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Income Tax - Case Laws
Showing 301 to 320 of 168845 Records
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2024 (11) TMI 313
Disallowance of prior period expenses - Expenditure not pertaining to the year under consideration - HELD THAT:- AR before us fairly submitted that let the details given by the assessee be examined by the ld AO as no finding whatsoever has been given by the ld AO with regard to each of such expenditure. It was always the case of the assessee that this expenditure get crystallized during the year or the details of the incurrence of the said expenditure were received after the completion of the audit of the earlier years. Both these categories of the expenditure were booked by the assessee as prior period expenditure. We find that the genuineness of the said expenditure is not doubted by the lower authorities. The prayer made by the ld AR before us is very fair and hence we deem it fit and appropriate to restore this issue to the file of the ld AO for verification of the fact as to whether the assessee had not claimed the very same expenditure in earlier year - Ground No. 1 raised by the assessee is allowed for statistical purposes.
Addition of depreciation on estimated increase in cost of properties - AO observed that the assessee has accounted for estimated cost of 10% towards stamp duty/ registration charges in respect of properties where lease/ sub lease is yet to be executed and has provided depreciation on this addition - HELD THAT:- We find that the issue is no longer res integra in view of the decision in assessee’s own case where the very same issue has been remitted back to the file of the ld AO for de novo verification for AY 2003-04. We find that the Hon’ble Jurisdictional High Court had restored the issue for verification by the ld AO. AR made a statement from the bar that no addition was made by the ld AO up to AY 2009-10 thereof. However, in the interest of justice, we feel it appropriate to restore this issue to the file of the ld AO - Ground No. 2 raised by the assessee is allowed for statistical purposes.
Addition on account of revenue de-recognition in the books of the assessee - HELD THAT:- The issue in dispute has been decided in favour of the assessee by the Hon'ble Supreme Court in the case of Vashisht Chay Vyapar [2018 (3) TMI 56 - SUPREME COURT] But considering the application preferred by the assessee u/s 158A(1) of the Act dated 08.07.2020 in Form 8 which is maintainable, we deem it fit and appropriate to restore this issue to the file of the ld AO to decide based on the final outcome of Hon'ble Supreme Court in assessee’s own case on the said issue. In our considered opinion, this would keep the interest of both the parties alive. Accordingly, Ground No. 3 raised by the assessee is allowed for statistical purposes.
Addition on account of administrative charges of Andrews Ganj Project - assessee has not shown any income on account of administrative charges of Andrews Ganj Project - HELD THAT:- We find that the issue is subject matter of consideration by the Hon’ble Jurisdictional High Court in Income Tax Appeal [2014 (11) TMI 17 - DELHI HIGH COURT] in assessee’s own case for AY 2002-03 answered issue in favour of the appellant-assessee and against the Revenue as held it is an accepted position that the appellant-assessee had never received 1.5% administrative expenses in respect of the residential quarters in Andrews Ganj project. Clearly, therefore, the stand of the appellant-assessee that the notes of the meeting held on 7th September, 1995 related to the development of community centre complex at Andrews Ganj, New Delhi and not to residential quarters is correct. The aforesaid document has been misread. There was no accrual of income in case the Government of India had not agreed to pay any overhead expenses or administrative charges @ 1.5% in respect of residential quarters at Andrews Ganj Complex, New Delhi.
Addition on account of expenditure on grants-in-aid - main contention of the ld AO is that expenditure incurred towards grant-in-aid are akin to donation paid by the assessee. Hence, the same cannot be treated as having been incurred wholly and exclusively for the purpose of business of the assessee, and hence not allowable as deduction - HELD THAT:- We hold that assessee would be entitled for deduction in respect of grant-in-aid expended by it on the ground that same are to be construed as wholly and exclusively incurred for the purpose of business of the assessee. Accordingly, ground No. 5 raised by the assessee is allowed.
Addition on account of revenue recognition on realization basis in respect of loan application fees, front-end fees, administrative fee and processing fees of loans as against accrual basis - HELD THAT:- First of all loan processing/ front-end fees becomes payable to the company only when the loan is actually disbursed and not when the loan is sanctioned. There is no certainty as to when the concerned borrower would draw the loan amount from the assessee. Hence, taxing the loan processing fee, front-end fee etc on accrual basis would be wrong as there is no certainty of its realization. Further, C&AG had also directed the assessee to recognize income respect of these services on realization basis instead of accrual basis by duly appreciating the fact that there is no certainty of its realization. Further, this is done only for Government borrowers by the assessee because the Government may choose not to draw the disbursement from the assessee, even though the loan is sanctioned to it. Depending upon the political climate, financial need and the financial strain that could be managed or tolerated by the particular Government, the decision to draw the sanctioned amount from the assessee company would be taken by the respective Government borrowers. All these factors are certainly beyond the reach and control of the assessee company. Hence, it could be safely concluded that there is no certainty of realization of the fees in the form of loan processing fees, application fee, front-end fee etc. Hence, we find that C&AG had directly directed the assessee to recognize income on receipt basis in respect of these services qua Government borrowers. Further, we find that the issue in dispute is no longer res integra in view of the decision of the Hon’ble Jurisdictional High Court in assessee’s own case for Assessment Year 2007-08 reported in [2020 (2) TMI 372 - DELHI HIGH COURT].
We find that there is no absolutely no basis at all for the revenue to tax a sum as it is made purely only on ad hoc basis - Ground raised by the assessee is hereby allowed.
Disallowance u/s 14A - HELD THAT:- We find that the assessee had derived exempt income and had duly offered the same to tax in the return of income itself. Hence, there was no exempt income claimed by the assessee at all warranting application of application of provision of Section 14A of the Act. See Era Infrastructure (India) Ltd [2022 (7) TMI 1093 - DELHI HIGH COURT] Accordingly Ground raised by the assessee is allowed.
Seeking correct TDS credit - This matter requires factual verification by the ld AO and accordingly the ld AO is directed to decide this issue in accordance with law after considering all the explanations and documents submitted by the assessee in support of its contention. Accordingly, Ground allowed for statistical purposes.
Addition on account of capitalization of financial charges written off - assessee submitted that these financial expenses were incurred by it on account of deferred expenditure on the issue of bonds and term loans in its books of account whereas, the same were fully claimed as deduction in the year on incurrence for the purpose of computing the taxable income - HELD THAT:- The issue in dispute is squarely covered by the decision of IRFC Ltd [2014 (6) TMI 224 - DELHI HIGH COURT] held that respondent-assessee was/is a Government of India undertaking and was engaged in the business of leasing and financing to Indian Railways. It procured funds from various sources and acquired rolling stock which was leased to Indian Railways. The expenditure which was incurred on bonds was for ensuring finance and availability of funds for carrying out the business of finance and leasing. To procure and get funds in the form of bonds etc, some expenditure had to be incurred. These funds, when procured, were used for the business activities to earn income. It is not a case wherein the respondent-assessee was yet to set up or commence their business. The business, it is accepted, had commenced much earlier and not during the year in question.
Disallowance made by the AO on account of prior period expenses - AR submitted additional evidences in terms of Rule 29 of the ITAT Rules, giving the complete break up of the prior period expenses together with an affidavit supporting the Rule 29 petition - HELD THAT:- we find that these additional evidences at the first instance are required to be admitted as it would be relevant for adjudication of the appeal and moreover we find that all these correspondences are pertaining to year 2007 i.e. the additional evidences submitted by the assessee constitutes internal correspondences between officers of the assessee company giving certain authorization to book certain expenses. But we find that these authorization dates are in the year 2007 whereas the appeal before us pertains to AY 2004-05. Hence, it is very clear that the authorization were indeed obtained by the assessee company after the claim of deduction was made. Hence, there is no evidence has rightly pointed out by the ld DR that the liabilities had indeed crystallized during the year. Hence, the disallowance made by the ld AO on account of prior period expenses and confirmed by the ld CIT(A) is in order - Decided against assessee.
Disallowance made u/s 14A - AO estimated 25% of the dividend income and made a disallowance u/s 14A of the Act on the assumption that it was the expenditure incurred by the assessee for the purpose of earning income - HELD THAT:- We find that the year under consideration is prior to the introduction of Rule 8D of the Income Tax Rules, hence the computation mechanism provided in Rule 8D cannot be applied in the instant case - we direct the ld AO to disallow 1% of the dividend income as expenditure u/s 14A - Ground raised by the assessee is partly allowed.
Disallowance on account of expenses on Corporate Social Responsibilities (CSR) - HELD THAT:- The issue in dispute is clearly covered by the decision of PEC Ltd [2022 (12) TMI 759 - DELHI HIGH COURT] wherein, it was held that amendment by way of Explanation 2 to section 37(1) of the Act w.e.f. 01.04.2015 was prospective in nature and thus CSR expenditure incurred prior 01.04.2015 was to be allowed.
Disallowance of prior period expenditure - AO had disallowed this prior period expenditure as the assessee had not proved with cogent evidence with the said expenditure had been crystallized during the year so as to make it eligible for claiming deduction - HELD THAT:- Before us, no arguments were advanced by the ld AR on the said issue. Hence, we hold that there is no further submission that is required to be made by the assessee with regard to this issue. Hence, we do not deem it fit to interfere in the order of the ld CIT(A) in this regard. Accordingly, ground raised by the assessee is dismissed.
Disallowance of expenses u/s 14A - The law is very well settled by the decision of Maxopp Investments Ltd [2018 (3) TMI 805 - SUPREME COURT] wherein, it has been held that the disallowance cannot be exceed exempt income. Since, the exempt income is only Rs. 21,06,000/-, the disallowance of expenditure cannot exceed the same. We direct the ld AO accordingly. Accordingly, ground is partly allowed.
Addition on account of accrued interest receivables on account of advance paid on property tax to MCD - CIT(A) held that the assessee is a agency of the Govt of India and was held not liable to pay property tax in respect of community centre developed by the Govt and therefore, the interest recoverable from the property tax from the MCD becomes the assessee’s income - HELD THAT:- Before us, the ld AR stated that in AY 2006-07 the very same addition was deleted by the ld CIT(A) and the revenue did not prefer any appeal before this Tribunal. Having accepted this situation in AY 2006-07 the revenue cannot have any grievance on the same issue in the year under consideration. Applying the principles of consistency as decided by the Hon'ble Supreme Court in the case of PCIT Vs. Maruti Suzuki India Ltd [2019 (7) TMI 1449 - SUPREME COURT] we hold that the interest income cannot be brought to tax in the sum in the hands of the assessee. Accordingly, ground raised by the assessee is allowed.
Disallowance of expenses u/s 14A of the Act read with Rule 8D of the Rules, with regard to investment in bonds - We find that the ld CIT(A) had directed the ld AO to consider only those investments which yielded exempt income while computing the disallowance in terms of Rule 8D(2) of the Income Tax Rules, 1962. Admittedly the investment in bonds made by the assessee had yielded interest income to the assessee which is taxable receipt. Hence, the provisions of section 14A per se cannot be made applicable for the same. The error committed by the ld AO in this regard has been duly rectified by the ld CIT(A) in his order. Hence, we do not find any infirmity in the order of the ld CIT(A). Accordingly, the ground raised by the revenue is dismissed.
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2024 (11) TMI 312
Unexplained cash credit u/s 68 - onus to prove - CIT(A) deleted addition relying on the fact that four (4) out of the six (6) loans were repaid by the assessee during the relevant year and the other two loans were repaid by the assessee during the subsequent financial years - HELD THAT:- CIT(A) has considered the entire remand report and appreciated the observation of the Assessing Officer correctly and no fault could be found with the order of the CIT(A) while deleting the addition made by the AO.
Assessee has correctly pointed out that the AO has made addition of ₹ 850 lakh out of total loan of ₹ 45.53 crore in the case of the assessee. In respect to loans on receipt of information under section 133(6) of the Act the Assessing Officer has considered it to be sufficient compliance to explain the credits by accepting the transaction of loan creditors. Similar evidence having come on record in remand proceedings, it is not appropriate for the AO to object the deletion of addition made. It is also noted that the AO even though noted that interest has been not paid on unsecured loan has accepted the majority of such unsecured loan in the assessment framed on receipt of information u/s 133(6) - Non-payment of interest thus could be no valid justification for making addition under the provisions of section 68 - assessee having satisfactorily discharged its onus by placing on record voluminous evidence, CIT(A) has correctly appreciated the facts and evidence on record and thus the deletion of addition made by CIT(A) is reasonable and correct.
Also loan received by the assessee have been repaid during the year under consideration and in respect to one loan it has been repaid in the subsequent accounting year. Repayment of loan by the assessee is evident from evidence placed on record and is undisputed fact on record. Repayment of loan accepted by the Revenue Authorities is not controverted by the learned D.R
Thus, we are of the considered opinion that the assessee has discharged its onus to explain identity and creditworthiness of loan creditors as well as genuineness of transaction. There remains no scope for invoking provisions of section 68 on the facts and evidence on record. The addition has been correctly deleted by the learned CIT(A) on the facts and evidence on record. Decided in favour of assessee.
Addition u/s 14A - expenditure incurred earning exempt income - CIT(A) deleted addition - HELD THAT:- It is undisputed fact on record that the assessee has own funds and non-interest borrowing fund at ₹ 62.55 crore. Investment made in securities as computed by the AO is ₹ 31.79 crore. Entire investment could be considered as explained out of available fund comprising on own fund and non-interest borrowing. As relying on Reliance Industries Ltd[2019 (1) TMI 757 - SUPREME COURT] and HDFC BANK LTD.[2016 (3) TMI 755 - BOMBAY HIGH COURT]learned CIT(A) has correctly deleted the addition made. Respectfully following the same, we find no merit in the ground no.3, raised by the Revenue.
Addition of claim of interest paid on borrowed funds - CIT(A) deleted addition - HEDL THAT:- It is undisputed fact on record that the assessee has own funds and non-interest borrowing fund at ₹ 62.55 crore. Advances given interest free are noted at ₹ 17.85 crore. Entire advances could be considered as explained out of available fund comprising of own fund and non-interest borrowing. Case of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] is squarely applicable to the facts in the case of the assessee. In our opinion, the learned CIT(A) has correctly deleted the addition made by the Assessing Officer.
Addition being sundry balances written-of - as argued advance was given in the course of business and on abandonment of project which was written-of in its books of account - CIT(A) deleted addition - HELD THAT:- On perusal of decision of learned CIT(A) and judgment of Binani Cement Ltd. [2015 (3) TMI 849 - CALCUTTA HIGH COURT] we are of considered opinion that the amount written-of in the books of account on abandonment of project is allowable as business expenses. We do not find any fault or infirmity in the impugned order passed by the learned CIT(A).
Revenue appeal dismissed.
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2024 (11) TMI 311
AO power either to withdraw or modify or substitute one assessment order passed by him earlier with another assessment order - AO issued a corrigendum correcting the total income - HELD THAT:- As corrigendum issued in rectifying the error in preamble of the assessment order as legal and valid. Considering the facts of the present case before us, we noted that the AO while issuing original assessment order has wrongly noted the details of some other assessee as is apparent from the assessment order issued on 20.12.2019. The fact is that the corrigendum issued thereafter i.e., immediately on next day on 21.12.2019 carries the correct assessment order which was issued as a correct assessment order.
Admittedly, the assessment order issued vide corrigendum is matching with the computation sheet and demand notice issued along with the original assessment order dated 20.12.2019.
The decision of Hon’ble Supreme Court Kalyankumar Ray [1991 (8) TMI 291 - SUPREME COURT] rather support the case of Revenue for the reason that the ITNS 65 and ITNS 50 i.e., Form for determination of tax payable and demand notice (in old scheme), now in computerization the computation sheet and demand notice is generated on the system which was created itself on 20.12.2019. In our view, the AO has made mistake in issuing original assessment order and subsequently rectified the mistake by issuing corrigendum which is a valid assessment order and hence, we reverse the finding of CIT(A) on this issue.
Since the CIT(A) has not adjudicated the issues on merits, the matter is restored back to the file of the CIT(A) for adjudication on merits after allowing reasonable opportunity of being heard to the assessee.
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2024 (11) TMI 310
Revision u/s 263 on issues which were never the subject- matter of the assessment in a proceeding initiated under section 147 - HELD THAT:- We find that the issues on which re–assessment order was passed under section 143(3) r/w section 147 of the Act and the issues on which revision order passed under section 263 of the Act are entirely different.
The assessee had filed Paper Books containing documents filed during re–assessment proceedings under section 147 and revision proceedings under section 263. We also find that during the re–assessment proceedings, a notice dated 10/12/2021 under section 142(1) was issued along with a questionnaire. The assessee furnished reply along adducing documentary evidences exhibited. Thus, we find merit in the submission of assessee that the Assessing Officer had made the enquiry during re-assessment proceedings in line with the reasons recorded and after verification had accepted the returned income of the assessee. Thus, no additions were made based on the reasons recorded. Assessing Officer was prohibited from making additions in respect of other issues which were not part of reasons recorded.
Thus when no addition is made on account of grounds of re–opening. There is no scope to make any other addition. Section 263 does not empower indirectly to circumvent the provision by directing to make an enquiry on some other independent issue. DR is incorrect to invoke Explanation 3 to section 149 of the Act. In view of the aforesaid discussions, we are of the considered opinion that the impugned order passed by the learned Commissioner is bad–in–law and is hereby quashed. Therefore, ground of appeal no.2, stands allowed.
AY 2017–18 - We find that in the present facts and circumstances, the legal maxim 'sublatofundamentocaditopus' is applicable, meaning thereby – 'a foundation being removed, the superstructure falls'. Once the basis of a proceeding is gone, the action taken thereon would fall to the ground. If initial action is not in consonance with law, all subsequent proceedings would fail as illegality strikes at the root.
Thus, in the absence of valid foundation, exercise of a suo motu power is impermissible. It should not be presumed that initiation of power under suo motu revision is merely an administrative act. It is an act of a quasi judicial authority and based on formation of an opinion with regard to existence of adequate material to satisfy that the decision taken by the Assessing Officer is erroneous as well as prejudicial to the interests of the revenue. Revision of order passed by learned Assessing Officer under section 147 r/w section 143(3) by the learned Commissioner under section 263 being not as per mandate of law could not be sustained and is liable to be struck down.
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2024 (11) TMI 309
TFDS u/s 195 - Non deduction of TDS on export commission paid by the assessee to NRIs - addition u/s 40(a)(ia) - CIT(A) deleted addition as remittance made to a non-resident for services rendered abroad, which services are not of the nature specified in Section 9, cannot be brought to tax in India - HELD THAT:- The remittance to the agents was in foreign currency, i.e., in the currency of the respective country of the agent. The remittance, it is note worthy, was made directly to the agents and no deposit was made in their accounts. As such, there was no question of the remittance having either been received in India or being deemed to have been received in India, as correctly held by the ld. CIT(A), to which there is no rebuttal.
Then, since the services were rendered outside India, it does not amount to a case of income either accruing or arising in India.
So, it only remains to be seen as to whether the ld. CIT(A) has correctly held the income of the non-resident to be not accruing or arising in India as per the provisions of Section 9. The first requirement is that of a business connection in India or any property in India or any asset or source of income in India or the transfer of a capital situated in India. It is evident on record and not disputed that the matter does not concern the income in question to have accrued or arisen, whether directly or indirectly through or from any business connection in India or any property in India or any asset or source of income in India or through the transfer of a capital asset situated in India. Then, since the payments were not by way of either salary, or dividend, or interest, or royalty or technical services, other provisions of Section 9 do not get attracted. This being so, the remittance in question cannot be taxed in India. The Department, again has not been able to refute this. As a necessary corollary, then, since the income of the non- residents is not exigible to tax in India, the provisions of Section 195 do not get attracted and there was no liability on the assessee to make TDS on the payment made.
Therefore, despite referring to and relying on the provisions of Sections 5 and 9 of the Act, as stated in Ground No. 2, the Department has not been able to make out a case as to how the matter at hand gets covered within the provisions of these two Sections. The findings of the ld. CIT(A) on this issue remains un-hinged and firm. These findings are, therefore, confirmed.
Addition u/s 14A - CIT(A) deleted addition - HELD THAT:- As no borrowings were made for making the investments and, therefore, no expenditure had been incurred to earn any income and no dividend or other exempt incomes were earned for the investment. The stress of the AO has been on the fact that the provisions of Section 14A of the Act are applicable despite no income having been earned. This, as held in “Lakhani Marketing Inc” [2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT] is not sustainable.
Further, since surplus funds were available with the assessee, the reliance by the assessee on the following decisions is found to be well placed, decision of Winsome Textile Inds Ltd.” [2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT] wherein also, it was held that the assessee had admittedly not made any claim for exemption and, therefore, Section 14 A could have no application. Moreover, as contended on behalf of the assessee and not disputed by the Department, in the assessee's own case for assessment year 2011-12 CIT(A) has itself deleted the addition made under Section 14 A under similar facts and circumstances. Thus action of the ld. CIT(A) deleting the addition made by the AO by invoking the provisions of Section 14 A of the Act found to be justified and the same is confirmed.
Disallowance of interest @ 12% per month on notional basis, on the three advances given by the assessee - HELD THAT:- As we find that the availability of own funds of the assessee more than the advances for the year needs to be ascertained. Thus, a presumption of the advances having been made from such own funds/ surplus, cannot be denied in case of such availability of funds executing advances. AO is, accordingly, directed to ascertain the position of availability of the funds of the assessee exceeding the advances, as alleged and to grant relief to the assessee in accordance with law.
Addition made on account of VAT penalty - compensatory v/s penal nature - assessee submitted that this expenditure was compensatory in nature but AO, however, held the VAT penalty to be penal in nature, having arising due to a penalty on the part of the assessee for not making deposit within the stipulated time - CIT(A) deleted addition and held the penalty to be in the nature of a fine which is compensatory - HELD THAT:- Before us, the Department has not been able to make out any case as to how the ld. CIT(A) is wrong in holding the penalty in question to be compensatory payment. No decision contrary to those relied on by the ld. CIT(A) has been cited before us. Therefore, finding no error therein, the Commissioner’s action of deleting the addition is confirmed.
Addition on account of application money paid by the assessee and advances made - CIT(A) deleted addition - HELD THAT:- CIT(A) observed that since the funds had been invested from the assessee's Current Account, in which, the assessee's own funds were deposited, it could not be said that borrowed funds were used for making the advance; that no interest was payable by the assessee of this money; and that therefore, the disallowance of interest on this score had not been correctly made by the AO. The ld. CIT(A) deleted the addition. While doing so, the ld. CIT(A) found no difference in the facts for both the years, i.e., assessment year 2013- 14 and 2014-15.For assessment year 2013-14, the above deletion of disallowance of application money paid to HUDA was not challenged by the Department before the Tribunal - Decided in favour of assessee.
Addition of advances from the Current Account - CIT(A) deleting the addition as observed that the assessee made representing the non-interest bearing funds, ignoring that the Current Account is mixed kitty account where interest bearing and interest free funds can be parked for further payment - HELD THAT:- This position can well be verified and the AO is directed to ascertain the position of availability of the funds of the assessee exceeding the advances as alleged and to grant relief to the assessee in accordance with law.
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2024 (11) TMI 308
Penalty u/s 271(1)(c) - addition in respect of disallowance of loss on Forex Derivatives treating it as speculative loss and disallowance of Foreign Exchange Fluctuation loss which was claimed by the assessee as per the assessee’s understanding - HELD THAT:- The advice given to the assessee by the Consultant cannot be termed as furnishing of inaccurate particulars of income as envisaged under Section 271(1)(c) of the Act for penalty provisions. The decision of Hon’ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd [2010 (3) TMI 80 - SUPREME COURT] is categorically applicable in the assessee’s case and, therefore, the penalty levied under Section 271(1)(c) of the Act is not justifiable on the part of the Assessing Officer. Thus, the penalty is deleted. Appeal of the assessee is allowed.
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2024 (11) TMI 307
Reopening of assessment u/s 147 - Assessment of Long Term Capital Gain on sale of land - transaction of transfer of the land in question took place in Financial Year 2005-06 relevant to the A.Y. 2006-07 which was rejected by the AO - Adoption of full value consideration by AO - Claim of exemption u/s 54B - HELD THAT:- From the assessment order it is manifested that after rejecting the objection against issue of notice u/s 148 AO has not issued any show cause notice to the assessee for adopting the full valuation consideration u/s 50C(1) of the Act and hence, it appears that the assessee was not given an opportunity before adopting the full valuation consideration as per Section 50C(1) and consequent addition by the A.O on account of Long Term Capital Gain arising from sale of land in question.
Though the assessee challenged the order before the CIT(A) however, still the assessee did not raise any specific ground regarding full valuation consideration or allowing the cost of acquisition or exemption u/s 54B. So far as assessing the entire sale consideration u/s 50C(1) of the Act is concerned the A.O is not justified in making the addition of the entire sale consideration without allowing the cost of acquisition.
Even the AO has not made any attempt to ascertain the cost of acquisition or fair market value as on 01.04.1981 while assessing the Long Term Capital Gain in the hands of the assessee therefore, to that extent the order of the A.O is not sustainable.
Assessee has also disputed the fair market value of the land in question as adopted by the A.O being full valuation consideration u/s 50C(1) of the Act in view of the fact reported by the registered valuer in the valuation report that the guideline value of the land situated at the main road is Rs. 5 crores per hectare whereas the A.O has adopted the full value consideration for a land measuring 0.101 hectare which is prime facie more than the guideline prescribed for the land in question reported by the registered valuer.
Thus, in the facts and circumstances when the registered valuer has reported the guidelines value which is less than the full valuation consideration adopted by the A.O this aspect is required to be properly verified and examined by ascertaining the correct fact from the record. Even otherwise once the assessee has questioned the adoption of full value consideration, the fair market value is required to be determined as per Section 50C(2) of the Act. Accordingly, in the facts and circumstances of the case and in the interest of justice the matter is set aside to the record of the A.O for fresh adjudication after considering the cost of acquisition of the land in question as well as the fair market value in terms of Section 50C(2) of the Act. The assessee has also raised the claim of exemption u/s 54B of the Act which is also required to be verified and adjudicated by the A.O after giving an opportunity of hearing to the assessee. Assessee appeal allowed for statistical purpose.
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2024 (11) TMI 306
Revision u/s 263 - deduction u/s. 54/54F has been allowed without proper examination of relevant details and materials - difference between no enquiry and inadequate enquiry - HELD THAT:- AO framed assessment u/s 143(3) and he has taken a conscious decision that the assessee entitled for deduction u/s 54F of the Act on going to the details of assets sold during the financial year 2016-017 relevant to assessment year 2017-18 and its cost of acquisition of said property. Assessee has furnished details of investment in new residential property vide notice u/s 142(1) - assessee has furnished the bills/vouchers.
AO/NFAC after examining all the relevant details concluded on the allowability of deduction u/s 54F of the Act. It is also be seen that as noted by ld. PCIT assessee has furnished the details of investments in huge amount of Rs. 6,66,50,852/-, out of which deduction has been claimed amounting to Rs. 4,64,71,744/- without specifying the details of expenses against which deduction u/s 54F of the Act has been claimed. Once the ld. PCIT himself has noted that assessee has furnished the details of expenditure it cannot be said that there is no enquiry or inadequate enquiry on the issue of exemption u/s 54F of the Act.
We note that notice u/s. 263 of the Act issued by the Pr. CIT is vague and only for making deeper enquiry and re-considering the evidences already on record duly considered during assessment proceedings based on purported proposal that fresh facts have been emerged subsequent to the order of assessment which is factually incorrect and untenable and the conditions or the factors enabling the Ld. Pr. CIT to invoke his jurisdiction u/s 263 have not been satisfied.
Though Explanation provides for an extra discretionary power to the Commissioner in his revisionary powers under section 263 of the Act. This discretion cannot be assumed arbitrarily by the ld. PCIT.
At least something he should bring on record to show the error and the prejudice to revenue caused by that error while assuming jurisdiction under section 263 of the Act. This can be done to the least by him by making independent inquiry/ investigation to conclusively bring on record such error and also the prejudice. In view of this we hold that exercising of jurisdiction u/s 263 of the Act is not justified. Accordingly, we quash the order passed by PCIT u/s 263 of the Act for the assessment year 2017- 18. Assessee appeal allowed.
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2024 (11) TMI 305
Rectification application u/s 254 - first mistake claimed by assessee is such that the order of first- appeal passed by CIT(A) was without DIN and therefore ‘non-est’ - HELD THAT:- As submitted that if the assessee was aggrieved by CIT(A)’s order not having DIN, it was for the assessee to raise this issue either in Form No. 36 or during hearing of original appeal by ITAT. But the assessee did not raise any such grievance. Therefore, the assessee was not having grievance or alternatively it was a mistake/lapse on the part of assessee in not raising issue before ITAT but certainly there is no mistake in ITAT’s order much less any apparent mistake. Therefore, in the garb of rectification of ITAT’s order, the assessee cannot set right his own mistake or lapse. Ld. DR strongly requested to reject assessee’s claim. On a careful consideration, we find full merit in the submissions of Ld. DR for revenue. We agree that the assessee has not raised any claim before ITAT that the order of first-appeal passed by CIT(A) was ‘non-est’ for want of DIN and therefore the ITAT had no occasion to deal such an issue. Now, the assessee is trying to set right his own lapse/ mistake and for that matter going to upset the impugned order of ITAT. When the issue did not form part of appeal of assessee, how can there be a mistake apparent from record in the impugned order? Therefore, we do not find any merit in the claim of assessee; the same is hereby rejected.
ITAT upholding the addition made by AO as ITAT has not considered CBDT Instruction No. 3 of 2017 dated 21.02.2017 read with Press Release dated 18.11.2016 wherein the CBDT allowed household savings of ladies upto Rs. 2,40,000/- - A careful consideration, we find that the ITAT has extensively dealt assessee’s issue and thereafter taken a reasoned decision.assessee’s claim that the ITAT has not dealt Instruction dated 21.02.2017 is wrong. So far as the decision of Chetnaben J. Shah Vs. ITO [2016 (7) TMI 973 - GUJARAT HIGH COURT] there is no quarrel with the proposition that the authorities cannot make any addition on the basis of mere statement. In fact, this view is time and again accepted by various courts and ITAT, Indore Bench itself and we all are very much aware. But in present case, the AO has made addition on the basis of cash found and seized from assessee in the form of demonetized notes and not merely on the basis of statement of assessee. Therefore, there is no merit in Ld. AR’s submission that the AO has made addition on the basis of mere statement. Being so, we do not find any mistake in the impugned order as being projected by assessee. Consequently, this issue is also rejected.
ITAT upholding the levy of tax at a higher rate of 60% u/s 115BBE on the undisclosed income - ITAT followed the solitary available decision Maruthi Babu Rao Jadav [2021 (1) TMI 481 - KERALA HIGH COURT] wherein it was categorically held that the amendment though made on 15.12.2016, would apply to the whole previous year 2016-17 relevant to AY 2017-18. Then, Ld. DR also submitted that in Shri Krishan Kumar Verma [2024 (3) TMI 1018 - MADHYA PRADESH HIGH COURT] relied by Ld. AR, the undisclosed income of assessee was found not taxable u/s 69A and consequently section 115BBE itself was not applicable whereas in present case of assessee, the undisclosed income in the form of demonetized currency was found taxable u/s 69A and section 115BBE was also held to be applicable. Therefore, the case of Shri Krishan Kumar Verma (supra) had different facts and the assessee cannot take any benefit out of it. On a careful consideration, we find merit in the submissions made by Ld. DR for revenue.
Levy of interest u/s 234A and 234B was challenged but the ITAT has decided the issue of interest u/s 234B only and missed to decide the issue of interest u/s 234A - We agree that the ITAT has missed to decide the issue of interest u/s 234A which needs to be rectified.
As per Board Circular No. 2/2015 and case Nitin Kumar [2018 (4) TMI 338 - ITAT KOLKATA] we find that the cash-seized by department in present case on 14.11.2016 and agreed by assessee to be adjusted against tax liability of assessee, is in the nature of self-assessment payment before due date of filing of return for AY 2017-18 which deserves to be allowed in computation of interest u/s 234A. Therefore, we remit this issue also back to the AO with a direction that the AO shall give benefit of cash seized and available with department in calculation of interest and re-compute interest u/s 234A.
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2024 (11) TMI 277
Addition u/s 68 - Genuineness or creditworthiness of the unsecured loans received by the petitioner during the year not proved - HELD THAT:- Petitioner has furnished all the relevant documents containing the copy of the ledger account from its audited books, confirmation of respective depositor with PAN Number, copy of its bank statements, copy of the ITR filed by the respective depositors, copy of the bank statements of respective depositors from where the funds were provided, which is evident from the paper-book filed by the petitioner in this petition as it contains the documents submitted during the assessment proceedings. It is pertinent to note that no dispute has been raised by the respondent with regard to submission of the aforesaid documents by the petitioner during the assessment proceedings.
We are conscious about the settled legal position that extra-ordinary jurisdiction under Article 227 of the Constitution of India is required to be exercised sparingly and a self-restraint is required to be maintained on the entertainment of a writ challenging the orders where alternative efficacious remedy is available. However, in the gross facts of the present case, we are constrained to exercise our extra-ordinary jurisdiction as the Assessing Officer has not considered the documents placed on record and without referring to the same, has made vague observations, which are not tenable in the eyes of law and therefore, we are left with no other option but to entertain this petition in the facts of the case.
This Court is of the view that the impugned assessment order has been passed without considering the documents placed on record and therefore, the same is not tenable in the eyes of law. Decided in favour of assessee.
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2024 (11) TMI 276
Validity of reopening of assessment - Jurisdictional validity of the notice and order issued u/s 148, 148A(b), and 148A(d) - Application of mind by the specified authority in granting sanction for reopening the assessment or not? - petitioner did not submit the bank statement of the relevant time period, when the fixed deposit was initiated and the source of the amount which was used for investment in the fixed deposit was not submitted.
HELD THAT:- As specified authority has failed to consider the notice issued u/s 148A (b) of the Act, in its proper perspective vis-a-vis the information made available from the inside portal in relation to the reply filed by the petitioner, placing on record the details of the fixed deposits of the petitioners with the HSBC Bank for the year under consideration, which is reflected from the bank statements of the HSBC Bank placed on record. It is submitted that the clumsy attempt is made by the specified authority to justify granting sanction to reopen the case.
On perusal of the contents of the affidavits, it is clear that when the sanction was granted, there was no application of mind on the part of the specified authority and mechanical sanction was granted without referring to the documents and thereafter when the specified authority was called upon to justify the action of the sanction further details are placed on record which cannot be considered at this stage, as we are examining the validity of the impugned action i.e. passing of the order under Section 148A (d) and issuance of the notice under Section 148 to assume the jurisdiction by the respondent Assessing Officer to come to the conclusion that it is a fit case to reopen the assessment or not.
Therefore, on perusal of the show-cause notice and the impugned order under Section 148A (d) of the Act, it clearly shows that the assessee has shown the details of the amount as stated in the notice and the order being the investment made by the petitioners since 2013, and therefore there is no question of any escapement of income on face of the impugned notice and order, which would give a jurisdiction to the Assessing Officer to reopen the assessment for the year under consideration.There is no other information disclosed in the show-cause notice either under Section 148A (a) or 148B. AO has stated following false facts without taking into consideration the reply of the assessee, which ought to have been considered as provided under Section 148A (d) of the Act as such order is required to be passed after considering the reply filed by the assessee.
Thus we are of the opinion that the impugned order under Section 148A (d) and notice under Section 148A (b) of the Act are passed without jurisdiction as the Assessing Officer has failed to take into consideration the above facts. The petition is accordingly allowed.
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2024 (11) TMI 275
Revision u/s 263 - CIT noted that the Auditors of Kiri Industries i.e. the assessee had certified that an interest amount had been paid by the assessee u/s 201(1A) and 206C(7) towards late payment of TDS - CIT observed that the AO did not disallow these expenses, which were categorized as “penalties” by the Auditors of the assessee company, thus AO's failure to disallow this amount led to the assessment order as being erroneous and prejudicial to the interests of the Revenue
HELD THAT:- We observe that in the case of Resolve Salvage & Fire India (P.) Ltd [2022 (4) TMI 906 - ITAT MUMBAI] has held that interest paid on delayed payment of TDS under section 201(1A) would be compensatory in nature and thus, was to be allowed as deduction.
Therefore, in view of the above judicial precedent and other precedents cited by the Counsel for the assessee, we are of the considered view that the AO has taken a legally plausible view, duly supported by judicial precedents.
In a decision rendered in the case of CIT Vs. Sunbeam Auto [2009 (9) TMI 633 - DELHI HIGH COURT] wherein, while considering the distinction between lack of inquiry and inadequate inquiry, the Hon'ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 on the ground of inadequate inquiry.
Accordingly, when the AO has taken a legally plausible view, duly supported by judicial precedents, then, in our considered view the Principal CIT is precluded from taking recourse to 263 proceedings only with a view to substitute another view with that of the view taken by the AO, unless the view taken by the Assessing Officer is wholly unsustainable - Assessee appeal allowed.
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2024 (11) TMI 274
Cancellation of registration granted to the assessee u/s 12AB r.w.s. 12A(1)(ac)(i) - change in the objects of the trust - Validity of the earlier 12AB registration received as a religious trust - assessee trust has not undertaken any charitable activity as per changed objects of the trust as envisaged in the new trust deed - HELD THAT:- Unless and until any adverse material is brought on record which has not been done, the Ld. CIT(E) is not justified in withdrawing the registration granted to the trust u/s 12AB of the Act. Non-compliance of any other law/furnishing of incomplete or false or incorrect information has also not been noticed by the Ld. CIT(E). The issues raised by the Ld. CIT(E) in para 5 of his order are not at all relevant for the purpose of withdrawal of registration granted to the assessee trust u/s 12AB of the Act which is valid till AY 2026-27. Moreover, it is revealed from the records that the registration already granted to the assessee u/s. 12AB of the Act has been cancelled without following the due process of the principles of natural justice. We are therefore of the view that the cancellation of registration already granted to the assessee trust as a religious trust which subsists till AY 2026-27 is not justified at all. We, therefore vacate this part of the Ld. CIT(E)’s order.
Assessee’s application in Form 10AB u/s 12A(1)(ac)(v) of the Act filed before the Ld. CIT(E) on 15.04.2023 - Copy of new trust deed dated 31.03.2023 was submitted by the assessee which formed part of its reply filed on 12.09.2023 and 10.10.2023 before the Ld. CIT(E). Application for modification to enlarge the objects of the trust was also submitted to the Charity Commissioner u/s 50(A)(1) of Maharashtra Public Trust Act, 1950. The Charity Commissioner has granted permission to the modification/change in the objects of the trust vide his order dated 19.04.2023.
The contention of the assessee is that the assessee filed application before the Ld. CIT(E) for change in the object clause as per the new trust deed in compliance to the requisite condition of sub-clause (a) of clause 10 of Form 10AC within the prescribed time limit of 30 days. Therefore, the application for change in the object clause has been filed in time. It has also been asserted that the assessee trust till date has not effected any change in its objects, pending permission from the Income Tax Authorities. The proposed modified object, namely the educational activities have not yet been taken up. The argument of the Ld. CIT-DR is therefore not relevant. In our view, the aforesaid legal and factual matrix of the assessee’s case has not been considered/appreciated by the Ld. CIT(E) in right perspective.
We, therefore, direct the Ld. CIT(E) to consider the assessee’s application u/s 12A(1)(ac)(v) in Form 10AB seeking approval for change in the objects/rules/regulations of the assessee trust as per the new trust deed and pass order afresh in accordance with law after allowing reasonable opportunity of hearing to the assessee trust. Appeal of the assessee is allowed for statistical purposes.
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2024 (11) TMI 254
Computing value of perquisites u/s 17(2) - assessee is a Trust constituted under Charitable Endowment Act, 1890 - value of residential accommodation provided by the Central Government or any State Government to the employees either holding office or post in connection with affairs of the Union or of such State or serving with any body or Undertaking under the control of such Government on such deputation.
As per HC [2021 (7) TMI 1053 - KARNATAKA HIGH COURT] for the purposes of Rule 3, the requirement is that the accommodation should be provided by the Central Government or State Government to the employees either holding office or post in connection with affairs of Union or of State or serving with any body or undertaking under the control of such government from deputation. The aforesaid expression is unambiguous and unclear and therefore, its meaning cannot be expanded to include any body, undertaking under the control of Central Government. Merely because assessee is a body or undertaking owned or controlled by the Central Government, it cannot be elevated to the status of Central Government. Thus, the assessee cannot claim that valuation of perquisites in respect of residential accommodation should be computed as in case of an accommodation provided by the Central Government. Therefore, Sl.No.1 of Table 1 of Rule 3 of the Rules does not apply to the assessee.
HELD THAT:- Having heard learned senior counsel for the petitioner(s) and learned counsel for the respondent(s) at length, we do not find any reason to interfere in the impugned judgment and orders(s). Special Leave Petitions are hence dismissed.
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2024 (11) TMI 253
Legality of the Settlement Commission's order - Accrual of interest income - interest accrued as due on Government securities and debentures held by petitioner - case of respondents that as the applicant was following mercantile system of accounting for interest paid on securities and deposits it could not follow the cash system of accounting for corresponding income -
As decided by HC [2023 (7) TMI 135 - BOMBAY HIGH COURT] Income having accrued and corresponding expenditure having been reckoned on mercantile lasts, the interest income shall be taxed on accrual basis for both the years under consideration. Commission has not articulated as to why it did not agree with the submissions made by the assessee’s representative. We direct that the matter be sent to the Interim Board for Settlement constituted for the settlement of pending applications as contemplated u/s 245 AA of the Act
HELD THAT:- There is a delay of 364 days in the filing of the present special leave petition. Even on merits, we are not inclined to issue notice in the present special leave petition.
The application for condonation of delay and the special leave petition are both dismissed.
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2024 (11) TMI 252
Validity of reassessment notices/ proceedings - scope of notices issued under Section 148 of the new regime between July and September 2022 - Application of TOLA to the Income Tax Act after 1 April 2021 - TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021 or not? -
As decided by HC [2023 (3) TMI 1538 - GUJARAT HIGH COURT] all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. These notices cannot be issued as per the amended provision of the Act.
HELD THAT:- The Special Leave Petitions are disposed of in terms of the judgment of this Court in Union of India vs Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)]
AO will dispose of the objections in terms of the law laid down by this Court in Rajeev Bansal (supra). Thereafter, the assessees who are aggrieved will be at liberty to pursue all the rights and remedies in accordance with law, save and except for the issues which have been concluded by the judgment of this Court in Rajeev Bansal (supra). Pending applications, if any, stand disposed of.
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2024 (11) TMI 251
Taxability of compensation - Land-losers relieved off from the levy of income tax on the compensation paid for the acquisition of their lands - relief has granted principally in terms of section 96 of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Scope of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act) for tax exemption.
HELD THAT:- All the above being said, one cannot turn a Nelson’s Eye to the apparent hostile discrimination of the persons losing land in acquisition process under the statutes other than 2013 Act, are put to: Firstly, the benefit of package availing under the new Act 2013 Act are pretty attractive compared to those contemplated under State legislations such as Karnataka Industrial Areas Development Act 1966, inter alia providing for acquisition. In the new Act, the amount of compensation payable to the land-losers is much higher.
Added to the above, under Section 96 of the 2013 Act, the compensation is exempted from the levy of income tax. There are other rehabilitatory facilities too. It is quite obvious that there is a lot of heart-burn in the class of persons who have lost lands in acquisitions accomplished under the statutes other than 2013 Act.
As already mentioned above, ordinarily, land-losers in acquisition process, whichever be the statute, do constitute one homogenous class, at least viewed from the angle of recompense. It is high time that the Central Government addresses this aspect of the matter before long and thereby assuages the grievance of land losing farmers, consistent with the policy content & laudable intent enacted in Section 96 of the new Act. Much is not necessary to specify.
These Appeals are allowed and the impugned orders of the learned Single Judge are set at naught; the subject Writ Petitions of land-losers are liable to be and accordingly dismissed.
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2024 (11) TMI 250
Fees paid as sales is in nature of fee for included services - as per AO there was make available of technical inputs by the assessee and so, the amounts received as sales commission is in nature of Fee for included services - incomes accrued, arisen, or deemed to have accrued or arisen in India to the non-resident assessee’s or not? - HELD THAT:- The issue is covered by a decision of Toshoku Ltd. [1980 (8) TMI 2 - SUPREME COURT] as well as Evolv Clothing Co.(P). Ltd [2018 (6) TMI 1324 - MADRAS HIGH COURT] as held as Cl. (a) of the Explanation to Cl. (i) of sub-s. (1) of S. 9 of the Act which provides that in the case of a business of which all the operations are not carried out in India, the income of the business deemed under that clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India. If all such operations are carried out in India, the entire income accruing therefrom shall be deemed to have accrued in India.
If, however, all the operations are not carried out in the taxable territories, the profits and gains of business deemed to accrue in India through and from business connection in India shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories. If no operations of business are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any business connection in India cannot be deemed to accrue or arise in India. Decided in favour of assessee.
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2024 (11) TMI 249
Revision u/s 263 - income chargeable to tax commensurate to TDS - as per CIT AO did not raise any query related to this issue during the course of proceedings nor has the assessee given any justification for claim of TDS without declaring the corresponding interest income from securities - PCIT had sought to make an addition u/s 68 on account of a transaction which was not the subject matter of the reasons recorded for reopening the assessee’s assessment for the relevant assessment year
HELD THAT:- The powers of the Commissioner u/s 263 of the Act are in the nature of a review and an order under Section 263 of the Act could be passed only if the learned PCIT found that (i) the order passed by the AO is erroneous; and (ii) that it is prejudicial to the interest of the Revenue. Once it is accepted that the AO could not have made any addition to the assessee’s any other income if it was satisfied with the assessee’s explanation regarding the transaction of purchase of shares of FDPL; it would follow that the PCIT could not fault the AO for not making any such addition.
Clearly, once the AO accepted the assessee’s explanation regarding the investment made in the shares of FDPL and the amount borrowed from APPL for funding the said purchase, the AO could not proceed to make any addition on any other ground in the reassessment proceedings.
Thus, non-addition of any income on account of alleged income from interest commensurate with the TDS deposited by Valtika Limited, or making further enquiries would not confer the learned PCIT with the jurisdiction to pass an order under Section 263 of the Act. Decided in favour of assessee.
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2024 (11) TMI 248
Short deduction of TDS by petitioners - TDS rate applicable was 20% as the vendor's PAN was deemed invalid due to the non-linkage with Aadhaar - Section 206AA overrides the said rate when the vendor's PAN is invalid or not linked to Aadhaar
HELD THAT:- As seen from records that the vendor had linked his PAN with his Aadhaar on 02.08.2024 by paying a late fee of Rs. 1,000/- and he has also provided the challan receipt with the petitioners for the late payment made by him for delay in linking PAN with Aadhaar. Therefore, the question of vendor's PAN number being invalid does not arise.
Since Section 206AA(1) stipulates that if any person who is entitled to receive any sum on which tax is deductible at source under the Act, fails to furnish his PAN number to the deductor, then the deductor shall deduct tax at source (TDS) at the rate of 20% and as per Section 206AA(6), if the PAN number provided by the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his PAN to the deductor and the provisions of sub-section (1) of Section 206AA will apply, the question of Section 206AA being applicable to the petitioners does not arise in as much as the petitioners remitted the sum of Rs. 56,000/- against their vendor's PAN number on 09.08.2024 and the petitioners filed the Form 26QB on 09.08.2024 mentioning their vendor's PAN number and that the Department's website has also accepted the same and did not give any indication that the PAN number of the petitioner's vendor was invalid.
For the foregoing reasons, this Court is of the view that the impugned orders passed by the respondent are contrary to the facts and circumstances of the cases and violative of the principles of natural justice and the same are liable to be quashed.
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