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Showing 201 to 220 of 1526 Records
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2023 (10) TMI 1326
Cancellation of GST registration of petition - non-constitution of Tribunal under Bihar Goods and Services Tax Act - HELD THAT:- It is seen from the Bihar Goods and Services Taxes Rules, 2017, GST REG-19 has a specific column where reasons have to be assigned. However, the Assessing Officer seems to be laboring under the belief that when an assessee does not appear or an objection is not filed, no reasons have to be assigned - the said order cannot be countenanced, especially when there is absolutely no reason stated regarding the cancellation of registration.
Reliance placed in the judgment of another Hon'ble Division Bench of this Court passed in Manoj Kumar Sah versus The State of Bihar and Anr. [2023 (1) TMI 791 - PATNA HIGH COURT] wherein it has been held that the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is nonspeaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences - The impugned order in the instant writ petition also suffers from the very same illegality which has been pointed out by the Division Bench.
Petition allowed.
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2023 (10) TMI 1325
TP Adjustment - AMP expenses - International transaction - whether the assessee, which is a wholly owned subsidiary of its AE is required to be compensated AMP expenses incurred by it on behalf of its AE? - Tribunal had concluded that the AMP expenses incurred by the respondent/assessee did not amount to an international transaction as relying on decision of this court passed in Maruti Suzuki India Ltd.[2015 (12) TMI 634 - DELHI HIGH COURT] - HELD THAT:- Given the position and the fact that there has been no change in the circumstances concerning the respondent/assessee (something which has been noted by the Tribunal) according to us, in this matter, the principle of consistency would apply. Therefore, we are not inclined to interfere with the impugned order passed by the Tribunal.
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2023 (10) TMI 1324
Validity of faceless assessment - violation of principles of natural justice and non-affording an opportunity of personal hearing - in personal hearing through video conferencing petitioner joined the VC but there were issues in the audio but used the chat box in order to communicate with the authority concerned - as per assessee conversation in the chat box reveals that owing to technical glitches, the petitioner did not get an effective opportunity of explaining the case orally since conversation took place through chat box and requests for rescheduling the video conference were turned down - HELD THAT:- Issuing of a show cause notice and personal hearing is necessary before passing any adverse order against a person. It is a trite law that when the statute is silent, with no positive words in the Act or the Rules spelling out the need to hear the party whose rights or interests are likely to be affected, requirement to follow fair procedure before taking a decision must be read into the statute, unless the statute provides otherwise. The principles of natural justice operate in areas not covered by any law. They do not supplant the law of the land but only supplement it. They are not embodied rules and their aim is to secure justice or to prevent miscarriage of justice. The principles of natural justice need to be adhered in each and every case. It is a settled law that it is not permissible for any authority to jump over the compliance of natural justice on the ground that even if opportunity of hearing had been afforded, it would have served no fruitful purpose.
As decided in VASUPUJYA INFRASTRUCTURES LLP [2022 (8) TMI 1455 - GUJARAT HIGH COURT] it is not in dispute that in facts of the case no draft assessment along with show cause notice as required under section 144B(1) and section 144B(7) is given to the petitioner so as to enable the petitioner to give explanation for proposed addition during the hearing before the National Faceless Assessment Centre.
Section 144B(1)(xii) provides that on receipt of show cause notice, assessee may furnish his response to the National Faceless Assessment Centre and as per clause (xiv), assessment unit shall make a revised draft assessment order after considering the response of the assessee and send it to the National Faceless Assessment Centre. As per the provisions of section 144B(7) in case of variation prejudicial to the assessee as proposed in the draft assessment order, the assessee is entitled to request for personal hearing and upon such request, the personal hearing may be provided by the authority, if the case of the assessee is covered by circumstances provided therein in exercise of powers under sub-clause (h) of clause (xii) of section 144B(7) of the Act, 1961.
It can be safely be said that the impugned order was passed by the respondent in violation of principles of natural justice without affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment.
In the result, this petition succeeds and is accordingly allowed. The impugned order of assessment passed by the respondent under Section 147 r.w.s.144B and demand notice under section 156 of the Act are quashed and set aside.
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2023 (10) TMI 1323
Condoning the delay in preferring the refund application - Principal Commissioner's delegated power under Section 119(2)(b) - HELD THAT:- Section 119(2)(b) only empowers the Board to admit an application or claim for exemption, deduction, refund or any other relief under the Act, after the expiry of the period specified by or under the Act for making such application or claim and deal with the same on merits in accordance with law.
No doubt, the Board may authorise the Principal Commissioner to exercise the said discretion on its behalf, but such authorisation cannot confer on the Principal Commissioner a greater discretion than what is contemplated under the Act in favour of the Board.
In the instant case, we find that Ext.P10 circular authorises the Principal Commissioner to consider even the merits of the refund claim while exercising the delegated power under Section 119(2)(b) of the Act. This is plainly illegal for the mandate of the Act cannot be circumvented through any administrative circular issued by the Board.
Whether or not there was any justifiable reason for the delay in preferring the refund application was not considered by the Principal Commissioner on merits? - The present refund claim preferred by the appellant, whose late husband was the earlier assessee, is in respect of the tax deducted at source from the enhanced compensation amount pertaining to the same land. When the earlier refund was found admissible by considering the land in question as agricultural land, we fail to see how the very same land can cease to be agricultural land when it comes to a claim for refund of the tax deducted at source from the enhanced compensation amount paid to the assessee. At any rate, we feel that the issue on merits is something that has to be considered by the assessing authority to whom the matter must necessarily be relegated if the Principal Commissioner finds that there are justifiable reasons offered by the appellant for the delay in preferring the claim for refund.
Since a decision on the merits of the delay condonation application under Section 119(2)(b) has not been taken by the Principal Commissioner, we are compelled to remit this matter to the said authority for fresh consideration, strictly in accordance with Section 119(2)(b) of the Act.
We therefore allow this writ appeal by setting aside the impugned judgment of single Judge and direct the 1st respondent/Principal Commissioner to consider the application u/s 119(2)(b) preferred by the appellant afresh, solely for the purpose of determining whether or not justifiable reasons have been made out for condoning the delay in preferring the refund application.
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2023 (10) TMI 1322
Accrual of income - Money received under Marketing Assistance Programme [“MAP”] - HELD THAT:- A perusal of the clauses would show, as noted by the Tribunal, even for AY 2011-12 [2018 (10) TMI 1888 - ITAT DELHI], that the amount received by the respondent/assessee in his capacity as a distributor was passed on to sub-contractors as and when they lifted the goods in issue.
Clause 6 of the MAP agreement, would show that the amount received under the MAP agreement by assessee was conditional and was liable to be returned to Exxon in certain situations, as indicated in sub-clauses (a) to (f) of clause 6.
It is also surprising that the AO chose to treat only the difference between the amounts received and spent, as income. In our view. if the amount received was income of the respondent/assessee, then the entire amount should have been treated as income.
AO has noted that the aforementioned amount is treated as gross receipt of the respondent/assessee. AO, by treating sum as the gross receipts has, in a sense, indicated that the amount did not bear the attribute of income - no substantial question of law arises for consideration.
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2023 (10) TMI 1321
Penalty u/s 271E - period of limitation as prescribed u/s 275 (1)(c) - HELD THAT:- If the limitation period is connected to when the concerned officer issues notice, then the appellant/ revenue can extend the period of limitation, way beyond the timeline prescribed in Section 275 (1)(c).
We are clearly of the view that the notice issued by the JCIT on 13.06.2011 could not have extended the period of limitation, as prescribed under Section 275 (1)(c).
In this case, what is required to be brought to the forefront is that the AO had taken prior approval of the ACIT, who is equal in rank to the JCIT, before triggering the penalty proceedings. Thus, although the decision to initiate penalty proceedings is found embedded in the assessment order dated 31.12.2010 and approval to frame the assessment order was given prior to the said date, the notice was issued only on 13.06.2011.
Even though this may be an additional factor in this particular case, our reasons for holding the limitation period as prescribed u/s 275 (1)(c) had expired latest by 30.06.2011, is not confined only to this aspect of the matter. The appellant/revenue, as noticed above, cannot extend the period of limitation by deciding at its whim and fancy when the notice has to be issued. The notice u/s 274 should have been issued before the period of limitation, as discussed above.
Decided in favour of assessee.
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2023 (10) TMI 1320
Reopening of assessment u/s 147 - Reason to believe - scope of amended law - accommodation entry receipts - As per assessee no reassessment proceedings may have been initiated against the petitioner after 31.3.2017 if the component of income alleged to have escaped assessment was less than 50 Lakhs - HELD THAT:- Neither under the unamended law nor under the amended law, it was ever obligatory on the assessing authority to proceed to make assessment of component of escaped income with respect to entire 'information/reason to believe' that may have given rise to reassessment proceedings. That satisfaction/reason to believe has always been relevant only for the purpose of assumption of jurisdiction.
Once jurisdiction was validly assumed by recording appropriate 'reason to believe', issuance of the notice thereafter, threw open entire assessment of the subject assessee. It enabled the assessing authority to pass a reassessment order both with respect to information that may have given rise to 'reason to believe', as also on other issues that may arise during the course of reassessment proceedings.
Similarly, AO was not bound in law to bring to tax all income commensurate to the information/'reason to believe', recorded by him, to assume jurisdiction. It was always open in law (for the assessing authority), to drop whole or any part of such allegations of escapement of income (drawn at the initial stage).
Even under the amended law, no change has been brought as may compel the assessing authority to subject an assessee to tax on entire information giving rise to reassessment proceedings. In short, even after the amendment made to the Act, the issue as to assumption of jurisdiction and passing of assessment order in exercise of that order remain two separate and largely independent exercise. While no reassessment order may be passed unless jurisdiction is shown to have been validly assumed, reassessment order giving rise to tax liability is not sine qua non of valid assumption of jurisdiction.
The fact that in the present case, the assessing authority has reconsidered his position and now reached a conclusion that there exists only one accommodation entry of Rs. 27 lakhs and not two such entries, may only impact the quantum of reassessment order to be made.
The effect of section 149 has to be seen in the context of facts that obtained at the stage of initiation of reassessment proceedings. Insofar as at that stage the quantum of income alleged to have escaped assessment was quantified at Rs. 54 lakhs, allowed the assessing authority of the petitioner to take benefit of Section 149(b) of the Act, at that stage. Almost one year has passed since then, before present challenge has arisen. At present, even the reassessment order has come into existence. There is no reason available to this Court to infer, there is no escapement of income of Rs. 27 lakhs (arising from the other accommodation entry).
Subsequent development emerging in the course of reassessment proceedings wherein a fact conclusion may be drawn by the assessing authority indicating escapement of income below 50 lakhs cannot relate back to have any material bearing on the initiation of the reassessment proceedings and it cannot undo that initiation of proceeding.
There is no principle of law (statutory or otherwise) to reach that conclusion. Plainly, in the facts as noted above, no sanction was required to be obtained at the stage of initiation of reassessment proceedings. Therefore, initiation of reassessment proceeding was well founded on satisfaction as to escapement of income, from tax. The fact that some part of the allegation of escapement is being dropped or not pursued at the stage of quantification of income, may not nullify the assumption of jurisdiction, by now invoking section 149.
Accordingly, we refuse to exercise jurisdiction under Article 226 of the Constitution of India. Writ petition is dismissed
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2023 (10) TMI 1319
Deduction u/s 80IB(10) - Assessee allotted more than one residential unit of his housing project to an individual - CIT(A) allowed deduction - HELD THAT:- It is the claim of the assessee that he had as regards the aforesaid property, viz. Flat No. A-102 executed the agreement to sell in favor of Shri Mahendra Sethiya, HUF, but the same, in our considered view, would not take his case beyond the realm of the infraction contemplated in clause (f) of sub-Section (10) of Section 80IB.
Thus for the reason that as Smt. Usha Basant Sethiya (individual ) vide a registered deed executed in her favor by the assessee got vested with both the rights and title as that of an allottee for Flat No.A-102; therefore, there is no merit in the claim of the assessee that he had transferred the said property to Shri Mahendra Sethiya, HUF.
Also, the claim of the Ld. AR that HUF, had signed as a consenting party in the aforesaid registered deed executed by the assessee in favor of Smt. Usha Basant Sethiya (supra) would by no means come to his rescue.
Our conviction that the aforesaid property, viz. Flat No. A-102 was allotted by the assessee to Smt. Usha Basant Sethiya (supra) can also be gathered from the fact that the profit/income accruing on the transfer of the same had been recognized by the assessee only pursuant to the execution of the aforesaid registered sale deed by him.
We are unable to bring ourselves to agree with the view taken by the CIT(Appeals), who held a conviction that as Smt. Usha Basant Sethiya (supra) was neither Karta nor a member of Mahendra Sethiya, HUF; therefore, the assessee had carried out independent sale transactions of. Flat No. “A-101” & “A-102” to two different entities. We, thus, set aside the order of the CIT(Appeals) to the extent he had vacated the disallowance u/s. 80IB(10) Flat No. “A-101” and A-102” sold by the assessee to one individual, viz. Smt. Usha Basant Sethiya (supra).
Decided in favor of revenue, partly.
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2023 (10) TMI 1318
Reopening of assessment u/s 147 - Validity of approval granted u/s 151 - reason to believe - non filling of ROI - HELD THAT:- On going through the reasons recorded, we are of the view that they are replete with various factual misstatement/inaccuracies and silly mistakes. Though, AO has reopened the assessment for assessment year 2013-14, however, the heading of the reasons recorded refers to assessment year 2014-15. Even, the name of the assessee has been wrongly mentioned.
In paragraph 3 of the reasons recorded, the AO has very clearly and categorically stated that, though, the assessee had filed TDS return u/s 194E and u/s 195 however, it didn’t file any return of income. As a result of which, genuineness of financial transaction business activities of the assessee could not be ascertained.
In reasons recorded, AO has mentioned filing of return of income by M/s. Cricket Australia. Whereas, admitted facts are, the assessee has not filed any TDS returns whatsoever under Section 194E or section 195 of the Act. In fact, there is no reason for the assessee to file any TDS returns in India as it has not remitted any amount out of India to any other party.
On the contrary, the assessment order itself would reveal, instead of making any payment, assessee had receipts from Taj Cricket Ltd., another non-resident entity. Thus, the reasons recorded by the Assessing Officer for reopening of assessment under Section 147 of the Act clearly reveals that the formation of belief has no live link or nexus with any tangible material available on record. Rather the reasons recorded are based on either non-existent or completely irrelevant facts. In fact, while disposing of the objections of the assessee questioning the validity of the reopening of the assessment, the Assessing Officer has clearly admitted/owned up various factual inaccuracies in the recorded reasons.
Reasons recorded by the Assessing Officer certainly do not make out a case for reopening of assessment under Section 147 of the Act.
Also without examining the facts on record, both the Additional CIT and CIT have granted approval under Section 151. Granting approval under Section 151 of the Act is not an empty formality. Approval has to be granted with caution and proper application of mind to the facts and material on record to prevent miscarriage of justice, as, reopening of assessment involves reopening of an already concluded assessment. Therefore, it should not be used as a tool for harassment to the assessee.
Most unfortunate part in the entire exercise is the approach adopted by learned DRP. As could be seen from the observations of learned DRP, they have disposed of the objections of the assessee, being completely oblivious of the factual position, as, the DRP has referred to non-filing of TDS return and related transactions as the reasons for reopening. This, in our view, is totally unacceptable.
When the Assessing Officer, while disposing of the objections of the assessee has admitted errors committed by him, it is surprising that learned DRP has fallen into the same error while referring to non-filing of TDS return and related transaction as the cause for reopening of assessment. Decided in favour of assessee.
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2023 (10) TMI 1317
Reopening of assessment u/s 147 - reassessment beyond 4 years - Undisclosed investment u/s. 69 - performance guarantees/deposits - deductions towards performance guarantee and other deposits by the PWD were in the nature of deposits that were refundable after a period of time as mutually agreed upon by the parties, thus, the same should have been shown by the assessee as deposits on the asset side of his balance sheet - HELD THAT:- When the assessee’s claim as regards the allowability of performance guarantee/other deposits, which the assessee accounted for under the head “Contract expenses,” had been looked into by the A.O in the course of original assessment proceedings, therefore, we find substance in the claim of the Ld. AR that in the absence of any fresh material coming to the notice of the A.O after the culmination of the original assessment proceedings that had culminated vide order passed u/s. 143(3) same could not have been reopened merely on the basis of a “change of opinion” on the basis of the same set of facts as were available on record in the course of the original assessment proceedings.
As per the mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is a must that the A.O has fresh material or information with him, that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Our aforesaid view is fortified by the judgments of NYK Lime (India) Ltd [2012 (2) TMI 283 - BOMBAY HIGH COURT] and Purity Tech Textile Pvt. Ltd.[2010 (2) TMI 26 - BOMBAY HIGH COURT]
As the case of the assessee had been reopened by the A.O merely on the basis of “change of opinion” and not on the basis of any fresh tangible material coming to his notice after the conclusion of the original assessment proceedings which would reveal any income of the assessee chargeable to tax had escaped assessment, therefore, in light of the aforesaid settled position of law, quash the assessment framed by the A.O u/s. 143(3)/147 of the Act dated Nil for want of valid assumption of jurisdiction. Decided in favour of assessee.
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2023 (10) TMI 1316
Penalty u/s 271(1) - estimation of income on bogus purchases - HELD THAT:- Disallowance in the instant case is on estimated basis on the presumption that expenditure incurred is excessive having regard to nature and business activity of assessee and also having regard to the non-availability of cogent evidences to support purchases.
Significantly, the assessee, in the instant case, has inter alia pointed out that the purchases do not belong to the Assessment Year 2012-13 in question but the amount outstanding against the respective suppliers are opening balances during the year therefore, no expenditure has been incurred towards bogus purchases in the year. We observe that on this point alone, the imposition of penalty towards disallowance of bogus purchases affected during the year is unsustainable in law.
Also see Vijay Proteins Ltd. [2015 (1) TMI 828 - GUJARAT HIGH COURT] and Sanjay Oil Cake Industries [2008 (3) TMI 323 - GUJARAT HIGH COURT] wherein the penalty imposed u/s 271(1)(c) was struck down in similar circumstances of estimated disallowance towards bogus purchases. Decided in favour of assessee.
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2023 (10) TMI 1315
Employees’ contribution to PF/ESIC u/s 36(1)(va) r.w.s. 43B - default in timely depositing contribution qua the due date - Assessee submitted that mere approval of liability towards payment of salary without actual disbursement would not fastened obligation for deposits of employees’ contribution under the Labour Act - HELD THAT:- We find merit in such alternative plea towards timely deposit of employees’ contribution to PF/ESIC qua the due date prescribed under relevant legislations and regulations. Thus while the action of the Revenue for making adjustments towards belated payment to employees’ contribution is endorsed on first principles, the matter is restored back to the file of the designated Assessing Officer for the purposes of ascertaining whether there is any delay in deposit of such contributions qua the due date in the light of the Kanoi Papers [2001 (5) TMI 139 - ITAT CALCUTTA-E] It shall be open to the assessee to place all factual matrix before the Assessing Officer and take all pleas for evaluation and determination of the issue by the Assessing Officer. The Assessing Officer shall examine this alternative aspect and pass a fresh order in accordance with law after giving proper opportunity to the assessee of being heard.
Denial of deduction u/s 80JJA - claim disallowed as prescribed Form 10DA for the purposes of deduction under Section 80JJA has not accompanied the return of income - Assessee submitted claim of deduction was duly made in the original return of income but however same was not reported in the Tax Audit Report and on realizing mistake, the Tax Audit Report was revised and also Form 10DA required for claiming such deduction was also filed albeit after the filing of original return of income but before the date of intimation - HELD THAT:- We find that the Bangalore Bench in Jeans Knit [2022 (3) TMI 244 - ITAT BANGALORE] has taken a view that filing of such prescribed form is directory requirement and hence would stand satisfied if the Accountant’s report is furnished during the course of assessment.
In consonance with the view taken by the Co-ordinate Bench, the denial of deduction under Section 80JJA solely for reasons of belated filing of the prescribed form is not justified. Consequently, the action of the CIT(A) is set aside and the Assessing Officer is directed to grant relief by way of deduction as claimed. Ground No.1 is accordingly allowed.
Eligibility of deduction u/s 80JJAA - HELD THAT:- On consideration of the counter submissions of the Revenue and assessee on the eligibility of deduction on merits, we consider it expedient to restore the matter back to the file of the CIT(A). It shall be open to the assessee to demonstrate that the criteria for eligibility of deduction under Section 80JJAA has been duly met for the purpose of such claim. CIT(A) shall adjudicate the issue of eligibility of deduction under 80JJAA on merits after giving proper opportunity to the assessee to demonstrate its case.
Appeal of the assessee is allowed in part for statistical purposes.
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2023 (10) TMI 1314
Additions towards unexplained advance paid to land owner for development of the land - AR submitted that the assessee invested impugned amount towards irrevocable advance for development of site at Pedagantyada out of the accumulated savings, agricultural income of the HUF and also amounts from HUF - AR submitted that she had not maintained any books of account and that the income from the construction business was admitted on estimate basis
HELD THAT:- Assessee had advanced an amount towards development of site at Pedagantyada and the source being agricultural income from Ac.27.50 cents.
AO found that the assessee is having only Ac.16.77 cents and accordingly estimated the agricultural income of Rs. 1,67,000/- @Rs.10,000/- per acre and brought the difference amount of Rs. 3,33,000/- to tax as unexplained expenditure u/s 68 which was upheld by the Ld.CIT(A). It is observed that the assessee has not furnished any supporting evidences for substantiating her claim that the advance is given out of her past accumulated savings, agricultural income and income received from HUF, either before the revenue authorities or before me.
When the assessee claims to admit the source, the onus is on the assessee to prove the source with cogent evidence. In the absence of any proper documentary evidence, no reason to interfere with the orders passed by the lower authorities and hence, dismiss the appeal of the assessee on this ground.
Unexplained agricultural income - AR submitted that the assessee had admitted agricultural income of Rs. 3,10,000/- in her return of income and the AO is not justified in estimating the agricultural income at Rs. 1,67,000/- - HELD THAT:- As after survey u/s 133A, when the evidence of undeclared advance made by the assessee was unearthed, the assessee filed ITR admitting agricultural income in response to notice u/s 148 on 30.05.2016, which appears to be an afterthought to explain the source of advance subsequent to the survey conducted by the department.
It is observed from the receipts and payment account that the agricultural income of Rs. 3,00,000/- was credited on account of transfer from HUF against the agricultural income of Rs. 3,10,000/- as shown in the ITR filed by the assessee in response to notice u/s 148. This discrepancy was not explained by the assessee and moreover, no supporting evidences have been filed to support the claims of receipt on account of transfer from HUF in the receipts and payment account - no reason to interfere with the order passed by the lower authorities, hence, dismiss the appeal filed by the assessee on this ground.
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2023 (10) TMI 1313
Deduction of Scientific Research Expenses claimed u/s 35(2AB) - Claim disallowed as DSIR has not approved the above said expenditure in Form No.3CL - approval of expenses by DSIR has been made compulsory after the amendment carried out in Rule 6(7A) of Income tax Rules w.e.f. 01.07.2016 - HELD THAT:- As provisions of sec.35(3) provides for making a representation to the prescribed authority. In the instant case, the question is about quantifying the expenditure, i.e., whether the expenses incurred in the in-house scientific research facility is would fall under the category of “scientific research expenses” or not as specified in sec.35(2AB) of the Act.
Since the DSIR has not certified part of the expenses incurred by the assessee and since it did not furnish any reason for doing so, we are of the view that there is violation of principle of natural justice. Unless the prescribed authority furnishes the reason for not certifying the reasons, it will not be possible for us to adjudicate this issue. Accordingly, we restore this issue to the file of the AO to take appropriate action to ascertain the reasons for non-certification.
Depreciation made in respect of capital asset purchased from certain entities - HELD THAT:- The facts are that the assessee had capitalized steel purchased by it from P K Agarwal in the year relevant to AY 2003-04. The AO had held that those purchases are not genuine in nature and accordingly disallowed the depreciation claimed thereon. Consequent thereto, the AO has been disallowing the proportionate amount of depreciation relatable to the above said purchases in all the subsequent years. We notice that the said disallowance has since been confirmed by the co-ordinate benches of Tribunal in the earlier years. Accordingly, we do not find any infirmity in the decision of Ld CIT(A) in confirming the proportionate amount of depreciation relatable to the steel purchases claimed by the assessee in both the years under consideration - Decided against assessee.
Disallowance u/s 14A r.w. Rule 8D - mandation of recording dissatisfaction by AO - assessee had computed disallowance u/s 14A by allocating specific expenses to the exempt income - AO held that he was not satisfied with the workings given by the assessee, thus computed disallowance as per Rule 8D(2) - HELD THAT:- We notice that the AO did not examine the workings furnished by the assessee before him. For arriving at the dissatisfaction over the correctness of the expenditure claimed by the assessee, it is required for the AO to examine the workings furnished by the assessee vis-à-vis the accounts, find fault therein, i.e., identify the deficiencies in the workings furnished by the assessee. There should not any dispute that the dissatisfaction contemplated in sec. 14A of the Act is “objective dissatisfaction”.
Since these observations have been made by the AO without examining the workings furnished by the assessee, we are of the view that the AO has not arrived at the objective satisfaction as contemplated in sec. 14A of the Act. AO could not have resorted to the provisions of rule 8D for computing disallowance u/s 14A of the Act in both the years. Decided in favour of assessee.
Addition u/s 115JB in respect of expenses relating to exempt income - HELD THAT:- As decided in the case of Vireet Investments P Ltd. [2017 (6) TMI 1124 - ITAT DELHI] that the disallowance computed u/s 14A of the Act cannot be adopted for the purpose of making addition under clause (f) of Explanation 1 to sec.115JB of the Act, meaning thereby, the disallowance to be made for computing book profit u/s 115JB, the expenses relatable to the exempt income has to be computed on the basis of expenses claimed in the relevant Profit and Loss account. Hence the Ld CIT(A) was justified in holding that the disallowance computed u/s 14A of the Act cannot be adopted verbatim for the purpose of clause (f) of Explanation 1 to sec. 115JB
Also CIT(A) was not right in law in directing the AO to restrict the addition to be made under clause (f) of Explanation 1 to sec.115JB of the Act to the amount of disallowance computed by the assessee for the purposes of sec.14A of the Act, since the disallowance made by the assessee also u/s 14A could not have been imported in sec.115JB of the Act.
MAT computation - addition of interest on income tax refund to the Net Profit while computing book profit of the assessee u/s 115JB - HELD THAT:- We notice that this issue has been decided in favour of the assessee by the Co-ordinate bench in AY 2016-17,..[2022 (10) TMI 827 - ITAT MUMBAI] as held once assessee’s accounts have been maintained in accordance with Companies Act and the same have also been scrutinised and audited by the statutory auditor, in absence of any material to negate these facts, the AO has limited power under section 115 JB of the Act to make adjustment to book profit only in respect of the items provided in Explanation 1 to section 115 JB (1) of the Act.
As there is no dispute on the fact that assessee has offered interest on income tax refund to tax while filing its return of income and same has also been assessed under the normal provisions of the Act. Accordingly, we find no merits in addition of interest on income tax refund for computing the book profit under section 115 JB of the Act and the AO is directed to delete the same - Decided in favour of assessee.
LTCG arising on compulsory acquisition of land - new claim made - Land acquired as per section 96 of the Right to Fair compensation and Transparency in land Acquisition, Rehabilitation and Resettlement Act, 2013 - HELD THAT:- Since the above said claim of the assessee has been raised for the first time before the Tribunal and since the AO did not have occasion to examine the above said claim, we are of the view that it requires verification at the end of AO in both the years. Accordingly, we restore this issue in both the years to the file of AO for examining the same in the light of contentions raised by the assessee and also accordance with law.
Short grant of foreign tax credit - CIT(A) confirmed the action of AO in both the years, but accepted the alternative plea of the assessee that the above said amounts are allowable as deduction u/s 37(1) - AO has not given any reasons for giving short credit - HELD THAT:- As the decision rendered in the case of Wipro Ltd [2015 (10) TMI 826 - KARNATAKA HIGH COURT] is applicable to the facts of the present case. Accordingly, we set aside the order passed by Ld CIT(A) on the main claim of the assessee and restore the same to the file of AO for examining the above said main claim of the assessee afresh.
ALP adjustment - share application money returned back, by re-charcterising the same as loan - assessee had made investment in preference shares issued by its subsidiary company - HELD THAT:- As it is held that there is no merit in imputing interest thereon by way of transfer pricing adjustment. Since the transfer pricing adjustment made in this year is a continuation of earlier year’s action of TPO and since the earlier year’s T P adjustment has been deleted by the Tribunal, following the said decision, we direct the AO to delete the Transfer pricing adjustment that was confirmed by Ld CIT(A).
Disallowance of part of depreciation claim, on account of reduction of WDV by thrusting depreciation upon the assessee in the earlier years, when the claim of depreciation in those years was optional in nature - HELD THAT:- CIT(A) has granted relief to the assessee on this issue following earlier orders of ITAT, wherein it was held that the depreciation, which was not claimed by the assessee in the earlier years when the claim was optional in nature, cannot be thrust upon the assessee so as to reduce the WDV of assets. We notice that the disallowance of depreciation made by the AO in both the years under consideration are consequential to the stand taken by him in the earlier years, which has since been rejected by the ITAT in those years - we uphold the order of learned CIT(A) passed on this issue.
Deduction claimed u/s 10AA by computing ‘profits and gains’ of Refinery SEZ unit and PP SEZ unit as per Chapter VI-D, instead of adopting gross profit of the said units - assessee had claimed deduction u/s 10AA of the Act on the gross profit reasoning that the “Profits and Gains of undertaking” for the purpose of sec. 10AA of the Act should be taken as the gross profits as commercially understood and hence the AO should not resort to the provisions of Chapter IV of the Act for computing “profits of undertaking” - HELD THAT:- Deduction to be allowed u/s 10AA of the Act shall be allowed from “the total income” and further the said deduction shall not exceed such total income. Hence there is merit in the contentions of the assessee that the above said Explanation specifies “the stage” at which the deduction u/s 10AA of the Act should be allowed (i.e. from the total income) and also states that quantum of deduction should be restricted to the amount of Total income - we agree with the contentions of the assessee that sec.80AB and Explanation inserted in sec. 10AA operate in different fields. Decision rendered by Ld CIT(A) on this issue does not require any interference.
Deduction claimed u/s 80G - donations given under Corporate Social Responsibility - HELD THAT:- In the case of Naik Sea foods P Ltd [2021 (11) TMI 1168 - ITAT MUMBAI] as followed the decision rendered of M/s FNF India P Ltd ( [2021 (1) TMI 205 - ITAT BANGALORE] which in turn followed the decision rendered in the case of Allegis Services (India) Pvt. Ltd [2020 (5) TMI 378 - ITAT BANGALORE] and held that the assessee is eligible for deduction u/s 80G of the Act in respect of certain payments included in CSR Expenses.
Disallowance u/s 42(1)(b) in respect of KG-DWN- 98/3 (KGD6 bloc) and Coal Bed Methane Sohagpur (CBM) - reasoning given by the AO is that, as per PSC), the assessee has an option to exercise either Article 17.2.3 or Article 17.2.4 of PSC to compute correct profits of KGD6 and CBM units - AO allowed 10% of expenses claimed by the assessee and accordingly disallowed 90% of expenses in both the blocks - HELD THAT:- Option to claim expenses incurred prior to the date of commercial production in ten instalments is available only in KGD-6 Block, vide clause 17.2.4 and not in CBM Block, i.e., as per PSC in CBM block, expenditure incurred prior to the commercial production shall be aggregated and the loss so assessed as well as loss, if any, incurred in the assessment year relevant to the year in which Commercial production commences or in any subsequent assessment year shall be carried forward to succeeding assessment years for being set off as provided in the Income tax Act. Accordingly, in the absence of any clause for allowing expenses in installments in CBM block, the AO was not justified in restricting the deduction to 10% of expenses claimed by the assessee. Accordingly, we are of the view that the Ld CIT(A) was justified in directing the AO to allow entire expenses claimed in CBM block.
KGD-6 block, we notice that the Ld CIT(A) has given a categorical finding that all the expenses claimed by the assessee have been incurred post Commercial production. As per clause 17.2.4 of PSC of KGD-6 block, the option to claim expenses in installments is available to the expenses incurred prior to the date of Commercial Production. Since the impugned expenses are Post Commercial production expenses, the clause 17.2.4 of PSC will not apply. Accordingly, we are of the view that the Ld CIT(A) was justified in directing the AO to allow entire expenses claimed in KGD-6 block.
TP Adjustment - addition by imputing Interest on delayed receipts - assessee had benchmarked interest income on delayed receipts of sale proceeds at LIBOR plus 200 basis points - TPO, however, adopted weighted average borrowing cost of the assessee (including long term and short term domestic and foreign borrowings) plus mark up based on Bloomberg date - HELD THAT:- We notice that the ALP adopted by the assessee at LIBOR plus 200 basis points has been accepted by the Tribunal in the earlier years. No distinguishing feature was pointed out by the revenue in these two years, which may compel us to take a different view. Accordingly, we uphold the view taken by Ld CIT(A) on this issue in both the years.
Disallowance of long term and short term capital loss on sale of Non-cumulative compulsorily convertible preference shares (NCCPS) - AO noticed that the TPO had characterized the above said investment as loan in the earlier years and hence held that the loss is not allowable as deduction - HELD THAT:- Since an identical issue has been decided in favour of the assessee by the Tribunal in AY 2016-17 [2022 (10) TMI 827 - ITAT MUMBAI] and since the decision rendered by Ld CIT(A) on this issue is identical with the view taken by the Tribunal, we uphold the view taken by Ld CIT(A) on this issue in AY 2017-18 also.
Addition u/s 50C - addition on the basis of information not shared with the appellant - CIT(A) deleted the addition on the reasoning that the said addition was made on presumptions, since no information was provided by the AO to the assessee - HELD THAT:- It is settled principle of law that the AO is required to confront the material relied upon by him with the assessee before using the same against the assessee. In the instant case, it is the contention of the assessee that it was not aware that the stamp duty valuation was more than the sale consideration and further the AO did not confront the material with the assessee. Accordingly, we are of the view that this issue may be restored to the file of AO with the direction to confront the material that was relied upon by him. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO. After examining the reply given by the assessee, the AO may take appropriate decision in accordance with the law.
TP adjustment in respect of Management consultancy services (MCS), technical services and business support services (BSS) rendered to AE - Comparable selection - HELD THAT:- ANJ POWER TECHNOLOGIES P LTD - TPO has considered only turnover of this company, but did not examine as to whether it is functionally comparable. We notice that the ld CIT(A) has given categorical finding that it is not functionally comparable. No material was placed before us to contradict above said finding of Ld CIT(A). Accordingly, we are of the view that the Ld CIT(A) was justified in rejecting this company.
1 to 1 Help P Ltd - TPO has simply mentioned that the business of this company is comparable with that of assessee. On the contrary, the ld CIT(A) has noticed that the functions of this company is not comparable at all with the assessee. No material was placed before us to contradict the findings given by Ld CIT(A). In view of the above said discussions, we are of the view that this company’s functions are not comparable with that of the assessee. Accordingly, we are of the view that the Ld CIT(A) was justified in excluding this company.
Inmacs Management Services P Ltd - We notice that the TPO has considered the description of services provided by this company, but ignored the fact of development of specialized software. No segmental result is given. Further, the turnover of this company is Rs.1.34 crores only, where as the assessee’s turnover is Rs.13.99 crores. Hence, it fails in turnover filter of 10% also. Accordingly, we are of the view that the Ld CIT(A) was justified in excluding this company.
Spectrum Business Solutions Ltd - As description of nature of services provided by this company would show that it is functionally comparable. Further, the turnover of this company is Rs.5.53 crores, while the transaction value of the assessee company is 13.99 crores. Hence it would not fail in turnover filter of (+)/(-) 10%. Accordingly, we are of the view that the Ld CIT(A) was justified in directing the AO/TPO to include this company.
Allsec Technologies Ltd - As this company has been accepted as comparable in the years relevant to AY 2012-13 to 2015-16 by the Tribunal. In AY 2016-17, the TPO has accepted this company as good comparable. It was submitted that there is no change in facts in this year also. In view of the foregoing discussions, we are of the view that the Ld CIT(A) was justified in directing the AO/TPO to include this company.
Since we have rejected the claim of the revenue in respect of above said five companies, the assessee does not have objection in inclusion/exclusion of remaining three companies, i.e., the assessee does not object to the exclusion of two other companies (MCI Management India P Ltd and ICRA Management Consulting Services Ltd) and inclusion of M/s JPS Associates P Ltd.
Accordingly, we restore this issue to the file of AO/TPO for redetermining the ALP of this international transaction in the light of discussions made supra.
TP adjustment in respect of Guarantee commission given to the Associated Enterprise (AE) - assessee followed “Yield spread approach” method for calculating the Guarantee commission to be charged on the above said Corporate guarantee given by the assessee - HELD THAT:- We noticed that the decision rendered by the learned CIT(A) on this issue is in line with the decision rendered by the Tribunal in A.Y. 2011-12 to 2016-17. We noticed earlier that the Tribunal has been consistently upholding the yield spread approach and also splitting of differential interest in the ratio 50:50 between the assessee and its AE. Hence, we do not find any reason to interfere with the decision rendered by the learned CIT(A) on this issue.
TP adjustment in respect of the business support services availed from its AE - adjustment relates to “Specified domestic transactions” (SDT) - Comparable selection - HELD THAT:- BVG India Ltd. company is engaged in diversified business activity, thus we uphold exclusion of this company by the learned CIT(A).
Empire Industries Ltd. assessee has considered relevant business segment for the purpose of benchmarking analysis. However, the TPO has missed this vitas aspect. Further this company has been accepted as comparable company by the ITAT in A.Y. 2013-14 to 2016-17. Accordingly, we do not find any infirmity with the decision of the learned CIT(A) in including this company as comparable one.
ICRA Management Consultancy Services justification in including this company as comparable one as functionally similar.
Spectrum Business Solutions Ltd. -. Since we have applied turnover filter in respect of other comparable companies, we are of the view that the learned CIT(A) was not justified in directing for inclusion of this company. Accordingly, we set aside the order passed by the learned CIT(A) and direct for inclusion of this company.
Arms Length price adjustment made in respect of money realized on transfer of electricity generated by one undertaking to other undertakings - assessee is running a captive power plant which is eligible unit for deduction u/s 80IA - CIT(A) noticed that the Tribunal has accepted the internal CUP in A.Y. 2013-14 to 2015-16. Accordingly, he reversed the order of AO and deleted the addition - HELD THAT:- Since the Tribunal is consistently upholding the practice of adopting internal CUP in respect of transaction of sale of power to non-eligible undertaking and since the learned CIT(A) has followed the order so passed by the ITAT in earlier years, which has been upheld by Hon’ble Bombay High Court in one of the years, we uphold the order passed by the learned CIT(A) on this issue.
TP adjustment in respect of Management Consultancy Services (MCS), technical services and Business support services (BSS) rendered to AE - Comparable selection - HELD THAT:- Spectrum Business Solutions Ltd -description of nature of services provided by this company would show that it is functionally comparable. Further, the turnover of this company is Rs.6.75 crores, while the transaction value of the assessee company is 10.33 crores. Hence it would not fail in turnover filter of (+)/(-) 10%. Accordingly, we are of the view that the Ld CIT(A) was justified in directing the AO/TPO to include this company.
Allsec Technologies Ltd - CIT(A) was justified in directing the AO/TPO to include this company as services provided by this company is akin to the services provided by assessee. Also this company has been accepted as comparable in the years relevant to AY 2012-13 to 2015-16 by the Tribunal. In AY 2016-17, the TPO has accepted this company.
ANJ Power Technologies P Ltd., 1 to 1 Help P Ltd. - CIT(A) was justified in rejecting this company as it is not functionally comparable.
Inmacs Management Services P Ltd - TPO has considered the description of services provided by this company, but ignored the fact of development of specialized software. This company also holds inventories of Rs.1.12 crores, meaning thereby, it is also a product company. No segmental results is provided. Accordingly, we are of the view that the Ld CIT(A) was justified in excluding this company.
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2023 (10) TMI 1312
Validity of proceedings / orders without DIN - Absence of DIN on the directions issued by DRP - assessee is a foreign company incorporated in France and is a tax resident therein - HELD THAT:- As relying on BRANDIX MAURITIUS HOLDINGS LTD. [2023 (4) TMI 579 - DELHI HIGH COURT] and circular No. 19/2019 dated 14.08.2019,the impugned DRP order is invalid and shall be deemed to have never been passed. Accordingly, we quash the impugned assessment order which has been passed pursuant to the DRP order.
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2023 (10) TMI 1311
Validity of the re-assessment proceedings - reasons to believe - reopening beyond periods of four years - Addition u/s 68 - HELD THAT:- Since the issue for reopening was same and during the course of original assessment proceedings, ld. Assessing Officer has issued notices u/s 133(6) to all the share subscribers, who have duly received the same and replied to the said notice u/s133(6) based on which AO was satisfied with the nature and source of the alleged sum.
Thus we find that there was no failure on the part of appellant to disclose fully and truly all material facts necessary for reassessment during the course of original scrutiny proceedings. Therefore, the first proviso to section 147 of the Act which requires for recording the reasons to believe is not satisfied because the reasons for reopening have already been addressed by the assessee in the course of original assessment proceedings and such reopening is only based on the change of opinion.
As noticed that during the course of original assessment proceedings, the appellant had disclosed all the preliminary facts, which were necessary for completing the assessment. CIT(Appeals) further held that if at the time of original assessment proceedings, the AO has raised wrong inference from the facts disclosed by the appellant, then, appellant cannot be penalized for the wrong inference of facts and law by AO and the assessment of the appellant cannot be reopened after four years from the end of relevant A.Y. once again under section 147 of the Act. In support of this finding, reliance was placed by ld. CIT(Appeals) on the judgment of M/s. Techspan India Private Limited & Another[2018 (4) TMI 1376 - SUPREME COURT] and M/s. Kelvinator India Limited[2010 (1) TMI 11 - SUPREME COURT] - Decided in favour of assessee.
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2023 (10) TMI 1310
Assessment u/s 144C - demand payable was determined on the basis of draft assessment order for which the impugned demand notice as referred above was issued to the assessee - whether curable defect u/s 292B? - HELD THAT:- As perused the decision of Cisco Systems Services B.V. (2023 (3) TMI 416 - KARNATAKA HIGH COURT) wherein held that at stage of passing draft assessment order, the ACIT also issued a demand notice, procedure followed by ACIT was contrary to law and said mistake could not be cured u/s 292B
We find that assessing officer has failed to follow the mandatory procedure laid down u/s 144C of the Act at the stage of passing draft assessment order, therefore, we are of the considered view that final assessment order passed is null and void as the mistake committed in passing the draft assessment order is not curable us/ 292B of the Act - Decided in favour of assesse.
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2023 (10) TMI 1309
Addition u/s 68 - Denial of Exemption u/s 10(38) - bogus LTCG on purchase and sale of shares - disallowance brokerage expense - penny stock transaction - HELD THAT:- In the case in hand the assessee has produced all the evidences to prove the purchase of the shares as well as sale of the shares and holding all these shares in the Demat account and also recorded in the books of account. The purchase consideration was paid through banking channel by account payee cheque and the sale transaction is carried out through stock Exchange from the Demat account of the assessee.
Once the assessee has discharged its onus to show that the transaction of purchase and sale is a real and genuine transaction then the burden is shifted to AO to disprove the claim of the assessee by some tangible material brought on record. The AO has held these transactions as bogus only on the basis of suspicion and not on the basis of conclusive evidence whereas the assessee has produced all the relevant evidence to establish that the transaction is genuine and assessee is eligible for claim u/s 10(38)
We hold that the assessee has successfully proved the genuineness of the transaction of purchase and sale as well as holding of the shares which is also not disputed by the AO and therefore, in absence of any material brought on record to controvert these facts substantiated by the evidence produced by the assessee the claim of the assessee cannot be held as bogus - addition made by the AO on account of long term capital gain claimed as exempt u/s 10(38) of the Act and consequently, the disallowance of brokerage expenses is deleted. Decided in favour of assessee.
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2023 (10) TMI 1308
Undervaluation of goods - whether the allegation of undervaluation against the respondents is substantiated by the evidence that has been put forth by the investigation? - it was held by CESTAT that Antecedents cannot be an evidence for the alleged undervaluation of the goods. At best antecedents may be a reason for creating a suspicion and be a reason for causing an enquiry or Investigation. Mere propensity of the respondent is not enough proof of undervaluation.
HELD THAT:- This Court is of the opinion that the impugned order(s) does not call for interference. The Civil appeal is accordingly dismissed.
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2023 (10) TMI 1307
Valuation of imported consignments - Linen Yarn, Ramie Yarn and other misc. items from various overseas suppliers, based in China - rejection of declared value - redetermination of the rejected value - retraction of relied statements - Section 28 of Customs Act,1962 - it was held by CESTAT that it is evident that none of the evidences relied upon by the department, to allege the under valuation resorted to by the appellants, stand the scrutiny of Law.
HELD THAT:- There are no merit in these appeals and the same accordingly stand dismissed.
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