TMI Tax Updates - e-Newsletter
June 10, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Central Excise
Highlights / Catch Notes
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GST:
Liability of GST - leased premises for cold storage purpose of agriculture produce on leasing charges - cold storage leased on rent - providing non-residential property on rental basis is a supply of service which is classifiable under SAC No.997212. The said supply of service is chargeable to tax (GST) @18%
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Income Tax:
MAT Computation - book profit adjustments - While passing the order, the tribunal has misconstrued the relevant statutory provisions. It is also pertinent to note that the tribunal has not dealt with the claim of the assessee for deduction under Section 10A of the Act.
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Income Tax:
Assessment u/s 153A - disallowing exemption u/s 80-1B (11C) - It has to be pointed out that any tax holiday can be granted to a person who declares a truthful return. It cannot and should not be granted to the person who claims that he purchased medical equipments in the guise of treating poor persons.
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Income Tax:
Delay in deposit made to the employees Provident fund and ESIC - such sums were not credited by the respective assessee to the employees 'accounts in the relevant fund or funds on or before the due date as per the Explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees' contribution to the employees account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act - Additions confirmed.
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Income Tax:
Unexplained cash credit under section 68 - Once the assessee is able to prove that the money received by it was returned in the subsequent assessment year in the account of the party, then there remains no doubt that the loan and advances received by the assessee were not unexplained cash credit.
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Income Tax:
Penalty u/s 271(l)(c) - The assessee has immediately on receipt of the notice u/s 142(1) has revised the computation of income restricting the deduction claimed u/s 54F and paid the due taxes. Thus it is transpired that the assessee has claimed deduction for the investment in two properties under the bona-fide believe and he did not claim excessive deduction u/s 54F of the Act deliberately - No penalty.
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Income Tax:
Disallowance of bad debt - the assessee has shown such bad debts as debtors in the earlier assessment years which was subject to the scrutiny assessment u/s 143(3) and the revenue has accepted the same - such bad debts were offered to tax. Accordingly the assessee is entitled for the deduction u/s 36
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Income Tax:
Penalty u/s 271(1)(c) - addition of Capital gain under the provisions of section 45(3) and Disallowance of the interest expenses - the assessee himself suo-moto revised the computation and paid the taxes before any finding from the AO - the assessee has not deliberately undisclosed the income under the head capital gain and claimed excessive interest expenses. - No penalty.
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Income Tax:
Penalty u/s 271(1)(c) - non disclosure of capital gain - whether the income was taxable in the assessment year 2012-13 as the land in dispute was handed over to the developer but the consideration was not received in the assessment year 2012-13? - the assessee explained that such income was not offered to tax under the bona fides believe that the same would be taxable upon the completion of the entire project. - there cannot be any penalty.
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Income Tax:
Nature of subsidy received - Capital or revenue receipt - Though the principles of res judicata doesn’t apply in the income tax proceedings, however, it has also been laid down by the Courts that unless there are changes in the facts and circumstances of the case, past consistent position so adopted should not be disturbed
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Customs:
Revocation of Customs Broker license - As per the Commissioner, the appellant has not brought to the knowledge of the Department that IEC holders have lent their IECs to other persons. There is no evidence on record brought by the Department to show that the appellant had knowledge regarding the lending of IEC. Further, the lending of IEC is not an offence under the Customs Act, 1962.
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Central Excise:
Valuation - Physician Samples - the sales are to industrial consumers and are not sold / supplied to retail consumers. By this logic also, the provisions of Section 4A are not applicable in the facts of the case.
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2020 (6) TMI 201
Liability of GST - leased premises for cold storage purpose of agriculture produce on leasing charges - cold storage leased on rent for storage with or without preservation and maintenance to Private Enterprises - seeds/agricultural produce for storage or warehousing on behalf of farmers and traders - HELD THAT:- Sl. No. 54(e) of the N/N. 12/2017-CT (R) dated 28.06.2017 as amended [SGST Not. No. 12/2017-ST(R)dated 29-062017 as amended] provides for exemption from GST in respect of supply of services rendered for storage in relation to the agricultural produce. It is noticed that the term agricultural produce has been defined under clause 2(d) of the Notification ibid. Thus, the supply of service for storage or warehouse of goods is exempted if the same is provided in connection with storage or warehousing of agriculture produce as defined in clause 2(d) of Not. No. 12/2017-CT (R) dated 28.06.2017 as amended. Further, the notification is with regard to service supplied and not person specific. As such, the entry No. 54(e) is equally applicable for storage services in respect of agricultural produce of both the farmers and the traders. Tax liability on leasing services availed by the applicant with regard to the cold storage facility - HELD THAT:- If the agreement is purely for renting/leasing of the premises of cold storage by one entity to another entity, then the said activity amounts to renting/leasing of immovable property and does not fall within the ambit of storage services.In terms of clause (a) of para 5 of the Schedule II (appended to the GST Act), read with Section 7of the GST Act, renting of immovable property is to be treated as supply of service. Thus, providing non-residential property on rental basis is a supply of service which is classifiable under SAC No.997212. The said supply of service is chargeable to tax @18% under residuary entry at Sl. No. 35 of Not. No. 11/2017-CT (R) dated 28.06.2017 as amended [SGST Not.No. 11/2017-ST (R) dated 29-06-2017 as amended].
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Income Tax
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2020 (6) TMI 200
MAT Computation - book profit adjustments - tribunal not allowing deduction of brought forward loss or unabsorbed depreciation relating to non-STPI units in computing book profits under Section 115JB - Deduction of income u/s 10A from book profit - HELD THAT:- Section 115JB was inserted in the Act by Finance Act, 2000 with effect from 01.04.2001. Explanation-(1) to Second proviso to Section 115JB(1) provides that for the purposes of this Section, book profit means the profit as shown in the statement of profit and loss account for the relevant previous years prepared under sub-Section(2). The supreme court in J.K.INDUSTRIES LTD. VS. UNION OF INDIA [ 2007 (11) TMI 401 - SUPREME COURT] has held that books of account do not include balance sheet and profit and loss account. It has further been held that balance sheet and profit and loss account are financial statements. Section 10A of the Act permits a newly established undertaking in Free Trade Zone to claim a deduction from profits as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive Assessment years relevant to the previous year, in which undertaking begins to manufacture of produce such article or things or computer software as the case may be, shall be allowed from the total income of the assessee. In the present case the tribunal has held that net profits have to be determined as per the provisions of the companies Act and thereafter, the adjustments have to be made. It has further been held that the assessee cannot adjust the books of profit except as provided under the companies Act. While passing the order, the tribunal has misconstrued the relevant statutory provisions. It is also pertinent to note that the tribunal has not dealt with the claim of the assessee for deduction under Section 10A of the Act. Therefore, in the fact situation of the case, the remand of the matter to the tribunal for decision afresh has become imperative. It is therefore, not necessary for us to deal with the substantial questions of law framed by this court. In view of the preceding analysis, the order passed by the Income Tax Appellate Tribunal is hereby quashed and the matter is remitted to the tribunal for decision afresh in accordance with law.
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2020 (6) TMI 199
Exemption u/s 11 - Deemed registration under Section 12AA - as per tribunal objects of the assessee is of general public utility and is entitled to registration under Section 12AA - HELD THAT:- Admittedly, an application under Section 12A of the Act on 17.09.1999 and order on the aforesaid application has been passed beyond a period of six months i.e., on 30.10.2001. Therefore, in view of law laid down in SOCIETY FOR PROMN. OF EDN., ALLAHABAD [ 2016 (2) TMI 672 - SC ORDER ] the registration under Section 12A of the Act shall be deemed to have taken effect after six months from the date of presentation of the application i.e., 18.03.2000. In any case, the registration has already been granted in favour of the assessee under Section 12A of the Act vide order dated 03.06.2003. Therefore, it is not necessary for us to examine the validity of the order passed by the tribunal and therefore, in our opinion, the substantial questions of law framed by a bench of this court have been rendered academic. Therefore, it is not necessary to answer the same. However, the appeal is disposed of with the observation that the mere grant of registration to the assessee shall not result in grant of benefit to it ipso facto under Sections 11 and 12 of the Act and if any, regular assessment is pending, the same may be completed in accordance with law.
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2020 (6) TMI 198
Assessment u/s 153A - disallowing exemption under Section 80-1B (11C) - writ petitions were filed challenging the assessment order passed on remand and invoking Section 115-JC - violation of principle relating to natural justice - HELD THAT:- Any tax holiday can be granted to a person who declares a truthful return. It cannot and should not be granted to the person who claims that he purchased medical equipments in the guise of treating poor persons for a sum of ₹ 2,32,79,760/- and it is subsequently found that the entire transaction is bogus. We find every justification in the order of the Assessment Officer invoking Section 115JC which provision is squarely applicable. It is also seen that C.P.Anbunathan had further stated in his statement that the demand draft drawn in the name of M/s.Sowdambika Traders was received by Meenakshi Mission Hospital and Research Center, Madurai and in turn cash was handed over by him to the petitioner Dr.S.Gurushankar after deducting commission of one percentage. Naturally, when commercial trade is indulged in the guise of serving the poor and needy and seeking tax holiday, this court can never come to the rescue of the petitioner. The account books of Meenakshi Hospital, Thanjavur were also verified and it was seen that the demand draft was never reflected in the accounts and only cash payment has been made. Petitioner cannot complain about violation of any principle relating to natural justice. An assessment order has been passed. An appellate remedy is available. The petitioner has consciously decided to forego that remedy. If the assessment order is examined further, it also reveals that during the demonetisation period, the petitioner had deposited a total sum of ₹ 7,54,77,619/- in cash, and when the assessee was asked to explain the source, he stated that he was running Meenakshi Mission Hospital at Thanjavur, for which, the tax holiday is now being sought. The hospital has been the source for a huge cash holding of ₹ 7,54,77,619/-. It is a wonder that the petitioner actually seeks tax holiday. This Writ Petition has to suffer an order of dismissal.
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2020 (6) TMI 197
Condonation of delay in filing the revised return - delay of 4 years in filing the revised return - revised ROI filed within the period of six years from the end of assessment year, making the claim for deduction under Section 80HHC - HELD THAT:- We are of the view that the assessee should have a right to contest his claim and cannot be non-suited merely on the ground of delay. Hence, we are inclined to allow the application for condonation of delay. Further, it is just and appropriate that the Assessing Officer decides the claim of the petitioner in accordance with law. We do not think it appropriate to stay the processing of the revised return by the Assessing Officer. The Assessing Officer is entitled to pass such orders as he deems fit.
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2020 (6) TMI 196
Assessment u/s 153A - whether in unabated assessments (no pending proceedings) as on the date of search, the AO could frame the search assessment u/s 153A making additions without any incriminating materials found during the course of search? - HELD THAT:- Once the proceeding u/s 153A of the Act is initiated which are special proceedings, the legislature provides different treatments for abated and unabated assessments. However, in respect of unabated assessments the legislature has not conferred powers on the Ld. AO to disturb the assessments already concluded unless incriminating materials are found in the course of search. We hold that the disallowances made for the Assessment years i.e. 2005-05 and 2006-07 which were unabated/concluded assessments as on date of search cannot be made in the absence of any incriminating material found during the the course of search and accordingly all those additions are directed to be deleted. Since the legal issues are addressed, we refrain to give our findings on merits of additions under the provisions of the Act. Accordingly, the grounds raised by the assessee allowed. Disallowing the deduction claimed u/s 80-IA (4) with respect to the eligible infrastructure project - HELD THAT:- Assessee is in development of the infrastructure facilities eligible for deduction under section 80 IA(4) of the Act. The ground of appeal of the assessee is allowed and ground of appeal of the Revenue is dismissed. Deduction u/s 80-IA (4) - Denial of claim assessee is not executing any projects eligible for deduction specified - AY 2009-10 - HELD THAT:- We note that the assessee is supplying heavy earthmoving machinery on hiring basis to GMDC. CIT (A) held that there cannot be any deduction with respect to such projects under section 80-IA(4) of the Act, as the assessee is not executing any projects eligible for deduction specified under section 80-IA(4) of the Act. AR at the time of hearing before us has not advanced any argument against the finding of the learned CIT(A). Accordingly in the absence of any information/assistance from the side of the learned AR for the assessee, we do not find any reason to interfere in the finding of the learned CIT (A). Appeal of the assessee is dismissed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (6) TMI 195
TDS u/s 195 - payments made to the non-residents - disallowance made u/s. 40(a)(i) - deduction u/s. 10A/10AA - Whether disallowance u/s. 40(a)(i) will have no effect because deduction u/s 10A/10AA of the Act has to be allowed on the enhanced income? - HELD THAT:- There is no dispute regarding genuineness of the expenditure that was disallowed and the fact that the said expenditure is otherwise allowable as deduction in computing income from business. In such circumstances, even if the expenditure is disallowed u/s.40(a)(i) of the Act, the result will be that the disallowance will go to increase the profits of the business which is eligible for deduction u/s.10A/10AA of the Act and consequently the deduction u/s. 10A/10AA of the Act should be allowed on such enhanced profit consequent to disallowance u/s. 40(a)(i) of the Act. We find that two High Courts in the case of CIT v. Gem Plus Jewellery India Ltd. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] and ITO vs. Kewal Construction, [ 2013 (7) TMI 291 - GUJARAT HIGH COURT] have taken the view that when disallowance u/s. 40(a)(ia) of the Act goes to enhance the profits that are eligible for deduction under Chapter VIA of the Act, the deduction under Chapter VIA should be allowed on such increased profit. This position has also been now confirmed by the CBDT in its Circular No.37/2016 dated 02.11.2016 - there is no merit in the grievance projected by the revenue in its appeal. - Decided in favour of assessee.
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2020 (6) TMI 194
Revision u/s 263 - non-verification of source of cash deposit made during financial year 2013-14 - HELD THAT:- We find that the assessee is having a taxable income and exempted income during the year which majorily comprise of profit from partnership firm totalling to ₹ 2,96,41,668/- and had sufficient cash in hand on various dates during the year out of which the amounts were deposited in the bank account. The major source of cash deposited in the amount received from the partnership firm. All these details of cash received from partnership firm and the amount deposited is the bank account were placed before assessing officer and after examination of these details assessment was completed. AO in the body of the assessment order did not record any observation regarding the transaction of cash deposits in the bank but the questionnaire issued during the course of assessment proceedings and various replies filed by the assessee shows that during the course of assessment proceeding specific query is raised regarding cash deposits in bank, calling of bank statements and other statement. To this specific query there is a specific reply given by the assessee which demonstrates that after receiving the information the AO had applied his mind on these transactions. More over the ld. CIT(A) has given a swiping statement that transaction between the assessee and the partnership firm (wherein assessee is partner) was exclusively through banking channel without rebutting the entries made in the cash book by the assessee duly supported by other independent evidence. As relying on ANIL KUMAR SHARMA [ 2010 (2) TMI 75 - DELHI HIGH COURT] since sufficient enquiry has been conducted by the Ld. AO during assessment proceedings with regard to the issues raised by the Ld. Pr. CIT in the show cause notice issued u/s 263 of the Act and thus hold that Ld. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act and inferring that the assessing officer has not conducted enquiry. - Decided in favour of assessee.
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2020 (6) TMI 193
Disallowance of interest expenses paid to the related parties being excessive - AO during the assessment proceedings found that the assessee had paid interest on the borrowed fund at different rates ranging from 12% to 24% p.a. thus worked out the reasonable rate of interest being 18% on the fund borrowed from the relatives - HELD THAT:- There cannot be any disallowance for the year under consideration on the money borrowed in the earlier year. As relying on SRIDEV ENTERPRISES [ 1991 (1) TMI 52 - KARNATAKA HIGH COURT] we hold that there cannot be any disallowance on account of interest expenses being excessive paid to the related parties under section 40A of the Act. Hence 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 u/s 14A r.w.r 8D - HELD THAT:- It is the settled laws that there cannot be any disallowance of interest expenses if the own fund of the assessee exceeds the amount of investments. Admittedly the own fund of the assessee exceeds the amount of investment in the present case. In this connection, we find support and guidance from the judgment in the case of Reliance Utilities [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein held if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments - Thus we hold that no disallowance of interest expense claimed by the assessee can be made on account of investments as discussed above under the provision of section 14A r.w.r. 8D - Decided in favour of assessee. Addition of administrative expenses - HELD THAT:- AR at the time of hearing has not advanced any argument about the disallowance made by the authorities below. Accordingly we confirm the disallowance for the administrative expenses made by the authorities below. Hence the ground of appeal of the assessee is partly allowed. MAT computation - Working out the book profit under the provisions of section 115 JB for disallowance u/s 14A - HELD THAT:- We hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] We note that there is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore in the given facts circumstances, we feel that adhoc disallowance will serve the justice to both the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income under the clause (f) to Explanation-1 of Sec. 115JB of the Act, subject to the condition that the disallowance shall not exceed the amount of disallowance determined by the authorities below under the provisions of section 14A r.w.r. 8D of Income Tax Rules. Hence, the ground of appeal of the assessee is partly allowed. Delay in deposit made to the employees Provident fund and ESIC - Addition on account of delay in deposit the employee s contribution under section 36(1)(va) - HELD THAT:- As decided in GUJARAT STATE ROAD TRANSPORT CORPORATION [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] such sums were not credited by the respective assessee to the employees 'accounts in the relevant fund or funds on or before the due date as per the Explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees' contribution to the employees account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act. - Decided against assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (6) TMI 192
Nature of land sold - Short-term capital gain on the sale of immovable property - land in dispute is the agricultural land within the meaning of section 2(14)(iii) OR not - whether AO should have referred the matter to the DVO to determine the market value as he found difference in the sale price viz a viz the value determined for the purpose of Stamp duty? - HELD THAT:- We find that the assessee was just general Power of Attorney holder with respect to the lands in dispute. This fact has not been disputed by the authorities below. As such there was no documentary evidence available before the authorities below suggesting that the assessee has received consideration against the transfer of such lands. CIT (A) has given very clear finding that the impugned lands were not transferred. The learned DR has not brought anything on record contrary to the finding of the learned CIT (A). In such a situation we have no alternate except to confirm the finding of the learned CIT (A). Hence the ground of appeal raised by the Revenue is dismissed. Unexplained cash credit under section 68 - CIT-A deleted the addition - HELD THAT:- We find that the amount received by the assessee as discussed above represents the sale consideration of the shares transferred by her to the parties aforesaid. The learned AR in support of his contention has filed the confirmation, shares transfer certificates and share purchase agreement along with the ledgers. DR has not brought anything on record contrary to the finding of the learned CIT (A). In such a situation we have no alternate except to confirm the finding of the learned CIT (A). Hence the ground of appeal raised by the Revenue is dismissed. Addition u/s 68 - CIT (A) was pleased to delete the addition made by the AO by observing that the assessee has discharged his onus by furnishing the necessary details as specified under section 68 - HELD THAT:- Admittedly the assessee has discharged its onus by furnishing the necessary details such as a copy of PAN, passport, bank details, etc. in support of identity of the parties. There is also no dispute that all the transactions were carried out through the banking channel. Therefore, we are conscious of the fact that the assessee has discharged onus regarding the genuineness of the transactions. See ROHINI BUILDERS. [ 2001 (3) TMI 9 - GUJARAT HIGH COURT] Coming to the 3rd condition, i.e. creditworthiness of the parties, regarding this we note that the assessee claimed to have refunded part of the amount through banking channel to the aforesaid parties as discussed above. The repayment of the loan amount by the assessee was duly accepted by the Revenue. Therefore,there remains no doubt that the transactions of the advance received by the assessee from the parties were genuine - See ROHINI BUILDERS. [ 2001 (3) TMI 9 - GUJARAT HIGH COURT] We also note that the assessee has furnished the source of the money received from the parties which was used for the purpose of investment in Yuva Sports Academy Pvt. Ltd. Once the assessee is able to prove that the money received by it was returned in the subsequent assessment year in the account of the party, then there remains no doubt that the loan and advances received by the assessee were not unexplained cash credit. Assessee furnished the sufficient documentary pieces of evidence including the details of the income of the parties which has been elaborated in the preceding paragraph. Therefore in our considered view, the assessee has discharged its onus imposed under section 68 - Decided in favour of assessee. Addition treating the agriculture income as income from other sources - HELD THAT:- Onus lies on the assessee to furnish the documentary evidence such as sales bills of the agriculture produce but he failed to do so. However in the present facts of the case we note that the assessee has been showing the agriculture income consistently which have been accepted by the revenue. Even the contention of the assessee that the inspector of Income Tax Department has also confirmed the fact of existence of the mango trees since 2007 which has not been doubted by the AO. Thus after considering the facts in totality and there being no adverse record brought by the learned DR contrary to the finding of the learned CIT (A), we do not find any reason to interfere in the order. Hence the ground of appeal of the Revenue is dismissed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (6) TMI 191
Penalty u/s 271(l)(c) - assessee has furnished inaccurate particulars of income by claiming excessive deduction under section 54F - contention of the assessee that there was no specific charge levied by the AO whether the assessee has concealed the particulars of income or furnished inaccurate particular of income - HELD THAT:- AO has mentioned the specific charge in the penalty order by stating that the assessee has furnished inaccurate particulars of income. Accordingly we hold that, the assessee cannot get the benefit of immunity from the penalty merely there was no specific charge in the penalty notice issued under section 274 of the Act or in the assessment order. We, in this regard, draw support and guidance from the judgment of Snita Transport Pvt. Ltd. [ 2012 (12) TMI 981 - HIGH COURT OF GUJARAT] wherein it was held that penalty cannot be imposed without mentioning the specific charge. Whether the assessee has furnished inaccurate particulars of income with respect to such excess deduction claimed under section 54F ? - The term inaccurate particular of income has not been defined under the provisions of section 271(1)(c) or elsewhere in the Act the Act. However, the meaning of the term inaccurate has been discussed in the case of Reliance Petroproducts (P) Ltd [ 2010 (3) TMI 80 - SUPREME COURT] wherein it was held that the term inaccurate signifies deliberate act or omission on the part of the assessee. As such, the details/information contained in the return of income /financial statements /audit report which are not correct according to truth, and were furnished by the assessee with the dishonest intent shall be treated as inaccurate particulars. In the present case we find that the deduction under section 54F of the Act was claimed for the investment made by the assessee in two properties. The fact for the purchase of two properties was not doubted by the authorities below. The assessee has immediately on receipt of the notice under section 142(1) of the Act has revised the computation of income restricting the deduction claimed under section 54F of the Act from ₹ 89,83,817.00 and paid the due taxes. Thus it is transpired that the assessee has claimed deduction for the investment in two properties under the bona-fide believe and he did not claim excessive deduction under section 54F of the Act deliberately. Revenue has also not brought any material suggesting that the assessee deliberately furnished the inaccurate particulars of income. In our considered view any addition/disallowances made during the quantum proceedings does not automatically justify the levy of the penalty under section 271(1)(c) of the Act. - Decided in favour of assessee.
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2020 (6) TMI 190
Disallowance of bad debt - as per assessee claim of bad debt for the A.Y. 2011-12 has been allowed in similar fact and circumstances - onus to prove - HELD THAT:- The assessee does not have any direct evidence in support of his contention that these bad debts were offered to tax in the respective assessment years, but the circumstantial evidences in the form of audited financial statements cannot be neglected wherein the assessee has classified such bad debts as the debtors. In this connection we draw support and guidance from the judgment of the Hon ble Supreme Court in the case of Sumati Dayal vs. CIT[ 1995 (3) TMI 3 - SUPREME COURT] We are also not oblivion to the fact that the assessee has shown such bad debts as debtors in the assessment years 2006-07 and 2007-08 which was subject to the assessment under section 143 (3) of the Act and the revenue has accepted the same. Further the learned CIT (A) had allowed the claim of Bad debt for A.Y. 2011-12 with regard to debt pertaining to similar period. In view of the above and after considering the circumstantial evidences, we hold that such bad debts were offered to tax. Accordingly the assessee is entitled for the deduction under section 36 of the Act. Hence the ground of appeal of the assessee is allowed. Nature of land sold - agricultural land v/s capital asset - HELD THAT:- It is the settled law that there cannot be any kind of income tax on the sale of the agricultural land. As such the income of the assessee is exempted from the tax on the sale of the agricultural land. However the onus is on the assessee to prove that the land is agricultural in nature within the meaning of the provisions of section 2(14) of the Act. However we find that the necessary details are not arising from the order of the authorities below. Accordingly, we restore the impugned issue to the file of the AO for fresh adjudication as per the provisions of law. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (6) TMI 189
Penalty u/s 271(1)(c) - addition of Capital gain under the provisions of section 45(3) and Disallowance of the interest expenses - assessee suo-moto revised the computation of income - HELD THAT:- Assessee has offered income by filing the revised computation of income which was accepted by the revenue. The assessee has filed such revised computation of income before the detection by the revenue about such additions made during the assessment proceedings. Thus it can be inferred that the assessee has not disclose the income with any dishonest intent. Accordingly, in our considered view the assessee cannot be visited with the penalty under section 271 (1)(c) of the Act. Addition in the present case under the head capital gain has been made under the provisions of section 45(3) representing the such addition during the assessment proceedings being deemed income does not automatically attract the penalty provisions as envisaged under the provisions of section 271(1)(c) of the Act. As such, the onus, in the case of deemed income as specified under section 45(3) of the Act, lies on the Revenue to prove that such deemed income is the real income of the assessee in order to attract the penalty provisions specified under section 271(1)(c) - See case of CIT Vs. Baroda Tin works Box [ 1995 (9) TMI 18 - GUJARAT HIGH COURT] We hold that the assessee has not deliberately undisclosed the income under the head capital gain and claimed excessive interest expenses. As such the assessee himself suo-moto revised the computation and paid the taxes before any finding from the AO. Accordingly, in such a situation the penalty provisions cannot be attracted. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the penalty imposed by him. Thus the ground of appeal of the assessee is allowed. - Decided in favour of assessee Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (6) TMI 188
Penalty u/s 271(1)(c) - non disclosure of capital gain - whether the income was taxable in the assessment year 2012-13 as the land in dispute was handed over to the developer but the consideration was not received in the assessment year 2012-13? - HELD THAT:- Admittedly, in the present case the land has been handed over to the developer against the consideration which was fixed at ₹ 6 crores. Therefore, we are of the view that the transfer of the land has taken place in the assessment year 2012-13 in pursuance to the agreement dated 10th February 2012. The conditions as specified under section 53A of the transfer of property Act 1882 have been satisfied as discussed above. From the above, it is transpired that the land was transferred to the developer with the possession in the assessment year 2012-13 and therefore the transfer as per the provisions of section 2(47)(v) of the Act has taken place. Thus the income in our understanding on such transaction was taxable the assessment year 2012-2013. Whether the penalty can be levied in the year under consideration for the income offered to tax by the assessee in the year under consideration? - Question of the penalty arises when there is an income which was either concealed or furnished inaccurate particulars of income. Accordingly we hold that there cannot be any question of penalty as there was no taxable income in the hands of the assessee. As such, there cannot be any penalty merely on the ground that the assessee has offered some income during the assessment proceedings which was actually not chargeable to tax in the year under consideration. Assessee has not disclose the capital gain income in his income tax return on question, by the AO the assessee explained that such income was not offered to tax under the bona fides believe that the same would be taxable upon the completion of the entire project. This contention of the assessee was not doubted by the authorities below. Therefore it can be inferred that the assessee did not deliberately offer the impugned income in his income tax return. As such there was no deliberate/willful act on the part of the assessee either to conceal the income or furnish the inaccurate particular of income. We hold that there cannot be any penalty in the given facts and circumstances under the provisions of section 271(1)(c) of the Act for the reason that the assessee has not deliberately furnished inaccurate particular of income. Accordingly 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. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (6) TMI 187
Revision u/s 263 - AO failed to consider/apply his mind to the information available on record with regard to the subsidy credited to the Capital Reserve A/c - order passed without making necessary verification as was required under Explanation 10 to section 43(1) and without examination of the nature and use of subsidy - HELD THAT:- Where the matter relating to treatment of subsidy under RIPS 2010 is arising year after year right from assessment year 2012-13 and in the said year, the matter has been duly examined by the Assessing officer and said subsidy has been treated and accepted as capital subsidy and not brought to tax and following the same position as adopted by his predecessor holding the same charge as that of ACIT, Circle 4, Jaipur, subsequently followed in AY 2013-14 by another predecessor holding the same charge, where the Assessing officer examined the matter for the impugned assessment year A.Y 2014-15 and maintained the past consistent position so accepted by the Revenue, the order so passed by the Assessing officer cannot be held as erroneous in so far as it is prejudicial to the interest of the Revenue. Though the principles of res judicata doesn t apply in the income tax proceedings, however, it has also been laid down by the Courts that unless there are changes in the facts and circumstances of the case, past consistent position so adopted should not be disturbed. In the instant case, we find that under the same investment promotion scheme of 2010 of the Rajasthan Government, the assessee has received the subsidy right from A.Y 2012-13 onwards and similar treatment has been done by the assessee in its financial statements where the amount of subsidy has been credited in the capital reserve account and similar treatment has been done while filing its tax return which subsidy has not been offered to tax. Facts and circumstances of the case are exactly identical as in the past years and where the Assessing officer has followed the consistent position, the order so passed by him cannot be held as erroneous. We note that in the past as well as current year, the Assessing officer has followed the decision in case of Shree Cements Ltd [ 2017 (8) TMI 1336 - RAJASTHAN HIGH COURT] and there is nothing on record that such decision has been overruled by the Hon ble Supreme Court at the relevant point in time. Therefore, in such circumstances, where the Assessing officer has followed the decision of the Hon ble Jurisdictional High Court, the order so passed by him cannot be held as erroneous. The ld Pr. CIT has not pointed out as to how the said decision is not applicable or the same has been wrongly followed by the Assessing officer - Decided in favour of assessee.
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2020 (6) TMI 186
Unexplained cash deposits - assessee has placed on record an abstract of his cash book - DR submitted that the authenticity of such an abstract of cash book is not established - HELD THAT:- If the position of cash sales vis-a-vis the bank deposits as depicted in the abstract for the month of November, 2009 is correct, then obviously no addition on account of cash deposits in the bank can be made because such deposits can be safely presumed to have been made out of cash sales made during the month, which is much more than the amount of deposits. Concurring with the submissions of the ld. DR, we set-aside the impugned order and remit the matter to the file of the AO for examining the abstract of cash book given. If the same accords with the regular books of account maintained by the assessee, then no addition should be made. Addition on account of cost of improvement - as per revenue assessee failed to prove that improvement was carried out to the property in question - HELD THAT:- assessee carried out improvement to the property through M/s. S.S. Rathi Developers. A copy of ledger account of the contract receipts of Mr. S. S. Rathi has been placed on record, in which receipt of ₹ 10,75,920/- from the assessee has been included. Such amount of total contract receipts at ₹ 29,56,976/- has gone into his Profit and loss account. He furnished the return with the resultant income accordingly. When the assessee furnished bill from M/s. S. S. Rathi Developers for carrying out improvement to the property and the said receipt from the assessee has been subjected to tax in the hands of Mr. S.S. Rathi, we do not find any reason for sustaining the disallowance on the ground that the assessee failed to prove that improvement - Decided in favour of assessee. Disallowance on account of exemption u/s.54F - Assessee owning two or more residential houses - as per revenue though the property purchased at Bibvewadi, Hyde park on 08-03-2010 was sold on 21-06-2010, but the assessee was having a separate house also at Rathi Niwas, Loni Kalbhor, Tal - HELD THAT:- Benefit of exemption as per this provision can be denied if the assessee owns two or more residential houses on the date or transfer of original asset, including the new asset for which the exemption is claimed. The balance sheet of the assessee as on 31-03-2010, whose copy has been placed at page 7 of the paper book, shows the flat at Hyde Park, which was purchased on 08-03-2010 but sold after the close of the year on 24-06-2010. There is another flat at Salisbury Park reflected in the balance sheet. This was the only residential house that the assessee was owning on the date of transfer of agricultural land on 13-07-2009. The ld. CIT(A) noticed that the assessee was having one more residential house, being, Rathi Niwas, Loni Kalbhor, Tal. Haveli, Dist. Pune, which was shown as his residential address in the return of income. AR submitted that Rathi Niwas house belongs to his father. In support of this contention, he placed on record a copy of payment of house tax in respect of this property by his father. It, therefore, becomes evident that Rathi Niwas house was not a residential house owned by the assessee on the date of transfer of the agricultural land. The assessee was having only one house, namely, flat at Salisbury Park. After transferring the agricultural land, the assessee availed exemption by purchasing another property on 28-09-2010. Thus, it is seen that there is no violation of sub-clause (i) of clause (a) of proviso to section 54F as well. Assessee was right in claiming the benefit of exemption u/s.54F. - Decided in favour of assessee.
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Customs
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2020 (6) TMI 185
Revocation of Customs Broker license - forfeiture of security deposit - imposition of penalty - allegation that the appellant had colluded with the exporters to over value the goods for obtaining excess duty drawback - non-fulfilment of requirement of Regulations 11(b), 11(d), 11(e) and 11(n) of CBLR 2013 - HELD THAT:- In the impugned order, the Commissioner has held that the appellant has not directly interacted with the IEC holders and is guilty of violation of Regulation 17(d) of CBLR 2013. This finding is factually incorrect because in the statements of Mr. Mohammad Yusuf Siddique, G Card holder and Power of Attorney of the appellant at Mumbai, he has stated in his statement dt. 25/05/2017 that he had interacted with the IEC holders. As per the Commissioner, the appellant has not brought to the knowledge of the Department that IEC holders have lent their IECs to other persons. There is no evidence on record brought by the Department to show that the appellant had knowledge regarding the lending of IEC. Further, the lending of IEC is not an offence under the Customs Act, 1962. Non-verification of antecedents of IEC holders - HELD THAT:- As per Regulation, the Customs Broker is to verify the correctness of IEC number, identity of client and functioning of them at the declared address using reliable, independent, authentic documents data or information. Further physical inspection of the premises of the importer or exporter is not required under the law as well as under the Board s Circular No.9/2010-Cus dt. 08/04/2010. In the present case, the appellant had obtained copies of PAN card, Aadhaar Card, GST registration certificate, IEC certificate from all the three exporters concerned. Time limit prescribed under Regulation 17(7) of CBLR - HELD THAT:- The Inquiry Report is dated 15/07/2019 and if we accept that the said report was submitted on the same date, even then, as per Registration 17(7) of CBLR 2018, the Commissioner is supposed to pass the order within 90 days but the Commissioner in this case has passed the order on 20/09/2019 which is beyond the time limit prescribed under Regulation 17(7) of the CBLR 2018 - the time limit prescribed under CBLR is mandatory and not directory. The impugned order is set aside on merits as well as on limitation - appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (6) TMI 184
Valuation - Physician Samples - to be valued under Section 4A of Central Excise Act, 1944 or not? - HELD THAT:- The issue is squarely settled by the Hon ble Apex Court in COMMR. OF CENTRAL EXCISE CUSTOMS, SURAT VERSUS M/S SUN PHARMACEUTICALS INDS. LTD. ORS. [ 2015 (12) TMI 670 - SUPREME COURT] where it was held that where an assessee clearing physician samples charged a price from the distributors, the duty is payable on such price in terms of Section 4(1)(a) of the Act. Moreover, the moot point in the case is that the appellants are selling the goods to the principal manufacturers. Therefore, the sales are to industrial consumers and are not sold / supplied to retail consumers. By this logic also, the provisions of Section 4A are not applicable in the facts of the case. Thus, the physician samples cleared by M/s. Ontop Pharmaceuticals are to be valued under Section 4 of Central Excise Act, 1944 - appeal dismissed - decided against Revenue.
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