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Showing 241 to 260 of 1466 Records
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2024 (6) TMI 1226
Estimation of income - Bogus purchases u/s 69C - finding of the investigation Wing that party was engaged in providing bogus bills without actual sales - HELD THAT:- The amount was outstanding as on 31/3/2010 in the books of the assessee. This sum was paid on 1/10/2010 by the assessee by account payee cheque. Quantity of purchases in the above transaction is shown by the assessee stated to be in closing stock and valued at the same rate. Assessee has stated that it has the closing stock of ₹ 1.35 crores.
It is not the claim of the learned assessing officer that the purchases shown by the assessee are not at market rate. It is claimed by the assessee that above amount is also standing in the books of accounts in the closing stock at the same rate. Therefore, only the appropriate amount of the gross profit involved in the above transaction needs to be added to the total income of the assessee.
As there is no information available with the assessing officer due to non-compliance by the assessee, non-compliance before the CIT appeal and also not producing any details except written submission before us, we are constrained to adopt 12.5% of the bogus purchases as income of the assessee. Accordingly the AO is directed to restrict an addition of 12.5%. Decided partly in favour of assessee.
Set-off of loss as per return of income - claim of the assessee is that such loss should be set off against any income held to be chargeable on account of this bogus purchases in view of CBDT circular number 11 of 2019 - HELD THAT:- The circular states that there was an uncertainty on the issue of set off of losses against the income referred to under section 115BBE. As per paragraph number 4 of that circular it was stated that to remove any ambiguity of interpretation set off of any losses was specifically inserted only by the finance act 2016 with effect from 1/4/2017, therefore assessee is entitled to claim set off of loss against income determined under section 115BBE of the act in the assessment year 2016 – 17. Thus the claim of the assessee is covered by the circular as the impugned assessment year is 2010 – 11. Accordingly ground of the appeal is allowed.
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2024 (6) TMI 1225
Disallowance on the basis of audit report in the intimation generated u/s 143(1) - disallowance of Gratuity u/s 43B as not mentioned in proper classification in Income Tax Return and also not reported in the tax audit report - HELD THAT:- Inadvertent non-reporting in tax audit report by auditor is bonafide when when all details are available in ITR on records although such deduction was find mentioned in wrong classification in ITR.
Deductions based on the genuine claim of the assessee cannot be denied especially in the circumstances as narrated above. As such the assessee has claimed deduction u/s 43B of the Act and therefore in our considered view, the same should have been allowed by the authorities below.
The income of the assessee should not be over assessed even if there is a mistake made by the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income.
Thus the claim of the assessee cannot be denied for the reason that a deduction was mentioned in wrong classification in ITR especially in the circumstances where all other evidence is available on record suggesting the deduction in pursuance to the provisions of section 43B is available. Appeal of the assessee are allowed.
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2024 (6) TMI 1224
Validity of the final assessment order passed by the AO u/s 144(C)(3) beyond period of limitation - Role of the Dispute Resolution Panel (DRP) in deciding on objections - mandation to pass the assessment order within one month from the end of the month in which the statutory period of filing the objections expired - HELD THAT:- A perusal of Section 144C(2) of the Act would show that the assessee, on receipt of the draft order, shall file his objections within 30 days of the receipt of the draft order with Dispute resolution Panel and the AO. Only when no objections are received within the period specified under Sub- Section 2, the Assessing Officer shall complete the assessment on the basis of the draft order, as contemplated under Section 144(C)(3) of the said Act. What is contemplated under Section 144C(2) is the filing of the objections by the assessee with the Dispute Resolution Panel, if he is not accepting the draft assessment order. The said provision also contemplates filing of such objection before the Assessing Officer as well. If such objection is filed in time, then the Dispute Resolution Panel alone shall proceed to decide the matter as provided under Section 144C(5) & 6 of the said Act.
DRP may confirm, reduce or enhance the variation proposed in the draft order. It is not in dispute that the DRP rejected the objection filed by the assessee on the ground that it is barred by limitation. Though, it is an order rejecting the objections but the Panel concluded that it “does not find it fit for issuing directions for the guidance of the assessing officer for enabling him to complete the assessment.” Once, the DRP has chosen to reject the objections on the ground of delay, it goes without saying that resultant position of such rejection is nothing but confirming the merits of draft order passed by the AO but in no way extends the limitation of passing the order under sub-section (4) of Section 144 of the Act. The final order should have been passed under sub- section (3)(b) of Section 144 read with sub-section (4)(b) of Section 144 of the Act. of the Act. There is nothing in the DRP order stating that the directions are communication to the assessee and the departmental authorities as per the provision of Section 144C(5) of the said Act. Rather, being aware of the lapse at end of the AO, ordered that “The Revenue is advised to take further course of action as per the law and precedents in interest of revenue.”
Consequently, we are inclined to hold that the final order passed of AO under Section 144C(13) of the Act, is devoid of jurisdiction. The additional ground is sustained. The appeals are allowed.
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2024 (6) TMI 1223
Deduction of interest income received from banks u/s. 80P(2)(a)(i) - considering the interest income as income from other sources u/s. 56 - HELD THAT:- We note that the assessee was not allowed deduction under Chapter VIA of the Act by observing that the assessee is not registered under the the Karnataka Co-operative Societies Act, 1959, it is registered under Karnataka Souharda Sahakari Act, 1997. We further note that the assessee has not represented the case before the CIT(Appeals).
In the interest of justice, we remit the appeal to the CIT(Appeals) for fresh consideration and decision as per law after reasonable opportunity of being heard to the assessee. The assessee is directed to update its correct email-id and phone number in the departmental portal and respond to the notices issued by the department. The assessee is directed not to seek unnecessary adjournment for early disposal of the case and in case of further default, the assessee shall not be entitled to any leniency. Appeal by the assessee is allowed for statistical purposes.
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2024 (6) TMI 1222
Revision u/s 263 - as per CIT AO did not make proper enquiries in respect of Long Term Capital Gain Exemptions u/s 54 - HELD THAT:- AO had not only examined the deduction u/s. 54 of the Act, but also blamed the assessee that the claim made by the assessee u/s. 54 of the Act amounted to wrongful and malafide claim. The blame so made was explained by the assessee, and consequently, the claim of the assessee was allowed by ld. AO. Thus, having raised the issue of deduction u/s. 54, collected the related information and after applying the mind on the information so collected, the claim was allowed.
We also take note that the case of the assessee was re-opened for verification of source of investment in property for an amount. Said issue was examined and subsequently the ld. AO having noticed that the assessee had claimed deduction u/s. 54 of the Act, he called for information while exercising powers u/s. 133(6) of the Act.
All the details related to claim were examined as is evident from the findings recorded in the body of the assessment order. We may note here that ld. CIT evidently did not place on record any apparent error on the part of the AO to substantiate that order passed by ld. AO is prejudicial to the interest of revenue. He only mentioned that a detailed investigation was required to be conducted in order to verify the claim of the assessee for which related details had already been called for and examined.
CIT has not pinpointed as to on which aspect enquiry required to be made was not made by the ld. AO. He commented about the eligible amount of the claim which was allowed and considered, based on the information collected.
Thus, no further defect was found from the record collected by the AO. Since, in this case, ld. AO has clearly incorporated the extract of enquiry conducted in the body of the assessment order and revenue did not pinpoint any error on the part of the Assessing Officer the order passed after due application of mind could not be subjected to proceeding u/s. 263 of the Act.
In our considered view, A.O while framing the assessment had taken a possible view, and revenue did not demonstrate any error on the part of the AO. In fact, when the ld. AO had conducted the required enquiry and none of the conditions mentioned for revision of order as required by Explanation 2(a) of Section 263 of the Act has been fulfilled, the order passed by the AO could not be deemed to be erroneous so as to be prejudicial to the interests of the revenue - Appeal filed by the assessee is allowed.
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2024 (6) TMI 1221
Validity of the notice u/s 153C - addition of undisclosed income - sum received by the assessee LLP are through shareholder/paper companies which have no substantial business and has been used as a conduit for bringing unaccounted money in the books in the form of capital investment - HELD THAT:- As no valid satisfaction note was recorded, the ld. Assessing Officer erred in assuming jurisdiction u/s 153C of the Act to make the assessment. Thus, we fail to find any infirmity in the finding of the ld. CIT(A) quashing the impugned assessment order holding them to be invalid, void ab initio and bad in law for want of proper satisfaction note.
Since no incriminating material found during the course of search has been referred by the ld. Assessing Officer for making the impugned addition, which falls under the category of completed and unabated Assessment Year, no addition can be made in the hands of the assessee. See ABHISAR BUILDWELL P. LTD. [2023 (4) TMI 1056 - SUPREME COURT]
Addition made by the ld. AO is on account of investment made in two LLPs (of which one is the assessee) by its partner M/s. Dayanidhi Commercial Ltd., in the preceding financial year. We also note th the ld. Assessing Officer on the one hand, himself states that assessee company received capital contribution of Rs. 3.72 Crores in the preceding year but went on to make addition of Rs. 10.72 Crores for the year under appeal which includes Rs. 7 Crores received by another LLP, namely, M/s. Suntok Plantations LLP, from its partner in preceding financial year. It clearly indicates that the impugned additions has been made without making any reference to the incriminating material found during the course of search. Decided in favour of assessee.
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2024 (6) TMI 1220
Deduction u/s 80P(2)(a)(i) - deduction denied by applying the judgement of Citizen Co-operative Society Ltd. [2017 (8) TMI 536 - SUPREME COURT] observing that there was violation of principles of mutuality among members and the society cannot be granted deduction u/s 80P(2)(a)(i) - assessee society is having two accounts of members i.e. associated and nominal members, who are not identical to that of ordinary/resident members - HELD THAT:-Similar issue came for consideration before this Tribunal in the case of Kotekar Vyavasaya Seva Sahakara Sangha Niyamitha [2024 (6) TMI 1096 - ITAT BANGALORE] as held in respect of associate / nominal members, Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] has held that the expression “Members” is not defined in the Income-tax Act. Hence, it is necessary to construe the expression “Members” in section 80P(2)(a)(i) in the light of definition of that expression as contained in the concerned co-operative societies Act - Thus, the facts are to be examined in the light of principles laid down in Mavilayi Service Cooperative Bank Ltd. (surpa) - we remit this issue of deduction u/s 80P(2)(a)(i) of the Act to the files of Ld.AO to examine the same de novo in the light of the above judgment.
Deduction u/s 80P(2)(d) - claim denied as assessee earned interest on deposits from Co-operative banks and scheduled banks and it is to be assessed as “income from other sources” - Similar issue came for consideration before this Tribunal in the case of Kotekar Vyavasaya Seva Sahakara Sangha Niyamitha [2024 (6) TMI 1096 - ITAT BANGALORE] wherein directed the A.O. to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns interest / dividend income out of investments with co-operative society, as observed in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd [2023 (9) TMI 761 - SUPREME COURT] the same is entitled to deduction u/s 80P(2)(d).
In view of the above order of the Tribunal, we remit the issue to the file of ld. AO for fresh consideration to decide the same in the light of above observations.
Relief u/s 57 - If the interest earned by assessee from the banks is considered under the head “Income from other sources”, relief to be granted to the assessee u/s 57 of the Act in accordance with law. Accordingly, the issue is restored to the file of ld. AO for de-novo consideration with the above observations.
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2024 (6) TMI 1219
Rejection of application for approval u/s 80G as time barred - process for charitable institutions and introduced provisional registration to facilitate newly formed trusts - scope of amendment - HELD THAT:- Institution which have provisional registration have to apply at-least six months prior to expiry of the provisional registration or within Six months of commencement of activities, whichever is earlier. In continuation of this when we read the ‘sub clause iii of Proviso’ of section 80G(5), which we have already reproduced above, it is clear that the intention of parliament in putting the word “or within six months of commencement of its activities, whichever is earlier” is in the context of the newly formed Trust/institutions.
For existing Trust/Institution, the time limit for applying for Regular Registration is within six months of expiry of Provisional registration if they are applying under sub clause (iii) of the Proviso to Section 80G(5) of the Act. This will be the harmonious interpretation.
As decided by K P Varghase [1981 (9) TMI 1 - SUPREME COURT] the statutory provision shall be interpreted in such a way to avoid absurdity. In this case to avoid the absurdity as discussed by us in earlier paragraph, we are of the opinion that the words, “within six months of commencement of its activities” has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of the Hon’ble Finance Minister and the Memorandum of Finance Bill. 2020.
Therefore, we hold that the Assessee Trust had applied for registration within the time allowed under the Act. Hence, the application of the assessee is valid and maintainable.
Even otherwise, assessee had received provisional approval under section 80G(5) on 27.05.2021 and it was valid upto A.Y. 2023-24. The assessee had applied for registration under section 80G on 24.05.2023, which was before A.Y. 2023-24. Thus, assessee had applied for permanent registration under section 80G before the expiry of provisional approval. Therefore, the application of the assessee was not time barred. Assessee appeal allowed.
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2024 (6) TMI 1218
Additions made u/s 56(2)(ix) - forfeiture of advance - Additions towards advance received by the appellants as forfeiture of advance in the course of negotiation for transfer of capital asset and same is forfeited for failed negotiation and thus, opined that advance received by the appellant is taxable u/s. 56(2)(ix) - HELD THAT:- If you go by the arguments of assessee, he claims that the negotiation was never failed and it is still alive and they are ready to transfer the properties in favour of the buyer. At the same time, from the arguments from both the parties, in light of statement recorded from Smt. V.K. Sasikala, we find that she has denied having entered into any kind of MoU and also payment of advance in cash. The facts are totally contradictory. We further came to know that the department has completed assessments of alleged buyer Smt. V.K. Sasikala and also made additions towards advance claimed to have paid by her as per MoU, for purchase of property as unexplained money. The Assessing Officer, has also made additions in the hands of the appellants towards additions as forfeiture of money.
There is no concept of deemed forfeiture of advance as per sub clause (ix) of section 56(2) of the Act, because if you go by said provisions, it is very clear that sum can be assessed u/s. 56(2)(ix) of the Act, in a case where any sum of money received as advance or otherwise in the course of negotiation for transfer of a capital asset, if, (a) such sum of forfeited and (b) the negotiations do no result in transfer of said capital asset. If you go by the arguments of the Ld. Counsel for the assesse’s, two conditions prescribed u/s. 56(2)(ix) of the Act are not satisfied.
Further, they claimed that even now they are ready to transfer of property in favour of the buyer. From the above, it is undoubtedly clear that these appeals needs to be decided along with other connected appeals pending in the case of Smt. V.K. Sasikala and her associates at the first appellate authority level itself. Therefore, we are of the considered view, that these appeals cannot be independently decided, because the issues involved in these appeals are inextricably linked to additions made by the department in the hands of the Smt. V.K. Sasikala, the alleged buyer of the property and their associates. Thus, we set aside the orders of the ld. CIT(A) in all these cases and restore the issues to the file of the first appellate authority and direct the first appellate authority to decide these appeals along with other connected appeals pending before the first appellate authority in the group cases of Smt. V.K. Sasikala and others and decide the issues afresh in accordance with law - These appeals are set aside for denovo consideration by the ld. CIT(A) in accordance with law.
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2024 (6) TMI 1217
Disallowance of interest paid on loan taken from Hyderabad Mutual Benefit Society (HMBS) - DR has submitted that no evidence was shown by the assessee to the lower authorities that the loan amount was utilized for the business purpose after taking loan from HMBS and to that effect, the C.A. of the assessee has given a Certificate which has been considered by the learned lower authorities - whether the amount has been received through banking channels or not? - HELD THAT:- From a perusal of the list of documents, we find the assessee had filed a certificate and ledger account certifying that the documents issued by HMBS were available with the Assessing Officer. However, the date of the document dt. 14.04.2017 which is subsequent to passing of the assessment order clearly shows that these documents are not available with the AO. Therefore, in our view, the submission that the document was available with the AO, is incorrect. We expect the learned advocate to be fair while filing the certificate of certifying documents and making the submissions before us. In our view, the application should have been filed by the assessee for admission of the additional documents / evidences before the lower authority as well as before us, before assessee choses to rely upon the documents / evidences.
With respect to the letter issued by HMBS certifying that the interest instalments were paid by the assessee, we are of the opinion that the AO is required to verify whether the interest certificate issued by HMBS is correct or not and further, the Assessing Officer is required to verify whether the amount received by HMBS was from banking channels or not. AO is also required to verify whether the amount allegedly deposited by the common partner of M/s. G.B. Bakers, was claimed by the said partner as expenditure in the books of accounts of M/s. G.B. Bakers or not. Since the statements of bank account was not available before the AO/ CIT(A), therefore, there was no question of examination of his bank statement and give finding.
Thus, we remit the matter to the file of ld.CIT(A) with a direction to the assessee to move appropriate application for admission of additional evidence before ld.CIT(A) in respect of documents now filed before us. Ground allowed for statistical purposes.
CIT(A) power to enhance without providing an opportunity of being heard -CIT(A) disallowed expenditure on feeds and maintenance of livestock and the cost of purchase of livestock, treating them as capital expenditure - HELD THAT:- Admittedly, in the present case, CIT(A) has made addition under the separate head of income. Infact, while passing the order, the income directed to be determined by the ld.CIT(A) would be below the income assessed by the Assessing Officer in his assessment order. Thus, there is no enhancement of income and therefore, there was no occasion to follow the procedure as argued by the ld.AR. In fact, in the paragraphs below, we have adjudicated the issue whether the livestock is capital asset or not and we have held that the livestock is not a capital asset. As we have held that the livestock is not a capital asset, therefore, the expenditure claimed by the assessee cannot be capitalized. In view of the above, the ground no.4 raised by the assessee, is dismissed.
Addition towards profit on sale of livestock - capital asset or not? - AO held that livestock is not a capital asset and the long term capital gain on sale of self breeded livestock is not covered by the provision of section 10 of the Act and therefore, the assessee is not entitled to claim any exemption of this in the income of the assessee - whether the livestock is a capital asset or not? - HELD THAT:- The nature of ‘assets’ whether it is fixed asset like plant and machinery or stock-in-trade is required to be determined on the basis of the correct nature of the asset. Based on the correct nature of the asset, the taxability of the transaction is required to be determined. In the present case, the nature of the asset namely, ‘livestock’ is not a fixed asset as mentioned hereinabove as it is so defined by the Income Tax Act and therefore, the finding of the ld.CIT(A) holding it to be a capital asset is contrary to law.
As we have held that livestock is not a capital asset, the next argument decided by the ld.CIT(A) of his order that the buffalo calves born in the shed has zero cost of acquisition. In our view, as we have decided that livestock is not a capital asset and therefore, there is no purpose to discuss whether what will be the cost of acquisition of newly born buffalo calves.
As mentioned hereinabove, the normal business principles as applicable for the purpose of determining the profit and loss of the business are required to be applied even for the purposes of computing the profit on sale of newly born buffalo calves and thereafter, the income earned used to be taxed as ‘business income’.
Having held that livestock is not a capital asset and is only a stock-in-trade, the logical fallout of the above conclusion is that the income of the assessee is required to be determined by applying the principle as applicable for determining the profit and loss of the business and is to be taxed as business income. Further Assessee is not entitled to indexation on the cost of purchase of the livestock, as there is no provision for grant of indexation of the livestock, being not a capital asset.
Therefore, we reverse the finding of the ld.CIT(A) whereby he had wrongly held that livestock is a capital asset, and the income of the assessee is to be determined on the basis of treating the livestock as capital asset and not as stock in trade.
Computation of total income for amount being purchase of livestock charged to Profit and Loss Account - HELD THAT:- Since the contention of the assessee is that the income has already been taken into account while computing the income of the assessee in the computation, therefore, it cannot be charged again in the profit and loss account, on the face of it, is required to be accepted. However, in view of the finding given hereinabove that livestock is not a capital asset and the sale of it is required to be computed as business income, therefore, we deem it appropriate to remand this issue to the file of AO to verify the contention of the assessee and decide the issue afresh in the light of our finding given hereinabove.
Short term capital gain - As sale and purchase of livestock is a business activity and is not subjected to determination of capital gain or loss under the head income from “Capita Gain”. Therefore, the gain arising out of the sale of livestock during the year under consideration is required to be treated as business income only and, accordingly, is required to be taxed.
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2024 (6) TMI 1216
TP Adjustment - comparable selection - calculation of profit margin - grievance of the assessee is to consider the depreciation during calculation of fair net profit under TNMM by the TPO - HELD THAT:- The assessee is newly set-up company and yielding huge depreciation in respect of comparable M/s Stelco Limited and M/s Tata Steel BSL Limited who are incorporated in 1995 and 1983 respectively. In comparison of depreciation percentage of revenue was @1.09% for Stelco Limited and 11.19% for Tata Steel BSL Limited whereas the assessee has @16.92%.
The assessee prayed to reject both the comparable as functionally different. We accordingly direct the TPO /AO to remove both the comparable during calculation of fairnet profit for ALP.
Assessee has requested for acceptance of two comparable M/s Vallabh Steel Limited, for which rectification application u/s 154 has been filed before the TPO and is pending for disposal and M/s Uttam Galva Steels Ltd - We direct the TPO /AO to accept both the comparable M/s Vallabh Steel Limited and M/s Uttam Galva Steels Ltd after considering the function and activity of the two companies and direct to dispose the rectification petition filed U/s 154. The TPO/AO is directed to allow the fresh search in relation to comparable of the assessee.
Remove the depreciation during the calculation of profit margin and requested for cash PLI in TNMM - In cash PLI the average of comparable 10.44% which is similar for assessee. The assessee stated that considering depreciation as a part of the total cost would not be appropriate for the purpose of benchmarking since the depreciation in the year under consideration was 16.92% of its revenue, vis-a-vis depreciation of 4.85% of seven comparable companies as taken by the TPO which in most cases as average depreciation as a percentage of revenue.
The assessee has relied on the order of M/s Epcos Ferrites Ltd [2019 (3) TMI 554 - ITAT KOLKATA] We also relied on the same. In our considered view the depreciation should be removed for calculation of net profit margin and cash PLI is justified method. Accordingly, we remit back the matter to the file of TPO/AO for further calculation of TP adjustment by considering the direction of the Bench.
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2024 (6) TMI 1215
Computation of book profit u/s 115JB - as per AO discrepancies in the deduction claimed by the assessee for brought forward loss or unabsorbed depreciation and recomputed the deduction, allowing a lesser amount - as per assessee calculation of book profits must relate to the entries made in the books for the relevant year and such calculation must start from the profit as shown in P&L account. Thereafter, the amount of loss brought forward or unabsorbed deprecation, whichever is less, as per the books of account, must be considered - HELD THAT:- We are of the view that assessee’s claim of deduction for computing book profit under section 115JB of the Act requires fresh verification in the light of the Chart furnished by the assessee, which has been reproduced in the order. Accordingly, the issue is restored back to the Assessing Officer for fresh adjudication after factually verifying assessee’s claim.
TDS u/s 195 - payments have been made to non-residents without deducting tax at source - Disallowance made u/s 40(a)(i) - as submitted by assessee repair and maintenance work was carried out outside India and no part of it was carried out in India - also in absence of Permanent Establishment (PE) of such non-resident companies in India, business profit cannot be taxed in India - HELD THAT:- AO has failed to demonstrate with cogent evidence that the make available condition enshrined in the concerned treaties are satisfied. In fact, learned first appellate authority has recorded a categorical factual finding that in course of rendition of service technical knowledge, know-how, skill, etc. has not been made available to the service recipient by the service provider. Thus, in absence of any contrary material brought on record by the Revenue, we concur with the view expressed by learned first appellate authority.
Once the payments do not qualify as FTS under the respective treaty provisions, in terms with section 90(2) of the Act, treaty provisions being more beneficial would override the provisions contained in the domestic law. That being the legal position, in our view, the payments made to the residents of USA, UK, Australia, Canada and Singapore, being not chargeable to tax in India, section 195 is not applicable. Accordingly, we hold that the assessee was not required to deduct tax at source while making payment to residents of the aforesaid countries.
Payments made to entities in UAE, admittedly, in India – UAE treaty, there is no provision concerning taxability of FTS. Thus, in absence of any such provision, the payments made to the residents of UAE can either be taxed as business income or as other income in terms with Article 7 or 22, respectively. On reading of Article 7 it becomes clear that business profits can be taxed in the source country only if the resident of other country has a PE in the source country. In the facts of the present appeal, admittedly, none of the entities had any PE in India. Therefore, the payments made to them cannot be taxed in India as business profits. Even, they cannot be taxed as other income in India as Article 22 of India – UAE treaty makes it clear that the other income can only be taxed in the country of residence. Thus, in our view, the payments made to the entities in UAE are not taxable in India as per the treaty provisions, hence, there is no requirement for deduction of tax at source on the payments made.
Second category comprising of Netherlands, Spain and France. Admittedly, the definition of FTS in the treaty provisions with these countries are wider in scope and do not contain the make available clause. However, it requires to be examined whether the nature of services would fall within the category of technical consultancy or managerial services. As per the work process followed by the assessee, as discussed earlier, certain parts of helicopters are sent for routine repair/overhaul in terms with the guidelines of DGCA to keep the helicopters airworthy. The parts of helicopters were sent outside India for repair/overhaul and the repair/overhaul is carried out outside India.
The repaired/overhauled parts are sent back to India to be fixed in the helicopters. In fact, learned Commissioner (Appeals) has given a categorical factual finding to the aforesaid effect. The Revenue has failed to bring any material on record to demonstrate that any non-resident technical personnel visited to render any technical service in India or the repair and maintenance work was carried out through any PE in India. When, the entire repair and maintenance of helicopter parts was carried out outside India and nothing was done in India by the non-resident payees, in our view, the payments made to the non-residents are not chargeable to tax in India. Therefore, there was no obligation on the assessee to withhold tax under section 195 - Decided in favour of assessee.
Disallowance of advances written off - addition made as assessee failed to furnish adequate evidence in support of its claim - CIT(A) deleted addition - HELD THAT:- Commissioner (Appeals) after examining the facts and materials on record has recorded that the amount in dispute represents the advances given earlier by the assessee in its normal course of business for purchase of spare & consumables, repairs and maintenance, freight & clearing forwarding charges, lodging boarding charges, etc. The amount has become irrecoverable owing to nonfulfillment of certain conditions. Advances were pertaining to two to three years prior to assessment year 2011-12 and that no expenses were booked by the assessee.
Revenue has not brought any contrary materials on record to disturb the aforesaid factual finding of learned Commissioner (Appeals). Therefore, we do not find any infirmity in the decision of learned first appellate authority. Ground raised is dismissed.
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2024 (6) TMI 1214
Non disposal of appeal by CIT(A) on merits - non considering additional evidences -Addition of cash deposited in bank account - Addition invoking provisions of section either 68 or 69 or 69A - CIT(A) non considering evidence filed before him to prove sources of cash without giving any reason for doing so - HELD THAT:- Under the factual matrix of the present case, it is apparently discernible that the assessee has not discharged the onus cast upon him in explaining the huge cash amounts deposited in his bank accounts before the Ld AO.
After the completion of assessment, it is stated by the assessee that the facts furnished before Ld AO were incorrect, thus the same should not be relied. Since the assessee himself had admitted that books of accounts are not maintained by him and no plausible explanation could be furnished before the Ld AO, the addition proposed by the AO under 69A cannot be faulted with. So, the contention of assesse that money if recorded in books of accounts can’t be treated as unexplained money u/s 69A is devoid of merit on the facts of present case. Thus, the case laws relied upon on this aspect by the assessee cannot rescue or support the contention of the assessee.
Non-admission of additional evidences by CIT(A) - The audit of books of accounts under the provisions of section 44AB for the relevant AY 2017-18, which was due to be completed by 30th September 2017 further extended to 31st October 2017 have been conducted and certified on 07.12.2021, i.e., after more than 4 years of time. It is the assertion of Ld AR that such audit report was furnished before the Ld CIT(A) as additional evidence but the same was not even discussed by him. On perusal of the order of Ld CIT(A), no whisper with respect to submission of audit report or its discussion was perceptible, even the exhaustive submission of the assessee before the Ld CIT(A), running into 31 pages.
CIT(A) was supposed to discuss the issue on its merits considering the additional evidence, if admissible under the provisions of rule 46A of the IT Rules following the pre-requisite conditions of the said rule. it is copiously clear that Ld. CIT(A) was in error in dismissing the appeal of the assessee without discussing the written submission of the assessee and without considering the evidence filed before him. This shows that Ld. CIT(A) has not decided the issue by considering the response and the documents furnished before him by the assessee.
CIT(A) has discussed about contention of the assessee and certain documents like purchase ledger, Kirana Sales ledger, balance sheet and part of bank statement uploaded by the assessee but there was no whisper in the order of Ld. CIT(A) regarding admission of additional evidence in the form of such documents, neither said documents have been remitted to the Ld. AO for his comments. Under such facts and circumstances, it is evident that the issue to be decided was not dealt with on merits by the Ld. CIT(A) in consideration of the evidence submitted by the assessee, without rejecting or accepting such evidence, also the further enquiries which are obligatory for the Ld. CIT(A) to be conducted or to direct the Ld. AO to conduct the same.
CIT(A) has grossly erred in dismissing the appeal of the Assessee mainly discussing the noncompliant conduct of the assessee by summarily accepting the decision of Ld AO, without attending to the merits of the issue by dealing with the submissions of the assessee or by causing any further enquiries by himself or by directing the Ld AO to do so - Thus we direct the Ld. CIT(A) to pass denovo order as per law, in accordance with Sections 250 and 251 of I.T. Act
Appeal of the assessee is partly allowed for statistical purpose.
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2024 (6) TMI 1213
Condonation of delay filing appeal before ITAT - Delay of 7 years & 104 days and 6 years & 83 days in filing the captioned ITAs - HELD THAT:- In the present case, though the assessee is claiming that the delay in filing has occurred solely due to lapse of counsel but the fact is that the assessee has also contributed to a large extent in the process of delay. As can be seen from Ld. DR’s arguments that the assessee has filed appeals of other two years i.e. AY 2011-12 and 2013-14 on 07.09.2022 and even at that stage, had not taken care to enquire and see the status of present appeals. This clearly shows lethargic attitude of assessee.
The grossly negligent attitude of assessee is further discernible from one more fact. As can be seen from first pages of impugned orders reproduced earlier in Para No. 4(iv) of this order, the assessee received impugned orders on 20.01.2016 and 13.02.2017. Thus, when the assessee received later order on 13.02.2017, wasn’t it a duty of assessee to enquire from his counsel about filing status of appeal against former order received on 20.01.2016? Had the assessee exercised any care at that stage itself, he would have not only rushed to file appeal against impugned order dated 20.01.2016 with a smaller delay but also could ensure timely filing of appeal against order dated 13.02.2017. However, the assessee did not exercise any such care even at stage and only continued with its negligent or lethargic attitude. Therefore, the assessee is also a contributor in causing delay in filing.
DR is very much correct in submitting that the assessee does not deserve any sympathy in present cases. Needless to mention that there is a whopping delay of more than 7 or 6 years. Consequently, we are inclined to reject the assessee’s condonation prayer and dismiss these appeals as being time-barred.
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2024 (6) TMI 1212
Assessment u/s 153A - Income from undisclosed sources - incriminating material found during search or not? - addition made in respect of the entries credited by the assessee in the books of account in the form of sale of investments to two concerns/companies - HELD THAT:- Addition not based on any incriminating material found at the time of search. This issue is now well settled in favour of the assessee and against the revenue by the Hon’ble Supreme Court in the case of Abhisar Buildwell Private Limited [2023 (4) TMI 1056 - SUPREME COURT] - Respectfully following the decision of USG BUILDWELL PVT. LTD [2021 (3) TMI 518 - ITAT DELHI] and in the light of the decision of the Hon’ble Supreme Court (supra) we direct the AO to delete the impugned addition. Decided in favour of assessee.
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2024 (6) TMI 1211
Disallowance of claim of depreciation on assets acquired by the assessee from a demerged company - assessee came into existence as a result of demerger - depreciation claimed on the written down value of assets as standing in the books of the erstwhile company on the date of demerger and acquisition by the assessee - DR submitted that in terms of explanation 10 to section 43(1) of the Act, the actual cost of such assets has to be determined after reducing the cost mat by the Central Government through Central Excise Exemption.
HELD THAT:- The factual position in these appeals are identical to the facts involved in the case of Abhisar Buildwell Pvt. Ltd. [2019 (8) TMI 107 - DELHI HIGH COURT] as held that since excise refund is in the nature of revenue receipt forming part of profits and gains arising from the business, it cannot be reduced from the cost of plant & machinery
Therefore, we are of the considered opinion that assessee’s claim of depreciation is allowable. Even, otherwise also, the disallowance of depreciation would only enhance the profit of the assessee, which is otherwise eligible for claim of deduction u/s 80IC of the Act. In fact, in case of Abhisar Buildwell Pvt. Ltd. (Supra), Hon’ble jurisdictional High Court has expressed the aforesaid view.
As FAA has directed the AO to allow assessee’s claim of depreciation after verifying, if the assets have been brought in the books of the assessee on the closing WDV from the demerged company as on the effective date of demerger and depreciation has been claimed on such WDV year after year as per law. If it is found to be so, claim should be allowed. In our view, the Revenue should not have any grievance against such directions as it is in consonance with the directions of the Tribunal, while deciding the earlier year’s appeals of the present assessee. Appeals of the Revenue are dismissed.
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2024 (6) TMI 1210
Levy the penalty u/s 271B - assessee had failed to get his accounts audited - assessee contended that assessee is only a commission agent and earns only commission from selling products of Mother Dairy - CIT (A) was not convinced that the assessee was not required to get his books of account audited for the year under consideration and next assessment year assessee has got his accounts audited - HELD THAT:- Upon careful consideration, we find that assessee has made cogent submissions. Assessee’s commission income was only Rs. 3,24,558/- and the deposits in the bank were sales on behalf of Mother Dairy. The assessee was under a reasonable/bonafide belief that he was not needed to get his accounts audited as transactions belonged to Mother Dairy. In these circumstances, we set aside the orders of the authorities below and delete the levy of penalty u/s 271B. Assessee appeal allowed.
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2024 (6) TMI 1209
Assessment completed ex-parte order - Undisclosed cash deposits addition u/s 69A - HELD THAT:- The Bench observed that the assessee was really lethargic and unserious in pursuing his case in spite of providing various opportunities by the ld. CIT(A) and ld. AO as mentioned in his order.
The assessee did not appear or filed any reply to the notices which were issued by the ld. AO during the assessment proceedings, finally the assessment completed ex-parte order.
Assessee or his legal representative did not appear even appellate proceedings in spite of several notices, it is evident in the ld. CIT(A) order.
Bench feels that the assessee has filed an affidavit stating that he could not advance his arguments/submissions to contest the case before the lower authorities and the ld. AR for the assessee also prayed to give one more opportunity to submit the evidences concerning the issue in question, with grounds so raised by the assessee, to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings before the ld. AO. Appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 1208
Calculation of capital gain on the sale of property against the claimed capital loss - recalculation of LCG on cost of acquisition in FY 2008-09 - assessee argued that the property was purchased in FY 2005-06 and that the AO erroneously considered the date of the sale deed (16.07.2008) as the date of purchase - HELD THAT:- AO had accepted the contentions of the assessee partly in the remand proceedings and the ld CIT(A) had relied on the same remand report and granted relief to the assessee. Once, relief is granted based on the remand report of the ld AO, revenue would be precluded from filing any further appeal before this Tribunal. This view of ours is further fortified by the decision of Smt B Jayalakshmi Vs. ACIT [2018 (8) TMI 208 - MADRAS HIGH COURT]. Hence, we do not find any infirmity in the order of the ld CIT(A) granting relief to the assessee qua the assessee under first issue.
Addition u/s 68 - Unexplained Unsecured Loans - HELD THAT:- As submission of the appellant was verified and having gone through the additional submission as submitted by the appellant as well as examination of additional evidences, the contention of the assessee seems to be acceptable. Additional evidences which were not submitted during the course of assessment proceedings i.e. bank account no, confirmed copy of account, ITR, bank statement and bank statement of assessee, it has been found that there was opening credit balance and during the year under consideration, assessee had received unsecured loans through banking channels and amount was credited in the bank account - No infirmity in the order of the ld CIT(A) granting relief to the assessee.
Revenue appeal dismissed.
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2024 (6) TMI 1207
Addition u/s 69A - cash deposit made in the bank account during the demonetization period - HELD THAT:- The source of cash deposits is clearly explainable from the cash withdrawal made earlier which is reflected in the same bank account. The reason for holding huge cash of Rs. 15 lakhs for a period of 14 months had also been explained by the assessee as she had to pay the requisite fees to the medical college within three days from the date of intimation by the College management.
The assessee had also explained the source of withdrawal of cash to be out of maturity proceeds of fixed deposits which is also evident from the bank statement reproduced. Hence, no hesitation in deleting the addition made on account of cash deposit u/s 69A in the instant case. Accordingly, grounds raised by the assessee on merits are hereby allowed.
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