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2022 (6) TMI 1471
Recovery of dues - priority of dues - first charge over the property mortgaged by the respondents No.4 to 7 under Section 26-E SARFEASI Act or not - HELD THAT:- The writ-applicant Bank undisputedly auctioned the subject property on 25.2.2021 and PRA Realities LLP being the highest bidder submitted the bid of Rs.3,41,00,000/- and in accordance with the sale notice has deposited the entire amount as per the Rules. The writ-applicant Bank is the secured creditor and having auctioned the subject property under the SARFEASI Act, the writ-applicant would have first charge over the subject property.
The ratio as laid down in PATTECH FITWELL TUBE COMPONENTS VERSUS THE STATE OF GUJARAT [2022 (6) TMI 202 - GUJARAT HIGH COURT] squarely covers the present issue. The dues of the secured creditor i.e. writ-applicant Bank shall have priority over the dues of the respondent No.2 over the subject property.
In the facts of the present case, in the revenue records undisputably the charge of respondent No.1 is at a later point of time i.e. 14.12.2015 and 7.6.2018 which is subsequent to the mortgage with the writ-applicant Bank i.e. 8.6.2012 and 26.10.2013, being the secured creditor. In view of above, as per the provisions of Section 26-E SARFEASI Act also, the balance tilts in favour of the writ-applicant Bank and then in favour of the present writ-applicant. Accordingly, there is no hesitation in holding and declaring that the respondent No.1 State authorities cannot claim first charge over the subject property.
It is hereby directed that the writ-applicant shall have the first charge over the property mortgaged by the respondents No.4 to 7 under Section 26-E SARFEASI Act and the same would overwrite the charge of the respondent No.3 under Section 48 of the GVAT, 2003. The respondent authority is further directed to post and certify a mutation entry to record the certificate of sale dated 19.3.2021 for the subject land.
The writ-application succeeds and is hereby allowed.
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2022 (6) TMI 1470
Revision u/s 263 by CIT - Addition u/s 56(2)(viib) - PCIT said AO has neither enquired about the claim of the assessee that the property was under litigation during the course of assessment proceedings nor brought to the notice of the Assessing Officer by the assessee - as argued AO has passed order after seeking an approval of the ACIT, u/s 153D - AR had admitted that details of the property were disclosed by the assessee in pursuant to the notice issued u/s 142(1) and the same was duly examined by the AO and no additions were made on the basis of the documents filed by the assessee. Moreover it was submitted that notice u/s 153A r.w.s 143(3), the addition can only be made by the AO in respect of the documents / incriminating material found during the course of search
HELD THAT:- As during the assessment proceeding u/s 153A r.w.s. 143(3), AO is duty bound to make the addition in respect of the incriminating documents found during the course of search or in respect to the additions which are relatable to the material seized during the search. AO is not required to make any addition in respect of the material / document came to its possession on account of post search enquiries, though this issue may be debatable within the jurisdiction of Hon’ble Telangana High court.
CIT in the impugned orders had nowhere stated that the documents were filed by the assessee in response to notice under section 142(1) of the Act and that the documents found during the course of search were incriminating in nature. Unless the requirement of law, namely existence of the incriminating document is fulfilled, the Assessing Officer could not make the addition and therefore, the Assessing Officer has rightly not made any addition.
The reliance on explanation 2 to section 263 of the PCIT was incorrect, as Assessing Officer had made enquiries from the assessee and assessee had provided all information to the Assessing Officer, therefore, PCIT’s finding was factually incorrect, as it was not born out of the record.
Moreover, we agree with the view taken in the case of M/s. Indian Roadways Corporation Ltd. [2018 (10) TMI 1495 - ITAT KOLKATA] wherein the identical view was decided by the Kolkata Tribunal in favour of the assessee. Therefore, on this count alone, the order passed by the ld.PCIT is required to be annulled .
There is another reason for annulling the order passed by the ld.PCIT, as in the present case, the Assessing Officer before passing the assessment order has taken the approval of ld.ACIT under section 153D
Also in the case of Dhariwal Industries Limited, Pune [2017 (1) TMI 260 - ITAT PUNE] on similar facts, had annulled the order passed by ld.PCIT. Therefore, we have no hesitation to take a similar view, more particularly, when one of us (namely Hon’ble A. M.) was a party to the decision.
Another reason to annul the order passed by the ld.PCIT was that the ld.PCIT had directed the Assessing Officer to make the additions after invoking the provisions of section 56(2)(vii)(b) of the Act on the premise that there is difference in consideration for which the property was purchased vis-à-vis the SRO value. In our view, the addition under section 56(2)(vii)(b) is a deeming provision, based on this notional addition can be made.
We hereby hold invocation of jurisdiction section 263 of the Act by ld.PCIT was not correct. In our considered opinion, once all the material including the sale deeds and other litigation documents were available on the record before the PCIT, then it is the duty of the ld.PCIT to give a specific finding as to how the provisions u/s 56(2)(vii)(b) are applicable and why the order of Assessing Officer was passed without proper enquiry. Therefore, PCIT’s finding that the order passed by AO was erroneous and prejudicial to the interest of the Revenue, can not be upheld. Decided in favour of assessee.
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2022 (6) TMI 1469
Revision u/s 263 - Principal CIT held the assessment framed u/s 143(3) as erroneous insofar prejudicial to the interest of Revenue - correct head of income - assessee was liable to declare the income under the head income from house property on notional basis under section 22 read with section 23 of the Act but the assessee has not done so - HELD THAT:- The Finance Bill 2017 seeks to amend section 23 w.e.f. 1st April, 2018 which lays down the determination of annual value in case of house property for the purpose of calculating the Income under the head "House Property" income particularly in case of deemed let out property.
This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year 2018-19 and subsequent years.
A plain reading of the above provisions makes it clear that the amendment for charging the tax on the notional rent with respect to the properties held as stock in trade was applicable from the assessment year 2018-19 and subsequent assessment year. As such, the amended provision is not applicable for the year under consideration. Thus the question of calculating the rental income with respect to the units of the properties held as stock in trade does not arise.
Thus we hold that there was no error in the order of the AO framed u/s 143(3) which is causing prejudice to the interest of revenue. For invoking the provisions of section 263 of the Act, it is necessary that the twin conditions should be satisfied. The order should be erroneous and prejudicial to the interest of revenue. Once there is no error the order of the AO, the same cannot be subject to the provisions of section 263 - In view of the above and after considering the facts in totality, we hold that there is no error in the assessment framed by the AO u/s 143(3) causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned PCIT is not sustainable and therefore we quash the same. Hence the ground of appeal of the assessee is allowed.
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2022 (6) TMI 1468
Disallowance u/s 14A in course of the assessment undertaken under Section 153A - disallowance made under Section 14A while computing of Book Profit under Section 115JB - HELD THAT:-The present Tax Appeal is Admitted on the following substantial questions of law.
(i) Whether in the facts and circumstances of the case, could it not be said that the Appellate Tribunal committed an error in deleting the additions made on the count of fictitious losses from National Multi Commodity Exchange trading and also the disallowance under Section 14A in course of the assessment undertaken u/s 153A more particularly having regard to the import purport and the language of the said provision, holding that the additions have to be confined to the incriminating material found during the course of search u/s 132(1) even though there is no stipulation of the Section 153A and notwithstanding that there was no assessment u/s143(3) despite the fact that return was processed u/s 143(1) and no scrutiny proceedings were undertaken u/s 143(3) of the Act?
(ii) Whether in the facts and in the circumstances of the case and in law the Appellate Tribunal has erred in holding that disallowance under Section 14A of the Act cannot exceed the exempt income earned by the assesses?
(iii) Whether in the facts and in the circumstances of the case and in law the Appellate Tribunal was justified in excluding the disallowance made under Section 14A while computing of Book Profit under Section 115JB ignoring the clause (f) of Explanation1 to Section 115JB(2)?
(iv) Whether Appellate Tribunal committed an error in deleting the additions in respect of the allowance of losses taken from M/s. Mari Gold Vanijya Private Limited, Kolkata without appreciating the entire set of facts attended to the said aspect, whether the transaction evidenced that it was in the nature of accommodation entry and whether the Tribunal acted perverse on facts on that count?
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2022 (6) TMI 1467
Validity of reopening assessment - order passed u/s 148A(d) pursuant to the notice u/s 148A(b) challenged on the ground of alleged violation of principles of natural justice - HELD THAT:- As the impugned order u/s 148A(d) has been passed after compliance of all the formalities required under the relevant provisions of the Income Tax Act, 1961, and there is no procedural irregularity or violation of principles of natural justice.
It appears from record that, first, notice was issued u/s 148A(b) and in response to the same, the petitioner has filed its objection and thereafter the Assessing Officer concerned has passed order u/s 148A of the Act after considering the objection of the petitioner by giving reason and making elaborate discussion.
This Court in exercise of its Constitutional writ jurisdiction cannot act as an Appellate Authority over the impugned order passed u/s 148A(d) when there is no procedural irregularity or violation of principles of natural justice or the Officer has not acted contrary to any provision of the Statute and reasoning and findings given by the AO in his order u/s 148A(d) should not be substituted by a writ Court. WP dismissed.
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2022 (6) TMI 1466
Assessment against company dissolved/insolvent - proceedings initiated against the corporate debtor/assessee company including income tax proceedings and recovery of demand or giving effect of any order - Addition u/s 68 - HELD THAT:- In the light of the above order by Hon’ble NCLT in the assessee’s own case for its CIRP as per Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016, no proceedings can continue against the corporate debtor i.e. the assessee.
In view of this and drawing further force from the order of coordinate bench in the case of Real Steps Ltd. [2021 (7) TMI 1445 - ITAT AHMEDABAD] all these nine appeals before this Tribunal filed by the assessee/Department are dismissed as infructuous. However, ld. AO is at liberty to make an application for reinstitution of these appeals after the resolution process ends in IBC 2016. Accordingly, the appeals of the assessee and the Department (totaling nine in numbers) are dismissed as infructuous.
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2022 (6) TMI 1465
Assessment against company dissolved/insolvent - Income tax dues - priority to debts to be discharged - Scope of section 238 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As against the respondent company an application for liquidation has been filed before the National Company Law Tribunal, Kolkata Bench and by order ]the application filed by Chaitanya Alloys Private Limited, the operational creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016 has been admitted and a moratorium as provided under Section 14 of the Code has been ordered. There are other directions issued by the NCLT as well.
Thus, in the light of the statutory provision and in the light of the decision of the Hon’ble Supreme Court in PCIT- Vs. -Monnet Ispat and Energy Limited [2018 (8) TMI 1775 - SC ORDER] and also in the light of the overriding provisions of the Code in terms of Section 238 of the Act, the revenue cannot pursue the appeal.
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2022 (6) TMI 1464
Deduction u/s 80P - Claim denied as assessee did not file the return of income for Assessment Year 2017-18 - as contended that since the assessee did not file return of income for Assessment Year 2017-18, there was no question of invoking the provision of section 80A(5) - HELD THAT:- Section 80A(5) of the Act is applicable only when a return of income is filed by an assessee and a deduction under Chapter VI “A” of the Act, is not claimed in such return of income. It will not apply to a case where no return of income is filed. The provisions of section 80AC of the Act, as we have already seen, contemplates denial of deduction in respect of certain provisions of Chapter VI “A” of the Act, if a return of income is not filed by an assessee. Those provisions, as rightly contended by assessee, do not apply to the claim for deduction under section 80P - Revenue authorities were not justified in not entertaining the claim of the assessee for deduction under section 80P of the Act as made by the assessee.
Since neither the AO nor the CIT(A) have examined the other conditions for allowing deduction under section 80P of the Act, we deem it fit and proper to remand the issue of the assessee’s eligibility to claim deduction u/s 80P in the sense with regard to the quantum of deduction and also with regard to the other conditions for allowing deduction u/s 80P for examining afresh by the AO. Allow the appeal of the assessee for statistical purposes.
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2022 (6) TMI 1463
Maintainability of petition filed under Articles 226 and 227 of the Constitution of India read with Section 482 of the Cr.P.C. at the hands of a power of attorney holder of an accused - suppression of material facts or not - offences alleged meet their ingredients or not.
Whether the subject writ petition filed under Articles 226 and 227 of the Constitution of India read with Section 482 of the Cr.P.C. is maintainable at the hands of a power of attorney holder of an accused? - HELD THAT:- It is not in dispute that the petitioners are presently residing at United Kingdom and the petition is presented by one Mr. Gautam Giri on the strength of a power of attorney executed by the petitioners on 14-12-2021 at Bangalore. The power of attorney appended to the petition is executed at Bangalore, but signed by the executants before the Notary at London. There is no averment in the entire petition that the said power of attorney holder is aware of the facts of the case. There being no averment to the effect that the power of attorney holder has full knowledge of what is being filed and the reason for presenting the petition by the said power of attorney holder, notwithstanding the fact that it is filed invoking writ jurisdiction of this Court as an amalgam to Section 482 of the Cr.P.C., the writ petition would not become maintainable. The Constitutional Courts have consistently taken a view that the petition under Section 482 of the Cr.P.C. by a power of attorney holder is not maintainable.
The High Court of Delhi in a Judgment rendered in the case of AMRINDER SINGH v. STATE OF NCT OF DELHI [2022 (1) TMI 1421 - DELHI HIGH COURT] addresses the very issue as it was argued therein that the petition filed under Article 227 read with Section 482 of the Cr.P.C. was not maintainable. The High Court of Delhi following the judgment of the Apex Court in the case of T.C. MATHAI AND ANOTHER v. THE DISTRICT & SESSIONS JUDGE, THIRUVANANTHAPURAM [1999 (3) TMI 635 - SUPREME COURT], clearly holds that the petition filed through Special Power of Attorney Holder is per se not maintainable. Therefore, no permission can be granted to the power of attorney holder to present the petition under Article 227 of the Constitution of India or otherwise. The challenge to the proceedings seeking annulment of FIR was also held not maintainable.
On a coalesce of the judgment so rendered by the Constitutional Courts, what can be unmistakably gathered is that the power of attorney holder of an accused cannot maintain a petition be it under Article 226 or 227 of the Constitution of India read with Section 482 of the Cr.P.C. or Criminal Petition under Section 482 Cr.P.C. Therefore, the present petition filed by the power of attorney holder of the accused, without seeking any permission at the hands of this Court, and without even narrating in the petition that he is personally aware of the facts of the case, the writ petition filed under Articles 226 and 227 of the Constitution of India read with Section 482 of the Cr.P.C. is per se not maintainable, as the accused cannot be represented by a power of attorney holder and thus, maintain the subject petition.
Whether the writ petition suffers from suppression of material facts entailing dismissal of the petition? - HELD THAT:- The petitioner No. 1 has filed an affidavit of declaration which is dated 29-03-2022 for the first time stating that in view of travel restrictions due to COVID-19 the power of attorney was handed over to a family friend Mr. Gautam Giri and has also sought to defend the allegations made in the complaint. But there is no whisper about the afore-narrated facts and events that have been suppressed by the petitioners while filing the present petition. Therefore, there can be no doubt that the petitioners are guilty of approaching this Court with unclean hands and such petitions should be thrown to the winds by imposition of exemplary costs. If there is no candid disclosure of relevant and material facts or the petitioners are guilty of misleading the Court, the petition is to be dismissed at the threshold without considering the merit of the claim.
The case at hand is to meet its dismissal with imposition of exemplary costs, as the petitioners have invoked the jurisdiction of this Court both under Articles 226 and 227 of the Constitution of India and Section 482 of the Cr.P.C. with unclean hands.
The first and second question having been answered in the negative against the petitioners, the other point with regard to merits of the matter need not be gone into, as both the points act as a threshold bar for entertaining the petition and the doors of this Court cannot be considered to be open or even ajar to the petitioners, but they are closed. Therefore, third question is not answered.
Writ Petition is dismissed with exemplary cost of Rs. 1,00,000/- to be paid by the petitioners to the High Court Legal Services Authority, Bengaluru within four weeks from the date of receipt of a copy of this Court and file an acknowledgment to that effect before the Registry of this Court.
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2022 (6) TMI 1462
TP Adjustment - MAM determination - determination of ALP of an international transaction between the assessee and its Associate Enterprises (AE) u/s 92 - application of residual PSM OR TNMM - HELD THAT:- The facts in the present asst. year are identical with issue covered by the decision of coordinate bench in the assessee’s own case in [2020 (3) TMI 947 - ITAT BANGALORE] for the assessment year 2013-14 thus we set aside the question of determination of ALP to the TPO afresh applying TNMM as the most appropriate method as was done in Assessment Years 2013-14 and 2014-15 & 2015-16 in the order referred to above. Needless to say the assessee shall be given reasonable opportunity of hearing. Assessee does not make any unique contribution to the transaction, hence PSM in this case cannot be applied.
Appeal of the assessee is allowed for statistical purposes.
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2022 (6) TMI 1461
Scope of Advance Ruling - Service recipient, M/s. Jaipur Vidyut Vitran Nigam Limited is a Government Entity or not - clause (zfa) of para 2 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 32/2017 - Central Tax (Rate) dated 13.10.2017 - Operation and Maintenance of identified 33/11 KV Grid Sub-Stations to Jaipur Vidyut Vitran Nigam Limited are wholly exempt vide serial number 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 [as amended] or not - HELD THAT:- The words "or a Governmental authority or a Government Entity" has been omitted at serial number 3, in column (3), in the heading "Description of Services" in the said Notification No. 12/2017- Central Tax (Rate) dated the 28th June, 2017 vide aforesaid Notification No. 16/2021-Central Tax (Rate) dated 18.11.2021 which resulted as withdrawn of exemption from tax from 01.01.2022. Thus, as on date there is no exemption is applicable on Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Hence, applicant is not eligible to avail the said exemption from tax.
The scope of the ruling for Authority for Advance Ruling (AAR) is limited to the transactions being undertaken or proposed to be undertaken. In the instant case, the application seeking advance ruling was filed on 16.11.2021 before the RAAR with respect to supplies undertaken for the period from 01.11.2019 to 30.04.2021. Hence, the case is out of the purview of the Advance Ruling.
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2022 (6) TMI 1460
Disallowance u/s 35(2AB) - research and development expenditure - assessee had itself admitted that there was a difference in the claim of Research & Development expenditure and that the assessee had claimed excess deduction u/s. 35 (2AB) - As per CIT contentions put forth by the appellant were not disposed off by the AO, thus AO is directed to restrict the disallowance after necessary verification as specifically brought out in the contentions of the appellant - HELD THAT:- AR has filed the working of disallowance U/sec. 35(2AB) of the Act which explains the nature of expenditure, actual expenses debited to profit &loss account, claim made in the return of income and the assessee claim before the DSIR and the revised claim. The workings tally with the net disallowance restriction directed by the CIT(A) to A.O. DR could not controvert the above findings of restoration to the file of A.O. and we do not find merit in this ground of appeal of the revenue and is dismissed.
Depreciation on computer software - HELD THAT:- ITAT in the Assessee own case in A.Y. 2010-11 [2020 (1) TMI 1200 - ITAT MUMBAI] has observed that the computer software is eligible for depreciation @60%. We find there is nothing remains in the ground of appeal as it become in fructuous due to grant of higher depreciation on software and the ground of appeal of the revenue is dismissed.
Grant of depreciation on assets transfer in the merger and the said companies have not claimed depreciation on the assets held by them - HELD THAT:- We find the Hon’ble Tribunal In [2020 (1) TMI 1200 - ITAT MUMBAI] has considered the facts, provisions of the Act and judicial decisions and directed the A.O. to allow the depreciation. In the present case the facts are identical and CIT(A) has relied on the earlier years decision and granted the relief. We up held the same as decided in favour of the assessee.
Addition u/s 145A of the Act with respect to modvat credit - HELD THAT:- The Honble Tribunal in [2021 (10) TMI 505 - ITAT MUMBAI] as perused Tax Audit report of the assessee and find that it is the claim of the assessee that the impact of grossing up of tax, duty, cess etc. by restating the values of purchases and inventories by inter alia including the effect of CENVAT credit will be Nil, subject to Sec. 43B that the duty, taxes, cess etc. is paid before the "due date" of filing of the return of income. As the ld. D.R had submitted that the aforesaid working of the assessee would require to be verified, we therefore, in all fairness restore the matter to the file of the A.O for readjudication.
Allowance of consultancy charges as revenue expenditure and allow deduction u/s 35DD - HELD THAT:- We find that the similar issue has been decided in the assessee favour by the Honble Tribunal in [2021 (10) TMI 505 - ITAT MUMBAI] for A.Y.2003-04 dated 510-2021 as held that it is a clear case of simple professional services rendered by Accenture to the assessee which at any cost cannot be considered as a capital in nature. We find that the said expenditure has to be considered as wholly and exclusively as deduction u/s. 37(1) - We hold that the provisions of Section 35DD of the Act as alleged by the ld. CIT(A) cannot be made applicable in the instant case as admittedly the same only refers to expenses incurred pursuant to amalgamation. Hence, we direct the ld. AO to grant deduction of the said expenditure u/s. 37(1) - Decided in favour of assessee.
Correct head of income - Treating rental income from RP House and centre point under the head IFHP OR IFOS - HELD THAT:- We find the Honble Tribunal [2021 (10) TMI 505 - ITAT MUMBA] has held that the transfer of ownership has to be completed over a period of 4 years and therefore the assessee continues to remain the owner of part property of the RP House. Further it was decided that the income from RP House and Centre Point is assessable as Income From House Property.
CIT(A) has considered the factual aspects and made a reasonable observations and granted the relief. We find the revenue could controvert on the findings of the CIT(A) on this disputed issue. Accordingly, we follow the judicial precedence of ratio of the ITAT decision and dismiss the ground of appeal of the revenue.
Deduction of eligible profits u/s 80HHC of the Act while calculating the book profits u/s 115JB - HELD THAT:- We find that in the assessee’s own case for the A.Y 2003-04, the Hon’ble Tribunal has allowed the assessee’s ground of appeal in [2021 (10) TMI 505 - ITAT MUMBA] as held that deduction u/s. 80HHE had to be worked out on the basis of adjusted book profit u/s. 115JA of the Act and not on the basis of profits computed under regular provisions of law applicable to computation of profits and gains of business. - Decided against revenue.
Allowance of set off of losses /depreciation of tools division on account of demerger - HELD THAT:- As relying on own case [2021 (10) TMI 505 - ITAT MUMBAI] to hold that the ld. CIT(A) had rightly directed the ld. AO to allow set off of losses of amalgamating company in the hands of the assessee - Decided against revenue.
Allow depreciation on computer software @ 60% rate after due verification and recomputed the computer and computer software as on block &WDV and allow ground of appeal for statistical purpose.
Disallowance of interest on loan taken for purchase of a capital asset(Shares of RPIL) - AR submits that if the barrowed funds are used for investment in shares held for controlling interest, interest is allowable U/sec 36(1)(iii) of the Act and such expenditure is incurred out of commercial expediency - HELD THAT:- We find the CIT(A) has followed the assessee own case for A.Y.2002-03 &2003-04 and confirmed the disallowance of interest. Further on appeal by the assessee to the Honble Tribunal, for both the assessment years ITAT has decided in favour of the assessee as per the observations discussed in the above paragraphs. The Ld.DR has accepted the decisions of the Honble Tribunal. Accordingly, we set aside the decision of the CIT(A) on this disputed issue and direct the assessing officer to delete the disallowance of interest and allow the ground of appeal.
Capital gains on sale of RP house to be taxed over 4 years.
Grant the depreciation on the block of building - HELD THAT:- As decided in [2021 (10) TMI 505 - ITAT MUMBAI] block of building continued, depreciation thereon should be eligible to the assessee. Accordingly, we direct the ld. AO to grant depreciation.
Nature of receipts - treatment of sales tax deferral loan - revenue receipt or capital receipt - HELD THAT:- We are of the opinion that the Assessing officer should also be provided an opportunity to verify and examine the facts in the additional ground raised by the assessee. Hence to meet the ends of justice with out going in to merits of the case restore this disputed issue for limited purpose to the file of the Assessing officer to decide on merits and allow the ground of appeal for statistical purposes.
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2022 (6) TMI 1459
Exemption u/s 10(23C) denied - AO observed that the total receipts of assessee were approximately Rs. 109 crores, out of which the grant received from Govt. was just Rs. 3.90 crores, thus exemption disallowed since the assessee does not meet the condition of “wholly or substantially financed by the Govt.” as prescribed in section 10(23C)(iiiab) - as submitted assessee is a University established under M.P. Vishwavidhalaya Adhiniyam,1973, an Act of the State Govt. of Madhya Pradesh, established to provide education, supervision and maintenance to various colleges and educational institutions as per regulations of the Govt. and to establish, maintain and manage colleges, teaching departments, school of studies, center of studies, to institute degree diplomas, certificates and other academic distinctions, etc.
AO concluded that the receipts from government-grant are much less and therefore the assessee does not satisfy the requirement of “substantially financed by Govt.” - HELD THAT:- The component of government-grant received by the assessee is just 3.50% of the total receipts which is so less that by no stretch of understanding, the assessee can be said to be “substantially financed by the Govt”.
Also looking at submission of Ld. AR that out of the total receipt of Rs. 109 crore, there is a receipt of examination fee of Rs. 58 crore from affiliated institutions and colleges who had in turn received grants from the Govt. as also from certain categories of students who have received grants and scholarships from the Govt. The Ld. AR submitted that the receipt of Rs. 58 crore should also be considered as receipt from Govt. We are afraid to accept this argument of Ld. AO. If the affiliated colleges / institutions / students have received grant or scholarship from Govt., it is those colleges / institutions / students who have been financed by the Govt. and not the assessee. Even otherwise although the Ld. AR has raised this point but there is no material or evidence produced before us to prove that such state of affairs actually exist. Therefore, we are not impressed by this argument of Ld. AR. Thus, assessee is not substantially financed by the Govt. and therefore not entitled to exemption u/s 10(23C)(iiiab).
Alternative claim of exemption u/s 11 / 12 demanded by the assessee - can we entertain this new claim made by assessee for the first time before us? - HELD THAT:- A fresh claim before appellate authorities is not barred. It is constantly held in several decisions that a legal claim can be made by the assessee before appellate authorities even if the same was not claimed during assessment proceedings. We also observe that the provisions of section 11 / 12 grant exemption to the assessee and such exemption, if not allowed, would result in illegal collection of tax from the assessee, which is never an objective of the Income-tax Act, 1961. In view of this position of law, we do not find any difficulty in accepting the alternative claim of assessee to allow exemption u/s 11 / 12. However, the claim of exemption u/s 11 / 12 involves a different type of working based on application and accumulation of income. Therefore, we feel that it would be more appropriate to refer this matter back to Ld. AO who shall give an opportunity to the assessee to provide the necessary information for computation of exemption u/s 11 / 12.
Appeal of assessee is allowed for statistical purpose.
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2022 (6) TMI 1458
Validity of assessment order framed by non-jurisdictional officer - competent officer to proceed with the assessment by way of issue of notice u/s 143(2) - when notice u/s 143(2) was issued by an officer who did not have jurisdiction to proceed with the assessment - as submitted that the jurisdiction to pass the assessment order in this case laid with the ACIT/DCIT as the income declared by the assessee was more than Rs. 20 lacs
HELD THAT: - Jurisdiction of Income Tax Authorities may be fixed not only in respect of territorial area but also having regard to a person or classes of persons and income or classes of income also. Therefore, the CBDT having regard to the income as per return has fixed the jurisdiction of the Assessing Officers.
Thus in this case, the competent officer to proceed with the assessment by way of issue of notice u/s 143(2) of the Act was DCIT/ACIT, whereas, the notice u/s 143(2) has been issued by the ITO, Ward-1(1), Kolkata who did not have any jurisdiction to issue the aforesaid notice.
As has been held by the various courts of the country including the Apex Court, the issuance of notice u/s 143(2) by the concerned Assessing Officer of a competent jurisdiction is mandatory to assume jurisdiction to proceed to frame assessment u/s 143(3) of the Act. The identical issue also came into consideration in the case of Bhagyalaxmi Conclave (P) Ltd. v. DCIT [2021 (2) TMI 181 - ITAT KOLKATA] wherein the Tribunal further relying upon various other decisions of the Co-ordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that when the notice u/s 143(2) was issued by an officer who did not have jurisdiction to proceed with the assessment and the assessment was framed by the other officer who did not issue the notice u/s 143(2) before proceeding to frame the assessment, then such an assessment order was bad in law.
Thus assessment order passed by the Assessing Officer (ACIT) was bad in law for want of issuance of notice u/s 143(2). Decided in favour of assessee.
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2022 (6) TMI 1457
Approval for Scheme of Amalgamation - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- After analysing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima fade beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company. In view of the absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Arrangement appended as Annexure "D" with the Company Petition as well as the prayer made therein.
The Company Petition stands allowed.
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2022 (6) TMI 1456
Benefit of scheme under SPLDRS - failure to deposit the money because of technical glitches in the system of the department - HELD THAT:- Without going into the truthfulness and verification of such allegation, this writ petition is not entertained for the reason that the said scheme has already expired long back and it is the authority concerned who can only consider the grievance of the petitioner in accordance with law.
Accordingly, no relief can be granted to the petitioner in this writ petition except requesting the authority concerned to consider and dispose of the representation of the petitioner being Annexure P-5 to the writ petition in accordance with law within the reasonable time and preferably within eight weeks from the date of communication of this order.
Petition disposed off.
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2022 (6) TMI 1455
Disallowance u/s 37(1) - expenditure on account of group management fee paid to associate enterprises - no evidences regarding actual occurrence of the management service fees for which the foreign parent company has charged - HELD THAT:- What can be concluded is that assessee has failed to produce any cogent evidence before the Ld. AO or Ld. First Appellate Authority to indicate that the expenditure incurred was for the purposes of the business.
Assessee company is a advertising agency in Gurgaon and engaged in providing advertising communication and marketing solutions to its clients both domestic and international. The company is closely held company with 99.76% of the shares being held by the Holding Company . Thus, certainly the assessee must be in possession of quite relevant commercial and accounting documents which may indicate that there was valid expenditure on as many as ten heads, which were claimed to be the areas of expert services. However, no evidence to that effect was led.
AO has rightly relied the judgment of Cushman and Wakefield Indian (P.) Ltd. [2014 (5) TMI 897 - DELHI HIGH COURT] to hold that in spite of the case of assessee being covered by transfer pricing provision that does not restrict or in any way by pass the functions of the TPO when AO goes for determining u/s 37(1) of the Act, that whether the business expenditure claimed is expended wholly and exclusively for the purposes of business or not. Decided against assessee.
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2022 (6) TMI 1454
Seeking directions to the Revenue to implement the Final Order dated 25 January 2018 passed by this Tribunal in its favour - HELD THAT:- It is found from the records and from the Final Order, that the refund applications covering various periods were filed and were rejected by the Assistant Commissioner and such rejections were upheld by the Commissioner (Appeals). By the Final Order dated 25 January 2018 held that the appellant was entitled to the refund claimed in these applications and allowed the appeal with consequential relief. It was incumbent upon the Revenue to implement the Final Order and give the refund. Therefore, the Assistant Commissioner was wrong in stating that again a Refund Application must be filed within one year of the Final Order. If he had read the Final Order even once, it would have been clear to him that the Refund applications were filed long ago under Section 11B and it was their rejection which was the subject matter of the Final Order.
It is found appropriate to direct the Principal Chief Commissioner Of Chief Commissioner of Central Goods & Services Tax (Delhi Zone) C.R. BUILDING, I.P. ESTATE, NEW DELHI-110109 in whose jurisdiction all the divisions and Commissionerates of the Zone fall to direct the appropriate officer to sanction the refund along with appropriate interest forthwith.
Application allowed.
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2022 (6) TMI 1453
Application for modification of the order dated 12 September, 2019 passed by the Tribunal disposing of the appeals - HELD THAT:- It is not in dispute that an Appeal has been filed before the Allahabad High Court against the aforesaid order of the Tribunal. This apart, this application has been moved after a period of almost two and a half years from the date of passing of the order. Not only that, the Tribunal has passed several orders on Miscellaneous Applications filed by the Appellant under Rule 41 of the CESTAT (Procedure) Rules, 1982 - The present application, therefore, deserves to be dismissed. It is, accordingly, dismissed.
Rectification of mistake - HELD THAT:- An application for Rectification of Mistake can be moved within six months from the date of order as is contemplated under Section 129B of the Customs Act. The application, therefore, cannot be entertained. It is, accordingly, rejected.
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2022 (6) TMI 1452
Assessment u/s 153A - bogus purchases - whether ‘satisfaction’ has not been recorded by AO of the searched person and when there was no incriminating document was found? - books of accounts of the company were rejected u/s 145(2) and a substantive addition was made in the hands of M/s. Orient Craft Ltd. and a Protective Assessment was made in the hands of assessee - addition @ 5% on account of alleged commission/brokerage as business income - HELD THAT:- Appreciating the matter on record it can be observed that in ITAT order [2021 (9) TMI 1408 - ITAT DELHI] dated 24.09.2021 in ITA No. 3312/Del/2019 for assessment year 2015- 16 and [2021 (10) TMI 86 - ITAT DELHI] ITA No. 3311/Del./2019 for assessment year 2014-15 the substantive additions in the hands of M/s. Orient Craft Ltd. have been deleted.
It can be observed that as been held that M/s. Orient Craft Ltd. has proved that the material was purchased from vendors involved and payments have been made through banking channel. It was further held that the voluminous documentary evidences filed by M/s. Orient Craft Ltd. clearly established the genuineness of purchase of fabric from the present assessee / appellant.
That being so there is no force in the contention of the Ld. DR that if substantive additions are deleted then as per orders of ld. CIT(A) the protective assessment in the hands of present assessee / appellant will still revive. In fact the findings arrived by the Tribunal in case of M/s. Orient Craft Ltd. are to the effect that the purchases made from the present assessee were genuine therefore, the Bench is of firm view that protective additions in the hands of the assessee/ appellant was never sustainable.
In the light of aforesaid facts and circumstances the order of Ld. CIT(A) making additions on account of alleged commission / brokerage as business income is not sustainable.
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