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Showing 221 to 240 of 1740 Records
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2024 (9) TMI 1522
Reassessment proceedings on income from aircraft leasing treated as royalty under IT Act and DTAA - AO had proceeded to hold that the consideration received by the writ petitioner would be in the nature of “royalty” for use of aircraft and thus taxable both in terms of Section 9 (1) (vi) as well as the provisions of the India-Ireland Double Taxation Avoidance Agreement [DTAA].
HELD THAT:- We find that it is the respondent who had proceeded on the premise that the revenue and consideration received was in connection with aircraft leasing and would thus amount to “royalty” by virtue of the relevant provisions of the DTAA. However, on a plain reading of Article 12 (3) (a) of the DTAA, the view as taken is rendered wholly unsustainable.
We are also of the considered opinion that it would be wholly impermissible for the AO to invoke Section 9 (1) (vi) of the Act in light of the express exemption under the DTAA. Insofar as the question of interplay between provisions contained in a domestic legislation and those in the DTAA, we have in Telstra. [2024 (7) TMI 1340 - DELHI HIGH COURT] already held that the latter would override being more beneficial to the assessee. Accordingly, and for the aforesaid reasons we find ourselves unable to sustain the reassessment action.
Writ petition is accordingly allowed. The impugned notice referrable to Section 148 is hereby quashed and set aside.
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2024 (9) TMI 1521
Notice u/s 148 issued by Jurisdictional Assessing Officer w/o jurisdiction - petitioners submits that in terms of Section 151A, consequent upon publication of the notification dated 29th March, 2022 a notice u/s 148 can only be issued through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 for issuance of notice, in a faceless manner, to extent provided in Section 144B of the said Act with reference to making assessment or reassessment of total income or loss of assessee - HELD THAT:-Having heard the learned advocates appearing for the respective parties and since, a jurisdictional issue has been raised, the present writ petition should be heard upon exchange of affidavits.
Taking note of the prima facie case and the order passed by in the case of Girdhar Gopal Dalmia v. Union of India, [2023 (9) TMI 1555 - CALCUTTA HIGH COURT] the impugned notice issued by the Jurisdictional Assessing Officer u/s 148 of the said Act dated 31st March, 2024, is required to be stayed till the disposal of the writ petition or until further order whichever is earlier.
Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date. Reply there to, if any, be filed within four weeks thereafter. Liberty to mention upon expiry of the period for exchange of affidavits.
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2024 (9) TMI 1520
Stay of recovery of tax demand until the disposal of the appeal by the petitioner before the Commissioner of Income Tax (Appeals) - Since the petitioner is a widow and facing financial problem, she expressed her hardship in paying 20% of the total disputed demand as directed as directed by the third respondent - HELD THAT:- Considering the hardship expressed by the petitioner and the submissions made by the learned standing counsel for the respondents, this Court feels it appropriate to direct the petitioner to pay a sum of Rs. 2,50,000/- (Rupees Two Lakhs Fifty Thousand only) instead of 20% of the total disputed demand as directed by the 3rd respondent vide impugned order.
Accordingly, the petitioner petitioner is directed to pay a sum of Rs. 2,50,000/- within a period of four weeks from the date of receipt of a copy of this order and upon such deposit, the respondents shall stay the recovery of tax demand until the disposal of the appeal filed by the petitioner before the first respondent.
This Court, generally at the instance of the learned Standing counsel, adjourns the matters for filing counter affidavits from time to time. In one matter, even after adjourning the matter on seven occasions, still the learned standing counsel sought adjournment on eighth occasion, which prompted this Court to impose the costs. While so, in the present case, it is important to note that Thiru Dr.B.Ramaswamy, learned Senior Standing Counsel appearing for the respondents has filed the counter affidavit immediately on the first day itself when the matter is taken up for admission.
This Court places its appreciation on record towards best efforts taken by Thiru Dr.B.Ramaswamy, learned Senior Standing Counsel for the respondents, in filing the Counter affidavit without taking any adjournment, when the matter came up for first hearing and facilitated this Court to dispose of the matter without keeping it pending for want of counter.
When the learned Senior Standing Counsel is able to file the counter on the very first day of hearing, this Court is unable to understand as to why the other learned standing counsels are unable to file the counter affidavits in time in their respective matters.
Generally, the litigant public is under impression that pendency of the cases is at the instance of the Courts. But the Courts will always take strenuous efforts to dispose of the matters where both the parties have made out the pleadings. Majority of Writ Petitions have been pending for want of counter affidavits and lack of co-operation on behalf of the statutory authorities and the learned standing counsel and Government Pleaders who represent them. There cannot be any excuse for not filing the counter affidavits in time.
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2024 (9) TMI 1519
CSR expenses claimed u/s 37(1) - applicability of Section 135 of the Companies Act, 2013 - how the expenses like building classrooms or toilets in U.P. or installing LED lights or planting trees in MECON Colony is incidental to the business of the assessee-company, i.e., rendering engineering/architectural consultancy services, has not been proved by the assessee-company - whether Section 135 of the Companies Act, 2013, which deals with Corporate Social Responsibility (CSR), could be applied to the financial year 2012-13?
HELD THAT:- Tribunal by putting reliance on the judgment passed in the case of ACIT Vs. Jindal Power Limited [2016 (7) TMI 203 - ITAT RAIPUR] has reversed the findings without considering the applicability of Section 135 of the Companies Act and without making any assessment regarding its applicability based upon the financial year, in the present case, which has ended on 31st March, 2013.
This Court, therefore, is of the view that the reference which has been considered by the Tribunal is required to be answered in favour of the Revenue. The aforesaid reference having been answered, the consequence would be that the order passed by the Tribunal is held to be bad in the eyes of law.
Accordingly, the order passed by the Income Tax Appellate Tribunal, Kolkata, Ranchi Bench,[2023 (2) TMI 1335 - ITAT RANCHI] is quashed and set aside and the matter is remitted to the Tribunal for passing a fresh order in the case after giving opportunity of hearing to the parties.
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2024 (9) TMI 1518
Unexplained investment - assessee could not bring anything on record to establish that this unexplained investment was from known source of income - CIT(A) deleted addition - HELD THAT:- We are inclined to agree with the decision of the CIT(A). We also find force in the contention of assessee that where the assessee furnishes a valid explanation for the investment made, the onus cast upon it is discharged.
We are of the considered opinion that the decision of the co-ordinate bench in the case of M/s Ambika Enterprises [2023 (7) TMI 1401 - ITAT DELHI] relied upon by the assessee, squarely applies. It was held, on the issue of addition of share capital u/s 68 of the Act, that where there is no ambiguity about the identity of the partner and capital introduced from him, in such circumstances, if the AO was of the opinion that the amount is not proved in the hands of the partner, he should have considered it in his individual hands and not in the hands of the firm.
We also find that this view is supported by the decision of Metachem Industries1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT]. We notice that the Tribunal while coming to the conclusion in the case of Ambika Enterprises [supra], has cited the decisions relied upon by the ld. counsel for the assessee as above.
No infirmity in the order of the ld. CIT(A). Accordingly, we dismiss the appeal of Revenue.
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2024 (9) TMI 1517
Bogus LTCG - sale proceeds fron from sale of shares treated as unexplained income u/s 68 - disallowance of exemption u/s 10(38) - HELD THAT:- We find force in the contention of the counsel on identical set of facts and on identical transactions in identical scrip the coordinate bench had considered the identical issue in the case Sanket Shailendra Modi [2022 (12) TMI 1537 - ITAT MUMBAI] thus we direct the AO to delete the impugned addition and allow the claim of the assessee u/s 10(38) of the Act. Decided in favour of assessee.
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2024 (9) TMI 1516
TP Adjustment - disallowance of payment made for technical services received from the Associated Enterprise (AE) - assessee could not be able to fetch that project for which the biddings were made and hence the TPO as well as Ld. DRP took a view of the assessee failed to derive any benefit from the technical services and hence the expenses attributable to these bids are not allowable to the assessee - HELD THAT:- We observe that so far as the receipt of services by the assessee from its AE, vis-à-vis the project bidding is concerned, there is no quarrel between the assessee and the Department. However, the main averment of the Department is that the assessee failed to derive any benefit from these expenses.
We find force in the argument of assessee that the TPO is not empowered to apply benefit test while computing the ALP. It is settled position of law as held by apex court in SA builder [2006 (12) TMI 82 - SUPREME COURT] that revenue authorities could not sit in the Arm Chair of the an assessee, when it comes to the business decisions to be taken by an assessee in the interest of business. Thus we direct the AO to delete the addition.
Regional support services provided by the assessee - assessee has filed certain additional evidences to rebut the observations made by the DRP - HELD THAT:- After considering the rival submissions, we are of the view that one more opportunity shall be granted to the assessee in the interest of justice to prove his case in respect of regional support services. Therefore, this ground of appeal(number 3) is allowed for statistical purposes.
Interest on receivables - We are of the view that the for bench marking the loan transactions rate of LIBOR + 200 points is correct adjustment, in view of the recent decision of this Tribunal in the case of S&P Capital (IQ) [2024 (9) TMI 1372 - ITAT HYDERABAD] we direct the AO to apply LIBOR + 200 points in this set of transaction. We also observe that the assessee had not disputed the interest receivable transaction as international transaction per se. Therefore, we affirm the view of the Ld. DRP wherein it was held that the impugned transaction is of international transaction and has to be computed having regard to the ALP.
Taxability of interest income - case of the TPO that the assessee could not be able to reconcile the mismatch between the 26AS reflecting interest income as well as the profit and loss account showing interest income - We remit this issue to the file of TPO for examining afresh in the light of the new facts brought on record before the bench and decide the issue accordingly.
Loans and advances given to employees by the assessee and later written off by the assessee - Assessee fairly agreed that out of Rs. 10.95 Lakhs an amount Rs. 4,15,190/- has been wrongly debited to the profit and loss account and hence the same may kindly be disallowed and for the balance advance the matter may kindly be restored to the file of AO as the assessee is now in possession of the details of the employees with PAN Card and Aadhar Card to prove the identity of the genuineness of the transactions - We are of the view that in the interest of justice, this issue would also go back to the file of TPO for examining afresh. Ground number 8 is allowed for statistical purposes.
Security deposit given by the assessee for rental accommodation at the project site - main contention of the learned counsel for the assessee is that the assessee failed to provide the copies of agreements and other related documents before the lower authorities, and hence this disallowance has been made - HELD THAT:- We are of the view that heavens are not going to fall if one more opportunity would be given to the assessee to prove the genuineness of expenses in the shape of security advances given for the purpose of business. Therefore, in the interest of justice, we remit this issue also to the file of TPO for fresh adjudication.
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2024 (9) TMI 1515
Accrual of income in India or not - Permanent Establishment [P.E.] in India - attribution of profits - estimation of gross profit attributable to the assessee - HELD THAT:- Respectfully following the decision of the co-ordinate benches in the earlier assessment years [2022 (1) TMI 1465 - ITAT MUMBAI] for AY 2017-18, we hold that the assessee does not have a PE in India. Accordingly, Ground Nos. 2, 3 and 4 are decided in favour of the assessee.
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2024 (9) TMI 1514
Addition as unaccounted receipts - treated as advance received by the assessee, to the returned income - credibilty of statements of the Members of the Samiti - HELD THAT:- We find that the issue before us covered by the judgment of Narayansingh Gulabsinghji [2015 (4) TMI 622 - GUJARAT HIGH COURT] wherein held assessee was following the system regularly showing the mobilization account and the amount of advance were always stated in the subsequent AY against bills in that year and the revenue had not raised any objection for that treatment - when the learned CIT (Appeals) as well as the Tribunal have deleted the additions made by the Assessing Officer on account of "Mobilization Advance" in the year under consideration, it cannot be said that the learned CIT (Appeals) as well as the learned Tribunal have committed any error.
On a perusal of the statements of the Members of the Samiti, it is evident that they did not have full knowledge on the progress of work and that the Sub Divisional Engineer, Rural Water Supply, was looking after the matter. Various work completion certificates clearly denotes that the work was completed subsequently and the income was also offered for taxation in subsequent years.
We further find that it is beyond comprehension as to how the non–commensurate amount of work–in–progress amounting to ₹ 69,31,666, convert the advances as an income. The Assessing Officer has ultimately added ₹ 2,00,95,900, as an unaccounted receipts from Samiti. The Assessing Officer has failed to note that the same has already been shown in the books of account by way of liability. Therefore, is it not the case that the receipts are not accounted at all. Consequently, there is no instance to interfere with the cogent observations of the learned CIT(A). Accordingly, the order passed by the learned CIT(A) is upheld by dismissing the grounds raised by the Revenue.
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2024 (9) TMI 1513
Validity of assessment u/s 153A - unexplained cash credit u/s.68 - Sustainability of the additions made by the A.O in absence of any incriminating material found in the course of the search proceedings - Non obtaining a valid approval u/s.153D
Whether or not assessment proceedings in the case of the assessee company for A.Y.2010-11 were unabated as on the date on which search & seizure proceedings u/s. 132 of the Act were conducted on it, i.e. on 24.10.2017? - HELD THAT:- Admittedly, it is an undisputed fact that assessment proceedings in the case of the assessee company for the subject year, i.e. A.Y.2010-11 on the date of search i.e. on 24.10.2017 were unabated. On this aspect, neither anything to the contrary is discernible from the record nor any contention disputing the said factual position had been raised before us by the Ld. CIT-DR or stated in the report filed by the A.O.
Whether any incriminating material pertaining to the subject year, i.e. A.Y.2010-11 was found in the course of search & seizure proceedings? - We are of a firm conviction that now when the share application money received by the assessee company from the mentioned share applicants is found recorded in its audited books of accounts, and had formed part of its financial statements that were enclosed along with its original return of income for the said year, it is difficult to fathom that as to how the same could be brought within the meaning of "Incriminating material" found in the course of search proceedings conducted.
Rather, the fact that shares were issued by the assessee company to the aforementioned respective share applicants in lieu of the share application money that was received from them much prior to the search and seizure proceedings, therein fortifies the assessee's claim that the share application money that was received from the aforementioned parties could not be held as "incriminating material found in the course of search and seizure proceedings conducted on the assessee company on 24.10.2017.
Although it is the claim of the department that the assessee company during the year under consideration was in receipt of share application money of Rs.5.75 crore from 2 paper/shell companies but there can be no gainsaying that no incriminating material was found or unearthed during the course of search proceedings which would support the same. In fact, it is not even the case of the department that any incriminating material evidencing receipt of accommodation entries by the assessee company in the garb of share application money/share capital/share premium from the aforementioned investor/subscriber companies was found in the course of the search & seizure proceedings conducted on 24.10.2017.
Statements of the directors of the investor companies - We are unable to persuade ourselves to subscribe to the aforesaid claim of the department. As the statements of the directors of the investor companies were recorded by the DDIT(Inv.), Unit-IV, Kolkata much prior to the search & seizure proceedings conducted on the assessee company on 24.10.2017, therefore, the same cannot be brought within the meaning of incriminating material found or unearthed during the course of search & seizure proceedings conducted on the assessee company.
Thus, unable to concur with the A.O (as stated in his report dated 08.09.2023)/CIT-DR that the adverse statements of the directors of the investor companies, which were recorded much prior to the search conducted on the assessee company can be brought within the meaning of "incriminating evidence" found in the course of the search & seizure proceedings conducted on the assessee company on 24.10.2017 which, thus, vested jurisdiction with the A.O to make additions while framing the assessment u/s.153A of the Act.
Evasive reply of Shri Sanjay Agrawal, director of the assessee company in his statement recorded u/s. 132(4) dated 24.10.2017 and u/s. 131(1A) - We are of a firm conviction that the mere fact that Shri Sanjay Agrawal, director of the assessee company, had in his statement recorded u/s. 132(4) of the Act, dated 24.10.2017 failed to furnish details as regards the investments made by the investor/subscriber companies can by no stretch of imagination render the said statement as incriminating in nature. Also, we find no substance in the claim of the department that as Shri Sanjay Agrawal in his reply to Question No.7 of his statement recorded u/s.131(1A) of the Act dated 29.01.2018, had stated that the share capital/premium was received by the assessee company from Kolkata based investor companies through banking channels, therefore, the same rendered the said statement as incriminating in nature. At the threshold, we may observe that as the aforesaid statement dated 29.01.2018 (supra) was in itself recorded much after conclusion of the search proceedings, therefore, the same cannot be brought within the meaning of "incriminating material" found in the course of search & seizure proceedings conducted on the assessee company on 24.10.2017.
Insignificant financials of the investor companies - It is only where any incriminating material is found or unearthed in the course of search proceedings that the requisite jurisdiction to make addition regarding unabated assessment of the assessee company for the subject year would be vested with the A.O. We are of a strong conviction that drawing of adverse inferences regarding the financial credibility of the investor companies by the A.O de-hors finding of any incriminating material in the course of search & seizure proceedings would not vest jurisdiction with the A.O to make addition in its unabated assessment for the subject year, i.e. A.Y.2010-11
We are of a firm conviction that as the observation of the A.O that investors/subscriber companies did not have necessary creditworthiness to make investment towards share application money/share capital/share premium cannot be brought within the meaning of "incriminating material" found in the course of search & seizure proceedings conducted on the assessee company on 24.10.2017, therefore, the A.O on the said count itself was divested of his jurisdiction to make any addition while framing assessment in the unabated assessment of the assessee company for A.Y. 2010-11. 74.
We, thus, in terms of our aforesaid observations are of the considered view that as held by the Hon'ble Apex Court in the case of Abhisar Buildwell (P) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] in absence of any incriminating material found in the course of search proceedings, no addition regarding the unabated assessment of the assessee company for the subject year, i.e. A.Y.2010-11 could have been made. 75. Accordingly, in the backdrop of our aforesaid deliberations, we concur with the Ld. AR that the A.O had wrongly assumed jurisdiction and made an addition u/s. 68 of the Act while framing the assessment u/s. 143(3) r.w.s. 153A.
Absence of a valid approval u/s. 153D of the Jt. CIT, Range Central - A.O in the present case before us, had after forwarding the "draft assessment order" for approval u/s. 153D of the Act to the Jt. CIT on 26.12.2019 not only continued with the assessment proceedings, but had also after receiving the approval of the Jt. CIT, Range-Central, Raipur vide his letter, dated 30.12.2019, tinkered with the said "draft assessment order" which, thus, had resulted to material variance/difference between the final assessment order and the "draft assessment order" that was approved by the Jt. CIT. As observed by us hereinabove, it is neither the case of the department that the facts pertaining to continuation of the assessment proceedings after forwarding the "draft assessment order" for approval of the Jt. CIT, Range-Central, Raipur, i.e. from 27.12.2019 to 28.12.2019 were brought by the A.O to the notice of the Jt. CIT; or any fresh "draft assessment order" incorporating the aforementioned material facts was forwarded to the Jt. CIT, Range-Central, Raipur for his fresh approval u/s. 153D of the ActOnce the "draft assessment order" is approved by the Jt. CIT u/s. 153D of the Act, then the A.O thereafter is rendered as functus officio and can only pass the final assessment order as approved by the Jt. CIT. An analogy in support of our aforesaid view can safely be drawn from the judgment of the Hon'ble Apex Court in the case of Panchmahal Steel Ltd. Vs. U.A.Joshi, ITO and another [1996 (9) TMI 8 - SUPREME COURT]
In the present case before us not only the A.O had tinkered with the "draft assessment order" that was approved by the Jt. CIT, Range-Central, Raipur vide his letter dated 30.12.2019 but had also come up with a final assessment order, which as observed by us hereinabove is found to be materially different from the "draft assessment order" that was approved by the Jt. CIT on 30.12.2019.
Thus we are of a firm conviction that as the Jt. CIT, Range-Central, Raipur had no occasion to consider the changes/modifications/alteration carried out by the Dy.CIT(Central Circle)-2, Raipur to the "draft assessment order" that was approved by him on 30.12.2019; nor was informed of the assessment proceedings that were continued by the A.O after forwarding of the "draft assessment order" on 26.12.2019, therefore, we concur with the Ld. AR that the final assessment order was passed by the A.O without obtaining the approval of the Jt. CIT, Range-Central, Raipur as required per the mandate of Section 153D of the Act.Accordingly, in absence of a valid approval having been granted by the Jt. CIT, Range-Central, Raipur, based on which, the common final assessment order had been passed by the A.O u/s. 143(3) r.w.s. 153A/143(3) of the Act, dated 30.12.2019, we are of the view that the same cannot be sustained and is liable to be struck down on the said count itself.
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2024 (9) TMI 1512
Unexplained money u/s 69A - unexplained cash deposits in bank account - HELD THAT:- On going to the facts of the instant case, the submissions of the assessee along with bank statement filed by the assessee during the course of appellate proceedings before Ld. CIT(Appeals), the income tax returns for various years filed by the counsel for the assessee before us for our perusal, in our considered view, it is a fit case where the addition made by the assessing officer is liable to be deleted.
This is for the reason that the assessee is a trader in garments on semi-retail basis and is carrying on business on a small scale. The assessee did not file the return of income for the impugned year under consideration owing to the minor income earned by the assessee as a result of which the taxable income of the assessee was falling below the prescribed taxable limit and hence no tax was payable by the assessee for the impugned year under consideration.
Asssessee has also submitted that the assessee could not cause appearance before the assessing officer since the notices were issued at the email address of the erstwhile consultant of the assessee and therefore, the assessee could not respond to such notices. Accordingly, looking into the instant facts, the additions made by the assessing officer directed to be deleted and the appeal of the assessee is allowed.
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2024 (9) TMI 1511
Reopening of assessment u/s 147 - deemed dividends addition u/s 2(22)(e) - HELD THAT:- Merely alleging that the entire story made up by the assessee is clearly an afterthought would be of no help to revenue unless the factual evidence brought on record and contention of the appellant are disproved. CIT(A) has been justified in relying on the judgement delivered on similar fact in the case of Pradip Kumar Malhotra [2011 (8) TMI 16 - CALCUTTA HIGH COURT] Therefore, no interference is called for in the decision of the Ld. CIT(A) in holding that the payment of Rs. 3.00 crores on account of ‘security’ does not fall within the definition of ‘deemed dividends’ as per the provisions of section 2(22)(e).
In view of that matter we find no infirmity or perversity in the decision of the Ld. CIT(A) to the facts on record in quashing the reopening of the assessment u/s 147 of the Act and that payment of Rs. 3.00 crores on account of ‘security’ does not fall within the definition of ‘deemed dividends’ as per the provisions of section 2(22)(e) of the Act. Thus, the ground no. 1 and 2 of the department are rejected.
Advancement paid by the company to the appellant assessee hit by section 2(22)(e) - In the present case the assessee has leased prime properties at Chandigarh and received an advance rent in respect of the said premises leased out to the company, and such advance was to be later adjusted towards rent payable by the company. In our view, the amount of advance rent received by the assessee from the company would be a commercial transaction and it would certainly fall outside the purview of section 2(22)(e) - The assessee being having substantial interest in the company would not change the character of the transaction.
In the present case where we have a situation of contrary views having been expressed by the non-jurisdictional High Courts and there is no decision of M/s Vegetables Products Ltd [1973 (1) TMI 1 - SUPREME COURT] where it was held that where the provision is capable of more than one reasonable interpretation and different High Courts have taken different view on the matter, the view which is favourable to the assessee should be adopted.
In view of the same, we are inclined to follow the views expressed by Hon’ble Karnataka High Court in the case of Smt. Jamuna Vernekar [2021 (2) TMI 757 - KARNATAKA HIGH COURT] where it was observed that such loan or advance is given to a shareholder as a consequence of any further consideration which is beneficial to the company received from such a shareholder is a commercial transaction and it is outside the purview of section 2(22)(e) of the Act. In the present case, advance rent or even security was given in lieu of the use of rented premises in terms of lease agreement and therefore, such an advance rent and not even loan cannot be said to be deemed dividend within the meaning of the provision of section 2(22)(e) of the Act.
Thus, we hold that ‘advancement’ paid by the company to the appellant assessee amounting to Rs. 86,01,836/-is not hit by section 2(22)(e) and as such, the said addition is deleted. Thus, the ground. No.1 of the CO. of the assessee is allowed.
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2024 (9) TMI 1510
Rejection of registration u/s 12A(1)(ac)(iii) - application made in Form No.10AB of the Income-Tax Rules, section 12A(1)(ac)(ii) had inadvertently been typed on account of typographical error instead of section 12A(1)(ac)(iii) - HELD THAT:- It is evident that the appellant/assessee had committed a technical mistake in preparing the application under Section 12A(1)(ac)(ii) instead of 12A(1)(ac) of the Act. It was also brought to the notice of the Bench that the assessee had filed revised Form 10AB for seeking registration under the correct provisions i.e. Section 12A(1)(ac)(iii) of the Act which could have been considered by the CIT(Exemption).
In the light of the latest decisions in Sri Jeyamkonda Choleeswara Soundaranayakai Amman Kumbhabiskheka Mala Kuzhu and Raj Krishan Jain Charitable Trust’s cases [2024 (6) TMI 1400 - ITAT DELHI] the typographical error deserves to be corrected. Therefore, it would be appropriate and reasonable if the appeal is remanded back to the file of the CIT(Exemption) for fresh adjudication by considering amended application of the appellant under the required provisions. Appeal is allowed for statistical purposes.
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2024 (9) TMI 1509
Addition u/s 68 - Bogus share capital and share premium received - identity and creditworthiness of the subscriber companies and the genuineness of the transactions not proved
HELD THAT:- There is no justification for the huge premium charged by the assessee nor the assessee has been able to establish the same before the Ld. AO nor even before the Ld. CIT(A). As discussed above, mere identity of the creditor is not sufficient but the genuineness of the transaction as well as the creditworthiness of the creditor has to be established which the assessee has miserably failed to do.
The onus is heavy on the assessee in case of private placement of shares as the details are in the knowledge of the assessee and it ought to have established the creditworthiness of the share applicants/shareholders and the genuineness of the transactions. The directors also failed to appear before the Ld. AO.
Most of the applicants are not having any regular source of income except for income under the head income from other sources nor have strong financials to justify the investment with huge premium, as would be evident from Annexure ‘SP’ which forms part of the order. Neither the applicants are likely to receive any dividend nor the assessee has carried out any valuation to justify the huge premium charged. Accordingly, the transactions relating to issue of shares are not genuine nor the creditworthiness of the creditors has been established.
Hence in view of the decision of BST Infratech Ltd. [2024 (4) TMI 989 - CALCUTTA HIGH COURT] and others and the discussion made out by the Ld. CIT(A) to demonstrate that the applicants are shell companies, there does not appear to be any justification to interfere with the order of the Ld. CIT(A) and his order is hereby confirmed - Decided against assessee.
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2024 (9) TMI 1508
Rejection of claim of the assessee u/s 11 - assessee has not filed audit report in Form 10B along with return of income - CIT(A) rejected the grounds raised by the assessee with the observation that power of condonation of delay in filing Form 10B rest with CIT (Exemptions) only and not with CIT(A) - HELD THAT:- In the present case, the assessee has to file the audit report in Form 10B before the due date as per Rule 12A(1)(b) of the Rules. As observed that the above conditions of filing the Form 10B was relaxed by the CBDT in the earlier assessment years, therefore, it clearly shows that it is only directory in nature and not mandatory, since, it is in compliance with Rules framed for availing the benefit under the provisions of Sec.11. It is held that to be directory in nature. See Shri Chandraprabhuji Maharaj Jain Juna Mandir Rust [2019 (8) TMI 363 - MADRAS HIGH COURT] and Savier Kelavani Mandal (P.) Ltd. [2012 (9) TMI 1049 - GUJARAT HIGH COURT].
Thus allow the claim made by the assessee and, accordingly direct the Assessing Officer to allow the claim of the assessee u/s 11 of the Act. Decided in favour of assessee.
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2024 (9) TMI 1507
Intimation u/s 143(1) restricting TDS based on Rule 37BA of the Income Tax Rules - Rectification of mistake u/s 154 denied and credit of difference TDS could not be given - contention raised is that vide this communique the credit difference TDS for the assessment year 2019- 20 was denied to the assessee, without affording any opportunity to the appellant of being heard - HELD THAT:- There is nothing in the letter dated 23.01.2023 to suggest that the assessee was given any opportunity of being heard for taking up of its rectification application u/s 154 of the Act once again, and before rejecting the same by way of any decision on merits.
In the given situation, issuance of notice to the assessee was one of the essential requirements of section 154(3) of the Act to be complied with by the authority. At the cost of repetition, we mention that as submitted before us by Learned AR, no notice came to be issued by the ITO to the assessee for the purpose of any proceedings or before passing of any order or prior to the communique dated 23.1.2023 came to be issued.
For the foregoing reasons and findings, we find that once the department had allowed credit of TDS passed u/s 143(1) r.w.s. 154 of the Act realizing its mistake made in the Intimation, and the appeal filed by the assessee before Learned CIT(A) had become infructuous, neither there was any reason for issuance of letter dated 23.01.2023 by the same Assessing Officer, intimating the assessee that its grievance u/s 154 of the Act could not be accepted, and that the assessee could file the appeal against the order u/s 143(1) of the Act, particularly when the assessee had already filed an appeal on receipt of the Intimation, and same had become infructuous with the passing of the order dated 18.01.2023.
Impugned order passed by Learned CIT(A) is hereby set aside. We hereby direct the Assessing Officer to give effect to this judgment, and his own order whereby the mistake made in the Intimation issued initially was rectified and the assessee was given credit of TDS.
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2024 (9) TMI 1506
Accrual of Income in India - Taxability of receipts as 'fees for included services' under India-USA DTAA - addition on account of receipts from remittances on account of providing IT support services, maintenance services, etc., to its sister concerns in India for the reason that the operations of the assessee company is highly complicated and systems have been codified and methods to be adopted as per business need
AO has not accepted the assessee’s explanation above that the services rendered by it is not taxable as there is a clear nexus between services rendered and the compensation received by assessee company after going through the recital of service agreement entered into between assessee and its sister concern and treated the total remittances as fee for technical services u/s. 9(1)(vii)(b) of the Act and taxed the same u/s. 115A
Main argument of the assessee was that merely providing highly complicated services, as understood by Revenue and the same having nexus with the compensation received by it, by itself will not result in taxing such receipts as ‘fees for included services’ unless it satisfies the definition of FIS under DTAA between India and USA - HELD THAT:- We are in agreement with the arguments of ld.counsel that in order to constitute a receipt ‘fees for included services’ [FIS] under Article 12 of India-US DTAA, services rendered must make available technical knowledge, expertise, skill, know how or processes or consist of the development and transfer of a technical plan or technical design.
These services rendered by assessee to its sister concern and compensation received on account of the same does not fall in these typical categories mentioned in paragraph 4(b) which includes ‘making technology available’ nor to be taxable under Article 12 of the tax treaty as FIS, the payment should fit into the terminology ‘make available’ wherein the technical knowledge, skill etc., must remain with the person receiving the services even after the particular contract comes to an end. Want to back of that, in the present case there is no such clause in the service agreement which we have gone through and substantially reproduced in our order. The nature of services provided by assessee which the company merely centralizes the IT related services to achieve a standardized IT environment and payment towards access to developed standard business / engineering applications, data management by providing disaster recovery / back up services, helpdesk support services, user administration, maintenance of IT infrastructure support services, telecom services do not make available any technical knowledge, experience, skills, etc., to the recipient, since the recipient cannot at any time independently manage the IT environment and requires continuous re-course to the company for the said services. Hence the service provided by the assessee company do not fall within the ambit of ‘fee for included services’ as defined under Article 12 of India US DTAA and hence, not taxable in India.
Since the assessee is not having any PE in India and he is covered by India US DTAA and MOA, the nature of services rendered by the assessee on account of which received the remunerations cannot be described as ‘fee for included services’ and hence, not taxable in India. We also hold that the amount received cannot be treated as royalty even under the provisions of section 9(1)(vii), because the service rendered cannot constitute technical services so as to cover u/s. 9(1)(vii) of the Act. Hence, we delete the addition and allow this issue of assessee’s appeal on merits.
Point of reconciliation being difference in figures between Form No.26AS and Form No.15CA - We are of the view that Form No.15CA filed by the banker and the assessee was not in a position to verify the details forming part of Form No.15CA. The assessee has made claim as per Form No.26AS, this is subject to verification. The assessee will be provided necessary details as received by the AO in Form No.15CA and will confront the same to the assessee so that the assessee can peruse the same and provide suitable response and reconcile the figures. In term of the above, this particular verification is restored back to the file of the AO.
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2024 (9) TMI 1505
Income deemed to accrue or arise in India - income qualifies as FIS - nature of services is highly technical - DRP to conclude that the report or information generated by access to the software of assessee, can be called ‘Technical’ as with regard to the nature of services generating FIS - HELD THAT:- In the present case, only commercial information is transferred to the end user and not technical knowledge as required under Article 12(4)(b) to constitute FIS.
Clearly, commercial information/output from a technical application does not constitute FIS as there is no technical design, process or plan which has been transferred to the client providing enduring benefit.
Clause 2 of agreement clearly mentions all rights and test of Application remains with assessee and end users have not been given source code of the application which constitute technical knowledge an per 12(4)(b). In this context, we find force in the contention of Ld. Counsel, that when no source code was shared with the end users, said end user cannot be said to have been enabled for any enduring benefit. In present case, this test is not satisfied by any stretch as the contract is limited only to grant of access to the software during the subscription period and on the expiry of the subscription period, the access to the software gets terminated and the customer content also stands deleted.
Facts the 'make available’ clause is not satisfied, as erroneously held by the DRP. Decided in favour of assessee.
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2024 (9) TMI 1504
Rectification u/s 254 - whether the assessment in a case wherein requisition has been made u/s 132A of the Act, the jurisdiction to complete the assessment is to be governed by the provisions of section 153A of the Act? - HELD THAT:- Admittedly, in the present case, on perusal of the order of tribunal it is discernible that the tribunal had considered the submissions of both the parties and have expressed a positive view on the legal contention raised by the assessee. It is also apparent that the contentions raised in the present MA by the department are explained / clarified under an exhaustive submission. We herein may observe that such lengthy contention which needs to be looked into and dealt with under a long-drawn deliberation and debate, therefore, such arguments does not suggest a mistake apparent from record that can be pointed out for rectification invoking the provisions of section 254(2). Further, the prayer of the department to re-call, reinstitute and rehear the present matter would equate to review, which is absolutely not within the purview / powers of Tribunal conferred upon it by the provisions of section 254(2).
Regarding the mandate of law which allows the tribunal to deal with miscellaneous application of the appellant, it is to be appreciated that the tribunal is having limited powers to rectify any apparent and glaring mistake on the face of records. The tribunal is not expected to re-hear the entire case on merits or to revisit its earlier order and to deal with the merits on the basis of arguments by the appellant.
We reject the MA filed by the department, wherein a request has been made for rehearing / review of the earlier order of the tribunal in the garb of rectification of mistake by way of long drawn process of reasonings and arguments which is neither permissible nor allowed under the provisions of Act.
Since the department has squarely failed in point out any mistake apparent from records which calls for rectification within the provisions of section 254(2) in the impugned order of tribunal, thus, in absence of such preconditions to allow an application under section 254(2) which warrants for rectification of Tribunal's order. The lengthy contentions raised by the department in present MA cannot be accepted at this stage, thus, the same are rejected.
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2024 (9) TMI 1503
Imposition of duty and penalty on the appellant on the pilfered goods in terms of Section 45 of the Customs Act, 1962 read with Regulation 6 of Handling of Cargo in Customs Area Regulations - principal contention of the appellant is that the appellant was not a party to the Panchnama and security of the container was the prime responsibility of the CISF deployed at ICD Tughlaqabad - HELD THAT:- As is manifest from a plain reading of Section 45 (2) (b) of the Customs Act, 1962, the custodian is duty bound to not permit such goods to be removed from the customs area, except under and in accordance with the written permission of proper officer or otherwise dealt with. Section 45(3) of the Act provides that the custodian of the imported goods having been in custody is liable to pay duty in case they are pilfered while in custody. “Imported Goods” are defined in Section 2 (25) as goods brought into India from a place outside.
Admittedly, appellant is a Customs Cargo Service Provider. Admittedly, the goods in question had entered the customs area as defined under the Act and were placed in the custody of the appellant - In terms of Section 45 of the Act and the ‘HCCAR’, being the custodian of imported goods, appellant was burdened with the responsibility of safe custody of the imported goods. Appellant cannot escape such burden by shifting its responsibility upon the CISF and has therefore been rightly held liable to pay customs duty and penalty as prescribed under Section 45 (3) of the Act and Regulation 6 (1) (j) of HCCAR, 2009.
The contentions raised by the petitioner have been duly addressed - the appeal does not raise any substantial question of law.
There are no merit in the instant appeal. The appeal shall stand dismissed.
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