 - ITAT AMRITSAR
Unexplained deposits in cash in bank - assessee's father was the owner of agriculture land and the said cash was deposited partly out proceeds from sale of agriculture land belonging to father - as argued AO only had taken the amount for depositing cash in bank but not consider the withdraw of cash during assessment proceeding - HELD THAT:- As it is very clear that the assessee filed the return for the impugned assessment year and the cash deposited from the well explained source for selling of the property of his father. The assessee is a power of attorney holder of his father for selling the land, copy of the power of attorney dated 17.02.2012 along with English Translation are duly.
The documents are duly filed before both the authorities. After considering the factual matrix the assessee cannot be deemed assessee as mentioned by the AO in the remand report. In remand report the ld. AO accepted the fact that the properties are not related with the assessee and the cash was originated from the sale of property and the assessee’s own source which is explained in cash account of assessee.
The concept of the deemed assessee cannot be sustained as per the explanation of section 159 and 160 r.w.s 2(7) - assessee is not liable for payment of tax related to sale of property which belong to his father. The source of cash deposited in bank accounts is well explained considering the cash trial of the assessee.
AO had only considered the cash deposit. Deposit of cash was duly explained during the remand before the ld. AO. Entire issue was explained before both the lower authorities by the assessee. DR has not submitted any contrary fact or any judgment against the submission of the ld. AR. So, the addition made by the ld. AO is quashed. Decided in favour of assessee.
-
2023 (5) TMI 1205 - ITAT CHENNAI
TDS u/s 194C or 192 - short deduction of TDS u/s. 201(1) and interest thereon u/s. 201(1A) - remuneration paid to the consultant doctors - existence of employer and employee relationship - when the engagement of the services of the doctors can be seen to be in the nature of employment? - survey team observed that there exists an employer and employee relationship between consultant doctors and the appellant and thus, the assessee should have deducted TDS u/s. 192 for payment made to the consultant doctors - HELD THAT:- AO grossly misunderstood the model employed by the assessee for employing employee doctors and consultant doctors and took one sample report of an employee doctor and observed that even consultant doctors are governed by said report - fact remains that as per details filed by the assessee, consultant doctors are not governed by said rules and are independent. AO is completely erred in coming to the conclusion that there is an employer and employee relationship between consultant doctors and appellant company and remuneration paid to said doctors is salary which attracts provisions of section 192.
As there is absence of employer and employee relationship. Therefore, opined that the department does not have individual materials to reassess the income of consultant doctors.
As in CIT v/s. Grant Medical Foundation [2015 (2) TMI 457 - BOMBAY HIGH COURT] examined at length the issue as to when the engagement of the services of the doctors can be seen to be in the nature of employment. In this case also the Hon'ble High Court held the relationship between Professional Doctor consultant and the Hospital cannot be treated as Employer Employee relationship, unless there exist the specific Rules and Provisions in the contract of appointment between the consultant and Hospital.
There is no error in the reasons given by the CIT(A) to delete additions made towards short deduction of TDS u/s. 201(1) and interest thereon u/s. 201(1A) in respect of payment made to consultant doctors. Thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the revenue.
Short deduction of TDS - payment to annual maintenance charges for maintenance of medical equipment u/s. 194J OR 194C - HELD THAT:- AMC charges paid by the appellant to various contractors is a simpliciter works contract charges paid for repair and maintenance of medical equipment, which cannot be considered as fees for technical services as defined u/s. 194J of the Act, because said services does not parse required specialized technical knowledge.
As decided in case of M/s. Saifee Hospital [2019 (4) TMI 710 - BOMBAY HIGH COURT] payment for services rendered towards maintenance of medical equipment, is payment for work contract covered u/s. 194C and the same does not involve any technical service, which would require deduction of tax at source u/s. 194J of the Act. CBDT Circular No. 715 dated 08.08.1995, has also clarified the applicability of TDS provisions in respect of payment made to AMC provider by way of question no. 29 and answered that routine, normal maintenance contract which includes supply of spares will be covered u/s. 194C - there is no error in the reasons given by the CIT(A) to delete additions made towards short deduction of TDS on payment made to AMC charges u/s. 201(1) and interest thereon u/s. 201(1A) - Decided against revenue.
-
2023 (5) TMI 1204 - ITAT CHENNAI
Unexplained cash deposits - cash deposits made during demonetization period - assessee submitted that source for cash deposits was out of sale proceeds of ancestral property (agricultural land) and initially receipts from sale of property was deposited into joint account of assessee and sister-in-law and later sister-in-law has withdrawn money from her bank account and gave a gift to the assessee. The source for cash deposit is out of gift received from my sister-in-law - HELD THAT:- From the sequence of events and arguments of the assessee right from the assessment stage to appellant stage, we find that there is inconsistency in arguments in respect of source for cash deposits.
Assessee could not file any corroborative evidence to substantiate his arguments, that why the money received towards sale of property was kept in his sister-in-law bank account, when he was having right and interest in the property.
Assessee could not also explain how the amount withdrawn in the year 2013 was made available for depositing in the year 2016, that too during demonetization period. The arguments of the assessee that money was kept for the purpose of treatment of his brother was also unproved, because no evidence has been filed to justify his arguments and further, there was no proof as to how much was spent for treatment and how much balance was available with the assessee.
It is difficult to accept the evidences filed by the assessee to prove the source for cash deposits during demonetization period - Decided against assessee.
............
|