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Showing 361 to 380 of 1396 Records
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2021 (4) TMI 1036
Disallowance of input tax credit - purchasing dealers either been deregistered or had failed to discharge their tax liability paid on such sales - failure to discharge the burden under Section 70 of the KVAT Act of proving the correctness and genuineness of the claim - HELD THAT:- The Tribunal has relied upon the decision of this Court passed in THE STATE OF KARNATAKA VERSUS SRI RAJESH JAIN [2017 (1) TMI 333 - KARNATAKA HIGH COURT] where it was held that Once the purchaser dealer-assessee satisfactorily demonstrates that while purchasing goods, he has paid the amount of VAT to the selling dealer, the matter should end so far as his entitlement to the claim input tax credit.
The substantial questions of law involved in this petition are covered by the aforesaid decision of the Division Bench of this Court - there are no merit in this petition and the substantial questions of law are answered against the petitioner and in favour of the assessee - petition dismissed.
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2021 (4) TMI 1035
Adjustment of amount which is due and payable to the petitioner as assessee towards their liability under the amount payable as per the Amnesty Scheme - HELD THAT:- The issue involved in the instant writ petition regarding adjustment of amount which is due and payable to the petitioner as assessee towards their liability under the amount payable as per the Amnesty Scheme is no more res integra. In the matter of M/S. STEEL EXCHANGE INDIA LTD VERSUS THE ASST. COMMISSIONER, STATE OF KERALA [2020 (7) TMI 756 - KERALA HIGH COURT] it has been held that The department has not preferred any appeal against the said order so as to cast any doubt on the entitlement of the petitioner for the refund amount. In that scenario, when amounts are liable to be paid by the petitioner to the department for the purposes of getting the benefit of the Amnesty Scheme, an adjustment of the refund amounts due to the petitioner towards whatever amount is found payable by the petitioner, would not in any manner offend the terms of the Scheme because it is simply an adjustment towards the payment to be made under the Scheme and the amount was appropriated.
In this view of the matter, non adjustment of the amount due and payable to the petitioner being assessee for the assessment years 2006-07, 2007-08, 2013-14 and 2016-17 towards their liability under the Amnesty Scheme 2020 cannot be justified - petition allowed.
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2021 (4) TMI 1034
Rectification application u/s 154 - application under section 264 has been dismissed/rejected - rectify the mistake of the mis-recording of long-term capital gains in the order under section 143 (1) of the Income Tax Act as being in an inadvertent error as the same had already been considered in the return for the A. Y. 2017-18, assessment in respect of which had already been completed under section 143 (3) of the Income Tax Act - - HELD THAT:- In a situation where there is an appeal that lies to the Commissioner appeals and which has not been made and the time to make such an appeal has not expired in that case the Principal Commissioner or Commissioner cannot revise any order in respect of which such appeal lies. The language is quite clear that the two conditions are cumulative viz: there should be an appeal which lies but has not been made and the time for filing such appeal has not expired in such a case the Principal Commissioner cannot revise. However, if the time for making such an appeal has expired then it would be imperative that the Principal Commissioner would exercise his powers of revision under section 264.
The other or second situation is when the Petitioner assessee has not waived his right of appeal; even in such a situation the Commissioner cannot exercise his powers of revision under section 264 (4) (a). In clause (a) of section 264 (4), in the language between filing of an appeal and the expiry of such period and the waiver of the assessee to his right of appeal there is an “or” thereby meaning that there is an option i.e either the assessee should not have filed an appeal and the period of filing the same should have expired or he should have waived such right. Therefore, there are two situations which are contemplated in said sub-section (4) (a) of section 264. The section cannot be interpreted to mean that for the Principal Commissioner to exercise his powers of revision under section 264 not only that the time for filing the appeal should have expired but also that the assessee should have waived his right of appeal. We are afraid that, that is not how the section can be read. In the facts of the case, Petitioner has not filed appeal against order under section 143 (1) under section 246-A of the Income Tax Act and the time of 30 days to file the same has also admittedly expired. In our view, once such an option has been exercised, a plain reading of the section suggests that it would not then be necessary for Petitioner to waive such right. That waiver would have been necessary if the time to file the appeal would not have expired.
Also the argument of the Revenue to say that the Petitioner can still file the appeal by filing an application for condonation of delay, is in our view, not proper and would be a fallacious proposition as after the period of 30 days, there is no right of appeal but an appeal would rest on the discretion of the Appellate Authority to condone delay upon sufficient cause being shown.
In matters like these, where the errors can be rectified by the authorities, the whole idea of relegating or subjecting the assessee to the appeal machinery or even discretionary jurisdiction of high court, in our view, is uncalled for and would be wholly avoidable. The provisions in the Income Tax Act for rectification, revision under section 264 are meant for the benefit of the assessee and not to put him to inconvenience. That cannot and could not have been the object of these provisions. We do not find any statement either in the impugned order or in the reply to state that the case of the Petitioner seeking remedy of the purported error was not bona fide. Order passed by the 2nd Respondent- Principal Commissioner is unsustainable and deserves to be set-aside.
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2021 (4) TMI 1033
Deduction u/s 80JJAA - assessee had not made the claims u/s 80JJA and qua prior period expenses, in the original return - assessee did not move the AO with a revised return for claiming deductions under Section 80JJAA of the Act and for prior period expenses and assessee for the first time made these claims before the AO by way of a statement/communication dated 14.12.2009 -CIT(A) concluded that the deduction under Section 80JJAA was correctly claimed by the assessee - Tribunal setting aside the order of the Commissioner of Income Tax (Appeals) [in short "CIT(A)"] granting deduction, under Section 80JJAA of the Act and qua prior period expenses - HELD THAT:- Once the Tribunal accepted the view taken by the CIT(A) that it could entertain fresh claims; a view which the CIT(A) has expressed in paragraph 6.6.2 of its order, all that the Tribunal was required to examine was: as to whether the CIT(A) had, scrupulously, verified the material placed before it before allowing deductions claimed by the assessee. The Tribunal, however, instead of examining this aspect of the matter, observed, and in our view, incorrectly, that because an opportunity was not given to the AO to examine the material, therefore, the matter needed to be remanded to the AO for a fresh verification.
Unless the Tribunal would have reached to a conclusion and expressed its clear view, in that respect, as to what was wrong or missing in the examination made by the CIT(A), a remand was not called for. We agree with Mr. Seth's contention that the CIT(A) in the exercise of its powers under Section 250(4) of the Act was entitled to seek production of documents and/or material to satisfy himself as to whether or not the deductions claimed were sustainable/viable in law. This was, however, a case where the details were placed before the AO, who declined to entertain the claims only on the ground that they did not form part of assessee's original return and that the assessee had not made a course correction by filing a revised return.
This view was based, as noticed above, on the judgment of the Supreme Court rendered in Goetze (India) Ltd.[2006 (3) TMI 75 - SUPREME COURT]. The CIT(A), squarely, dealt with this and concluded, that a fresh claim could be entertained. Therefore, the Tribunal, as noticed above, has accepted this view of the CIT(A) and the revenue has not come up in appeal before us assailing this conclusion of the Tribunal.
In any event, we are of the view that, if a claim is otherwise sustainable in law, then the appellate authorities are empowered to entertain the same. See ASPENTECH INDIA PVT LTD [2011 (11) TMI 366 - DELHI HIGH COURT]
Therefore, in our view, the judgment of the Tribunal deserves to be set aside. The fresh claims made by the assessee, as allowed by the CIT(A), will have to be sustained. The questions of law are answered in the favour of the assessee
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2021 (4) TMI 1032
Fraudulent collective investment scheme - HELD THAT:- The applicants company and their agents were engaged in promoting the scheme of the company by selling certificates with a promise of higher rate of interest on the eventuality of the plans of term, hence, it can be said that the activity of the applicants' company appears to be covered under Section 2 (c) of the Act, 1978 and therefore, promotion of such scheme, which is banned under Section 3 of the Act, 1978 is punishable under Section 4 of the same Act, 1978, regarding which, there is sufficient evidence present for framing of charge against the applicants.
As regards framing of charge under Section 10 of Protection of Depositors Interest Act, 2005, report of the Competent Authority does not appear to be a condition precedent for lodging of FIR or framing of charge against the persons concerned. Section 13 of the Act, 2005 empowers the Special Court to take cognizance of the offence without being committed the case to it. As the Court of Sessions Judge is notified under Section 4 of the Act and also that there being no procedure prescribed for filing of complaint in this Act, shows that the provisions under the Code of Criminal Procedure are applicable, hence, lodging of FIR under Section 10 of the Act, 2005 is well within the law. Further there is evidence present that depositors were defrauded by the HBN Company in which the applicants are directors, which is prima-facie case for framing charge under Section 10 of the Act, 2005.
Hence, after considering on all the submission and the material present in the charge-sheet against these applicants, this Court is of the opinion that prima-facie case for framing of charge against these applicants, framed by the trial Court, is present. Hence, all the revision petitions are liable to be dismissed, which are dismissed accordingly.
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2021 (4) TMI 1031
Refund of IGST - IGST on ocean freight - It is clarified that while the question of the Petitioner being entitled to refund will await the final decision of the Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [2021 (1) TMI 647 - SC ORDER], the Opposite Parties will not require the Petitioners before this Court hereafter to pay IGST on ocean freight until further orders.
These writ petitions are adjourned sine die with liberty to the parties to mention them for listing after disposal of the SLPs pending before the Supreme Court.
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2021 (4) TMI 1030
Reopening of assessment u/s 148 - exemption u/s 54B - beyond 4 years from the end of the relevant assessment year - HELD THAT:- A bare perusal of the reasons recorded, reveal that the findings recorded by the AO with regard to non-production of the necessary documents in support of the claim are without any basis and it reflects total non-application of mind to the record. Records indicate that the details with regard to deduction u/s 54B was called for and the assessee had complied the same by furnishing the registered sale deed and agreement of purchase along with bank particulars.
We are of the view that initiation of the proceedings based on the same set of facts, which were earlier relied upon by the AO while framing the assessment order, would nothing but a review of earlier proceedings, which cannot be permitted in law. The attempt on the part of the AO to reopen the assessment is nothing but he has changed his opinion. In the previous assessment proceedings, the AO had consciously applied his mind to the relevant facts and material available and framed the assessment and now, on the same set of facts, again, on the different view by the AO to reopen the proceedings would amount to change of opinion.
At the stage of previous assessment proceedings, the assessee had disclosed all the primary facts for the assessment and based upon the materials the AO did not disallow the deduction to the extent of ₹ 1,85,00,000/-.
Revenue has failed to show that which necessary facts were not disclosed by the assessee at the stage of previous assessment proceedings. In these circumstances, we are of the view that no new material surfaced during the reassessment proceedings on which the AO could have formed a requisite belief with regard to escape of assessment, especially when the assessee has disclosed all materials fully and truly at the stage of original assessment proceedings. Reference may be made to the case of CIT Vs. Usha International Ltd. [2012 (9) TMI 767 - DELHI HIGH COURT] wherein held that the reassessment will be invalid, in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. The reassessment proceedings in the said cases, will be hit by principles of “change of opinion”.
It would be appropriate to rely and refer the observation of the Apex Court in case of CIT Vs. Kelvinator India Ltd,[2010 (1) TMI 11 - SUPREME COURT] wherein, it was observed that ‘one must treat the concept of ‘change of opinion’ as an inbuilt test to check abuse of power by the AO. It was further observed that the AO has power to reopen the assessment proceedings, provided there is tangible material to come to the conclusion that there is escapement of income from assessment.
We are of the opinion that the impugned action on the part of the respondent to issue notice under Section 148 of the Act and consequential proceedings are without jurisdiction and therefore, is required to be quashed and set aside and accordingly, it is quashed and set aside.- Decided in favour of assessee.
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2021 (4) TMI 1029
Disallowance made u/s 40(a)(ia) for non deduction of tax at source on transport charges - Retrospective effect of amendment made by the Finance Act, 2010 in Section 40(a)(ia) - HELD THAT:- The appellant fairly submitted that the issues involved in the present appeal are covered by the decision of the Hon'ble Supreme Court in Commissioner of Income Tax, Kolkata v. Calcutta Export Company [2018 (5) TMI 356 - SUPREME COURT] the amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Section 40(a)(ia) was inserted i.e., with effect from the Assessment Year 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act - Decided in favour of the assessee.
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2021 (4) TMI 1028
Reopening of assessment u/s 147 - reference to the Settlement Commission in terms of Section 245F(2) - HELD THAT:- Prima facie, it appears that the assessment order passed in respect of petitioner's trust for the Assessment Year 2014-15 is already under reference to the Settlement Commission in terms of Section 245F(2) of the Act, which has been allowed to be proceeded with under Section 245D of the Act. Further, proceedings of the Settlement Commission have already been stayed vide order of the Hon'ble Supreme Court indicated here-in-above. Furthermore, it is undisputed that the order passed under Section 12AA of the Act is already under challenge before this Court. Once the aforesaid proceedings are already pending consideration of this Court, it does not appear to reason as to why the fresh re-asseement notice was required to be issued at this stage.
The matter requires consideration for which the opposite parties are granted four weeks' time to file detailed counter affidavit.
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2021 (4) TMI 1027
Reopening of assessment u/s 147 - penny stock transaction entered by assessee - whether the revenue is justified in reopening the assessment for the year under consideration ? - HELD THAT:- Assessing officer himself was satisfied with regard to the information and other material on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat Ltd., and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act.
We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment.
As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment.
We have no hesitation to hold that it could not be said to have that there was no material or grounds before the AO and the assumption of jurisdiction on the part of the AO under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render the notice unsustainable. Therefore, the assessee failed to make out a case.
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2021 (4) TMI 1026
Transfer under Section 127(2) - Transfer of assessment cases - centralize the case of the writ applicant along with the other cases with the “DCIT, Central Circle – 2, Rajkot” with a view to facilitate effective investigation and coordinated action - order transferring the case of the writ applicant from the “ITO, Ward – 1, Gandhidham” to the “Joint Commissioner of Income Tax, Gandhidham Range, Gandhidham” - HELD THAT:- We are of the view that we should not interfere with the impugned order of transfer passed by the respondent in exercise of powers under Section 127(2) of the Act. The power of transfer of cases would have to be exercised in proper cases when sufficient materials on record justify such action. As held by this Court, in the case of Hindustan M. I. Swaco Limited [2016 (7) TMI 212 - GUJARAT HIGH COURT], “this is, however, not to suggest that the transfer of cases for effective investigation and coordination can be resorted to only in cases of assessees, who are subjected to search operation. Such requirement may arise in other circumstances also”.
In view of the aforesaid, the present writ application and all other connected writ applications fail and are hereby rejected. The interim relief earlier granted stands vacated forthwith.
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2021 (4) TMI 1025
Reopening of assessment u/s 147 - unexplained investment in the assets held outside India from an undisclosed and undeclared source of income from India - reopening on the basis of information received from the Investigation Wing about the foreign bank account in the name of Late Sh. Ladli Pershad Jaiswal - HELD THAT:- For the purpose of assuming jurisdiction u/s 147 of the Act, the Assessing Officer should form reason to believe based on tangible material that income has escaped assessment - such belief should not be on mere suspicion but on the basis of some objective material that leads to prima face case of escapement of income. Although in the present case Assessing Officer was in possession of report of the Investigation Wing about the existence of foreign bank account which has not been denied by the legal heir, however, there is no details or evidence that money lying in the bank account represent undisclosed income in terms of section 5(1) of the Income Tax Act.
Assessing Officer in the instant case has failed even to take note of the income tax return filed by the assessee while recording reasons which in our opinion shows non application of mind. The reasons recorded do not inspire confidence to make out a prima facie case for escapement of income and the Assessing Officer in the instant case was carried away by the mere fact of existence of foreign bank account.
Assessing Officer himself has mentioned that the assessee late Sh. Ladli Pershad Jaiswal was non-resident of India during AY 1993-94 to 2004-05 and not ordinarily resident for AY 2006-07 and 2007-08. The Assessing Officer in the assessment order at clause 5 has also mentioned that assessee is not ordinarily resident. Under these circumstances and in absence of any factual finding, it is not open to dispute the claim of residential status as declared in the return of income. Since, the proceedings u/s 147 are extraordinary proceedings, the onus is on the Revenue to establish the existence of undisclosed income.
Mere discovery of a foreign bank account in the name of the assessee is not sufficient to thrust the tax liability without bringing on record the chargeability of the same under the provisions of the Income Tax Act,1961. It is the settled proposition of law that assessment cannot be carried out on the basis of guess work and there must be more than mere suspicion. In the present case, it is seen that there is no whisper of any enquiry or investigation carried out by the Assessing Officer to demonstrate the existence of source of income in India in respect of deposit found in foreign bank account.
Moreover, the Assessing Officer has not brought anything on record to prove that there is money trail which actually flew from India to the foreign bank account maintained abroad. Further, the learned counsel for the assessee also clarified that Sh. Ladli Pershad Jaiswal was not having any major stake or financial interest or business connection in India during the AY 2006-07 and 2007-08. Therefore, we find it difficult to subscribe to the reasoning given by the Assessing Officer while assuming that deposit in the foreign bank account in the year under consideration was sourced from India. In any case, when the addition made by the Assessing Officer is on the basis of peak credit in the month of January 2006 and when Sh. Ladli Pershad Jaiswal expired on 11.08.2005, it is not understood as to how any credit in January 2006 could be attributed to the deceased.
In the light of our discussion we are of the considered opinion that the assessment order is not in accordance with law and is liable to be set-aside.
In the interest of justice and as requested by the learned CIT-DR at the time of hearing before us, the matter is being restored back to the file of the Assessing Officer with a direction to arrive at specific finding based on certified copy of the bank statement and the nature of credit entry in the said bank account. In case, there is no ground or basis to establish any nexus between the alleged deposits in the bank account and any undisclosed income under the provisions of Income Tax Act or how such credit entries are attributable to the assessee who expired on 11.08.2005 there will be no case for assuming jurisdiction u/s 148 or consequential addition on merit. Needless to say the AO shall give due opportunity of being heard to the assessee and decide the issue as per fact and law after providing relevant documents or evidences that may be taken into consideration while deciding the issue. It is further clarified that the Assessing Officer shall restrict his verification only on the basis of documents which are already available on record and shall not resort any roving and fishing enquiry is permitted. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2021 (4) TMI 1024
Addition u/s 68 - share capital of the assessee company was increased to ₹ 20,00,00,000/- with no satisfactory explanation with regard to settled accounting practices - HELD THAT:- AO had erroneously invoked the provisions of section 68 of the Act to the facts of the instant case, which, in our considered opinion, are not at all applicable herein. This is a simple case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and instead the consideration was settled through issuance of shares to the respective parties. Moreover, in the balance sheet of the assessee company in the schedule to share capital, it is very clearly mentioned by way of note that the fresh share capital was raised during the year for consideration other than cash. Hence we hold that provision of section 68 of the Act are not applicable in the instant case and accordingly the entire addition deserves to be deleted which has rightly been done by the ld. CIT(A) which does not require any interference. Accordingly, grounds raised by the revenue are dismissed
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2021 (4) TMI 1023
TP Adjustment - comparability adjustment on account of abnormal cost - assessee adjusted margin after making the adjustments was worked out at 4.08% - claim of the assessee was rejected by the TPO - HELD THAT:- The assessee in appeal before the CIT(A) filed revised calculation of adjusted margin and adjusted margin was calculated at 12.71%. Thus, the claim of comparability adjustment was not made for the first time before the CIT(A) and only the calculation of the amount of adjustment was revised.
CIT(A) has given a detailed finding on the TP Adjustment and there is no other ground in respect of corporate issues by the Revenue. In the transfer pricing documentation, the assessee determined arm’s length price of the international transaction of rendering BPO services applying CUP method. Since the prices charged by the assessee at USD 19.20 per hour from the AE exceed the prices charged from the unrelated party, i.e., ALP @ USD 14.00 per hour, the ‘international transactions’ of BPO services were considered being at arm’s length, in the Transfer Pricing Documentation. There is no dispute on part of the revenue that in the BPO industry the prevalent rate for services was in the range of USD 8 to USD 15 per hour and was comparable/lower to the rate of USD 19 charged by the assessee from the AE and was at arm’s length applying CUP method. Thus, the adjustment made by the TPO is not sustainable even applying the CUP method. Hence, there is no need to interfere with the findings of the CIT(A). Hence, the appeal of the Revenue is dismissed.
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2021 (4) TMI 1022
Revision u/s 263 - Bogus LTCG - exemption claimed u/s 10(38) denied - HELD THAT:- In our considered view, the Assessing Officer has called for and verified all the details and documents in connection to the purchase and sale of the shares in question and after examining the same, has taken a possible view that the transactions are genuine. This is not a case of non verification or no application of mind.
This is not an order passed without making enquiries or verification, which should have been made. In fact, a number of decisions of the Tribunal support the view taken by the Assessing Officer on the very same issue on the very same evidences. Hence the Assessing Officer has taken a possible view.
Applying the proposition of law laid down in the cases as extracted above to the facts of the case on hand and considering the proposition of law laid down in the case of Manish Kumar Baid [2017 (10) TMI 522 - ITAT KOLKATA] and Navneet Agarwal [2018 (8) TMI 509 - ITAT KOLKATA] wherein the genuineness of these transaction were upheld on the facts and circumstances of the case we hold that the revision of the assessment order u/s 263 of the Act, by the ld. Pr. CIT is bad in law. Hence we quash the order passed by the ld. Pr. CIT u/s. 263 of the Act on 20/03/2020 and allow these grounds of the assessee.
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2021 (4) TMI 1021
Disallowance of loss on foreign exchange derivatives - HELD THAT:- Reliance placed on the decision of DCIT vs. Tega Industries Ltd [2019 (11) TMI 269 - ITAT KOLKATA] wherein also the issue of MTM loss has been allowed in the favour of the taxpayer on both counts i.e. such loss is neither speculative loss within the meaning of section 43(5) of the Act nor the same being notional or contingent in the nature.
Hence the said sum being loss on foreign exchange derivatives deserves to be allowed in the light of the order of Hon’ble Tribunal of the preceding assessment year i.e. AY 2008-09 [2017 (3) TMI 966 - ITAT KOLKATA] wherein the facts are identical.D/R, could not controvert the arguments of the assessee that the facts are identical for both the Assessment Years. Thus, consistent with the view taken by the co- ordinate bench of the Tribunal in the assessee’s own case we delete the disallowance on account of loss on foreign exchange derivatives and allow this ground of the assessee.
Disallowance u/s 14A r.w.r. 8D- HELD THAT:- We restrict the disallowance u/s 14A of the Act to the extent of exempt income earned by the assessee company during the year.The argument that the Assessing Officer has not recorded satisfaction before the invoking Rule 8D of the Income Tax Rules, 1962 (‘Rules’), is not factually correct. On a reading of the assessment order, we find that he Assessing Officer has recorded his satisfaction. In the result, ground of the assessee is allowed in part.
Disallowance of non compete fee - Allowable expenditure - HELD THAT:- Coming to the facts in the present case, it is undisputed fact that the consideration is paid to individuals who had experience in the business of consultancy for not to engage themselves in similar kind of business and activities for a period of 3 years. It is also not disputed that such consideration is independent and not part of the cost of acquisition of business paid to shareholders. It is also an admitted fact that both the Share Transfer Agreement and Non-Compete Agreement are separate agreements with different parties, though entered on the same date.The cases relied upon by the assessee above are squarely applicable on the facts of the assessee’s case, Thus, the payment in question is revenue in character and hence allowable as an expenditure.
Disallowance of depreciation on leased assets and non-grant of claim of principal portion of lease rentals - HELD THAT:- As decided in assessee's own case [2016 (7) TMI 1052 - ITAT KOLKATA] wherein the coordinate Bench of the Hon’ble Kolkata Tribunal dismissed the Revenue’s appeal and upheld the order of the CIT(A) by holding that the lease rentals (net of interest element) should be allowed as deduction.
Disallowance of PWC World firm charges - HELD THAT:- As decided in own case [2018 (9) TMI 1812 - ITAT KOLKATA] find no substance in Revenue’s instant stand. We make it clear that the assessee- company is engaged in multi functional consultancy services as a group entity of PWCDA organization based in Netherlands. Learned counsel has also filed before us relevant assessment records with regard to the payee entity pertaining to the impugned assessment year itself accepting the returned income without making any addition. Necessary reference regarding Firm Services Agreement is also made - no TDS is deductible in case of such firm services agreement payments not including any income component but only reimbursement of expense on cost allocation formula.
Addition on account of non refundable grant - HELD THAT:- Grant received for specific purpose i.e., for procuring a capital asset is in the nature of a capital receipt, not subject to tax and this receipt being in cash cannot be taxed u/s 28(iv) of the Act. Hence this ground of the assessee is allowed.
Non grant of deduction u/s 35(1)(II) - HELD THAT:- We restore this matter to the file of the Assessing Officer with a direction to verify the certificate issue u/s 35(1)(II) of the Act, which was produced by the assessee before the lower authorities. The Assessing Officer shall dispose off the issue de novo, in accordance with law. This ground of the assessee is allowed for statistical purposes.
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2021 (4) TMI 1020
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2021 (4) TMI 1019
Wealth tax assessment - valuation of assets under the Wealth Tax Act - valuation of immovable assets and revaluation thereof - HELD THAT:- The revaluation of the properties at Banjara Hills and Madhapur needs reconsideration by the AO in the light of the CBDT Circular No.3 dated 28.09.1957 above and if the value of the assets was fixed by the Assessing Officer in A.Y 2002-03 in accordance with law, then he has to adopt the same for the next two succeeding A.Ys. The Assessing Officer is directed accordingly. Further, the additional ground raised by the assessee with regard to the chargeability of Wealth Tax on Madhapur property is admitted and is also remanded to the file of the Assessing Officer for consideration in accordance with law.
Assessing Officer is also directed to verify the existence of movable assets during the financial year and if they do not exist, then Assessing Officer cannot make any addition in this regard.
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2021 (4) TMI 1018
Addition made towards book profit computed u/s.115JB - difference in income reported in Form No.26AS and income as per books of accounts of the assessee - HELD THAT:- We find that there is no merit in the arguments taken by the assessee in light of decision of Hon’ble Supreme Court in the case of Apollo Tyres vs. CIT [2002 (5) TMI 5 - SUPREME COURT] because when books of accounts of assessee are not in accordance with Part II and III of Schedule VI to the Companies Act, 1956, then AO is empowered to tinker with net profit by making additions. In this case, assessee has under reported income received from M/s. Shell India Markets Pvt. Ltd., and hence it cannot be said that books of account of the assessee are prepared in accordance with Part II and II of Schedule – VI to the Companies Act. Therefore, we are of the considered view that there is no error in the reason given by AO to re-compute book profit by making addition towards income not reported in books of accounts of the assessee.
As regards case law relied upon by the assessee, in the case of Apollo Tyres vs. CIT [2002 (5) TMI 5 - SUPREME COURT] the same is not applicable because in that case, the books of accounts of assessee are prepared in accordance with Part II and III of Schedule VI to the Companies Act and under those facts, the Hon’ble Supreme Court held that once books of accounts are in accordance with Companies Act and approved by the Board, then the AO has no jurisdiction to go behind net profit shown in profit and loss account except to extent provided in Explanation to section 115J of the Act. Hence, we reject arguments of the assessee and confirm addition made by the AO towards income not reported in books to book profit computed u/s.115JB of the Act.
Disallowance of expenditure u/s.14A to book profit computed u/s.115JB of the Act - HELD THAT:- We find that ITAT, Special Bench of Delhi in the case of ACIT vs. Vireet Investments (P) Ltd.,[2017 (6) TMI 1124 - ITAT DELHI] held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without restoring to computation as contemplated u/s.14A r.w.rule 8D of Income Tax Rules, 1962. The Hon’ble Madras High Court in the case of CIT vs. Shriram Ownership Trust, [2017 (6) TMI 1124 - ITAT DELHI] has considered an identical issue and held that no addition could be made to book profit in respect of disallowance of expenditure u/s.14A r.w.rule 8D of Income Tax Rules, 1962.
Hon’ble Karnataka High Court in the case of CIT vs. Gokaldas Images (P) Ltd [2020 (11) TMI 345 - KARNATAKA HIGH COURT] had considered an identical issue and held that disallowance made u/s.14A should not be added to book profit of assessee u/s.115JB of the Act. Therefore, we are of the considered view that the AO is erred in making addition towards disallowance u/s.14A to book profit computed u/s.115JB of the Act and hence, we direct the AO to delete adjustment made to book profit towards disallowance of expenses u/s.14A.
Addition towards factory shifting expenditure - AO has made addition incurred towards shifting factory from Grigambakkam to Chrompet on the ground that said expenditure is in the nature of capital expenditure which gives enduring benefit to the assessee - HELD THAT:- We ourselves do not agree with the reasons given by the AO to disallow transportation expenses incurred for shifting factory from one site to another site, because transportation expenses incurred for shifting factory from one place to another place does not give any enduring benefit to the assessee and hence, the same cannot be treated as capital in nature. Hence, we direct the AO to delete addition made towards disallowance of factory shifting expenditure.
Addition towards loan received from Shri Muthaiyah, Director of assessee company u/s.68 - HELD THAT:- From the financial statement of creditors, we find that amount advanced to the company was recorded in loans and advances. The assessee has also explained creditworthiness by filing his Income Tax return for relevant assessment year. The AO except stating that loan was received in cash, no other observations were made to reject arguments of the assessee that the creditor is having creditworthiness to provide loan. Therefore, we are of considered view that once identity of creditor is proved and genuineness of transaction is established then merely for the reason that loan is received in cash no addition can be made u/s.68 of the Act. Once initial burden was discharged then burden shifts to the Revenue to prove otherwise as held by the Hon’ble Supreme Court in the case of CIT vs. Orissa Corp. P. Ltd.,[1986 (3) TMI 3 - SUPREME COURT]. In this case, assessee has filed all possible evidences to prove loan but the AO has disregarded evidences filed by the assessee and made addition only on the ground of receipt of loan by cash. Therefore, we are of considered view that the AO is erred in making addition towards unsecured loan received from Shri R. Muthaiyah - Hence, we direct the AO to delete addition made u/s.68.
Levy of penalty u/s.271(1)(c) - addition made towards unexplained cash credit u/s.68 - HELD THAT:- We find that in quantum appeal filed by the assessee, addition made by the AO towards unexplained cash credit has been deleted. Therefore, once addition on which penalty levied u/s.271(1)(c) of the Act was deleted, then penalty levied on said addition cannot survive under law. Therefore, penalty levied by the AO u/s.271(1)(c) of the Act is not sustainable under law and hence, the AO is directed to delete penalty levied u/s.271(1)(c) of the Act.
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2021 (4) TMI 1017
Disallowance of claim made u/s.10B - Whether appellant is carrying out manufacturing activity as defined u/s. 2(29BA)? - even if the activity does not fall within the meaning of the term 'manufacture', it would fall within the meaning of the term 'production' for the purposes claiming the deduction u/s.10B - HELD THAT:- Whether activities carried out by the assessee amounts to manufacture or production of goods or article or thing which qualifies for deduction u/s.10B of the Act is a highly debatable issue. If we go by the judicial precedents, various courts have held that even processing of frozen fish or marine products amounts to manufacture or production. Therefore, when an issue is debatable and if two views can be taken on the issue, then the AO cannot deny beneficial deduction allowed under Income Tax provisions to deny deductions by taken one of the view.
This principle is supported by the decision of the Hon’ble Supreme Court in the case of Bajaj Tempo Ltd., vs. CIT [1992 (4) TMI 4 - SUPREME COURT] where it was held that A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. Since a provision intended for promoting economic growth has to be interpreted liberally the restriction on it too has to be construed so as to advance the objective of the section and not to frustrate it. Under clause (i) of sub-section (2) of section 15C formation of the undertaking by splitting up or reconstruction of an existing business by transfer to the undertaking of building, raw material or plant used in any previous business results in denial of the benefit contemplated under sub-section.
In this case, on perusal of facts available on record, we find that there is no change in facts prevailing at the time when deduction was allowed to the assessee in the assessment year 2004-05 and in the assessment year 2009-10 when deduction was denied. Therefore, we are of the considered view that unless there is change in facts, the AO cannot take a different view for denying deduction claimed u/s.10B of the Act. Hence, we are of the considered view that the assessee is entitled for deduction u/s.10B of the Act in respect of profit derived from 100% export oriented undertakings and accordingly, direct the AO to allow benefit of deduction.
Computation of deduction u /s 10B - exchange gain / loss fluctuation is part of export turnover or not? - HELD THAT:- No doubt, exchange fluctuation whether it is gain or loss is attributable to exports effected and ultimately goes to increase or reduce figure of export turnover recorded initially by the assessee in its books of accounts and hence, it is definitely part of export turnover which qualifies for deduction u/s.10B of the Act. But, the fact remains that whether gain or loss incurred by the assessee on account of exchange fluctuation is attributable to export effected by the assessee or not needs to be examined by the AO. Moreover, the ld.CIT(A) has not adjudicated the issue although the assessee has taken a specific ground challenging the findings of the AO. Therefore, we are of the considered view that the issue needs to go back to file of the ld.CIT(A) for reconsideration of the issue and hence, we set aside the issue to file of the ld.CIT(A) and direct him to reconsider the claim of the assessee in light of decision of ITAT, Chennai bench in the case of Changepond Technologies (P) Ltd. [2008 (2) TMI 486 - ITAT MADRAS-A]
Deduction u/s.10B in respect of expenses disallowed and added back to total income - AO has denied deduction u/s.10B of the Act in respect of various additions made towards provision written back, disallowance of expenses u/s.37 of the Act and disallowance of expenses u/s.40A(7) of the Act - HELD THAT:- Whether enhanced profit on account of disallowance of expenses is eligible for deduction under deduction / exemption provisions of the Act is no longer res-integra. Various high courts have taken a consistent view that enhanced profit on account of disallowance of various expenses goes to increase business profit and to that extent would be eligible for deduction under deduction / exemption provisions of the Act. The Hon’ble High Court of Bombay in the case of CIT vs. Gem Plus Jewellery India Ltd., [2010 (6) TMI 65 - BOMBAY HIGH COURT] has considered an identical issue and held that enhanced profit on disallowance of expenses is eligible for deduction u/s.10B or 10A of the Act. The CBDT has accepted legal position and issued a Circular No.37/2016 dated 02.11.2016, where it was clarified that enhanced profit on account of disallowance of expenses is eligible for deduction under exemption / deduction provisions by various section of IT Act, 1961. Therefore, we are of the considered view that assessee is entitled for deduction towards enhanced profits. But, fact remains that the issue has not been adjudicated by the ld.CIT(A) and hence, the issue has been set aside to the file of the CIT(A) and direct him to reconsider the issue in light of our findings given herein above.
Exclusion of expenses from export turnover and total turnover - HELD THAT:- We find that the issue of exclusion of expenses from export turnover and total turnover is squarely covered in favour of the assessee by decision of Hon’ble Supreme Court in the case of CIT vs. HCL Technologies Ltd.,[2018 (5) TMI 357 - SUPREME COURT] as held that export turnover is a numerator and also forms a constituent element of the denomination in as much as it forms part of the total turnover. Hence, the export over as numerator must have the same meaning as the export turnover which is a constituent element of the total turnover in the denominator and hence, needs to be excluded from total turnover. Therefore, we are of considered view that the AO is erred in not excluding expenses from total turnover for computing deduction u/s.10B of the Act. But, fact remains that the issue has not been considered by the ld.CIT(A) and hence, assessee has filed a petition u/s.154 of the Act and said petition is pending for adjudication.
Therefore, the issue has been set aside to the file of the ld.CIT(A) and direct him to reconsider the issue in light of decision of Hon’ble Supreme Court in the case of CIT vs. HCL Technologies Ltd.
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