TMI Tax Updates - e-Newsletter
April 21, 2020
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
Indian Laws
Highlights / Catch Notes
GST
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Profiteering - supply of Dettol HW Liquid Original 900 ml - allegation that respondent had not passed on the benefit of reduction in the GST rate from 28% to 18% and instead, increased the base price of the above product - The profiteered amount is determined as ₹ 63,14,901/- in respect of the Respondent No. 1 and ₹ 2,33,456/- in respect of the Respondent No. 2 in terms of Rule 133 (1) of the CGST Rules, 2017 - NAPA
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Profiteering - restaurant service - Respondent had increased the base prices of different items by more than 9.05% i.e. by more than what was required to offset the impact of denial of ITC, supplied as a part of restaurant service to make up for the denial of ITC post-GST rate reduction. - NAPA
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Profiteering - restaurant service - the Respondent had increased the base prices of different items by more than 7.39% i.e. by more than what was required to offset the impact of denial of ITC, supplied as a part of restaurant services to make up for the denial of ITC post-GST rate reduction and on comparison of pre and post GST rate reduction prices of the items sold in respect of items sold - NAPA
Income Tax
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Maintainability of appeal before CIT(A) u/s 249 (4)(b) - failure to pay advance tax - Once the assessee alleged that his income is not taxable during the provisions of the Act there cannot be any obligation upon the assessee to pay advance tax - appeal restored before CIT(A)
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Rental income earned - Correct head of income - the rental income is taxable under the head “Income from House Property” as claimed by the assessee in the return of income. - AT
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Disallowance u/s 14A r.w.r 8D - These expenses are directly relatable to earning of exempt income and the same has already been disallowed by the assessee while computing its income under normal provisions. However, the same has not been added back while computing Book Profits u/s115JB. Keeping in view the clause (f) to explanation-1 to Section 115JB (2), the same would be added back while computing Book Profits u/s 115JB.
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Capital gain - assessee has argued that the assessee is a society and did not incur any cost to acquire the TDR attached to land owned by it and transferred the same to a developer for a consideration for construction of a floor space and transfer of TDR would not give rise to any capital gains chargeable to tax - Additions deleted by accepting the argument - AT
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LTCG - Benefit of exemption u/s 54 in case residential house is purchased outside India - the amendment brought by Finance Bill (No.2) Act, 2014 is not applicable in the case of assessee. - AT
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Exemption u/s 11 - denying registration to the assessee u/s 12A read with Section 12AA - assessee had paid salary partly through Bank and partly in cash, but had not deducted tax at source in case of any of the employees - it is of no relevance, for registration u/s 12A r.w.s 12AA, if salary has been paid partly in cash and partly by cheque.
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CIT(A) has admitted and considered the additional evidences without complying with the mandatory provisions of Rule 46A of I.T.Rules and hence, the ld CIT(A) order granting relief to the assessee cannot be held as sustainable and valid as per mandatory provision Rule 46A of I.T.Rules. - AT
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Deemed dividend u/s 2(22)(e) - Supply is more or less equal to the advances received by the assessee from the company - the commercial transactions would not fall within the ambit of sec.2(22)(e) - AT
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Penalty u/s 271(1)(c) - unexplained investment u/s.69 - The penalty can be justified only if assessee fails to offer an explanation or his explanation is found to be false. If these circumstances are not present, the penalty can be avoided if assessee is able to substantiate his explanation.
Indian Laws
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CBDT revising return forms to enable taxpayers avail benefits of timeline extension due to Covid-19 - News
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Interpretation of statute - Dishonor of cheque - enforcement of legal liability towards in Unregistered partnership firm - complaint filed by an unregistered firm u/s 138 - there is no point in stretching the bar which is in the nature of temporary bar to the suit to the complaints under section 138 of the N. I. Act, which is in the nature of penal provision with the object to inculcate faith in banking transactions - HC
Articles
Notifications
GST - States-
13766-FIN-CT1-TAX-0002/2020 - dated
7-4-2020
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Orissa SGST
Notification to extend due date of furnishing FORM GST CMP-08 for the quarter ending March, 2020 till 07.07.2020 and filing FORM GSTR-4 for FY 2020-21 till 15.07.2020.
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13762-FIN-CT1-TAX-0002/2020 - dated
7-4-2020
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Orissa SGST
Notification to provide relief to taxpayers by conditional waiver of late fee for delay in furnishing outward statement in FORM GSTR-1 for tax periods of February, 2020 to April, 2020 / quarter ending 31.03.2020.
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13758-FIN-CT1-TAX-0002/2020 - dated
7-4-2020
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Orissa SGST
Notification to provide relief to taxpayers by conditional waiver of late fee for delay in furnishing returns in FORM GSTR-3B for tax periods of February, 2020 to April, 2020
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13754-FIN-CT1-TAX-0002/2020 - dated
7-4-2020
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Orissa SGST
Notification to provide relief to taxpayers by conditional lowering of interest rate for tax periods of February, 2020 to April, 2020.
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13750 -FIN-CTI-TAX- 0001/2020 - dated
7-4-2020
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Orissa SGST
Odisha Goods and Services Tax (Fourth Amendment) Rules, 2020
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10678-FIN-CT1 -TAX-0002/2020 - dated
31-3-2020
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Orissa SGST
Notification to amend Notification No. 19869-FIN-CT1-TAX-0022/2017, dated the 29th June, 2017, reducing SGST rate on Maintenance, Repair and Overhaul (MRO) services in respect of aircraft from 18% to 5% with full ITC.
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10674 - FIN-CT1 -TAX- 0002 /2020 - dated
31-3-2020
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Orissa SGST
Notification to prescribe the due date for furnishing FORM GSTR-1 for the quarters April, 2020 to June, 2020 and July, 2020 to September, 2020 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year.
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10670 -FIN-CT1-TAX- 0002/2020 - dated
31-3-2020
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Orissa SGST
Seeks to specify class of persons, other than individuals who shall undergo authentication, of Aadhaar number in order to be eligible for registration.
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10666- FIN-CT1 -TAX- 0002 /2020 - dated
31-3-2020
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Orissa SGST
Seeks to notify the date from which an individual shall undergo authentication, of Aadhaar number in order to be eligible for registration
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10662-FIN-CT1-TAX-0002/2020 - S.R.O. No. 93/2020 - dated
31-3-2020
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Orissa SGST
Notification to specify the class of persons who shall be exempted from aadhar authentication
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10654-FIN-CT1 -TAX-0002/2020 - dated
31-3-2020
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Orissa SGST
Notification to exempt certain class of registered persons capturing dynamic QR code and the date for implementation of QR Code to be extended to 01.10.2020.
News
Case Laws:
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GST
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2020 (4) TMI 571
Profiteering - supply of Dettol HW Liquid Original 900 ml - allegation that respondent had not passed on the benefit of reduction in the GST rate from 28% to 18% and instead, increased the base price of the above product - contravention of section 171 of CGST Act - penalty - HELD THAT:- It is apparent from the DGAP s Report that there has been reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 and the above product was impacted by the rate reduction and hence, the benefit of the rate reduction was required to be passed on to the customers by the Respondents. It is also revealed that the DGAP vide his report dated 19.09.2019 has calculated the amount of net higher sales realization due to increase in the base price of the impacted goods, despite the reduction in the GST rate from 28% to 18% as ₹ 63,14,901/- in respect of the Respondent No. 1 and ₹ 2,33,456/- in respect of the Respondent No. 2. - The said profiteered amount has been arrived at by the DGAP by comparing the actual invoice-wise base price of the complained product sold during the period from 15.11.2017 to 31.03.2019 with the commensurate price based on the average of the base prices of the product sold during the period from 01.11.2017 to 14.11.2017. The profiteered amount is determined as ₹ 63,14,901/- in respect of the Respondent No. 1 and ₹ 2,33,456/- in respect of the Respondent No. 2 in terms of Rule 133 (1) of the CGST Rules, 2017, during the period from 15.11.2017 to 31.03.2019. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent No. 1 2 shall reduce their prices commensurately as has been detailed above. The Respondent No. 1 2 are also directed to deposit an amount of ₹ 63,14,901/- and ₹ 2,33,456/- respectively in the CWF of the Central and the concerned State Governments, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c) of the above Rules alongwith 18% interest payable from the dates from which the above amount was realised by them from their recipients till the date of deposit - Since the Respondent No. 2 has made supplies in the NCT of Delhi only the profiteered amount shall be deposited by him in the CWF of the Central Government and the Government of NCT of Delhi respectively, as per the provisions of Rule 133 (3) (o) along with the interest @ 18% within a period of 3 months failing which the same shall be recovered by the concerned Commissioner CGST/SGST as per the provisions of their respective Acts. Penalty - HELD THAT:- It is evident from the above narration of facts that the Respondent No. 1 and 2 have denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and have thus profiteered as per the explanation attached to Section 171 of the above Act. Therefore, both the Respondents are apparently liable for the imposition of penalty under Section 171 (3A) of the CGST Act, 2017 - Therefore, a show cause notice be issued directing them to explain why the penalty prescribed under the above sub-Section should not be imposed on him.
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2020 (4) TMI 570
Profiteering - restaurant service - allegation that the Respondent had increased the base prices of his products and had not passed on the benefit of reduction in the GST rate - contravention of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- Section 171 of the CGST Act 2017 itself defines the term profiteered which means the amount determined on account of not passing on the benefit of reduction in the rate of tax on supply of goods and services or both or the benefit of Input Tax Credit to the recipient by way of commensurate reduction in the prices of the goods or services or both. We find it also pertinent that Section 171 of the CGST Act 2017 provides that the profiteered amount is to be computed in respect of each supply made by a registered person and that the scope of profiteering is confined to the question of whether the benefit accruing on account of reduction in the tax rate or the benefit of ITC as the case may be, has been passed on to the recipient/consumer or not. It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been a reduction in the rate of tax from 18% to 5% w.e.f. 15.11.2017, vide Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017 in the post GST period. It has been revealed from the DGAP's Report that the ITC which was available to the Respondent during the period July 2017 to October 2017 is 6.32% of the net taxable turnover of restaurant services supplied during the same period. With effect from 15.11.2017, when the GST rate on restaurant service was reduced from 18% to 5%, the ITC was not available to the Respondent - Based on the above facts the profiteered amount is determined as ₹ 1,49,896/- as has been computed in Annexure-8 of the DGAP Report dated 17.09.2019. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of ₹ 1,49,8961- in two equal parts of ₹ 74,948/- each in the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c) of the above Rules along with 18% interest payable from the dates on which the above amount was realized by the Respondent from his recipients till the date of its deposit. Penalty - HELD THAT:- It is evident from the above narration of facts that the Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence under section 171 (3A) of the CGST Act, 2017 and therefore, he is liable for the imposition of penalty under the provisions of the above Section - Accordingly, a notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2020 (4) TMI 569
Profiteering - restaurant service - allegation that reduction in the rate of GST from 18% to 5% w.e.f. 15.11.2017, the Respondent had not passed on the commensurate benefit since he has increased the base prices of his products - contravention of section 171 of CGST Act - Penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been a reduction in the rate of tax from 18% to 5% w.e.f. 15.11.2017, vide Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017 in the post GST period. It has been revealed from the DGAP's Report that the ITC which was available to the Respondent during the period July 2017 to October 2017 was 9.05% of the net taxable turnover of restaurant services supplied during the same period. With effect from 15.11.2017, when the GST rate on restaurant service was reduced from 18% to 5%, the ITC was not available to the Respondent - The DGAP in his Report has stated that the Respondent had increased the base prices of different items by more than 9.05% i.e. by more than what was required to offset the impact of denial of ITC, supplied as a part of restaurant service to make up for the denial of ITC post-GST rate reduction. The profiteered amount is determined as ₹ 20,80,087/- as has been computed in Annexure-11 of the DGAP Report dated 13.09.2019. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. Further, since the recipients of the benefit, as determined, are not identifiable, the Respondent is directed to deposit an amount of ₹ 20,80,087/- in two equal parts of ₹ 10,40,043.50/- each in the Central Consumer Welfare Fund and the Maharashtra Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated starting from the dates on which the above amount was realized by the Respondent from his recipients till the date of its deposit. Penalty - HELD THAT:- The Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence under section 171 (3A) of the CGST Act, 2017 and therefore, he is liable to penal action under the provisions of the above Section - Accordingly, a notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2020 (4) TMI 568
Profiteering - restaurant service - allegation that reduction in the rate of GST not passed on - contravention of section 171 of GST Act - HELD THAT:- It is clear from the plain reading of Section 171(1) that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC - On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been a reduction in the rate of tax from 18% to 5% w.e.f. 15.11.2017, vide Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017 in the post GST period. It has been revealed from the DGAP's Report that the ITC which was available to the Respondent during the period July 2017 to October 2017 is 7.39% of the net taxable turnover of restaurant services supplied during the same period. With effect from 15.11.2017, when the GST rate on restaurant service was reduced from 18% to 5%, the ITC was not available to the Respondent. The DGAP in his Report has stated that the Respondent had increased the base prices of different items by more than 7.39% i.e. by more than what was required to offset the impact of denial of ITC, supplied as a part of restaurant services to make up for the denial of ITC post-GST rate reduction and on comparison of pre and post GST rate reduction prices of the items sold in respect of items sold - Accordingly, the quantum of profiteering has been computed to ₹ 7,33,043/- as per Annexure-10 of the DGAP's Report dated 13.09.2019, which is correct and can be relied upon. The profiteered amount is determined as ₹ 7,33,043/- as has been computed in Annexure-10 of the DGAP Report dated 13.09.2019. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed profiteered by the Respondent as ordered by this Authority is deposited in the CWFs of the Central and the State Government of Maharashtra - File be consigned after completion.
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Income Tax
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2020 (4) TMI 567
Maintainability of appeal before CIT(A) u/s 249 (4)(b) - failure to pay advance tax - it is the say of the counsel that the income of the assessee was below the taxable limit and, therefore, the assessee was under no obligation to pay advance tax as per the provisions of the law - HELD THAT:- Once the assessee alleged that his income is not taxable during the provisions of the Act there cannot be any obligation upon the assessee to pay advance tax. Our view is fortified by the affidavit of the assessee filed before us - first appellate authority has not decided the appeal on merits of the case, therefore, in the interest of justice and fair play restore the appeal to the files of the CIT(A) as directed to decide the appeal afresh on the grounds raised - Decided in favour of assessee for statistical purposes.
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2020 (4) TMI 566
Rental income earned - Correct head of income - taxable under the head Income from House Property OR Income from Business - HELD THAT:- Referring to lease deeds available in the paper book, we find that the assessee has simply let out the properties owned by it for exploitation of his property by an owner and it is not doing any such activity based on which, it can be said that the letting out of the properties was the doing of a business. In very next year, the AO has also accepted the claim of the assessee in the scrutiny assessment although without any discussion but because of this fact that in the immediately preceding year, the claim of the assessee was not accepted by the AO, it cannot be said that the claim of the assessee was not noticed by the AO particularly when as against loss reported by the assessee under the head Income from Business and income declared by the assessee under the head Income from Other Sources , the assessee has declared much higher amount of income under the head Income from House Property , which was converted by the AO to Income from Business in the preceding year i.e. the present year. We respectfully follow the judgment rendered in the case of Raj Dadarkar Associates vs. ACIT [ 2017 (5) TMI 586 - SUPREME COURT] and in turn follow the earlier judgment of Sultan Bros. Pvt. Ltd. [ 1963 (12) TMI 4 - SUPREME COURT] and decide the issue in favour of the assessee and hold that the rental income is taxable under the head Income from House Property as claimed by the assessee in the return of income. - Decided in favour of assessee.
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2020 (4) TMI 565
Reopening of assessment u/s 147 - Bogus purchases - HELD THAT:- There is sufficient materials in the possession of the AO to form reasonable belief of escapement of income in form of information from DGIT(Inv), which was further supported by sales tax report on suspicious dealers, which is sufficient to reopen assessment and hence, we reject legal ground taken by the assessee. Addition towards bogus purchases - Estimation of profit- AO has made 100% additions towards alleged bogus purchases as assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers - CIT(A) has restricted addition to 25% profit - HELD THAT:- In a situation where purchase is made from alleged hawala dealers, various High Courts and Tribunals had considered an identical issue in light of investigation carried out by the Sales Tax Department and held that in case purchases claims to have made from alleged hawala dealers, only profit element embedded in those purchases needs to be taxed, but not total purchase from those parties. In the case of CIT vs Simith P.Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] considered a similar issue and held that at the time of estimation of profit from alleged bogus purchases no uniform yardsticks could be adopted, but it depends upon facts of each case - considering the nature of business of the assessee both authorities have considered different rate of profit for addition towards alleged bogus purchase, but no one could support said addition with necessary evidences or any comparable cases - we direct the ld. AO to estimate 12.50% profit on alleged bogus purchases. - Decided partly in favour of assessee.
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2020 (4) TMI 564
Disallowance u/s 14A r.w.r 8D - assessee offered suo-moto disallowance u/s 14A - HELD THAT:- As assessee s own funds far exceeded the investments held by the assessee which is evident from the fact that the assessee has year-end share capital and free reserves aggregating to ₹ 17.25 Crores as against investments of ₹ 9.16 Crores held by the assessee - incremental reserves during the year far exceeds the incremental investments made by the assessee during the year - unless nexus of borrowed funds vis- -vis investments made by the assessee was established by Ld. AO, a presumption was to be drawn in assessee s favor that the investments were out of own funds - interest disallowance u/r 8D(2)(ii) would not be warranted. Therefore, we delete the same. Direct expenditure u/r 8D(2)(i) - Disallowance u/s 14A made while computing Book Profits u/s 115JB - Assessee has identified direct expenditure in the shape of demat charges and securities transactions charges and offered suo-moto disallowance of the same in its computation of income. These expenses are directly relatable to earning of exempt income and the same has already been disallowed by the assessee while computing its income under normal provisions. However, the same has not been added back while computing Book Profits u/s115JB. Keeping in view the clause (f) to explanation-1 to Section 115JB (2), the same would be added back while computing Book Profits u/s 115JB. The Ld.AO is directed to add back the same while making computations u/s 115JB. Disallowance of indirect expenditure u/r 8D(2)(iii) - AO is directed to consider only those investments which have yielded exempt income during the year and add back the same while computing income under normal provisions. However, the same would not be added back while making computations u/s 115JB as held by Delhi Tribunal (Special Bench) in ACIT Vs. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI]
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2020 (4) TMI 563
Estimation of profit - bogus purchases - estimation of profit element @ 12.5% - HELD THAT:- In a case where purchases are considered to be purchased from suspicious/hawala dealers, various High Courts and Tribunals had considered an identical issue in light of investigation carried out by the Sales Tax Department and held that in case of purchases claims to have made from alleged hawala dealers, only profit element embedded in those purchases needs to be taxed, but not total purchase from those parties - See SIMIT P SHETH [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] Considering facts and circumstances of this case and consistent with view taken by the Co-ordinate Bench in number of cases, we are of the considered opinion that the ld. AOP as well as the ld. CIT(A) have taken fairly reasonable view and estimated 12.50% profit of alleged bogus purchases. We, therefore are of the view that there is no reason to interfere with orders of the CIT(A) - Decided against assessee.
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2020 (4) TMI 562
Capital gain - transfer of development rights to the developers - assessee has given the developing right to the housing society - assessee executed agreement with Developers for re-development of the existing building on the said property - whether assessee had not incurred any cost of acquisition on a capital asset and such capital asset does not fall in the category of the capital assets specified in section 55(2)? - HELD THAT:- The facts of the present case is quite similar to the facts of the case New Shailaja Co-operative Housing Society Ltd [ 2008 (12) TMI 442 - ITAT MUMBAI] wherein also the assessee acquired the land in the year 1972 and constructed the building and subsequently by virtue of Regulation 33(7) of the Development Control Regulations of the Municipal Corporation of Greater Bombay, 1991 (DCR). The assessee became entitled to the additional FSI. The assessee nowhere incurred any cost for the execution of the additional FSI, therefore, the consideration nowhere considered as short/long term capital gain. This controversy has also been adjudicated by Hon ble High Court in the case of CIT-18 Vs. Sambhaji Nagar Co-operative Hsg Society Ltd [ 2014 (12) TMI 1069 - BOMBAY HIGH COURT] . Thus finding of the CIT(A) is not justifiable, therefore, we set aside the same and delete the addition - Decide issue in favour of the assessee.
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2020 (4) TMI 561
Estimation of income - bogus purchases - disallowance of 12.5% of the purchases by AO - CIT(A) had reduced the disallowance to the extent of 3.75% - HELD THAT:- In the given case, assessee is a dealer in various types of iron steel products, therefore we cannot standardize the profits among various types of steel industries. Thus, we are inclined to reject the contentions of Ld. AR. Accordingly, we direct the AO to disallow 9.53% (i.e. 12.5% - 2.97%). Therefore, grounds raised by the revenue are partly allowed.
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2020 (4) TMI 560
Capital gain on the sale of inherited property - indexed cost of acquisition to be computed with reference to the year in which the previous owner first held the asset OR year in which the assessee became the owner of the asset - HELD THAT:- In the present case, admittedly, the assessee inherited the property on the death of her parents. Therefore, the assessee is entitled for the benefit of indexation cost from the date of acquisition of asset or from 01-04- 1981. The ld CIT(A) while passing the order followed the ratio of decision of Manjula J Shah ( [ 2011 (10) TMI 406 - BOMBAY HIGH COURT] - No infirmity in the order passed by Ld. CIT(A). In the result the first issue is decided in favour of assessee. Benefit of exemption u/s 54 in case residential house is purchased outside India - CIT (A) granted relief to the assessee by following the decision of Hon ble Gujarat High Court in Leena J Shah [ 2016 (12) TMI 351 - GUJARAT HIGH COURT] - HELD THAT:- CIT(A) held that amendment in exemption in incorporating the word constructed one residential house in India in section 54F is inserted by Finance Act 2014 and applicable w.e.f . 01-04-2015 and accordingly would apply from 2015-16. The case of the assessee relates to AY 2013- 14. Therefore, the amendment brought by Finance Bill (No.2) Act, 2014 is not applicable in the case of assessee. Similar view was taken by Hon ble Gujarat High Court in Leena J Shah [ 2016 (12) TMI 351 - GUJARAT HIGH COURT] and CIT vs Smt. VK Karapagam [ 2014 (8) TMI 899 - MADRAS HIGH COURT] and Mumbai Tribunal in DCIT vs Shah Rukh Khan [2018 (6) TMI 147 - ITAT MUMBAI] . - Decided against revenue
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2020 (4) TMI 559
Exemption u/s 11 - denying registration to the assessee u/s 12A read with Section 12AA - assessee had paid salary partly through Bank and partly in cash, but had not deducted tax at source in case of any of the employees - HELD THAT:- Not in dispute that the assessee is engaged in the activity of education which qualifies as charitable purpose within the meaning of Section 2(15) - there is no reference in the impugned order dated 27.09.2016 of Ld. CIT(E), whatsoever, to any facts and circumstances which can be said to be violative of provision of Section 12A read with Section 12AA - No materials have been brought to our attention from the Revenue s side either to show how any of the provision under Section 12A read with 12AA are not fulfilled by the assessee - we agree with the contention of the assessee that it is of no relevance, for the purposes of registration under Section 12A read with Section 12AA of I.T. Act, whether or not tax was deducted at source from salary of the staff. We also agree with the contentions of assessee that, it is of no relevance, for registration under Section 12A read with Section 12AA of I.T. Act, if salary has been paid partly in cash and partly by cheque. We also agree with the contention of the Ld. Counsel for assessee that there is nothing in law to prevent the assessee from applying for registration under Section 12A read with Section 12AA at a later stage, if such registration was not sought for by the assessee in earlier years. Assessee s application for registration under Section 12A read with Section 12AA of I.T. Act cannot be rejected by Ld. CIT(E) relying on irrelevant considerations, merely on the basis of an unsustainable conclusion. - Decided in favour of assessee.
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2020 (4) TMI 558
Non-compliance of Rule 46A of I.T.Rules by CIT-A before deleting the addition u/s 68 - CIT(A) has admitted the additional evidences/enclosures without confronting the same to the AO and without obtaining comments/remand report from the AO - HELD THAT:- CIT(A) has admitted the additional evidences/enclosures at Sl. No.1 to 8 stated at page 10 of the impugned order without confronting the same to the AO and without obtaining comments/remand report from the AO on the said additional enclosures. Therefore, we hold that the ld CIT(A) has admitted and considered the additional evidences without complying with the mandatory provisions of Rule 46A of I.T.Rules and hence, the ld CIT(A) order granting relief to the assessee cannot be held as sustainable and valid as per mandatory provision Rule 46A of I.T.Rules. We, therefore, set aside the order of the ld CIT (A) and restore the appeal to his file to the first appellate stage with the direction that he should allow proper opportunity of hearing to the AO as well as to the assessee and re-decide the appeal afresh in accordance with law. Ground No.1 of additional ground is allowed for statistical purposes.
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2020 (4) TMI 557
Assessment of agricultural income under the head 'income from other sources' - HELD THAT:- As decided in own case [ 2016 (10) TMI 1306 - ITAT CHENNAI] we allow 75% of the income declared by assessee as agricultural income , by relying on the decision of Radhasoami Satsang v. CIT [ 1991 (11) TMI 2 - SUPREME COURT] in order to maintain consistency. We note that learned CIT(A) accepted agriculture income from said lands held by assessee to the tune of ₹ 10,000/- per acre for impugned ay and Revenue has neither filed any appeal nor filed any cross objections against the said decision of learned CIT(A) accepting agricultural income partially from said land to the tune of ₹ 10,000/- per acre. Decided partly in favour of assessee.
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2020 (4) TMI 556
Addition u/s 69B - AO treated the assessee as co-owner for 50% share of the property and taxed 50% of the sale consideration along with stamp duty as unexplained sources u/s 69B - contention of the assessee is that the assessee is only having 10% in the total investment, thus requested to delete the addition made by the AO over and above the 10% of share - HELD THAT:- Agreement dated 31.12.2010 between the assessee and the other co-owners was unregistered and the stamp paper was purchased on 24.03.2005. Since the property was registered on 15.06.2012 and the Registered sale deed do not support the purported agreement dated 31.12.2010, the agreement dated 31.12.2010 appears to be an afterthought hence, rejected. On perusal of the sale deed, there was no mention with regard to shares of the parties - lower authorities rightly assessed 50% of the share of the property in the hands of the assessee. Accordingly, appeal of the assessee on this ground is dismissed. Taxing share of 50% u/s 69B - From the perusal of the sale deed, the assessee has made the investment to the extent of ₹ 26.59 lakhs jointly along with other co- owners in the F.Y.2013-14 for which the assessee could not explain the source. Therefore, we hold that the sum of ₹ 13,29,500/- (being 50% of 26.59 lakhs) required to be brought to tax and the remaining amount should be deleted - Set aside the order of the Ld.CIT(A) and direct the AO to verify the actual payments made during the year and decide the issue. The appeal is remitted to the file of the AO for a limited purpose of verifying the actual dates and the actual payment made in the impugned assessment year and to make the addition representing the investment made in the impugned assessment year. Appeal of the assessee is partly allowed for statistical purpose.
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2020 (4) TMI 555
Deemed dividend u/s 2(22)(e) - Whether advances taken from the company takes the character of trade advances, hence, the provisions of deemed dividend u/s 2(22)(e) has no application in the assessee s case? - HELD THAT:- We observe from the order of the AO that the assessee did not fail to furnish any information which was called for by the AO. Supply is more or less equal to the advances received by the assessee from the company - within the short span of time of receiving the advances, the assessee had supplied the chillies after procurement from M/s Religare Commodities Ltd. Though the Circular was dated 12.06.2017, the Board has clarified that the issue has attained finality and the commercial transactions would not fall within the ambit of sec.2(22)(e) of the Act. - CIT(A) rightly deleted the addition. However, matter remitted back to the file of the AO for limited purpose of verification of genuineness of transactions submitted in the paper book with regard to sales made to the company. If the sales are supported by the books of accounts of the assessee as well as the company the transactions would not treated as deemed dividend and covered by the circular cited. Appeal of the Revenue is allowed for statistical purposes.
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2020 (4) TMI 554
Penalty u/s 271(1)(c) - unexplained investment u/s.69 - as contended that assessee had deposited cash, out of the sales proceeds of Art Silk Cloth and also withdrawn money from the said bank account for payment of purchase of Art Silk Cloth - assessee was not maintaining any books of accounts, therefore requested to treat the above account as retail business account and club the income from retail business u/s.44AF - HELD THAT:- In case addition is made on the basis of peak working and on the same estimated income is assessed, then, in that eventuality, no penalty is leviable and moreover once the assessee himself has submitted that the above account be treated as retail business account and club the income from retail business u/s.44AF of the Act. Then, obviously the additions at the most could be made on the basis of estimation. And, therefore, in that circumstance, no penalty is leviable. Revenue has failed to make any such enquiry and as stated earlier no corresponding unaccounted asset belonging to assessee has been found and therefore, following the ratio of SHRI OJAS ASHOKBHAI MEHTA VERSUS ITO, WARD 3 (1) , SURAT. [ 2013 (8) TMI 1127 - ITAT AHMEDABAD] the explanation of assessee is required to be treated as bonafide and consequently no penalty u/s 271(1)(c) can be imposed in view of explanation to section 271(1)(c) of the Act and we have also considered that merely because additions have been made the same is confirmed in first appeal, it does not at all mean that penalty for concealment of income is automatically required to be imposed. Explanation 1 to section 271(1)(c) only raises rebuttable presumption, which can be discharged by assessee on balance of probability. The penalty can be justified only if assessee fails to offer an explanation or his explanation is found to be false. If these circumstances are not present, the penalty can be avoided if assessee is able to substantiate his explanation. Respectfully following the aforesaid decision of the Co-ordinate Bench and decision of Hon'ble Gujarat High Court decision CIT Vs. President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] we are of the considered opinion that present penalty does not survive - Decided in favour of assessee.
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Insolvency & Bankruptcy
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2020 (4) TMI 553
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The claim as made by the Operational Creditor is within the prescribed period of limitation of 3 years. The claim amount as made in the Application is also in excess of ₹ 1,00,000/- being the statutory minimum amount fixed under section 4 of the I B Code, 2016 for approaching this Tribunal by the creditors, in the instant case by Operational Creditor and further in relation to the Corporate Debtor the registered office of which is situated within the State of Tamilnadu, amenable to its territorial jurisdiction, this Authority deem it fit to admit the instant Application and to initiate the Corporate Insolvency Resolution Process (CIRP) as against the Corporate Debtor. The Application as filed by the Operational Creditor is required to be admitted under section 9(5) of the IBC, 2016 - application admitted - moratorium declared.
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Indian Laws
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2020 (4) TMI 552
Interpretation of statute - Dishonor of cheque - enforcement of legal liability towards in Unregistered partnership firm - complaint filed by an unregistered firm u/s 138 - prosecution of accused under Section 138 of the Negotiable Instruments Act, 1888 - Whether prosecution of accused, is hit by the bar created by sub-section (2) of Section 69 of the Indian Partnership Act, 1932? - HELD THAT:- Section 138 of the N.I. Act is a penal provision, the commission of which entails prosecution and conviction on proving of guilt. Once the offence under Section 138 of the N.I. Act is completed, the prosecution can be initiated for bringing the offender to penal liability. There is no disagreement with the proposition that the 'debt or other liability' as has been referred in Section 138 of the N.I. Act, is a 'legally enforceable debt or other liability' - However, by creating a bar to enforce a right arising out of contract by an unregistered firm, with the object to promote registration of the firms and to exempt the small firms from compulsory registration, the inherent character of enforceability of the 'right' does not get changed and it would still remain as a right enforceable by law. Once the bar is removed, the remedy would be revived. Moreover, even the plaintiff/unregistered firm can withdraw the suit with liberty to file a fresh one after getting the firm registered and section 14 of the Limitation Act, 1963 would be applicable to such proceedings. Thus, there is no point in stretching the bar which is in the nature of temporary bar to the suit to the complaints under section 138 of the N. I. Act, which is in the nature of penal provision with the object to inculcate faith in banking transactions - The prosecution of an accused under Section 138 of the Negotiable Instruments Act, 1888, is not hit by the bar created by sub-section (2) of Section 69 of the Indian Partnership Act, 1932. The matter be placed before the appropriate Bench.
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