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Showing 241 to 260 of 1526 Records
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2023 (10) TMI 1286
Penalty u/s. 271(1)(c) - Reference to Explanation no. 7 while initiating penalty were made or not - application of arm’s length principles which resulted in the erosion of taxes payable in India to the extent of 24% - Base Erosion Theory was adopted and the application of arm’s length principles for making TP adjustment was not proper - Divergence of opinion between the Koltaka Bench and the Pune Bench of the Tribunal - Assessee had charged additional fees from its Indian AES in order to comply with Arm’s Length Standards, the additional fees would have been taxed in India in the hands of the appellant @ 10% on gross basis, while at the same time, the said additional fees would have been allowed or deducted in the hands of the payers - HELD THAT:- What is evident from the discussion herein above is that the CIT(A) did not accept the arguments on base erosion since the arguments were considered and dealt with in length by the ITAT Kolkatta Special Bench in the case.
According to the CIT(A) even if the assessee was charging lower fees for technical services to its Indian AEs and transfer pricing is proposed in the hands of the assessee, no deduction could be claimed by Indian AEs. Reading a particular paragraph of the observations of the AO’s order reproduced by the CIT(A) itself would indicate that there were two views possible and that the issue was debatable.
Therefore even if the deemed provision on the basis of Explanation 7 is pressed into service, then also there can be a case based on good faith and it cannot be termed as concealment.
What is evident is that the AO has found that the view of the ITAT in Cummins Inc [2016 (7) TMI 1689 - ITAT PUNE] on facts may not apply. Even though, a Mumbai Bench decision in the case of 3I INFOTECH LTD. [2010 (7) TMI 843 - ITAT MUMBAI] was on the subject of base erosion but the AO did not consider it appropriate as the Ahmedabad Bench had relied upon the Special Bench order of Kolkatta. These findings itself suggest that there are in fact more than two opinions on the subject of base erosion.
In the case of Toyota Kirloskar Motor (P) Ltd. V. Union of India [2019 (6) TMI 932 - KARNATAKA HIGH COURT]relied upon by Shri Soparkar, Explanation 7 of Section 271(1)(C) was under consideration where the Court held that the Explanation cannot be applied blindly in a routine manner to levy penalty on the additions made in the absence of any material to establish the concealing of income or furnishing inaccurate particulars. Moreover, they are independent and distinct from the assessment proceedings.
Also decided in VERIZON INDIA PVT. LTD. [2016 (8) TMI 1287 - DELHI HIGH COURT] in the absence of any overt act, which disclosed conscious and material suppression, invocation of Explanation 7 in a blanket manner could not only be injurious to the assessee but ultimately would be contrary to the purpose for which it was engrafted in the statute. It might lead to a rather peculiar situation where the assessees who might otherwise accept such determination may be forced to litigate further to escape the clutches of Explanation 7.
What is therefore evident from the above is that provisions of Section 271(1)(C) and Explanation 7 is clearly not applicable.
Also merely because the appeal of the assessee was admitted on the issue of quantum, the fact that the `Revenue’s appeal ipso-facto requires to be admitted, is not necessary. Penalty need to be deleted - Decided in favour of assessee.
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2023 (10) TMI 1285
Addition u/s 40A(3) - purchases made otherwise than by account payee cheque - HELD THAT:- There are undated confirmations that bear identical language. This brought the genuineness of the transactions into serious doubt.
According to us, even if we were to accept that the reason given in the confirmation letters was correct, that is, the appellant/assessee was a new entrant in the business, we believe, to allay concerns of the suppliers i.e., the above-mentioned concerns, payments could have been made through bank drafts or other modes, whereby, banking channels were used for the subject payments.
We find that the Tribunal has returned with a finding of fact that these confirmations were produced for the first time before the CIT(A).
The grounds of appeal preferred before us show that there is nothing stated that would indicate that the appellant/assessee has averred that the said observation was perverse. However, as indicated hereinabove, even if we were to assume that these confirmation letters were produced before the AO, it would still not help the cause of the assessee.
Clearly, payments made by the assessee to the concerns violated Section 40A(3) as they were not made through an account payee cheque drawn on a bank, account payee bank draft or through the use of electronic clearing system through a bank account, and therefore, to fall within the ambit of the 1977 circular, the appellant/assessee was required to establish the genuineness of the transactions. The appellant/assessee having failed to do so, led to the deduction being rightly disallowed for the subject payments.
Even if the petitioner’s/assessee’s case fell within the ambit of the 1977 circular, the petitioner/assessee could not have been allowed deductions on the subject payments made by the petitioner/assessee as the rule under which leeway was claimed did not exist for the AY in question. Decided against assessee.
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2023 (10) TMI 1284
Reopening of assessment u/s 147 - reason to believe - lump sum compensation receipts - HELD THAT:- As during the course of assessment proceedings, the petitioner had filed letters - also furnished the orders of the Court and related documents such as memorandum of understanding, entered into between the petitioner and the Ratna developers, ledger, account of the lump-sum compensation and the bank statement showing that the payment was made with regard to the lump sum compensation.
AO at the time of original assessment proceedings after satisfying himself about the correctness of the lump-sum compensation had passed an assessment order under section 143(3) of the Act? - there was no reason for the author of the notice u/s 148 to have reason to believe or come to a conclusion that the income had escaped assessment of the year under consideration.
Reading of the annual report and the auditor’s report indicates that in note 19 of other expenses and entry of lump-sum compensation was made. Even in response to the notice under Section 143(2) of the Act, a specific response was given under the headlump- sum compensation, producing the orders, the Court and relating documents to justify the lump-sum compensation paid by the company. Whereas the letter would indicate that a reference was made to memorandum of understanding between Ratna Bhumi Developers Private Limited and Ratna Developers along with bank statements earmarking the payments made to Ratna Developers for the compensation - during the entire scrutiny assessment, the question of the debit of an amount of Rs. 135.00 lakhs was gone into. In fact, the reasons recorded would indicate the fact that the very records were sought to be claimed as the basis of information for reopening.
Reasons recorded indicate that there was no new tangible material or information or fresh evidence which came into the possession of the assessing officer and the entire basis of the reasons to believe was founded on the original assessment proceedings.
Having built an opinion on the basis of the original assessment records which did not call for any clarifications and having accepted the same, it was not open for the Assessing Officer to review and recall that opinion and take a different stand based on the same set of facts and having accepted the view after scrutiny, as held by the Supreme Court in the decision in case of Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT].
Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of “change of opinion” as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.
Apparently, the twin condition i.e. existence of new tangible material and failure on the part of the assessee to disclose all material facts (truly and fully), does not exist. Thus, jurisdiction under Section 148 cannot be exercised. Decided in favour of assessee.
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2023 (10) TMI 1283
Deduction qua bad debts acquired from predecessor-in-interest on acquisition of its commercial vehicle division in a scheme of demerger - whether the successor-in-interest i.e., the respondent/assessee, could have written off the debts which were already turned bad? - HELD THAT:- According to us, this issue is no longer res integra, given the factual matrix arising in the instant matter and in view of the judgment T. Veerabhadra Rao [1985 (7) TMI 2 - SUPREME COURT].
This view has also found resonance with a judgment rendered in CIT v. Times Business Solution Ltd [2013 (4) TMI 370 - DELHI HIGH COURT].
Having regard to the factual position and the legal principles enunciated in the judgments referred to hereinabove, we are of the opinion that no interference is called for with the impugned order.
Disallowance concerning bad debts was correctly deleted - no substantial question of law.
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2023 (10) TMI 1282
Nature of receipt - non- compete fee - capital or revenue receipt - assessee had been restrained both directly and indirectly from undertaking any business which would compete with the business of WSIL - as per CIT(A) non- compete fee was a camouflage for payment of money or transfer of business - HELD THAT:- According to us, a bare perusal of what is recorded by the CIT( A) of his order would show that the consideration was paid against various agreements, which included the non-compete agreements.
A plain reading of the extract embedded in the aforementioned proceeding order does not convey that the assessee had conceded, as is sought to be portrayed before us, that the non-compete agreements were sham agreements and the consideration was artificially bifurcated into that which were paid for various assets [both fixed and movable] and transfer of IPR rights.
There is, in fact, no elucidation of the note said to have been submitted by the authorized representative of the assessee.
Tribunal, in our view, has applied the correct test, which is that there was no material on record for the CIT(A) to conclude that non- compete fee was a camouflage for payment of money or transfer of business.
Tribunal, in brief, is seeking to convey is that because the assessee had executed a non-compete agreement with WSIL, the conversation the CIT(A) had with the assessee could not be used to vary, add or subtract from the obligations contained in the said agreement.
Assessee had been restrained both directly and indirectly from undertaking any business which would compete with the business of WSIL.
Clearly, for the period in which the non-compete agreement was to operate, which in this case was 10 years, the assessee’s source of income had been clamped and, therefore, compensation received by him could only be treated as capital receipt. - Decided in favour of assessee.
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2023 (10) TMI 1281
Reopening of completed assessment - petitioner was not eligible for exemption u/s 10 AA being profits not derived from any export from its unit of Special Economic Zone - HELD THAT:- As in coming to the conclusion that the petitioner was not entitled or not eligible for exemption u/s 10AA and that the assessee had wrongly claimed the exemption, what is evident from reading the reasons and the order disposing the objections is that the author of these communications is the very same Officer who in response to a notice u/s 142 having been satisfied with the explanation given by the petitioner vide its communication dated 11.12.2019 passed an assessment order, accepting the explanation tendered by the petitioner in the communication of 11.12.2019.
This case can be no better example of a case where an Officer at the drop of the hat has sought to change his opinion which is contrary to the decision of the Supreme Court in the case of CIT Vs. Kelvinator of India Ltd [2010 (1) TMI 11 - SUPREME COURT]
Thus the petition is allowed. The impugned notice and the order disposing of objections are quashed and set aside. Decided in favour of asssessee.
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2023 (10) TMI 1280
Levy of fringe benefit tax (FBT) on expenditure claimed concerning advertisement - Assessee claimed that it may not be able to produce all bills, as the record was voluminous and maintained in different branches - CIT(A) had arrived at a solution, by giving assessee benefit to the extent that the bills were produced and balance amount [ 50%] was disallowed - HELD THAT:- Even though the Tribunal has given complete benefit of the expenditure claimed by assessee in terms of 115WB read with Section 115WC of the Income Tax Act, 1961 [in short, “the Act”], the respondent/assessee would be quite satisfied if the order of the CIT(A) is sustained instead.
As revenue, says that this may perhaps be the best outcome, given the fact that this is the matter which pertains to AY 2008-09 and even if this Court were to remand the matter to the AO, it will be difficult for the respondent/assessee to produce the record.
Since substantial number of bills were produced by the respondent/assessee qua which no defect was found, this may be a reasonable outcome in the present appeal. We tend to agree with the submissions made by both parties impugned order is set aside, and instead the order passed by the CIT(A) is restored.
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2023 (10) TMI 1279
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2023 (10) TMI 1278
Rectification u/s 154 of the intimation issued u/s 143(1)(a) - Deduction u/s 80P(2)(a)(i) denied - doctrine of merger - HELD THAT:- Application as per the mandate of sub-section (1A) of Section 154 of the Act was in itself not maintainable for the reason, that as per the doctrine of merger, after the intimation issued u/s 143(1)(a), dated 07.06.2019, had been subjected to appeal before the CIT(Appeals), then, the right of the assessee to seek rectification u/s 154 before the A.O was confined to only such matter/matters other than that which had been considered and decided by the CIT(Appeals).
As the issue in the present case, i.e., the entitlement of the assessee for claim of deduction u/s 80P(2)(a)(i) had already been considered and decided by the CIT(Appeals), therefore, the application thereafter filed by the assessee society u/s. 154, on the said count itself was not maintainable.
Accordingly, the order passed by the A.O. declining the assessee’s request for rectification vide his order u/s. 154 is approved in terms of our aforesaid observations.
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2023 (10) TMI 1277
Reopening of assessment u/s 147 - “reasons to believe” - unaccounted cash purchases - Non issue of valid notice u/s. 143(2) - HELD THAT:- We concur with the view taken by the CIT(Appeals) that the same clearly reveals non-application of mind on the part of the A.O who had initiated proceedings for making fishing and roving inquiries which cannot be justified to be drawn in the garb of proceedings u/s. 147 of the Act.
Apart from that, as the A.O had neither in the “reasons to believe” nor in the assessment order as well as in the course of proceedings before the CIT(A) placed on record any material/evidence which would evidence that the assessee had made the impugned unaccounted cash purchases from/through Shri Ramesh Kundanani therefore, as observed by the CIT(Appeals) and, rightly so, it can safely or in fact inescapably be inferred that there was no tangible material available with the A.O, on the basis of which, he could have arrived at a belief that the income of the assessee chargeable to tax had escaped assessment.
We concur with the view taken by the CIT(Appeals) that as the A.O had neither in the “reasons to believe” or in the body of the assessment order or in the course of the proceedings before the CIT(Appeals) placed on record any material/ evidence which would reveal that he had any tangible material available before him to arrive at a bonafide believe that income of the assessee chargeable to tax had escaped assessment, therefore, in absence of any such tangible material justifying the formation of bonafide belief, the very jurisdiction assumed by him u/s. 147 of the Act cannot be sustained.
No infirmity in the view taken by the CIT(Appeals), who had rightly observed that in the absence of any tangible material that would have justified the formation of a bonafide belief on the part of the A.O that the income of the assessee chargeable to tax had escaped assessment, the assumption of jurisdiction by the A.O u/s. 147 of the Act was devoid and bereft of any force of law.
Admittedly, the notice u/s. 143(2) of the Act could have been issued to the assessee by 30.09.2016. As observed by us hereinabove, the Ld. DR, on being confronted with the aforesaid claim of the assessee’s counsel, could not rebut the same. As the impugned assessment in the case of the assessee had been framed in the absence of any valid notice u/s. 143(2) of the Act, which is the foundation for passing a valid assessment order, we find substance in the claim of the Ld. AR that the impugned order passed by the A.O u/s. 147 r.w.s. 143(3) of the Act dated 28.10.2016 could not be sustained on the said count itself and was liable to be struck down - Appeal of assessee allowed.
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2023 (10) TMI 1276
Penalty u/s 270A - under-reporting of income - taxability of interest - Immunity from imposition of penalty u/s 270AA - assessee was unaware that interest income earned by is not exempt till assessment in its case for AY 2013-14 was completed wherein the same was disallowed and assessee opted for DTVSV Scheme for 3 years to wind up the tax liability - HELD THAT:- It is an admitted position that in its original return in its Income & Expenditure Account the assessee disclosed that during the year it earned interest income and miscellaneous/other incomes and complete details thereof were brought on record.
On the face of these facts it cannot be alleged that the assessee is guilty of underreporting and/or misreporting of income. It is not the case of the Revenue that anything more than what was declared by the assessee was found by the Revenue.
The case of the assessee all along has been that it was under bonafide belief that the impugned interest and miscellaneous income was exempt from tax on ground of “principle of mutuality” and therefore in its original return it claimed the same as exempt. As soon as the assessee became aware that the said income is taxable, it opted for DTVSV Scheme and revised its return offering the said income to tax and paid tax which has not been disputed by the Revenue.
It may be emphasised that the fact of earning the impugned interest and miscellaneous income has duly been disclosed in its accounts and in the original return with full details. However, due to ongoing litigation about the taxability of the said income and misconception of law, the assessee claimed it as exempt. Nonetheless, the fact remains that the assessee filed revised return, offered the said income to tax during the course of assessment proceedings itself.
As following the decisions in Prem Brothers Infrastructure LLP [2022 (6) TMI 130 - DELHI HIGH COURT] and Alrameez Construction (P) Ltd. [2023 (8) TMI 371 - ITAT MUMBAI] we hold that the impugned penalty is not exigible which we hereby vacate. Decided in favour of assessee.
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2023 (10) TMI 1275
Validity of reassessment proceedings - non-filing of the return of income and cash deposits made in the bank account - HELD THAT:- If the assessee had exempted income, the same had to be claimed in the return of income either in the earlier years or in the current AY. Whether the sources of cash deposits are subjected to tax or exempted from tax, the same must be reflected in the return of income in the year of receipt. If the assessee had past savings, the same will be known from the earlier returns of income. In fact, the assessee himself had admitted before the AO that in the earlier years, he had meager incomes. So, he can't take a hypothetical stance and say that he may be having the savings or exempted incomes to make cash deposits in the bank account. Further, there must be a source of information in front of the AO before recording the reasons to believe that there is an escapement of income. Though the assessee had not fulfilled the conditions to obtain the reasons recorded such as not filing the return in response to the notice issued u/s 148. To be fair and showing unbiased nature of action, the AO had supplied the reasons for the reopening suo moto.
As seen from the reasons narrated, it appears that there is no presumption or assumption against the assessee in reopening the case. When the twin situations are fulfilled viz. not filing the return of income and huge cash deposits which are disproportionate to the amounts of income admitted in the returns of earlier years; I find this is the sufficient reason to reopen the case u/s 147.
The admission of meager incomes in the earlier AY returns certainly forms a basis for belief that there is an escapement of income in the assessee's case. Therefore, the ground of appeal raised on the reopening of the case without having proper reasons is considered as not having merits, thus dismissed.
Cash deposits - as argued entire credit entries in the bank statement should not be treated as “income” of the assessee and it would be appropriate to note the background of the assessee`s case - We note that the peak credit in the bank account during the year is considered for making such additions. It is a measure to ensure that any unexplained credits during the year are taken into account. Therefore, respectfully following the decisions of ITAT Surat Bench [2018 (7) TMI 2326 - ITAT SURAT],[2018 (10) TMI 2012 - ITAT SURAT] and Ahmedabad Bench [2014 (5) TMI 1101 - ITAT AHMEDABAD],[2013 (6) TMI 522 - ITAT AHMEDABAD] [2013 (3) TMI 713 - ITAT AHMEDABAD] we direct the Assessing Officer to make addition in the hands of assessee to the partly - Assessee ground partly allowed.
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2023 (10) TMI 1274
Addition u/s 68 - unexplained credit - onus to prove “genuineness and creditworthiness” - Addition of advanced paid on the ground that the assessee has not furnished any agreement with the parties and only copy of ledger was furnished, which do not justify the payment of huge amount without any registered document - HELD THAT:- AO wrongly invoked the provision of section 68, when such amount was not credited in the books of account of assessee, rather it was a clear case of advance. Such investments are shown in the assets side of the balance sheet. The real issue before the AO was, if the advance or investment made by the assessee are from the known sources or from unexplained sources. We find that before CIT(A) the assessee filed detailed written submissions, which are not recorded here for the sake of brevity.
We further find that the CIT(A) on appreciation of such submissions recorded that source of advance to Rameshwaram developers was from the loan availed by the assessee. CIT(A) appreciated the fact that once, entire loan was added u/s 68, the application of fund by way of investment cannot be added again, which is otherwise double additions - stand of the assessee right from the beginning is that the assessee made advance for purchase of land for development. The land was ultimately transferred in favour of assessee in assessment year 2019- 20 purchases by way of two sale deeds on 02.07.2018 vide document No.11863 respectively, copy of such sale deed is available on record. All the payment for purchase of land was made by way of account payee cheques.
AO has not brought adverse material on record to doubt the transaction of land which was in consequence of the advance payment of the land. Hence, no infirmity or illegality in the order of CIT(A) in deleting the addition which is affirmed. Decided against revenue.
Addition u/s 68 - taxation u/s 115BBE - issuing show cause notice the assessee failed prove genuineness and creditworthiness of loan amount - HELD THAT:- We find that the assessee has already furnished all details in the comprehensive sheet mentioned; the name of the lender, PAN, amount of loan, repayment of loan, interest paid and Tax Deducted at Source (TDS in short) and the closing balance as on 31.03.2018 and complete pdf folder consisting of duly signed of confirmation of ITR, relevant bank statement of the depositors was furnished, even on furnishing such details, the Assessing Officer has not made any enquiry of his own either issuing notice under section 133(6) or 131 of the Act. The assessee has discharged its onus. The Assessing Officer without making any independent verification or enquiry prepared to make huge addition in Crores of rupees, which he clearly tantamount to travesty of justice. While making submissions before us, the ld AR for the assessee vehemently argued that the assessee has already repaid the entire loan amount of 14 lenders, the details of whom were furnished by assessee in a chart, showing the amount, date of repayment and the details of banks of lenders. Such facts were not disputed before us. We also find that the assessee furnished all such details of the lenders/ depositors. There is no allegation of assessing officer that any of such lenders/ creditors are part of syndicate of accommodation entry provider. There is no evidence that credit/ advance in the books of assessee was result of some circular transactions.
As decided in Ayachi Chandrashekhar Narsangji [2013 (12) TMI 372 - GUJARAT HIGH COURT] held that when loan amount has been repaid by the assessee in the immediately next year and the department has accepted the repayment of such loan without proving it, no addition can u/s 68 can be made. No justification in making the addition of unsecured loan amount as unexplained credit u/s 68 by assessing officer and confirmed by ld CIT(A) - Decided in favour of assessee.
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2023 (10) TMI 1273
Rejection of the request for adjournment non intimated to assessee - HELD THAT:- As stated by the AR and, rightly so, the failure on the part of the CIT(A) to intimate to the assessee the rejection of his request for adjournment had clearly divested him of an opportunity to defend his case by placing on record whatever material/submissions he had as on the date on which the appeal was fixed for hearing.
Reason that in case the rejection of the request for adjournment would have been intimated to the assessee, then he might have participated in the proceedings on the stipulated date of hearing, i.e., on 18.07.2023 and defended his case with whatever material that was available to him. As the CIT(A) had proceeded with and disposed off the appeal at the back of the assessee, concur with the claim of the AR that the latter had remained divested of his right to defend his case before the first appellate authority.
Matter, in all fairness and the interest of justice, requires to be restored to the file of the CIT(Appeals) with a direction to him to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee.
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2023 (10) TMI 1272
Reassessment of assessment u/s 147 - Reason to believe - unexplained credit - As per AO bogus entries or transactions were given or taken by the assessee - HELD THAT:- We are unable to see any details of the company/entity through which the assessee received alleged accommodation entry, date of transaction, nature of transaction viz as to whether it was share application money or unsecured loan or any other kind of bogus transaction and from which entity or company the assessee received alleged entry or undertaken transaction.
From the reasons it is also clear that the AO had proceeded to initiate reassessment proceedings u/s. 147 of the Act and to issue notices u/s. 148 without any examination, verification or evaluation of the facts and documentary evidence and report received from the officer/competent authority of search/survey operation during which alleged documentary evidence found and seized from Jain Brothers.
In the reasons recorded, it is nowhere mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or undertaken alleged transactions. It is also nowhere mentioned as to on which dates and through which mode and entity/companies the bogus entries and transactions were made by the assessee.
AO has vaguely referred to certain documentary evidences including a list of 195 companies found and seized during search/survey operation on Jain Brothers to allege that the assessee company (listed at S.No. 139) was involved in giving and taking bogus entries/transactions during the relevant financial year. The AO did not mention the details of transactions that represented unexplained income of the assessee company. Decided in favour of assessee.
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2023 (10) TMI 1271
Deduction u/s 80(IB)(10) in respect of POR project - whether granted deduction can be withdrawn in the subsequent years, without pointing out to any change in facts? - HELD THAT:- When the deduction under Section 80(IB)(10) of the Act was allowed to the assessee in the initial assessment year i.e. A.Y. 2012-13, then unless the said deduction is withdrawn, deduction u/s 80(IB)(10) cannot be withdrawn on identical set of facts.
Secondly, on the facts placed on record before us, and letter issued by GUDA, it is seen that the GUDA has in all the letters issued on various dates, maintained its position that in-principal approval in respect of POR Project was granted to the assessee on 30.30.2007.
While allowing deduction u/s 80(IB)(10) in respect of POR residency, CIT(A) has taken note of this fact while allowing the assessee’s appeal. During the course of arguments before us, the Ld. D.R. has not brought forth any substantive evidence to dispute or disprove the factual findings made by the CIT(A) on this issue, which are to the effect that the approval with respect to POR Project was granted to the assessee on 30.03.2007.
CIT(A) has also observed that in view of the provisions of Section 80(IB)(10) of the Act, when the approval of the Housing Project is obtained more than once, such Housing Project shall be deemed to have been approved on the date on which the building plan of such Housing Project is first approved by local authorities, which in the present case is 30.03.2007. Accordingly CIT(A) has not erred in holding that the assessee was eligible for deduction u/s 80(IB)(10) with respect to POR Project.
PMC Project - BU Permission was obtained in respect of only 349 Units out of a total of 376 Units - entire project was not approved within five years from the end of the Financial Year in which project was approved - HELD THAT:- , we are of the considered view that the assessee is eligible to claim deduction under Section 80-IB(10) of the Act with respect to those blocks, where BU Permission was obtained since the same were separate and distinguishable from those blocks for which BU Permission was not obtained. Accordingly, in our considered view the fact that assessee could not obtain BU Permission with respect to 27 Units comprising of three blocks, out of total of 276 Units, and had obtained BU Permission with respect to 349 Units, the assessee cannot be denied claim of deduction under Section 80-IB(10) with respect to the entire PMC Project. The assessee, in our considered view is eligible for claim of deduction under Section 80-IB(10) of the Act with respect to those Units for which BU Permission has been obtained.
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2023 (10) TMI 1270
Credit of TCS - intimation u/s 143(1) denying credit - TCS collected by the Excise Department of State of M.P. in respect of the purchase of liquor due to nonappearance in the PAN account of the assessee company but reflected in the accounts of the individual license holders who are directors and associates of the assessee company - HELD THAT:- Prima facie it is manifest from the record that actual transactions of purchases and sales of liquor have been carried out by the assessee company on the basis of the license granted in the name of the individual who have associated with the assessee company. This practice is otherwise prevailing and accepted by the concerned authorities of the State Government that after obtaining the license by the individuals they are usually forming association or partnership firm or a company to pool their resources as well as to avoid competition among themselves.
Though the licenses are given by the Excise Department to the individuals as per the policy of the Government however, if the actual business of purchase and sale of liquor is conducted by a Corporate entity formed by the individual license holders and corresponding income from the said business is also offered to tax by the said business entity and not by the individual license holders then the credit of advance tax collected from the transactions of purchase has to be allowed in the hands of the company which is the actual purchaser/buyer and also offering the income from the said business activity to tax. It is very pertinent and relevant for allowing the credit of TCS as who is actually subjected to the TCS on purchase of liquor from Excise Department and also accounting the transactions and consequential income offered to tax.
Whether the individual in whose name license is issued has claimed any credit of the said amount of TCS or not ? - Credit of the tax deducted at source/tax collected at source be given to the de-facto prayer/recipient of the amount which is subjected to the collection/deduction of tax as in whose hands the corresponding income is going to be assessed.
The only rider to this principle is that there should not be any double claim of credit. Accordingly if the assessee produces the record as well as undertaking/indemnity bond from the license holders that they have not claimed or not going to claim the credit of the said amount of TCS then the credit of the TCS on the transactions of purchase of liquor actually carried out by the assessee by using the license issued in name of the individuals shall be allowed to the assessee.
Since the relevant facts regarding the purchase, sales of liquor by the assessee and consequential income offered to tax by the assessee as well as the undertaking/indemnity from the individual license holders are required to be produced and verified/examined therefore, the matter is set aside to the record of the AO for limited purpose of examining the factual aspect of carrying out the transactions of purchase and sales and corresponding income offered to tax by the assessee as well as production of the undertaking/indemnity on behalf of the individual license holders for not claiming the credit of the said amount of TCS. The AO shall allow the claim of credit of TCS subject to verification of the above record and facts.
Appeal of assessee is allowed for statistical purposes.
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2023 (10) TMI 1269
Estimation of Net Profit before remuneration at 5.206% - rejection of books of accounts of the assessee u/s 145(3) - AO alleged that the assessee has lowered his profits by manipulating its books of accounts by deflating partners' remuneration and inflating other expenses to artificially compensate for the income surrendered by the assessee on account of survey done in the month of October 2014.
HELD THAT:- There is no error in the findings of Ld. CIT(A) that the books of accounts were rejected without cogent reasons. There is no allegation of change of any accounting practice by the assessee. There was no enquiry about the transactions reported in financials to corroborate there was any significant irregularity which made books inaccurate. It is a settled law held that in the absence of any material pointing towards falsehood of the books of accounts and no particular defect or discrepancy being pointed in the books of accounts, resort could not be made to rejecting the books of accounts by invoking Sec. 145(3), specially where same were duly audited by a statutory auditor.
It is a settled law, that merely because the Net Profit has declined, the AO cannot resort to rejecting the books of accounts.
The discretion exercised about how much remuneration shall be paid to the partners is upon the discretion of the assessee firm cannot be basis to doubt the net profit itself. It is a settled position of law that revenue cannot sit into the armchair of the businessman and question the reasonableness of expenditure.
We are of considered view that ad-hoc addition of Net Profit has not been sustained by Ld. CIT(A) on the basis of additional evidences before it.
Prudent approach is needed to examine the explanation given by an assessee for decline in profits and statistical examination of financial of past years alone cannot be basis of gearing up the Net Profit. Ld. CIT(A) has appreciated the transactions leading to lower Net profit and accepted explanation of assessee for fall in Net Profit while Ld. AO had examined the issue only on statistical parameters, which is not sustainable. The grounds raised by Revenue have no substance. The appeal of Revenue is dismissed.
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2023 (10) TMI 1268
Net prior period expenses - addition made as assessee has not proved that the same was crystallized during the year under consideration - HELD THAT:- The tribunal in earlier years has accepted the method adopted by the assessee where the liability of the work/services rendered in earlier year was allowed when the same was crystallized on receipt of the bill in the current assessment year. The Tribunal has also held that the Revenue has to adopt consistent approach and allow the expenditure which was crystallized during the year under consideration.
By respectfully following the above conclusion we direct the ld. A.O. to allow the claim of the assessee as per the findings of the Tribunal mentioned hereinabove [2021 (2) TMI 733 - ITAT MUMBAI] Appeal filed by the assessee is allowed.
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2023 (10) TMI 1267
Delayed employees’ contribution to ESIC / PF - addition u/s 36(1)(va) on account of late contribution - HELD THAT:- Matter is already decided by Supreme Court in the case of Checkmate Services P. Ltd. v/s. Commissioner of Income Tax-1 [2022 (10) TMI 617 - SUPREME COURT] against Assessee.
Also in the case of Pr. CIT v. Suzlon Energy Ltd. [2020 (2) TMI 792 - GUJARAT HIGH COURT] held that where assessee had not deposited employees' contributions towards PF and ESI within prescribed period in law and Assessing Officer by invoking provisions of section 36(1)(va) read with section 2(24)(x) made addition of aforesaid amount to income of assessee, impugned addition made to income of assessee was justified. Decided against assessee.
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