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2024 (2) TMI 1554
Assessment order as time barred - AO has not generated the DIN and the order was issued manually against mandate of the CBDT Circular No.19 of 2019 - HELD THAT:- The order as per the records of the postal department for the first time was dispatched/booked on 14.02.2020. All the noted relevant factors would show that the order was not passed by the AO within the stipulated period, therefore, he did not adopt the regular practice of generating DIN number, uploading the order on the Income Tax website or portal and sending the order through email.
There is no evidence on the file either direct or indirect or even circumstantial to show that the order was passed by the AO on or before the last date of limitation for the same i.e. on 31.12.2019. Therefore, we have no hesitation to hold that the assessment order in this case is time-barred. The assessee succeeds on this legal ground.
Excess claim of expenditure on account of purchase - Additions have been made by the Assessing Officer on account of difference in figures of consumption of cotton, viscose, fibre, polyester - As the total purchases of the assessee of all the materials duly matched and there is no difference of purchases. The ld. counsel has duly demonstrated the aforesaid contention by referring to reconciliation statement vis-à-vis accounts of the assessee which have been examined by us. In view of this, even on merits, the addition made by the AO is not sustainable and the same is accordingly ordered to be deleted.
Appeal of the assessee stands allowed.
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2024 (2) TMI 1553
Depreciation on goodwill - fictitious capital gains - transaction undertaken with a group entity and the execution of the Business Transfer Agreement (BTA) and Share Transfer Agreement (STA) within a short time that too ten days before the close of the financial year renders them colourable device only for the creation of goodwill and to avoid payment of taxes - HELD THAT:- It remains an undisputed fact that the seller company is assessed to tax and the capital gains offered by it are accepted without any adjustment. Assessee placed reliance on the decision of Triune Projects Private Limited [2016 (12) TMI 408 - DELHI HIGH COURT] and I&B Seeds Pvt. Limited [2022 (6) TMI 1295 - ITAT BANGALORE] for the principle that once the department accepted the capital gains in the hands of the seller, the said transaction cannot be doubted in the hands of the purchaser. These decisions bind us.
Viewing from any angle, the circumstances cited by the authorities to hold that the BTA is a colourable device created only to reduce the tax, does not hold water. We, therefore, while disagreeing with the authorities, return a finding that it is legitimate for the assessee to go for acquisition of IT services division of Allegis India and there is no material to make it a colourable device in the shape of any undue advantage derived by the assessee. We, accordingly, direct the learned Assessing Officer to allow the depreciation on goodwill.
Depreciation on other tangible assets disallowed on the ground that such assets were not put to use by the assessee during the year under consideration - When once we accept the BTA, it goes without saying that the assessee acquired the IT services division of Allegis India on a going concern basis. Submission made on behalf of the assessee that in the hands of the seller, depreciation in respect of such assets was allowed and in accordance with the provisions under the 6th proviso to section 32(1) of the Act is a verifiable fact. If such assets are considered for depreciation in accordance with law in the hands of the seller, the question of putting such assets to use by the assessee does not arise and only requirement is compliance with the 6th proviso to section 32(1) of the Act.
6th proviso to section 32(1) of the Act reads that in any previous year, the aggregate deduction in respect of depreciation of the tangible assets allowable to the predecessor and successor in case of succession shall not exceed the deduction calculated at the prescribed rates as if the succession had not taken place, and such deduction shall be apportioned between the predecessor and successor in the ratio of the number of days for which the assets were used by them. No record is available before us throwing light on the proportion of the depreciation claimed by the seller, but the assessee is entitled to claim such depreciation only in proportion to the number of days for which the asset held by it. We, therefore, deem it just and proper to cause verification of this fact and to allow such depreciation.
We set aside the issue relating to the depreciation on the other tangible assets to the file of AO to verify and allow depreciation as directed above. Ground No. 2 is allowed.
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2024 (2) TMI 1552
Penalty levied u/s. 271(1)(c) - Estimation of income - bogus purchases made by the assessee from various hawala parties - FAA restricted the addition to 5% of the alleged bogus purchase - HELD THAT:- As relying on M/s. V. K. Ispat & Alloys [2023 (2) TMI 1058 - ITAT MUMBAI] penalty u/s. 271(1)(c) of the Act cannot be levied where the addition has been made on estimate basis on the gross profit on alleged bogus purchase. We, therefore, direct the ld. A.O. to delete the impugned penalty levied u/s. 271(1)(c) of the Act. Appeal filed by the assessee is allowed.
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2024 (2) TMI 1551
Validity of order of settlement passed u/s 245D(4) - additions made u/s 2(22)(e) treating loan advances obtained by the petitioner from companies in which he held substantial shareholding and voting rights as deemed dividends - HELD THAT:- The settlement procedure commenced by filing the application by the assessee u/s 245C. The statutory mandate to the assessee is that the application shall contain “full and true disclosure” of the income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the source of income, etc.
The jurisdiction of the Settlement Commission commences after it passes an order u/s 245D(1) admitting the case. The Order u/s 245D(4) is not an order of regular assessment. It is neither an order under Section 143(1) or Section 143(3) or Section 144. Under this Chapter, taxability is determined by the Commission with respect to the undisclosed income only through the process of settlement/arbitration. [ See Brij Lal [2010 (10) TMI 8 - SUPREME COURT]
From the plain reading of section 245D(4) of the Act, the jurisdiction of the Settlement Commission to pass such orders as it may think fit is confined to the matters covered by the application. It can extend to such matters which are referred to in the report of the Commissioner of Income Tax under Section 245D(1) or Section 245D(3).
A full and true disclosure of the income which has not been previously disclosed by the assessee, being a pre- condition for a valid application under Section 245C(1) of the Act, the scheme of Chapter XIXA does not contemplate non-revision of the income so disclosed in the application against item no.11 of the Form. It is well settled that under the power of judicial review of the High Court, the High Court cannot interfere with the finding of facts recorded by the Settlement Commission.
The conditions as contemplated in Section 2(22)(e) are fully satisfied in the present case. The petitioner has allegedly obtained loans from Companies where he has majority shares and more than 10% voting rights. The petitioner has a substantial interest as the beneficial owner of majority shares in the Companies. Therefore, unless the petitioner could prove by leading cogent and credible evidence before the Commission that the loan he obtained was for business purposes, the said loan amount is to be treated as a deemed dividend in the hands of the petitioner. Except for one year, the petitioner has not been able to prove that the said advances/loan were given in the ordinary course of business. The Commission, after examining the record, has disallowed the claim of the petitioner in respect of two years, and this Court finds no ground to interfere with such a finding. WP dismissed.
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2024 (2) TMI 1550
Rejection of application under the Vivad se Viswas Act, 2020 - as alleged no appeal was pending as on the specified date - HELD THAT:- Since no appeal was pending on 02.05.2020, his application has been rightly rejected.
In the present case, as per Annexure Income Tax Department have themselves, on an application made by the appellant, supplied him the certified copy of the order. This letter is not in dispute between the parties.
Once the certified copy was given on 10.07.2020, the appellant’s right to file an appeal arose on that date, as he could not have filed an appeal without the certified copy of the assessment order. Hence, for all intents and purposes the cause of action to file an appeal arose on 10.07.2020. Hence, after 10.07.2020, the appellant could have made an application under Act No.03 of 2020, and his case could not have been rejected on the ground that he had made an application on 02.05.2020 under the said Act.
Even, if he had made an application to take the benefit of that scheme, the said application was not carrying the certified copy of the order, and hence, the application in itself was incomplete. On 02.05.2020, no appeal was pending, as the appellant did not have the certified copy of the order.
On the application made by the appellant on 02.05.2020, his application was rejected vide Annexure No.11, on the ground that no appeal was pending before any appellate forum. Hence, his application under Vivad se Viswas Act, was rejected.
In the present case, the certified copy of the order dated 09.12.2019 was given by the Income Tax Department on 10.07.2020 - Annexure No.8. The cause of action to file an appeal before the appellate authority arose on 10.07.2020. Since certified copy was given on 10.07.2020, the appellant has thirty days’ time to file an appeal.
Since the impugned order was already passed Annexure No.11, the appellant had no other option but to approach this Court. His only remedy was to approach this Court against the order dated 02.05.2020.
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2024 (2) TMI 1549
Power of Courts to modify an arbitral award in exercise of power under sections 34 or 37 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The questions need to be referred to a larger Bench for answers.
The special leave petitions may be placed before the Hon’ble the Chief Justice of India for an appropriate order.
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2024 (2) TMI 1548
Disallowance of depreciation on securities - HELD THAT:- This issue is covered by the order of this Tribunal in assessee’s own case [2022 (1) TMI 287 - ITAT DELHI] held it is a verifiable fact with reference to the sales of securities, if any, that took place during the year or in earlier or subsequent years. Such an exercise has not been undertaken by the AO but merely basing on the figures reflected in the balance sheet which was prepared in accordance with the RBI guidelines, AO reached a conclusion that there was an escapement of. income due to the preparation of the balance sheet in a particular way, as prescribed by the RBI.
If we appreciate the facts of this case in the light of the decision of UCO Bank [1999 (9) TMI 4 - SUPREME COURT] it is clear that since the assessee has been maintaining its accounts on mercantile system, they are entitled to show his real income by taking into account market value of such investments in arriving at real taxable income. All the aspects argued by the Ld. DR were considered in the case of UCO Bank [supra] and were held in favour of the assessee.
Disallowance on account of contribution to pension fund - This issue is covered by the order of this Tribunal in assessee’s own case [2022 (1) TMI 287 - ITAT DELHI] deleted disallowance.
Disallowance of expenses u/s 14A under normal provisions of the Act - HELD THAT:- This issue is covered by the order of this Tribunal in assessee’s own case [2022 (1) TMI 287 - ITAT DELHI] dated deleted the disallowance made u/s. 14A r.w.r. 8D.
Disallowance of contribution to P&S Bank Employees Pension Fund Trust while computing book profit u/s 115JB - Since the said disallowance is already deleted under normal provisions of the Act hereinabove, the disallowance gets automatically deleted u/s 115JB of the Act.
Disallowance of expenses u/s 14A in accordance with clause (f) of Explanation 1 to section 115JB(2) of the Act while computing book profit u/s 115JB - Since the said disallowance is already deleted under normal provisions of the Act hereinabove, the disallowance gets automatically deleted u/s 115JB of the Act.
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2024 (2) TMI 1547
Addition u/s 68 of the assessee credit co-operative society - AO found that in the KYC records of such cash depositors, neither the name, PAN, nature of business were mentioned completely and proof of identity was also not available completely. Thus, it was impossible to make any enquiry with the depositors - HELD THAT:- As accepted that out of the 40 cases, 26 notices could be served on the parties, therefore, it cannot be said that the details with respect to these 26 accounts were not available with the AO.
AO as well as the CIT-A, did not delete the addition to the extent of at least these 26 accounts wherein the parties were identified as per the know your customer norms. The balances of 14 notices were received back. The learned AO did not say that whether the addresses to which this notices were served were not correct, it has changed, or the parties have left or for any other reasons.
It is the claim of the assessee that the members of it are residing in rural areas and most of them are farmers having agricultural income, some of them are small shopkeepers. It is also not the finding of the AO that that the members had only account for which the addition is made. Those members may also have the accounts in the nature of other deposits such as savings, current deposits or fixed deposits. Further, with respect to 26 accounts, the addition is sustained by the CIT – A in the hands of the assessee is also not justified.
No reason is given by CIT – A to confirm the action of the AO with respect to the full amount when those parties were served notices and 2 of them have replied to such notice. According to this, the addition made by the AO and confirmed by CIT – A cannot be sustained.
AO further required to examine with respect to the balance 14 parties (members) who have not responded to his notices under section 133 (6) of the act by giving an opportunity to the assessee to identify those members by their other credentials of savings bank account, current account, agricultural loan accounts etc. Of course, the addition with respect to those 26 parties deserves to be deleted. However as the amount pertaining to those 26 parties is not available, so we set-aside ground number 2 – 6 of the appeal back to the file of the learned assessing officer (1) with a direction to the assessee to substantiate the identity of the members of the society. The AO may examine the same and decide the issue afresh with respect to those of 14 parties and after ascertaining the detail of amount involved (2) with respect to 26 parties, delete the same. Accordingly, ground number 2 – 6 of the appeal is allowed with above direction.
Addition computed as a percentage of total deposit accepted from the members during the year as undisclosed commission income earned by assessee - We find that this addition cannot be made in the hands of the assessee because assessee has earned this commission income and has shown it into its profit and loss account. It is not the case of the AO or CIT – A this commission income has not been credited in the books of assessee. The statement of the managing director and the chairman of the bank clearly shows that they have earned this commission income in the books of society. Accordingly we direct the learned assessing officer to delete the addition. Accordingly, ground of the appeal is allowed.
Cash deposited by 10 members of the society during a short span and the details furnished by the assessee of KYC norms is inadequate or incorrect - It was the claim of the assessee that amount of deposit made with this assessee has already been added in case of that assessee and assessee has been served notice u/s 226 (3) of the act. Similarly, in case of other nine persons, KYC documents are submitted but they are stated to be incomplete and incorrect in some cases. It is also a fact that such huge money cannot be the income of assessee, but it is also apparent that the assessee's Hyderabad branch is also a party where this huge cash deposit has been made and the beneficiaries have been benefited by the exercise of deposit of cash through multiple layers of transactions.
Thus, whole issue is set-aside to the file of AO to conduct necessary enquiry covering all aspects including the beneficiaries also and decide whether addition can be made in the hands of the assessee or not. The assessee is also directed to submit the necessary details to the learned assessing officer for the above enquiry. Accordingly, these grounds are allowed with above directions.
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2024 (2) TMI 1546
Estimation of income - bogus purchases - CIT(A) partly allowed the appeal by restricting the disallowance to the extent of 5% - ITAT while dismissing the appeal preferred by the assessee, partly allowed the appeal filed by the revenue by enhancing disallowance at the rate of 6% of the impugned purchases to meet with the possibility of revenue leakage
HELD THAT:- When the Tribunal has thought it fit to reduce the disallowance at 6% the Tribunal had before it the facts which were duly analyzed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. See Pankaj K. Choudhary case [2023 (3) TMI 1402 - GUJARAT HIGH COURT]. No substantial questions of law.
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2024 (2) TMI 1545
Denial of Registration u/s 12A - whether the CIT had rightly declined registration u/s 12AA by holding that the objects of the assessee were not of education and thus charitable in nature? - as urged that all the objects mentioned by the assessee in the trust deed were not of charitable nature - HELD THAT:- The objects mentioned by the assessee were thoroughly examined by the Tribunal and it came to the conclusion that the same were genuine i.e of providing education. It was also noticed that the assessee was running Dental College and activities were by way of constructing the building for establishing the Dental College. The said findings have not been shown to be perverse or erroneous in any manner. The CIT was, thus, not right in declining registration u/s 12AA of the Act to the assessee. No substantial question of law arises.
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2024 (2) TMI 1544
Management, Maintenance and Repair Service - commercial complex / shopping mall - providing services at no profit no loss - case of appellant is that they are not liable to pay any service tax, for the reason that they are neither collecting any service charges and that there is no relationship of service provider and service recipient with regard to the assessee and the owners of the shops - pure agent - it was held by CESTAT that 'assessee is liable to pay service tax on the charges collected for rendering management, maintenance or repair services of Spencer Plaza' - HELD THAT:- Delay condoned.
Petition admitted.
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2024 (2) TMI 1543
Amnesty scheme - request for adjustment of an alleged amount due from the government against the tax arrears settled under the Kerala Amnesty Scheme 2020 - HELD THAT:- The Amnesty Scheme does not contemplate adjustment of any amount which may be due to an assessee. If any amount is due to the assessee, he may take the appropriate course of action to recover the said amount from the Government. When the provisions of the Amnesty Scheme do not contemplate adjustment of the amount and no such request was made before the 2nd respondent before the passing of the order dated 12.02.2021 under the Amnesty Scheme, the petitioner cannot seek a modification of the said order by requesting to adjust any amount allegedly due to him from the Government.
Once an application under the Amnesty Scheme has been decided and an order has been passed, the authority becomes functus officio to modify the said order. If any amount was due to the petitioner, the petitioner could have taken recourse to appropriate remedy. The petitioner could not get a right to get the order passed under the Amnesty Scheme modified on the ground that some amount was due to the petitioner.
Petition dismissed.
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2024 (2) TMI 1542
Dismissal of a suit for return of advance sale consideration - applicability of time limitation - Is the plaintiff entitled for charged decree in terms of Section 55(6)(b) of the Transfer of property Act? - HELD THAT:- Understanding the scope of the first limb of Section 55(6)(b), it is held that, where the non-performance is not due to the fault of the buyer and the seller, or where both are at blame/default, or where the default occurred at the hands of the vendor, it cannot be said that the buyer has improperly declined to accept delivery and hence he is entitled for charge over the property for the purchase price paid and interest. Of course, whether interest is to be granted and if so at what rate are all matters for determination based on the facts of each case.
The defendants allege that the plaintiff did not have sufficient funds with him to get the sale deed executed. The plaintiff was evading performance of the contract, it is alleged. No evidence is adduced by the plaintiff to prove that he was possessed of sufficient means to go ahead with the transaction. This tells upon the readiness of the plaintiff to go ahead with the transaction. On appreciating the entire evidence it appears that both the plaintiff and the defendants (their predecessor Rosamma) contributed to the non-performance of Ext.A1 agreement. As held supra, in such a situation, when both the plaintiff and the defendant are at fault or were not eager in the performance of the agreement, the plaintiff is entitled for charge over the property for the sale consideration paid. A decree is liable to be granted to the plaintiff.
Now coming to the grant of interest, taking note of the entire facts including the delay in institution of the suit, it is deemed appropriate that interest be declined till the date of suit. The plaintiff could be granted interest at the rate of 6% per annum from the date of suit till the date of realisation.
Conclusion - The plaintiff's claim for a personal decree is time-barred, but the claim for a charged decree is within the limitation period and valid. The plaintiff is entitled to recover the advance payment with interest, charged on the property, due to mutual fault in non-performance.
The decree and judgment of the trial court are set aside. The plaintiff is granted a decree for realisation of Rs. 12,50,000/- with interest at the rate of 6% per annum from the date of suit till realisation charged on the plaint schedule property - Appeal allowed.
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2024 (2) TMI 1541
Reduction in claim u/s 80-IA on power undertakings - rejection of allowability of Reliability charge of Rs. 1.50 per unit in computing Transfer Price of Power for the purpose of deduction u/s 80-IA - HELD THAT:- We note that the issue has already been decided on principles in favour of the appellant in earlier year (i.e. in AY 201415) wherein it has been held that the reliability charge shall form part of the transfer price of power. We further, from the facts of the assessee’s case as stated above, where there is both exclusivity (resulting in huge capex for single user) advantage and uninterrupted power supply, we on facts, agree with the assessee’s claim that Rs. 1.50/unit is the minimum reliability surcharge at arm’s length principles.
As regards the contention of the CIT (A) that the said rate of reliability charge does not pertain to Rajasthan and hence not applicable, in this regard, the co-ordinate bench in AY 2014-15 in assessee’s own case has held held both the orders of commission does not pertain to the state of Rajasthan being state in which power undertakings of the assessee is situated, however we do not think that the aforesaid fact is of much relevance here as what is to be considered is whether the concept of collection of reliability charge is justifiable and being practiced in the industry or not. We note that such concepts are not unfamiliar and have become common industry practice in some states - Decided in favour of assessee.
Disallowance on account of claim of Education Cess - On this issue we found force in the arguments of the ld. DR that in view of the amendment made in the law with retrospective effect of 01.04.2005 by inserting explanation 3 to section 40(a)(ii). Therefore, we see no merits in the ground No. 3 raised by assessee and therefore, the same is dismissed.
Deduction u/s 80IA in computing Book Profit u/s 115JB - HELD THAT:- When two views are possible in a statutory tax provision, the one in favour of the assessee be adopted. This ensures that if there is ambiguity or multiple interpretations, the interpretation that benefits the taxpayer should be preferred. Accordingly, in the background of the afore said discussion, and binding precedents cited, we are of the considered opinion that the order of the ld. CIT (A) is not sustainable.
DR could not show us any decision of equal binding strength contrary to the above high court decisions. The question that raises as there are conflicting decisions before us why the issue not referred to special bench, as it is judicial principle that when two conflicting decisions of same strength of co-ordinate benches matter should be referred to special bench for resolution of the conflicting view. This principle does not apply where there are decisions of higher forum i.e. Hon’ble High Court, then in that case it should not be referred to a special bench but a view provided by Hon’ble High Court should be followed. It may also happen that such view may be provided by Hon’ble High Court that too being the solitary High of court. In the absence of any conflicting decision of equal strength, the view provided by the high court binds us.
We reverse the decision of Ld. CIT (A) and in terms of the finding recorded here in above the ground no. 4 of the appeal of assessee is allowed.
Depreciation on expenditure incurred in respect to acquisition of leasehold rights on land u/s 32(1)(ii) being business or commercial right of similar nature - appellant has submitted that such rights have been acquired for carrying on the business and hence is in the nature of “business or commercial right” eligible for deprecation @ 25% u/s 32(1)(ii) of the Act - HELD THAT:- On being consistent to the findings so recorded by the coordinate bench on the issue in the year under consideration we note that such intangible assets being "business or commercial right" is entitled to depreciation u/s 32(1)(ii) of the Act. Hence, AO is directed to grant depreciation @25% on such leasehold rights in accordance with the provision of section 32(1)(ii) of the Act. Ergo we decide accordingly, and the additional ground no. 1 raised by the assessee is allowed.
Allowability of interest paid on late deposit of TDS as business expenditure u/s 37(1) - We find merit in the contention of the ld. AR of the assessee that the issue in question is squarely covered in favour of the assessee for AY 2014-15 AO is directed to reduce interest on TDS while computing Total Income.
Disallowance on account of deduction u/s 80IA on account of Solid Waste Management System - quantum determination - HELD THAT:- The appellant is eligible for tax holiday u/s 80IA in respect of its Solid Waste Management Systems. Since solid waste management unit is responsible for doorstep delivery of clinker to the Cement unit, therefore entire savings on account of clinker including freight and handling expenses of such clinker at cement unit should be considered as transfer price of solid waste. Freight should therefore form part of benchmarking mode.
Allowance of tax holiday u/s 80IA in respect of its Water Treatment System - Benchmarking based on quotation is a recognised method under Rule 10AB of Income Tax Rules for determining transfer pricing. Bonafide quotations are duly covered under the expression ‘price which has been charged or paid, or would have been charged or paid’ used in Rule 10AB of the Rules as held in CIT vs Toll Global Forwarding [2015 (12) TMI 1513 - DELHI HIGH COURT].
Profit margin earned by the appellant is not relevant when the transaction is at arm’s length as held by Hon’ble Pune Tribunal in MSS India [2009 (5) TMI 600 - ITAT PUNE-A]
In the present facts of the case, CPM method cannot be applied since determination of gross profit margin is a difficult and subjective exercise in absence of proper data. Decided against revenue.
Allowance on account of Incentives in the form of Sales Tax Subsidy, Electricity Duty Exemption and Excise duty Exemption received by assessee in nature of capital receipt and hence not taxable as income - HELD THAT:- As both the difference between reward and assistance is summarized as to the fact that rewards acknowledge accomplishments, while assistance focuses on aiding and supporting others. Thus, looking to these differences we are of the considering view that the assessee has not received the rewards but has received the assistance and after the amendment made in the section 2(24)(xviii) such assistance is considered as income of by the Finance Act, 2015 and therefore, all the arguments made by the ld. AR of the assessee has no leg to stands.
Thus, on the ground raised by the assessee after going through the records and arguments of both the parties noted as under :
a) Under section 2(24) of the Act a capital receipt cannot be charged to income tax unless it is specifically included as income therein.
b) The Finance Act 2015 introduced section 2(24)(xviii) wherein any form of subsidy was brought into definition of income. Such subsidy maybe in case or in kind. It also includes grant cash incentive duty drawback, waiver, construction or reimbursement of all kind.
c) The exceptions are provided under clause (a) the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of section 43; or (b) the subsidy or grant by the Central Government for the purpose of the corpus of a trust or institution established by the Central Government or a State Government, as the case may be;
d) Therefore with effect from 1.4.2016 all such receipts are income.
e) All prior decision of all courts holding it to be capital receipt are now no more good laws.
f) Intention of this amendment is to be support the law with ICDS VII relating to the government grants.
g) Distinction is lift only with (1) grants pertaining to depreciable assets and (2) grants pertaining to non depreciable asset (3) grants received as compensation, waiver, reimbursement and (iv) other grants and (v) non monetary grants.
h) There is press release dated 05.05.2015 that it does not apply to individuals and having business income to save government relief measures.
i) When subsidy is included in the definition of income provision of section 14 shall apply to determine under which head said income falls. So section 14 will classify the income under the respective heads.
j) There is no amendment under section 28 or section 56 to include specifically subsidy taxable under those respective heads for the reason that such classification will depend upon the nature, purpose of such subsidy.
k) Amendment is constitutionally valid as held by Bombay High Court in case of Serum Institute of India Private Limited [157 taxmann.com 107].
l) Provision of section 145B(3) has also dealt with the year of taxability of the susidy.
m) In paragraph 12(g) of the Serum Institute decision (supra) the argument of absence of head of income was raised stating that in the absence align amendment in the Section 28, subsidy still remain outside the taxation. Court answered it by relying upon decision of apex court in the case Poona Electric Supply Co Ltd. [1965 (4) TMI 20 - SUPREME COURT] negated these arguments. So, now this argument is decided by the Bombay High Court against the assessee. Thus no merits in the grounds so raised by the assessee.
Deduction u/s 80IA in respect of captive power plant - As assessee has adopted Transfer Price for the purpose of power transferred by the Power Generating Units (‘PGUs’) to the Cement Manufacturing Unit (‘CMU’) based on annual average rate of power sold by the State Electricity Board (‘Grid/SEB’) during the year to the nearby manufacturing units of independent assessees in the State of Rajasthan by applying Comparable Uncontrolled Price (‘CUP’) Method. These grounds have been extensively dealt with in while dealing with Departmental Appeal for AY 2015-16 and in the light of our findings recorded therein, we find no infirmity in the order of the ld. CIT (A).
Deduction u/s 80IA on eligible Solid Waste Management System as per Form 10CCB filed along with return of income - HELD THAT:- Restricting the said claim merely because the claim in the computation part of return is lower is not justified as it is the duty of the appellate authorities to determine correct tax liability of the assessee as laid down in NTPC vs CIT [1996 (12) TMI 7 - SUPREME COURT]
We further find that the full claim was quantified and reflected in the audited accounts of SWMS as well as in Form 10CCB both of which were duly filed along with the return of income. This fact makes the prayer of the appellant all the more stronger. When the claim is allowed on merit by CIT (A) and is in terms of audited accounts and form 10CCB uploaded with return of income and also in terms of amount reflected in the return read with notes forming part of the return, there is no reason to restrict the claim to the amount reflected in the computation part of the return. AO is therefore directed to allow deduction u/s 80IA on account of solid waste management system.
Addition on account of payment made to transporter -Whether addition can be made on the third party evidence without being shared to the assessee and without affording any cross examination to the assessee for countering those relied upon third party evidence? - HELD THAT:- As the assessee has filed copies of all invoices, bank statement as well as confirmation from the said party that submitting the evidence in support of the claim that the transactions are genuine. Hence, the onus now shifts to department to counter them and provide evidence that the transaction is not genuine. We find that the AO in the present case has not discharged its onus despite repeated requests from the assessee to provide documents to justify the addition. In view of the above facts, we find that Ld. CIT (A) was not justified in confirming the addition made by AO in summary without dealing with the contentions and his finding on the contention so raised by the assessee. This ground is therefore decided in favour of the assessee addition made of Rs 1 Crore on the basis of mere assumption and presumption is deleted. Ground No. 5 is therefore allowed.
MAT computation - compute Book Profit u/s 115JB of the Act after allowing deduction under Chapter VI-A, Part C, particularly u/s 80IA & u/s 80IC.
Exclusion of notional income while computing Book Profit u/s 115JB - HELD THAT:- We hold that notional income on account of bonds and debentures and on account of shares and mutual fund represents notional income and hence needs to be excluded while computing Book Profit u/s 115JB of the Act. Based on this observation the ground no 8 of the assessee is therefore partly allowed.
Excess levy of interest u/s 234C - HELD THAT:- Amendment to Section 115JB have been brought vide Finance Act 2017 bringing retrospective amendment to Sec 115JB w.e.f. 1-42016. Due to such retrospective effect, notional income accounted for the first time on adoption of Ind-AS became taxable u/s 115JB of the Act. It is a settled principle that law does not compel the assessee to perform what is impossible to perform in advance. Here, the assessee cannot be expected to estimate its total income considering retrospective amendment when at the time of payment of advance tax, no amendment was proposed by the legislature.
Performance of this impossible duty must be excused in accordance with the maxim, ‘lex non cogitate ad impossible’ as held in Cochin State Power and light vs State of Kerela [1965 (2) TMI 100 - SUPREME COURT]
Based on the above finding of the apex court read with the facts of the case, the ld. AO is directed to delete interest levied u/s 234C.
Depreciation @25% on such leasehold rights acquired in accordance with section 32(1)(ii)
Unexplained investments u/s 69B as purchases not fully disclosed in the books of account of the assessee - Addition merely on the premises that the same is not reconciling with the details available in the insight portal - HELD THAT:- As it is held by the various courts that the ld. Assessing officer holding co judicial power. His role is multifaceted and is not the only adjudicator but he serves as investigator when the assessee has furnished all the details he is duty bound to asked the assessee the specific defaults and the information in his possession read with the records provided by the assessee. The bench noted that how the assessing officer has proposed the addition and how ultimately he made the addition is without appreciating the information placed on record by the assessee. We see that there is no finding about details as available in the Insight Portal and only after being satisfied on the basis of corroborative evidence, such disallowance can be made. Since the ld. A.O. failed to point out any defect in the details supplied by the assessee, the disallowance made by the AO merely on surmises and suspicion is not sustainable and thus, directed to be deleted. Hence the ground raised by the assessee is allowed.
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2024 (2) TMI 1540
Recovery of duty drawback - export of “unlocked” mobile phones by Merchant Exporters - process of unlocking a mobile phone amount to the phone being taken into use or not - HELD THAT:- Issue notice.
List on 20.02.2024 alongwith W.P.(C) 9461/2023.
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2024 (2) TMI 1539
Recovery of excise duty (compounded levy amount and interest) under Section 3A of the Central Excise Act, 1944, and Rule 96ZP of the Central Excise Rules, 1944 - continuation of proceedings, after the omission of the provisions without any saving clause - HELD THAT:- In the facts of the case, admittedly the show-cause notices were issued prior to the year 2001 however, the proceedings continued before this Court and before the Tribunal thereafter and upon remand of the matter by the Tribunal before the Commissioner of Central Excise in the year 2009, the impugned order is passed in the year 2010 and in response to the remanded proceedings, the petitioner has raised the dispute with regard to the continuation of the proceedings after the omission of the Rules 96ZP and Section 3A of the Act before the Commissioner of Income Tax. However the respondent Commissioner has without considering such submissions, held that the provisions of Sub-rule 3 of Rule 3 of the Hot Rolling Mills Annual Capacity Determination Rules 1997 read with provision of Sub-rule 1 of Rule 96ZP will be applicable in the facts of the case and decided the issue against the petitioner by fixing the APC for the various periods from 1998-99 onwards by raising the demand of Rs.33,52,443/-.
On perusal of the impugned order, it appears that the respondent authorities have not considered the aspect of continuation of the proceedings. However, it is also true that at the relevant time, the decision of this Court in case of Krishna Processors [2012 (11) TMI 954 - GUJARAT HIGH COURT] was not available. This Court has delivered the judgment in case of Krishna Processors [2012 (11) TMI 954 - GUJARAT HIGH COURT] in the year 2012, which was considered by the Hon’ble Apex Court in the case of Shree Bhagwati Steel Rolling Mills [2015 (11) TMI 1172 - SUPREME COURT] in the year 2015 by confirming the same.
The Hon’ble Apex Court in case of Shree Bhagwati Steel Rolling Mills [2015 (11) TMI 1172 - SUPREME COURT] was mainly concerned with the levy of interest and penalty under Rules 96ZO, 96ZP and 96ZQ of the Central Excise Rules 1994 which were held to be ultra vires by this Court in the case of Krishna Processors and the rules relating to levy of penalty were struck down as being ultra vires and violative of Articles 14 and 19(1)(g) of the Constitution of India.
The Hon’ble Apex Court after considering the effect of the decision in case of The Fibre Board’s [2015 (8) TMI 482 - SUPREME COURT] wherein the view was taken that an “omission” would amount to a “repeal” after referring to several authorities of the Hon’ble Apex Court and G.P.Singh’s Principles of Statutory Interpretation, Section 6A of the General Clauses Act, 1897 and a passage in Halsbury’s Laws of England, arrived at the conclusion that “omission” would amount to a “repeal” for the purpose of Section 24 of the General Clauses Act and since the same expression namely “repeal” is used both in Section 6 and Section 24 of the General Clauses of the Act, the construction of the said expression in both the sections would therefore include within it “omissions” made by the legislature.
Conclusion - Neither Section 3A nor Rule 96 ZP existed on the statute book when the Commissioner passed the order in November 2010 as the aforesaid provisions have been omitted vide notification no.6/2001 dated 01.03.2001, the aforesaid rule was omitted whereas Section 3A came to be omitted vide Section 121 of the Finance Act 2001, which would amount to repeal of Section 3A as well as Rule 96(ZP). When the order dated 09/10 April, 2003 was passed by the Commissioner against which the appeal was preferred before the Appellate Tribunal the provisions were omitted.
Petition allowed.
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2024 (2) TMI 1538
Validity of Revision u/s 263 - deduction u/s 80HHC on the book profit has been wrongly claimed - HELD THAT:- We note that the ITAT while interfering with the order passed u/s 263 has principally taken note of the judgment rendered by the Court in Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT] which had essentially held that once the AO had failed to make any additions in respect of matters on which the notice u/s 147 or 148 was founded, no other items forming part of the original order of assessment could have been reopened. The order framed by the Revisional Authority u/s 263 of the Act essentially compels the AO to proceed contrary to the above.
AO has pursuant to the order passed by the Revisional Authority framed a consequential order of assessment which forms subject matter of the connected appeal.
We note that the judgment in Ranbaxy Laboratories [2011 (6) TMI 4 - DELHI HIGH COURT] and the doubt which was expressed in respect of its correctness in Jakhotia Plastics Private Ltd. [2018 (1) TMI 1525 - DELHI HIGH COURT] were noticed in some detail by us while considering ITA 756 of 2023 [2024 (2) TMI 404 - DELHI HIGH COURT]
Thus, we admit these appeals on the following question of law:
Whether Ld. ITAT has erred on the facts and circumstances of the case in not appreciating Explanation 3 of Section 147 of the Income Tax Act, 1961 and whether the same would empower the Assessing Officer to assess or reassess income in respect of any issue which has escaped assessment notwithstanding the reasons recorded under sub-section (2) of Section 148 having not alluded to the same or formed the basis for reopening?
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2024 (2) TMI 1537
Copy of the sanction has not been made available - validity of sanction letter due to the absence of a Document Identification Number (DIN) - Petitioner submits that there is no DIN number mentioned in the sanction letter and, therefore, the document is invalid - HELD THAT:- Ashok Commercial Enterprises [2023 (9) TMI 335 - BOMBAY HIGH COURT] held that any document without a DIN number and which is not in conformity with the Circular No. 19/2019 (F.No.225/95/2019-ITA.II) dated 14th August 2019 shall be treated as invalid and shall deemed to have never been issued.
In the circumstances, since the sanction on which reliance has been placed is not valid, the impugned order is hereby quashed and set aside.
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2024 (2) TMI 1536
Appeal dismissed as being barred by limitation as it was filed beyond the prescribed period of three months and the condonable period of further one month as per sub-section (4) of Section 107 of the TSGST Act, 2017 - HELD THAT:- When the Special Act has prescribed a definite period of limitation and delay of one month beyond that can only be condoned, there is no basis to make any exception to the legislative intent. Reliance is placed on Ganesan represented by its Power Agent G. Rukmani Ganesan Vs Commissioner, Tamil Nadu Hindu Religious and Charitable Endowments Board and Ors. [2019 (5) TMI 1752 - SUPREME COURT] where it was held that 'The suo motu power has been given to the Commissioner to correct the orders of Joint Commissioner or the Deputy Commissioner even if no appeal has been filed within 60 days. Giving of suo motu power to the Commissioner is with object to ensure that an order passed by the Joint Commissioner or the Deputy Commissioner may be corrected when appeal is not filed within time under Section 69(1). The scheme of Section 69 especially sub-section (2) also re-enforces our conclusion that Legislature never contemplated applicability of Section 5 in Section 69(1) for condoning the delay in filing an appeal by applying Section 5 of the Limitation Act.'
Conclusion - Evidently, the scheme of the special statue i.e. TSGST Act does not permit application of the provision of Section 5 of the Limitation Act, 1963 for condonation of delay beyond the period of 1 month as provided under Section 107 (4) of the TSGST Act, 2017 - There are no error in the impugned order calling for interference under Article 226 of the Constitution of India.
Petition dismissed.
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2024 (2) TMI 1535
Revenue prays for and is granted four weeks' time to file counter affidavit. Petitioner shall have two weeks thereafter to file rejoinder thereto - For reason of interim order granted in the lead case, until further orders, payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed.
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