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Showing 421 to 440 of 1519 Records
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2025 (5) TMI 1099
Exemption from GST - cleaning and sanitary services rendered under the head “House keeping” services provided to Indian Institute of Information Technology, Design and Manufacturing, Kancheepuram - exemption as per Ministry of Finance Notification No. 13/2023-CT (Rate) dated 19.10.2023 - raising of invoice without GST - HELD THAT:- It is found from the application filed by the applicant that they are into provisioning of House Keeping' services including sanitation, toilet cleaning, cleaning and clearing, Gardening and Security services. Further, the question for advance ruling raised by the applicant revolves around the supply of such House Keeping' services rendered to M/s. Indian Institute of Information Technology, Design and Manufacturing (IIITDM) Kancheepuram, which is a public technical and research Institution funded by the Ministry of Education, Government of India.
The Indian Institute of Information Technology Design and Manufacturing Kancheepuram (IIITDM Kancheepuram) is a Centre of Excellence for technical education and research established in 2007 by the Ministry of Education, Government of India to pursue design and manufacturing oriented engineering education and research and to promote the competitive advantage of Indian products in global markets. Whereas, it is seen that activities in relation to water supply, public health, sanitation conservancy, solid waste management, slum improvement and upgradation, etc., are the constitutional responsibilities entrusted to a Municipality or a Panchayat under the respective articles of the Constitution, and when a body is created to carry out such functions entrusted to a Municipality or a Panchayat, such bodies do get categorised as 'Governmental Authority' as per the clause (zf) of the exemption notification No. 12/2017-Central Tax (Rate), dated the 28.06.2017. However, in the instant case, IIITDM is not entrusted with any such constitutional function so as to get categorised as a 'Governmental Authority'.
IIITDM through their letter dated 09.05.2024 addressed to the applicant, has stated that GST was exempted in respect of sanitation, water supply and solid waste management services, when provided to a government authority by a service provider, and accordingly, they have requested the applicant to raise invoices without GST henceforth. At this juncture, it also becomes imperative to distinguish the housekeeping' services, provided by the applicant to IIITDM, as against the 'sanitation, water supply and solid waste management services', referred to by IIITDM in the aforesaid letter. While 'housekeeping' is a straightforward service which involves supply of manpower for the purpose of cleaning, gardening, security, etc., 'sanitation, water supply and solid waste management services' on the other hand refers to broader range of function entrusted to the Government (Municipality/Panchayat) to be carried out for the public in general, which involves provision of drainage and other sanitation related activities, supply of water for domestic and commercial needs, and solid waste management which includes collection of waste from individual houses/commercial establishments/institutions, processing of the said waste and disposal of the same - the 'housekeeping' services provided by the applicant to IIITDM, cannot be equated to 'sanitation, water supply and solid waste management services', in any manner whatsoever, and accordingly the provisions of Notification No. 13/2023-CT (Rate) dated 19.10.2023, do not apply to the instant case.
IIITDM do not fall within the ambit of the term 'Governmental Authority' as defined under clause (zf) of the exemption notification No. 12/2017-Central Tax (Rate), dated the 28.06.2017. Further, we find that the work assigned to the applicant by IIITDM is nothing but an activity in relation to house-keeping/cleaning services, and not in relation to sanitation or solid waste management, as claimed in the application filed by the applicant. We are, therefore, of the considered opinion that house-keeping/cleaning service provided to IIITDM by the applicant is not exempted from payment of GST either under entry SI.No.3B or under SI.No.66 of the exemption Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017, as amended.
Conclusion - i) The house-keeping/cleaning service provided to IIITDM by the applicant is not exempted from payment of GST. ii) The work assigned to the applicant by IIITDM is nothing but an activity in relation to house-keeping/cleaning services, and not in relation to sanitation or solid waste management. iii) It will not be lawful on the part of the applicant to raise invoice without GST, in the instant case.
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2025 (5) TMI 1098
Exemption from GST under N/N. 12/2017, CT (Rate) read with Section 8 (a) of GST - Composite Supply or not - supply of medicines and consumables used in the course of providing health care services to In-patients by pharmacy unit of Maha Critical Speciality Division for diagnosis or treatment during the patients admission in hospital - HELD THAT:- The inpatient services means services provided by hospitals to inpatients under the direction of medical doctors aimed at curing, restoring and/or maintaining the health of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services till the patient gets discharged. A complete gamut of activities required for well-being of a patient from admission till discharge, provided by a hospital under the direction of medical doctors is a composite supply of service and is covered under Inpatient services' classifiable under SAC 999311.
From a joint reading of the 'Explanation of service' pertaining to 'Inpatient services' and the clarification, it is evident that the exemption is applicable to a “Clinical Establishment”, when services by way of diagnosis or treatment or care for illness, etc., are undertaken by such establishment under the directions of a medical doctor. The applicant hospital is a Clinical Establishment and for the health care services provided as defined in the Notification above provided to inpatients from admission till discharge including the supply of medicines, implants and consumables, they are exempt under SI.No.74 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended and SI.No.74 of Notification No. II(2)/CTR/532(d-15)/2017 vide G.O.(Ms.)No.73, dated 29.06.2017.
In the instant case, taxable supplies such as medicines and consumables provided to in-patients are naturally bundled and supplied in conjunction with health services being the principal supply, qualifies as a composite supply. Therefore, supply of medicines and consumables to in-patients in the course of the treatment till the patient is discharged is a composite supply of health care services.
The clarification provided as in para 5(3) of the Circular No.32/06/2018-GST, dated 12.02.2018, addresses the issue by clarifying that the food supplied to the in-patients as advised by the doctor/nutritionist is part of the composite supply of healthcare and not separately taxable, whereas the other supplies of food to patients who are not admitted are taxable. The same analogy applies to the instant case of dispensing medicines and consumables also. Accordingly, we are of the opinion that the supply of Medicines and consumables used in the course of providing health care services to out-patients visiting the hospital for diagnosis or medical treatment or follow up procedures cannot be considered as part of a composite supply involving supply of health care service, as they are different supplies independent of each other. Therefore except for the exempted healthcare service, all other supplies including medicines, consumables, food etc., in the case of supplies to out-patients are taxable to GST.
Conclusion - Supply of medicines and consumables used in the course of providing health care services to In-patients by pharmacy unit of Maha Critical Speciality Division having common registration within Tamil Nadu for diagnosis or medical treatment or procedures till discharge is a composite supply of in-patient healthcare service as defined in Para 2(zg) of Notification No. 12/2017, CT (Rate), dated 28.06.2017 as amended and Notification No. II(2)/CTR/532(d-15)/2017 vide G.O.Ms.No.73, dated 29.06.2017, as amended and the same is exempted from CGST and SGST as per Sl.No.74 of the above notifications respectively.
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2025 (5) TMI 1097
Revision u/s 263 by CIT - unexplained cash credit u/s 68 - Tribunal set aside the order passed u/s 263 and remanded the matter back to the PCIT for a fresh decision - as decide by HC [2023 (4) TMI 66 - CALCUTTA HIGH COURT] where any proceeding is initiated in the course of assessment proceedings, having a relevant and material bearing on the assessment to be made and the result of such proceedings was not available with the ITO before the completion of the assessment but the result came subsequently, the revising authority (PCIT) is entitled to look into the search material as it forms part of the assessment records of the particular assessment year.
The finding rendered by Tribunal was perfectly justified as in our opinion the PCIT could not have ignored the order passed u/s 153A as being immaterial and irrelevant. Tribunal not stopping with that has also examined as to the exercise undertaken by the AO while completing the assessment u/s 153A and found that the entire records were examined and no adverse inference was drawn against the assessee.
Tribunal rightly granted relief to the assessee and the order does not call for any interference. Substantial questions of law are answered against the revenue.
HELD THAT:- There is a gross delay of 646 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner – Revenue.
Special Leave Petition is dismissed on the ground of delay.
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2025 (5) TMI 1096
Validity of notice issued u/s 143(2) beyond the prescribed six-month period - HELD THAT:- Notice u/s 143 (2) of the Act was issued well within the time prescribed for issuance of notice on 26-9-2012, it was required to be served as per the provisions contained in Section 143 of the Act on or before 30-9-2012 and 30-9-2012 was Sunday being a holiday as per the Post Office Regulations noticed herein-above, therefore, notice was came to be served on 1-10-2012 on Monday. In our considered opinion, such service of notice u/s 143 (2) of the Act on the assessee on 1-10-2012 is the valid service of notice in view of Section 10 of the General Clauses Act.
Thus the assessee was timely served and as such, both the appellate authorities are absolutely justified in holding that notice served was within the period of limitation prescribed u/s 143 (2).
Denial of exemption u/s 11 - charitable purposes u/s 2(15) - renting of marriage hall - HELD THAT:- A careful perusal of Section 2 (15) of the Act would reveal that the expression “charitable purpose” has been defined by way of an inclusive definition so as to include relief to the poor, education, yoga, medical relief, preservation of environment (including watersheds, forest and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility. The expression “advancement of any other object of general public utility” has been considered by the Supreme Court in number of judgments.
Undisputedly, the appellant/assessee is registered as a charitable trust u/s 12A with the Commissioner of Income Tax, Raipur. One of the objects of the assessee Trust is to establish, maintain, Dharamshalas, Temples, homes orphanages or other establishments for relief of and to give help to poor and destitute people, orphans, widows, cripples and old aged persons and otherwise provide them rehabilitation aid for self earnings among the other objects. All the authorities were impressed with the fact that the “Dharamshala” was rented out to different persons and therefore had ventured into commercial activities. However, it is the case of the assessee that the “Dharamshala” was rented out to different persons on a cost basis or nominally above cost.
It is the case of the assessee that renting of marriage hall was done on a cost-basis or nominally above cost to cover up the expenditure, which has not been considered by all the authorities and merely by holding that Rs. 15,89,163/- was received by the assessee Trust, the authorities have proceeded to hold that Rs. 2,20,247/- was liable to tax. In our considered opinion, the Dharamshala was let out for charitable purpose mentioned in the trust deed on a cost-basis or nominally above cost to cover up the charges as demonstrated by the assessee and the primary and predominant object of the Trust was charitable. Furthermore, it has been shown by the appellant/assessee that the appellant Trust has adopted the mercantile system of accounting for the financial year 2010-11 (assessment year 2011-12) for which depreciation of Rs. 8.55 lakhs is to be accepted which the authorities have not accepted, same ought to have been allowed as depreciation being notional expenditure in light of the decision of the Supreme Court in Rajasthani and Gujarati Charitable Foundation, Poona’s case [2017 (12) TMI 1067 - SUPREME COURT] and that of the M.P. High Court in Raipur Pallottine Society’s case [1989 (9) TMI 93 - MADHYA PRADESH HIGH COURT] As such, on both the counts, the finding of the learned authorities that proviso to Section 2 (15) of the Act would apply, is contrary to the facts and law available on record.
All the three authorities are absolutely unjustified in holding that the appellant Trust is carrying out the commercial activities by letting out the Dharamshala for various purposes and committed grave legal error in holding that appellant / assessee Trust is involved in commercial activities. Accordingly, the second substantial question is answered in favour of the assessee and against the Revenue.
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2025 (5) TMI 1095
Rejection of Petitioner’s application u/s 119 (2) (b) for condonation of delay in filing the revised income tax return [ITR] - CPC rejected the ITR filed by the petitioner on the ground that it was not accompanied by the Tax Audit Report [TAR] -It is the petitioner’s case that its turnover was less than Rs. 10.00 Crores, and therefore, it was not required to file TAR along with the ITR.
HELD THAT:- Since the petitioner’s case is that its cash payment and receipts did not exceed five percent of the total receipts and payments, the petitioner was required to tick the box with ‘Yes’ instead of box ‘No’. It is the petitioner’s contention that its ITR could not be rejected on this ground.
There is no appeal provided against the order rejecting the ITR as invalid. We do not consider it apposite to examine this question as the petitioner does not desire to pursue any contentious proceedings and seeks rectification of its return by filing the revised return. It is in the aforesaid context, the petitioner moved the application under Section 119 (2) (b) of the Act.
It is apparent from the above that the entire controversy has arises on account of checking the incorrect box in the return, which has no implication on the assessment of the income of the petitioner.
Petitioner’s claim that its cash receipts are NIL and its cash payment did not exceed five percent of the total payments is not controverted.
Petitioner has made out a case of genuine hardship for condonation of delay in filing the revised ITR. Accordingly, the petition is allowed and the impugned order is set aside.
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2025 (5) TMI 1094
Deduction u/s 36 (1) (va) - Delayed employees’ contribution deposited - HELD THAT:- The retrospective effect of the decision rendered by the Supreme Court in Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT (LB)] is not an issued involved in present case, as the question involved herein was quite different as to whether Section 143 (1) (a) of the Act of 1961 can be resorted to when there is highly debatable issue. Therefore, the case laws relied upon by the Revenue are not applicable to the facts of the present case.
Concludingly, we are of the considered opinion that the Assessing Officer should not have resorted to the provisions contained under Section 143 (1) (a) of the Act of 1961 and instead could have resorted to the provisions under Section 143 (3) of the Act of 1961, as on the date of issuance of intimation order dated 30.11.2021 by the Assessing Officer, exercising power under Section 143 (1) (a) of the Act of 1961, the subject issue was highly debatable and ultimately, that issue was resolved by their Lordships in the matter of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT (LB)] on a later date.
Disallowance of impugned contribution towards ESI and EPF under Section 36 (1) (va) read with Section 2 (24 )(x) of the Act of 1961 made by the Assessing Officer under Section 143 (1) (a) by order dated 30.11.2021 is hereby set-aside. Consequently, the order passed under Section 154 set-aside - Decided in favour of the appellant/assessee.
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2025 (5) TMI 1093
Unexplained cash credit u/s 68 - neither the identity nor the creditworthiness of the party has not been established - Tribunal had allowed the assessee’s appeal on the ground that the source of verification provision was inserted u/s 68 on and from Finance Act, 2012 with effect from 1.4.2013 and it cannot have retrospective effect for the assessment year 2011-12, the year under consideration.
HELD THAT:- This view appears to be inconsistent with the view taken by this court in Neelkantha Commosales [P] Ltd. [2021 (12) TMI 23 - CALCUTTA HIGH COURT] It is no doubt true that the case on hand can be brought on under one of the exceptions drawn by Central Board for preferring appeal before this court nonetheless, we are of the view that the tax effect in the instant case is Rs. 4,95,000/-.
Therefore, we are of the view that the legal issue which has been raised by the appellant/revenue in this appeal has to be left open since there are other decisions which the learned senior counsel for the revenue relied upon. Therefore, considering the peculiar facts and circumstances of the case, we are not inclined to interfere with the order passed by Tribunal.
Accordingly, the appeal is dismissed.
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2025 (5) TMI 1092
Penalty u/s 271(1)(c) - case of the assessee was reopened u/s 147/148 and the AO has made certain additions which have resulted in reduction in declared loss - HELD THAT:- Assessment order passed u/s 147 r.w.s.143(3) that AO has observed that the assessee has not carried forward the business loss in the subsequent assessment years. While completing the assessment, he considered the unclaimed carried forward of loss and reduced the voluntary disallowance of expenses for which the reassessment proceedings were initiated on the behest of audit objection.
We observed that when the assessee has chose not to carry forward the returned losses to future assessment years, the reduction in such amount which the assessee chose not to carry forward, the adjusted losses have no impact on the taxable income. That being the case, there is no intention to conceal the income nor to furnish inaccurate particulars of income.
Therefore, there is no requirement to impose the present penalty on the adjusted losses which were already surrendered not to carry forward the same to the subsequent assessment years. Hence, inclined to direct the AO to delete the penalty imposed. Appeal filed by the assessee is allowed.
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2025 (5) TMI 1091
Income deemed to accrue or arise in India - Treating fabrication charges received - Fees for Technical Services (“FTS”) u/s 9(1)(vii) of the Act as well as Article 12 of the India-Singapore - HELD THAT:- Fees for Technical Services (“FTS”) under section 9(1)(vii) of the Act as well as Article 12 of the India-Singapore - HELD THAT:- As decided in Owens Corning (Singapore) PTE Ltd [2022 (7) TMI 1396 - ITAT MUMBAI] an arrangement regarding situs of entities providing different facilities, in connection with a transaction of the multinational group, is done in a tax-efficient manner, cannot be reason enough to disregard the arrangement. We are satisfied that so far as the income of the assessee from the refurbishing of the bushes is concerned, it is not taxable in India as the provisions of Article 12(3) cannot be invoked in this case, and that, so far as the provisions of Article 12(4)(a) are concerned, these provisions cannot be invoked as the assessee has not rendered these services in connection with the services "for which a payment described in paragraph 3 is received" by the assessee. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee, and delete the impugned addition - Decided in favour of assessee.
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2025 (5) TMI 1090
Addition under the head ‘Income from house property’ - determination of ALV u/s. 23(1)(a) - notional income from unsold units held as stock-in-trade - whether addition could be made on the notional income from unsold units held as stock-in-trade for the year under consideration and if so, whether the same has to be determined as per the Municipal Rentable Value. Also, whether the amendment brought to the provisions of Section 23(5) would be applicable for impugned year or prospectively from A.Y. 2018-19 onwards
What should be the rental value that the ld. AO will have to apply for determination of the notional rent? - HELD THAT:- We place reliance on the decision of Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT] which has relied on the full bench decision of Moni Kumar Subba [2011 (3) TMI 497 - DELHI HIGH COURT] where it has been reiterated that for determination of ALV u/s. 23(1)(a) of the Act, the same has to be in accordance with the municipal laws after duly considering the inflated or deflated rent based on extraneous circumstances, if any, which in any case cannot exceed the standard rent as per the Rent Control Legislation applicable to the said property.
It has also specified various methods of valuation for arriving at the hypothetical rent.
As in the case of Inorbit Malls [2022 (10) TMI 1150 - ITAT MUMBAI] has also relied on the decision Tip Top Typography (supra) for determining the ALV for computing the notional rent. By respectfully following the proposition laid down supra we direct the ld. AO to determine the notional rent in accordance with the principles emphasized in the said decision.
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2025 (5) TMI 1089
Unexplained money u/s 69A - assessee has deposited cash during demonetization period - assessee has taken new PAN without there being any necessity - HELD THAT:- Assessee has declared two bank accounts opened by the firm with three partners and also new bank account in the return of income filed by the assessee with the new PAN.
Assessee has continued with the same business and deposited the cash in both the accounts and declared all the transactions involved two bank accounts in its return of income. The above facts were brought to the notice of the lower authorities and they were focused only on the aspect that assessee has taken new PAN without there being any necessity and they doubted the actions of the assessee and rejected the explanation given by the assessee on the basis that assessee has deposited cash during demonetization period.
We may have accepted if the assessee has opened new account as well as new PAN after the declaration of demonetization or few months earlier. That is not the case here.
We observed that the reconstituted firm was continued with the business w.e.f. 01.04.2016 and all the transactions were properly recorded in its books of account and assessee has also established that there is a source for cash deposits during the demonetization period. It is also brought on record during the period 08.11.2016 to 31.12.2016, the assessee has enough cash balance in its books of account to deposit old denomination of currency as well as new denomination of currency. Therefore, the assessee has enough source of cash deposit during the demonetization period. The lower authorities have merely doubted and not brought on record any cogent material to establish that the assessee has any other source of cash to make the deposit during demonetization period and they rejected the plea of the assessee merely on the basis that assessee has acquired new PAN and opened a new bank account without there being any necessity. Therefore, we are inclined to allow the grounds raised by the assessee.
Applicability of section 115BBE - The issue under consideration is whether the amended provisions are applicable prospectively or not. I observed that in the case of SMILE Microfinance Ltd. [2024 (11) TMI 1444 - MADRAS HIGH COURT] has held that the amended provisions are applicable w.e.f. 15.12.2016. Therefore, the same is applicable prospectively. Accordingly, we are inclined to allow the above additional ground filed by the assessee.
Appeal filed by the assessee is allowed.
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2025 (5) TMI 1088
Addition u/s 68 - unexplained entries in bank account - Assessee has acted as conduit concern for providing accommodation entries to the beneficiaries - Assessee has failed to produce any concrete and any additional evidence’s in support of its contention - HELD THAT:- The Co-ordinate Bench of the Tribunal in the case of Holeon Traders Pvt. Ltd. [2023 (7) TMI 1558 - ITAT DELHI] upheld the order of the Ld. CIT(A) in deleting the protective addition made by the A.O addition cannot be made in the hands of the conduit companies once the beneficiaries and accommodation entry provider are identified and addition of commission income has already been made in the hands of the accommodation entry provider.
Addition made on account of unaccounted commission - CIT(A) was right in deleting the addition on account of commission income as entire net commission income has already been taken into consideration and taxed in the hands of named two individuals.
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2025 (5) TMI 1087
Bogus and fictitious expenses - CIT(A) deleted addition holding that this would amount to double taxation of same amount, as this amount was considered in assessment made u/s. 143(3) - HELD THAT:- No material has been placed on record by the Revenue to controvert the findings of the First Appellate Authority. On the contrary, DR has pointed that in assessment made u/s. 143(3) of the Act, the AO denied assessee’s claim of LTCG and brought gains to tax as business income. The said addition was deleted by the CIT(A), and the order of CIT(A) was upheld by the Tribunal. This itself, shows that the issue was considered by the Tribunal in assessment proceedings u/s. 143(3) of the Act and had rejected contention of the Revenue. We find no reason to interfere with the findings of the CIT(A), on this issue. Hence, ground no. 1 of appeal is dismissed.
Addition on account of loss on sale of shares - CIT(A) deleted Addition stating that the issue was considered by the AO in original assessment made u/s. 143(3) of - HELD THAT:- The same issue cannot be agitated again in reassessment proceedings. The Revenue has admitted the fact that in original assessment proceedings the AO denied assessee’s claim of LTCG and brought the gains of Rs. 1.54 crores to tax as business income. The said addition was deleted by the CIT(A) and the Department’s appeal was dismissed by the Tribunal as well as the Hon’ble High Court.
We are of considered view that once the issue has been settled, the same issue cannot be agitated again in reassessment proceedings. Thus, Ground no. 2 of appeal is dismissed being devoid of any merit.
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2025 (5) TMI 1086
Unexplained cash deposits made in the bank account - addition of negative peak credit as undisclosed cash deposits in the hands of the assessee - HELD THAT:- We observed that he has extracted only the cash deposits into the bank and cash withdrawal during the year. Therefore, he determined the negative cash balance. He conveniently ignored the opening balance held by the assessee on 01.04.2014 of Rs. 28,85,000/-. In our view, non-consideration of opening balance led to the negative cash balance.
Therefore, the cash deposits made in the bank account matches with the information submitted by the assessee and when the assessee has explained the details of cash deposits and cash withdrawals which match with the books maintained by him, there is no requirement for the AO not to consider the opening balance held by the assessee. Therefore, the whole reasoning basis of making addition is not proper. Accordingly, ground raised by the assessee is allowed.
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2025 (5) TMI 1085
CPC power to change the option of taxing the assessee at special rate or that of the normal rate - scope of 143(1)(a) adjustment - whether even though the assessee has submitted that they have not availed the benefit of section 115BAA of the Act while filling the ITR. Even though while processing the ITR CPC can change that option from “No” to “Yes” or not? - HELD THAT:- CPC has no power to change the option of taxing the assessee at special rate or that of the normal rate and thus that adjustment was beyond the power given u/s 143(1)(a) of the Act. The fact that the assessee has applied for that in earlier year and now the same is straight away cannot be made applied when the CPC for the past two year already considered the ITR filled by the assessee under normal provision of the Act.
The matter the CPC is taking up cannot be subjected to processing of ITR u/s. 143(1)(a) of the Act. We support of our view from the decision in the case of JKs Employees Welfare Fund [1992 (3) TMI 41 - RAJASTHAN HIGH COURT]
As is evident from the record that while filling the ITR about the applicability of section 115BAA of the Act, the assessee submitted as “No” and the ld. CPC made to “Yes”. This action of the CPC is beyond the scope as he held in above case by our jurisdictional High Court in the above case and thus once that is beyond the scope of 143(1)(a) adjustment that mistake being apparent on record the same is rectifiable u/s 154 of the Act and therefore, we direct the AO to give effect to that application filed by the assessee. Appeal filed by the assessee is allowed.
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2025 (5) TMI 1084
Benefit of India-Cyprus DTAA - LTCG arising from the sale of shares of a third-party Indian company - as submitted source of funds for investments have generated from US based company i.e. General Atlantic, hence, the real beneficiaries are based in US
HELD THAT:- Assessee company was managed in Cyprus and not the USA. The Assessing Officer's observation that the assessee is managed by a company in the USA is misconceived and contrary to facts on record.
Once it is established that the assessee company is carrying its business activities in Cyprus and undisputedly assessee is having TRC issued by Revenue Authority at Cyprus, and is not merely a pass through entity, the allegation of Revenue that it is merely a pass through entity has no feet to stand.
We find merit in submissions of the assessee and hold that the assessee is entitled to India Cyprus DTAA. The contentions of the Revenue of treaty abuse by the assessee are fallacious. Hence, ground allowed.
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2025 (5) TMI 1083
Disallowance being 30 percent on account of expenses alleging that excess deduction claimed u/s 80lC by wrong allocation of the expenses between eligible and non-eligible units - HELD THAT:- A cursory glance a the voluminous details filed in the paper book do not reveal a clear picture of the bifurcation of expenses between the 4 units, including the Sitarganj Unit. It is felt that while some expenses like audit fees, Directors’ remuneration etc. would have to be allocated on a pro-rata basis, but other expenses like electricity charges or employee expenses would be readily allocatable to various units. Accordingly, we set aside the order of Ld. CIT(A) on this specific point and remand the matter pertaining to Ground no. 2 to the file of Ld. Assessing Officer for working out, with the assessee’s assistance, the expenses allocatable to various units. Certain common expenses, which cannot be readily segregated, may be allocated on a pro-rata basis in line with the turnover of business reported for each of the four units. We remand this issue back to AO accordingly.
Disallowance on account of deduction claimed u/s 80lC by treating the 30% of the receipts from export incentives & other income not to be part of eligible profit - whether an item of income is “derived” from an industrial undertaking or is generally “attributable” to it? - HELD THAT:- The expression ‘any income derived from property’ must refer to the effective source from which the income arises. It is not sufficient that the property should be indirectly responsible for the income. The income must directly and substantially arise from the property held under Trust [J.K Trust v. CIT [1952 (10) TMI 44 - BOMBAY HIGH COURT].
As per the case of Hindustan Lever Ltd. [1979 (1) TMI 34 - BOMBAY HIGH COURT] the word ‘derived’ as far as Income Tax law is concerned, has been given a narrow meaning, indeed a strict meaning. The meaning has been understood in the restricted sense of a direct derivation and not understood in the broad sense as equivalent to be derived directly or indirectly. In other words, only the proximate source has to be considered and not the source to which it may ultimately be referable.
There are some important decisions delivered by the Apex Court on sections 80-I and 80-E of the Act. Amongst the decisions of Cambay Electric Supply Industrial Co. Ltd [1978 (4) TMI 1 - SUPREME COURT] is the most important one, as it has been followed in several of the subsequent decisions.
Thus, the action of AO/CIT(A) is upheld, with respect to ground of appeal number 2. Thus, it is held that items like interest, rent receipt, export incentive etc. not “derived” from the Industrial Undertaking. However, we are considerably persuaded by the finding in [2019 (11) TMI 798 - ITAT KOLKATA] last paragraph to direct that only the net interest should be considered for the purposes of computing deduction u/s. 80IC of the Act.
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2025 (5) TMI 1082
Disallowance of expenses debited to profit and loss account on ad hoc basis - HELD THAT:- While completing assessment the AO required the assessee to produce supporting evidences, vouchers, bills, etc. in respect of expenses debited to profit and loss account under the head “other expenses”. On verification of the vouchers, bills, etc. on check test basis the AO observed that few vouchers and bills pertaining to these expenses were not in order.
As observed by the AO that some of the vouchers are self made and not verifiable, therefore, the AO disallowed Rs. 10 lakhs on ad hoc basis from out of the expenses debited to profit and loss account under the head “other expenses”.
CIT(A) sustained the ad hoc disallowance made by the AO Perusal of the assessment order shows that the AO did not point out any specific voucher and bill where there are defects found by him. Therefore, in the absence of any specific instance pointed out by the AO there cannot be any ad hoc disallowance in general. Thus, the disallowance made by the AO is hereby deleted.
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2025 (5) TMI 1081
Validity of the combined approval accorded u/s 148B for reopening assessments for multiple assessment years - HELD THAT:- Validity of the impugned assessments itself as the learned prescribed authority herein had accorded its combined approval u/s 148B for six assessment years involving these three assessees, which has already been held as not sustainable going by Case Shiv Kumar Nayyar [2024 (6) TMI 29 - DELHI HIGH COURT] MDLF Hotels (P.) Ltd. [2024 (8) TMI 1138 - DELHI HIGH COURT] and Serajuddin and Co. [2023 (11) TMI 1254 - SC ORDER].
That being the case, thus adopt the judicial consistency to quash all these assessments framed in all these assessee’s appeals pertaining to assessment years 2019-20, 2020-21 and 2021-22, respectively.
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2025 (5) TMI 1080
Validity of reassessment proceedings - reasons to believe - Unexplained cash addition u/s. 69 - HELD THAT:- We find that in the reasons recorded, AO has not mentioned anything against the Column No. 8, although the return was duly filed, which shows the non-application of mind on the part of the AO.
In this view of the matter, in the case of PCIT vs. RMG Polyvinyl (I) Ltd. [2017 (7) TMI 371 - DELHI HIGH COURT] is squarely applicable in the instant case and accordingly, on the basis of the aforesaid exposition of the Hon’ble Delhi High Court, we hold that there is a complete non-application of mind on the part of the AO, hence, assessment is not valid in the eye of law and therefore, the same is hereby quashed. Since we have already quashed the assessment, the other grounds need not be adjudicated, therefore, the same are treated as infructuous. Assessee’s appeal stand allowed.
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