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Showing 401 to 420 of 1398 Records
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2020 (10) TMI 998
Validity of Provisional Release Order - case of appellant is that while passing the impugned order the releasing authority was required to follow the judgments of various courts under judicial discipline, the impugned order has been passed in utter violation of judicial discipline - HELD THAT:- The investigation in the matter is still under process as per letter C.No. DGGSTI/JZU/INT/CE/02/2017/3256 dated 22.07.2019 received from Joint Director, DGGI, Jaipur and appeal has been filed only against the conditions imposed for provisional release. The various courts order submitted by the appellant is not squarely covered in the instant matter.
The Provisional Release Order passed by the Releasing Authority is as per law; as the order has been rightly passed by the Releasing Authority and is in accordance with the provisions of sub-section(6) of Section 67 of the CGST Act, 2017 - Appeal dismissed.
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2020 (10) TMI 997
Reopening of assessment u/s 147 - Assessment barred by limitation - HELD THAT:- Even though the revenue of the State is involved in the present appeal filed by the Revenue may be more than ₹ 1 Crore, the limit prescribed in the CBDE Circular for withdrawal of the appeal, we do not find any merit in the present appeal filed by the Revenue for the reason that the learned Tribunal has categorically held that there was no failure on the part of the assessee, but disclosed the relevant facts and therefore, merely on the basis of the audit objection or change of opinion and re-assessment under Sections 147 & 148 of the Income Tax Act, 1961, could not be made beyond the period of four years from the end of the relevant assessment year 1997-98.
In the present case, the notice under Section 148 of the Income Tax Act, 1961, was issued on 26.03.2004, as per the assessment order much beyond the period of four years from the end of relevant AY 1997-98.
Therefore, in our opinion, the learned Tribunal was justified in annulling the re-assessment order of the AY 1997-98 on the ground of same being barred by limitation as per proviso to Section 147 - Decided in favour of assessee.
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2020 (10) TMI 996
Reopening of assessment u/s 147 - Eligibility of reasons to believe - Employee benefit expense, long term capital gains on slump sale, Bike event expenses, legal and Professional fees, employees as PF contribution, non-deduction of tax at source under Section 194J in respect of remittances towards fee for technical/professional services, disallowance u/s 14A - HELD THAT:- All issues based on which the impugned proceedings for re-assessment have been initiated emanate from the Return of income and accompanying annexures and have been noted even at the time of original proceeding. Queries have been raised by the officer even at that juncture and the petitioner has, admittedly, furnished explanations and details in response thereto.
The reasons for re-assessment themselves fairly reveal that the assumption of jurisdiction is only based on materials already available on record and no new, tangible materials have been culled thereafter. There is no dispute on the position that the alleged escapement of income, if any, is not attributable to non-disclosure of material particulars by the petitioner. The conditions precedent in the proviso to Section 147 are clearly not attracted in this case.
The Supreme Court, in the case of ACIT vs ICICI Security Primary Dealership Ltd [2012 (8) TMI 754 - SC ORDER] considered the re-opening of an assessment beyond the period of four years confirming the quashing of the proceedings for re-assessment on the ground that there was a full disclosure of all material particulars in the return of income filed by the assessee. So too in this case. Order re-opening the assessment was not maintainable. - Decided in favour of assessee.
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2020 (10) TMI 995
Stay petition - HELD THAT:- Before the assessee had approached the Tribunal, the assessee had paid 25% of the disputed tax and as per the above orders, a further sum of ₹ 8,00,000/- had already been remitted. Therefore, we are of the considered view that the interest of the revenue is sufficiently safeguarded and nothing more is required to be done and the order of stay, which was initially granted on 11.06.2019 should continue till the appeal is heard and disposed of by the Tribunal.
Writ petition is allowed and the impugned order is set aside and in the light of the reasons assigned above, there shall be an order of interim stay of the demand raised by the AO pursuant to the order of assessment dated 14.03.2016, till the appeal filed by the assessee before the Tribunal is heard and disposed of on merits and in accordance with law.
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2020 (10) TMI 994
Mandatory filing electronic return of income - Prayer to declare that Rule 12 of the Income-tax Rules, 1962 requiring such mandation is ultra vires the provisions of the Income-tax Act, 1961 and the Constitution and, hence, void and of no legal effect - as prayed when it is not possible for the Petitioner to file electronic return of income for reason beyond the control of the Petitioner, the Petitioner is entitled to file the return of income in paper form - HELD THAT:- Considering that the challenge in the petition is to the vires of Rule 12 of the Income-tax Rules, 1962, issue notice to the Additional Solicitor General of India.
Stand over after eight weeks. This order will be digitally signed by the Private Secretary of this Court.
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2020 (10) TMI 993
Validity of assessment proceedings u/s 153C - documents must pertain to the assessee and must have a bearing on the income of the assessee - HELD THAT:- When Annexure A-1, Page 5, which is the very basis of addition made by the AO in this case, has been held to be belonging to Lalit Modi, the very initiation of proceedings u/s 153C on the basis of the same against assessee are held to be not sustainable by the Hon’ble Delhi High Court [2017 (5) TMI 992 - DELHI HIGH COURT]. Ld. CIT (A) has rightly deleted the addition made by the AO following the order passed by the Tribunal in assessee’s own case (supra) and confirmed by Hon’ble Delhi High Court and Hon’ble Supreme Court [2018 (8) TMI 1154 - SC ORDER]. So, finding no illegality or perversity in the impugned order passed by the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed.
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2020 (10) TMI 992
Condone the delay of 440 days in filing appeal - Eligible reasons for delay - assessee was waiting for the rectification pending before the AO against the order u/s 143 (1) - HELD THAT:- Delay was for this reason that the assessee was pursuing an alternative remedy available under the law because there was no dispute about quantum of income because returned income was accepted and the dispute was only regarding non granting of credit for TDS by DCIT (CPC) which can be rectified u/s 154.
We find that in the facts of the present case as noted above, we are satisfied that the assessee was bonafidely pursuing alternative remedy available under the law and therefore, by respectfully following this tribunal order, we condone the delay in filing of appeal before CIT (A) and restore the matter back to the file of CIT (A) for a decision on merit. Appeal of the assessee is allowed for statistical purposes
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2020 (10) TMI 991
Reopening of assessment u/s 147 - Non independent application of mind - addition u/s 68 read with section 115BBE as against profit declared on account of commodity trading - HELD THAT:- Name of the assessee as a broker has nowhere mentioned in the reasons recorded. Reasons have been recorded by the Investigating Officer without making any verification of facts and figures forwarded by the Investigation Wing what to talk of conducting independent enquiry.
Assessee to prove the fact that the reasons recorded are vague and factually incorrect taken us to the audited balance sheet, profit & loss account and Schedule IX, Sales and Other Income, particularly Schedule IX depicting sales and other income,which shows that assessee has booked profit from commodities at ₹ 149,19,900/- and not ₹ 1,37,250/-. This fact goes to prove that the AO has proceeded merely on the basis of report given by the Investigation Wing and has not preferred to verify the same from the audited financials brought before him by the assessee and in these circumstances, it is difficult to believe that he has applied his mind before recording the reasons requires for initiating the proceedings u/s 147/148.
When AO was not even aware as to the actual profit earned by assessee from commodities and this fact has also not been verified by the Principal CIT from audited financial of the assessee, then it is difficult to believe as to how and under what circumstances he has made himself satisfied to proceed against the assessee u/s 147/148 of the Act. So, the entire process as to initiating the reopening is merely mechanical without any application of mind by the AO as well as sanctioning authority, Principal CIT, which has vitiated the entire proceedings.
"Reasons to believe" recorded by the AO, which is replica of information received from the Investigation Wing, cannot be a tangible material per se sufficient to form reasons to believe; that even figures of buying, selling and profit booking qua commodity trading, are not in accordance with the audited financials of the assessee company which shows that there is absolutely no application of mind on the part of the AO - Decided in favour of assessee.
Addition u/s 68 read with section 115BB - When assessee has specifically proved on record that it has earned profit of ₹ 59,56,410/- on commodity trading through R.K. Commodities (P) Ltd. registered with NMCE but AO has wrongly taken this amount as ₹ 41,45,405/- and treated the same as the profit earned by the assessee through manipulations without examining the evidence available on file, it is proved on record that all these documents were placed before the AO by the assessee vide letters dated 06.12.2017 and 29.12.2017,but he has not drawn any adverse inference against the claim of the assessee. Rather AO as well as ld. CIT (A) kept on essay writing spree on the basis of surmises in making the impugned addition by completely ignoring the evidence available on record, hence addition made by the AO and confirmed by the ld. CIT (A) is not sustainable on merit also. So, this ground is determined in favour of the assessee.
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2020 (10) TMI 990
Disallowance of depreciation - Depreciation on opening written down value - HELD THAT:- Information cannot be relied upon to decide the issue in hand in the absence of primary documents as highlighted by the authorities below.
Assessee failed to file any documentary evidence reflecting the sales made by it through the Manufacturing activity viz a viz the trading activity separately which was essential to establish the fact that assessee has carried out the manufacturing activity in the year under consideration.
Assessee has claimed depreciation in the year under consideration in the opening written down value and addition of fixed assets put together which was disallowed by the CIT (A) - depreciation claimed by the assessee in the opening written down value cannot be denied in the year under consideration as it pertains on the fixed assets which were acquired in the earlier years and the depreciation was allowed thereon - we direct the AO to allow the depreciation on such opening written down value of the assets brought forward from the earlier assessment year. Hence, the ground of appeal of the assessee is partly allowed.
Disallowance on account of damage and wastage of goods - HELD THAT:- Assessee by claiming the bad debts is not under the obligation to prove the ir-recoverability of the amount from the parties. Assessee chooses to write off such amount as the damaged goods which is also supported by the ledger copy of the other party. Thus,in the present situation, what we try to infer is that claim of the assessee cannot be treated as bogus.Authorities below have not verified from the concern parties whether the claim made by the assessee is not tenable by issuing notice under Section 133(6)/131 of the Act.
Similar claim of the assessee was admitted by the Revenue for immediate preceding assessment year as discussed above, therefore, the same claim in the year under consideration, though high in value, cannot be rejected without any cogent materials - we are not impressed with the finding of the authorities below in the manner in which they have rejected the claim of the assessee. Accordingly, we set aside the finding of CIT (A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.
Disallowance of the expenses on account of business promotion expenses - HELD THAT:- Whether the Circular No.5/2012 issued by CBDT is applicable retrospectively or prospectively. In this regard we note that the relevant assessment year under consideration is A.Y. 2008-09 during which there was no CBDT Circular as referred by the authorities below for making disallowance by branding the expenditure as covered by Explanation to Section 37(1) - We found that the expenditures were incurred wholly and exclusively for the purpose of business, therefore, same cannot be disallowed by applying CBDT Circular dated 01-08-2012 in respect of years under consideration. In the case of Troikaa Pharmaceuticals Limited vs. DCIT [2019 (10) TMI 731 - ITAT AHMEDABAD] involving identical facts and circumstances has decided the issue in favour of the assessee. Hence, the ground of appeal of the assessee is allowed.
Disallowance of foreign travelling expenses - HELD THAT:- Claim of the assessee was accepted by the Learned CIT(A) to the tune of 90% of the total foreign travelling expenses incurred by the assessee. But, the Learned CIT(A) in his finding has inadvertently restricted the disallowance at ₹ 1,38,381/- instead of ₹ 15,376/-. Thus, accordingly we hold that the issue is limited to the extent of ₹ 15,376 only. First of all, we note that there is no provision under the law to make the disallowance on estimated basis. As such we do not find any cogent material on the part of the Learned CIT(A) for making disallowance in part.
Assessee being a body corporate cannot incur any expenditure personal in nature as held in the case of Sayaji Iron &Engg. Co.[2001 (7) TMI 70 - GUJARAT HIGH COURT] - assessee has made exports to the foreign countries as evident from the details filed by it (the assessee). Therefore, we hold that foreign travelling expenses were incurred by the assessee in the course of his business activities and therefore no disallowance is warranted.
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2020 (10) TMI 989
Addition of low gross profits after rejecting the books of accounts u/s 145(3) - HELD THAT:- AO cannot reject the books of accounts for the reasons where the assessee does not maintain the stock register. Accordingly, we note that the reasons which were based by the AO for rejecting the books of accounts are not sufficient enough and cogent.
Books of accounts of the assessee are not liable to be rejected as per the provisions of Section 145(3) of the Act. Accordingly, we conclude that once the books of accounts of the assessee are not liable to be rejected then its book profit should be accepted in the given facts and circumstances. No infirmity in the order of the Learned CIT (A) and direct the AO to delete the addition made by him.
Disallowance of interest expenses u/s 36(1)(iii) - assessee has acquired a machinery loan which was put to use only after 2ndJuly 2007 - AO was of the view that the interest paid by the assessee up- to the date i.e. 2ndJuly 2007 when the machinery was put to use should be capitalized under Section 36(1)(iii) - HELD THAT:-On perusal of the installation report placed we note that the machine was installed on 2ndJune 2007 which implies that it was ready to use on that date. Therefore, the disallowance of the interest expenses should be limited to the extent pertaining to two months only.
Assessee has also utilized its own funds in the purchase of machineries in addition to the borrowed fund from the bank. Accordingly, CIT (A) excluded the amount of own fund utilized by the assessee while working out the amount of interest expenses to be capitalized. These facts, have not been disputed by the Learned DR at the time of hearing - No infirmity in the order of the Learned CIT (A). Hence, the ground of appeal of the Revenue is dismissed.
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2020 (10) TMI 988
Proceedings u/s 143(3) - Non issuance of notice u/s. 143(2) from the competent AO - Unexplained cash credits addition u/s 68 - addition on account of assessee’s failure in discharging onus of identity, genuineness and creditworthiness of the share application / premium’s investors - HELD THAT:- Revenue itself is fair enough in admitting the clinching fact that ITO, Ward 24(3), Kolkata only had issued 143(2) notice dated 07-08-2013 to the assessee without having his jurisdiction since it was the TRO-4, Kolkata who was supposed to frame assessment in the taxpayer’s case. The latter authority never issued sec.143(2) notice to the assessee. There can hardly be any dispute that issuance of notice u/s. 143(2) from the competent Assessing Officer is a mandatory condition as per ACIT vs. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT].
Assessment in absence of section 143(2) notice issued from the Assessing Officer having jurisdiction is rendered invalid - See D. CRAFT ENTERTAINMENT PVT. LTD. VERSUS INCOME-TAX OFFICER, WD-6 (1) , KOLKATA [2018 (10) TMI 1114 - ITAT KOLKATA].
Thus impugned assessment order dated 22-03-2015 had been framed without the competent Assessing Officer’s sec. 143(2) notice issued to the assessee. The same is declared invalid for this precise reason. - Decided in favour of assessee.
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2020 (10) TMI 987
Deduction u/s 80P(2) - Denial of claim as assessee was essentially doing the business of banking and disbursement of agricultural loans by the assessee was only minuscule - HELD THAT:- After perusing the narration of the loan extracts for the financial periods under consideration, came to the conclusion that out of the total loan disbursement, only a minuscule portion has been advanced for agricultural purposes. The narration in loan extracts / audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes.
Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In this case, such a detailed examination has not been conducted by the A.O’s. In the light of the dictum laid down in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [2019 (3) TMI 1580 - KERALA HIGH COURT]we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not.
A.O. shall list out the instances where loans have disbursed for non-agricultural purposes and accordingly conclude that the assessee’s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2) - Appeal filed by the assessee is allowed for statistical purposes
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2020 (10) TMI 986
TDS u/s 195 - Demand raised u/s 201(1) and 201(1A) - assessee has been making payments to its US subsidiary which were in the nature of selling and marketing expenses - AO took the view that the impugned payments are in the nature of “Fee for technical services” - assessee submitted that the services carried out by its US subsidiary are in the nature of targeting new customers, carrying out promotional activities and participating in trade shows outside India on behalf of the assessee - HELD THAT:- We notice that the AO has not properly analysed the nature of services rendered by M/s Adadyn Inc., USA, in the context of sec. 9(1)(vii) or DTAA, even though he has extracted the agreement entered between the assessee and M/s Adadyn Inc.
Assessee contention that nature of services provided by the above said company is in the nature of business support services and not in the nature of consultancy services in strict sense. It is not shown that the above said contention of the assessee is wrong.
Nature of services provided by M/s Adadyn Inc., USA has not been analysed by Ld CIT(A) also. On the contrary, it is the contention of the assessee that the first appellate authority has entertained erroneous belief that the assessee has been using market analysis/ online data/data bases etc., belonging to M/s Adadyn Inc. The above said observation of Ld CIT(A) was strongly objected to by the assessee. Hence the observation of the Ld CIT(A) that a part of payment constitutes Royalty is strongly disputed.
CIT(A) has also not properly analysed the provisions of article 12 of India USA DTAA. Without analysing the nature of services, the Ld CIT(A) has observed that the services were made available. Thus, we notice that the Ld CIT(A) has rendered the decision without bringing on record supporting materials and also without properly analysing the provisions and contentions of the assessee. In the absence of proper analysis of facts relating the issues contested before us, it would be difficult for the Tribunal to adjudicate them.
Thus all the contentions of the assessee require fresh examination at the end of Ld CIT(A). Assessee appeals are treated as allowed for statistical purposes.
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2020 (10) TMI 985
Disallowance u/s 35(i)(ii) - assessee had made donation to M/s. School of Human Genetics and Population Health a Trust which was approved by the Ministry of Finance (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi, dated 26.01.2009 u/s 35(i)(ii) r.w. Rule 5C and 5E of the Income Tax Rules, 1962 from the AY 2008-09 onwards in the category of “Other Institution” project engaged in research activities vide F.No.203/64/2009/ITA-II dated 20.01.2009 - HELD THAT:- In SANTOSH SURESH KUMAR AGARWAL [2018 (9) TMI 1827 - ITAT KOLKATA] AND M/S MACO CORPORATION (INDIA) PVT. LTD. [2018 (3) TMI 811 - ITAT KOLKATA] AND Zenith Credit Corporation [2018 (7) TMI 1958 - ITAT KOLKATA] considering fact that the donee has approached the Settlement Commission were also considered and it was held that these facts do not affect the claim of the assessee for deduction u/s 35(1)(ii).
The case on hand, reliance was placed by the AO on the copy of statement of Smt. Samadrita Mukherjee Sardar, the Secretary of SHG&PH. In the statement, the name of the assessee is not mentioned as a company which had indulged in bogus donation. Copy of the statement was not given to the assessee. It is well settled that when adverse material is not given to the assessee, the same cannot be used against them. No opportunity of cross examination of the witness of the Revenue was granted. Thus, these statements cannot form evidence, based on which an addition can be sustained.
When the assessee had given a donation to the donee organization, the registration granted u/s 35(1)(ii)(iii) of the Act by the competent authority was in force. Just because this was withdrawn at a later date, the assessee to claim for deduction cannot be rejected. All these propositions have been laid down in the case law extracted above. Consistent with the view taken by different Benches of the ITAT on this very issue on similar facts, we hold that the assessee is entitled for deduction u/s 35(1)(ii) of the Act. In the result this ground of the assessee is allowed.
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2020 (10) TMI 984
Exemption u/s.11(1)(a) - Disallowance of Administrative & Establishment expenses claimed by the assessee - HELD THAT:- Assessee enjoys registration under section 12A of the Act and that the AO without assigning any reason has disallowed which was claimed by the assessee as Administrative & Establishment expenses which was included in the application of income u/s.11
Whether the administrative and establishment expenses can be included as application of Fund is no longer res integra, since Hon’ble jurisdictional High Court in CIT Vs. Birla Janahit Trust [1990 (8) TMI 5 - CALCUTTA HIGH COURT] has held that salaries and miscellaneous expenses which are incurred for carrying out the object and purpose of the trust must be considered as application for charitable purpose.
Audit fee is necessary expense likewise bank charges, which assessee has to pay to the bank for running of its activities, and the expenses under the head ‘rates and taxes’ are in the nature of municipal taxes etc. which are necessary for the survival and then only it can run the trust, thereby achieve the objective of the trust, so the expenditure incurred by the assessee trust, needs to be allowed. Therefore, the total expenses incurred as Administrative & Establishment expenses are allowable expenses.
Allowability of exemption u/s. 11(1)(a) (i.e. 15% accumulation of income is on Gross Receipt or not) - As per assessee, it is entitled to accumulate 15% of its gross receipt in case it is not applied for charitable purpose u/s. 11(1)(a) - HELD THAT:- the issue under consideration in respect of accumulation of income allowed u/s. 11(1)(a) of the Act is no longer res integra. For that, we rely on the decision of the coordinate bench of this tribunal (Bangalore bench) in the case of Greenwood High Trust [2018 (1) TMI 1105 - ITAT BANGALORE] we direct the AO to allow accumulation income u/s. 11(1)(a) of the Act @ 15% of the gross receipt as claimed by the assessee and consequently ground raised by the assessee is allowed.
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2020 (10) TMI 983
Addition u/s 14A read with Rule 8D - sufficiency of own funds - HELD THAT:- As decided in own case [2018 (5) TMI 420 - ITAT KOLKATA] the own funds of the assessee are sufficient to make the cost of the investments which yielded exempt income. A.O. has not brought anything on record which proves that the investment was made out of the borrowed funds. We are, therefore, of the view that the investment made out of the assessee’s own funds and accordingly the addition made by the A.O. and confirmed by the Ld. CIT(A) under section 14A read with rule 8D(2)(ii) is to be deleted.
Disallowing deduction on account of provision for future loss on derivative due to foreign exchange fluctuation - HELD THAT:- As relying on S VINODKUMAR DIAMONDS PVT LTD [2013 (11) TMI 408 - ITAT MUMBAI] and HINDUSTAN GUM & CHEMICALS LTD [2017 (3) TMI 1173 - ITAT KOLKATA] allowability of the loss on actual payment in AY 2009-10 has been made subject to the allowability of the loss for AY 2008-09. This stand of the DRP itself negates the observations of assessing officer that it is a notional loss and establishes that it is a business loss incurred by the assessee on mercantile system which method is consistently followed by the assessee. Under these circumstances, we are inclined to allow the foreign exchange fluctuation loss to assessee in this year. This ground of the assessee is allowed.
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2020 (10) TMI 982
Validity of reopening of assessment u/s 147 - issue of notice u/s.143(2) beyond the prescribed period - HELD THAT:- Hon'ble Supreme Court of India in the case of CIT Vs. Laxman Das Khandelwa [2019 (8) TMI 660 - SUPREME COURT] has held that - the notice u/s.143(2) being prerequisite, in the absence of such notice, the entire proceedings would be invalid. Therefore, the provisions of Section 143(2) of the Act and the proviso thereunder would clearly apply to the case before us. Admittedly notice u/s.143(2) of the Act was given on 24-11-2014, which is beyond the prescribed period of six months from the end of the financial year, in which the return was furnished by the assessee. - Decided in favour of assessee.
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2020 (10) TMI 981
Suppression of debtors - CIT-A deleted the addition - HELD THAT:- Entire turnover of the assessee is exclusively from Government Department and the said turnover has not been disputed by the AO. AO has also not considered the debtors of other divisions and only considered debtors of contracting division - no Government Department issues any confirmation, an issue which has been raised by the AO.
AO has just made an estimated calculation and actual figures of various deductions such as TDS, Works contract Tax, Security deposit, royalty, Secured Advances (EMD), and Retention money has not been considered. These facts were not refuted by the Ld. DR at the time of hearing.
AO resorted to some strange calculation finding out mismatch in the account of sundry debtors in view of the accounts derived at for the subsequent assessment year. When the AO is accepting the turnover, sales are not disputed and the AO has also not considered the actual figure of various deductions as afore-stated, in such scenario, we are of the considered view that the Ld. CIT(Appeals) was correct in deleting the addition.
Addition on account of mismatch in work in progress - CIT-A deleted the addition - HELD THAT:- AO arrived at a conclusion by selecting some particular sites and taking recourse to reverse calculation on the basis of subsequent years profitability. On the facts on records, AO failed to consider specifies of each project. The facts such as escalation in some projects, were not considered. In the case of amount of escalation, there is no corresponding expenditure against the same and therefore, it would not have any impact on WIP. AO has not considered the figures and accounts of all the sites. Adoption of accounts of subsequent years cannot be the basis for calculating work in progress of the year. In view of our above observations, we do not find any reason to interfere with the findings of the Ld. CIT(Appeals).
Addition on account of labour payment - AO disallowed 5% of the entire site expenses - HELD THAT:- Ground of the Revenue was against restricting of disallowance to 5% of labour charges by the Ld. CIT(Appeals). However, with the order of the Tribunal [2017 (12) TMI 1780 - ITAT PUNE] this 5% disallowance on labour charges has been overturned and instead 3% disallowance on labour charges has been retained. In such scenario, the ground of appeal by the Revenue before us on this issue needs to be dismissed.
Appeal of the Revenue is dismissed.
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2020 (10) TMI 980
Deemed income / addition u/s 41(1) - Recovery of bad debts written off - AO held that assessee claimed deduction of provision for bad and doubtful debts u/s.36(1)(viia) of the Act out of which bad debts written off is set off - HELD THAT:- In the instant case, the bad debts written off did not exceed the credit balance in provision for bad and doubtful debts and the bad debts written off was not claimed as deduction u/s.36(1)(vii) of the Act in earlier years. This fact was not controverted by the Revenue before us. Accordingly, we hold that the provisions of Section 41(4) of the Act which has been invoked by the ld. AO in the instant case are not applicable at all in the facts of the instant case.
DR had in principle agreed to the fact that the ratio laid down by the Bangalore Tribunal in the case of State Bank of Mysore [2009 (5) TMI 610 - ITAT BANGALORE] shall be applicable to the facts of the instant case but he pleaded for remitting back this issue to the file of the ld. AO for verification of figures alone. In this regard, we find that while giving effect to the order of the ld. CIT(A), the ld. AO would obviously allow the claim only after verifying the figures and hence, no purpose would be served by remitting this issue again to the file of the ld. AO for verification of figures. Hence, the argument made by the ld. DR in this regard is dismissed. In view of the aforesaid observations, the ground No.1 raised by the revenue is dismissed.
Income accrued in India - income of its foreign branches - taxability in India - HELD THAT:- There is absolutely no finding recorded either by the ld. AO or by the ld. CIT(A) with regard to availability of relevant information with regard to payment of taxes in foreign countries by the assessee in respect of income of the foreign branches. Hence, we find considerable force in the argument advanced by the ld. DR that this aspect needs to be factually verified by the ld. AO. Hence, we deem it fit and appropriate to remand this issue to the file of the ld. AO only for the limited purpose of making following verifications:-
(a) The details of branches located in country with which DTAA has been entered into, by India
(b) The details of branches located in the Country with which DTAA has not been entered into, by India
(c) The details of taxes paid by the foreign branches in respect of its income earned outside India.
Assessee is directed to provide the aforesaid details before the ld. AO.
Adjustment of refund granted by the revenue to the assessee - HELD THAT:- CIT(A) had granted relief to the assessee by placing reliance on the order of his predecessor in assessee’s own case for A.Y.1995-96 wherein reliance had been placed on the decision of CIT vs. HEG Limited [2009 (12) TMI 35 - SUPREME COURT] and decision of India Trade Promotion Organisation vs. CIT [2013 (9) TMI 451 - DELHI HIGH COURT]. In the case of Bank of Baroda [2018 (12) TMI 1836 - ITAT MUMBAI] (authored by the undersigned) wherein it was held that the refund granted by the revenue should be first adjusted against the interest portion of refund due and balance, if any, is to be adjusted against the tax portion of refund due and interest for the subsequent period shall be calculated on such tax portion of refund due. It was also held that this would not tantamount to interest on interest claimed by the assessee and the assessee was right in claiming interest on such portion - Decided against assessee.
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2020 (10) TMI 979
Rectification of mistake - ITAT in its order has observed the fact that the matter needs to be examined and verified by the lower authorities in its paragraph No. 40 and 41 of the order but directed the AO in the paragraph No. 42 of the order to allow the claim of the assessee for the short recoveries as discussed above after necessary verification and examination which is contrary to the observation made in paragraph No. 40 and 41 of the order - HELD THAT:- MA was filed by the Revenue dated 31st December 2019 whereas order of the Hon’ble High Court was passed on 17th February 2020 [2020 (2) TMI 1236 - GUJARAT HIGH COURT] subsequent to the date of filing the MA by the Revenue. Thus it is inferred that the order of the Hon’ble High Court was not available at the relevant point of time with the Revenue i.e. at the time of filing the MA.
As the order of the ITAT has merged with the order of the Hon’ble Gujarat High Court on the issue raised by the revenue in the MA as discussed above, therefore there is no question of any mistake in the order of the ITAT in terms to the provision of sub-section (2) of section 254 of the Act. The ld. DR at the time of hearing has not brought anything on record to support the grievance raised by the Revenue in the MA. Accordingly, we dismiss the MA filed by the Revenue.
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