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Income Tax - Case Laws
Showing 41 to 60 of 163734 Records
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2024 (5) TMI 155
Validity of assessment proceedings initiated u/s 153A - unabated assessment - purchase of agri-land by the assessee - Addition u/s 69 - HELD THAT:- As held in the case of Abhisar Buildwell P Ltd (2023 (4) TMI 1056 - SUPREME COURT] no addition can be made in the case of unabated assessment which are not part of incriminating materials found during the search. In the present case, it is clearly established that assessee has made several payments to the farmers which lead to the finding that the assessee has purchased several immovable properties. Therefore, we are not inclined to accept the submissions of the assessee on the issue of purchase of agri-land by the assessee that there is no incriminating material found during the search. Accordingly, the ground nos.1 and 2 are are partly allowed because in the other additions, there are no incriminating material, the same was discussed somewhere in this order.
Addition u/s 69 - Payment to farmers and purchase of agriland - We observed from the record that AO acknowledged that assessee has paid cash payment to the farmers to the extent of money withdrawn from the bank. These findings clearly shows that there is a direct link with the information collected from the assessee and substantiates that the assessee has capacity to make payments to farmers. We also observed from the record that the AO has made addition based on the presumption that the assessee has no source and also the difference between the investment made as per registered documents and circle rates as per the respective lands.
The assessee has demonstrated that she has sources to make the investment and she is eligible to get the investment made in the agricultural land to the extent of declared sources. It is fact on record that the assessee has withdrawn the cash and made the payment to the farmers, to the extent of cash withdrawn by her from the bank for which she has sufficient fund available in the bank. Therefore, we are directing the AO to adjust the payments made from withdrawing from the bank account. The other part of the addition after making the addition may be sustained. In this regard, we are inclined to partly allow the ground no 3 raised by the assessee.
Coming to the other additions made by the Assessing Officer, we observed that all these information collected in post search proceedings and there is no evidence to show that the additions made by the assessing officer has bearing from the material found during the search - we are inclined to direct the Assessing Officer to delete above mentioned additions made by him in the assessment order. Accordingly, ground Nos 4 to 7 raised by the assessee are allowed.
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2024 (5) TMI 154
Denial of TDS credit - employer of the assessee has not deposited TDS after deducting the same from the salary paid to the assessee - Liability to deduct TDS - in the absence of TDS getting reflected in form 26AS, the CPC denied granting TDS credit - HELD THAT:- We find that the issue in this appeal is similar to the issue decided by the Hon'ble Delhi High Court in the case of Harshdip Singh Dhillon vs. Union of India [2024 (1) TMI 275 - DELHI HIGH COURT] since the petitioner accepted the salary after deduction of Income-tax at source, it is his employer who is liable to deposit the same with the Revenue authorities and on this count, the petitioner cannot be burdened. We find no substantial question of law to be considered by us in this appeal. Therefore, the petition is allowed and consequently the impugned demand notice is set aside and the respondent-Revenue is directed to allow credit of tax at source deducted by his employer - Appeal of the assessee is allowed.
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2024 (5) TMI 153
Levy of penalty u/s. 271(1)(c) - disallowance made u/s. 35(2AB) - assessee argued that claim was made by the assessee as per DSIR guidelines and duly certified by a Chartered Accountant and DSIR does not communicate the grounds or items on which, it has restricted the claim of weighted deduction towards capital expenditure and revenue expenditure - Whether the DSIR approval or certificate restricting the claim of deduction u/s. 35(2AB) and particularly, when certificate comes after filing of return of income, restricting the deduction by the AO based on DSIR approval can amount to concealment of particulars of income or not ?
HELD THAT:- The issue answered in the case of CIT vs. Balaji Distilleries Ltd. [2012 (10) TMI 514 - MADRAS HIGH COURT], wherein it is held that in the absence of due care, it did not mean that the assessee was guilty of either furnishing inaccurate particulars or attempting to conceal its income and hence, the imposition of penalty for furnishing of inaccurate particulars of income on assessee’s held not justified. The Hon’ble Madras High Court applied the decision of Price Waterhouse Coopers Pvt. Ltd. [2012 (9) TMI 775 - SUPREME COURT]
Also decided in Reliance Petroproducts Ltd. [2010 (3) TMI 80 - SUPREME COURT] wherein as propounded “the meaning of the term ‘particulars’ used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate ‘particulars’. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate ‘particulars’”
Thus at the time of filing of return of income, the DSIR approval was not available with the assessee restricting the claim of deduction will not tantamount to furnishing of inaccurate particulars of income in the return of income filed by the assessee. Hence, we delete the penalty and allow the appeal of assessee.
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2024 (5) TMI 152
Computation of deduction u/s 10AA - excluding expenses incurred in foreign currency from export turnover for the purpose of computation - HELD THAT:- As referring to High Court of Madras [2020 (8) TMI 19 - MADRAS HIGH COURT] against [2016 (11) TMI 1670 - ITAT CHENNAI] order dated 16.11.2016 in ITA No. 1009/Mds/2014 hold that the order of the ld. CIT(A) is not justified in confirming the order of the Assessing Officer in excluding foreign currency expenditure from the export turnover for the computation of deduction under section 10AA of the Act.
Double addition of interest from fixed deposits in the computation of income - HELD THAT:- On perusal of the computation of total income in giving effect proceedings in pursuance to the directions of the ITAT, AO again added sum which is clear from appeal memo. In this regard, we find that the assessee filed rectification application under section 154 and it was submitted by the ld. AR that no decision whatsoever passed by the Assessing Officer as on today. CIT did not dispute the same, but, however, prayed to give direction to the Assessing Officer to pass orders in this regard. Accordingly, ground No. 4 raised by the assessee is allowed for statistical purposes.
Short grant of TDS credit - HELD THAT:- DR prayed to give a direction to the Assessing Officer to give full TDS credit as was given in the original assessment proceedings order dated 20.03.2015. We order accordingly. Thus, the ground No. 5 raised by the assessee is allowed for statistical purposes.
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2024 (5) TMI 151
Time limit to pass assessment u/s. 92CA(3) - time line for passing of the order u/s. 92CA(3) of the Act for the purpose of reckoning the time period for completion of the assessment - HELD THAT:- The assessee has relied on the said decision of the Hon'ble High Court of Madras which has held that the time period prescribed under the said provision is mandatory and not discretionary though the word used in the statute is “may”.
The assessee has also placed reliance on the decision of Saint Gobain India (P) Ltd. [2022 (4) TMI 808 - MADRAS HIGH COURT]which has again reiterated that on identical facts, TPO should have passed the order on or before 31.10.2019 and any order passed beyond this would be barred by limitation, holding the ld.TPO's order to be nonest in the eyes of law, consequently the draft assessment order is also held to be invalid. In the case of an invalid transfer pricing order and the draft assessment order, the ld. A.O. has no jurisdiction to assess u/s. 144C of the Act holding the assessee to be not an ‘eligible assessee’ as per section 144C(15)(b)(i) of the Act.
On the above observation, where this issue has been dealt with extensively by the Hon'ble High Court, we are inclined to hold the ld. TPO's order dated 01.11.2019, draft assessment order and the final assessment order dated 27.03.2021 is barred by limitation as per the provision of section 92CA(3) and, hence, the subsequent draft assessment order and the final assessment order is, therefore, liable to be quashed on this ground. Hence, the additional ground raised by the assessee are hereby allowed.
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2024 (5) TMI 150
Validity of reopening of assessment - reason to believe - HELD THAT:- Though the assessee has raised the legal ground challenging the validity of reopening proceeding but in the course of hearing failed to bring any substantial information to rebut the legality of reassessment proceeding. Therefore, considering that Ld. AO having relevant information indicating escapement of income, was well within his jurisdiction to issue notice u/s. 148 of the Act and carry out the reassessment proceedings.
Addition u/s. 56(2)(viib) - transaction of sale of agricultural land - difference between the consideration as per the stamp value authority and the sale consideration disclosed by the assessee - HELD THAT:- Examining the definition of agricultural land mentioned in the above section 2(14) of the Act in light of the certificates of the Municipal Board, certificate of distance from land to Municipal Board and certificate of population by Gram Panchayat office, we find that agricultural land in question do not fall in the category of capital asset. These additional evidence were also made available to the Ld. DR and she also failed to point out any specific discrepancies in the said documents which have been filed under the certificate of assessee. We are, thus, of the considered view that agricultural land in question is not a capital asset and is not falling under the provisions of section 2(14) of the Act.
Whether if an asset is not falling in the category of capital asset then the provisions of section 56(2)(viib) of the Act are not attracted because the property defined in clause (d) to explanation refers to only capital asset? - As relying on SHRI TRILOK CHAND SAIN [2019 (2) TMI 277 - ITAT JAIPUR] the asset in question is an agricultural land not falling in the category of capital asset defined in clause (d) to Explanation to sec. 56(2)(viib) of the Act and, therefore, section 56(2)(viib) of the Act cannot be invoked.
Assessee appeal is partly allowed.
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2024 (5) TMI 149
Addition u/s 68 OR 41(1) - unexplained cash credit - assessee has not given satisfactory explanation with regard to identity of parties, genuineness of transaction and capacity of creditors - Contrary to this, CIT(A) sustained the addition by invoking the provisions of section 41(1) of the Act holding that these credits have been outstanding since long time - HELD THAT:- As rightly pointed out by the ld. A.R., the authorities have not brought anything on record to prove that the liability is ceased to exist and neither of the parties has written off the same in their books of accounts. Further, balance sheet of this assessment year has been duly signed by the assessee itself thereby acknowledged the debt and in such circumstances, the lower authority is precluded in applying the provisions of section 41(1) - More so, lower authority was not sure whether section 68 of the Act to be applied or section 41(1) - In such dichotomy neither provisions of section 68 nor 41(1) of the Act could be applied by the Revenue Authorities. Accordingly, we delete this addition made in respect of S.K. Enterprises.
With regard to Amitabh Enterprises when the inspector has visited the premises, it was reported that the firm was not operative from that address in the year 2015. Transaction took place prior to 01.04.2009 and the non-existence of this firm in 2015 cannot be reason to sustain addition and the report of the inspector cannot be relied in its entirety since there was no basis for such information so recorded by him by following the due procedure as stipulated in Code of Civil Procedure. Hence, unless and until there is an evidence to show that these credits are ceased to exist, there cannot be any addition u/s 41(1) of the Act, accordingly we delete the addition.
With regard to Shiv Shakti Card there was no cessation of credits in the assessment year under consideration. Full payment has been made in the assessment year 2013-14 and the purchase has been accepted in assessment year 2012-13. Being so, it cannot be added u/s 143(3) of the Act as discussed in earlier para 7 above and for the reasons mentioned thereon, we delete the addition.
With regard to Renuka Enterprises the said outstanding was of prior to 01.04.2009. Complete payment has been made in assessment year 2013-14 and no assessment was made u/s 143(3) on the same in the assessment year 2013-14. Only intimation u/s 143(1) of the Act was made. Hence, as discussed in earlier para 7 above and for the reasons mentioned thereon, we delete the addition.
With regard to Sikka Paper Pvt. Ltd. it is not possible to hold that debt ceased to exist. Accordingly, by placing reliance on the Judgment of Hon’ble Supreme Court in the case of CIT Vs. Balkrishna Industries Ltd reported in 300 CTR 29, wherein held that “if there is no remission or cessation of liability, amount in question cannot be treated as income u/s 41(1) of the Act”. In the case of CIT Vs. SI Group India Ltd. [2014 (12) TMI 267 - BOMBAY HIGH COURT] held that “since record before authorities did not disclose that, there was no remission or cessation of liability, one of the requirements spelt out for applicability of section 41(1) of the Act had not been fulfilled in facts of present case. Addition is deleted”. Accordingly, in our opinion, in all these cases mentioned above, it cannot be held that there is cessation of liability.
Addition for Cardline Products - Cessation of liability - The complete payment has been made in the assessment year 2013-14 to the tune of Rs. 33,41,957/- and the return has been filed by the assessee and accepted for the assessment year 2013-14 while processing the return u/s 143(1) of the Act and there is no evidence brought on record by ld. AO to show that this credit has ceased to exist in assessment year 2012-13.
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2024 (5) TMI 148
Addition of employees’ contribution towards PF - delayed contribution - HELD THAT:- This issue is no longer res integra and the issue has been decided in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that “deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees’ contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961. Decided against assessee.
Disallowance of interest paid on TDS u/s. 201(1A) - assessee reiterated as had paid interest u/s 201(1A) for delayed payment of TDS before filing of the income tax return - as urged that the said payment is not in the nature of penalty but it is the amount of interest which is not penal in nature, therefore, it should be allowed u/s. 37(1) - HELD THAT:- As relying on M/S PREMIER IRRIGATION ADRITEC (P) LTD case [2023 (1) TMI 1124 - ITAT KOLKATA] interest on late deposit of TDS is not an allowable expenditure and this ground of appeal is dismissed.
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2024 (5) TMI 147
Estimation of income - bogus purchases - GP estimation - HELD THAT:- The assessee submitted books of account, purchase bills, sale bills, transaction through banking channels and the sale was totally declared in MVAT returns which were filed before the ld. Assessing Officer and the ld. CIT(A). The GP of the genuine purchase is @5.66% and GP of bogus purchase is @3.10%. So, the balance@ 2.56% of bogus purchases is only to be added and is restricted for addition. In our considered view, we set aside the appeal order and the addition is restricted to gross profit @2.56% on the bogus purchase.
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2024 (5) TMI 146
Condonation of delay in filling appeal before CIT(A) - CIT(A) dismissing the appeal of the assessee in-limine - non condoning the delay in filing the appeal - AO has served all the notices to the old address of the assessee - HELD THAT:- It is stated that the assessee came to know of the assessment order, only when he came to know about the lien marked in his bank account. Thereafter, the assessee could file before CIT(A), even though the covid pandemic was continuing. In view of the above explanations given by the assessee, we are of the view that there was reasonable cause for the assessee in filing the appeal belatedly before CIT(A). Accordingly, we are of the view that the Ld CIT(A) was not justified in not condoning the delay. Considering the explanations given by the assessee, we condone the delay in filing the appeal before Ld CIT(A).
Assessment of property purchased - percentage of assessee share - Since the ld CIT(A) has not adjudicated the appeal of the assessee on merits, normally, all the issues need to be restored to his file for adjudicating them on merits. However, it is submitted that the share of the assessee in the property purchased was only 20%, while the entire value of property has been assessed in his hands by the AO. Further, it is the submission of the assessee that he has paid only a sum of Rs. 40.00 lakhs during the year under consideration.
Thus, we notice the facts relating the addition also require detailed examination. Hence, we find merit in the prayer of Ld A.R. Accordingly, we restore all the issues to the file of the AO for examining them afresh, after affording adequate opportunity of being heard.Appeal of the assessee is allowed.
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2024 (5) TMI 110
Maintainability of appeal before SC on tax effect - income qualification for deduction u/s 80HHC of the Act - excluding the net profit or gross profit - Benefit of netting - HELD THAT:- As petitioner states that there is no reason to dispute the tax effect calculation submitted by the learned counsel appearing for the respondent. The tax effect is below the threshold limits. Therefore, the Special Leave Petition is disposed of.
However, question of law, if any, is kept open.
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2024 (5) TMI 109
Validity of Revision u/s 263 - ITAT has set aside the said order of the Principal CIT as noted “this is not a case of inadequacy of enquiry. It is a case of absence of enquiry” - HC confirmed that ITAT appears to be a plausible one and not erroneous in law - HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petition is dismissed.
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2024 (5) TMI 108
Revision u/s 263 - as per CIT AO failed to enquire the deduction claimed u/s 54 - ITAT justification in holding that the order passed u/s 263 suffered from "hypertechnical approach" in following the provision of Section 54(2) - HELD THAT:- Tribunal has opined that the order may not have been prejudicial to the interest of revenue. Though not worded as such that appears to be the real finding of the Tribunal inasmuch as the Tribunal has observed that the revisional authority has not expressed any doubt regarding the quantum of capital gain arising at the hands of the assessee and that it was invested in purchase/construction of residential house.
We find, there is no material to doubt the correctness of the findings recorded by the Tribunal. While procedural lapse may have been caused by the assessee in observing the provision of Section 54 of the Act, in absence of real prejudice having arisen to the revenue, upon claim capital gain having been allowed by the Assessing Officer the Tribunal may have rightly allowed the assessee's appeal.
Seen in the context of an assessee with modest means, we find, the CIT had unnecessarily drawn up revision proceedings upon a procedural lapse as no real prejudice may have ever arisen to the revenue authorities in the context of petty amount involved. No substantial question of law arises.
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2024 (5) TMI 107
Reference to Departmental valuation officer[DVO] without first rejecting the books of accounts - HELD THAT:- Provision of law empowers the assessing officer to make a reference, however, the stage for making the reference being after rejection of books of account, the decision in Sargam Cinema [2009 (10) TMI 569 - SC ORDER] holds the field.
Since the essential facts with respect to making of reference have not been dealt by the Tribunal, we would not like to allow that discussion to arise before us. Accordingly, the order of the Tribunal is set aside and the matter remitted to the Tribunal to pass a fresh order keeping in mind the observations made above. Thus the Tribunal may first determine if the books of account of the assessee had been rejected before reference was made to the DVO. Only in the event the books are found to have been rejected before the reference order was made, the further issue of a edition may survive for consideration.
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2024 (5) TMI 106
Validity of reopening of assessment - Validity of grant the approval by the PCIT - relevancy of information reported by Insight portal - reason to believe - AO proceeds on the basis that on a search conducted under Section 132 on one Prathamesh Constructions,as subcontracting its jobs to various subcontractors and Petitioner was one of such sub-contractors - as submitted AO is a mere post office, who finds materials and then forwards it to the Faceless Assessing Officer (“FAO”) and the FAO will go into the details to decide whether there is any escapement of income -
HELD THAT:- Admittedly, in the notice issued under Section 148A (b) of the Act, certain allegations have been made to which reply has been filed and the AO has accepted that the information is accounted for by the assessee. AO, wanted to verify the genuineness of the contract work done by Petitioner or whether any accommodation entry was provided to Prathamesh Constructions. It is necessary to note that, first of all, in re-assessment proceedings, the law is clear. An Assessing Officer cannot indulge in a fishing enquiry.
In this case, the AO has accepted the contention of the assessee and held that the information report by the Insight portal is accounted for by the assessee in his books and income arising out of those transactions is duly offered for taxation. Therefore, the impugned order dated 21st April 2023 under Section 148A (d) of the Act cannot be sustained. At the same time if the AO wishes to, he could issue a fresh notice under Section 148A (b) of the Act if, that is permitted in law. We are expressing no opinion.
In the circumstances, the AO having accepted the explanation of Petitioner, he could not have gone ahead and recommended that it was a fit case where income chargeable to tax has escaped assessment. We would add that the approval granted by the PCIT is also without application of mind. In the approval, it is stated “I have perused the facts of the case vis-a-vis information/material available on record and found the case to be fit case for issue of notice u/s 148 of the I.T. Act, 1961. Accordingly, the draft order u/s 148A (d) of the I.T. Act submitted by the AO is approved.” If only the PCIT had read the impugned order and the notice issued under Section 148A (b) of the Act, he would have refused to grant the approval. The PCIT seems to have done nothing and it is clear that he has mechanically signed the approval. Decided in favour of assessee.
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2024 (5) TMI 105
Validity of reopening of assessment - During the pendency of first reassessment proceedings, Petitioner received another notice u/s 148A(b) once again, alleging escapement of income - HELD THAT:- In absence of information in the notice issued u/s 148A(b) of the Act with regard to the first two items mentioned in the order u/s 148A(d) of the Act [i.e., (i), Purchase of shares by related PAN of penny stock of EML and GBFL Limited and (ii) Sale of shares by related PAN of penny stock of EML and GBFL Ltd] and the fact that assessment orders have already been passed with regard to those two items and item 2 includes item 1 mentioned above, also clearly indicates total non-application of mind by the Assessing Officer (“AO”) as also by the Principal Chief Commissioner of Income Tax (“PCCIT”), who has granted the approval u/s 151.
Such an order has been passed without referring to first two items in the notice that was issued under Section 148A(b) of the Act. Decided in favour of assessee.
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2024 (5) TMI 104
TCS u/s 206C - assessee fault as neither collecting tax at source@1% and neither submitting declaration in Form-27 BA from the buyers of the scrap - HELD THAT:- We observe that from plain language of the Statute, since no specific timeline has been prescribed on the date when such declaration is to be received by the person collecting TCS from the purchaser i.e. no specific time obligation has been cast upon the purchaser of goods to furnish Form 27C to the seller. It would be onerous on person collecting TCS (seller) to be denied the opportunity of furnishing Form 27C, provided the seller is able to demonstrate that there was no lack on his part in furnishing Form 27C as soon as it was received by him from the purchaser to whom scrap had been sold.
In the case of Gopallal Ramprasad Kabra [2023 (2) TMI 746 - ITAT RAJKOT] ITAT held that where assessee-company sold scrap without collecting TCS, since, Form no. 27C was submitted by assessee although belatedly before Commissioner (TDS) and as there was no time-limit provided in Section 206C(1A) to furnish declaration in Form no. 27C by buyers, delay in filing said declaration to prescribed authority would not be ground to deny benefit to assessee.
In the case of Chandmal Sancheti [2017 (8) TMI 1182 - ITAT JAIPUR] ITAT held that since no time limit is provided in Section 206C(1A) to make a declaration in Form 27 collected from buyers; hence delay in filing declaration shall not be ground to deny benefit of declaration to assessee.
Looking into the instant facts, in the interest of justice, the entire matter is restored to the file of Assessing Officer to firstly, verify the veracity/genuineness of Form 27C submitted by the assessee with respect to the aforesaid parties, and if the same is found to be in order, to grant necessary relief, accordance with law. Secondly, the AO is also directed to carry out the necessary verification in terms of the directions given by Ld. CIT(A) with respect to the balance 17 parties, in respect of whom the assessee has already furnished Form 27BA - Appeal of the assessee is allowed for statistical purposes.
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2024 (5) TMI 103
Penalty u/s 271(1)(c) - Estimation of income - bogus purchases - during the assessment, the addition was made on estimation @ 25% of the disputed purchase - In first appeal, the addition was restricted to 12.5% and on second appeal to the Tribunal, it was further reduced to 6% of the disputed purchases - HELD THAT:- The entire addition right from the assessment stage to the Tribunal was merely on estimation and there is no definite findings on the quantum of concealment of income by the assessee. It is accepted legal position that penalty under section 271(1)(c) of the Act levied on additions made purely on estimation is not sustainable - See SUBHASH TRADING COMPANY [1995 (11) TMI 37 - GUJARAT HIGH COURT], NAVJIVAN OIL MILLS. [2001 (7) TMI 81 - GUJARAT HIGH COURT], BOMBAYWALA READYMADE STORES [2014 (11) TMI 1099 - GUJARAT HIGH COURT] and SANGRUR VANASPATI MILLS LTD. [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT]
Thus we hold that penalty u/s 271(1)(c) of the Act is not sustainable in the present case - Decided in favour of assessee.
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2024 (5) TMI 102
Levy of penalty u/s 271BA - assessee failure to furnish report u/s 92E, though assessee had transaction with its Indian AE - assessee is a Foreign Company incorporated and resident in USA and it did not file its return of income and therefore notice u/s 148 of the Act was issued - income was received by the assessee as Royalty which was subjected to TDS @15% as per the Article 12 of India – USA DTAA - HELD THAT:- Assessee was under a bonafide belief that it was not required to file any return of income as its income has been subjected to tax deducted at source. We find that the assessee did furnish report under section 92E of the Act during the course of the scrutiny assessment proceedings itself - we do not find this to be a fit case for the levy of penalty under section 271BA - Decided in favour of assessee.
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2024 (5) TMI 101
Penalty levied u/s 271(1)(c) - Transfer pricing adjustment - assessee advanced interest free loan to its AE - Assessee has not charged interest on such loan and therefore, till the stage of Tribunal, adjustment on account of interest has been confirmed which has been reduced by applying LIBOR + 300 bps - HELD THAT:- We find that it is not in dispute that assessee had advanced loan to its AE, out of which part has been repaid to the assessee. When this was pointed out, assessee has explained that the entire working capital loan was extended out of own funds of the assessee company and these were in the nature of investment in the form of equity / quasi-equity as part of investment so as to promote business in Asian region to support international customers for aircraft sales.
Apart from that, assessee has disclosed all the particulars of income including ALP of interest in the TP study report, by claiming that no interest is chargeable on this transaction. Though assessee has given explanation before the ld. TPO / ld. AO, however, the same has not been accepted.
The assessee has explained all the reasons for not charging of interest due to various reasons and also one of the important explanations was that these investments were in the form of equity / quasi equity then in that case there could not have been any issue of imputing any interest even under TP provisions.
What was the extent of the investment in equity / quasi equity has not been elaborated however, the contention of the assessee is that it has given partly that capital loan out of its own funds and has also justified the reasons for not imputing interest, then such explanation can be said to be not bonafide and does not lead to inference that assessee has furnished inaccurate particulars. Accordingly, penalty levied by the ld. AO in both the years are deleted. Appeals of the assessee allowed.
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