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Showing 161 to 180 of 1280 Records
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2022 (10) TMI 1121
Validity of reopening of assessment - total violation of the principles of natural justice as no opportunity was given to the petitioner to submit documents, more so because of his sickness - HELD THAT:- Petitioner was not well but the period of his illness was only from 08.12.2021 to 13.12.2021. Notices were issued under the provisions of the Income Tax Act, more particularly under Sections 148, 142(1) and 144 of the Income Tax Act both by the 2nd as well as the 1st respondents long prior to the said date. In fact, the notices were said to have been sent by registered post and also through e-mail but there was no response to any of those notices.
The draft assessment order was also sent to the same e-mail, to which the petitioner responded and communicated with the respondent on 16.03.2022 itself, seeking time to file documents. Therefore, the plea of the petitioner that he is not in a habit of seeing the e-mails cannot be accepted. If that was so, the petitioner could not have responded so fast to the draft assessment sent on 15.03.2022.
Therefore, the argument of learned Senior Counsel that there was total violation of the principles of natural justice cannot be accepted. It may be true that the petitioner herein would have to pay huge amount if the best assessment goes uncontested but, the averments made in the affidavit itself would show the petitioner has got statutory remedy of filing an Appeal under Section 246-A of the Income Tax Act to the National Faceless Appellate Authority. Hence, in view of statutory remedy of appeal under Section 246-A of the Income Tax Act to the National Faceless Appellate Authority, the petitioner can submit all the documents or information regarding cash deposits etc.
Writ Petition is disposed of directing the petitioner to prefer an Appeal in which event the Commissioner of Appeals shall consider the same, including the request for condonation of delay, having regard to the facts involved in the case in accordance with law
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2022 (10) TMI 1120
Revision u/s 263 by CIT - assessee had purchased the property in question with an intention to build Tech Park, but due to recession, the building was not constructed and as the firm had no funds, assessee sold the land - HELD THAT:- A careful analysis of the facts of the case indicate that although the property was purchased with an intention to construct a Tech Park, the same was sold for want of funds. No development whatsoever was made by the assessee. There is no expenditure incurred for anything other than for interest, professional charges and brokerage. This aspect has been considered by the Assessing Officer and he has taken a view that assessee was liable to pay the Capital gains.
In the order u/s 263 Commissioner has recorded that the AO has wrongly treated the land as 'Capital asset'.
As further recorded in assessee's transaction was a solitary transaction and no construction of building nor any development activity was made. This factual finding that the transaction was a solitary transaction and no development activity was made, is in consonance with the facts recorded by the AO.
The only difference is, AO has taken a view that for any purchase or sale of a land, assessee is liable to pay the capital gains tax and the Commissioner has taken a different view. In view of the authority in Malabar Industrial Company Limited. [2000 (2) TMI 10 - SUPREME COURT] merely because two plausible views are available and the AO has taken one view, the jurisdiction u/s 263 cannot be exercised. Invoking Section 263 in the facts and circumstances of the case was erroneous.
Consequently, the first question as to whether the Tribunal was right in holding that there was no infirmity in the order of revision, requires interference and the said finding needs to be set-aside.
Whether the Tribunal was right in holding that no enquiry was made by the AO during the original assessment proceedings? - In view of the admitted facts that the land was purchased and sold without any development, no elaborate enquiry was required and the AO has noted the facts required for the case and passed the AO.
Decided in favor of assessee.
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2022 (10) TMI 1119
Assessment u/s 153C - Necessity of recording satisfaction - HELD THAT:- Assessees' grievance is that the said proceedings are without jurisdiction because recording satisfaction which is a condition precedent before making over it to the jurisdictional Officer even though the AO and the Searching officer are one and the same, is mandatory. This position of law is not disputed by the Revenue. Admittedly, the assessees have filed rectification application before the ITAT with a prayer to call for records and to examine whether satisfaction as required under Section 153C was recorded. The said applications have been rejected.
In Calcutta Knitwears, [2014 (4) TMI 33 - SUPREME COURT] it is held that satisfaction note is sine qua non and must be proved by the Assessing Officer before he transmits the records to the jurisdictional Assessing Officer. The Apex Court, in that case was considering Section 158BD of the Act, which is pari materia with Section 153C of the Act.
In view of the law laid down in Calcutta Knitwears (supra) and the facts and circumstances of this case, we are of the considered opinion that the matter requires a re-look in the hands of the Tribunal
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2022 (10) TMI 1118
Validity of assessment - unexplained credit under Section 68 - stay application filed by the petitioner pending statutory appeals filed by it challenging orders of assessment passed in terms of the provisions of the Income Tax Act - claim of the petitioner had been disbelieved by the Assessing Officer who had proceeded on the basis that the alleged loan represented the funds of the petitioner, being illegal gratification relatable to, and received in connection with the 2G scam - HELD THAT:- All additions have merely been re-confirmed in an automated fashion, simply copying the reasons adduced in the original order of assessment dated 31.03.2014 that has expressly been set aside by the Income Tax Appellate Tribunal as having been framed in blatant disregard to the principles of natural justice, and pasting the same onto the impugned assessment order. Upon a comparison of assessment orders dated 31.03.2014 and 20.12.2019, I find substantial and near total identity in the reasoning adduced for the additions.
No doubt there are two instances where the officer reduces the quantum of the addition, one on account of interest. However that would not, in any way, justify or excuse the mere reiteration of an assessment that has been set aside. The officer does have the liberty to adopt the same view as earlier taken, however, following the proper procedure in regard to the framing of a denovo assessment.
In the present case, the facts, as set out above leave in no doubt that there was no intention of the officer to afford a fair or a denovo hearing, which, in my view, borders on contempt. The framing of an assessment has to be in line with the procedures that have been set out in the Manual of office procedure - Volume-II issued by the Directorate of Income Tax. We refer to the Manual only to drive home the point that the proper procedure for framing of assessment is not just one evolved by the Courts, but one codified by the department by way of the Guidelines framed for the Officers.
The principles of natural justice are reiterated therein on all fronts. That apart at paragraph 3.2.7 the manual requires officers to furnish copies of all documents that are referred to in the assessment order and relied upon by the Officer to the assessee. This has not been done in this matter despite a specific direction by the Tribunal in this regard. Courts have consistently reiterated the position that an order as repugnant to the provisions of natural justice and proper procedure, as the present one, is liable to be set aside and thus have no hesitation in doing so.
The only question that survives is whether, as the Standing Counsel would urge, an opportunity be given once again to the Department to go through the process of assessment and reframe the assessment. I think not. An assessment cannot be set aside merely for the asking and simply as a measure of affording multiple opportunism/innings to the respondents.
There are simply no mitigating circumstances in the present case that commend themselves to me, that would persuade me to remand the matter yet again. Instead, the blatant disregard to all cannons of law, fairness as well as to the order of the Tribunal, convince me to conclude that this is not a matter where the respondent must be afforded one more innings. The impugned assessment stands annulled.
The issue on merits in AYs 2009-10 and 2010-11 pending in first appeal relates to the claim of the petitioner in regard to loans that it had allegedly obtained in the respective FYs, from Cineyug. According to the respondents, the claim is bogus and the funds represent illegal gratification. For the subsequent AY, the petitioner claims that the loan has been repaid from out of advertisement revenues received from four companies.
Though the assessment for AY 2011-12 stands annulled by virtue of the present order, the Commissioner of Income Tax Appeals, while disposing the appeals for the previous two (2) years that is 2009-10 & 2010-11, can certainly examine, analyse and take into account subsequent events including the claim of the petitioner relating to repayment of the loans.
The transaction must be looked at in entirety including events that have transpired in the subsequent years. That is to say that the proper facts in regard to whether the advertisement advances had indeed been received in AY 2011-12 and utilized for repayment of the loans must be looked into by the Assessing Officer in order to determine the veracity of the additions under Section 68 for AY 2009-10 & 2010-11 as well. Annulment of the order of assessment for AY 2011-12 has been effected only for the reasons as above, and does not, by any stretch of the imagination, lead to the acceptance of the petitioner’s claims and arguments on merits and I categorically clarify so.
Direction to the assessee to pay 10% of the disputed amount requires no interference and hence confirm the same.
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2022 (10) TMI 1117
Estimation of income - bogus purchases - HELD THAT:- In absence of any dependable material for the Assessing Officer to come to the conclusion about the bogus purchases made by the assessee to make addition of the entire purchases under section 68 of the Act as income for the year under consideration. CIT(Appeals) and the Tribunal therefore, considering the possibility of bogus purchases on the basis of documentary evidence produced before the appellate authority have arrived at the concurrent findings of fact by holding that factum of said three parties already being engaged in bogus billing was not ruled out and therefore, sustained the addition by estimating 10% of alleged bogus proceedings considering the Gross Profit Ratio of 3.98% shown by the assessee for the year under consideration.
In view of above concurrent findings of the fact arrived at by the CIT(Appeals) and the Tribunal, we do not find any error with the impugned order giving rise to any question of law much-less substantial question of law for consideration.
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2022 (10) TMI 1116
Exemption u/s. 11 - claim denied as delay in filing audit report in Form 10B - whether the CIT(A) is justified in confirming the denial of exemption u/s. 11 of the Act made by the CPC for not filing Form 10B along with return of income in terms of Circular No. 10/2019 issued by the CBDT? - HELD THAT:- CBDT vide para 4(i) clearly explained the delay in filing of Form 10B for A.Ys. 2016-17 and 2017-18 is condoned where the audit report obtained before filing of return of income and furnished subsequent to filing of return of income before due date specified u/s. 139 of the Act. There is no dispute with regard to the assessee filing the original return of income on 02-01-2017 before the date specified u/s. 139 of the Act vide para 4.1 of the said circular. It is also not disputed in obtaining the hard copy of audit report in Form 10B on 03-11-2016 which is the date prior to filing of return of income on 02- 01-2017.
Therefore, assessee obtained Form 10B before filing return of income under the provisions u/s. 139 of the Act but it could not be uploaded digitally for want of access to the Income Tax official website. Therefore, the clarification in condoning the delay in filing Form 10B for A.Y. 2016-17 is binding on the CPC, but however, was ignored to consider the same. Therefore, the delay in filing audit report in Form 10B is condoned in terms of CBDT Circular No. 10/2019 dated 22-05-2019 and the denial of exemption u/s. 11 of the Act by the CIT(A) is not justified. The Additional Ground Nos. 1 and 2 raised by the assessee are allowed.
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2022 (10) TMI 1115
Penalty u/s 271(1)(c) - Addition u/s. 68 - unexplained cash credit in bank accounts of the directors advancing the share application money to the Assessee just before advancing the share application amount - HELD THAT:- Addition was made on cash deposit, which was used for share application money.
We observe that the Assessee has clearly made adequate disclosure of all facts and it is also not a case here, of submitting a claim which is incorrect in law. There is also nothing on record either to suggest that the Assessee had not acted in a bona fide manner and committed conscious defaultand concealed any income or furnished inaccurate particulars.
Simply the Assessee did not prefer any appeal against the said quantum order, ifso facto would not lead to imposition of penalty.On the aforesaid analyzations, in our considered view, the Assessee cannot be held guilty of furnishing of particulars of income, for the purpose of levy of penalty u/s 271(1)(C) of the Act, hence we are inclined to delete the penalty under consideration. - Decided in favour of assessee.
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2022 (10) TMI 1114
Disallowance of claim of depreciation on the withholding tax (TDS liability) borne by the assessee, which has been capitalised - AO noticed that, as per the agreement entered for receiving FCCB, the assessee would be liable to bear withholding tax only in excess of 10% - contention of the assessee that the AO could not have disallowed in the subsequent years, since the depreciation has been allowed in the first year - HELD THAT:- We notice that the above said proposition of the assessee finds support from the decision rendered by Ahmedabad bench of ITAT in the case of Bodal Chemicals Ltd [2019 (10) TMI 914 - ITAT AHMEDABAD] wherein it was held that the revenue, once allowed the deduction for the depreciation claimed by the assessee, then it is debarred to reject the claim of the assessee in the subsequent year on the WDV carried forward from the earlier assessment year. Though the AO had disallowed the claim of depreciation made in AY 2013-14, being the first year of claim, the same was deleted by Ld CIT(A) and the ITAT. As such the claim of depreciation made in the first year has been allowed. Hence, there is merit in the above said contention of the assessee.
There should not be any dispute that the identity and character of the asset, which has entered into the block of asset, would be lost. In the instant case also, the TDS liability borne by the assessee on the premium amount, after it is thrown into the common hotchpotch of block asset in AY 2013-14 has lost its identity and become an inseparable part of block asset insofar as calculation of depreciation is concerned. Hence the AO could not have disallowed the depreciation claim as made in the first year.
We notice that the AO has not enquired on the developments subsequent to the entering of agreement, which compelled the assessee to bear the TDS liability, which in the normal course would be deducted from the amount payable to the payee. Be that as it may, once the assessee has borne the liability of withholding tax, as per the ratio laid down by the Hon’ble Madras High Court [1998 (11) TMI 49 - MADRAS HIGH COURT] the same would acquire the character of cost in the hands of the assessee and the same would go to increase the cost of asset. Once the cost of asset is increased, then the depreciation is allowable thereon. Accordingly, we are of the view that the ratio laid down by Hon’ble Madras High Court in the above said case would apply to the facts of the present case and the same was also applied in the assessee’s own case in
First of all, it is not shown to us that the assessee has got refund of withholding tax. According to Ld D.R, the assessee is acting as representative of the payees. In case of an representative assessee, there is no personal benefit/consequences, i.e., the consequences/benefits arising from the transactions would belong to the principal and not to the representative. It is not shown to us that the refund, if any, that will be obtained out of the impugned withholding tax would be given back to the assessee by the payees to offset the TDS liability already borne by the assessee. If the above said scenario happens, it would happen in future and in that year of receipt, the AO is always be free to examine the tax liability, if any/ tax treatment to be given thereon. Hence, a future contingency, which may or may not happen, cannot be a ground to deny the depreciation claimed on the amount of withholding tax borne by the assessee and which has been capitalized.
In view of the foregoing discussions, we are of the view that the depreciation claim by the assessee cannot be disallowed in all the three years under consideration. Accordingly, we set aside the orders passed by Ld CIT(A) on all the three years and direct the AO to allow the depreciation claimed by the assessee. - Decided in favour of assessee.
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2022 (10) TMI 1113
Rectification order u/s 154 - Addition is made as other income while computing allowable remuneration - HELD THAT:- Remuneration of partners upon which the rectification order was passed thereby making addition, is related to the partners’ remuneration and the same is taxable in the hands of the partners for income from other sources and not in the hands of the partnership firm i.e. assessee firm herein.
The delay before the CIT(A) was also explained by the assessee as the assessee did not receive the assessment order and received the recovery notice of outstanding demand. In fact, the CIT(A) has not taken into account whether the rectification order was received by the assessee or not and did not give any finding as to the service of the rectification order. Thus, the CIT(A) was not right in dismissing the appeal.
Besides this before us, AR has explained the case on merit and from the merit of the case it appears that the assessee has explained all the details related to the business expenses and the same are incurred during the business of the assessee firm. Therefore, the rectification order passed by the AO is not just and proper. Hence, appeal of the assessee is allowed.
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2022 (10) TMI 1112
Assessment u/s 153A - incriminating material found during the course of search or not? - Deduction of interest expenditure u/s 57 - HELD THAT:- On reading of the assessment order, we do not find any material which was unearthed during the course of search on 13/7/2016 related to the adjustment made by the learned assessing officer with respect to the adjustment in the closing inventory of the assessee. Now it has been fairly concluded by the Honourable Supreme Court in Sinhgad technical education society [2017 (8) TMI 1298 - SUPREME COURT] that without reference to incriminating material seized during search, the concluded assessment cannot be enhanced. Therefore ground number 1 and 3, 4 of the appeal of learned assessing officer are dismissed.
Net interest expenditure as cost of inventory is merely an academic in view of our decision in holding that there is no incriminating material with respect to the above adjustment, therefore there is no requirement of going into the merits of the addition. Therefore, ground number 2 is dismissed.
Addition u/s 69A - addition made on account of seized material found during search - HELD THAT:- Therefore, as the amount has already been taxed in the settlement petition of the assessee group, making addition once again in the hence of this assessee will amount to double taxation of the same income. Therefore, ground number 5 – 7 of the appeal are dismissed.
Addition of differential interest income - trust income offered in the return of income is less as per the form 26AS the same was shown - HELD THAT:- We find that with respect to the above addition was found during the course of assessment proceedings and the same was made only on the issue of 3 verification of form number 26AS. Therefore, for the same reasoning given by us that concluded assessment can only be tinkered with incriminating material found during the course of search. Same is absent with respect to this addition. Accordingly, ground number 3 of the appeal is dismissed.
Claim of the interest expenditure and adjustment in value of the closing stock inventory - HELD THAT:- In the present case the return of income was filed on 26/11/2013 and search took place on 13/7/2016 and therefore the impugned assessment year is concluded assessment, which could have been upwardly adjusted only on account of incriminating material found during the course of search. We find that no such incriminating material has been referred to in the assessment order and no such incriminating material has been produced before us during the course of hearing. In view of this following our reasoning given in the appeal of the learned assessing officer for assessment year 2011 – 12 and 2012 – 13 as above, we dismiss ground number 1-4 of the appeal of the learned assessing officer for assessment year 2013 – 14.
Addition of interest on loan - AO aggrieved that appellate authority failed to appreciate the fact that the assessee failed to substantiate with documentary evidence the business expediency of the loan given from which interest expenses was earned and therefore the same is allowable u/s 57 of the income tax act but not u/s 36 (1) (iii) - HELD THAT:- As stated that the fixed deposit receipts made by the assessee is in the normal course of its business and had absolute commercial expediency while doing so and thus the nature of the income of the assessee company must be treated as business income. Further this issue was replied before the learned CIT – A which is also placed - Therein also did not discuss any of the facts as stated before us with respect to the agreement entered into by the assessee.
CIT – A has also did not give any justifiable reason to hold that the income and by the assessee on interest from fixed deposit receipt should be considered as business income but merely believed the written submission of the assessee. The arguments of AR with respect to the stalled project was not considered by any of the lower authorities as emanating from the assessment order or appellate order.
We set-aside appeal of AO back to the file of the learned assessing officer for the purpose of determination whether the interest income earned by the assessee on fixed deposit receipt is a business income on income from other sources. The assessee is also directed to justify the same that interest on fixed deposit receipt should be considered as business income and consequently the deduction of interest expenditure is also required to be examined by the learned assessing officer. Accordingly ground number 1 – 4 of the appeal of the AO is restored back to the file of the learned assessing officer.
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2022 (10) TMI 1111
Reopening of assessment u/s 147 - ITO, Ward-35(4), Kolkata jurisdiction to issue notice u/s. 148 - HELD THAT:- Since the valid notice u/s. 148 of the Act was not issued by the respective AO(Assessing Officer) having jurisdiction over the assessee, the said notice was invalid and the assessment proceedings carried out thereafter u/s.143(3)/147 of the Act are void ab inito and liable to be quashed. Thus, the legal issue raised by the revenue is dismissed.
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2022 (10) TMI 1110
Deduction u/s.80IA(4) - eligible projects undertaken by the assessee - Developer of infrastructure facility v/s contractor - CIT-A granted relief treating that assessee is only a developer of infrastructure facility and not a contractor as alleged by the ld. AO - Recurring issue from past many years - HELD THAT:- Projects were duly examined by the ld.CIT(A) with all supporting documents and he had arrived at the conclusion that the assessee is only a developer. No contrary materials were brought on record with supporting evidences by the revenue to controvert this factual findings of the ld. CIT(A) before us.
In view of the above observations and respectfully following various orders of this Tribunal in assessee’s own case order dated 31/10/2014 and also the decision of the Hon’ble Jurisdictional High Court in the case of ABG Heavy Industries Pvt. Ltd., [2010 (2) TMI 108 - BOMBAY HIGH COURT] we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee. Appeals of the Revenue are dismissed.
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2022 (10) TMI 1109
Disallowance of long Term Capital loss (LTCL) - Whether CIT(A) erred in not upholding the action of the AO in recalculating the purchase price of the shares? - Revenue seeking to disturb the purchase price of acquisition of shares paid by the assessee @15.40 per share in view of the fact that the company in which assessee had invested is a loss making company and did not command any investment at a premium - whether the Revenue could at all disturb the purchase price of acquisition of shares within the mandate provided in the Act? - HELD THAT:- The answer is an emphatic ‘no’ in as much as there is no provision in the Act warranting to disturb the purchase price of shares by the assessee. What is required to be seen is whether the assessee had sufficient sources for making such investment in shares. As stated earlier, there is absolutely no dispute that payments for acquisition of shares at Rs.15.40 per share had been duly met out of disclosed sources of the assessee. Moreover, it is also pertinent to note that the said investment had been made by the assessee in A.Y.2012-13 i.e. the earlier year.
We find that assessee had duly explained the rationale behind making investment in the shares of Pyxis Systems Pvt. Ltd., at a premium, based on the advice given by certain parties and after analysing the various reports that are made available to her by her advisors and had also taken cognizance of the strength of the promoters of the said company and their capabilities. The assessee had also furnished the proper reasons for exiting out of her investment from the said company. None of these explanations furnished by the assessee were found to be false by the Revenue. Hence, it was only the failed investment deal of an assessee being a private equity investor, which had resulted in incurrence of loss for the assessee which is claimed as a long term capital loss by the assessee.
There is absolutely no basis for the ld. AO to arrive at the revised book value per share at Rs.2.69 per share based on the financials as on 31/03/2011 of Pyxis Systems Pvt. Ltd., and concluding that the said rate should be the fair market value which the assessee ought to have paid for the purpose of making investment in shares. If this is to be accepted then what will happen to the remaining money paid by the assessee towards acquisition of shares? The order of the ld. AO is completely silent on this aspect.
Hence, we conclude that the ld. AO does not have any power to substitute the purchase price of shares with a different value than the value at which actually it was paid. We hold that the ld. AR was justified in placing reliance on the decision of the Hon’ble Madras High Court in the case of CIT vs. Sriram Investments [2016 (12) TMI 673 - MADRAS HIGH COURT] - Decided against revenue.
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2022 (10) TMI 1108
Exemption u/s 11 - CIT cancelled the registration issued to the assessee u/s 12A - AO disallowed exemption as assessee has received substantial amount as donation which in turn are transferred to the three parties and the redonation was compulsion to the assessee as per the terms and conditions of getting donations from the donors - HELD THAT:- We find the CIT(A) upheld the action of the Assessing Officer. It is the submission of assessee that since the Tribunal has restored the registration u/s 12A which was cancelled by the PCIT and since the PCIT has passed consequential order by granting registration u/s 12A, therefore, the denial of exemption u/s 11 is not justified.
AO in the instant case denied exemption u/s 11 for the impugned A.Y and following this order he also rejected the claim of benefit u/s 11 for the A.Y 2016-17. After the orders passed by the AO for the A.Ys 2015-16 and 2016-17, the Pr.CIT cancelled the registration issued to the assessee u/s 12A.
We find on appeal by the assessee, the Tribunal [2021 (9) TMI 1435 - ITAT HYDERABAD] restored the registration u/s 12AA of the I.T. Act and the CIT has given the appeal effect and has granted registration u/s 12AA of the I.T. Act. Under these circumstances, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one more opportunity to the assessee to substantiate his case and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2022 (10) TMI 1107
Interest u/s 244A on refund of taxes in respect of TUFS Subsidy - whether the proceedings resulting in refund are delayed for reasons attributable to the assessee and the period of such delay which shall be excluded from the period ? - claim of the Revenue is that the delay is attributable to the assessee as the assessee has not raised any such claim either in the return of income or during the course of assessment proceedings and the same has been claimed by way of additional ground of appeal before the CIT(A) by virtue of which the claim of the assessee has been allowed by the CIT(A) and refund of taxes have become due to the assessee and therefore, the assessee is only eligible for interest from the date of passing of the order of the ld CIT(A) i.e, 18/01/2019 to the date of issue of refund i.e, 13/08/2019 which has already been granted by the AO, and the period starting from the first day of assessment year i.e, 01/04/2011 to 18/01/2019 has rightly been excluded by the AO while computing interest in terms of provision of Section 244A(2)
HELD HAT:- The assessee has filed an appeal before the CIT(A) on 26.03.2014 and during the course of appellate proceedings, the assessee took an additional ground of appeal for the first time before the Ld. CIT(A) vide its letter dated 04.10.2016 stating that TUFS subsidy which has been received by the assessee from the Ministry of Textiles is exempt from tax and should be reduced from the assessed income.
CIT(A) vide order admitted the additional ground of appeal and held that the TUFS subsidy received by the assessee company from the Ministry of Textiles, Government of India be treated as capital receipt and directed the AO to reduce the amount of TUFS subsidy received during the year from total assessed income. Therefore, the assessee shall be eligible for interest on the refund amount with effect from 04/10/2016 (and not from 01/04/2011) till the date of grant of refund. We make it clear that for the prior period to 04/10/2016, it shall not be eligible for interest as the delay is attributable to the assessee.
The time period taking by the ld CIT(A) in disposing off the appeal cannot be attributed to the assessee and the said period cannot be excluded. Admittedly, the assessee has already been allowed interest from the date of passing of the order of the ld CIT(A) i.e, 18/01/2019 to the date of issue of refund i.e, 13/08/2019. Therefore, the assessee shall be eligible for interest for remaining period starting 04/10/2016 to 18/01/2019 and accordingly, the AO is directed to allow the interest for the said period and the order of the ld CIT(A) thus stand modified.
The appeal of the Revenue is partly allowed in light of aforesaid directions.
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2022 (10) TMI 1106
Disallowance u/s 37(1) - allowable business expenditure - payment of compensation for the negligence of the assessee company to provide proper treatment to the patient amounts to breach of contract and the payment of compensation made therefore - HELD THAT:- On perusal of the above finding of ld. CIT(A) and also considering the plethora of judgments filed by the assessee in the paper book so far as the proposition of ld. Counsel for the assessee is concerned that the said amount is not a penalty for an offence or for being any act prohibited by law, we find merit since the said compensation was awarded for the negligence on the part of the hospital in providing proper treatment to the patient named Anuradha Saha but there is lack of mensrea. There is no reference in the litigation before us that the assessee has committed any offence prohibited under the law. Therefore, so far as the finding of ld. CIT(A) that explanation 1 to Section 37 of the Act is not applicable on the assessee is found to be correct and to this extent that the alleged sum is not in the nature of any penalty paid for committing an offence prohibited under the law, the finding of ld. CIT(A) is confirmed.
Whether the said sum is a revenue expenditure is still in doubt and the first appellate authority has also not adjudicated this issue which has been observed by ld. AO in the assessment order for making the alleged disallowance. The alleged sum is admittedly not a penalty in nature but whether it a revenue or capital expenditure still needs to be examined.
We, therefore, are of the considered view that this issue that “whether the alleged sum i.e. compensation paid by the assessee company on the direction of Hon'ble Supreme Court of India to the relative of a patient who died due to the negligence of the doctors and the hospital authority is in the nature of capital expenditure or revenue expenditure” needs to be restored to ld. CIT(A) for necessary adjudication. Needless to mention that the assessee shall be provided fair opportunity of being heard and to file necessary submissions as well as to place reliance on judicial pronouncements if considered necessary so that ld. CIT(A) can decide the issue in accordance with law. We therefore, restore the issue raised by the Revenue in ground nos. 1 to 4 to the file of ld. CIT(A). In the result, ground nos. 1 to 4 are allowed for statistical purposes.
Correct head of income - rent received from IBS tower is Income from house property or Income from other sources - HELD THAT:- CIT(A) following the decision of the Coordinate Bench of this Tribunal in assessee’s own case for AY 2010-11 held it as an Income from house property. Ld. D/R failed to controvert that the issue is covered in favour of the assessee by the decision of this Tribunal in assessee’s own case by placing before us any binding precedence in Revenue’s favour. We therefore, respectfully following the decision of this Tribunal, hold that the alleged rental income from installation of IBS tower has been rightly offered to tax as Income from house property. Thus, no interference is called for in the finding of ld. CIT(A) and ground nos. 5 to 7 raised by the Revenue are dismissed.
Business advance written off - assessee claimed the said amount expenditure by writing it off from the profit & loss account.- AO disallowed the sum treating it as capital in nature - HELD THAT:- We find merit in the finding of ld. CIT(A) who has rightly observed that the said advance was given in relation to the business transaction for setting up a hospital project and since the project was abandoned and the advance given could not be recovered, the said sum is a business loss u/s 28(1) and for this view he placed reliance on the judgment Woodward Governor [2009 (4) TMI 4 - SUPREME COURT] Thus, no inference in the finding of ld. CIT(A) allowing the said sum as revenue expenditure. Thus, ground nos. 8 to 10 raised by the Revenue are dismissed.
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2022 (10) TMI 1105
Deduction 80IB - claim of interest income & other income - only point raised by the ld. CIT(A) is calculated the other income, but no such other income was pointed out in the calculation of the assessee - HELD THAT:- The claim of the assessee related to section 80IB is restricted by the revenue on determination of other income embedded in the profit of the assessee. Respectfully, we observed the direction of Hon’able Apex Court in the case of Krishak Bharati Cooperative Ltd. v. Joint Commissioner of Income-tax [2022 (8) TMI 1296 - SC ORDER] held that the interest income is not part of deduction U/s 80IA.
CIT(A) had rightly pointed out about the embedded duty drawback value in Export Turn Over which is not separately explained by the assessee in the submission. The claim of interest income & other income should be verified by the ld. AO during hearing. The assessee should get reasonable opportunity to submit the evidence during the hearing.Accordingly, the matter is setting aside to ld. AO consider the terms indicated above - Appeal of the assessee is allowed for statistical purpose.
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2022 (10) TMI 1104
Income accrued in India - Addition treating the entire receipt as “Royalty” u/s 9(1)(vi) taxable @ 10% under the India Germany Double Taxation Avoidance Agreement (“DTAA”) - HELD THAT:- We find that the identical issue was raised before the Co-ordinate Bench of the Tribunal in the case of M/s. Springer Verlag GmbH [2022 (8) TMI 1297 - ITAT DELHI] no merit in the findings of the ld. CIT(A) by treating the commission as ‘managerial service’ under the India Germany DTAA.
There is no dispute that the assessee has received commission as per the Commissionaire Agreement with SIPL which is nothing but export commission/sales commission, which has been treated as FTS. Thus we set aside the findings of Ld.CIT(A) and direct the AO to delete the addition. Thus, Ground No.2 raised by the assessee is allowed.
Addition in respect of subscription fee collected from third party customers - HELD THAT:- it is not the case of the Revenue that there was transfer of copyright by the assessee - As respectfully following the judgement of Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P.) Ltd. [2021 (3) TMI 138 - SUPREME COURT], AO directed to delete the additions.
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2022 (10) TMI 1103
Exemption u/s 54F - claim of the assessee for excess exemption denied - HELD THAT:- Exemption u/s 54F was wrongly claimed by the assessee after taking into consideration the amount of Long Term Capital Gain after reducing the exemption claimed under Section 54EC of the Act. As noted by the learned CIT(A) in paragraph No. 6.1.1. of his impugned order, this mistake in the working of exemption under Section 54F was accepted by the authorized representative of the assessee and keeping in view the same, the learned CIT(A) upheld the action of the Assessing Officer in disallowing the claim of the assessee for excess exemption under Section 54F - Thus find no infirmity in the impugned order of the learned CIT(A) in confirming the disallowance made by the Assessing Officer on this issue and upholding the same, dismiss the appeal filed by the assessee.
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2022 (10) TMI 1102
TP Adjustment - comparable selection - Whether high turnover is a ground for excluding companies as not comparable with a company that has low turnover? - HELD THAT:- As relying on case of Autodesk India Pvt.Ltd. [2018 (7) TMI 1862 - ITAT BANGALORE]. we hold that the following 3 companies viz., Exiliant Technologies Pvt. Ltd., Tata Elxsi Ltd., and Mindtree Ltd., whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies.
Action of the TPO in not giving effect to the directions of the DRP directing Devita Engineering (India) Ltd., as a comparable company - It is undisputed that the DRP in its directions directed Devita Engineering (India) Ltd., to be included as a comparable company (vide Paragraph 2.3.20.1 of the DRP’s direction). The TPO, while giving effect to the order of the DRP, failed to give effect to this direction. We are of the view that it would be just and appropriate to direct the TPO/AO to include this company also as a comparable company in the list of comparable companies. We hold and direct accordingly.
Grant of working capital adjustment should be directed to be examined by the TPO/AO afresh in the light of the decision of the tribunal in the case of Huawei Technologies India Pvt. Ltd [2018 (10) TMI 1796 - ITAT BANGALORE] after affording opportunity of being heard to the assessee.
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