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Showing 401 to 420 of 1464 Records
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2021 (10) TMI 1065
Seizure of goods - absence of E-way bill - Section 129(3) of UPGST Rules, 2017 - HELD THAT:- For the period 1.2.2018 to 31.3.2018, the condition of E-way bill has been held to be not applicable.
The order dated 28.2.2018 passed under Section 129(3) of UPGST Rules, 2017 is quashed and all consequential proceedings stands dropped - petition allowed.
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2021 (10) TMI 1064
Assessment u/s 153A - addition u/s 68 - onus to prove - addition was confirmed based on the report of the DDIT (Inv.) Kolkata - incriminating material found in search or not? - summons u/s 131 to lenders issued - as argued by assessee AO made no sufficient efforts to produce its witnesses before the assessee for cross examination - Whether reliance on 'reports of investigation wing' etc. did not constitute 'material' relevant for the purpose of assessment in this case? - HELD THAT:- In the present cases also the opportunity to cross examination has not been given to the assessee - AO at the fag end of time barring dates, had issued the alleged notices u/s 131 of the Act, the fact of which is also not coming out from the records as in the order sheets, the AO has not mentioned about the fact of having issued notices u/s 131 - AO straight forward shifted the onus of producing witnesses to the assessee by observing that assessee were also responsible for producing the witnesses but it is not a valid argument for not giving opportunity to the assessee for cross examination as the Department is all powerful to make sure that these witnesses are present for the cross examination by the assessee. Under similar circumstances, the Hon'ble Delhi High Court in the case of Pr. CIT vs. Best Infrastructure (India) (P.) Ltd. [2017 (8) TMI 250 - DELHI HIGH COURT] has held that Revenue cannot shift the onus of producing its witnesses to the assessee.
AO did not make sufficient efforts to produce its witnesses before the assessee for cross examination therefore, such statements taken behind the back of the assessee and not confronted to the assessee do not have any evidentiary value and therefore, if we ignore such statements, taken behind the back of the assessee and not confronted to the assessee and take into account all other evidences filed by the assessee which are in favour of the assessee and wherein the Assessing Officer has also not found any discrepancy, the additions sustained by learned CIT(A) are liable to be deleted.
Additions have been made on the basis of statements of witness and the witnesses have not been cross examined by assessee. AO though in the assessment order has noted that summons u/s 131 of the Act were issued to the witnesses but no steps, as required by law, have been taken by the AO as the witnesses did not appear and the AO did not enforce their presence by taking further steps. Merely writing in the assessment order that notices u/s 131 has been issued, without recording any order in the order sheet regarding this fact nor having any evidence of service of such notices, does not serve the purpose of giving opportunity to the assessee of cross examination.
On merits also, we find that assessee had fulfilled its part of onus which is required to be fulfilled by the assessee as the identity of the lender companies is not in doubt, creditworthiness of the companies is not in doubt as these companies had sufficient funds to advance the loans which is apparent from the amount of share capital and the reserves they are carrying in their balance sheets. The year-wise amount of share capital, reserves and loans out of which these creditors had advanced loans to the assessee, has been tabulated in a chart, which, for the sake of completeness, has been made part of this order.
Creditworthiness of the lender companies is not in doubt. As regards the genuineness of the transactions, we find that loans were taken through banking channels and interest was also paid after deducting TDS and a part of loans were also returned back with interest even before the date of search and this proves that the transactions were genuine. The authorities, during the search on the assessees, did not find any incriminating material and any money trail to establish that cash had exchanged in lieu of transactions of loans received and repayments thereof. The assessments of these companies, wherein the interest paid by the assessee, has been accepted to be their income, also proves that the transactions were genuine. Therefore, all the three ingredients of section 68 are fulfilled and therefore, also the additions confirmed by learned CIT(A) cannot be sustained.n the present cases, other than the statements recorded by another officer (which we have already held to be of no evidentiary value) there is no material before the Assessing Officer to disapprove the evidences filed by assessee. - Decided in favour of assessee.
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2021 (10) TMI 1063
Artificial Increase in Valuation or not - express provisions not followed - HELD THAT:- Matter requires consideration.
Learned Standing Counsel has accepted notice on behalf of all respondents. He prays for and is granted four weeks' time to file counter affidavit. Petitioners shall have two weeks' thereafter to file rejoinder affidavit - List thereafter.
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2021 (10) TMI 1062
Seizure of goods alongwith the conveyance - valid E-way bill or not - requirement of seeking extension of validity period of E-way bill - HELD THAT:- There is a categorical finding by the learned Judge that the conveyance had reached the destination on 1.1.2019 at 11.00 p.m. which was well within the prescribed validity period under the E-way bill. The appellant-authorities contention that the consignment was being delivered on 2.1.2019 and therefore, the goods cannot be transported cannot be acceded to. The materials on record clearly indicates that the action by the authorities was taken at the destination and not during transit and therefore, an inference has to drawn that the conveyance had reached the destination well within the subsistence of the valid period stipulated under the E-way bill.
Appeal dismissed.
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2021 (10) TMI 1061
Levy of GST - activity of disposal of developed plots of land to allottee members of the applicant from and out of the land received from the TSIIC for specified purpose of industrial development - the activity failing under Entry 5 of Schedule III of Central Goods & Service Tax Act, 2017 and corresponding provisions under Telangana Goods & Service Tax Act, 2017 as amended - activity of infrastructure development (ID) of land received from the TSIIC for specified purpose of industrial development and undertaken on behalf of allottee members (allottee(s) or the member(s)) - “supply” under Section 7 of the Central Goods & Service Tax Act, 2017 & corresponding provision under Telangana Goods & Service Tax Act, 2017 as amended.
HELD THAT:- There will be (2) sale deeds one between TSIIC and the applicant and the second between the applicant and the individual industrialist. The peculiar circumstances obtaining from these (2) transactions are due to the larger objective for development of industrial parks in pursuance of the industrial policy of the State - the TSIIC ltd executes an agreement for sale of land with the applicant and collects the full consideration for the cost of land but sets condition to execute the sale deed to transfer the title only after the applicant completes infrastructure development in the land.
The perusal of the contract entered by the applicant with the TSIIC ltd clearly indicates that the property in land will be transferred to the applicant only when the applicant completes the development of infrastructure of schedule land. However, this clause in the agreement appears to have been made to meet the larger objective enumerated in industrial policy of the State. Though there is a contract for development of the land the other (2) conditions enumerated above are not fulfilled i.e., transfer of property in goods from the applicant to the TSIIC ltd and payment of consideration by TSIIC ltd to the applicant.
The examination of the agreement between the applicant and one individual allottee M/s. Beaver tracks pvt ltd reveals that the applicant has taken up development of infrastructure as per the conditions of allotment set by TSIIC. And that M/s. Beaver tracks pvt ltd will get the title of the land only on commencement of industrial production. There is no clause in the agreement by which the applicant is obliged to develop the land for the industrialist like M/s. Beaver tracks pvt ltd. This obligation is only with TSIIC ltd. Thus even in the contract with individual industrialist like M/s. Beaver tracks pvt ltd the above (3) conditions for making such a supply as supply of works contract are not fulfilled - Further the applicant also indicates that it may take up certain infrastructure development after the title to land is transferred to M/s. Beaver tracks pvt ltd by way of sale deed. It is also indicated that consideration will be recovered for executing such works. Such development works executed after the sale deed is registered will necessarily amounts to works contract and the consideration received for the same will be liable to tax under CGST Act, 2017.
If the applicant sells the land after developing by way of erecting a civil structure or a building or a complex then such supply is liable to tax under CGST/SGST Acts. However if land is sold without any development involving any civil structure or building or complex such supply falls under paragraph 5 of schedule III to Section 7(2) of CGST Act, 2017 and hence is exempt from tax - If the applicant executes works contracts involving transfer of property in goods for a consideration under an agreement of contract such consideration will be liable to tax. However if these elements are missing in execution of a construction it shall not be liable to tax.
Application disposed off.
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2021 (10) TMI 1060
Filing of two proceedings challenging one order or proceeding - HELD THAT:- It is not in dispute that petitioner after passing of assessment order 16.06.21 (Annexure P-1) and issuance of demand notice dated 16.06.21 (Annexure P-2), petitioner has approached the Appellate Authority by way of filing an appeal under Section 246(A) of the Act. It is also not in dispute that the Appellate Authority has powers to set aside the assessment order if found to be contrary to mandatory provisions under the Act. Under Section 251 of the Act of 1961, the Appellate Authority is having all the powers to consider the grounds raised by the petitioner in appeal. See SATYA PAL ANAND VERSUS STATE OF M.P. AND ORS. [2016 (10) TMI 1142 - SUPREME COURT]
Provisions under Section 251 of the Act of 1961, grounds raised by petitioner and also considering aforementioned ruling of Hon'ble Supreme Court, the writ petition challenging the same order which is pending consideration before the Appellate Authority is not maintainable ad is liable to be dismissed, as such.Consequently, writ petition is dismissed as not maintainable.
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2021 (10) TMI 1059
Determining the income on mining activity - increase in expenditure of re-screening charges in the course of extraction of iron ore - HELD THAT:- As assessee vehemently argued that the authorities have failed to consider the invoices in a proper perspective, we are unable to subscribe to her submissions. It is well settled that the Tribunal being the last fact finding authority, the finding recorded by the Tribunal with respect to the quality of material i.e., iron ore purchased by the assessee has some relevance. The arguments now advanced by the learned counsel for the assessee would not touch upon any question of law much less the substantial questions of law to be decided by this Court. On the contrary, the submissions would relate to the factual aspect of the expenses incurred towards the extraction/re-screening charges of iron ore purchased in the assessment year in question.
Thus the attempt made by the assessee to establish the lower grade of material purchased by the assessee required more extraction/rescreening charges was not supported by any material evidence. The same being considered extensively by the Tribunal, we do not find any ground to interfere with the factual findings recorded by the Tribunal. Hence, we dismiss the appeal answering the substantial questions of law, in favour of the revenue and against the assessee.
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2021 (10) TMI 1058
Jurisdiction of DCIT Bengaluru to issue notice u/s 153C - transfer of case u/s 127 - assessee’s case was transferred from ACIT, Circle – 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) - HELD THAT:- As assessee’s case was transferred from ACIT, Circle – 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) dated 20.07.2009; notices under Section 153C for the assessment years under consideration were issued by the DCIT, Central Circle, Bengaluru on 11.05.2009; date of transfer of files from ACIT is 19.08.2009. Thus, it is ex-facie apparent that the notices under Section 153C were issued prior to transfer of case and jurisdiction conferred on the DCIT. It is well settled by now that any order passed without jurisdiction is invalid.
As in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd.[2019 (7) TMI 1449 - SUPREME COURT] wherein, it has been held that the assessment order passed against the non-existent company is a substantive illegality and not a procedural violation of the nature adverted to Section 292B.
Thus, it is well established that the notice issued by the DCIT Circle 1(1), Bangalore, is without jurisdiction and as such, all further proceedings would render void ab initio. The arguments of the learned counsel for the revenue with respect to Sections 292B and 292BB do not merit any consideration. - Decided in favour of assessee.
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2021 (10) TMI 1057
Disallowance of deduction u/s.80IA - aggregate losses was more than the claim of deduction u/s.80IA(4) the AO disallowed the deduction - HELD THAT:- It is seen that the losses pertaining to the earlier years, referred to by the AO for setting off against the current year’s qualifying income from the eligible unit, relate to the years prior to the initial year. Obviously, such losses cannot be set off against the income from the wind mill on or after the initial year. Similar issue came up for consideration before the Tribunal in the case of the assessee for earlier years. Vide order dated 25-06-2019, the Tribunal in for the assessment years 2007-08, 2009-10, 2010-11 & 2011-12 [2019 (6) TMI 1644 - ITAT PUNE] has accepted the assessee’s claim. The ld. DR fairly accepted the position. In view of the foregoing discussion and respectfully following the precedent, we uphold the impugned order on this score.
Liability on account of revised wages - HELD THAT:- As seen that Central Govt. set up Wage Board for the working Journalists and other Newspaper employees. The Board submitted its report on 31-12-2010. The Central Govt. issued consequential notification on 11-11-2011 accepting the recommendations, which was challenged in the Courts of law and eventually got nod in a later year. In terms of the notification of the Central Govt., the assessee recomputed the amount of wages pertaining to the year under consideration and claimed deduction for the same by means of the revised return. The assessee is admittedly following the mercantile system of accounting. Since the amount of additional wages pursuant to the Central Govt. notifying the recommendations of the Wags Board pertaining to the year under consideration amounted to ₹ 6.26 crore, in our considered opinion, the same has to be allowed under the mercantile system of account followed by the assessee. The fact that the payment was made in subsequent years cannot mar the deductibility of the amount which pertains to and became payable during the year. We, therefore, uphold the impugned order deleting the liability on account of revised wages for the year under consideration .
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2021 (10) TMI 1056
Revision u/s 263 by CIT - Low net profit or loss shown from large gross receipts - HELD THAT:- As in the present case, we have examined in reference to the shortcomings in the assessment order as alleged by the Ld. Pr. Commissioner of Income Tax the assessee had demonstrated each and every aspect of such queries raised before the Assessing Officer.
DR also could not refute the fact that necessary documents were placed before the AO and he also could not bring on record any material/evidence to show that the Assessing Officer has not conducted any enquiry. Rather, we have observed that questions were asked and in response thereto, the assessee had given reply to each and every queries raised by the Department.
It is a settled position of law while assuming jurisdiction u/s.263 of the Act, the Ld. Pr. Commissioner of Income Tax should specifically state the reasons why the order of the Assessing Officer was erroneous in so far as prejudicial to the interest of the revenue by supporting factual evidences and reasoning which in this case is absent.
Thus we hold that resorting to revisionary jurisdiction u/s.263 of the Act by the Ld. Pr. Commissioner of Income Tax in this case is not valid in law and hence, we quash the impugned order of the Ld. Pr. Commissioner of Income Tax. - Assessee appeal allowed.
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2021 (10) TMI 1055
Benefit of exemption u/s. 11 & 12 - Scope of charitable purpose as defined in Section 2(15) - regular receipt of money from the sale of paintings - AO observed that the assessee is renting out galleries to the artists for displaying their work and has thus concluded that the assessee is engaged in a business activity and held to be in violation of the statutory remit in view of the amendment in section 2(15) of the Act by Finance Act, 2009 - HELD THAT:- As relying on India Trade Promotion Organization vs. DIT (Exemption) & Others [2015 (1) TMI 928 - DELHI HIGH COURT], India International Centre [2015 (5) TMI 515 - ITAT DELHI] AND ALL INDIA FOOTBALL FEDERATION [2015 (10) TMI 2162 - ITAT DELHI] if some incidental activities are carried out by a charitable organization whose dominant and prime objective is not a profit motive, the organization cannot be deemed to be pursuing non charitable objects and hence be considered to be existing for non-charitable purposes - the constitutional validity of proviso to Section 2(15) of the Act, had held that mere receipt of fee or charge will not mean that the assessee is involved in any trade, commerce or business.
Accordingly considering the legal position as found settled with respect to interpretation of proviso of Section 2(15) of the Act in the case of India Trade Promotion Organisation vs. DGIT (Exemption) (supra) the coordinate bench held that the benefit of exemption u/s. 11 & 12 of the Act could not be denied. We find that similar view has been followed right from 2009-10 assessment year till date. Thus we hold that the appeals filed by the Revenue have to be dismissed in view of the consistent orders available on record qua the issue ordered accordingly.
Lack of opportunity as pleaded by the assessee - Without commenting upon the correctness, of the conclusions drawn addressing the procedural shortcoming only, we deem it to appropriate to set aside the orders of the Ld. First Appellate Authority to this extent and restore the issue back to the file of the CIT(A) with a direction to give a specific opportunity to the assessee to make its submission before the passing of the order. No doubt technically the resultant addition may not be capable of being described as an enhancement, however, the fact remains that when the administrative authorities proceed to pass an order adverse to a party then due notice of this fact necessarily in all fairness needs to be given to the assessee. In the facts of the present case, it is evident that the assessee was not heard. The law is well settled that it cannot be inferred/presumed that the assessee even if given an opportunity would have nothing further to state on facts or law. The principles of natural justice mandate that a reasonable and effective opportunity of being heard needs to be granted specifically where an administrative authority proceeds to take an adverse view. Accordingly, in the interests of justice, it is deemed appropriate to set aside the impugned order back to the file of the Ld. CIT(A) with a direction to pass a speaking order.
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2021 (10) TMI 1054
TDS u/s 192 - Demand u/s 201(1)/201(1A) - withholding of tax on LFC paid to employees - assessee submitted that LFC was paid to the employees for the shortest route by the entitled class to the destination in India - HELD THAT:- As decided in own case [2021 (2) TMI 28 - ITAT MUMBAI] taxability of these amounts in the hands of the employees concerned, because that aspect of the matter is not really relevant as on now. We leave it at that for the time being. The coordinate bench decisions deal with only the issue of taxability of leave travel facility under section 10(5) and not with the broader question about the nature of tax deduction at source liability under section 192, as also the issue about bonafides of the stand of the assessee employer. These decisions, therefore, do not come in the way of our present decision.
Once we hold, as we do in this case, that estimation of income, in the hands of the employees under the head' income from salaries', by the employer was bonafide and reasonable, the very foundation of impugned demands raised under section 201 r.w.s 192 ceases to hold good in law. We must, therefore, vacate these demands.
Bearing in mind entirety of the case, we cancel the impugned demands under section 201 r.w.s. 192 as unsustainable in law. - Decided in favour of assessee.
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2021 (10) TMI 1053
Denial of deduction claimed u/s 10A in respect of income derived from training activity - HELD THAT:- As the Tribunal in the preceding assessment year has allowed assessee’s claim of deduction under section 10A of the Act in respect of the income derived from training activity. It is relevant to observe, aforesaid decision of the provision has been upheld by the Hon’ble jurisdictional High Court [2014 (3) TMI 1162 - BOMBAY HIGH COURT]while dismissing revenue’s appeal. [2014 (3) TMI 1162 - BOMBAY HIGH COURT] Facts being identical, respectfully following the decision of the co-ordinate Bench and the Hon’ble jurisdictional High Court in assessee’s own case, as referred to above, we direct the AO to allow assessee’s claim of deduction under section 10A of the Act by including it both in the total turnover as well as export turnover. This ground is allowed.
Facts being identical, respectfully following the decision of the co-ordinate Bench and the Hon’ble jurisdictional High Court in assessee’s own case, as referred to above, we direct the AO to allow assessee’s claim of deduction under section 10A of the Act by including it both in the total turnover as well as export turnover. This ground is allowed.
Deduction claimed under section 10A of the Act in respect of interest income - assessee had earned interest income on bank deposits, bonds, loans to employees, loans to subsidiary etc - HELD THAT:- Undisputedly, out of the total interest income earned, the assessee has apportioned an amount of ₹ 12,37,49,444/- to the 10A units. It is the stand of the assessee that the interest income on which deduction under section 10A of the Act was claimed was because of temporary parking of surplus funds available to the 10A units out of the export proceeds. Thus, it is closely related to the activity of the 10A units.
A reading of section 10A of the Act would show that profits and gains derived by an undertaking from export of articles or things or computer software would be eligible for deduction. Whereas, in the decisions relied upon by the Departmental Authorities, the dispute related to claim of deduction under chapter VI-A of the Act - in principle we accept assessee’s contention that interest earned from temporary parking of surplus funds in bank deposits, bonds as well as loans to employees and subsidiary would qualify for deduction under section 10A of the Act. However, the quantification and attribution of such interest to the 10A units has to be examined by the AO. The assessee is directed to furnish necessary evidence in this regard to establish its claim of deduction under section 10A of the Act on the amount of ₹ 12,37,49,444/-. This ground is allowed subject to factual verification.
Transfer pricing adjustment made because of interest charged on delayed receivables - delay in remittance by overseas subsidiaries, the assessee has submitted that such delay was because of delay in remittance by the end customers to the overseas subsidiaries - HELD THAT:- As assessee had furnished reconciliation statement, bank statement of subsidiaries and some other evidences. Notably, learned Commissioner (Appeals), in fact has appreciated assessee’s contention that there could be delay/considerable time gap in remittance of receivables by the overseas subsidiaries and the third party distributors, as the AEs are not the end customers, whereas, the third party distributors are themselves the customers. He has also appreciated the fact that some of the subsidiaries in USA and Netherland are incurring losses. Thus, when the AEs themselves are not the end customers and their remittance to the assessee, in turn, depends upon the remittances by the end customers, it cannot be said that the AEs have benefitted because of delay in remitting the receivables.
As before the TPO the assessee had furnished certain evidences including the bank statements of subsidiaries and reconciliation statement reconciling the time gap in amounts receivable from subsidiaries and from third parties. These evidences furnished by the assessee, certainly, support assessee’s claim that the delay in receivables was purely because of the delay in receipt from end customers. In fact, learned Commissioner (Appeals) has also appreciated this fact. Thus, after taking into consideration the entire factual we are of the view that the adjustment made on account of delayed receivables has to be deleted.
Transfer pricing adjustment on account of customization fee - CIT-A deleted the addition - HELD THAT:- As relying on assessee's own case [2010 (8) TMI 750 - ITAT MUMBAI] though the subsidiaries are not directly involved in the customization work of the software but at the same time they are only authorized to collect the customization work in the market and other independent distributors are not doing said work. It is also seen that some of the independent distributors are paid higher commission then the subsidiaries without doing any job for collection of customization work. Moreover, the Learned D.R. could not controvert the findings of the Learned CIT (A) before us.
TP adjustment made towards granting fee on loan extended by the assessee to the AE - HELD THAT:- As rightly observed by learned Commissioner (Appeals), question of providing a corporate guarantee will arise in a situation where the borrower has obtained debt from third party lender. In the facts of the present case, the assessee itself has advanced the loans to the AEs and has charged interest at the appropriate rate of LIBOR + certain basis points. No material has been brought on record by the TPO to demonstrate that the rate of interest charged by the assessee on the loans advanced is not at the appropriate rate prevailing in the countries, where the AEs are located. Therefore, in the aforesaid factual position, when the assessee has charged interest on the loans advance, there is no question of additionally charging guarantee commission for provision of corporate guarantee. - Decided in favour of assessee.
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2021 (10) TMI 1052
Addition u/s 68 - Unsecured loan entries facilitated - discharge of primary onus - identify &, creditworthiness of lender and genuineness of transactions and discharge of primary onus or not? - addition based on information received from DCIT,Circle-2(4) Ahmedabad - HELD THAT:- No independent finding was given by Ld. CIT(A) except holding that mere filing of confirmation, bank statement, copy of return of income is not sufficient to prove the genuineness of transaction and creditworthiness of lenders.
CIT(A) has not given any finding as to what more evidence was required to file if any other evidence was required from the assessee. In our view the assessee has discharged the primary onus in showing the identity, creditworthiness and genuineness of such transaction. We further find that similar addition of the same amount was made in the hand of facilitator Dhirajlal Sanghvi [2019 (10) TMI 1369 - ITAT AHMEDABAD]
As in view the decision of Hon'ble ITAT Ahmedabad Bench in case of facilitated Dhirajlal V Sanghvi (supra), wherein it was held that he had acted as facilitator in providing the funds to the investors and from this purpose he had made noting of funds which were remitted by third party and received by another third party. Hence, we are of view that once the assessee has discharged the primary onus, the Assessing Officer without brining any adverse evidence was not justified in making addition under section 68 of the Act. This ground of assessee’s appeal raised by assessee is allowed.
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2021 (10) TMI 1051
Exemption u/s.11 - Charitable activity u/s 2(15) - assessee is a registered entity u/s 25 of The Companies Act, 1956 and holds valid registration u/s 12AA since the year 2005 and hitherto allowed exemption u/s 11 / 12 as applicable to a charitable trust - AO denied the same in this year by holding that the assessee collected maintenance charges, track rent and earned income from other sources which would be in the nature of commercial receipts and therefore, the activities were hit by proviso to Sec. 2(15) - HELD THAT:- As in INDIA TRADE PROMOTION ORGANIZATION VERSUS DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) & OTHERS [2015 (1) TMI 928 - DELHI HIGH COURT] if the institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it would be an institution established for charitable purposes. It was also observed that merely because a fee or some other consideration is collected or received by the assessee, it would not lose its character of having been established for a charitable purpose. The dominant activity of the assessee was to be examined. If it was not business, trade or commerce then any such incidental or ancillary activity would also not fall within the categories of business, trade or commerce.
Hon’ble Allahabad High Court in CIT V/s Lucknow Development Authority [2013 (9) TMI 570 - ALLAHABAD HIGH COURT] has held that where a trust is carrying on its activities for the fulfillment of its aims and objectives which are of charitable in nature with no motive to earn profit and in the process, earns some profit, the same would not be hit by proviso to Section 2(15).
Thus, it is fairly settled legal position that it is the pre-dominant objective which would be relevant to examine the applicability of proviso to Sec.2(15). The Ld. CIT(A) after examining the primary objects of the assessee as well as the purpose for which it was established, came to a conclusion that the primary objective was charitable in nature and collection of fees was not to earn profit. Therefore, the assessee did not cease to be charitable in character so as to render it ineligible to claim benefits u/s 11 and 12. We concur with these findings of Ld. CIT(A) and consequently, dismiss the revenue’s appeals for all the years.
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2021 (10) TMI 1050
Nature of land sold - gain on sale of land - agricultural land or capital asset - distance between the Municipal limit and agriculture land - why the agricultural land should not be treated as capital asset within the meaning of section 2(14)? - AO treated the agricultural land as capital asset by taking view that aerial distance of land is less than 8 kms from Municipal Limit of Surat - whether CIT (A) was justified in allowing the appeal of the assessee as not appreciated that even the word road distance does not constitute the distance followed by the traffic Rules? - HELD THAT:- We find that CBDT in Circular No.17/2015 while accepting the decision of Hon’ble Bombay High Court in Smt. Maltibai R Kadu [2015 (4) TMI 227 - BOMBAY HIGH COURT] held that measurement of aerial distance is to be applied prospectively, therefore, considering the facts and circumstances of the case, particularly the finding of ld.CIT(A) that distance of land measured road is more than 8 kms, therefore, we affirm the order of ld.CIT(A). No contrary decision is brought to our notice to take other view. In the result the grounds of appeal raised by the revenue are dismissed.
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2021 (10) TMI 1049
Estimation of income - Bogus Purchase u/s 69C - HELD THAT:- The assessee has shown Gross Profit @ 6.3% and Net Profit @ 4.69%, which is in line in the business of diamonds. We find that the impugned purchases are less than 10% of the total transactions of the assessee.
Assessee has not fully substantiated purchases, the Revenue Authorities are not entitled to make addition @ 100% of the transaction rather to tax the income component in the said transaction - Lower Authorities has not discarded the documentary evidence furnished by assessee. The Lower Authorities basically relied upon the report of Investigation Wing. Therefore, considering the peculiarity of the facts and circumstances of the case, we are of view that to avoid the possibility of revenue leakage, the disallowance of token amount of ₹ 20,000/- will meet the end of justice.
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2021 (10) TMI 1048
Rectification of mistake - disallowance of interest expenses for want of non-deduction of tax at source while making payment of interest - HELD THAT:- As gone through the order dated 10.12.2020 order passed by the AO while giving effect to the order of Tribunal vide his order dated 12.04.2021 and the subsequent order passed u/s 154 of the Act, withdrawing the relief is granted to the assessee in terms of order of tribunal.
AO initially while following the direction of Tribunal, verified the fact and granted relief to the assessee. However, the relief granted to the assessee was withdrawn by AO on the same day in order passed u/s 154. We find that the AO passed the subsequent order without giving opportunity of hearing - we find that the ld.AR of the assessee failed to point out any mistake apparent in the order dated 10.12.2020. Therefore, the application filed by the assessee under section 254(2) of the act is dismissed - Miscellaneous Application filed by the assessee is dismissed.
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2021 (10) TMI 1047
Non addition of additional grounds of appeal in revised return - Deduction u/s 36(1)(viia) - additional claim was not accepted by the AO on the ground that he is not empowered to accept additional claim in absence of revised return - HELD THAT:- AO is not entitled to entertain fresh claim, however, these restriction is not applicable on the first appellate authority or on the Tribunal. We find that before the AO assessee claimed that due to calculation mistake the assessee claimed deduction u/s 36(1)(viia) however, they are entitled @7.5% of interest earned on the advances on rural loan. In our view it was not a fresh claim.
AO should have examined the fact instead of rejecting the claim by raising legal objection. To avoid any further objection by the lower authority, we admit the additional claim of the assessee and restore the issue back to the file of AO to examine the facts as to how much interest earned by the assessee on rural advances and allow relief to the assessee in accordance with law. Ground of appeal raised by the assessee is allowed for statistical purpose.
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2021 (10) TMI 1046
Estimation of income - Bogus purchases - disallowance at 10% of disputed purchases made during the year - assessee is one of the beneficiaries of various dealers who provide only accommodation entries without any delivery of goods based on the information received from Sales Tax Department, Mumbai - HELD THAT:- Taking the totality of the facts and circumstances into consideration we are of the view that ends of justice would be met if the disallowance is sustained at 6% of the alleged bogus purchases considering the fact that even the Assessing Officer in his remand report did not dispute the records in respect of purchases, consumption, sales as well as the stock reconciliation etc., furnished by the assessee - we direct the AO to restrict the disallowance to 6% of the alleged bogus purchases. Ground raised by the assessee on this issue is partly allowed.
Deduction u/s. 35(2AB) - assessee company has incurred expenditure on research and development activities and has claimed additional deduction u/s. 35(2AB) - application for approval in form 3CK was made after the close of the Financial Year - HELD THAT:- Merely because approval is received in the subsequent year, the deduction u/s 35(2AB) could not be denied to the assessee - denial of deduction u/s. 35(2AB) of the Act on the ground that the application for approval in form 3CK was made after the close of the Financial Year is also unsustainable. See BANCO PRODUCTS (INDIA) LTD.[2018 (7) TMI 1559 - GUJARAT HIGH COURT] - we have no hesitation in holding that the deduction u/s.35(2AB) as claimed by the assessee is to be allowed. Hence, the deduction u/s 35(2AB) as claimed by the assessee is allowed.
Disallowance u/s 14A r.w.r. 8D - CIT-A deleted the addition - HELD THAT:- It is the finding of the Ld.CIT(A) that the financial statements of the assessee shows that it had sufficient own funds to make the investments on equities. The Ld.CIT(A) following the decision of the Hon'ble Jurisdictional High Court in the case of Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC BANK LTD. [2014 (8) TMI 119 - BOMBAY HIGH COURT] held that there is no case for disallowance of any interest under Rule 8D(2)(ii) of I.T. Rules. We do not find any infirmity in the order of the Ld.CIT(A) in deleting the interest disallowance. The order of the Ld.CIT(A) is affirmed on this issue. The ground raised by the revenue is rejected.
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