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Showing 441 to 460 of 1733 Records
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2019 (6) TMI 1295
Disallowance of payment of excess price of sugarcane - deduction for payment of excessive price for purchase of sugarcane - HELD THAT:- The issue of payment of excessive price on purchase of sugarcane by the assesses is no more res integra in view of the recent judgment of Hon’ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. . [2019 (3) TMI 321 - SUPREME COURT] to extent of the component of profit which will be a part of the final determination of SAP and/or the final price/additional purchase price fixed under Clause 5A would certainly be and/or said to be an appropriation of profit.
We set-aside the impugned orders on this score and remit the matter to the file of the AO, He would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause.
The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. At this stage, it is made clear that the distribution of profits can only be qua the payments made to the members.
In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon’ble Supreme Court supra. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the AO in such fresh determination of the issue. It is further made clear that the assessee will be at liberty to raise any other argument concerning the issue before the AO.
Addition understatement of sale - HELD THAT:- Assessee admittedly sold sugar to JJSD at a concessional rate of ₹ 1,080/- per bag on the understanding that the same was meant for export by the latter. JJSD did not export the sugar. Rather, they sold the sugar obtained from the assessee under quota in the domestic market at the prevailing market prices.
It has been brought to our notice that the assessee took up civil proceedings against JJSD and some arbitration award was also passed. AR submitted that the Hon’ble Bombay High Court has cancelled the award directing the payment of some compensation to the assessee. Be that as it may, in our considered opinion, compensation, if any, which the assessee eventually receives from JJSD will be subjected to tax in its hand when it acquires the right to receive the same. In sofaras the year under consideration is concerned, the assessee has neither recovered excess over quota price from JJSD nor acquired right to receive any compensation. We, therefore, hold that the ld. CIT(A) was justified in deleting the addition.
Deduction of expenditure claimed on salaries and wages - HELD THAT:- CIT(A) has not granted any relief in respect of the expenditure claimed. He simply directed the AO to verify the assessee’s claim and then allow relief. In other words, if on verification, the AO finds that the relief is not due, he will deny the same and vice versa.
The mere fact of restoring the matter to the file of AO, in our considered opinion, does not constitute any cause of grievance to the Revenue in asmuch as the ball has again come back to the court of the AO, who can decide the issue as per law. We are, therefore, not inclined to disturb the impugned order on this score.
Addition towards sale of sugar at concessional rate - HELD THAT:- Following the precedent MAJALGAON SAHAKARI, SAKHAR KARKHANA LTD. VERSUS ACIT, SHRI CHHATRAPATI SHAHU, DCIT, ITO [2019 (3) TMI 906 - ITAT PUNE] we set-aside the impugned order to this extent and remit the matter to the file of AO for its fresh determination in accordance with law.
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2019 (6) TMI 1294
Deduction u/s. 80IB(4) in respect of Unit - II - assessee had obtained factory licence on 22.04.2004 i.e. after 31.03.2004 and hence the conditions prescribed for claiming deduction were not fulfilled by the assessee - HELD THAT:- The claim of the exemption of the assessee u/s 80IB has been accepted in A.Y. 2004-05, therefore, in the said circumstances, the exemption is not liable to be declined in subsequent year and in this regard we also find support in law settled in CIT Vs. Wester Outdoor Interactive (P) Ltd. [2012 (8) TMI 709 - BOMBAY HIGH COURT] & CIT Vs. Paul Brothers [1992 (10) TMI 5 - BOMBAY HIGH COURT]
Claim of the assessee was also declined on account of this fact that the factory licence was taken on 22.04.2004 but it cannot ground to deny the exemption u/s 80IB and in this regard, we also find support in the decision of Bombay High Court in the case of M/s. Jolly Polymers Vs. CIT [2015 (6) TMI 610 - BOMBAY HIGH COURT] - Thus the finding of the CIT(A) on the issues is quite correct which is not liable to be interfere with at this appellate stage. - Decided against revenue
Addition u/s 14A - CIT(A) restricted the expenditure to earn the exempt income to the extent of 10% dividend income - HELD THAT:- It is not in dispute that the provisions of Section 14A r.w. Rule 8D of the Act is applicable subsequent to the A.Y. 2008-09. The present case is in connection with the A.Y. 2006-07. The assessee earned the exempt income in sum of ₹ 3,93,753/-.
CIT(A) has restricted the expenditure to earn the exempt income to the extent of 10% dividend income which nowhere seems unjustifiable. Earlier to the period 2008-09 it was justifiable to earn the exempt income on reasonable basis unless satisfaction has been recorded by AO in the order. We also find support of law settled in case titled as CIT Vs. Essar Technology Ltd. [2018 (2) TMI 115 - SUPREME COURT] & Godrej & Boyce [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Decided against revenue
Delayed payment of employee’s provident fund - disallowance u/s 36(1)(va) - assessee deposited the said amount before filing the return of income - HELD THAT:- AO has noticed that the assessee has not made the payment earlier to filing the return of income, therefore, the said amount was added to the income of the assessee. It is also not in dispute that the assessee deposited the said amount before filing the return of income. In this regard, the law has now been settled in CIT Vs. Ghatge Patil Transports Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] . If the assessee deposit employee’s contribution funds before due date of filing the return, therefore, in the said circumstances, the claim of the assessee is not liable to be disallowed. - Decided in favour of the assessee against the revenue.
Addition u/s 14A r.w. Rule 8D(2) - own fund more than investment - HELD THAT:- The presumption lies in favour of the assessee if the assessee have own fund more than investment than the assessee’s investment would be treated from his own fund to earn the exempt income. The CIT(A) has also relied upon the decision in the case of Reliance Industries [2009 (1) TMI 4 - BOMBAY HIGH COURT] therefore, we are of the view that the finding of the CIT(A) is quite correct which is not liable to be interfere with at this appellate stage. Accordingly, these issues are decided in favour of the assessee against the revenue.
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2019 (6) TMI 1293
Deduction u/s 80P(2)(i) - assessee is not a recognized bank in view of the provision of the Reserve Bank of India (RBI) - HELD THAT:- Assessee nowhere fall within the definition of the Co-operative Bank. The assessee is not a recognized bank in view of the provision of the Reserve Bank of India (RBI). There is a difference between the Co-operative bank and in the Credit Co-operative Society. If the Assessee is not in the banking business then in the said circumstances, no doubt the assessee is entitled to raise the claim of deduction u/s 80P of the Act. .
The facts are not distinguishable at this stage also. The assessee is not doing the banking business. The CIT(A) has relied upon the decision of Bombay High Court in the case of Quepem Urban Co-operative Credit Society Ltd. Vs. ACIT [2015 (6) TMI 573 - BOMBAY HIGH COURT] . No law contrary to the law relied by the Ld. CIT(A) in his order has been produced before us. - Decided in favour of the assessee against the revenue.
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2019 (6) TMI 1292
Penalty u/s 271G - alleged that assessee had clearly failed in maintaining the documentation as required u/s 92D(3) - assessment of the assessee was finalized u/s 92CA(3) - HELD THAT:- CIT(A) has passed the order on the basis of this fact that the assessee has furnished the relevant documents u/s 92D(3) r.w.r. 10D of the Act. The penalty is not laviable specifically on the facts and circumstances when the assessee submitted all the necessary/relevant information to the TPO which was not acceptable if any by TPO.
CIT(A) has also relied upon the decision in the case of Annapurna Business Solution Vs. ACIT Circle 6(1) [2011 (12) TMI 224 - ITAT HYDERABAD] The facts are not distinguishable at this stage also. The basic requirement of Section 271G of the Act is that the assessee failed to submit the relevant information/document required u/s 992D(3) of the Act.
But in the instant case, the necessary information was given but was not acceptable by TPO so these facts nowhere entitled the TPO to levy the penalty. No law contrary to the law relied upon the CIT(A) if any has not been produced before us. CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. - Decided against revenue.
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2019 (6) TMI 1291
Eligibility for deduction u/s 80P(2)(e) - CIT-A allowed claim - HELD THAT:- CIT(A) allowed the assessee’s claim u/s 80P(2)(e) noting that the Hon'ble Jurisdictional High Court in the case of assessee itself [2011 (3) TMI 615 - PUNJAB AND HARYANA HIGH COURT] had held that the deduction u/s 80P(2)(d) of the Act was allowable on rental income earned from outsiders.
It was on appreciating this legal proposition that the I.T.A.T. in the first round has restored the matter back to the CIT(A) to adjudicate the issue of allowance of claim u/s 80P(2)(e) after verifying the evidences filed by the assessee. CIT(A) has gone through all the evidences filed by the assessee and found the claim of the assessee to be in accordance with law. DR has been unable to controvert this factual finding of the CIT(A). In view of the same, we find no reason to interfere in the order of the CIT(A).
Disallowance of interest expenditure u/s 14A calculated as per Rule 8D(2)(ii) - HELD THAT:- where sufficient own interest free funds are available, no disallowance of interest is warranted. The CIT(A) has given a factual finding that sufficient interest free funds were available with the assessee. DR was unable to distinguish the decision of the I.T.A.T. relied upon by the Ld.CIT(A) and was also unable to controvert the factual finding of the CIT(A) vis-à-vis the deletion of interest expenses as per Rule 8D(2)(ii) of the Rules. As far the directions of the CIT(A) to calculate the disallowance of administrative expenses as per Rule 8D(2)(iii) of the Rules by taking into consideration only those investments which had earned interest and dividend income, we find that the CIT(A) had relied upon the decision of the I.T.A.T. in the case of the assessee itself for assessment year 2013-14 on identical issue. DR was unable to distinguish the same. In view of the same, we do not find any reason to interfere in the order of the CIT(A) in this regard also.
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2019 (6) TMI 1290
Unexplained cash credit u/s.68 - money received in the form of preference share capital has come through FDI route - original documents were not submitted before the AO - HELD THAT:- We find that money received in the form of preference share capital has come through FDI route with the proper approval of FIPB and RBI by filing requisite statutory forms and complying with the requisite conditions prescribed thereon.
There is no question of doubting the genuineness of the said transactions. The assessee has received preference share capital from Aanya Properties (I) Ltd. which is holding 31% equity in the assessee company which means the preference share capital is received from the existing share holder of the assessee company. The assessee has given various documentary evidences pertaining to the investor company i.e. Aanya Properties (I) Ltd. proving the identity and creditworthiness thereon.
Hence the three necessary ingredients of Section 68 have been duly complied with by the assessee in the instant case. Merely because the original documents were not submitted before the AO, the photo copy of the said documents cannot be summarily brushed aside and ignored in order to draw the adverse inference against the assessee company.
Key management personnel of Aanya Properties (I) Ltd. is stationed at Mauritius and merely because of his non-appearance before the AO, no adverse inference could be drawn against the receipt of preference share capital by doubting the veracity of the same, without rebutting various documentary evidences that are already available on record. Since this is more of a factual issue, we do not deem it fit to adjudicate the various decisions relied upon by the ld. AR before us.
There is no need for setting aside of this appeal to the file of the AO as prayed by the ld. DR as it would only tantamount to giving second innings to the AO, which in our considered opinion, would not serve any purpose, as no second view is possible in the instant case and as these details were already before the AO. No infirmity in the order of the CIT(A) who had appreciated the entire facts and documentary evidences available on record, granting relief to the assessee. - Decided against revenue
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2019 (6) TMI 1289
Addition u/s. 40A(2)(b) - payment made for getting sales lead from related party - neither furnish details of such sales leads nor details of business actually generated through those leads - HELD THAT:- Thus, in nut shell the assessee could not prove that these payments made to its related party were actually incurred wholly and exclusively for the purposes of business of the assessee. The assessee has also not filed any paper book even before tribunal containing evidences to prove that these expenses were incurred wholly and exclusively for the purposes of business of the assessee. The onus is on the assessee to prove that these reimbursement of expenses to related party were wholly and exclusively incurred for the purposes of business of the assessee , which the assessee in the instant case failed to discharge.
There is no material on record to prove that these expenses were incurred for business of the assessee, we are inclined to confirm additions as were upheld by CIT(A) and hence we are not inclined to interfere with well reasoned appellate order passed by CIT(A). - Decided against assessee
Purchase of gold coins - allowable business expenses u/s 37(1) - HELD THAT:- Assessee has purchased gold coins to the tune of ₹ 4,16,333/- which it claimed to have given as gift for business purposes . The assessee although had given the list of the persons to whom gold coins were gifted but the nexus of gift of gold coin to business of the assessee could not be proved.
The assessee could not prove that these expenses were incurred wholly & exclusively for the purpose of business of assessee and that the assessee did infact generated business from the persons to whom gift of gold coins were given. The onus is on the assessee to prove that it satisfied mandate of Section 37(1) that these expenses were incurred wholly and exclusively for the purposes of the business of the assessee and these expenses were neither personal expenses nor capital expenses, which the assessee had failed to discharge in the instant case. - Decided against assessee.
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2019 (6) TMI 1288
Disallowance u/s.14A r.w.r. 8D - investment in partnership firms as its capital contribution - HELD THAT:- Not only the CIT (A) has properly examined the utilization of interest bearing funds for the assessee which was purely for the purpose of business but also from the bare perusal of the balance sheet, it is seen that the interest free funds available with the assessee in the form of reserves and surplus far exceeds the total investment made in shares/partnership firms including the investment made in the shares of M/s. Edward Keventor P. Ltd. which has been stated to be strategic investment. If that is so, then no disallowance u/s.14A can be made.
This proposition has now been confirmed in the case of CIT vs. Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] wherein upheld the proposition that if assessee has interest free funds available sufficient to meet its investment, then it can be presumed that the investment have been made from interest free fund available with the assessee and not from the borrowed funds. Thus, no disallowance of interest can be made.
Disallowance made under Rule 8D(2)(iii) as relying on ACB India Ltd vs. ACIT [2015 (4) TMI 224 - DELHI HIGH COURT] we direct AO only to include those investments while computing the average investments which have yielded exempt income, i.e., investment made in the partnership firm and mutual fund only, because investment made on unquoted shares have not yielded any exempt income. The calculation of average investment in partnership firm and mutual fund has been given by the learned counsel as has been incorporated above and accordingly we direct the AO to verify the same and work out the disallowance of 0.5%. Accordingly, appeal of the assessee is partly allowed.
TDS u/s 194C - Disallowance u/s.40(a)(ia) for non-deduction of TDS on payment to Petron Civil Engineering Ltd - HELD THAT:- As decided in ISLAMIC INVESTMENT CO. VERSUS UNION OF INDIA AND ANOTHER. [2002 (3) TMI 3 - BOMBAY HIGH COURT] Interest paid in pursuance of decree of the Court which has to be discharged under the said decree, then it assumes the character of the judgment debt and hence judgment debtor is not liable to deduct tax at source on the interest component of the decree - award given by the Arbitral Tribunal cannot be reckoned as payment made in pursuance of a contract but payment in pursuance of a judgment decree and is part of a judgment debt, and therefore, in such a case, assessee was not liable to deduct TDS either u/s.194C or u/s.194A. Thus no obligation to deduct TDS on the payment made to M/s. Petron Engineering P. Ltd. in accordance with arbitration award. Accordingly, this issue is allowed in favour of the assessee.
Notional rent where security deposits were received but no rental was shown - HELD THAT:- The addition has been made on the ground that assessee despite being owner of the Kiosks has not disclosed rental income in its books and the same has been transferred to M/s. DLF Services Ltd. by over riding title. M/s. DLF Services Ltd is providing maintenance and upkeep services of the mall including Kiosks. In return for consideration for these services, the appellant vide authority letter dated 12/12/2005 has granted M/s DLF Services Ltd., right to recover the rental receipts from the third parties using said Kiosks. Assessee has not claimed any expenditure in the name of M/s DLF Services Ltd. in connection with maintenance services of the mall. In view of above arrangement, M/s. DLF Services Ltd. is showing the receipts from the Kiosk as a part of its income which is duly subjected to tax in its hands and accordingly there is no loss to the revenue - As relying on assessee’s own case [2017 (11) TMI 381 - ITAT DELHI] , we decide this issue in favour of the assessee.
Addition on account of capitalization and processing fees on loan taken for purchase of windmills - HELD THAT:- We find that the issue is with regard to the capitalisation on account of interest paid on loan for windmill project and ₹ 96 lacs on account of loan processing charges. AO has capitalized proportionate claim of interest and processing charges after allowing depreciation @ 40% based on proviso to Section 36(1)(iii) r.w. Explanation 8 to Section 43(1). In so far as capitalisation of interest expenditure is concerned, the same is definitely part of acquisition of the capital asset which needs to be capitalized. The loan processing charges is also part of the same loan agreement, and therefore, it cannot be given a different treatment as it also a charge for acquisition of an asset and same too has to capitalization only. Accordingly, we agree with the contention raised by the ld. Special Counsel that this cannot be allowed separately u/s.37. Accordingly, ground raised by the assessee is dismissed.
Addition on account of interest on late deposit of TDS - HELD THAT:- As decided in NARAYANI ISPAT PVT. LTD. [2017 (10) TMI 67 - ITAT KOLKATA] TDS amount is in the nature of tax of the deductee, i.e., other party and not that of the assessee and as such the interest on late deposit of TDS is allowable expenses u/s.37 of the Act.
Disallowance of prior period expenses - HELD THAT:- Similar issue has arisen in assessee’s own case for assessment year 2006-07 wherein the Tribunal has allowed the same nature of expenditures, after observing case of MODIPON LTD. (NO. 1) [2010 (12) TMI 836 - DELHI HIGH COURT]
Disallowance of SEZ deduction u/s 80IAB - ownership of land on which SEZ has been developed is in dispute in view of decision of Hon'ble Punjab and Haryana High Court, and therefore, such a claim is inadmissible - HELD THAT:- The case of assessee has been that the land has been given on lease for a period of 30 years and lease rentals per annum are being received over a period of lease term on annual basis and not up-front for all the years under the lease. The disclaimer condition mentioned in clause 3(xvii) of the approval letter dated 01.06.2009 does not give any additional power to the AO to examine the taxability of the transaction of hand over and transfer of bare shells but has to be restricted only to examine the transaction of lease of Land, as expressly clarified by the Ministry of Commerce in the clarification dated 18.01.2011 so that the transactions of sale of land in the guise of long term lease by receiving premium/down payments etc. do not escape the scrutiny under the Income Tax Act as there is an express prohibition on sale of Land in the SEZ. Under these facts and circumstances, we do not find the reasoning given by the AO to disallow the claim is justified.
Once assessee has been notified as developer under the SEZ Act and his activity has been approved by BOA and the SEZ in which the assessee has carried out its business activity has been notified under the SEZ Act, 2005 then profits derived from business of development, operation and maintenance of a SEZ has to be taken from such activity and consequently is entitled for claim of deduction u/s.80IAB. AO was not justified in denying the benefit of deduction u/s.80IAB arising from sale of bare shell building to co-developer.
Deduction u/s 80IAB - isolated transaction of sale of building is assessable under the head ‘income from capital gain’ - HELD THAT:- When the books of account of the assessee were subjected to Special Audit u/s 142(2A) and the Special Auditor has accepted the treatment of income from sale of bare shell building as part of business profits, then such an income arising from sale of bare shell building would fall in the nature of business income eligible for deduction u/s 80IAB of the Act. Apart from that, it is noted that assessee-company was formed with the object of real estate development and has been engaged in this activity since inception - the assessee moved an application for setting up of SEZ project which was duly approved as Developer by BOA. The cost incurred on development of bare shell building was disclosed as stock and revenue was recognized as per POCM. The income from sale of building is purely in the nature of business income. The assessee is engaged in organized activity of development of infrastructure facility in SEZ and as such operations ostensibly are in the nature of business in terms of section 2(13). Thus, re-characterising the income as short-term capital gain by the AO is rejected.
Disallowance of proportionate deduction - alternative finding AO that, since the land has been leased for 49 years, therefore, the income from sale of bare shell building should also be bifurcated and proportionate recognized over a period of 49 years - CIT (A) has discussed this issue in detail and has held that the lease is only in respect of land and same cannot be applied on transfer of building. In any case, the recognition of revenue relating to real estate projects is governed by AS-7 and the assessee has been consistently following POCM which has accepted by the Tribunal in assessee’s own case for AY 2006-07. Hence, such a reasoning of the AO to disallow proportionate deduction cannot be sustained.
Disallowance of Revenue recognition as per percentage of completion method (POCM) - HELD THAT:- This issue stands covered in favour of the assessee by the Tribunal in assessee’s own case for the Assessment Year 2006-07 .
Disallowance of interest pertaining to loan for M/s. Edward Keventer Project by capitalizing the same - HELD THAT:- As decided in assessee’s own case for Assessment Year 2006-07 the principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments.
Therefore, we are of the view that presumption is to be assumed in favour of the assessee and not against assessee. Hence, we reject the formulae adopted by CIT (A) of working out proportionate disallowance by adopting artificial formulae - order of the CIT (A) confirming the disallowance of expenditure and direct the AO to allow this interest expenditure u/s 36(1) (iii)
Disallowance of capitalization of interest - AO on the basis of Special Auditor’s comment observed that interest capitalization is also required on interest paid on loan taken for M/s. Edward Keventer Project, and therefore, net interest eligible for capitalization is to be bifurcated into interest capitalization on Keventer loan and interest capitalization on project under execution - HELD THAT:- Issue decided in decided in favour of the assessee by the Tribunal in assessee’s own case for Assessment Year 2006-07 Expenditure towards brokerage and commission paid to brokers for booking and sale of certain properties is allowable firstly in view f the facts that assessee’s treatment of such expenditure has been decided in favour of the assessee and revenue has not challenged it and secondly such expenditure are allowable. In view of the above facts and following the decision of coordinate Bench as facts are not distinguished by revenue, we confirm the order of CIT (A) in deleting the addition.
Disallowance of brokerage and commission - HELD THAT:- This issue has been decided in favour of the assessee by the Tribunal in assessee’s own case for Assessment Year 2006-07. - decided in favour of the assessee
Addition on account of late construction charges - as per AO receipt of late construction charges is income on the basis of such late construction charges were collected during the year - HELD THAT:- As decided in favour of assessee Assessee as following a prudent and consistent accounting policy which was necessitated by the order of Honourable Punjab And Haryana High court. The assessee offered the entire amount as its income on settlement of disputes by the Honourable Supreme Court. Therefore, we hold that the assessee was acting on prudent and consistent accounting policy. Accounting standard 9 issued by ICAI on revenue Recognition also satisfies the accounting policy of the company that when the revenue is saddled with uncertainties same should not be recognised till the uncertainties are resolved. Therefore following the decision of coordinate bench as well as the accounting standard 9 of ICAI we are of the view that assessee has correctly recognised revenue in the year the issue attained certainty. Therefore on perusal of the decision of CIT (A) we are of the view that there is no infirmity in the order.
Addition on account of net contingency deposit received - HELD THAT:- As decided in assessee's own case these are the security deposits which would be utilised in performance of the contractual obligation of the assessee towards those buyers. Anyway, it is not the case of the AO that these receipts have been received during the year, it is also not the case that the payers or the depositors are unidentified and it is not the case of the AO that these amounts have been paid by the buyers without any obligation on the assessee to perform by providing the services. In view of this, we confirm the order of CIT (A) in deleting the addition
Net interest fee security deposits receipt - revenue or capital receipt - HELD THAT:- a separate account is maintained and as and when the buildings or the complex is handed over to the resident association or condominium association such deposits are handed over to them for maintaining the building and payment of insurance premium of building out of interest received from such deposits. Such deposits are not forming part of sale proceeds, therefore, the same cannot be treated as trading receipts in the hands of the appellant. There is a regular movement of funds for utilization of the same for maintenance and payment of insurance premium from this account. Hence, the addition made by the AO on account of interest free deposits is deleted.
Addition on account of net registration charges - HELD THAT:- The total receipt of registration charges is identified with respect to each of the buyer and there are movement in respective accounts. In fact, it is a past through cost collected by the assessee from the buyer to be incurred by assessee on behalf of the buyer. These receipts cannot partake character of the revenue in the hands of the assessee. It is also not the case of the AO that the depositors are not identified and despite the conveyance deed executed by the assessee, the amount has not been incurred. In absence of this finding, it is not possible to confirm the disallowance. Therefore, we confirm the order of the CIT (A) in deleting the addition being credit balance of registration charges received from the customers
Addition on account of closing credit balances in indirect taxes account - HELD THAT:- This issue is fully covered in favour of the assessee by the order of the ld. CIT(A) in assessee’s case for AY2006-07 and Department has not preferred any second appeal in ITAT. Otherwise also, we are of the view that, the indirect tax collected from the customer on behalf of the Revenue authorities, which the assessee is liable to pay to the government, then such an action of the Assessing Officer in treating the indirect taxes as income of the assessee is highly misconceived and unjustified. In any case, this amount has been subsequently paid and therefore, it cannot be treated as income in this year. Accordingly, the order of the ld. CIT (A) is affirmed.
Disallowance /capitalization of preoperative expenses (on SEZ projects not commenced) - HELD THAT:- As decided in assessee own case the assessee has incurred this expenditure on proportionate and feasibility of various construction projects in which business the assessee is engaged into. Before embarking on to any of the projects, it is a common practice to obtain a feasibility and economic viability of construction projects at different geographical location. These expenses are for facilitating the existing business of the assessee. It is not the case of the revenue that it is altogether a new line of the business or unrelated to the business of the assessee. Therefore, in our view, this expenditure are wholly and exclusively incurred for the purposes of the business of the assessee. Hence, we confirm the order of CIT (A) and delete this ground of revenue’s appeal
Disallowance of expenses on projects not commenced - HELD THAT:- The assessee has incurred this expenditure on proportionate and feasibility of various construction projects in which business the assessee is engaged into. Before embarking on to any of the projects, it is a common practice to obtain a feasibility and economic viability of construction projects at different geographical location. These expenses are for facilitating the existing business of the assessee. It is not the case of the revenue that it is altogether a new line of the business or unrelated to the business of the assessee. Therefore, in our view, this expenditure are wholly and exclusively incurred for the purposes of the business of the assessee.
Disallowance of expenditure u/s.40(a)(ia) for non deduction of TDS on payment to two trusts - HELD THAT:- CIT(A) after taking into consideration certificate issued by ITO, TDS Ward-49(4), New Delhi and as such there is no default on the part of the assessee in not deducting TDS on such payment. The order of the CIT (A) is based on proper appreciation of facts and there is thus no justification for any interference and this ground of revenue is dismissed
Addition on account of reconciliation of rental income as per TDS certificates and withdrawal of TDS credit - HELD THAT:- Rental income has been assessed under the head “income from other sources” and since the TDS relates to the very same income, the credit for the said TDS cannot be logically denied. Therefore, the AO is directed to allow credit of TDS
Reclassification of income from house property to income from business and profession - HELD THAT:- As relying on case of assessee for AY 2005-06, we confirm the order of CIT(A) in taxing the rental income as income from house property
Disallowance of notional rent/additional annual letting value in respect of the vacant property - HELD THAT:- The bonafide lease agreement between the appellant and third parties cannot be disregarded without having any adverse information in this regard and based on conjectures and surmises. Hence, the addition made by the Assessing Officer on this issued is deleted.
Depreciation claimed on DLF Centre Building - HELD THAT:- CIT(A) has observed that this very issue arose in the preceding year and relief allowed at the first appellate stage was accepted by the revenue as no appeal was filed against the same before ITAT. In the light of above position and as per the decision of Hon’ble Supreme Court in the case of CIT v. J K Charitable Trust 2008 (11) TMI 8 - SUPREME COURT] the revenue could not be permitted to agitate the very same issue in the year under reference
Disallowance of expenses where bills are not in the name of the company - HELD THAT:- The bulk of expenses are in the nature of electricity and water expenses for which the name of erstwhile tenant has been mentioned. Similar issue was involved in the earlier year also, therefore, respectfully following the precedence this issue is decided in favour of the assessee and against the Revenue. Accordingly, the Revenue’s grounds are dismissed.
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2019 (6) TMI 1287
Disallowance of provision of leave encashment u/s 43B - HELD THAT:- AO/assessee shall follow the directions issued by the Hon’ble Supreme Court in the case of M/s.Exide Industries Ltd. & Anr. Vs. Union of India & Ors. [2009 (5) TMI 894 - SC ORDER] .
When the question of law in the case of M/s.Exide Industries Ltd. & Anr. Vs. Union of India & Ors. becomes final, the AO shall amend the impugned orders conformably to such decisions as per Sec.158A of the Income Tax Act, 1961. - Appeals filed by the assessee are treated as partly allowed for statistical purposes.
MAT computation - provision for gratuity and leave encashment should be added to book profits while computing the book profit u/s 115JB - HELD THAT:- Though the actual payment of gratuity may be made at a later point of time upon periodical release of the employees from service, it is provision having been made on actuarial basis, it cannot be stated to be an unascertained liability so as to add it back in terms of Clause (c) to Explanation 1 to Section 115JB
It is not emanating from the assessment order as to whether the assessee has furnished the actuarial calculations of the ascertained liability for exclusion from adding the same to its book profit. The assessee is required to furnish before AO the actuarial calculations of the ascertained liabilities and after verification of the same; the AO may allow the assessee to exclude the same from the computation of book profit u/s 115JB. If the assessee chose not file the valuations, then the addition made by the AO stands sustained. Appeal filed by the assessee is allowed for statistical purposes. .
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2019 (6) TMI 1286
Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income - disallowance of interest expenses u/s 43B - HELD THAT:- The assessee during the assessment proceedings admitted the fact that it not eligible for deduction on account of such interest expense by virtue of the provision of section 43B of the Act.
On perusal of the financial statements of the assessee, we note that there was a disclosure regarding the default committed by the assessee for non-payment of interest to the bank.
CA also filed a letter issued admitting the mistake committed by him for not making the disallowance in its tax audit report on account of non-payment of interest to the bank
We are of the opinion that the assessee has made sufficient disclosures in the financial statements and furthermore it should not be penalized on account of the mistake committed by the chartered accountants as discussed above. Therefore we are reluctant to confirm the penalty levied by the authorities below.
There was no deliberate intention/ act on the part of the assessee to furnish the inaccurate particulars of income. We also find strength from the fact that there was no immediate tax benefit to the assessee by not disallowing the interest expenses in the given facts and circumstances since there was loss in the return of income filed by the assessee. Thus we reverse the order of the authorities below and direct the AO to delete the penalty imposed - Decided in favour of assessee.
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2019 (6) TMI 1285
Addition u/s 68 - unexplained cash credit on the basis of information received from the office of Additional Directors of Income Tax - notices issued u/s. 133(6) to the parties were returned unserved - HELD THAT:- The assessee has received unsecured loan from different parties in both the assessment years. Due information has been received and the enquiry by the Assessing Officer duly proved that these are accommodation entries. AO duly issued notices and assessee has not at all been able to prove the identity of the parties. Elaborate enquiry by the AO duly proved that assessee is recipient of bogus accommodation entry in the garb of unsecured loan.
The view of the authorities below is duly supported by the decision in the case of Pr.CIT Vs. NRA Iron and Steel Pvt. Ltd. [2019 (3) TMI 323 - SUPREME COURT] wherein it was duly expounded that by merely producing documentary evidence assessee is not relieved of its onus to prove that it is not a party to the receipt of accommodation entries, if Assessing Officer's enquiry duly prove the bogus nature of transaction.
Accordingly, we don't find any infirmity in the well reasoned orders of the authorities below. Accordingly, we confirm the same. - Appeals filed by the assessee is dismissed.
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2019 (6) TMI 1284
Addition of peak value of investment as Unexplained income - income estimated of profit by applying the provisions of section 44AF of the Act @ 5% of total turnover - HELD THAT:- Estimating the profit @ 5% to the tune of ₹ 2,12,550/- u/s 44AF as unexplained income by CIT (A) is concerned, AR for the assessee has accepted the same and has not pressed Ground no.1 to that extent. So, we confirm the findings of ld. CIT (A) as to estimating the profit @ 5% of the total turnover of ₹ 42,50,993/-.
We are inclined to agree with the contention raised by the ld. AR because when profit @ 5% on the total turnover has been estimated by the CIT (A) then peak value of the investment cannot be treated as unexplained income which would otherwise amount to double addition which is not permissible under the Act. So, we order to delete the addition made by the CIT (A) by making the peak value of the investment.
Penalty u/s 271(1)(b) - Reopening of assessment u/s 148 - non compliance of notice sent in the name of Alam Zafar in place of Zafar Alam - no proof of service - HELD THAT:- CIT (A) has confirmed the penalty on the basis of assumptions and presumptions that when the notice to the assessee was issued in the name of Alam Zafar in penalty proceedings and he attended the penalty proceedings then he must have been served in the quantum proceedings also. Penalty cannot be imposed on the basis of assumptions and presumptions rather to levy the penalty the Revenue has to make out a categoric case that the assessee was served upon by proving on record acknowledgements to show that assessee has received the notice and has failed to comply with the same by attending the proceedings.
We are of the considered view that when the Revenue has failed to prove the service of notice upon the assessee, question of levying the penalty u/s 271(1)(b) does not arise, hence penalty levied u/s 271(1)(b) is ordered to be deleted. - Decided in favour of assessee.
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2019 (6) TMI 1283
Penalty u/s 271(1)(c) - AO initiated penalty on one limb of section 271(1)(c) and had imposed penalty on another limb - diversified views of Accountant Member and Judicial Member
Ld. Accountant Member held that when the AO proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. He followed decisions in the cases of M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS [2013 (7) TMI 620 - KARNATAKA HIGH COURT] , M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SC ORDER], CIT v. Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] and Pr. CIT VERSUS SMT. BAISETTY REVATHI [2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT].
Ld. Judicial Member has held that simply not striking off of the inappropriate portions in the notice does not vitiate the u/s 271(1)(c) as invalid. Further, simply by issuing a proceedings for one limb of section 271(1)(c), does not take away the power of the Assessing Officer to pass an order on other limb of the section, the entire provisions cannot be quashed simply on the technical lapses until and unless the same have resulted into failure of justice and denial of the principles of natural justice. He relied on KP MADHUSUDANAN VERSUS CIT [2001 (8) TMI 8 - SUPREME COURT], CIT VERSUS CHANDULAL [1984 (7) TMI 58 - ANDHRA PRADESH HIGH COURT].
THIRD MEMBER HELD THAT:- In the light of the accepted facts considering the specific questions referred to by the learned Members I am of the considered view that in terms of the judicial precedent available(supra relied by AM) I find that there is no scope of ambiguity. Amongst all these decisions available on the legal issue in favour of the assessee, the sole contrary view referred to by the Revenue is the decision of the hon'ble Andhra Pradesh High Court in the case of CIT v. Chandulal (supra) in favour of the Revenue. I concur with the view expressed by the learned Accountant Member.
When the position of law as held by the apex court in Dilip N. Shroff [2007 (5) TMI 198 - SUPREME COURT] is considered, it is clear that the decision rendered in the case of CIT v. Chandulal (supra) is no longer good law.
Further, It is seen that the decision of the apex court in K. P. Madhusudhanan (supra) has been considered at considerable length and in detail by the latest decision of hon'ble Teleangana and Andhra Pradesh High Court in the case of Pr. CIT v. Smt. Baisetty Revathi ( supra) and decided issue in favour of assessee.
Accordingly, ALL questions referred by AM & JM are answered in favour of the assessee.
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2019 (6) TMI 1282
Maintainability of appeal - Jurisdiction - Valuation of imported goods - demand of differential amount - HELD THAT:- This is clearly a valuation dispute between the parties - This Court has no jurisdiction over the matter.
However, we feel that the appellants have proceeded bonafide in a Court not having jurisdiction which may be taken into account for the purpose of limitation under Section 14 of the Limitation Act.
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2019 (6) TMI 1281
Condonation of delay of 214 days occurred in filing the above appeal - appellant that the delay was occurred only because of some communication gap between the appellant and the consultant, who was handling the case earlier - principles of natural justice - HELD THAT:- The Tribunal had failed in considering the question with a liberal approach. The Tribunal had failed in applying the settled legal principle of law in the matter of granting condonation of delay. The Tribunal had also failed in considering the question of condoning the delay by compensating the respondent in terms of cost.
Taking note of the larger interest involved and on the basis of the settled legal principle we are of the considered opinion that the delay caused ought to have been condoned by compensating the respondent in terms of cost - COD application allowed.
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2019 (6) TMI 1280
Refund of Service Tax - service tax paid during the period between 27.08.2012 and 06.03.2013 - applicability of Section 11B(1) of the Act - Time Limitation - whether the application for refund of the amount filed by the assessee was beyond the period of limitation provided under Section 11B(1) of the Act? - HELD THAT:- Section 11B of the Act makes it clear that an application for refund of duty of excise (service tax in the case at hand) has to be made in the prescribed form before the expiry of one year from the relevant date. Explanation (B) to Section 11B of the Act states what is meant by relevant date. As per Clause (ec) of Explanation (B) to Section 11B, in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the relevant date is the date of such judgment, decree, order or direction. As per Clause (f) of Explanation (B) to Section 11B, in any case other than provided under clauses (a) to (ec), the relevant date is the date of payment of duty.
There is no dispute with regard to the fact the service tax payable by the appellant would come within the ambit of duty of excise mentioned in Section 11B(1) of the Act. However, the contention of the appellant is that the amount paid by it was actually not due from it as service tax because the value of the materials supplied free of cost by the service recipients cannot be included in computing the taxable value of the services - There is no basis for the contention raised by the learned counsel for the appellant that the amount was paid by the appellant on account of coercion and threat made by the authorities. There is no material produced in support of this contention.
In the instant case, as noticed earlier, when the amount was levied from the appellant, the demand for levy was legal. The amount was paid by the appellant as service tax. The amount paid lost the colour of tax only when the issue was finally decided by the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT] to the effect that value of materials supplied free of cost by service recipient is not exigible to service tax - Applying the dictum laid down by the Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [1996 (12) TMI 50 - SUPREME COURT] it is held that the claim for refund of amount made by the appellant comes within the purview of Section 11B(1) of the Act - decided against assessee.
The amount was paid by the appellant on different dates during the period between 27.08.2012 and 06.03.2013. The last date of payment was 06.03.2013. It was on 23.10.2014 the appellant filed an application dated 14.10.2014 in the prescribed form for refund of the amount. The application for refund in the prescribed form was filed beyond the period of one year from the last date of payment of duty - whether the appellant can take advantage of the decision of the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT] to contend that the application for refund of amount filed by him in the prescribed form was within the time stipulated under Section 11B(1) of the Act?
Clause (ec) of Explanation (B) to Section 11B of the Act states that in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the relevant date from which the period of limitation is to be computed, is the date of such judgment, decree, order or direction - The proceedings pending before the Tribunal, at the time when the Supreme Court rendered the decision in Bhayana Builders, were not proceedings against assessment of service tax on the value of materials supplied free of cost by the service recipients. The appeal pending before the Tribunal was against the order passed by the authorities rejecting the application for refund of amount. In other words, levy of service tax from the appellant for the relevant period had attained finality by the time the Supreme Court rendered the decision in Bhayana Builders. In such circumstances, the appellant cannot take advantage of the decision in Bhayana Builders to contend that the application for refund filed by it was within the prescribed time.
Thus Tribunal was correct in finding that the application for refund filed by the assessee was beyond the period of limitation provided under Section 11B(1) of the Act - decided against assessee.
Appeal dismissed - decided against assessee.
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2019 (6) TMI 1279
Clearance of the goods to Respondent No.6 on payment of Appropriate duties of Customs - HELD THAT:- Learned advocate Shri Amit Laddha for Shri Modh, learned advocate for the petitioner places on record the order passed by Custom Authorities dated 13.5.2019 issued on 14.5.2019 permitting amendment in Import General Manifest and submits that, in that view of the matter, now nothing further survives in the matter.
This petition is DISMISSED as having become infructuous.
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2019 (6) TMI 1278
Confiscation of imported goods - cosmetic goods - improper importation - it was alleged that goods imported or brought within Indian customs waters contrary to the prohibition imposed by law - HELD THAT:- So far as cosmetics are concerned, their importation into India cannot be made except through the points of entry specified under Rule 43-A. Rule 43-A contains restrictions in respect of drugs to be imported into India. It specifies the places, through which alone drugs can be imported into India by rail, road, sea or air. By virtue of Rule 133 of the Rules, the restrictions as to the points of entry specified under Rule 43-A have been made applicable to all cosmetics imported into India. Rule 132 gives exemption to cosmetics specified in Schedule D. Cosmetics specified in Schedule D are cosmetics which are imported for manufacture and export by units situated in “Special Economic Zones” as mentioned by Government of India (Item 6 of Schedule D); cosmetics generally cannot be said to be entitled to exemption as substances not intended for medicinal use (Item 1 of Schedule D).
Once it is held that the import of goods by the Respondent is contrary to the prohibition contained in Rule 133 of the Rules, it is a foregone conclusion that the goods are improperly imported, and are liable to be confiscated under Clause (d) of Section 111 of the Customs Act, 1962. The action of the Commissioner in confiscating the goods, accordingly, cannot be faulted.
Appeal allowed - decided in favor of Revenue.
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2019 (6) TMI 1277
Import of Capital goods under EPCG Scheme - non-fulfillment of export obligations - benefit of N/N. 49/2000 dt. 27/04/2000 - HELD THAT:- In the present case, the appellant could not fulfill the export obligation on account of reasons beyond his control as he has suffered huge financial loses and his factory was closed in 2007 - further the appellant have paid the entire customs duty foregone amounting to ₹ 22,14,833/- as on date.
There is no force in the contention of the appellant that they had fulfilled the export obligation by earning foreign exchange of ₹ 28,28,526/- because both the authorities have not considered the same as export. Further there is no deliberate default in fulfilling the export obligation and therefore there is no justification for confiscation of the goods and imposition of redemption fine in terms of Section 125 of the Act - the confiscation, redemption fine of ₹ 5 lakhs in lieu of confiscation and penalty of ₹ 2.5 lakhs is set aside.
Demand of Interest - HELD THAT:- The appellants are liable to pay interest on the delayed payment of customs duty foregone - case remanded back to the original authority for quantification of interest which the appellant would be liable to pay.
Appeal allowed by way of remand.
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2019 (6) TMI 1276
Admissibility of the application - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, as we find that the parties have reached provisional settlement prior to issuance of the impugned order and finally settled the matter on 5th December, 2018 i.e. prior to the constitution of the ‘Committee of Creditors’, in the light of the decision of the Hon’ble Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT], we allow the Respondent to withdraw the application under Section 7.
In effect, order (s), passed by the Adjudicating Authority declaring moratorium, freezing of account, and all other order (s) passed by the Adjudicating Authority pursuant to impugned order and action, if any, taken by the ‘Interim Resolution Professional’, including the advertisement published in the newspaper calling for applications all such orders and actions are set aside. Learned Adjudicating Authority will now close the proceeding - The ‘Corporate Debtor’ (company) is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect.
Appeal allowed.
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