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Showing 201 to 220 of 1551 Records
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2024 (2) TMI 1351
Classification of supply - supply of service or not - activity of supply of food by the Applicant - Tariff/Service code - restaurant service or Outdoor Catering Service? - HELD THAT:- The activity to be undertaken by the Applicant viz. supply of food and beverages for a consideration is 'supply of service' - the service rendered by the Applicant falls under the Tariff/Service code 996337.
Whether the service will not fall under 'Outdoor Catering Service'? - HELD THAT:- The activity undertaken by the Applicant will not fit into the explanation given for 'Outdoor catering'.
The restaurant service covers only services provided by restaurant, mess or canteen, thereby, the activity to be undertaken by the Applicant, that providing catering service under a contract to Industries would not be covered under 'restaurant service'. The said activity of the Applicant would not be covered under 'outdoor catering service' as it is not an event based or an occasional service. It will not be covered under 'hotel accommodation' and also not a 'specified premises'. Thus the service to be undertaken by the Applicant does not fall under 7(i) to 7(v) of the description given in the said Notification. Therefore, the catering services of the Applicant under a contract would be falling under entry No. 7(vi), being the residual entry and thereby attract 9% CGST and 9% SGST as per Notification No. 11/2017-State Tax (Rate) dated 30.06.2017.
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2024 (2) TMI 1350
Condonation of delay - rejecting the Appellant's appeal for non-removal of office objections - seeking condonation of delay of 286 days in seeking to set aside the self-operating order passed by the Prothonotary & Senior Master - As decided by HC [2018 (3) TMI 1820 - BOMBAY HIGH COURT] We find that at the time of passing of the order by the Prothonotary & Senior Master, the appellants were represented. The affidavits-in-support of the Notices of Motion are bereft of any particulars, in as much as, the basic date of when the Assessing Officer came to know of the dismissal of the Appeals for non-removal of office objections is even not mentioned therein. The Affidavits-in-support is most casual and there is no explanation even attempted to be offered for the delay.
HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (2) TMI 1349
Application made u/s 197 - HELD THAT:- In view of the fact that Certificates under Section 197 have already been given, as stated in the Counter Affidavit, we see no reason to interfere with the impugned judgment and order passed by the High Court. However, question of law is kept open.
Accordingly, the Special Leave Petitions are dismissed.
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2024 (2) TMI 1348
Validity of Revision u/s 263 - order of the AO is erroneous on the ground of not being in accordance with law - absence of actual business activity - As decided by HC [2017 (1) TMI 252 - BOMBAY HIGH COURT] AO has not taken into account the relevant consideration of absence of actual business activity of the appellant for the purpose of treating the expenditure claimed as an allowable expenditure and loss to the revenue on account of the error in the assessment order is directly attributable to the error in the assessment order.
HELD THAT:- As submitted at the Bar that pursuant to the exercise of jurisdiction u/s 263 of the Income Tax Act, 1961, fresh assessment order has been passed and the same is also under challenge before the Appellate Tribunal (ITAT). In that view of the matter, we are not inclined to interfere in this case.
The special leave petition is, hence, dismissed.
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2024 (2) TMI 1347
TP Adjustment - substantial questions of law raised before the High Court u/s 260-A or not? - substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases - Tribunal held that extra credit allowed can be considered as an independent international transaction and the same be compared with the internal CUP being average cost of the total funds available to the assessee, directed the TPO to find out the cost of the total funds available to the assessee and same should be adopted as internal CUP for benchmarking of this independent international transaction i.e. allowing extra credit in addition the agreed credit period of 30 days - As decided by HC [2018 (8) TMI 2094 - KARNATAKA HIGH COURT] that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellants, the appeal at the instance of an assessee or the Revenue u/s 260-A of the Act is not maintainable
HELD THAT:- As stated by Revenue that this appeal has to be dismissed on the ground of low tax effect as being covered by the Circular No. 17 of 2019 dated 08.08.2019 issued by Department of Revenue, Ministry of Finance.
This Special Leave Petition is therefore dismissed. However, question of law is kept open.
Pending applications, if any, shall stand disposed of.
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2024 (2) TMI 1346
Reopening of assessment u/s 147 - transactions in question were in the nature of partners’ capital withdrawal - subjective satisfaction and reasons to believe that the income had escaped the assessment - as decided by HC [2022 (12) TMI 1281 - GUJARAT HIGH COURT] communication whereby the reasons recorded were supplied, no satisfaction was recorded by the assessing officer that the income chargeable to tax has escaped assessment. Not only the said requirement was not satisfied, but there was no actual escapment of income as well - HELD THAT:- We are not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (2) TMI 1345
Action on the complaint of the petitioner sent through speed post - Request for necessary investigation may be done against private respondents - Writ of Mandamus - as decided by HC [2020 (2) TMI 842 - ALLAHABAD HIGH COURT] present writ petition is liable to be dismissed on the ground of concealment of facts in respect of the filing of the earlier writ petitions - HELD THAT:- The special leave petition stood dismissed owing to the defects not being cured within the permitted time, in terms of the order [2023 (7) TMI 1376 - SC ORDER] - The defects having been cured thereafter, the subject applications have been filed seeking condonation of the delay of 36 days in filing a restoration petition and to restore the case.
Both the applications are ordered, condoning the delay of 36 days and permitting the restoration of the case. In consequence, SLP shall stand restored to the file.
Miscellaneous application shall stand disposed of accordingly.
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2024 (2) TMI 1344
Notice of reassessment proceedings issued on a wrong E-mail ID - primary and secondary email ID - there exists two email ID of the petitioner-Company - what is the registered e-mail address of the petitioner as on 07.03.2023 i.e the date of issuance of notice under Section 148A (b) of the Act, 1961? -
HELD THAT:- If the registered email address of the assessee cannot be determined from (a) e-filing account of the addressee registered in designated portal or (b) from the last income tax return furnished, or (c) from the permanent Account number data base relating to the addressee or (d) from the official website of the Ministry of corporate affairs, etc. then only the authority may resort to any e-mail address made available by the assessee. Further, the word “available” is of significance as it records a positive action on the part of the assessee in making available the e-mail ID, so that the same may be construed as the registered email ID of the assessee.
As far as the present case is concerned, it has been the consistent stand by the petitioner that he has used or made available the e-mail ID: [email protected] for e-filing of his income-tax return even since the Assessment Year 2020-21 and the same has been used by him even for filing of the latest income-tax return for the Assessment Year 2022-23. Further, the said email ID has been also mentioned by him in the income-tax return and the same is relatable to PAN data base and also mentioned in the master data of the petitioner’s Company as available from the official website of the Ministry of Corporate Affairs at the relevant time. Therefore, taking a holistic view of the matter, it has to be held that the e-mail ID: [email protected] is the registered e-mail address of the petitioner company and it is the e-mail ID, which has been made available to the Authority by the assessee.
Recently, the Delhi High Court in the case of Jyoti Narang Vs Income tax Officer [2023 (7) TMI 1377 - DELHI HIGH COURT] has also set aside the penalty and demand notice on the ground that the show cause notice was issued on a wrong E-mail ID.
In the present case, the notice under Section 148A(b) of the Act, 1961 has not been issued on the registered email address of the petitioner’s company. Thus the order passed by the Assessing Authority under Section 148-A (d) and the consequential notice issued under Section 148 as also the consequential proceedings are quashed.
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2024 (2) TMI 1343
Reopening of assessment u/s 147 - reason to believe - Reliance on audit objection - assessee had debited an amount under the head ‘Employee benefit expenses’ on account of reimbursement of proportionate expenses paid to the ultimate holding company, for ESOP granted to the assessee’s employees and break-up of income from arbitrage business shown under the head ‘Other Operating Revenues’ on account of delivery based purchase and sale of shares - HELD THAT:- In the reason to believe itself, it has been admitted that Assessee had filed a copy of audited Profit and Loss Account and Balance-sheet along with return of income where information/ material was disclosed. Reason to believe does not, however, disclose the fact that these two items mentioned in the reason to believe, i.e., the debit under the head ‘Employee Benefit Expenses’ and the break-up of income from arbitrage business shown under the head ‘Other Operating Revenues’ on account of delivery based purchase and sale of shares were subject of consideration during the assessment proceedings. Petitioner had received a communication dated 11th January 2016 calling upon Petitioner to produce the accounts and/or documents specified in the annexure to said notice.
As regards, the employee benefit expenses on account of Employee Stock Option (“ESOP”), there is no discussion in the assessment order. As held by this Court in Aroni Commercials Limited [2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The Court held that only requirement is that AO ought to have considered the objections now raised in the grounds for issuing notice under Section 148 of the Act during the original assessment proceedings. If that has been done, it would follow that the reopening of assessment by impugned notice will merely be on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and that change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Since both the issues raised in the reason to believe for reopening the assessment have been subject matter of consideration during the assessment proceedings, it can be based only on change of opinion which is not permissible.
Reopening as based on audit objections - It is settled law as laid down in Indian & Eastern Newspaper Society [1979 (8) TMI 1 - SUPREME COURT] that in every case, the Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice, he can reasonably believe that income has escaped assessment - the true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer. Therefore, the AO cannot reopen the assessment relying on audit objections. Moreover, there is nothing on record to indicate that the AO had applied his mind afresh without being influenced by the audit objections. The reason to believe should be of the AO and he cannot be acting on the dictates of other parties.
Decided in favour of assessee.
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2024 (2) TMI 1342
Bad Debts - Loans advanced to the Group Company utilized for purchase of properties and shares - whether it can be termed as proper debt for the purpose of claim as bad debt u/s. 36(1)(vii) r.w.s. 36(2)? - HELD THAT:- As position before the amendment was that assessee could claim deduction in respect of the bad debt or part thereof which is established to have become bad in the previous year relevant to the assessment year in which the claim is made, whereas the position after the amendment is that assessee is entitled to deduction in respect of the amount of bad debt or part thereof which is written off as irrecoverable in the account of assessee in the previous year.
In our view, it is not necessary that assessee should establish that the debt has gone bad during the previous year relevant to the assessment year in question. If assessee could show that it bona fidely believed that the debt had gone bad and the claim could be made, it is to be allowed for the year in which it is written off in the books of accounts.
One of the reasons the AO has disallowed the claim of assessee is that assessee is not a money lender and hence, it could not be said that the amount advanced had become bad. We agree with the ITAT that it is not necessary that every businessman should register himself under Money Lending Act and make the claim in relation to any advance made by it only in the capacity of carrying on money lending business.
As per the balance sheet of assessee, the said M/s. Ganges Soaps Pvt. Ltd. was assessee’s debtor because assessee had given advance loan to it. ITAT has come to a factual finding that the money was advanced during the course of business.
As relying on a judgment of Bazpur Co-op. Sugar Factory Ltd. [1988 (5) TMI 4 - SUPREME COURT] the ITAT has given a finding that entries in the books of accounts were not determinative of the character of a transaction but it is the nature and the quality of receipt/transaction and not the head under which it is entered in the account books that will prove decisive. In the grounds of appeal this view taken by the ITAT has also not been disputed. Decided in favour of assessee.
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2024 (2) TMI 1341
TDS u/s 194I or 194C - storage charges paid by assessee - TDS @ 20% or 2% - HELD THAT:- The storage tanks in question do not qualify either as land or as building within the meaning of Section 194I of the Act. In terms of Section 194I of the Act, there has to be a lease, sub-lease or tenancy or any other agreement involving land or any building excluding factory building. It is not the case of the Revenue that the storage tank was taken on lease or sub-lease or tenancy. Assessee’s case would fall under the part “or any other agreement involving land or any building, together with furniture, fittings and the land appurtenant thereto”. It is nobody’s case that assessee has taken any land or building together with furniture, fittings and the land appurtenant thereto.
Thus we hold that the payments in question are liable for deduction of tax at source under the provisions of Section 194I - Decided in favour of assessee.
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2024 (2) TMI 1340
Unexplained cash credits u/s 68 - allegation of involvement in multi crore securities transactions scam of nineties infamously known as Harshad Mehta Scam, Assessee got labelled as party under the Special Court's (TORTS) Act, 1992 - assessee had failed to meet all the three criteria i.e. identity, creditworthiness and genuineness of the transaction - ITAT deleted addition - HELD THAT:- ITAT has very elaborately dealt with each of the additions. For the first addition relating to Rita Chopra, ITAT came to a finding that there is no reason to suspect the credit obtained from this party. ITAT, therefore, directed the AO to delete this addition.
Cash credit in the name of Ronak Patel, though assessee did not obtain any confirmation letter, he produced evidence on repayment of Rs. 93,000/- made on 10th May 1991 to Ronak Patel. Assessee also showed evidence of having paid interest of Rs. 11,890/- to Ronak Patel during the year under consideration and, therefore, the Tribunal considered that for a sum of Rs. 12,000/- there was satisfactory explanation given by assessee. ITAT, therefore, modified the additions and reduced it from Rs. 40,000/- to Rs. 28,000/-.
Cash credit received from Saurin Patel, the ITAT has accepted the explanation and evidence from assessee that he paid an interest of Rs. 12,600/- in February and August 1986. It has also noted that assessee has obtained fresh credit of Rs. 12,000/- on 3rd December 1986. ITAT, therefore, expressed a view that the interest payment of Rs. 12,600/- was sufficient to explain the sources for the fresh credit of Rs. 12,000/-.
As regards cash credit received from Vikram Patel, opening balance of Rs. 1,00,000/- available in this account and interest payment made to the creditor, the ITAT did not find any reason to sustain the addition of Rs. 10,000/-.
Interest expenditure debited as interest on securities - ITAT deleted addition by holding that the AO did not show any reason to the conclusion that the expenditure is excessive in nature - The admitted position is that payments have been made by cheques to bank accounts. AO should have considered the vouchers submitted by assessee and examined the genuineness of the expenditure with reference to the underlying invoices, bills of payment details, party details etc., and not straightaway come to the conclusion that the expenditure accounted through journal vouchers are bogus without verifying the factors and evidence that necessitated the passing of journal entries. ITAT, therefore, rightly concluded that passing of entries through journal vouchers are part and parcel of accounting proceedings in any type of business and any expenditure accounted through journal vouchers cannot be doubted on the only reason that they have been accounted through journal vouchers. Nothing prevented the AO to examine the entries with the underlying evidence.
AO has also expressed the view that expenditure incurred was excessive in nature but has not given any reason for coming to this conclusion. ITAT noted that the AO cannot arrive at the conclusion on certain presumptions and by making general observations. ITAT has also correctly observed that CIT(A) has simply confirmed the order of the AO without critically examining the same. Therefore, even here no substantial question of law arise.
Addition on account of negative balance of securities - ITAT deleted addition - AO has made observation, which has been confirmed by CIT(A) on the basis of stock summary prepared by the AO himself without furnishing the basis for arriving at alleged negative stock. The addition has been made without providing relevant materials and the ITAT has accepted that the relevant materials have not been submitted. The revenue was not been able to furnish materials on the basis of which the stock statement was prepared.
ITAT has correctly concluded that the revenue has failed to appreciate that there is no difference in the quantity of units of UTI because the debit and credit of face value of units of UTI are the same. There is no difference in the quantity of units of UTI alleged to have been purchased or sold. AO has arrived at a presumed figure simply by looking at the cost price of the units and the sale price of the same. We would agree with the findings of the ITAT.
No substantial question of law arise.
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2024 (2) TMI 1339
Addition u/s 68 - unexplained cash credit - Onus to prove - HELD THAT:- We note that assessee has sufficient evidence and document to prove the claim and for that assessee also submitted bank statement and cash-flow statement, which clearly shows the availability of cash balance.
Assessee has submitted relevant documents and evidence to prove his claim and Assessing Officer has not made any adverse finding in any of these documents even though all the details were furnished by the assessee before Assessing Officer. AO ought to have examined all these documents and rebutted them with a cogent adverse findings and discernable line of reasoning in order to arrive at conclusion and to make addition on account of unexplained cash credit.
We also find merit in the submission of the assessee that since assessee is not maintaining books of accounts, therefore addition made by the AO u/s 68 of the Act, is not tenable. Therefore, we note that AO has just brushed aside the documents and evidences submitted by the assessee, without even a word on why they are not acceptable.
It is a well settled law that when assessee has all plausible evidence in support of his claim, they cannot be brushed aside on surmise and conjecture. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence, this ground of assessee is allowed.
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2024 (2) TMI 1338
Non following Procedure laid down u/s 144C - Action of the AO/NeAC not proposing all the variation in the Draft Assessment Order - HELD THAT:- AO did not complete the assessment in conformity with the directions of DRP which did not contained any variations on account of addition of PF & ESI, Fees paid for Authorised Capital increase and Profit on sale of fixed assets. Action of the AO/NeAC not proposing all the variation in the Draft Assessment Order has denied the assessee of its legal right of filing objections before the DRP
In the draft Assessment Order passed by the Assessing Officer has only proposed adjustment on account of the Transfer Pricing Order to the total loss as per ITR. DRP deleted the addition proposed on account of Transfer Pricing determining adjustment on account of ALP at NIL.
Then the AO passed an order making addition on account of PF & ESI, ROC Fess and profit on sale of fixed assets. These three items were either two were not part of the draft Assessment Order. Hence, in view of the provisions of Section 144C(13)-“[Upon receipt of the directions issued under sub-section(5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 [or section 153B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.], the AO was not empowered to make any other addition which was not proposed in the draft Assessment Order an hence the order of the cannot be sustained.
Appeal of the assessee is allowed
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2024 (2) TMI 1337
Bogus LTCG - unexplained cash credit u/s 68 - accommodation entry of bogus exempted long term capital gain - onus of proof - scrip named "Lifeline Drugs & Pharma Ltd" was having no financial strength as well as no substantial business activities in the company during the period of purchase of shares to period of sales by the assessee - HELD THAT:- Hon`ble Jurisdictional High Court of Gujarat in the case of Jagat Pravinbhai Sarabhai, [2023 (1) TMI 44 - GUJARAT HIGH COURT] held that where AO noted that assessee had indulged in scrip of shell company and had claimed long term capital gain on sale of shares and made addition u/s 68 holding that entire transaction was bogus and in the nature of penny stock, however, since genuineness of investment in shares by assessee was substantiated by him by producing copy of transaction statement for period from 1-6- 2001 to 1-10-2010 and shares were retained for more than ten years and were sold after such long time, hence investment was not bogus therefore it cannot be treated that investment was made in penny stock.
It is well settled position of law that, an assessee receiving a credit has to testify its case through the 'triple marker test' of identity, Creditworthiness and Genuineness of Transactions. It is imperative, therefore, that the case be analysed in light of these three well- settled canons of adjudication, as embedded in the statute, as also promulgated by various judicial pronouncements. The onus of proof requires the assessee to furnish the proof of identity, creditworthiness and genuineness of the transaction. We note that in assessee`s case under consideration, the assessee has submitted the copy of Contract note. The said contract notes show the quantity, rate, time, stamp, value, taxes and charges viz. STT, brokerage, SEBI and exchange turnover charges, service tax and stamp duty incurred on all the transactions done on stock exchange platform. These documents have been accepted by the assessing officer. The transactions are done through proper banking channel and the sale is done at prevailing price quoted on the Stock Exchange. Hence, by submitting these documents, the assessee has proved identity, creditworthiness and genuineness of the transactions.
AO having failed to bring on record any material to prove that the transaction of the assessee was a collusive transaction could not have rejected the evidences submitted by the assessee. In fact, in this case nothing has been found against the assessee with aid of any direct evidences or material against the assessee, under these circumstances nothing can be implicated against the assessee.
One is bound to consider and rely on the evidence produced by the assessee in support of its claim and base decision on such evidence and not on suspicion or preponderance of probabilities, no material was brought on record by the AO to controvert the evidence furnished by the assessee.
The evidence filed by the assessee is accepted and the claim that the income in question is a bona fide Long Term Capital Gain arising from the sale of shares is allowed and hence exempt from income tax. Based on the above factual position, we deleted the addition - Decided in favour of assessee.
Addition u/s 69C on account of commission paid @ 3% of bogus long term capital gain - Since, we have deleted the alleged addition u/s 68 hence addition made by Assessing Officer does not have leg to stand, therefore it is hereby deleted, and hence ground No.3 raised by the assessee is allowed.
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2024 (2) TMI 1336
TP Adjustment - interest charged on foreign currency loan - HELD THAT:- As comprehensible that interest has been earned by assessee at arm’s length rate and accordingly, no adjustment on account of arm’s length rate is required to be carried out. Therefore the addition sustained is hereby directed to be deleted. Decided in favour of assessee.
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2024 (2) TMI 1335
Excess grant of interest contrary to the practice followed by the Department - recomputation of interest u/s 244A - As alleged CIT – A directing the AO to adjust the refund granted first towards interest amount refundable and thereafter consider the balance amount of tax amount refundable - HELD THAT:- CIT – A by directing the AO to verify the details of tax payment submitted by the assessee and the amount of tax paid on period of tax payment to recompute the amount of interest u/s 244A of the act till date of granting of refund. He has further held that in view of the observation of the honourable Supreme Court in [2006 (1) TMI 55 - SUPREME COURT] and the provisions of section 244A should be considered. Nothing was shown to us that how the learned AO is aggrieved when he is directed to recompute the interest by following the decision of the honourable Supreme Court and considering the provisions of the act. Further, coordinate bench decision has also been referred to.
Section 244A of the Income Tax Act pertains to the payment of interest on refunds. It states that if the taxpayer is entitled to a refund, they shall be paid an additional interest amount as determined by the Act.
According to assessee from the tax refund, nothing is to be reduced and tax and refund already determined should be reduced from interest refund, so that tax on which interest is eligible u/s 244A is always higher than the amount determined by the dl AO because tax amount eligible for interest would always be higher, resulting into higher interest out go.
Therefore, we do not find any merit in the appeal of learned AO as ld. AO is directed to verify the claim of assessee in accordance with law - ground of appeal raised is that if the order of the learned CIT – A is followed it will lead to excess grant of interest which is contrary to the practice followed by the Department and the intention of the legislation. We find that the practice followed by the Department should be in consonance with the provisions of the income tax act - Appeal of AO dismissed.
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2024 (2) TMI 1334
Addition based on entries appearing in a diary seized from the assessee - addition as unexplained income of the assessee and also initiated Penalty proceedings u/s. 269SS, 269T and 271AAB - money transaction received for various housing projects - CIT(A) deleted addition - HELD THAT:- CIT(A) has already held that the AO did not disprove that the entries in the diary seized are relating to the money transaction received for various housing projects of the Partnership Firms and the assessee was maintaining the accounts of the Partners of the various Firms.
AO nowhere in the assessment order rebutted the claim of the assessee with any material evidence. Further the Assessing officer did not give any basis for working out the figure of Rs. 2,53,04,000/- as unexplained cash in the hands of the assessee, as against the workings of Rs. 5,79,61,200/- found in the seized diary. Whereas the assessee produced before us the Return of Income filed by the partnership firm M/s. Yash Buildcon and M/s. Dev Corporation relating to the AY2014-15 and Ld. CIT(A) order in the case of M/s. Yash Buildcon wherein the undisclosed income declared by the assessee.
Therefore the ground raised by the Revenue is devoid of merits and the same is liable to be dismissed.
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2024 (2) TMI 1333
Revision u/s 263 - Validity of limited scrutiny proceedings - as per CIT AO has passed assessment order without proper verification and interest expenses claimed as deduction u/s 57 were required to be disallowed - assessee submitted that the assessment proceedings were selected for limited scrutiny with the specific purpose of enquiry into claim of interest expenses u/s 57.
HELD THAT:- On going through the contents of the 263 order and the assessment records, we observe that firstly there was no evidence lack of enquiry on part of the AO on the aspect of allowability of claim of deduction u/s 57 of the Act.
We observe that the case of the assessee was opened under limited scrutiny to examine whether the deduction against interest income from other sources has been correctly shown in the return of income and also to examine whether deduction claimed on account of interest expenses is deductible. The assessee had also filed replies to the query raised by the Assessing Officer during the course of assessment proceedings.
Even before PCIT, the assessee had filed written submissions giving the basis for claim of deduction of interest expenses u/s 57 by stating that the aforesaid interest income had been incurred exclusively for the purpose of earning interest income and accordingly the order passed by the AO was not erroneous and prejudicial to the interest of the Revenue.
Assessee had filed detailed written submission before Ld. PCIT explaining that the notice issued u/s 263 was on an incorrect understanding / appreciation of the facts of the assessee’s case and the assessee had submitted that the interest expenditure had been incurred wholly for the purpose of earning interest income. Assessee had also submitted that only that part of interest expenditure had been claimed by way of deduction u/s 57 which had been incurred for earning interest income and the proportionate part of the interest expenditure which was not utilized for earning interest income had not been claimed by the assessee as deduction under Section 57 of the Act.
As PCIT did not give any specific finding to controvert the written submissions filed by the assessee during the course of 263 proceedings and proceeded to hold that the assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue.
Accordingly, PCIT has erred in facts and law in holding that the assessment order passed by the Assessing Officer in the instant case is erroneous and prejudicial to the interest of the Revenue. Appeal of the assessee is allowed.
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2024 (2) TMI 1332
Scope of Limited Scrutiny - Accrual of income - Addition towards advance fees and deposits from old students - AO attempt to convert limited scrutiny into complete scrutiny - HELD THAT:- AR before us made a statement from the Bar that similar accounting treatment of advance fees and deposits from old students done by the assessee was duly accepted by the revenue in the earlier years even in scrutiny assessment proceedings and that there was no change in factual matrix during the year when compared to earlier years.
Even in AY 2015-16, the treatment of the same in the books of accounts was accepted by the ld. AO u/s 143(3) proceedings dated 18.12.2017. In any event, he also stated that the entire issue is revenue neutral as assessee has been consistently following the practice of offering the earlier advance fees to income and whatever fee that is received for the period beyond the financial year is treated as advance fees, which would become income in the succeeding year. DR could not bring any contrary material to this argument.
We find that CIT(A) had elaborately dealt with the issues in dispute and had granted relief to the assessee both on legal issue as well as on merits. As per the scheme of the Act, AO if he desires to convert limited scrutiny into complete scrutiny, he has to obtain prior permission from the competent authority to do so and only then could assume jurisdiction to examine other issues.
In the instant case, the same was admittedly not done by the AO. CIT(A) was duly justified in quashing the additions made by the ld. AO on this ground. CIT(A) had elaborately given a categorical finding that the income had been properly accounted and offered by the assessee in accordance with the provisions of the Act and there is no scope for making any addition even on merits. Appeal of the revenue is dismissed.
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9911796707
