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Showing 241 to 260 of 1415 Records
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2023 (4) TMI 1176
Penalty u/s 271(1)(c) - depreciation on account of the increase in the cost of machinery due to foreign currency fluctuation losses - assessee accepted the position that the foreign currency fluctuation losses had to be capitalized, and therefore, logically, depreciation qua the same had to be allowed - Tribunal sustained the view of CIT(A) as deleted the penalty - HELD THAT:- The record shows that the respondent/assessee could not have claimed the loss on account of foreign currency as deductable expenditure, in view of the provisions of Section 43A of the Act.
This provision, broadly, mandates adjustment in the cost of an asset, depending on whether there was an increase or a reduction in the liability of the assessee at the time of making payment, on account of changes in the rate of exchange.It appears that this aspect emerged during scrutiny.
Assessee, as rightly pointed out accepted this position, without demur, even before the assessment order was passed, and accordingly, claimed depreciation on the increased cost of plant and machinery,qua which foreign currency fluctuation loss had been incurred.
The record shows that the respondent/assessee had preferred the appeal with CIT(A) only vis-a-vis that aspect of the assessment order whereby depreciation had not been granted by the AO.
As noted by the CIT(A) while dealing with the penalty order passed by the DCIT there was in fact no advantage accruing to the respondent/assessee in claiming foreign currency fluctuation loss as deductable expenditure, given the fact that it had unobserved losses.
Clearly, assessee, as noted even by the CIT(A), could not have gained anything by claiming foreign currency fluctuation loss as deductable expenditure, as it would have only added to the existing burgeoning losses.
At worst, in the instant case, the petitioner’s action could be construed as one where it sought to make a claim which was unsustainable in law. That by itself, in the given circumstance, would not call for imposition of penalty, as once the error was pointed out by the AO, the respondent/assessee made a course correction before the assessment order was passed.
The law on the issue of penalty is a well traversed course, both by this court as well as by the Supreme Court. (See Commissioner of Income Tax, Ahmedabad v. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] and Taneja Developers and Infrastructure Ltd. [2021 (4) TMI 275 - DELHI HIGH COURT]. It is only the application of law which has occurred in the facts and circumstances of the case.
No substantial question of law
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2023 (4) TMI 1175
Reopening of assessment u/s 147 - Validity of order u/s 148A - scope of new enactment of Section 148A - Period of limitation to issue notice issued u/s 148A(b) - notices issued u/s 148 referable to the old regime - HELD THAT:- As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time.
In Keenara Industries Pvt. Ltd. [2023 (3) TMI 104 - GUJARAT HIGH COURT] this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime.
The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions.
This Court is in agreement with the decision in Keenara Industries Pvt. Ltd. (supra), of this Court as well with Allahabad High Court decision in Rajeev Bansal [2023 (2) TMI 1081 - ALLAHABAD HIGH COURT]
Therefore, the point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act.
Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above.
All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction.
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2023 (4) TMI 1174
Rectification of mistake u/s 154 - amount relating to contingent liability amount been admittedly mentioned in Form 3CD but under the head “Amount in Income Tax Returns”, the figure of “0” is shown, instead of actual figure. - HELD THAT:- We observe from petition which contains an electronic dialogue on the Income Tax Portal between the Income Tax department and Petitioner with respect to the purported inconsistency with respect to the sum of Rs.42,94,12,920/- which the petitioner has disagreed with the following remarks :
“The proposed adjustment is incorrect. The proposed amount of Rs.42,94,12,920/- is already disclosed in Form 3CD clause 21(g) and also disallowed in the ITR computation refer Schedule BP Sr no 23.”
As observed from the rectification order dated 22nd November 2022 under Section 154 of the I.T.Act that is submitted on behalf of the petitioner, there is a figure of “0” in the “Amount in the Income Tax Returns” instead of the said figure of Rs.42,94,12,920/-. In our view, this is an exfacie error which deserves to be rectified.
We direct the respondent no.1 – Centralized Processing Centre to consider the application of the petitioner for rectification in the light of the above discussion, within a period of three months.
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2023 (4) TMI 1173
Validity of reassessment proceedings u/s 147 - notice after the expiry of 4 years from the end of the relevant assessment year - business loss claimed by the assessee, which is chargeable to tax has escaped assessment and the assessee has failed to disclose true and full particulars of income for the year under consideration - HELD THAT:- All the details sought by the AO were provided by the assessee during the course of scrutiny assessment proceedings, and the said details were accepted by the AO under section 143(3) of the Act. Further, from the perusal of reasons recorded for reopening the assessment, it is evident that the only basis available with the AO for initiating the impugned reassessment proceedings was the perusal of the profit and loss account and balance sheet i.e. the information which was already considered and examined during the course of original scrutiny assessment proceedings.
Reassessment proceedings u/s 147 of the Act, in the present case, are set aside being bad in law. Decided in favour of assessee.
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2023 (4) TMI 1172
Exemption u/s 10(1) - Whether research and development activities of the assessee forms integral part of the agricultural activities for the purpose of section 10(1)? - HELD THAT:- There is no dispute about the activities conducted by the assessee or the assessee conducting such activities year after the year. It is also not in dispute that for the earlier assessment year, 2012-13, initially, no such disallowance of claim under section 10(1) of the Act was made, but was made consequent to the order under section 263 of the Act. It is also not in dispute that the order under section 263 as well as the order under section 143(3) read with section 263 of the Act were quashed. It is also not in dispute that the activities conducted by the assessee in this case are similar to the activities of M/s. Nuziveedu Seeds Ltd. [2015 (3) TMI 938 - ITAT HYDERABAD]
It does not deny the fact that the activities of the assessee include such operations as are defined as the agricultural operations under section 2(1A) of the Act. Complaint of the learned Assessing Officer is that merely because the assessee is conducting the activities like sowing, weeding, irrigation, inter-cultivation etc., the same cannot be considered as agricultural operations u/s 2(1A) of the Act, because assessee conducts such activities as incidental to the main activity of producing foundation seeds which is a commercial activity in nature.
We are unable to agree with this argument advanced on behalf of the Revenue. Hon’ble High Court succinctly said that seed is a product of agricultural activity. When such agricultural activity is conducted and seeds are produced, merely because such seeds were sold commercially, the basic agricultural operations also cannot be dubbed as ‘commercial activities’, and not ‘agricultural activities’. Also see M/S PRABHAT AGRI BIOTECH LIMITED., HYDERABAD [2014 (2) TMI 1197 - ANDHRA PRADESH HIGH COURT] - Decided against revenue.
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2023 (4) TMI 1171
Rectification of mistake - assessee e-filed application u/s 154 seeking rectification of mistake while processing intimation u/s 143(1) and reversal of the disallowance u/s 40(b) - inaccuracy in adopting the correct figure of remuneration from audited financial statement - HELD THAT:- Admittedly, the figures entered towards partner remuneration in the P&L account are inconsistent with the tax audit report due to human error while making report under Section 44AB - The certificate of the tax auditor presenting correct position was also made available to the lower authorities.
On the face of inaccuracy in adopting the correct figure of remuneration from audited financial statement, an apparent mistake has been committed. In the absence of opportunity to the assessee contemplated in proviso to Section 143(1)(a) the difficulty has been compounded. The mistake could have been avoided while processing the return itself.
The mistake in adopting incorrect figure without opportunity mandated in law despite availability of correct position is a mistake of apparent nature and espouses the purpose rectification proceedings under Section 154 of the Act. The pedantic approach adopted by the CIT(A) does not take into account the denial of opportunity to assessee in this regard and thus cannot be countenanced.
We thus set aside the impugned order passed by the CIT(A) in question and restore the matter back to the file of the Assessing Officer for redetermination of the issue after taking note of correct facts. This will advance the principles of natural justice explicit in Section 143(1) - Opportunity shall be given to the assessee to present correct factual position on the admissible partner remuneration eligible for deduction under Section 40(b) of the Act. Appeal of the assessee is allowed for statistical purposes.
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2023 (4) TMI 1170
Deduction u/s 10AA - claim denied as assessee did not file return within time specified u/s 139(1) - HELD THAT:- On reading of the provisions of section 10AA of the Act we observe that no such proviso was introduced making mandatory filing of return within the due date specified under sub section (1) of section 139 of the Act for availing deduction under section 10AA of the Act.
An identical issue raised in the case of M/s. Opto Circuits (India) Limited [2022 (10) TMI 117 - ITAT BANGALORE]and M/S. OPTO CIRCUITS (INDIA) LIMITED [2022 (10) TMI 117 - ITAT BANGALORE] held that the denial of exemption claimed under section 10AA of the Act on the ground of not filing return of income within the due date specified under section 139(1) of the Act is not legally correct.
For the year under consideration i.e. assessment year 2018-19 there is no mandatory requirement of filing the return of income within the due date specified under section 139(1)of the Act for availing exemption under section 10AA of the Act. Assessee appeal allowed.
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2023 (4) TMI 1169
Disallowance of bad debts written off u/s 36(1)(vii) - HELD THAT:- After going through entire material placed before us, we notice that similar issue has been decided by the coordinate bench of the Tribunal in assessee’s own case for AY 2014-15 [2022 (3) TMI 669 - ITAT BANGALORE] as held that assessee bank is eligible to claim and be allowed write off of the bad debts u/s.36(1)(vii) of the Act and we therefore reverse and delete the disallowance made by the Assessing Officer in this regard. Decided in favour of assessee.
Deduction u/s. 36(1)(viii) for reserve credit - AO observed that the assessee has not transferred any amount to the special reserve as mentioned in section 36(1)(viii) - HELD THAT:- As decided in assessee own case [2022 (3) TMI 669 - ITAT BANGALORE] reserve created even in subsequent / succeeding years; however before the finalization of grant of deduction under Section 36(1)(viii) of the Act i.e. as per date of order of assessment is required to be considered while allowing the assessees claim for deduction under Section 36(1)(viii) of the Act. As in the case of Vijaya Bank [2022 (3) TMI 669 - ITAT BANGALORE] and hold that reserve credit in the subsequent or succeeding years before the initiation of grant of deduction u/s 36(1)(viii) of the Act is required to be considered while allowing the assessee’s claim for the deduction under the said section. We, therefore direct the AO to examine and allow the assessee’s claim accordingly.
TDS u/s 194J - Disallowance of expenditure u/s 40(a)(ia) - expenditure for ATM switch charges to National Payment Corporation of India (NPCI) and debited under the head other expenses - assessee stated that no TDS was made on the NFS ATM charges and that ATM Switching facility provided by NPCI does not involve any human intervention and is a seamless transaction as the same is based on settlement reports - HELD THAT:- As decided in assessee own case [2022 (3) TMI 669 - ITAT BANGALORE] following the said decision of Canara Bank [2018 (9) TMI 2109 - ITAT BANGALORE] payments made to NPCI towards NFS ATM charges cannot be considered as “technical services” within the meaning of sec.194J of the Act. Hence there is no liability to deduct tax at source from those payments. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance. Decided in favour of assessee.
Penalty for violation of any direction of RBI - allowable deduction u/s. 37 or not? - HELD THAT:- We note that assessee has paid Rs.5.16 lakhs as penalty for deficiencies in exchange of notes and coins/ remittances sent to RBI/operations of currency chest etc. AR could not controvert the case law relied by the ld. CIT(A). However, the violations of Banking Regulation Act and RBI directions is not clear from the order of authorities below as well as from the submissions made by the ld. AR of the assessee - we think it fit to remit the issue to the AO for determination of the nature of violation of Banking Regulation Act / RBI directions and decide the issue as per law. The assessee is directed to provide necessary details. Accordingly this issue is allowed for statistical purposes.
MAT applicability u/s 115JB - assessee submitted that it was a public sector bank and not a company under proviso to section 211(2) of the Companies Act, thus not covered under section 115JB(2)(b) and hence book profit was not computed - HELD THAT:- As decided in assessee’s own case for AY 2014-15 [2022 (3) TMI 669 - ITAT BANGALORE] CIT(A) should considered the effect of provisions of sec. 51 of BR Act and accordingly he should have appreciated the contentions of the assessee on the definition of “banking company”, provisions of sec.211(2) of the Companies Act etc. Since these aspects go to the root of the issue, in our view, this issue needs to be examined at the end of Ld CIT(A) afresh.
Considering the submission of the ld. DR that SLP has been accepted by the Supreme Court on this issue, but the status of the same could not be furnished by the ld. DR. In view of this, respectfully following the decision rendered by the coordinate bench in assessee’s own case, we restore this issue of applicability of the provisions of section 115JB to the CIT(A) with similar direction.
Computation of the deduction u/s. 36(1)(viia) - HELD THAT:- As decided by the co-ordinate bench of this Tribunal in the case of VIJAYA BANK [2018 (1) TMI 1575 - ITAT BANGALORE] assessee is not disputing the classification of rural branches made by the Assessing Officer and accepts the AAA [Aggregate Rural Advances] as arrived at by the Assessing Officer of the order of assessment and in this context pleaded that the matter need not be remanded back to the Assessing Officer. In view of the aforesaid submissions of the learned Authorised Representative of the assessee, we hold that the assessee is entitled to deduction by considering the AAA as worked out by Assessing Officer and direct the Assessing Officer to rework the deduction under Section 36(1)(viia) - Decided against revenue.
Depreciation on various categories of securities as per classification of the RBI in its computation of income - HELD THAT:- Similar issue has been decided by the coordinate Bench in [2022 (3) TMI 669 - ITAT BANGALORE] wherein decision of CIT(A) with respect to depreciation on HTM securities is upheld and the appeal of the revenue on this issue is dismissed.
Disallowance under Section 14A - assessee made suo-moto addition - HELD THAT:- As decided by the coordinate Bench of the Tribunal in assessee’s own case for the AY 2014-15 [2022 (3) TMI 669 - ITAT BANGALORE] A.R relied upon certain other decisions in order to contend that no disallowance u/s 14A is called for. In view of the subsequent development of law on this issue, in our considered view, this issue requires fresh examination at the end of AO by duly considering the various decisions on the subject - we set aside the order of the CIT(A) and restore the issue to the AO for examining it afresh in the light of above cited details. Accordingly the grounds raised by the revenue is allowed for statistical purposes.
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2023 (4) TMI 1168
Nature of expenditure - Addition of licence fee as capital expenditure - as per AO Act provides for such capital expenditure to be amortised as per provision of section 35ABB over unexpired portion of the licence. The unexpired portion of the licence from assessee’s document is 8.5 years - assessee has contended that in three preceding AY(s) and in succeeding AY 2011-12 the said payment of licence fee has been allowed as revenue expenditure - HELD THAT:- A different view has been taken by the Ld. AO in AY 2010-11 presently under consideration. The contention of the assessee could not be controverted by the Ld. DR. In our view, a different approach without there being variation in facts or in law is not justified. CIT(A) has placed reliance on the decision of Bharti Hexacom Limited [2013 (12) TMI 1115 - DELHI HIGH COURT] as also on the decision of Delhi Tribunal in the case of M/s. MTNL [2006 (2) TMI 224 - ITAT DELHI-G] for recording his findings in favour of the assessee with which we concur. Accordingly ground No. 1 of the Revenue is rejected.
Addition u/s 41(1) - unexplained creditors - entire amount standing in the name of sundry creditors as reflected in the Balance Sheet as on 31.03.2010 for want of submission by the assessee of details as per the format devised by him under section 41(1) - addition deleted by the Ld. CIT(A) - HELD THAT:- As per CIT-A addition under section 41(1) can be made only if a genuine trade liability has ceased to exist for the reasons enumerated in section 41(1) of the Act. We agree. CIT(A) has recorded the finding that the Ld. AO has not made the impugned addition by holding that these liabilities ceased to exist during the year.
None of the conditions precedent for applicability of the provisions of section 41(1) is fulfilled in the case of the assessee. The Ld. AO was thereof not justified at all to invoke the provisions of section 41(1) to make the impugned addition and the Ld. CIT(A) has rightly observed that the impugned addition can be deleted on this ground alone.O was not justified in treating the entire trade creditors as bogus when majority of them were well-established public sector undertakings or limited companies e.g. BSNL, MTNL, Bharti Airtel Ltd., HCT Info-systems Ltd. and Tata Tele Services Ltd. etc. as observed by the Ld. CIT(A) whose identity cannot be questioned. Decided in favour of assessee.
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2023 (4) TMI 1167
Maintainability of the appeal against company as dissolved - assessee company does not exist anymore in the eye of law and the Official Liquidator has discharged his duties and relieved as OL - Revenue relied on case of CIT vs. M/s. Gopal Shri Scrips Pvt. Ltd. [2019 (3) TMI 743 - SC ORDER] wherein it was held that proceedings can be initiated and continued even after strike off of names of companies remain - also in Dwearka Portfolio Pvt. Ltd. [2022 (5) TMI 1385 - ITAT DELHI] ruled that even if the company has been struck off from the register of Companies, an appeal filed by it against the revenue does not become ineffective or infructous and is maintainable
HELD THAT:- The revenue in the present Misc. Application quoting the cases above which are in the nature of cases the “company name has been struck off from the register of Companies” under section 560(5) of the Companies Act, 1956.
But in the present case of the assessee here in, the Hon’ble High Court of Gujarat dissolved assessee company under section 481 of the Companies Act. Therefore in the present Misc. Application, citing new of the Judgments on the ground of “striking off the name of the company and consequence thereon” will not be applicable to the facts of the present case. Thus the Revenue is re-arguing the appeal with new grounds and case laws, which is not permitted, since the Appellate Tribunal u/s. 254 of the Act, do not have the power to review his own order. Therefore the Present Misc. Application filed by the Revenue is hereby dismissed.
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2023 (4) TMI 1166
Addition u/s 69A - cash deposit in the bank account by the assessee as unexplained money - HELD THAT:- Assessee has earned tuition fees by providing tuition to various students and received cash in consideration of the same - supporting, account books, relevant vouchers and the documentary evidences were not considered during the course of assessment proceedings by the A.O.
CIT(A) ought to have consider the material on record for adjudicating the issue contested in the appeal on merit. Section 250(6) contemplates that the first appellate authority would determine point in dispute and therefore, record reason on such point in support of his conclusion. Therefore, restore this case to the file of the ld. CIT(A) for adjudicating on merit after affording opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2023 (4) TMI 1165
TDS u/s 194H - incentive paid to various parties - Non deduction of tds - addition u/s 40(a)(ia) - CIT(A) has viewed that the discount given to the various parties by the assessee in the nature of turnover discount did not attract TDS u/s 194H and assessee in the instant case did not have any right or control over the goods sold to the retailers and the goods hold by the retailers on their own behalf and not on behalf of the appellant - HELD THAT:- CIT(A) rightly observed that the payment of incentive are made to the various parties by the assessee leading to transfer of ownership in the goods (with complete risk and rewards) the assessee in such a situation did not have any right or control over the goods sold to the retailers, as the retailers held the goods on their own behalf and not on behalf of the assessee and therefore they did not act as an agents of the assessee as such no TDS is deductible u/s 194H as it is not applicable in the case of assessee. Thus we confirmed the order passed by the ld. CIT(A) - Decided against revenue.
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2023 (4) TMI 1164
Revision u/s 263 by CIT - Allowability of deduction u/s.57 - nexus between interest received from the firm and the interest paid to the bank on the term loan not developed - assessee claimed net interest income after claiming interest expenses u/s.57, i.e., interest paid on SBI term loan was claimed as expenditure allowable u/s.57 - assessee has taken term loan from SBI which was given to the partnership firm - HELD THAT:- Assessee has received interest on capital contribution which has been shown separately. Apart from that, it has paid interest on loan taken from the assessee - The loan taken by the firm from the assessee, in turn was taken by the assessee from the SBI. Thus, the assessee received interest on loan given to the firm and on the same loan taken from the bank, the assessee has paid interest.
Thus, there was direct nexus between earning of the interest income and interest paid. Accordingly, the netting of the net interest income after deducting the interest paid to the bank had direct nexus which is allowable under Section 57.
This aspect of the matter was also examined by the AO and assessee has filed all the replies which were called upon by the AO. No infirmity in allowing the interest paid by the AO and therefore, order of ld. PCIT cannot be sustained, because on merits the assessment order is neither erroneous nor prejudicial to the interest of the Revenue and therefore, on merits, the appeal of the assessee is allowed.
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2023 (4) TMI 1163
Income deemed to accrue or arise in India - Royalty or Fees for Technical Services - assessee received consideration for project support services such as Midrange support services, Database support services, Service delivery management, and support services in relation to the Standard Chartered Bank Project from Atos India - AO held the consideration received by the assessee from the Indian entity is nothing but Royalty within the definition as per Article 12(3) of the India Singapore DTAA - HELD THAT:- We find the coordinate bench of the Tribunal in assessee’s own case [2021 (4) TMI 446 - ITAT MUMBAI] held that payment received by the assessee from various projects related services, including Standard Chartered Bank Project, would not qualify as Royalty/Fees for Technical Services.
The issue arising in the present appeal is recurring in nature and has been decided by the coordinate bench of the Tribunal in the preceding assessment years. Thus we uphold the plea of the assessee and direct the AO to delete the impugned addition on account of receipts from Atos India towards project-related services pertaining to Standard Chartered Bank Project.
Taxability of receipts from Atos India for the support services pursuant to the Regional Service Agreement - AO only referred to the Regional Support Agreement entered by the assessee with Atos India, but neither analysed the various services rendered by the assessee under the aforesaid agreement nor analysed the terms of the agreement to come to the conclusion that the receipts are in the nature of Royalty and/or Fees for Technical Services under the Act and the DTAA.
DRP also did not analyse any of the above aspects and rejected the objections filed by the assessee by merely placing reliance upon its directions rendered in assessee’s own case for the assessment year 2014-15, wherein this issue was not involved. Since the factual aspect pertaining to the taxability of receipt under the Regional Service Agreement has not been properly examined by any of the lower authorities vis-à-vis the terms of the agreement and services rendered therein, we deem it appropriate to remand this issue to the file of AO for de novo adjudication - Assessee ground allowed for statistical purposes.
Short grant of credit of TDS - This issue is restored to the file of the AO with the direction to grant TDS credit, in accordance with the law, after conducting the necessary verification.
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2023 (4) TMI 1162
Revision u/s 263 - Assessee Declared Income in Survey u/s 133A - As per CIT provisions of section 115BBE were applicable to the case of the assessee and the AO should have assessed the Undisclosed Income declared during the survey u/s.69, 69A and 69C - Assessee Declared Income in Survey u/s 133A - HELD THAT:- Pr.CIT has himself observed that the Undisclosed Income have been rightly credited to P & L A/C. Once, the ld.Pr.CIT has observed that the undisclosed income declared during survey of has been Correctly credited to P&L A/c, he cannot advocate that the declaration should have been assessed u/s.69, 69A and 69C. The amounts assessed under Section 69, 69A and 69C are never part of P & L A/c. Whereas in the case under consideration, the assessee has included survey declaration in P & L A/c and the ld.Pr.CIT has observed it to be correct entry. In these facts and circumstances of the case, the Assessment Order cannot be said to be erroneous and prejudicial to the interest of the Revenue.
Therefore, we hold the order u/s.263 as not sustainable in law. Thus, the ground of appeal number 1 & 5 of the assessee are allowed.
CIT’s observation that AO has not verified the survey disclosure - AO had verified during the scrutiny proceedings that assessee has offered the amount disclosed during the survey for taxation. The AO based on the submission has satisfied himself that the amount disclosed during the survey has been properly reflected by the assessee in the return of income. After satisfying himself, the AO passed the order under section 143(3) of the AcT Pr.CIT’s observation that AO has not verified the survey disclosure is not based on facts. Therefore, the order passed by the AO is not erroneous. Once the AO takes a view on a particular issue after considering all facts, the ld.Pr.CIT may or may not agree with the view taken by the AO, but that does not mean that the assessment order is erroneous.
When two views are legally possible and AO adopts one view the Assessment Order cannot be said to be erroneous for the ld.Pr.CIT to invoke jurisdiction u/s.263. Decided in favour of assessee.
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2023 (4) TMI 1161
Characterization of income - addition made towards agricultural income treating the same as income from other sources - HELD THAT:- Respectfully following the order of the Tribunal in assessee’s own case for the preceding 3 A.Ys,[2022 (7) TMI 493 - ITAT HYDERABAD] we are of the considered opinion that an amount of Rs.40,000/- may reasonably be estimated as agricultural income for the impugned A.Y. We accordingly modify the order of the CIT (A) and direct the Assessing Officer to give benefit as agricultural income and the balance amount is to be treated as “income from other sources”. Ground of appeal No.2 by the assessee is accordingly partly allowed.
Correct head of income - Cash received as rental income - Income from house property or house property - addition by treating the same as “income from other sources” as against rental income shown by the assessee on the ground that the assessee could not prove the existence of the persons against whom he has shown the cash receipt as rental income as those persons were not in existence and were not traceable - HELD THAT:- We do not find any force in the above argument of the learned Counsel for the assessee. It is an admitted fact that the assessee was giving loan against mortgage of the property and such interest income received towards loan extended against mortgage of properties cannot partake the character of rental income. We find the learned CIT (A) while upholding the addition has also given a finding that since the assessee has already offered the rental income under the head income from house property as per remand report, the addition should be limited to the disallowance u/s 24(b) of the Act only which in our opinion is just and proper and needs no interference. Accordingly, ground of appeal No.3 by the assessee is dismissed.
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2023 (4) TMI 1160
Income deemed to accrue or arise in India - receipts from services relating to Progressive Cavity Pump system (PCP) and rental of tools/equipments to Cairn India’ and ONGC - nature of business profits to be taxed under section 44BB or Fee for Technical Services (FTS) - assessee is a non-resident corporate entity incorporated under the laws of Singapore and a tax resident of Singapore - HELD THAT:- Once the services related to prospecting, exploration, extraction or production of mineral oils is treated as in the nature of mining or like projects, automatically it will fall out of the ambit of FTS as defined in Explanation 2 to section 9(1)(vii) of the Act, hence, cannot be treated as FTS - Language used in section 44BB makes its scope very wide and encompasses not only the services or facilities in connection with prospecting for, or extraction, or production of mineral oils but also supply of plant and machinery on hire to use or ought to be used for the said purpose.
In the facts of the present case, undisputedly, the service provided by the assessee to Cairn India is in connection with activity of prospecting for, or extraction, or production of mineral oils. Even, the hiring/leasing of tools/equipments to both Cairn India and ONGC is in connection with the same activity. Merely because the services provided are of technical nature, that by itself, would not make the receipts FTS when there is special provision in the shape of section 44BB engrafted in the Statute to bring such kind of receipts for the purpose of taxation in India under the head ‘profits and gains from business or profession’.
AO, while concluding that the receipts are in the nature of FTS, has heavily relied upon a decision of the Uttarakhand High Court in case of CIT Vs. ONGC [2005 (12) TMI 46 - UTTARANCHAL HIGH COURT] However, we are surprised to note that, while doing so, he has completely ignored the decision of the Hon’ble Supreme Court in case of ONGC Vs. CIT [2015 (7) TMI 91 - SUPREME COURT] wherein the very same decision of the Hon’ble Uttarakhand High Court was reversed.
As per SC in above case if the work/services in terms of a particular agreement is directly associated or inextricably linked with prospecting, extraction or production of mineral oil, then the receipts have to be taxed as business profits under section 44BB of the Act. Thus, in our view, the scope and ambit of section 44BB of the Act is wide enough to include the receipts of the assessee from Cairn India and ONGC. At this stage, it is relevant to observe, in assessee’s own case for assessment year 2019-20, the Assessing Officer, while considering similar nature of receipts from ONGC, has accepted assessee’s claim under section 44BB of the Act.
We cannot sustain the decision of the Assessing Officer to treat the receipt as FTS. Accordingly, we direct the Assessing Officer to compute assessee’s income under section 44BB of the Act. This ground is allowed.
Taxability of the receipts from repair services stated to have been rendered directly from head office to Cairn India and ONGC - HELD THAT:- As observed that the receipts in dispute are from repair of tools and equipments used by Cairn India and ONGC for extraction or exploration of mineral oil. In case of ONGC Vs. CIT [2015 (7) TMI 91 - SUPREME COURT] while interpreting the provisions contained under section 44BB of the Act in the context of scope of work covered under the contract, has considered the entire gamut of work executed under the contract, including repair, training of personnel etc. and held that the pith and substance of each of the contracts is inextricably connected with prospecting, extraction or production of mineral oil - we hold that the receipts from repair work is inextricably connected with prospecting, extraction or production of mineral oil, hence, such receipt has to be taxed under section 44BB of the Act. We order accordingly. This ground is partly allowed.
Treating the receipts from Cameron India’ towards business support services as FTS - HELD THAT:- The expression ‘make available’ if read in conjunction with, which enables the person acquiring the services to apply the technology contained therein’, would mean that the recipient of service will be in a position to acquire the technical knowledge, experience, skill etc so that it equips the recipient to apply such technical knowledge, experience, skill etc. by himself independently without the aid and assistance of the service provider. In the facts of the present appeal, the departmental authorities have failed to prove this fact through any cogent material brought on record. The nature of services enumerated earlier would make it clear that these are routine managerial and partly consultancy services to provide business support to the subsidiary. There is nothing on record to suggest that while rendering services, the assessee has made available any technical knowledge, know-how, skill etc. enabling the recipient of service to apply them independently. That being the case, in our considered opinion, the conditions of section 12(4)(b) are not satisfied. Therefore, we hold that the receipts are not in the nature of FTS. This ground is allowed.
Addition treating the reimbursement of expenses as FTS - HELD THAT:- An amount on which, the assessee has paid service tax on reverse charge mechanism is actually expenditure incurred by the assessee itself on its own behalf and not in the nature of reimbursement. As it appears, the Assessing Officer has treated this amount as income under factual misconception. Therefore, we are inclined to delete the addition made as FTS.
For the balance amount it is the claim of the assessee that these are reimbursements from Cameron Indian on cost to cost basis without any markup. The assessee has explained before the Assessing Office that the assessee was expecting to enter into new contracts with Cairn India but Cairn India awarded the contract to Cameron India. The assessee submitted that since the assessee had incurred certain expenses in relation to ongoing work, they were cross charged to Cameron India without any markup on pure cost to cost basis. In principle, we accept assessee’s contention that reimbursement of expenses on cost to cost basis without any markup does not have any profit element - as observed, before the Assessing Officer and learned DRP, the assessee did make submission to the effect that given sufficient time, he will be in a position to submit the agreement between Cairn India and Cameron India - we restore this issue to the Assessing Officer with a direction to examine assessee’s claim afresh with reference to evidences already available on record or which the assessee may file in course of proceeding.
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2023 (4) TMI 1159
Penalty u/s 271(1)(c) - additions made on estimation basis - HELD THAT:- It is seen from the records that the additions were made on the basis of estimation and part relief was granted by the Appellate Authority.
AO ought not to have imposed penalty. We therefore, considering the binding precedent as relied by the Ld. Counsel for the assessee, direct the AO to delete the penalty imposed u/s 271(1)(c) of the Act to the assessee. Grounds raised by the assessee are hence, allowed.
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2023 (4) TMI 1158
Condoning the delay in filing of Form 10B - assessee has not filed the audit report electronically - HELD THAT:- As non-compliance of filing Form 10B along with return of income electronically, the assessee failed to show reasonable cause which prevented to file the same along with the return of income. Therefore, we find no infirmity in the order of CIT(A) and it is justified. Thus, ground No. 1 raised by the assessee is dismissed.
Exemption u/s 11(1B) - We note that there is no dispute with regard to showing the said amount as chargeable to tax by the assessee in the return of income and also for non-filing of Form 10B electronically along with return of income. The said amount was treated as income by the CPC as well as by CIT(A). Having no submissions rebutting the findings of CIT(A) in this regard, we deem it proper to uphold the order of CIT(A) in holding an amount as income chargeable to tax u/s. 11(1B) of the Act. Therefore, we agree with the reasons recorded by the CIT(A).
Application of money consequential, to filing of Form 10B electronically along with the return of income - As we upheld the order of CIT(A) in dismissing ground No. 1 that no Form 10B was filed by the assessee. In the view of the same, the assessee is not entitled to claim amount in this regard as application of money.
Appeal of assessee is dismissed.
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2023 (4) TMI 1157
Conversion of limited scrutiny into complete scrutiny - whether AO has exceeded the jurisdiction in enquiring into the issues relating to unsecured loans even before prior to 14.12.2017 when the case was converted into complete scrutiny which is against the provisions of Act? - HELD THAT:- CBDT Instruction No. 5/2016, we are of the considered view that the AO has exceeded his jurisdiction in enquiring into those issues beyond the scope of limited scrutiny even prior to the date of conversion which is in clear violation of mandate given by CBDT in the said Circular and has been held by the Co-ordinate Bench of Delhi in the case of Dev Milk Foods Pvt. Ltd. [2020 (6) TMI 317 - ITAT DELHI] to be bad in law.
CBDT has clarified that in a limited scrutiny, the scrutiny assessment proceedings would initially be confined only to issues and questionnaire, enquiry, investigation etc. would be restricted to such issues in the limited scrutiny. Only upon conversion of such case to complete scrutiny after following the procedure laid down as stated, the AO may examine the issues other than the issues involved in the limited scrutiny but in the present case the procedures were not followed and assessment was conducted in violation of this Instruction. In our opinion, the order passed by the AO is bad in law and cannot be sustained - Decided in favour of assessee.
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