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Showing 421 to 440 of 1664 Records
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2022 (9) TMI 1245
Rejection of books of accounts - estimation of gross profit - HELD THAT:- CIT(A) noted that there is force in the arguments of the assessee that there is no fall in the GP of the post survey period. Assessee has shown overall GP of 17.14% as per tax audit report during the year under consideration and even otherwise, if the GP re-worked by the Assessing Officer is considered after adding the disclosure income which is business income in nature, and the GP ratio shall be Rs. 14.23% and the same is reasonable and in lines with average GP of succeeding years. Hence, ld CIT(A) considering these facts deleted the addition of Rs.3,51,57,284/- on account of low gross profit. We do not find any error in the above conclusion reached by ld CIT(A), hence we concur with findings of ld CIT(A) and dismiss the ground raised by the Revenue.
Under valuation of excess stock found during the course of survey - HELD THAT:- CIT(A) observed that survey team has made a detailed working of valuation quality wise which was confronted to the assessee and on the basis of such efforts by the survey team, the declaration could be made. AO cannot be expected to brush aside the valuation done by survey team to enhance the valuation without pointing out any defect in the valuation done by survey team. CIT(A) held that there is force in the argument of the assessee that the issue of valuation is revenue neutral in as much the value of closing stock on the date of survey becomes the opening stock of the post survey period and the same is captured either in Sales with profit margin or in closing stock at same value and hence there is no effect on the profit and loss account per se - CIT(A) deleted the addition correctly - dismiss the ground raised by the Revenue.
Addition on account of under valuation of chemical stock - HELD THAT:- AO cannot dictate the assessee to follow a particular method of valuation of closing stock without citing any cogent reason to do so. The assessee is consistently following the method of valuation in subsequent years also and the closing stock of colour and chemicals shall become the opening stock of the next year and hence there is no incentive for the assessee to choose a particular method. Hence, based on this factual position, ld CIT(A) deleted the addition - We note that ld CIT(A) has passed a reasoned and speaking order therefore we do not find any infirmity in the conclusion reached by him, hence we confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue.
Addition on account of unaccounted purchase - CIT-A deleted the addition - HELD THAT:- CIT(A) observed that there is no mismatch as worked out by the AOr. AO has also not given any other evidence which proves that assessee has made any unaccounted purchases - CIT(A) deleted the addition Correctly. Based on the factual position stated above, we confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue.
Unexplained cash credit - CIT-A deleted the addition - HELD THAT:- Unsecured loans from all the lenders as cash credit based on wrong appreciation of facts and law, hence ld CIT(A) has rightly deleted the addition - We confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue.
Nature of expenses - repair and maintenance of building - Unexplained capital expenditure - HELD THAT:- We note that assessee submitted various vouchers and bills relating to bajri, retti and cement expenses and we note that these expenses are incurred by the assessee for the purpose of current repairs and maintenance, hence such expenditure does not fall in the domain of capital expenditure, therefore we direct the Assessing Officer to treat it as revenue expenditure.
Addition on account of late payment of PF and ESIC - HELD THAT:- We are of the view that the issue may be remitted back to the file of the Ld. CIT(A) to decide the matter after taking into account the judgment of the Hon'ble Supreme Court as and when will be passed by the Hon'ble Supreme Court. Therefore, this appeal at this stage is dismissed. However, if the Supreme Court reverses the judgment in the case of the Hon`ble Gujarat High Court in the case of CIT vs. GSRTC [2014 (1) TMI 502 - GUJARAT HIGH COURT] it would be open for the assessees to revive this appeal by filing an application for such purpose within three months from the date of the judgment.
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2022 (9) TMI 1244
Additions u/s.68 - unexplained cash credits in the form of unsecured loans - HELD THAT:- We concur with the view taken by the CIT(Appeals) that as not only the assessee had duly substantiated the authenticity of the transaction to the hilt on the basis of supporting corroborative documentary evidences, but it is also a fact to which we cannot be oblivion that the A.O in the present case before us had except for harping upon certain unsubstantiated allegations, had however, failed to placed on record any such material which would have refuted the authenticity of the documents that were placed on record by the assessee before him to drive home its claim of having raised genuine loans in question.
We are pained to find that the A.O had not even thought it fit to refer to the material which was placed on record by the assessee in support of his aforesaid claim of having raised authentic loans from the aforementioned lenders. Accordingly we, finding no infirmity in the view taken by the CIT(A) who had rightly vacated the characterization of the loans raised by the assessee company from the aforementioned seven lenders as unexplained cash credits u/s.68 uphold the same. Thus, the Grounds of appeal raised by the revenue are dismissed in terms of our aforesaid observation - Decided against revenue.
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2022 (9) TMI 1243
Maintainability of appeal - Monetary limit - Penalty u/s 271(1)(c) - HELD THAT:- We find that similar issue arose for consideration before the Co–ordinate Bench of the Tribunal in appeal in DCIT v/s Aluvind Architectural Pvt. Ltd [2021 (4) TMI 1340 - ITAT MUMBAI]wherein the Tribunal, while deciding the issue in favour of the tax payer.
As tax effect on the amount disputed by the Revenue in the present appeal is below the revised monetary limit of Rs.50 lakh, as per CBDT Circular no. 17/2019, dated 08/08/2019, r/w CBDT Circular no.3/2018, dated 20/08/2018. In view of the aforesaid, Revenue’s appeal deserves to be dismissed.
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2022 (9) TMI 1242
Rate of tax - 20% or 30% - share of depreciable assets - applicability of section 50 - use of assets more than thee years / long term assets - HELD THAT:- Provisions of section 50 of the Act provides for procedure for computation of capital gains in case of transfer of capital asset which forms part of block of assets and in respect of which depreciation has been allowed under the Act.
Therefore, only for this limited purpose, the capital gains arising from transfer of the assets, as covered in section 50 of the Act, is treated as capital gains arising from transfer of short term capital assets. Further, section 50 of the Act also clarifies that the same is restricted for the purpose of provisions of section 48 and 49 of the Act which, inter–alia, deals with mode of computation of capital gains.
We find that similar issue arose for consideration before the Co–ordinate Bench of the Tribunal in Smita Conductors Ltd. (2013 (9) TMI 1056 - ITAT MUMBAI] wherein it was held that even in case where capital gain has been computed under section 50 of the Act, tax rate applicable will be the rate in respect of the long term capital gain in respect of property held for more than three years.
Section 50 of the Act, which is a special provision for computing the capital gains in the case of depreciable assets, is not only restricted for the purposes of Section 48 or Section 49 of the Act as specifically stated therein and the said fiction created in sub–section (1) & (2) of Section 50 has limited application only in the context of mode of computation of capital gains contained in Section 48 and 49. See V.S. DEMPO COMPANY LTD. [2016 (10) TMI 62 - SUPREME COURT]
In the present case, it is not the plea of the Revenue that the property from which the capital gains arose was held by the assessee for less than three years. The Assessing Officer only by application of provisions of section 50 of the Act treated the gains as arisen from transfer of short term capital asset and hence applied the rate of tax @ 30% as applicable in case of short term capital gain. Therefore, respectfully following the aforesaid judicial precedents, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, grounds raised by the Revenue are dismissed.
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2022 (9) TMI 1241
Capital gain computation - assessee company had acquired the business of two companies on slump sale basis without assigning any values to individual assets or liabilities - AO has taken the value of assets of the two companies that were taken over by the assessee at the WDV of the assets as on 31.03.2007 on the ground that the copy of the audited financial statements of M/s. Ferico Laboratories Pvt.Ltd. was not submitted and the assessee has not filed any valuation report - HELD THAT:- The appeal for the AY 2008-09 is still pending before the ld.CIT(A) for adjudication. The outcome of the appeal for the AY 2008-09 in our opinion will have a bearing on the out come of this appeal. Since the appeal for AY 2008-09 is still pending before the ld.CIT(A) and the ld.CIT(A) has passed a very cryptic order, therefore, considering the totality of the facts of the case and in interest of justice, we deem it proper to restore the issue to the file of the ld.CIT(A) with a direction to admit the additional evidences, which has got a bearing on the outcome of this appeal and decide the issue as per fact and law, after giving due opportunity of being heard to the assessee. While doing so, he shall also keep in mind how the valuation report dated 02.07.2007 was prepared when the separate business Transfer Agreements are dated 16.05.2007 and therefore, whether such valuation report is a colourable device/sham instrument and self serving document. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2022 (9) TMI 1240
TDS on the reimbursement of Leave Fare Concession in view of Section 10(5) and Rule 2B - Whether expenditure incurred on foreign LFC was not except? - notice u/s 201(1)/201(1A) of the Act issued to the assessee - assessee mainly contended that as per Section 10(5) of the Act read with Rule 2B of Income Tax Rules, the LFC (Leave Fare Concession) has to be only to a designated place in India and the same has been complied with - HELD THAT:- The issue involved in the Assessment Year 2013-14 and that of the present appeal are similar in nature, i.e. whether assessee is liable for deduction of TDS on the reimbursement of Leave Fare Concession in view of Section 10(5) and Rule 2B of the Act or not? The said issue is already under consideration by the Hon'ble Supreme Court which will be binding on the revenue and also on the assessee. Since the Ld. A.O has to give effect to the order that would be passed in Special Leave Appeal [2022 (7) TMI 1323 - SC ORDER] in respect of A.Y 2013-14 in Assessee’s own case, we deem it fit to restore the issue also (for A.Y 2016-17) to the file of A.O. to consider the same after disposal of the Special Leave Appeal and decide same in compliance with outcome of the order of the Hon’ble Supreme Court. Therefore, the issue involved in the present appeal is restored to the file of the A.O. to decide the same after disposal of Special Leave Appeal. Appeal of assessee allowed for statistical purpose.
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2022 (9) TMI 1239
Revision u/s 263 by CIT - advances received from customers and capitalization of project expenses - HELD THAT:- Admittedly, it is an undisputed fact that assessee has disclosed advances received from customers in its audited balance sheet on the date of 31.03.2016 and 31.03.2017 - It is a rudimentary knowledge of accountancy that balance sheet is prepared with the balances in the books of accounts taken at a particular point of time, which is 31.03.2017 in the present case and a statement of assets, liabilities and capital of a business or an organization is prepared depicting financial picture at a particular given point in time
Balance sheet gives the whole picture which is a cumulative reflection of the assets, liabilities and capital on a particular date. The amount of advance from customers reported in the balance sheet “as on” 31.03.2017 for an amount of Rs. 3,72,77,107/- signifies the amount received from customers as advance upto the date of 31.03.2017 when the said balance sheet was drawn. Thus, this balance as on 31.03.2017 is inclusive of Rs. 20 lacs which was received by the assessee in the period prior to the financial year 2016-17 for which the balance was drawn “as on” 31.03.2016 wherein the advance received from customers till that date was reported at Rs. 20 lacs in that balance sheet prepared as on 31.03.2016. Lack of such a rudimentary knowledge of accountancy for reading a balance sheet and thereby invoking the revisionary proceedings by holding that Rs. 20 lacs has been understated is not appreciated.
Project expenses in the tax audit report - Assessee has accounted for cost of purchases of raw material under an inclusive method but since there has been no sale during the year, the entire project expenses have formed part of the closing stock/work in progress taken on the income side of the profit & loss account. Thus the VAT component is on both sides of the P & L A/c, on the debit side included in the cost of purchases and on the credit side in the closing stock. Therefore, there is no loss to the revenue on this account. Even if, by adopting the exclusive method of accounting, the VAT component is removed from the cost of purchases then at the same time, it will get removed from the closing stock/work in progress, making it revenue neutral. From the above factual matrix of the two issues raised by the ld. PCIT, we find that ld. PCIT has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 of the Act.
We observe that in the course of proceedings u/s 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the Ld. PCIT, supporting its contentions by various decisions. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied.
We find that the two issues in the present case are purely on facts which are verifiable from the records of the assessee. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit & Loss account of the assessee reveals the correct state of their affairs in respect of the two issues raised in the impugned revisionary proceedings for which both, ld. PCIT and the ld. CIT, DR could not bring any material on record to controvert the verifiable factual position.
Accordingly, on the issues raised by the Ld. PCIT in the revisionary proceedings, no action u/s 263 of the Act is justifiable which in our considered view cannot be sustained - Decided in favour of assessee.
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2022 (9) TMI 1238
Disallowance u/s 14A read with 8D - absence of any exempt income - HELD THAT:- Going by the language employed in section 14A of the Act, the possession which emerges is that whether the assessee has not earned any exempt income, there cannot be “disallowance’ of the expenditure as it would resulting imposing tax on hypothetical income which is wholly impermissible in law, in view of the decision rendered by various High Courts as well as Tribunal.
As noted that while deciding the issue, CIT(A) relied on the judgement in the case of CIT vs Oil Industry Development Board [2019 (3) TMI 1571 - SC ORDER] filed by the revenue against the judgement of Hon’ble Delhi High Court [2018 (2) TMI 1861 - DELHI HIGH COURT] by relying upon the decision in the case of CIT vs Essar Teleholdings Limited [2018 (2) TMI 115 - SUPREME COURT] - The Hon’ble Delhi High Court had rules that, in absence of any exempt income, disallowance u/s 14A of the Act of any amount was not permissible. In arriving at this conclusion, the Hon’ble Delhi High Court had relied upon its earlier decision in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT]. The above proposition of law has been well accepted by various courts and as such we do not want to interfere in the order passed by the CIT(a) and following the decision of Co-ordinate Bench in the case of ACIT vs K. Raheja Corporate Services Pvt. Ltd. [2022 (7) TMI 1044 - ITAT MUMBAI]. Appeal of the revenue is dismissed.
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2022 (9) TMI 1237
Non-speaking order passed by CIT- A - Dismissal of assessee’s appeal summarily for non-prosecution - HELD THAT:- In the present case, we note that the Ld. CIT(Appeals) passed a non-speaking order and dismissed the appeal of the assessee summarily without discussing the merits of the case and the issues for consideration and the grounds of appeal raised by the assessee. However, we also note that adequate opportunity was not given to the assessee to present his case on merits (as many as 6 opportunities were provided by Ld. CIT(Appeals)). Therefore, in the interests of justice, we are restoring the file to Ld. CIT(Appeals) to decide the appeal afresh, after giving due opportunity of hearing to the assessee to present his case on merits. However, in the instant case we have also noted that despite several opportunities, the assessee neither caused appearance before Ld. CIT(Appeals) and for which assessee has not been able to produce any convincing reason.
Respectfully following the decision of Shri Vipul V. Dhakan [2022 (5) TMI 1455 - ITAT RAJKOT]cited by the assessee before us, and in the interests of justice we are setting this matter back to the file of the Ld. CIT(Appeals) subject to the condition that the assessee shall deposit cost of ₹ 1,000/- with the Department within 60 days from receipt of this order.
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2022 (9) TMI 1236
Assessment u/s 144C - AO passed a draft assessment order - constitution of dependent agent PE and taxability of royalty income under Article 7 of India – UK DTAA - Whether there was no variation in income returned by the appellant and, therefore the impugned order passed by the AO is void ab initio and, therefore, is liable to be quashed? - HELD THAT:- We find that the Assessing Officer has only recharacterized the income which was shown as royalty income by the assessee and was taxed as ‘business income’ by the Assessing Officer without there being any variation in income returned by the assessee. In our understanding of the provisions of section 144C of the Act mentioned hereinabove, we are of the considered view that the Assessing Officer wrongly assumed jurisdiction u/s 144C of the Act when there is no variation in the income returned by the assessee. See IPF INDIA PROPERTY CYPRUS (NO. 1) LTD. [2020 (2) TMI 1500 - ITAT MUMBAI]
We hold that the AO wrongly assumed jurisdiction u/s 144C of the Act, and therefore, the final assessment order framed in Assessment Years 2007-08 and 2010-11 to 2015-16 are barred by limitation and accordingly, the impugned assessment orders are liable to be quashed as void ab initio. This additional ground is, accordingly, allowed.
Determination of income - consideration for use of brand [ie for ‘Royalties’] in India as liable td tax Tat 40% as Business Income under Article 7 instead of being liable to tax as ‘Royalties’[at 15%] under Article 13 of DTAA between UK and India - assessee moved an application u/r 29 of the ITAT Rules requesting for admission of additional evidences - HELD THAT:- It is true that the entire assessment has been based on the reading of the trade mark license agreement dated August 08, 2002. It is equally true that supplementary trade mark licence agreement dated April 04, 2013 changes the color of the entire transaction.
Such an agreement which goes to the root of the matter cannot be brushed aside lightly. Therefore, in the interest of justice and fair play and as contended by the ld. DR, we deem it fit to restore the entire quarrel to the file of the Assessing Officer. AO is directed to consider the agreement dated April 04, 2013 and decide the issue afresh after giving reasonable and adequate opportunity of being heard to the assessee. Thus, ITA is allowed for statistical purposes.
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2022 (9) TMI 1235
Accrual of income - Addition being notional premium receivable on preference shares as income of the assessee - HELD THAT:- As rightly pointed out by assessee, the payment of redemption premium can be only out of profits of the company or out of reserves. Even if one were to be regarded the premium as akin to dividend, the assessee cannot claim dividend as a matter of right and it is for the directors of the Company to declare dividend which needs to be approved by the shareholders in an Annual General Meeting (AGM). By no stretch of imagination can it be said that the preference shares issued by the assessee is in the nature of equity. It is only when the assessee has a right to receive periodic payments can it be said that income has accrued to an assessee under the mercantile system of accounting.
If the sum paid by the assessee is loan and as per the terms of the loan agreement, certain rate of intereset is payable by the borrower every year then it can be said that under the mercantile system of accounting, interest accrues to the assessee as income, irrespective of actual receipt of payment. In the case of preference shares, such an inference cannot be drawn and the repayment of the face value of the preference shares as well as the premium on redemption is uncertain. In such circumstances, the action of the Revenue authorities in making the impugned additions cannot be sustained. We, therefore, hold that the income brought to tax by the Revenue authorities cannot be sustained and the said addition is directed to be deleted.
Whether the revenue authorities can overlook the legal effect when a person holds cumulative preference shares and treat as loan instrument rather than a share capital/equity instrument? - The revenue authorities cannot disregard the legal effect of issue of cumulative preference shares and say that the same is akin to debt and therefore the cumulative preference shares which is a capital instrument is a debt or in the nature of debentures.
The decision of ENAM SECURITIES (P.) LTD. [2012 (5) TMI 257 - BOMBAY HIGH COURT] is a complete answer to the question that the revenue authorities cannot disregard the legal effect of a document evidencing a debt and that which evidences holding shares in a limited liability company. The legal consequences thereof cannot be ignored and a share characterized as a debt instrument. Such a course is permissible under the thin capitalization rules which were introduced w.e.f. 1.4.2018 by virtue of the provisions of Sec.94B of the Act, but those provisions are applicable only in the case of transactions with Associated Enterprise which is not a tax resident of India. It is a common practice among multinational companies globally to lessen their tax outgo by resorting to extensive use of legal arrangements for parking profits in low or no-tax jurisdictions, formally coined as base erosion and profit shifting (BEPS).
One of the simplest profit-shifting techniques available in international tax planning is by way of interest payments and therefore, specific Action Plan, viz., Limiting Base Erosion Involving Interest Deductions and Other Financial Payments (“BEPS Action Plan 4”) has been devoted by the OECD to tackle BEPS through payments in the nature of interest and payments economically equivalent to interest. In BEPS Action Plan 4, OECD has set out the best practice approaches for countries to prevent erosion of their tax base by way of excess interest deductions claimed by multinational group entities. BEPS Action Plan 4 is focused on the use of third-party, related-party, and intra group debt to obtain “excessive” deductions or to “finance the production of exempt or deferred income.” Adopting the recommendations of BEPS Action Plan 4, India introduced section 94B in the domestic tax law, viz., Income-tax Act, 1961 (“the Act”), as an anti-tax avoidance provision to restrict deduction of interest paid to non-resident associated enterprises (AEs). As already stated, the said provisions are applicable only when interest is paid to non-resident associated enterprises and such a feature is absent in the present case.
Application of the provisions of Sec.14-A -. The law is clear that premium on redemption is exigible to tax under the head 'Income from Capital Gains' as laid by the Hon’ble Supreme Court in the case of Anarkali Sarabai [1997 (1) TMI 5 - SUPREME COURT] and Karthikeya Sarabai [1997 (9) TMI 2 - SUPREME COURT] and is not exempt from tax. Further the investment in preference shares is to be regarded as an investment in an unlisted and unquoted security and is therefore definitely exigible to tax. Section 14A comes into play only in the case of investment, income from which, is completely exempt from tax. Hence the question of any disallowance u/s 14A in respect of interest paid on loans, which are utilised to make the investment, is to be allowed as a business expenditure. If the same is claimed and allowed as a business expenditure, the same cannot be treated as part of cost of investment and be allowed for indexation while determining cost at the time of redemption of the shares. Therefore, the disallowance cannot be sustained even by application of the provisions of Sec.14-A of the Act.
We hold that the Revenue authorities were not justified in adding a sum being notional premium receivable on preference shares as income of the assessee. The appeal of the assessee is accordingly allowed.
Interest on delayed remittance of TDS - Whether such interest partakes the character of tax and hence is not an allowable deduction? - HELD THAT:- In so far as the nature on the interest on delayed remittance of TDS is concerned, this Tribunal has been taking a consistent view following the decision of the Hon’ble Madras High Court in the case of CIT Vs. Chennai Properties and Investments Ltd.[1998 (4) TMI 89 - MADRAS HIGH COURT] that interest paid takes colour from the nature of principal amount required to be paid but not paid in time and this principal amount being income tax, interest was also in the nature of direct tax and cannot be regarded as a compensatory payment and allowed as business expenditure. Thus we reverse the order of the CIT(A) in so far as it relates to the sum being remittance of delayed TDS and hold that the said sum is not an allowable deduction.
Admission of additional evidences by CIT-A - Whether CIT(A) ought to have remanded additional evidences w.r.t. disallowance of trade payable made by the AO before admitting and accepting the same? - HELD THAT:- Rule 46A(1) lays down that additional evidence shall be admitted by the CIT(A) only for reasons stated therein and Rule 46A(2) lays down that only after recording in writing reasons for admitting additional evidence, can additional evidence be admitted. Further, Rule 46A(3) specifically provides that CIT(A) shall not take into account any additional evidence produced under Rule 46A(1) of the Rules unless AO has been allowed reasonable opportunity to examine the additional evidence to produce evidence in rebuttal. Thus, in the present case, there is a clear violation of the mandate laid down in Rule 46A(3) of the Rules.
Whether under 46A(4) of the Rules, the CIT(A) can call for additional evidence on his own to decide the controversy in appeal and in such event, he need not follow the requirements of 46A(3) of the Rules? - As we find that the CIT(A) in the present case has not called for additional evidence on his own and it has been produced only by the assessee before the CIT(A). In such circumstances, we are of the view that the assessee cannot place reliance on the decision of the Hon’ble Karnataka High Court in the case of CIT Vs. Sam Family Trust (supra). In the given facts and circumstances of the case, we are of the view that it would be just and appropriate to set aside the order of the CIT(A) on the issue raised in ground 2 to the AO for fresh consideration with a direction to the AO to consider the additional evidence filed by the assessee before CIT(A) and also such other evidences the assessee may seek to rely on in support of its claim.
Appeal of the assessee is allowed while appeal of the Revenue is partly allowed.
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2022 (9) TMI 1234
Unexplained money u/s 69A - unexplained deposits - HELD THAT:- As there was no cash involved in inter-banking deposit or rejection of return of cheques. The bank details have been submitted before us and it is seen that ICICI Bank out of total bank transaction except for an amount in respect of rejection of cheque, the remaining amount was on account of transfer of funds from Majumder Hosiery the proprietorship concern of the appellant. The details of the date wise transfer with narration and amount is seen to be matching with the bank entries as per record and therefore there is not discrepancy in the matter as alleged.
As in respect of ICICI Bank and Bandhan Bank out of inter-bank transactions details of date wise transfer with narration and amount is seem to be matching with the bank entries and there are no discrepancies found as alleged by the AO in his order.
The view taken by the AO in respect of impugned addition as unexplained deposit u/s 69A of the Act was deleted by the ld. CIT(A) since assessee clearly explained the transaction by furnishing details of date-wise transfer with narration and amounts are matching with bank entries and no discrepancies found in the transactions and therefore, we do not want to interfere in respect of this issue and view taken by the ld. CIT(A) is affirmed.
Addition on account of realization from sundry debtors account from the order - The books of accounts were not disturbed and on the settled principle that once books of assessee are not rejected and explanation furnished is reasonable no addition can be made. The ld. CIT(A) also relied on the various decisions pronounced by the Hon’ble High Court as well as Hon’ble Apex Court and stand taken by the AO was deleted. We also going through the facturl matrix of the case, we do not want to interfere in the findings given by the ld. CIT(A) since one goods have been sold the buyer became the debtor and such in respect of money from him is nothing but realization of such debt. As such section 68 cannot be applied in the case of assessee and the addition made by the AO stand deleted by the ld. CIT(A) and we do not want to interfere in the order passed by the ld. CIT(A) in respect of this issue and ground taken by the revenue is dismissed.
Unexplained deposits - On perusal of the assessment order as well as the order passed by the ld. CIT(A), we noticed that the AO never rejected the books of accounts of the assessee and without rejecting the books of accounts, the addition made by the AO cannot be sustained and it is settled principle of law that without rejecting books of accounts, the addition made by the AO cannot be sustained and as such the addition confirmed by the ld. CIT(A) is hereby deleted.
Appeal of assessee allowed.
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2022 (9) TMI 1233
TP adjustments towards AMP expenditure pertaining to trading segment AND reimbursement of warranty expenses to AE - separate international transaction or not? - HELD THAT:- The warranty expenses and AMP expenses have been considered as part of operating cost for the purpose of computing the margins of the assessee. We also notice from the order passed under section 92CA of the Act that the TPO has not made any adjustments towards the margin of trading segment thereby accepting the ALP analysis of the assessee with regard to trading segment.
We hold that the AMP expenses and warranty expenses cannot be treated as a separate international transaction when the TPO has not otherwise rejected the margins of the assessee in the trading segment. Therefore, the adjustments made in this regard is deleted and the appeal is allowed in favour of the assessee.
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2022 (9) TMI 1232
Revision u/s 263 by CIT - a report from DDIT (Investigation) Kolkata with respect to price manipulation of penny stock but the AO did not consider the same - As per CIT, assessment order has been passed by AO without making inquiries or verification with respect to the deduction/exemption claimed under section 10(38) - HELD THAT:- Phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue.
Now coming to the facts of the case before us, we note that the AO during the course of assessment proceedings, has made enquiries on this issue and after consideration of written submissions filed by the assessee and documents / evidence placed on record. Thereafter, the AO framed the assessment under section 143(3) of the Act accepting the return of income.
It is not the case that the AO has not made enquiry. Indeed, the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of exemption claimed under section 10(38) of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the Ld. AO had made enquiries and after consideration of materials placed on record accepted the genuineness of the claim of the assessee. We thus find no error in the order of Ld. AO so as to justify the initiation of 263 proceedings by the Ld. Pr. CIT. assessee is thus allowed.
No error in the assessment framed by the AO under section 143(3) causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned principal CIT is not sustainable and therefore, we quash the same. Hence the ground of appeal of the assessee is allowed.
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2022 (9) TMI 1231
Addition u/s 45(3) - assessee has contributed land as contribution towards capital in the partnership firm - determination of cost of acquisition - HELD THAT:- The purchase cost of the said part of the land was determined at Rs.3,43,12,394 as against the purchase cost computed by the assessee at Rs.4,60,75,840. The assessee contended that the Assessing Officer had not taken into consideration, the improvement cost accepted by the revenue determined from year to year in the past while computing the proportionate cost of the land. AO had not considered the relevant evidences and documents furnished at the time of assessment proceedings. In this regard, we direct the AO to follow the direction of the CIT(A) to verify the sum capitalised by the assessee and considered the correct cost of acquisition as accepted by the Revenue in the preceding years and recompute the capital gains accordingly. Therefore Ground of the assessee is allowed for statistical purposes.
Applicability of provisions of section 45(3) or provision of section 50C of the Act in the case of the assessee - Section 45(3) is the specific provision which states that profit or gain arising from the transport of the capital asset by a person to a firm or other association of persons or body of individual (not being a company or a co-operative society) in which he becomes a partner or member by way of capital contribution shall be chargeable to tax as his income for the previous year for which such transfer takes place. For the purpose of section 48, the amount recorded in the books of accounts of the firm as capital asset shall be deemed to be full value of consideration received or accrued as a result of the transfer of capital assets.
Hon’ble Supreme Court in the case of Pr. CIT Vs. Dr. Ramamurthy (2018 (9) TMI 1102 - SC ORDER) held that for the purpose of computing capital gain u/s.45(3) of the Act, value of assets recorded in the books of account of a firm on date of transfer would be deemed to be full value of consideration received or accrued as a result of transfer.
In the case of DCIT Vs. Amartara Pvt. Ltd. [2020 (4) TMI 222 - ITAT MUMBAI] it is held that profit or gains arising from the transfer of capital asset by a partner to a firm in which he become a partner by way of capital contribution, then for the purpose of section 48, the amount recorded in the books of accounts of the firm shall be deemed to be full value of consideration received or accrued as a result of transfer of capital asset. - Decided in favour of assessee.
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2022 (9) TMI 1230
Seeking provisional release of the vehicle - Issuance of summons under Section 108 of the Customs Act, 1962 - Section 110A of Customs Act - HELD THAT:- This Court is unaware as to the identity or otherwise of the facts in the present case with the facts in the case dealt with by the Telangana High Court. That apart, the order of provisional release dated 29.12.2021 has also, as on date, become final. However, there is no bar and Mr.Sundareswaran would agree with me on this, for the petitioner to seek modification of the conditions imposed by the Commissioner and attempt to persuade the Commissioner to vary the conditions imposed originally.
As far as the present Writ Petition is concerned, much water has flown under the bridge from the time of issuance of seizure memo, with which this Writ Petition has been rendered infructuous - Petition closed.
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2022 (9) TMI 1229
Condonation of delay of 5 days in filing appeal - applicability of time limitation - it is claimed that the date mentioned is just and inadvertent error - HELD THAT:- On perusal of the impugned order, it is noted by the Commissioner (Appeals) that the Order-in-Original is signed by the adjudicating authority on 06.04.2015. Merely because the appellant had mentioned the date of receipt of the order in Form C.A.1 as 09.03.2015, the Commissioner (Appeals) has blindly accepted this date for computing the period of limitation. When it is obvious that the date mentioned in Form C.A.1 is an inadvertent error, the Commissioner (Appeals) ought to have considered the argument put forward by the appellant with regard to the error committed by them.
The OIO having been signed on 06.04.2015 and the impugned order having been received by the appellant only on 09.06.2015, when computed from the date of receipt of the impugned order, the appeal ought to have been filed on 08.08.2015. The appeal is filed on 13.08.2015 with a delay of 5 days which is within the condonable period of limitation.
The matter requires to be remanded to the Commissioner (Appeals) who shall give an opportunity to the appellant to file an application for condonation of delay in filing the appeal - Appeal is allowed by way of remand.
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2022 (9) TMI 1228
Seeking provisional release of confiscated goods - Confiscation - redemption fine - penalty - import of used Digital Multifunctional Printers / Devices (MFDs) - prohibited goods or not - non-compliance with the provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012 - failure to obtain DGFT authorization as required for the import of second hand goods, as required under paragraph 2.31 of the FTP, 2015-20 - mis-declaration of value of the imported used MFDs in violation of Section 14 of the Customs Act, 1962.
HELD THAT:- Reliance placed in the decision of the Hon’ble Apex Court in M/s. Delhi Photocopiers [2021 (8) TMI 1244 - SUPREME COURT], where it was held that The goods involved in these petitions, are allowed to be provisionally released on the same terms that have been indicated in all the other cases.
In the light of the decision of the Hon’ble Apex Court in the case of M/s. Delhi Photocopiers and the fact that the First Appellate Authority has not brought on record any peculiar / distinguishing facts which were not available in respect of other assessees-appellants who are in appeal before the First Appellate Authority, the impugned order as to remand is not sustainable as the same suffers from inconsistency - the Revenue’s appeals are liable to be dismissed and the cross objections filed by the respondent are required to be allowed.
Appeal dismissed - decided against Revenue.
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2022 (9) TMI 1227
Seeking provisional release of seized goods - import of used Digital Multifunctional Printers / Devices (MFDs) - non-compliance with the provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012 - failure to obtain DGFT authorization as required for the import of second hand goods, as required under paragraph 2.31 of the FTP, 2015-20 - non-production of Chartered Engineer certificate in complete - failure to comply with the conditions imposed under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 - HELD THAT:- Reliance placed in the case of THE COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. KUTTY IMPEX [2022 (9) TMI 1049 - CESTAT CHENNAI], wherein it was held that the First Appellate Authority was correct in allowing the appeal thereby ordering provisional release of the goods in question, and since there is no change in the facts, the same is required to be followed in the case on hand as well.
Following the above ratio decidendi, therefore, the appeals of the Revenue are dismissed.
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2022 (9) TMI 1226
Smuggling - 3 Kgs of smuggled Gold Bars - foreign origin goods or not - reliability of statements - whether the compliance of 138 B of the Customs Act, 1962 was mandatory and that as to whether the non-compliance thereof amounts to no evidence on record to disprove the allegations of show cause notice? - HELD THAT:- Perusal of Section 138B of Customs Act makes it clear that it is mandatory on the adjudicating authority to examine the witnesses before itself prior relying upon the statement irrespective it has not been so asked by the party whose statement has been recorded or who is relying upon the said statement - These are the observations of this Tribunal in the case of M/S. ANIL GADODIA VERSUS C. C-NEW DELHI (PREV) [2020 (4) TMI 82 - CESTAT NEW DELHI]. No doubt department has also relied upon a decision of Kerala High Court where denial of cross examination of witnesses was upheld. But perusal reveals that in that case the cross examination of departmental officers was denied on the ground that those are the officers who assessed, audited and examined the import consignment and on the ground that show cause notice has not relied upon any of those statements but has been issued on the basis of the documents. Hence the said decision do not appear to squarely cover the present case.
There are no reason to differ from the decision in the case of M/s. Anil Gadodia. As the result thereof it is held that statement of Shri Ankit Bansal cannot be read into evidence. For the same reason the statements even of Shri Pankaj Tayal and Shri Vivek Aggarwal as relied upon by the learned Counsel for the appellant are held not to be admissible into evidence.
From the Panchnama, it is clearly apparent that three gold bars were seized being packed in the paper having marking “KOLHAPUR GOLD LAB” by the Customs Preventive Officers from Shri Ankit Bansal having inscription “RAND REFINERY LTD, SOUTH AFRICA”. This perusal is sufficient to hold that no error has been committed by the department by reasonably believing the seized good to be the gold of foreign origin. Such an inscription has otherwise not been disputed by the appellant even at the stage of making final submissions - Mere production of delivery challan on the record at subsequent stage is highly insufficient to prove that the said delivery challan was in possession of Shri Ankit Bansal at the time he was intercepted with three gold bars.
It was purely for the appellant to prove that the gold was not smuggled and that Shri Ankit Bansal was legitimately possessing the said gold which otherwise was not of foreign origin.
The invoices, purchase register, stock register, delivery challan have failed to prove that the gold in question was lawfully purchased by the appellant that too of such a purity which was more than 995. The possibility of all these documents to be subsequently created cannot be ruled out. This inference gets support from the fact that the delivery challan as is mentioned to have been given to Shri Ankit Bansal was not found during his personal search, nothing cogent has been brought on record to prove that the said challan was with Shri Ankit Bansal at the time of search and the seizrue of the gold. In the light of above discussion, even if the statements of the witnesses are not looked into due to the non-compliance of Section 138 B of Customs Act, 1962 but the documents on record are held insufficient to prove the appellant’s case. The onus of appellant to prove that the goods were not smuggled goods stands un-discharged.
The allegations in the show cause notice are held to have rightly been accepted by the adjudicating authorities below. The confiscation of 3 gold bars is held to have rightly been confirmed - there are no infirmity with the order of imposition of penalty upon Shri Mukul Aggarwal. As far as Shri Ankit Bansal is concerned, he being the possessor of the gold was equally responsible, in terms of the provisions of Customs Act, to have all genuine documents proving the valid possession of the gold having foreign mark with him. There are no infirmity in the order imposing penalty even on Shri Ankit Bansal.
Appeal dismissed.
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