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Showing 141 to 160 of 1687 Records
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2023 (9) TMI 1548
Direction to respondent to dispose of the refund application - imposition of GST on Service and Freight - whether the imposition of GST on Service and Freight, when it has already suffered levy of customs duties was considered and the notification which had imposed GST was struck down, while that being so the respondents cannot state that the judgment is only in persona and not in rem?
HELD THAT:- The counter filed by the respondents stating that the judgment cannot be treated as “In Rem”, is total non-application of mind and misinterpretation, since the notification issued by the Government itself is struck down then the notification is not existence in the eye of law. In such circumstances the judgment is not in rem would not arise, since the respondents would not have power to impose GST. When there is no power to the respondents, then the imposition of GST is without any authority.
The respondents further submitted that the refund application ought to be submitted within a period of 2 years, but in the present case the petitioners had submitted beyond the period two years. Since the issue was pending before various Courts subsequently, it has been settled by the Hon'ble Supreme Court, then the respondents cannot reject the plea of refund on the basis of limitation. Therefore, the respondents are directed to refund the claim and disburse the amount within a period of four (4) weeks from the date of receipt of a copy of this order.
Petition allowed.
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2023 (9) TMI 1547
Validity of reassessment proceedings - invalid/mechanical grant of approval from the Competent Authority - HELD THAT:- Having perused the approval Form, it is quite obvious that the person seeking the approval has not applied his mind and the PCIT granting approval also has not applied her mind.
This is because the time limit for current proceedings should be covered u/s 149(1)(a) that is for less than three years because the assessment year is 2019-2020 and the notice u/s 148A(b) is dated 29th March 2023. But in the Form, in row 9, it is mentioned as “u/s. 149(1)(b) – for more than 3 years but not more than 10 years”.
If that had been even noticed by the PCIT or the officer seeking the approval, certainly the notice could not have been issued because the quantum, which has escaped assessment, is only Rs.4 lakhs. U/s 149(1)(b) of the Act no notice can be issued if the amount is less than Rs.50 lakhs. Further, if Section 149(1)(b) of the Act is applicable, then the approval could be granted only by the Principal Chief Commissioner and not Principal Commissioner as in this case.
Therefore, in our view, the application for approval and the grant of approval have all been made by the officers mechanically and without application of mind. There is not even an attempt to explain in the affidavit in reply as to how this error has been committed.
We are of the opinion that if only the PCIT had read the Form for approval carefully, she would not have come to the conclusion that there is any material to treat it as a fit case to issue notice under Section 148 or pass order under Section 148A(d) of the Act. Decided in favour of assesse.
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2023 (9) TMI 1546
Disallowance of prepaid finance charges - HELD THAT:- We find that the Hon’ble Supreme Court has considered an identical issue in the case of Taparia Tools Ltd [2015 (3) TMI 853 - SUPREME COURT] and held that once actual payment is made towards any expenditure, merely because a different treatment was given in the books of accounts, could not be factor, which would deprive assessee from claiming the entire payment of interest as deduction in the year of payment.
The Hon’ble Supreme Court in the case of Kedarnath Jute Mfg. Co Ltd [1971 (8) TMI 10 - SUPREME COURT] held that entries in books of accounts is not relevant to decide the issue of deductibility of any expenditure.
In the present case, there is no dispute with regard to the fact that the assessee has incurred the expenditure towards finance charges and also paid during the impugned assessment year itself. Since, the assessee has already paid finance charges, in our considered view, deduction should be allowed towards finance charges including prepaid finance charges, if any, in the year of payment itself, even though, said expenditure has been treated as deferred revenue expenditure or prepaid expenditure in the books of accounts and claimed over a period of loan.
CIT(A), without appreciating relevant facts simply sustained additions made by the AO and thus, we set aside the findings of the CIT(A) and direct the Assessing Officer to delete additions made towards disallowance of prepaid finance charges. Decided in favour of assessee.
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2023 (9) TMI 1545
Refund of IGST - jurisdiction of erroneous punching of duty drawback percentage to deny the refund of IGST - HELD THAT:- It would be appropriate that the concerned authority should apply its mind to the refund application as made by the petitioners, as far as back on 13 March 2020 and take an appropriate decision, which be placed on record of the Court, before the adjourned date of hearing. It is appropriate that the concerned Designated Officer hears the petitioners in passing an appropriate order.
Stand over to 9 October 2023. High On Board.
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2023 (9) TMI 1544
Imposition of stamp deficiency together with penalty - industrial land or commercial land - the proceedings under Section 33 read with Section 47 A has been initiated on the ground that property in question is having commercial value, therefore, deficiency of stamp duty has been imposed - HELD THAT:- It is not in dispute that the petitioner had purchased vacant plot and paid the stamp duty thereof. The plot in question was not only vacant but also has been declared as industrial land and no commercial activity was being undertaken adjacent to the property in question - The record further reveals that while passing the impugned order, a finding has been recorded that at the time of execution of sale deed, plot in question was vacant and no construction was standing thereon and the land was declared as industrial use, still the deficiency of stamp has been levied on the ground that the land in question can be used for commercial purpose.
The deficiency of stamp can neither be determined on the value of future use of the property nor it can be levied on the ground that property can fetch good market value nor in the absence of any declaration made by the State Government changing the nature of the land from industrial to commercial. The judgement referred by the counsel for the petitioner clearly indicates for determination the stamp duty only on the date of execution of deed.
This Court in the case of Sunny Motors [2008 (8) TMI 1030 - ALLAHABAD HIGH COURT] has held that proceedings can be initiated on the basis of report but decision cannot be relied upon on the basis of said report until and unless the Collector has made the inspection himself or through some authorized person. Further the Court has observed that until and unless area in question has been declared as commercial by the State Government, the land use cannot be changed from industrial to commercial and no stamp deficiency can be levied.
The case in hand, the property in question was purchased as vacant industrial plot and no material has been brought on record to treat the same as commercial plot. The authorities below have failed to bring on record that nature of the land in question has been changed by passing appropriate order under the relevant Act converting its use from industrial to commercial. In view of above facts as well as law laid down as aforesaid, the impugned orders cannot be sustained in the eyes of law.
The impugned orders are set aside. Any amount deposited by the petitioner during pendency of the present litigation shall be refunded to the petitioner within 15 days from the date of production of a certified copy of this order before the concerned authority - petition allowed.
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2023 (9) TMI 1543
Validity of Reopening of assessment - Disallowance of provision for forex loss and disallowance of loss on forward contracts - whether the assessee has disclosed fully and truly all the material facts before the AO to complete the assessment u/s 143(3) or not? - HELD THAT:- As per the proviso to section 147 of the Act, it is the duty of the assessee to disclose all the material facts fully and truly to complete the assessment. In this case, we find that the assessee has not filed any details in respect of claim made by the assessee. AO by issuing notice u/s 148 reopened the assessment, which is in accordance with law.
So far as some details are filed and those are not the details actually required to complete the assessment u/s 143(3) and not only that, the details filed by the assessee cannot be said that those are the material facts to complete the assessment. Therefore, we are of the opinion that the AO has rightly reopened the assessment by issuing notice u/s 148. Thus, we hold that the reopening is valid.
On perusal of the reasons recorded by the AO, we find that the assessee has not filed fully and truly all the relevant material facts for completing the assessment. There is no need to record separately that there is a failure on the part of the assessee to file fully and truly all the materials for completing the assessment. Therefore, the arguments are rejected.
Disallowance of provision for foreign exchange losses - Assessee has created a total provision towards restatement of the liability in foreign currency. Since the assessee failed to establish as to how the provision was calculated on a scientific basis in accordance with the method of accounting, the AO disallowed the entire claim and brought to tax.
CIT (A) observed that the assessee has adopted an ad-hoc rate of ₹.50.22 per USD, which was not supported by any document. CIT (A) sustained the loss to the extent and allowed relief to the extent - We have perused the details filed by the assessee in the form of paper book as was filed before the CIT (A) and find that the ld. CIT (A) has rightly confirmed the disallowance and granted. No merits in the arguments of the ld. Counsel for further relief over and above the relief granted by the CIT(A). Thus, we find no infirmity in the order passed by the CIT(A).
Thus, the ground raised by the assessee towards confirmation of disallowance is dismissed. Similarly, the ground raised by the Revenue of deletion of addition to the extent stands dismissed.
Addition of loss on forward contracts - Before us, assessee has contended that the purchase rates are supported by purchase invoice and therefore, the losses claimed by the assessee are allowable on account of actual remittance - HELD THAT:- The production of purchase invoices justifies the deduction on the basis of rate on the date of purchases, thereby, deduction was allowed as purchases are booked as per the rates prevailing on the date of raising the invoices.
The assessee was claiming further deduction at the time of remittances stating that the rate as per forward cover or spot rate on the date of remittances as against the rate booked at the time of purchase has resulted in further loss to the assessee. As rightly pointed out by the CIT(A), we are also of the opinion that this loss can be allowed only when the assessee shows that rate of settlement is spot rate and there was no forward cover or alternatively rate of settlement was the forward rate and produce the forward contract.
Admittedly, the assessee has not produced forward contract either before the AO or before the ld. CIT (A) or even before the Tribunal. The assessee has not produced any evidence whatsoever in respect of the underlying transactions, cancellation of the forward cover contract, the circumstances under which they were cancelled and whether same was a premature cancellation. Since the assessee could not produce even a single document for cancellation, the ld. CIT (A) dismissed the ground raised by the assessee. Before the Tribunal also the assessee has not furnished any document in support of its claim. We uphold the order passed by the CIT (A) on this issue and thus, the ground raised by assessee is dismissed.
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2023 (9) TMI 1542
Stay order in respect of collection of demand raised against the appellant, till the disposal of the appeal pending before the third respondent - HELD THAT:- The order of the Ld' Judge passed in the writ petition is set aside. The order of the first respondent is modified by granting an order of stay, subject to the condition that the appellant shall pay Rs. 40 lakhs (i.e.) around 10% of the demand raised to the authority concerned, which shall be paid in two equated monthly instalments and the first installment be paid on or before 15.10.2023 and the second/final installment be paid on or before 15.11.2023.
It is made clear that the said conditional amount is agreed to be paid by Elgi Rubber Company Limited on behalf of the appellant and in the event of the appellant succeeding before the competent authority, the refund be effected in favour of Elgi Rubber Company Limited, who makes the conditional payment.
Any default on the part of the appellant in payment of instalments within the time stipulated, the respondent authorities shall proceed further in the manner known to law.
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2023 (9) TMI 1541
Exemption from service tax - activity of construction of bridges for railways - taxability in terms of N/N. 25/2012-ST dated 20.06.2012 w.e.f. 01.07.2012 - HELD THAT:- With effect from 01.07.2012 in terms of Notification No. 25/2012- ST dated 20.06.2012, the assessee has been exempted from payment of service tax for services by way of construction, erection, commissioning or installation of original works pertaining to an airport, port or railways, including monorail or metro. Admittedly, the assessee has executed the works which pertain to construction of railways and it has been admitted by the respondent that the assessee has provided such services to M/s RITES Limited. The activity undertaken by the assessee is for construction of railways, therefore, the same is exempted in terms of N/N. 25/2012-ST dated 20.06.2012.
Thus, no demand is sustainable against the assessee.
As no demand is sustainable against the assessee, therefore, there is no merit in the appeal filed by the Revenue - appeal of assessee allowed.
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2023 (9) TMI 1540
Intimation u/s 143(1)(a) - delay in deposit of employees PF/ ESI contributions - HELD THAT:- The Bench has observed that the recently the Hon’ble Supreme Court has opined in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] held that the provision of Section 43B shall not apply to employee’s contribution to PF/ESI and the due date specified u/s 36(1)(va) of the Act shall apply for determination of deductibility of employee’s contribution to PF/ESI.
As decision taken by the Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. [2022 (10) TMI 617 - SUPREME COURT], Strides Arcolab Ltd [2023 (1) TMI 729 - SC ORDER] and in the case of Savleen Kaur [2023 (2) TMI 51 - ITAT DELHI] the Bench sustains the addition confirmed by the ld. CIT(A) and the appeal of the assessee is dismissed so far as to disallowance of payment made after the due date but as regards the arguments of the ld. AR for the payment disallowed which in fact is paid within the time allowed under the respective Act of PF/ESI the Bench directs the ld. AO to look into the payments of the employees contribution made by the assessee timely in respect of ESI/PF and give relief accordingly whose details are submitted by the ld. AR of the assessee after necessary verification.
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2023 (9) TMI 1539
Unexplained investment u/s 69 - assessee has paid unaccounted on-money in cash from undisclosed sources - HELD THAT:- The registered sale-deed 19.03.2013 was for plot (with under structure-level house) only and the construction was to be done subsequently for which the assessee was required to make independent payments. This also corroborates with the seized document “Page No. 58 of LPS-1” re-produced above which clearly mentions “Percentage completion as on 30.11.2016 – 90%”.
In fact, this also meets the contention raised by DR for revenue that the cash-component is always paid before execution of registered-deed because in the present case, the registered-deed is for plot and cash-component (even if believed to paid) was for construction-work and not for plot.
In any case, the seized document “Page No. 58 of LPS-1” clearly shows date of 05.11.2013 which falls within previous year 2013-14 relevant to AY 2014-15, therefore the Ld. AR is very much correct and justified in arguing that there was no cash-payment during the previous year 2012-13 relevant to AY 2013-14. Hence the addition made by AO in AY 2013-14 is patently wrong and unsustainable. Being so, we are inclined to delete the addition made by AO on this reasoning itself. Appeal of assessee is allowed.
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2023 (9) TMI 1538
Rectification of mistake - addition was made in the hand of the assessee on protective basis on account of gold seized by the Revenue - CIT(A) deleted the addition as substantive addition has been made in the hands of the sender of the gold Shri Brij Mohan, a Jeweler based in Hyderabad - Against the finding of ld. CIT(A), the assessee preferred an appeal to the ITAT contending that the gold belongs to him which was allowed by the ITAT in his favour (the assessee) - the Revenue in its MA contended that there cannot be two owners of the same parcel of gold.
HELD THAT: - Error of judgement cannot be described as a mistake apparent from record. In such a situation, the aggrieved party should approach the higher forum for the redressal of the issue involved in the dispute.
ITAT has passed the order after due application of mind. Thus, there cannot be any apparent mistake in the order of ITAT within the meaning of provisions of section 254(2) of the Act. If we reconsider the arguments of the Revenue, the same shall amount to a review of our own order which is not permissible. There is no mistake apparent from the record in the order of ITAT requiring revision u/s 254(2) of the Act. Hence, the MA filed by the Revenue is hereby dismissed.
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2023 (9) TMI 1537
Non- payment of ‘unpaid service tax liability’ u/s. 43B - violation of provisions of Section 43B - HELD THAT:- Issue raised in the present appeal is already dealt with and decided by the Co-ordinate Bench of ITAT, Raipur [2016 (2) TMI 1263 - ITAT RAIPUR], therefore, the issue is squarely covered and accordingly we do not have any second opinion in absence of any deviating view, fact or decision that the revenue could have brought to our knowledge to distinguish.
With regard to the contention of the department, that the issue in hand is covered by order of Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] we are unable to comprehend with such contention of the Department, wherein Hon’ble Apex Court has decided the issue pertaining to the applicability of Section 43B of the Act on delayed payment of employees’ contributions to PF/ESI, therefore, we reject this contention of the Department devide of any merit for issue in hand.
Since the issue pertaining to VAT has been deliberated and decided by the Hon’ble Jurisdictional High Court of Chhattisgarh in the case of Ganpati Motors [2017 (4) TMI 1613 - CHHATTISGARH HIGH COURT] wherein it was categorically noted that in the situation where the Assessing Authority and the First Appellate Authority did not doubt the modality of the accounting system adopted by the assessee, is an outstanding phenomenon which goes in favour of the assessee. Under such circumstances, it is not necessary for the authorities to consider, whether Section 43B of the Act is to be relied on by the assessee to claim any deduction. Decided in favour of assessee.
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2023 (9) TMI 1536
Exemption u/s 11 - Charitable activity or not? - whether the assessee is a “charitable” trust within the meaning of section 2(15) of the Act in order to entitle the assessee to claim exemption of its income earned from its activities ? - HELD THAT:- We have also gone through the order of the ITAT passed in the assessee’s own case for earlier years on the similar issue, which has not been disputed by the assessee either.
We also noted that the grounds raised in the earlier years are also similarly worded. Therefore, looking to the similarity of the issue on hand i.e. whether the activities carried out by the assessee is a “charitable” as defined in the first limb of section 2(15), and whether the activities related to general public utility services as defined in the last proviso of the said section, we apply the decision of the ITAT in the case of the assessee for the earlier year [2023 (3) TMI 920 - ITAT AHMEDABAD] in which the Accountant Member herein was also a party), where after detailed discussion made on the issue in the light of various judgments including that of the Hon’ble Apex Court, it has been held that the activities of the assessee qualify as general public utility activities. The ITAT also restored the issue to the AO to determine whether these general public utility activities are commercial in nature in the light of the directions laid down by the Hon’ble Apex Court in this regard in the case of Ahmedabad Urban Development authority [2022 (10) TMI 948 - SUPREME COURT]
Thus, no infirmity in the impugned order of the CIT(A), holding the activities of the assessee as qualifying as general public utility activities, which we uphold. The issue is further restored back to the AO to decide the commercial nature of the activities in accordance with the direction given by the ITAT in the earlier years. Appeal of the assessee is partly allowed for statistical purposes.
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2023 (9) TMI 1535
Denial of the salary expenditure - assessee has not deducted TDS on salary payment to its employees - HELD THAT:- The salary and wages register has the particulars of the each of the employees in terms of name, father’s name, period of rendering the service during the relevant month, amount of salary and signatures of the respective employees.
The assessee has again submitted details of employee wise and month-wise salary paid to the employees vide his submissions dated dt. 29/11/2019 during the course of assessment proceedings.
Nothing has been brought on record by the AO as to how the documentation so submitted by the assessee was not found acceptable or for that matter, what more documentation is required to provide the authencity and genuineness of the salary expenditure.
The fact that salary payment is below the taxable limit and doesn’t carry TDS obligation u/s 192 and hence, where no TDS is done by the assessee doesn’t lead to the conclusion that salary expenditure itself is not genuine.
Comparative data of salary expenditure for last two years were also submitted and on perusal thereof, it is noted that though there is a marginal increase in the salary expenditure as a percentage of sales but the fact of the matter is that salary expenditure has been incurred by the assessee in the past and the same has been allowed by the Revenue.
Therefore, on what basis, the whole of the salary expenditure has been disallowed during the year is beyond any comprehension. CIT(A) has also summarily rejected the same reiterating the findings of the AO. There is no justifiable basis for denial of the salary expenditure and disallowance is hereby directed to be deleted.
Disallowance of freight expenses - The fact that the assessee has availed the services of only one truck provider cannot be held against the assessee as the said decision is within the domain of the assessee and its business exigency which cannot be challenged by the Revenue.
Regarding the format and contents of the declaration u/s 194C(6), the ld CIT(A) has referred to certain deficiency therein in the impugned order and for removing the said deficiency, we deem it appropriate to set-aside the matter to the file of the AO wherein he shall consider the revised declaration. The assessee is also directed to arrange for the revised declaration as pointed out by the ld CIT(A) and the AO is at liberty to verify the same with M/s Supreme Cargo Carrier and where the same is found to be in order, allow the necessary relief to the assessee. The matter is accordingly set-aside to the file of the AO. In the result, the ground of appeal is allowed for statistical purposes.
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2023 (9) TMI 1534
Denial of exemption u/s 11 - assessment of trust - disallowance of expenses incurred on account of chairperson’s birthday - CIT(A) deleted the addition by taking a view that the assessee has incurred such expenses for the birthday celebration of the chairperson who has already expired and incurring such small expenses in his memory by the staff and students of the institutions - HELD THAT:- The institution/assessee is incurring large amount of expenses and incurring of such small expenses in commemoration of the founder who had devoted for setting up of institution cannot be treated as infringement of provisions of Section 13 of the Act.
CIT(A) also held that there is no element of benefit taken by interested person under Section 13(3) of the Act. We fully concur with the finding of ld. CIT(A) that incurring such a negligible amount which were disclosure of which was made honestly, require disallowance. Thus, we do not find any merit in the grounds of appeal raised by the Revenue and dismiss the same.
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2023 (9) TMI 1533
Unexplained cash transaction recorded during the survey operation - HELD THAT:- As we note that the assessee has surrendered in the assessment year 2012-13 and a sum in the assessment year 2013-14 which the CIT(A) has taken into consideration that while making the offer as additional income by the assessee, entries in Annexure-D of the impounded material has also been considered and after taking into consideration the additional income offered by the assessee which was on the basis of peak level of Hulyati book, which fact has not been disputed by the AO in the remand report, thus, the addition which is covered by the additional income offered by the assessee has been rightly deleted by the CIT(A), by relying upon the various decisions mentioned in his order, which in our opinion does not need any interference on our part. Therefore, we affirm the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground no. 1 raised by the Revenue.
Addition of additional income offered by the assessee which was on the basis of peak amount calculated and after taking into consideration the entire documents seized during the survey which is covered by the additional income offered by the assessee, the addition made by the AO has been rightly deleted by the Ld. CIT(A), by relying upon the various decisions mentioned in his order, which does not need any interference on our part. Hence, we affirm the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground raised by the Revenue.
Disallowance u/s. 40A(3) - As we note that the provisions of section 40(a)(ia) and section 40A(3) is applicable only if the assessee has claimed the cash payment as expense, however, in the instant case the assessee has not claimed the payment as expenses and this submission has not been disputed by the AO in the remand report. Hence, by relying upon the decision of the CIT vs. Alfa Toyo Ltd. [2008 (2) TMI 885 - PUNJAB AND HARYANA HIGH COURT], of the Hon’ble Punjab and Haryana High Court by the Ld. CIT(A), wherein it has been held that the provision of section 40A(3) does not apply to repayment of loan in cash because the loan repayment is of capital nature. Hence, the addition was not justified and therefore, has been rightly deleted by the Ld. CIT(A), which does not need any interference on our part. Hence, we affirm the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground no. 3 raised by the Revenue.
Addition unexplained cash credit / undisclosed receipts - Assessee has considered the entries in cash delivery which is part of Hulyati book while working out the amount surrendered as income and this fact has not been disputed by the AO in the remand report. Hence, the addition made by the AO is not tenable and thus has been rightly deleted by the CIT(A), by relying upon the various decisions mentioned in his order, which does not need any interference on our part. Hence, we affirm the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground no. 4 raised by the Revenue.
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2023 (9) TMI 1532
Correct head of income - gain on sale of land - nature of land sold - LTCG or business income - AO observed that the assessee had purchased agriculture land, thereafter converted it into non-agriculture category in 2001, then converting into a non-agriculture (N.A.) land in the subsequent years, getting the plan approved from the Vadodara Municipal Corporation and later giving right for development of remaining land to the company in which the assessee himself is a Managing Director, since is not found to be in the nature of investment - AO observed that the nature of above activity is basically business activities
HELD THAT:- The said land was admittedly acquired in 2001. The said land was agricultural land, and it is an admitted position that no agriculture activities were ever carried on in the said land since it was acquired in 2001 by the assessee and his brother, both as co-owner. The assessee applied for getting NA(Non agriculture ) permission from Collector order No. S.R./4/2006-07 land/D/VASHI/1355/2008 dated 27/05/2008 and taken the permission for construction from Vadodra Municipal Corporation on 26.08.2008. The assessee also got his lay out map.
Assessee entered into development agreement with the company M/s Mahindra Patel Builders Private Limited on 08.04.2013 and given the land for development. The assessee has claimed that permission for construction was revised on 23.07.2012. The assessee had converted the land use from agricultural to non-agricultural, and paid the prescribed requisite fee including the betterment charges, development charges, scrutiny charges, mapping fees, zoning certificate fees and sketch plan and other charges.
AO observed that the land was purchased, and subsequently substantial expenses were incurred for improvement to make it useful for business purposes and to exploit it in commercial way. The department has claimed that the payments for sale of land was not received immediately on development agreement entered into by the assessee on 08.04.2013 , but were received in 20 months and the assessee shared the risk with developer, while the assessee is claiming that the entire consideration was received in one go.
These are disputed facts, as well detailed investigation of facts are required to identify the true intention of the assessee in acquiring the said land, converting the same into non-agricultural land, taking permission for construction from vadodra municipal corporation, the manner of executing development agreement so on and so forth - Tribunal is last fact finding body.
Assesssee has chosen not to file factual paper book. The adjudication of this appeal requires detailed study of all the factual documents, to enable Tribunal to discern the true intention of the assessee while holding the said land from 2001 to 2013. The manner in which land was acquired, the various applications/plans filed with government authorities. terms of development agreement entered into by the assessee etc. are all required to be analyzed in depth to arrive at true intentions of the assessee, as to whether land is held as investment or as business asset.
The complete facts/evidences/documents are not on record before us as well some facts are disputed. Thus, we are inclined to set aside and restore the matter back to the file of the AO for fresh adjudication. The appeal of the assessee is allowed for statistical purposes.
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2023 (9) TMI 1531
Applicability of Section 50C - multiplicative factor of one (1) OR three (3) applicability to property sold by the appellant assessee - HELD THAT:- The record shows that the AO had applied the multiplicative factor of three (3) on the assessee. In the appeal preferred by the assessee before CIT(A) the CIT(A) has reduced the multiplicative factor to one (1). This conclusion of CIT(A) has been sustained by the Tribunal.
We would like to hear the counsels for the parties in some detail. Accordingly, issue notice.
Disallowance with respect to packaging expenses - The record shows that the respondent/assessee took the stand that the expenses towards packaging were incurred in cash. According to the respondent/assessee, it is in the business of selling electronic goods and uses packaging materials consisting of wooden boxes, tin patti (to tie up the wooden boxes from all sides) and soft materials to be put inside the wooden boxes to preserve the goods that are packed from damage during the transportation. It is the respondent/assessee’s case that these wooden packages are sourced generally from persons, available in the market, who do not conduct an organized business.
It was the assessee’s stand that the payments were not made to another contractor or sub-contractor, as wrongly construed by the AO. Therefore, the respondent/assessee had not deducted tax at source with regard to the payments made for purchasing packaging materials.
As noticed above, has been accepted by the CIT(A), as according to him, there was no material available to show that the bills and vouchers produced before the AO were bogus. Given these findings of fact, we are of the view that no substantial question of law arises, insofar as the second issue is concerned.
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2023 (9) TMI 1530
Revision u/s 263 - Validity of notices u/s 142(1) without DIN - Taxability of transaction of Termination of Call option agreement - addition u/s 14A - HELD THAT:- The consideration received subsequently upon termination of call option agreement resulting into relinquishment of right to purchase the shares would amount to transfer u/s 2(47) exigible to tax u/s 45.
The assessee also made submissions on disallowance u/s 14A and submitted that the assessee inadvertently missed to allow entire expenditure incurred during the year and submitted that the gains could be increased by that amount. Along with this reply the assessee furnished Call option agreement as well as call option termination agreement.
Considering assessee’s reply, AO framed the assessment accepting the returned income of the assessee. In the light of AO’s query and the assessee’s reply thereto, it could be said that the impugned issue of nature of sale consideration on Call Termination Agreement was very much considered by AO during the course of assessment proceedings. The view taken by AO was one of the possible views which, considering the amendment to Sec. 2(14), was one of the possible view.
CIT-DR has argued that the aforesaid notice was issued without DIN and therefore, the same was to be treated as an invalid notice - This argument could not be accepted since non- mentioning of DIN was not the fault of the assessee. Secondly, assessment order has taken cognizance of the reply filed by the assessee. Thirdly, the validity of notice u/s 142(1), as rightly pointed out by Ld. AR, could not be challenged in these proceedings. Further, it is not the case of Ld. Pr. CIT in the impugned order that the assessment was framed on the basis of an invalid notice. Therefore, this argument stand rejected.
Voluntary disallowance as offered by the assessee was not considered by Ld. AO. However, it is undisputed fact that the assessee has not earned any exempt income during the year and therefore, no such disallowance could otherwise have been made by Ld. AO considering the decision of State Bank of Patiala[2018 (11) TMI 1565 - SC ORDER] and Chettinad Logistics P. Ltd. [2018 (7) TMI 567 - SC ORDER]
CIT-DR argued that AO did not verify the genuineness of the investment activity of the assessee company since the financial statements would show that the assessee was merely acting as conduit for making investments in order to exploit 2G license of Aircel Ltd. - There was no other activity carried out by the assessee. However, the genuineness of assessee’s activities has not been questioned either in assessment order or in impugned revisionary order. Pr. CIT merely held an opinion that the income earned by the assessee was to be assessed as ‘business income’ instead of ‘capital gains’. Therefore, this argument has no substance.
The argument that the payment received by the assessee was in relation to non-compete and non-solicit application is not supported by the terms of the termination agreement. In the present case, the assessee had a definite right to buy certain shares and the assessee has transferred this right to another entity for a sale consideration which has been offered to tax. The consideration was not received for not carrying out of any activity in relation to any business or profession. Neither there was a bar on the assessee to purchase further shares of Aircel Ltd. Therefore, the provisions of Sec. 28(va) would not apply. The termination of the call option merely relinquishes the right of the assessee company to buy shares of Aircel Ltd. There is no element of non-compete obligation inherent in the agreement which would trigger the provisions of Sec. 28(va) as alleged in the impugned order.
The case law of Hon’ble High Court of Delhi in CIT vs. Jansampark Advertising & Marketing Pvt. Ltd. [2015 (3) TMI 410 - DELHI HIGH COURT] held that it was necessary on the part of the appellate authorities to ensure effective enquiry, if AO fails to conduct proper enquiry. The same is not the case here.
The decision of Kapurchand Shrimal [1981 (8) TMI 2 - SUPREME COURT] merely states that appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue. However, in the present case, the view taken by Ld. AO is one of the plausible views and the same is not contrary to any law.
In the case law Usha International Ltd. [2012 (9) TMI 767 - DELHI HIGH COURT] it was held that once assessment is framed u/s 143(3), a presumption can be raised that such an order has been passed with due application of mind. The same supports the case of the assessee.
Bank interest has already been offered by the assessee as business income and considering the same as income from other sources would be tax neutral. The set-off of current year’s business losses is allowable to the assessee against capital gains as rightly submitted by Ld. AR. Therefore, the assessment order could not be held to be erroneous or prejudicial to interest of revenue, on these scores. Assessee appeal allowed.
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2023 (9) TMI 1529
Validity of assessment u/s 144C - applicability of time limit prescribed u/s 153 - as decided by HC [2023 (8) TMI 460 - BOMBAY HIGH COURT] having considered the language of Section 144C and 153, we cannot accept that the provisions of Section 153 are excluded to the operation of Section 144C.
Petitioners, therefore, is correct in his submissions that the time limit prescribed under Section 153 of the Act would prevail over and above the assessment time limit prescribed under Section 144C of the Act. This is because the Assessing Officer may follow the procedure prescribed under Section 144C of the Act, if he deems fit necessary but then the entire procedure has to be commenced and concluded within the twelve months period provided under Section 153 (3) of the Act.
The assessment has to be concluded within twelve months as provided in Section 153(3) of the Act when there has been remand to the AO by the ITAT under Section 254 of the Act. Within this twelve months prescribed, the AO has to ensure that the entire procedure prescribed under Section 144C is completed and pass a final assessment order.
HELD THAT:- We observe that the impugned judgment shall not be cited as a precedent in any other subsequent matter until further orders.
We also clarify that the operative portion of the judgment shall apply only insofar as the respondents herein are in question.
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