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Showing 181 to 200 of 1466 Records
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2024 (6) TMI 1286
Estimation of income - bogus purchases from non-existent vendor’s - CIT(A) restricting the disallowance to 25% of purchases - HELD THAT:- AO has made the addition of 100 percent of the bogus purchases as addition to the income of the assessee by invoking the provisions of section 69C of the act despite the assessee showing the purchase invoices, name, and address of the parties, producing the books of accounts, payments made by the banking channel.
Merely because the notices issued to the supplier u/s 133 (6) could not be served by the AO and further the assessee failed to produce the owner of M/s Rishabh Enterprises the learned assessing officer made the addition to the extent of hundred percent of such bogus purchases.
CIT-A upon the decision of M/s Vijay Proteins Limited [2015 (1) TMI 828 - GUJARAT HIGH COURT] retained the addition only to the extent of 25% of bogus purchases. We find that in the case of NK proteins [2016 (6) TMI 1139 - GUJARAT HIGH COURT] followed the decision of M/s Vijay Proteins Ltd and further in both the cases the addition was restricted to the extent of 25% of the bogus purchases only. Therefore, the grounds of appeal preferred by AO are misplaced - no infirmity in the order of the CIT – A in restricting the addition of bogus purchases to the extent of 25% of such bogus purchases. Appeal of revenue dismissed.
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2024 (6) TMI 1285
Claim of deduction u/s 32AD - additional investment allowance - investment made in financial year 2015-16 - matter referred to third member - opinion difference between the Hon'ble Members of Hyderabad B Bench - claim denied on the ground that the Central Government has issued the notification of the backward area on 20.07.2016 and it is mentioned that the notification will come into effect from the date of publication in the official gazette, therefore, the areas notified can be treated as backward areas from the date of notification only which is 20.07.2016 and therefore, the assessee cannot claim the deduction prior to the date of notification
DR submitted that the assessee has not earned any revenue from its operations and that the notification was issued after the FY, therefore, section 32AD is not applicable to the assessee and strict interpretation should be applied as per the judgment case of Dilipkumar & Company [2018 (7) TMI 1826 - SUPREME COURT] - Whether the notification No. 61/2016/F.No.142/13/2015, TPL issued by the Central Board of Direct Taxes on 20.07.2016 keeps the operation of the provisions u/s 32AD of the I.T. Act in abeyance till 20/07/2016?
AM while upholding the order of the learned CIT (A) was of the opinion that in the gazette notification published on 20th July, 2016, it is clearly mentioned that the notification shall come into force on the date of publication in the official gazette i.e. 20.07.2016 AND noted that the section was inserted by the Finance Act 2015 w.e.f. 1.4.2016. The impugned financial year is 2015-16 and the impugned financial year is prior to the insertion of the section - assessee has claimed deduction u/s 32AD which was not in force for the relevant financial year.
JM held assessee shall be allowed deduction of a sum equal to 15% of the actual cost of such new asset for the A.Y relevant to the previous year in which such new asset is installed - the amendment shall take effect from 1.4.2016 and will accordingly apply in relation to A.Y 2016-17 and subsequent years. Further, the section clearly indicates that such a deduction is allowable for the previous years between 2015-16 and 2019-20 corresponding to the A.Ys 2016-17 to 2020-21. Thus, applicability of section 32AD(1) of the Act to the A.Ys 2016-17 is beyond any controversy.
HELD THAT:- On combined reading of the Memorandum explaining the provisions in the Finance Bill 2015 as well as the CBDT Circular No.19 of 2015 clearly mentions that the provisions of section 32AD are applicable from A.Y 2016-17 for a period of 5 years. Therefore, the first question i.e. as to whether the provisions u/s 32AD of the Act, 1961 are applicable for the investment made in financial year 2015-16 is concerned, the answer, is Yes and is applicable for financial year 2015-16 i.e. assessment year 2016-17.
So far as the remaining two questions referred the assessee in the instant case has set up the undertaking or enterprise for manufacture or production of an article or thing after 1.4.2015 and the new asset has been acquired and installed for the said purpose, during the period beginning from 1.4.2015 from which the date the section 32AD is introduced. Therefore, the assessee is entitled for the allowance u/s 32AD.
As find force in the argument of assessee that neither the section nor the notification states that the deduction u/s 32AD is allowable only for the period starting from the date of notification. In my opinion, the purpose of section 32AD is to give the benefit for a period of 5 years and once the notification is issued, the benefit accrues for full 5 years. If the contention of the Revenue that the assessee is entitled to claim the benefit of section 32AD only w.e.f. the date of notification i.e. 20.07.2016 is accepted, then the condition of getting the benefit for a period 5 years from 1.4.2016 is not fulfilled and this cannot be the mandate of the legislation.
Since the assessee in the instant case satisfies the eligibility criteria, the exemption notification, in my opinion, should be construed liberally. Once the notification is issued u/s 32AD specifying the area to be a backward area. it relates back to 1.4.2015 onwards. There are no further restricting words to support that the allowance shall be available for the period after the date of notification of the backward area.
Hon'ble Supreme Court in the case of Mother Superior Adoration Convent [2021 (3) TMI 93 - SUPREME COURT] has held that wherever there is exemption provision and if there is ambiguity, such ambiguity must be interpreted in favour of that which is exempt.
Since section 32AD is a beneficial provision and since the assessee falls in the beneficial provision, therefore, the provision as well as the notification needs to be interpreted liberally i.e. in favour of the assessee and the assessee is entitled to deduction u/s 32AD.
Order of Third Member - a) The notification issued by CBDT on 20.07.2016 does not keep the operation of the provisions u/s 32AD of the Act in abeyance till 20.07.2016
b) The notification stating that it shall come into force as on the date of its publication in the official gazette cannot override the provisions of section 32AD(1) of the Act.
Thus agree with the order proposed by the learned JM that the assessee is entitled to deduction u/s 32AD.
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2024 (6) TMI 1284
TP Adjustment - Non-grant of working capital adjustment - HELD THAT:- As relying on M/S. SOFTWARE AG BANGALORE [2016 (3) TMI 1384 - ITAT BANGALORE] and M/S. TIVO TECH PRIVATE LIMITED [2020 (6) TMI 708 - ITAT BANGALORE] negative working capital adjustment cannot be carried out, where the assessee was a captive service provider. Here also it is an admitted position that assessee was a captive service provider and its services are entirely rendered to its AE abroad. Its share capital was entirely sourced from its AE abroad. Thus direct that no negative working capital adjustment shall be carried out on the average PLI of the final set of comparables Thus we direct the Ld.AO that no negative working capital adjustment shall be carried out in the light of above order of the Tribunal. Ordered accordingly.
Comparable selection - HELD THAT:- Exclude L&T Infotech Ltd. and Infosys Ltd. from the final list as present assessee is found to be a captive service provider who carries out software development services in accordance with the direction of its associated enterprises and is compensated on a cost+mark-up basis.
Persistent Systems Ltd. company is mostly into product development and owns huge intellectual properties. It is also noted that there is no segmental details available in respect of the various systems of revenue earned by this company. Under such circumstances, we do not find it appropriate to be included in the final list.
Infobeans Technologies Ltd.is not functionally comparable to that of the assessee.
Tata Elxsi Ltd. company is into research and development activities and has developed various product design, industrial design etc. It is also noted that though this company is into software development services, in the process has developed various products that has been sold and revenue has been generated from sale of products. The segmental details in respect of software services rendered and product sale is not available in the financials of this company. It is noted that Hon’ble Hyderabad Tribunal in case of Infor (India) Pvt. Ltd. [2023 (3) TMI 597 - ITAT HYDERABAD] for similar reason has excluded this company from the final list.
Mindtree Ltd. & Nihilent Ltd. companies are into various segments but segmental financials are not available it cannot be a valid comparable vis-à-vis assessee which is a routine software development service provider working on cost + markup model, hence ordered to be excluded.
Cygnet Infotech Pvt. Ltd. company is not captive service provider like that of assessee and is an independent entrepreneur owning intangibles. Under such circumstances, it is not appropriate to consider this comparable with that of assessee. We direct the Ld.AO/TPO to exclude this company from the final list.
Cybage Software Pvt. Ltd. be excluded from the list of comparables basing on functionally not comparable — diversified activities, product company, marketing services, presence of intangibles, lack of segmental data, abnormal margins, onsite revenue and non-contemporaneous data.
Batchmaster Software Pvt. Ltd. comparable needs to be verified based on the annual reports and the filters in accordance with law. we remand this comparable back to the Ld.TPO for necessary verification and to consider the claim of assessee in accordance with law.
Deduction u/s. 10AA - levy of interest u/s. 234A, 234B, 234C - AR submitted that assessing officer failed to include the deduction claimed even though the same was not disputed in the draft assessment order and there is an erroneous levy of interest even though assessee had filed the return of income before the due date - HELD THAT:- We note that all the above issues raised by assessee deserves necessary verification at the end of the Ld.AO. Assessee is directed to furnish details / evidences in respect of the same and the Ld.AO is directed to consider the claim of assessee in accordance with law.
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2024 (6) TMI 1283
Deduction u/s 80IB(10) - units where built up area exceeds the limit of 1000 sq. fts only when area of open sky balcony is added to built area - HELD THAT:- We observe that the Tribunal for the assessment years 2008-09 & 2009-10 in the common order [2016 (5) TMI 1555 - ITAT DELHI] allowed the claim for deduction u/s 80IB(10) in respect of flats excluding the balcony open to sky for the purpose of calculating the built-up area of the individual units
Thus, we allow the claim for deduction u/s 80IB(10) of the Act in respect of those flats which area exceeds 1000 sq. fts excluding balcony open to the sky. The Assessing Officer is directed to verify the claim of the assessee after obtaining the details and allow deduction in view of the observations of the Tribunal in assessee’s own case.
Choice of Method of accounting - CIT(A) directing AO to accept “Project Completion Method” - assessee is neither following cash system nor mercantile system completely - HELD THAT:- As decided in the assessment years 2008-09 & 2009-10 [2016 (5) TMI 1555 - ITAT DELHI] Tribunal decided the issue in appeal in favour of the assessee by sustaining the order of the CIT(A) in holding that the project completion method adopted by the assessee is the right method for determining the profits. Ld. CIT(A) also held that the Assessing Officer should not have been disturbed the project completion method followed by the assessee regularly and there is no cogent reason to change the method.
We further observe that the appeal of the Revenue has been dismissed by the Hon’ble High Court [2017 (5) TMI 1824 - DELHI HIGH COURT] holding that there is no substantial question of law. Hon’ble High Court held that the question “whether the addition made by the Assessing Officer to the income of the Respondent for the relevant year based on percentage completion method was not correct as held by the ITAT” stands answered in favour of the assessee and against the Revenue in PCIT Vs. Shipra Estate Ltd. & Jai Krishan Estate Developers Pvt. Ltd [2016 (11) TMI 1758 - DELHI HIGH COURT] - Decided against revenue.
Partly allowing the deduction u/s 80IB(10) as the project as a whole does not satisfy the conditions enumerated - two projects have been sanctioned by a common approval - HELD THAT:- This ground also decided in favour of the assessee in earlier years [2016 (5) TMI 1555 - ITAT DELHI] by the Tribunal following the decision of Vishwas Promoters Pvt. Ltd. [2012 (11) TMI 1117 - MADRAS HIGH COURT] and also Siddhivinayak Kohinoor Venture [2013 (10) TMI 1295 - ITAT PUNE] as held that the requirement of s. 80-IB (10) of the Act to the effect that project should be approved by a 'local authority' is fulfilled no sooner when the 'housing project' considered by an assessee is approved by a 'local authority'. Moreover, the expression 'housing project' is not defined in the Development Control Rules for PCMC i.e. the 'local authority' in the case before us and thus, the said enactment cannot be resorted to for the purpose of understanding the meaning of expression 'housing project' contained in s. 80-IB(10) of the Act. Therefore, so long as the claim of deduction is in relation to a 'housing project', which has been approved by the 'local authority', it would satisfy the requirement of s. 80- IB(10) of the Act.
There is no dispute that the expression 'housing project' is not defined in the Development Control Rules for PCMC and therefore, the concept of housing project’ as sought to be understood by the AO based on the explanation of Chief Engineer. PCMC is not relevant for the purposes of s, 80IB (10) of the Act. Thus, the argument of the Revenue to the effect that since SWRH and ’S'1 projects have been approved by PCMC under a common approval, the two projects should be combined and considered as a single project for the purpose of s. under s. 80-IB(10) of the Act in our opinion is misplaced. Decided in favour of assessee.
Deduction u/s 80IB(10) - conditions laid down in clauses (e) & (f) of subsection u/s 80IB(10) of sub-section (10) of section 80IB of the Act are not fulfilled - HELD THAT:- As observed that even though there is a reference to clause (e) & (f) of section 80IB(10) of the Act in the assessment order there is no specific finding by the Assessing Officer as to which flats are violative of clause (e) & (f) of section 80IB(10) of the Act. We also observe that there is no separate addition or disallowance for violation of these clauses u/s 80IB(10) of the Act in the assessment order. Similarly, there is no specific adjudication on this aspect of the matter by the CIT(A). In such circumstances, we find no merit in the ground raised by the Revenue. Thus, this ground is rejected.
Assessee appeal allowed.
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2024 (6) TMI 1282
Denial of foreign tax credit (FTC) - delay in filing Form No.67 as filled after the due date of filing the return of income - HELD THAT:- We note from the Form No.35 that the appeal was filed by the assessee before the CIT(A) against 143(1) of the intimation.
As decided in [2022 (10) TMI 87 - ITAT BANGALORE] wherein as held Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Therefore, non-furnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC.
Respectfully following the above judgment, we direct the AO to give credit for foreign tax credit as per Form No.67 filed on 22/10/2022 after due verification.
Appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 1281
Rejection of application filed in Form 10AB, u/s 80G(5)(iii) - application filled beyond limitation period - scope of period as "within six months of commencement of the activities" - CIT(E) held that date of commencement of activities in the assessee’s case is 23.12.1974 and the assessee was supposed to file application in Form 10AB, u/s 80G(5) of the Act, within six months or up to 30.09.2022, whichever is earlier, however, the assessee failed to submit the application within the above said period.
HELD THAT:- We note that the assessee- trust was incorporated on 23.12.1974 and started its activities from 23.12.1974. The assessee-trust has filed application in Form No.10AB, u/s 80G(5)(iii) of the Act on 30.09.2023 and as per Circular No. 8, the assessee-trust was supposed to file the application in Form No. 10AB, u/s 80G(5) of the Act on or before 30.09.2022, hence, there is a delay for 365 days (one year approx).Considering the limitation period as mentioned in section 80G(5)(iii) of the Act, as "within six months of commencement of the activities, whichever is earlier" which is practically impossible for the existing trusts applying for the first time for approval u/s 80G(5)(iii) of the Act, hence we note that there is ambiguity in the provisions of section 80G(5)(iii) of the Act, vis-à-vis, CBDT circular No.6 /2023.
Since the assessee- trust was incorporated on 23.12.1974 and therefore it was not possible to file the application within six months of commencement of its activities, as per the provisions of Section 80G(5)(iii) of the Act, therefore in these circumstances, we do not have any option but to condone the delay in filing Form 10AB, u/s 80G(5)(iii) of the Act and for that we rely on the judgment of the Co-ordinate Bench of ITAT Surat in the case of Vananchal Kelvani Trust [2024 (1) TMI 877 - ITAT SURAT]
Therefore, we condone the delay in filing application in Form 10AB, u/s 80G(5)(iii) of the Act and remit the matter back to the file of Ld. CIT(E), with a direction to decide the application of assessee in accordance with law. We also direct the assessee to file the details and relevant documents, if any, before Ld. CIT(E), as and when required by Ld. CIT(E), for disposal of this appeal. For Statistical purposes, the appeal of the assessee is treated to be allowed.
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2024 (6) TMI 1280
Cancellation of registration granted U/s.12AA/ U/s. 12AB - Scope of Retrospective application of Section 12AB(4)(ii) introduced by Finance Act, 2022 - CIT (Central) cancelled registration invoking the provisions of section 12AB(4)(ii) invoking the provisions of section 12AB(4)(ii) with retrospective effect though this section was introduced by Finance Act, 2022 w.e.f. 1.4.2022 - HELD THAT:- We find force in the argument of ld. A.R. that in income-tax matters, law to be applied is the law in force in the assessment year unless otherwise stated or implied. In the present case, ld. PCIT is cancelling the registration granted u/s 12AA/12AB of the Act w.e.f. previous year 2020-21 relevant to assessment year 2021-22. In our opinion, the law as stated in the assessment year 2021-22 is to be applied and not the law as stood in the assessment year 2022-23.
Thus, we are of the view that no retrospective cancellation could be made u/s 12AB(4)(ii) of the Act as it has been provided or is seen to have explicitly provided to have a retrospective character or intended. Therefore, without a specific mention of the amended provisions to operate retrospectively, no cancellation for the earlier years could be made.
As decided in case of Auro Lab Ltd [2019 (1) TMI 1478 - MADRAS HIGH COURT] PCIT has cancelled the registration under the new provisions of the Act i.e. 12AB(4)(ii) of the Act, which specifically provides that cancellation can be done for such previous year and all subsequent previous years, which makes it clear that the cancellation cannot be retrospective, therefore, in view of the above discussion, we are of the opinion that cancellation of registration with retrospective effect is invalid in these cases. Since the ld. PCIT invoked the provisions of section 12AB(4)(ii) of the Act, which has been introduced by the Finance Act, 2022 w.e.f. 1.4.2022 so as to cancel the registration with retrospective effect from assessment year 2018-19, which is bad in law.
Also in the case of Heart Foundation of India [2023 (8) TMI 1063 - ITAT MUMBAI] wherein held that registration granted u/s 12A of the Act dated 21.7.1989 cannot be cancelled by ld. PCIT (Central) vide order dated 6.3.2023 w.e.f. assessment year 2016-17, by invoking the provisions of section 12AB(4)(ii) - Appeals of the assessee are allowed.
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2024 (6) TMI 1279
Ex-parte order passed by CIT(A) - denial of natural justice - Addition u/s 69A - cash deposited in bank accounts - Revenue has argued that during the appellate proceedings the assessee submitted addition evidences which were sent to Assessing Officer for remand report, however, ld CIT(A) did not remind the Assessing Officer to send the remand report, and pass the order without providing sufficient opportunity to the Assessing Officer, which is against the principle of natural justice - HELD THAT:- CIT(A) did not take effort, at least to send the reminder letter to the Assessing Officer to submit remand report before him. We note that the Hon’ble Supreme Court in M.S.Gill [1977 (12) TMI 138 - SUPREME COURT] held “The dichotomy between administrative and quasi-judicial function vis-à-vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak vs UOI [1969 (4) TMI 103 - SUPREME COURT] which makes the water-shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice.
It is a settled principle of law that justice not only to be done, it is seen to be done. Therefore, we find merit in the arguments advances by ld DR for the Revenue to the effect that at least one reminder should be sent to the assessing officer to submit the remand report, however, ld CIT(A) failed to do so. Therefore, we are of the view that assessing officer did not get sufficient opportunity to submit remand report, hence it is against the principle of natural justice.
We also find merit in the arguments of ld DR for the Revenue that if the order of ld CIT(A) is an ex-parte order and there is no adjudication on merit, then this Tribunal always send the matter back to the file of the ld CIT(A) for fresh adjudication on merit.
Thus both these appeals, one relates to father wherein substantive addition was made and second relates to protective addition, which was made in the hands of son, should be remitted back to the file of ld CIT(A) for fresh adjudication - Appeals filed by the assessee are allowed for statistical purposes
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2024 (6) TMI 1278
Issuance of notice u/s 143(2) by non jurisdictional AO/ITO - As argued no notice u/s 143(2) was issued by the jurisdictional AO i.e., DCIT-2(1), Bilaspur who had framed and passed the assessment order - contention of Ld. Sr. DR that the notice u/s 143(2) of the Act was issued by the ITO Ward 1(1), Bilaspur, since the PAN of the assessee was lying with him at the time of issuance of notice - As soon as ITO 1(1) has realized that the amount of returned income filed by the assessee exceeds Rs. 15 Lacs, he transferred the said case to DCIT-1(1) Bilaspur
HELD THAT:- Admittedly, in the present case the mandatory notice u/s 143(2) for initiating the assessment proceedings was issue by ITO Ward 1(1), Bilaspur vide notice dated 17.03.2016, who at relevant point of time was not vested with valid jurisdiction over the case of the assessee, since the cases having returned income above Rs. 15,00,000/- in the case of corporate assessee’s are under the jurisdiction of ACIT/DCIT. The assessee’s returned income was Rs. 21,44,050/-, which as discussed hereinabove is more than Rs. 15 Lac, therefore the valid jurisdiction was with ACIT/DCIT.
In view of aforesaid CBDT’s instructions referred to supra, followed by communication by the Ld. CCIT, Raipur, we hold that the first notice u/s 143(2) issued by the ITO Ward-1(1), Raipur, was clearly against the mandate of instructions issued and thereafter subsequently no notice u/s 143(2) was issued by the jurisdictional AO i.e., DCIT-2(1), Bilaspur who had framed and passed the assessment order.
Objection raised by DR that the assessee has not objected to the jurisdiction of the ITO-1(1) within the stipulated time period as per provisions of section 124(3) of one month from the date on which the notice was served on the assessee - The issue has been duly considered in the case of Durga Manikanta [2023 (1) TMI 1099 - ITAT RAIPUR] held as the assessee’s objection to the validity of the jurisdiction assumed by the Income- Tax Officer, Ward-2(2), Bhilai is by no means an objection to his territorial jurisdiction, but in fact an objection to the assumption of jurisdiction by him in contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, therefore, the provisions of sub- section (3) of Section 124 would not assist the case of the revenue.
Thus admittedly, the first notice u/s 143(2) was issued by ITO Ward- 1(1), Bilaspur, on 17.03.2016, who was not vested with valid jurisdiction over the case of the assessee, therefore, the assessment framed on the foundation of such invalid notice is liable to be struck down. It is pertinent to mention that the DCIT, Circle-2(1), Bilaspur, who had framed the assessment have never issued any notice u/s 143(2) of the Act, therefore, the assessment order framed u/s 143(3) cannot survive on the basis of the first notice u/s 143(2).
Thus assessment order passed u/s 143(3) by DCIT, Circile-2(1), Bilaspur, on the basis of proceedings initiated vide notice u/s 143(2) dated 17.03.2016 by ITO, W-1(1), Bilaspur, who at the relevant point of time was not vested with valid jurisdiction over the case of the assessee, cannot be sustained, thus, the same is liable to be quashed, and we do so. Appeal of assessee allowed.
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2024 (6) TMI 1277
Disallowance of delayed payment of PF & ESI - reckoning of due date of payment - difference of due date for deposit of employees’ contribution is same as due date for deposit of employer’s contribution - CIT(A) confirming the addition of employee contribution to PF/ESI U/s 36(1)(va) when the due date of making payment from 15 days from the close of the month is to be reckoned from the date of payment of salary/wages to employees and not from the date when salaries become due.
HELD THAT:- The issue is covered by the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT]. Accordingly, the entire amount will be disallowed.
In our considered view that It has finally been held by Hon’ble Apex Court there is clear distinction between employer’s contribution which is its primary liability under law in terms of Section 36(1)(iv) and its liability to deposit amounts received by it or deducted by it from its employees’ in terms of Sec. 36(1)(va). The former part is the employers’ income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x) and therefore, subjected to conditions spelt out by Explanation to Section 36(1)(va) i.e., depositing such amount received or deducted from the employee on or before the due date.
This marked distinction has been clarified while interpreting the obligation of every assessee under Section 43B. If the same is not deposited as per mandate of Sec.36(1)(va), the deduction of the same would not be available to the assessee. Decided against assessee.
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2024 (6) TMI 1276
Addition made under excess receipts from contract works - As per AO assessee has designed the contract receipts to bring the unaccounted money into the books of account - CIT(A) deleted addition - HELD THAT:- Merely granting sub-contracts without any corresponding development activities will not legalize the unlawful amount paid by the said MEIL to the assessee in the guise of the running bills. Further nothing had been brought out on record that the State Government had permitted MEIL to grant sub- contract to assessee. Accepting the income disclosed by the assessee as legal income would be illogical, contrary to law and undermine the purpose of construction activities. In fact, it is difficult to comprehend that such activities were permitted to be carried out unabetted by the State Government and huge amount has allegedly been released to such contractors.
The time has come where some suitable mechanism should be put in place by the State Government or other agencies against such contractors so that there should not be any siphoning or diversion of funds meant for development by any unscrupulous contractor. If today we decide this issue against the Revenue, by legalizing the payment merely because the contractor had submitted the confirmations of grant of contract then it would set a wrong precedent and there would not be any actual construction / development works would take place.
Since in the present case, the Revenue authorities have failed to examine the details of the work contracts awarded and the payment made by the Government which are relatable to various stages of work contract, therefore, we remit back the matter to the file of Assessing Officer for fresh examination. Needless to say while examining the matter afresh, the Assessing Officer shall take the assistance from state Government Development Agencies and other statutory enforcement agencies to find out the terms of the allotment of the contract, execution, performance, quality control etc., and whether the assessee can divert the funds meant for development to its other activities namely, aircraft / solar power business. Thereafter, considering the inputs from the State Government and other enforcement agencies the Assessing Officer shall decide the matter in accordance with law after granting due opportunity of hearing to the assessee.
In case, the Assessing Officer comes to the conclusion that no work has been executed by the assessee or only a small part of the work has been executed then to pass the assessment order accordingly. Thus, ground no.2 is allowed for statistical purposes.
Addition towards STCG [Short Term Capital Gains] - the value of the shares deserves such a huge price, it is not clear why the earlier company has sold these shares at a meagre price of Rs.10/-.- CIT(A) deleted addition - HELD THAT:- Since we are remanding ground no.2 back to the file of Assessing Officer, therefore, it is deemed appropriate to remand this issue also to the file of Assessing Officer, to maintain the consistency.
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2024 (6) TMI 1275
Dismissal of appeal by CIT(A) ex-parte - non prosecution of the appeal by the assessee with cogent material evidences in support of the grounds of appeal raised - Reopening of assessment - Unexplained cash credit u/s 68 - assessee has not submitted any details and supporting evidences as called for - HELD THAT:- As observed from the records that the assessee was given several opportunities, but the assessee failed to respond to the notices for prosecution of his appeal with evidences and hence, the appeal was dismissed ex-parte by the Ld.CIT(A). When the assessee files appeal before the appeal authorities, the onus is on the assessee to adhere to the notices and appear before the authorities for prosecution of his case and controvert the findings of the revenue authorities with supporting material evidences. However, keeping in view the principles of natural justice, we are inclined to remit the matter back to the file of the Ld.CIT(A) and direct the Ld.CIT(A) to afford the assessee, another opportunity of being heard before the Ld.CIT(A). Appeal of the assessee is allowed for statistical purpose.
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2024 (6) TMI 1274
Non Grant of registration u/s 12AB from assessment year 2021-22 - Scope of amendment to Clause (ac) to section 12A(1) of the Act was inserted by TOLA - HELD THAT:- It is a fact that the assessee trust was already registered under section 12AA of the Act vide order dated 31.03.2018. The assessee has to file an application in Form 10A for fresh registration due to amendment to Clause (ac) to section 12A(1) of the Act was inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (“TOLA”) with effect from 01.04.2021. The assessee has also filed as per amended laws in Form 10A within the due date as permitted by CBDT.
We find that there is no justification for the ld. PCIT/CIT in not granting registration from the assessment year 2021-22. The ld. PCIT/ CIT has only granted registration from assessment year 2022-23 to assessment year 2026-27 by his order dated 06.04.2022. In our opinion, the ld. PCIT/CIT ought to have been granted registration from the assessment year 2021-22 onwards.
The assessee was not able to file details of registration along with return of income filed by the assessee for the reason that no fresh registration was available with the assessee as per amended law. Thus, the CPC was not correct in denying benefit under section 11 of the Act to the assessee.
PCIT/CIT, by following the observations of the CPC, denying the registration to the assessee from the assessment year 2021-22 was also not correct. We find that the assessee is entitled for grant of registration from the assessment year 2021-22. In view of the above, we set aside the order of the ld. PCIT/CIT dated 06.04.2022 in granting registration from 2022-23 to 2026-27 and remit the matter back to the file of the ld. PCIT/CIT with a direction to grant registration from the assessment year 2021-22 onwards and pass order accordingly. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (6) TMI 1273
Addition of capital gain - transaction had not been declared in his return - status of property i.e. the property was actually owned by firm OR assessee’s late father - claim of transfer of impugned property under ‘partition of HUF’ - crux of assessee’s submission was two-fold i.e. the property belonged to HUF, it was a case of partition of HUF and the distribution of assets by a HUF to its members on partition of HUF is excluded from transfer u/s 47(i) and the impugned property was basically a devolved property bequeathed by his deceased father by way of will - when assessee’s late father had no legal title in the impugned property, how can assessee have?
HELD THAT:- A careful reading of “Partition-Deed” reveals that the HUF had only movable property in the form of certain unsecured loans given to parties which were partitioned. The deed also makes it clear that there is no immovable property in HUF. Thus, the claim of transfer of impugned property under ‘partition of HUF’ as projected by assessee before AO, stands unproved. It seems that realizing this eventuality, the assessee has himself mentioned on Page No. 2 of the application under Rule 29 “family arrangement or partition”, “Family Settlement”. Needless to mention that the Ld. AR, during hearing before us, has also not made any pleading qua the claim of ‘partition of HUF’. We may also mention here that even if we assume that there was a partition of HUF then also the exclusion from ‘transfer’ u/s 47(i) is available only to HUF at the time of distribution of assets to its members on partition; the said exclusion is not available to a member who transfers his share/right in divided or undivided property. The act of transferring any share/right in property by a member to other members would be a posterior event to the partition of HUF and such act does not fit in section 47(i). Therefore, the assessee’s claim of ‘partition of HUF’ and thereby exclusion from taxation is an unproved claim besides being untenable in section 47(i); we are rejecting the same.
Assessee executed sale-deed as part of ‘family settlement’ and ‘family settlement’ is not taxable under Income-tax - We find that the assessee has never claimed before lower-authorities the factum of “family settlement” although the assessee claimed “partition of HUF”. As stated earlier, the theory of “family settlement” has been pushed for the first time in the application under Rule 29 by mentioning “family arrangement or partition”, “Family Settlement”. Further, in the “additional evidences” filed under Rule 29, the assessee has filed “Memorandum of Family Settlement” alongwith “Partition-Deed” because the “Partition-Deed”, as mentioned earlier, does not support assessee’s stand. Further, the Ld. AR for assessee has also refrained from making any pleading qua ‘partition of HUF’ claimed by assessee before lower authorities. Instead, Ld. AR harped on ‘family settlement’.
We may mention that in the reply filed to AO, the assessee mentioned that it was a case of forced sale to his family members but there also the assessee did not talk of ‘family settlement’, the assessee only tried to get out of taxability by claiming income of HUF or claiming partition of HUF. Now in such a situation, if we allow the claim of ‘family settlement’ at this stage, it would amount to upsetting the whole proceeding done by lower-authorities and giving concession to assessee to set up a new case. We are afraid that we can do this. Therefore, without going into the merit of the additional evidence titled “Memorandum of Family Settlement” filed by assessee, we are straightaway rejecting the assessee’s claim of “family settlement’ itself. Rejected thus.
Assessee’s father/assessee did not have any right in the property which was owned by partnership firm and therefore there is no income earned by assessee even if a sale-deed has been executed - Here the case is such that the assessee’s father was having 1/3rd share in partnership firm and after death of father, there were 6 legal heirs including assessee. Accordingly, the assessee sold his 1/6th share in ‘1/3rd share of assessee’s father in undivided property of firm’ to his 3 brothers. To materialize this, the assessee executed a sale-deed and received actual consideration of Rs. 1,80,00,000/- from his brothers through cheques. This is a transaction inter-se between assessee and his brothers. The partnership firm is nothing to do with this transaction of sale. As admitted by Ld. AR for assessee, the firm continued even after death of assessee’s father. Therefore, it seems that the entire property continued intact in the books of firm and remained unaffected by the transaction of sale made in-between the assessee and his brothers.
Assessee as seller and his 3 brothers as purchasers have acted upon the sale-deed and essentially the assessee’s right became right of brothers for a consideration. Therefore, when a de facto transaction of sale by assessee has been made and the assessee has received a hefty consideration of Rs. 1,80,00,000/- for transfer of his right, it would attract taxability and it is nothing to do with the provisions of section 14 of the Indian Partnership Act. The department is not asking to pay tax on any kind of ‘notional’ transfer, the revenue’s case is such that the assessee has made an actual sale which is taxable. Needless to mention that the assessee is also claiming to have utilized the sale consideration of Rs. 1,80,00,000/- for making investments in newer properties (it is a different point that the assessee claimed exemption u/s 54/54F on the basis of those newer investments but the AO has disallowed exemption on a different premise). Therefore, we do not find any merit in the second claim of assessee argued by Ld. AR too. - Decided against assessee.
Unexplained cash deposits in bank a/c - HELD THAT:- We find that the assessee has filed a Cash-Book during proceeding before AO in which the entries of cash-inflow, outflow and opening-closing balances are adequately reflected. We also find that the Written-Note filed by Ld. AR also gives a summarized picture of Cash-Book to show that the assessee was having sufficient cash balance for deposit in bank a/c. Ld. DR for revenue though dutifully supported the orders of lower-authorities yet could not contradict or rebut the submissions made by Ld. AR. Hence, we are inclined to accept that the assessee was having sufficient cash balance for making deposits as is demonstrated by Cash Book. The addition made by AO is therefore not warranted. The same is hereby deleted. This ground is thus allowed.
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2024 (6) TMI 1272
Delay in deposit of Employees’ Contribution of Provident Fund and Employees State Insurance (PF & ESI) - addition u/s. 36(1)(va) and 43B - HELD THAT:- The issue relating to grounds taken by the assessee have come to rest by the recent verdict of Chekmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that “deduction u/s. 36(1)(va) in respect of delayed deposit of amount collected towards employees’ contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act, 1961.” - Decided against assessee.
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2024 (6) TMI 1271
Benefit of section 50C - Retrospective application of safe harbor limit of 5% - difference of the sale consideration and the market value [as per the ready reckoner rates] - Whether “safe harbour limit of 5%” as introduced by 3rd proviso to sub section (1) of section 50C is retrospective in operation, being curative of the ‘unintended consequence’? - HELD THAT:- A co-ordinate Bench of this Tribunal in Maria Fernandes Cheryl [2021 (1) TMI 620 - ITAT MUMBAI] while negating the contention on behalf of the Revenue, found that the amendment was essentially brought about to cure “unintended consequences” of section 50(1) even in a bonafide situation, as sub section (1) of section 50 was essentially an anti-avoidance provision. While holding so the Bench had noted Circular 8 of 2018 by the Central Board of Direct Taxes (CBDT) viz. explanatory notes to the Finance Act 2018, which intended the rationalization of section 43CA, section 50C and section 56 of the said Act.
It can thus be seen that the CBDT had acknowledged that there can be genuine cases, where there would be a variance between the “stamp duty value” and the “actual consideration received” in respect of similar properties depending upon variety of factors”. It can be seen that such variance indeed occurs on the basis of location, dimension, access and other facilities which a particular property may enjoy. It is necessary to note that the stamp duty value or the ready reckoner value is essentially an estimate.
Section 50C(1) is an anti-avoidance provision to prevent evasion of tax by showing lesser consideration in the transactions. However, after acknowledging the fact of variance between the stamp duty value and the actual consideration, the proviso was initially introduced by Finance Act 2018 from A.Y. 2019-20, introducing the “safe harbour limit” of 5%, which has been enhanced to 10% by Finance Act 2020. A co-ordinate Bench of the Tribunal has held that the subsequent amendment by Finance Act, 2020 would apply retrospectively. It is trite that the same principle would apply even in respect of the initial introduction of the proviso by Finance Act, 2018.
It is necessary to emphasize that this Tribunal after holding that it was a curative amendment has held that it was retrospective in operation. While doing so this Tribunal has placed reliance on its earlier decision of Agra Bench in Rajeev Kumar Agarwal [2014 (6) TMI 79 - ITAT AGRA] held in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was intended.
In that view of the matter the appellant-assessee would be entitled to the benefit of section 50C of the Act. Consequently, the appeal succeeds. The impugned addition stands set aside.
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2024 (6) TMI 1270
Deduction u/s. 80P(2)(d) - interest received on fixed deposits in banks with any other co-operative society - HELD THAT:- There is no dispute that the assessee has received interest from various banks on deposits. Section 80P(2)(d) of the Act is very clear that interest received from the co-operative society is eligible for deduction. In the present case, the ld. AR could not bring to our notice that the interest received by the assessee is only from cooperative society and it is not carrying on business of banking as per RBI Regulations. This issue has been considered by the Hon’ble Apex Court in the case of Kerela State Co-operative Agricultural & Rural Development Bank Ltd. [2023 (9) TMI 761 - SUPREME COURT] as examined in detail that what is co-operative Bank even if it is registered under the Cooperative Society Act.
We remit this issue back to the file of AO for determination whether interest received by the assessee is only from co-operative society or co-operative bank as decided by the Hon’ble Apex Court. If the AO finds that interest is received from deposits in the co-operative society, the assessee is eligible for deduction u/s. 80P(2)(d) of the Act on such interest received. If the AO finds otherwise, then assessee would be eligible for deduction of cost of funds as per the judgment of the Hon’ble jurisdictional High Court in the case of Totgar Co-operative Sale Society [2015 (4) TMI 829 - KARNATAKA HIGH COURT]
Appeal by the assessee is allowed for statistical purposes.
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2024 (6) TMI 1269
Habeas Corpus Petition - Detention on the ground of smuggling of gold of foreign origin from Srilanka - detention order served belatedly - defective translation of the word "representation" - HELD THAT:- This court is of the view that though there there is no hard and fast rule fixing any time limit for considering the representation, there should not be supine indifference, slackness or callous attitude in considering the representation. Any unexplained delay in the disposal of representation would be a breach of the constitutional imperative and it would render the continued detention impermissible and illegal.
Timely and expeditious communication of grounds and disposal of representation in the cases of preventive detention has been dealt with elaborately by a Full Bench in Sarabjeet Singh Mokha vs. District Magistrate, Jabalpur and others [2021 (10) TMI 1378 - SUPREME COURT] where it was held that 'The delay by the State Government in disposing of the representation and by the Central and State Governments in communicating such rejection, strikes at the heart of the procedural rights and guarantees granted to the detenu. It is necessary to understand that the law provides for such procedural safeguards to balance the wide powers granted to the executive under the NSA.'
A similar stand has been taken in the case of KAMLESHKUMAR ISHWARDAS PATEL VERSUS UOI. [1995 (4) TMI 283 - SUPREME COURT], wherein a question arose for consideration as to when an order for prevention detention is passed by an officer especially empowered to do so by the Central Government or the State Government, is the said officer required to consider the representation submitted by the detenu and a Constitution Bench of the Apex Court has held 'Maybe that the detenu is a smuggler whose tribe (and how their numbers increase!) deserves no sympathy since its activities have paralysed the Indian economy. But the laws of preventive detention afford only a modicum of safeguards to persons detained under them and if freedom and liberty are to have any meaning in our democratic set-up, it is essential that at least those safeguards are not denied to the detenus.'
In the case on hand, there is a delay of seven days on the part of the detaining authority in forwarding the representation of the petitioner to the sponsoring authority. A feeble stand has been taken on behalf of the respondents contending that the representation was made in Tamil requiring translation and the intervening two closed holidays and two Restricted holidays had caused the delay of a few days and the same cannot be a ground for interference.
It may not be appropriate for the respondents to take a stand that the intervening restricted holidays had prevented the execution of their assignment to forward the representation. In the circumstances, this court is of the view that the delay on the part of the detaining authority in forwarding the representation of the petitioner to the sponsoring authority has not been properly explained and such delay is also a ground for interference by this court - this court is of the view that the least safeguards guaranteed by the Constitution are denied to the detenus and thereby, this court is of the view that the detention order is liable to be set aside.
The Habeas Corpus Petition is allowed.
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2024 (6) TMI 1268
Refund of Special Additional Duty paid on import of goods - technical violation - unjust enrichment - refund application was rejected on the ground that the CA certificate has not stated as how the unjust enrichment was not applicable - HELD THAT:- It is the admitted fact that appellant had paid 4% SAD at the time of import and the appellant had also paid VAT as applicable while selling the goods. The appellant also complied with the condition No. 2(b) in the N/N. 102/2007 dated 14.09.2007 where it is stated that “the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 shall be admissible. Facts being so, it is an admitted fact that the amount paid by the appellant as 4% SAD is not passed on to the buyers and the said aspect was confirmed by the statutory auditor of the appellant while issuing certificate on 05.06.2012.
The issue is squarely covered by the decisions of the Tribunal relied by the appellant in KORADIA EXPORTS (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS (EXPORTS) , MUMBAI [2018 (6) TMI 944 - CESTAT MUMBAI], it is settled that once CA certificate is produced and in the absence of any allegation of fraud or collusion, such certificate is sufficient to grant the refund claim. Refund should not be denied merely on technical violations.
The impugned order rejecting the refund claim is not sustainable. Therefore, impugned order is set aside and the appeal is allowed.
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2024 (6) TMI 1267
SVLDRS - Initiation of proceeding under Section 129 (2) (c) of the Finance Act, 2019 without a finding that any material particular furnished by the declarant in the declaration is false - correctness of the proceeding - voluntary disclosure under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS, 2019) - HELD THAT:- Under Section 129 (2) (c) of the SVLDRS, 2019, in a case of voluntary disclosure, where any material particular furnished in the declaration is subsequently found to be false within a period of one year of issue of discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted.
Therefore, before instituting proceedings under the applicable indirect tax enactment, there has to be a finding, in a case of voluntary disclosure, that a material particular that was furnished in the declaration was false - The Authority should first come to a finding based on the declaration filed that a material particular (and not any particular) furnished in the declaration was false. In the impugned letter, the Authority only refers to Section 126 (1) of the Finance (No. 2) Act, 2019 read with Rule 6 (1) of the SVLDRS, 2019 and Section 129 (2) (c) of the SVLDRS, 2019 read with Clause 8 of a Circular and straight away proceeds to say in view of the above you are requested to provided the following documents.
As there is no finding that a material particular in the declaration was false and which was that material particular, the impugned communication dated 9th November 2020 is quashed and the communication dated 13th November 2020 is followed.
Petition disposed off.
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