|
Advanced Search Options
Income Tax - Case Laws
Showing 81 to 100 of 168831 Records
-
2024 (11) TMI 856
Revision u/s 263 - excess deduction of transport expenses and non deduction of TDS on transportation charges - CIT held that the AO failed to verify these issues adequately, thus rendering the assessment order erroneous and prejudicial to the interests of the Revenue - HELD THAT:- Details of Form 26Q and quarterly return in Form 27A were verified by the AO along with quarter wise details of both the transporters from whom TDS was deducted as well as from transporters who were not liable for TDS deduction in view of sub-section (6) of section 194C of the Act, as they were not owning more than ten goods carriage during the relevant financial year. We find that the aforesaid issues were duly explained by the assessee not only before the AO, but also, before the ld. Pr. CIT. However, the Ld. Pr. CIT without examining the explanation given by the assessee and also without pointing out any defect or infirmity in the details furnished by the assessee, simply held that the AO was supposed to make enquiries/verification upon the aforesaid issues and set aside the assessment order. The ld. Counsel has demonstrated that all the factual discrepancies pointed out by the ld. Pr. CIT regarding lack of enquiry by the AO were, in fact, factually wrong. As per the provisions of section 263 of the Act, the ld. Pr. CIT was supposed to go through the said details and should have pointed out as to which of the fact or explanation needs what further enquiries.
The words “as he deems necessary”, in our view, do not mean that the Ld. Pr. CIT is left with a choice either to make or not to make an enquiry. As per the relevant provisions of section 263 of the Act, it was incumbent upon the Ld. Pr. CIT to make or cause to make an enquiry. So far as the words “as he deems necessary” are concerned, the said words suggest that the enquiries which are necessary to form a view as to whether the order of the Assessing Officer is erroneous and prejudicial to the interest of Revenue? Once a point wise reply was given by the assessee, then a duty was cast upon the Ld. Pr. CIT to examine the reply of the assessee and form a prima-facie opinion as to whether the order of the Assessing Officer was erroneous so far as it was prejudicial to the interest of Revenue.
Admittedly, the Assessing Officer asked the assessee to furnish the necessary details from time to time which were duly furnished by the assessee and after considering the same the Assessing Officer passed the assessment order. The ld. Counsel for the assessee, has demonstrated before us that both the points, which the Ld. PCIT has held that the Assessing officer was supposed to examine, have been duly examined by the Assessing Officer during the assessment proceedings and the observations of the Ld. PCIT regarding any lack in enquiry on both the points was factually wrong. The ld. Pr. CIT, as discussed above, has not pointed out any error or discrepancy in the details furnished by the assessee and without examining such evidence and without counter questioning the assessee on the relevant points and even without considering the submission of the assessee furnished in reply to the show-cause notice, the ld. Pr. CIT, in our view, was not justified in setting aside the order, simply stating that in his view more enquiries were needed to be carried out by the Assessing Officer.
Thus, the impugned order of the Ld. PCIT passed u/s 263 of the Act is not sustainable as per law, the same is accordingly, hereby quashed - Assessee appeal allowed.
-
2024 (11) TMI 855
Deduction claimed u/s 80G under Chapter VIA in respect of donations which also qualifies as CSR expenditure and expressly disallowed u/s 37(1) - HELD THAT:- Even there is no explanation provided under the Income Tax Act as to why the contributions towards Swachh Bharat Kosh and Clean Ganga Fund set up by the Central Government are not eligible for claiming deduction u/s 80G whereas, there is no such restriction in relation to other type of contributions and to the institutions whose names find mention in Schedule VII of the Companies Act read with CSR Rules of 2014 and CSR Rules of 2021, as well as u/s 80G the even u/s 35 of the Act. Rather, as noted above, in the explanatory notes explaining the amendment to section 37(1), it has been clarified by the CBDT that if the funds meant for CSR are spent and are in the nature of expenditure described u/s 30 to 36 of the Act, that shall be allowed as deduction under those sections, despite the fact that such funds are made towards discharge of CSR obligation. Hence, this clarifies the position that the purpose of introduction of Explanation-2 to section 37(1) is not to disallow the CSR expenditure, if so admissible, under any other provision of the Act, but under section 37 only.
Contention of the ld. DR, that u/s 80G(2)(a) the deduction is admissible on the sum paid by the assessee to the approved institutions as “donations” - The term “donations” refers to a gift usually one of a charitable nature. That the donation is a voluntary transfer of property by the doner to the donee without any exchange of value on the part of the recipient and that the CSR expenditure u/s 135 of the Companies Act, 2013 is a mandatory/statutory obligation and cannot be termed as “donation”. Though, on the face of it, there seems to be some force in the aforesaid contention of the ld. DR, however, on deeper analysis of the facts, we find that this contention is not applicable in this case.
Though, there is a statutory obligation of CSR expenditure u/s 135 of Companies Act 2013, however there are many prescribed modes and activities under Schedule VII of the Companies Act for spending the CSR expenditure, which list is not exhaustive rather inclusive. There is no provision either u/s 135 of the Companies Act or under Schedule VII to the Companies Act or the CSR Rules, requiring mandatory donations to the institutes/funds prescribed under the relevant provisions of section 80G of the Income Tax Act. Therefore, there was no compulsion upon the assessee to donate the funds to a charitable organisation approved u/s 80G of the Income Tax Act.The assessee has chosen this mode out of its own volition.
When a taxing statute imposes a financial burden/tax liability even though the same appears to be harsh and not equitable, the courts have held that the fiscal statues are to be interpreted in strict terms and such liability cannot be set aside on the ground of equity or natural justice. The vice-versa is also true. Since, there is no bar to claim deduction under the relevant provisions of section 80G, except wherein so specifically barred i.e. in respect of donation towards Swachh Bharat Kosh and Clean Ganga Fund, the same cannot be denied to an assessee importing or reading the barring provisions of some other section to the entire provisions of section 80G.
In view of the above discussion, the assessee, in our view, is not barred from claiming deduction u/s 80G of the Income Tax Act in respect of donations made to the approved institutions even though the same is made in discharge of CSR obligation u/s 135 of the Companies Act.
-
2024 (11) TMI 854
Addition u/s 68 - unexplained cash credit - Case of the assessee was selected for scrutiny as the assessee has deposited cash during demonetization period - HELD THAT:- On one hand ld. AO accepted the sales and on the other hand on the same set of evidence placed before him he is not considered the other part of the sales and that too based on the estimation, presumption and assumption he has not placed on record failure on the part of the assessee as when the part of the sale is considered then why the other part is not considered.
Addition made by the ld. AO and sustained by the ld. CIT(A) merely based on the presumption and assumption. They did not deal to the fact of the case on the same set of evidence part of the sale is accepted and part of the same were not accepted. Considering that factum we do not find any reason to sustain the addition and therefore, we direct the ld. AO to delete that addition made in the hands of the assessee. Assessee appeal allowed.
-
2024 (11) TMI 853
Validity of reopening proceedings against dead assessee - HELD THAT:- This issue exactly on identical facts has already been examined in the case of Savita Kapila [2020 (7) TMI 441 - DELHI HIGH COURT] held that the issuance of a notice u/s 148 of the Act is the foundation for reopening of an assessment. Consequently, the sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not merely a procedural requirement but is a condition precedent to the impugned notice being valid in law.
Curable defect u/s 292BB or not? - In Commissioner of Income Tax-VIII, Chennai v. Shri M. Hemanathan [2016 (4) TMI 258 - MADRAS HIGH COURT] as been held "In the case on hand, the assessee was dead. It was the assessee's son, who appeared and perhaps cooperated. Therefore, the primary condition for the invocation of Section 292BB is absent in the case on hand. Section 292BB is in place to take care of contingencies where an assessee is put on notice of the initiation of proceedings, but who takes advantage of defective notices or defective service of notice on him. It is trite to point out that the purpose of issue of notice is to make the noticee aware of the nature of the proceedings. Once the nature of the proceedings is made known and understood by the assessee, he should not be allowed to take advantage of certain procedural defects. That was the purpose behind the enactment of Section 292BB. It cannot be invoked in cases where the very initiation of proceedings is against a dead person. Hence, the second contention cannot also be upheld.
Decided in favour of assessee.
-
2024 (11) TMI 852
Foreign Tax Credit (FTC) - denial of claim on delay in filing of Form 67 prescribed under Rule 128 of the Income Tax Rules - HELD THAT:- Admittedly, the assessee has revised the return of income claiming the foreign tax credit much before the intimation generated u/s 143(1). Thus, in our considered view, the Revenue should have allowed the benefit of foreign tax credit to the assessee. The assessee has filed Form 67 for claiming the benefit of foreign tax credit, which is directory in nature.
Thus, even there was no Form 67 filed by the assessee with the original return of income, yet the Revenue should have accepted the claim made by the assessee in the revised return of income. In holding so, we draw support and guidance form the order of this Tribunal in the case of Sanjeev Gopal [2022 (10) TMI 1033 - ITAT BANGALORE].
Thus direct the AO to allow the benefit of foreign tax credit to the assessee after due and necessary verification as per the provisions of law. Hence, the ground of appeal filed by the assessee is allowed.
-
2024 (11) TMI 851
Validity of proceedings against company dissolved/insolvent - HELD THAT:- As per the provisions of Insolvency and Bankruptcy Code, 2016, and the judicial pronouncements of various Courts including that of the Hon’ble Supreme Court and Hon’ble Bombay High Court and other Jurisdictional Benches which strongly support the case of assessee. The NCLT has prohibited all the proceedings against the assessee before any of the Courts including this Tribunal and also judgments relied upon by the learned A.R. for the assessee which covers the case of the assessee respondent. Hence, in view of the judicial pronouncements, as relied upon by the learned A.R. appearing for the assessee, the appeal filed by the Revenue is liable to be dismissed.
-
2024 (11) TMI 850
Deduction u/s 80P(2)(a)(i) - interest income from investments treated as 'Business Income' or 'Income from Other Sources '- HELD THAT:- After the decision of Hon'ble Apex Court in the case of the Mavilayi Service Cooperative Bank Ltd. & Ors. [2021 (1) TMI 488 - SUPREME COURT] AO's case does not stand, as inclined to agree with its claim that being primary agricultural credit cooperative society registered and operating under the provisions of the Kerala Co-operative Societies Act, 1969, it is eligible for deduction u/s 80P of the Act.
Also decided in Peroorkada Service Co-Operative Bank Ltd. [2021 (12) TMI 1084 - KERALA HIGH COURT] interest earned from investment of surplus funds to be assessable as 'income from other sources and not as 'profit and gains of business. Further, the Hon'ble court has held the interest earned from Co-operative banks to be eligible for deduction u/s 80P(2)(d) holding the co-operative banks to be co-operative societies for the purposes of section 80P(2)(d). However, Hon'ble courts has held interest earned from treasury/commercial banks to be not eligible for deduction under section 80P as it is neither covered under section 80P(2)(a)(i) nor under section 80P(2)(d).
To sum up, even though such interest and dividends as received from entities registered with Cooperative Societies Act is income from other sources, it is eligible for deduction u/s 80P(2)(d) of the Act.
DR vehemently quotes Totagars Cooperative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT]; CIT vs. Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] that the assessee’s impugned interest income is not eligible for sec.80P(2)(d) deduction. He could hardly dispute that learned CIT(A)-NFAC has already considered the catena of case law (supra) whilst deciding the instant issue in assessee’s favour. That being the case, we did not find any substance in the Revenue’s instant sole substantive grievance - Decided in favour of assessee.
-
2024 (11) TMI 849
Rectification of mistake - Addition made in respect of Reserve for Unexpired Risks (URR) u/s 115JB - HELD THAT:- We feel that the Tribunal made mistake in observing that the assessee agreed and hence, the above line may be read as under:-
“Hence, taking a consistent view, we remit this issue also back to the file of the AO with similar direction to the AO as mentioned in para 15.10 of this order.”
Provision made towards Claims Incurred But Not Reported (IBNR) and Claims Incurred But Not Enough Reported (IBNER) added to the Book profits u/s 115JB - Revenue pointed out that this issue is neither adjudicated by the CIT(A) nor the Tribunal, on merits and only some facts are available in the order of the Assessing Officer. Hence, this issue can be remitted back to the file of the Assessing Officer before whom the assessee will place all evidences and prove whether claim made by the assessee is ascertained liability or unascertained liability.
Rectification of mistake allowed as Tribunal has not adjudicated the addition grounds raised pertaining to considering of income as per 143(1)(a) of the Act and addition to book profit relating to URR, even though no amount have been debited to Profit & Loss account - We have gone through the order of the Tribunal and noted that the Tribunal has not adjudicated these two additional grounds and hence, to that extent we recall the order of the Tribunal and direct the Registry to fix this appeal for the assessment year 2018-19 for hearing.
-
2024 (11) TMI 848
Rectification of mistake - Reopening of assessment u/s 147 v/s assessment u/s 153C - information or seized document pertains/ belongs to the assessee was found at searched person place - AR mentioned that the Hon’ble Tribunal has not considered the judicial decisions and dismissed the additional ground of appeal and sustained the decision of the CIT(A) upholding the validity of the reassessment proceedings U/sec147 of the Act
HELD THAT:- We support our view relying on the decision of the Hon’ble Supreme Court in the case of Honda Siel Power Productions Ltd. [2007 (11) TMI 8 - SUPREME COURT] reversing the decision of the High Court, that in allowing the rectification application the Tribunal gave a finding that the earlier decision of a co-ordinate Bench was cited before it but through oversight it had missed the judgment while dismissing the appeal filed by the assessee on the question of admissibility/allowability of the claim of the assessee for enhanced depreciation under section 43A. One of the important reasons for giving the power of rectification to the Tribunal under section 254(2) was to see that no prejudice was caused to either of the parties appearing before it. The rule of precedent was an important aspect of certainty in the rule of law, and prejudice had resulted to the assessee since the precedent had not been considered by the Tribunal. The Tribunal was justified in rectifying the mistake on record.
We, thus find that non consideration of judicial decisions cited before the bench is a mistake apparent from the record Accordingly, in the interest of principles of natural justice, we recall the Hon’ble Tribunal order [2022 (11) TMI 443 - ITAT MUMBAI] and direct the registry to post the appeal for regular hearing and inform the parties.
-
2024 (11) TMI 847
Deduction u/s 80P(4) - appellant is a co-operative bank - HED THAT:- As the appellant CIDCO Employee co-operative credit society was registered under Maharashtra state co-operative societies Act, 1960 on 11.10.1999. According to appellant's bye laws the main objective of the appellant society is to provide credit facility among its members and the membership is restricted to its employees only. The appellant assessee society’s members contribute their funds to society and same funds are given as loans on interest amongst its members only.
Assessee’s principal business is not banking business as it does not transact banking business with general public in India. The first and third conditions, thus do not exist in the functioning of assessee society. It is accordingly held that in absence of aforesaid two conditions, the appellant assessee does not fall under the category either of a co-operative bank or a “primary co-operative bank”, hence not hit by sub section 4 of section 80P of the Act.
Apart from the business income, certain small portion of income of the society was earned from the interest and dividend. It appears from the profit & loss A/C of paper book at page 37 that the appellant's co-operative credit society received interest income on investments and dividend income on bank shares. The investee institutions have not been questioned by the authorities below in respect of their status as co-operative societies.
The total income from profit & gains during the term under consideration is not disputed by the revenue. The income from interest on investment & dividend is eligible for deduction u/s. 80P(2)(d) and the remaining amount received from the interest from members on deposit is attributable to assessee society’s business income and is deductible u/s. 80P(2)(a)(i) - AO was thus not justified in denying the benefit of Section 80P of the Act to the assessee society. The aforesaid point is accordingly determined in favour of the assessee and against the revenue.
-
2024 (11) TMI 822
Jurisdiction of DCIT Bengaluru to issue notice u/s 153C - transfer of case u/s 127 - assessee’s case was transferred from ACIT, Circle – 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) - As decided by HC 2021 (10) TMI 1058 - KARNATAKA HIGH COURT] notice issued by the DCIT Circle 1(1), Bangalore, is without jurisdiction and as such, all further proceedings would render void ab initio. The arguments of the learned counsel for the revenue with respect to Sections 292B and 292BB do not merit any consideration.
HELD THAT:- Special Leave Petitions are dismissed.
-
2024 (11) TMI 821
Deduction of TDS on salary u/s 192 - Taxability of income received by Nuns, Sisters, Priests, or Fathers working as teachers in religious institutions - As decided by HC [2019 (3) TMI 1253 - MADRAS HIGH COURT] there is no exemption available even to the charitable or religious institutions themselves, who have to secure registration as such and then, their income and application of income for charitable or religious purposes only is regulated strictly in accordance with the provisions contained in Chapter III of the Act. These provisions have no application to the individual Nuns, Sisters or Missionaries so as to claim any exemption from income tax.
As far as the provisions with which we are concerned, namely Sections 15 and 192 of the Act, we do not have an iota of doubt that these provisions have nothing to do with religion or any other special status of the person receiving the income described to be salary by the payer of the same.
HELD THAT:- We are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution.
Special Leave Petitions are accordingly dismissed.
-
2024 (11) TMI 820
Unexplained cash credits u/s 68 - Addition invoking provisions of Section 115BBE (Enhanced Rate of Tax) - AO as well as Ld. CIT(A) doubted the source of cash deposits by taking view that assessee has not shown cash-in-hand in the ITR for assessment years 2015- 16 and 2016-17 - HELD THAT:- Considering the overall facts and circumstances of the case, and the facts that no independent investigation of fact was carried out about agricultural holding nor discarded / rejected the receipt of agricultural produce. Thus in order to avoid the possibility of revenue leakage at reasonable disallowance would be sufficient to avoid the possibility of revenue leakage. Thus, considering the various heads of income of assessee, find that ad hoc disallowance @ 10% of addition would be sufficient to avoid the possibility of revenue leakage. In the result, ground No.1 of appeal is partly allowed.
Enhanced Rate of Tax u/s 115BBE - Divisions Bench as well as SMC Bench of this Tribunal in a series of case has held that enhance rate prescribed under section 115BBE is not applicable for AY 2017-18, reference is made in case of Samir Shantilal Mehta [2023 (5) TMI 1279 - ITAT SURAT] Arjunsinh Harisinh Thakor [2023 (6) TMI 770 - ITAT SURAT] and in Jitendra Nemichand Gupta [2023 (6) TMI 1338 - ITAT SURAT] and Punjab Retail Pvt. Ltd [2021 (11) TMI 405 - ITAT INDORE] and Sandesh Kumar Jain [2022 (11) TMI 126 - ITAT JABALPUR] In the result, ground of the appeal is partly allowed.
-
2024 (11) TMI 819
Assessment u/s 153C - determination of six years prior to the relevant assessment year - HELD THAT:- We observed that the search in the case of Sunstar Group was carried on 19.12.2013 and as per records submitted before us, we observed that the notice u/s 153C was issued only on 20.01.2016.
Therefore, the satisfaction in the case of the assessee was recorded by the jurisdictional Assessing Officer prior to issue of notice issued u/s 153C, therefore, the relevant searched assessment year pertains to AY 2016-17. Accordingly, six years prior to the relevant assessment year covers AYs 2010-11 to 2015-16. In the case of the assessee, notice u/s 153C was issued to the assessee covering AY 2009-10 which is beyond jurisdiction as per the judicial precedence as held in the case of CIT-14 vs. Shree Jasjit Singh [2015 (8) TMI 982 - DELHI HIGH COURT]
We note that AY 2009-10 which was covered by the AO u/s 153C is beyond jurisdiction. Accordingly, we set aside the assessment made in this case. Assessee appeal allowed.
-
2024 (11) TMI 818
Computation of deduction u/s 80IB/80IC and 10B - AO took the view that the assessee has increased the profits of eligible units by not allocating common expenses. Accordingly, he allocated Head office expenses to various units eligible for deduction and resultantly, the deduction u/s 80IB/80IC and 10B of the Act came to be allowed at a lower figure - HELD THAT:- We notice that the Tribunal is consistently restoring this issue to the file of the AO with certain directions.
A.R invited our attention to the order passed in assessee’s own case for AY 1993-94. In this order, the Co-ordinate Bench has followed the order passed for AY 2006-07 [2012 (12) TMI 458 - ITAT MUMBAI] in respect of deductions claimed u/s 80HH and 80I of the Act and restored the issue to the file of AO with the instruction to follow the directions given in AY 2006-07 with regard to allocation of common expenses incurred at the Head Office. It is also pertinent to note that the Co-ordinate Bench has also accepted the plea of the assessee that certain “common income” should also be allocated to the eligible units.
We notice that the CIT(A) has restored this issue to the file of the AO with the direction to follow the ITAT's order. Accordingly, we also direct the AO to allocate both common expenses and common income to the eligible units while computing deduction u/s 80IB/80IC and 10B of the Act as per the direction issued by the ITAT in the earlier years.
Miscellaneous income earned on sale of scraps and by products in eligible units are eligible for deduction u/s 80IB/80IC - We notice that the AO did not allow deduction in respect of these kinds of receipts, without making any specific discussion. CIT(A) also did not adjudicate this issue specifically.
As brought to our notice that the Mumbai Bench of Tribunal has examined an identical issue in the context of deduction u/s 80IC of the Act in the case of Addl.CIT vs. Sterlite Technologies Ltd. [2017 (1) TMI 1249 - ITAT MUMBAI] wherein it was held that the income arising on sale of scraps is held to be eligible for deduction u/s 80IB/80IC.
In the instant case, the amount received by the assessee is on account of sale of scraps and by products and they are generated out of manufacturing process. Hence, the scrap & by-products are inextricably connected with the manufacturing activities carried on by the eligible units. Accordingly, we are of the view that there is merit in the submission of the assessee that the sale value of scraps/by-products, in fact, will go to reduce the cost of materials used in manufacturing and hence it should be considered as "profits and gains derived from" industrial undertaking. The decision rendered by the Co-ordinate Bench in the case of Sterlite Technologies Ltd [2017 (1) TMI 1249 - ITAT MUMBAI] support the case of the assessee.
We direct the AO to allow deduction u/s 80IB/80IC of the Act in respect of sales value of scraps/by-products generated in the eligible units.
Adjustment on account of CENVAT credit - AO, following sec.145A of the Act, assessed the unutilized CENVAT amount as income of the assessee - HELD THAT:- Since, it is a case of method of accounting and since it is stated that there will be no impact on the profit under both Exclusive method and Inclusive method of accounting, following the decision rendered by the Co-ordinate Bench in AY 2006-07, we restore this issue to the file of the AO for examining the claim of the assessee.
Deduction of cost of Relief materials given to Tsunami victims - allowable business expenditure u/s 37(1) or not? - HELD THAT:- When the dominant objective is philanthropic in nature, the same cannot be considered as an expenditure laid out or incurred wholly and exclusively for the purposes of business. It is pertinent to note that the assessee has not shown that there existed any business connection in incurring this expenditure.
Assessee has also taken a plea that this expenditure should be considered as Sales promotion expenses. We are unable to accept the same. It is inconceivable that a business man would promote its products amongst the badly affected Tsunami victims, who have been rendered penny less. Hence, this plea of the assessee deserves rejection.
Assessee has also taken a plea that this expenditure should be considered as CSR expenditure. It was not shown that this expenditure has been incurred as per the requirement of Companies Act as CSR expenditure. It may be akin to CSR expenses, but it would not qualify as CSR expenses. Hence, we are of the view that the assessee cannot take support of the decisions rendered in respect of CSR expenses.
We are of the view that the Ld. CIT(A) was justified in confirming the disallowance of sum incurred on the relief materials given to the victims of Tsunami.
Claim of enhancement of Written Down Value (WDV) of assets by the amount of Insurance claim not received - HELD THAT:- We do not find any merit in the contentions of the assessee that the insurance claim amount of Rs. 8.00 crores refunded to the assessee should be considered as refund of part of purchase consideration, since the insurance claim of Rs. 8.00 crores was received by the then parent company in connection with destruction of Salt Pans and the said amount only was refunded to the assessee. Hence, in our view, it would fall within the meaning of “moneys payable”. In this connection, we are of the view that the mode or manner of paying the insurance compensation by M/s Conopco Inc to the assessee is irrelevant. In Ground No.12, the assessee is contending that the above said amount should be treated as capital receipt, which is liable to be rejected for the reasons discussed above.
We modify the order passed by Ld.CIT(A) on this issue and direct the AO to increase the WDV of AY 2005-06 in the following manner:-
(a) Increase the WDV of AY 2001-02 of the relevant block by Rs. 14.44 crores.
(b) Re-compute the WDV of AY 2005-06 of that block by reducing the depreciation amount of AY 2001-02 to 2004-05.
(c) Allow depreciation in AY 2005-06 on the WDV so computed. We order accordingly.
Reduction of Capital subsidy amount from the WDV of assets - HELD THAT:-Following the decision rendered by the co-ordinate bench of Kolkata in the case of Gloster Ltd. [2016 (2) TMI 700 - ITAT KOLKATA] we hold that the amount of subsidy referred above is not required to be deducted from the WDV for the purpose of computing depreciation, since the objective of subsidy scheme is to promote industrialization of backward areas and not to fund part of cost of assets. We also notice that identical view has been expressed in the case of Harinagar Sugar Mills [2017 (1) TMI 853 - BOMBAY HIGH COURT] Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO not to reduce the amount of subsidy from WDV while computing depreciation.
Dispute of rate of tax applicable to the dividend distributed to Non-resident shareholders - HELD THAT:- We notice that this issue has been decided against the assessee by the Special Bench of ITAT in the case of Total Oil India P Ltd. [2023 (4) TMI 988 - ITAT MUMBAI (SB)]
TP adjustment made by TPO/AO on various items of international transactions - assessee had selected TNM Method as most appropriate method and bench marked the international transactions at entity level - HELD THAT:- Since the Ld.CIT(A) has followed the decision rendered by the Co-ordinate Bench in the assessee’s own case in AY.2006-07 [2012 (12) TMI 458 - ITAT MUMBAI] wherein entity level bench marking under TNM Method has been accepted by the Tribunal, we do not find any reason to interfere with the order passed by the Ld.CIT(A) on Transfer Pricing issues urged before us.
-
2024 (11) TMI 817
LTCG - deduction u/s 54 - assessee received two flats in exchange for old properties under a redevelopment agreement - HELD THAT:- As perused the provision of section 2(47) of the Act which define the terms ‘transfer’ to include various kinds of transactions. This section defines transfer as the ‘transfer of capital asset including the sale, exchange relinquishment or extinguishment of the capital asset or extinguishment of any right therein or the compulsory acquisition thereof under any law’. Since in the case of the assessee there is an exchange of capital asset (old flats no. 266 and 273) for another capital assets (new flats no. 23 and 23B) as discussed as per the re-development agreement entered with the developer therefore we direct the assessing officer to allow the claim of deduction u/s 54 of the Act as directed by the ITAT in the above referred case of Shri Dilip P. Ahuja [2014 (10) TMI 1078 - ITAT MUMBAI]
-
2024 (11) TMI 816
Disallowance u/s 14A r.w.r.8D - suo-moto disallowance made by assessee - AO held that nowhere in the section 14A provides that disallowance is to be made only, if assessee has earned exempt income during the year - as argued AO without recording his dissatisfaction issue a Show Cause Notice to the assessee to explain as to why provisions of Rule 8D r/w section 14A should not be invoked - HELD THAT:- We hold that the reliance placed by the Ld AO of the CBDT Circular No.5 of 2014 to make disallowance u/s. 14A is legally not tenable and liable to be deleted.
Scope of Amendment to Section 14A by the Finance Act, 2022 - Since very recently Hon’ble Guwahati High Court reversed the decision of the ITAT Guwahati Bench in Williamson Financial Services Ltd [2024 (9) TMI 1571 - GAUHATI HIGH COURT] and others and held that the Amendment to Section 14A by the Finance Act, 2022 is to be applicable Prospective only.
Own funds of the Assessee were much more than the investments made by the Assessee, hence no disallowance be made u/s. 14A of the Act on account of interest expenditure - Hon'ble Supreme Court in the case of CIT -Vs- UTI Bank Ltd [2022 (10) TMI 613 - SC ORDER] held that where interest free own funds available with assessee exceeded their investments in tax free securities, investments would be presumed to be made out of assessee’s own funds and proportionate disallowance was not warranted u/s. 14A. Thus we hold that the disallowance made by the Ld AO u/s. 14A is legally not tenable and liable to be deleted.
Mandatory for the AO to record dis-satisfaction as required u/s. 14(2) -Disallowance made invoking Rule 8 without recording dis-satisfaction by the Assessing Officer is against the provisions of section 14[2] and the addition is liable to be deleted.
MAT computation on section 14A addition - Provisions of section 14A cannot be applied for computing the book profit u/s. 115JB of the Act and thereby delete the addition made by the AO.
Depreciation on goodwill arising from amalgamation u/s. 32 - HELD THAT:- The basic fallacy in the approach of the Ld AO in this case is that he has proceeded further on the premise that the goodwill in question was transferred from "amalgamating company" to "amalgamated company" and hence depreciation on the same is not allowable in the eye of law. However, in the present case, as a matter of fact, "goodwill in question" is a "result of amalgamation" and has come into existence only pursuant to Scheme of Amalgamation duly approved by competent authority namely Hon’ble NCLT. Thus all the provisions relied upon by the Ld AO (enlisted hereinabove) would apply only in a case where an "asset" is "transferred" in the course of "amalgamation" by "transferor company" to the "transferee company" and would not apply when a particular "asset" is a "result" of amalgamation.
The reasoning given in the Memorandum explaining the Finance Bill, 2021 for excluding ‘goodwill’ from the ambit of intangible assets is that the actual calculation of depreciation of goodwill is required to be carried out in accordance with various other provision of the IT Act. Once those provisions are applied, in some situations (like that of business re-organization) there could be no depreciation on account of actual cost being zero and the WDV of that asset in the hands of the predecessor/amalgamating company being zero.
Goodwill, in general, is not a depreciable asset and it depends upon how the business runs, goodwill may see appreciation and in the alternative no depreciation to its value. Hence, for the said reasons assessee’s have been barred from claiming depreciation on goodwill. These amendments are to take effect from 01st April 2021 and will accordingly apply to the assessment years 2021-22 and subsequent assessment years. Therefore the amendments in question will have no impact on the claim of the assessee company in this appeal which pertains to the Asst. Years 2016-17 and 2017-18. In view of the above findings depreciation on goodwill created as a result of amalgamation is allowable and directed the JAO to allow the same by passing appropriate orders. Decided in favour of assessee.
-
2024 (11) TMI 815
Taxability of income in India - Receipts under code sharing arrangements - Denial of benefit of exemption under Article 8 of the India-USA Tax Treaty -receipts with the third parties where the assessee has only booked the tickets and the actual transportation has been done by third parties - Disregarding alternative methodology for computing taxable income submitted by the Appellant
Assessee is a foreign airline company and a tax-resident of USA engaged in the business of operation of aircrafts in the international traffic. The assessee obtained an approval from the Director General of Civil Aviation (“DGCA”) to undertake scheduled air services in India on the routes specified under the India-US Air Transport Agreement (“ATA”) and established a branch office in India, to undertake activities related to the booking of air passenger tickets and air freight in India, with the approval of the Reserve Bank of India (“RBI”), which is an admitted Permanent Establishment (“PE”) in India.
HELD THAT:- It is relevant to note that in assessee's own case for AY 2010-11 [2015 (5) TMI 681 - ITAT DELHI], the coordinate bench has considered the same issue and held that the receipts under code sharing arrangements cannot avail the benefit of Article 8 of India-US DTAA and accordingly taxable in India.'
Since the terms of Treaty are negotiated between the two countries it is clear that the terms agreed between India and US while entering into the agreement, that India-US DTAA, generally follows the pattern of the US model tax convention but is different in a number of respects to reflect India's status as a developing country. This is supported by the fact that a combined reading of the above Article 8 as per US Model and Article 8 of India US DTAA, and accordingly leads to us to see the merit in the argument that the OECD commentaries have to be read into Article 8 while considering the applicability of the same to code-sharing arrangement.
One of the reasons for the coordinate bench to decide the issue against the assessee in AY 2010-11, is that there is no agreement to substantiate the terms under which code-sharing arrangement have been entered into by the assessee. For the year under consideration the assessee during the course of hearing provided a sample copy of the agreement entered into with Air France and submitted that similar agreements are available for all code-sharing arrangements with third party airlines. Therefore, the contention of the revenue that the receipts from code sharing agreement are not substantiated by any underlying agreements is not tenable for the year under consideration.
On perusal of records we notice that the assessee had filed an application with the Competent Authority (“CA”) under Art.27 of the India-US DTAA requesting that the authorities invoke Mutual Agreement Procedures(“MAP”) for resolving the impugned issue for the year under consideration along with the earlier years. US authorities have responded stating that despite prolonged efforts, a consensus could not be reached with the Indian authorities and that the US authorities are in agreement with the view that all of assessee's profits including revenue associated with interline and code sharing arrangement are to be exempt from Indian Taxation.
Thus we hold that the profits derived from the transportation of passengers under code sharing arrangement by the assessee is to be treated as profits from operation of aircrafts for the reason that –
i. the transportation of passengers either fully or party in third party aircrafts in a specific journey by way of a code sharing arrangement, would fall within the ambit of the word "charterer" and, accordingly would be within the scope of "operation of aircrafts " as defined in Article-8(2) of the India US DTAA.
ii. The passengers under code sharing arrangements are transported on behalf of the assessee by the third party airlines under the code sharing arrangement on a principal to principal basis where the ticket for the entire journey is issued by the assessee bearing specific code. Hence the same would fall within the scope of "operation of aircrafts"
iii. The transportation of passengers by the assessee under code sharing arrangement either fully or partly in a third party aircrafts is inextricably linked which is established in assessee's case here
Accordingly the receipts of the assessee under code sharing arrangement are covered under Article-8, of India US DTAA and cannot be taxed in India. The grounds including the additional ground raised by the assessee in this regard are allowed.
-
2024 (11) TMI 814
Reopening of assessment after four years - Addition u/s 68 - independent application of mind v/s borrowed satisfaction - HELD THAT:- As undisputed fact that the original assessment in the case of the assessee u/s 147 was already completed on 27.11.2018. The notice u/s 148 for the second time for reopening of the case was issued on 22.03.2019 after the end of the four years period from the end of assessment year 2011-12.
The four years period was expired as on 31.03.2017. We have perused the return of income filed by the assessee as referred supra in this order wherein the assessee has disclosed the information and facts relating to the receipt of share capital from the three entities in the ITR Form 6 and in the financial statements filed before the AO at the time of original assessment order passed u/s 147 of the Act on 27.11.2018.
AO failed to substantiate that there was any fault on the part of the assessee to disclose fully and truly all material facts.
As decided in case of Everest Kanto Cylinder Ltd. [2024 (2) TMI 163 - BOMBAY HIGH COURT] since the notice u/s 148 has been issued more than 4 years after the expiry of the relevant assessment year, proviso to section 147 shall apply in as much as re-assessment is not permissible unless there has been failure to truly and fully disclosed necessary facts required for the assessment.
We have also perused the decision of Ananta Landmark (P) Ltd.[2021 (10) TMI 71 - BOMBAY HIGH COURT] wherein it is held that after a period of 4 years even if the assessing officer has some tangible material given to the conclusion that there is an escapement of income from assessment, he cannot exercise the power to reopen unless he discloses what was the material fact which was not truly and fully disclosed by the assessee.
Thus as considered that the assessee had already disclosed the detail of all the shareholder who have subscribed to the share capital of the assessee in the case of the shareholders, the assessing officer has already made addition in the case of one shareholder in the original reopening assessment order passed in the case of the assessee as already discussed above in this order.
It is categorically mentioned in the proviso to section 147 of the Act that condition of reopening of the assessment beyond the period of 4 years of the assessment year in which the return was filed is also applicable to the cases reopened u/s 147 of the Act. Therefore, we consider that reopening of the assessment in the case of the assessee made by the assessing officer beyond the period of 4 years without bringing on record any lapses on the part of the assessee for not disclosing fact of the case truly and fully is invalid. Appeal of the assessee is allowed.
-
2024 (11) TMI 813
Stay the demand sought of assessment order passed u/s 143 (3) r.w.s. 144C - AR submitted that assessee is a wholly owned subsidiary of Multi-Accord Limited, a Hong Kong based company which holds 99.99% of share capital of the assessee - HELD THAT:- We observed that the issue under consideration is more or less covered by various decisions of Hon’ble Delhi High Court and other High Courts. We also observed that assessee has already remitted 20% of the total outstanding demand and relevant bank challan is already filed in the form of paper book. Considering the above facts on record and balance of convenience is in favour of the assessee, we are inclined to grant stay for a period of 180 days from the date of this order or till the date of disposal of present appeal, whichever is earlier, subject to the rider that the assessee shall not take unnecessary adjournment to prolong the appeal otherwise stay order would cease to operate.
The case of the assessee is also posted for hearing on 16.12.2024 along with other pending appeals which are posted on the same date. Since the date of hearing is announced in the open court, there is no requirement for issue of separate notice.
........
|
9911796707
