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Showing 141 to 160 of 1640 Records
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2024 (7) TMI 1500
Validity of Revision u/s 263 - non adhering to procedural requirements and non considring reply and the documents of assessee submitted - HELD THAT:- Section 263 gives power to the Principal Chief Commissioner or the Officer as it is been prescribed that he may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the AO is erroneous, in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order.
The order of the Pr. CIT, therefore, necessarily would require to explain i.e. record reasons to exercise the power under Section 263 of the Act, 1961 to say that the order was prejudicial to the interest of Revenue.
However, in case in hand after that proceedings were initiated, the enquiry was conducted and during such enquiry the reply and the documents were placed by assessee. Section 263 makes it incumbent to the Pr. CIT to conduct enquiry. The enquiry means not to shelve the reply and the documents but to deliberate upon it and the same cannot be set aside on the ground that the Officer is not satisfied with reply. The reasons for satisfaction or non-satisfaction are required to be recorded. In the instant case, after going through para 5 of the order, which is the substratum of the entire issue, it is manifest that the said procedure has not been followed.
We allow the appeal and answer the question of law in favour of the assessee and remand back the case to the Pr. CIT to reconsider the reply and the documents of assessee.
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2024 (7) TMI 1499
Best judgment assessment u/s 144 - Whether action of the authorities below in holding the assessment made by the AO is in violation of Section 145 of the Income Tax Act - HELD THAT:- From the perusal of the aforesaid provision, it is apparent that the petitioner having not further pursued after having been appeared through his counsel, the AO had no other option, but to invoke the provisions of Section 144 above, which provides that if any person fails to make return, AO shall proceed on best judgment assessment basis in the absence of the answered assessee.
Keeping in view above, the action taken by the AO does not warrant any interference. Question is accordingly answered in favour of the revenue.
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2024 (7) TMI 1498
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- Similar issue came up for consideration before a Division Bench of Bombay High Court in Hexaware Technology Ltd.(2024 (5) TMI 302 - BOMBAY HIGH COURT] discussed the issue at length and held that notice u/s 148 after introduction of Finance Act, 2021, cannot be issued by Jurisdictional AO.
Revenue is not in compliance with the Scheme notified by the Central Government pursuant to Section 151A (2) of the Act. The Scheme has also been tabled in Parliament and is in the character of subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act
Thus, as there is no dispute that the JAO had no jurisdiction to issue the impugned notice, the Writ Petition is accordingly allowed and the impugned notice as well as order are hereby quashed and set aside. So also consequential demand notices or penalty notices will also stand quashed and set aside.
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2024 (7) TMI 1497
Exemption u/s 11 - definition of "charitable purpose" under Section 2(15) - ITAT allowed the appeal filed by the assessee/Board setting aside the canceling the Registration of the respondent-Board - HELD THAT:- ITAT has considered the objects for enactment of the Haryana Rural Development Act, 1986. The Board was constituted in terms of the said Act with the purpose of augmenting agricultural production and improving market sales.
The activities have been enumerated to improve development of roads, establishment of dispensaries, water supply & sanitation and other public facilities, conversion of notified market areas falling in rural areas by utilizing technical know-how, construction of godowns and storage places for agricultural produce, construction of rest houses for the visitors in the market area. The Board earnings are the fee prescribed under the Haryana Rural Development Act, 1986 to be made as a per centum of the sale proceeds of the agricultural produce.
It has, on the said basis, reached to the conclusion that the said Board is carrying out activities of general public utility in terms of the new definition of Section 2 (20) of the Act. Upon reaching the factual findings as above, it proceeded to observe that the Commissioner was not justified in denying the Registration to the assessee.
No error in the judgment passed by the ITAT. No substantial question of law.
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2024 (7) TMI 1496
Correct head of income - profits from the sale of lands - ‘business income’ or ‘capital gain’ - Intention of assessee - Revenue contends that though the primary business activity of the assessee is that of running medical shops under the Trade name ‘Sevana’, he had during the relevant assessment years indulged in buying and selling of landed property with a view to earn profit - HELD THAT:- When a property kept not for trade, but for an investment purpose is sold, the gain has to fall under head 'capital gains' and such transaction is only taxable under capital gain and not under adventure of trade. If the Revenue intends to prove the contrary, then the burden is upon it to prove it by reliable evidence. Merely because the assessee makes some profit in a particular transaction, it can not be treated as an adventure in the nature of trade so long as the initial intention or a reason investing money was to hold the property and utilise it for a different purpose.
Having understood the term “adventure in the nature of trade” used in Section 2 (13) of the Income Tax Act as above and that the burden of proving it is on the Revenue, we now proceed to consider whether the the assessee’s investments in real estate, factual details of which were unearthed during the search would justify terming his involvements in real estate transactions as one on capital account or whether the Revenue has sufficient evidence to prove that the activities of the assessee constituted an adventure in the nature of trade.
As noted by the ITAT that the assessee had never treated the properties as stock in trade and the search in the residential and business premises of the assessee had not revealed any material to suggest that the assessee had advertised the sale of properties or that he had made any efforts towards creating or submitting a development plan before any authorities with the objective of developing the property and thus augmenting its value in real estate market.
ITAT has noted that no evidence has been procured to reveal that the assessee had done activities such as plotting, consolidation, laying of roads, preparation of development plans, obtaining permits for piling, excavation etc, or preparation of reports for external financing which are typical activities indulged in by real estate traders.
As the asseesse had held the landed property as investment and disposal of the same would not convert, what was a capital accretion, to an adventure in the nature of trade. The finding arrived at by the ITAT based on the facts and circumstances available at hand, that the assessee had treated the landed property as an investment acquired over the years and did not choose to carry on any commercial activity with reference to such land and had upon noticing favourable market conditions, sold the land and fetched a good price, does not justify the action of the AO to treat the activities of the assessee as adventure in the nature of trade. Decided in favour of assessee.
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2024 (7) TMI 1495
Tribunal extending stay of demand beyond 365 days in the light of the provisions of Section 254 (2A) - HELD THAT:- The appeals before Tribunal in which the impugned interim order was passed granting extension of the stay of demand have been adjudicated, and therefore, for such reason these appeals have become infructuous.
Be that as it may, even otherwise the question of law which has fallen for consideration in the present Appeals filed by the Appellant-Revenue, is no more res integra in view of the decision of Pepsi Foods (P) Ltd. [2015 (5) TMI 655 - DELHI HIGH COURT] in which the Delhi High Court considered the validity of the provisions of the third proviso to Section 254 (2A) and the amendment incorporated to the said provision by Finance Act, 2008 (with effect from 1 August 2008), by the words “even if delay in disposing of appeal is not attributable to assessee” were added. The Delhi High Court, held that the proviso to be illegal and had struck down the impugned part of the third proviso to Section 254 (2A) of the Act, which did not permit extension of stay of the said order beyond 365 days, even if the assessee was not responsible for delaying the disposal of appeal. The decision of the Delhi High Court was confirmed by the Supreme Court in the case of Deputy Commissioner of Income Tax Vs. Pepsi Foods Ltd. [2021 (4) TMI 369 - SUPREME COURT]. Thus in view of the authoritative pronouncement (supra), no fault can be found in the impugned order passed by the Tribunal.
These appeals would not give rise to the question of law, as sought to be raised on behalf of the Appellant-Revenue.
We may observe that similar issue had arisen for consideration of this Court in Fulford (India) Ltd. [2024 (6) TMI 1029 - BOMBAY HIGH COURT] in which considering such position in law as held by the Delhi High Court and confirmed by the Supreme Court in the case of Pepsi Foods (P) Ltd. (supra), this Court had refused to entertain Appeals filed by the Appellant- Revenue, assailing the orders passed by the Tribunal.
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2024 (7) TMI 1494
Reopening of assessment u/s 147 - Validity of the approval granted under Section 151 - notice not issued by JAO - HELD THAT:- There is no question of any concurrent jurisdiction to be exercised by the JAO and the Faceless Assessing Officer (“FAO”) for issuance of notice u/s 148 of the Act or even for passing an assessment or reassessment order.
As observed that when the specific jurisdiction has been assigned to the FAO in the Scheme dated 29 March, 2022 notified in pursuance of the said provision, in such event, it excludes the jurisdiction of the JAO.
As held that as Section 151A of the Act itself contemplates formulation of the Scheme for both assessment, reassessment or recomputation under Section 147, as well as for issuance of notice u/s 148 of the Act, and that the Scheme framed by the CBDT covered both such aspects of the provisions of Section 151A of the Act. It was observed that the Scheme as framed was clearly applicable for issuance of notice u/s 148 of the Act and accordingly, only the FAO can issue the notice u/s 148 of the Act and not the JAO.
In our opinion, there is merit in the contention as raised on behalf of the Petitioner that for the aforesaid reasons, as well, the impugned notice would also be hit by the provisions of Section 151A of the Act insofar as the issuance of notice is by the JAO who has acted without jurisdiction.
The impugned notice issued u/s 148 of the Act is quashed and set aside as being barred by limitation and also being contrary to the provisions of Section 151A.
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2024 (7) TMI 1493
Validity of reopening of assessment - non providing reasonable opportunity of hearing as per Circular dated 22.08.2022 of the Central Board of Direct Taxes - HELD THAT:- This Court has found that such reasonable opportunity of hearing was not given before Order u/s 148(d) was issued.
In our considered opinion, there is no dispute regarding explanation given under Section 148 regarding information that can be relied upon by the Assessing Officer to reopen assessment of escaped income. Revenue Audit Objections can be considered as a valid ground for opening assessment that has concluded.
This Court is of the considered opinion that the reply of the petitioner had specifically asked for documents to be supplied including complete case proceedings and for personal hearing, which was not given. AO has acted in undue haste.
The orders passed u/s 148A(d) and u/s148 are set aside. The respondents shall provide all relevant documents that have been asked for by the petitioner in his representation by making payment of necessary fees to the department, within a period of one week from today. The petitioner shall submit his reply within one week, thereafter. WP allowed.
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2024 (7) TMI 1492
Attachment orders - additional affidavit on record pointing out specific financial constraints on its business operations on account of the interim order - Restraining repatriating royalty or dividend abroad during the pendency of the search assessment proceedings - application oved for modification of Clause 7(iv) in order [2022 (9) TMI 1150 - DELHI HIGH COURT] - HELD THAT:- We note that while restraining the petitioner-applicant from repatriating royalty and dividend abroad, we had reserved liberty to it to approach the Court in case the need so arise.
Both learned senior counsels, submit that since more than two years have elapsed and the search assessment is yet to be completed, there exists no justification for the continuation of that condition. As submitted by learned senior counsels that repatriation of royalty is a contractual obligation and in the absence of any crystallized demand, the conditions as imposed by Clause 7 (iv) are liable to be lifted.
The facts and circumstances warrant the applicant being permitted to repatriate Rs. 97 crores which represents the royalty subject to deduction of tax. The applicant is thus permitted to repatriate moneys payable towards royalty less TDS in the interim and till the matter is taken up for consideration again. We further direct the applicant to provide full and complete details in respect of the royalty repatriation which is proposed to be undertaken to the respondents.
This we so provide since substantial deposits have already been made by the applicant and a demand is yet to be formulated. We also take into consideration the fact that Clause 7(iv) was clearly intended to be a temporary measure liable to hold the field till such time as the search assessment is completed. We had at that time proceeded on the premise that the assessment would conclude shortly or at least within a reasonable period of time. However, almost two years have passed since then. The assessee, thus, cannot be compelled to default on its contractual obligations.
We consequently request the respondents to make all end eavours to ensure that the search assessment is completed with due expedition and preferably by 31 December 2024. The applicant petitioner shall render full cooperation towards that end.
Insofar as the declaration of dividend and its pay-out is concerned, we defer consideration of that issue at this stage. Let the matter be called again to review progress on 14.02.2025
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2024 (7) TMI 1491
Deduction claimed in respect of amounts deposited as “Swachh Bharat Cess” - as per the admitted case of the appellant, the aforesaid payments were placed in the category of "write off of sundry balances" - ITAT held as assessee has failed to demonstrate that the amount was actually paid during the year in terms of section 43B(a), therefore we uphold the disallowance
Appellant contends that although the Swachh Bharat Cess was shown under the category of "write off of sundry balances", it essentially related to amounts paid as cess by the assessee / appellant in the year in question and ITAT has for the first time proceeded to advert to Section 43B(a) and allowed the disallowance altogether.
HELD THAT:- Bearing in mind the aforesaid stand raised, we are of the considered opinion that insofar as this aspect is concerned, it would merit reconsideration by AO.
We, accordingly allow the instant appeal in part and set aside the findings of the ITAT insofar as this aspect is concerned. The matter shall stand remitted to the AO for considering the claim of the appellant afresh.
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2024 (7) TMI 1490
Estimation of income - Bogus purchases - ITAT restricted the disallowance at 6% - HELD THAT:- The view taken and the conclusion arrived at by the appellant Tribunal are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court.
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2024 (7) TMI 1489
Validity of initiation of reassessment proceedings - reason to believe - petitioner had reiterated the contention that it had no transaction with Fortune Graphics Limited and that the entries as appearing in GSTR-1 were made unilaterally - HELD THAT:- As submissions do not appear to raise a substantial jurisdictional challenge and pertain principally to allegations of fact. The petitioner has failed to provide any plausible explanation for the transaction which stood reflected in the GSTR-1 forms.
As is evident from a reading of the order issued u/s 148A(d) AO has taken into consideration facts which would clearly be germane for the purposes of examining whether there was material to suggest that income of the petitioner had escaped assessment.
We take note of the principles which would govern a challenge to the initiation of reassessment proceedings in Article 226 of the Constitution as laid down in Experion Developers P. Ltd [2020 (2) TMI 1061 - DELHI HIGH COURT] and Synfonia Tradelinks Pvt. Ltd [2021 (3) TMI 1177 - DELHI HIGH COURT] held that the expression "reason" in section 147 of the Act means a "cause" or "justification". The Assessing Officer can be said to have reason to believe that income has escaped assessment, if he has a cause or justification to know, or suppose, that income has escaped assessment.the reasons for the formation of opinion should have a rational connection with the formation of the belief that there has been an escapement of income chargeable to tax. WP dismissed.
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2024 (7) TMI 1488
Appeal against order of National Faceless Appeal Centre - Appeal dismissed by CIT(A) being barred by time - CIT(A) who dismissed the appeal on account of delay of 184 days in filing the appeal - HELD THAT:- As in view of the decision of the Hon’ble Supreme Court in suo moto writ petition [2022 (1) TMI 385 - SC ORDER] the learned CIT(Appeals) was not justified in dismissing the assessee’s appeal being barred by time, without discussing the issue on merit. Accordingly, considering the facts and circumstances of the present case and to sub serve the principles of natural justice, we are constrained to set aside the order of learned CIT(Appeals) and restore the matter to the file of learned CIT(A) for decision afresh on merits after affording adequate opportunity of being heard. Grounds are allowed for statistical purposes.
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2024 (7) TMI 1487
Correct head of income - interest income on Inter Corporate Deposits (ICD) and Fixed Deposits (FD) - income of the assessee under the head “Profits & Gains of Business or Profession” OR “Income from Other Sources” - HELD THAT:- The assessee is engaged in the business of leasing & financing. To substantiate nature of business carried out by the assessee, the assessee has placed on record copy of Memorandum of Association (MOA). A perusal of main objects of MOA shows that one of the main objects of the assessee is to carry business of leasing & financing.
In the impugned assessment year AO has changed the head of income from profits & gains from business profession to income from other sources. Primary reason for changing head of income by the AO is, that the assessee is not a registered non banking finance company. The findings of the AO have been upheld by the CIT(A). We do not find merit in the reasons for changing head of income. The object clause of Memorandum of Association clearly defines the objects of the company for which it is incorporated and the business it intends to carry.
Merely, for reason that the company is not a registered NBFC cannot be reason for changing the head of income. It is an admitted fact that in preceding assessment year and succeeding assessment year the Department has accepted interest income as Business Income of the assessee. The assessee has been consistently showing interest income as business income. The rule of consistency demands that the nature of assessee’s income should not be disturbed in one of the intervening assessment years when in the past and in the subsequent assessment years, the Revenue has already accepted the nature of income as Business Income. Thus, in the light of above observations, the ground no. 1 of appeal is allowed.
Disallowance claimed as business expenditure - disallowance of amortized preliminary expenses - AO disallowed assessee’s claim of amortization of expenses in the impugned assessment year only - HELD THAT:- In the subsequent assessment years the Department has again accepted amortization of expenditure. We find no valid reason for disallowing amortization of expenditure in the impugned assessment year when the same has been allowed in the preceding and succeeding assessment years. The AO is directed to allow amortization of preliminary expenses in the impugned assessment year as well. Ground of appeal is thus allowed pro tanto.
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2024 (7) TMI 1486
Addition u/s 56(2)(x) - Difference between consideration and Stamp duty value of property - HELD THAT:- According to the provisions of section 56(2)(x) of the act where any person receives from any person on or after the first day of April 2017, any immovable property for a consideration whereas the Stamp duty value of such property exceeds such consideration by more than ₹ 50,000 or amount equal to 10% of the consideration than such amount should be considered as an income chargeable to income tax under the head income from other sources.
If the parties have agreed to an agreement prior to the year where the amount of consideration is fixed, and consideration is paid in a specified manner, then stamp duty value on the date of agreement should be considered for the purpose of computing the income of the assessee.
Provisions of section 50C will also apply to such provision. Thus, it is apparent that provisions of section 50C are applicable to the seller and provisions of section 56(2)(x) applies to the buyer. At present the benefit of 10% of the tolerance limit is provided under section 50C and the same tolerance limit also applies to provisions of section 56(2)(x) of the act.
Therefore, in the present case the benefit of 10% of the tolerance limit should be allowed to the assessee as if it has operated since the inception of the provisions of section 56(2)(x) and section 50C of the act. In view of this, the addition made in the hands of the assessee is not in accordance with the law and hence the learned assessing officer is directed to delete the addition. Assessee appeal allowed.
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2024 (7) TMI 1485
ALV of residential units held as stock-in-trade - Addition on account of notional ALV in respect of unsold spaces/ flats - CIT(A) deleted addition treating the same as income from house property - HELD THAT:- There is no dispute that under the identical facts in the assessee’s own case pertaining to Assessment Years 1988-89 to 1998-99, the Hon’ble Jurisdictional High Court. [2012 (11) TMI 323 - DELHI HIGH COURT] has decided the issue against the assessee. The contention of the assessee that the flats were not habitable therefore, notional ALV could not have been computed. It is seen that no such contention was made before the authorities below. Moreover, no material is placed before this Tribunal, supporting the contention. Since, under the identical facts, the Hon’ble Delhi High Court has already decided the issue against the assessee and the view of the Hon’ble High Court of Delhi has been affirmed by the Hon’ble Supreme Court [2013 (7) TMI 1111 - SC ORDER] therefore, the finding of Ld. CIT(A) cannot be sustained and same deserved to be reversed.
CIT(A) has deleted the impugned addition without giving specific finding regarding the properties being vacant farm land and there was no construction of house property by the assessee. Therefore, the issue of taxability of properties claimed as being vacant farm lands needs verification by the AO for ascertaining the correctness of the claim that no house/building was constructed on such lands. Thus the issue is hereby, restored to AO. If it is found true that during the relevant time, no house property/commercial space were constructed thereon. No addition would be called for. Thus, Ground No.2 of the Revenue’s appeal is partly allowed.
Allocation of various expenses to eligible projects on the basis sales ratio for computing allowance of deduction u/s 80IB(10) - preliminary objections of the assessee against allocation of expenses is that the assessee company has been maintaining separate books of accounts, qua the eligible projects which is duly supported by the audit report in Form No.10CCB - HELD THAT:- We find that Ld. CIT(A) has deeply considered the facts and submissions of the assessee in respect of the allocation of advertisement and publicity expenses and returned finding on fact that the expenditure incurred in current year could not be compared for allocation purpose, the average expenses on advertisement incurred during AYs 2005-06, 2006-07 & 2008-09 should be taken into consideration.
We are of the considered view that this finding of CIT(A) is correct because the benefit of advertisement by the assessee in earlier years i.e. 2005-06, 2006-07 & 2008-09, would also certainly pass on to the year under consideration. Therefore, CIT(A) has rightly allocated expenditure on pro-rata basis in the sale ratio u/s 80IB(10) of the Act - Hence, no interference is called for on this issue.
Disallowance of interest on the borrowed capital - CIT(A) has given a finding on fact that most of the projects are eligible for deduction u/s 80IB(10) of the Act, are more than 90% completed prior to 01.04.2006 and were running in surplus. Therefore, no allocation should have been made qua the interest on borrowed funds on all projects where section 80IB(10) of the Act, was claimed as internal accrual being higher than the investment. This finding of CIT(A) is not rebutted by the Revenue by bringing any contrary material therefore, we do not see any reason to interfere in the same.
Decision of the CIT(A) in allocating the expenses of meeting fee of Directors -As we are of the view that Ld.CIT(A) has rightly given a finding that such fee related to meetings of the Directors and such meeting issues related to eligible projects would also be subject matter. The assessee has not furnished Minutes of Board meeting to support its contention that no agenda related to the eligible projects was discussed in these meetings. In the absence of such evidence, we do not see any merit in the contention of the assessee. CIT(A) in respect of Director’s travelling has given a finding that foreign travelling by the Directors was not related to any eligible projects. This finding is not rebutted by the Revenue by placing any contrary material on records - Ground of appeal of Revenue against deletion of allocation of expenses to eligible project are dismissed.
Allowing setting off losses against profits of succeeding years - Losses of earlier years which had already been set off against other income in earlier years, could not be notionally set off again while computing current income admissible for deduction u/s 80IB(10) of the Act during relevant year. In the light of binding precedent cited by assessee wherein it has been held that “loss if already absorbed against the profit of other eligible project could not be notionally brought forward”.
Revenue has not brought any contrary material to rebut the contention that losses of earlier year which had already been set off against the income of the eligible projects in earlier years could not be notionally brought forward. Therefore, we do not see any reason to disturb the findings of CIT(A), the same is hereby affirmed. Thus, Ground No.7 raised by the Revenue is dismissed.
Addition u/s 14A of the Act r.w. Rule 8D - CIT(A) deleted addition - HELD THAT:- CIT(A) was of the view that no disallowance u/s 14A should be made in the case of the assessee company as the AO was unable to establish any link between fund borrowed from public deposits and the fund that was used for the purpose of earning of exempt income.
We do not find fault with this finding of CIT(A), even before this Tribunal, no material is furnished suggesting that the investments were made out of borrowed fund and/or any expenditure related to earning of exempt income is debited to profit and loss account by the assessee. In the absence of such evidence, we do not see any merit in the grounds of appeal raised before us. Hence, the same is hereby rejected.
Allocation of retainership fee - As contended this expenditure ought not to have been attributed to the eligible projects as the assessee has been maintaining separate books of accounts for each eligible projects - HELD THAT:- We do not see any merit into the contention of the assessee that no services were rendered qua the eligible projects. No detail has been filed regarding nature and scope of services rendered to the assessee by the retainers. In the absence of such evidences, we do not find fault in the finding of Ld.CIT(A), the same is hereby affirmed. Ground No.2 of the cross-objection raised by the assessee, is rejected.
Allocation of Director’s meeting fee - Undisputedly, the assessee has not furnished any evidence supporting its contention that no agenda related to eligible projects was discussed. In our considered view, it is highly improbable that no agenda related to eligible projects was discussed in Director’s meeting. The assessee has not furnished any register recording minutes of Director’s meeting. Therefore, in the absence of the same, it cannot be definitely concluded that no agenda was discussed related to eligible projects. Therefore, Ground raised by the assessee in the cross-objection is rejected.
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2024 (7) TMI 1484
Disallowance u/s 14A - assessee has not received any exempt income - HELD THAT:- The settled legal position is that no disallowance u/s 14A is called for where there is no exempt income earned during the year. We note that the Ld. CIT(A) has failed to consider the submissions made by the assessee and dismissed the appeal in a very casual manner.
Addition confirmed by the Ld. CIT(A) is not justified and cannot be sustained. In view of the fact that no disallowance is called for where there is no exempt income.
As decided in R. M Commercial Pvt .Ltd. [2022 (2) TMI 1456 - CALCUTTA HIGH COURT] no disallowance u/s 14A is called for as the assessee has not received any exempt income during the year. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.
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2024 (7) TMI 1483
Exemption u/s. 11 - Charitable activity - as per DR income derived by the assessee in the nature of ‘trade or business’ when the gross receipts exceeds Rs. 25 lakhs - claim of the assessee that the sale of welfare funds stamps to its members are even to the general public would render the activity to be advancement of other object of general public utility in terms of section 2(15) - HELD THAT:- It is an admitted fact that the Tamilnadu Advocate’s Welfare Fund Act, 1987 was created by the State Legislature dated 07.12.1987 (Act No. 49 of 1987) for providing death benefits to the family members of the deceased advocates, who have joined as member in the said scheme. The source of income for the said scheme is income generated through sale of welfare fund stamps, life time subscription from members, interest on corpus deposits and Government grant.
Section 16 of the Advocate’s Welfare Act, 2001 deals with the Recognition of the Association by the State Bar Council and nothing has been mentioned therein regarding the prior approval from the Bar Council of India before forming a welfare fund. Since, the assessee fund is enacted prior to the formation of the Central Act namely Advocate’s Welfare Fund Act, 2001 and the saving clause is provided u/s. 38 by the Advocate’s Welfare Fund Act, 2001, there is an exemption for the applicability of the Central Act of the State of Tamilnadu.
Since, section 23 of the Central Act provides for exemption of Income-tax to the Advocates Welfare Fund of the State against the provisions of section 11 and section 2(15) of the Act is not applicable to the Tamilnadu Advocates welfare Fund. Therefore, we are of the considered view that the assessee is exempted from income-tax and uphold the order of the ld.CIT(A) and hence, dismiss the appeal of the revenue.
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2024 (7) TMI 1482
Addition for unexplained/unreconciled deposits - Estimated addition of 21% was made for alleged difference between the deposits appearing in the Bank statement, vis-à-vis the books of account - HELD THAT:- AO has grossly erred in simply matching the net decrease under the head “loans and advances” appearing in the balance sheet with the credits or receipts of Bank statement.
Since there is no difference as alleged by AO in the assessment order framed after directions of the ld. PCIT, we are inclined to set aside the finding of ld. CIT(Appeals) and delete the addition (addition made by the ld. Assessing Officer in the order under section 143(3) of the Act, which was further added by the ld. Assessing Officer in the order framed under section 143(3) r.w.s. 263 of the Act). Thus effective grounds of appeal raised by the assessee are allowed.
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2024 (7) TMI 1481
Disallowance of commission paid to the Director u/s 36(1)(ii) - AO rejected the submission of the assessee on the ground that it is only an arrangement to avoid dividend distribution tax and deduction cannot be allowed - as per AO board resolution cannot be considered as evidence of extra service provided by the director as the board is constituted by the director employee to whom payment is made - HELD THAT:- AO primarily relied on the case of Dalal and Broacha Stock Broking Pvt. Ltd. [2011 (6) TMI 251 - ITAT, MUMBAI] which is factually distinguishable. In the present case, the assessee has provided substantial evidence demonstrating the services rendered by Shri Girish Chovatia/Director and the resultant benefits to the company.
The case laws cited by the assessee before the Ld.CIT(A), particularly M/s Nat Steel Equipment Pvt. Ltd. [2018 (6) TMI 750 - ITAT MUMBAI] and M/s.Marks Shipping Pvt. Ltd. [2016 (10) TMI 805 - ITAT MUMBAI] support the view that commission paid for actual services rendered cannot be disallowed merely on the presumption of tax avoidance. AO did not provide concrete evidence to show that the payment was made to avoid DDT. The assessee has clearly distinguished the judgement relied upon by the AO and the Ld.CIT(A).
Thus, we hold that the commission paid to director/Shri Girish Chovatia is an allowable business expenditure u/s 36(1)(ii).
Disallowance of weighted deduction claimed u/s 35(2AB) - claim denied relying upon Form 3CL issued by DSIR - HELD THAT:- AO's reliance solely on the DSIR report, without considering the detailed books of accounts and certification by a Chartered Accountant, is not justified. The principles of natural justice require that any reduction in the claim should be substantiated with clear reasons and the assessee should be given an opportunity to respond.
Following the judgment in Bosch Ltd. vs. Secretary, DSIR [2016 (4) TMI 1294 - KARNATAKA HIGH COURT] we hold that the restriction of the weighted deduction u/s 35(2AB) of the Act by the AO is not sustainable. Accordingly, the disallowance made by the AO and confirmed by the Ld.CIT(A) is deleted, and the assessee's claim is allowed in full.
Assessee appeal allowed.
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9911796707
