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Income Tax - Case Laws
Showing 61 to 80 of 163734 Records
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2024 (5) TMI 100
Validity of order passed u/s 154 - computation of commission income - Scope of rectification - modifying the assessment order passed u/s 143(3) whereby AO had wrongly computed the commission at 8% instead of 2% - contention of the ld. AR that the assessee has been regularly showing commission income at 2% in all the previous and subsequent assessment years.
HELD THAT:- In the present case, CIT(A) has noted that no reply has been furnished by the assessee and that the assessee not even responded to the notice served upon him. Since the assessee has willingness to produce all the records, therefore, in our opinion, it would be appropriate if the matter is remanded back to the file of CIT(A).
The order of CIT(A) clearly shows that the rectification order was passed by the Assessing Officer on the basis of internal audit party report whereby the audit party was of the opinion that instead of 2%, 8% commission rate should have been applied. Prima facie, the above said basis for rectifying the order passed by the Assessing Officer is not permissible in law. However, considering the rival contentions and willingness of the assessee to produce all the records, the assessee may be given one chance to explain the case before the ld.CIT(A).
Matter is remanded back to the file of ld.CIT(A) with the following directions as CIT(A) should examine whether the Assessing Officer can rectify the assessment order dt. 12.12.2017 on the objections raised by the internal audit party or not thereby increasing the commission rate @ 8%. CIT(A) shall decide the issue in accordance with law and thereafter pass a detailed speaking order dealing with the contentions of the assessee.
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2024 (5) TMI 99
Disallowance of commission paid to foreign agents - Assesee failed to prove actual delivery of services by these agents - Disallowance of legal and professional charges - CIT(A) deleted addition relying on the information submitted before him - as per revenue payments to above said agents were in the nature of fee for technical services on which neither any TDS was deducted by the assessee nor any certificate for no deduction of TDS was furnished by the assessee - CIT(A) has deleted the disallowance of interest amount by the assessee, who has diverted its interest bearing funds to its sister concern for non-business purposes - HELD THAT:- All the above said issues were not clarified by the assessee by making proper representation and failed to utilize the several opportunities granted to the assessee. We are of the view also that the issue raised by the Revenue needs to be verified afresh and adjudicated accordingly. The issues raised by the Revenue apparently shows that the assessee has not justified in bringing on record the services rendered by the agents and how the percentage of payment of commission justified in this case.
With regard to interest bearing fund, the Ld. CIT(A) has observed that the assessee has enough interest free the funds, however, it has not been demonstrated how the interest free fund were actually diverted to sister concern and not interest bearing funds. Accordingly, both appeals filed by the Revenue are allowed due to non representation from the assessee side.
In the result, both appeals filed by the Revenue are allowed.
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2024 (5) TMI 98
Penalty u/s. 271(1)(c) - bogus purchases or inflated purchases not supported by proper vouchers treated the same as concealed income - HELD THAT:- In the present case before us, the assessee is unable to prove a claim because the vouchers of purchases were self-made vouchers and this fact has been recorded by AO,
As noted that once these purchases are supported by self-made vouchers and the same are treated as bogus as held by the AO, how the same is concealment of particulars of income leading to concealment of income, the decision of Hon’ble Supreme Court in the case of Suresh Chandra Mittal [2001 (6) TMI 63 - SC ORDER] squarely applies to the facts of the case. Hence, respectfully following the decision of Hon’ble Supreme Court in the case of Suresh Chandra Mittal, supra, we delete the penalty and allow the appeal of assessee.
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2024 (5) TMI 97
Deduction u/s 80P(1) - assessee is registered as a Primary Agricultural Credit Society (PACS) - HELD THAT:- Banking being an eligible activity u/s. 80P(2)(a)(i), the assessee being in the said business would again matter little; rather, entitle it for the deduction on the entirety of it’s profit, i.e., including that referable to business with non-members. Further still, the assessee/s, satisfying the primary condition of s. 2(19) of the Act defining a society, is, thus, a cooperative society, a pre-requisite for deduction u/s. 80P(1). The resolution of the dispute as to whether the assessee is therefore eligible for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) and, where so, its extent, thus rests solely on the assessee being, or not being, a co-operative bank, a term again defined under BRA, which stands adopted for the purpose of s. 80P, determining the issue.
Copy of the bye-laws, only a certified translated copy of which, in full, can be taken cognizance of and regarded as a part of the record, is not on record. As also noted by the Tribunal in it’s orders afore-referred, what value the restriction on the area for it’s members, if the assessee-society is otherwise eligible to accept deposits from non-members as well! Under the circumstances, we, for the reasons afore-noted, as also the cases referred to, set aside the orders by the Revenue authorities, and restore the matter back to the file of the Assessing Officer (AO) to determine the assessee’s eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) on the basis of it being or, as the case may be, not being, a co-operative bank, i.e., on the basis of it’s bye-laws read with the Kerala Act and the BRA, as well as the quantum of the deduction there-under, which we clarify would be in full where the assessee is a cooperative bank, with it’s entire income arising from the business of banking. Assessee’s appeal is allowed for statistical purposes.
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2024 (5) TMI 96
Revision u/s 263 - claim of deduction u/s. 54B not properly verified - assessee’s case before us was that the relevant enquiry had been made by the AO, who though did not write an elaborate order, and which should not therefore prejudice the assessee - HELD THAT:- Apart from a clear absence of pertinent enquiry into the several specific aspects of the matter, the assessment is not per a speaking order, a sine qua non for a judicial order. We, accordingly, find the impugned order as valid in principle
We are, though, not in agreement with the ld. Pr. CIT, where he expresses an apprehension as to the fitness of the land sold for agricultural purposes. The only aspect relevant, even as pointed out by him, is if it was indeed put to use for agricultural purposes in the two-year period prior to sale (s. 54B(1)). The requirement being stricter than of the subject land being agricultural, and which would require being positively satisfied, subsumes the requirement of the land being fit for agriculture. The other infirmity we observe in the impugned order is that it is not proper for the ld. Pr.CIT to have ‘held’ that the assessee is not eligible for a claim u/s. 54B of the Act, followed by direction for a de novo examination and adjudication in accordance with law per a speaking order. This is dichotomous. Accordingly, the first sentence in para 7 of his order the words ‘is not eligible’ be read as ‘may not be eligible’. The material gathered by the Revenue may though; rather, ought to be, put across to the assessee, who is to establish his claims, leading evidence. See SMT. ASHA GEORGE [2013 (1) TMI 545 - KERALA HIGH COURT]
The ensuing assessment would accordingly be sustainable only on the basis of finding/s of fact, i.e., as to whether the facts admit of, or not, a claim u/s. 54B. We may also clarify that we may not be construed as having expressed any opinion in the matter, except that the AO’s enquiry is seriously wanting, and there had thus been no proper verification and examination of the assessee’s claim by him, finding each of the several objections as highlighting the various aspects of the matter which ought to have been, but were not, examined by the AO, who shall though make an assessment afresh, uninfluenced by any finding/s by the ld. Pr. CIT, inasmuch as it is a de novo assessment.
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2024 (5) TMI 95
Levy of late fees u/s 234E - TDS Statement filed under form 24Q for Quarter 3 and Quarter beyond due date - enabling clause (c) was inserted in the section 200A w.e.f. 01.06.2015 - HELD THAT:- We understand that earlier, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E. As such, in respect of TDS statement filed for a period prior to 31.03.2015, no late fee could be levied in the intimation issued u/s 200A of the Act. See Sudershan Goyal [2018 (5) TMI 1626 - ITAT AGRA] as relying on SRI. FATHERAJ SINGHVI AND OTHERS [2016 (9) TMI 964 - KARNATAKA HIGH COURT] held demand u/s 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015.
Thus we accept the legal position that late fees u/s 234E cannot be imposed on late filing of TDS returns u/s 200A, for both the Asst years, under appeal, and the same is deleted. Decided in favour of assessee.
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2024 (5) TMI 94
Deduction u/s 80IA(4) - Disallowance of project facility expenses - Revenue expenses or Capital expenditure - principle of consistency - assessee is engaged in business of building infrastructure facilities and earning income by way of collecting toll from vehicles running on roads constructed by the assessee - HELD THAT:- We observe that the Department on identical set of facts, has allowed the claim of deduction u/s 80-IA(4) of the Act to the assessee both for the earlier assessment year i.e. A.Y. 2013-14 and also for the subsequent assessment years. Therefore, following the principle of consistency, in our considered view there is no infirmity in the order of Ld. CIT(A) in which he had held that assessee is eligible for claim of deduction under Section 80-IA(4) - for the impugned assessment year, the assessee did not claim deduction under Section 80-IA(4) of the Act for the simple reason that the assessee had incurred losses for the impugned year.
In the case of ITO vs. Keval Construction [2013 (7) TMI 291 - GUJARAT HIGH COURT] held that in case of disallowance / addition on account of non-deduction of TDS liability, this would increase the profits of the assessee from the business of developing housing projects and therefore, the ultimate profit would increase and the same would qualify for deduction under Section 80-IB of the Act.
In the case of Virtusa (India) Pvt. Ltd [2013 (10) TMI 1395 - ITAT HYDERABAD] ITAT held that the amount of statutory disallowance under Section 40(a)(ia) of the Act has to be considered as business profit eligible for deduction under Section 10A of the Act.
In the case of Commissioner of Income-tax vs. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] the High Court held that where the Assessing Officer had enhanced income by disallowing employers as well as employees contribution towards Provident Fund / ESIC, exemption under Section 10A had to be granted on such enhanced income.
Accordingly, when the claim of the assessee for grant of deduction under Section 80-IA(4) of the Act has not been disputed / disturbed by the Department in either the earlier or later / subsequent years, in our considered view, CIT(A) has not erred in facts and in law in holding that the assessee is eligible for claim of deduction u/s 80-IA(4) of the Act with respect to income which has been enhanced on account of disallowances made by the AO. Appeal of the Department is dismissed.
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2024 (5) TMI 93
LTCG - deduction u/s 54 denied - construction of the house was not completed on or before 25.09.2017 - AO concluded that assessee had confirmed that there was no electricity supply, water connection in the subject mentioned property for which deduction u/s 54 was claimed and even the approved map for construction of the house was not submitted - HELD THAT:- No basic amenities are present on the subject mentioned property for which deduction u/s 54 of the Act is claimed by the assessee. Though the assessee might be intending to construct a full fledged residential house on the agricultural land purchased by him, the aforesaid facts clearly bring out that such residential house, having the basic amenities was not constructed by the assessee on or before 25.09.2017 (i.e. three years from the date of transfer i.e. 25.09.2014). Even as late as on 7.12.2017, the Inspector of Income-tax along with Office Superintendent attached to the office of the learned AO, together with the Authorized Representative of the assessee (who appeared before the learned AO), had physically visited the site and had confirmed the aforesaid facts that the alleged house did not even have the basic amenities listed herein above.
When there is a physical inspection carried out as late as on 07.12.2017, wherein photographs were also taken of the subject mentioned property, the basic amenities were not available in the subject mentioned property.
Thus the assessee had not constructed the residential house within the prescribed time and in fact had not constructed a residential house at all on or before 25.09.2017 which could be construed as a residential house, habitable for its dwelling. Accordingly, deduction u/s 54 of the act had been rightly denied by the learned AO in the instant case. Appeal of the Revenue is allowed.
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2024 (5) TMI 92
Validity of assessment framed u/s 143(3) by Non- jurisdictional ITO - Jurisdiction of AO based on income threshold / monetary limits as per the return of income - ITO transferred the jurisdiction of the assessee from him to DCIT since the returned income for A.Y. 2015-16 is more than 30,00,000/- - jurisdiction will be that of DCIT or ITO - DR pointed out to the provisions of section 124(3) wherein it was mentioned that assessee should challenge within one month about the jurisdiction of the AO on receipt of the notice - HELD THAT:- This argument of the DR is wrong in as much as section 124(3) of the Act talks only about territorial jurisdiction, whereas the issue involved here is pecuniary jurisdiction. Provisions of section 124(3) of the Act could be taken shelter by the Revenue only when legal valid notice u/s 143(2) of the Act has been issued by the Revenue. In the instant case, notice issued u/s 143(2) on 12.04.2016 by ITO is not legal as he did not possess jurisdiction over the assessee for A.Y. 2015-16 in as much as the returned income for A.Y. 2015-16 had exceeded Rs. 30,00,000/-. We find that the issue in dispute is no longer res integra by the decision of Ashok Devichand Jain [2022 (3) TMI 1466 - BOMBAY HIGH COURT] as held where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC.
Thus we have no hesitation to hold that the assessment framed under section 143(3) of the Act deserves to be quashed in the instant case as the initial scrutiny notice issued under section 143(3) of the Act dated 12.04.2016 by ITO was without jurisdiction as he did not possess jurisdiction over the assessee for the A.Y. 2015-16. Decided in favour of assessee.
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2024 (5) TMI 91
Addition u/s 69A - cash loans given by the assessee as unexplained - whether incriminating the assessee found in the seized materials to support the allegation that the assessee has given cash loans? - HELD THAT:- We notice from the assessment order that the AO has not brought out any specific finding on how the impugned entries are linked to the assessee and whether any other seized material other than what is shared with the assessee have been used to aid the interpretation. We further notice that other than decoding the entries as pertaining to the assessee the AO has not brought any other material on record to substantiate that the assessee has given the cash loans to Shri Nilesh Bharani.
Assessee has furnished the audited financial statements for the year ended 31.03.2012 before the AO during assessment proceedings and that the AO has not recorded any adverse findings with regard to the same.
From the perusal of the findings of the CIT(A), we notice that the CIT(A) has not gone into the merits of the issue and has merely confirmed the addition relying on AO's findings. Thus as nothing has been brought on record by the AO to substantiate the allegation that the assessee has entered into the impugned transactions, addition made by the AO without bringing any concrete evidence on record incriminating the assessee is not sustainable - Decided in favour of assessee.
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2024 (5) TMI 90
Addition u/s 68 - capital introduced by five partners, which in turn was out of the loan advanced - Proprietor of loan advancing concern is a non filer of income tax return and does not have the creditworthiness
HELD THAT:- We find in the case of Prayag Tendu Leaves Processing Co. [2017 (12) TMI 932 - JHARKHAND HIGH COURT] while deciding an identical issue has held that u/s 68 of the Act, the AO, while assessing a partnership firm, can go behind the source of income of the partnership firm, but he cannot go to the ‘source of source’.
We find in the case of PCIT vs. Vaishnodevi Refoils & Solves [2018 (1) TMI 861 - GUJARAT HIGH COURT] under identical circumstances has held that if the AO is not convinced about the creditworthiness of the partners who had made the capital contribution, the inquiry had to be made at the end of the partners and not against the firm. While holding so, the Hon’ble Gujarat High Court followed its earlier decision in CIT vs. Pankaj Dyestuff Industries [2005 (7) TMI 601 - GUJARAT HIGH COURT].
Similar view has been taken in various other decisions relied on by the assessee, wherein it has been held that the addition, if any, can be made in the hands of partners on account of introduction of capital, but no addition can be made in the hands of firm. Thus we hold that the addition made by the AO u/s 68 of the Act in the hands of assessee firm on account of introduction of capital by the partners is not sustainable in the eyes of law. We, therefore, set aside the order of CIT(A) / NFAC and direct the AO to delete the addition - Decided in favour of assessee.
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2024 (5) TMI 89
Deduction u/s 80P - interest income(s) realized from parking of alleged surplus funds in nationalized bank(s)/similar institution(s) involving varying sums - HELD THAT:- We find in this factual backdrop that this tribunal’s learned co-ordinate bench’s order in Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT’s [2022 (1) TMI 419 - ITAT PUNE] has settled the issue regarding the former limb of interest income derived from cooperative bank(s) etc., in assessee’s favour
The outcome would be hardly any different qua the latter limb of interest income(s) from public sector bank(s) in light of The Vaveru Co-operative Rural Bank Ltd. [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] that interest income(s) derived from such nationalized/other bank(s) also qualifies for Sec. 80P deduction. We thus reject the Revenue’s vehement arguments qua the assessee’s sole substantive grievance in very terms.
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2024 (5) TMI 88
TDS u/s 194H - non deduction of TDS commission paid to Primary Agriculture Co-operative Society (PACS) - HELD THAT:- For carrying out all the activities, PACS were given commission @ 2.05% of MSP for procurement by PACS in the kharif marketing seasons and 2% of MSP on procurement of wheat in the rabi marketing season - On subsequent dates i.e. 26.07.2013, the percentage of commission was replaced by the commission of Rs. 31.25/- per quintal for common grade and Rs. 32/- per quintal for grade A. Further, notification dated 24.11.2015 provides for the provisional rates of custom milled rice procured under specification and retained for distribution under decentralized procurement operation.
In the said notification, apart from the commission paid to societies on per quintal basis, PACS are also reimbursed for the mandi and labour charges, transportation charges, driage @ 1% of MSP, custody and maintenance charges, interest charges for two months, milling charges, administrative charges, cost of new gunny bags.
Before us, as assessee has contended that the transactions between the assessee corporation and the PACS are on principal to principal basis because the risk is on the PACS for the procurement of food grains and they have to make payment in advance and get it reimbursed from the State Government.
On the above identical factual matrix as decided in BIHAR STATE FOOD & CIVIL SUPPLIES CORPORATION LIMITED VERSUS ITO, WARD-2 (1), PATNA [2024 (4) TMI 884 - ITAT PATNA] held that in order to compute the correct amount of commission paid and in order to ascertain the correct amount of tax to be deducted at source u/s 194H of the Act, the matter is restored to the file of the assessing officer for carrying out necessary verification and calculation. The assessee is also directed to provide full co-operation to the assessing officer by placing all relevant material in order to get the needful information about correct amount of commission and correct amount of TDS u/s 194H of the Act. Appeals are also allowed for statistical purposes.
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2024 (5) TMI 87
Interest u/s. 244A - interest on unpaid interest - refund awarded in the order u/s. 154 - assessee was originally granted the refund with no interest given because the refund was less than 10% of the total tax liability and only in the rectification order that the refund of tax component was given.
HELD THAT:- We notice that assessee’s case falls under the category of sec. 244A(1)(a)(i) of the Act because the refund order to the assessee is out of the tax deducted at source upto 31.03.2017 and the assessee had furnished its original return u/s 139(1). Even though the assessee has revised the return but for the purpose of calculating interest, assessee’s return shall always be treated to be filed u/s. 139(1) of the Act.
Though the refund in the present case has been awarded in the order u/s. 154 of the Act but even section 154 is also forming part of the fleet of other sections mentioned in sec. 244A(3) of the Act and that comes into action when a refund has already been granted but subsequent to the rectification order, the refund is increased or decreased then the interest given earlier also needs to be increased or decreased.
However, in the instant case when the assessee was originally granted the refund no interest was given because the refund was less than 10% of the total tax liability. It was only in the rectification order dated 12.07.2022 that the refund of tax component was given. After considering the facts and circumstances of the case, and also considering the set off of MAT credit available with the assessee as on the beginning of the assessment year, we find sufficient merit in the contentions of assessee that the interest u/s. 244A of the Act in the case of the for AY 2017-18 needs to be computed from 01.04.2017 to the date of grant of refund. Accordingly, the effective issue raised in the instant appeal is allowed.
Thus we hold that the assessee indeed is entitled for interest on unpaid interest and accordingly all the grounds raised by the assessee in this regard are allowed.
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2024 (5) TMI 86
FTC u/s. 90 - credit for Foreign Taxes paid denied as Appellant has claimed the credit only in the revised return of income and not in the original return of income and also not filed Form No. 67 within the due date of filing of return of income prescribed u/s. 139(1) - HELD THAT:- Co-ordinate Bench of the Tribunal in the case of Vidya Tukaram Desai [2023 (12) TMI 1307 - ITAT MUMBAI] following the finding of coordinate bench in the case of Sonkashi Sinha (2022 (10) TMI 107 - ITAT MUMBAI] has allowed the claim of foreign tax credit where Form No. 67 is filed before the completion of the assessment for the relevant assessment year.
Assessee is eligible for claim of the foreign tax credit as Form NO. 67 has been filed by the assessee along with revised return of income on 28.03.2019 which is much before the processing of the return of income by CPC on 11.06.2020.
We direct the AO to consider the claim of the assessee subject to the verification of the facts as mentioned above. The matter is accordingly restored to the file of AO for considering the claim of the assessee of the foreign tax credit as directed above. Appeal of the assessee is allowed for statistical purposes
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2024 (5) TMI 85
Rental income earned on immovable properties owned by his family members - Benami Owner - properties owned by relatives of the assessee - basis for treating the same as benami property of the assessee is the CBI search conducted on the assessee making out a case of assets owned by the assessee disproportionate to his source of income - assessee contended before us that this rental income had been disclosed by the owners of the property in their returns, and the same had not been disturbed or disputed till the date - HELD THAT:- As it is evident that the case of the Revenue of the impugned properties being benami of the assessee rests merely on the preliminary report of the CBI which did not see the light of day by framing concrete charges against the assessee.
We have perused the statement recorded by CBI and as rightly pointed out by the Ld.Counsel the assessee denied having anything to do with the said properties, he stated the names of the owners of the properties and also revealed sources from where investment was made by them. The entire case of the Revenue rests on the CBI Charge sheet framed by the CBI which was subsequently dropped.
Revenue has failed miserably to prove that the assessee was a benami owner of the impugned properties. The assessee therefore cannot be treated as owner of the properties. The decision referred of the Hon’ble Kerala High Court in K. Mahim Udma [1999 (10) TMI 45 - KERALA HIGH COURT] casting an onerous burden on the party alleging benami transaction aptly covers the issue in hand, in favour of the assessee.
Therefore there is no occasion to tax rental income earned therefrom in the hands of the assessee.Further the fact that rental income from these properties was returned in the hands of respective owners has been accepted by the Revenue all along, also strengthens the case of the assessee.
In view of the above we hold that the rental income cannot be treated to be that belonging to the assessee. Addition made of the same is directed to be deleted.
Badla income earned by the assessee - HELD THAT:- As entire case of the Revenue rests on the CBI charge sheet which ultimately did not culminate in any charges being framed on the assessee. Therefore, not much credence can be given to allegations levelled on the assessee in the charge sheet. Besides we have noted that Sh. Pawar filed an affidavit stating on oath that all income from badla activities carried out in D.D Enterprises related to him and had nothing to do with the assessee. The Revenue has been unable to point any infirmity in the affidavit of Shri Pawar. Even income from the badla business carried out in D D Enterprises was shown to be duly returned to tax by the said entity,being proprietorship of Sh.Pawar. Thus no substance in the addition made by the Revenue of income badla.
Income earned from investments held to be benami of the assessee - interest earned on Post-Office MIS - investment being in the name of father of the assessee treated to be benami of the assessee - HELD THAT:- As there is no case for treating the impugned income as that related to the assessee, since Revenue has been unable to discharge its onus of proving that these investments were benami of the assessee.In view of the same, the addition made of interest income earned from FDR and interest earned on Post Office MIS are directed to be deleted.
Appeal of the assessee is allowed.
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2024 (5) TMI 57
Validity of reopening of assessment against the ex-promoters - notice u/s 148 against petitioner company after the approval of the resolution plan for a period prior to closing - liability of previous management - HELD THAT:- As we find all these petitions will be covered by the judgment of this Court in Alok Industries Limited [2024 (3) TMI 1083 - BOMBAY HIGH COURT] wherein held that Section 148 read with Section 147 of the Act only deals with a situation where any income chargeable to tax has escaped assessment for any assessment year. We are unable to fathom as to how the provisions of Section 148 of the Act can be applied for collection of evidences of third party, ex-promoters etc., and we say this because there are separate provisions under Section 133(6) of the Act in which, such evidences can be collected. We are also unable to understand how the provisions of Section 148 of the Act can be used when the proceedings are not for recovery of tax. Both Petitioner and respondent agreed.
Petitioner at the same time states that Revenue’s doors should not be closed and they must be permitted to take such steps as advised against the ex-promoters because the purpose of passing the orders or issuance of notices under Sections 148A/143C/143(3)/148 of the Income Tax Act, 1961 were only to take action against the ex-promoters of Respondent-company.At the same time we make it clear that if Revenue wants to take any steps as they proposed to, it may do so in accordance with law. We express no opinion.
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2024 (5) TMI 56
Eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) - assessee is registered as a Primary Agricultural Credit Society (PACS) - HELD THAT:- The assessee/s, satisfying the primary condition of s. 2(19) of the Act defining a society, is, thus, a cooperative society, a pre-requisite for deduction u/s. 80P(1). The resolution of the dispute as to whether the assessee is therefore eligible for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) and, where so, its extent, thus rests solely on the assessee being, or not being, a co-operative bank, a term again defined under BRA, which stands adopted for the purpose of s. 80P, determining the issue.
The copy of the bye-laws, only a certified translated copy of which, in full, can be taken cognizance of and regarded as a part of the record, is not on record. As also noted by the Tribunal in it’s orders afore-referred, what value the restriction on the area for it’s members, if the assessee-society is otherwise eligible to accept deposits from non-members as well - Under the circumstances, we, for the reasons aforenoted, as also the cases referred to, set aside the orders by the Revenue authorities, and restore the matter back to the file of the AO to determine the assessee’s eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) on the basis of it being or, as the case may be, not being, a co-operative bank, i.e., on the basis of it’s bye-laws read with the Kerala Act and the BRA, as well as the quantum of the deduction there-under, which we clarify would be in full where the assessee is a cooperative bank, with it’s entire income arising from the business of banking. Assessee’s appeal is allowed for statistical purposes.
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2024 (5) TMI 55
Deduction u/s. 80P(2)(a)(i) - denial of deduction as assessee being, in substance, not a PACS inasmuch as the bulk of it’s lending is not for agriculture and allied purposes - as submitted assessee, that it is, registered as a Primary Agricultural Credit Society (PACS) under the Kerala Cooperative Societies Act, 1969 (Kerala Act), is admittedly in the business of banking - HELD THAT:- As explained therein, where and to the extent the assessee-society accepts deposits from non-members; rather, is entitled to, being permitted by it’s bye-laws, it is in the business of banking notwithstanding the area restrictions for it’s operations inasmuch as the same are applicable only qua it’s members. Rather, in such a case, being in the business of banking, even income on provision of credit to non-members would stand to be deductible u/s. 80P(2)(a)(i). The bye-laws of the assessee-society are not on record, neither stand referred to in their orders by the Revenue authorities. It is only with reference thereto would it stand to be determined as to if:
(a) the assessee is a co-operative bank; and
(b) the assessee is in the business of banking.
The matter, accordingly, is restored to the file of AO for, on a perusal of it’s bye-laws, and after affording due opportunity of hearing to the assessee, issue specific finding/s on the two aspects afore-stated, and decide accordingly, allowing or, as the case may be, disallowing – wholly or partly, the assessee’s claim for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) of the Act. We make it clear that the assessee shall be allowed deduction u/s. 80P only if it is not a cooperative bank, i.e., as per the definition provided in Explanation below s. 80P(4). Two, where it’s bye-laws permit it to accept deposit from non-members, it is by definition in the business of banking and, accordingly, entitled to deduction on it’s profit in full, as opposed to that attributable to the provision of credit to it’s members. Assessee appeal allowed.
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2024 (5) TMI 54
Deduction u/s. 80P - assessee, a cooperative society in existence since 1961, and registered under the Kerala Cooperative Societies Act, 1969 (Kerala Act) as a primary agricultural credit society (PACS) - denial of deduction even as the assessee is registered as a PACS, it is actually undertaking banking business, providing the services, with in fact only a small fraction (close to 10%) of it’s lending being to the agricultural sector, so that it is not a PACS - HELD THAT:- The assessee’s lending being admittedly not primarily for agricultural purposes, it is not a PACS by definition and, two, is a cooperative bank, i.e., a cooperative society in the business of banking, even as clarified by the Hon'ble Courts time and again, as in Mavilayi SCB Ltd. [2021 (1) TMI 488 - SUPREME COURT], THE CITIZEN CO-OPERATIVE SOCIETY LIMITED [2017 (8) TMI 536 - SUPREME COURT] AND MUHAMMED USMAN [2002 (11) TMI 686 - HIGH COURT OF KERALA]
Why, the provision itself recognizes ‘banking’ as an eligible activity for a cooperative society, entitling it to deduction of the profits derived therefrom (s. 80P(2)(a)(i)). It being not a PACS would thus not carry the Revenue’s case far. Firstly, for the reason that exemption u/s. 80P(1) r/w s. 80P(2)(a)(i) is, as afore-noted, equally applicable to income derived from the business of banking, even as that from credit to members is not confined to that for agricultural purposes only. Two, inasmuch as the tax statutes are to be strictly construed, the term ‘cooperative bank’ is it be, for the purpose of s. 80P(4), excluding cooperative banks from the benefit of s. 80P, strictly construed, i.e., as defined therein.
The assessee, per it’s Ground 4 before the first appellate authority, has made a specific claim as to it’s bye-laws permitting admission of other cooperative societies as members and, therefore, of not being a primary cooperative bank in terms of s. 56 r/w s. 5(ccv) of BRA. There is no finding by the ld. CIT(A) thereon, which clearly has a direct bearing on the assessee being, or not being, a primary cooperative bank and, thus, a cooperative bank for the purposes of s. 80P of the Act. Copy of the byelaws is not on record. Even the two pages (in English) thereof, forming part of the paper-book, to which Shri Narayanan would refer during hearing, are not by an authorized translator for us to place reliance thereon; the original, as explained, being in vernacular. The matter, accordingly, is restored to the file of the AO to examine if the assessee falls under the definition of a ‘cooperative bank’ under BRA, construed strictly, which definition stands adopted for the purpose of s. 80P(4) of the Act, i.e., whether as a primary cooperative bank or district/state cooperative bank.
As afore-noted, it being in the business of banking or not a PACS is not detrimental to it’s claim u/s. 80P(1) r/w s. 80P(2)(i)(a). The AO shall, upon hearing the assessee and examining such material as it may adduce in substantiation of it’s claim/s, and causing such verification as he may deem fit, issue a definite finding as to if it is, or is not, a cooperative bank as defined under BRA, determining it’s entitlement to exemption u/s. 80P(1) r/w s.80P(2)(a)(i) accordingly. We make it further clear that despite being not a PACS under the Act, it is yet a cooperative society under the Kerala Act, satisfying thus the requirement of s. 2(19) of the Act, which only is relevant for claiming deduction u/s. 80P(1) - Assessee’s appeals allowed for statistical purposes.
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