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Showing 201 to 220 of 1464 Records
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2021 (10) TMI 1265
TDS u/s 195 - Demand u/s 201(1) and u/s 201(1A) - DTAA between India and UAE - as argued all the replies given by petitioner to show cause notices issued have not been considered and dealt with in the impugned order - as stated show cause notice does not refer to this issue and petitioner has not been called upon to show cause why it should not be held that petitioner was dependent PE for PDR Solutions UAE etc. - HELD THAT:- Issuance of a show cause notice is the preliminary step which is required to be undertaken. The purpose of show cause notice is to enable a party to effectively deal with the case made out by respondents ( See Om Shri Jigar Association Vs Union of India [1994 (5) TMI 24 - GUJARAT HIGH COURT]
In the circumstances, without making any observations on the merits of the case, we are quashing the impugned order dated 30th March 2021 and any consequential demand notice issued therein and remand the matter to respondent no.1 to pass fresh orders after hearing petitioner. If respondent no.1 feels need to add any further points in the show cause notice, respondent no.1 shall issue fresh show cause notice to petitioner and petitioner may respond to the said show cause notice. We keep open all rights and contentions of the parties including petitioner’s right to raise the issue of limitation.
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2021 (10) TMI 1264
Seeking Relaxation for clearance of subject consignment on payment of necessary four times penalty charges for dispensing with the Phytosanitary Certificate - import of teak wood from the originating country called, Panama - whether the petitioner is entitled to get relaxation under Clause 14 of the said Order, 2003 from producing the phytosanitary certificate? - HELD THAT:- Assuming that the reason stated by the third respondent is correct, where the petitioner already availed the relaxation for production of phytosanitary certificate, even then, for second or subsequent relaxation, the power may not be vested with the third respondent, but vested with the Joint Secretary to Government of concerned Department, before whom, if the very request is made by any importer for giving relaxation for production of phytosanitary certificate second time or subsequent time, that can also be considered in the public interest and accordingly, that can also be considered by the Joint Secretary to the Government of the Department concerned.
Under Clause 14, it has been made clear that the powers for relaxation has been delegated to the Officer in-charge of the Plant Quarantine Station for relaxing the conditions of the said Order, 2003 as a one-time exception in favour of a single party and not for repeated violation by that party. Therefore, it has been made clear that only one time relaxation is permissible in respect of one party at the hands of the Officer in-charge of the Plant Quarantine Station - Herein the case in hand, the third respondent is Officer concerned of the Plant Quarantine Station. Therefore, his power is to grant one time relaxation, not beyond that.
Forwarding of the issue - HELD THAT:- In the case in hand, the forwarding of the issue has not been undertaken by the third respondent, therefore, in this aspect also, this Court feels that, the impugned order can be interfered with.
The matter can be remitted back to the third respondent for consideration as to whether the petitioner has made any earlier request and availed any relaxation or not and if there is no such relaxation benefit or waiver of the production of phytosanitary certificate, the officer concerned, ie., the third respondent can very well consider for grant of such relaxation, within the meaning of Clause 14 of the said Order, 2003 - Petition allowed by way of remand.
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2021 (10) TMI 1263
Deduction u/s 80P - AO has come to a conclusion that the assessee cannot be treated as a Co-operative society meant only for its members and providing credit facilities to its members - Whether the appellant is a ‘primary co-operative bank’ and that the appellant is not entitled for deduction u/s.80 P(2)(a)(i) ? - Tribunal held that even if the assessee is not found to be a Co-operative Bank, the factual aspects requires to be analysed and thereafter final decision has to be made - HELD THAT:- The Hon'ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] considering the expression ‘member’ as defined in Section 2(l) of the Kerala Co-operative Societies Act, 1969 and the said Act expressly permitting loans to non-members under Section 59(2) and (3), held that loans given to nominal members would qualify for the purpose of deduction under Section 80P(2)(a)(i) of the Act. In the wake of this judgment, the matter requires re-consideration by the Assessing Officer with reference to Section 2(f) and 60 of the Karnataka Co-operative Societies Act, 1959 read with Section 80P(2)(a)(i) of the Act. The order of the Tribunal impugned being adjudicated and this Court having formed an opinion that the matter requires re-consideration, the consequential order of assessment has to be set aside. Alternative remedy of statutory appeal is not a bar in the circumstances of the case.
For the aforesaid reasons, without answering substantial questions of law, we set aside the orders impugned and restore the matter to the file of the Assessing Officer to re-consider the matter in the light of the observations made hereinabove.
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2021 (10) TMI 1262
Addition of security charge reimbursed - Assessee failure to credit HV AC charges to P&L A/c - tribunal has set aside the disallowances made by assessing authority - Substantial question of law - Denial of natural justice - whether tribunal is right in law in allowing relief to assessee on the basis of fresh materials brought on record before Tribunal ? - no opportunity was provided to the AO to examine the material evidence furnished before the Tribunal for the first time - HELD THAT:- Revenue challenge that no opportunity was provided to the Assessing Officer to examine the material evidence furnished before the Tribunal for the first time does not holds water for the reason that it was admitted by the CIT(A) as well, that the assessee has provided clarification in rectification proceedings under Section 154 of the Act before the Assessing Officer which came to be disposed of. If such material evidence was placed before the Assessing Officer even in the proceedings under Section 154 of the Act, regarding entries in P&L A/c, the same being available, CIT(A) under hyper technicalities ought not to have confirmed the addition of HV AC charges on the premise that no documentary evidence was placed to substantiate the same.
Tribunal is the last fact finding authority, irrespective of the material evidence examined by the authorities, the Tribunal is equally competent to examine the material evidence placed before it. Having considered the breakup figures available in the P&L report and the clarification offered by the assessee, the Tribunal has rightly allowed the appeal setting aside the orders passed by the authorities. It is well settled law that these factual aspects having been considered by the Tribunal and on the finding of the Tribunal with respect to this factual aspects, no questions of law would arise. It is apt to refer the judgment of this Court in Soft Brands India (P) Ltd. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT] wherein it has been held that the finding of the Tribunal being one of the fact which has not been shown to be perverse, that unless the perversity in the finding of the fact is established before the High Court, no Substantial Questions of law arises for consideration under Section 260(A)
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2021 (10) TMI 1261
Deduction u/s 57(iii) - interest paid to the bank - establish the nexus for claiming the deduction under Section 57(iii) with the borrowed fund - HELD THAT:- It is discernable that the Tribunal has dismissed the appeal solely on the ground that the Annexure/Schedule mentioned in the agreements placed on record by the assessee were not made available to decide the issue of deduction under Section 57 (iii) of the Act. As such, we are of the considered opinion that providing one more opportunity to the assessee to furnish the details would not prejudice the rights of the Revenue. Given the circumstances, we set aside the order impugned and remand the matter to the Assessing Officer to provide an opportunity to the assessee to furnish the Annexure/Schedule mentioned in the agreements in support of her claim made, without answering the substantial questions of law raised.
The impugned order passed by the Income Tax Appellate Tribunal, Bengaluru Bench ‘C’, Bengaluru, is set aside. The matter is remanded to the Assessing Officer for reconsideration keeping open all the rights and contentions of the parties.
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2021 (10) TMI 1260
Delayed deposit of ESI/PF u/s 36(1)(va) - HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income. We find that Delhi Bench of Tribunal in the case of Dee Development Engineers Ltd. [2021 (4) TMI 393 - ITAT DELHI] after considering the decision of Bharat Hotels [2018 (9) TMI 798 - DELHI HIGH COURT] has decided the issue in favour of the assessee - no disallowance u/s 36(1)(va) of the Act is called for in the present case. Decided in favour of assessee.
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2021 (10) TMI 1259
Deduction u/s. 80IC - Rejection of books of accounts - estimation of income - HELD THAT:- As pertaining to the discrepancies in the financials of the assessee and has also given the details depicted by way of various charts which reflects the profits of the assessee in the preceding years as well as the profits of other related concern of the same group which were operating in the same field and even in the same geographical area and has reasonably estimated the profit of the assessee company, which cannot be faulted as perverse.
As already agreed with the decision of the Ld. CIT(A) rejecting the books of account, book results and invocation of the provision of section 145(3) of the Act while disposing of the assessee’s appeal - we do not find any infirmity in the order of the CIT(A) in estimating the income of the assessee. We note that from AY 2007-08 the assessee is eligible unit for deduction u/s. 80IC of the Act and, as discussed the estimation is made on the basis of relevant material and has been found by us to be reasonable in the facts and circumstances of the case. Therefore we uphold the impugned action of the Ld. CIT(A) giving partial relief to the assessee and also in the process confirming partly the action of AO. - Decided against revenue.
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2021 (10) TMI 1258
Disallowance of excess depreciation on computer software - assessee had purchased software being operating system for Windows and claimed depreciation as per Rule 5 of IT Rules, 1962 @ 60% as applicable to computer and computer software. The AO restricted depreciation claimed on computer software @ 25% as applicable to intangible assets being patent, license etc on the ground that payment made by the assessee for acquiring license for software is nothing but an intangible asset - HELD THAT:- Computer software (whether canned form or uncanned form) is goods and a tangible asset by itself. Further Rule 5 of IT Rules, 1962 governing the rate of depreciation for software, has prescribed 60% depreciation on computer and computer softwares. Since, the assessee has purchased software like Windows, MS Office and other operating system which is embaded in computer system and thus, the same is construed as an integrated part of computer system which is eligible for depreciation @ 60% as claimed by the assessee, but not 25% as applicable to intangible asset as considered by the Ld. AO. Therefore, we are of a considered view that the AO as well as CIT(A) were erred in restricting depreciation on software to 25% as against 60% as claimed by the assessee. Hence, we direct the AO to allow depreciation @ 60% as claimed by the assessee.
TDS u/s 195 - disallowance of payment made to a non-resident for purchase of software u/s. 40(a)(i) - assessee has purchased copyrighted software from a service provider from USA and assessee has not deducted TDS u/s. 195 for the reason that software license purchased from non-resident supplier is not in the nature of Royalty as defined u/s. 9(1)(vi) - HELD THAT:- In the case of CIT vs M/s. Dassault Systems Simulia P Ltd.,[2021 (4) TMI 180 - MADRAS HIGH COURT] had considered an identical issue and held that whether assessee had purchased only a right to use copyright, i.e., software and not entire copyright itself, amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not payment of royalty for the use of copyright in the computer software, and same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 were not liable to deduct any TDS u/s. 195 of the Act, 1961. In this case, the assessee has purchased software from supplier in USA and said software is a copyrighted article - payment made by the assessee for purchase of software to non-resident supplier is outside the scope of the definition of Royalty as defined u/s. 9(1)(vii) and thus, the assessee does not required to deduct TDS u/s. 195 and consequently, payment made for purchase of software cannot be disallowed u/s. 40(a)(i) of the Act for non-deduction of tax at source. Hence, we direct the AO to delete the additions made towards disallowance of payments made to non-resident for purchase of software.
Assessee appeal allowed.
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2021 (10) TMI 1257
Disallowance of rental expenses - expenses relating to earlier year were not admissible - HELD THAT:- The assessee society was required to pay rent and delayed interest which was paid by the assessee on 29th August, 2009. On the basis of this payment the district collector, Surendranagar has passed an order on 8th Sep, 2008 renewing the lease of the petrol pump land for further period of 15 years.
CIT(A) has incorrectly stated in his finding that assessee has only claimed the interest component and not claimed the rental expenses of earlier year, after perusal of the material on record, we find that amount as comprised of lease rent and interest pertaining to lease rent and interest for the period 2003 to 2008. On perusal of material on record, it is categorically demonstrated that impugned expenses were crystallized during the year under consideration. There is no doubt about the genuineness of the expenditure. Having considered the material on record, we do not find any justification for the disallowance of the claim of the assessee without considering the relevant material fact that the impugned liability was crystallized during the year under consideration. Appeal of the assessee is allowed.
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2021 (10) TMI 1256
Addition u/s 36(1)(va) - delayed deposit of employees contribution of EPF and ESI but paid before the due date of filing of return - HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income.
Following the decision rendered in the case of Dee Development Engineers Ltd. [2021 (4) TMI 393 - ITAT DELHI] and for similar reasons hold that no disallowance u/s 36(1)(va) of the Act is called for in the present case. I therefore direct the deletion of addition. Thus the ground of assessee is allowed.
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2021 (10) TMI 1255
Overriding effect of Insolvency and Bankruptcy Code over income tax act - National Company Law Tribunal under section 31 of the Insolvency and Bankruptcy Code 2016 overriding effect over anything inconsistent contained in the Income Tax Act - Effect of the order delivered by the National Company Law Tribunal, Kolkata Bench on 12.02.2018 approving the resolution plan on the proceedings in the case of the assessee for AY 2010-11 - HELD THAT:- The order passed by the National Company Law Tribunal under section 31 of the Insolvency and Bankruptcy Code 2016 has overriding effect over anything inconsistent contained in the Income Tax Act and it shall be binding on all the respective entities including other stakeholders, which include Central Government, State Government and other Local Bodies.
As per the said order delivered in the case of the assessee-company affirming the Resolution Plan, all dues under the provisions of the Income Tax Act including taxes, duty, penalties, interest, fines, cesses, unpaid tax deducted at source/tax collected at source, whether admitted or not, due or contingent, whether part of above claim of income tax authorities or not, whether part of tax due diligence finding or not, asserted or unasserted, crystallized or un-crystallized, known or known, secured or unsecured, disputed or undisputed, present or future, in relation to any period prior to the acquisition of control by the resolution applicant over the company pursuant to this plan shall extinguished by virtue of the order of the adjudicating authority and the company should not be liable to pay any amount against such demand.
All assessments or other proceedings pending in case of the company, on the date of the order of the adjudicating authority relating to the period prior to that date, shall stand terminated and all consequential liabilities, if any, should be deleted and should be considered to be not payable by the company by virtue of the order of the adjudicating authority. Post the order of the adjudicating authority, no reassessment/revision or any other proceedings under the provisions of the Income Tax Act should be initiated on the company in relation to period prior to acquisition of control by the resolution applicant over the Company pursuant to this plan shall stand extinguished by virtue of order of the National Company Law Tribunal and the assessee-company should not be liable to pay against such demand.
Since the present appeal involving AY 2010-11 relates to the period prior to the acquisition of control by the Resolution Applicant over the company pursuant to this plan, all dues under the provisions of the Income Tax Act 1961 including taxes, duty, penalties, interest fines, cesses, etc. shall stand extinguished by virtue of the order of the National Company Law Tribunal and all proceedings including the appellate proceedings pending on the date of the order of the National Company Law Tribunal including the present proceedings relating to the prior period to the date of order shall stand extinguished and all consequential liabilities, if any, should be deleted and should be considered to be not payable by the Company. In the light of the order of the National Company Law Tribunal (NCLT) dated 12.02.2018 passed in assessee’s case, we deem it fit to restore the case for the assessment year under consideration before us to Assessing Officer for taking necessary action in accordance with law
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2021 (10) TMI 1254
Entitlement to interest u/s 244A - nature of amount of refund - refunds admittedly due to it by an order of the Hon’ble Income Tax Settlement Commission, but granted to it after a delay of 98 months - HELD THAT:- Hon’ble Apex Court in case of K.Lakshmanya & Co. [2017 (11) TMI 589 - SUPREME COURT] had held that assessee was entitled to interest u/s 244A of the Act on a refund due to it on account of waiver by the ITSC of interest u/s 234A, 234B and 234C.
We hold that the refunds finally determined by the ITSC in the instant case had been wrongfully retained by the department for a considerable period of time and hence department is bound to compensate assessee with interest u/s 244A of the Act.
We find from perusal of provisions of section 244A of the Act that the said section does not draw any distinction between ‘tax’ and ‘interest’. It only uses the expression ‘any amount due’. Hence the final refund determined by the ITSC would fall within the ambit of the expression ‘any amount due’ in section 244A of the Act , thereby making the assessee eligible to receive interest u/s 244A of the Act thereon.
In view of the aforesaid observations and placing reliance on various judicial precedents relied upon hereinabove including the CBDT Instruction and CBDT Circular we direct the ld AO to grant interest on refund from 14.7.2009 onwards till the date of granting refund for all the Asst Years under consideration. Accordingly, the grounds raised by the assessee are allowed.
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2021 (10) TMI 1253
Revision u/s 263 by CIT - As per CIT no adequate inquiry was conducted by the Assessing Officer with regard to the nature of land as agricultural land and the applicability of Section 50C of the Act was also ignored - Whether the subject matter of agricultural land sold was a capital asset? - HELD THAT:- AO has raised the taxability of sale transaction under capital gain. The assessee also replied the above query by way of reply at clause no. 4 of letter dated 10.09.2016 alongwith copy of sale deeds.
As submitted by the assessee before the Assessing Officer that 5 acres land was transferred to seller parties as per court’s order. The Assessing Officer after perusal of documents, did not find taxability of the transaction. Thus, the finding of the PCIT that no inquiries have been carried out in respect of sale transaction is factually incorrect.
Assessee got registered 11 acres 9 gunthas agricultural land on 11.03.2013 along with 5 other persons jointly in their favour and on same date, 5 acres and 29 gunthas of land transferred back to the seller party. In this transaction, even the land is treated as Capital Asset, there will not be any capital gain, the stamp duty value of purchase and sale being same on the day of transaction.
Invoking of Section 50C - Relevant provision has been made effective from 01.04.2003, whereas agreement for purchase of land was entered into in the year 1984 (01.10.84) as per Para–B of the compromise dead (English translate copy). The compromise deed was entered into on 13.03.2013 and the land has been returned back to the seller, which has been registered by ways of sale deed. Hence, provisions of section 50C are not applicable over the facts of the case.
The required conditions for invoking the Section 263 read with Explanation 2(a) of the Act are not satisfied - Decided in favour of assessee.
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2021 (10) TMI 1252
Exemption u/s 11 - denial of registration u/s 12AA - Proof of charitable activities u/s 2(15) - main/ primary object of the trust/ institution - whether activities undertaken by the assessee do not fall within the definition of Section 2(15) of the Act? - HELD THAT:- It is evident that the objects of the assessee trust meant for benefit of pharma dealers would undoubtedly fall within the fourth limb of Section 2(15) of the Act i.e. ‘the advancement of any other object of general public utility’ which has been held to be very wide in its connotation in several judicial pronouncements noted above.
The assessee society in the instant case is stated to be engaged in promotion of trade and commerce related to pharma business, protecting the rights and interests of its members, making its members aware about their duties, conducting seminars and workshops and organizing awareness camps and educating them about health and safety, cleanliness and also creating awareness about the legal provisions and duties and obligations under Income Tax Act and other laws to help them becoming a law abiding citizens. In this background, we are of the opinion that endeavors of the assessee society tantamounts to advancement of public utility and hence making such objects charitable in nature and susceptible to s.2(15).
The object beneficial to a section of the public is also an object of general public utility. Hence, the case of the assessee gets covered in the fourth limb of Section 2(15) of the Act i.e. ‘the advancement of any other object of general public utility’. This being so, the assessee would be entitled to the benefit meant for charitable trust as contemplated in the scheme of the Act.
Other objection of the CIT(E) that assessee society has purchased the land and distributed the same to its members by way of 99 years of lease - merely leasing of developed plots to its members on the basis of their respective contributions does not make the assessee ineligible for registration as a charitable entity per se.
No merit in the contention of the CIT(E) that land purchased by the society is not appearing in the balance sheet. As pointed out on behalf of the assessee, the land purchased by the assessee society has been duly disclosed in the Schedule ‘A’ ‘Land and Land Development’ of the balance sheet and thus disclosed in a particular manner.
While the assessee is a mutual concern and operating on the principles of mutuality, this by itself would not place any embargo for registration under s.12AA of the Act and to avail associated benefits under s.11 & s.12 of the Act having regard to CBDT Circular No. 11/2008 dated 19.12.2008 coupled with the decision of All India Rubber Industries Association vs. Addl.CIT & Ors. [2018 (10) TMI 1172 - ITAT MUMBAI]
The objects of the assessee society when read in the light of judicial precedents expounding the law in this regard, the conclusion is inescapable that the objects of the assessee is for charitable purpose within the meaning of Section 2(15) of the Act and the assessee is entitled in law for registration under s.12AA - Decided in favour of assessee.
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2021 (10) TMI 1251
Bogus LTCG - Addition u/s 68 - unaccounted share transaction - not eligible for exemption u/s 10(38) - legalize the unaccounted money through dubious method into white money - CIT-A deleted the addition - HELD THAT:- As the entire transaction as to purchasing and selling of 40,000 shares of M/s. Kappac Pharma Limited by the assessee company is genuine one routed through banking channel as well as SEBI, in the light of the fundamental facts that no man of ordinary prudence would invest in a company which is consistently in loss as per its annual report, the entire transaction is ingenuine.
Transaction undertaken by the assessee for purchasing 40,000 shares were dubious from the very outset as assessee has purchased the shares with undisclosed money of ₹ 4,52,000/- by way of cash payment which he subsequently declared unaccounted in IDS, 2016 scheme and got the same legalized from Principal CIT. Thereafter, assessee took back the cash of ₹ 4,52,000/- from the seller and paid him cheque of the aforesaid amount on 31.12.2013 after getting the scrips dematerialized.
During investigation when statement of assessee was recorded as to how he had paid the amount of ₹ 4,52,000/- and as to what is the name of the seller of the shares of M/s. Kappac Pharma Limited, he has given evasive reply making the entire transaction doubtful. Questions put to assessee during investigation and answers given thereto during his recording of statement u/s 131
Statement of the assessee recorded during investigation leads to the irresistible conclusion that the assessee has not discharged his onus to prove that the entire transaction was genuine because it is incomprehensible that a person, assessee in this case, who is constantly in touch with the person since 25.06.2012 when he has purchased the scrips by making payment through undisclosed cash, then got the scrips dematerialized on 30.12.2013 only after legalizing amount of ₹ 4,52,000/- through IDS, 2016, thereafter he got the amount of ₹ 4,52,000/- returned and paid him the amount through cheque on 31.12.2013, but strangely stated that, “I do not particularly know the parties from whom or to whom he bought and sold the shares”. Evasive reply coupled with undisputed fact narrated in the preceding para shows that the entire transactions as to purchasing and selling the shares of M/s. Kappac Pharma Limited by the assessee was not a genuine share trading transaction but has been given colour of share trading.
Because the entire case is crystal clear from the undisputed facts brought on record by the assessee himself. And moreover assessee has failed to discharge the onus that the entire transaction was genuine even by suppressing the correct facts during recording of his statement u/s 131 of the Act.
Entire transactions have to be examined in the light of the surrounding circumstances in order to unearth the bogus transactions of purchase and sale of shares. So, the assessee has failed to dispel all the suspicion raised by the AO to establish that the transactions in question were neither real nor beyond human probabilities. The case laws relied upon by the ld.AR for the assessee is not applicable to the facts and circumstances of the case.
CIT (A) has erred in deleting the disallowance made by the AO on account of exempt LTCG claimed by the assessee u/s 10(38) of the Act, hence question decided in favour of revenue.
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2021 (10) TMI 1250
Penalty proceedings u/s.271AAB - During the course of search operation assessee in his sworn deposition recorded u/s.132(4) had offered undisclosed income - As argued admission of undisclosed income without any reference to incriminating material does not warrant levy of penalty - HELD THAT:- The facts borne out from records clearly indicate that the assessee has undisclosed income, which was offered to tax in the sworn statement recorded u/s.132(4) of the Act. The assessee had also filed revised return and declared undisclosed income offered to tax during course of search and paid taxes. As per provisions of section 271AAB, penalty is mandatory, where the assessee has admitted undisclosed income during the course of search in the statement recorded u/s.132(4) of the Act and specifies manner in which such income has been derived.
In this case, the assessee has admitted undisclosed income in the statement recorded u/s.132(4) of the Act and substantiates the manner in which undisclosed income was derived. Therefore, we are of the considered view that reasons given by the Assessing Officer to levy penalty of 30% of undisclosed income is in accordance with law and thus, we are inclined uphold order of the learned CIT(A) and dismiss appeal filed by the assessee.
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2021 (10) TMI 1249
Assessment u/s 153A - addition of income from house property - Whether AO is not supposed to make assessment on the basis of estimation or on the basis of appreciation of material other than the seized material in respect of completed/unabated assessments in respect of years prior to the searched year? - HELD THAT:- In view of the decision of SINHGAD TECHNICAL EDUCATION SOCIETY [2017 (8) TMI 1298 - SUPREME COURT] wherein it has been held that for framing assessment u/s 153C of the Act, there must be an incriminating material relevant to that assessment year.
For AY 2009-10 & 2010-11 AND 2011-12 & 2012-13 the assessment framed u/s 153C of the Act in this case is without jurisdiction and therefore, the same is bad in law. Further, no incriminating material was found for the assessment years AY 2009-10 and AY 2010-11. Therefore, as per the decision of the Hon’ble Supreme Court, the notices issued u/s 153C of the Act in these appeals as well as consequent assessments framed u/s 153C of the Act are not sustainable in the eyes of law and the same are accordingly quashed.
Assessment Year 2013-14 - A diary containing the rental income for the whole year was found during the search and seizure operation. The rent from nine rooms was noted in the aforesaid diary - The income recorded, in our view, is the full income of the year from the aforesaid property. Moreover, it is not necessary that all the rooms of the building will be occupied on all days during the entire year. Therefore, as per the incriminating material, the rental income for the year from the property in question was at ₹39,12,500/-. The assessee having one third share in the said property, the rental income from the said property would be ₹13,04,166/- upon which the assessee would be entitled to deduction at the rate of 30% u/s 24(1) of the Act. However, the assessee, for the AY 2013-14, has already offered an income of ₹28,07,259/- which is more than the income that can be arrived at from the incriminating documents. We find force in the contention of the Ld CIT(A). AR that the assessee had offered the income in lumpsum of ₹ 1,80,00000/- which was bifurcated on approximation basis and that the excess income offered in an year may be adjusted against the year in which less income is found to have been offered. The additions made by the AO in respect of the aforesaid assessment year are set aside and it is directed that the taxes paid over and above the income of ₹ 1304166/- would be adjusted against other years for which the less taxes have been found to be offered.
Assessment Year 2014-15 - After granting deduction u/s 24(1) of the Act, at the rate of 30% , the total income of the assessee during the year comes out at ₹55,68,161/- whereas the assessee has offered the income of the year under consideration at ₹31,44,095/-. Therefore, the addition to the extent of ₹24,22,066/- is sustained for the assessment year under consideration. However, the assessee will be entitled to the adjustment of the taxes paid for the assessment years AY 2009-10, AY 2010-11, AY 2011-12, AY 2012-13 and of excess taxes paid for AY 2013-14 against the taxes due for the AY 2014-15 in view of the assessment quashed for A.Y. 2009-10 to A.Y. 2012-13 and additions sustained for A.Y. 13-14 as ordered above.
Assessment Year 2015-16 - As in this case, admittedly no notice u/s 153C of the Act was issued to the assessee for the assessment year under consideration. Even otherwise, the return of income for the assessment year under consideration was filed by the assessee on 07.02.2016 i.e. within the standard period of filing of the return of income and as per the proviso to Section 143(2) of the Act, no notice could have been issued after the expiry of six months from the end of the financial year in which the return of income is furnished which expires on 30.09.2016. As the assessment framed was time barred. Moreover, no incriminating material was found during the year under consideration. Therefore, even otherwise, the assessment framed u/s 153C of the Act would be without jurisdiction. Under these circumstances, the return of income has to be accepted for the year under consideration. The additions made by the AO for the year under consideration are ordered to be deleted.
Since the facts of the cases as well as the ownership rights in the property are same in case of both the assessees, therefore, our findings arrived herein would mutatis mutandis apply for the respective appeals for different years of both the assessees
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2021 (10) TMI 1248
Computation of deduction u/s 10AA - exclusion of telecommunicating expenses and internet usage charges from the export as well as total turnover while computing deduction - HELD THAT:- As relying on M/S. IGATE GLOBAL SOLUTIONS LTD. [2019 (8) TMI 1226 - ITAT BANGALORE] DR did not bring on record any contrary view or order against the order of this Tribunal. Therefore, we hold that any amount reduced from export turnover should also be reduced from the amount of total turnover in the computation of deduction u/s. 10AA of the Act. Thus, ground raised by the assessee is allowed.
Exclusion of expenditure on account of technical services from the export as well as total turnover while computing deduction u/s. 10AA - HELD THAT:- As relying on own case [2019 (8) TMI 1325 - ITAT PUNE] hold that any amount of foreign exchange expenses reduced from export turnover should also be reduced from the amount of total turnover in the computation of deduction u/s. 10AA of the Act. Thus, ground raised by the assessee is allowed.
Onsite/deputation of technical manpower (DTM) software services not eligible for deduction u/s. 10AA - HELD THAT:- We note that, in assessee‟s own case i.e. IGATE Global Solution Ltd. as it was then in A.Y. 2007-08,[2019 (8) TMI 1226 - ITAT BANGALORE] on transfer, Pune Benches of ITAT discussed the issue in great detail and turned down the contention of Revenue that the income from onsite/DTM was not derived from export of computer software and is not qualified for deduction u/s. 10A/10AA of the Act. Further, the Co-ordinate Bench held that Explanation 3 is a deeming provision, which specifically brings profits and gains derived from on site development of computer software and services for development of software outside India within the meaning of the profits and gains derived from the export of computer software outside India which means that not only the profits and gains derived by the eligible undertaking from export of computer software are eligible for deduction but also profits and gains derived from onsite development of computer software and services for development of software outside India.
The words “derived from” contained in sub-section (1) of section 10A is not an exhaustive provision and it has been further elaborated in sub-section (4) to mean the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking. The Co-ordinate Bench opined when there exists a direct link between the eligible undertaking and some income, the same is profit of the business of undertaking, even if may not be derived from the export of computer software etc. The proposition as enunciated by the Co-ordinate Bench in assessee‟s own case i.e. iGATE Global Solution Ltd, as it was the then, in A.Y. 2007-08 has been followed by this Tribunal in assessee‟s own case in A.Y. 2010-11[2020 (3) TMI 338 - ITAT PUNE] therefore, we hold that the income from onsite/DTM rendered abroad is considered to be derived from the export of computer software, is eligible for deduction u/s. 10A/10AA of the Act.
Nature of gain - foreign exchange gain falls on capital account or revenue account - HELD THAT:- AO opined that the foreign operations are part and parcel of the overall company‟s operations and cannot be regarded as separate or independent operations and accordingly an amount being amount credited in the year under consideration as held as taxable - CIT(A) directed the AO to ascertain the amount of foreign exchange gain on capital account and on the revenue account and to delete the addition on account of furnishing of gain on capital account. It is clear from the impugned order that the ld. CIT(A) sent the mater back to the file of AO for making addition only in respect of foreign exchange gain on revenue account. The claim of the assessee is on the same line as has been directed by the ld. CIT(A) to be done, accordingly, we, therefore, dismiss the ground taken by the assessee.
Disallowance of depreciation on goodwill - HELD THAT:- As the assessee acquired entity IT&T Ltd. and taken overall net worth of its assets, totaling to ₹ 10,57,24,413/- which clearly evidenced in the financials of assessee in the Agreement at Page No. 8 of the paper book. Likewise, the assessee also shown the total consideration as goodwill under acquisition in the Balance sheet, therefore, we find the order of CIT(A) is incorrect in holding that no evidences showing acquisition in the F.Y. 2003-04. In the facts and circumstances of the case as discussed above, we find force in the arguments of the ld. AR that the assessee is entitled to claim depreciation on goodwill.
Depreciation on goodwill only on the written down value of the goodwill starting from F.Y. 2003-04 onwards. The assessee placed on record a chartof the assessment order by which the opening written down value of the F.Y. 2003-04 at ₹ 105,724,413/- and after depreciation allowing @ 25% the closing written down value at ₹ 79,293,310/-. In the same way the written down value has been computed in each of the succeeding year and for F.Y. 2009-10 arrived at ₹ 14,112,506/-. Thus, it is well constitutes the opening written down value of goodwill for the F.Y. 2010-11 relevant to A.Y. 2011-12 i.e. the year under consideration. We, therefore, direct the AO to grant depreciation @ 25% on written down value of the goodwill at ₹ 14,112,506/-. Thus, ground No. 5 raised by the assessee is allowed for statistical purpose.
Denial of carry forward of long term capital loss - AO observed that the said amount is net of short term capital loss and said short term capital loss is disallowable u/s. 94(7) - HELD THAT:- If we accept the interpretation rendered by both the authorities below, definitely, it would frustrate the object contemplated u/s. 80 of the Act. Section 80 of the Act explains that no loss which has not been determined in pursuance of a return filed shall be carried forward in accordance with the provisions of sub-section (3) of section 139 of the Act. Admittedly, there was no return of loss u/s. 139(3) of the Act as the assessee declared positive income u/s. 139(1) of the Act. Even then, in our opinion that when the AO found variation in long term capital loss he should have allowed carry forward of such loss in the assessment proceedings itself, because, When the he taxed the difference in amount under short term capital gain and also disallowed short term capital loss u/s. 94(7) of the Act, definitely, in our opinion, the AO should have allowed carry forward of differential amount under long term capital loss and for denying the same, in our opinion, is not justified. Therefore, we direct the AO to allow carry forward the difference of amount.
Addition of foreign tax credit - HELD THAT:- We note that the CIT(A) directed the AO to obtain documents as required under Rule 128(8) of the Income Tax Rules and to give benefit of foreign tax credit. It is seen that the several issues came up for consideration in assessee‟s own case for A.Y. 2009-10. Since, the facts and circumstances of the instant ground are similar to those of the earlier years as discussed in the aforesaid order for A.Y. 2009-10 in the said impugned order and remit the matter back to the file of AO for re-deciding this issue in conformity with the relevant discussion given by the Tribunal in the said order. Needless to say the assessee shall be offered reasonable opportunity of hearing. Thus, ground raised by the assessee is allowed for statistical purpose.
Deduction paid towards Education Cess under Finance Act while computing the taxable income - HELD THAT- The Hon‟ble High Court of Bombay in the case of Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT] was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act - we direct the AO to allow deduction in respect of Education Cess paid by the assessee. Accordingly, the additional ground raised by the assessee is allowed.
Disallowance u/s. 14A r.w. Rule 8D - Mandation of recording satisfaction - HELD THAT:- the contention of the ld. AR is that there was no satisfaction recorded by the AO as confirmed by the CIT(A) regarding the disallowance made by the assessee on its own is incorrect and we find that the AO categorically held that the disallowance made by the assessee is not accepatable, thereby, the submission of ld. AR is rejected.
We find in the present case the AO clearly recorded is non-satisfaction regarding the disallowance made by the assessee on its own relating to exempt income and proceeded to invoke the procedure contemplated under Rule 8D of the Rule. Therefore, the contention of ld. AR that the finding of this Tribunal in assessee‟s own case for A.Y. 2011-12 is applicable to the year under consideration is rejected, therefore, we hold the facts in A.Y. 2011-12 in consolidated order of this Tribunal [2019 (3) TMI 1135 - ITAT PUNE] are not identical to the fact of the year under consideration. In view of the same, we hold the order of CIT(A) in this regard in holding that the AO did not record any satisfaction relating to the disallowance made by the assessee on its own is not justified. Thus, the order of CIT(A) is set aside in this regard and the order of AO is restored. Accordingly, ground raised by the Revenue is allowed.
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2021 (10) TMI 1247
TDS u/s 194C - Disallowance u/s 40(a)(ia) being the amount of expenses claimed under the head testing charges on the reason that the assessee has not deducted tax on such payment - CIT(A) in his finding held that the assessee has not awarded any contract to any party for testing charges, in fact, the testing charges were deducted by the Government while making payment to the assessee on running bills raised by the assessee upon the Governmen - HELD THAT:- As contract agreement with terms and conditions for project of SSS. Canal with Government department wherein as per Clause 76 stated that deduction to be made toward testing charges from the running account bill of the contractor. No infirmity in the decision of the Ld. CIT(A) holding that testing charges was made by the Government and the assessee has only reimbursed the expenses through the mode of deduction made by the Government out of running bills of contract. Therefore, we do not find any merit in the ground of appeal of the Revenue and the same stand dismissed.
Addition u/s 40(b) - remuneration to partner on the ground that remuneration of partner was not allowable on the amount of interest received on Fixed Deposit/SSNL Bonds which was treated as income from other sources -CIT(A) has allowed the appeal of the assessee - HELD THAT:- The assessee has claimed that interest on Fixed Deposit, interest on SSNL Fixed Deposit and interest on SSNL Bonds was made out of surplus funds available with the assessee and the interest income was part of the business income. Therefore, the same was correctly included for calculating remuneration of the partners.
As in the case of CIT vs. J.J. Industries [2013 (7) TMI 577 - GUJARAT HIGH COURT] wherein it is held that interest from Fixed Deposit on spare funds cannot be excluded from book profit for the purpose of determining allowable deduction of remuneration paid to partners. After taking in to consideration the decision of Hon'ble Jurisdictional High Court we do not find any error in the decision of the Ld. CIT(A), therefore, this ground of appeal of the Revenue is also dismissed.
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2021 (10) TMI 1246
Revision u/s 263 by CIT - Addition u/s 68 - amount received in a different Financial year - verification of loan transactions - HELD THAT:- Assessee has vociferously pleaded before PCIT in the first instance that the so called list of shell co. by SEBI implicating lender (a privately held group co.), statement of some third party witness alleging such a privately managed company to be a shell company and all other material coming to the notice of deptt., which is basis for allegation of order being erroneous, must be confronted and made available to Assessee. Such material were admittedly never confronted to the assessee despite specific request.
Pertinent here to observe that while it is fairly settled that substantive power enshrined in the Act cannot be ordinarily held hostage to procedural requirements, nonetheless, it bears to recall that procedure delineated in section 263 is a substantive provision and the provision explicitly requires the revisional authority to meet the mandate of principles of natural justice., an abiding characteristic of any administrative or quasi-judicial function in any case.
The revisional order so passed, in the instant case, alleging existence of some adverse material without enabling the assessee to respond thereto and without giving any effective opportunity despite express demand is thus palpably fragile and requires to be treated as illegal. In the absence of adherence to salutary principles, the purported new material is rendered extraneous and hence required to be ignored as non est and consequently, the revisional action is required to be tested dohors such alleged material. The whole case of the PCIT built on such unintelligible and non-descript premise is thus a damp squib. On this score too, the revisional action fails. Looking from any angle, the directions towards verification of loan transactions are unsustainable in law and deserve to be quashed. The directions no. 1-4 are thus set aside.
Applicability of Section 56(2)(viib) in respect of shares issued - We are unable to see any error in the action of the AO towards his endorsement on issue of shares at premium. The premium charged is demonstrated to be strictly as per the immediately last available audited and approved balance-sheet at the time of issue of shares. The action of the Assessee is thus on a sound basis. We find prima facie merit in the plea advanced for justification of the requirement of Section 56(2)(viib) of the Act. No abnormality is discernable in the admission of claim of the Assessee by the AO. On facts, the balance-sheet for the FY 2013-14 was stated to be signed on 29.08.2014, i.e. after the issue of shares on 30.07.2014 and, therefore, the stance of the assessee to adopt the figures as per last audited accounts of FY 2012-13 is plausible - AO has weighed these facts and has come to a reasonable conclusion.
Valuation dynamics is contingent upon of plethora of factors such as market interest, feasibility, perception etc. and cannot be determined with a mathematical precision. It is often said that valuation is an art rather than a science. A meager difference in premium qua a book net-worth as per past balance-sheet would not, in our view, necessarily invite the deeming fiction in the larger context of its stated objects. Such course is certainly not decipherable under the shelter of revisional proceedings where the order has been passed in exercise of quasi judicial powers and carries legal effect. Such a tiny difference in valuation determined by a highly subjective exercise can not be said to be either erroneous or even prejudicial to the interest of revenue in it true purport. It is not permissible to PCIT to substitute a view taken by the AO which has a plausible basis. Applicability of Section 56(2)(viib) by the Revisional Commissioner is thus set aside.
Applicability of Section 43CA in respect of sale deed executed below stamp duty value - A chart was placed before the PCIT also showing actual sale consideration and circled rate/stamp duty value - assessee thus contends that it was conclusively demonstrated before the PCIT that there exists no infringement of Section 43CA. The PCIT has not applied his mind to the demonstrable facts but has merely directed the assessee to re-verify the point in question.
The action of PCIT does not appear tenable. The PCIT must have weighed the submissions of the assessee to remove any doubt entertained by him as per show cause. The points at the stage of show cause are ephemeral and rebuttable. The PCIT has not given any finding on the submissions made. No hesitation to set aside such action. Section 263 is not meant to conduct roving inquiry howsoever wide the amplitude of the powers may be. When a glaring and demonstrable fact has been placed before the PCIT to address his concern, the minimum that is expected of him is to look at the relevant facts. He cannot direct the Assessing Officer to make further inquiry/adequate inquiry without himself looking into the facts and carrying out some minimum inquiry to demonstrate the error. The mundane and perfunctory remittance of the issue to the file of the Assessing Officer cannot be approved. The action of PCIT is thus set aside and that of AO is restored.
Applicability of Section 40A(3) in respect of payment for purchase of land - We straight away find substantial merit in the plea of the assessee that Section 40A(3) has no application in the facts of the case where the payment was made merely by way of advance and consequently not claimed as expenditure/deduction. The PCIT has not controverted the claim of the assessee that no expenditure has been claimed under the provisions of law towards advances made. Apparently, the provisions of Section 40A(3) does not apply to such transactions of mere advance without being claimed as expenditure. The genuineness of stamp-paper for execution of documents for advance payment is not relevant where no prejudice is caused to the revenue having regard to the fact that no expenditure has been claimed at all. The proposed directions are grossly opposed to the scheme of the revisionary powers. We thus see no merit, whatsoever, in this direction either.
The whole set of directions given by the revisional order thus are thus marred in law and traveled beyond the mandate. - Decided in favour of assessee.
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