TMI Tax Updates - e-Newsletter
November 24, 2021
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Indian Laws
Highlights / Catch Notes
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Income Tax:
Reopening of assessment u/s 147 - change of opinion - when the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion for commencing proceedings for reassessment. It is also held that when on consideration of the material on record, one view is conclusively taken by the Assessing Officer, it would not be open for the Assessing Officer to reopen assessment based on the very same material and to take another view. - HC
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Income Tax:
Validity of notice u/s 143(2) - Jurisdiction of ACIT to issue notice - No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ACIT which was beyond his jurisdiction and the same is therefore, void ab initio. - AT
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Income Tax:
Income from house property - ALV determination - these are the guiding factors for determining the annual rental value of the property and any deviation from the same is to be based on evidence showing that it is wrong. We find the entire exercise of the Revenue Authorities in the present case for determining the annual ALV of the property as being arbitrary. No reason has been given for adopting the fair rent determined by the valuer as against the municipal valuation or of the standard rent of the property, which has not even been determined in the present case. - AT
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Income Tax:
Correct head of income - rental income - except for creating the infrastructure as per the requirement of the lessee, the assessee is not providing any other service during the year as is evident from the profit and loss account of the assessee for the relevant assessment year. The only expenses claimed by the assessee are interest, salaries & administrative expenses. Therefore, it is clear that the assessee's intention is to enjoy the rental income on a long term basis by leasing out the premises and not to exploit the same commercially on short term basis. - AT
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Income Tax:
Disallowance of excise duty - an item of section 43B - Since the excise authority held that CENVAT credit on fuel used for generation of electricity supplied to the outside entities is not available therefore the assessee has adjusted CENVAT credit receivable against CENVAT payable/excise duty. The assessee has exercised his option to set off CENVET credit against excise liability, which amounts to payment of excise duty, therefore, assessee is entitled to deduction u/s. 43B . - AT
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Income Tax:
Revision u/s 263 - Pr. CIT has taken the action merely on the basis of the audit objection while the A.O. made the proper inquiries in depth at the time of framing the assessment under section 143(3) r.w.s 147 of the Act. Therefore the impugned order passed by the Ld. Pr. CIT is not maintainable - AT
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Income Tax:
Gain/loss on sale of shares - legal nature of the transaction - As per companies Act shareholder and company both are two separate legal person capable of holding property of any kind in their own name. The land in question was held by M/s ARGHPL and not by the shareholder i.e. Assessee company. By being shareholder, the assessee cannot be said to be the owner of the land held by impugned company for the reason that a company is perpetual succession not affected by incoming and outgoing of its shareholder. Therefore, to our understanding what can be transferred by the assessee being shareholder is only the shares, held by it. Thus the transfer of share by the assessee cannot be equated with transfer of land which is not held by it. - AT
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Income Tax:
Depreciation on goodwill generated in the scheme of amalgamation - the depreciation on the goodwill originated in the earlier year cannot be disturbed in the year under consideration without disturbing the year in which it was instigated. In fact, the claim of the assessee for the amount of depreciation on the goodwill should be allowed based on consistency in the given facts and circumstances. - AT
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Income Tax:
Revision u/s 263 by CIT - reopening of assessment u/s 147 - "reason to suspect" v/s 'reason to believe' - Information adverse may trigger "reason to suspect" and not 'reason to believe'. When an information adverse like this comes to the notice of the AO then it only triggers 'reason to suspect'. Then what the AO should have done was that he should have made reasonable enquiry and should have collected material which could make him believe that there is in fact escapement of income. - AT
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Customs:
Interest on refund - Rate of interest - The rate of interest is statutorily prescribed under section 27 (A) read with Notification issued there under according to which 6% as rate of interest was prescribed. The departmental officer is bound to follow the statutory provision strictly and therefore, no interest more than 6% can be calculated. Even this tribunal which is creature under the statute of Customs Act cannot decide the rate of interest out of the statutory provisions - the assesseee cannot be granted interest at the rate of 15% or any other rate above 6% - AT
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Indian Laws:
Dishonor of Cheque - vicarious liability - Whether the company is not functioning from January 2014 and the petitioner were not directors in the company at that point of time could be tried and decided only in the Trial. Further the averments made by the petitioner is not acceptable while the petitioners have not produced any substantial material to prove that the directors have not involved in the affairs of the company and they were not responsible in the day to day activities of the company - All these averments are factual in nature and the same has to be established only at the time of Trial. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
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India – United States to take economic relationship to the next high level India – US TPF gets a big boost India – US TPF agrees to integrate the economies across sectors
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Centre releases two installments of tax devolution to State Governments amounting to ₹ 95,082 crore as against normal monthly devolution of ₹ 47,541 crore ₹ 95,082 crore of Tax devolution to strengthen fiscal space of States
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Union Finance Minister Smt. Nirmala Sitharaman hands over credit sanction letters to 145 beneficiaries for ₹ 306 crore in Jammu FM launches new schemes for women entrepreneurs, hotel & tour and tourism industry
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Removal of Inverted Tax Structure on MMF Textiles Value chain and uniformity of rates brings relief to Textiles sector;
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India & World Bank sign loan agreement to improve quality of learning for over 50 lakh students across Andhra Pradesh
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Union Finance Minister Smt. Nirmala Sitharaman inaugurates Income Tax Department’s new Office cum Residential complex, ‘The Chinars’, at Srinagar, J&K today
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Auction for Sale (Issue/re-issue) of (i) ‘New GS 2023’, (ii) ‘5.74% GS 2026’, (iii) ‘6.67% GS 2035’, and (iv) ‘6.99% GS 2051’
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Union Finance Minister Smt. Nirmala Sitharaman inaugurates development works of around ₹ 165 crore, including Sub-Projects under Jhelum & Tawi flood recovery projects in Srinagar
Case Laws:
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Income Tax
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2021 (11) TMI 776
Reopening of assessment u/s 147 - Allowability of expenses incurred on advertisement and marketing by the Petitioner - change of opinion - HELD THAT:- As in view of notice dated 14/8/2014 and order sheet entry dated 4/10/2014, it is clear that the Assessing Officer in the original assessment was aware of the issue of expenses incurred on advertisement and marketing by the Petitioner. Once the Assessing Officer had applied his mind in the regular assessment proceedings of Petitioner having incurred advertisement and marketing expenditure, it is not open for the Assessing Officer to reopen the assessment. This Court in Aroni Commercial Limited [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] and in Marico Limited [ 2019 (8) TMI 1337 - BOMBAY HIGH COURT] had taken a similar view. The pronouncements of the coordinate Bench of this Court are binding on us. Reopening beyond period of four years - The criteria s for reopening of assessment after a period of 4 years are no longer Res-Integra in view of the judgment of Division Bench of this Court in the case of Ananta Landmark (P.) Ltd. [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] wherein this Court held that where assessment was not sought to be reopened on reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of Assessing Officer about manner of computation of deduction under Section 57, reopening was not justified. It is also held that when the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion for commencing proceedings for reassessment. It is also held that when on consideration of the material on record, one view is conclusively taken by the Assessing Officer, it would not be open for the Assessing Officer to reopen assessment based on the very same material and to take another view. We are therefore satisfied that the Assessing Officer could not have reopened the assessment merely on the basis of change of opinion and could not have issued a notice of reopening of assessment to Petitioner. - Decided in favour of assessee.
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2021 (11) TMI 775
Revision u/s 263 - Deduction u/s 54F disallowed - Case has been subsequently selected for scrutiny and notice u/s. 143(2) was issued calling for various details - assessee preferred an appeal before the CIT(A), but could not appear therefore, the CIT(A) disposed off appeal filed by the assessee ex-parte - assessee submitted that the learned CIT(A) has erred in dismissing appeal filed by the assessee without providing reasonable opportunity of hearing in violation of principles of natural justice - HELD THAT:- No doubt, appellate authority has no option, but to dispose off appeal filed by the assessee, in case appellant does not appear before the appellate authority, despite various opportunity of hearing was provided, but such appeal should be disposed off on merits on the basis of material available on record. But, before disposal of appeal, reasonable opportunity of hearing must be given to explain his case. In this case, the learned A.R submitted that the learned CIT(A) has not disposed off the appeal on merits by passing reasoned order. Therefore, considering facts and circumstances of this case, we are of the considered view that issue needs to go back to the file of learned CIT(A) to give one more opportunity of hearing to the assessee to file necessary evidences and explain his case. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2021 (11) TMI 774
Validity of assessment u/s 153A - bogus LTCG - search action on the premises of Prraneta Industries Ltd. revealed that this entity was not carrying our any business activities and had no underlying assets - HELD THAT:- We find that the assessee had filed original return of income on 20/07/2011 and search operations were carried out on assessee group on 25/07/2013. It is quite evident that on the date of search, no assessment proceedings were pending against the assessee and no notice u/s. 143(2) was ever issued to the assessee till the date of search. The time limit for issuance of such notice had already expired on 30/09/2012 i.e. within 6 months from the end of relevant assessment year. Thus, AY 2011-12 was a non-abated year. In such a case, the additions which could be made has necessarily to be on the basis of incriminating material found by the department during the course of search operations as held by Hon'ble Bombay High Court in CIT Vs. Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] There must be a nexus between the statement recorded and the evidence/material found during search in order to sustain additions on the basis of recorded statement. Similar is the view of Hon'ble High Court in an earlier judgment of CIT Vs. Sunil Aggarwal [ 2015 (11) TMI 286 - DELHI HIGH COURT] wherein Hon'ble Court refused to give any evidentiary value to the statement made by the assessee u/s. 132(4) as the department could not find any unaccounted money, article or thing or incriminating document either at the premises of the company or at the residence of managing director or other directors. In such circumstances, the finding of the Tribunal that the statement of managing director recorded patently u/s. 132(4) did not have any evidentiary value, was upheld. The ratio of all these decisions makes it clear that the surrendered income must be correlated with some incriminating material found during the course of search action so as to justify the addition. We find that there is no such incriminating material in the case of the assessee which would show that the transactions under consideration were sham transactions and there was any connection/nexus between the assessee and the group entities of Shri Shirish C. Shah. This legal issue stood covered in assessee's favor by the decision of SMC bench of Tribunal rendered in the case of another assessee of the group i.e. Smt. Reena A. Ajmera [ 2021 (3) TMI 917 - ITAT MUMBAI] We concur with the submissions of Ld. AR that in the absence of any incriminating material, the additions could not be made in the hands of the assessee as per settled legal proposition. Accordingly, the impugned additions stand deleted. The legal ground raised by the assessee stand allowed.
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2021 (11) TMI 773
Delayed payment of employees' contribution to PF and ESI - allowability of employees' contribution to PF and ESI if deposited after the due date prescribed under the relevant Act, but, before the due date of filing of return of income u/s. 139(1) - Assessee submitted that the addition is not justified since the assessee has deposited the employees' contribution to PF and ESI before the due date of filing the return of income - HELD THAT:- Admittedly, the assessee, in the instant case, has deposited the employees' contribution to PF and ESI after the relevant date prescribed under the PF and ESI Act, but, before the due date of filing the return of income. In the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. [ 2018 (9) TMI 2009 - DELHI HIGH COURT] has held that 'the legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. The Hon'ble High Court has further held that legislative intent and objective is not to treat belated payment of Employee's Provident Fund (EPD) and Employee's State Insurance Scheme (ESI) as deemed income of the employer under the Act. Tribunal in the case of CIT v. Dee Development Engineers Ltd.[ 2021 (4) TMI 393 - ITAT DELHI] has decided the issue in favour of the assessee holding that no disallowance u/s. 36(1)(v) r.w.s. Section 2(24)(x) can be made if the employees' contribution to PF and ESI are deposited after the due date prescribed under the relevant Acts, but, paid before the due date of filing of return. Since the assessee, in the instant case has, admittedly, deposited the employees' contribution to PF and ESI before the due date of filing of the return of income, therefore we hold that no disallowance u/s. 36(1)(v) r.w.s. Section 2(24)(x) can be made in the instant case - Decided in favour of assessee.
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2021 (11) TMI 772
Validity of notice u/s 143(2) - Jurisdiction of ACIT to issue notice - Proof of ay valid transfer by the competent authority from Income Tax Officer to ACIT - HELD THAT:- Jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ACIT which was beyond his jurisdiction and the same is therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not have any pecuniary jurisdiction to frame the assessment. The issue relating to the pecuniary jurisdiction also came into consideration before the Coordinate Bench of the Tribunal [ 2021 (2) TMI 181 - ITAT KOLKATA ], wherein the Tribunal further relying upon various other decisions of the Coordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that the assessment framed by Assessing Officer who was not having pecuniary jurisdiction to frame such assessment was bad in law. - Decided in favour of assessee. assessment order passed u/s 143(3) of the Act by the ACIT being without jurisdiction is bad in law and the same is accordingly set aside. - Decided in favour of assessee.
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2021 (11) TMI 771
Delayed payment of employees contribution to PF ESI - Addition under section 36(1)(va) - Contribution were paid late in terms of the provisions of ESIC and EPF, but before the filing of return of income for the present period - HELD THAT:- Since in the instant case the assessee admittedly has deposited the employees contribution to PF ESI before the due date of filing of the income tax return, therefore, respectfully following the decisions INSTA EXHIBITIONS PVT. LTD, C/O. CHACHAN LATH [ 2021 (8) TMI 1235 - ITAT DELHI] and PRO INTERACTIVE SERVICE (INDIA) PVT. LTD. [ 2018 (9) TMI 2009 - DELHI HIGH COURT] hold that the Ld. CIT(A) is not justified in sustaining the adjustment made by the A.O-CPC on account of belated payment of employees contribution to PF ESI. Therefore, set aside the order of the Ld. CIT(A) and direct the A.O. to delete the disallowance. The grounds raised by the assessee are accordingly allowed.
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2021 (11) TMI 770
Income from house property - ALV determination - determination of income from house property as governed by the provisions of chapter IV-C of the Act - whether Income to be assessed basis actual rent received? - Revenue contends the same to be assessable at fair market rent determined on the basis of report of a Govt. approved valuer - HELD THAT:- As per the facts of the case the assessee had returned actual rent received of ₹ 6,50,000/- and deducted expenses therefrom disclosing income of ₹ 4,09,830/-,while the Revenue has determined the fair market rent relating to assesses share of property at ₹ 14,87,604/- based on valuation report of a govt. approved valuer. Revenue while doing so has simply accepted the Valuation Report as sacrosanct for the purpose of determining the fair rental value of the property without undertaking any exercise for determining its municipal value or standard rent, when as per the Ld.CIT(A) himself and as per law interpreted by courts in this regard, these are the guiding factors for determining the annual rental value of the property and any deviation from the same is to be based on evidence showing that it is wrong. We find the entire exercise of the Revenue Authorities in the present case for determining the annual ALV of the property as being arbitrary. No reason has been given for adopting the fair rent determined by the valuer as against the municipal valuation or of the standard rent of the property, which has not even been determined in the present case. Adoption of the fair rent as determined by a govt. approved valuer as the annual rental value of the property owned by the assessee is not justified and the same is, therefore, rejected. The income so determined by the Revenue Authorities of ₹ 14,87,600/- is set aside and that returned by the assessee is restored .
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2021 (11) TMI 769
Disallowance of expenses u/s 37(1) - legal, professional and consultancy charges was not allowed by treating the same as capital expenditure - CIT(A) observed that this expenditure may be allowed u/s. 35D, but not u/s. 37(1) - HELD THAT:- We observe that the assessee has entered joint development agreement on 18/01/2008 for the development of the land, which means, the commencement of the business was started in case of real estate business, which the assessee is doing. Therefore, there is no confusion in this regard that the assessee has not started its business. JDA was entered for development of the property which is to be treated as assessee started its business in the line of real estate business. The case law relied upon by the ld. AR support the assessee's case. The expenditure incurred by the assessee towards legal, professional and consultancy charges is hereby allowed as revenue expenditure. Our decision is support by the judgment of Indian Railway Stations Development Corporation Ltd [ 2019 (4) TMI 816 - DELHI HIGH COURT] as opined that the assessee's activity, which it claims to be preliminary steps towards the fulfilment of the purpose, which is embodied in the MoU clearly indicates that it had set up its business and that these steps were for the ultimate fulfilment of its purposes, which was the preparation of development plans leading to the projects. - Decided in favour of assessee.
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2021 (11) TMI 768
Correct head of income - rental income - On perusal of the assessment order u/s. 263 CIT was of the opinion that rental income shown by the assessee under the head 'income from house property' should have been treated as income from business - assessee preferred a appeal before the CIT(A) who allowed the same partly by following the order of ITAT in assessee's own case for the AY 2014-15 wherein ITAT has directed to treat the income from letting of flats as 'income from house property' and income from furniture fixtures as 'income from business' - as per revenue CIT(A) erred in holding that income earned from exploitation of commercial space has to be assessed under the head 'income from House Property' instead of 'Profits and Gains of Business/Profession and had incorrectly and unjustifiably deleted the action of Ld. AO - HELD THAT:- As decided in own case [ 2019 (5) TMI 1875 - ITAT HYDERABAD] the property let out is a commercial complex is not sufficient to treat the rental income therefrom as 'Business Income'. The tests to be applied are; 1) the tenure of the lease, 2) the objects of the company; 3) the intention of the company; and 4) the services provided or activities carried on by the assessee after letting out of the property. Though one of the objects of the company is to let out the properties on lease/rent, it is not clear whether the intention is to earn rental income only from the properties constructed/developed by it. On perusal of the returns of income for earlier assessment years, we find that the assessee had let out properties at Hyderabad, Mumbai Delhi, but the income from said properties is not offered during the relevant assessment year. So, whether such properties were let out since they were unsold during the relevant period and whether they were sold subsequently to which, there is no rental income during the relevant assessment year is not clear from the details filed before us. As held by the Hon'ble Bombay High Court in the case of Gundecha Builders (supra), rental income from unsold flats is to be assessed on 'income from house property'. Further, as held by the Hon'ble Courts in cases cited supra, unless the assessee is carrying on a systematic and organized activity to exploit the property commercially, it cannot be taxed as business income. We find that except for creating the infrastructure as per the requirement of the lessee, the assessee is not providing any other service during the year as is evident from the profit and loss account of the assessee for the relevant assessment year. The only expenses claimed by the assessee are interest, salaries administrative expenses. Therefore, it is clear that the assessee's intention is to enjoy the rental income on a long term basis by leasing out the premises and not to exploit the same commercially on short term basis. We are inclined to accept the contentions of the assessee that the rental income is to be assessed as 'income from house property' as offered by the assessee and as accepted by the Revenue in the earlier years up to A.Y 2011-12. Accordingly, assessee's appeal is allowed.
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2021 (11) TMI 767
Reopening of assessment u/s 147 - assessee stating per its return of income of it being not liable to get its account audited u/s. 44AB - HELD THAT:- Qua the first limb of the reason recorded, when the assessee states in its return of income a duly verified document, that it is not liable to get its accounts audited u/s. 44AB, it only means that, in view of the assessee, the said provision is not applicable thereto for the relevant year. The only inference arising from the said statement by the assessee in its return, which is to be regarded as true and, further, only where the AO has reason/s to believe of the assessee being, on the contrary, liable to get its account audited u/s. 44AB, is that the assessee has not complied with the provisions of the said section. There is no income implication, even as none emanates from the (part of the) said reason, as recorded, as well. The assessee may at best be liable to penalty u/s. 271B. The first limb of the reason recorded, is, thus, clearly not valid. Non-eligibility to deduction u/s. 80IB(11A) - Board has per its Circular 09/2006, relied upon by the ld. Sr. DR, clarified that the returns in old forms would not be valid, and that the assessees shall be required to furnish returns in the new forms. This is only in terms of the law; s. 139(1) providing for furnishing the return of income in the prescribed form. No dispute or objection stands raised by the Revenue in the matter, at any stage, accepting the return furnished as valid. This is particularly relevant in view of s. 80-AC. No issue qua the prescribed form, therefore, obtains. In the instant case, the assessee has acted consistent with law furnishing the return within the prescribed time, in the annexure-less mode; obtained the audit report in the prescribed form (Form 10CCB) in time (on 25/8/2008)(PB-1, pgs. 24-29), and furnished the same before the AO at the earliest possible time, i.e., on 23/2/2010, along with the reply in response to the notice u/s. 148(1) dated 20/1/2010. No reason to believe non-conduct of audit u/s. 80-IB and, thus, non-eligibility to deduction thereunder could have been, in view of the foregoing, formed by the AO, who cannot but be aware of the extant procedure, or is required to be, particularly when the reason formed is based on the provisions of law. As clarified by the Apex Court in Jaganmohan Rao (V.) [ 1969 (7) TMI 4 - SUPREME COURT] , it is only the true and correct state of law that can form a basis for the reason to believe escapement of income from assessment. AO, where he wanted to clear his doubts in the matter, ought to have inquired with the assessee, as u/s. 133(6). No wonder, the law stands amended since (by Finance Act, 2020, w.e.f. 01/4/2020), delinking the furnishing of the audit report from that of the return of income, so that both are independently required to be furnished by the due date/s prescribed in their respect. The second limb of the reason recorded is, thus, also not valid. The assessee, accordingly, succeeds in its legal challenge per Gd.4, so that there is no valid assumption of jurisdiction u/s. 147 in the instant case. - Decided in favour of assessee.
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2021 (11) TMI 766
Disallowance u/s. 14A r.w.r. 8D - CIT(A) has restricted the disallowance after taking into consideration the submission of the assessee that it had sufficient interest free funds available with it and the nature of the expenditure incurred by the assessee was not related to investment made by it on which exempt income earned - HELD THAT:- It is undisputed fact that the total exempt income earned during the year under consideration was of ₹ 16,78,260/- only. In this regard, we observed that in a number of decisions the ITAT Ahmedabad had adjudicated that disallowance u/s. 14A cannot exceed the amount of exempt income earned by the assessee during the year under consideration i.e. in the case of Jivraj Tea Ltd. [ 2014 (9) TMI 131 - ITAT AHMEDABAD] and decision of Sahara India Financial Corporation Ltd. [ 2014 (1) TMI 1597 - ITAT DELHI] - disallowance u/s. 14A cannot exceed exempt income, therefore, we restrict the disallowance u/s. 14A of the act to the extent of exempt income of ₹ 16,78,260/- earned by the assessee during the year under consideration. Accordingly, the ground of appeal of revenue is dismissed. Excess depreciation claim on commercial vehicle - assessee submitted that it was entitled for depreciation @ 50% on purchase of new commercial vehicle on or after 1st January, 2009 but before 30th Sep, 2009 and put to use before 30th Sep, 2009 - As per AO the requirement for registration for commercial vehicle was different from private vehicles and in the case of the assessee the vehicle on which higher deprecation claimed was not registered as commercial vehicle. Therefore, the claim of depreciation was restricted to the normal rate of depreciation at 15% and the excess claim of depreciation - HELD THAT:- CIT(A) has deleted the addition after following the decision on identical issue and similar facts in the case of Voltamp Transformers Ltd. [ 2013 (3) TMI 804 - ITAT AHMEDABAD] and the decision of Sunil Kumar Dhulichand HUF [ 2013 (6) TMI 902 - ITAT AHMEDABAD] as elaborated in his findings supra in this order. Following the decision of Co-ordinate Bench, we do not find any infirmity in the decision of ld. CIT(A), therefore, this ground of appeal of the Revenue is dismissed. Disallowance of excise duty - assessee has claimed excise duty claim adjusted against securities premium account - assessee explained that the same has not been charged to P L account rather it has been set off against the share premium account as per the scheme of capital reduction sanction by High Court of Gujarat dated 15th Feb, 2013 being an item of section 43B - AO has not accepted the submission of the assessee stating that the assessee has reversed the CENVAT credit on the order of excise department and the same was not certified by the auditor in his report in form 3CDCIT-A deleted the addition - HELD THAT:- The assessee has followed exclusive method of accounting as purchases and sales in the P L A/c are reflected at net of excise duties. The CENVAT credit receivable is shown in the Balance Sheet under the head loan and advances. Since the excise authority held that CENVAT credit on fuel used for generation of electricity supplied to the outside entities is not available therefore the assessee has adjusted CENVAT credit receivable against CENVAT payable/excise duty. The assessee has exercised his option to set off CENVET credit against excise liability, which amounts to payment of excise duty, therefore, assessee is entitled to deduction u/s. 43B . Assessee has used the CENVAT credit balance for making payment of excise duty. The records of CENVAT credit is maintained in RG 23 register as per excise law and adjustment of CENVAT credit is one of the mode of payment of excise duty under Excise Rule. Considering the above facts and findings, we do not find any infirmity in the decision of ld. CIT(A). Disallowance u/s. 14A for computing book profit u/s. 115JB - HELD THAT:- As relying on VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] disallowance made u/s. 14A is not required to be added for computing book profit u/s. 115JB of the Act. Therefore, this ground of cross objection of the assessee is allowed. Disallowance on account of employee s contribution - assessee has failed to deposit employee s contribution to provident fund and ESIC before due date prescribed under relevant provisions of the said acts - addition as per provision of section 36(1)(va) r.w.s. 2(24)(x - HELD THAT:- It is observed that the issue is covered by the decision of Hon ble Gujarat High Court in the case of Gujarat State Road Transport [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] wherein it is held that where an employer has not credited sum received by it as employee s contribution to employees account in relevant fund on or before due date as prescribed in explanation to section 36(1)(va), the assessee is not entitled to deduction of such amount, therefore, we do not find any infirmity in the decision of ld. CIT(A). - Decided against assessee. Addition made u/s. 41(1) - assessee has shown sundry creditors of ₹ 506.16 crores - liability presumed to be ceased in view of the fact that till date the amount due to such parties has not been paid - HELD THAT:- It is undisputed fact that assessee has not written back the aforesaid liability and it is still shown in the books of account as payable. Therefore, considering the decision of Hon ble Jurisdictional High Court of Gujarat in the case of CIT vs. Bogilal Kamjibhai Atara[ 2014 (2) TMI 794 - GUJARAT HIGH COURT] we do not find any infirmity in the decision of ld. CIT(A) ld. CIT(A) since there was noting on record to indicate that there was cessation of liability during the year under consideration. Therefore, this ground of appeal of the revenue is dismissed. Nature of expenditure - expenditure on repairs on plant and machinery - revenue or capital expenditure - CIT(A) has allowed the appeal of the assessee - HELD THAT:- It is clear from the facts as elaborated above in the finding of ld. CIT(A) that the assessee has incurred the expenditure for repairing of existing spare parts as evident from the invoices and detail of contract note mentioned in the finding of ld. CIT(A). The Revenue has not controverted the facts reported in the finding of the ld. CIT(A), therefore, following the decision of BANCO PRODUCTS (I) LTD. [ 2012 (12) TMI 572 - ITAT AHMEDABAD] as referred by the ld. CIT(A), we do not find any infirmity in the decision of ld. CIT(A). Therefore, this ground of appeal of the revenue stands dismissed. Disallowance of commission expenditure - assessee explained that it has been consistently making provision for commission expenditure on mercantile basis on year to year basis at the end of financial year on the basis of sale made in that financial year -CIT(A) has allowed the appeal of the assessee - HELD THAT:- In view of the decision of Hon ble Co-ordinate Bench of the ITAT in the case of Adani Enterprises [ 2015 (4) TMI 324 - ITAT AHMEDABAD] as elaborated in the finding of ld. CIT(A) as above, we do not find any infirmity in the decision of ld. CIT(A). Therefore, this ground of appeal of the revenue stands dismissed. Disallowance u/s. 40(a)(ia) - Assessee has made payment as recruitment expenses to Perfect Connection Ltd. without deducting tax on the aforesaid payment - HELD THAT:- We do not find any infirmity in the decision of ld. CIT(A), since the Assessing Officer has not disproved the fact that assessee has made payment on account of reimbursement of expenditure on which no TDS is deductable. Therefore, this ground of appeal of the Revenue stands dismissed Long term capital loss as against long term capital gain offered in the original return of income and revised return of income filed by revenue - HELD THAT:- assessee has brought to the knowledge of the Assessing Officer vide letter dated 29th March, 2012 that because of error in computing the income under the head long term capital gain, it has omitted to take correct cost of acquisition while computing the long term capital loss of ₹ 7,640,519/- on the sale of ₹ 7,13,383 shares of Arvind Brand Ltd. The assessee further submitted that correct long term loss on the sale of those shares would have worked out to the amount of ₹ 1,265,46,770/- as against the loss of ₹ 76,40,519/- computed in its return of income. The assessee has given the working as per which the long term capital gain of ₹ 5,30,66,091/- shown in the revised return was required to be re-stated as long term capital loss of ₹ 6,58,40,160/-. The aforesaid submission of the assessee was not considered by the Assessing Officer. Subsequently, in the appellate proceedings, the ld. CIT(A) referred the decision of CIT vs. Pruthvi Brokers and Shareholders [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] and decisionin the case of MITESH IMPEX [ 2014 (4) TMI 484 - GUJARAT HIGH COURT] wherein it is stated that assessee can claim additional claim before CIT(A) even though no revised return of income is filed. Therefore, in accordance with the findings laid down in these decisions, the ld. CIT(A) has directed the Assessing Officer to allows the losses as per provision of the act after verification of the working given by the assessee - No error in the direction of the ld. CIT(A). Therefore, this ground of appeal of the revenue stands dismissed. Computation of deduction u/s 14A r.w.r. 8D - HELD THAT :- In VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] it is held by the Special Bench of the Tribunal that only those investment are to be considered by computing average value of investment which yielded exempt income during the year. We are of the considered view that ratio laid in the above decision is squarely applicable in the instant case. Therefore, we set aside the order of the ld. CIT(A) for the impugned assessment year and restore the matter to the file of the Assessing Officer to make a de-novo order after following the ratio laid down in Vireet Investment Pvt. Ltd. (supra) after giving a reasonable opportunity of being head to the assessee. In the result, this ground of appeal of Revenue and assessee are partly allowed for statistical purpose
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2021 (11) TMI 765
Revision u/s 263 - Reopening of assessment u/s 147 initiated against assessee - as per CIT A.O. failed to make any independent inquiry to verify the fact relating to the purchase of immovable property by the assessee - HELD THAT:- The documents placed on record clearly shows that the A.O. made the inquiries in depth and accepted the explanation given by the assessee as well as the co-owner. The assessment framed in the hands of the co-owners namely Smt. Monica Aggarwal W/o Shri Manish Kumar and Smt. Swati Aggarwal W/o Shri Avnish Aggarwal in whose cases also the assessments were reopened under section 147 of the Act and were framed under section 143(3) of the Act vide separate orders dt. 28/12/2018 and 27/12/2018 respectively. Those assessment framed under section 143(3) of the Act in the hands of the co-owners had been accepted. The only objection was taken to the assessment famed in the hands of the assessee under section 263 of the Act which is against the principle of consistency. A.O. after making the proper inquiry relating to the property in question accepted the explanation. Therefore, it cannot be said that the A.O. failed to make the proper inquiries while accepting the explanation given by the assessee. Pr. CIT considered the value mentioned in the agreement to sell which was not acted upon and nothing was brought on record that the amount stated in the agreement was paid for the sale. On the contrary the amount mentioned in the sale deed was paid through Demand Draft and was accepted as correct in the case of another co-owners also by the A.O. while framing the assessment under section 143(3) r.w.s 147 of the Act. Pr. CIT has taken the action merely on the basis of the audit objection while the A.O. made the proper inquiries in depth at the time of framing the assessment under section 143(3) r.w.s 147 of the Act. Therefore the impugned order passed by the Ld. Pr. CIT is not maintainable, accordingly the same deserves to be quashed.Department has accepted the value of the property in the cases of two co-owners while the value of the same property in the hands of the 3rd co-owner i.e; the assessee was doubted. Therefore in view of the principle of consistency also the action taken by the Ld. Pr. CIT was not justified. Pr. CIT was not justified in holding that the assessment order dt. 28/12/2018 passed by the A.O. was erroneous and prejudicial to the interest of the Revenue. Accordingly, the impugned order passed by the Ld. Pr. CIT is quashed. - Decided in favour of assessee.
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2021 (11) TMI 764
Gain/loss on sale of shares - legal nature of the transaction - period of holding - what was held by the assessee by virtue of purchase of shares was land - Treatment to share holding - CIT(A) rejecting the claim of long term capital loss on the sale of shares by treating the same as short term capital gain on transfer of immovable property - whether the assessee has adopted the colourable device by transferring the land in the garb of transfer of shares? - HELD THAT:- The assessee in the present case had two legal courses open to dispose of the land held by M/s ARGHPL. One was to directly sale the land and pay the capital gains tax in the hands of M/s ARGHPL either as long term or short term depending upon period of holding of land by impugned company i.e. more than 36 month or less as the case may be in accordance with the provisions provided under section 2(29A) and 2(42A) of the Act. In the other case by selling the shares of M/s ARGHPL so that control over the company as a whole was transferred. In the latter situation, the M/s ARGHPL would continue to hold the land and, the assessee company would pay long term capital gain on transfer of share after claiming indexed cost of acquisition as the holding period of shares by assessee was for more than 12 month by virtue of proviso to section 2(42A) of the Act read with section 2(29A) of the Act. Thus, the assessee chooses one option out of two legally permissible options which it deem most tax effective or viable option. There was no inserting of any device and, therefore, it could not be said that any colourable device was used to reduce the tax liability. Entire basis of holding the transaction on hand as colourable device was that M/s ARGHPL was holding only one assets which is land, thus what was held by the assessee by virtue of purchase of shares was land which was transferred after holding period of 34 month which was less than 36 months for qualifying as long term capital assets. In other words, had these shares been transferred by the assessee after the expiry of 36 months, then the transaction would have been accepted as genuine by the revenue. However to our understanding, the period of holding for 34 months cannot be a criteria/reason to hold the transaction in dispute as colourable device. The assessee could have easily postpone the transaction by two months in order to avoid the possible hassle of the income tax proceedings. In the present case, the assessee has not adopted the colourable device by hiding the truth or by carrying out the transaction in order to give the appearance of genuine transaction. Hence, we do not find any reason to uphold the finding of the authorities below. As per companies Act shareholder and company both are two separate legal person capable of holding property of any kind in their own name. The land in question was held by M/s ARGHPL and not by the shareholder i.e. Assessee company. By being shareholder, the assessee cannot be said to be the owner of the land held by impugned company for the reason that a company is perpetual succession not affected by incoming and outgoing of its shareholder. Therefore, to our understanding what can be transferred by the assessee being shareholder is only the shares, held by it. Thus the transfer of share by the assessee cannot be equated with transfer of land which is not held by it. Throughout the period the assessee has treated the said shareholdings as investment in shares and not in land. The assessee was subject to disallowances under section 14A of the Act for the expenses incurred to earn dividend from such investment. Therefore to our mind principle of consistency should be followed. As such the revenue cannot change the stand as per its will. Thus in view of above stated discussion we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Disallowance on account of diversion of interest bearing fund - assessment proceedings found that the assessee on one hand bearing interest expenses and on the other hand it has made interest free advances - AO worked out the amount of interest attributable on such advances of ₹ 9,90,000/- by taking the rate of interest @ 12% of the interest free advances - HELD THAT:- Admittedly, the own fund of the assessee exceeds the amount of interest free loans and advances shown in the balance sheet as on 31/03/2012. Therefore an inference can be drawn that the assessee had not utilized borrowed fund in making such interest free loan and advances. Thus there cannot be any disallowance on account of interest expenses under the provisions of section 36(1)(iii) of the Act - we hold that no disallowance of interest expense claimed by the assessee can be made on account of such interest free loans and advances as discussed above. Hence the ground of appeal of the assessee is allowed. Deduction u/s 80-IB (10) denied - return not filed within the time limit provided - conditions specified therein were not fulfilled - availability of extended period of due date for filing return of income - project of the assessee was not approved/completed within the time prescribed under the provisions of section 80 IB (10) - DR submitted that the return of income was filed by the assessee beyond the due date as specified under the provisions of section 139(1) of the Act which is in contravention to the provisions of section 80AC of the Act - HELD THAT:- There is no dispute to the fact that the assessee was to file the return of income on our before 30 November 2012 in the event if it was to file TP report in form 3CEB for having international transactions with its associated enterprise. Admittedly, the assessee has filed form 3CEB for having international transactions with the AE. These transactions include the guarantee furnished by the AE as well as the brokerage agreement with the AE. This fact of filing the form 3CEB report has not been controverted by the AO. The chartered accountant being the expert of his field, his advice cannot be faulted by the AO without bringing any cogent material on record. Therefore, the opinion of the chartered accountant should be admitted. CIT (A) has given clear finding that by virtue of guarantee deed entered between assessee, ATTCO and SIPL, the advance given by SPIL were converted into secured short term loan. Thus guarantee with respect to such short term loan of ₹ 11.34 constitute more than 10% of total borrowing of the assessee. Hence the ATTCO became the AE of the assessee by virtue of provision of section 92A(2)(d) of the Act. The Learned CIT(A) also given finding that the assessee through ATTCO sold flats in Venus Parkland project, thus the assessee was liable to pay commission as per brokerage agreement entered by the assessee which was ultimately paid to the ATTCO after deducting withholding tax. There was relationship of AE created between assessee and ATTCO and further entered into international transaction by crediting brokerage commission in the name of ATTCO. Thus a s per the provision of section 92E, the assessee was required to get TP report in form 3CEB. Accordingly it enjoy the extended period of due date for filing return of income. AO has disallowed the deduction claimed by the assessee for the reason that it has not got the BU permission for entire project up-to 31st March 2012 - We find that the learned CIT(A) has given flawless finding that after resolution of dispute of jurisdiction over issuance of BU permission, the AMC has issued such permission for remaining units to the assessee and certified that the project was completed before due date i.e. 31st March 2012. These permission are placed. This fact was not controverted by the revenue before us - there remains no ambiguity with respect to completion of project within the prescribed time limit. Hence we do not find any reason to interfere in the finding of the learned CIT (A) given on merit. Thus the grounds of Revenue s appeal are dismissed.
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2021 (11) TMI 763
Revision u/s 263 by CIT - valid scheme of amalgamation - merger or amalgamation - CIT alleged that depreciation on goodwill generated in the scheme of amalgamation is not allowable under the provision of the Act - HELD THAT:- In the case on hand, the M/s SSL taken over the business of M/s SGSL with all the assets, liabilities and reserve. However all the assets of transferee company i.e. M/s SGSL were taken at fair market value which was valued by independent valuer namely Duff and Phelps . The M/s SSL discharged purchase consideration by cancelling investment in the books of account instead of issuing equity share capital. Thus condition specified under sub clause (iii) and (iv) of para 3(e) of AS-14 did not comply with. Hence the scheme of amalgamation in the case on hand is in the nature of purchase method which recognizes goodwill where the purchase consideration surpasses the net assets value taken over. Admittedly the assessee paid purchase consideration by cancelling the investment of ₹ 2699.72 against net assets value acquired of ₹ 1271.90 crores. Accordingly excess amount recorded as goodwill. Admittedly all these information was part of scheme of amalgamation which was approved the jurisdictional High Court as discussed above. Thus the finding of the learned principal CIT to this extent that the scheme of amalgamation is in the nature of merger is based on wrong assumption of facts. Depreciation on goodwill generated in the scheme of amalgamation is not allowable under the provision of the Act - Section 32 of the Act requires allowing the depreciation to the amalgamated company in the same manner which would have been allowed to the amalgamating company in the event had there not been any amalgamation.Similarly, the actual cost of the assets acquired in the scheme of amalgamation in the hands of the amalgamated company will continue to be the same as it would have been in the hands of the amalgamating company in the event, had there not been any amalgamation. WDV of the assets acquired in the scheme of amalgamation in the hands of the amalgamated company will remain to be the same as it would have been in the hands of the amalgamating company in the event, had there not been any amalgamation. The relevant extract of the explanation 2 to section 43(6)(c). The assets which have been acquired by the assessee in the scheme of amalgamation would continue at the book value in the books of the amalgamated company. As such, these provision are not related to the goodwill arising in the hands of amalgamated company in the scheme of amalgamation which rises due to the difference between the purchase consideration and the NAV acquired by it. Thus the provisions of the Act i.e. 6 proviso to section 32, explanation 7 to section 43(1), explanation 2 to section 43(6)(c)of the Act cannot be applied to the goodwill emerged in the scheme of amalgamation approved by the Jurisdictional High Court. Whether such goodwill acquired by the assessee is eligible for depreciation under the provisions of section 32 ? - As goodwill created in the scheme of amalgamation is acquired by the assessee. Thus, in our considered view the assessee has complied all the conditions provided under section 32 of the Act. Accordingly, we hold that the order passed by the ld. CIT under section 263 of the Act is not sustainable and therefore we quash the same. Hence, the ground of the assessee is allowed. Revision u/s 263 - disallowing depreciation on goodwill arising on amalgamation - additional issue arises for our consideration is that whether the depreciation can be disallowed/disturbed claimed on the opening written down value of the intangible assets being goodwill - AY2017-18 - HELD THAT:- We note that the assessee has claimed depreciation on the goodwill which was brought forward from the immediate preceding assessment years. Thus the depreciation on the goodwill originated in the earlier year cannot be disturbed in the year under consideration without disturbing the year in which it was instigated. In fact, the claim of the assessee for the amount of depreciation on the goodwill should be allowed based on consistency in the given facts and circumstances. Thus we hold that the order passed by the ld. CIT under section 263 of the Act is not sustainable and therefore we quash the same. Hence, the ground of the assessee is allowed.
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2021 (11) TMI 762
Assessment u/s 153A - additions based on the seized documents apart from the addition made for surrendered made u/s 132(4) - HELD THAT:- Addition deserves to be deleted, as it is based only on the statement recorded u/s 132(4) having no nexus whatsoever with any incriminating/seized material found during the course of search carried out u/s 132 of the Act at the premises of the assessee. Accordingly sole ground raised by the assessee is allowed. Addition u/s 69 - Addition for alleged pawning business and the addition for money-lending business calculated as per ceased diary BS-4 - HELD THAT:- The alleged pawning business was not carried out by the assessee firm and it was carried out by the family members of the partners and the income from pawning business have been shown in the income tax return filed by them. This fact is supported by copy of income tax return computation of income and balance sheet placed in the paper book. Thus no addition was called for u/s 69 and has been rightly deleted by the Ld. CIT(A). Addition for money lending business - We find that this was also carried out by the partners of the firm and they have already surrendered income of ₹ 15,33,000/- for the alleged money lending business in their individual hands. Since the alleged seized documents referred for making alleged addition are not connected to the assessee firm, no addition was called for u/s 69 of the Act. We find no infirmity in the finding of Ld. CIT(A) and the same is confirmed. Accordingly ground no.1 2 of revenue s appeal for A.Y. 2016-17 stands dismissed. Unexplained cash found during the course of search - CIT-A deleted the addition - HELD THAT:- Opening balance of cash in hands as on 01.04.2015 in the audited books of accounts was ₹ 76,16,708/- but in the manual cash book the balance as on 01.04.2015 was taken at ₹ 26,13,010/- which was marked in pencil. Since the audit for F.Y. 2014-15 was undergoing when the search took place on 21.08.2015, the assessee subsequently completed books of account, got them audited and produced such audited books before Ld. AO. During the course of assessment proceedings no additions have been made during A.Y. 2015-16 for the alleged cash in hands shown as on 31.03.2015. Thus Ld. AO has neither brought on record any deficiency in the books produced nor has rejected books of account. AO should have considered the opening balance of cash in hands as on 01.04.2015 of ₹ 76,16,708.71/-. On considering the opening balance as on 01.04.2015 at ₹ 76,16,708/- the alleged unexplained cash stands explained. Thus, no interference is called for in the finding of Ld. CIT(A) deleting the addition of ₹ 60,00,000/- ground no.3 raised by the revenue stands dismissed. Addition made u/s 69 based on the seized diary BS44 page 11 for the alleged money-lending business - HELD THAT:- We observe that in seized diary BS-44 list of name amount and dates were appearing. Before Ld. AO it was submitted that the same is a list of debtors. Ld. AO refused to accept. The assessee filed audited balance sheet and the entries relating to debtors - the contentions made by the assessee before lower authorities and before us are duly supported by the audited balance sheet for preceding years and the alleged names appearing in the seized diary BS-44 are name of the outstanding debtors and have no relation with the alleged moneylending business. Ld. CIT(A) has rightly appreciated the facts and deleted the additions which thus no interference is called for. Ground No.4 of the revenue s appeal is stands dismissed. Addition u/s 69 on the basis of loose paper as per diary BS-43 - HELD THAT:- Undisputed fact emerge that the alleged loose papers as per the diary BS43 which are the foundation for the addition of ₹ 5,00,000/- do not belongs to the assessee. It actually belongs to Jain trust namely Pandit Todarmal Smarak Trust. One of the partners of the firm namely Shikhar Chand Jain is known to be a preacher and a renowned speaker on Jain Dharma and also attached to the said Jain Trust. These loose papers refer to purchase of the idols of God worshiped by the Jain Community for being placed in a Jain Temple. Therefore, under the given facts and circumstances of the case since the alleged loose paper do not belong to the assessee firm, Ld CIT(A) has rightly deleted the addition. The finding of Ld CIT(A) needs no interference. Accordingly ground no.5 raised by the revenue stands dismissed. Unexplained jewellery - valuation of inventory of gold and silver ornaments and the diamonds - HELD THAT:- As in view of the CBDT circular dated 11.05.1994, settled judicial precedents, will of late Chameli Devi, Wealth Tax returns for A.Y..2011-12 of the beneficiaries referred in the will, affidavit of Devendera Jain brother of late Chameli Devi substantiating the gift and the statement during the course of search are sufficient enough to explain the jewellery of 10987 grams which was included in the stock of inventory but not accounted in the books as they were personal assets of the partners and not of the assessee firm. Further in light of the evidence filed before us which were also placed before lower authorities which are of the dates preceding to the date of search it cannot be said to be an afterthought submission to explain the gold ornaments weighing 10987.35 grams. CIT(A) has rightly appreciated the facts and documentary evidences in accepting the contention of assessee that the alleged unexplained stock of gold ornament weighing 10987 gms is the personal jewellery of partners and is therefore duly explained. Addition for value of 5686 gms of gold jewellery claimed to be purchased prior to the date of search but bills accounted for after the date of search and addition being deleted by ld. CIT(A), we find that the assessee has provided the following details which commonly states that the payments were made prior to the date of search but the bills were received by the assessee subsequent to the date of search. All the above stated bills along with copy of invoices of the suppliers, details of payments made and confirmations received from suppliers were placed before the Ld. AO. who failed to find any discrepancy or inaccuracy in the above said documents produced before us. Under these given facts and circumstances of the case, we are of the considered view that the Ld. CIT(A) after appreciating the facts brought on record and in light of sufficient documentary evidences has rightly accepted the explanation of the jewellery weighing 5686 gms and thus rightly deleted the addition for alleged unexplained stock. Jewellery belonging to sister and brother in law weighing 779.64 gms we find merit in the submissions made by the assessee and finding of Ld. CIT(A) that this jewellery weighing 779.64 gms belong to Smt. Meena Jain and Ashok Jain who intended to go to Canada and the same is verifiable on the copy of Passport filed by the assessee. Thus, no addition was called for unexplained jewellery 779.64 gms. It is not in dispute that during the course of search valuation report of jewellery in the name of Ms. Meena Jain and Ashok Jain was found which clearly indicates that the jewellery of 779.64 gms belonged to them. Thus, we find no infirmity in the finding of Ld. CIT(A) deleting addition for unexplained gold ornaments weighing 779.64 gms. No reason to interfere in the finding of Ld. CIT(A) who had examined the facts of the case in detail and deleted the addition of unaccounted stock of ₹ 4,18,16,751/- which comprised of the alleged unaccounted stock of 10987 gms on account of jewellery of partners/family member, 5685.92 grms on account of purchase bills received after search and 779.64 gms belonging to Ms. Meena Jain and Ashok Jain. Thus, ground no.6 raised by the revenue stands dismissed.
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2021 (11) TMI 761
Failure to deposit the employees contribution to PF/ESI for having not paid the same on or before the prescribed due dates as per section u/s 36(1)(va) - addition made in the intimation made to the assessee u/s 143(1) - Scope of amendment to section 36(1)(va) and u/s 43B - HELD THAT:- We find that this issue has already been decided in INSTA EXHIBITIONS PVT. LTD [ 2021 (8) TMI 1235 - ITAT DELHI] AND M/S CRESCENT ROADWAYS PRIVATE LIMITED. [ 2021 (7) TMI 1265 - ITAT HYDERABAD] holding that the amendment to section 36(1)(va) and u/s 43B of the Act effected by the Finance Act 2021 is applicable prospectively ,reading from the Notes on Clauses at the time of introduction of the Finance Act, 2021, specifically stating the amendment being applicable in relation to assessment year 2021-22 and subsequent years. Therefore the addition, we hold, cannot be made on the strength of the amendment effected by Finance Act 2021 to section 36(1)(va)/43B. Also it is an admitted position that the jurisdictional High Court has in various decisions held that employees contribution to ESI PF is allowable if paid by the due date of filing return of income u/s 139(1) - we hold that the claim of employees contribution to ESI and PF as per section 36(1)(va) of the Act cannot be denied in the impugned year, i.e. 2019-20 on the basis of amendment made to the section by Finance Act 2021. The order of the Ld.CIT(A) upholding the said disallowance is therefore set aside and the AO is directed to allow the claim of the assessee. - Decided in favour of assessee.
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2021 (11) TMI 760
Revision u/s 263 by CIT - reopening of assessment u/s 147 - reason to suspect v/s 'reason to believe' - unaccounted fund was transferred from M/s. Kalyan to M/s. BSR Finance and Construction Ltd. through layering and finally reached to the ultimate beneficiary the assessee (M/s. Usha Polycab Ltd.) - AO has not properly enquired both the issue of ₹ 25 lakhs transacted with M/s. Kalyan; and the loss claimed by the assessee of ₹ 43,02,450/- on account of transaction with M/s. SSL- HELD THAT:- AO has in the reasons recorded for reopening has mentioned about receiving information from the DDIT (Inv.) from which he was informed that huge suspicious transaction of money in the bank statement of M/s. Kalyan took place and that M/s. Kalyan is not doing any actual business and the un-accounted money of beneficiary like assessee are being brought through the guise of share premium/share etc. back to the actual beneficiary. Information adverse may trigger reason to suspect and not 'reason to believe'. When an information adverse like this comes to the notice of the AO then it only triggers 'reason to suspect'. Then what the AO should have done was that he should have made reasonable enquiry and should have collected material which could make him believe that there is in fact escapement of income. So in the present case the AO when he got this information from the DDIT (Inv.) should have found out the intermediaries through whose hands the assessee had received ₹ 25 lakhs and then should have properly recorded in the reasons recorded the fact from whom the assessee has received ₹ 25 lakhs which has been layered from M/s. Kalyan. Here in this case this important fact/jurisdictional fact is found missing and, therefore, the factual basis on which the AO reopened itself is fragile and, therefore, the reasons recorded to reopen itself is bad in law and, therefore, the reassessment order dated 27.12.2019 passed by the AO itself stands vitiated on the factual findings recorded by the Ld. Pr. CIT that the assessee has received money not from M/s. Kalyan directly but through several layers from M/s. Kalyan, M/s. BSR Finance Construction Co. and finally reached to the assessee. This particular assertion of facts itself takes away the base/foundation on which the AO had recorded the reason to believe to reopen the assessment. Therefore, the reassessment order dated 29.12.2019 itself is bad in law and therefore, null in the eyes of law and therefore, the very initiation of revisional proceedings taken by the Ld. Pr. CIT against the assessee itself is void in the eyes of law and therefore quashed. - Decided in favour of assessee.
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Customs
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2021 (11) TMI 759
Interest on refund - relevant time - to be calculated from expiry of three months after passing of the Tribunal s final order or it has to be calculated from the date of final order of the tribunal - rate of interest should be 6% or 15% or any other rate - entitlement of interest on interest - HELD THAT:- In the earlier round of litigation in the same case this tribunal in the order No A/1641/WZB/AHD/08 dated 19.08.2008 [ 2008 (8) TMI 731 - CESTAT, AHMEDABAD] held that interest liability arises from the date of the order of the tribunal and not the date of judgment of the Hon ble Supreme Court - In the above order of the tribunal though the order of the commissioner(Appeals) was upheld but at the same time it was stated that interest liability arises from the date of order of the tribunal. Rate of interest - HELD THAT:- The rate of interest is statutorily prescribed under section 27 (A) read with Notification issued there under according to which 6% as rate of interest was prescribed. The departmental officer is bound to follow the statutory provision strictly and therefore, no interest more than 6% can be calculated. Even this tribunal which is creature under the statute of Customs Act cannot decide the rate of interest out of the statutory provisions. Accordingly, the rate of interest i.e. 6% decided by the Lower Authority is correct and legal - Learned Commissioner (Appeals) has rightly held that the Adjudicating Authority has rightly applied simple rate of interest as 6% P.a. Therefore, the assesseee cannot be granted interest at the rate of 15% or any other rate above 6%. Entitlement of interest on interest amount - HELD THAT:- Learned Commissioner (Appeals) has concluded that being a creature of the statute he has no power to allow interest on interest amount to the appellant. There are no infirmity in the above finding. Even this Tribunal also being a creature under statute of customs Act cannot decide anything beyond the provisions of the statue of the Customs Act. There is no statutory provision for granting the interest on interest. Therefore, the decision on this issue by the Learned Commissioner (Appeals) is legal and correct - we concur with the Commissioner (Appeals) on the issue of rate of interest and interest on interest. Appeal is partly allowed.
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Corporate Laws
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2021 (11) TMI 758
Sanction of Scheme of amalgamation of the transferor companies into the transferee company (Scheme) - Section 230, 232 of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensation with various meetings issued - directions for issuance of notices also given. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (11) TMI 757
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The records revealed that inspite of the Corporate Debtor falling due to the Operational Creditor, he failed to make any payment. He did not even respond to the Demand Notice. The Copy of the Demand Notice delivered by the Operational Creditor to the Corporate Debtor is on record. The Affidavit filed by the Operational Creditor shows that no reply is given by the Corporate Debtor relating to the dispute of the unpaid operational debt. The Copy of the financial statement furnished by the financial institutions is also filed. Hence, this Application is found to be complete. The petition is admitted - moratorium declared.
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Indian Laws
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2021 (11) TMI 756
Dishonor of Cheque - seeking permission to lead defence evidence were dismissed - right to lead defence evidence closed - seeking directions for recalling of CW-1 for further cross-examination - petitioners has prayed that only one opportunity may be granted to the petitioners to lead defence evidence and the petitioners undertake to examine the defence witnesses in one day - HELD THAT:- Doubtless, the petitioners are guilty of delaying the trial, however, this Court cannot lose sight of the fact that a fair trial is the hallmark of criminal procedure. It entails not only the rights of the victims but also the interest of the accused. It is the duty of every Court to ensure that fair and proper opportunities are granted to the accused for just decision of the case. In furtherance of the above, adducing of evidence by the accused in support of his defence is also a valuable right and allowing the same is in the interest of justice. This Court is of the opinion that interest of justice would be served if the petitioners are allowed to lead defence evidence, subject to their examining the defence witnesses on one single day. The cross-examination of all such defence witnesses shall also be conducted on the same day. It has been informed that the next date of hearing fixed before the Trial Court is 13.12.2021 - it is directed that the matter be listed before the concerned Trial Court on 22.11.2021 for the petitioners to take appropriate steps for leading their defence evidence. The same shall however be subject to payment of cost of ₹ 30,000/- in each case, to be payable to the respondent, within a period of two weeks from today.
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2021 (11) TMI 755
Dishonor of Cheque - specific allegations made against these petitioners about their role in issuing the cheques in question and its subsequent dishonour or not - vicarious liability under Section 141 of NI Act - HELD THAT:- The responsibility of the directors and day to day activities of the directors in the company would be disclosed in the Trial - Further, the reliance of the Judgment in the case of Pooja Ravinder Devidasani Vs. State of Maharashtra and another [ 2014 (12) TMI 1070 - SUPREME COURT] placed by the learned counsel for the petitioners wherein it is held that the appellant was neither a Director f the accused company nor in charge of or involved in the day to day affairs of the company at the time of commission of the alleged offence. There is not even a whisper or shred of evidence on record to show that the appellant could be vicariously held liable for the offence with which she is charged . However, in the present case, it is admitted fact that the cheques were issued by the Directors with seal of the company and signature of the petitioners who were the directors in the company in favour of the respondent/complainant for the supply of the material.ie. waste and scrap of iron and steel to M/s. Mehala Castings and Components Pvt. Ltd. These cheques have been given for the business transaction held between the petitioner's company and the complainant's company. In such circumstances, the petitioners/Directors of the company have issued the said cheques in question in favour of the respondent/complainant. Whether the company is not functioning from January 2014 and the petitioner were not directors in the company at that point of time could be tried and decided only in the Trial. Further the averments made by the petitioner is not acceptable while the petitioners have not produced any substantial material to prove that the directors have not involved in the affairs of the company and they were not responsible in the day to day activities of the company - All these averments are factual in nature and the same has to be established only at the time of Trial. The petitioners cannot seek to quash the C.C.Nos.367 and 368 of 2015 on the file of the Judicial Magistrate Court No.1, Tiruppur as they have failed to produce the substantial evidence to prove their averments before this Court. Hence, this Court is not inclined to accept the contentions of the petitioners - Petition dismissed.
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