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Showing 301 to 320 of 1398 Records
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2020 (10) TMI 1098
Maintainability of petition - appealable order or not - Section 107 of the Central Goods and Services Tax Act, 2017 - allegation that the impugned order is without the opportunity of being heard as contemplated under the proviso to Rule 92[3] of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- There is no dispute that the proviso contemplates right of hearing and this hearing has not been extended to the petitioner. It is settled law that the procedural safeguards have to be strictly adhered to, and in the absence of specific procedural safeguards, the principles of natural justice will have to be complied with. The provisions of Proviso to Rule 92[3] stipulate a right to be heard; and in the present case, this right, as accepted by the learned Additional Government Advocate, is not extended to the petitioner. Therefore, the order cannot be sustained and is required to be quashed on this short ground, and the case remanded for reconsideration.
The proceedings are restored for consideration by the fourth respondent - matter on remand.
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2020 (10) TMI 1097
Profiteering - purchase of flats - allegation of Respondent had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in prices of the flats - contravention of Section 171 (1) of the CGST Act, 2017 - penalty - HELD THAT:- The Respondent is executing his “Aangan” project in Gurgaon, Haryana which has been approved under the “AHP 2013”. The said AHP was notified under Section 9A of the Haryana Development and Regulation of Urban Areas Act, 1975 vide Notification No. PF-27/48921 dated 19.08.2013 issued by the Town and Country Planning Department, Government of Haryana to facilitate creation of affordable housing stock in the urban areas of the State. The above project has three phases out of which the Angan Phase-I project is subject matter of the present proceedings. It has also been revealed that the Applicants No. 1, 2 & 3 had complained to the Haryana State Screening Committee on Anti-profiteering on 16.10.2018, 24.09.2018 and 31.10.2018 respectively that the above Respondent was not passing on the benefit of ITC to them on the flats which they had purchased from him in the project, as per the provisions of Section 171 of the above Act. The above 3 complaints were examined by the Standing Committee on Anti-profiteering in its meeting held on 27.12.2018 and were forwarded to the DGAP for detailed investigation as per the provisions of Rule 129 (1) of the CGST Rules, 2017.
This Authority hereby determines the profiteered amount as ₹ 6,24,48,008/- as per the provisions of Section 171 (1) read with Rule 133 (1) of the above Rules which includes GST @ 12% or 8% on the base profiteered amount of ₹ 5,71,81 ,399/-. The above amount shall be paid by the Respondent to the eligible buyers as per the details given in Annexure-17 of the DGAP’s Report dated 14.06.2019 within a period of 3 months from the date of passing of this order along with interest @18% per annum from the date from which the above amount was collected by him from the buyers till the payment is made failing which it shall be recovered by the concerned Commissioner CGST/SGST and paid to the eligible buyers. The above amount is also inclusive of an amount of ₹ 4,32,315/- including the GST which is the profiteered amount in respect of the Applicant No. 1 to 5 as per the details given at Sr.No. 78, 119, 329, 341 and 465 of Annexure-17. The ITC for the balance period of the project shall also be passed on by the Respondent otherwise the buyers shall be at liberty to approach the State Screening Committee Haryana for claiming benefit of ITC.
This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 read with Sub-Section 171 (1) further orders that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him.
Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his present project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, since the provisions of Section 171 (3A) have come in to force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 31.12.2018, hence the penalty prescribed under the above Section cannot be imposed on the Respondent retrospectively. Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him is not required to be issued.
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2020 (10) TMI 1096
Penalty u/s 271(1)(c) - ITAT set aside the order passed by the CIT(Appeals) as well as by the AO and allowed the appeal preferred by the assessee - HELD THAT:- Revenue could not dispute the position that the order of the Tribunal [2019 (8) TMI 1122 - ITAT BANGALORE] is based on the decision rendered by this Court in 'CIT VS. SSA'S EMERALD MEADOWS[2015 (11) TMI 1620 - KARNATAKA HIGH COURT]. Since the order of the Tribunal is based on the decision rendered by a Bench of this Court, in our opinion, no substantial question of law arises for consideration in this appeal.
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2020 (10) TMI 1095
Assessment of trust - Determinate Trust or indeterminate Trust - Whether Tribunal was right in law in holding that the assessee as a discretionary trust ignoring the fact that the beneficiaries and their share of interest in the trust are determinable at all points of time? - Tribunal held that the provisions of Section 160 is not applicable and the assessee is liable to be taxed on the entire income? - as per tribunal entire receipt is taxable in the hands of assessee even though the income and expenditure have been distributed and intimated to the beneficiaries?
HELD THAT:- In the light of the decision of this Court in the case of CIT vs. M/s.TVS Shriram Growth Fund [2020 (10) TMI 665 - MADRAS HIGH COURT] section 164 of the Act gets attracts only when the shares of the beneficiaries are unknown, which is manifest from the marginal heading of that Section itself, viz., Charge of tax where the share of the beneficiaries unknown. That Section comes into play only where any income or any part thereof is not specifically receivable on behalf of or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown, and in such case, the relevant income, or part of the relevant income shall be charged at the maximum marginal rate.
In order to attract Section 164(1) of the Act, the beneficiaries on whose benefit, such income or such part thereof is receivable are indeterminate and unknown.
Thus substantial questions of law are to be answered in favour of the assessee.
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2020 (10) TMI 1094
Exemption u/s 11 - income received by the appellant such as advertisement income from the souvenir, seminar surplus etc. are in the nature of commercial transaction and cannot be considered as charitable purpose - Tribunal held that the appellant is not entitled for the benefit of Section 11, merely because the appellant received certain additional amounts - what was dominant object of the trust? - organisations which were having their objects of general public utility - HELD THAT:- Fact remains that the assessee is a non-profit entity viz., a charitable public trust and in the light of being a such organisation/institution, the registration of the assessee has not been cancelled or withdrawn till date.
Unless and until there is a factual finding rendered by the authority, benefit could not have been denied to the assessee. As we have found that both the authorities or the Tribunal have examined this aspect and merely gone by the first proviso to Section 2(15) of the Act, we are inclined to interfere with the orders passed by the authorities and the Tribunal and remand the matter for fresh consideration.
Appeal is allowed and the impugned order passed by the Tribunal as well as the order passed by CIT(A) and the assessment order are set aside and the matter is remanded to the Assessing Officer to take a fresh decision bearing in mind the legal principles laid down by the Courts and Tribunal in various decisions as referred.
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2020 (10) TMI 1093
Provision for warranty - allowable revenue expenditure - HELD THAT:- In case of doubt and debate, Income Tax Authorities should have asked for the basis and the formula/criteria applied by the respondent/assessee to compute provision for warranty. On the other hand without disputing the computation, disallowance was made by holding that actual expenditure on warranty claims and not provision for warranty was allowable as expenditure. This proposition is wrong and incorrect. Improvement in technology would not justify disallowance of claim/expenditure on account of provision for warranty, though in a given case on basis of data it could be relevant factor in making the calculations.
In view of the decision of the Supreme Court in Rotork Controls India (P.) Ltd.'s case [2009 (5) TMI 16 - SUPREME COURT] and decision in respondent-assessee's case we do not find any good ground or reason to accept the aforesaid contention of the Revenue.
Marketing expenditure - whether above expenditure is allowable as a revenue expenditure incurred wholly and exclusively for the purposes of the business u/s 37 (1) - HELD THAT:- On examination of the issue before the lower authorities it is apparent that identical issue has been entered by the coordinate bench in assessee’s own case for assessment year 2003 –04 , wherein claim of the assessee was allowed and the issue reached to the doorstep of the honourable High Court [ 2018 (9) TMI 877 - DELHI HIGH COURT ] and order of the coordinate bench was confirmed.
DR could not show us any reason or change in the facts and circumstances of the case. Therefore, respectfully following the decision of the coordinate bench which is been upheld by the honourable High Court on the identical circumstances and facts of the case, we allow ground wherein the marketing expenses on free of cost phones issued to the employees as well as the service centre dealers claimed by the assessee as revenue expenditure, disallowed by the AO holding it to be capital expenditure, direct the learned assessing officer to delete the disallowance of the whole expenditure and also Simultaneously to withdraw grant of 25% depreciation thereof.
Addition on account of closing stock of free of cost phones - closing stock of the assessee has been computed after excluding free issue of phones of 15,554 numbers - HELD THAT:- Respectfully following the decision of the coordinate bench in assessee’s own case for earlier years, where revenue could not show any change in the facts and circumstances of the case of the minuscule amount in comparison to the total turnover of disputed stock, we allow ground number 4 of the appeal of the assessee and direct the learned assessing officer to delete the addition on account of inclusion of closing stock of free of cost phones issued.
Addition on account of provision for obsolescence of inventory - HELD THAT:- Assessing officer has not done any exercise on his part, the disallowance proposed by the AO constantly being deleted by the learned dispute resolution panel in subsequent years also, we allow ground number 5 of the appeal for assessment year 2004 – 05 and ground number 4 for assessment year 2005 – 06 direct the learned assessing officer to delete the disallowance of 25% of the provision for obsolescence of inventory for both the years.
Non consideration of the foreign exchange gain while computing the deduction u/s 80 HHE - HELD THAT:- The issue squarely covered in favour of the assessee by the decision of Novell Software Development (I) (P.) Ltd. [2013 (7) TMI 120 - KARNATAKA HIGH COURT] 90% of the foreign-exchange gain cannot be reduced from the profits and gains of the business of the export of software while calculating deduction u/s 80 HHE of the income tax act. Accordingly ground number 8 of the appeal for assessment year 2004 – 05 filed by the assessee is allowed.
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2020 (10) TMI 1092
Rectification of mistake - double disallowance of Lease Rent - HELD THAT:- Assessee arrived at business income after making disallowance of Lease Rent and although the assessee claimed the deduction of Lease Rent while computing Income from House Property but it resulted in net loss under the head “Income from House Property” and Net Taxable Income as worked out accordingly.
AO has started the computation by taking the figure of income which is after making disallowance of Lease Rent and again disallowed Lease Rent therefore, it is a clear case of double disallowance of Lease Rent because the loss worked out under the head Income from House Property and consequent lesser taxable income worked out by the assessee is not given effect to by the AO. Under these facts, we accept that there is apparent mistake in tribunal order in saying that there is no double disallowance of Lease Rent - We rectify this mistake - M. P. of the assessee is allowed.
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2020 (10) TMI 1091
Interest earned from the unutilized capital subsidy and equity - Capital or revenue receipt - HELD THAT:- CIT(A) has followed the Tribunal’s order in assessee’s own case for AY 2009-10 & AY2010-11 while giving relief to the assessee by treating the interest earned from the unutilized capital subsidy and equity as capital receipt. Since there is no change in fact or law and we note that the interest from the unutilized capital subsidy and equity are ‘inextricably linked’ with the process of setting up of the project i.e. integrated petrochemicals complex at Pipalkota, District Dibrugarh, Assam and has only commenced/set up/operation in February, 2016 (AY 2016-17), by relying on the ratio of the decision of CIT Vs. Bokaro Steels Ltd. [1998 (12) TMI 4 - SUPREME COURT] and Karnataka Power Corporation [2000 (7) TMI 72 - SUPREME COURT] we are of the opinion that the Ld. CIT(A) rightly allowed the claim of assessee.
Interest earned from the borrowed funds (short term temporary deposits) - claim of capitalizing interest received by assessee from short term deposit (herein after referred as ‘STD’) of unutilized borrowed funds - HELD THAT:- Utilization of the funds available with the assessee is strictly governed by the objects set up by the Articles of Association of company. A perusal of the object clause indicates that there is no scope for the assessee to utilize any funds available for any purpose other than that stated in the Articles of Association - interest earned on the deposits had to be mandatorily invested in the project/business of the assessee and in the facts as discussed we note that interest from borrowed funds temporarily deposited in banks [STD] is inextricably linked to the setting up of the plant. Hence, the interest from the borrowed funds has been rightly capitalized and set off against the pre-operative expenses and, therefore, we rely on the decision of the Hon’ble Supreme Court in Bokaro Steels Ltd. and Karnataka Power Corporation (supra), hold that the interest earned from the borrowed funds/STD which is inextricably linked to the setting up of the plant need to be treated as a capital receipt.
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2020 (10) TMI 1090
Condonation of delay - delay of 51 days - HELD THAT:- Assessee has explained cause of delay, therefore, in the facts and circumstances of the case, we condone the delay of 51 days in filing the present appeal and admit the appeal for hearing.
Claim of depreciation as an application of income towards the income earned by the assessee society - CIT(A) had passed an ex-parte order - HELD THAT:- As noticed that CIT(A) had passed an ex-parte order as nobody appeared on behalf of the assessee before CIT(A). On perusal of the order, we also noticed that initially the appeal was fixed for hearing and was adjourned from time to time on various occasions, but none attended on behalf of the assessee. As noticed that throughout the assessee remained non-cooperative despite availing several opportunities, therefore CIT(A) passed the impugned order, thereby taking into consideration, the statement of facts and the material placed on record.
It was the bounded duty of the parties i.e. assessee as well as the Department to appear before the Ld. CIT(A). Since, this was the assessee’s appeal, therefore it was all the more important for the assessee to appear before Ld. CIT(A). However, the assessee had not acted with due diligence - aside the impugned order of the ld. CIT(A) and remand the matter back to the record of the ld. CIT(A) for deciding the appeal afresh on merits - Appeal of the assessee allowed for statistical purposes only.
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2020 (10) TMI 1089
Addition u/s. 68 - Addition on account of share capital and share premium as Unexplained cash credit - onus to prove - HELD THAT:- Assessee had discharged the initial onus of proving the fulfilment of primary ingredients of Sec.68. The onus, thus, shifted on Ld. AO to rebut the assessee’s stand as well as documentary evidences by bringing on record cogent material to dislodge the same. Except for relying on a third-party statement, which was never confronted to the assessee, there is no other material to support the conclusion that the said transactions were unexplained cash credit. No opportunity of cross-examination was ever provided to the assessee and in fact, no further investigations were done by Ld. AO to support his conclusion.
Therefore, additions could not be sustained in the eyes of law.
As rightly noted by Ld. CIT(A), in terms of the decision of Gagandeep Infrastructure P. Ltd. [2017 (3) TMI 1263 - BOMBAY HIGH COURT] proviso to Sec.68 requiring assessee to prove the source of source was applicable only from AY 2013-14 onwards only and therefore, the assessee could not be obligated to prove the source of source for AY 2010-11. We concur with the reliance of Ld. CIT(A) on this binding judicial precedent for the said proposition.
Since there is allegation by Ld. AO that the three entities were being managed as well as controlled by Shri Shirish Chandrakant Shah whereas the said party, in the sworn affidavit, has already denied having advanced any accommodation entry to the assessee.
Additions made Ld. AO u/s 68 could not be sustained in the eyes of law and hence, rightly deleted by Ld. CIT(A). - Decided in favour of assessee.
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2020 (10) TMI 1088
Validity of reassessment proceedings - reasons to believe - HELD THAT:- Since the assessee was found to be one of the beneficiary, the case was reopened within 4 years from end of relevant assessment year as per due process of law by issuance of statuary notices u/s 148 as well u/s 143(2) & 142(1). Original return filed by the assessee was not subjected to scrutiny assessment. It is quite discernible that Ld. AO was clinched with specific tangible information as to possible escapement of income. Nothing more, in our opinion, was required at this stage to reopen the assessment proceedings. Therefore, we do not find any substance in legal grounds raised before us. Ground Nos. 1 to 3 stand dismissed
Rejection of books would stand dismissed in view of the fact that Ld. AO has made specific item-wise additions without disturbing the overall financial results shown in the audited financial statements. Ground Nos. 1 to 4 stands dismissed.
Estimation of income - Bogus purchases - AO estimated an addition of 12.5% against suspicious purchases - HELD THAT:- The assessee’s accounts were duly audited wherein various stock register as well as quantitative details of traded goods were furnished. As uncontroverted fact that not even a single piece of diamond was found at the premises of the suspicious suppliers which came to light during search / survey proceedings. The said aforesaid facts would justify the stand of AO in rejecting the profits shown on these purchases and make estimated additions to account for undeclared profit element earned by the assessee on these purchase transactions. As rightly concluded that the said purchase-sale transactions recorded in the books would not reflect true picture of profits earned by the assessee on these transactions and purchase rate as mentioned in the supplier’s sale invoices could not be accepted.
Estimation of profit - assessee has reflected overall Gross profit (GP) Rate of 6.65% during the year as against corresponding rate of 6.11% in preceding year. AR has stated that since the profit earned on these suspicious transactions is 7.25%, no further addition should be made. We are not inclined to accept the said plea. Assessee was dealing in low margin commodity like diamond which attract lower VAT rate of 1% and in view of the overall GP rate reflected during the year, we restrict the estimation to 2% of aggregate purchase
Addition of Unsecured Loans, interest & commission - HELD THAT:- Nothing was brought on record to suggest any cash got exchanged between the assessee and the lenders. In the background of stated facts, it could very well be said that the assessee had duly discharged the onus of proving the fulfilment of primary ingredients of Sec.68. The onus, thus shifted on revenue, to controvert the same by bringing on record cogent material to dislodge the documentary evidences submitted by the assessee. However, except for third party statements, the revenue is not cinched with any specific evidence against the assessee to declare the said loans as the money of the assessee brought into the books by way of unexplained cash credit. No effective investigation is shown to have been carried out by the revenue to dislodge the assessee’s documentary evidences.
Addition of unexplained cash credit could not be sustained in the eyes of law. Consequently, interest disallowance as well as commission / brokerage addition as made against the same would not survive.
Disallowance u/s 14A - HELD THAT:- While computing the said disallowance, only those investments which have fetched exempt income during the year are to be considered.
Overall disallowance could not exceed the exempt income earned by the assessee during the year. Therefore, we direct Ld. AO to re-compute the said disallowance considering only those investments which have fetched exempt income during the year. Ground No.9 stands partly allowed.
Disallowance u/s 36(1)(iii) - interest free loans given to partners - nexus of borrowed funds vis-à-vis capital withdrawals - HELD THAT:- Assessee firm has not provided any interest on credit balances of partners’ capital in earlier years and likewise it has also not charged the interest on debit balances during the year. Partners’ had credit balances in all earlier three years whereas debit balances have arisen only due to the withdrawals during the year. Assessee’s financial statements for the year, as placed on record, would show that there is overall reduction in secured and unsecured loans during the year whereas sundry creditors for goods and expenses have shown hefty increase which would lead to a conclusion that the withdrawals were funded out of credit float enjoyed by the assessee. Further, the assessee has reflected taxable income of ₹ 204.42 Lacs which could be said to have accrued evenly throughout the year. Therefore, unless direct nexus of borrowed funds vis-à-vis capital withdrawals was established, no such disallowance u/s 36(1)(iii) could have been made. We find that Ld. AO has failed to bring on record this nexus - Decided in favour of assessee.
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2020 (10) TMI 1087
Bogus purchases - Estimation of income - investigations carried out by the Investigation Wing, Mumbai as well as on the basis of statements recorded U/s 132(4) - HELD THAT:- There is nothing on record to show that the ITO had not disclosed to the assessee, the material he had collected from the Investigation Wing of the Income Tax Department. ITO/AO is not bound by any technical rules of law of evidence. It is open to him to collect materials to facilitate the assessment even by private enquiry but if he desires to use the said material so collected, then in that eventuality, the assessee must be informed of the material and must be given an adequate opportunity of explaining it.
In this case, the A.O. had informed the assessee in respect of material collected by him and had also provided adequate opportunity to the assessee of explaining the same. Even otherwise, from the records, we also noticed that in the statement of Shri Bhanwal Lal Jain recorded U/s 132(4) of the Act, it was specifically admitted that they were involved in providing bogus entries by issuing accommodation bills.
AR could not point out any material on record to show that the above concerns from whom the purchases made, were in fact carrying out any commercial activity and were maintaining stocks.
Presumption of correctness is attached with the statement recorded U/s 132(4) of the Act as the said statement was recorded by the officials of the IT department during discharge of their official duties and since the said statement is recorded on oath, therefore, the presumption of correctness is attached with the said statement until it is rebutted or uprooted by the assessee. We also noticed that the ld. CIT(A) while reaching to the conclusion on the basis of material placed on record had held that since the assessee has failed to justify the purchases made by him, therefore, had rightly invoked the provisions of Section 145(3) - since the assessee failed to substantiate the purchases of ₹ 90,42,850/-, therefore, keeping in mind, the better trading results declared by the assessee, a lumpsum addition of ₹ 10.00 lacs were sustained. - Decided against assessee.
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2020 (10) TMI 1086
Unexplained jewellery - Jewellery offered in original Return of income and said income was not withdrawn by filing Revised return of Income - whether said jewellery did not belong to assessee but belonged to the family members and that there is no estoppel against statute? - HELD THAT:- As during the statement on oath under section 132(4) of the IT Act the assessee has duly submitted that the jewellery found in their lockers belong to the family members. In course of assessment proceedings the assessee has duly given details about the jewellery found in the search belonging to other family members. The very fact that the assessee was made to pay tax equivalent to 100% value of undisclosed jewellery clearly shows that the Revenue authorities have taken advantage of the assessee not being aware of his rights properly.
By no stretch of imagination if tax is at all due the same is equivalent to 100% value of the jewellery found. Furthermore, the Revenue authorities cannot also show ignorance of the permissible limit of jewellery holdings as prescribed by the CBDT Instruction No. 1994. Assessee has duly brought on record affidavits of the family members owning jewellery. Just because the claim is made otherwise then by revised return the said claim does not seize to be a claim to be adjudicated as long as the claim is made.
Hon'ble Supreme Court’s decision in the case of Shelly Products [2003 (5) TMI 4 - SUPREME COURT], supports the proposition that if the assessee has erroneously paid more tax than he was legally required to do, he is entitled to claim the refund, as otherwise it would be violative of Article 265.
Thus hold that the jewellery found was within the limit fixed by CBDT as per Instruction No. 1994 dated 11.5.1994. The authorities below have erred in rejecting the assessee’s claim - Decided in favour of assessee.
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2020 (10) TMI 1085
Depreciation claim on motor vehicles - Personal use v/s business use - Disallowance of claim as vehicles were purchased in the name of the directors of the assessee company - HELD THAT:- As decided in assessee's own case [2019 (1) TMI 1816 - ITAT PUNE] there cannot be any disallowance of personal expenses for cars on account of personal use by the director. It has been further held that no disallowance can be made even by treating such expenditure as not having been incurred for the business purpose - there can be no disallowance on account of personal use by the director-employees of the assessee. Such an amount can be treated as a perquisite in the hands of the employees - Decided in favour of assessee.
Disallowance u/s.80IA(4) - As per AO Assessee had claimed deduction u/s.80IA(4)(iii) of the Act without complying with the provisions of the Act and Income Tax Rules - HELD THAT:- This issue is also covered in favour of the assessee by the order of Pune Bench of the Tribunal [2018 (8) TMI 1993 - ITAT PUNE] wherein placing reliance on the decision of the Hon‟ble Jurisdictional High Court in the case of CIT Vs. Paul Brothers [1992 (10) TMI 5 - BOMBAY HIGH COURT] wherein held unless the relief claimed in the first year of undertaking is withdrawn, the AO cannot withhold the relief for the subsequent years. As claim is allowed for first year of undertaking, the AO cannot withdraw the deduction - Decided in favour of assessee.
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2020 (10) TMI 1084
Bogus purchases - enquiries from the VAT Department - AO also found that both the parties have not reported any sales to the assessee in their respective returns filed to the VAT Department for the sales made to the assessee - HELD THAT:- We are disallowing the purchases but on the other side we are treating the sales of such purchases as genuine - none of the authorities below has doubted on the sales made by the assessee against such purchases.
We find force in the contention of the Learned AR that an element of profit can be added to the total income of the assessee prevent the loss if any to the revenue on account of such purchases. In the construction activity, it is the prevailing practice that the assessee makes purchases of the raw materials from the grey market and further made bogus purchases to record the same in the books of accounts. Accordingly, we don’t incline to disallow purchases treating them as bogus in the given facts and circumstances.
Determine the element of profit embodied in such purchases - In the interest of justice and fair play and to prevent any leakage to the revenue, we are of the view that the justice will be served the assessee as well as to the revenue if income of the assessee is enhanced by 5% on such purchases. Accordingly, we direct the AO to make the addition @ 5% on such bogus purchases.
Addition on account of commission expenses - HELD THAT:- AO was aware of all the details of the commission agents such as the addresses, PAN but he has not taken any confirmation from such agents about the genuineness of the commission received by them. The assessee by furnishing the requisite details about the commission agent shifted its onus upon the AO to prove that commission expenses was not incurred in the course of the business.
AO was under the obligation to provide the opportunity for the cross-examination of the statement obtained from the flat owners to the assessee as well as to the commission agents before arriving at the conclusion that there was no involvement of the commission agents in selling the flats to the flat owners. In our considered view, the statement obtained at the back of the assessee of the flat owners cannot be a ground for making the disallowance in the given facts and circumstances - Decided in favour of assessee.
Addition on account of on money - random enquiries from ten persons who have purchased flats/shops in the projects developed by the assessee, found that the buyers have made the payment for the purchase of the flats/shops through cash and cheques in the ratio of 40% to 50% - HELD THAT:- AO in the remand proceedings vde letter dated 16thJune 2014 has verified all the ten owners of the flats/shops in response to the summon issued under Section 131 of the Act and reached to the conclusion that there was no cash involved in the purchase of flats/shops. Assessee has not received any cash against the sale of the flats/shops from the buyer. Accordingly, we do not find any infirmity in the order of the Learned CIT(A) and, thus, we decline to interfere in his order. Hence, the ground of appeal of the Revenue is dismissed.
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2020 (10) TMI 1083
Violation of Rule 46A - CIT(Appeals) non affording opportunity to the AO - Income from other sources - permitted method of valuation - assessee is a domestic company engaged in the business of internet services and infrastructure management services and assessee issued 19500 shares and received share premium - CIT(Appeals) deleted the addition made by the AO - HELD THAT:- As agreed by both the parties that there was a violation of Rule 46A of the Income Tax Rules, 1962 (Rules), in as much as the CIT(A) did not confront the material that was placed before him to substantiate the valuation under the DCF method adopted by the Assessee in its report of valuation. The ld. counsel for the assessee, however, submitted that what was filed before the CIT(Appeals) was only financial statements to substantiate the valuation as made by the assessee. In our view, when the basis of conclusion of CIT(Appeals) is the financial statements filed by the assessee before him, it was incumbent upon the CIT(A) to have confronted the material filed before him to the AO in accordance with the mandate of Rule 46A of the I.T. Rules, 1962.
Since there is a violation of Rule 46A of the Rules, the issue should be remanded back to the CIT(Appeals) for fresh consideration after affording opportunity to the AO. - Decided in favour of revenue for statistical purposes.
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2020 (10) TMI 1082
Provisions for future expenses disallowed - AO was of the opinion that such type of contingent liabilities were not deductible - HELD THAT:- Nature of provisions considered by this Tribunal in preceding years are not similar to future claim provided for by assessee during the year under consideration - assessee submitted details of work, which was to be incurred by assessee in preceding year against which, provision was made.
Also that before this Tribunal assessee demonstrated that, the provisions were subsequently debited at the end of the year as the expenditure had been incurred by assessee in respect of the same. In the interest of Justice, we remand the issue to Ld.AO to verify the submissions of assessee in light of the contract entered into with BMRCL. Assessee is directed to furnish all requisite details in support of its claim. Ld.AO is then directed to consider the claim of assessee in accordance with law. Grounds raised by revenue stands allowed for statistical purposes
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2020 (10) TMI 1081
Penalty u/s 271(1)(c) - AO held that the assessee had concealed the particulars of income because the interest earned from the fixed deposit was not included as income under the head “income from other source” in the return of income and levied minimum penalty - HELD THAT:- The issue of netting off of the interest or treating the interest income earned by the assessee as taxable under the head “income from other source” is a debatable issue considering the facts and circumstances of the case of the assessee. assessee has taken one possible view which was rejected by the Ld. Revenue Authorities - assessee had brought out all the facts before the Revenue along with the return of income. Therefore, at the most it can be only treated as a claim of the assessee which may not be sustainable in law.
We are of the considered view that the ratio laid down in the case of CIT vs. Reliance Petroproduct (P.) Ltd [2010 (3) TMI 80 - SUPREME COURT] will be squarely applicable to the case of the assessee wherein held Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c) - Decided in favour of assessee.
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2020 (10) TMI 1080
Penalty u/s 271(1)(c) - information from the Sales Tax Department, Government of Maharashtra about bogus purchases made by the assessee - HELD THAT:- Instead of disallowing the entire purchases AO had only added the profit element embedded in such purchases which clearly suggests that the assessee, in fact, had made purchases, though, the source of such purchases may not have been established for whatever may be the reason.
Even assuming that the assessee was unable to prove the source of such purchases, what might have escaped assessment is only the profit element embedded in such purchases. For that reason only, the Assessing Officer has estimated the profit element embedded in such purchases @ 12.5% and added back to the income of the assessee.
Additions of such estimated profit by no means would lead to an inference that the assessee has either furnished inaccurate particulars of income or concealed its income. That being the case, the provisions of section 271(1)(c) cannot be pressed into action - Decided in favour of assessee.
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2020 (10) TMI 1079
Disallowance u/s. 36(1)(v) on account of unapproved Gratuity Expenses - AO was of the view that in the assessee's case, the contribution is made to an unapproved Gratuity Fund, therefore deduction u/s. 36(1)(v) of the Act cannot be claimed - HELD THAT:- Payment made by the assessee to the Life Insurance Corporation under Group Gratuity Scheme would be an allowable expenditure as held in the case of Shri Sajjan Mills [1985 (10) TMI 2 - SUPREME COURT] therefore respectfully following above we allow ground no. 1 raised by the assessee.
Disallowance u/s. 40(a)(ia) on account of non-deduction of TDS - scope of amendment - whether Disallowance should be restricted to 30% of the total disallowance as per amended provision of Income Tax Act? - whether insertion of second proviso to Sec. 40(a)(ia) is retrospective or prospective in nature? - HELD THAT:- The said issue raised by the assessee is no longer res integra, recently in the case of Shree Choudhary Transport Company [2020 (8) TMI 23 - SUPREME COURT] held that amendment in the second proviso to Sec. 40(a)(ia) is prospective in nature.
Hence the amendment in the second proviso to Sec. 40(a)(ia) is prospective in nature therefore, disallowance should not be restricted to 30% of the total disallowance therefore we dismiss the ground raised by the assessee.
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