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Showing 61 to 80 of 1444 Records

• 2023 (5) TMI 1384
  

  Penalty imposed on contravention under FEMA provisions - outward remittances in 39 tranches abroad in the guise of advance for imports - quantum of penalty imposed under FEMA 1999 as unreasonable - HELD THAT:-On reading of Section 13(1) FEMA it is obvious that the maximum amount of penalty which can be imposed under the Section is three times the amount of contravention involved. From the language of the Section it is clear that the Section has not prescribed either a fixed amount of penalty or minimum amount of penalty. It therefore, follows that the amount of the penalty which is to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before him. The appellant has failed to place any reason in the pleadings as to show that the discretion has not been exercised judiciously by the Adjudicating Authority.

  The question as to when a penalty is to be regarded as either low or high is at best answered subjectively.

  In this case Adjudicating Authority has complied with the provisions of the Section by imposing penalty for contravention of section 10(6) FEMA r/w Regulation 6(1) of Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations 2000 and as well as imposing penalty for contravention of section 3(b) of FEMA. For contravention of each of these Sections he has chosen to impose penalty slightly over fifty percent thus totaling a penalty of over hundred percent. Any insistence to impose higher penalty for contraventions of each of the Section arising from the same set of transactions may introduce element of subjectivity. In any case, there is no such requirement under the statute as long as each contravention has been examined and if found established has attracted penalty. The reading of the Adjudication Order, therefore, reflects objectivity and judiciousness on the part of the Adjudicating Authority.

  In the present case the statute (FEMA) itself provides for a penalty up to thrice the sum involved in such contravention and thereby gives explicit scope to the Adjudicating Authority to exercise his discretion, albeit judiciously, for imposition of penalty.

  In view of the appeal having failed to bring out the reasons that why the penalty imposed is low and as to how the Adjudicating Authority has not exercised his discretion judiciously, I observe that the order of the Adjudicating Authority cannot be interfered with.

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• 2023 (5) TMI 1383
  

  Delay in filing application under Section 52A of the NDPS Act - what is a reasonable time to make an application to the Magistrate under section 52A NDPS and the effect of delay, if any? - HELD THAT:- Section 52A NDPS does not give a time frame within which application has to be made for collection of sample to the magistrate. The time frame is provided in Standing Order 1/88 and that too, only in the context of sending the sample to FSL.

  In Mohanlal [2016 (5) TMI 500 - SUPREME COURT], the Hon’ble Supreme Court in para 19 has opined that “The scheme of the Act in general and Section 52A in particular, does not brook any delay in the matter of making of an application or the drawing of samples and certification. While we see no room for prescribing or reading a time-frame into the provision, we are of the view that an application for sampling and certification ought to be made without undue delay” - What is reasonable has been left open by the Apex Court in the said judgment.

  It cannot be the intent of the legislature that since no time limit is mentioned in the statute, the respondent authorities can take their own sweet time in moving an application under section 52A NDPS. Rather, the said application should be moved at the earliest to prevent the apprehension of tampering with the samples as the seizure, quantity and quality of contraband is the most crucial evidence in NDPS cases and drawing of sample and certification in the presence of magistrate is of utmost importance.

  Thus, a harmonious and combined reading of Standing Order 1/88 and Section 52A NDPS construes that a reasonable time must be read into section 52A(2) for making an application for drawing the sample and certification before the Magistrate.

  In the present case, the sample was kept in the custody of the prosecuting agency for more than one and a half month, thus, raising doubt with regards to tampering of the same.

  The application for sample collection under section 52A is not a technical application wherein elaborate reasons, principles of law or detailed facts are required. It is more of a clerical application and should mandatorily be made within a reasonable time under section 52A NDPS. The application has to be moved at the earliest and in case, the same has not been moved, the reasons for delay must be explained by the authorities.

  The applicant has been in custody since 07.03.2022 and more than a year has passed since then. No further custodial interrogation of the Applicant is required. No recovery was made from the Applicant or at his instance. Therefore, the embargo of Section 37 NDPS is not applicable on the Applicant - The triple test i.e., a) flight risk; b) tampering with evidence and c) influencing the witnesses can be taken care of by imposing stringent bail conditions.

  The application is allowed and the applicant is granted bail subject to fulfilment of terms and conditions - Bail application allowed.

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• 2023 (5) TMI 1382
  

  Money Laundering - property attached in disproportionate to value of the proceeds of crime - whether attachment of the property should be after assessment of its value on the current market price as on the date of attachment to protect the proceeds of crime? - Right to cross-examination - principles of natural justice - HELD THAT:- The word "value" has been used in section 2(1)(u) defining "proceeds of crime" and if section 2(1) (u) & 2(1) (zb) are read together "value of any such property" can be assessed at the fair market value as on the date of acquisition and not at the current market price on the date of attachment.

  There are no ground is made out to seek cross examination of the two officers. It is when cross examination of the officer is sought for valuation of the property attached and that too as on the date of attachment while as per the definition of "value" given in section 2(zb) of the Act, 2002, it is to be taken as on the date of its acquisition or possession, as the case may be. There are no reasons to cause interference in the interim order passed by the Adjudicating Authority though it kept the legal issue open with liberty to the Appellant to raise it appropriately but Tribunal was requested to decide the legal issue.

  It is observed that the cross examination of the witness may be part of the principle of natural justice but it cannot be sought for the sake of it and even in the case, issue for cross examination is not even made out. The proceeding before the Adjudicating Authority is otherwise to be completed within 180 days as per the provisions of the Act of 2002. The appeal is accordingly fails and dismissed.

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• 2023 (5) TMI 1381
  

  Seeking grant of statutory bail - illegal means of extortion and by giving out loans at exorbitant rate of interest - offence punishable under Section 120-B, 201,384, 465, 467 & 471 IPC and Section 17, 18, 20 & 21 of UA (P) Act, 1967 and u/s 25(1A) of the Arms Act, 1959 - HELD THAT:- It is pertinent to mention herein that it was peak of Covid period and the Courts were functioning in a very restricted mode and the learned Metropolitan Magistrates were deputed to the Tihar Jail itself to extend the custody remands as it was not possible to bring all the under-trials lodged in the Tihar Jail to Courts because of Covid restrictions and it was also not possible to produce each and every accused before the concerned Court through video conferencing, because the Courts itself were functioning in a very restricted mode and at that time even appropriate video conferencing facilities were not available either at the Court rooms or at the residential offices of the judicial officers.

  Unless and until a bail order is passed the under-trial has to remain in judicial custody and as it was not possible for the accused to be produced before the Special Court because of the Covid restrictions, her remand was rightly extended by the Duty Metropolitan Magistrate as per the directions issued from time to time by the higher judicial authorities keeping in view the prevailing circumstances.

  Thus, filing of a complete charge-sheet within the stipulated period is sufficient compliance and no default bail can be granted in a case where cognizance was taken later on and the custody of the accused/appellant cannot be termed as illegal only on the ground that sufficient amount of time was spent by the court clerk to raise objections regarding page numbering and illegible documents etc., and the respondent/NIA had taken some time to respond to the said objections and after removal of objections, the cognizance was rightly taken on 03.07.2020.

  There is no illegality or infirmity in the orders passed from time to time regarding detention of the present appellant - Appeal dismissed.

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• 2023 (5) TMI 1380
  

  Unexplained credit u/s 68 r.w.s.115BBE - Depositing of Specified Bank Notes (SBNs) during the demonetization period - HELD THAT:- Assessee has produced all the details including audited books of accounts as was produced before the AO - From the cash book of the assessee, CIT(A) has noted that the cash in hand and balance available with the assessee has increased slowly but steadily from 01.04.2016 till 08.11.2016 and the assessee had maximum cash in hand of ₹.427.19 lakhs as on 12.10.2016 much before the announcement of demonetization of SBN on 08.11.2016.

  Assessee has shown particular stream of income in his books of account and the inflow/receipts have been recorded in the books of account as income, we are of the opinion that the AO cannot treat it as unexplained credits.

  From the records, CIT(A) has noted that the assessee has shown the receipts as being payment received from the debtors an also these debtors were all emanating from the sales made and recorded in the books and these facts were not disputed by the Revenue. When the demonetization was announced by the Government, there was heavy tension among the public for depositing the SBN. We cannot question as to why the deposits were not made in single day.

  From the point of Revenue, if the assessee has to make deposit on single day, why the AO has allowed the deposits made on 10.11.2016 & 12.11.2016 to the extent of ₹.53,40,000/- In fact, it was announced that the Reserve Bank of India would allow all the banks to receive old currency from 08.11.2016 to 31.12.2016 and the assessee made deposit before the end date announced by the Government. Under these facts and circumstances and once the cash in hand was not disputed, we are of the considered opinion that the CIT(A) has considered all aspects and rightly allowed the appeal of the assessee.

  We find no reason to interfere with the order passed by the CIT(A). Thus, the appeal filed by the Revenue is dismissed.

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• 2023 (5) TMI 1379
  

  Challenge to assessment order - rejection of export goods - intention to reexport the goods after curing the defects - Confiscation - penalty - HELD THAT:- In the instant case, this Court specifically permitted the petitioner to invoke its statutory remedy as provided under the Act, which it availed and the petitioner preferred the appeal, and suffered Ext.P16 order.

  The statute provides a further appeal before the Customs, Excise and Service Tax Appellate Tribunal under Section 129A of the Act.

  It is too late in the day for the petitioner to now aspire and turn around and challenge the legality of Exts.P9 and 16 orders in a writ petition. In the above conspectus, it is not required to entertain this writ petition - petition dismissed.

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• 2023 (5) TMI 1378
  

  Legality of criminal proceeding - mandatory provision under section 202 Cr.P.C not followed and cognizance taken - HELD THAT:- The person who is looking into the day to day affairs of the company and was responsible at the time of offence can only be prosecuted and in that view of the matter in absence of any averment to that effect vicarious liability upon the petitioners are not liable to be fastened upon them as there is no such averment in the complaint petition and the case of the petitioners is fully covered in view of the judgment rendered in the case of State (N.C.T. of Delhi) v. Rajeev Khurana [2010 (7) TMI 283 - SUPREME COURT].

  Considering that argument this Court has also decided the same issue in the case of M/s Maithon Power Limited and Others v. The State of Jharkhand and Others [2022 (3) TMI 83 - JHARKHAND HIGH COURT]. It is worth considering that there is no exception to the section 202 Cr.P.C, and in that view of the matter, even in the Government complaint case, section 202 Cr.P.C is mandatory and it is admitted that the petitioners are stationed at Delhi and seeing that the learned magistrate was required to follow the mandatory provision of section 202 Cr.PC which has been amended vide Amendment Act, 2005, making it mandatory to postpone the issue of process where the accused resides in an area beyond the territorial jurisdiction of the Magistrate concerned.

  The entire criminal proceeding in connection with G.O.C.R No. 61 of 2013, T.R. No. 879 of 2014 including order taking cognizance dated 15.07.2013 pending in the court of learned Chief Judicial Magistrate, Deoghar are quashed - Petition allowed.

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• 2023 (5) TMI 1377
  

  Seeking modification of the bail conditions imposed upon the petitioner - permission to travel abroad to United States of America from 26.03.2022 to 26.04.2022 for appropriate medical treatment for serious ailment suffered by him including stage-II cancer i.e., carcinoma prostate - HELD THAT:- This court is conscious of the fact that every person has the right to get effective and proper medical treatment. Anybody has the right to have the medical treatment. Right to live healthy life with dignity is fundamental right of every citizen of this country. Therefore this court has always been of the firm view that the person should get all necessary medical treatment for being health. However, at the same time while dealing with such matter the court has to balance the right of the individual with the right of the prosecuting agency. The right of the prosecuting agency is equally important that is to ensure that the accused attends to the trial and may not abscond.

  The court has to strike a balance and to see that the person who has approached the court should not be deprived of the effective medical treatment and at the same time prosecuting agency may not suffer on account of non-availability of the accused person. In this regard, the report of the medical board becomes very important. The medical board has specifically stated that the treatment which is required for the petitioner can be provided in various medical institutions across India.

  Petition dismissed.

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• 2023 (5) TMI 1376
  

  Mandate of grant of a personal hearing - Solicitor General states that in respect of his submission that the judgment of the Court should be granted only prospective effect, the State Bank of India may be advised to file a review separately - HELD THAT:- The Miscellaneous Application is disposed of.

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• 2023 (5) TMI 1375
  

  Unconditional withdrawal of the writ petition - grant of any liberty to the petitioner objected - HELD THAT:- The Court is constrained to observe that despite the Three-Judge Bench decision in the case of Vijay Madanlal Choudhary and Others vs. Union of India and Others [2022 (7) TMI 1316 - SUPREME COURT], upholding the vires of various provisions including Sections 50 and 63 of PMLA, a new trend is developed in this Court to file writ petitions under Article 32 of the Constitution of India again challenging the constitutional validity of Sections 50, 63 and other provisions of the PMLA, also seeking consequential reliefs which otherwise would tantamount to by-passing the other alternative efficacious forums available to the petitioners under the law.

  The writ petition stands dismissed as withdrawn with limited liberty.

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• 2023 (5) TMI 1374
  

  Dismissal of appeal on Non-payment of the self-assessment tax - assessee made full payment of tax due on return income - HELD THAT:- The provisions of section 249(4)(a) of the Act set out the condition that no appeal shall be admitted unless, at the time of filing the appeal, the assessee has paid the tax due on the income that return by him. Thus, it is clear that there is no limitation prescribed for payment of the tax but it is required to be paid at the time of filing the appeal and consequently the delay in payment of the due tax on the return income can be at the most considered as delay in filing the appeal.

  Non-payment of tax due on return income would amount a defect in appeal and not avoid appeal. Thus, we are of the considered view that once the assessee made full payment of tax due on return income, the appeals of the assessee ought to have been decided on merits instead of dismissed the same in limine.

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• 2023 (5) TMI 1373
  

  Cash deposit made during the demonetization period - Addition u/s 69A r.w.s.115 BBE - HELD THAT:- CIT(A) despite recording the submission of the assessee that he has filed copy of agreement, bank account, AS-26 details has not examined the business activities nor any remand report was called from assessing officer.

  Perusal of bank accounts of the assessee clearly shows that the cash amount deposited by the assessee prior to the demonetization period was immediately transferred to the accounts of Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. through RTGS/NEFT.

  Thus, these entries in the bank statement clearly shows that the assessee was in the business activities associated with Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. Further noted that the cash deposits in the bank accounts are not abnormal comparatively to the transaction in earlier period.

  CIT(A) confirmed the addition without seeking remand report from assessing officer or investigating the facts independently. Thus addition made by assessing officer and sustained by CIT(A) is not justified. Ground No. 1 of the appeal is allowed

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• 2023 (5) TMI 1372
  

  Disallowance u/s.40A(3) vide intimation u/s.143(1) - assessee had incurred expenses towards purchases made from the State Government of Chhattisgarh - HELD THAT:- The legislature while enlarging the provisions of Section 143(1)(a) of the Act had set out the aforesaid manner and methodology which is to be ritually followed before making any adjustment. We are unable to persuade ourselves to subscribe to the manner in which the objections/response filed by the assessee to the proposed adjustment had been brushed aside; or in fact dispensed with by the CPC, Bengaluru, which as observed by us hereinabove, had rendered the entire mechanism provided u/s.143(1)(a) of the Act as redundant and otiose.

  As we cannot remain a mere spectator of the aforesaid whimsical exercise carried out by the CPC, Bengaluru which violates the clear mandate of Section 143(1)(a) of the Act, therefore, in all fairness in order to safeguard an assessee from being saddled with a tax liability which is not as per the mandate of law; and at the same time prevent leakage of any revenue to which the Government exchequer would be duly entitled for, restore the issue to the file of the A.O for afresh adjudication.

  A.O shall in the course of set-aside proceedings, as per the mandate of “2nd Proviso” to Section 143(1)(a) of the Act consider the claim that was raised by the assessee vide its objection/response that was uploaded by him on 24.01.2019 (18:57:41) to the proposed adjustment that was intimated by the CPC, Bengaluru vide communication dated 21.01.2019, wherein he had claimed that no disallowance u/s.40A(3) of the payment made by him towards purchase of beer from State Government of Chhattisgarh was called for in his hands.

  We, thus, set-aside the order of the CIT(Appeals) and restore the matter to the file of the A.O. Needless to say, the A.O shall in the course of set-aside proceedings afford a reasonable opportunity of being heard to the assessee.

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• 2023 (5) TMI 1371
  

  Addition of unexplained income u/s 69A and 115BBA - cash deposit during demonetisation - HELD THAT:- When the assessee has duly explained the details of cash sales, cash deposit, sales and purchase for the year under consideration, which have not otherwise been disputed by the AO there is no need to rush to the estimation and guess work by the AO. Rather the audit account books are required to be examined in entirety.

  The assessee has come up with categoric plea that his entire sale was in cash from a bar and restaurant business which runs 365 days in a year accept on dry days and having average regular sale of 9,000 per day as it is serving 32 dishes on 10 tables. However, all these facts and documents have not been examined by the AO.

  To decide the issues raised in this appeal once for all, all the account books and documents brought on record by the assessee are required to be examined afresh by the AO to reach the logical conclusion, instead of working on the basis of estimation and guess work. D.R. has also agreed with the proposition that when all the documents/audit account books have been brought on record the same are required to be examined. So the impugned order passed by the Ld. CIT(A) is here by set aside and file is remitted back to the AO to decide afresh after providing opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes.

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• 2023 (5) TMI 1370
  

  Delayed employee’s contribution for PF & ESIC - HELD THAT:- As in view of the law laid down in case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] which is law of the land from the date of inception of the Act, the issue raised by the assessee that it is a debatable issue is misconceived contention as the debate on the issue has already been set at rest. So since the assessee has failed to comply with the condition precedent for depositing the employees' contribution on account of PF & ESIC before the due date prescribed under the Act the same has been rightly disallowed by the CIT(A).

  Following the decision rendered in case of Checkmate Services P. ltd [2022 (10) TMI 617 - SUPREME COURT] this issue has rightly been decided against the assessee by the ld CIT(A) to the extent that the actual amount deposited by the assessee on account of employees contribution on account of PF & ESI late as prescribed under the Act is to be disallowed.

  Difference in the amount disallowed by the CPC/AO and the actual amount deposited late - As perused the Form 3CD which shows an error in the amount mentioned in Form 3CD and actual disallowance made by the AO. The AO is directed to verify this fact and disallow the amount which was actually deposited on account of PF & ESIC late as prescribed in the Act.

  Last date of depositing the employee’s contribution of PF & ESIC fell on Sunday - Perusal of the Circular No. 676 (supra) goes to show that “when in case last day for payment of any installment of advance tax is day on which receiving bank is closed, assessee can make payment on next immediately following working day, and in such cases mandatory interest leviable under sections 234B and 234C would not be charged.” Though this proposition is not directly applies to the issues at hand but when it is examined in the interest of justice it certainly favors the assessee.

  Applying the provisions contained u/s 10 of the General Clauses to the facts and circumstances of the case, we are of the considered view that payment made by the assessee on 16.07.2018 qua year under consideration is to be taken within time as there was no unjust enrichment of the assessee nor there was any malafide on its part to misappropriate the employee’s contribution of PF & ESI rather deposited the same on the very next day of opening the banks, the 15.07.2018 being Sunday.

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• 2023 (5) TMI 1369
  

  Addition of interest said to be agreed on loans - as per AO assessee used interest-bearing funds to provide interest-free loans, invoking Section 40A(2)(b) - HELD THAT:- The parties are not in a position to pay the interest receivable. However, it cannot escape from the payment of interest to the parties from whom it has been borrowed. Hence, the interest receivable is not booked in the books of accounts of the assessee. As discussed earlier in a mercantile system of accounting revenue is recognized on accrual basis as per the agreement entered by the assessee with the parties to whom loan has been advanced. Accrual of interest is the most important fact under the receipt of the interest income. When there is no due or modification of agreement through which the money has been advanced the interest accrued on the basis of said agreement to be recorded in the books of accounts of the assessee and it cannot be modified by a Board resolution. In the case of assessee, no such modification of the agreement of advancing loans has been done. The assessee on its own not recognized the interest income though it was agreed with the assessee as per the loan agreement. The assessee take support from Board resolution where they taken decision not to recognized the income. Being so, it is not tune with the AS-9 which is more concerned with the true and fair view of the state of affairs of the business of the assessee and also in conformity with the mercantile system of accounting as prescribed in section 145 of the Act.

  AO is empowered and bound to compute the income of the assessee in accordance with section 145 of the Act, which is the mercantile system of accounting. There is no dispute that under mercantile system of accounting, the income of the assessee has been accrued and only the assessee failed to record the same in the books of accounts of the assessee though it was accrued. Therefore, the claim of assessee is not based on any sound accounting system or section 145 .

  Also in other assessment year 2015-16 the AO has not mentioned anything about section 40A(2)(b) - thus, we dismiss this ground in both the appeals of the assessee.

  Addition u/s 69C - assessee has not replied to AO's question to understand the nature of the said expenditure being revenue and connected to the business of the assessee - HELD THAT:- Before the lower authorities, the assessee has said that expenditure was paid to SREI Infrastructure Ltd. and no further details have been furnished. Even before us, the assessee reiterated the arguments made before the lower authorities. In our opinion, it is appropriate to remit the issue to the file of AO with direction to assessee to establish that the expenditure is wholly and exclusively incurred for the purpose of business. With this observation, we remit the issue to the file of AO for fresh consideration.

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• 2023 (5) TMI 1368
  

  Dishonour of Cheque - right to fair trial - grievance of the petitioner is that petitioner has been denied right of cross-examination without any default on his part - Violation of principles of natural justice - HELD THAT:- The accused had put in appearance before learned trial Court for the first time on 20.11.2017. He was put to notice under Section 251 Cr.P.C. on 5.12.2017. At that stage, learned trial Court had not shown strict compliance to afore-mentioned direction and rather had not only fixed the case for recording of evidence of complainants but had recorded statement of one of the complainant's witness on 4.6.2018.

  The impugned order cannot be sustained as it has divested the accused of his right to cross-examine the prosecution witness. The reason assigned for closing the right of cross-examination also cannot be countenanced for the reason that the accused had not been afforded reasonable opportunity to file the application under Section 145(2) of the Act.

  The accused had availed opportunity to lead defence evidence and in order to prove his defence, the accused had moved an application under Section 45 of the Indian Evidence Act for orders of learned trial Court to send the questioned signatures of accused on document Ext.-C-7 relied upon by complainants, with his admitted signatures on the "Vakalatnama" filed in the Court - there is no hesitation to hold that the impugned order dated 12.7.2018 has not only taken away a valuable right of the accused but such order has caused serious prejudice to the right of defence of petitioner in proceedings held after passing the impugned order.

  The impugned order dated 12.7.2018, passed by learned Chief Judicial Magistrate, Sirmour District at Nahan in Complaint Case No. 135/3 of 2013 is set aside. As a necessary consequence thereof, the subsequent proceedings and orders passed in Complaint Case No. 135/3 of 2013 are also set aside with a direction to the learned trial Court to afford reasonable opportunity to the accused to cross-examine the witness of complainant whose statement was recorded as preliminary evidence and thereafter to proceed further in the case.

  Petition disposed off.

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• 2023 (5) TMI 1367
  

  Revision u/s 263 - claiming the benefit of exemption u/s 11(1) of the Act by virtue of proviso to section 12A - scope of new proviso to section 12A(2) effective from October 1, 2014 - HELD THAT:- As the first proviso to section 12A(2) of the Act was brought in the statute only as a retrospective effect with a view not to affect genuine charitable trusts and societies carrying out genuine charitable objects in the earlier years and substantive conditions stipulated in section 11 to 13 have been duly fulfilled by the said trust. The benefit of retrospective application alone could be the intention of the legislature and this point is further strengthened by the Explanatory Notes to Finance (No. 2) Act, 2014 issued by the Central Board of Direct Taxes vide its Circular No. 01/2015 dated 21.1.2015.

  Apparently, the statute provides that registration once granted in subsequent year, the benefit of the same has to be applied in the earlier assessment years for which assessment proceedings are pending before the AO, unless the registration granted earlier is cancelled or refused for specific reasons. The statute also goes on to provide that no action u/s 147 could be taken by the AO merely for non-registration of trust for earlier years. In view of the above, we hold that the proviso to section 12A of the Act is applicable for the year under consideration.

  There remains no ambiguity that once the benefit of exemption under section 11(1)(a) of the Act is available to the assessee in pursuance to the proviso to section 12A(2) of the Act, the income of the assessee has to be computed after considering the benefit of exemption 11(1)(a) of the Act.

  In this case, the registration application under section 12AA of the Act was made dated 25-06-2010 which was accorded vide order dated 30-12-2010 effective from the AY 2011-12. However, the notice for the assessment under section 143(3) for the year under consideration was issued dated 29-11-2011 after the date of registration under section 12A of the Act.

  Thus, it transpired that the assessment under section 143(3) was not pending at the time of registration application under section 12A of the Act. Thus, there is no possibility of claiming the benefit of exemption under section 11(1) of the Act by virtue of proviso to section 12A of the Act. As such, the ld. also accepted this proposition of law.

  Assessment for the year under consideration was re-opened on certain issues under the provisions of section 263 of the Act as elaborated above. Thus, in such a situation, the proviso to section 12A of the Act comes into picture, which was inserted to cover the genuine hardship to the trusts for preceding years assessment after receiving the registration.

  The Proviso says when the registration is granted and any proceeding is pending before the AO relating to the previous/preceding year of the date of registration, the benefit of exemption will be applicable to the preceding year also. Thus, we hold that the proceedings pertaining to the A.Y. 2009-10 were pending at the time of registration under section 12A of the Act to the extent of the direction provided by the ld. CIT in his order passed under section 263 of the Act. Therefore, the benefit of exemption u/s 11 of the Act will be extended to the assessee. However, such benefits provided under section 11 of the Act shall be subject to the provisions contained therein. In other words, the AO while granting the benefit of exemption provided under section 11 of the Act shall adhere the relevant provisions of the Act. Hence, the ground of appeal of the assessee is partly allowed for the statistical purposes.

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• 2023 (5) TMI 1366
  

  Cessation of trading liability u/s. 41(1) - due to heavy business losses and non realization of export proceeds from overseas clients, Assessee could not repay the entire - whether the waiver of certain part of principal loan taken from the banks, taken for post shipment credit for a period between the time shipments is sent and the time when the shipment is received by the other party? -

  HELD THAT:- The condition for invoking of section 41(1) (a) is that, where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee and subsequently during any previous year, any benefit, whether in terms of money or not, in lieu of such loss, expenditure or trading liability shall be chargeable to income-tax as the income of that previous year.

  Here in case of the Assessee, the loan was never part of profit & loss account in any of the previous year and was capital in nature.

  Hon’ble Supreme Court in the case of Mahindra and Mahindra Ltd [2018 (5) TMI 358 - SUPREME COURT] while deciding the issue of waiver of loan, held that for invoking the provision of section 41(1), it is sine-qua-non that allowance of deduction should be claimed by the Assessee in any assessment for any year, in respect of loss, expenditure or trading liability incurred by the Assessee and then subsequently, if the creditor remits or waives any such liability then assessee liable to pay tax u/s. 41 of the Act.

  Objective behind this section is to ensure that assessee does not get way with the double benefit.

  Here in this case the loan taken by the assessee was neither an expenditure nor trading liability and therefore waiver of such loan which otherwise was capital in nature, the provision of section 41 (1) cannot be invoked.

  Waiver of loan amount considered as a benefit u/s 28(iv) - Section 28 (iv) also does not apply, as benefit on waiver of loan was not in the kind of money, i.e., cash receipt. Thus, the Ld. CIT (A) has rightly followed the principle laid down by the Hon’ble Apex Court. This principle has been retreated in several judgments on waiver of loan including the judgment of Gujarat State Financial Corporation [2020 (4) TMI 32 - GUJARAT HIGH COURT] And SLP by the department has been dismissed as reported by the Ld. CIT(A) [2021 (2) TMI 1349 - SC ORDER]

  Accordingly, the order of the CIT (Appeals) is confirmed and the grounds raised by the Revenue dismissed.

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• 2023 (5) TMI 1365
  

  Rejecting grant of registration u/s 10(23C)(vi) - PCIT noticed that the rights/proprietorship of institutes & properties are restricted to the family itself and not for enduring benefit to the general public and as the properties and rights to run the institutes would be restricted to the members of the family and denied the registration to the applicant u/s 12AA - HELD THAT:- PCIT had denied the registration to the applicants u/s 12AA, although the appellants sought for registration u/s10(23C)(vi) - Meaning there by, there was a fundamental error in the impugned order of the Ld. PCIT, as the material issue of grant of registration u/s10(23C)(vi) of the Income Tax Act, 1961 is remained unaddressed in the case of both the appellant assessees.

  We consider it deem fit to restore back the matter to the file of the Ld. CIT(A) to adjudicate the captioned appeals afresh on the issue of grant of registration u/s10(23C)(vi) of the Income Tax Act, 1961, after considering the written submission and evidences filed on record and may be filed before him during the fresh proceedings after granting sufficient opportunity of being heard to the assessee.

  PCIT is further directed to consider the fact that both the appellant assessee do not have independent PAN numbers and are using the PAN of the S.M.D.R.S.D. College Society, Pathankot which was registered under the Societies Registration Act, 1860 in 1979 vide Registration No.34 of 1979-80. Since, these M/s S.M.D.R.S.D. College Education and M/s SMDRSD Collegiate Senior Secondary School running under the management of the S.M.D.R.S.D. College Society, Pathankot and using its PAN, and hence whether the appellant assesses can be treated as an independent entity for the purpose of registration u/s10(23C)(vi) of the Income Tax Act, 1961, in the absence of PAN number. No doubt, the appellant assessees shall cooperate in the fresh proceeding before the Ld. PCIT registration u/s10(23C)(vi) of the Income Tax Act, 1961.Appeals filed by the assessees are allowed for statistical purposes.

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