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Income Tax - Case Laws
Showing 101 to 120 of 751 Records
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2018 (1) TMI 1552 - ITAT JAIPUR
Revision u/s 263 - MAT Computation - higher depreciation on the Energy Saving Equipments as well as pollution control equipments - HELD THAT:- Addition on account of excess stock found during the course of survey proceedings in the normal computation of income. However, the tax was charged on the book profit u/s 115JB of the Act computed and therefore, even if the claim of higher/additional depreciation is disallowed there will be no effect on the tax liability as the AO has computed the total income as per the provisions of Section 115JB and charged MAT on the same.
Therefore, we find that the claim of higher depreciation on the Energy Saving Equipments as well as pollution control equipments is not going to effect the Revenue when the income of the assessee was assessed u/s 115JB and MAT was charged. Even if the claim was disallowed if the higher depreciation claim was disallowed the tax liability under MAT was still higher than the normal computation. It is settled proposition of law the Commissioner can invoked the provision of Section 263 only when the twin conditions being the order of the AO is erroneous as well as prejudicial to the interest of the Revenue are satisfied. In the case in hand for the sake of argument even if the order of the AO is considered as erroneous but the same is not prejudicial to the interest of the Revenue so far as the claim of higher depreciation is concerned as the income of the assessee would be computed u/s 115JB and the tax liability under MAT is still more than the normal computation of income.
DR has fairly admitted this fact that even after disallowance of the claim of higher depreciation the tax liability under MAT would be higher than the normal computation. Further, this issue of higher/additional depreciation is not recurring in nature and limited to the year under consideration. We set aside the impugned order passed u/s 263 - Decided in favour of assessee.
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2018 (1) TMI 1551 - ITAT DELHI
Validity of assessment order u/s 153C - fulfillment of requirement of Section 153C before issuance of notice - assessee contended that satisfaction note is not in accordance with the satisfaction as contemplate u/s 153C - Held that:- The A.O has not mentioned that the agreement reflects that there was any unaccounted transaction or unaccounted payments/receipts the business activities of the assessee in-fact was confirmed by the said agreement and all the documents were before the Assessing Officer during the regular assessment proceedings. Thus, there was no incriminating material or document found in respect of Section 153C proceedings.
The Ld. DR’s contentions that it is an established practice of the Income Tax Department that not everything found at the time of search and cease. Only such material is seized which is prima facie incriminating in nature. The Revenue cannot simply rely on their departmental Endeavour practice, they have to strictly follow the statute while conducting the search adhering to Section 153C. If the practice is supported by law/statute then it can be allowed but if the material which is relevant to the assessee’s escapement of income has not been seized then merely on the surmises or conjectures that cannot be called as incriminating material which was properly demonstrated by the assessee during his regular assessment.
Order of CIT(A) holding the order as void ab-initio is correct - Decided against the revenue.
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2018 (1) TMI 1550 - ITAT BANGALORE
TP Adjustment - non conformity with the provisions of section 144C - assessee pointed out that in the present case, the final order of assessment does not incorporate the directions of the DRP and was a verbatim repetition of the draft order of assessment - HELD THAT:- AO, as per law, was required to pass the final order of assessment dated 17/1/2014 for asst. year 2009-10 u/s 143(3) r.w.s 144C of the Act in conformity with the directions issued by the DRP u/s 144C(5) of the Act, which are binding on him as per section 144C(10) thereof and within the time prescribed u/s 144C(13) of the Act. We find that instead of passing the final order of assessment as required by law, the AO passed the impugned final order of assessment dated 17/1/2014 u/s 143(3) r.w.s 92CA of the Act; which, as contended by the id AR, is identical to the draft order of assessment passed on 14/3/2013 by only incorporating this TPO's proposals and , thereby evidently giving the DRP's mandatory directions issued u/s 144C(5) of the Act a complete go-by.
It is factually established that the AO in the final order of assessment dated 17/1/2014 has not given effect to or carried out the binding directions of the DRP as required u/s 144C(10) within the time specified u/s 144C(13) of the Act; which is a clear violation of the binding provisions of sec. 144C(10) and (13) of the Act. Therefore, in our considered opinion, the conduct of the AO/TPO in passing the impugned final order of assessment dated 17/1/2014 is a clear case of defiance and disregard to the binding directions of the higher authorities, i.e, the DRP in the case on hand. In fact, in the impugned order dated 17/1/2014 there is not even a single reference to the DRP's directions issued us/ 144C(5) of the Act vide order dated 30/12/2013.
Impugned final order of assessment for asst. year 2008-09 passed u/s 143(3) r.w.s 92CA of the Act by the AO, in violation of the express mandatory provisions of sec. 144C(10) and (13) of the Act by not passing the impugned order in pursuance of and in conformity with the binding directions of the DRP issued u/s 144C(5) of the Act, within the time specified for this purpose, has rendered the said impugned final order of assessment unsustainable in law - Decided in favour of assessee
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2018 (1) TMI 1549 - ITAT COCHIN
Penalty levied u/s. 271(1)(c) - non specification of specific charge against the assessee as to whether the assessee is guilty of having concealed particulars of income or having furnished inaccurate particulars of income ? - HELD THAT:- Show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of t M/S SSA’S EMERALD MEADOWS [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled.
Provision of section 292B cannot cure the basic defect in assumption of jurisdiction and only cure the mistake, defect or omission in return of income, assessment, notice or the proceeding is in substance and effect in conformity with or according to intent and purpose of the Act.
As we have already seen that the Hon'ble Karnataka High Court in the decision referred to earlier view the show cause notice and the reasons mentioned in the show cause notice are part of the process of the natural justice and the defect in such notice cannot be overlooked. In view of the aforesaid decision we do not find any infirmity in the arguments advanced by the learned AR before us.
Contention of the Ld. DR is that the assessee has participated in the penalty proceedings and hence the error, if any that has occurred would be cured in view of the provisions of sec. 292B/292BB of the Act. Opposing the said contention, reliance was placed on the decision rendered by the Bangalore Bench of the Tribunal in the case of Shri K. Prakash Shetty vs. ACIT [2014 (6) TMI 976 - ITAT BANGALORE] wherein it was held that the provisions of sec. 292BB would not come to the rescue of the revenue, when the notice was not in substance and effect in conformity with or according to the intent and purpose of the Act. In our view, the notice issued by the AO was not in substance, and effect in conformity with or according to the intent and purpose of the Act, since the Assessing Officer did not specify the charge for which penalty proceedings were initiated and further there was non-application of mind on the part of the Assessing Officer. - Decided in favour of assessee.
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2018 (1) TMI 1548 - DELHI HIGH COURT
TPA - comparable selection - HELD THAT:- This Court is of the opinion that the exclusion of five comparables in the present case by the ITAT is on sound basis. ITAT quite correctly found that the exclusion of Eclerx Services Ltd and Vishal Information Technologies Ltd – both of which transact entirely different business i.e. Knowledge Processing Outsourcing (KPO), was justified. The assessee concerns itself with the broader range of Information Technology (IT) enabled Back Office Support Services. In the other two cases of M/s Infosys BPO and Wipro BPO Ltd., the ITAT again, in the opinion of this Court, quite correctly held that the corporate entities had a significant brand presence for profits and large corporate size, which could not be compared to the assessee’s transactions.
As far as HCL Commet Systems & Services Ltd. was concerned, the Revenue’s contention that it was an act comparable, was rejected on the ground that it did not pass the appropriate filter and related party transactions were used for the pricing exercise. In these circumstances, out of the seven comparables, the five are to be ruled out and no question of law arises in this case.
The Court has considered the submissions with respect to the Accentia Technology Pvt. Ltd. and Bodhtree Consulting Ltd. The Court admits the following questions of law:-
“(1) Did the ITAT err in its consideration as to whether the amalgamation undertaken by Accentia Technology Pvt. Ltd. for A.Y. 2007-08 had any effect on its finance or profitability in the circumstances of the case.
(2) Did the ITAT err in excluding the reliance placed by the TPO upon information collected by him under Section 133(6) of the Act, having regard to Section 92CA(7) read with Section 92D(3) of the Act.”
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2018 (1) TMI 1547 - ITAT MUMBAI
TP Adjustment - Comparable selection - HELD THAT:- The annual report of the company showed that during the year 2011-12 it was awarded the work of rendering consultancy services for design and engineering, project management procurement of medical equipments, drugs and pharmaceuticals for various prestigious and big projects, that it was participating exhibitions organised by various agencies.
HSCC had shown abnormally high profit margin for the year ended on 31/03/2012 @ 39. 08%, that in the earlier years it had shown profit @17. 02%. A government enterprise cannot be rejected as a valid comparable just because it is a government undertaking. But, the basis of accepting/rejecting it is a valid comparable should be the functionality, especially when TNMM is applied. Cases relied upon by the representatives deal with the issue of comparisons of government undertakings with private business entities. But, they lay down the general principles and hold that FAR is the decisive factor for comparing the valid comparables.
We hold that ASL is a valid comparable and HSCC is not a good comparable for benchmarking the IT. s, entered into by the assessee, for the year under consideration. If ASL is considered as a valid comparable, the assessee will fall within the safe zone of (+/ -)5% of the arithmetic mean. So, we hold that there was no justification in making the upward adjustment for the IT. s of the assessee. We decide effective ground of appeal, in favour of the assessee.
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2018 (1) TMI 1545 - ITAT BENGALURU
Deduction u/s 10A - reduction of the expenses incurred in foreign currency from Total turnover for the purpose of computing the deduction to be allowed u/s 10A because such expenses were reduced by the AO from Export Turnover - HELD THAT:- As per the judgment of Hon’ble Karnataka High Court rendered in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] it was held that total turnover is sum total of Domestic Turnover and export Turnover and therefore, if any amount is reduced from Export Turnover than Total turnover also goes down by the same amount automatically. Respectfully following this judgment, this issue is decided in favour of the assessee
Exclusion of various comparables - HELD THAT:- Assessee company undertakes Software Development services under a Research & Development Agreement with its parent company thus companies thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Deduction u/s 80G in respect of contribution made towards Calamity Relief Fund of Karnataka - HELD THAT:- The bench pointed out that there is no discussion on this aspect in the draft assessment order, order of DRP and in Final assessment order and therefore, it is not clear as to whether any such deduction was claimed or not. The bench observed that if such deduction is claimed in the return of income and it is not allowed without any discussion/objection, this claim can be raised u/s 154 because in that situation, it is an apparent mistake. Assessee had nothing to say. We dismiss this ground with the observation that the assessee can raise before the AO this issue u/s 154 as per law.
Interest u/s 234D - assessee submitted that in the present case, refund was not granted but adjusted against old demand and therefore, section 234D is not applicable - HELD THAT:- As per section 234D, where any refund is granted to the assessee under section 143 (1) and no refund is due on regular assessment or refund so granted u/s 143 91) exceeds the refund as per regular assessment, the assessee is liable for interest u/s 234D. In our considered opinion, for applicability of section 234D, issue of refund voucher is not a prerequirement and adjustment of refund against old demand is also granting of refund and section 234D is applicable if such refund is more than the refund allowable on regular assessment. In this view of the matter, Ground is rejected.
Appeal filed by the assessee is partly allowed.
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2018 (1) TMI 1544 - ITAT MUMBAI
Provisions of Section 115JB applicability to assessee bank - HELD THAT:- As in assessee's own case [2013 (4) TMI 752 - ITAT MUMBAI] issue decided in favour of the assessee holding that provisions of section 115JB are not applicable to the assessee.
Disallowance of broken period interest claimed - HELD THAT:- In our considered opinion, the findings of the Ld. CIT (A) is in accordance with the principals of law laid down by the Hon’ble Supreme Court in the case of CIT vs. Citibank [2008 (8) TMI 766 - SUPREME COURT] , decision in the case of American Express International Banking Corp. [2002 (9) TMI 96 - BOMBAY HIGH COURT] and in assessee's own case [2013 (4) TMI 752 - ITAT MUMBAI] broken period interest paid by the appellant is allowable as deduction in computing the total income of the assessee.
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2018 (1) TMI 1543 - ITAT DELHI
Deduction u/s 80IA - how the assessee is qualified as a “developer” - AO has rejected the claim of deduction u/s 80IA mainly on the ground that the assessee has failed to submit its return of income u/s 139(1) - HELD THAT:- The provisions contained in Section 80AC are directory in nature and if the return is filed by the assessee under either of the Sections 139(1), 139(4), 142(1) and 148, then the assessee would be entitled to claim deduction. The reason given by THE CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. VERSUS THE COMMISSIONER OF INCOME TAX [2016 (4) TMI 826 - KERALA HIGH COURT] is that such claim cannot be disallowed merely on the ground that return was filed belatedly. A return filed by the assessee beyond the period stipulated u/s 139(1) or 139(4) or u/s 142(1) or Section 148 can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the IT Act. In all such situations, it cannot be treated that a return filed at any stage of such proceedings could be treated as non est in law and invalid for the purpose of deciding exemption. In this manner the aforementioned questions of law B and C have been answered in favour of assessee.
Applying the aforementioned position of law, as the present assessment is made by the A.O. u/s 147 r.w.s 143(3) on the basis of return filed by the assessee in response to notice u/s 148 and such assessment is pending in statutory hierarchy of adjudication, the benefit of claiming deduction u/s 80IA cannot be denied to assessee, therefore, we are of the opinion that deduction cannot be disallowed merely on the ground that the return filed by the assessee was filed in response to notice u/s 148 and it was not filed u/s 139(1).
This is apart from main claim of the assessee that in any case the deduction was claimed in the return filed u/s 139(1) inadvertently by the erstwhile proprietary concern of Shri Naresh Kumar Tomar, which may be considered to be a reasonable cause for the present assessee for not filing the return within the prescribed statutory period u/s 139(1) of the Act.
Second reason stated by the A.O. for which he has held that the deduction cannot be allowed to the assessee as the assessee cannot be categorized as ‘Developer’. A.O. while holding so has rested his decision mainly on two factors namely, the assessee did not own plant and machinery usually owned by ‘Developers’ and the assessee also does not have own role employees who have the capability to create and execute ‘owned designs’ for infrastructural projects. He observed that merely engaging subcontractors and manual labor for doing some earth excavation work does not entitle any corporate to qualify itself as a ‘Developer’.
Assessment order for A.Y. 2010-11 was already in existence and was passed by A.O. of the same ward and under same PAN number and reference to this order was made before the AO in the written submissions filed on 04-03-2014 i.e. before completion of the assessment for the impugned assessment year which is completed on 07-03-2014. Thus, when the order for impugned A.Y. was passed, the claim of deduction u/s 80IA was already accepted by the revenue and no material has been brought on record by the Revenue to suggest that the claim of deduction granted for A.Y. 2010-11 has ever been sought to be withdrawn after taking the view in the case of the assessee itself that such deduction was not available to the assessee on account of its not being classified as ‘Developer’ in respect of impugned assessment year.
After about one year, the claim of the assessee regarding deduction u/s 80IA was again accepted by the A.O. in respect of A.Y. 2012-13. AO has conveniently ignored the submissions of the assessee in letter filed on 04-03-2014 and it has not been described by him that how the assessee which was already considered eligible for claiming deduction u/s 80IA being a developer in respect of A.Y. 2010-11 cannot be considered as developer for A.Y. 2007-08. We are of the opinion that it will be incorrect to deny the claim of the assessee regarding deduction u/s 80IA on the ground that the assessee does not fall within the category of ‘Developer’.
Third reason given the A.O. to deny the claim of deduction u/s 80IA that initially the assessee did not submit complete Form no. 10CCB - Alongwith the above letter, the assessee also filed Form no. 10CCB fulfilling all the deficiencies pointed out by the A.O and copy of such Form has been filed at pages 34 to 39 of the paper book. CIT(A) also has taken into consideration the fact that Form no. 10CCB, complete in all respect was filled before the completion of the assessment. A.O. also has not denied that the said Form complete in all respects was filled before him as he has observed that “initially” incomplete Form was filled by the assessee. Taking into consideration all these facts, we are of the opinion that deduction u/s 80IA of the Act cannot also be denied to the assessee on the ground that the report initially submitted along with letter dated 16-01-2014 in Form no. 10CCB did not contain complete particulars as the assessee had submitted complete Form during the course of assessment proceeding itself on 04-03-2014.
Allowability of deduction u/s 80IA on business profits, we are of the opinion that Ld. CIT(A) did not commit any error in holding that under the facts and circumstances of the case, the assessee is eligible for claiming deduction u/s 80IA and he was right in directing the A.O. to modify the assessment order accordingly.
Order of the CIT(A) that issue regarding allowability or otherwise of deduction u/s 80IA of the Act on the nterest earned on FDRs and NSCs was decided by way of separate ground which involves a sum of ₹ 4,31,338/-. Such issue has been decided by CIT(A) vide Para 6 of the impugned order. However, while filling the appeal, the revenue has impugned the entire amount of deduction amounting to ₹ 92,22,111/- which comprises of two components namely a sum of ₹ 87,90,773/- being an income from business and ₹ 4,31,338/- being interest earned on FDRs and NSCs. We have already held that CIT(A) is correct in holding that the assessee is eligible for claiming deduction u/s 80IA on business profit. Therefore, addition of ₹ 87,90,773/- has rightly been deleted by CIT(A) and we decline to interfere in the deletion to the extent of ₹ 87,90,773.
Deletion of addition we find no infirmity in the order of the ld. CIT(A) and accordingly, to that extent, ground of Revenue is dismissed - restore the issue regarding allowability or otherwise of deduction u/s 80IA in respect of interest income earned by the assessee on FDRs and NSCs to the file of A.O. for fresh adjudication as per provisions of law after giving the assessee a reasonable opportunity of hearing.
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2018 (1) TMI 1542 - ITAT JAIPUR
Disallowance of expenses on wages, petrol, hire charges etc.- CIT-A applied net profit rate of 11.5% on an adhoc basis instead of head-wise disallowances made by the A.O. - HELD THAT:- When the books of accounts of the assessee were rejected u/s 145(3) of the Act then, the income of the assessee is required to be assessed on estimate basis and best judgment of the AO. Therefore, the following earlier decision of this Tribunal in assessee’s own case, we do not find any error or illegality in the impugned orders of the ld. CIT(A) qua this issue.
Disallowance u/s 40(a)(ia) - non deduction of tax at source - amount paid or payable at the end of the year - CIT(A) has deleted the said disallowance on the ground that the entire expenditure claimed by the assessee was paid and nothing was payable at the end of the year - whether any disallowance u/s 40(a)(ia) would be made when the income of the assessee is assessed on the basis of net profit estimated by the ld. CIT(A) after rejection of the books of accounts of the assessee u/s 145(3)? - HELD THAT:- As decided in M/S POWER LINERS VERSUS A.C.I.T., CIRCLE-3, JAIPUR [2018 (1) TMI 512 - ITAT JAIPUR] once the n.p. rate is estimated, the AO cannot based this disallowance on the same books of accounts for the purpose of disallowance by invoking provisions of section 40(a)(ia) of the Act or general disallowance u/s 37 of the Act. The estimation made by the AO of net profit will take care of every addition related to business income or business receipts and no further disallowance can be made. Also see ARJUN BHOWMICK [2014 (8) TMI 1075 - CALCUTTA HIGH COURT] - Appeal of the Revenue is dismissed.
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2018 (1) TMI 1540 - ITAT CHENNAI
Reopening of assessment u/s 147 - TDS u/s 195 - payment to foreign company without deducting tax - HELD THAT:- In view of the specific agreement between the assessee and M/s. Canadian Crystalline Emirates Trading Company, UAE, it is obvious that M/s. Canadian Crystalline Emirates Trading Company, UAE has erected and commissioned the desalination equipment outside the country, therefore, it cannot be construed to be a technical service within the meaning of Section 9(1)(vii) - this Tribunal is of the considered opinion that the fee paid by the assessee to M/s. Canadian Crystalline Emirates Trading Company, UAE is not a fee for technical service. Hence, it does not require any deduction of tax under Section 195 of the Act. Therefore, no income has escaped from taxation.
As the original assessment order u/s 143(3) of the Act was passed on 29.12.2011. Therefore, AO after scrutinizing the entire material available on record, allowed the claim of the assessee. In the case before High Court, it was only an intimation under Section 143(1)(a) but in this case it is an order passed by the Assessing Officer under Section 143(3) of the Act. The reassessment proceedings were initiated on the basis of the return and its enclosures. No tangible or new material came to the possession of the Assessing Officer subsequently.
In the absence of any tangible material which came to the possession of the Assessing Officer, the proceeding cannot be reopened by issuing notice under Section 148 of the Act. Since the scrutiny proceeding under Section 143(3) of the Act was completed by an order dated 29.12.2011, in view of the judgment of Tanmac India [2017 (1) TMI 122 - MADRAS HIGH COURT] AO cannot reopen the completed assessment in the absence of any new or tangible material. Therefore, even the reopening of assessment itself is invalid in law. - Decided in favour of assessee.
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2018 (1) TMI 1539 - ITAT INDORE
Claim of set off against the additional income offered by the assessee - HELD THAT:- CIT(A) has applied the memorandum of explanation and treated the amendment of retrospective nature, treating the same as clarificatory in nature.
We are unable to affirm this view of the authorities below. In view of the judgment of CIT, Mumbai vs. M/s. Walfort Share & Stock Brokers P. Ltd. [2010 (7) TMI 15 - SUPREME COURT] . The Hon'ble Apex Court while examining the amendment made in section 94 of the Act, after considering the law
In view of the fact that in the explanatory notes itself states that this amendment takes effect from 1st April 2017 and would accordingly be applicable from assessment year 2017-18 and subsequent assessment years. The year under appeal is 2013-14, therefore, in our considered view the authorities below have wrongly disallowed the set off of loss and taxed the same @ 30%. We, therefore, reverse the finding of Ld. CIT(A) and direct the Assessing officer to allow the set off of loss as claimed by the assessee - Appeal of the Assessee is allowed.
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2018 (1) TMI 1538 - ITAT LUCKNOW
Disallowance of expenses relating to staff welfare, pooja expenses, postage, telegram & telephone expenses etc.- AO made disallowance by holding that the expenses of vouchers were not properly vouched and he also held that major expenses were supported by self-made vouchers - HELD THAT:- AO did not point out any specific voucher on which we was not satisfied and had made the addition on ad hoc basis. Before learned CIT(A), the assessee submitted that no defect was pointed out by the Assessing Officer in any of the vouchers and had relied on a number of case laws. CIT(A), on the basis of submissions, restricted the disallowance of 10% to 5% and also upheld a part of certain disallowances.
CIT(A) had also not cited any reason for partly confirming the additions and partly allowing the additions. In view of the above, the disallowances sustained by learned CIT(A) are not in order and therefore, we allow the appeal of the assessee.
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2018 (1) TMI 1537 - ITAT COCHIN
TDS u/s 195 - payments under the head “Consulting Services” to M/s. UST Global Inc., USA, a non-resident company incorporated in the United States of America, without deducting tax at source - HELD THAT:- The Authority for Advance Ruling considered the DTAA between India and UK and found that rendering of service and making use of service go together. It was found that rendering of service and making use of the service are two sides of the same coin. After considering the word “which” the Authority for Advance Ruling found that rendering technical or consultancy service is followed by relative pronoun “which” and it has the effect of qualifying the services.
The service offered may be the product of intense technological effort and lot of technical knowledge and the experience of the service provider would have gone into it. Authority for Advance Ruling found that the technical knowledge and the experience of the service provider should be imparted to and absorbed by the receiver, so that the receiver can deploy similar technology or techniques in future without depending on the provider.
In this case also, the information, expertise and training provided by the USA company was absorbed by the assessee company in their decision making process and it was utilized for the purpose of business. The USA company made available all the technical data, information, expertise to the assessee company which was absorbed and made use of by the assessee company in their managerial and financial decision making process and other decision in the development of the business. Therefore, the expertise and technology which was made available by the USA company is technical service within the meaning of Article 12(4)(b) of the DTAA between India and USA. Hence, this ruling of the Authority for Advance Ruling may not of any assistance to the assessee.
We do not find any infirmity in the order of the lower authority. Accordingly the same is confirmed - we are inclined to uphold the orders of the CIT(A) and sustain the additions on account of non deduction of TDS on account of management fees for the relevant assessment years. - Decided against assessee
Amount remains unpaid in AY 2012-13 - Even if the assessee credited the amount to the recipient account, the provisions of sec. 195(1) is applicable.
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2018 (1) TMI 1534 - DELHI HIGH COURT
Deduction u/s 35ABB - expenditure claimed by the assessee, for the concerned assessment year, could be treated as revenue - in the opinion of the AO the treatment had to be as falling in the capital stream - HELD THAT:- ITAT followed its view for the previous years and held that the expenditure fell in the revenue stream; the ITAT was also guided by the decision of this Court, which had confirmed its previous view.
This Court notices that the question sought to be urged with respect to the revenue treatment, was identical to the question framed in Commissioner of Income Tax. Vs. Bharti Hexacom Ltd. [2013 (12) TMI 1115 - DELHI HIGH COURT] by a reasoned judgment, the Court dismissed the Revenue’s appeal and confirmed the view taken by ITAT. As a consequence, no question of law arises. The appeal is therefore, dismissed.
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2018 (1) TMI 1533 - ITAT KOLKATA
Penalty u/s 271D and 271E - transactions between family relatives - whether not covered by the provisions of section 269SS and 269T? - addition U/s 69A - HELD THAT:- Coordinate Bench of the Kolkata Tribunal in the case of Sri Mansur Ali Laskar 2011 (12) TMI 732 - ITAT KOLKATA for A.Y 2007-08 dated 30.12.2011 (supra) wherein the Bench has considered, Niece, Uncle, Aunty, Wife of brother, Wife`s Sister and Counsin sister as a part of family members. In the assessee`s case under consideration the transaction with sister-in- law and Nephew should also be considered as a part of family members. There is no difference between Wife`s sister and Sister-in law and if Niece is part of family member then Nephew should also be part of family member.
The definition of relatives include husband, wife, brother, sister, sister-in law, Niece and Nephew etc. as per the list given in para 6 of this judgment. The transactions between these family members are neither loans nor deposit and purely a family system and purely a family requirement to help each other in the needy hours, for example medical help, education help and expenses to run the family. That is, one member of the family helps to other member in the needy hours, such as during medical treatment, education, marriage or some other family needs. Therefore, respectfully following the judgment of the Coordinate Bench, we are of the view that transaction between Sister-in -law and Nephew(family members) did not fall in the definition of loan. Therefore, penalty for accepting loan and repaying loan u/s 271D and 271E should not be levied.- Decided in favour of assessee.
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2018 (1) TMI 1531 - ITAT BANGALORE
Rectification u/s 154 - HELD THAT:- Assessment order was passed on 20.03.2017. But the revenue has filed the appeal on 31.08.2015 before the assessment order consequent to the directions of the DRP is passed. As per the provisions of section 253(1)(d), an order passed by the AO under subsection (3) of section 143 or section 147 or section 153A or section 153C pursuant to the directions of the DRP or an order passed under section 154 in respect of such order, is appealable before the Tribunal and not the directions of the DRP. In the light of these facts, we find that the appeal filed by the revenue is not maintainable as it is not filed against an appealable order. We accordingly dismiss the same being not maintainable.
Since the assessee has categorically stated that its appeal and CO have become academic after the dismissal of the revenue’s appeal as it has already got relief in rectification. In the light of the statement of the assessee, we dismiss the appeal and CO of the assessee as being infructuous and academic.
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2018 (1) TMI 1529 - ITAT DELHI
Reopening of assessment u/s 147 - borrowed satisfaction - reopening on the basis of report of the Investigation Wing without independent application of mind by the AO - addition u/s 68 - HELD THAT:- Reopening was made on the basis of the report of the Investigation Wing and there is no independent application of mind by the AO for such reopening. The Jurisdictional High Court in a number of cases has held that the reopening on the basis of report of the Investigation Wing without independent application of mind by the AO is not valid.
Accordingly, the reassessment proceedings were held to be illegal. Since in the instant case the reopening has been made on the basis of report of the Investigation Wing and there is no independent application of mind by the AO for reopening of the assessment u/s 147 by issuance of notice u/s 148, therefore, the reassessment proceedings initiated by the AO is not proper. Therefore hold that the reassessment proceedings initiated by the AO is illegal and accordingly the subsequent proceedings also become illegal. Since the assessee succeeds on this legal ground, the other grounds being academic in nature are not being adjudicated. Appeal filed by the assessee is allowed.
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2018 (1) TMI 1527 - ITAT KOLKATA
Addition u/s 40A(3) - cash payments made against purchases from M/s. IFB Agro Industrial Ltd. - HELD THAT:- Issue squarely covered in favour of the assessee by the decision of this Tribunal rendered in assessee’s own case for A.Y. 2008-09 [2016 (9) TMI 1537 - ITAT KOLKATA] held that the assessee has commercial expediency under Rule 6(2) of the West Bengal Rules referred to above to make payments to the credit of M/s. IFB Agro Industries Ltd., Durgapur who is deemed to be an agent of the State Government as such in terms of Rule 6DD(b) and Rule 6DD(k) of the Income Tax Rules, they are exempted and the disallowance made under section 40A(3) of the Act cannot be sustained. We, therefore, answer this issue in favour of the assessee and that the order of the authorities below cannot be sustained
Addition u/s 69B - difference closing stock of 60UP and 80UP of country liquor - assessee contended that stock record for both these items is regularly maintained by the assessee for excise purpose and the same duly checked by the concerned excise authorities is more reliable to ascertain the exact discrepancy - HELD THAT:- As urged that since the said record maintained for excise purpose could not be produced by the assessee either before the A.O. or before the Ld. CIT(A), the matter may be sent back to the Assessing Officer for giving the assessee an opportunity to produce the same for verification. Since the learned DR has not raised any objection in this regard, we set aside the impugned order of the Ld. CIT(A) on this issue and restore the matters to the file of the A.O. for deciding the same afresh after giving the assessee an opportunity to produce the relevant stock record maintained for excise purpose.
Bogus purchases - undisclosed investment of the assessee under section 69B - GP estimation - HELD THAT:- Addition on account of unexplained investment in stock as made by the A.O. under section 69B thus is based on presumption and the same cannot be sustained. In our opinion, the only presumption that can be reasonably drawn in the absence of anything brought on record to show that the quantity purchased by the assessee outside the books of accounts was lying in the closing stock is that the said quantity was sold by the assessee outside the books of accounts and the addition that can justifiably made on this issue is only to the extent of gross profit on such unaccounted sales. We, therefore, modify the impugned order of the Ld. CIT(A) on this issue and direct the A.O. to recompute the addition to be made on this issue by applying GP rate of 8% on the undisclosed sales made by the assessee out of unaccounted purchases. Ground no 8 of the assessee’s appeal is thus partly allowed.
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2018 (1) TMI 1525 - DELHI HIGH COURT
Applicability of Section 40(a)(ia) and (3) read with Section 194C - HELD THAT:- Revenue’s appeal had to be examined on its merits as to the applicability or otherwise of Section 194C of the Act in the facts of the case.
Legality of re-assessment proceedings - HELD THAT:- There cannot be per se conclusion that failure to furnish reasons would invariably invalidate all the assessment proceedings. The assessee concededly reiterated its returns previously filed; the assessee was put on sufficient notice – in the sense, if, it felt aggrieved, it could have approached the Court under Article 226 of the Constitution of India for an order compelling the Revenue to disclose the reasons. More crucially, the judgment of the Supreme Court in GKN Driveshafts (India) Ltd. vs. Commissioner of Income Tax, [2002 (11) TMI 7 - SUPREME COURT] no doubt directs the Revenue Authorities and Tax Administration to furnish copy of the “reasons” and also deal with the representations through a reasoned order. However, to characterise that requirement – though a matter of law, by raising Article 141 of the Constitution of India as mandatory and resulting in nullity of the reassessment proceedings, would be going too far. The Court notices that GKN Driveshafts (supra) has not been assimilated through statute. This aspect is important because in the absence of a consequence spelt out either by statute or through judgment, it cannot be said that invariably every assessee would suffer the same amount of prejudice as to nullify or invalidate the entire assessment proceedings; much will depend on the circumstances of the case.
In the present case, the assessee was issued with questionnaires calling for particulars, which it complied with. Especially therefore, there was no prejudicial consequence as is sought to be urged. For these reasons, the ground urged is not tenable and therefore rejected.
“Tangible material” to support the reassessment notice - the original assessment was completed or framed under Section 143(1) of the Act. Furthermore, the notice under Section 147 of the Act was issued within the four years period. Clearly, the framing of assessment itself does not result in judicial application of mind and an order, as held in Indu Lata Rangwala vs. Deputy Commissioner of Income Tax, [2016 (5) TMI 804 - DELHI HIGH COURT]
Furthermore, the Court recollects the decision of the Supreme Court in Commissioner of Income Tax vs. Zuari Estate Development and Investment Co. Ltd., [2015 (8) TMI 480 - SUPREME COURT] which clearly states that the filing under Section 143(1) of the Act does not result in any expression of judicial opinion. For these reasons, the second ground urged to attack the reassessment is rejected.
Additions on the grounds and facts other than on the issues for which reassessment notice was premised, and has not made additions on those grounds in the reassessment proceedings -
This Court specifically is of the opinion that the Karnataka High Court’s view in the case of N. Govind Raju [2015 (8) TMI 271 - KARNATAKA HIGH COURT] is a more accurate one. In this Court’s view the emphasis placed in Jet Airways’s case [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] on “and also” undermines the essential objective of Section 147 of the Act and unduly restricts and narrows it. The circumstance clarifies existence of an additional power to bring to tax other sums. This per se would not mean that the sums or amounts sought to be brought to tax in a reassessment notice (which are ultimately not the subject of the final reassessment orders), act as a limitation.
Having regard to the facts, this Court is of the opinion that since there is some doubt as to the accuracy of the interpretation in the case of Ranbaxy Laboratories Limited [2011 (6) TMI 4 - DELHI HIGH COURT] and which was subsequently followed in the case of Monarch Educational Society [2016 (2) TMI 971 - DELHI HIGH COURT] the appropriate course would be to refer the issue to a larger Bench.
The following issue is accordingly framed for reference to the Full Bench i.e. whether the view expressed in the case of Ranbaxy Laboratories Limited (supra) [following Jet Airways’s case (supra) of the Bombay High Court and followed later in Monarch Educational Society’s case (supra)] with respect to the interpretation of Section 147 read with Explanation (3) of the Act, is restrictive, so as to sustain only additions made in the course of reassessment proceedings subject to the additions of amounts adverted to in the reassessment notice in the “reasons to believe” under Sections 147/148 of the Act and notice pursuant thereof?
The office is directed to register the question as a reference and lay the papers before the Hon’ble the Acting Chief Justice subject to whose orders, the matter would be listed before the appropriate Full Bench.
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