TMI Tax Updates - e-Newsletter
September 7, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Pre-deposit before filing af appeal - It is contended that, the entire tax liability has been deducted from the cash ledger, thereby the requirement of 10% of prerequisite deposit is already stands satisfied. - The entire tax part having been deducted, it is directed that the respondent shall hear the application for condonation of delay and if the application for condonation of delay is allowed, then the respondent may hear the appeal on merits - HC
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GST:
Seeking grant of bail - huge loss of GST, sale tax etc. - This Court is of the opinion that if the liberty of bail is granted to the accused at the present stage of investigation, the entire investigation is likely to be hampered - bail application dismissed.- HC
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Income Tax:
Addition solely on the basis of statement of official of assessee as recorded during the survey action - The AO has not investigated the issue and only insisted on the disclosure made by assessee. As seen that the ld.CIT(A) after considering the submission of assessee, accounts of MDHPL and the fact that no amount on account of marketing fees from the contract of assessee with MDHPL was realised. - No additions - AT
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Income Tax:
Deduction u/s. 35(1)(ii) being 175% debited towards donation - He has not brought on record a specific evidence wherein donee has deposed that donations received from the assessee was paid back in cash after deducting commission. On the basis of a general information collected from the donee, the donation made by the assessee cannot be doubted. - AT
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Income Tax:
Capital gain/ loss on sale of property - unregistered sale agreement - whether it constitute valid transfer under section 53A of Transfer of Property Act - There is no requirement within the meaning of the word "transfer" as per Income Tax Act for the charge ability of capital gains, for the registration of property as long as the possession and part consideration has been effected with regard to the subject property. - AT
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Income Tax:
Deduction u/s. 80IA(4)(iii) - interest income received - Income derived from - In the present case, the immediate source of interest income was the fixed deposits kept by the assessee with the bank and not the business of the eligible undertaking of the assessee company and the same, in our opinion, is not eligible for deduction u/s. 80IA, as rightly held by the authorities below. - AT
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Income Tax:
Income from pension fund u/s 10(23AAB) - CIT(A) admitted the fresh claim - Claim of exemption when the income is taxable u/s 44 - If the assessee failed to revise its claim by way of revised return of income, for any reason whatsoever, the assessee is not estopped to make correct claim by way of revised computation. The revised claim can be entertained in appellate proceedings. We find no infirmity in the action of CIT(A) to allow revised enhanced claim. - AT
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Income Tax:
Exemption u/s 10(23C) (vi) - rejection of the application u/s 12AA - allegation of paying interest on unsecured loan to specified persons at higher rate - Whether paying the interest at the rate of 9%/12% to the above then person was a benefit to the specified person, was required to be examined by the AO during the assessment proceedings and for that purposes it was incumbent upon the AO to bring on record the contemporaneous comparative instances of the similar society indicating that the interest of rate paid by the assessee was far more than that was prevailing in the open market. In the light of the above, the first objection raised by the CIT(E) was without any basis. - AT
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Income Tax:
Ad-hoc disallowance of various expenses on the ground that said expenses incurred in cash and not further, supported by necessary bills and vouchers - once the Assessing Officer having accepted fact that cash payments for purchases does not exceed prescribed limit provided under the Act, then erred in making 20% ad-hoc disallowance of expenses. CIT(A), after considering relevant facts has rightly deleted additions made by the AO - AT
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Income Tax:
Revenue or capital receipt - The HC has held that, Excise duty refund, Interest subsidy and Insurance subsidy received with the object of creating avenues for perpetual employment, to eradicate the social problem of unemployment in the state by accelerated industrial development is capital receipt - we find no dispute that the Excise Duty refund received by the assessee is to be treated as capital receipt. - AT
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Income Tax:
Rectification u/s 154 - Exemption u/s 11 - accumulation of income for charitable purpose - mistake apparent from the record - whether accumulation at 15% has to be computed on the gross receipts in terms of section 11(1)(a) of the Act and not on the net receipts as computed by the AO? - In view of CBDT circular and Decision of Supreme Court, since there is apparent mistake, AO directed to rectify the same - AT
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Income Tax:
Penalty u/s 271(1)(c) - when the assessee has explained the entries with necessary evidences and said explanation is not found to be false, then merely for the reason that assessee had accepted addition made towards particular income is not a ground to hold that the assessee has furnished inaccurate particulars of income, which warrants levy of penalty u/s.271(1)(c) - AT
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Income Tax:
Nature of expenditure - Expenditure incurred by the assessee towards repairs and renovation of the premises to house the branch - if the expenditure incurred by the assessee is on the revenue front, whether the premises is taken on lease or not is immaterial and the same is always an allowable deduction - CIT(A) misinterpreted Explanation 1 to section 32(1) of the I.T.Act - the assessee is entitled to deduction as revenue expenditure. - AT
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Income Tax:
Reopening of assessment u/s 147 - Had the Assessing Officer perused the letter of the Assessing Officer dated 26.07.2005, wherein, the details were sought for with regard to the deposit of capital gains, the information furnished by the assessee through his Chartered Accountant on 08.08.2005, the certificate issued by the Indian Bank, North Usman Road Branch, Chennai, dated 07.08.2005, and the order of assessment under Section 143(3) dated 30.10.2008, the present reopening would not have been made and could not have been made. - It is clear case of change of opinion - HC
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Income Tax:
Deduction u/s 10B - ‘manufacture’ defined u/s.2(29BA) - whether sculpturing and carving of dimensional block of granites and monument amounted to manufacture ? - Held Yes - HC
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Income Tax:
Reopening of assessment u/s 147 - When the assessment is sought to be reopened after the expiry of period of four years from the end of the relevant year, the proviso to Section 147 stipulates a requirement that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. This stipulation does not govern a notice for reopening within a period of four years. In the case at hand, as noted earlier, there is not even a whisper about what fact was not disclosed. In our view, therefore, the notice to reopen under Section 148 of the said Act itself was issued without jurisdiction. - HC
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Income Tax:
Reopening of assessment u/s 147 - It is sufficient if any one of the conditions stipulated in Proviso clause to Section 147 is satisfied for reopening of assessment. - The sufficiency of the reasons need not be gone into by the High Court in a writ proceedings. Thus, if there is a prima facie case for the purpose of reopening of assessment, and the objective satisfaction is sufficient for the purpose of reopening of assessment. - HC
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Customs:
Import for Mega Power Project under exemption scheme - Auto Renewal of Security deposited as Fixed Deposit - This Court is of an opinion that Auto Renewal clause is a facility provided by the Banks and the petitioner could not able to establish in the event of opting such Auto Renewal clause, their rights are affected, a writ petition may be entertained if the petitioner is able to establish a right and such a right is infringed - the relief as such sought for in the present writ petition deserves no merits - HC
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Customs:
Revocation of Customs Broker License - Proceedings for revocation of license contemplated under regulations 14 and 17 are independent of the proceedings for suspension of the license under regulation 16. Merely because the Commissioner of Customs decides not to continue with the suspension order after hearing the Customs Broker, would not divest the Commissioner of Customs of his power to proceed under regulations 14 and 17 for revocation of the license. - AT
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VAT:
Whether the re-assessment proceedings initiated against the petitioner are barred by limitation? - The amendment made to Section 40 of the Act, cannot be construed so as to open up a liability which had become barred. Even by retrospective operation of law, the aforesaid vested right accrued to the petitioner cannot be taken away - the re-assessment proceedings for the period between April 2006 to December 2006 and April 2007 to December 2007 is held to be barred by limitation. - HC
Articles
Notifications
News
Case Laws:
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GST
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2021 (9) TMI 271
Rectification of Mistake or not - correctness and legality in the case of IN RE: M/S. SRI. V. MOHANDAS PAI, PROP. M/S DHEERAJ ENTERPRISES, [ 2020 (12) TMI 903 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] where it was held that issue raised in the instant application and the issue pending under the proceedings are one and same i.e. classification of the services provided by the applicant. Thus first proviso to Section 98(2) of the CGST Act 2017 is squarely applicable to the instant case, as all the conditions therein are fulfilled - HELD THAT:- There is no error/ mistake apparent on record in the aforesaid ruling as alleged by the applicant. In fact the applicant is challenging the correctness and legality of the said ruling, instead of bringing out any error apparent on record in the said ruling. Thus it is very clear that the authority has considered all the submissions and issued proper ruling. Hence there is no error / mistake apparent on the face of the record in the given judgement. There is no error / apparent mistake on the face of the record in the given judgement - the instant application is not maintainable and is liable for rejection in terms of Section 98 (2) of the CGST/KGST Act 2017 and hence the same is dismissed as inadmissible.
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2021 (9) TMI 269
Pre-deposit before filing af appeal - It is contended that, the entire tax liability has been deducted from the cash ledger, thereby the requirement of 10% of prerequisite deposit is already stands satisfied. - Section 107 (6)(b) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The appeal having been filed and the application for condonation of delay was pending, if the amount of entire liability which was imposed by order dated 12/09/2019, and tax part having been deducted then it would amount to satisfaction of deposit of tax of 10% to the account of the respondent - the dismissal of the appeal only on the ground that 10% amount has not been deposited cannot be too technically viewed and always the petitioner can go for adjudication on merits. The entire tax part having been deducted, it is directed that the respondent shall hear the application for condonation of delay and if the application for condonation of delay is allowed, then the respondent may hear the appeal on merits - Petition disposed off.
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2021 (9) TMI 266
Seeking withdrawal of Writ Petition with permission to file statutory appeals - time limitation of filing appeal - Section 107(1) of the Tamil Nadu Goods and Services Tax Act, 2017 - HELD THAT:- Though the period for filing of statutory appeal is only three months from the date on which the order is received, in this case December, 2020, the Supreme Court in Re: Cognizance for Extension of Limitation [ 2021 (5) TMI 564 - SC ORDER] , [ 2021 (3) TMI 497 - SC ORDER] , [ 2021 (1) TMI 261 - SC ORDER] , [ 2020 (5) TMI 671 - SC ORDER] , [ 2020 (5) TMI 418 - SC ORDER] has extended the limitation, which is current. The request for withdrawal is accepted and these Writ Petitions are dismissed as withdrawn. Liberty is granted to the petitioner to file appeals within a period of two weeks from today. Upon filing of appeals along with pre-deposit of 10%, the provisions of Section 107 provide for an automatic stay of the balance.
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2021 (9) TMI 263
Release of detained vehicle - client has already preferred reply to proceedings - notice issued under Section 122(1)(2) of the Goods and Service Tax Act, 2017, without considering the reply - violation of principles of natural justice - HELD THAT:- The stage of interference by this Court in any of the matters, which are in controversy, has not yet commenced because, as rightly stated by the learned Senior Government Pleader, Ext.P6 is only a notice under Section 122(1)(2) of the Act. Obviously, therefore, the petitioner must submit themselves to the enquiry being conducted by the competent Authority, for which purpose, they have been asked to appear at 11 a.m. on 12.08.2021. The petitioner is directed to comply with Ext.P6; with a further direction to the respondents to ensure that before any further action under Section 129 of the Act is initiated against the petitioner, they will be properly notified and their explanation made in Ext.P5 specifically adverted to particularly that, in the case of a vehicle without any consignment on it, said provision will not apply - petition disposed off.
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2021 (9) TMI 260
Eviction of the respondents from the suit schedule properties - due monthly rents with GST not duly deposited - non-compliance with the order of the court regarding payment of rent - HELD THAT:- Since the Court below had directed deposit from December, 2018 to January, 2019 in its initial order on 27.08.2019, the payment to the petitioners should have started immediately after the said order. If the petitioners had declined to receive any payments, then permission of the Court should have been taken to deposit the same in the Court - But the payments for the months of November, 2018 to January, 2019 were made through D.D.No.008773 dt.28.01.2020, D.D.No.009013 dt.24.08.2020 and D.D.No.008844 dt.24.08.2020. The rents for February and March, 2019 were deposited vide D.D.No.009067 dt.03.10.2020 and D.D.No.009076 dt.09.10.2020 - Even according to the Court below, from April, 2019 to September, 2020, no deposits have been made and no amount was credited towards GST to the Competent Authority under the GST Act. There is a clear finding that the respondents are due monthly rents + GST at 18% for 14 months - there is clear non-compliance with the lower Court s order dt.27.08.2019 in I.A.No.451 of 2019 as modified in the order dt.12.03.2020 in C.R.P.No.263 of 2020 by this Court. Under Rule (2) of Order XV-A CPC, the defence of the respondents in the suit is liable to be struck off - CRP allowed with costs.
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2021 (9) TMI 259
Seeking grant of bail - huge loss of GST, sale tax etc. - forgery of documents for the purpose of illegal transportation of coal, limestone etc. by way of export and import between India and Bangladesh (cross-border trade) - HELD THAT:- During enquiry, it was learnt from some reliable sources that the number plates of some of the trucks carrying coal were also fake and those were suspected to be stolen vehicles. It is stated in the FIR that an illegal transportation and export business of coal is going on in Karimganj district in connivance with coal suppliers, coal exporters and coal export-import associations by the illegal means. This Court is of the opinion that if the liberty of bail is granted to the accused at the present stage of investigation, the entire investigation is likely to be hampered - bail application dismissed.
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Income Tax
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2021 (9) TMI 257
Unexplained cash credits u/s 68 - Bogus share capital and share premium - as per revenue assessee company has failed to prove the identity, creditworthiness and the genuineness of the transactions - Applicability of amended provisions of section 68 - Need to prove source of the source - HELD THAT:- AO has himself called for the above details from the Investor companies, to satisfy himself as regards the identity of the Investors, the genuineness of the transactions, as also the creditworthiness of the Investors. Assessee company has discharged its onus to prove the share capital by establishing the identity of the shareholders, the genuineness of the transactions and even the creditworthiness of the shareholders. AO has not even an iota of evidence to hold that the share capital is non-genuine since in the inquiry carried out by him the share capital has been found to be genuine and the findings in the assessment order are not relevant as they are pertaining to some other assessee and not to the assessee under consideration - we note that despite of complete compliance made by the Investor companies and furnishing of all the details as required by AO to establish the identity, creditworthiness and genuineness of the transaction, the impugned assessment order as passed by the learned AO is absolutely erroneous. As the amended provisions of section 68, is not applicable to the assessee company under consideration, as the assessee`s, assessment year is 2012-13, therefore the assessee under consideration need not to prove source of the source. We find that the assessee had given the complete details about the share applicants clearly establishing their identity, creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries from the assessing officers of the concerned share applicants for which every details were very much made available to him by the assessee - Decided in favour of assessee.
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2021 (9) TMI 252
Reopening of assessment u/s 147 - Bogus purchases - whether there was relevant material on which a reasonable person could have formed a requisite belief that income has escaped assessment? - HELD THAT:- As the original return was processed u/s. 143(1). Subsequently, upon receipt of certain information from DGIT (Inv.), it transpired that the assessee made suspicious purchase in A.Ys. 2010-11 2011-12. On the basis of said information, Ld. AO formed a belief that assessee would have taken bogus bills in A.Y. 2012-13 also to suppress profits. Another reason of reopening was the fact that there was difference in TDS figures. On the given facts, in our opinion, the presence of this material/information was quite enough to reopen the case and no infirmity could be found in reopening the case of the assessee. The legal grounds, thus raised, stand dismissed. Estimation of income o bogus purchases - Quantum of additions - AR has submitted that similar issue arose in A.Ys. 2010-11 2011-12 wherein Ld. AO estimated addition of 15% in set-aside proceedings - Since the same has been accepted by both the sides, similar estimation may be made in this year, concurring with the same and adopting consistent approach in the matter, we direct Ld. AO to estimate the additions @ 15% The balance addition stand deleted.
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2021 (9) TMI 251
Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - Covid lockdown in India - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT:- The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament. Notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021. The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved - no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.
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2021 (9) TMI 250
Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - Covid lockdown in India - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT:- The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament. Notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021. The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved - no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.
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2021 (9) TMI 249
Reopening of assessment u/s 147 - reopening proceedings beyond the period of four years - eligibility of reasons to believe - difference arising on reporting of long term foreign currency monetary items effect of Exchange loss on ECB loans - whether the assessee disclosed the material facts fully and truly necessary for the assessment? - HELD THAT:- The petitioner / assessee is a company, adopting mercantile method of accounting. Thus, the findings in these aspects are of paramount importance for the purpose of making the assessment in a clear manner - assessment order did not speak anything regarding the actual payments and other details elaborately, then it paves way for reopening of assessment. In the present case, the first reason would show that there is a shortfall in assessment of income under Section 115JB by 390.96 lakhs. Thus, the Assessing Officer has 'reason to believe' that there was an under-assessment. When such an under assessment is identified and falling under the deemed cases, where income chargeable to tax has escaped assessment, then the conditions stipulated in the proviso clause that disclosure of material facts fully and truly became absent. Assessing Officer has 'reason to believe' for reopening of assessment. It is sufficient if any one of the conditions stipulated in Proviso clause to Section 147 is satisfied for reopening of assessment. Second reason furnished for reopening, wherein the respondent considered as per schedule 18 of the profit and loss account, expenses have been debited - With reference to the said expenses, it is stated that as per clause I J of Explanation of section 115JB both the above items are to be added back to the book profits. Thus, there is escapement of ₹ 59,72,380/- to be taxed U/s.115JB. The tax effect thereon is ₹ 8.96 lakhs. Third reason stated is that there is revaluation of assets in the depreciation schedule which goes to increase the claims for depreciation under normal provisions by 25% i.e., ₹ 945.27 lakhs (₹ 4699.80-₹ 918.73=₹ 3781.1 25 %=₹ 945.27). This should have been added back in the normal computation of income as per provisions section 43A of the IT Act. There tax effect thereon is ₹ 321.39 lakhs. This Court is of the considered opinion that High Court is not an expert body, so as to go into the details of the accounting system and find out the arithmetic errors, if any. What is to be considered in a writ petition mainly with reference to the cases of reopening of assessment is the 'reason to believe' for reopening of assessment. The reasons furnished should have live link with the materials and the conditions stipulated are to be complied with. If these aspects are satisfied, such an objective satisfaction would be sufficient for the purpose of allowing the assessing authority to proceed with the reassessment proceedings and conclude the same by providing opportunity to the assessee. The sufficiency of the reasons need not be gone into by the High Court in a writ proceedings. Thus, if there is a prima facie case for the purpose of reopening of assessment, and the objective satisfaction is sufficient for the purpose of reopening of assessment. This Court could able to arrive a conclusion that the case of the petitioner is falling under Sub-Clause (c) to Explanation 2 of Section 147 of the Act as it is a deemed case, where income chargeable to tax has escaped assessment and if such deemed cases are traced out, then necessarily the Assessing authority has to draw an inference on certain factual aspects for forming such an opinion and such 'reason to believe' would be certainly falling under the condition that the assessee has not disclosed fully and truly material facts necessary for assessment. Thus, the Assessing Officer had 'reason to believe' that income chargeable to tax has escaped assessment. However, whether it is escaped assessment or not is the subjective adjudication, which is to be done by following the procedures as contemplated under the Act. WP dismissed.
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2021 (9) TMI 248
Reopening of assessment u/s 147 - notice after the expiry of period of four years - eligible reason to believe - non disclosure to deduction under Section 10A was allowed on capital gain - HELD THAT:- Reasons cannot be improved upon and/or supplemented much less substituted by affidavit and/or oral submissions. In the reasons to believe, except for a general statement that the escapement of income is by a reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, there is no mention anywhere that the assessee did not disclose that the deduction under Section 10A was allowed on capital gain during the course of assessment proceedings under Section 143(3) of the Act or that the subsequently it came to the notice of the assessing officer. Infact in the reasons for reopening, it is expressly mentioned that the assessee has added short term capital gain. We would also add that in the assessment order dated 31st January 2017, the assessing officer has allowed the set of - Therefore, by no stretch of imagination it can be concluded that there was failure on the part of petitioner to disclose fully and truly the fact that sum has been deducted against the losses claimed under Section 10AA. In the case at hand the assessing officer has not even indicated what was the material fact that was not disclosed truly or fully to him. When the assessment is sought to be reopened after the expiry of period of four years from the end of the relevant year, the proviso to Section 147 stipulates a requirement that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. This stipulation does not govern a notice for reopening within a period of four years. In the case at hand, as noted earlier, there is not even a whisper about what fact was not disclosed. In our view, therefore, the notice to reopen under Section 148 of the said Act itself was issued without jurisdiction. Consequently, the order passed also cannot be sustained. - Decided in favour of assessee.
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2021 (9) TMI 247
Deduction u/s 10B - manufacture defined u/s.2(29BA) - whether sculpturing and carving of dimensional block of granites and monument amounted to manufacture ? - HELD THAT:- Issue decided in favour of assessee as decided in M/S. JANNANI HOLDINGS [ 2021 (8) TMI 569 - MADRAS HIGH COURT] wherein held CIT(A) had elaborately examined the process through which the quarried rough stone goes through before it becomes a polished granite slab or tile or any other article. We are of the considered view that the Tribunal was right in confirming the order passed by the CIT(A) - Decided against revenue.
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2021 (9) TMI 246
Reopening of assessment u/s 147 - capital gain not offered to tax - sale transaction that took place in the previous year, i.e., 2009-10 relating to Assessment Year 2010-11, when the Power Agent has executed the sale deed - whether there was a transfer of the immovable property during the previous year relevant to AY 2004-05 or did the transfer take place at the behest of the appellant/assessee in the Assessment Year 2010-11? - HELD THAT:- Assessee has filed his return of income for the Assessment Year 2004-05 and has offered the sale consideration for capital gains and deposits were made in the Bank Account. All these aspects were called for by the Assessing Officer by issuing intimation and after considering the documents produced by the assessee, summons were issued to the partner of the firm, who had purchased the property, their Books of Accounts were perused and the AO having been fully satisfied that the transfer has taken place in terms of Section 2(47) of the Act in the Assessment Year 2004-05, had passed the scrutiny Assessment Order under Section 143(3). Admittedly, the Assessing Officer did not have any new or tangible material to show that the assessee failed to fully and truly disclose all particulars and the assessment warrants reopening - assessee has been put to sheer harassment on account of notice under Section 148 of the Act, dated 31.03.2017. Had the Assessing Officer perused the letter of the Assessing Officer dated 26.07.2005, wherein, the details were sought for with regard to the deposit of capital gains, the information furnished by the assessee through his Chartered Accountant on 08.08.2005, the certificate issued by the Indian Bank, North Usman Road Branch, Chennai, dated 07.08.2005, and the order of assessment under Section 143(3) dated 30.10.2008, the present reopening would not have been made and could not have been made. Therefore, we are convinced that the reopening is a clear case of change of opinion and therefore, not valid in law.
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2021 (9) TMI 245
Nature of expenditure - Expenditure incurred by the assessee towards repairs and renovation of the premises to house the branch - revenue or capital expenditure - HELD THAT:- The mere fact that enduring benefit ensure to the assessee by itself would not be a factor to be decided as to whether it is a capital or revenue expenditure. Tribunal concluded that the amount could not be said to be a capital expenditure and was only a revenue expenditure. On appeal, the Hon ble High Court confirmed the ITAT s order. Hon ble High Court held that the premises had been taken on lease by the assessee and the repairs that were carried out for the purpose of business to create the ambience and to carry out repairs to use the premises as the office of the assessee as there was stiff competition in the business of the assessee and the expenditure of the amount of ₹ 15,89,613 which would come to ₹ 9 per sq.ft. in respect of 17113 sq.ft. could not be said to be capital expenditure. The mere fact that it was taken on lease for six years would not itself render the expenditure capital in nature . Explanation 1 to section 32(1) of the I.T.Act relied on by the CIT(A) is of no help to the revenue. Explanation 1 to section 32(1) of the I.T.Act only permits the assessee to claim depreciation on capital expenditure incurred on leased premises taken by the assessee. On the other hand, if the expenditure incurred by the assessee is on the revenue front, whether the premises is taken on lease or not is immaterial and the same is always an allowable deduction - CIT(A) misinterpreted Explanation 1 to section 32(1) of the I.T.Act - we hold that the assessee is entitled to deduction as revenue expenditure. Ex-gratia payment payment made to the employees is not a statutory payment, and hence, not liable for disallowance u/s 43B - CIT(A) rejected the plea of the assessee since the assessee has not filed a revised return - HELD THAT:- It is an admitted position of law that powers of the CIT(A) are coterminous with that of the Assessing Officer can exercise. CIT(A) while hearing an appeal has all the powers which an Assessing Officer can exercise. CIT(A) ought to have independently considered the issue raised before him de hors the fact that the issue was not considered by the Assessing Officer. In this context, we rely on the judgment of the Hon ble Apex Court in the case of Jute Corporation of India Ltd. [ 1990 (9) TMI 6 - SUPREME COURT] - judgment of the Hon ble Supreme Court in the case of Goetze (India) Limited [ 2006 (3) TMI 75 - SUPREME COURT] only impinge upon the powers of the AO to consider a claim which is not made in the return of income, whereas, such restriction is not there with regard to power of an Appellate Authority. We are of the view that the issue of ex-gratia payment, whether it can be subjected to disallowance u/s 43B of the I.T.Act needs examination by the Assessing Officer.
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2021 (9) TMI 244
Excess deduction u/s.35(2AB) - expenditure incurred on in-house R D facility - excess deduction claimed by the assessee over and above the amount approved by the DSIR - scope of Tenth Amendment Rule, 2010 - DSIR power to quantify the expenditure incurred on inhouse R D facility - HELD THAT:- As relying on CUMMINS INDIA LIMITED VERSUS THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1 (1) , PUNE [ 2018 (5) TMI 1314 - ITAT PUNE] that the amendment brought in by the IT (Tenth Amendment) Rules w.e.f. 01.07.2016, wherein separate part has been inserted for certifying the amount of expenditure from year to year and the amended form No.3CL thus, lays down the procedure to be followed by the prescribed authority. Prior to the aforesaid amendment in 2016, no such procedure/methodology was prescribed. In the absence of the same, there is no merit in the order of Assessing Officer in curtailing the expenditure and consequent weighted deduction claim under section 35(2AB) of the Act. The case before us pertains to FY 2013-14 relevant to AY 2014-15 and therefore, facts and circumstances are absolutely identical in assessee‟s case also. Therefore, respectfully, following the order of the Tribunal (supra.) on the same parity of reasoning and under same set of facts and circumstances, we find no reason to interfere with the findings of the Ld. CIT(Appeal) and relief provided to the assessee is hereby sustained. Thus, grounds raised by the Revenue are dismissed.
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2021 (9) TMI 243
Penalty u/s 271(1)(c) - addition towards unexplained cash credit - Penalty for furnishing inaccurate particulars of income - as argued assessee has shown purchases of stock-in-trade from the sister concern and passed necessary journal entries by debiting purchases into opening stock and crediting to party account under the head sundry creditors - HELD THAT:- On perusal of reasons given by the AO we understood is the AO has completely mis-stated the facts without understanding the principles of accountancy, which is evident from the fact that although the assessee has passed entries for purchase in its books of accounts by debiting to purchase account and crediting to sundry creditors account, the AO has stated that the assessee has purchased the goods in the earlier financial year and has not recorded the same in the books of accounts of the assessee. Assessee has explained the transactions with necessary evidences and has also furnished necessary details before the AO to determine its taxable income - there is no effect on the profit / loss or taxable income for the impugned assessment year - when the assessee has explained the entries with necessary evidences and said explanation is not found to be false, then merely for the reason that assessee had accepted addition made towards particular income is not a ground to hold that the assessee has furnished inaccurate particulars of income, which warrants levy of penalty u/s.271(1)(c) of the Act. The ld.CIT(A) without appreciating facts, has simply confirmed penalty levied by the AO. - Decided in favour of assessee.
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2021 (9) TMI 242
Rectification u/s 254 - Tribunal has restored the issue to the file of the A.O. to examine the applicability of section 6(1)(c) while the assessee s case is covered by section 6(1)(a) - HELD THAT:- Tribunal has taken a particular view of the matter and restored the issue to the file of the A.O. for examining it. In my view, the same would not constitute mistake apparent from record within the meaning of section 254(2) of the Act. Accordingly, I dismiss the miscellaneous application filed by the assessee.
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2021 (9) TMI 241
Rectification u/s 154 - Exemption u/s 11 - accumulation of income for charitable purpose - mistake apparent from the record - whether accumulation at 15% has to be computed on the gross receipts in terms of section 11(1)(a) of the Act and not on the net receipts as computed by the AO? - Whether Computer Processing Centre (CPC) was not competent to make the adjustment under section 143(1) ? - debatable issue - HELD THAT:- We find no basis for the AO to have made the impugned adjustment under section 143(1) of the Act. The law is well settled that the accumulation of 15% under section 11(1)(a) of the Act has to be computed on the income (gross receipts) before application i.e., on the gross receipts and not on the amount remaining after expenditure for charitable purpose (net income). Case followed PROGRAMME FOR COMMUNITY ORGANISATION [ 2000 (11) TMI 4 - SUPREME COURT] In the CBDT s Circular No.68 dated 17.11.1971 supports the plea of the assessee that an interpretation of law by the Supreme Court if not followed in an assessment could constitute a mistake apparent from the record and therefore rectifiable under section 154 of the Act. In this background of facts, we are of the view that there was a mistake apparent on the face of the record which ought to have been rectified under section 154. It is clear from the order passed under section 154 of the Act that the AO has computed accumulation of 15% on the net revenue after reducing all the expenditures in the form of application of income for charitable purpose. This approach of the AO was clearly contrary to the decision of the Hon ble Supreme Court cited by the learned Counsel of the assessee. In these circumstances, we are of the view that the mistake sought to be rectified by the assessee ought to have been rectified by the Revenue authorities - Decided in favour of assessee.
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2021 (9) TMI 240
Grant of recognition u/s 80G (5) (vi) - denial of recognition as no noticeable charitable activities as on date from the date of formation of trust - non speaking order passed by CIT-E - Admission of additional information on the activities of the trust - proof of charitable activities u/s 2(15) - HELD THAT:- With regard to grant of recognition u/s.80G of the Act to the assessee has to be remanded to the AO for consideration afresh because the impugned order has been passed without affording assessee proper opportunity of being heard. The impugned order is therefore set aside and the CIT(E) will decide the issue of grant of recognition, in the light of the law as explained by the decisions referred to by the learned Counsel for the assessee before us. As held in M/S. ANANDA SOCIAL AND EDUCATIONAL TRUST [ 2020 (2) TMI 1293 - SUPREME COURT] the proposed activities can also be explained by the assessee which can be examined by the CIT(E). As held in the case of Vidyashilp Community Trust [ 2019 (11) TMI 1538 - ITAT BANGALORE] the assessee can furnish additional information on the activities of the trust in the set aside proceedings for examination by CIT(E). Since the order of CIT(E) is also a non-speaking order, he is directed to consider the issue afresh - Appeal of the assessee is allowed for statistical purposes.
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2021 (9) TMI 239
Addition u/s 68 - unexplained Bank credits, unexplained share application money, unexplained share premium and unexplained share capital - assessee has failed to discharge the initial onus cast on it by proving the various transactions appearing in the bank account - CIT(A) after admitting the additional evidences and obtaining a remand report from the A.O. granted part relief to the assessee - Assessee submitted that all credits in the Bank account have been added including the credits in the Bank Account from Auto Sweep Account despite the fact that the Sweep Account is merely a credit in the Current/ Savings Account out of the Fixed Deposit Account of the assessee, disregarding the explanation given by the assessee and additions on account of Bank interest, dividend income and share application money received through Banking channels have been made, which were already taxed and therefore the same amounts to double addition - HELD THAT:- Considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to the file of A.O. with a direction to grant one more opportunity to the assessee to substantiate its case by filing the requisite details and explaining each and every transaction including the credits in the Bank Account from Auto Sweep Account. Wherever double addition has been made on account of Bank interest, dividend income and share application money etc., the A.O. shall, upon satisfaction, delete the same. The A.O. shall also consider the application of proviso to section 68 w.e.f. 01.04.2013 in respect of share application money received from family members relatives of directors. A.O. shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to appear before the A.O. and substantiate its case by producing the requisite details - Grounds raised by the Assessee are allowed for statistical purposes.
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2021 (9) TMI 238
Maintainability of appeal - low tax effect - primary ground on which the Revenue seeks to recall this order is by placing reliance on CBDT Circular No. 23/2019 dated 06/09/2019 wherein the Circular was issued in respect of long term capital gain and short term capital loss generated through penny stocks, citing the same as an exception to application of low tax effect circular - HELD THAT:- We find that the Tribunal order dated 27/08/2019 contains only four paragraphs and there is no para 5 in the said order. Hence, the content in the Miscellaneous Application of the Revenue primafacie is incorrect. First of all there was no provision given in the Tribunal order to recall the order giving leeway or liberty to the Revenue to approach this Tribunal for recalling of the order. Tribunal order was passed in SMT. MANJULABEN B PATEL, [ 2019 (8) TMI 1753 - ITAT MUMBAI] and the CBDT Circular No.23/19 was issued on 06/09/2019. Hence, on the date of passing the Tribunal order, the CBDT Circular / instruction relied upon was not in existence at all. In this view of the matter, we see no mistake on record in the order passed by this Tribunal. Accordingly, the Miscellaneous Application of the Revenue deserves to be rejected as devoid of legally sustainable merits.
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2021 (9) TMI 237
Penalty u/s 271(1)(c) - Defective notice - non striking inappropriate words - assessee made wrong claim in respect of taxable income thereby furnished inaccurate particulars of income and concealed its income - HELD THAT:- Inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of the Hon ble Karnataka High Court in the case of SSA S Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] where the SLP filed by the Revenue has been dismissed by Hn ble Apex Court [ 2016 (8) TMI 1145 - SC ORDER] is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon ble Delhi High Court in case of M/s. Sahara India Life Insurance Company Ltd [ 2019 (8) TMI 409 - DELHI HIGH COURT] will be applicable in the present case In the present case the assessee has not furnished inaccurate particulars of income as the revised return was filed during the course of assessment proceedings before being pointed out by the AO in the notice u/s 142(1) 143(2). The assessee has claimed the statutory deductions/exemptions only. Thus, the present case is squarely covered by the Hon ble Apex Court decision [ 2010 (3) TMI 80 - SUPREME COURT] and Section 271(1)(c) will not be attracted in the present case. Thus, the Assessing Officer was not right in imposing the penalty and the CIT(A) also ignored the crucial facts of the present case. Hence, appeal filed by the assessee is allowed.
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2021 (9) TMI 236
Disallowance u/s 14A - whether assessee has not earned exempt income ? - HELD THAT:- No disallowance u/s. 14A is permissible when the assesse has not earned exempt income. This proposition is further supported by the decision in the case of Delite Enterprises [ 2009 (2) TMI 498 - BOMBAY HIGH COURT] and in Maxopp Investment Ltd.[ 2018 (3) TMI 805 - SUPREME COURT] wherein the proposition that disallowance cannot exceed the exempt income has been upheld. As an obvious corollary, when there is no exempt income there cannot be disallowance u/s 14A. Hence, we do not find any infirmity in the order of Ld.CIT(A). Contribution made towards the Employees Provident Fund - Addition on the ground that it has paid beyond the due dates prescribed u/s. 2(24)(x) r.w.s. 36(1)(va) - CIT-A deleted the addition - HELD THAT:- It is not disputed that the impugned amounts were paid/deposited before the due date of filing of the return. See GHATGE PATIL TRANSPORTS LTD. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] - Ld. DR could not controvert that the issues are could not covered in favour of the assessee. Accordingly, we uphold the order of Ld.CIT(A).
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2021 (9) TMI 235
Deduction claimed by the cooperative society u/s 80P(2)(a)(i) - assessee is having nominal/associate members and accordingly took the view that the assessee has violated the principles of mutuality - HELD THAT:- Since the issue of deduction u/s 80P(2)(a)(i) of the Act requires fresh examination in the light of decision rendered by Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] , we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O for examining it afresh as discussed above. Deduction claimed u/s 80P(2)(d) - interest earned on deposits kept as SLR - A.R. submitted that the assessee is required to maintain deposits with banks to meet the requirement of Statutory liquidity ratio (SLR), which is 28% of total deposits and since these deposits have been made under legal obligation, it is incidental activity of business intricately connected with the main business of providing credit to the members - HELD THAT:- An identical issue was restored to the file of the A.O. by the coordinate bench in the case of Thannirupantha Primary Agricultural Credit Co-operative Society Ltd. [ 2021 (8) TMI 68 - ITAT BANGALORE] - Following the above said decision we restore this issue to the file of the A.O. for examining it afresh in the light of discussions made. Alternative claim that the expenses incurred to earn the interest income should be allowed u/s 57(iii) of the Act, if it claim for deduction u/s 80P(2)(a)(i) or 80P(2)(d) is not allowed - Since we have already restored the issue of claim of deduction u/s 80P(2)(d) of the Act, we restore this alternative contention also to the file of the A.O., since the claim of the assessee gets support from the decision rendered by Hon ble High Court of Karnataka in the case of Totgars Co-operative Sales Society Ltd [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT]
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2021 (9) TMI 234
Levy of penalty u/s 271(1)(c) - denial of the assessee s claim under section 80IB - HELD THAT:- It is not the case that assessee s claim was exfacie bogus - CIT(A) in dealing with the penalty order has distinguished the assessee s reliance upon decision in the case of Vandana Property [ 2012 (4) TMI 54 - BOMBAY HIGH COURT ] by holding that assessee is picking lines from the above Hon ble jurisdictional High Court decision. CIT(A) has misled himself in distinguishing the assessee s reliance upon the decision in the case of Reliance Petroproducts [ 2010 (3) TMI 19 - SUPREME COURT ] wherein as expounded that mere denial of an assessee s claim cannot fasten upon the assessee liability of penalty u.s 271(1)(c), unless the assessee s claim is found to be ex-facie bogus - assessee s claim by no stretch of imagination can be said to be apparently bogus claim. Hence, in our considered opinion, on the facts and circumstances of the case authorities below have erred in levying the penalty u.s. 271(1)(c) upon the assessee. The only aspect in the present case is that the claim of deduction was made, which has not been allowed because of the non-satisfaction of the requirement of size of the project. We note that in similar situation in the case of CIT vs. Petels Engineers Limited [ 2013 (11) TMI 1374 - BOMBAY HIGH COURT ] has held that penalty u/s. 271(1)(C) is not exigible on denial of claim u/s 80IA. Therefore, levy of penalty in the present case is not justified - Decided in favour of assessee.
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2021 (9) TMI 233
Rectification u/s 154 - Nature of receipt - revenue or capital receipt - benefit in the form of excise duty subsidy - Whether issue falls u/ s 154 or not? - what constitute mistake apparent from record - whether, a Supreme court judgment delivered at later point of time after passing or order can constitute mistake apparent from record or not, whether income tax authority can amend any order, if there is any mistake apparent from record with relevance to a later judgment? - HELD THAT:- We find that in the case of DCIT vs. M/s Kashmir Steel Rolling Mills [ 2015 (1) TMI 1265 - ITAT AMRITSAR] held on identical facts that non consideration of order of jurisdictional high court constitute mistake apparent from record.- also Further, the Co-ordinate Bench of ITAT Mumbai in the case of Nulux Engineers vs. DCIT [ 2018 (10) TMI 1908 - ITAT MUMBAI] held that non-consideration of the decision of Hon ble Supreme Court as well as subsequent interpretation of law by Hon' ble Supreme Court and its non- consideration by Revenue in its order constitute mistake apparent from record which can be rectified u/ s 154 of the Act. Hon ble Supreme Court in the case ACIT vs. Saurashtra Kutch Stock Exchange Ltd. [ 2008 (9) TMI 11 - SUPREME COURT] held that non consideration of a decision of Jurisdictional High court or Supreme court can be said to be a 'mistake apparent from record' which can be rectified under section 254(2). After considering the above circular and judicial pronouncements, we hold that the petition submitted by the assessee falls within the scope of section 154. Whether Excise Duty refund is capital or revenue receipt ? - Hon' ble High Court of J K in the case of Shree Balaji Alloys [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] held that Excise duty refund, Interest subsidy and Insurance subsidy received with the object of creating avenues for perpetual employment, to eradicate the social problem of unemployment in the state by accelerated industrial development is capital receipt - we find no dispute that the Excise Duty refund received by the assessee is to be treated as capital receipt. Exclusion of capital receipts in computing Book profit u/ s 115JB - HELD THAT:- Only that receipt which forms part of the income are to be taxed. The capital receipts which are otherwise not subject to tax under the normal provisions of the Act are not envisaged to be taxed under the provisions of Minimum Alternate Tax . Once a receipt is not considered as income, the same cannot be subjected to tax under this Act as such receipt naturally classified under capital receipt. Which was never meant to be taxed cannot be taxed even u/ s 115 JB. The Hon ble Supreme Court in the case of Apollo Tyres Ltd. [ 2002 (5) TMI 5 - SUPREME COURT] held that the revenue cannot go beyond the net profit shown in the P L account except to the extent provided in the Explanation to Section 115J. The Hon ble High Court of Karnataka in the case of Hariram Hotels Pvt. Ltd. [ 2015 (12) TMI 1419 - KARNATAKA HIGH COURT] held that the capital receipts are not subjected to the provisions of Section 115JB.
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2021 (9) TMI 232
Revision u/s 263 by CIT - disallowance of certain expenses u/s 40(a)(ia) - HELD THAT:- On a specific query by the bench it was stated by the ld. A.R that the case of the assessee at no stage was converted into full scrutiny with the approval of the CIT/Pr.CIT. Backed by the aforesaid facts, we are of a strong conviction that now when the jurisdiction of the A.O while framing assessment was in itself circumscribed and limited qua examination of the assessee s claim for deduction under Chapter VI-A of the Act, therefore, by no means the Pr. CIT could have held the order passed by the A.O u/s 143(3), dated 31.08.2017 as erroneous, for the reason, that he had not carried out an addition/disallowance which fell beyond the realm of the reasons on the basis of which the assessee s case was selected for limited scrutiny. We are unable to persuade ourselves to accept the view taken by the Pr. CIT that the order passed by the A.O u/s 143(3), dated 31.08.2017 was erroneous, for the reason, that he had failed to carry out disallowance of certain expenses u/s 40(a)(ia). A.O had failed to disallow the assessee s claim for deduction u/s 80P(2)(d) qua the interest income as received by it from co-operative Banks - Co-operative banks pursuant to the insertion of sub-section (4) to Sec. 80P of the Act would no more be entitled for claim of deduction u/s 80P of the Act, but as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912) or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction u/s 80P(2)(d) - As the facts and the issue involved in the present case before us remains the same as were there before the Tribunal in the case of M/s Solitaire CHS Ltd. [ 2019 (12) TMI 80 - ITAT MUMBAI] , wherein the order passed by the Pr. CIT u/s 263 of the Act was quashed, we, thus, respectfully follow the same - we are unable to uphold the view taken by the Pr. CIT that the failure on the part of the A.O to be disallow the assessee s claim for deduction u/s 80P(2)(d) had rendered the assessment order passed by him u/s 143(3) of the Act, dated 31.08.2017 as erroneous in so far it was prejudicial to the interest of the revenue. - Decided in favour of assessee.
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2021 (9) TMI 231
Deduction u/s.80IB(10) - disallowance of excess claim of development expense - Method followed to allocate expenses - method of accounting followed by the assessee to recognize revenue from sales and accounting of development expenses - HELD THAT:- We do not ourselves subscribe to reasons given by the AO for allocation of expenses on the basis of sales revenue, because the method followed by the Assessing Officer to allocate expenses for each assessment year on the basis of sales revenue is contrary to accounting standard issued by the ICAI for recognition of revenue from construction contracts. Assessee has incurred total development expenses in two financial years including impugned assessment year 2008-09. However, revenue from project has been recognized in three assessment years starting from assessment year 2008-09. Therefore, we are of the considered view that method of accounting followed by the assessee to recognize revenue from sales and accounting of development expenses is in accordance with prescribed accounting method suggested by the ICAI and such method has been consistently followed by the assessee. Hence, the Assessing Officer s action of allocating expenditure on the basis of sales revenue is contrary to prescribed method for accounting of construction contracts and hence, we are of the considered view that the Assessing Officer has erred in reallocation of expenses on the basis of revenue and working out excess development cost without any basis. CIT(A) has recorded categorical finding that when the assessee is eligible for deduction u/s.80IB(10) of the Act, in respect of 100% profit derived from housing project, there is no question of inflation of expenditure to reduce profit, because it adversely impact benefit of deduction to the assessee. Therefore, on this count also reasons given by the Assessing Officer that assessee has inflated expenditure for impugned assessment year is not supported by any evidence - no error in the findings recorded by the learned CIT(A) to delete additions - Decided against revenue. Ad-hoc disallowance of various expenses on the ground that said expenses incurred in cash and not further, supported by necessary bills and vouchers - AO has disallowed 20% of contract expenses like site expenses, earth filling charges and sand purchases on the ground that the assessee has incurred expenditure in cash - CIT(A) has recorded categorical finding that Assessing Officer has made ad-hoc disallowance of 20% of construction expenses without pointing out any specific defects in bills and vouchers - HELD THAT:- In this case, there is no observation regarding defects in bills and vouchers submitted by the assessee in respect of expenses. Although, the AO claims that most of expenditure is incurred in cash, but he himself admitted fact that each payment is less than ₹ 20,000/- prescribed u/s.40A(3) of the Act. Therefore, we are of the considered view that once the Assessing Officer having accepted fact that cash payments for purchases does not exceed prescribed limit provided under the Act, then erred in making 20% ad-hoc disallowance of expenses. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer and hence, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the revenue. Additional ground taken by the assessee making alternative plea for deduction u/s.80IB(10) - HELD THAT:- Deletion of additions made by the Assessing Officer towards disallowance of development expenses and ad-hoc disallowance of construction expenses, he has not allowed additional ground raised by the assessee making a claim for deduction u/s.80IB(10) - As categorically stated that the assessee has satisfied conditions prescribed u/s.80IB(10) of the Act, to be eligible for deduction towards profit derived from housing project. Therefore, we are of the considered view that grounds taken by the revenue challenging findings of the learned CIT(A) in allowing claim of the assessee towards deduction u/s.80IB(10) of the Act, in principle, is merely academic in nature and does not require any specific adjudication. Hence, ground taken by the Revenue is rejected.
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2021 (9) TMI 230
Exemption u/s 10(23C) (vi) - rejection of the application u/s 12AA - charitable activity u/s 2(15) - Appellant is a society registered under the society registration Act 1860 and is running a school in the name of Oxbridge World School at village Dhilwan on Kotakapura to Bhathinda Road - rejecting the application was that the assessee has taken the unsecured loan from the president, executive member and chief patron of the society and is paying the interest @ 9% to three person and @ 12% to Smt. Prem Rani and thus the assessee is violating the provisions of section 13(1c) - HELD THAT:- CIT(E) has not disputed the fact that the loan taken by the assessee from the patron, executive member and the president of the society were solely utilized for the purposes of educational institution. Further the CIT(E) has not alleged that the loan taken by the assessee was used for any other purposes, other than running the school. In our considered opinion the section 13(1)(c) would only triggered only if the assessee society is exempted u/s 12 of the Income Tax Act 1961. In the present case , the exemption/approval is yet to be granted to the appellant society, therefore in our opinion section 13 (1) (c) would not be applicable to the facts and circumstances of the case. Whether paying the interest at the rate of 9%/12% to the above then person was a benefit to the specified person, was required to be examined by the assessing officer during the assessment proceedings and for that purposes it was incumbent upon the assessing officer to bring on record the contemporaneous comparative instances of the similar society indicating that the interest of rate paid by the assessee was far more than that was prevailing in the open market. In the light of the above, the first objection raised by the CIT(E) was without any basis. Assessee has made addition of van /buses in the financial year 2012-13 to 2014-15 - The assessee had filed the income and expenditure account for all the three years and in the income the assessee has shown the fees of ₹ 13093505/- for the year ending upto 31.03.2015 and the said fees, have been utizlied for various purposes mentioned in the income and expenditure - assessee is entitled to the claim of depreciation on the fixed assets and was not restricted to only to the buses but was also relatable to the other fix assets as per schedule 5 of the balance sheet - facts remains the assessee was only having of actual surplus of ₹ 2,36,800/- (after claiming depreciation). In our view, no fault can be found in the computation of the assessee. In our view, none of the head mentioned by the assessee on the expenditure side shows the utilization of the fund for any purpose other than education. In our considered opinion generation of surplus fund by the educational institution is not a taboo. The Hon'ble Apex Court in the case of Queen's Educational Society [ 2015 (3) TMI 619 - SUPREME COURT] has held that when surplus is ploughed back for educational purpose, the educational institutions exist solely for educational purposes and not for purposes of profit. The Apex Court further approved accumulation to the tune of 15% of its total income pertaining to the relevant assessment year as per Sec.11(1)(a) of the Act No fault can be found in utilization of surplus fund by the assessee for the purposes of buying the buses / transportation. Admittedly, the buses are ferrying to 66 villages and transporting to the students to the school. In the absence of buses the quality education would be a pipedream and would not be a reality. In our considered opinion the education per se cannot be given a pedantic or narrow interpretation and it should be given the wide interpretation so that all the ancillary but necessary activity would form the part of education. In the absence of necessary transport facility, the students will not be able to attend school regularly and punctually. Therefore, the provision for transportation is sine qua non and is integral part of imparting education. In view of the above, the objection of the CIT(E) is devoid of any merit. Assessee is not paying the sufficient salary to the teachers and thereby violating the CBSE guidelines by not paying the 6th pay commission salary - The scope and ambit of the verification u/s 10(23C) (vi) was only to verify whether the assessee was established / running solely for the purpose of education or not. Once the CBSE grant affiliation to the assessee, then it is for the CBSE to ensure compliance of the terms and condition of attached with the affiliation. Undoubtedly, the assessee was into imparting of solely for education purposes and this aspect has not been denied by the CIT(E). In our considered opinion payment of the salary to the teacher in violation of 6th pay commission cannot be a ground to deny the approval u/s 10(23C) (vi) of Income Tax Act 1961. Recently, the coordinate bench in the matter of Dr. Madan Lal Atri had held that the scope and ambit of the enquiry at the time of registration should be confined to find out whether the activity of the assessee are charitable and genuine in nature and not. The CIT(E) should not expand the horizon for the purposes of finding whether the assessee is following the conditions laid down by the other Act at the time of approval / affiliation. CIT(E) is directed to grant approval, to the assessee from the date of application i.e. 21.09.2015 u/s 10(23C) (vi) of Income Tax Act 1961 and in view of Reham Foundation [ 2019 (10) TMI 151 - ALLAHABAD HIGH COURT] - Decided in favour of assessee.
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2021 (9) TMI 229
Admission of additional ground - TP Adjustment issue - whether the impugned order u/s. 92CA(3) of the TPO has been passed beyond the time limit provide under section 92CA(3A), therefore, bad in law and liable to the quashed? - HELD THAT:- We are of the view that this additional ground raised by the assessee will go to the root of the matter. Hence, we admit the additional ground raised by the assessee, which would not require any fresh investigation into facts of the case, by following the dictum laid down by the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [ 1996 (12) TMI 7 - SUPREME COURT] . This additional ground is raised for the first time before the Tribunal and the Income Tax Authorities did not have any occasion to examine the merits of the additional ground. Accordingly, we remit the issue raised in the additional ground to the files of the DRP, for fresh adjudication in accordance with law. Since we have remitted the issue raised in the additional ground to the files of the DRP, which will go to the root of the matter, we are refrained from adjudicating the grounds raised in the assessee's appeals.
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2021 (9) TMI 228
Income from pension fund u/s 10(23AAB) - CIT(A) admitted the fresh claim - Claim of exemption when the income is taxable u/s 44 - HELD THAT:- As relying on own case [ 2019 (8) TMI 1754 - ITAT MUMBAI] in the instant case the assessee filed revised computation of claim at the time of assessment proceedings - CIT(A) accepted the enhanced claim made in revised computation. Once the assessee is held to be eligible for claiming the benefit of exemption u/s.10(23AAB) of the Act, the exemption of correct amount should be allowed to the assessee. If the assessee failed to revise its claim by way of revised return of income, for any reason whatsoever, the assessee is not estopped to make correct claim by way of revised computation. The revised claim can be entertained in appellate proceedings. We find no infirmity in the action of CIT(A) to allow revised enhanced claim. The ground no.1 of the appeal by Revenue is thus dismissed. Deduction on dividend income u/s 10(34) - HELD THAT:- As relying on own case . [ 2019 (8) TMI 1754 - ITAT MUMBAI] AO is directed to allow appellant's claim of sec.10(34). Disallowance u/s 14A - HELD THAT:- As relying on ICICI PRUDENTIAL INSURANCE CO LTD.[ 2012 (11) TMI 13 - ITAT MUMBAI] we hold that the provisions of section 14A are not attracted in the case of Insurance Companies.
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2021 (9) TMI 227
Long term capital gain - FMV determination - joint co-owners of property - deemed sale consideration for the purpose of computing the long term capital gain as per the 1st Proviso to section 50C - proportionate share of the assessee in fair market value of the property - fair market value as on registration of the conveyance deed i.e. 12.10.2010 as adopted by the AO - HELD THAT:- As the assessee has relied on the decision in the case of CIT vs. Vummudi Amarendran [ 2020 (10) TMI 517 - MADRAS HIGH COURT] wherein it was held that the amendment made in section 50C by inserting 1st Proviso with effect from 01.04.2017 is applicable retrospectively with effect from the date on which section 50C was introduced. Keeping in view that this decision we hold that the benefit of the 1st Proviso to section 50C is available to the assessee. We accordingly direct the AO to re-compute the capital gain chargeable to tax in the hands of the assessee by taking the proportionate share of the assessee in fair market value of the property as on 05.10.2010 as determined by the DVO as deemed sale consideration. AO is also directed to allow deduction on account of the indexed cost of acquisition of the property while computing the capital gain in accordance with law.
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2021 (9) TMI 226
Deduction u/s. 80IA(4)(iii) - interest income received - first contentions raised that interest was actually paid to the assessee company by M/s. Salarpuria Properties Pvt. Ltd. and although this factual position was clearly mentioned by the Assessing Officer, this fact was accepted by the Ld. CIT(A) but while deciding the issue related to the disallowance u/s. 80IA, the same was ignored/overlooked by - HELD THAT:- We accept the contention raised by the Ld. Counsel for the assessee and direct the Assessing Officer to consider only the amount of interest received by the assessee company on bank fixed deposits for making disallowance u/s. 80IA of the Act. Income derived from - As held in the various judicial pronouncements, referred to and relied upon by the Ld. CIT(A) in his impugned order including that of the Hon'ble Supreme Court, the expression derived from envisages immediate nexus or first degree connection with the business of the eligible undertaking inasmuch as, the immediate source of such income should be a business of the undertaking in order to be eligible for deduction u/s. 80IA of the Act. In the present case, the immediate source of interest income was the fixed deposits kept by the assessee with the bank and not the business of the eligible undertaking of the assessee company and the same, in our opinion, is not eligible for deduction u/s. 80IA, as rightly held by the authorities below. Only the net interest income after adjustment of interest paid can be considered for disallowance u/s. 80IA - We note that the claim of the assessee for adjustment of interest can be allowed only when there is inexplicable link between the interest income earned by the assessee and the corresponding interest paid. Since the authorities below have not verified this aspect, we restore this issue to the file of the Assessing Officer for the limited purpose of verifying as to whether there is any inexplicable link between the interest paid and the interest earned by the assessee on bank deposits and recompute the disallowance accordingly on such verification, in accordance with law. Ground No. 1 2 of the assessee's appeal are thus partly allowed. Addition while computing the book profits u/s. 115JB of the Act on account of adjustment of depreciation - HELD THAT:- Assessee submitted that the direction give by the Ld. CIT(A) to the Assessing Officer on this issue is little confusing inasmuch as, when the depreciation as worked out under the Companies Act is debited by the assessee company to its profit and loss account, the direction should have been given by the Ld. CIT(A) to verify this aspect alone. He has also invited our attention to the profit and loss account of the assessee company listed at page 43 of the paper book and pointed out that the depreciation as worked out under the Companies Act was actually debited by the assessee company to the profit and loss account. We accordingly modify the direction of the Ld. CIT(A) as given in his impugned order and direct the Assessing Officer to verify the claim of the assessee of having debited the depreciation as computed under the Companies Act to the profit and loss account and decide this issue in accordance with Explanation 1 to Section 115JB of the Act. Ground No. 3 of the assessee's appeal is accordingly treated as allowed for statistical purposes.
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2021 (9) TMI 225
Employee's contribution to P.F. and ESI - amount was not paid within the due dates specified u/s. 36(i)(va) - HELD THAT:- As in the case of Gujarat Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] held that assessee is entitled for the deduction only if the amount is credited to the relevant funds before the due date, therefore, respectfully following the decision of the Hon'ble Gujarat High Court as referred above, we do not find any infirmity in the decision of the CIT(A). Therefore, this ground of appeal of the assessee is dismissed. Charging of interest u/s. 234B and u/s. 234C - HELD THAT:- Against charging the aforesaid interest, the assessee has filed appeal before the ld. CIT(A) and requested to direct the Assessing Officer to charge interest under the aforesaid sections in accordance with the provision of the Act. Without reiterating the facts as mentioned above, we direct the Assessing Officer to examine the issue of computing interest u/s. 234B and 234C after examination of the submission of the assessee in accordance with the provision of section 234B and 234C of the Act respectively. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes.
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2021 (9) TMI 224
Capital gain/ loss on sale of property - unregistered sale agreement - whether it constitute valid transfer under section 53A of Transfer of Property Act - HELD THAT:- No reason to interfere with the observations of the CIT(A) that.A.O. has accepted that the land was sold by the appellant, for which substantial consideration has been received coupled with the handing over of the possession of the said land. The buyer has also reflected the same in her balance sheet and the Wealth Tax Returns subsequently. A.O. has however stated that the property is not yet been registered. There is no requirement within the meaning of the word transfer as per Income Tax Act for the charge ability of capital gains, for the registration of property as long as the possession and part consideration has been effected with regard to the subject property. Therefore, the above will have no relevance with regard to the computation and chargeability of capital gains for the year under consideration and the appellant has already offered the sale consideration for the purpose of computing the capital gains or capital loss in the instant case - Decided against revenue .
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2021 (9) TMI 223
Delayed payment of employees contribution to PF ESI - addition confirmed ignoring that they were paid before the due date of filing of the return of income - Held that:- As decided in Nipso Polyfabriks Ltd. [ 2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT ] if the employer does not deposit such contributions within the time prescribed by the respective Acts, the employer may face criminal case and become liable to pay fine or penalty, but that cannot be the reason to deny the benefit of section 43B of the Act, which contemplates that the assessee can take the benefit of such contributions if the same are paid before furnishing the return of income - thus we hold that employees contribution to PF ESI remitted before the due date of filing of return u/s 139(1), will be allowable as deduction - Decided in favour of assessee.
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2021 (9) TMI 222
Addition u/s 56 - addition on account of locker rent on presumption basis - interest earned on deposit received against the locker facility - AO noticed that assessee has not collected any rent towards safe deposit vaults allotted to its customer and deposits was collected from customers against allotment of safe deposit vaults - HELD THAT:- On the perusal of the copy of balance sheet placed in the Paper Book it is noticed that assessee has shown the amount of safe vault deposit in the liabilities side under the head deposits claiming that same was invested in working capital of bank for providing loans and making investments - interest income from loan and investment was reflected in the Profit and Loss Account and Income Tax Return was filed as per profit shown in the Profit and Loss Account. - In the decision of the Coordinate Bench of the ITAT in the case of Co-op. Bank of Mehsana Ltd. [ 2019 (1) TMI 1917 - ITAT AHMEDABAD] wherein the similar issue on identical facts has been adjudicated in favour of the assessee - We find merit in the submission of the assessee and allow the appeal of the assessee as charging of notional interest is not justified. - Decided against revenue.
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2021 (9) TMI 221
Disallowance of expenditure on transportation - whether assessee had genuinely incurred the Transportation expenses? - as per AO increase in sales during the year when compared to last year is only 27% whereas freight outward is increased by 210% - CIT-A deleted the addition - HELD THAT:- All the payments made to APK Road Lines are through account payee cheques only. Also TDS has been deducted and paid on the amounts paid to APK Road Carriers by the assessee, and the same is also reflected in the Form 26AS of APK Road Carriers produced before me. Further, receipt of the transportation amount is confirmed by APK Road Carriers and the same is reflected in its income as confirmed by it and the income tax return filed by it, a copy of which is on record. On perusal of the CIT(A)'s order, the CIT(A) has addressed each and every grievance raised by the A.O. in his order as well as in the remand report and came to the conclusion that the expenditure incurred by the assessee on transport is genuine. Therefore, we do not find any infirmity in the order of the CIT(A) in directing the A.O. to delete the disallowance made by the A.O. on account of expenditure on transportation. Accordingly, we dismiss the grounds raised by the revenue on this issue. Addition based on the various loose papers impounded during the Survey proceeding conducted in the business premises of assessee - clandestine removal and unaccounted sales - CIT-A deleted the addition - HELD THAT:- CIT(A)'s categorical finding is that the A.O. during the survey proceedings of the assessee company's business premises have not collected any material from assessee company which indicate unaccounted sales and the loose papers impounded from business premises of M/s. B.S. Transcomm belong to them and assessee company cannot be held responsible for the other company's record and their statement - No reason to interfere with the order of CIT(A) in deleting the addition made by the A.O. on account of unaccounted sales. Revenue ground dismissed. Addition u/s. 40A(2)(a) (b) - appellant company had made purchases both from related party and unrelated party - AO compared the price of purchase from related party and unrelated party and disallowed as excess payment as provisions of Section 40A(2)(a) (b) - CIT(A) deleted the addition - HELD THAT:- CIT(A)'s categorical findings are that the assessing officer erred by comparing prices of two different quality product supplied by M/s. Agarwal Foundries and unrelated parties. AO has not tried to find out the fair market value of the product. The appellant company has also produced the details of sale price of finished product manufactured using higher grade material which fetch extra margins to company. Furthermore, both M/s. Agarwal Foundries and Appellant Company are taxed at maximum rate of tax. Therefore, we do not find any infirmity in the order of the CIT(A) in deleting disallowance u/s. 40A(2)(a) (b) - Decided against revenue.
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2021 (9) TMI 220
Deduction u/s. 35(1)(ii) being 175% debited towards donation to Herbicure Healthcare Bio-Herbal Research Foundation[HHBHRF] - survey was carried out by the revenue and one of the official of HHBRF has categorically stated that HHBRF has given bogus entry and returned back money to the donors.- HELD THAT:- As decided in M/S. THAKKAR GOVINDBHAI GANPATLAL [ 2019 (7) TMI 1559 - ITAT AHMEDABAD] AO is harping upon an information supplied by the survey team of Calcutta. He has not specifically recorded statement of representatives of the donee. He has not brought on record a specific evidence wherein donee has deposed that donations received from the assessee was paid back in cash after deducting commission. On the basis of a general information collected from the donee, the donation made by the assessee cannot be doubted. Neither representatives of the donee have been put to cross-examination, nor any specific reply deposing that such donation was not received, or if received the same was repaid in cash, has been brought on record. In the absence of such circumstances, donation given by the assessee to the donee, on which the assessee no mechanism to check the veracity, can be doubted, more particularly, when certificate to obtain donation has been cancelled after two years of the payment of donation. It is fact which has been unearthed subsequent to the donations. Therefore, there cannot be any disallowance on this issue. - Decided in favour of assessee.
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2021 (9) TMI 219
Receipts short admitted in the P L Account - gross receipts of services received by the assessee were shown more than the assessee offered receipts in P L Account only for the services - mobilization advances received, which was not proved by way of documentary evidence before the A.O - HELD THAT:- Considering the contention of the DR that without cross verifying with the accounts of the company, the CIT(A) accepted the submissions of the assessee company, we set aside the order of the CIT(A) and remit the issue in disputed difference amount to the file of the A.O. with a direction re-decide the impugned issue that when the assessee has offered as part of turnover. If the A.O. found that the it has been offered as turnover in subsequent year, there will be no disallowance. If it is found, otherwise, the A.O. can decide the issue as per law after providing reasonable opportunity of being heard to the assessee in the matter. The assessee is directed to substantiate its claim by way documentary evidence and proper explanation. Appeal allowed for statistical purposes.
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2021 (9) TMI 218
Delayed payment of Employees' Contribution to ESI Provident Fund - Addition invoking the provisions of Section 36(1)(va) -assessee submitted that the Employees Contribution towards Provident Fund and ESI had been deposited with in the time limit prescribed under section 139(1) - HELD THAT:- In the present case it is not in dispute that the assessee deposited the amount in question before filing the return of income therefore, it was allowable deduction under section 43B of the Act. It is noticed that a similar issue having identical facts has been decided in the case of Hotel Surya [ 2021 (9) TMI 209 - ITAT CHANDIGARH] wherein held second proviso to section 43B of the Income-tax Act, 1961, omitted by the Finance Act, 2003, with effect from April 1, 2004, was clarificatory in nature and was to operate retrospectively. Thus, the assessee, for the assessment year 2003-04, was entitled to deduction in respect of the employer's and employees' contributions to the employees' State Insurance and provident fund as the contributions had been deposited prior to the filing of the return under section 139(1) - Decided in favour of assessee.
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2021 (9) TMI 217
Disallowance u/s 14A r.w.r. 8D2(ii) and Rule 8D2(iii) - CIT(A) deleted disallowances after appreciating the fact that reserve and surplus available with the assessee are in far excess than the investment made by assessee - HELD THAT:- The Hon ble Bombay High Court in Reliance Utilities powers Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] held if there are funds available both, interest free and interest bearing, then a presumption would arise that investment would be out of interest free funds generated or available with the company. We find that the interest free funds available with the assessee are in far excess than the investment made by the assessee for earning the exempt income. Considering the aforesaid factual matrix, we do not find any legality or infirmity in the order passed by the Ld.CIT(A), which we affirm. In the result this ground of appeal is dismissed. Addition solely on the basis of statement of official of assessee as recorded during the survey action - HELD THAT:- We find that the stand of assessee right from the beginning is that the additional income was not accrued as the agreement with MDHPL was not materialised. AO has not issued any notice under section 133(6) or summon under section 131 to MDHPL to verify the veracity of the facts to prove it contrary. The AO has not investigated the issue and only insisted on the disclosure made by assessee. As seen that the ld.CIT(A) after considering the submission of assessee, accounts of MDHPL and the fact that no amount on account of marketing fees from the contract of assessee with MDHPL was realised. In our view, there is no infirmity in the order of the ld.CIT(A), which we affirm. In the result, Ground No.2 of the raised by Revenue is dismissed. Addition on protective basis on the stock difference found during the survey - Addition on the basis of additional evidences - HELD THAT:- The assessee explained that the difference was recorded in the books of accounts of Vivid Margi Investment [sister concern of assessee]. The AO made the addition by taking view that the sister concern of assessee is not assessed in his range and it is not ascertainable. We find that the AO has not investigated the fact from sister concern, no notice of summon was issued. We find that the Ld.CIT(A) after considering the accounts and invoices of Vivid M. Investment that these stocks were duly accounted in the said concern deleted the protective addition. CIT(A) took a reasonable view after verifying the facts. We further find that the assessee made a mere protective addition and not clarified on whom the substantive addition is made. Hence, we affirm the order of ld CIT(A). In the result this ground of appeal is also dismissed. Unexplained cash difference at the time of survey - CIT(A) deleted the addition without calling the remand report and in violation of Rule 46A - HELD THAT:- AO has not pointed out whether the difference in cash was short or in excess. We find that before making addition, the AO has not issued any show cause notice. The ld.CIT(A) on furnishing copy of petty cash book found that the cash available on 05.08.2008 was of ₹ 1,15,026/-. - AO made addition without specifying the difference whether it was short or in excess made addition of ₹ 34,962/-. The ld. CIT(A) on verifying the petty cash book deleted the addition. In our view, the ld.CIT(A) has taken a reasonable and plausible view as the ld.AO has not clarified whether cash was excess or short. Thus, we do not find any reason to interfere with the findings of the ld.CIT(A). - Decided against revenue.
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2021 (9) TMI 216
Assessment u/s 153A - addition u/s 68 - whether material seized during search operations suggesting concealed income? - HELD THAT:- It is an admitted fact that on the date of search, the assessment for the Assessment Years 2009-10 and 2010-11 had attained finality and were not pending on the date of search. Hence, the assessment for the Assessment Years 2009-10 and 2010-11 cannot be treated as abated assessments. Further, it is also an admitted position that the additions which have been made by the Assessing Officer u/s. 68 is neither based on any seized documents or any incriminating material found during the course of search. As the additions made in the order passed U/s. 153A, for the captioned assessment years which are unabated assessments, cannot be made, because same are beyond the scope of assessments u/s. 153A as the same are without any incriminating documents found during search. Hence on legal grounds the impugned additions are deleted. - Decided in favour of assessee.
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2021 (9) TMI 215
Provision for bad and doubtful debts - only reason for which the claim of the assessee is disallowed is because assessee has not made any provision in the books of accounts - HELD THAT:- As relying on assessee's own case [ 2020 (2) TMI 1558 - ITAT DELHI] we hereby remand the matter to the file of the Assessing Officer to examine the provisions with reference to the final accounts of the assessee. Difference in the P L account and computation of income - difference between the profit as per the P L account and the profit declared in the computation of income - HELD THAT:- CIT(A) held that the assessee failed to submit the reconciliation statement whereas the contention of the assessee before the Tribunal was that the assessee has duly submitted the reconciliation statement as per the memorandum of changes. The same has been duly enclosed at page no. 5 of the paper book reflecting the contraction - AO is directed to verify the same with regard to books of accounts before accepting the reconciliation. In the result, the appeal of the assessee on this ground is allowed.
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2021 (9) TMI 214
Disallowance u/s 14A r.w.r.8D - Assessee submitted that assessee has not earned any dividend income and has not claimed any exempt income earned - HELD THAT:- As it is clear that assessee did not earn any exempt income in assessment year under appeal - we set aside the Orders of the authorities below and delete the entire addition. Accordingly, appeal of the Assessee is allowed.
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2021 (9) TMI 213
Penalty u/s 271(l)(c) - undisclosed income as accepted during survey operation - CIT-A deleted the penalty levy - HELD THAT:- Survey proceeding dated 25-0302014 was conducted at the assessee premises the financial year was not ended and also there was plenty of time for filing the return of income under the provision of section 139(1). Assessee incorporated the amount of income which was admitted during survey in the computation of income. Further the AO also accepted the returned income while finalizing assessment proceeding under section 143(3) dated 23-12-2016. AO was satisfied for the income disclosed in the computation of income. AO was not justified in invoking the penalty proceeding for concealment of income or furnishing inaccurate particulars of income for the reason that there was no disallowance/ addition to the total income of the assessee during the assessment proceedings. The presumption of the AO that the assessee would not have disclosed the income in return in future is mere a suspicion having no any base. - Decided against revenue.
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2021 (9) TMI 212
Addition u/s. 56(2)(vii)(b) - difference between actual consideration paid and value determined by stamp valuation authority in respect of a residential flat purchased under construction - notional difference in the amount of stamp duty value and the actual consideration paid for purchasing the flat - HELD THAT:- The assessee has entered into an agreement and consequently assessee has been duly given allotment letter and assessee has also paid part of the consideration at that time, hence, there is no infirmity in the assessee s request that the date of allotment should be considered as date of agreement. Hon'ble Supreme Court decision in the case of Sanjeev Lal Vs. CIT [ 2014 (7) TMI 99 - SUPREME COURT] in this regard supports the above proposition. Accordingly, we set aside the orders of the authorities below and decide the issue in favour of the assessee.
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2021 (9) TMI 211
TDS u/s 194I - Non deduction of TDS on lease rent paid to Noida Authoritiy towards the cost of land allotted to the assessee for group housing project - CIT- A held that the assessee is not to be treated as an assessee in default in view of the letter received from Noida Authority, which disabled the assessee from deducting TDS on the payments made to NOIDA - HELD THAT:- CIT(A), while following the decision in Rajesh Projects (India) Pvt. Ltd. [ 2017 (2) TMI 1109 - DELHI HIGH COURT] recorded a finding that the assessee is not to be considered as an assessee in default in view of specific requirement of Noida Authority not to deduct TDS on the payments made to them. Hon ble Court directed that wherever amounts have been paid by the petitioners, towards TDS as a result of the coercive process used by the Revenue, the GNOIDA shall make appropriate orders to credit/reimburse such payments; and that in case payments are made through deposit, over and above the rental amounts paid to the GNOIDA without TDS, the income tax authorities shall not pursue any coercive proceedings and the GNOIDA shall duly reimburse the petitioners for such amounts. Above observations made by Hon ble High Court in Rajesh Projects (India) Pvt. Ltd. clearly go to show that the relief granted to the assesses was not only in respect of rents, but to all amounts which are paid over and above the rental amounts to GNOIDA without TDS - since the assessee was directed not to be treated as assessee in default and in view of the directions of the Hon ble High Court in respect of the payments made to GNOIDA over and above the rental amounts, no addition could be made in terms of the orders of the ld. CIT(A) also. We direct the authorities not to add any amount on this score. - Decided in favour of assessee.
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2021 (9) TMI 210
Estimation of income - Bogus purchases - Commissioner (Appeals) restricted the disallowance to 12.5% of the alleged non genuine purchases - HELD THAT:- As assessee was unable to furnish complete evidences to conclusively prove the source of purchases, however, the fact that the assessee had purchased the goods, possibly from unverified sources, has not been disputed by the Assessing Officer since he has accepted that the disputed goods representing such purchases were in possession of the assessee. Therefore, instead of disallowing the entire purchases, he has restricted the disallowance to gross profit rate declared by the assessee. Whereas, learned Commissioner (Appeals) has restricted such disallowance to 12.5% of non genuine purchases. The decision of Commissioner (Appeals) in restricting the disallowance to 12.5% of the non genuine purchases is fair and reasonable, hence, deserves to be upheld.
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2021 (9) TMI 209
Delayed payment of Employees Contribution to ESI Provident Fund - Addition u/s 36(1)(va) - assessee submitted that the Employees Contribution towards Provident Fund and ESI had been deposited with in the time limit prescribed under section 139(1) of the Act, which is allowable as per the provisions of 43B - HELD THAT:- In the present case it is not in dispute that the assessee deposited the amount in question before filing the return of income therefore, it was allowable deduction under section 43B of the Act. Similar issue has been decided in the case of M/s New Time Contractors and Builder (P) Ltd. [ 2019 (3) TMI 1627 - ITAT CHANDIGARH ] wherein held assessee was entitled to deduction in respect of the employer's and employees' contributions to the employees' State Insurance and provident fund as the contributions had been deposited prior to the filing of the return under section 139(1). - Decided in favour of assessee.
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Customs
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2021 (9) TMI 268
Import for Mega Power Project under exemption scheme - Auto Renewal of Security deposited as Fixed Deposit - imports for a project for which certificate regarding Mega Power Project status issued by an officer not below the rank of Joint Secretary to the Government of India in the Ministry of Power - HELD THAT:- The writ petition was filed in the year 2014 challenging the Communication issued by the Ministry of Finance Department of Revenue and the said Communication was issued relating to the Bank Guarantee for customers purposes. A provision for Auto Renewal was issued by the Reserve Bank of India in its Master Circular dated 01.07.2009. Similarly, the Central Board of Excise and Customs also issued a Circular dated 30.06.2010 based on the Reserve Bank of India Master Circular and the Circular issued by the Central Board of Excise and Customs, the respondents issued an impugned Communication dated 02.07.2014 directing the petitioners to opt for an Auto Renewal clause which became a requirement as per the Reserve Bank of India for the purpose of Bank Guarantee for customers purposes. This Court is of an opinion that Auto Renewal clause is a facility provided by the Banks and the petitioner could not able to establish in the event of opting such Auto Renewal clause, their rights are affected, a writ petition may be entertained if the petitioner is able to establish a right and such a right is infringed - In the present case, undoubtedly at the initial stage, the Communication was not available and that was not taken note of, however, during the year 2014, the respondents issued a communication which is impugned in the writ petition. Petition disposed off.
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2021 (9) TMI 258
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - submission of learned Counsel appearing for the Appellant is that if the Commissioner decides not to continue with the suspension order and in fact revokes the suspension order, then the procedure contemplated under regulation 17 cannot be resorted to revoke the license - HELD THAT:- This submission advanced by learned Counsel for the Appellant cannot be accepted. Proceedings for revocation of license contemplated under regulations 14 and 17 are independent of the proceedings for suspension of the license under regulation 16. Merely because the Commissioner of Customs decides not to continue with the suspension order after hearing the Customs Broker, would not divest the Commissioner of Customs of his power to proceed under regulations 14 and 17 for revocation of the license. The power exercised by the Commissioner under regulation 16 (2) is summary in nature. An order under regulation 16(2) to either revoke the suspension or continue with it is passed after giving an opportunity of hearing to the Customs Broker. On the other hand, the procedure under regulation 17 contemplates a full fledged inquiry. A notice has to be issued to a Customs Brokers stating the grounds on which it is proposed to revoke the license or impose penalty and a Customs Broker has to submit a reply to the Deputy Commissioner of Customs nominated by the Commissioner to submit statement of defense and also to specify whether the Customs Broker desires to be heard in person - It is on a consideration of the report submitted by the Deputy Commissioner and the representation made by the Customs Broker that the Commissioner is required to pass an order either revoking the suspension of the license or revoking the license. In this view of the matter, the findings recorded under regulation 16(2) cannot in any manner have any bearing on the findings recorded under regulation 17. It needs to be noted that a finding has been recorded in the order dated June 11, 2021 that an attempt was made by the Appellant to export restricted items by mis-declaring the Customs Tariff Heading of the goods by M/s Balaji International through the Appellant as a Customs Broker and the Appellant failed to exercise due diligence at the time of filing the shipping bill. A finding has also recorded that both the exporter and the Customs Broker had stated at the time of personal hearing that goods were restricted at the time when the Shipping Bill was filed. Appeal dismissed.
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Corporate Laws
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2021 (9) TMI 254
Sanction of Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (9) TMI 256
Acceptance or rejection of the Application - default in repayment of the loan for which the personal guarantee has been given - receipt of Report under Section 99 of the IBC when the matter is taken up under Section 100 of the IBC - HELD THAT:- There is no dispute that CIRP was initiated against the Corporate Debtor and that the said matter is at the stage of liquidation. The Learned Counsel for the Respondents as well as the Learned Counsel for the Appellant have referred to judgment of this Tribunal in RAVI AJIT KULKARNI, PERSONAL GUARANTOR OF PRATIBHA INDUSTRIES LIMITED AND ORS. VERSUS STATE BANK OF INDIA [ 2021 (9) TMI 60 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] and the Learned Counsel for both sides agree that the Personal Guarantor of Corporate Debtor may be given the opportunity before the Resolution Professional and orders on similar lines as in the matter of Mr. Ravi Ajit Kulkarni vs. State Bank of India could be passed. Thus, at the stage at which the matter stood such finding in advance should not have been recorded as the said stage would be after receipt of Report under Section 99 of the IBC when the matter is taken up under Section 100 of the IBC. In the present matter, now the Personal Guarantor is already available and did appear before the Adjudicating Authority to submit that the impugned order should be recalled. As such, the requirement of serving formal notice would not be necessary but the matter needs to be sent back to the Adjudicating Authority so that the procedure is duly followed as indicated by us in the matter of Mr. Ravi Ajit Kulkarni vs. State Bank of India - appeal allowed in part.
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Service Tax
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2021 (9) TMI 265
Maintainability of petition - remedy of appeal also available - Order-in-Original or the vires of the Act, is challenged in present case - HELD THAT:- Writ Petitions are filed challenging either the Order-in- Original or challenging the vires of the Act. Undoubtedly, those Writ Petitions challenging the vires of the Service Tax Act is pending before the Hon'ble Apex Court of India and before the Hon'ble Division Bench of this Court. However, the Revenue cannot made to suffer for an indefinite period and finally after several years, the petitioners will say that there was an interim stay throughout and therefore, they are not liable to pay the interest. In such circumstances, the Revenue will be put to great hardship and therefore, balancing approach is required in such circumstances, where the litigations are prolonged for a longer period on account of multiplicity of the proceedings or otherwise. In the present case, the petitioner has challenged the Order-in-Original. He has not preferred an Appeal, admittedly against the order. The respondents have demanded the Service Tax amount in the Order-in-Original. The Writ Petition was filed on 27.02.2012. Now, the Writ Petition is pending for more than nine years. Even now, representation is made that the Writ Petition is to be tagged along with the other Writ Petitions, challenging the vires of the Act. This Court is inclined to direct the petitioners to deposit the entire Service Tax amount demanded in the Order-in-Original within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off.
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Central Excise
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2021 (9) TMI 270
Interest on the delayed refund - delayed refund was of certain exemptions - Applicability of Section 11 BB of the Central Excise Act - HELD THAT:- The writ appeal is dismissed as withdrawn subject to the condition that Revenue will pay the amount as directed by the learned Single Judge in M.K. JOKAI AGRI PLANTATIONS (P) LTD., MUTTUCK TEA ESTATE VERSUS THE UNION OF INDIA, ASSISTANT COMMISSIONER, CENTRAL GOODS SERVICE TAX, DIBRUGARH, DEPUTY COMMISSIONER, CENTRAL GOODS SERVICE TAX, DIBRUGARH, CENTRAL BOARD OF INDIRECT TAXES CUSTOMS, [ 2021 (2) TMI 828 - GAUHATI HIGH COURT] but that shall be subject to the decision of the Hon ble Apex Court in the pending in SLP (C) No.016322/2018.. The revenue shall pay the amount within a period of three months from today. However, the interest payable shall be subject to the outcome of the SLP [being SLP (C) No.016322/2018] pending before the Hon ble Apex Court.
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2021 (9) TMI 255
Process amounting to manufacture or not - deemed manufacture - activity of labeling undertaken by the assessee - credit wrongly availed - rebate as per rule 18 of the Central Excise Rules, 2002 - separate marketable commodity emerged at the time of clearance of these goods from Jammu Kashmir unit - demand of interest and penalty - HELD THAT:- The issue is squarely covered by the earlier decision in appellant s own case JINDAL DRUGS LTD VERSUS CCE BELAPUR [2015 (2) TMI 833 - CESTAT MUMBAI] where it was held that the activity of fixing labels undertaken by the appellant, which is not in dispute, shall amount to manufacture as per Note 3 of Chapter 18 of the CETA although this activity does not enhance the marketability of the product. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (9) TMI 267
Validity of attachment order - recovery of tax arrears - whether the petitioner is entitled to claim priority over the claims made by the Commercial Tax Department regarding the tax arrears to be recovered? - HELD THAT:- This Court considered the provisions of the Tamil Nadu Value Added Tax Act, 2006 and the claim made by the petitioner and in yet another case, the similar priority provision under the Income Tax Act was also considered by this Court elaborately and based on the two judgments of this Court in JANATA SAHAKARI BANK LTD., REPRESENTED BY ITS AUTHORIZED SIGNATORY VERSUS TAX RECOVERY OFFICER VII, INCOME TAX DEPARTMENT, COMPANY RANGE IV, CHENNAI [ 2021 (8) TMI 1233 - MADRAS HIGH COURT] and M/S. FEDERAL BANK LTD. VERSUS COMMERCIAL TAX OFFICER, M/S. ARROW PACK PVT. LTD., MR. S. AMALRAJ, K.V. BALA MURALI KRISHNA KUMARI, SUB-REGISTRAR [ 2021 (8) TMI 1077 - MADRAS HIGH COURT] the present case is also to be decided as the issues are one and the same and the factual aspects are also almost on the same line. It was held in the case that the bank being aggrieved from and out of the action initiated by the 1 st respondent, Commercial Tax department, is entitled to file an appeal before the appellate authority for adjudication of complete facts and circumstances. Petition disposed off.
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2021 (9) TMI 264
Seeking grant of interim relief - levy of GST on High Speed Diesel Oil - C- Form not issued - HELD THAT:- Taking into consideration the fact that in case the C-Form is subsequently found to be wrongly issued or obtained then it is always within the power of the State to charge a higher rate of GST payable alongwith the penalty for which the petitioner shall always be exposed. Withholding the C-Form in any way will not serve any bodies purpose as the petition will take some time for final hearing. It is directed that the State shall issue C-Form to the petitioner which would be subject to the final adjudication of the entitlement of the petitioner's C-Form and if it is found that the petitioner were not entitled to get the C-Form, then in such case they shall be liable for the consequences of penalty and higher rate of GST and other measures which are provided under the law. List the case after six weeks.
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2021 (9) TMI 262
Exemption on 'sales in the course of imports' - demand on account of Value Added Tax / Central Sales Tax on local / inter-state sales - effect of change in law or facts - time limitation - exigibility to tax under KST Act. Whether advance ruling dated 31.03.2006 by the Authority for Clarification and Advance Ruling is without jurisdiction and non-est? - HELD THAT:- It is evident that the ACAR vide order dated 31.03.2006, has opined on the issue of applicability of the tax or otherwise on a transaction under KST Act and has not dealt with the issue under Section 5(2) of the Act. It is pertinent to note that though the aforesaid order could either have been revised by the Commissioner of Commercial Taxes under Section 22-A(2) of the KST Act or could have been challenged by the respondent in a writ petition before this Court. However, the respondent has not chosen to challenge the same. In other words, the order dated 31.03.2006 passed by the ACAR is in existence and has attained finality and binds the parties. The aforesaid order is neither without jurisdiction nor non est and the respondent cannot be permitted to raise a contention about its validity - the question of law is answered in the negative. Whether there is any change in law or facts so as to render the ruling by the Authority for Clarification and Advance Ruling inapplicable? - HELD THAT:- The finding recorded by the Assessing Authority that it has examined voluminous transactions to arrive at a different conclusion on the facts of the case, is factually incorrect as Assessing Officer has only examined 0.11% of the entire transactions of sales in the course of import namely 60 transactions out of total 51,435 transactions - The Assessing Authority infact has undertaken a fresh analysis and arrived at different conclusions in respect of the very transactions which were considered by ACAR. Therefore, in the fact situation of the case, the advance ruling by ACAR is binding - the question of law is answered by stating that there is no change in the facts and in law so as to render the advance ruling by ACAR inapplicable to case of the petitioner. Whether the re-assessment proceedings initiated against the petitioner are barred by limitation? - HELD THAT:- The order of re-assessment was passed on 04.01.2012 and therefore, the proceeding for re-assessment for tax period between April 2006 to December 2006 and from April 2007 to December 2007 is barred by limitation. It is pertinent to note that under the unamended provision, a vested right had accrued in favour of the petitioner. The amendment made to Section 40 of the Act, cannot be construed so as to open up a liability which had become barred. Even by retrospective operation of law, the aforesaid vested right accrued to the petitioner cannot be taken away - the re-assessment proceedings for the period between April 2006 to December 2006 and April 2007 to December 2007 is held to be barred by limitation. Whether the transactions in question are exigible to tax under KST Act? - HELD THAT:- Since the adjudication of the nature of transaction involves factual adjudication, therefore, we deem it appropriate to remit the matter to the Adjudicating Authority in respect of the transactions beyond March 2007 and March 2008 as the transactions for a period between April 2006 to March 2007 and April 2007 to March 2008 have become final and the re-assessment proceedings cannot be initiated in respect of the transactions between the period from April 2006 to March 2007 and April 2007 to March 2008. Petition disposed off.
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2021 (9) TMI 261
Violation of the circular issued by the Special Commissioner and Commissioner of Commercial Taxes vide Acts Cell-VI/13234/2001 dated 20-04-2001 - seeking direction to respondent to pass an assessment order afresh - opportunity of personal hearing required - HELD THAT:- It is a definite case of the petitioner that a return has been filed for the concerned assessment year for which acknowledgement from the respondent also had been filed before this Court - In this context, when notice was issued under Section 22(4) to proceed further, admittedly, the petitioner had not responded to the said notice, therefore, the respondent had proceeded further and to pass assessment order dated 10.07.2015. In the said order, the provision has been wrongly quoted as Section 25(1) instead of Section 22(4) even that has also been rectified, ofcourse pursuant to the application submitted in this regard by the petitioner dated 19.01.2016, by the respondent through the order dated 10.03.2016 passed under Section 84 of the Act - Therefore, if at all the petitioner still has got any grievance over the orders passed by the respondent both on 10.07.2015 and 10.03.2016, against both orders, the petitioner can either file an appeal under Section 51 of the Act or revision under Section 54 of the Act respectively, if he is advised to do so. Petition dismissed.
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Indian Laws
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2021 (9) TMI 253
Dishonor of cheque - offence punishable under Section 138 of the N.I. Act - whether the order passed by the Trial Court on 15.05.2018 could be modified when already the said order is confirmed by this Court in MRS. ASHA JAYAWANT MORE VERSUS SMT. SWATI SANJAY REVANKAR [ 2019 (4) TMI 2010 - KARNATAKA HIGH COURT] ? - HELD THAT:- Even though learned counsel for respondent contended that the finding given by this Court while disposing of the Crl.P.No.101047/2018 is not the correct law, admittedly, the said Criminal Petition was disposed of by the Coordinate Bench of this Court. The accused has not challenged the said order passed by this Court, dismissing the criminal petition. This Court is not sitting in appeal against the dismissal of the criminal petition. As the facts and circumstances of the case stand, the Appellate Court modified its earlier order, after the same has been confirmed by this Court, which is not proper and cannot be upheld - Petition allowed.
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