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Income Tax - Case Laws
Showing 421 to 440 of 168944 Records
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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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2024 (11) TMI 170
Compounding application u/s 276CC - HELD THAT:- The respondents have proceeded on the premise that the compounding application was made for the first time on 24 September 2020. The aforesaid order does not even allude to or notice the original applications which had been made on 15 February 2018. We also take note of the fact that the filing of the original application on 15 February 2018 is not disputed by the respondents. In view of the aforesaid and the clear stipulations contained in the 2019 Guidelines, it would be the erstwhile compounding guidelines which would apply. This since it is the stated case of the respondents that the 2019 Guidelines would have applied only to applications made or received after 17 June 2019.
We allow the instant writ petition and call upon the respondents to compute the compounding charges liable to be paid by the writ petitioner in accordance with the 2014 Guidelines, treating the application to have been first made on 15 February 2018.
Subject to the aforesaid computation exercise being completed and the petitioner depositing the compounding charges, the application may be processed further and disposed of in accordance with law.
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2024 (11) TMI 169
LTCG - Exemption u/s 54F - non-investment of the sale consideration or portion thereof in the designated capital gains - HELD THAT:- In view of the law laid down in Shri. K. Ramachandra Rao [2015 (4) TMI 620 - KARNATAKA HIGH COURT] to the effect that mere non-deposit of the sale consideration or portion thereof in a designated capital gains account would not deprive or come in the way of the petitioner from claiming exemption from payment of capital gains tax, that the impugned reassessment order and notices are contrary to law and the aforesaid judgments of the Court and the same deserves to be quashed. Decided in favour of assessee.
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2024 (11) TMI 168
Disallowance u/s 80P(2)(a)(i)/80P(2)(d) - Interest income earned form nationalized bank - assessee is a Cooperative Society engaged in banking business among its members - HELD THAT:- The Pune Bench of the Tribunal in the case of Sharad Nagari Sahakari Patsanstha Maryadit [2024 (4) TMI 746 - ITAT PUNE] has decided the impugned issue in favour of the assessee under the similar set of facts stating interest income derived from investments made in nationalized/other bank(s), the Revenue could hardly dispute that case law The Vaveru Cooperative Rural Bank Ltd. [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] that interest income(s) derived from such nationalized/other bank(s) also qualifies for sec.80P deduction and thereby declined it’s very stand. Thus accept the assessee’s sec.80P(2)(a)(i)/80P(2)(d) deduction claim(s) in very terms.
Also see Yogiraj Nagari Sahakari Patsanstha Maryadit [2024 (6) TMI 1415 - ITAT PUNE] as direct the Assessing Officer to allow deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of interest income earned from other cooperative banks. Appeal of the assessee is allowed.
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2024 (11) TMI 167
Levy of penalty u/s 270A - Disallowance of excess depreciation on computer software - as per AO internally generated software to fall under the ambit of intangible assets thereby eligible for depreciation only @25% as against @60% claimed by the assessee - HELD THAT:- The facts narrated herein above, in our considered opinion, clearly prove that there is neither underreporting nor misreporting by the assessee. The disallowance of depreciation by adopting different rate had arose only due to difference in interpretation by the ld AO by not agreeing to the contention of the assessee. Ultimately this is only disallowance of a claim made by the assessee.
There cannot be any allegation of either underreporting or misreporting of income. There is no concealment on the part of the assessee as all the details relevant for adjudication of the issue had been duly placed on record by the assessee in the return coupled with tax audit report thereon. Hence, the principles laid down by the Hon'ble Supreme Court and various Hon’ble High Courts on the levy of penalty for concealment of income or furnishing inaccurate particulars of income u/s 271(1)(c) of the Act shall duly apply to the misreporting or underreporting of income in Section 270A of the Act.
Hence, by placing reliance on the decision of Reliance Petro Products Ltd [2010 (3) TMI 80 - SUPREME COURT] and Price Waterhouse Coopers (P) Ltd [2012 (9) TMI 775 - SUPREME COURT] there is absolutely no justification at all for levy of penalty u/s 270A - Appeal of assessee allowed.
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2024 (11) TMI 166
Undisclosed investment in committees - a diary was found at the residential premises of the assessee during the course of search, which contain certain transactions in respect of investment made in various committee - HELD THAT:- Tribunal had in the first round given specific directions to the ld AO to make verification of claim of the assessee with the relevant documents filed before the Hon’ble ITSC. The assessee on his part had duly submitted the said documents to substantiate his claim.
AO does not bother to look into the said documents and proceeds to tax the assessee for the second time on the same transaction which had already suffered tax before the Hon’ble ITSC. This illegal action of the ld AO is upheld by the ld CIT(A). Hence we have no hesitation to conclude that both the orders of the lower authorities are perverse and the revenue does not deserve another chance in these appeals. Hence we hereby delete the additions made by the ld AO towards undisclosed investment in committees for both the Asst Years 2007-08 and 2008-09 and accordingly the Ground raised by the assessee are allowed.
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2024 (11) TMI 165
TDS u/s 195 - disallowance u/s. 40(a)(i) - non deduction of tax at source (TDS) on overseas payment towards patent fees, reimbursement of official fees and professional fees, by treating such payments as Royalty taxable in India - whether such income had accrued or arisen outside India? -
Whether the assessee was liable to deduct tax at source on payments made to non-resident attorneys where such payments are in the nature of official fees, reimbursement of renewal fees and professional fees? - HELD THAT:- The department has not disputed the fact that the overseas payments made by the assessee are towards reimbursement of expenses incurred by the non-resident attorneys towards renewal of registration of patents abroad and payments to registration authorities. Revenue has not controverted the fact that professional fee paid to the foreign attorneys who are non residents have no Permanent Establishment (PE) in India and none of the Attorneys have visited India during the year under assessment.
After examining the nature of payments made by assessee, we are of considered view that the AO and the CIT(A) have erred in coming to the conclusion that the assessee is liable to deduct tax at source on the aforesaid payments.
The coordinate bench in the case of Chandra Mohan Lall [2021 (12) TMI 1354 - ITAT DELHI] held these payments being in the nature of reimbursement and payment made for official purpose and trade fair services cannot come within the purview of either professional or technical services. Therefore, such payments not being in the nature of income chargeable to tax in India in terms of section 195 of the Act, there was no obligation on the assessee to deduct tax at source on such payment. Therefore, delete the disallowance of the aforesaid amount.
The payments made by assessee to non-resident attorneys who have no permanent establishment in India for the services rendered overseas are not subject to TDS provisions u/s. 195 - Similarly, the payments made towards reimbursement of renewal fee and official fee are not subject to TDS provisions. Thus, the assessee was not under obligation to deduct tax at source on such payments. Assessee appeal allowed.
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2024 (11) TMI 164
Levy of penalty u/s. 271(1)(c) - defective notice as it did not clearly specify the grounds for the penalty - additions/disallowances on account of set off of losses and disallowance u/s. 37 (including disallowance of donation) - HELD THAT:- A perusal of the same reveals that the notice is issued in a pre printed performa, without striking off irrelevant clauses in the notice. It is an omnibus notice.
As decided in the case of PCIT vs. Sahara India Life Insurance Company Ltd. [2019 (8) TMI 409 - DELHI HIGH COURT] following the decision rendered in the case of CIT vs. Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] deleted penalty where the AO failed to clearly specify the limb of section 271(1)(c) of the Act for levy of penalty in the notice.
As in the case of Mohd. Farhan A Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] has held that where assessment order records satisfaction for imposing penalty on one or other or both grounds mentioned in section 271(1)(c) of the Act, a defect in notice in not striking of irrelevant matter would vitiate penalty proceedings. An omnibus notice suffers from the vice of vagueness. Assessee appeal allowed.
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2024 (11) TMI 163
Rejecting application for registration u/s 12AB - non-furnishing/furnishing of incomplete compliance, which are not to the satisfaction of CIT(E) and in the manner as desired - HELD THAT:- There was no comment by the Ld. CIT(E) qua the objects and activities of the assessee trust that the objects of the assessee trust are not in the nature as defined under the provisions of section 11 & 12 of the IT Act or the Activities carried out by the assessee trust are not genuine.
Since the genuineness of activities and conduct of the assessee trust towards the objects of the as per there bylaws are not doubted by the CIT(E), neither any plausible reason or reasonable explanation to hold the same not in charitable nature was noted by the Ld. CIT(E), under such circumstances, we are of the considered view that this crucial aspect was left to be looked into by the approving authority, therefore, the matter requires to be restore back to the file of Ld. CIT(E).
Thus, respectfully following analogy of law drawn from the order of Shaheed Nand Kumar Patel Vishwavidyalaya [2024 (9) TMI 976 - CHHATTISGARH HIGH COURT] and case of Koi Apna Sa Ho Society [2024 (5) TMI 1481 - ITAT RAIPUR] in absence of any contrary decision, fact, or submission by the revenue, we find it appropriate to restore the issue to the files of Ld. CIT(E), with the directions to re-visit the application of the assessee and dispose of the same under express finding qua the objects and activities of the trust in deciding the eligibility of the assessee trust for grant of registration u/s 12AB of the Act. The assessee is also directed to assist in the proceedings before the Ld. CIT(E) to furnish all the information necessary so as to satisfy the approving authority about the objects of the trust and the genuineness of its activities
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2024 (11) TMI 162
Transfer of capital assets owned by the appellant firm to its partners resulting into Capital Gains - transfer of immovable property by book entries - As per AO assessee firm had purchased the lands for business purpose and due to no business activity carried on in these lands, the same were transferred to the partners - as argued appellant firm has transferred only the amounts pertaining to the immovable properties sitting in the Balance Sheet of the assessee firm to its partners capital accounts without execution of any instruments in writing and hence there was no legal transfer of the impugned properties to the partners giving rise to the Capital gains
HELD THAT:- Perusal of the Balance Sheet of the assessee firm shows that the opening value of such land as on 01.04.2016 was shown as Rs. 2,28,29,180/- which was transferred to the two partners on the ground that the lands were registered in their name originally. It is an admitted fact that there was no revaluation of such lands and no excess amount other than the cost of the lands has been credited to the capital accounts of the partners which is otherwise eligible for withdrawal by the partners. It is also an admitted fact that the lands were transferred to the capital accounts of the partners at book value only and therefore, no capital gain has arisen.
Since there was no revaluation of any asset and the assets were transferred at cost price to the partners, therefore, the decision of Mansukh Dyeing and Printing Mills [2022 (11) TMI 1180 - SUPREME COURT] is not applicable to the facts of the present case.
As assets in question were transferred to the two partners by passing a journal entry only. The Hon’ble Bombay High Court in the case of CIT vs. M.J. Mehta and Bros. [1992 (9) TMI 11 - BOMBAY HIGH COURT] has held that the transfer of immovable property belonging to the firm to its partners by means of book entry was not valid. Once the transfer is treated as not valid because of mere passing of book entry, therefore, in our opinion, there cannot be any capital gain.
While the AO has brought the amount being transfer of land to Sameer A Pimple, however, the amount transferred to Shirish K Sankhe towards the land has not been brought to tax and no action either u/s 263 or 147 of the Act has been initiated. In other words, the Assessing Officer has partly accepted a transaction and partly rejected the same. Therefore, the CIT(A)/NFAC in our opinion is not justified in sustaining the addition made by the AO - Grounds raised by the assessee are accordingly allowed.
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