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Showing 201 to 220 of 1644 Records
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2025 (4) TMI 1444
Validity of the assessment framed u/s 147 - Disallowance of assessee’s claim of deduction of its income u/s 80P - HELD THAT:- AO while framing order under Section 147 of the Act in the present case did not make any addition on the income which he believed had escaped assessment, which in the present case was the cash withdrawals of Rs. 1.13 crores from its bank account the source of which was found to be unexplained, the AO hold, could not have made addition or disallowance on any other account, in the present case being disallowance of deduction claimed u/s 80P of the Act, since Courts have time and again reiterated that the moment the AO finds no escapement of income of the assessee on the basis of which he had assumed jurisdiction u/s 147 of the Act he loses jurisdiction to proceed further and make any other addition or disallowance to the income of the assessee.
Disallowance of deduction u/s 80P of the Act made in the present case by the AO is not sustainable being not in accordance with law, beyond the jurisdiction of the AO and accordingly, direct deletion of the same. Appeal of the assessee is allowed
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2025 (4) TMI 1443
Assessment u/s 153A - absence of any incriminating material belonging to the assessee being found during the course of the search - HELD THAT:- From the perusal of the impugned order of AO, we find that the AO referred one pen drive seized from the premises of the proprietorship firm of the assessee containing Trial balance of the assessee. In the said trial balance, an entry of unsecured loan of Rs. 30.00 lacs taken from M/s Destiny Gems & Jewellers Pvt. Ltd. is appearing.
The trail balance is prepared from the regular books of accounts and in the Balance Sheet, this loan of Rs. 30,00 lacs taken from M/s Destiny Gems & Jewellers Pvt. Ltd. is duly appearing. Therefore, this document could not be hold as incriminating material.
As seen that besides pen drive, the AO has relied upon the statements of various directors of the loaner company wherein they accepted that the said company is paper/ shell company and concluded that the loan taken from the said company is bogus. It is admitted position that search was simultaneously carried out in the case of assessee as well as in the case of SRS group of cases, however, both the entities are independent and separate entities.
AO cannot allowed to assume jurisdiction to assess the assessee u/s 153A on the statements of third parties in whose cases, search was also carried out and such persons were not related to the assessee.
AO should have proceeded to assess the income of the assessee for such statements u/s 153C after following the procedure of recording of satisfaction to this effect in the case of CIT vs. Culcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT]
Any material/ statements pertaining / relating to a person other than the person searched, was first to be handed over by the AO of the searched person after recording his satisfaction, to the AO of other person to whom such material/ statements belonged, who after recording his satisfaction, has to proceed against such other person by issuing a notice u/s 153C and then to assess / re- assess income of such other person for such material/ statements.
As by respectfully following the decisions of Anand Jain, HUF [2021 (3) TMI 8 - DELHI HIGH COURT] and coordinate benches of the Tribunal in various cases, we hold that no addition could be made in the assessment completed u/s 153A on the basis of statements of third party recorded during the search in their own case. Therefore, the addition made in the hands of the assessee on account of unsecured loan taken from M/s Destiny Gems & Jewellers Pvt. Ltd. solely on the basis of statements of third party is hereby deleted. Assessee appeal allowed.
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2025 (4) TMI 1442
TP Adjustment - challenge to inclusion of commission paid to local distributors in AMP expenses for working out the adjustment on account of AMP adjustments and not followed the settled history of the assessee of preceding assessment years - HELD THAT:- Commission paid was not AMP expenses and further looking to the past history of the assessee and by following the principle of the consistency and by respectfully following the aforesaid judgements of various Courts on this principle, we hold that AMP expenses including the amount of commission paid to distributors are not international transaction. Accordingly, we set aside the order of TPO/AO/DRP and delete the addition made made by TPO/AO toward AMP adjustment. The Ground of appeal No.1 of the assessee is allowed.
Deduction u/s 80G when the said sum was not allowed being part of CSR expenses - whether the same can be allowed as deduction u/s 80G when it is part of CSR expenses? - HELD THAT:- Explanation 2 inserted in Section 37 to deny the deduction for CSR expenses incurred by companies as normal business expenditure and the same applies only to the extent of computing business income under Chapter IV-D. The said Explanation cannot be extended or imported to CSR contributions which are otherwise eligible for deduction under any other provision or Chapter, to say donations made by a charitable trust registered u/s 80G and if the same denied merely because such payment forms part of CSR, it would lead to double disallowance, which is not the intention of Legislature. Accordingly, we allow the deduction as claimed by the assessee u/s 80G of the Act. This ground of appeal of the assessee is allowed.
Disallowance of deduction claimed u/s 80G - AO has disallowed the claim of the assessee for the sole reason that assessee has field to produce the receipts of the donation - AR requested that the matter may be sent back to the AO for submission of the receipts which was misplaced earlier and now is available - HELD THAT:- We are remitting this issue back to the file of AO for making verification of the fact whether the conditions necessary to claim deduction under section 80G of the Act are fulfilled or not after obtaining the receipt of donation from the assessee. Assessee is directed to file all requisite details in order to substantiate its claim before AO who is directed to grant deduction to the extent of eligibility.
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2025 (4) TMI 1441
Addition made on account of bogus purchase and profit estimation on sales -AO made addition @8% on these 3 sales treating that actual sales had been made in the grey market and accordingly would have earned grey market premium on sales - HELD THAT:- Merely because there was some cash deposit in its bank account prior to the issuance of cheques to the assessee towards payment of purchase consideration, it cannot be concluded that the source of said cash deposit represent the unaccounted income of the assessee. Similarly, with regard to sales made by the assessee to M/s. Bhagya Laxmi Gems and Jewellers Pvt. Ltd, the said company is a Pvt ltd company registered under Companies Act at Secunderabad, Telengana and assessed to income tax. The said party had filed its confirmation that it had made purchase from the assessee and had directly responded to the notice issued u/s 133(6) of the Act before the AO, which fact is also mentioned by the AO in the assessment order.
For all the sales made to these 3 parties, i.e. Bombay Gold Lab, Dharneesh Gold Pvt. Ltd and Bhagya Laxmi Gems and Jewellers Pvt. Ltd, the assessee had already declared the same in its profit and loss account and in the income tax returns. There is absolutely no evidence brought on record that assessee had made cash sales in grey market at a huge premium. Hence, there is absolutely no question of bringing to tax any amount on account of profit of premium at grey market.
Hence, the addition made again @8% by the ld AO which was reduced to 2% by the CIT(A) does not deserve to survive at all. Accordingly, the grounds raised by the assessee in this regard are allowed and grounds raised by the revenue in this regard are dismissed.
Addition made on account of purchase made from Bombay Gold Lab - The said party Bombay Gold Lab had duly responded to the notice issued u/s 133(6) of the Act by furnishing the requisite details directly before the ld AO. The assessee had even given the PAN details and GST details of the said party before the lower authorities. Hence, purchase transaction made from the said party cannot be treated as bogus. Once corresponding sales made out of disputed purchase stands accepted, the purchase cannot be doubted.
The books of account of the assessee have not been rejected by the ld AO or by the ld CIT(A). With regard to the Inspector report that Bombay Gold Lab does not exist at the address given, the assessee had already pleaded that said Inspector’s Report was never furnished to the assessee for its rebuttal over the purchase made by the assessee which includes the disputed purchase, the closing stock, sales which are reflected in the books of account already cannot be doubted as they are not rejected by the ld AO. CIT(A) duly appreciated all these facts and erroneously proceeded to make an ad hoc addition @1% of the value of purchase treating it as an accommodation entry on account of claim of expenditure. Once, the transaction from Bombay Gold Lab is held to be genuine, there is no question of treating the same as accommodation entry. Accordingly, the addition made on account of commission expenditure stands deleted as it was not incurred at all and it was not required to be incurred by the assessee.
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2025 (4) TMI 1440
Deduction u/s 80P - addition of interest received by the assessee from fixed deposits - HELD THAT:- We find that the present issue is squarely covered by the various judicial precedents. In the decision of Gunja Samabay Krishi Unnayan Samity Ltd. [2023 (1) TMI 783 - CALCUTTA HIGH COURT] held that interest earned by the cooperative society on surplus funds deposited in bank and Govt. securities is qualified for deduction u/s 80P(2)(a)(i) of the Act.
Similarly in the case of Yendagandhi Large Sized Co-operative Society Ltd. [2023 (12) TMI 61 - ITAT VISAKHAPATNAM] allowed the deduction for interest income from deposits with the cooperative society and nationalised banks. Thus, we direct the AO to delete the disallowance u/s 80P of the Act and therefore, the deduction u/s 80P claimed is allowed.
Addition on account of overdue interest provisions made by the assessee - HELD THAT:- The provisions for overdue interest was not an issue raised in the limited scrutiny assessment. Therefore, the ld. CIT(A) erred in confirming this addition without proper justification and the addition is hereby deleted since the limited scrutiny had done in the case of the assessee was only related to the specific issues and the AO cannot go beyond the scope of limited scrutiny on an issue which was never for limited scrutiny assessment. Moreover, provision was made relating to overdue interest as amount in question had not been recovered for a continuous period of six years.
Additions on miscellaneous income and rental income - HELD THAT:- CIT(A) cannot make an addition on an issue which is not raised in the original assessment order without giving the assessee an opportunity to respond. In the present issue, without giving notice to the assessee, the alleged addition was made by the ld. CIT(A) suo moto which is not in accordance with law. Consequently, the additions on miscellaneous income and rental income are hereby deleted.
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2025 (4) TMI 1439
Addition on issue other than the issue mentioned in the notice u/s 143(2) where the case of the assessee has been selected for limited scrutiny - HELD THAT:- During the hearing, the Bench had requested the DR to submit the copy of the reasons for selection of the case for scrutiny under CASS. DR has submitted a copy of “CASS Selection Reason and Issue” from which it is seen that the case was selected for scrutiny with Reason Code EI02.02 and DM01.15A on issue of “Agricultural income” and “Cash deposit during demonetization period”. It is clear from the above that the AO has passed the order as per the mandate given to him by the CBDT for limited scrutiny under CASS. He has not exceeded the jurisdiction as contended by the ld. AR. Accordingly, the ground No.1 is dismissed.
Unexplained cash credit being cash deposits in bank account - HELD THAT:- The amounts of withdrawal are substantial. The appellant has not filed confirmation or affidavit from Shri Vijay J. Ramani that he withdrew the impugned amounts in cash and gave it to the appellant. He has not confirmed that the amount was not utilized by him for personal purposes or investment. Copy of the bank account of Shri Vijay J. Ramani has not been submitted to prove that the above withdrawals were not credited to his account. The copies of PAN, Aadhar and Passport of Shri Vijay J. Ramani mentioned the name of his father as Jashubhai Manjibhai Ramani and not Jashubhai Manjibhai Patel, the appellant herein. The name of the assessee in the PAN is Jashubhai Manjibhai Patel, and not Jashubhai Manjibhai Ramani. Since no supporting and corroborative evidence has been filed by the appellant to support the claim that the cash withdrawal by Shri Vijay J. Ramani, was part of cash available with the appellant, we do not find any infirmity in the order of AO. The order of AO has been rightly upheld by the CIT(A). Accordingly, the ground No.2 is dismissed.
Taxing the addition by taking the rate @77.25% by attracting Sec 115BBE instead of taxing as per normal tax slab - HELD THAT:- The provisions of section 115BBE of the Act was enacted on 15.12.2016 and hence cannot be applied for the year under consideration.
As relying on Punjab Retail Pvt. Ltd. [2021 (11) TMI 405 - ITAT INDORE] and Sandesh Kumar Jain [2022 (11) TMI 126 - ITAT JABALPUR] held that applicability of amended provision of Section 115BBE of the Act is not retrospective. There is no reason not to follow above decisions. Thus, the AO is directed to tax the addition at normal rate of tax and applicable surcharges and cess, if any. The assessee is, accordingly, allowed relief against taxing the addition at higher rate u/s 115BE of the Act.
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2025 (4) TMI 1438
Disallowance of labour expenses made u/s 36(1)(va) on account of employee’s contribution to the Labour Welfare Fund - HELD THAT:- The assessee in the statement of facts filed before CIT(A) had also stated that due date was further extended to 30.06.2020 by the Welfare Commissioner, Haryana Labour Welfare Board vide letter dated 02.06.2020. Assessee had duly remitted the Labour Welfare Fund dues within the due date prescribed thereon.
The said due dates were beyond the due date of filing of income tax return u/s 139(1) of the Act. Hence, the ld CPC, Bengaluru while processing the return had erroneously construed this employees’ contribution to have not been remitted within the due date prescribed under the respective Labour Act and made addition u/s 36(1)(va) of the Act in the sum which was also confirmed by the assessee CIT(A).
We find that in view of section 9 of Haryana Labour Welfare Board Act, the labour welfare fund dues in the instant case had been duly remitted within the respective dates prescribed under the Labour Laws. Hence, the decision in the case of Checkmate Services [2022 (10) TMI 617 - SUPREME COURT] relied by the NFAC is not applicable to the facts of the instant case. Hence, we direct the ld AO to delete the addition in the sum u/s 36(1)(va). Accordingly, Ground No. 2 raised by the assessee is allowed.
Disallowing the Employee State Insurance Corporation fund u/s 43B by making double addition - HELD THAT:- Assessee had made suo moto disallowance being the employees’ contribution to ESI in the return of income which is evident from the tax audit report enclosed at page 19 of the paper vide Sl. No. 7 thereon. This fact was ignored by the ld ld CPC while processing the return and addition was made by the CPC. The assessee had brought this point to the knowledge of the CIT(A)/ NFAC. The fact was ignored by the ld NFAC thereby resulting in double addition. We are convinced with this fact that there was indeed double addition.
Upward adjustment - inconsistency between amount reported in the tax audit report and the deduction claimed in the income tax return towards gratuity component and other comprehensive income - HELD THAT:- The entire addition has been made by the lower authorities without understanding the requirement of IND-AS which has been duly explained by the assessee before the lower authorities. Further, the ld AR also submitted that in AY 2017-18, CIT(A) granted relief on this issue and revenue did not challenge the same before the Tribunal which goes to prove that the revenue had accepted the same in AY 2017-18. The copy of the said CIT(A) order for AY 2017-18. The relevant observation of the CIT(A) in order where these issues were deleted by the CIT(A. It is pertinent to note that the ld CIT(A) while addressing this issue for the year under consideration had erroneously looked at clause 26(i)(A)(a) in Form 3CD instead of clause 26(i)(B)(a) which had lead the ld NFAC to arrive at the conclusion. Accordingly, ground No. 4 raised by the assessee is allowed.
Chargeability of interest u/s 234C - The law is very well settled that the interest u/s 234C of the Act could be charged only on the returned income and not on the assessed income.
Credit of advance relating to company which got merged with the assessee with an appointed date of 01.04.2021 - HELD THAT:- Amalgamating entities paid an advance tax of Rs. 1.50 crores. Later the two amalgamating entities got amalgamated with the assessee. The appointed date is 01.04.2021. The fact of advance tax payment made by the amalgamating entity in the sum of Rs. 1.35 crores and Rs. 0.15 crores are reflected in Form 26AS. Since the entire transactions of the amalgamating entities are reflected in the hands of the assessee, credit for advance tax paid by the amalgamating entity should be given to the assessee. We direct the ld AO accordingly and allow Ground No. 4 raised by the assessee.
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2025 (4) TMI 1437
Deduction u/s 80IC - assessee has failed to file the Audit Report in Form 10CCB within stipulated time period provided under the Act - extension of the period of limitation falling under Covid-19 period - HELD THAT:- In the instant case, the due date of filing of return of income was extended upto 15.02.2021. However, the Audit Report was filed only on 15.02.2021, simultaneously alongnwtih return of income filed on the same day. Thus, the assessee has failed to comply with the provisions of Rule 18BBB of the Rules.
However, in view of the judgement of Hon’ble Supreme Court in the case of Suo Moto Writ Petition [2022 (1) TMI 385 - SC ORDER] the period of limitation was extended by the Hon’ble Supreme Court upto 31.05.2022. Therefore, there was no delay in filing the Audit Report by the assessee in Form 10CCB. Co-ordinate Bench of the Tribunal in the case of Sanjay Kukreja [2024 (2) TMI 41 - ITAT DELHI] has also expressed the view that filing of Audit Report alongwith return of income is not mandatory but directory and if the Audit Report is filed at any time before framing the assessment, it would be sufficient to hold that the assessee has complied with the provision of filing of Audit Report.
We are of the view that there is no delay in filing the Audit Report in Form 10CCB in the instant case. Therefore, we allowed the said Audit Report to be considered for deduction u/s 80IC however, we are not aware whether the other conditions for claiming deduction u/s 80IC have been coupled with or not. Therefore, the AO is directed to verify all such conditions and if it is found that the assessee has duly complied with all conditions, the deduction claimed u/s 80IC be allowed. Appeal of the assessee is allowed.
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2025 (4) TMI 1436
TP Adjustment - payment of royalty/consideration for use of trademark and knowhow - HELD THAT:- We find that the Tribunal for the immediately preceding AY i.e. 2017-18 [2024 (8) TMI 277 - ITAT DELHI] in so far as royalty addition is concerned decided the issue in favour of the assessee wherein the payment of royalty was held to be at arm’s-length by coordinate benches of this Tribunal.
Addition on account of consultancy services, reimbursement of advertisement expenses and IT cost allocation - HELD THAT:- On perusal of the Tribunal’s order for the AY 2017-18 [2024 (8) TMI 277 - ITAT DELHI] assessee has availed consultancy services from an employee based out of Hong Kong and has reimbursed the salary and related expenses of this employee to its AE. Since this is similar to the issue of expatriate cost in previous years, we find no reason to take a different view for this assessment year. While respectfully following the consistent view taken by the Tribunal in Assessee’s own case for the AY 2007-08, 2008-09 and 2009-10, we hold that the impugned addition cannot be sustained. We, therefore, direct the TPO/AO to delete the adjustment made on this issue. Thus, Ground and sub-grounds are partly allowed in favour of the assessee.
Not allowing deduction on account of reversal of provision for contingent Income tax liability credited to profit and loss account and disallowed earlier in the year of creation that the time it was debited to profit and loss account - HELD THAT:- As Counsel submits that thus the provision which was created in AY 2016-17 was never claimed as deduction since it was added back in the computation of income. Since in the assessment year under consideration the provision was reversed in the books consequent adjustment was made in the tax computation otherwise it would have resulted in a double addition.
We find considerable merit in the submissions of the Ld. Counsel for the assessee. Therefore, the issues in ground nos. 5 & 6 are in principle allowed subject to verification by the Assessing Officer. The Assessing Officer while passing the consequential order may verify the contentions of the assessee before allowing claims of the Assessee.
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2025 (4) TMI 1435
Income from other sources - deduction of interest expenditure u/s 57(iii) against the interest income earned under the head "Income from Other Sources" - Assessee had earned interest income from loans and advances and had simultaneously claimed interest expenses u/s 57(iii) - assessee had failed to establish a clear nexus in respect of the interest-bearing borrowings and the corresponding advances before the lower authorities
HELD THAT:- In the present case, the nexus, at least indirect if not direct, between the interest-bearing borrowings and the interest-earning advances is sufficiently established by the assessee by furnishing cogent documentary evidence. AO and the CIT(A) have disregarded the evidence placed on record without pointing out any specific defect therein. Disallowance cannot be sustained on mere conjecture or suspicion, without any tangible adverse material.
AR has brought to our attention that in the subsequent Assessment Year 2018–19, the assessee had claimed deduction of similar interest expenditure against interest income earned on loans and advances, and the same was allowed by the CIT(A).
As there is no change in facts or law, and a particular view has been taken in the assessee’s own case for a different year, consistency demands that the same view should ordinarily be followed, unless there is a distinguishing feature brought on record.
We are of the considered opinion that the assessee is entitled to claim deduction u/s 57(iii) and the disallowance made by the AO and confirmed by the CIT(A) is not sustainable in law. Accordingly, the disallowance is directed to be deleted.
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2025 (4) TMI 1434
Unexplained cash credits u/s 68 - AO rejected the books of account u/s 145(3) - CIT(A) deleted addition - HELD THAT:- While the CIT(A) has extensively relied on the books of accounts and the availability of cash-in-hand, there is no independent verification of the crucial aspects raised by the AO. The issue of related party purchases from M/s. Veeram Spiritual Energies Pvt. Ltd. and the complete absence of disclosure of such transactions in the Annual Report and Audit Report has been overlooked.
No attempt was made to verify the genuineness of the purchases, which is a critical factor in cases where sales are cited as the source of cash deposits, particularly when no sale is possible without genuine purchases.
We also note that during the course of hearing before us, when queried specifically, the Learned AR was unable to confirm whether the quantitative details of stock, including opening stock, purchases, sales, and closing stock, had been disclosed by the assessee’s tax auditor in the annexure to the audit report in Form 3CD as required.
The absence or insufficiency of audited quantitative particulars further necessitates independent verification of the quantitative records maintained by the assessee to corroborate the genuineness of the transactions. In addition, it is pertinent to observe that significant purchases were recorded by the assessee from M/s. Veeram Spiritual Energies Pvt. Ltd., an entity primarily engaged in monetary intermediation and not in the business of trading in gold or jewellery. The genuineness of such purchases, the actual delivery of goods, and their reflection in stock movement records assume greater importance in the facts of the present case and require detailed verification.
AO’s findings regarding recording of purchases during festival closure days, lack of detailed invoices, and failure of third parties to respond to notices under section 133(6) were material and went to the root of the issue. CIT(A) did not call for any remand report from the AO or undertake any factual verification to rebut these discrepancies but accepted the assessee’s explanation solely based on audited books.
The judicial precedents relied upon by the CIT(A) are distinguishable on facts, as in those cases there was no finding of suppressed related party transactions, unverified stock entries, or complete failure of independent verification. In the present case, the factual matrix is materially different.
We also observe that although the CIT(A) noted that the AO had rejected the books of account u/s 145(3) CIT(A) did not independently adjudicate whether the said rejection was justified in the facts of the case.
CIT(A) merely proceeded on the basis that the books of account were audited and relied upon the cash book and stock records submitted by the assessee, without critically examining the serious discrepancies recorded by the AO. No independent verification of quantitative stock records, purchases, sales, or cash movements was undertaken by the CIT(A).
CIT(A) also did not address the material inconsistencies relating to related party purchases and unverified sales. In the absence of reconciliation of discrepancies or independent verification, the CIT(A) could not have accepted the assessee’s explanation at face value after lawful rejection of the books of account by the AO. The failure of the CIT(A) to properly deal with the rejection of books vitiates the appellate order and necessitates restoration of the matter for fresh adjudication.
Thus, CIT(A) has not passed a sufficiently reasoned and comprehensive order dealing with the serious discrepancies highlighted by the AO. The order of the CIT(A) suffers from lack of factual verification and examination of critical issues necessary to establish the genuineness of the cash deposits.
Accordingly, we deem it appropriate to set aside the order of the CIT(A) and restore the matter back to his file for fresh adjudication to Verify the quantitative stock details with reference to purchase and sale records maintained by the assessee and Verify the genuineness of purchases and correlation with the sales shown. Examine the issue of unverified sales and non-responded 133(6) notices. Revenue’s appeal is accordingly allowed for statistical purposes.
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2025 (4) TMI 1433
Addition as commission income in the hands of an auto-rickshaw driver - HELD THAT:- Assessee is an auto-rickshaw driver, who was lured by Shri Raju Bhimrajka to carry on the business in the name of M/s. Aqua Trading Company. The assessee was offered Rs. 2,000/- per month for his name. It is beyond one’s imagination as to how an auto-rickshaw driver can do transactions of Rs. 103,33,86,100/-.
AO was in possession of the complete information of all the three companies mentioned elsewhere. The AO was also in possession of the transactions done through RTGS inter-se bank transfers by the three companies but the AO did not make any verifications from the real culprits and taxed the entire amount in the hands of the autorickshaw driver i.e., the assessee.
AO ought to have considered the transactions, once the assessee has stated on oath that he is not doing any business but the entire business is done by Shri Raju Bhimrajka, there is no evidence on record that the AO made any effort to trace the real business behind the alleged transactions and instead chose to make addition in the hands of the assessee.
We are of the considered view that such action of the AO cannot be justified on any count. Therefore, considering the peculiarity of the case, being that of an auto-rickshaw driver, the impugned addition cannot be sustained in his hands and is accordingly directed to be deleted.
It is made clear that considering the peculiarity of the case and considering that the assessee is an auto-rickshaw driver, our decision should not be considered as precedence in any other case. The AO is free to take action against real culprits and bring them to tax-net. In the interest of justice and fairplay, appeal of the assessee is allowed.
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2025 (4) TMI 1432
Disallowance of claim of deduction u/s 80P - return was not filed u/s 139(1) - intimation u/s 143(1) - HELD THAT:- Intimation issued under section 143(1) of the Act is without jurisdiction, as it was based on a return that was already held invalid by CPC itself. A foundational requirement for processing a return u/s 143(1) of the Act is that such return must be a valid return as per the Act.
Once the updated return filed under section 139(8A) of the Act was declared invalid by CPC for non-compliance with procedural requirements, it ceased to exist for legal purposes, and therefore could not form the basis for any further intimation or adjustment under section 143(1) of the Act.
Where no valid return exists, any disallowance of claims must be undertaken through regular assessment proceedings under section 144, not through summary processing under section 143(1) of the Act. Accordingly, the impugned intimation dated 29th December 2023 issued by CPC is held to be bad in law and void ab initio. The disallowance made therein is therefore liable to be set aside.Appeal of the assessee is hereby allowed.
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2025 (4) TMI 1431
Accrual of income in India - fee for technical services u/s 9(1)(vii) of the Act read with Article 12 of Tax Treaty of India-Netherlands - Taxability of CHR Recruitment Fees, Taxability of External Information Services, Taxability of Real Estate Corporate Travel Services, Taxability of Health Ecotox Services and Taxability of IT Services - HELD THAT:- As in view of observations made we are of the considered view that in respect of the aforesaid services, the condition of “make available” is not satisfied and the Department has not brought anything on record to demonstrate that in the instant case, the technology was “made available” to the recipient of services, so as to fall within the ambit/definition of FTS under the India-Netherlands tax treaty. Accordingly, in our considered view, the aforesaid services do not qualify as FTS under the India Netherlands tax treaty.
Taxability of Health Ecotox services as FTS under the Act, read with taxability of IT Services - We are of the considered view that in respect of the aforesaid services, the condition of “make available” is not satisfied and the Department has not brought anything on record to demonstrate that in the instant case, the technology was “made available” to the recipient of services, so as to fall within the ambit/definition of FTS under the India-Netherlands tax treaty.
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2025 (4) TMI 1430
Reopening of assessment u/s 147 - Notice issued beyond four years - reopening of assessment can be sustained on the basis of audit objection - HELD THAT:- As to a specific query, specific reply was filed and proper disclosure was made in the financial accounts and also in the computation of income.
We have no hesitation in setting aside the impugned notice u/s 148 of the Act thereby quashing the resultant assessment order. Since we have quashed the assessment order, we do not find it necessary to delve into the merits of the case.
Whether audit objection by the revenue audit party constitutes information on tangible material that justifies reopening? - We are of the considered view that decision P.V.S. BEEDIES PVT. LIMITED [1997 (10) TMI 5 - SUPREME COURT] apply when an audit party points out facts not in the knowledge of the AO originally whereas the facts discussed elsewhere clearly show that the basis for the re-opening was examined by the AO during the original assessment proceedings and the facts relating to the impugned payment of commission claimed this year have been extensively disclosed in the audited financial statement of accounts and also in the computation of income. Therefore, the decision relied upon by the ld. D/R are not applicable on the facts of the case. Decided in favour of assessee.
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2025 (4) TMI 1429
Rejecting the application seeking registration u/s 12A(1)(ac)(iii) - nature of the activities carried out by the Trust are religious or charitable in nature - HELD THAT:- We find that the assessee in its application in Form No. 10AB specifically mentioned that its nature of activities are religious in nature. This is evident from Form No. 10AB. The assessee gave evidence to the fact of commencement of religious activities along with the reply.
Assessee also furnished the salary register together with the photos as evidence in support of religious activity carried out by it since the inception. Despite all these documents, CIT (Exemptions), Lucknow on perusal of the financial statements of the assessee made a remark that assessee had not incurred any expenditure on the charitable activities carried out by the assessee.
Hence it could be safely concluded that the CIT (E) had proceeded on the premise that the activities carried out by the assessee trust are charitable in nature whereas factually they are only religious in nature and even the assessee sought registration only as a religious trust and not as a charitable trust.
Hence the entire rejection order of the CIT (E), Lucknow had proceeded on incorrect assumption of facts and not understanding the predominant purpose for which the assessee trust was even formed. Hence we have no hesitation to cancel the said rejection order of the CIT(E) and direct CIT(E) to grant registration to the assessee trust - Assessee appeal allowed.
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2025 (4) TMI 1428
Classification of expenditure incurred - replacement of Hydraulic system with electrical control panel of the main machine - Revenue or capital expenditure - HELD THAT:- Assessee fairly accepted that the machine consists of 3 parts, out of which 2/3rd parts have been replaced. We note from the order of the ld. CIT(Appeals) that he has noted that SMG Feintool Germany Fine Blanking 630 Ton Press is second hand machine and imported alongwith its hydraulic system.
Since this second hand machine is imported, it cannot be denied that assessee was not knowing the fact that after the purchase of old machinery to put the main machinery to working condition, Hydraulic system with electrical control panel are required to be replaced.
After replacing Hydraulic system with electrical control panel to maintain the working capacity of the machine, the assessee has incurred expenditure. Therefore, it cannot be said that it is a revenue expenditure which gives enduring benefit to the assessee.
As relying on [2023 (8) TMI 373 - ITAT DELHI] we uphold that the expenditure incurred by the assessee is a capital expenditure and the assessee is eligible for depreciation as per law. Decided against assessee.
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2025 (4) TMI 1427
Denial of benefit of section 11 on no registration u/s 12AA/12AB - chargeability of tax on the income computed by AO at MMR instead of calculating tax as if it were an individual assessee - HELD THAT:- AO has levied tax on an income of Rs. 1,92,751/- whereas the appellant out of said income has claimed deduction u/s 11 of the Income tax Act, 1961 for 15% of the gross income calculated at Rs. 1,04,581/-. Considering the fact that the assessee trust was not registered u/s 12AA of the Income Tax Act,1961 we are of the opinion that correct assessable income is Rs. 1,92,751/- and hence we dismiss this ground of the appellant.
Chargeability of tax on the income computed by Assessing Officer at MMR - We agree to the same but here we are dealing with the issue of rate of tax chargeable in case of a trust which is not registered u/s 12AA/12AB whether it is to be charged at MMR or at normal rate as applicable to individual.
We find that in case of charitable trust wherein there is no provision of share of any surplus and there is no provision of distribution of assets, provisions of section 164(2) can only be applied and we, therefore, following the decision of Shri Digambar Jain Mandir Trust [2024 (4) TMI 661 - ITAT JODHPUR] allow ground of the appeal of the assessee and hold that the tax rate as applicable to section 164(2) will apply to the rate of the AOP/Individual and the initial exemption is also available to such assessee.
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2025 (4) TMI 1426
Rejection of its application seeking registration u/s. 80G(5) - copy of regular registration u/s 12A/12AA of the Act prior to 01-04-2021 has not been furnished - HELD THAT:- Assessee couldn’t submit the certificate so sought by the ld CIT(E) and had submitted other certificates inadvertently. However, given that these certificates have been issued earlier by the Revenue and are part of the records and a copy thereof has since been placed on record, we deem it appropriate that the matter is set aside to the file of the ld CIT(E) to examine the same. Further, the ld AR has pointed out the amendment which has been brought in by the Finance Act 2024 which apparently has not been taken into consideration by the ld CIT(E) while examining the application so filed by the assessee.
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2025 (4) TMI 1425
Rejection of Grant of registration u/s 12AB - Assessee contended that “Impugned Order” of Ld. CIT(E) is in violation of principles of natural justice and is therefore bad in law, illegal and not proper - HELD THAT:- AR fairly conceded that no doubt donation details were sought by Ld. CIT(E) at the material time but since the same were not available at the material time it could not be supplied however the same are available now and if this Tribunal is pleased to set aside the impugned order then in the proposed remand proceedings before CIT(E) they would submit the same without any demur.
Revenue did not strongly oppose the contention of the Ld. AR and finally left it to this Tribunal to take appropriate call on this issue in accordance with law. In rejoinder Ld. AR submitted that they indeed regret non compliance on part of the assessee but asserted that in Audit Report donation amount could be seen as having been received through normal banking channels. The assessee has now compiled the details and that they are ready to submit the same.
In the premises “impugned order” is set aside as and by way of remand on denova basis.
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