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Showing 41 to 60 of 1318 Records
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2023 (12) TMI 1278 - DELHI HIGH COURT
Refund of the input tax credit including cess - petitioner’s application was rejected on mere apprehension that its supplier had issued fake invoices - HELD THAT:- This Court had also noted that there are no findings on the basis of the cogent material that the invoices issued by one of the petitioner’s suppliers (M/s Shruti Exports) were fake. It was also noticed that there was no allegation that the petitioner had not exported the supplies in respect of which refund of ITC on inputs was claimed. Accordingly, the petition was allowed and the respondents were directed to process the petitioner’s claim for refund.
An application for refund by a tax payer is required to be examined in entirety. If there are any grounds for requiring further clarification or proof, the concerned officer is at liberty to issue a show cause notice setting out all the grounds on which the application is proposed to be rejected. This affords a tax payer an opportunity to meet the allegations and provide such material to satisfy the concerned officer. Once that exercise is done, the concerned officer has to pass a final order either accepting the tax payer’s claim for refund or rejecting it. The reasons for such rejection are required to be clearly stated in the order - A tax payer has an opportunity to appeal against the said order before the Appellate Authority. It is important to note that the Appellate Authority is required to consider the appeal and pass an appropriate order, however, it cannot remand the matter to the concerned adjudicating authority for considering it afresh.
In the present case, after this Court had passed an order, the adjudicating authority once again issued a show cause notice dated 07.07.2023. This is impermissible. The respondents were required to pass an order for sanctioning the refund in accordance with the law and not to re-adjudicate the application once again.
Application disposed off.
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2023 (12) TMI 1277 - TELANGANA HIGH COURT
Anti-Profiteering proceedings - Maintainability of petition against a mere show-cause notice or charge-sheet - Legality of notice initiated under Rule 129 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge-sheet is that at that stage the writ petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established.
A mere show-cause notice or charge-sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.
Thus, no strong case has been made out by the petitioner calling for interdiction of the notice and summons under challenge - petition disposed off.
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2023 (12) TMI 1276 - MADHYA PRADESH HIGH COURT
Betting and gambling - whether the petitioner's platform which is used for gaming would fall within an actionable claim amounting to betting and gambling? - validity of Rule 31A of the CGST Rules, 2017 and Section 15(5) of the CGST Act, 2017 - HELD THAT:- In a similar case, the High Court of Gujarat at Ahmedabad in NXGN Sports Interactive Private Limited Versus Union of India [2023 (11) TMI 357 - GUJARAT HIGH COURT] has entertained the petitions by granting the interim order. Since the subject matter involved is identical, the petitioner too would be entitled to similar order.
Hence, the respondents are directed not to take any coercive action against the petitioner pursuant to the show cause notices. However, the petitioner shall respond to the show cause notices and the proceedings may go on which shall be subject to further orders of this Court.
Issue rule nisi.
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2023 (12) TMI 1275 - PUNJAB AND HARYANA HIGH COURT
Seeking release of the confiscated goods and conveyance - transaction was being carried out in contravention of the provisions of Punjab GST Act, 2017 and with intention to evade tax.
Counsel for the petitioners submits that the petitioners have financial handicap as such and are not in a position to deposit the amount twice over at one point of time. Accordingly, he prays that directions be issued firstly to refund the amount so that thereafter it can be deposited by the correct person for release of the goods and the vehicle.
HELD THAT:- Keeping in view the admitted fact as such and the response filed by the State, the present writ petition is disposed off by issuing directions to the Superintendent, Muktsar Ward I, Central GST/Jurisdictional Officer where the penalty and fine had been wrongly deposited by petitioner No. 1 to refund the said amount within a period of 10 days from the date of receipt of certified copy of the order. Thereafter, if the said amount is deposited by petitioner No. 2, the said goods and the vehicle be released within a period of one week thereafter.
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2023 (12) TMI 1274 - GUJARAT HIGH COURT
Constitutional validity of Rule 96(10)(b) of Central Goods and Service Tax Rules, 2017, / State Goods and Service Tax Rules 2017 - HELD THAT:- The order in UNJHA AGRO COMPANY THROUGH PARTNER JANAK PATEL VERSUS UNION OF INDIA [2023 (4) TMI 1268 - GUJARAT HIGH COURT] is perused, wherein, this Court has observed It is an admitted position that other petitions relying the vires of Rule 96(10)(b), have been entertained by this Court and the same are pending consideration. In those petitions, interim relief is granted to those petitioners concerned which is evident from the orders annexed in the compilation of Civil Application.
Issue NOTICE, making the same returnable on 21ST JUNE, 2023.
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2023 (12) TMI 1273 - AUTHORITY FOR ADVANCE RULING, UTTAR PRADESH
Classification of service - business of the civil constructions mainly with the Govt. Departments against the Contracts awarded by them - Whether the company will charge the GST @ 12% or @18% in the case of the contracts executed before the N/N. 03/2022-Central Tax (Rate) dated. 13.03.2022 w.e.f 18.07.2022?
HELD THAT:- The Applicant has been awarded the contract of "Redevelopment of Carriageway, foothpath, vending zone covering ROW within ABD area of Aligarh Smart City(CW-23) on EPC mode (Pakage-1) at Aligarh" by the Aligarh Smart City Limited (ASCL) vide contract agreement dated 23.12. 2021 - The Works contract services provided by the applicant was chargeable to GST @ 12% vide Notification 11/2017 - CT (Rate) as amended dated 28.06.2017. However subsequently vide Notification No 03/2022 dated 13.07.2022, the same was amended and enhanced to 18% w.e.f 18.07.2022.
Consequent to the change in rate of tax during an ongoing continuous service, applicable rate of tax is to be decided in terms of provisions contained in Section 14 of the CGST Act, 2017.
In cases where advance is received or invoices are raised before 18.07.2022, GST rate applicable is 12% - In cases where advance is received and invoices are raised after 18.07.2022. GST rate applicable is 18%.
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2023 (12) TMI 1272 - AUTHORITY FOR ADVANCE RULING, UTTAR PRADESH
Classification of goods - F-18 Products - classified under HSN 30063000, leviable to GST at the rate of 12%, in terms of entry no 65 of Schedule II of the Notification No 01/2017, Central Tax (Rate) issued under Central Goods and services Tax Act, 2017 or not - HELD THAT:- It can be seen that F-18 products are essentially radioactive isotopes which are used in radiopharmaceutical imaging such as PET scanning. Although they are used as a pharmaceutical product for the diagnosis and detection of various diseases, 18F FDG and other 18F radiopharmaceutical products are compounds of the radioisotope 18F. Heading 2844 of the Tariff covers radioactive isotopes and their compounds. 18F-FDG being a compound of the radioisotope 18F, it would fall under the heading 2844 - Diagnostic reagents are chemicals used in laboratories to determine specific types of pathogens, metabolic abnormalities, physiological anomalies, and genetic diseases. They're relied upon by medical practitioners to make accurate diagnoses, and can be used in vivo or in vitro in order to detect certain diseases.
The Section Note 1(A) specially stipulates that Goods answering to a description in heading 2844 are to be classified in the said heading only. F18 is a radioisotope and Fluorodeoxyglucose (18F-FDG) is a compound. The products being radioactive and compound of the radioisotope 18F, the same merits classification under heading 2844 only although it satisfies the condition mentioned in Chapter 30 i.e diagnostic reagent designed to be administered to the patient. The applicant has also submitted that medicaments are covered under Tariff heading 30 and that the same product has been classified under heading 3006 by some supplies. However, it may be appreciated that the classification of goods are to be guided by the provisions of law and Radioactive chemicals elements and radioactive isotopes are classifiable under ChSh 2844 only and nowhere else.
The HSN classification and rate of tax applicable on the product under consideration is 2844 @ 18%.
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2023 (12) TMI 1271 - AUTHORITY FOR ADVANCE RULING, UTTAR PRADESH
Scope of Advance Ruling - Supply or not - work done by the applicant in Transmission Line under the supervision of MVVNL - levy of GST on MVVNL on the full amount of work done for load sanction of 11 KV lines by applicant - applicant pays GST on the entire value of work done to its contractors and also to MVVNL - payment of same amount of GST on the same transaction to two separate entities - double taxation - HELD THAT:- Applicant M/s Spring Infrastructures is receiver of the Goods/Services provided by the M/s Madhyanchal Vidyut Vitran Nigam Limited. Therefore, it falls under category of Service recipient. In light of point provided under Section 95 of CGST Act 2017, only supplier of the services can file Application for Advance Ruling. Accordingly, the application for consideration/ruling not admitted on merits as applicant does not fall under the definition of supplier under Advance Ruling and cannot get the Advance Ruling under the Act.
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2023 (12) TMI 1270 - AUTHORITY FOR ADVANCE RULING, UTTAR PRADESH
Classification of goods - rate of tax - HSN Code - sale of solar driven submersible pump (water pump) - supply involves different components - whether the same shall constitute as single supply or together as composite supply or treated as mixed supplies? - HELD THAT:- The applicant has failed to provide technical specification of the supply. It is found that each component is capable of functioning independent of each other. Hence, we find that the supply cannot be treated as single supply. Further, it is observed, there are clear provisions in the GST Act itself as regards "composite supply" as defined under Section 2(30) and "mixed supply" under Section 2 (74) of CGST Act, 2017 which deal with situations where supply consisting of two or more taxable goods or services or both is involved.
In present case, it is not found either water pump is supplied with solar panel and controller in ordinary course of business and vice versa. Nor is found any principle supply. Each component can supplied separately. Hence, the supply in question cannot be termed as composite supply - So far as the concept of "mixed supply" is concerned, the same is defined under Section 2(74) of the CGST Act to mean 'two or more individual supplies of goods or services, or any combination thereof made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply'.
The supply of each one of the items in question as proposed by the appellant is independent and each one of the items can be supplied separately in the appellant's own case - It is observed that from the definitions it emerges that a supply, consisting of any possible combination of more than one type of goods which are independent of each other in terms of their supply but which are sold together as a bundle simply because the buyer has ordered purchase of such combination of goods, does not constitute a composite supply as the absence of the element of principal supply and natural bundling in the ordinary course of business weighs against the definition of composite supply - the supply of different items namely Solar Panel, Controller and Solar Pump, without anyone of the goods being supplied as principal supply would be covered by the definition of "mixed supply" of different type of goods.
The Solar driven submersible water pump comprising of Solar panel, Controller and submersible pump is a mixed supply and the highest rate of GST will be applicable amongst goods supplied by the applicant.
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2023 (12) TMI 1269 - AUTHORITY FOR ADVANCE RULING, UTTAR PRADESH
Scope of Advance Ruling - Liability of service tax - Reverse Charge Mechanism - upfront amount charged by the NOIDA Authority (as lease premium) in respect of allotment of plots to the Applicant by way of granting of long term lease of ninety years, for development of commercial infrastructure in an industrial township - scope of supply - long-term lease is in the nature of sale of land - scope of supply under the provisions of CGST Act.
HELD THAT:- The activities of the taxpayer being a recipient, are not related to the supply being undertaken or proposed to be undertaken by him.
The Applicant M/s Lavish Buildmart Pvt. Ltd. is receiver of the Goods/Services provided by the M/s New Okhla Industrial Development Authority and has admitted in the application dated 28.03.2023 that it falls under category of Service recipient. In light of point provided under Section 95 of CGST Act 2017, only supplier of the services can file Application for Advance Ruling. Accordingly, the application for consideration/ruling not admitted on merits as applicant does not fall under the definition of supplier under Advance Ruling and cannot get the Advance Ruling under the Act.
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2023 (12) TMI 1268 - AUTHORITY FOR ADVANCE RULING, UTTAR PRADESH
Scope of Advance Ruling - Supply or not - work done by the applicant (NHAI) in shifting the transmission lines for the widening of road under the supervision of MWNL - levy of GST on MWNL on the full amount of work done for shifting the transmission lines by NHAI - NHAI pays GST on the entire value of work done to its contractors and also to MWNL - payment of same amount of GST on the same transaction to two separate entities - double taxation - HELD THAT:- Applicant M/s National Highways Authority of India (NHAI) is receiver of the Goods/Services provided by the MVVNL. In light of subsection (a) provided under Section 95 of CGST Act 2017, only supplier of the services/goods can file Application for Advance Ruling.
No ruling can be given in the matter as discussed above. Hence, Advance Ruling No. UP ADRG-17/2022 dated 08.12.2022 is declared void ab-initio in terms of Section 104 of CGST Act.
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2023 (12) TMI 1267 - HIMACHAL PRADESH HIGH COURT
Deduction u/s 80IB(10) - As original return was filed by the assessee beyond the period prescribed u/s 139(1) of the Act. Hence, deduction u/s 80IB(10) could not be allowed to it in view of bar imposed u/s 80 AC - ITAT allowing certain deductions to the assessee under Section 80IB(10) even though its return of income for assessment year 2006-2007 was filed beyond the period prescribed under Section 139(1) of the Act and the deductions were claimed only in the revised return furnished later - HELD THAT:- As decided in Prakash Nath Khanna and another [2004 (2) TMI 3 - SUPREME COURT] Court cannot read anything into a statutory provision which is plain and unambiguous - A statute is an edict of the Legislature. The language employed in the statute is determinative factor of legislative intent. Provisions of Section 276-CC are in clear terms. There is no scope of uncertainty. The interpretation sought to be put on Section 276-CC to the effect that a return filed under Section 139(4) would meet requirement of filing a return under Section 139(1), cannot be accepted. The time within which a return is to be furnished is indicated in Section 139(1) and not in 139(4). That being so, even if a return is filed in terms of Section 139(4), that would not dilute the infraction in not furnishing the return ‘in due time’ as prescribed under Section 139(1). Otherwise, the use of words ‘in due time’ would lose their relevance and it cannot be said that the said expression was used without any purpose.
Therefore, a return of income filed under Section 139(4) cannot be said to be meeting the requirements of Section 139(1) in context of Section 80AC of the Act, which specifically insists upon filing of return by the due date prescribed under Section 139(1) for availing the admissible deductions.
In the instant case, the assessee is a statutory organization created by the State for providing & develop housing infrastructure. It took up a defence of late audit for belated filing of its return of income. The veracity of ground so put forth for late filing of return has not been disputed by the appellant. The assessee deals with public money, the State exchequer.
Commissioner of Income Tax and the Income Tax Appellate Tribunal have concurrently held on facts after undertaking a lengthy & pain staking exercise that the assessee was actually entitled to deductions under Section 80IB(10) of the Act. The specific amount of deduction admissible to it has also been computed. The ground put forth by the assessee for not filing the return of income within the time provided under Section 139(1) having been accepted on facts by the appellant, we in the given facts are inclined to hold, in this case, that the assessee had a reasonable & bonafide cause for not filing the return of income within the time permitted under Section 139(1).
We are in agreement with the view of the learned ITAT that once in the given facts, the assessee has been held entitled to claim the specifically computed deductions, then it should not be burdened with taxes which it is otherwise not liable to pay under law.
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2023 (12) TMI 1266 - KERALA HIGH COURT
Penalty for under-reporting and misreporting of income u/s 270A - application u/s 270AA seeking immunity from imposition of penalty - HELD THAT:- On a perusal of sub-Section (9) of Section 270A it is seen that if there has been misrepresentation or suppression of facts by the assessee, then the application seeking immunity from imposition/payment of penalty under Section 270AA of the Act shall not be maintainable.
The assessing authority while examining the application u/s 270AA cannot sit in appeal against its own assessment order to record a different finding than what was recorded in the assessment order. The assessing officer cannot examine the correctness or otherwise of the assessment order while examining the application u/s 270AA of the Act seeking immunity from imposition/payment of penalty, etc.
If there is a specific finding recorded in the assessment order that the assessee had underreported the income by misrepresenting the facts in the return of its income, then the application u/s 270AA of the Act would not be maintainable, in view of the express bar under Section 270A of the Act.
We do not find that the impugned order rejecting the application of the petitioner under Section 270AA of the Act suffers from any illegality on facts or law. Therefore, the present writ petition is hereby dismissed. Pending interlocutory application, if any, in the writ petition stands dismissed.
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2023 (12) TMI 1265 - MADRAS HIGH COURT
Penalty u/s 271(1)(c) - revised returns were not valid returns u/s 139(5) and that, such returns were not voluntarily filed rather the same were filed only after detection of concealment of income during the course of the survey conducted in the hospital - as argued appellant filed revised returns admitting additional income after payment of tax in relation thereto - CIT(A) deleted the penalty - ITAT restored the penalty - as submitted that before issuance of show cause notices, the appellant had filed the returns voluntarily showing additional income and there is no concealment or escapement of income to tax and hence, penalty u/s 271(1)(c) inflicted on the appellant, is erroneous and not sustainable in law - AO held that revised return was not a valid return under section 139(5) and accordingly, levied penalty under section 27(1)(c)
HELD THAT:- This court is of the opinion that this is a case of deliberate omission in the first return and further, the second return filed by the appellant is not a voluntary one, as rightly held by the ITAT.
Therefore, this court does not find any reason to interfere with the order passed by the ITAT. Accordingly, all these Tax Case Appeals are dismissed and the substantial questions of law are answered against the appellant and in favour of the revenue.
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2023 (12) TMI 1264 - MADRAS HIGH COURT
Validity of reopening of assessment - Period of limitation - procedure u/s 148A - HELD THAT:- In the present case, it is stated that a copy of the notice was sent thorough e-mail on 01.04.2021. Merely because the notice was made ready on 31.03.2021, it cannot be construed that the said notice was issued on 31.03.2021 itself. But the date of dispatch and the notice was issued by e-mail as well as by post is only on 01.04.2021. However, without considering these facts, the AO passed the Assessment Order on 23.03.2022.
Therefore, based upon the notice issued u/s 148 on 31.03.2021, the impugned assessment order came to be passed by the respondents, which, in the opinion of this Court it was passed without any authority and the same is barred by limitation and hence the same is liable to be set aside. However, considering the submissions made on behalf of the respondents and in the interest of revenue, without directing the respondents to venture upon issuing fresh notices u/s 148A, in the interest of revenue, this Court feels that the impugned notice under Section 148 of the Act issued to the petitioner, shall be deemed to have been issued u/s 148A of the Act as amended by Finance Act, 2021 and in the light of the law laid down in the case of Union of India and Others Vs. Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT]
Accordingly, while setting aside the impugned assessment order, this Court directs the Assessment Officer to provide necessary documents to the petitioner within 30 days from the date of request made by him so that he can file his reply within two weeks from the date of receipt of the relevant documents.
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2023 (12) TMI 1263 - ITAT DELHI
Power of CIT(A) to dismiss the appeal in limine ex-parte - violation of principles of natural justice, on the alleged ground that the appellant was not inclined to prosecute the appeal - TP adjustment - difference in arm's length price of the international transaction of availing testing services entered into by the appellant with the associated enterprises - CIT (A) noted that despite notices, nobody has attended, so he summarily referred to the TPO’s order and dismissed the assessee’s appeal - assessee submitted that assessee has sought adjournment before ld. CIT (A) who has ignored the same and passed the order dismissing the assessee’s appeal for non-prosecution.
HELD THAT:- Upon careful consideration, we find that section 251 does not give any power to the ld. CIT (A) dismissing the appeal for non-prosecution. Hence, in the interest of justice, we remit the issue to the file of ld. CIT (A). Ld. CIT(A) shall pass a speaking order on merits after giving the assessee adequate opportunity of being heard.
Appeal of the assessee is allowed for statistical purposes.
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2023 (12) TMI 1262 - ITAT DELHI
Revision u/s 263 by CIT - failure of the AO to send the case to the TPO - assessee’s claim was that there was Specified Domestic Transactions and the payments were made covered u/s 40(A)(2)(b) and for which both the parties are paying similar rate of taxation and no Revenue has been affected - HELD THAT:- We are of the considered view that Instruction No.3/2016 dated 10.03.2016 of CBDT providing for guidelines/implementation of transfer pricing provisions specifically provides that if a case is selected for scrutiny on the basis of transfer pricing risk parameters in respect of International Transactions or Specified Domestic Transactions or both the case has to be referred to TPO by the AO after obtaining the approval of the jurisdictional PCIT or CIT. The failure of Ld. AO to comply with these directions in relevant AY 2014-15 and following them in next AY 2015-16 makes it apparent that Ld. AO has not followed directions of Circular this years without mentioning any reasons for not referring the matter to TPO and that makes the order erroneous and prejudicial to the interest of Revenue irrespective of the fact that the transaction may have resulted into no loss to Revenue for the reason that both the parties were paying tax at similar rate as that is not a justification in TP issue examination by TPO.
For remaining grounds for finding the assessment order to be erroneous and prejudicial to the interest of Revenue, we find that assessee had made submissions to Ld. PCIT that the issue was examined by the Ld. AO by raising queries to which assessee had responded by letters dated 29.04.2016, 11.07.2016, 11.08.2016 and 17.08.2016.
The order of Ld. PCIT makes it apparent that he has taken note of these submissions of the assessee as made before Ld. AO and as available on the assessment record, but found that enquiry was not detailed without indicating by his own efforts as to where Ld. AO failed to follow the mandate of the Act in accepting the pleas. No separate and reasoning of his own are stated to establish his findings that how the submissions were not otherwise sustainable under the law to hold that assessment order was erroneous and prejudicial to the interest of Revenue.
Thus, we are not inclined to interfere in the order of Ld. PCIT with regard to directions of AO to refer the matter to TPO but on other counts the order is not sustainable. Appeal of assessee is allowed partly.
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2023 (12) TMI 1261 - ITAT KOLKATA
Capital gain - Joint Development agreement (JDA) - Transfer / sale of land u/s 2(47)(v) or not? - AO on the basis of said joint development agreement computed the short-term capital gain by taking the value as per stamp valuation authority as deemed sale consideration - HELD THAT:- Mere execution of joint development agreement with the builder would not result in any transfer of land by the assessee as contemplated by the provisions of section 2(47)(v) of the Act as the assessee has not allowed the possession of the plot to be taken away by the builder in part performance of a contract . It is just an agreement for carrying out construction on the plot after obtaining requisite permissions from the Government authorities and then after completion of the project, certain area has to be allotted to the assessee.
We find merit in the contention of assessee that the said execution of land development agreement cannot be a sale of land in favour of the builder within the meaning of section 2(47)(v) as only construction was allowed to be done by the builders after obtaining necessary approvals from competent authorities and, therefore, the capital gain has wrongly been computed and charged to tax.
No construction has been carried out on the said land due to legal hurdles. Capital gain cannot be assessed on the basis of joint development agreement executed by the assessee during the year as no possession was given to the builder in part performance of the contract but it is only permission to carry out construction on the plot. Considering all appeal of assessee allowed.
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2023 (12) TMI 1260 - ITAT KOLKATA
Reopening of assessment u/s 147 - bogus LTCG - reopening was done on the basis of information received from the Investigation Wing that the assessee has earned long-term capital gain from transfer of shares of Quest Financial Service Limited, which is a penny stock company and the said gain has been claimed as exempt u/s 10(38) - HELD THAT:- The reasons were recorded without application of mind and in a very casual and mechanical manner.
AO in the first second para stated that the assessee has taken bogus long-term capital gain through penny stocks. Besides we also note that the ld. AO has stated sometimes in the said reasons recorded “his/her”. We find merit in the contentions of the A.R. that the reasons have to be read as they are recorded and there has to be an independent application of mind by the AO and a objective satisfaction has to be recorded whereas the AO acted on the borrowed satisfaction which is a clear-cut non-application of mind by the AO.
The case of the assessee finds support from the decision of Hindustan Lever Limited –vs.- R.B. Wadkar, Asst. CIT [2004 (2) TMI 41 - BOMBAY HIGH COURT] wherein it has been held that the reasons have to be read as they are recorded and it cannot be substituted. The Hon’ble Court has held that there has to be satisfaction of AO for reopening of the assessment and reopening cannot be made for borrowed satisfaction in a mechanical manner.
Thus we quash the reopening of assessment and direct the ld. AO to delete the addition. The appeal of the assessee is allowed on legal issue.
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2023 (12) TMI 1259 - ITAT KOLKATA
Exemption u/s 11 - charitable activities u/s 2(15) - Accumulation of income - CIT(A) has treated activities of meetings, conferences and seminars of the assessee not for charitable purpose and thus denying exemption u/s 11 of the Act in respect of entire receipts of the assessee - HELD THAT:- We note that during the instant assessment year, the receipt form business activities of the assessee from the activities of holdings and organizing meetings, seminars and conferences and the profit as computed by the AO constituted only 2% of such receipts.
Therefore we are inclined to hold that the consideration charged by the ICC is just a cost basis and nominally above the cost. However if we allocate the administrative expenses on a rational and scientific basis between the activities of holding meetings, seminars and conferences on the one hand and other charitable receipts such as interest, rental and misc. income on the other , then there would be huge loss from these activities of organizing and holding meetings, seminars and meetings meaning thereby that the assessee has not been even charging from these sponsors, participants, members or non-members which are barely enough to cover the cost of the ICC and therefore it can be reasonable presumed that ICC has provided these activities even below the cost.
We are inclined to hold that the ICC is not carrying on any activity of holding meetings, seminars and conferences for business purpose but only in support its main object and it charges from its participants, members and non-members the amount of fee which does not even covers the cost of holding such events. So much so that the administrative and other incidental expenses of holding and organizing such seminars, conferences and meetings are met out of other charitable income received form interest on FDRs, rental and miscellaneous income.
Therefore in view of that the ICC is entitled to exemption u/s 11 of the Act as the activities of the advancement of main object is not hit by the proviso to Section 2(15) of the Act even post amendments.
Accumulation of income and investment - Provisions of 11(1) provides for accumulation of income of the trust to the extent of 15% of the gross receipts in perpetuity. The institution can retain 15% from the application of income without applying for charitable purpose in which accrued meaning thereby that 15% is indefinite accumulation and the assessee is not obliged to apply the same in subsequent years and can be retained as part of the corpus of the body.
AO has accepted which the same. But the institution has to comply with the requirements of section 11(5)(iii) of the Act. The ICC has fully complied with the provisions of section 11(5)(iii) of the Act and kept the funds invested in terms of the said section. So the ld CIT(A) has erred in treating the same as taxable income. But in any case we have allowed the main contentions of the ICC by allowing exemption u/s 11 of the Act on the entire receipts of the ICC.
We set aside the order of ld CIT(A) and direct the AO to allow exemption u/s 11 of the Act in respect of entire receipts/income. Consequently ,the grounds of assessee allowed.
Depreciation claim of assessee trust - HELD THAT:- The assessee’s case is squarely covered by the decision of Rajashthan and Gujrati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] in the context of amendment in Section 11(6) of the Act by the Finance (NO.2) Act 2014 w.e.f 01.04.2015 wherein it has been held that up to AY 2015-16 the assessee is entitled to claim the cost of acquisition of fixed asset as application of income and further depreciation thereon in subsequent years. We set aside the order of Ld. CIT(A) and direct the AO to allow the depreciation on fixed asset as application of income/expenses.
Addition treating the sale value of motor car as income - cost of car has been treated allowed as application of income when the car was purchased - HELD THAT:- We find that up to AY 2015-16 even if fixed asset purchased by the assessee was claimed as application of income while computing the income, even then it is presumed that WDV is there in the books of account. We have even perused the provisions of Section 11(1)(a) of the Act which provide that if the sale consideration received on sale of assets is utilized for acquiring another asset then the same is treated as having applied for the charitable purposes.
The case of the assessee also find support from the decision of Rajashthan and Gujrati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] wherein it was held that besides claiming the full deduction of cost of fixed asset in the year and the assessee would be entitled to depreciation thereon. By considering the ratio laid down in the said decision, we are of the view that even if the entire cost has been claimed as application of income even then the assessee is entitled to claim the deduction of WDV from the sales consideration in order to calculate the capital gain. Accordingly we set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition.
Deduction u/s 11(1)(a) @ 15% on the net income and not on the gross receipt of the ICC - HELD THAT:- We find that accumulation u/s 11 is to be computed on the gross receipts and not the net receipts. The issue settled by the Hon’ble Surpeme Court in the case of ACIT vs. A.L.N. Rao Charitable Trust [1995 (10) TMI 2 - SUPREME COURT] wherein it has been held that statutory accumulation u/s 11(1)(a) has to be computed on the gross receipts of the assessee - Thus we are inclined to direct the AO to allow the accumulation u/s 11(1)(a) of the Act on the gross receipt of the assessee and not on the net receipt. Accordingly ground raised by the assessee is allowed.
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