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Showing 441 to 460 of 1430 Records
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2023 (12) TMI 990
Violation of principles of natural justice - manpower supplying service - whether proper tax along with applicable interest had been deposited by the petitioner on the Indian component for payment or not? - HELD THAT:- Mr. Deepak Kakkar, Advocate accepts notice for Mr. Tejinder K. Joshi, Sr. Standing Cousnel, for respondents No. 1 to 3.
To come up for service of respondent No. 4 on 13.02.2024.
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2023 (12) TMI 989
Recovery of penalty pursuant to the order impugned - no Tribunal is constituted - HELD THAT:- Reading the order would indicate that the author of the order had opined that the petitioner should inform the authority if any appeal or stay application has been filed against the OIA dated 31.07.2023 and whether the Appellate Authority has granted stay of the order. It is the case of the authority that if no stay of recovery of dues has been granted, the petitioner is called upon to pay the dues in question.
Issue NOTICE returnable on 07.12.2023.
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2023 (12) TMI 988
Offence punishable u/s 276-B r/w 278-B of IT Act - statutory requirement of service of notice as contemplated by Section 2(35)(b) -to principal officer - as contented petitioner is not the principal officer under Section 2(35) of the I.T. Act, and he was never served with any notice treating him as a principal officer as required under clause (b) of Section 2(35) to initiate a prosecution under sections 276-B read with 278-B - HELD THAT:- The term ‘person’ is defined under section 2(31) of the I.T. Act and includes a company. As per sub-section (35) of Section 2 of the I.T. Act, principal officer with reference to a local authority or a company or any other public body or any association of persons or any body of individuals, means (a) the secretary, treasurer, manager or agent of the authority, company, association or body, or (b) any person connected with the management or administration of the local authority, company, association or body upon whom the Assessing Officer has served a notice of his intention of treating him as the principal officer thereof.
In order to treat a person as a ‘Principal Officer’ as defined under section 2(35)(b) of the I.T. Act, he must be a person connected with the management or administration of the company, and Assessing Officer must have served upon him a notice of his intention of treating him as the principal officer of the company.
In the present case, it is not the case of respondent No. 1 that the notice as contemplated by Section 2(35) of the I.T. Act has been served upon the petitioner. Although, the petitioner is not classified under Section 2(35)(a) as an individual who can be treated as a principal officer without notice, but he falls under the category of persons specified under Section 2(35)(b), where he can be treated as a principal officer only upon service of notice to prosecute him under the purview of Sections 276-B and 278-B of the I.T. Act.
Though the Department claimed that it sent the notice to the assessee company and its directors, the fact remains that it was never delivered to the petitioner. Further, the record does not indicate that the Department took any steps to ensure the delivery of the notice before initiating prosecution. Since the Department did not comply with the mandatory condition as enumerated in Section 2(35)(b), this Court finds it difficult to accept the contention of respondent No. 1/Department that it followed all necessary procedures before initiating prosecution against the petitioner.
Additionally, a bare perusal of the Order shows that before issuing the process, the learned Magistrate did not take into consideration the relevant provisions of the I.T. Act and determine whether the mandatory notice u/s 2(35)(b) of the I.T. Act was delivered to the accused or not. Needless to state that an order of issuance of process is not an empty formality and requires the Magistrate to apply his mind before issuing the process. Passing orders of issuance of a process without appreciating the statutory provisions and cautiously examining the material on record may put the wheels of criminal law in motion and summon an innocent individual to stand trial. Such orders are liable to be quashed and set aside.
This Court is satisfied that the statutory requirement of service of notice as contemplated by Section 2(35)(b) of the I.T. Act is not complied with. This non-compliance goes to the root of the matter and dents the prosecution against the petitioner.
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2023 (12) TMI 987
Reopening of assessment - Sales consideration shown double / twice in AIS - allegation of undisclosed source of purchase of property - As per AO the the assessee has purchased two properties and purchase consideration is more than sale consideration of property - Petitioner has been candid in admitting that though the residential flat sold during the year was a short term capital asset and petitioner was liable to pay tax thereon, petitioner did not pay any tax on short term capital gain because petitioner was advised that as the flat was a residential flat and in the same year petitioner had purchased another flat, no income was chargeable to tax - HELD THAT:- On the working of the short term capital gain for the flat sold, the Assessing Officer came to a finding that taxable capital gain was Rs. 13,64,000/-. But strangely in the impugned order dated 29th March 2023 issued under Section 148A(d) of the Act, the Assessing Officer proceeded further on the basis “as regards the two immovable properties purchased by the assessee, the assessee has submitted that, she has purchased only one property for the consideration of Rs. 35,00,000/-”.
What we find difficult to digest is even in the notice issued u/s 148A(b) or the information annexed thereto, nowhere does it state petitioner has purchased two properties for Rs. 70 lakhs. Petitioner has provided documents to justify that petitioner has purchased only one property for Rs. 35 lakhs and also has explained the source of funding.
If the Assessing Officer has to say that there are two properties purchased, either erroneously the figure of Rs. 35 lakhs is doubled and shown as Rs. 70 lakhs in the AIS, or the Assessing Officer should provide the details of the second property, which according to the Assessing Officer, petitioner has purchased but has failed to disclose resulting in an escapement of income. An assessee cannot prove negative. If the Assessing Officer has any positive information about the details of the second property allegedly purchased, the Assessing Officer was duty bound to apply his mind and confront petitioner with those documents. Simply relying on what the AIS states and passing an order is not something which this Court can accept.
As we agreed to entertain this petition only in view of this undertaking given by Mr. Phadke that assessee will pay the capital gain payable and will not raise the issue of limitation under Section 149(1)(b) of the Act. The impugned order to the extent of Rs. 35 lakhs remaining as unexplained is hereby quashed and set aside.
AO shall give effect to this order and provide computation of income to petitioner within four weeks of this order being uploaded and as per the undertaking given, petitioner shall pay the amount as computed within four weeks thereafter. Even if petitioner feels the computation is wrong, the amount will be paid and thereafter, petitioner may take such steps as advised in accordance with law to impugn the computation of income.
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2023 (12) TMI 986
Adjustment of refund against challan filled under VsV Scheme - calculation of interest u/s 244A - credit of the said challan was not given in Form 3 & Form 5 under VsV as the challan was not visible on the PAN of assessee due to the fact that assessee deposited the challan on incorrect PAN - As argued interest u/s 244A will not be allowed to assessee on the amount of the refund as the delay in issue of refund is attributable to assessee and also the matters is settled under VsV 2020 - HELD THAT:- Revenue are agreeable to refund the money after giving credit qua the same in the challan which concededly requires correction.
The amount to be credited and thereafter remitted to the petitioner/assessee would be Rs. 25 lakhs, even according to the respondents/revenue. However, the respondents/revenue have indicated that interest under Section 244A of the Income Tax Act, 1961 [in short, ‘the Act’] would not be paid to the petitioner/assessee.
Assessee, says that insofar as the proceedings under Direct Tax Vivad Se Vishwas Act, 2020 [in short, ‘2020 Act’] are concerned, they are positioned at the stage of acceptance of Form-3. Also albeit on instructions also states that the petitioner/assessee will be agreeable to correction of the challan and receipt of Rs. 25 lakhs, sans the interest.
Therefore, the writ petition is disposed of with a direction that the concerned authority will progress the matter under the 2020 Act, as per law, from the stage at which it is presently positioned.
n so far as correction of the challan is concerned, steps in that behalf will be taken by the respondents/revenue and consequential refund of Rs. 25 lakhs would be made. This exercise will be completed within three (3) weeks of the receipt of a copy of the order passed today.
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2023 (12) TMI 985
Deduction with regard to liquidated damages - CIT(A) examined the material on record and returned a finding of fact that the respondent/assessee had infact suffered damages to the extent of the provisions made in the preceding AY - CIT(A) found that the respondent/assessee had to make supplies to BSNL and MTNL. Since, there was a delay in making the supplies, liquidated damages were adjusted by the said entities against the invoices raised by the respondent/assessee - HELD THAT:- The Tribunal, was not impressed with the arguments advanced on behalf of the appellant/revenue, and hence sustained the findings returned by the CIT(A) with regard to the liquidated damages suffered by the respondent/assessee.
We may note that there is nothing brought on record to suggest that the findings returned by the CIT(A) are perverse.
Thus, having regard to the orders passed by the CIT(A) and the Tribunal, according to us, no substantial question of law arises for our consideration. Appeal closed.
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2023 (12) TMI 984
TP Adjustment - building design services rendered by assessee - assessee had taken recourse to the ratio of operating profit and total cost in arriving at the PLI - Tribunal justification in rejecting the Profit Level Indicator (PLI) (which is a ratio of operating profit to total cost) adopted by the AO - as submitted that since separate segmental accounts were not available, it was difficult to segregate the cost incurred by assessee in the deployment of employees concerning AEs and non-AEs - HELD THAT:- As assessee had maintained segmental accounts, and accounts vis-a-vis salary expenditure were maintained project-wise, the employees deployed with regard to the transactions entered with AEs were identifiable.
The conclusion arrived at by the DRP that common employees were allocated was a finding that did not emerge from the record. The Tribunal evidently was of the view that the employees deployed with AEs and non-AEs were identifiable as the accounts were maintained project-wise.The view taken by the DRP that hourly worksheets of employees were not maintained was unsustainable, as there was no such requirement in law. This conclusion was reached by the Tribunal also for the reason that salaries to employees were not paid on an hourly basis.
Given the aforesaid findings of fact, in our view, the Tribunal correctly concluded that the PLI had been properly computed by the respondent/assessee.
Tribunal justification in rejecting M/s Korus Engineering Solutions Pvt. Ltd. as a comparable - According to us, the DRP made no attempt to establish as to how Korus was functionally comparable with assessee. It is for this reason perhaps that the Tribunal stated that the information which was obtained from the website of Korus was “sketchy” and therefore Korus could not be used as comparable to benchmark international transactions entered into between the respondent/assessee and its AEs.
Having regard to the foregoing, we are of the opinion that the Tribunal has returned findings of fact and adopted the correct approach qua both issues, and hence no interference is called for with the impugned order.
No substantial question of law arises.
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2023 (12) TMI 983
Reopening of assessment u/s 147 - Capital Gains arising out of the sale in respect of Thiruporur land - A Power of Attorney was executed by the Petitioner and petitioner states that she has not received any amount subsequent to the execution of Power of Attorney - as apart merely because the Sale Deed was executed by the Power Agent, it will not create any liability for payment of Capital Gains for the Assessment Year 2017-2018. It is because the petitioner received entire sale consideration at the time of execution of Power of Attorney itself - HELD THAT:- This Court is of the considered view that since the petitioner has taken a stand that the entire amount of sale consideration was received on 16.12.2015 that would be the date for receipt of the sale consideration by the petitioner either for a sum of Rs. 50,00,000/- (Rupees Fifty Lakhs only) or a sum of Rs. 1,04,64,000/- (Rupees One Crore Four Lakhs Sixty Four Thousand only) as alleged by the Respondents.
In view of the admission of this aspect by the Petitioner by virtue of oral submission and by virtue of filing of the additional affidavit, this Court is of the considered view that the Impugned Notice of the 1st Respondent dated 31.03.2022 as well as Impugned Assessment Order dated 29.03.2022 are liable to the set aside. Accordingly, the same are set aside.
It is made clear that in the event if the petitioner takes a different stand in future that any of the Capital Gains arising out of the sale of the Thiruporur property has to be considered for Assessment Years 2017-18 in which case, the Respondents are at liberty to initiate proceedings against the Petitioner. Since, the matter is pending before the Appellate authority pertaining to the Assessment Year 2016-17, the Appellate authority shall consider this aspect with regard to the receipt of sale consideration and decide the same for the Assessment Year 2016-17.
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2023 (12) TMI 982
Revision u/s 264 - Seeking revision since the payment of interest in excess of 12% to a partner disallowed in the hands of partnership firm - HELD THAT:- Under the Income Tax Act, the firm and the individual partners are different entities. The disallowance of expenditure in the case of one entity does not entitle the other entity (recipient) to claim deduction of the disallowed expenditure. In this case assessee has actually received interest and obtained benefit to that extent. In view of the above, the petition u/s. 264 of the assessee considered devoid of any merit and hereby rejected. Therefore, there is no scope for interfering with the Impugned Order in the present writ petition.
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2023 (12) TMI 981
Unaccounted land transactions carried out - Incriminating documents in the form of duly written and signed “Sauda Chithi’ found and seized during the search and seizure action carried out by the Department - ITAT Deleted the addition - substantial question of low or fact - Whether ITAT is justified in deleting the addition of relying upon, the decision of Shri Pravinchandra Dahyabhai Umrigar [2022 (5) TMI 1479 - ITAT SURAT] without appreciating the fact that addition was made on the basis of incriminating documents, showing unaccounted land transactions carried out by the assessee, found and seized during the course of search proceedings?
HELD THAT:- As decided in the case of Shri Pravinchandra Dahyabhai Umriger [2022 (5) TMI 1479 - ITAT SURAT] the ‘sauda chithi’ is a dumb document as far as the assessee is concerned. Hence, the additions cannot be made on the basis of such dumb documents.
High Court must make every effort to distinguish between a question of law and a substantial question of law. In exercise of powers under Section 260A, the findings of fact of the Tribunal cannot be disturbed. It has to be kept in mind that the right of appeal is neither a natural nor an inherent right attached to the litigation. Being a substantive statutory right, it has to be regulated in accordance with law in force at the relevant time. The conditions mentioned in Section 260A must be strictly fulfilled before an appeal can be maintained under Section 260A. Such appeal cannot be decided on merely equitable grounds.
A finding of fact may give rise to a substantial question of law, inter alia, in the event the findings are based on no evidence and/or while arriving at the said finding, relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread. See Madan Lal Vs. Mst. Gopi & Anr. [1980 (8) TMI 204 - SUPREME COURT], Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi [2008 (12) TMI 724 - SUPREME COURT].
We have gone through the observations made by the Tribunal while passing impugned common order. We have also considered the submissions canvassed by learned Standing Counsel for the revenue. If the facts of the present case are examined on touch stone of the decisions rendered by the Hon’ble Supreme Court as observed hereinabove, we are of the opinion that the present appeals do not involve any substantial question of law.
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2023 (12) TMI 980
Deduction u/s 11(1) denied - corpus donation received - contention of the assessee is that the Trust received donation of Rs. 4,69,603/- and credited the same in the income and expenditure account under the head donation in cash or kind and specifically it was transferred to the Milan Mandir Building Fund, as the said donation was received for Milan Mandir Building Fund - HELD THAT:- Considering assessee submission that this is not case of transferring the funds to other funds and in fact the assessee trust have transferred the donation in the event for which it was received in respect of directly credited the fund in the balance sheet, the assessee has first credited it to income and expenditure account and subsequently transferred the said fund to the fund account for which it has received the said amount.
In the balance sheet also, the same is reflected in the specific fund i.e. fund related to Milan Mandir Building Fund. Such donation received for the specific purpose i.e. Milan Mandir Building Fund and also invested for the said purpose/said fund as per the provisions of section 11(1)(d) r.w.s. 11(5) in the schedule bank for which the assessee has submitted the bank account therefore this aspect was not taken into consideration by the CIT(A). CIT(A) is doubting that there is a signature only one trust of income and expenditure account and no signature of any trustee on balance sheet is not justifiable for disallowing the genuineness of the funds. Thus, the Assessing Officer as well as the CIT(A) was not justified in making the addition. Appeal of the assessee is allowed.
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2023 (12) TMI 979
Disallowance of deduction u/s 80-GGA - donation made by the assessee to Navjeevan Charitable Trust - claim of the assessee that at the time of making of aforesaid donation Navjeevan Charitable Trust was duly approved u/s 35-AC - HELD THAT:- As under section 80-GGA assessee is entitled to claim a deduction in respect of any sum paid in the previous year to a public sector company, local authority, association, or institution approved by the National Committee for carrying out any eligible project or scheme under section 35-AC. Further, Explanation-1 to section 80-GGA(2)(bb) further provides that the deduction to which the assessee is entitled of any sum paid to the aforesaid authority shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee the approval granted has been withdrawn or the notification notifying the eligible project or scheme referred to in section 35-AC has been withdrawn.
Section 35-AC of the Act provides that expenditure incurred by an assessee by way of payment of any sum to a public sector company or a local authority or to an association or institution approved by the National Committee for carrying out any eligible project or scheme be allowed as a deduction.
Since the relevant provisions of the Act, applicable to the present case, specifically debars denial of deduction claimed by the assessee merely on the ground of subsequent withdrawal of approval or notification under section 35-AC of the Act, therefore we find no merits in denial of deduction under section 80-GGA of the Act in the present case. Further, even though the Revenue has claimed that Navjeevan Charitable Trust has been involved in a bogus transaction of accommodation entry and the learned CIT(A) has also made various allegations against the assessee in the impugned order, however in the present case the impugned addition is based on the denial of deduction under section 80-GGA of the Act merely on the basis of subsequent withdrawal of notification u/s 35-AC of the Act and there is no material available on record to support the findings of the learned CIT(A). Accordingly, the impugned order upholding the denial of deduction claimed under section 80-GGA of the Act is set aside. As a result, grounds raised in assessee’s appeal are allowed.
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2023 (12) TMI 978
Levy of penalty u/s 271AAB - assessee has inflated his agricultural income, which would have been otherwise offered under any other head of income - Whether additional income declared in the return of income cannot be termed as “undisclosed income”? - difference between “undisclosed income” or “concealed income” - assessee replied that the addition was made on account of estimation of yield of cotton crops grown during that period, which by no means can be termed as undisclosed income as there is no nexus between additional income declared by the assessee and seized materials by the department - HELD THAT:- A plain reading of the explanation and definition of “undisclosed income” clearly shows that the undisclosed income could be represented money, bullion, jewellery or other valuable articles or things or any unrecorded entry as per documents found or any false entry recorded in the books of accounts, etc.
There is no such reference of money, bullion, jewellery or any other items mentioned in the above definition of “undisclosed income” were mentioned either in the assessment order or in the penalty order by the A.O. The assessee’s offer of additional income, which does not amount to undisclosed income as per the above definition. The A.O. has not brought on record any material which points to the “undisclosed income” as defined u/s. 271AAB. Whereas CIT(A) in his order refers to the questions stated in the statements recorded u/s. 132(4) of the Act, namely assessee’s son marriage expenses.
In our considered view, any disclosures made in the course of search and statement recorded u/s.132(4) itself cannot be construed as “undisclosed income” as per the definition provided in the Act. There is no incriminating material found by the Revenue on the alleged additional income offered by the assessee. Thus the levy of penalty u/s. 271AAB is against the provisions and inbuilt definition in the Act. Therefore the same is not sustainable in law. We hereby delete the levy of penalty levied u/s. 271AAB(1)(b) - Decided in favour of assessee.
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2023 (12) TMI 977
Legality of second revision notice of 263 order passed by Ld. PCIT - subsequent revision of original assessment order on another issues - Scope of the first notice for revision u/s 263 of the Act cannot be enhanced by way of issuance of subsequent notice by Principal CIT - Whether once the assessee has satisfied the Ld. PCIT that the assessment order is not erroneous and prejudicial to the interest of the Revenue with respect to reasons recorded in the first notice, then whether the PCIT is permitted to revise the original assessment order on another issue, not forming part of the initial notice, on the basis of which 263 proceedings were initiated?
HELD THAT:- We agree with the contention of the Ld. D.R. that there is no specific prohibition under Section 263 of the Act which prohibits the Ld. PCIT to give a finding with respect to any other aspect of the assessment order, if from the records it is find that the assessment has over-looked this issue. Admittedly in this case, the Assessing Officer had no plausible reason to explain the lack of inquiries with respect to non-deduction of TDS under Section 194C of the Act and there was no reason why disallowance under Section 40(a)(ia) of the Act was not made while framing the impugned assessment year. Further, in absence of any specific restriction on the powers of Ld. PCIT during the course of 263 proceedings itself, which were admittedly not barred by jurisdiction i.e. the second notice dated 04.02.2022 was not barred by period of limitation of two years as prescribed under Section 263 of the Act, we find no infirmity in the order of Ld. PCIT under Section 263 of the Act, so as to call for any interference. Appeal of the assessee dismissed.
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2023 (12) TMI 976
Revision u/s 263 - as per CIT AO had not conducted any inquiries or verification in respect of cash deposit after 11.11.2016 in HDFC bank account at the time of finalization of assessment, which is against the Explanation 2 of Section 263(1) - HELD THAT:- It is clearly seen from the SFT returns filed by the assessee u/s. 285BA of the Act, every cash transaction is reflected with the name of the person, with full postal address, nature of transaction and the amount of transaction, the same are placed before us by both Banks.
As further seen from notices issued u/s. 142(1) that various details called for by the A.O. in above notices were duly complied with by the assessee by furnishing the details and also clarified with further details as requested by the AO. Thus in our considered opinion, the AO has made necessary enquiries before passing the assessment order.
The other contention of the Ld. PCIT that the A.O. failed to verify the cash deposits in HDFC Account - The assessee also produced the bank statement of the above account, during the demonetization period. Perusal of the same clearly shows that there were no cash transaction in the above current account as alleged by the Ld. PCIT, whereas the entire transactions were done through either cheque or NEFT mode. So the very basis of invoking 263 on the ground that the cash deposits in HDFC Bank itself, is baseless. AO has made detailed enquiry before passing the assessment order on the cash transaction during the demonetization period.
PCIT partially looking into the assessment records and initiated the Revision proceedings on the ground that the assessee failed to submit evidences in support of the cash deposits, which is factually incorrect.
PCIT failed to consider the other reply letters filed by the assessee. Unless both the ingredients i.e order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding under section 263 of the Act, the same has been upheld by Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd[2000 (2) TMI 10 - SUPREME COURT]
An assessment cannot be revised if there is no jurisdictional error in the order or if it has been passed after due application of mind or in case, where PCIT has a view different from that taken by A.O. Therefore we have no hesitation in quashing the Revision order passed by the Ld. PCIT. Thus the Grounds raised by the assessee are hereby allowed.
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2023 (12) TMI 975
DRP direction without quoting Mandatory DIN - whether the subsequent generation of DIN will suffice as the requirement of the CBDT Circular which mandates quoting of DIN in the body of communication/order? - HELD THAT:- On perusal of the directions of the DRP it is very much clear that there is no mention of DIN generated for the said directions. In the letter dated 13.09.2023 the DRP stated that directions were up-loaded on system on 7.06.2022 for which a DIN was generated by the system but whereas no such DIN which was generated on 7.06.2022 was mentioned in the body of the directions. Generation of DIN for the directions of the DRP was separately communicated through letter dated 17.06.2022.
Whether the subsequent generation of DIN will suffice as the requirement of the CBDT Circular which mandates quoting of DIN in the body of communication/order came up for consideration before the jurisdictional High Court in Brandix Mauritius Holdings Ltd. [2023 (4) TMI 579 - DELHI HIGH COURT]
Communication/order passed in violation of the Circular of the CBDT without mentioning the DIN in the body of the order or without taking prior approval from the Chief Commissioner/Director General of Income Tax when there are exceptional circumstances in not quoting the DIN in the body of the order such communication/order was held to be invalid and shall be deemed to have never been issued. See ASHOK COMMERCIAL ENTERPRISES VERSUS ASSISTANT COMMISSIONER OF INCOME TAXATION CENTRAL CIRCLE – 2 (4) MUMBAI [2023 (9) TMI 335 - BOMBAY HIGH COURT]
As the Revenue could not show us any exceptional circumstances for not quoting the DIN number in the DRP order, we hold that the DRP order is invalid and consequently the final assessment order passed by the AO u/s 143(3) r.w.s.144C(13) of the Act pursuant to such invalid directions is deemed to have never been issued and thus bad in law.
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2023 (12) TMI 974
Royalty receipts - amount received from Indian entity - characterizing payment received by the assessee during the relevant previous year as royalty and taxing at 10% of gross receipts - submissions of the assessee is that amount is received by the assessee towards providing facilities to Volvo Indian entities and by such arrangement they (Indian entities) do not use or obtain a right to use the copy right in any of the software/business software/ application owned and executed by the assessee - HELD THAT:- The Hon’ble Delhi High Court in the case of EY Global Services Ltd. [2021 (12) TMI 571 - DELHI HIGH COURT] following the judgment of Engineering Analysis Centre of Excellence (P) Ltd. [2021 (3) TMI 138 - SUPREME COURT] held that payment received for providing access to computer software to its member firms located in India, does not amount to “royalty” liable to be taxed in India under the provisions of the Income Tax Act, 1961 and the India-UK DTAA.
Thus the authorities below committed an error in taxing the impugned receipts as “royalty”. Grounds raised by the assessee are allowed.
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2023 (12) TMI 973
Validity of final assessment order based on draft assessment order - Draft assessment order passed coupled with the Notice of demand u/s 156 and followed by notice u/s 274 rws 271(1)(c) - HELD THAT:- According to the provisions of Section 144C (1) AO is required to pass draft of the assessment order in case of impugned assessee. But here draft assessment order is accompanies with Notice of demand u/s 156 and followed with a show cause notice for levy of penalty u/s 274 r.w.s. 271 (1) (c) of the Act. Both Notice of demand and penalty proceedings are further followed by subsequent communication. Therefore, it is merely not an error but for all practical purposes, the AO passed the final assessment order instead of Draft Assessment order. In penultimate paragraph also AO mentions section 144 (13) of the Act.
Both the draft assessment order and the demand notice are dated 30-11-2018. Now the issue is squarely covered against the revenue in case of Cisco Systems Services B.V [2023 (3) TMI 416 - KARNATAKA HIGH COURT] held that it is settled that demand notice stems out of an order of assessment and it is enforceable. It meets the assessee with civil consequences. The argument on behalf of the Revenue that the demand notice was not enforced is fallacious and noted only to be rejected. Mistake which the ACIT has done in passing the final order at the stage of draft order is not curable u/s 292B.
Thus draft assessment order passed coupled with the Notice of demand u/s 156 of the Act and followed by notice u/s 274 rws 271(1)(c) of the Act makes the draft order as final. Thus, the draft assessment order dated 30-11-12018 passed by ld AO is invalid and further as the final assessment order is based on an invalid order, same is also quashed.
Adjustment of international transaction of payment of royalty for use of trade marks to AES - As assessee has already withdrawn grounds No 10 to 13 of the appeal, respectfully following decision of coordinate bench in [2019 (8) TMI 1011 - ITAT PUNE] A.Y. 2008-09, we hold that total income of the assessee shall be the amount of returned income and added thereto amount of income agreed by the assessee in MAP proceedings.
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2023 (12) TMI 972
Income surrendered during survey - excess stock u/s 69B r.w.s. provisions of section 115BBE - nature and source of such unrecorded transactions and the necessary nexus with assessee’s business - HELD THAT:- No doubt, these transactions were not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and the necessary nexus with assessee’s business has been established, thus, it cannot be said that these are unexplained transactions thus, doesn’t satisfy the second condition for invoking the deeming provisions of section 69B of the Act.
There is no physical distinction between the accounted stock and unaccounted stock. No such physical distinction was found by the Revenue either. We therefore find that the difference in stock so found out by the authorities has no independent identity and is in terms of value terms only and thus part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as business income.
In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the income of Rs 50 lacs surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69B and the same has to be assessed to tax under the head “business income”. In absence of deeming provisions, the question of application of section 115BBE doesn’t arise and normal tax rate shall apply. The AO is thus directed to assess the income of Rs 50 lacs under the head “Income from Business/profession” and apply the normal rate of tax. Assessee appeal allowed.
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2023 (12) TMI 971
Deduction u/s 80IA (4) - Contractor v/s Developer - assessee, a public limited company, is engaged in the business of development of infrastructure and other projects i.e., irrigation canal, road construction, water sewerage system etc. - AO held that the assessee, in the development of infrastructure project worked as work contractor and not as developer for which it received time to time payment from Government authorities for the work executed and invoice were accordingly issued, thus disallowed the claim of the assessee - HELD THAT:- Admittedly, the assessee has claimed deduction u/s 80IA(4) on 13 different projects of infrastructure facilities which has been disallowed by AO. On appeal by the assessee, CIT(A) allowed the claim of deduction by following the order of the predecessor CIT(A) in own case of the assessee from A.Y. 2004-05 to 2011-12 and 2013-14.
CIT(A) also given categorical finding that there were no new projects. As such, the deduction on all the 13 projects were claimed in earlier years (in between 2004-05 to 2011-12). At the outset, we note that the revenue was in appeal before this tribunal in own case of the assessee on the same issue in A.Ys. 2008-09 to 2011- 12 [2023 (7) TMI 1081 - ITAT AHMEDABAD] The coordinate bench of this tribunal vide order dated decided the issue of deduction under section 80IA(4) of the Act in favour of the assessee stating if the literal meaning is drawn from the word of the developer and accordingly the deduction of the benefit given under section 80 IA of the Act is denied, then the object for which the provisions of section were brought under the statute will be defeated. Therefore, the provisions of section 80IA (4) of the Act should be read in such a way that the object of the statute should not be defeated.
As assessee has undertaken the projects of infrastructure facility as envisaged under the provisions of section 80 IA(4A) of the Act in the capacity of the developer, we are inclined to hold that the assessee who is only engaged in the activity of development of infrastructure facility is eligible to claim the deduction u/s 80IA(4). Decided against revenue.
Additional income offered in the survey proceedings - CIT(A) held that additional income was agreed to be offered on account of unverifiable business expenses therefore the business income will stand increase by such amount on which the assessee will be eligible to claim deduction u/s 80IA - HELD THAT:- We find that the addition of ₹18 crores was made on account of unverifiable expenses which were recorded in the books of accounts. As such, the expenses recorded in the books of accounts to the tune of ₹18 crores were not supported by the proper documentary evidence. Therefore, the assessee agreed to disclose such income in the income tax return. Admittedly, the addition made on account of unverifiable expenses is going to enhance the income of the assessee.
Admittedly, the assessee has two categories of the project being eligible and non-eligible for deduction for deduction under section 80 IA(4) of the Act. Undeniably, the income of both the category of the project being eligible and non-eligible will enhance but the deduction under section 80 IA(4) of the Act on account of enhancement of income will be limited to the eligible projects as also observed by the ld. CIT-A in his order. Thus, we do not find any reason to interfere in the finding of the learned CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed.
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