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Showing 301 to 320 of 1182 Records
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2025 (2) TMI 882
Seeking quashing of order passed u/s 129(3) of the U.P.G.S.T. Act, 2017 - E-way bill did not accompany the goods in transit - HELD THAT:- Admittedly, in the case in hand, at the time of interception of the goods in transit, tax invoice, Central E-way bill and builty was accompanied therewith and only the State E-way bill under UPGST Act was not available along with it, due to which, the proceedings were initiated against the petitioner.
The issue in hand is no longer res-integra as the Division Bench of this Court in the cases of M/s Godrej and Boyce Manufacturing Co. Ltd. [2018 (9) TMI 1261 - ALLAHABAD HIGH COURT] and M/s Manas Enterprises [2024 (12) TMI 62 - ALLAHABAD HIGH COURT] has not justified the seizure proceedings and quashed the proceedings of the same therein.
In view of the aforesaid undisputed facts that during period from 01.02.2018 to 31.03.2018, the requirement of E-way Bill under UPGST Act read with Rules framed thereunder was not enforceable, the proceedings pressed against the petitioner are without jurisdiction and as such, the impugned orders cannot be sustained in the eyes of law and the same is hereby quashed.
Conclusion - The writ petition is allowed, in favor of the petitioner based on the lack of enforceability of the E-way Bill requirement during the relevant period.
Petiiton allowed.
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2025 (2) TMI 881
Detention of goods - levy of penalty - failure to accompany e-tax invoice with the goods - intent to evade - HELD THAT:- It is not in dispute that the goods in question were accompanying with tax invoice, e-way bill, bilty, etc., in which no adverse inference regarding the description of goods and the quantity of goods was ever drawn at any stage.
The only ground for seizure of the goods and penalty was that the e-tax invoice was not accompanying the goods in question. The petitioner submitted its reply specifically mentioning that due to technical glitch in the GST portal, the same could not be generated. The said fact has not been disputed by any of the authorities. Even before this Court, the said ground has been taken, but the same has not been specifically denied. Further, the record shows that none of the authorities below have recorded any finding that the petitioner has intention to evade payment of tax.
This Court in Shyam Sel & Power Limited [2023 (10) TMI 218 - ALLAHABAD HIGH COURT] and Galaxy Enterprises [2023 (11) TMI 359 - ALLAHABAD HIGH COURT] has specifically held that in case any deficiency is pointed out in the show cause notice and the same is cured before passing of the detention order, no penalty can be justified.
Conclusion - The detention and penalties imposed on the petitioner for not accompanying the e-tax invoice were not justified under the law.
The impugned order is set aside - petition allowed.
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2025 (2) TMI 880
Seeking a direction to pass separate orders for the various financial years - seeking to grant sufficient time for furnishing a reply for financial years 2018- 2019 to 2023-2024 and provide an opportunity for cross examination - HELD THAT:- Considering the fact that 05.02.2025 is the last date for passing orders under Section 74 of the Act in respect of 2017-2018, it is not deemed proper for this Court to interfere in respect of the determination now sought to be done through Ext.P1 especially in relation to the aforesaid year. However, if an opportunity for cross examination is required by law and is not granted, the same is a matter to be considered at the appropriate stage by the appropriate authority. This Court cannot at this juncture assume that the apprehension of the petitioner is legally justified, especially in the absence of any material.
However taking note of the apprehension of the petitioner that a composite order will be issued by the second respondent, insofar as years 2018-2019 onwards are concerned, the petitioner ought to be granted a reasonable opportunity of hearing since the limitation does not expire in the immediate future.
Hence, liberty is granted to the competent amongst the respondents to pass appropriate orders for 2017-18, pursuant to Ext.P1 show cause notice within the period of limitation, in accordance with law, after granting an opportunity of hearing - Petition disposed off.
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2025 (2) TMI 879
Challenge to assessment order - AO did not follow the required procedures u/s 74 of the Tamil Nadu Goods and Services Tax Act, 2017, or the guidelines provided in a circular issued by the Commissioner of State Tax - HELD THAT:- A perusal of the order impugned would also show that the Assessing Officer had not made any determination of the tax payable by the petitioner as envisaged under Section 74 of the Act, nor has followed the guidelines issued in Circular dated 29.08.2024 of the Commissioner of State Tax. In such view of the matter, the order impugned suffers from vice of arbitrariness. For the said reason, the order impugned is liable to be interfered with.
The matter is remitted back to the first respondent for fresh consideration - Petition allowed by way of remand.
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2025 (2) TMI 878
Challenge to assessment order - the proceeding does not contain the signature of the assessing officer - HELD THAT:- The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner [2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT]. A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections 160 & 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect.
The impugned assessment order would have to be set aside on account of the absence of the signature of the assessing officer, on the impugned assessment order.
This Writ Petition is disposed of, setting aside the impugned assessment order in Form GST DRC-07, dated 26.10.2023, issued by the 1st respondent, with liberty to the 1st respondent to conduct fresh assessment, after giving notice and by assigning a signature to the said order.
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2025 (2) TMI 877
Cancellation of petitioner's registration on the ground of non-filing of return - HELD THAT:- This writ petition is disposed of by setting aside the impugned orders by both the concerned authorities by directing and the respondent CGST/WBGST authority to restore the petitioner's registration and open the portal for a period of 45 days from date of communication of this order by the counsel of the respondent authority to enable the petitioner to make the payment of revenue due as well as any other due including penalty to be indicated by the respondent authority concerned within a period of 15 working days.
Petition disposed off.
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2025 (2) TMI 876
Reversal of credit availed on the strength of invoices - Fraudulent passing on input tax credit without actual supply of goods - petitioner is ready and willing to pay 25% of the disputed tax - HELD THAT:- The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order.
If any amount has been recovered or paid out of the disputed taxes, including by way of pre-deposit in appeal, the same would be reduced/adjusted, from/towards the 25% of disputed taxes directed to be paid. The assessing authority shall then intimate the balance amount out of 25 % of disputed taxes to be paid, if any, within a period of one week from the date of receipt of a copy of this order. The petitioner shall deposit such remaining sum within a period of three weeks from such intimation.
The impugned order dated 30.04.2024 is set aside - Petition disposed off.
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2025 (2) TMI 875
Revision u/s 263 - additions on account of notional rent under the head ‘income from house property’ - reopening is sought to be done beyond the period of 4 years from the end of the relevant assessment year.
HELD THAT:- The issues raised in the reasons recorded for reopening are identical to the reasons for which revisional proceedings u/s 263 were initiated by the PCIT. The said revisional order under Section 263 of the Act was passed directing the assessing officer to examine the issues raised in the revisional proceedings and pass a fresh order.
Therefore, on the same ground the assessing officer is not justified to reopen the case, moreso, after a period of 4 years. In our view, even the approving authority should not have given his approval after he himself having passed the order under Section 263. Therefore, even on this ground since the issues were subject matter of 263 proceedings, the impugned proceedings are barred by 3rd proviso of Section 147 of the Act.
The reasons recorded initially states that there has been no disclosure of material facts necessary in the assessment but, what were the material facts which were not disclosed has not been stated. On perusal of the reasons recorded it is observed that the officer himself has recorded that it is based on the perusal of records and verification of records that reopening proceedings are initiated. In our view, on this ground also the pre-condition required of failure to disclose truly and material facts necessary for the assessment is not satisfied and therefore, the proceedings are bad in law as per the proviso of Section 147 of the Act.
In the order rejecting the objections, the officer states that the reopening is permissible if in the original assessment the Assessing Officer has through inadvertence oversight given relief.
If that be the case, then, certainly no proceedings could have been initiated by the respondent by virtue of first proviso to Section 147 of the Act because according to the respondent, it is the mistake of the predecessor Officer and, therefore, the issue of any failure to disclose fully and truly all necessary facts for the assessment by the petitioner would not arise. In any case, pursuant to the direction under Section 263 of the Act, the Assessing Officer examined all the issues which are also subject matter of the present proceedings and passed the assessment order on 14 December 2018.
Therefore, any attempt now to re-agitate the issues which were already examined while passing the assessment order pursuant to directions in 263 proceedings would be based on change of opinion and review of the earlier order which is not permissible. Decided in favour of assessee.
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2025 (2) TMI 874
Validity of reopening of assessment proceedings - denial of principle of natural justice - despite the reply having being filed within the statutory period of seven (7) days, AO proceeded to pass an order u/s 148A (d) without considering the reply so filed by the petitioner - HELD THAT:- Revenue fairly states that the petitioner may be given one more opportunity to respond to the notice dated 21.08.2024.
The impugned order passed u/s 148A (d) as well as the notice issued u/s 148 are set aside. AO shall consider the reply already filed by the petitioner and pass an appropriate order within a period of four weeks.
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2025 (2) TMI 873
Claim of Unconditional stay on the proclamation and sale of the immovable property of which the Petitioner is the joint owner - HELD THAT:- The conduct of the Petitioner is important. The fact that the Petitioner or the Company are unwilling to pay any taxes, though the tax demands have attained finality, is also relevant. The fact that none of the foundational orders are challenged is important. The fact that no severe financial hardships are pleaded or urged is also important.
In the case of Dunlop India Ltd and Others [1984 (11) TMI 63 - SUPREME COURT (LB)] has held that in fiscal matters, there is no justification for granting unconditional interim reliefs merely upon the Petitioner making out a prima facie case. The aspects of balance of convenience must also be considered. Here, assuming that a prima facie arguable case is made out, still, the balance of convenience does not favour grant of an unconditional stay.
We are satisfied that the ad interim orders granted earlier can be confirmed if the Petitioner deposits 50% of the demanded amount with the Respondents within eight weeks of today. If no such deposit is made within eight weeks of today, this interim order will stand vacated without further reference to this Court. We order accordingly.
We clarify that this interim order only restrains the Respondents from selling the attached property. Based on this interim relief, the Petitioner must not deal with the attached property or otherwise sell, transfer, convey, or create any third-party rights in it.
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2025 (2) TMI 872
Penalty u/s 270A - HELD THAT:- This is not a case where the Assessing Officer, after being conscious of the institution of the Appeal, has nevertheless deemed it appropriate to exercise the powers u/s 275(1)(a). AO has only observed that since the ITBA data did not reflect the institution of the quantum Appeal, the Assessing Officer felt that he had no alternative but to impose a penalty.
Thus, this is not a case where the penalty was imposed after independent application of mind. The main grounds for imposing the penalty were because the AO felt that he had no alternative but to impose the penalty in the absence of the ITBA portal, reflecting the institution of the quantum Appeal by the Petitioner.
Petitioner had pointed out that the quantum Appeal was indeed instituted. The Petitioner also produced the acknowledgment receipt evidencing the institution of the quantum Appeal. Because of a technical glitch, if this institution was not being reflected on the ITBA portal, no penalty should have been imposed by holding that the AO had no alternative but to impose a penalty.
We quash and set aside the impugned penalty order. However, we clarify that the quashing of this order will not preclude the Respondents from initiating fresh proceedings for the imposition of penalty should they so desire upon the disposal of the Petitioner’s quantum Appeal before the Commissioner (Appeals).
Based upon this statement, the Petitioner’s Appeal against the penalty order before the Commissioner (A) is disposed of as withdrawn. Mr Jain states that this order will be placed before the Commissioner (Appeals) within 15 days from today so that the Appeals can be shown as disposed of for statistical purposes.
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2025 (2) TMI 871
Reopening of assessment u/s 147 - failure to disclose all material facts necessary for assessment - HELD THAT:- No fresh tangible material could be said to have come to the knowledge of the assessing officer for reopening of the assessment.
Admittedly, the Petitioner’s case was selected for scrutiny, and several queries were raised. In particular, the queries were raised regarding the claims u/s 35AC and deductions u/s 80G of the IT Act. Upon considering the Petitioner’s response, these claims were allowed in the assessment order u/s 143 (3) of the IT Act.
Though, this was a case of reopening within 4 years, still, in the absence of any fresh tangible material coming to the knowledge of the assessing officer, reopening of the assessment only on re-examination of the very same material based on which the original assessment order was passed cannot be permitted.
In this case, the Petitioner has not claimed any benefits under Section 37. Petitioner has, however, claimed deductions under Section 35AC. No provision was shown to us based on which we could infer that such a deduction could not, at least prima facie, be claimed. On the contrary, Mr Kamdar referred us to the statement of objects and reasons accompanying the Finance (No. 2) Bill, 2014 by which these amendments were introduced.
In any event, we do not propose to go into the merits of the matter. This Petition must be allowed because there was no tangible fresh material based upon which the AO could have reason to believe that any income had escaped assessment. This is, as noted earlier, a scrutiny case where several queries, including queries particular to this issue, had been raised. The queries were answered by the Petitioners, and upon consideration of all these materials, an assessment order was made u/s 143 (3) of the IT Act.
On the ground that some other view was possible, the AO could not have changed his earlier opinion and, based upon such change of opinion, issued the impugned notice seeking to reopen the assessment. For all these reasons, the impugned notice and the consequential orders will have to be set aside.
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2025 (2) TMI 870
Validity of reassessment proceedings on the basis of a search action u/s 132 - HELD THAT:- As in the event any incriminating material is found during the search, the Revenue necessarily would be required to take recourse to the provisions of Section 153A and in the event no incriminating material found during the search, then the power of the Revenue to have the reassessment u/s 147/148 stands saved, failing which, the Revenue would be left without remedy.
Rajasthan High Court in Shyam Sunder Khandelwal s/o. Late Damodar Lal Khandelwal [2024 (4) TMI 196 - RAJASTHAN HIGH COURT] also had taken a similar view when the issue which had arisen before the Court was in regard to the notice issued u/s 148 the basis of issuance of such notice was the material seized during search. The contention of the assessee was to the effect that in the said circumstances, the proceedings ought to have been initiated u/s 153C. The Division Bench referring to the decision of Supreme Court in Abhisar Buildwell P. Ltd. [2023 (4) TMI 1056 - SUPREME COURT] as also the decision of Sri Dinakara Suvarna [2022 (7) TMI 800 - KARNATAKA HIGH COURT] allowed the petitions observing that the department had not set up a case, that for initiating proceedings under Section 148, it had material other than the material seized during the search of a related party.
We are of the clear opinion that the foundation of the present case was certainly a search action which was undertaken by the Revenue against one Shilpi Jewellers Pvt. Ltd. and in such search and seizure action, materials were seized and such materials were further explored and enquired. Such enquiry revealed significant information in regard to M/s. Green Valley Gems Pvt. Ltd., which according to the Revenue had provided accommodation entries to the petitioner, in which it was also revealed that Green Valley Gems Pvt. Ltd. was a shell company. We do not find that the record would indicate something which is not on the basis of such new materials gathered under the search and seizure action under Section 132.
There cannot be any doubt on the position in law when the Revenue intends to proceed purely on materials relevant for an action under Section 148 r.w.s. 147. The provisions of Sections 147, 148 vis-a-vis Section 153A and Section 153 are quite compartmentalized. To avoid any overlapping of these provisions, the legislature in its wisdom has thought it appropriate to provide for an independent effect, to be given u/s 153A r.w.s. 153C by incorporating the “non-obstante” clause, in these provisions, which carves out an exception to any normal/regular action being resorted u/s 147.
We are of the clear opinion that the impugned notice u/s 147 and all actions consequent thereto are required to be held to be without jurisdiction and bad in law. The petition is accordingly allowed in terms of prayer clauses (a) and (b).
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2025 (2) TMI 869
Validity of proceedings initiated u/s 153C - no incriminating material was found during the search pertaining to the AYs in which the additions have been made - HELD THAT:- While and undoubtedly Section 153C as it stood at the relevant time did not contemplate a two tier recordal of satisfaction and the AO of the searched person was merely obliged to transmit the material belonging or pertaining to a third person gathered in the course of a search, proceedings under the said provision could not have been triggered mechanically absent the formation of opinion by the AO of the non-searched person that the material was likely to impact an assessment made.
We are of the considered view that the subsequent introduction of the words “have a bearing on” in the provision was not an introduction of a new obligation upon the AO.
The primordial requirement of the material relating to undisclosed income had existed even prior to the amendments introduced in 2015 and which position has been consistently recognized by our Court including in RRJ Securities and the host of precedents which followed. This would also appeal to reason since the family of provisions concerned with search were intended to enable the AO to utilise the material that may have been uncovered in a search to test the validity of assessments completed or the veracity of the disclosures made by assessees.
The provisional Balance Sheet could not be said to be reflective of affairs pertaining to AYs 2004-05 and 2005-06. It was clearly not a document which displayed carried forward or past entries of income or expenditure. The Tribunal was thus justified in annulling the assessment undertaken. Decided against revenue.
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2025 (2) TMI 868
Reopening of assessment u/s 147 in the name of deceased - HELD THAT:- A decision in the case of Meet Lalwani [2023 (11) TMI 1196 - MADHYA PRADESH HIGH COURT] wherein it is held that issuance of notice u/s 148 of the Act in the name of deceased cannot be sustained. The issue of notice under Section 148 of the Act is a foundation for reopening of assessment.
The sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of correct person meaning thereby the same should not have been issued in the name of dead person. Admittedly, the provisions of Section 159A of the Act of 1961 has not been taken into consideration in the case of Meet Lalwani [Supra]
This Court has no hesitation in quashing the impugned orders passed by respondent no.2.
Effect of Section 159 has not been considered in the case of Meet Lalwani (supra), the respondents/Department would be at liberty to proceed against the petitioner in accordance with law.
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2025 (2) TMI 867
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We accept the contention of the Appellant that no disallowance under Section 14A read with Rule 8D(2)(ii) of the IT Rules was warranted in the present case and therefore, addition made by the Assessing Officer by disallowing proportionate interest cost is deleted under the normal provisions.
Disallowance u/Rule 8D(2)(iii) - As in the case of ACIT Vs. Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has held that for computing the disallowance under Rule 8D(2)(iii) of the IT Rules only the investments yielding exempt income are to be taken into consideration. Accordingly, we direct the AO to recompute the disallowance under Rule 8D(2)(iii) of the IT Rules read with Section 14A.
MAT computation u/s 115JB - Amount for the purpose of Clause (f) of Explanation 1 to Section 115JB(2) of the Act can be computed on other reasonable basis. However, given the facts and circumstances of the present case, in order to put quietus to this issue, we deem it appropriate to direct the Assessing Officer to re-compute the said amount keeping in view the provisions of Clause (f) of Explanation 1 to Section 115JB(2) of the Act on a reasonable basis with the directions to restrict the same to the amount computed in terms of paragraph 4.6 above. The Assessing Officer is directed to grant to the Appellant a reasonable opportunity of being heard.
TDS u/s 194H - Disallowance of discount extended to pre-paid distributors under section 40(a)(ia) - discount extended represented the difference between the Maximum Retail Price (MRP) of the talktime & pre-paid connections and the price at which these were transferred to the Pre-paid Distributors - DRP were of the view that the upfront discount given by the Appellant to the Pre-paid Distributor was in the nature of ‘commission’ liable to withholding of tax at source u/s 194H - HELD THAT:- Mumbai Bench of the Tribunal in case of the Assessee for the Assessment Year 2009-10 [2024 (1) TMI 991 - ITAT MUMBAI] wherein Tribunal had concluded that tax was not required to be withheld u/s 194H from the upfront discount offered to Pre-paid Distributors, and consequently, no disallowance could be made u/s 40(a)(ia) of the Act for failure to deduct tax at source. Decided in favour of assessee.
Disallowance of depreciation on 3G Spectrum - AO disallowed the depreciatio claimed by the Appellant and allowed the Appellant to amortized the same u/s 35ABB - DRP declined to grant any directions and concluded that the AO had rightly amortized the expense of 3G spectrum over the period for which the spectrum was allocated to the Appellant - HELD THAT:- Mumbai Bench of the Tribunal for the Assessment Year 2011-12 [2020 (8) TMI 954 - ITAT MUMBAI] concluded that depreciation in respect of 3G spectrum charges was correctly allowed by the AO. Thus, we direct the AO to allow depreciation in respect of the 3G spectrum charges capitalize by the Appellant under Section 32(1)(ii)
Disallowance of payments made to IBM - Appellant had entered into a service agreement with IBM whereby IBM was under obligation to provide end-to-end information technology services and solutions to the Appellant for a period of five years which included providing IT support as well as provision of IT hardware on an operating lease basis - HELD THAT:- We find merit in the contention advanced on behalf of the Appellant that the claim of deduction made by the Appellant cannot be rejected merely on the ground that the expenditure under consideration was capitalized in the books of accounts of the Appellant. We find that the underlying agreement between the Appellant and IBM is not on record. Accordingly, we deem it appropriate to remand this issue back to the file of the Assessing Officer. The Appellant is directed to file the relevant agreement, invoices and other supporting documents before the Assessing Officer. AO directed to allow a deduction for service charges paid/payable to IBM in case on verification of the aforesaid agreement and supporting documents the Assessing Officer is satisfied that the aforesaid payment is in the nature of annual maintenance charge or annual operating lease rental paid/payable by the Appellant to IBM for the relevant previous year.
TP Adjustments - payment of brand royalty for obtaining the right to use of Vodafone trademark and trade name - HELD THAT:- As was the case in the preceding three assessment years, the benchmarking done by the Appellant using the CUP Method has been rejected by the TPO. The TPO rejected the comparables selected by the Appellant on account of significant differences in the functions, geography and level of operations. It has been submitted on behalf of the Appellant that the corroborative benchmarking using Transaction Net Margin Method (TNMM) had also not been considered by the Assessing Officer and the DRP. Given the aforesaid factual matrix and keeping in view the fact that for the three preceding Assessment Years 2011-12 to 2013- 14 the issue of benchmarking of the royalty transaction has been remanded back to the file of the TPO/Assessing Officer, we deem it appropriate to remand this issue back to the file of TPO/Assessing Officer with the directions to decide the issue of transfer pricing adjustment in relation to international transaction of royalty payment afresh.
TP adjustment pertaining to reimbursement of expenses - HELD THAT:- We deem it appropriate to grant to the Appellant another opportunity to substantiate its claim that the INR.2,45,23,347/- were incurred in relation to the employees deputed with the Appellant and that the same, having being recovered on cost to cost basis from the Appellant, was at arm’s length. Appellant is directed to furnish relevant documents/details to substantiate its claim. TPO/AO shall grant reasonable opportunity of hearing to the Appellant and shall decide the issue in accordance with law after taking into consideration the details/documents furnished by the Appellant.
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2025 (2) TMI 866
Assessment of insurance companies - Claim of exemption relating to profit on sale of shares and securities u/s. 10(38), interest on securities is allowable u/s. 10(15) and dividend on shares is allowable u/s. 10(34) - observed that the computation of income from business of insurance had to be made in accordance with section 44 r/w 1st Schedule of the Act and the other provisions of the Act in respect of relevant heads of income were not applicable in the case of an insurance company
HELD THAT:- Tribunal, while deciding the issue in assessee’s own case in preceding assessment years has categorically held that assessee’s claim of exemption relating to profit on sale of shares and securities is allowable u/s. 10(38), interest on securities is allowable u/s. 10(15) and dividend on shares is allowable u/s. 10(34) of the Act. We find that all the issue in dispute under present appeal are covered by the order for A.Y. 2010-11.
Also in view of the co-ordinate bench is also in consonance with the clarification issued by CBDT vide circular letter dated 21.02.2006, which has indeed been referred by learned CIT(A). In absence of any contrary decision, the impugned order passed by learned CIT(A) does not warrant any interference and is accordingly affirmed and the grounds raised by the revenue under appeal stand determined against the revenue.
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2025 (2) TMI 865
Reopening of assessment u/s 147 - Period of limitation - addition u/s. 69C - HELD THAT:- As the A.O in the present case had issued notice u/s. 148 of the Act, dated 25.07.2022 i.e. much subsequent to lapse of the period of limitation as was available with him upto 13.06.2022, therefore, as stated by the Ld. AR (subject to correction of the date by the Ld. AR as 16.06.2022), and rightly so, the same is found to be barred by limitation. Accordingly, the assessment order passed by the A.O u/s. 147 r.w.s. 144B in absence of a valid notice issued u/s. 148 of the Act cannot be sustained and, is quashed. Decided in favour of assessee.
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2025 (2) TMI 864
Taxation of interest income - change in the method of accounting from mercantile to cash basis - income of the assessee has to be computed on the basis of cash or mercantile system of accounting - HELD THAT:- Assessee has changed the method of accounting from mercantile system to cash system in the year under consideration. In this respect justifiable reasons and corroborative actions taken have been explained by the assessee.
Assessee is a non- corporate assessee who is permitted to follow either of the cash or mercantile system of accounting for recognizing his income. In the case of companies, they are mandatorily required to follow accrual basis of accounting.
Change in method of accounting is not prohibited when warranted by situations which has been justifiably explained by the assessee. Assessee had demonstrated that once changed, he has regularly followed the method in the subsequent years. Assessee has affirmed to offer the income as and when he receives it.
In our considered view, change of method of accounting from mercantile to cash by the assessee in the year under consideration is a legitimate exercise. Assessee has explained that it is a genuine and bonafide exercise arising out of compelling reasons of financial distress at the end of borrowers.
Subjecting assessee to tax on interest income which he has not received, we have held the change in method of accounting from mercantile to cash system justifiable and legitimate. Having held so, non-receipt of interest income during the year from both the parties, namely, in the case of SPCPL where assessee has waived the interest which has not even been accrued by it in its books of account to claim it as an expense and Roxanna having accrued the interest expense in its books of account has not paid the same to the assessee, cannot be added in the hands of the assessee on accrual basis as done by the ld. AO
No infirmity in the findings arrived at by ld. CIT(A) in deleting the addition made by AO towards interest income on loans given to the two companies. In the result, grounds raised by the Revenue are dismissed.
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2025 (2) TMI 863
Denial of benefit of Sections 11 and 12 - "charitable purposes" under Section 2(15) - assessee claims to be a local authority responsible for the administration, development, and monitoring of affairs in rural Magadi town, located in the Ramanagar district of Karnataka - HELD THAT:- Assessee operates under stringent Government regulation. All its receipts and expenditures are deposited into the Magadi Planning Authority Fund, and the budget is subject to approval by the State Government. The assessee's accounts are audited annually by Government agencies, and any surplus or assets, upon dissolution, revert to the State Government. These factors unequivocally demonstrate the non-commercial character of the assessee’s activities. We, accordingly, concur with the assessee's argument that the imposition of income tax on its operations would contradict statutory mandate and undermine its role as a state instrumentality serving public welfare.
AO’s invocation of Section 13(8) of the Act, citing that the assessee’s fee-earning activities constitute trade or business, lacks sufficient merit. The activities cited by the AO - such as layout plan approvals, betterment fees, and lake conservation fees are intrinsic to the assessee’s statutory responsibilities and do not exhibit the characteristics of a profit-driven enterprise. These fees are charged to ensure accountability and fund public welfare initiatives, not to generate profit. As such, the AO’s interpretation of the assessee’s activities as trade or commerce is inconsistent with the intent and purpose of Sections 11 and 12 of the Act.
CIT(A) further erred in concurring with the AO without adequately addressing the assessee's submissions, including its reliance on the BDA case. The appellate authority failed to provide a reasoned explanation for dismissing the precedent, despite the AO’s admission of factual similarity.
Given the admitted identical nature of the facts and the binding judicial precedent set by the Bangalore ITAT in the BDA case [2019 (6) TMI 429 - ITAT BANGALORE] we hold that the denial of exemptions under Sections 11 and 12 of the Act is unjustified. The assessee’s activities are undeniably charitable, and the provisions of the Act support its exemption claim. The addition made by the AO and upheld by the learned CIT(A) is, therefore, quashed.
The findings of the lower authorities are reversed, and the assessee is entitled to exemptions under Sections 11 and 12 - Decided in favour of assessee.
Whether assessment proceedings can be considered pending as on the date of approval of registration under Section 12AA of the Act, for the purpose of extending the benefit of exemption under Sections 11 or 12 of the Act? - It is a settled position of law that when there are conflicting views on the same issue by different non-jurisdictional High Courts, the view favoring the assessee shall prevail. Therefore, we are inclined to follow the view taken in the case of M/s Shree Shayam Mandir Committee [2017 (10) TMI 1450 - RAJASTHAN HIGH COURT]
Appellant assessee is entitled to the benefit of the provisions of section 11 of the Act for the year under consideration. Accordingly, the ground of appeal of the assessee is allowed.
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9911796707
