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Income Tax - Case Laws
Showing 341 to 360 of 168845 Records
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2024 (11) TMI 227
Addition made u/s 68 - share capital and share application money received from 13 share applicants - No evidences to prove the identity and creditworthiness of the share applicants and genuineness of the transactions - HELD THAT:- All documents speaks loud enough that identity and creditworthiness of alleged share applicants is established beyond doubt. Genuineness of the transactions is also proved because these companies have sufficient net worth to make the investment and they have applied in a NBFC company for better returns. Once, the assessee has discharged his primary onus, the burden of proof shifts on to Revenue authority and observations of AO that they are not satisfied with these details will not serve the purpose. At some part of the assessment order the AO has even observed that the assessee had filed submissions and some voluminous paper work which was of no use other than to increase the volume of the assessment report of the assessee company.
We fail to find any justification in such observation of AO. Rather than mentioning the documents as voluminous paper work, he/ she should have move ahead to examine the correctness of those documents and should have discussed the same in the assessment order.
General observation that the AO is not satisfied with the documents filed by the assessee cannot meet the requirement of law. We on perusal audited the balance sheet of the alleged share applicant companies notice that they have sufficient net worth in the form of share capital and accumulated reserve and surplus to explain the source of investment made in the assessee company.
Even the provisions which entitles the revenue authorities to examine the case where a company not being a company in which public are substantially interested receive from any person in any consideration for issue of shares that exceeds the face value of such share, the aggregate consideration received for such shares as exceeds the fair market value of the share to be treated as income of other sources u/s 56(2)(VIIB) of the Act has been inserted by the Finance Act, 2012, with effect from 1st April, 2013 and is therefore not applicable for the year under consideration.
We are thus of the considered view that the assessee has successfully explained the nature and source of the alleged share application money by way of proving the identity and creditworthiness of share applicants and genuineness of the transactions.
We find that the assessee has successfully discharged the burden of proof primarily casted upon it to explain the identity and creditworthiness of all the alleged thirteens share applicants / shareholder and genuineness of the share transactions and correctness of such details has not been disputed by the Revenue Authorities except making general observations. Therefore, we are inclined to hold that no addition u/s 68 of the Act, is called for. Assessee appeal allowed.
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2024 (11) TMI 226
Rejection of application for registration u/s 12AB - Invocation of Section 13(1)(b) regarding the trust's objectives - HELD THAT:- In the case of Shah Gulabchandmulchand Shree Parshwanath Trust, Vapi [2024 (9) TMI 197 - ITAT SURAT] ITAT held that where CIT(E) denied registration under Section 12A to assessee-trust due to one objective benefiting only Jain community, invoking Section 13(1)(b), but overlooked broader charitable objectives since provisions of section 13 can be invoked only at time of assessment and not at time of grant of registration under section 12A, matter would be remanded back to CIT(E) for reconsideration
As provisions of Section 13(1)(b) of the Act can be invoked at the time of assessment, on the basis of material that may be brought on record. However, grant of registration under Section 12A of the Act cannot be denied to the assessee by invoking the provisions of Section 13(1)(b) of the Act at the time of grant of registration.
In the result, in view of the above observations, the matter is restored to the file of CIT (Exemptions), for de-novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds as mentioned in its order for rejecting the application filed by the assessee trust. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (11) TMI 225
Delayed deposit of employees share of contribution towards ESIC and EPF - intimation issued u/s. 143(1)(a) - HELD THAT:- Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] had observed that the employee’s share of contributions towards ESI & EPF deposited by the assessee beyond the due dates prescribed under the said respective Acts would by virtue of Section 36(1)(va) r.w.s. 2(24)(x) of the Act constitute income of the assessee.
Whether or not the delayed deposit of employees share of contribution towards ESIC & EPF could have been made by the AO prior to the judgment of Checkmate Services Pvt. Ltd. vide an intimation u/s. 143(1) - As decided in M/s. BPS Infrastructure [2024 (4) TMI 1006 - CHHATTISGARH HIGH COURT] reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer’s obligation to deposit the amounts retained by it or deducted by it from the employee’s income, unless the condition that it is deposited on or before the due date, is correct and justified. The non- obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability.
In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees’ contributions- which are deducted from their income. They are not part of the assessee employer’s income, nor are they heads of deduction per se in the form of statutory pay out. They are others’ income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law.
They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee’s contribution on or before the due date as a condition for deduction.
Accordingly, in the backdrop of the judgment of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] we are unable to concur with the Ld. AR that the A.O/CPC, Bengaluru had erred in rejecting the assessee's application filed u/s. 154 of the Act, wherein the latter had sought for setting aside the disallowance of his claim for deduction of delayed deposit of employees share of contributions towards ESIC & EPF u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act made by the AO/CPC, Bengaluru vide an intimation u/s. 143(1)(a) of the Act prior to the judgment of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT (supra) - Ground of assessee dismissed.
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2024 (11) TMI 224
Denial of benefits of Section 11 - Appellant did not furnish Audit Report in Form 10-B within the prescribed time - extended due date of e-filing of Form No. 10B being audit report u/s 12A(1)(b) of the Act for the assessment year 2022-23 was 07.10.2022 and the assessee had e-filed Form No. 10B issued by the Chartered Accountant as on 07.11.2022, which is delayed by 31 days.
HELD THAT:- We find that the AO CPC has made adjustment for the amount of expenditure claimed, amount accumulated and set apart for exemption u/s 11(2) of the Act for the sole reason that the AO did not file the audit report prescribed in Form No. 10B of the Act on or before the due date. The said due date in the case of the assessee under the provisions of section 12A(1)(b) of the Act was 07.10.2022 however, the assessee has e-filed the said Form No. 10B on 07.11.2022 and thus, there was a delay of 31 days in filing such form on the Income-tax Portal. Therefore, the issue is merely for the condonation of the delay of the 31 days. We find that the Ld. CIT(A) has referred to Circular No. 16/2022 dated 19.07.2022 issued by the CBDT, where in the CBDT invoking powers u/s 119(2)(b) of the Act delegated the power for condoning the delay to the Pr. Chief Commissioner/Chief Commissioner or Commissioner of Income-tax as the case may be.
The assessee stated that application for condonation of delay in filing Form No. 10B for the year under consideration was filed before the Commissioner of Income-tax (Exemption), Mumbai on 16.03.2023 and said application is still pending for disposal till date. However, we find that under the CBDT circular No. 16/2022 dated 19.07.2022 the concerned Commissioner of Income-tax is preferably required to dispose off the application within the three month of receipt of this application. Before us, assessee expressed ignorance regarding disposal of the application of the assessee. We feel it appropriate to set aside the order of lower authorities and restore the matter back to the file of the Assessing Officer for deciding afresh.
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2024 (11) TMI 223
Rejecting the application u/s 12A for approval of the Appellant Trust - Charitable activity - Trust Deed copy submitted was not self- certified Rule 17A(2)(a) by the trustee, which is an inadvertent error, Details of date & place of each activity were not furnished by the Trust and Details of donation received were not supported by complete postal address/ PAN of the donors
HELD THAT:- We find that the assessee is a trust carried on charitable activities like arrangement of food for conducting pooja and relief to poverty. The activities are for the benefit of public at large - There is no reference of the information submitted on that date in the order of the ld CIT (E) , thus, it is true that the learned CIT(E) has issued the show cause notice on 01.02.2024 but there is no reference of the details submitted on 12.01.2024 and how same is dealt with by the learned CIT(E).
The observation of the CIT(E) has raised seven points which was not stated to have been replied by the assessee and, therefore, it was held that the learned CIT(E) was not able to draw any satisfactory conclusion about the genuineness of the activities and compliance of requirement of any other law.
Regarding the genuineness of the activities the assessee has provided the details of various expenditure of various activities for the year ended on 31.03.2022 wherein the total expenditure of Rs. 15,75,738/- were spent. The assessee has also spent sum of Rs. 12,74,626/- for the year ended on 31.03.2023 on the object of the trust. There is no comment by the learned CIT(E) on the activities of the assessee stated in these documents.
We restore the matter back to the file of the learned CIT(E) to decide the issue afresh. Appeal of the assessee is allowed for statistical purposes.
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2024 (11) TMI 222
Ex- parte appellate order passed by CIT(A) based on the material on record mainly statement of fact (SOF) filed by the assessee - second round of litigation - whether the assessee firm stood dissolved or the business stood discontinued? - Disallowance of freight expenses u/s 40(a)(ia) - HELD THAT:- It could be seen that the assessee did not participated at all in the appellate proceedings conducted before ld. CIT(A), for the reasons cited in SOF. This is second round of litigation. Huge additions were made by the AO even in second round of litigation and huge demand of tax and interest was raised by Revenue against the assessee. The assessee filed its appeal before ld. CIT(A) challenging the additions as were made by the AO in second round of litigation, and it is for the assessee to have remained vigilant once the appeal was filed by it before ld. CIT(A).
The assessee and/or its partners (or legal representative) acted negligent during the course of appellate proceedings before ld. CIT(A) in the second round of litigation and their act is deprecated. The assessee should not be allowed to take benefit of its own wrong as it acted in complete defiance of law on both the counts.
Assessee has now filed paper book before the ITAT and has raised challenge to the additions both on merits as well on law. It is equally true that the ld. CIT(A) passed an ex-parte appellate order based on material on record including SOF. The assessee did not comply with any of the eight notices issued by ld. CIT(A). It is also equally true that the Act of the Court should not prejudice anybody. The mandate of the 1961 Act is to compute and collect correct taxes from correct assessee and for the correct assessment year. The assessee has now come forward to argue against the additions as were made by authorities below, and paper book containing as many as 225 pages are filed before ITAT. The assessee has also stated the reasons for its non compliances before ld. CIT(A), which have been cited by us in the preceding part of this order. The true, complete and correct facts are to be brought on record and the onus is on the assessee to bring the same on record. Even before us contradictory statements are made with respect to dissolution of the assessee firm vis-à-vis discontinuance of the business of the assessee firm. Under these facts and circumstances, and in the interest of justice as well now the inquiries are to be conducted.
Keeping in view Section 189(1), 189(3) 189(4) read with Section 176(3)(owing to failure on the part of the assessee to intimate Revenue in stipulated time about discontinued business), it is considered fit and appropriate that in accordance with principles of natural justice, one more opportunity is required to be given to the assessee and hence the appellate order passed by ld. CIT(A) dated 25.09.2023 is set aside and the matter can go back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law after giving opportunities to both the parties.
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2024 (11) TMI 221
Assessment order u/s 143(3) passed against assessee trust v/s individual beneficiary - determination of primary assessee whose income is liable to be brought to tax in the hands of the representative assessee - Unexplained money u/s. 69A - no source of the cash deposits in the bank account provided
HELD THAT:- We are unable to subscribe to the explanation of the Ld. AR as regards the reason as to why the appeal was filed by "Kajal Deepak Trust", despite the fact that the impugned assessment order u/s. 143(3) was passed in the case of the beneficiary, viz. Ms. Kajal Jadwani.
Although we principally concur with the Ld. AR that the discretionary trust, viz. Kajal Deepal Trust is the primary assessee whose income is liable to be brought to tax in the hands of the representative assessee, i.e. the trustee or trustees u/s. 160(1)(iv) of the Act, but at the same time, may herein observe, that as per Section 166 of the Act there is no bar on the department to frame direct assessment of a person on whose behalf or for whose benefit income therein referred to is receivable. Accordingly, now when the A.O had proceeded with and framed the assessment u/s. 166 of the Act, i.e. in the hands of the individual beneficiary, then, in case if the said assessment order was not to be accepted, it was for the said assessee to have carried the same by way of an appeal before the CIT(Appeals). Accordingly, the Ld. AR's claim that as the trust viz, Kajal Deepak Trust is the primary assessee, therefore, no infirmity arises from the fact that the latter had filed the appeal before the CIT(Appeals) against the assessment order which was never passed in its case cannot be accepted.
As the assessee, viz. Ms. Kajal Jadwani had for the aforesaid misconception failed to carry the impugned order of the A.O passed u/s. 143(3) by way of a proper appeal before the CIT(Appeals), therefore, she shall remain at a liberty to assail the impugned assessment order before the first appellate authority, who is directed to adopt a liberal approach regarding the reasons leading to the delay in preferring of the appeal before him. Appeal of the assessee trust is dismissed.
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2024 (11) TMI 220
Denial of application u/s 80G - provisional certificate u/s 10 AC has been issued on 25.10.2022 and application in Form 10AB has not been filed within statutory time limit - HELD THAT:- There is substance in the submission of AR that in the instant case provisional approval u/s 80G of the Act had been granted to the appellant from 25.10.2022 to AY 2025-26, so period for which provisional approval had been granted was to expire only on 31.03.2025 and not before and further that the second limb of the aforesaid clause was inapplicable in appellant case.
We are of the considered opinion that rule of procedure are just to handmaid to administration of justice and not to penalise anybody and object of procedure only for interest of justice and the time limit prescribed in aforementioned provisions and clauses in question is quite directory in nature, not mandatory and such a provision / clause should be dealt which in above manner in order to fulfil the End’s of justice.
Consequently, the impugned order of the Ld. CIT(E) is hereby set aside and quashed on this point and matter be remitted back to file of the Ld. CIT(E) with the direction to decide expeditiously afresh.
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2024 (11) TMI 219
Levy of interest u/s 234C - failure on part of the payer to deduct TDS u/s 196D and 194LD - HELD THAT:- Tax due on returned income means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income.
As seen that the advance tax is reduced by any tax deductible or collectible which means that even the legislators have taken care of liability of the payer to deduct tax at source on payments and to that extent, assessee is not required to pay any advance tax.
In the case on hand, since the payers faulted in deducting tax at source, the assessee discharged its liability by paying the full tax. Therefore, in our considered opinion, the assessee cannot be levied with interest u/s 234C of the Act for the fault of the payers.
As decided in Ngc Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT] wherein the Hon’ble High Court held that when a duty is cast on the payer to deduct and pay the tax at source, on payer's failure to do so, no interest under section 234B can be imposed on the payee assessee. We are of the considered view that it is not case of deferment in payment of advance tax on income as envisaged in Section 234C of the Act. Since the assessee has discharged the tax liability, no interest is leviable u/s 234C - Thus direct the AO to delete the impugned addition. Decided in favour of assessee.
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2024 (11) TMI 218
Income recognition method - Assessment of the income of the assessee applying percentage completion method OR project completion method - HELD THAT:- Transitional provisions which state that for the projects, which commenced on or before 31.03.2016 but not completed by the said date, the revenue shall be recognized based on the method regularly followed by the person prior to the previous year beginning from the 1st day of April 2016.
It is unrebutted on the record that the assessee since its inception has been following project completion method. In view of the aforesaid transitional provisions, the action of the AO in applying the percentage completion method on the basis of ICDS III by part-reading the same, cannot be held to be justified. The impugned addition made by the AO for the year under consideration by applying percentage completion method of accounting is not justified and the same is accordingly set aside. Appeal of the assessee stands allowed.
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2024 (11) TMI 192
Rejection of provisional registration granted u/s 12AB r.w.s. 12A(1)(ac)(iii) - assessee trust has failed to substantiate the charitable nature of the trust as well as the genuineness of its activities - HELD THAT:- We have gone through the above documents and evidences, and noticed that assessee has satisfied the genuineness of its activities and the nature of activities. After going through the objects of the assessee- trust, we find that objects of the assessee -trust are for general public benefit and not restricted to a particular community or caste.
Assessee - trust, under consideration is not for the benefit of any particular religious community or cast, it is open for the benefit of the general public, as evident from the object of the assessee - trust, therefore we do not accept the contention raised by Revenue, to the effect that the assessee- trust was created only for the benefit of particular persons or community or caste.
As per the objects of the trust, the assessee - trust under consideration, is open for benefit for all sections of society and general public. That is, the facilities provided by the assessee- trust are intended to serve the needs of attendees of various activities without any discrimination based on caste, colour, or creed. Hence, assessee - trust deserve for registration.
Activities of running "Atithigruh" and "Bhojansala" - We find that these are not commercial activity. The "Atithigruh" facilities are intended to serve the needs of attendees of various activities without any discrimination based on caste, colour, or creed, hence, it is not a commercial activity. Besides, "Bhojansala" is only for providing food to the poor and needy persons of the general public without any discrimination. It is open only for poor and needy persons to provide them food. No any specific community and caste is taking benefit, exclusively, for the "Atithigruh" and "Bhojansala" these"Atithigruh" and "Bhojansala" are needed to run the charitable activities. Therefore, none of the objects of the assessee-trust, are restricted to any particular community and caste.
Expenditure incurred on the objects of the trust - We find that assessee -trust has applied Rs. 4,06,455/- out of total receipt of Rs. 6,61,437/- by way of establishment expenses and registration charges. In future, the assessee-trust would spend the amount for charitable- activities, as pointed out by ld. Counsel. Besides, the construction of a crematorium and the maintenance thereof is for the objects of the trust, which is not for particular caste, or community. No infirmity in the objects and activities of the trust. Therefore, we direct the CIT(E) to examine the objects and activities of the trust and grant the registration, in accordance with law.
CIT(Exemption), Pune assuming proper jurisdiction under the law - We find that assessee -trust is situated in Gujarat, therefore CIT (E) - Ahmedabad, would have jurisdiction, over the assessee, who, will pass the order in accordance with law.
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2024 (11) TMI 179
Reopening of assessment - reason to believe - Allegations of accommodation entries and bogus transactions, denying exemption u/s 10(38) - HELD THAT:- Insofar as the petitioner is concerned, the allegation clearly is that the petitioner had purchased 4800 (four thousand eight hundred) shares of Aurobindo, a listed entity, worth ₹56,04,000/-, by an off-market transaction (not through a recognized stock exchange). This was the first limb of the alleged transaction of avoiding payment of tax. This limb of transaction is admitted.
AO had noted that investment of such a value was not commensurate with the returns furnished by the assessee during three years (AY 2014-15, 2015-16 & 2016-17).
Admittedly, a copy of the report had been provided to the petitioner. A hard copy of the said report has also been handed over to this Court during the course of the proceedings.
As noted that the said report is fairly comprehensive and has sought to deconstruct the manner in which the accommodation entries were being routed through transaction in shares of listed companies, which were regularly traded on the stock exchange.
The report indicates that as many as twelve listed companies were identified, whose shares were used for structuring the accommodation entries. The report also included Annexure A, setting out the details of the beneficiaries and the names of the listed companies whose shares had been transferred in Demat Accounts of the beneficiaries. Annexure A to the said report is not produced but the extract, which pertains to the petitioner, has been filed along with an additional affidavit filed on behalf of the Revenue, which clearly indicates that the transaction in respect of 4800 (four thousand eight hundred) number of shares of Aurobindo, through Mridul Securities, was identified as one of the transactions for structuring the accommodation entries.
The petitioner in her response to the notice u/s 148A (b) of the Act had denied the allegations. However, it is material to note that she did not provide any details of the alleged transaction of purchase of 4800 (four thousand eight hundred) shares of Aurobindo.
The petition is also bereft of any particulars as to the said particulars which were identified and also alluded to in the notice u/s 148A (b) of the Act. The petitioner has not disclosed the price that she had paid for the 4800 shares, the source of funds of the said price, the date on which the said shares were purchased and the date on which the shares were lodged or transferred in the name of the petitioner.
In view of the above, we are unable to accept that the information available with the AO is not suggestive of the fact that income of the petitioner had escaped assessment.In the facts of the case, this condition for issuance of a notice under Section 148 of the Act, is clearly met. Decided against assessee.
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2024 (11) TMI 178
Condoning the delay of 216 days in filing their Income Tax Returns (ITR) - delay was occurred due to the delay in receipt of audit report and the COVID outbreak - HELD THAT:- As far as the 1st reason, i.e., delay in receipt of Audit report, is concerned, a perusal of the Audit Certificate dated 02.07.2019 issued by the Auditor would show that the Audit was completed on 02.07.2019 and the statements of (i) Receipts and Disbursements, (ii) Profit and Loss Accounts and Trading Account & (iii) Balance Sheet were also appended along with the said Audit certificate.
A perusal of the 1st paragraph would show that the account of the petitioner was audited by Thiru.N.Shunmuga Sundaram, Cooperative Audit Officer and the aforesaid Audit certificate was passed along with the Statements of (i) Receipts and Disbursements, (ii) Profit and Loss Accounts and Trading Account (iii) Balance Sheet. That apart, in the 12th paragraph, it has been indicated that a copy of the Audit certificate was communicated to the Society and the same along with the aforesaid documents are open for inspection by any member of the Society. Therefore, it is crystal clear that the Audit report was made available on 02.07.2019 itself and in such case, there is no substances in the reason assigned by the petitioner on the aspect of delay in receipt of the Audit report.
In the application filed by the petitioner under Section 119(2)(b) of the IT Act, nothing has been stated with regard to the delay in receipt of Audit report on 24.02.2020. Even if such statement was made in the said application, the same cannot be considered as a reason for delay in filing the ITR since the Audit certificate was issued to the petitioner as early as on 02.07.2019. Therefore, the respondent had rightly rejected the application filed by the petitioner.
2nd reason of COVID outbreak occured only during the month of March 2020, whereas, the Audit report was made ready, along with the statement of (i) Receipts and Disbursements, (ii) Profit and Loss Accounts and Trading Account (iii) Balance Sheet, as early as on 02.07.2019 itself, i.e., 7 months prior to the COVID outbreak. In such case, this Court is of the view that nothing prevented the petitioner to file their ITR before the said COVID outbreak period. However, in the case on hand, though the Audit certificate was issued on 02.07.2019, the ITR was filed by the petitioner only on 03.06.2020. Therefore, the reason of COVID outbreak cannot be accepted as a genuine hardship faced by the petitioner and considering all these aspects, the respondent had rightly rejected the petitioner's application.
Thus, by condoning the delay of 216 days, this Court will, either wittingly or unwittingly, be a party to all the acts of omission/misdeeds committed by the petitioner. Since the issue is pertaining to the revenue matters, the present condone delay petition cannot be compared at par with the other applications filed for condoning the delay in filing, representation, etc. If the delay is condoned and the present petition is entertained in the absence of genuine hardships, it would amount to further encourage the misdeeds of the petitioner. In such case, this Court is not inclined to entertain this petition.
Thus, the reasons assigned by the petitioner had not at all justified any genuine hardships faced by them in filing their ITR within prescribed time limit. Taking into consideration of all these aspects, the respondent had rightly rejected the application filed by the petitioner.
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2024 (11) TMI 177
Scope of Section 92 (BA) (i) as omitted - Tribunal holding that the reference made to TPO for specified domestic transaction mentioned in clause (i) of Section 92BA of the Act is not valid as the said provision has been omitted and as such addition made in respect of same needs to be deleted - HELD THAT:- As decided in M/s. Texport overseas Pvt. Ltd. [2019 (12) TMI 1312 - KARNATAKA HIGH COURT], when clause (i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.07.2017 from the Statute the resultant effect is that it had never been passed and to be considered as a law never been existed. Hence, decision taken by the Assessing Officer under the effect of Section 92BA and reference made to the order of TPO under Section 92CA could be invalid and bad in law. It is for this precise reason, tribunal has rightly held that order passed by the TPO and DRP is unsustainable in the eyes of law.
TP Adjustment restricted only to the transaction between the Associated Enterprises (AEs) - HELD THAT:- As decided in Phoenix Mecvano (India)(P.) Ltd. [2017 (6) TMI 1240 - BOMBAY HIGH COURT] we find that in terms of Chapter X of the Act, re-determination of the consideration is to be done only with regard to income arising from international Transactions on determination of ALP. The adjustment which is mandated is only in respect of International Transaction and not transactions entered into by assessee with independent unrelated third parties. This is particularly so as there is no issue of avoidance of tax requiring adjustment in the valuation in respect of transactions entered into with independent third parties. The adjustment as proposed by the Revenue if allowed would result in increasing the profit in respect of transactions entered into with non-AE. This adjustment is beyond the scope and ambit of Chapter X of the Act. Decided in favour of assessee.
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2024 (11) TMI 176
Delay of 80 days in filing the Return of Income - genuine hardship due to delay - eligible reasons for delay - HELD THAT:- A perusal of the provisions of Section 119 (2) (b) of the Act shows that the power conferred therein upon Respondent No. 1 is for the purpose of “avoiding genuine hardship”. In our view, the Petitioner would be put to genuine hardship, if the delay in filing the Return of Income is not condoned. This is because the Petitioner has given valid reasons for not filing the Return of Income on time.
The Petitioner has mentioned that her father had passed away on 30th November, 2022 due to Covid-19 and that her family members were affected by Covid-19 in November, 2020. The Petitioner, who is a doctor, was involved in Covid-19 duty at that time. The valuation of land for working out capital gain could not be completed prior to the due date of filing of the Return due to the said reasons and as the valuer was not able to carry out physical verification of the site until 13th February, 2021 and provide the Valuation Report until 16th March, 2021. In this context, it is important to note that the valuer was also a senior citizen aged 75 years. In our view, if for these reasons, the delay of 80 days in filing of the Return of Income by the Petitioner was not condoned, then definitely the Petitioner would be put to genuine hardship as the Petitioner was prevented by genuine and valid reasons for not filing the Return of Income on time.
It can never be that technicality and rigidity of rules of law would not recognize genuine human problems of such nature, which may prevent a person from achieving certain compliance. It is to cater to such situations that the legislature has made a provision conferring a power to condone the delay. These are all human issues which prevented the assessee, who is otherwise diligent, in filing the Return of Income within the prescribed time.
In our view, Respondent No. 1 failed to consider the same. Respondent No. 1 completely lost sight of the fact that not only was the Petitioner a doctor who was on covid duty but that the Petitioner faced various other problems due to the Covid-19 pandemic, and that was the reason why the Petitioner could not file her Return of Income within time.
Respondent No. 1 has also rejected the Application on the ground that the Petitioner, being an educated person, was well equipped with basic taxation law knowledge and, had accessibility to tax practitioners and, therefore, the claim of the Petitioner that she was not able to collect various information regarding income tax calculation, was not tenable. Again, we are afraid that we are unable to accept this reason of Respondent No. 1. The Petitioner has not claimed lack of accessibility to a tax practitioner. It is the case of the Petitioner that, for various reasons, which arose due to the Covid-19 pandemic, she was not able to obtain the Valuation Report in respect of the property on time and, therefore, was not able to compute the capital loss and file the Return of Income.
In this view of the matter, we are unable to accept the said reasons given by Respondent No. 1 for rejecting the Petitioner’s Application for condonation of delay.
Thus impugned order dated 20th October, 2023 passed by Respondent No. 1 is hereby quashed and set aside.The delay of 80 days in filing of the Return of Income for Assessment Year 2020-2021 by the Petitioner is hereby condoned.
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2024 (11) TMI 175
Denial of credit of TDS on salaries - petitioners are ex-employees of Karvy Stock Broking Limited and in spite of the fact that the tax was deducted from their salary but not deposited by the said Company - HELD THAT:- This Court in [2024 (4) TMI 1195 - GUJARAT HIGH COURT] recording the facts of the case, issued the Notice and stayed the impugned notices till final disposal of the petition.
Today, petitioners submitted that the petitioners are suffering continuous loss as they are not entitled to the refund because of the pendency of this proceeding.
Learned Senior Standing Counsel Mr. Sanghani submitted that in one of the matters, the reply is already filed by the respondent.
Considering the above submissions, list these matters for final disposal on 07.10.2024 on top of the Board.
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2024 (11) TMI 174
Stay of demand - Undertaking by the Petitioner to pay 20% of the amount due for pending appeal proceedings - HELD THAT:- Petitioner had approached the authorities under Section 226(6) of the Income Tax Act, 1961 which was rejected vide proceedings dated 24.02.2022.
It appears that for the Assessment Year 2018-2019, the Petitioner has paid a paltry amount of Rs. 54,794/- only. The Petitioner cannot expect the appeal to be heard without mandatory pre-deposit of the amount as is required as per the Office Memorandum issued by the Central Board of Direct Taxes issued from time to time. Unless the Petitioner pre-deposits the amount the Petitioner cannot expect any protection from recovery of tax dues confirmed against the Petitioner.
Under these circumstances, these Writ Petitions are dismissed. However liberty is given to the Petitioner to move suitable application for waiver in terms of the decision of the Hon'ble Supreme Court in Principal Commissioner of Income Tax 5 and Others vs. M/s.LG Electronics India Private Limited [2018 (7) TMI 1905 - SC ORDER].
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2024 (11) TMI 173
Stay petition - application was partly allowed by directing the petitioner to deposit 20% of the demand - Contention of petitioner that the learned appellate authority was totally guided by CBDT Office Memorandums dated 29.02.2016 and 31.07.2017 and directed the petitioner to deposit 20% of outstanding demand and here is no whisper or iota of discussion about exemption notifications -
HELD THAT:- Prima facie reading of Annexures-P.9 and P.10 shows that petitioner could make out a prima facie case. Sadly, the appellate authority has not taken any pain to consider the singular contention raised by the petitioner based on these notifications.
Thus, in the peculiar facts of this case, we deem it proper to restrain the respondents from taking any coercive action against the petitioner, pursuant to assessment order, during the pendency of the appeal.
Accordingly, this writ Petition is disposed of. It is made clear that this Court has not expressed any opinion on the merits of the case. It will be open for the appellate authority to adjudicate the appeal on its own merits.
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2024 (11) TMI 172
Eligibility of the petitioners to file applications for settlement in terms of the provisions contained in Section 245C following the amendments to the provisions contained in Chapter XIX-A of the 1961 Act by the Finance Act, 2021 - HELD THAT:- Even though the time-frames mentioned in the Explanation Clause only identified the period of exclusion with reference to each of the proceedings taken out of the definition of ‘case’ by operation of the provisos which were deleted (as already noticed, two provisos deleted in 2010 and the rest were deleted in 2014) the Explanation Clauses that were ancillary to the provisos, continued to remain in the statute book.
With the deletion of the provisos, the Explanation Clauses cannot by themselves control or restrict the definition of ‘case’ in Section 245A(b). If the interpretation now sought to be canvassed by the Revenue is accepted, the legislative intent behind the deletion of the provisos will not be achieved and the period which was originally excluded by operation of the provisos read with the explanations will become the period during which an application for settlement could be filed. This is, obviously, not the intention of the parliament. It is settled that where two views are possible and one produces anomalous results it is the duty of the Court to adopt the view that does not produce anomalous results.
The right that had accrued to eligible assessees to approach the Income- tax Settlement Commission until the the Finance Act, 2021 came into force on 01-04-2021 remained vested in them and such rights continued to be enforceable notwithstanding the amendment to the relevant provisions.
A Division Bench of the Bombay High Court in Senapati Santaji Ghorpade Sugar Factory Ltd. [2024 (4) TMI 204 - BOMBAY HIGH COURT] and in Vishwakarma Developers [2024 (8) TMI 366 - BOMBAY HIGH COURT] essentially take the same view.
We are in respectful agreement with the views expressed in those cases. The order issued by the Central Board u/s 119(2) of the 1961 Act permitted the actual filing of applications by assessees who are entitled to make such applications by 30.9.2021. Thus upon the interpretation that has been placed on the amended provisions of Chapter XIX-A of the 1961 Act and taking into consideration of the order issued under section 119(2) of the 1961 Act.
Since it is not disputed before me that the search u/s 132 in the case of all the petitioners in these cases was prior to 31-03-2021, the persons/entities, who were subject matter of the search, will be entitled to maintain an application for settlement before the Interim Settlement Board, provided such application has been filed on or before 30-09-2021. These writ petitions are therefore ordered directing that if the search u/s 132 in respect of the petitioners was prior to 31-03-2021, the petitioners are entitled to maintain applications for settlement before the Interim Board for Settlement, provided such applications were filed on or before 30-09-2021. Orders issued by the Interim Board for Settlement finding the applications for settlement filed by the petitioners as not maintainable will stand set aside.
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2024 (11) TMI 171
Constitutionality and legally of Income Computation and Disclosure Standards [ICDS] II and the Notification 87/2016 dated 29.09.2016 and Section 145A - as prescribed that the cost of inventories shall be computed by using the First In First Out (FIFO) or Weighted Average Cost method, to the exclusion of other methods relating to valuation of inventory, such as the Last In First Out (LIFO) method, while computing income under the head of Profits and Gains of Business or Profession under the Income Tax Act
HELD THAT:- It is not in dispute that FIFO, LIFO and Weighted Average Cost are methods recognised by the Accounting Standards for the purposes of Inventory/Stock valuation. As per those standards inventories are valued at the lower of cost or net realisable value, the latter term being a reference to the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The principle behind valuing stock at the lower of cost or realisable value is that no prudent trader would care to show increased profit before its actual realisation and hence, while anticipated loss is taken into account, anticipated profit in the shape of appreciated value of closing stock is not brought into the account [Chainrup Sampatram v. Commissioner of Income-Tax, West Bengal [1953 (10) TMI 2 - SUPREME COURT]. The adoption of any particular method of stock valuation is towards ensuring that it reflects the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition.
Whatever be the method of valuation adopted, it is a misconception to think that any profit arises out of the valuation of closing stock. As noticed in Chainrup Sampatram (supra), the valuation of unsold stock at the close of an accounting period is a necessary part of the process of determining the trading results of that period, and cannot be regarded as the ‘source’ of such profits. Thus, the issue canvassed in these appeals in the context of Article 14 of the Constitution, essentially boils down to whether the appellants herein can be said to be legally prejudiced, either on account of a law that is manifestly arbitrary or on account of any discrimination meted out to them through a validly enacted law.
The term manifest arbitrariness, in the context of plenary or subordinate legislation, refers to something done by the legislature capriciously, irrationally and/or without adequate determining principle. It also takes in situations where something is done which is excessive and disproportionate [Shayara Bano v. Union of India and Others 2017 (9) TMI 1302 - SUPREME COURT]
Can the amendment to Section 145A r/w the prescriptions under ICDS II, be seen as manifestly arbitrary in the light of the principles enumerated above ? - We think not. The ICDS II was issued with the objective of providing for a uniform method of inventory/stock valuation for assessees whose income was computed under the head “profits and gains of business or profession”, and Section 145A was amended so as to remove the basis of The Chamber of Tax Consultants (2017 (11) TMI 465 - DELHI HIGH COURT]
There was, therefore, a determining principle that informed both the statutory amendment and the ICDS II. It is also significant that the ICDS is applicable only for computation of income chargeable under the specified heads of income and not for the purpose of maintenance of books of accounts. Thus, while the assessees have the freedom to maintain their books of accounts using any of the methods recognised by the accounting standards, Section 145A only mandates that they shall follow the specified methods of inventory/stock valuation while computing their income under the head “Profits and gains of business or profession”.
Aspect of discrimination - It is trite that there is no infringement of the equal protection rule if the law deals alike with all of a certain class, as the legislature has the right of classifying persons and placing those whose conditions are substantially similar under the same rule of law, while applying different rules to persons differently situated. It is only if the classification is unreasonable and bears no rational relation to the object sought to be achieved by the legislative measure that it will be struck down as discriminatory and unconstitutional [Kerala Hotel & Restaurant Association & Others v. State of Kerala & Others [1990 (2) TMI 259 - SUPREME COURT]
On the facts of the instant appeals, since the prescription in ICDS II, with regard to the method of valuation of inventory/stock, is applicable to all assessees whose income is chargeable to tax under the head “Profits and gains of business or profession”, we do not find any unreasonable classification as having been effected among persons who are similarly situated. Further, the prescription under the ICDS II being one that is directed towards achieving the object of uniformity and consistency in the computation of income of assessees falling under the specified categories, we fail to see how the same would offend the equality clause under the Constitution. As a matter of fact, we also fail to see what pre-existing right of the appellants has been taken away by the prescription imposed through the amended Section 145A of the IT Act read with ICDS notified under Section 145 (2) of the Act ? Surely, the appellants cannot be heard to contend that they have a right, fundamental or otherwise, to follow a particular method of inventory/stock valuation that would prevail over a contrary statutory prescription under the IT Act. At best, the appellants could have contended that for the period upto 01.04.2018, they had already valued their stock/inventory in accordance with the LIFO method and their vested right to do so in accordance with the law as it stood then could not be retrospectively taken away. We find, however, that this contention of the appellants was accepted by the learned Single Judge who declared the retrospective operation of the provisions w.e.f. 01.04.2017 to be bad in law, and the revenue has not chosen to impugn the said finding of the Single Judge in any appeal preferred by it before us.
Thus, we find that the decision to amend Section 145A of the IT Act and make the ICDS II applicable to a certain category of assessees while computing their income for the purposes of the IT Act, was taken by the legislature after considering the opinions and recommendations of expert financial bodies. We therefore do not think it necessary to interfere with the findings of the learned Single Judge in the judgment impugned in these appeals - Writ appeal dismissed.
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