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Showing 61 to 80 of 1569 Records
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2023 (7) TMI 1512
Disallowance of commission expenses - As alleged that assessee has not furnished the addresses of customers who were provided the services by these companies and that the Principal Officers of these companies were not produced before the AO - HELD THAT:- This issue has already been dealt by the Coordinate Bench of ITAT, Kolkata in assessee’s own case for AY 2010 -11 [2018 (7) TMI 2356 - ITAT KOLKATA] wherein commission and brokerage was allowed. Accordingly, we allow the claim of the assessee in respect of commission of Rs. 15 lakh. Thus, the ground taken by the assessee in this respect is allowed.
Unexplained share capital and share premium - onus to prove - HELD THAT:- We note that Ld. AO without even going through and discussing the details submitted by the subscriber company, insisted for personal appearance to prove the identity, creditworthiness of the subscriber and the genuineness of the transaction. To our mind, Ld. AO could have taken an adverse view, only if, he could point out the discrepancies or insufficiency in the evidence and details furnished in his office and also as to what further investigation was needed by him by way of recording of statement of the directors of the assessee and the subscriber company.
We find that assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing company and the genuineness of the transaction towards sum received during the impugned year. Accordingly, considering these facts and in the light of the judicial precedence referred above, we set aside the order of the ld. CIT(A) and delete the addition so made. Accordingly, grounds taken by the assessee in this respect are allowed.
Disallowance of expenditure in respect of payment made for mediclaim insurance which was paid for the staff members of the assessee, by Director of the company, through his credit card - HELD THAT:- We find that claim of assessee is justifiable as the disallowance has been made owing to the mode of payment which is through the credit card of the Director but for the benefit of the employees of the assessee which is towards mediclaim insurance premium and the same has been adequately corroborated by the documentary evidence placed on record. We thus, delete the addition made in this respect. Accordingly, ground taken by the assessee in this respect is allowed.
Disallowance made towards prior period expenses - HELD THAT:- At the time of maturity of fixed deposit, it was observed that excess provision of income had been made and this excess provision was reversed and written off under the head “Prior Period expenses” in the P&L Account for the year under consideration. Thus, Ld. Counsel asserted that there is no expenditure which has been claimed during the earlier years and the disallowance so made deserves to be deleted. We agree with the submissions made by the ld. Counsel and delete the addition so made. Accordingly, ground taken by the assessee in this respect is allowed.
Disallowance on interest accrued on the aforesaid unsecured loans - HELD THAT:- Reference was made to first proviso to sec. 201 of the Act according to which payer shall not be deemed to be an assessee in default in respect of non-deduction of tax if the payee has furnished its return and taken into account such sum for computing the income and paid the taxes due thereon. Considering the overall factual matrix on this issue, we accept the finding of the Ld. AO as stated in the remand report allowing the interest expense. We also allow the claim of interest which has been sustained by the Ld. AO based on the submissions made by the Ld. Counsel of the assessee as discussed above. Accordingly, disallowance of interest expense on the unsecured loan amount is allowed. Grounds taken in this respect are allowed.
Addition made on account of share application money including share premium u/s. 68 - HELD THAT:- Assessee had furnished all the relevant details and evidence for the entire sum and there is no basis and reason to give a partial allowance and sustain the balance though the evidence and explanation applied to the entire sum. Having perused the material on record and the submissions of the assessee, we are in agreement with the contention of the Ld. Counsel and accordingly, delete the addition.
Disallowance made in respect of payment made by the assessee for weighted deduction u/s. 35 (1)(ii) - HELD THAT:- As decided in case of DCIT Vs. A. R. Stanchem (P) Ltd [2023 (7) TMI 1510 - ITAT KOLKATA] assessee is not entitled for the deduction claimed u/s. 35(1)(ii) of the Act in respect of payments made to both SHGHP and MIERE(the done trusts). Relief granted by ld. CIT(A) on this issue is set aside. Grounds taken by the Revenue are allowed.
Disallowance on account of interest expenses for late payment of statutory liabilities - an interest paid on delayed payment of sales tax etc. being adding to the cost/purchase price or decreasing the profit margin on sales may be taken into account for computation of profit or to say computation of taxable income, but that concession is not available in respect of interest on Income tax. Hence, any case laws dealing with the levy of indirect taxes and interest thereupon are not applicable for the purpose of interpretation of the relevant provisions of the Income Tax Act.” The Coordinate Bench in Premier Irrigation Adritec Pvt. Ltd. [2023 (1) TMI 1124 - ITAT KOLKATA] thus, held that the interest payment on delayed deposit of income tax whether TDS or otherwise is not an allowable expenditure.
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2023 (7) TMI 1511
Disallowance u/s 43B - disallowing the amounts paid or written back during the previous year - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case in Grasim Industries Ltd. [2023 (6) TMI 665 - ITAT MUMBAI] for the assessment year 2003–04, dismissed similar issue while following the decision rendered in assessee’s own case in preceding years as decided against assessee.
Taxability of Sales Tax exemption received by the assessee - assessee availed Sales Tax exemption benefit from the State Governments for setting–up of industries in the notified area - assessee claimed that the Sales Tax exemption is a capital receipt not chargeable to tax and, therefore, is to be excluded from the profit while computing the income taxable under the head “Income From Business” - HELD THAT:- We find that the coordinate bench of the Tribunal, vide order dated 23/06/2023, passed in assessee’s own case in Grasim Industries Ltd. [2023 (7) TMI 555 - ITAT MUMBAI], for the assessment year 2004–05, after considering the Sales Tax subsidy received under the aforesaid schemes held the same to be capital in nature and thus not taxable in the hands of the assessee.
Disallowance of depreciation on the let out property - assessee has claimed depreciation on the let out premises and is also claiming a deduction equal to 30% of annual rental value while computing income from house property the assessee cannot be allowed both deductions - HELD THAT:- In view of the above, once the property forms part of the block of assets, carving out the depreciation for the said property and disallowing the same goes against the spirit of allowing depreciation on the entire block of depreciable assets. Before concluding, we may note that in this appeal the Revenue has not disputed the claim of deduction u/s 24 of the Act in respect of the property which forms part of the block of assets. Thus, merely because the Revenue has accepted the claim of deduction u/s 24 of the Act doesn’t mean that the property which forms part of the block of assets will cease to be so. Therefore, the disallowance of depreciation made by the AO is deleted. As a result, ground raised in assessee’s appeal is allowed.
Miscellaneous receipts from business profits while computing deduction u/s 80IA - HELD THAT:- As various receipts under the broad category of ‘miscellaneous receipts’, except excess provision written back, were not examined by the lower authorities, therefore, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication as per law, after examining each and every receipt under the category of ‘miscellaneous receipts‘, which were excluded from the business profits by the learned CIT(A) for computing the deduction u/s 80IA. Thus, to this extent, the impugned order on this issue is set aside. Accordingly, ground in assessee’s appeal is allowed for statistical purposes.
Taxability of interest received from the Income Tax Department - HELD THAT:- As if in the subsequent year refund of interest is withdrawn, then the same should be reduced from the total income of the assessee. Accordingly, we direct the A.O. to tax interest income in terms of the order of the tribunal for A.Y. 1993-94 keeping in view our above observation.
Income taxability in India - taxability of dividend received from Egyptian company - dividend received from Alexandria Carbon Black Company, a company incorporated and registered in Egypt (U.A.R.) - HELD THAT:- We find that the coordinate bench, [2023 (7) TMI 555 - ITAT MUMBAI], passed in assessee’s own case for the assessment year 2004-05 decided a similar issue against the assessee as the mere fact of taxability in the treaty partner jurisdiction will not take it out of the ambit of taxable income of an assessee in India and that "such income shall be included in his total income chargeable to tax in India in accordance with the provisions of the Income-tax Act, 1961 (43 of 1961), and relief shall be granted in accordance with the method for elimination or avoidance of double taxation provided in such agreement". A coordinate bench of this Tribunal, in the case of Essar Oil Ltd. [2013 (9) TMI 126 - ITAT MUMBAI] also proceeded to hold that this notification was retrospective in effect inasmuch as it applied with effect from 1st April 2004 i.e. the date on which sub-section 3 was introduced in Section 90.
Treating the subsidy received by the assessee under Technology Upgradation Fund (“TUF”) Scheme as capital receipt and thus not chargeable to tax - HELD THAT:- As relying on M/s Grasim Industries Ltd. [2023 (6) TMI 611 - ITAT MUMBAI] the issue is squarely covered in favour of the assessee wherein it has been held that interest subsidy received under technology upgradation fund scheme, though credited in the net off against the interest expenditure in the books of account is still capital in nature and therefore not chargeable to tax. Further the argument of the learned departmental representative has also been negated about the applicability of explanation 10 to section 43 (1) of the act by the decision of Orbit exports [2020 (9) TMI 617 - ITAT MUMBAI] In view of this both the grounds of appeal raised by the learned assessing officer are dismissed.
Disallowance of Education Cess under section 40(a)(ii) - HELD THAT:- We find that Finance Act, 2022, with retrospective effect from 01/04/2005, inserted Explanation 3 to section 40(a)(ii), whereby it has been provided that the term 'tax' shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax. We further find that in JCIT Vs. Chambal Fertilisers & Chemicals Ltd. [2022 (12) TMI 1098 - SC ORDER] allowed the Revenue's appeal against decision in Chambal Fertilisers & Chemicals Ltd. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and held that education cess paid by the respondent-assessee would not be allowed as an expenditure under Section 37 read with 40(a)(ii) of the Act.
Disallowance on account of rural development expenses - HELD THAT:- As we find that the coordinate bench of the Tribunal vide order [2023 (6) TMI 665 - ITAT MUMBAI] passed in assessee’s own case for the assessment year 2003–04 decided issue in favour of assessee.
Expenses incurred for making advertisement films is to be allowed as revenue expenses as observing that advertisement film was made only for advertisement and its useful life is very short and such films do not add to the capital structure of the company.
Disallowance made on account of earning exempt income - HELD THAT:- As it is sufficiently evident that during the year under consideration, the assessee's own funds are more than investments, including the investments for earning exempt income. We including the investments find that HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] held that where assessee's own funds and other non-interest bearing funds were more than the investment in tax-free securities, no disallowance under section 14A of the Act can be made. We further find that the Hon'ble Supreme Court in South Indian Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT] held that disallowance under section 14A of the Act would not be warranted where interest-free own funds exceed the investment in tax-free securities and in such a case the investment would be presumed to be made out of assessee's own funds. Therefore,no infirmity in the impugned order in deleting the disallowance made under section 14A.
Apportionment of Head Office expenses to the Units eligible for deduction u/s 80IA of the Act - HELD THAT:- We find that the coordinate bench of the Tribunal [2023 (6) TMI 665 - ITAT MUMBAI] passed in assessee’s own case for the assessment year 2003–04 decided similar issue in favour of the assessee.
Denial of deduction u/s 80IA in respect of profit derived from Rail System at Raipur, and Hotgi - only plea raised by the learned DR is that such an agreement is post the commencement of operation and, therefore, the assessee does not satisfy the conditions as provided in section 80IA(4) for availing the benefit of the said section - HELD THAT:- We find that the language of the section does not support the submissions so made by the learned DR, as there is no specific requirement in the section that such an agreement should be prior to the operation. We find that the said section only requires that there has to be an agreement, which condition as noted by the coordinate bench of the Tribunal in the preceding year is duly satisfied. In the absence of any allegation of change in facts and law as compared to the preceding year, we find no reason to deviate from the view so taken by the coordinate bench in the preceding year. Thus, we find no infirmity in the impugned order in allowing deduction under section 80IA of the Act to the assessee in respect of profits from Rail System, Raipur, and Hotgi.
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2023 (7) TMI 1510
Addition of bogus donation as expenditure claimed u/s. 35(1)(ii) - During the course of assessment proceedings, assessee took note of its mistake in claiming deduction in respect of donation made to MIERE u/s. 80G instead of u/s. 35(1)(ii) - HELD THAT:- From the judgment of Batanagar Education and Research Trust [2021 (8) TMI 139 - SUPREME COURT] the apprehension on the factual aspect of utilization of money by the recipient donee trusts for the approved programme which remained open, is set to rest by the fact-based conclusion arrived at, as quoted above. Hon'ble Court has made reference to the outcome of the survey at SHGPH and the post survey enquiry conducted upon Batanagar Education and Research Trust to conclude about the organized fraud.
This very judgment of Batanagar Education and Research Trust (supra) was relied upon and analysed in the decision of Tarasafe International Pvt. Ltd. & ORs [2022 (12) TMI 1545 - ITAT KOLKATA] recorded finding of facts, based on the material placed before it by the Revenue in voluminous paper books gathered in the course of survey conducted u/s. 133A in the case of the donee trusts as well as post survey enquiries.
In the present case before us, the donee trusts are the same whose facts and credible material were brought on record by the Revenue and considered by the Coordinate Bench. Claim of deductions by the donors have already been disproved by the Revenue by dispelling the claim of first onus discharged by the donors, on the strength of credible material. These fact findings are substantive and cannot be overlooked in the present case wherein the donee trusts are the same. There is nothing brought on record by assessee to rebut these factual findings except for relying on the judgment of Chotatingrai Tea [1998 (12) TMI 81 - GAUHATI HIGH COURT] which is distinguished in the light of recent judgment of Batanagar Education and Research Trust (supra) as discussed above.
Thus, we hold that assessee is not entitled for the deduction claimed u/s. 35(1)(ii) of the Act in respect of payments made to both SHGHP and MIERE(the done trusts). Relief granted by CIT (A) on this issue is set aside. Grounds taken by the Revenue are allowed.
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2023 (7) TMI 1509
Applicability of Resolution Plan - creditor including the Central Government, State Government or any local authority - applicability of plan once it is approved by an adjudicating authority under subsection (1) of Section 31 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Issue notice to the respondents returnable on 23.08.2023.
Till the next date of hearing, there shall be ad-interim relief.
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2023 (7) TMI 1508
Admissibility of application filed after the approval of the Resolution Plan - appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Resolution Plan was finally approved long back on 05.03.2020 and thereafter application was filed by the Appellant under Section 60(5), 9 of Insolvency and Bankruptcy Code, 2016. It was filed after expiry of several months from the date of approval of the Resolution Plan by the Adjudicating Authority which was subsequently approved by this Appellate Tribunal also. In such situation, it is opined that Ld. NCLT was not required to entertain such application.
Both the parties have agreed on the point that this appeal can be disposed of with indication that any observation recorded by the NCLT in its order dated 28.01.2022 may not come in way in pursuing legal remedy by either of the parties in accordance with law.
Accordingly, with the consent of both the parties the appeal stands disposed of with indication that any observation recorded by Ld. NCLT in its order dated 28.01.2022 may not come in way in pursuing legal remedy by either of the parties in accordance with law.
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2023 (7) TMI 1507
Delay in filing of the appeal - Assessee preferred appeal before the learned CIT (A), which was delayed by 191 days - reason of delay, it was explained is on account of health of the Director of the company supported by medical certificate and also ignorance of tax advisory, supported by certificate of tax advisor also - CIT (A) considered it as not a ‘sufficient cause’ for condoning the delay - HELD THAT:- We find that in case of Collector of land acquisition V MSt katiji [1987 (2) TMI 61 - SUPREME COURT] has laid down certain principles and also stated that a liberal approach in condoning the delay should be adopted. The Hon'ble Supreme Court has also considered and reiterated all these principles in the three decisions cited before us of the Hon'ble Supreme Court. We find that the delay in filing of the appeal deserves to be condoned by the learned CIT (A). We are also conscious of the fact that the assessee is unable to explain the complete delay. Therefore, in the interest of justice, assessee is directed to pay ₹5,000/- as a cost for each of these three appeals to be deposited in ‘Prime Minister National Relief Fund’ within 30 days of the date of this order. Appeals filed by the assessee are allowed for statistical purposes.
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2023 (7) TMI 1506
Reopening of assessment of the deceased - non informing the tax department about the death of the individual - HELD THAT:- We would agree with the view expressed by the Income Tax Officer in his order passed u/s 148A(d) that an attempt to suppress the details has been made by petitioner. The Income Tax Officer has accepted that the death of the deceased has been noted.
Income Tax Officer also states in future the legal heir would be treated as deemed to be an assessee in respect of the deceased and the future notices would be issued in the name of legal heir.
Therefore, we would not accept petitioner’s argument that since the notice sent and the orders have been passed in the name of dead person, they are non-est . It is true that the specific notice dated 4th April 2023 u/s 142(1) has been again issued in the name of the deceased. Petitioner shall respond to this notice in accordance with law. Respondent no.1 is directed to ensure and correct its record to reflect the name of the deceased as C/o. Legal heir, i.e., petitioner. Respondent no.1, should he wish to issue a fresh notice under Section 148(1) of the Act, may issue such notice.
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2023 (7) TMI 1505
Claim of the petitioner as a legatee/nephew under a registered Will of late assessee - Proof of relationship between the petitioner and the deceased individuals - HELD THAT:- It is noticed that while dismissing W.P. filed by the late assessee/M.Pappammal, this Court had given liberty to the said M.Pappammal to approach the Appropriate Authority to get copies of the documents viz., Mahajjar and panchanama.
The said M.Pappammal is said to have died on 16.07.2020. There is a registered Will that has been kept along with the typed set of papers to indicate that the deceased M.Pappammal had earlier executed a registered Will in favour of the petitioner on 22.12.2022.
According to the petitioner, the deceased S.M.Pandian, also has a son by name Balaji. Therefore, the Department can furnish the documents to the petitioner only after appropriate notice to the legal heir of S.M.Pandian namely Balaji. Letter dated 29.11.2021 of the Income Tax Officer Headquarters (Investigation), Chennai, has also called upon the fourth respondent to guide the petitioner to approach the concern Assessing Officer from whom the petitioner may secure the document.
Thus, direct the fourth respondent to inform the petitioner as to the Assessing Circle whether the late S.M.Pandian was assessed and so the petitioner can proceed further.
Before furnishing any of the documents to the petitioner due notice shall be issued to the legal heir of late S.M.Pandian named Balaji. This exercise shall be carried out by the respondents within a period of four (4) weeks from the date of receipt of a copy of this order.
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2023 (7) TMI 1504
Delay filling appeal against order passed u/s 148A(d) - Petition was filed after a delay of almost one year and that too just few days before the Assessment Order came to be passed - HELD THAT:- We are not inclined to exercise our jurisdiction under Article-226 of the Constitution of India.
Petition dismissed. Petitioner may, however, exhaust its alternative remedy under the provisions of the Income Tax, 1961. If the time to file Appeal has expired, Petitioner may file an Appeal within two weeks from today. All rights and contentions to be raised in the Appeal are kept open.
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2023 (7) TMI 1503
Validity of jurisdiction assumed by the ITO-2(4), Raipur who has issued notice u/s. 143(2) - HELD THAT:- Admittedly, the assessee has filed its return of income for the assessment year 2012-2013 with a returned income of Rs. 40,63,900/-, which is above Rs. 10 lakhs for non-corporate returns. As per the CBDT Instruction No. 1/2011, dated 31.01.2011 and Instruction No. 6/2011, dated 08.04.2011 and the Notification of the CCIT, Raipur, dated 30.05.2011, the jurisdiction over the case of the assessee located in mofussil areas i.e at Raipur, Chhattisgarh was vested with an officer in the rank of ACIT/DCIT, whereas the notice u/s. 143(2) of the Act was issued by the ITO-2(4), Raipur.
Though, subsequently the case was transferred to DCIT-2(4), Raipur, however, the jurisdiction assumed by the ITO-2(4), Raipur, who has issued notice u/s. 143(2) of the Act was not in accordance with the CBDT Instruction No. 01/2011, dated 31.01.2011 and 06/2011, dated 08.04.2011. Therefore, the notice issued u/s. 143(2) of the Act was invalid in terms of non-following the binding instructions issued by the CBDT, consequently, the framing of assessment on the basis of such invalid notice was also void ab initio and needs to be struck down.
This issue has already been settled in the case of Mata Road Carriers [2023 (7) TMI 1426 - ITAT RAIPUR] wherein the Tribunal following various judicial pronouncements, in para 18 has held that the Instructions/Circulars are binding on the revenue authorities. Further, the Tribunal in para 19 has quashed the assessment framed u/s. 143(3) of the Act upon a notice issued u/s. 143(2) of the Act by a non-jurisdictional officer.
In the present case, notice u/s. 143(2) of the Act was issued by the ITO-2(4), Raipur, who had no jurisdiction over the assessee as per the CBDT Instructions and the Notification issued by the CCIT, Raipur dated 30.05.2011, which is not sustainable and void ab initio. When the notice u/s. 143(2) of the Act is not valid, the assessment so framed by the AO is also not maintainable and the same is hereby quashed. Appeal of the assessee is allowed.
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2023 (7) TMI 1502
Addition u/s.69B - gold, bullion found in the locker of the assessee for which the explanation given by the assessee along with supporting documents were not found convincing by the AO - as submitted that during the search proceedings, gold bullion of 2.5 kg was found in the locker of the assessee for which a precise explanation could not be offered by the assessee while recording the statement u/s. 132
HELD THAT:- Undoubtedly, the document of Will furnished by the assessee was executed much prior to the date of search and assessment proceedings, the same was further substantiated as a genuine document when the statement of Notary Public was recorded and the Notary Public had also put an affirmative stamp on the claim of the assessee with regard to aforesaid documents by confirming authenticity of the same.
The observations of the AO that certain other external documents like income tax return, wealth tax return pertaining to late Smt. Devki Devi Agrawal, who had executed the Will could not be made available by the assessee, without establishing the document of Will as an ingenuine document, is devoid of merits, therefore, the same cannot be accepted.
AO while rejecting the explanation of the assessee could not bring upon any finding or material that can dislodge the contention of the assessee, in such circumstances, the evidence produced in the form of certain documents by the assessee, cannot be considered as an afterthought only because while the statement u/s. 132 of the Act during the search proceedings recorded the assessee was unable to come up with a spontaneous explanation for the same.
CIT(A) has very thoughtfully considered the facts of the case and has offered a very reasonable finding against the observations of the AO. We, therefore, do not see any reason to interfere with the findings of the CIT(A) in deleting the addition made by the AO. Thus, we dismiss the appeal of the revenue.
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2023 (7) TMI 1501
CENVAT Credit - inputs, capital goods and input services used by the captive mines located away from the factory - Revenue submits that DSP although an integrated unit of the appellant, but input received at Bolani Mines was nowhere connected with the DSP who has taken the cenvat credit, therefore, the authorities below has rightly denied the cenvat credit to the appellant - HELD THAT:- The said issue has been settled by the Hon’ble Apex Court in the case of VIKRAM CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [2006 (1) TMI 130 - SUPREME COURT], wherein the Hon’ble Apex Court has held 'As regards the Modvat/Cenvat credit on capital goods, if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, Modvat/Cenvat credit on capital goods will be available to the assessee. On the other hand, if the mines are not captive mines but they supply to various other cement companies of different assessees, Modvat/Cenvat credit on capital goods used in such mines will not be available to the concerned assessee under the appropriate Modvat/Cenvat Rules. The matters are remanded to the respective original authorities for decision only on the above issue.'
As the issue has already been decided by the Apex Court, that capital goods, inputs or input services used in captive mines of the appellant, the appellant is entitled to take Cenvat Credit of the same.
In this case, the appellant is having an integrated unit comprising three units and DSP also and availed cenvat credit on input, capital goods and input services used in captive mines by procurement of iron ore to be used in manufacture of final product by the units of the appellant, the appellant is entitled to avail cenvat credit.
There are no merits in the impugned orders and the same are set aside - appeal allowed.
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2023 (7) TMI 1500
Disallowance of Bad debts written off u/s. 36(1)(vii) - assessee has failed to establish that debts that have been written off had in fact become bad - assessee purportedly has written off bad debts of nearly 9740 entities including companies, firms, individuals, etc. This includes bad debts of erstwhile Anagram Finance Ltd. (AFL), merged with the assessee - HELD THAT:- The requirement to establish that the debts have become bad was done away vide amendment effective from 1st April, 1989. Under the old provisions of section 36(1)(vii) of the Act as were applicable prior to 1st April, 1989, it was mandatory to establish before writing off that the debts have become bad. After amendment (effective from 1st April, 1989) the requirement of section 36(1)(vii) as explained by Hon'ble Apex Court in the case of TRF Ltd [2010 (2) TMI 211 - SUPREME COURT] is, it is sufficient if the bad debt is written off as irrecoverable in accounts of the assessee. The Act does not require the assessee to establish that the debts have in fact become bad before writing off. The CBDT vide Circular dated 30/05/2016 in an unambiguous manner explained the mandate of section and the law as explained by Hon'ble Apex Court in the case of TRF Ltd.(supra). Decided against revenue.
Disallowance to business/capital loss - DR submits that during assessment proceedings the assessee failed to produce relevant documents in support of its claim - HELD THAT:- A perusal of documents on record reveals that the assessee had furnished audit report in Form No. 64 before the Assessing Officer. CIT(A) has given a categoric finding that the Assessing Officer has selectively considered Form-64 furnished by the assessee for respective funds. AO has ignored various losses under respective heads of income and has taken only short-term capital gain of Rs. 32.00 lacs from ICICI Technology Incubator Fund. There is no justification for adopting such selective approach by the Ao - CIT(A) after examining the documents on record allowed assessee’s claim on the basis of Form-64. We see no infirmity in findings of the CIT(A) on this issue. The ground No. 2 raised by the Revenue is devoid of any merit, hence, dismissed.
Addition in respect of non-cash right back - assessee submits that the assessee has actually received the amounts, hence, the amounts are not taxable u/s. 41(4) - HELD THAT:- Co-ordinate Bench vide order [2017 (11) TMI 1839 - ITAT MUMBAI] dated 03/11/2017, common for the Assessment Year 2004-05 and 2005-06 placing reliance on the earlier orders of the Tribunal in the case of ICICI Ltd [2017 (11) TMI 1839 - ITAT MUMBAI] restored the issue back to the file of Assessing Officer.
Disallowance of expenditure u/s. 14A for earning income exempt from tax - HELD THAT:- As in assessee’s own case in appeal by the Revenue for Assessment Year 2004-05 [2017 (11) TMI 1839 - ITAT MUMBAI] if the investment made in exempt income yielding assets are made out of interest free funds available with the assessee, there cannot be any disallowance of interest expenditure. Therefore, what is required to be seen is whether sufficient interest free funds are available with the assessee to make investment in exempt income yielding assets.
As per facts and material on record, surplus interest free funds available with the assessee far exceeds the investment made in tax free interest income yielding assets, therefore, no disallowance of interest expenditure can be made in view of the decision of Reliance Utilities and Power Ltd., [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT v/s HDFC Bank Ltd., [2014 (8) TMI 119 - BOMBAY HIGH COURT] As far as disallowance of administrative expenses is concerned, it is the contention of the assessee that in the preceding assessment year, it has voluntarily disallowed 1% of the administrative expenditure attributable to earning of exempt income. However, we have noted, in assessment year 2001–02, the Tribunal while deciding the issue in Revenue’s appeal [2016 (4) TMI 648 - ITAT MUMBAI] has restored the issue to the Assessing Officer for considering afresh. The grounds allowed for statistical purposes in similar terms.
Addition of depreciation on lease assets - HELD THAT:- As for Assessment Year 2004-05 in assessee own case [2017 (11) TMI 1839 - ITAT MUMBAI] allowed assessee’s claim of depreciation as in the impugned assessment year, there is no new lease transaction. The assessee has claimed depreciation on its own fixed assets and depreciation claimed on leased assets were continuing from past lease transactions.
Notional interest for the purpose of determining annual value u/s. 23(1)(a) - As submitted that the assessee has received deposit against let out property - notional interest on account of deposit has been considered by the Assessing Officer for arriving at the annual value under section 23(1)(a) of the Act - HELD THAT:- We find that in assessee’s own case for Assessment Year 2004-05, the Assessing Officer had made addition on account of notional rent on deposit while determining annual value u/s. 23(1)(a) - CIT(A) deleted the addition. The Revenue carried the issue in appeal before the Tribunal. The Co-ordinate Bench following its own order on identical issue in the case of ICICI Ltd for Assessment Year 2002-03 upheld the findings of CIT(A) in deleting the addition. Facts being identical in the impugned assessment year, we see no reason to take a different view. Thus, ground of appeal by Revenue is dismissed.
Disallowance of deduction u/s. 36(1)(viia) - HELD THAT:- We find that the CIT(A) has deleted the addition by following the order of CIT(A) in Assessment Year 2003-04 and 2004-05. Against the order of CIT(A) for Assessment Year 2004-05 the Revenue carried the issue in appeal before the Tribunal [2017 (11) TMI 1839 - ITAT MUMBAI] as upheld the findings of CIT(A) wherein held ssessee is a Scheduled Bank and its accounts are maintained in conformity with the Generally Accepted Accounting Principle (GAAP) in India and the guidelines issued by the RBI from time to time. Further, it is evident from the annual report of the assessee that acquisition of assets including performing and non–performing asset are as per the prescribed guidelines of RBI. That being the case, there is no reason for the Assessing Officer to presume that the assessee is not qualified to exercise option under the first proviso. Further, as per the second proviso to section 36(1)(viia) of the Act for the assessment year commencing on/or after 1st April 2003 and ending before 1st April 2005, the deduction allowable in terms of proviso 1 to section 36(1)(viia) of the Act is 10% instead of 5%. In view of the above, we do not find any infirmity in the order of the learned Commissioner (Appeals) on this issued.
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2023 (7) TMI 1499
Refusing to grant registration u/s.12AA - no proof of charitable activities - non grant registration mainly on the ground that funds of the assessee were diverted for personal benefits of the executives of the society, in violation of provisions of section 13 (1)(c) - HELD THAT:- This day we have dealt with impugned common order by our judgment in Orissa Cricket Association [2023 (7) TMI 459 - ORISSA HIGH COURT] wherein held objects of the assessee society are charitable in nature and in absence of pointing out any specific activities of the assessee society which were not genuine, in our considered view, rejection of application for registration u/s.12AA of the Act on the ground of diversion of funds for the benefit of executives of the association in violation of provisions of Section 13(1)(c) of the Act is not justified. The violation of provisions of Section 13(1)(c) of the Act is a matter which is to be looked into by the Assessing Officer while making assessment after grant of registration u/s.12AA of the Act and the Assessing Officer has to act as per the provisions of law. We, therefore, set aside the order of the CIT(E) and direct him to grant registration to the assessee society u/s.12AA
This appeal stands covered by the judgment above. In the circumstances, the substantial question of law framed is deemed to have been framed herein and answered accordingly.
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2023 (7) TMI 1498
Applicability of provisions of section 115BBE - income declared during the course of survey proceedings and offered to tax in the return of income - AO assessed the said income under the head “Income from business”
HELD THAT:- Admittedly, the income offered during the course of survey proceedings was credited to Profit & Loss Account and the additional income offered on account of deficit in the physical stock was credited to Trading Account.
The income offered on account of alleged expenditure incurred on construction of the commercial building was offered to tax by crediting the same amount to the Profit & Loss Account. Thus, the income was offered to tax under the head “Income from business”, the AO also assessed the same under the head “Income from business”. Therefore, the presumption is to be drawn that the additional income was derived from the business.
Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions of section 115BBE have no application to the present case. The ratio of the decision of Bajargan Traders [2017 (11) TMI 388 - RAJASTHAN HIGH COURT] is squarely applicable to the facts of the present case.
The reliance placed by the ld. CIT (A) on the decision of M/s. SVS Oils Mills [2019 (5) TMI 1392 - MADRAS HIGH COURT] have no application to the facts of the present case, inasmuch as, in the said case, no explanation as to the source of excess stock was offered, whereas, in the present case, it is undisputed fact that the additional income was derived from business. Therefore, the orders of the AO as well as the ld. CIT (A) are reversed and direct the AO not to tax the additional income under the provisions of section 115BBE of the Act. AO shall tax the additional income under the normal rate of income tax. Accordingly, the grounds of appeal filed by the assessee stand allowed.
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2023 (7) TMI 1497
Tenability of the application - Nomination of an arbitrator on behalf of the Respondent in terms of the Transaction Documents - HELD THAT:- There are no merit in the submission of Respondent that the document is not adequately stamped and therefore, an arbitration clause contained in the said agreement cannot be acted upon. Apart from this, it would be sufficient to note that the stamp duty will have to be determined on the basis of the transaction and its value indicated in the instrument and not on the prospective value as Section 21 of the Maharashtra Stamp Act, clearly prescribe that when an instrument is chargeable with ad-valorem duty in respect of any stock, or of any marketable or other security, such duty shall be calculated on the value of such stock or security according to the average price or value thereof, on the day of execution of the instrument.
The instrument/ document in question dated 12/04/2018, which is the basis for invoking arbitration is affixed with adequate stamp duty and suffers from no legal infirmity.
In the wake of the existing arbitration clause in the agreement dated 18/04/2018 and since arbitration has been invoked by the applicant by appointing his nominee and the respondents having been called upon to appoint theirs, the applicant seek appointment of the nominee arbitrator on behalf of the respondent so that the two arbitrators so appointed shall nominate the third arbitrator.
At this stage, learned counsel for the respondent seek stay of the judgment pronounced today, which must be necessarily declined, since the matter is considered on merits and found the preliminary objection to be untenable and found the circumstances involved justifying the appointment of the nominee arbitrator on behalf of the respondents.
The prayer for stay is rejected.
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2023 (7) TMI 1496
Maintainability of petitioner’s challenge against the impugned Order of Trial Court allowing reference to arbitration u/s 115 of the CPC - Revisional jurisdiction of the High Court.
HELD THAT:- This Court has limited powers which can be exercised under Section 115 of the CPC. Not every order of the Trial Court can be regarded as an order that can be put under the ambit of revisional jurisdiction of the High Court.
In view of the instant matter, Trial Court has referred the dispute of the petitioner for arbitration u/s 8 of the Act, 1996. Considering the facts of the instant case, there is a reference to arbitration as per the AOF executed between the petitioner and respondent no. 2.
This Court is of the view that any agreement that contains an arbitration clause must be referred to arbitration in an application under Section 8 of the Act, 1996. The same must be done because the parties have already consented to arbitration. Since the AOF in the instant case contains the arbitration clause, it has to be referred to arbitration for the necessary adjudication. The Court in this scenario cannot adjudicate upon whether the disputes which are arbitrable under the agreed terms between the parties.
Hon’ble Supreme Court in Magma Leasing & Finance Ltd. v. Potluri Madhavilata, [2009 (9) TMI 592 - SUPREME COURT] has strictly narrated its view with regard to the cases wherein reference to the arbitration has not been allowed by the Court despite existence of an arbitration clause in the agreement.
The application filed before the learned Trial Court has been properly accompanied by the AOF, which outlines the petitioner’s rights and obligations and acknowledgment of the same by the petitioner therein. It evidently specifies that any dispute between the “client and stock broker‟ should be referred to arbitration. In addition, Chapter-11 of the National Stock Exchange of India Byelaws provides for arbitration between trading members and constituents deriving from or relating to dealings, contracts, and transactions made subject to the byelaws, rules, and regulations of the Exchange.
On bare perusal of the reliefs sought by the petitioner before the learned Trial Court, it is ex facie apparent that the petitioner’s primary concern is against respondent no. 2. The reference to arbitration is mandatory for adjudication of the dispute in the present petition. The petitioner's contention that the current dispute is a tripartite dispute and not a bipartite dispute is not sustainable.
Conclusion - This Court is of the view that the learned Trial Court has not committed any error of law that can be the subject matter to be exercised by this Court exercising its revisional powers u/s 115 of the CPC. Section 8 of the Act, 1996 refers to a clause that limits Court's interference in the arbitration procedure. This Court has serious objections to the extent of interference on the grounds of the arbitrability of the subject matter, and the competence of the arbitral tribunal to deal with it. Section 8 of the Act, 1996 continues to serve as a hope for arbitration, forming the basis for mandating the parties to follow the model of arbitration where an arbitration agreement exists.
With regards to the maintainability of the revision petition, the learned Trial Court has rightly determined that its jurisdiction to hear the suit does not exist due to the presence of an arbitration clause. After relying upon the aforementioned judgments, it is concluded that the observations made therein apply to the facts of the case in hand.
Therefore, it is held that the learned Trial Court did not have the jurisdiction to hear a dispute after an application for arbitration under Section 8 of the Act, 1996 was filed. As a result, the learned Trial Court has correctly allowed the said application under Section 8 of the Act, 1996. In such a case, refusing to refer the matter to arbitration would be a failure of justice, causing irreparable harm to the parties and violating the settled principles of law.
This Court is of the view that no case of revision as defined under Section 115 of CPC has been made out by the petitioner as no such cause exists wherein the learned Trial Court has failed to exercise its jurisdiction as per law. The learned Trial Court has neither acted illegally in the exercise of its jurisdiction nor has there been any material irregularity. Accordingly, the issue framed above has been decided.
This Court finds no infirmity in the impugned Order in Civil Suit passed by the learned Senior Civil Judge, Patiala House Court, New Delhi.
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2023 (7) TMI 1495
Seeking dissolution of the Company Remedy Finance Private Limited (in members voluntary liquidation) - HELD THAT:- The Official Liquidator sent a letter dated 10.02.2021 to Income Tax Department regarding their no objection/objection, if any. The said department vide their letter bearing No.58 dated 05.03.2021, had requested the official liquidator to furnish the PAN of the Company and the same was informed to the Income Tax Department vide letter dated 12.03.2021. However despite reminders, no response was received. The Official Liquidator verified the e-filing portal of the Income Tax Department, w.r.t. the said company, which shows that w.r.t. Remedy Finance Private Limited – ‘No Pending Action Found’ as on 06.02.2021.
The Official Liquidator is also satisfied that the necessary compliance of Section 497 and other relevant provisions of the Act have been made and the affairs of the said company have not been conducted in a manner prejudicial to the interest of its members or to the public interest and the said company may be dissolved.
In view of the satisfaction accorded by the OL by way of the present petition, the Court is convinced that the relief sought for deserves to be granted. Accordingly, the Remedy Finance Private Ltd. is hereby wound up and shall be deemed to be dissolved with effect from the date of the filing of the present petition i.e. 26.05.2023.
Petition disposed off.
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2023 (7) TMI 1494
Addition u/s 68 - unexplained cash credit - HELD THAT:- It is not in controversy that the Assessee had taken the said loans in the financial year 2010-11 (AY: 2011-12) which continued in the assessment year under consideration as well. During the course of assessment proceedings, Assessee also submitted the following documents in order to substantiate its claim, i.e., confirmation of loans, Acknowledgment of returns of income of loan parties, Copies of relevant pages of bank statements of loan parties and Copies of bank statements of the Assessee, in which interest payments have been debited.
AO doubted and rejected the same while relying upon the statement of Mr. Vipul Vidur Bhatt, without providing copy of the his statement to the Assessee and even without affording any opportunity of cross examination of Mr. Bhat.
Assessee in this case, has not only discharged its primary onus by establishing the identity of the parties etc. , providing confirmation of loans, acknowledgment of return of income filed by the parties who have duly shown the amount of loan in their returns of income and banks statement of loan parties and the Assessee showing the transactions held, but also shown to have deducted TDS on the interest payment made to the parties, which also strengthen the genuineness of the claim of the Assessee. Thus, on the basis of the general statement made by any 3rd party, without demolishing the case/claim of the Assessee, making of an addition is not logical.
Also the loan was taken by the Assessee from the said entities in 2010-11 (AY:2011-12) and during the year consideration, no such amount was found credited in the books of an Assessee maintained, if any and even otherwise the Assessee has claimed the he is not maintaining any books of account. As a settled law that mere suspicion cannot takes place for the purpose of passing an order, in fact there must be something more than suspicion in support of an assessment.
As neither the Assessee has received any cash nor paid any cash and there was no real cash credit during the year under consideration, therefore the amount in question as unexplained expenditure could not arise - Assessee appeal allowed.
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2023 (7) TMI 1493
Final dissolution of a company by the Official Liquidator - Rule 9 of the Companies (Court) Rules, 1959 - HELD THAT:- In the opinion of the Court, the liquidation proceedings deserve to be brought to an end. Consequently, M/s GENESIS WELLNESS CLINIC PRIVATE LIMITED is dissolved. The amount of Rs. 23,749/- be also transferred to the Common Pool Fund.
The petition along with all pending applications is disposed of, and the Official Liquidator is discharged.
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