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Showing 221 to 240 of 1574 Records
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2024 (12) TMI 1354
Time limitation for filing appeal - whether the appeals were filed within the time period in terms of Rule 108 or not and if filed with a delay, does it merit condonation? - requirement of physical filing - merely a ‘procedural requirement’ or not.
HELD THAT:- A perusal of the amended rule and the decisions make it clear that the condition to physically file the certified copy of the impugned decision/order is not mandatory. Therefore, an appeal filed prior to the amendment, where the certified copy was submitted with a delay, may be condoned if the online filing was completed within the prescribed limitation period. Ultimately, what is to be borne in mind is the fact that online filing was within limitation. There is no doubt being raised as to the genuineness of the copy of the order, which has been filed.
Merely because the physical submission of the appeal and the order was much later, when the online filing was within the prescribed time, cannot deprive the Petitioner of hearing on merits. In most Courts and Tribunals, online filing and electronic filing is now prescribed mode and the Courts are moving towards technologically advance systems. It would be retrograde to opine that online filing, which was complete in all respects, including electronic copy of the order, is not valid filing.
Petition allowed in part - appeals are remitted back to the Appellate Authority for being considered on merits.
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2024 (12) TMI 1353
Violation of principles of natural justice - requirement to provide opportunity of hearing - Time limitation for filing appeal - appeal preferred by the petitioner dismissed as being beyond limitation - HELD THAT:- The issue with regard to non grant of hearing was considered by the Division Bench of this Court in the case of M/S. ATLAS CYCLES HARYANA LTD. VERSUS STATE OF U.P. AND ANOTHER [2024 (2) TMI 942 - ALLAHABAD HIGH COURT] and held that the provisions of Section 75(4) of the GST Act are mandatory.
Conclusion - Without going to the arguments with regard to limitation and considering the submissions on the ground of non-grant of opportunity of hearing, the petition is allowed.
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2024 (12) TMI 1352
Condition of eligibility to file application for settlement Commission - whether paragraph 4(i) of the circular dated 28.09.2021 is bad in law in as much as it imposes a condition of liability to file application for settlement as on 31.01.2021 along with the issue as to whether the Finance Act, 2021 is unconstitutional in as much as by giving retrospective application with effect from 01.02.2021? - HELD THAT:- Question no. (i) was answered in Jain Metal [2023 (11) TMI 1111 - MADRAS HIGH COURT] by holding that when the Income Tax Settlement Commission itself has been made inoperative with effect from 01.02.2021, it cannot be said that Clause 4 (i) of the circular runs counter or imposes an additional condition to the statute.
Question no. (ii) was answered by the Hon'ble Division Bench by observing that it is just necessary to read down the last date mentioned for filing application in Section 245C (5) as 31.03.2021 and consequently the last date mentioned in paragraph 4(i) of the circular should be read as 31.03.2021.
In the case on hand the petitioners applied before the Settlement Commission on 17.03.2021 i.e., prior to the date when the assent of the Hon'ble President of India has been received. The decision in the case of Jain Metal (supra) shall squarely apply to the case on hand.
Thus the learned Single Judge as well as the order impugned in the writ petition passed by the Income Tax Settlement Commission are set aside and quashed. The application of the petitioner filed before the Income Tax Settlement Commission stands restored to the file of the Settlement Commission. The Interim Board is directed to consider the said application in accordance with the scheme that may be framed by the Central Government as in respect of the cases which arose prior to 31.01.2021 and to decide the same in accordance with law and on merits.
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2024 (12) TMI 1351
Cognizance of offences punishable u/s 276B/276BB - non deposit of TDS and TCS amounts in the revenue account by the stipulated due date - delay ranging from 1 day to 84 days - HELD THAT:- Explanation offered by the petitioners to explain the delay ranging from 1 day to 84 days owing to the prevailing COVID pandemic then was sufficient explanation. Therefore, the Revenue ought to have considered the same under Section 178AA of the I.T. Act and ought not to have proceeded against the petitioners.
Thus, it is appropriate to exercise the jurisdiction u/s 482 Cr.P.C. and quash the proceeding in the exceptional circumstances - impugned order passed by Additional Chief Judicial Magistrate (Special Court), Cuttack quashed.
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2024 (12) TMI 1350
Validity of orders passed u/s 264 - Addition u/s 56(2)(vii)(b)(ii) - value adopted for the purposes of payment of stamp duty value - Relevance and application of Section 50C(2) - differential value exceeds Rs. 50,000/- - HELD THAT:- In this case, admittedly, the value declared in the Sale Deed was Rs. 72,00,000/-. The value adopted by the SRO was Rs. 97,69,000/-.
Thus, the differential value exceeds Rs. 50,000/-. Therefore, the present case is covered by Section 56(2)(vii)(b)(ii) of the IT Act as extracted in the above tabular column.
Thus, the value adopted for assessment of the stamp duty by the SRO at Rs. 97,69,000/- has to be adopted for the purpose of computation of Income of the petitioner. If the value is disputed on the grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of Section 50C and sub-section (15) of Section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections.
It is clear that if the valuation is disputed, the conditions stipulated in sub-clause (a) & (b) to sub-section 2 to Section 50C will apply. Therefore, impugned orders rejecting the request of the respective petitioners for revising the orders is unsustainable and therefore, the same warrants interference. AO has to therefore refer the valuation of the property viz., capital asset under proviso to sub-clause (vii)(c) to sub-section 2 to Section 56 to the Valuation Officer.
Merely because the Authorized Representative of the petitioner did not raise any objection before the Assessment Order dated 30.11.2017 was passed, ipso facto would not mean that reference under sub-clause (vii)(c) to sub-section 2 to Section 56 of the IT Act would be barred.
Even if, no objections was raised before the Assessing Officer prior to the assessment order being passed, the assessee would still be entitled to raise such objections both before the Revisional Authority u/s 264 of the IT Act or before the Appellate Commissioner u/s 246A of the IT Act as these proceedings are continuation of the original assessment proceedings.
The impugned orders are liable to be quashed and the cases are remitted back to the 2nd respondent to re-do the exercise under first proviso to sub-clause (vii)(c) to sub-section 2 to Section 56 of the IT Act read with sub-section 2 to Section 50C of the IT Act.
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2024 (12) TMI 1349
Validity of reopening of assessment - jurisdiction of the Jurisdictional Assessment Officer (JAO) to issue notice u/s 148 - HELD THAT:- As far as the issuance of notice u/s 148 of the IT Act is concerned, only the JAO will have exclusive jurisdiction.
As far as the assessment, re-assessment or re-computation in terms of the provisions of Section 147 of the IT Act is concerned, both the FAO as well as the JAO will have concurrent jurisdiction.
Directorate of Income Tax (Systems) shall have the power to make allotment of cases, through Automated Allocation System to allot cases for issuance of notice u/s 148A/148 in eligible cases based on the risk management strategy in terms of the provisions of the Scheme dated 29.03.2022, to the Jurisdictional Assessing Officer based on the PAN card jurisdiction.
JAO shall issue notice under Section 148 of the IT Act, based on the cases allotted by the Directorate of Income Tax (Systems) in faceless manner, by virtue of signing it digitally without referring their name, to the e-mail id of the registered account of the Assessee through the ITBA Portal.
In the present writ petitions, the cases were allotted by the Directorate of Income Tax (Systems) through Automated Allocation System, based on the risk management strategy formulated by the Board as referred to in Section 148 for issuance of notice to the Jurisdictional Assessing Officer, who had thereafter sent the Section 148 notice to the registered email account of the Assessee from the ITBA Portal, in faceless manner. Thus, the issuance of the impugned notice was duly in accordance with the Scheme, except the procedural lapse of mentioning the name of the JAO.
The said procedural errors will not vitiate the initiation of the proceedings for issuance of notice under Section 148 of the IT Act since such errors are curable in nature.
In terms of the provisions of Section 151A of the IT Act, still the JAOs shall have to obtain prior approval from the higher authority for issuance of Section 148 notice under the Scheme in faceless manner.
JAO shall upload in the ITBA Portal, the relevant documents along with the reply received for Section 148 notice from the Assessee.
Directorate of Income Tax (Systems) forward the Section 148 cases to NaFAC to take further action. Immediately thereupon, the NaFAC shall assume the jurisdiction in terms of Section 144B of the IT Act.
Once the NaFAC assumed its jurisdiction subsequent to the receipt of the information pertaining to Section 148 cases from the Directorate of Income Tax (Systems), the NaFAC shall issue the notice under Section 143(2) or 142(1) of the IT Act calling for the further information from the Assessee.
In the present case, the guidelines issued in terms of Sub-Section (2) of Section 144B of the IT Act will not amount to the directions issued by the Central Government in terms of Sub- Section (2) of Section 151A of the IT Act.
The power of Central Government to issue any direction in terms of Sub-Section (2) of Section 151A of the IT Act read with its proviso, will be entirely different from the issuance of guidelines, by the Board, with the power available in terms of Sub-Section (2) of Section 144B of the IT Act.
The provisions of Section 144B of the IT Act is both in the nature of substantive as well as procedural.
While the FAO performing the duties of faceless assessment in faceless manner, the JAO is also equally performing his duties, in faceless manner, while issuing the notice under Section 148A/148 of the IT Act, as intended in the Scheme.
WP dismissed.
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2024 (12) TMI 1348
Validity of proceedings u/s 131/132 - stock of Jewelry having gross weight of 4603.110 grams and net weight of 4146.69 grams was seized u/s 132A - HELD THAT:- Categorical stand of the respondents is that when the petitioner (assessee) was asked to give itemized stock register and match the items carried by him with the stock register, he could not do so, to the satisfaction of the authorities. The itemized stock register was not furnished.
The net weight mentioned of the jewelry items did not match with the closing stock as on 21.03.2024 and was found to be different. The same has been demonstrated by the respondents by the answers given to Question No.18 in the statements in the proceedings under Section 131 and also in the answer to Question No.13.
This Court also observes that the respondents have further taken a stand that the difference in valuation, the itemized stock registers not being produced and the bills of Rs. 50,00,000/- not corresponding to the value of the gold items which was worth Rs.2.16 crores, became the reason for not releasing the same.
This Court further observes that the assessment proceedings are still going on and the present tax liability is still not ascertainable.
This Court also observes that once there is a factual dispute regarding the itemized stock register and the quantity of the gold seized, then all other documents can be considered by the assessing authority while completing its assessment proceedings. The assessment is for the year 2024-25, and this case is covered under Section 132 and after completion of such assessment, if the tax liability is arising then the petitioner shall have his own remedy, regarding the ornaments, but non-release thereof at this stage is justified.
The first summons u/s 131 as examined by this Court, was a sufficient opportunity for the petitioner to explain the source of the gold, and his failure to do so has prompted the respondents to initiate the proceedings u/s 132A, which has been done after due and prior approval of the concerned authorities as per the Act of 1961.
This Court also observes that the stock register of the Firm was present, but the jewelry items and the stock register bills were not matching.
The order u/s 132B thus, cannot be interfered with at this stage, as the information received warrants the assets to remain in custody. The compulsory proceedings have to take place and the petitioner during the assessment proceedings will get sufficient time and opportunity to defend his case and take his remedy by filing the appeal before the CIT(A), if any adverse order is passed and therefore, at this stage, no interference is called for in the present petition.
The principal argument of the petitioner is that the respondents have acted in sheer violation of the proviso to Section 132(1)(iii) of the Act of 1961, which provides that stock-in-trade of the business cannot be seized.
This Court also observes that in the present petition, the petitioner is seeking quashment of the proceedings u/s 131/132 of the Act of 1961, citing that Section 132 has ‘reasons to believe’ and thus, once the ‘reasons to believe’ were specified then the proceedings ought to have been dropped.
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2024 (12) TMI 1347
Eligibility to deduction u/s 80HHC - HELD THAT:- Burden was on the assessee to prove its eligibility to claim such deduction. In the instant case, the assessee had received a sum of Rs. 5,52,60,467/- from other sources. However, the assessee did not lead any evidence to show that the amount in question was received from the export business. Therefore, the Tribunal held that a sum cannot be treated as income from exports.
Thus, it is evident that Section 80HHC of the Act, in the facts and circumstances of the case, did not apply. The authorities under the Act have, therefore, rightly treated the aforesaid amount as miscellaneous income and excluded 90% of the said income in view of Explanation (baa) of Section 80HHC of the Act. Decided against assessee.
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2024 (12) TMI 1346
Unexplained money u/s 69A - deposit made after the demonetization notification on 8th November 2016 - HELD THAT:- The above argumentative explanation has given by the assessee after information received from UCO Bank, Sohela Branch, u/s 143 (6) was provided to him.
In the facts found by the AO, confirmed by the First Appellate Authority and thereafter the Tribunal, there does not arise any substantial question of law for admission of the appeal. Explanation offered by assessee was no explanation at all. Nature or source of acquisition of the money not explained could only invite opinion of the AO of unexplained money.
The appeal does not deserve to be admitted.
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2024 (12) TMI 1345
Profit from the sale of jaggery - Agricultural income of not? - distinction between 'gur' and 'jaggery' - HELD THAT:- After a detailed discussion and relying on various judgments [CIT v H.G. Date [1970 (2) TMI 41 - BOMBAY HIGH COURT], Commissioner of Income-Tax v Kirloskar Bros. Ltd [1989 (9) TMI 91 - BOMBAY HIGH COURT], Krishi Utapadan Mandi Samiti and another v M/s. Shankar Industries and Others [1993 (2) TMI 332 - SUPREME COURT], Banarsi Das Gupta v Commissioner of Income Tax [1972 (5) TMI 26 - ALLAHABAD HIGH COURT], this Court has come to the conclusion that the essential characteristic of sugarcane in its original form, stands converted after processing, into jagerry and both the commodities are different and distinct from one another. Decided in favour of the revenue.
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2024 (12) TMI 1344
Reopening of assessment u/s 147 - Entitlement for deduction to the broken period interest (BPI) on purchase of hold to maturity (HTM) securities - order passed u/s 148A (d) rejecting the petitioner’s reply to the show cause notice - HELD THAT:- We are inclined to accept the petitioner’s contention on the position in law in regard to the broken period interest on the purchase of HTM securities, which appears to be well settled in view of the decision as rendered by the Supreme Court in the case of Bank of Rajasthan [2024 (10) TMI 875 - SUPREME COURT] and other decisions which are referred by us. Similar question had recently fell for the consideration of the Division Bench of which one of us (G. S. Kulkarni, J.) was a member, as pointed out on behalf of the petitioner in the case of HDFC [2024 (11) TMI 1386 - BOMBAY HIGH COURT] wherein on question of law nos. 1 and 2 which were recorded in paragraph 2 of the order of the Division Bench, the Court answered the questions in the affirmative in favour of the assessee and against the revenue, when it was held that the Income-tax Appellate Tribunal had erred in holding that the appellant therein (HDFC) was not entitled to a deduction in respect of the broken period interest paid by it.
Thus the issue on the entitlement of the petitioner to the deduction of the broken period interest is no more res integra. On this count, the petition needs to succeed.
We are of the clear opinion that there was no basis in law whatsoever for respondent no. 1 to initiate the impugned proceedings against the petitioner and which are in the teeth of the principles of law as laid down by this Court and as confirmed by the Supreme Court as also reaffirmed by the Supreme Court in the recent decision in the case of Bank of Rajasthan [2024 (10) TMI 875 - SUPREME COURT].
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2024 (12) TMI 1343
Addition of expenses claimed towards the purchase of paddy - burden of proof - appellant herein had not discharged the burden by adducing evidence with regard to the actual incurring of the stated expenses while purchasing paddy from unregistered farmers - HELD THAT:- As rightly noticed by the First Appellate Authority, it is not in dispute that the assessing authority did not verify the books of accounts including the Stock Register, Ledger, Cash Purchase Register, etc., to see whether the allegation regarding bogus purchases of raw material (paddy) was justified or not.
In the absence of such verification, we are of the view that there was no justification for proceeding on the assumption that there was no purchase of paddy from unregistered farmers, and for making additions to the income declared by the assessee by disallowing the expenses claimed u/s 37 (1).
In our view, the findings to the contrary of the Appellate Tribunal cannot be legally sustained and it is only the order of the First Appellate Authority that confines the disallowance that can be legally sustained - impugned order of the Appellate Tribunal setaside, restoring the order of the First Appellate Authority - Decided in favour of the assessee.
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2024 (12) TMI 1342
Bogus purchases - GST authorities found the seller (from whom the purchases were made) was a bogus entity issuing accommodation bills to generate fake Input Tax Credit - CIT(A) deleted addition - HELD THAT:- The powers of the CIT(A) are in the nature of reassessment and once an assessment order is brought before CIT(A), his power is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance but his powers range over the whole assessment to correct the AO not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the AO and determined in the course of assessment.
Under sec 250(4)) of the Income-tax Act, the CIT-A is competent to make such further enquiry as he thinks fit or cause further enquiries to be made by the AO, under remand. He is further empowered to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment. If an income is the subject-matter of consideration by the AO and even though the AO might have come to the conclusion that that income is not subject to tax, still it would be open to the CIT-A to take different view and to bring that income to tax.
In cases of Kapoorchand Srimal [1981 (8) TMI 2 - SUPREME COURT] and Jute Corporation of India Ltd. [1990 (9) TMI 6 - SUPREME COURT] likewise held that the appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In absence of any such restriction, the appellate authority is vested with all the powers of the assessing authority.
Thus, we deem it appropriate to allow the appeal for statistical purposes, emphasizing the need for a thorough and compliant adjudication process. Appeal is allowed for statistical purposes.
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2024 (12) TMI 1341
TP Adjustment - international transaction on outstanding due receivable beyond the credit period - Characterization of transaction of overdue receivable - contention of assessee that if there is no policy of charging interest from non-AE and therefore from AE such interest cannot be imputed.
Separate international transaction - HELD THAT:- As at the point credit period ends the transaction of sales or services ends and in substances, the further credit allowed to the other party becomes transaction of providing finance, unless some other material is shown. There is no such material placed before us. Therefore, we uphold the finding of the learned lower authorities that the outstanding dues beyond an agreed credit period in the case of the assessee are separate international transaction, requires to be benchmarked separately and cannot be clubbed together with other transaction mentioned in para 11 B of form number 3CEB and therefore the learned that lower authorities have correctly benchmarked them separately.
Period for which interest has been calculated is to be limited to the year under consideration as interest accrued in other years cannot be taxed in this year - Only interest the extent of the financial year have been made by the learned TPO. Looking at the last 4 entries of the computation, it is clear-cut that the addition had been made of ₹ 5.65 crores. The adjustment should have been restricted only up to 365 days. Therefore, there is a computational error in the addition made by the learned transfer pricing officer.
Measures taken by the reserve bank of India for dealing with the Covid 19 pandemic - The financial year for which the relevant relaxation is made by the RBI starts from 1 April 2020. Here in impugned appeal financial year is 1-4-2019 to 31-3-2020. Therefore, for the financial year before us, the above relaxation by Reserve Bank of India does not apply. Therefore, the circular cited of the Reserve Bank Of India does not help the case of the assessee. Thus, we reject reliance on extended time period for this AY is not relevant at all. Even otherwise RBI circular has extended the time limit as per exchange control manual and may or may not have any impact on determination of arm’s length price to be determined as per the Act, off Course considering special effects of COVID -19.
Recharacterisation of the transaction - It is not related to the transfer pricing issues. Here the learned transfer pricing officer has also not recharacterised the transaction but has merely applied the law and benchmarked the arm's-length price of the international transaction of overdue receivable from associated enterprises.
Commercial expediency in keeping the outstanding receivable - no facts are produced before the Ld. lower authorities or before us that there is any commercial expediency from the side of the assessee to keep the outstanding receivable from the associated enterprises beyond the due dates. This is also apparent from the fact that there are almost 216 entries listed by the learned TPO delay ranging from 61 to 548 days. Argument rejected.
Setting off and netting of the outstanding receivable with outstanding payables - We fully agree with the learned authorized representative that if the sum is receivable from associated enterprises “A" and sum is also payable to the associated enterprises “A", then the outstanding receivables should be net of first against the outstanding payable, provided there are no contrary agreements, facts and circumstances. It is for the assessee to show that the outstanding receivable is not received by the assessee beyond the credit period from associated enterprises for the reason that there is an outstanding payable to the same party. Such facts are required to be demonstrated, the learned TPO is directed to look into these facts, if placed before him.
Instant adjustment was not proposed in show cause notice, no addition could have been made in the draft and final assessment order - The purpose of show cause notice is to make assessee aware about the likely step by the ld. AO and ld. TPO. Thus, assessee has been made aware about the issue in TP Assessment proceedings.
If the outstanding dues are considered in margin of the assessee in working capital adjustment, it would have also given a better margin to the assessee compared to the comparable margins - We restore this issue back to the file of the learned transfer pricing officer/learned assessing officer with a direction to the assessee to show before the TPO / AO that if the working capital adjustment is made, if allowable in accordance with the law, the above adjustment of interest on overdue realization of trade receivable would not be required.
MAT computation u/s 115JB - HELD THAT:- The book profit income has been taken by the learned AO at ₹ 4,664,431,180/– against ₹ 4,262,848,182/– shown by the assessee. We do not find any adjustment made to the book profit in the assessment order. Therefore, apparently there is an error which needs to be rectified. Therefore, the learned assessing officer is directed to compute the correct book profit u/s 115JB and consequent tax thereon. Accordingly ground number 7 of the appeal is allowed.
Non-grant of advance tax, tax deduction at source, tax collection at source credits and foreign tax credit - We find that, if the above credit is not given to the assessee, the learned assessing officer is directed to grant the same after proper verification.
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2024 (12) TMI 1340
Penalty u/s 271(1)(c) - assessee had wrongly claimed exemption u/s. 10(38) - HELD THAT:- Though the assessee had in her original return of income filed u/s. 139(1) raised a claim for exemption u/s. 10(38) on sale of shares of M/s Capital trade links, but she had thereafter, on her own voluntarily deposited the taxes corresponding to the aforesaid income on 14.02.2019 i.e. three years prior to issuance of notice u/s. 148 of the Act by the AO.
We, thus, find substance in the claim of the Ld. AR that as the assessee had voluntarily paid tax on the income arising on sale of shares of M/s Capital trade links i.e. way back three years prior to initiation of proceedings u/s. 148 by the A.O, therefore, the same clearly establishes her bonafides, which, thus, clearly brings her explanation within the meaning of the concession provided in “Explanation-1(B) of Section 271(1)(c) of the Act.
Alternatively, we also find substance in the Ld. AR’s contention that as the assessee in her return of income filed in compliance to notice u/s. 148 of the Act had included the income on sale of shares of M/s Capital trade links which, thereafter, had been accepted by the A.O vide his order u/ss. 147/144B as such, therefore, in absence of any amount having been added/disallowed while framing the said assessment, no penalty u/s. 271(1)(c) of the Act could have been imposed on her.
“Explanation 1” of Section 271(1)(c) pre-supposes an addition/disallowance made in the hands of the assessee. Apart from that, the machinery provision contemplated in “Explanation 4” for computing the amount of penalty as per Section 271(1)(iii) of the Act, in absence of any addition/disallowance made in the course of assessment/reassessment proceedings is also rendered as unworkable. Our aforesaid view is fortified by the order of Renu Behl [2023 (12) TMI 1334 - ITAT RAIPUR] wherein the Tribunal involving identical facts had vacated the penalty imposed by the A.O on the assessee.
In Puspendra Surana [2013 (8) TMI 969 - RAJASTHAN HIGH COURT] the Tribunal had held that as the assessee had declared the income from LTCG on sale of agricultural land in his revised return of income, which thereafter, was accepted by the A.O and there was no material available on record by which it could be inferred that there was deliberate concealment on the part of the assessee, thus, there was no justification in imposing penalty u/s. 271(1)(c) of the Act. Decided in favour of assessee.
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2024 (12) TMI 1339
Disallowance of guarantee fees paid to Govt. of Gujarat - This guarantee fees paid by the assessee to Govt. of Gujarat in consideration of guarantee issued by it for repayment of unsecured loans - CIT(A) deleted the above addition following assessee’s own case for the Assessment Year 2008-09 [2015 (6) TMI 1096 - ITAT AHMEDABAD] by holding that the guarantee fees is directed to be allowed as revenue expenditure but directed the Ld AO to verify the above claim - HELD THAT:- Ground No. 1 raised by the Revenue is devoid of merits and the same is hereby dismissed. Since Ld CIT[A] directed the AO to verify the Certificate filed by the assessee during appellate proceedings whether the loans on which guarantee fee was paid were utilized for construction of plant or not, questioning this direction by the assessee in its Ground No.1 is hereby rejected and dismissed.
Addition being 15% of year-end balance of capital grant - assessee submitted that this issue was remanded back to the file of the A.O. with specific direction by the Co-ordinate Bench of this Tribunal in Gujarat Energy Transmission Corporation Ltd. [2022 (8) TMI 1419 - ITAT AHMEDABAD] - HELD THAT:- Respectfully following the same, this issue is remitted back to the file of the Assessing Officer for verification of the proportionate amount of grant relating to different assets and upon applying the actual rate of depreciation relates to those assets and pass fresh order by giving proper opportunity of hearing to the assessee.
Disallowance of prior period expenditure - This ground no. 3 raised by the Assessee is hereby setaside to the file of the Assessing Officer for de novo assessment and by giving proper opportunity to the assessee for being hearing.
Disallowance of Additional Depreciation u/s. 32[1][iia] - generation of electricity which is covered under clause (i) of section 32(1) is excluded from availing additional depreciation - HELD THAT:- As relying on Kadodara Power Pvt. Ltd. [2019 (8) TMI 658 - GUJARAT HIGH COURT] we hold that the assessee is entitled for additional depreciation u/s. 32(1)(viia) of the Act and direct the A.O. to grant the same.
Treatment of interest income and miscellaneous receipts as “income from other sources” as against the claim as “business income” - CIT(A) held that the miscellaneous receipts treated as income from business. However the interest income was treated as “income from other sources”. Considering the judgment of Odisha Power Generation Corporation Ltd. [2022 (3) TMI 539 - ORISSA HIGH COURT] we direct the Ld AO to consider the issue afresh and pass orders accordingly. Thus the Ground No. 5 raised by assessee is allowed for statistical purpose and Ground No. 2 raised by the Revenue is dismissed.
Additions while computing book profit u/s. 115JB - Prior period Expenses - HELD THAT:- This issue is decided in favour of the assessee in the case of Gujarat Energy Transmission Corporation Ltd. [2022 (8) TMI 1419 - ITAT AHMEDABAD] which was followed in assessee’s own case in [2023 (8) TMI 1597 - ITAT AHMEDABAD] relating to Asst. Years 2014-15 & 2012-13 wherein no adjustment on account of prior period expenses is to be made in the net profit of the company for arriving at the book profits u/s 115JB.
Addition of capital grant - This issue is also decided in favour of the assessee in the case of Gujarat Energy Transmission Corporation Ltd. [2022 (8) TMI 1419 - ITAT AHMEDABAD]
Addition being excess depreciation - Issue of excess depreciation is decided in favour of the assessee in the case of Kansara Popatlal Tribhuvan Metal Pvt. Ltd. [2022 (8) TMI 618 - ITAT AHMEDABAD] as held where for purpose of section 115J, assessee claimed depreciation at rates provided under Income-tax Rules, action of Assessing Officer in redrawing profit and loss account and adopting rates prescribed under Companies Act, was totally unauthorized - Decided in favour of assessee.
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2024 (12) TMI 1338
Validity of Reopening of assessment u/s 147 - non-application of mind by the AO and the mechanical approval by the Principal Commissioner of Income Tax (Pr. CIT) - HELD THAT:- Undisputedly in this case there is non-application of mind by the AO in taking approval from the appropriate authority u/s 151 of the Act.
Perusal of Form for recording the reasons for initiating proceedings u/s 148 and for obtaining approval of the Pr. CIT, Delhi-8, New Delhi suggests that the AO mentioned the provisions under which the assessment was reopened as 147(b) of the Act.
As observed that the provisions of section 147(a)/147(b) have seized to be in the statute book from 1.4.1989. Therefore, mentioning all these incorrect and non-existent sections for obtaining approval for recording the reasons for initiating proceedings u/s 148 is a clear case of non-application of mind by the AO and also by the authorities providing satisfaction u/s 151 of the Act. Decided in favour of assessee.
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2024 (12) TMI 1337
Income deemed to accrue or arise in India - taxability as per India-Singapore Tax Treaty - Addition on account of washing charging charges - difference between the buying price and selling price between both contracts is recorded as “Washout Charges” by the assessee - AO held that the assessee did not offer the consideration received for washout charges - HELD THAT:- “Washout” charges are in the nature of business transaction and therefore credit of “washout” charges will be business income of the assessee. We find support from the decision of Louis Defrus [2019 (11) TMI 95 - ITAT DELHI] wherein “washout charges” are held to be business expense in the hands of tax payer. The nature of transaction is nothing more than a business transaction and where it is credited, it will be business income and where it is debited, it will be revenue expense.
As the said transactions are not speculative in nature, but hedging transactions entered to protect the price risk fluctuation, let us examine the result of the AO's contention that transactions being entered into by the assessee are in the nature of speculative activities u/s 43(5).
We find that the income from the same would still be covered under business income as the proviso (a) of section 43(5) excludes hedging transaction from being speculative. Even if the contention of AO is accepted that the transaction is speculative income, the same will still be considered as part of business income governed by Article 7 read with Article 5 of the India-Singapore DTAA.
Assessee having no Permanent Establishment (PE) in India, in terms of Article 5 of the India-Singapore tax treaty, the said washout receipts, being in nature of business income of the assessee, would still be not taxable in India.
There are no business activities of the assessee, namely entering of contract, receipts of money etc. is performed in India and the fact that assessee does not have any PE in India to carry out any business activities, there is no source for the assessee in India resulting in any income - Decided in favour of assessee.
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2024 (12) TMI 1336
Income deemed to accrue or arise in India - Royalty/Fee for Technical services (‘FTS’) under Article 12 of the India-Singapore DTAA - receipts from data center related services and receipts from provision of advertisement space - Assessee does not have a presence in India or Permanent Establishment (‘PE’) in India under Article 5 of the DTAA
HELD THAT:- We find from the perusal of the Schedule 1 of the inter-company Service Agreement enumerating the list and description of services rendered, that the assessee has provided Criteo India with only advertising spaces purchased from publishers. We note that the assessee does not have any physical possession or any sort of control over the advertising space. It is the third-party publishers who actually control the advertising space and hence the assessee was not in a position to pass on the control/right to the advertisement space to Criteo India.
In the instant case we find that Criteo India has used a standard facility which is provided for displaying advertisement on the website of third-party publishers. The assessee has merely provided the advertisement space bought from third-party publishers, which is also provided to other global customers of such publishers in the like manner. Equipment/installations are all owned by third-party publishers and the assessee/Criteo India does not have any role to play in either maintaining/involving into any managerial activities. Criteo India does not even have any economic/ possessory right with regard to the server of the third-party publishers and it is not at the disposal of the Assessee/ Criteo India.
We also find that the right to modify/deal with the server in any manner, vest with the third-party publishers. The Services Agreement does not provide any ‘right to use’ of any industrial, commercial, or scientific equipment or for imparting any information concerning technical, industrial, commercial, or scientific knowledge, experience or skill. In view of above, it is evident that the receipts for provision of advertisement space from Criteo India are not chargeable to tax in India as ‘royalty’ under Article 12(3) of the India-Singapore DTAA. We accordingly direct the AO to delete the said addition. Accordingly, Ground No. 1.1 is allowed.
Receipts on account of Business Support Services being treated as FTS - whether such receipts on Business support services are in the nature of FTS and whether the assessee has “made available” the technical knowledge, experience etc. under the DTAA? - HELD THAT:- In the instant case, we find that the receipts in question are for rendering the services categorized as Business support services which pertains to routine administrative services and that too, on a recurring basis year-on-year and thus, cannot have any enduring benefit for Criteo India as held by the AO. We find that the inter37 company agreement was effective since November 10, 2016 and the said support services are being provided to Criteo India year-on-year since the inception of the Agreement. We also find that travel related services was merely for supervisory activities and for very short duration. Such services, having a recurring nature, does not satisfy the “make available” clause. Mere incidental advantage to the recipient of services is not enough.
The technical or consultancy services may be said to be ‘made available’ only when the service recipient is enabled to apply the technology/ skill/ services in future without recourse to the service provider. A mere incidental advantage to the recipient of service is not enough. The test is the transfer of technology/ skill and not the incidental benefit to the recipient.
Training/ recruitment and human resource support neither result in transfer of technology or knowledge or skill or know-how. The receipts on account of travelling, by no stretch of imagination, can be considered in the nature of managerial, technical or consultancy services or for any use or right to use of any technology or software or equipment. Employees of the assessee travelled to India on certain occasions for a very short duration in relation to supervisory activities only. In view of the above, the receipts in the hands of the assessee for providing Business support services, travelling related services and external consultants’ services to Criteo India are not in the nature of ‘FTS’ as defined in Article 12(4) of the India-Singapore DTAA. We direct the AO to delete the said addition.
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2024 (12) TMI 1335
Unverifiable purchases u/s. 69C - Addition @ 0.25% on cash sales - HELD THAT:- Admittedly, the assessee has explained the source of purchases of all the purchases are recorded in the books of accounts and has produced all the bills and vouchers, import bills, bill of entry, airline bills and custom documents etc. All purchases have been made through account payee cheque/RTGS.
Assessee has recorded complete sales in the books of account and AO could not point out any defect in the books of account or even there is no finding in the Assessment Order about any deficiency in the books of account. AO has not at all invoked the provision of section 145 for rejection of books of account of the assessee.
We are of the view that addition made by the AO is just based on assumptions and has ignored the facts of the case. Interesting point is that once the purchases are accepted as genuine and its sales cannot be taken as bogus until and unless books of account are rejected or found to be defective. One interesting fact is that even enforcement directorate has enquired into the issue and find no adverse circumstances or facts in this case against the assessee.
Hence, we find no infirmity in the order of the CIT(A) the deleting of cash sales made by the AO u/s. 69C.
Estimating the profit / commission on alleged cash sales @ 0.25% - CIT(A) has simply tried to balance the view expressed by him but there is no basis for such estimation because the assessee has already disclosed profit, which is part of the accounts of the assessee on cash sales recorded in the books of account. Hence, we delete this addition and allow assessee’s appeal on this issue. As regards to the assessee’s appeal, this issue of assessee’s appeal is allowed and revenue’s appeal is dismissed.
Addition u/s 68 - HELD THAT:- We noticed that now the assessee for the first time before us filed bank statement of Pankaj Kapur from where this amount was advanced. Since, this document was produced before us for the first time, we admit this document and remand this issue back to the file of AO. AO will examine these cash credit of Sh. Pankaj Kapur in terms of section 68 of the Act and, thereafter, will decided this issue. This issue of assessee’s appeal is set aside and allowed for statistical purposes.
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