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Showing 281 to 300 of 324 Records
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2025 (3) TMI 44
Revision u/s 263 - As per CIT AO has not conducted enquiries with regard to valuation at which the Compulsorily Convertible Preference Shares ('CCPS') were issued to holding company of the Appellant - HELD THAT:- As relying on FIS PAYMENT SOLUTIONS[2024 (10) TMI 182 - DELHI HIGH COURT], M/S. BLP VAYU [2023 (6) TMI 209 - ITAT DELHI] and M/S. KISSANDHAN AGRI FINANCIAL SERVICES PVT. LTD. [2023 (3) TMI 769 - ITAT DELHI] Provisions of s. 56(2)(viib) would not apply in the present case where the transaction is between the assessee (subsidiary company) with its 100% holding company as issuance of share to the holding company cannot be seen to involve circulation of any unaccounted money of the assessee company per se. Thus, twin conditions of sec 263 do not simultaneously exist in the present case.
The deeming fiction of s. 56(2)(viib) would not apply in the present case and consequently, the assessment order cannot be regarded as ‘erroneous’ per se. Hence jurisdiction un/s 263 is not available to the revisional authority. Appeal of the assessee is allowed.
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2025 (3) TMI 43
Penalty u/s 271(1)(c) and 270A - assessee has not deducted TDS on EDC [External Development Charges] charges paid by the assessee to HUDA - CIT(A) deleted the penalty - HELD THAT:- We find as far as disallowance of the EDC payment u/s 40(a)(ia), it is stated that the assessee has not contested the disallowance made. However, with respect to penalty, we find that the assessee has given reasonable plausible explanation before us that at that point of time, there was confusion and difference of opinion on this issue. We therefore hold that the explanation that the issue of TDS being deducted on EDC payment was not having legal clarity and there was a difference of opinion on this issue which needed clarification from the CBDT, is a valid explanation.
No evidence on record that payment of EDC charges is non-genuine or that the assessment order has demonstrated that there is any concealment of income or there is any inaccurate particulars of the income.
Mere noncompliance with the TDS provisions do not imply concealment or furnishing of inaccurate particulars to encompass the assessee with the mischief of section 271(1)(c)/270A.We are of the considered view that by making an incorrect claim in law, would not tantamount to furnishing of inaccurate particulars. In such a scenario, following the ratio in the case of Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT] we hold that the learned CIT(A) has correctly deleted the penalty u/s 271(1)(c)
Also order of CIT(A) deleting the penalty u/s 270A of the Act needs no interference. Appeal decided in favour of assessee.
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2025 (3) TMI 42
Rectification u/s 154 - Disallowance contemplated u/s 14A r.w. Rule 8D - Suo-motto disallowance made by assessee - HELD THAT:-In the absence of recording any dissatisfaction, invocation of sec 14A read with Rule 8D of the Rules is jurisdictionally defective and legally unsustainable as held in judgements delivered in the case of U K Paints India Pvt. Ltd [2024 (12) TMI 650 - DELHI HIGH COURT] and H. T. Media Ltd.[2017 (8) TMI 962 - DELHI HIGH COURT]
Sec 154 of the Act empowers the AO to rectify the mistake of apparent nature. A mistake if any, which requires long drawn process of reasoning or involves any kind of debate is ousted from the jurisdiction available u/s 154 of the Act.
In the instant case, suo-motto disallowance carried out u/s 14A of the Act by the assessee was sought to be modified and enhanced in the proceedings u/s 154 of the Act. Such disallowance on the face of it, cannot be regarded as apparent mistake contemplated under s. 154 of the Act. The first appellate order thus requires to be set aside and the rectification order passed u/s 154 is liable to be quashed. Appeal of the assessee is allowed
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2025 (3) TMI 41
Revision u/s 263 - interest on enhanced compensation received by the Assessee should be classified as 'Income from Other Sources' u.56(2)(viii) - HELD THAT:- The opinion of the AO considering the ‘interest on the enhanced compensation’ as not taxable also cannot be called as plausible view. Once the Jurisdictional High Court reiterates the law considering the amendment to the provision and also the previous Judgments, the law laid down by the Jurisdictional High Court becomes binding precedent and the authorities or the Tribunal cannot ignore the same and take different view.
The Jurisdictional High Court in the case of Inderjit Singh Sodhi (HUF) [2024 (4) TMI 408 - DELHI HIGH COURT] considered the insertion of Clause (viii) to Sub Section 2 of Section 56 of the Act w.e.f 01/10/2010, wherein also considered the case of Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] and held that the interest on compensation and enhanced compensation shall be considered as ‘income from other sources’ and taxable. Thus, in our opinion, the view taken by the A.O. that the ‘interest on enhanced compensation is part of the compensation and not the ‘interest’ per-se and allowing the same as exempt u/s 10(37) of the Income Tax Act cannot be called as ‘plausible view’.
Thus, the interest on the compensation or interest on the enhanced compensation shall be considered as ‘income from other sources’ and taxable accordingly. Ld. PCIT committed no error in setting aside the assessment order and directing the A.O. to frame fresh assessment. Decided against assessee.
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2025 (3) TMI 40
Assessment u/s 153C v/s 143(3) - six assessment years determination - date of receiving seized documents for determining the assessment period - HELD THAT:- As relying on Aakansha Gupta [2024 (7) TMI 1133 - ITAT DELHI] as in the case of the assessee also the satisfaction note for initiating the proceedings u/s 153C were recorded by the AO of the assessee on 10-10-2-2022 thus assessment year relevant for previous year in which search was conducted in the case of the assessee should be the Assessment Year AY 2023-24 and the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act will be AY 2017-18 to 2022-23 and the impugned year i.e. AY 2021-22 is fallen in such block period thus the assessment should have been completed u/s 153C and not u/s 143(3) as has been done in the present case.
Also in the case of Jasjit Singh [2014 (11) TMI 1012 - ITAT DELHI] which has been affirmed by the Hon’ble jurisdictional high court as reported in [2015 (8) TMI 982 - DELHI HIGH COURT] the assessment order passed u/s 143(3) dt. 28.12.22 is hereby quashed. Appeal of the assessee is allowed.
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2025 (3) TMI 39
Addition u/s 56(2)(viib) - equity shares were allotted to the existing shareholders - excess amount (as excess shares premium) received on account of rounded off difference @ Rs. 0.09 Paisa on allotment of 1.00 crore equity share - AR submitted that shares were allotted to the existing shareholders in their existing share holding ratio and the shareholding allotment of the aforesaid shareholders remained the same
HELD THAT:- We find material substance in the submission advanced on behalf of the assessee and there is strong ground exist to interfere with the order passed by the Ld. CIT(A) and accordingly, the order passed by the Ld. CIT(A) not sustainable in eyes of law and addition in question deserves to be deleted. Decided in favour of assessee.
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2025 (3) TMI 38
Addition u/s 68 - unexplained entries in bank account - assessee has failed to produce any concrete and any additional evidences in support of its contention - CIT(A) deleted addition - HELD THAT:- The case of the assessee for the above mentioned AYs is squarely covered by the decision of Zed Enterprises (P) Ltd [2024 (1) TMI 1442 - ITAT DELHI] held the assessee company has received funds from various concerns as mentioned above and thereafter amounts were transferred to the above-mentioned companies/concerns immediately, thus the appellant company is not beneficiary company. CIT(A) also obtained the remand report from the AO and held that the AO has verified the fund flow statement depicting the source of funds and utilization of the same for payments to beneficiaries submitted by the assessee.
CIT(A) held that it was found which established that the Sh. Anand Jain and Sh. Naresh Kumar Jain were operating bank accounts in the names of various concerns/companies through which accommodation entries were being provided and the appellant company was one of such shell concerns. Further the beneficiaries of such accommodation entries were also identified and information to their respective AOs was also disseminated as mentioned in the assessment order as well as the remand report.
CIT(A) held that as far as charging of commission is concerned in the case of the assessee, it has been held by the AO in the assessment order that Sh. Anand Jain and Sh. Naresh Jain were entry operators who were managing and controlling various shell concerns including the appellant for providing accommodation entries in lieu of commission and taking that logic there is no question of charging of commission income in the hands of the appellant company arises, since nothing has been earned by the company, being the shell concern.
Since, the commission already stands taxed in the hands of the entry operators in their individual capacity, no separate commission can be charged in the hands of the pass through/ companies floated by the entry operators. As the assessee is found to be one of such pass-through entity, we decline to interfere with the order of the ld. CIT(A) in deleting the commission charged.
We therefore, are in agreement with the above extracted observations/findings in present case are squarely covered by this case.Decided against revenue.
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2025 (3) TMI 37
Rejection of application for grant of registration u/s 12AB - charitable purposes or not? - CIT(E) rejecting the application seeking permanent registration of the assessee on the ground that the assessee does not possess the registration for running charitable activities of hospital - HELD THAT:- Advance made to The Central Park Hotel is for acquisition of new hospital. Accordingly, we have no hesitation to hold that assessee had not diverted its funds for non-charitable activities by advancing to parties who are related either to the office bearers or to their concerns.
Professional payments made by the assessee - Assessee from its side before us had filed an affidavit from the doctors and income tax returns of the doctors for FY 2021-22 (AY 2022-23) together with TDS certificates issued by the assessee. In any case, non submission of supporting evidences, if any, for professional fees payment cannot be a ground for rejection of permanent registration u/s 12AB. If there is any infirmity in those professional fees payment, the same could be looked into at the time of assessment proceedings. In any event, the ld CIT(E) does not even whisper or even doubt that the said professional payments were made to the parties specified u/s 13(3) of the Act. Hence, drawing adverse inference on this account and rejecting the permanent registration u/s 12AB, in our considered opinion, is not in order.
Other receipts shown which was found to be excessive by the ld CIT(E) when compared to that in the earlier two years - Since, the receipts were actually received during the FY 2022-23 in respect of services rendered earlier, the same were accounted in FY 2022-23. There is absolutely no dispute to the fact that the assessee is following cash system of accounting. Hence, adverse inference drawn by the ld CIT(E) for rejecting registration on this count, in our considered opinion, cannot be upheld.
Payment of incentives expenses - Depending upon the number of treatments completed by him, incentives would be paid to him. These facts are evident from the appointment letter of Dr. Sandeep Saraf itself. In any event, both salary as well as incentive paid to Dr. Sandeep Saraf had been duly subjected to deduction of tax at source by the assessee. The finding given by us with regard to payment of professional charges supra shall apply to payment of incentive expenditure also. Accordingly adverse inference drawn by the ld CIT(E) on this account for rejecting the registration, in our considered opinion, cannot be upheld.
Income from college fees - AR before us duly clarified that assessee still runs the hospital and affiliation has been cancelled only for running the nursing college. Nowhere the activities of running hospital was construed to be non charitable by the ld CIT(E). We find force in the said arguments advanced by the ld AR and accordingly, we hold that cancellation of registration on this count cannot be held to be justified. The treatment of college fees received had to be looked into at the time of assessment proceedings and that does not stand as a hindrance while considering the recognition for registration u/s 12AB of the Act.
Salary paid during the last three financial years by the assessee - The assessee had indeed furnished the complete details of employees and doctors together with their designations in a separate annexure before the ld CIT(E). In any event, this can never be a relevant consideration for the purpose of grant of registration u/s 12AB of the Act.
The activities of running a hospital is certainly charitable in nature and during the course of such charitable activity, payment to doctors and employees had to be made. Hence, adverse inference drawn by the ld CIT(E) on this count is hereby dismissed.
Assessee has accumulated huge profit hence, working for profit motive and not for charitable purpose - There is always a huge difference between the concept of “public profit‟ and “private profit‟ and grant of exemption u/s 11 of the Act would be in jeopardy only when there is “private profit‟ i.e. profit being distributed to the trustees as dividend or in any other form. Once there is “public profit‟ i.e. profit/ surplus earned by a trust which are being ploughed back into coffers of the trust for future charitable activities are certainly permitted. Even the provisions of section 11 to 13 permit earning of profit of 15% and in the event of any trust deriving profit in excess of 15%, then the Income Tax Act itself permits for accumulation in terms of section 11(2) of the Act to be utilized in future. Hence, in our considered opinion, surplus earning is not a sinful activity and in any manner does not hinder the concept of charity or charitable activities. Accordingly, the observations made by the ld CIT(E) in this regard are hereby dismissed as devoid of merit.
Affiliation of nursing college has been cancelled and accordingly genuineness of the activity of the assessee is not established - The assessee society has been running the hospital with proper approvals from the competent authorities and cancellation of affiliation of nursing college would not in any way hamper the continuation of charitable activities of the assessee society in running the hospital. Hence, the genuineness of the activities cannot be doubted at all qua the hospital. This issue has already been addressed by us while giving out findings with regard to yet another query raised by the ld CIT(E) supra.
Assessee had paid monthly rent to Kantialal Saraf HUF who happened to be related person u/s 13(3) - CIT(A) had not even bothered to bring comparable instances to drive home the point that the monthy rent paid by the assessee to Kantilal Saraf HUF is excessive or unreasonable. CIT(E) had not brought any evidence on record to even state that the fair market value of the rent for the infrastructure taken on rent by the assessee was less than the amount paid by the assessee to the related person. Without this finding being brought on record, there cannot be any allegation that could be leveled on the assessee. In any event, this issue has got absolutely no relevance in any manner whatsoever for the purpose of grant of registration u/s 12AB of the Act. Hence, the observation made by the ld CIT(E) is hereby dismissed as devoid of merit.
Thus, no hesitation to conclude that the assessee should be granted registration u/s 12AB of the Act. The grant of exemption u/s 80G of the Act would be consequential to the grant of registration. Accordingly grounds raised by the assessee are allowed.
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2025 (3) TMI 36
Validity of assessment u/s 153A - as argued incriminating material was found during the search operation - HELD THAT:- In the case of Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] held that in case no incriminating material is found during the search conducted u/s 132 of the Act, the Ld. AO will have no jurisdiction to make an assessment
As there is no any such incriminating material was found during the search operation which may persuade or authorized to the Ld. AO to proceed with the assessment u/s 153A and by following judicial precedents mentioned hereinbefore, assessment proceedings invalid and not authorized by law and hereby quashed and set aside. Decided in favour of assessee.
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2025 (3) TMI 35
Bogus LTCG - addition made on account of share capital and share premium - HELD THAT:- As correctly decided by CIT(A) AO has himself mentioned in the order that details like copy of accounts, income tax particulars, bank statement and balance sheet of all the companies from whom share capital and share premium was received were filed during the course of assessment proceedings. The AO has primarily made additions for the reason that the directors of the said companies were not produced although opportunity was provided.
AO has cited a number of case laws to support his contention. The AO has, however, not mentioned any of the alleged evidence found or seized during the course of search in the case of S.K. Jain even though he had re-opened the assessment for that reason. In absence of the same the AO's case is primarily built on the non-appearance of the directors of the investing companies.
Details regarding share capital and share premium received were furnished during the course of the original assessment which was completed u/s 143(3) of the Act, on 15.12.2009, accepting the sources of share capital introduced. Even during the course of reassessment proceedings, the appellant filed all the necessary details to discharge its onus to prove genuineness of share capital and share premium received. In the instant case the said onus enjoined upon the appellant company stands discharged in as much as the identity and creditworthiness of the investors stands proved and the genuineness of the transactions stands evidenced by the confirmations and the bank accounts which have been filed before the AO, which has been acknowledged in the assessment order. Decided in favour of assessee.
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2025 (3) TMI 34
Addition u/s 68 - unexplained cash credit in the garb of share application money/premium - CIT(A) deleted addition - HELD THAT:- Considering the fact that the transactions have been done through banking channel, one cannot doubt the genuineness of the transaction.
Assessee has established the initial onus as required u/s 68 of the Act, therefore, it is for the AO to bring the material on record to controvert the claim of the Assessee or to discredit the evidence produced by the Assessee. In the assessment order in one breath A.O. confirmed that all the notices issued u/s 133(6) of the Act were served on the Investor Companies and contrary to the same, the existence of those Companies in the address have been doubted based on enquiry conducted by Income Tax Inspector, however, no date of inspection report and no reference of date of inspection has been mentioned in the assessment order.
AO has not collected any evidence to prove that the transactions in questions were not genuine or the share application money/share premium received by the Assessee during the year was its own undisclosed income. It is well settled law that mere non production of Directors of share applicant cannot be termed that the entire transactions are not genuine as held in the case of CIT vs. Orissa Corporation Pvt. ltd.[1986 (3) TMI 3 - SUPREME COURT] Appeal of the Revenue is dismissed.
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2025 (3) TMI 33
Disallowance of interest paid on Government loans - such interest was never paid in any year since such loan was taken from the State Government - HELD THAT:- Assessee is bound to record the interest payable on loans taken from the UP Government as the assessee has followed mercantile system of accounting. The appropriation of the loan here will not determine the allowability of interest expenditure as the AO has not commented on the fact that the appellant assessee’s balance-sheet has not have non-interest bearing fund/surplus.
Revenue (AO/CIT(A)/Sr. DR) has not brought anything on the record to demonstrate that either the nature of the said interest-bearing loan has been changed by the lender; UP Government or the appellant assessee is not required to pay any interest on the said loan.
As not brought on the record by the Revenue (AO/CIT(A)/Sr. DR) that either the UP Government has waived the interest on the said loan or the UP Government has converted the said loan into non-interest-bearing loan/grant-in- aid, etc. Here, we not find any material on the record which supports the AO’s stand on the disallowance of interest when the AO, without questioning the accounting method of the appellant assessee followed over the years, has acted against the principle of consistency.
We are of the considered view that the Ld. CIT(A) is not justified in sustaining the disallowance - Decided in favour of assessee.
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2025 (3) TMI 32
Disallowance u/s 14A - assessee is having interest free income in the shape of dividend, capital gain etc which did not form part of the total income and therefore, he invoked the provisions of Section 14A of the Act read with Rule 8D - HELD THAT:- We find that the assessee has made fresh investment in the year under appeal as against which it has sufficient own interest free funds in the shape of reserve and capital. Therefore, respectfully following the judgment of the Tribunal in the case of the assessee for preceding year [2019 (1) TMI 36 - ITAT DELHI], we direct the AO to delete the addition. However, since the assessee has made suo moto disallowance of Rs. 6,30,937/- therefore, the disallowance to this extent be restricted.
Disallowance made towards exemption u/s 10B and exemption u/s 10AA by not treating the other income (misc income, compensation, profit on exchange gain) earned from export activities - HELD THAT:-This Tribunal in the case of assessee for AY 2007-08 [2019 (1) TMI 36 - ITAT DELHI] and such order was followed by the Tribunal further in Assessee’s won case for AY 2010-11 to 2012-13 [2021 (10) TMI 1455 - ITAT DELHI] wherein considered the fact that with respect to the miscellaneous income and compensation being part of eligible profit for the purpose of computing the deduction u/s 10B and revenue has already accepted this issue. Tribunal has set aside the matter to the file of AO for verification of the nature of income and then allow the claim. Thus by following the principle of consistency in this year also we set aside the issue to the file of the AO for making verification of the nature of income and compute the deduction u/s 10B of the Act in terms of directions given by tribunal for Ay 2007-08.
Reduction in export turnover towards the amounts which have been received in foreign currency, AO has reduced such amount from the export turnover however, the same is also required to be reduced from the total turnover because the total turnover comprises of export turnover and legal turnover. The Tribunal in its order for AY 2010-11 to 2012-13 following the judgment in case of CIT Vs. Genpact India [2011 (11) TMI 119 - DELHI HIGH COURT] has directed the AO to recomputed the exemptions u/s 10B of the Act by reducing the said amount from the total turnover also. The facts in this year are identical. Therefore, we direct the ld AO accordingly. As a result, this ground of appeal are allowed for statistical purposes as per the direction given herein above.
Disallowance of bad debts - HELD THAT:- We find that during the year under appeal the assessee has claimed expenses on account of provision for doubtful debt and no deduction on account of amount written off out of such provision is claimed in the profit and loss account. Under these circumstances no disallowance could be made for the expenses on account of bad debt which was not claimed in Profit and loss Account and was adjusted against the provisions made. It is further relevant to state that when the assessee itself has added back the provision for bad and doubtful debt to the total income as per the computation of income therefore, any disallowance made may lead to double taxation of income.
Disallowance of payment made in foreign currency without deducting tax at source as provided u/s 195(2) read with Section 40(a)(ia) - HELD THAT:- The facts for the year under appeal are similar to the facts in earlier year [2021 (10) TMI 1455 - ITAT DELHI] where the Tribunal has confirmed the addition and assessee has also not controvert such finding before us. Thus, by respectfully following the observation made by the Tribunal supra, the disallowance made in this year is hereby confirmed.
Disallowance of interest related to funds involved the capital work in progress - HELD THAT:- Tribunal vide its common order for AY 2010-11 to 2012-13 [2021 (10) TMI 1455 - ITAT DELHI] has decided the issue and sent the matter back to the file of the AO for making verification of secured and unsecured loans and further verified whether any part of the loan were utilized in respect of expenses forming part of capital work in progress. After considering the facts we find that there is no quarrel about the facts which was similar to the earlier years.
Disallowance towards leave encashment u/s 43B(f) - HELD THAT:- We direct the AO to allow the claim of the assessee in the year when actual payment is made towards the leave encashment.
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2025 (3) TMI 31
Addition u/s 56(2)(viib) - shares have been issued at premium by the subsidiary company to its 100% holding company - HELD THAT: The Hon’ble High Court in FIS Payment Solutions & Services India Pvt.Ltd. [2024 (10) TMI 182 - DELHI HIGH COURT] endorsed the construction of s.56(2)(viib) rendered in the case of BLP Vayu (P.) Ltd. [2023 (6) TMI 209 - ITAT DELHI] & Kissandhan Agri Financial Services (P.) Ltd. [2023 (3) TMI 769 - ITAT DELHI].
As per judgements quoted, it was observed that deeming fiction of s.56(2)(viib) could not apply in the case of such transactions between holding company and wholly owned subsidiary in the absence of any purported benefit occurring to any outsider. Significantly, the Hon’ble High Court noted that the Revenue has acquiesced with the judgement of Co-ordinate Benches before the Hon’ble High Court.
No error in the order of CIT(A) which is resulted in reversal of the addition under s.56(2)(viib) of the Act. Appeal of the Revenue is dismissed.
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2025 (3) TMI 30
Penalty u/s. 271(1)(c) - TP Adjustment on interest-free loans given to associated enterprises - According to the assessee, issue of notional interest on interest free loans given to associated enterprise is highly debatable issue, more particularly when appeal by the assessee against the aforesaid order of Coordinate Bench has been admitted by the Hon’ble High Court of Bombay on substantial question of law and is pending for disposal - HELD THAT:- In this case, upward adjustment was made by TPO at SBI PLR which was confirmed by the ld. DRP but was restricted to LIBOR + 200 bps by the Coordinate Bench on appeal by the assessee. Facts of the case are undisputed. We note that although AO has levied penalty for furnishing of inaccurate particulars of income, fact of the matter is that assessee had disclosed necessary facts required for computation of total income in the return of income filed for the year.
It is also a fact on record that appeal by the assessee before the Hon’ble High Court of Bombay on the quantum assessment has been admitted on substantial question of law and is pending for disposal. Admission of appeal by the Hon'ble High Court indicates that the question is an arguable point in law on which two views are possible. Therefore, we are of the considered view that it is not a case for penalty under section 271(1)(c). When the issue is debatable and two views are possible, then on such issue, penalty under section 271(1)(c) cannot be levied by charging the assessee with the charge of furnishing inaccurate particulars of income.
Accordingly, considering the facts on record, pendency of appeal by the assessee before the Hon’ble High Court on quantum addition which forms the basis for levy of penalty by admitting substantial question of law as well as judicial precedents referred above, we hold that penalty under section 271(1)(c) is not leviable. Grounds raised by the Revenue are dismissed.
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2025 (3) TMI 29
Denial of exemption u/s 11 - diversion of funds for the benefit of the related parties mentioned in section 13(3) are not for charitable activities of the assessee and are not for the benefit of public at large - disallowance of interest expenditure made u/s 13(2)(a), 13(2)(b) and 13(2)(g) - HELD THAT:- From a detailed analysis of various clauses of section 13(3) vis-à-vis the facts of the present case, we of the considered view that ABET does not fall within the purview of the “specified person” under section 13(3) of the Act.
Accordingly, we are of the view that the AO erred in invoking the provisions of section 13(2) r.w. section 13(3) of the Act for disallowing the interest expenditure on the term loan u/s 13(2)(a), 13(2)(b) and 13(2)(g). Accordingly, we find no infirmity in the impugned order passed by the CIT(A) on this issue, and therefore, the same is upheld. Similarly, we also do not find any merit in the disallowance of lease rent paid by the assessee for a building which was provided free of charge to ABET to enable them to start “Aditya Birla World Academy School”. Accordingly, the impugned order passed by the learned CIT(A) on this issue is also upheld. As a result, Grounds No.1 to 4 raised in Revenue’s appeal are dismissed.
Allowance of standard deduction u/s 24 while computing the income under the head “income from house property” - whether the assessee, claiming exemption u/s 11, is entitled to claim a deduction of a sum equal to 30% of the annual value u/s 24(a)? -We find that in CIT vs Rao Bahadur Calavala Cunnan Chetty Charities, [1979 (8) TMI 17 - MADRAS HIGH COURT] held that the income from property held under trust would have to be arrived at in a normal commercial manner without reference to the provisions which are attracted by section 14.
Also in Girdhari Lal Shewnarain Tantia Trust [1991 (6) TMI 8 - CALCUTTA HIGH COURT] rendered similar findings and held that the income from the property held under trust has to be arrived at in a normal commercial manner and when the income from property held under trust as such is excluded, there is no scope for computing the income from house property by applying the provision of section 14 of the Act.
We direct the AO to disallow the deduction of 30% claimed by the assessee on income declared under the head “income from house property”. Accordingly, we do not concur with the findings of the learned CIT(A) on this issue.
Interest accrued but not received - AO held that the system of hybrid accounting or mixed accounting has been done away with. Thus, the taxpayers have to follow either the cash or mercantile system consistently. Accordingly, the interest income was worked out by invoking the provisions of section 144 in accordance with the provisions of section 145 and added to the total income of the assessee - HELD THAT:- We find that a similar issue pertaining to following the hybrid system of accounting came up for consideration before the co-ordinate bench of the Tribunal in assessee’s own case in ITO vs. M/s. Vaibhav Medical and Education Foundation [2024 (3) TMI 1414 - ITAT MUMBAI] deciding the issue in favour of the assessee as held that the assessee has been offering Income from Other Sources by following cash system of accounting i.e. on receipt basis consistently from inception. Therefore, in our view there is merit in the contention there is no violation of section 145 since for the purpose computing income from Other Sources the assessee is not following hybrid system of accounting but has been consistently following cash system of accounting. Decided against revenue.
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2025 (3) TMI 28
Estimation of income - bogus Expenses - AO had estimated the profit derived by the assessee from the two sub-contracts @25% - CIT(A) submitted that the addition sustained by him @16% was comparable with the GP of 15.49% as disclosed by the assessee - HELD THAT:- We find that identical issue was involved in the assessee’s own case in A.Y. 2009-10 [2023 (2) TMI 1390 - ITAT AHMEDABAD] In that year, on the basis of information received from Maharashtra Sales Tax Department that the assessee had claimed bogus purchase of materials, the AO had disallowed the entire purchases, which was reduced to 25% by the Ld. CIT(A). On further appeal, the Co-ordinate Bench of this Tribunal has restricted the disallowance to 12.5% of the bogus purchases. The same basis was followed to restrict the disallowance in respect of bogus sub-contract expenses in A.Ys. 2012-13 to 2018-19.
Thus, we restrict the disallowance in the current year to 12.5% of the subcontract amount as awarded by the assessee to AIL & KNRCL. Accordingly, the assessee gets part relief in the matter.
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2025 (3) TMI 27
Addition on account of sale of sugar on concessional rate - HELD THAT:- Sugar Commissioner Maharashtra Government gave the directions to all sugar factories as per Section 79(A) of Maharashtra Co-operative Societies Act, 1960. The Sugar Commissioner gave the direction that Sugar Factories shall sale maximum 5 kgs of sugar per month at concessional rate to its members only. The rate shall be @ levy sugar (+) excise duty. The sale of sugar at concessional rate shall be applicable only to those members who have supplied their Sugar Cane to the factory.
We set-aside the order of ld.CIT(A), qua sale of sugar at concessional rate to the CIT(A) for denovo adjudication. The ld.CIT(A) shall bring on record the specific facts mentioned by us in earlier paragraphs. Ld.CIT(A) shall also bring on record the specific facts mentioned in the Krishna SSK Ltd.,[2012 (11) TMI 669 - SUPREME COURT]. The Assessee shall file all necessary details before the CIT(A). Accordingly, grounds of appeal raised by the Revenue are allowed for statistical purpose.
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2025 (3) TMI 26
Disallowance of provision towards IBNR/IBNER claims - HELD THAT:- Right of an enterprise to make provisions for a liability which could be measured by and as the Supreme Court in Rotork Controls India Private Limited [2009 (5) TMI 16 - SUPREME COURT] described a "substantial degree of estimation". It was thus held that as long as a liability is properly ascertainable on the basis of empirical data or a known methodology, the same cannot possibly be held to be a contingent liability.
A lucid explanation of the concept of contingent liabilities is then found in Whirpool of India Ltd. [2011 (1) TMI 657 - DELHI HIGH COURT] wherin this Court found that the assessee there had been consistently making provisions on the basis of actuarial valuation in respect of machines sold and warranty claims lodged. Both the AO as well as the CIT(A) in that case had taken the view that claims pertaining to unexpired periods of warranty could be considered only when actual claims may arise and that the assessee would not be justified in estimating a warranty liability.
As relying on M/s Royal Sundaram General Insurance Company Limited [2025 (1) TMI 640 - ITAT CHENNAI] we also decide this ground in favour of the assessee. Accordingly, this ground of assessee is allowed.
Amortization of premium paid on securities - As respectfully following the Co-ordinate bench order in assessee’s own case up to AY 2019-20, we decide this ground in the favour of the revenue as decided the issue of amortization of premium paid on purchase of securities against the assessee.
Disallowance u/s 40(a)(i) on reinsurance premium paid to foreign insurers - As following the Co-ordinate bench order in assessee’s own case up to AY 2019-20, we decide this ground in the favour of the assessee as set aside order of the CIT(A) in restricting the claim of the assessee to 15% of payment made to NRRs of other countries and direct the Assessing Officer to delete the additions made towards disallowance of reinsurance premium ceded to NRRs u/s. 40(a)(i).
Disallowance u/s 40(a)(i) in respect of commission paid to non-resident agents - This ground has been decided in favour of assessee by the co-ordinate bench of the Tribunal in assessee’s own case [2024 (7) TMI 1556 - ITAT CHENNAI] wherein held assessee is not paying any commission to insurance companies and such commission was deducted by respective insurance companies themselves from reinsurance premium. Therefore, when the assessee is not making payment, the assessee is not liable to deduct tax.
Disallowance of expenditure incurred for the purpose of survey fees paid to non-residents. u/s. 40(a)(ia) - This ground has been decided in favour of assessee in [2024 (7) TMI 1556 - ITAT CHENNAI] wherein held whenever there was damage or claim, surveyors examined the insured property and estimated damages and entire services were outside India and the non-residents have no business connection in India. Further, the income of the surveyors is not liable for taxation in India, thus, the assessee is not liable to deduct tax, which is nothing but reimbursement of expenditure incurred by surveyors. Decided against revenue.
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2025 (3) TMI 25
Capital gains arising from the transfer of capital assets into stock-in-trade for the JDA, as well as business income - HELD THAT:- We note that the issue of capital gains arising from the transfer of capital assets into stock-in-trade for the JDA, as well as business income, has already attained finality through the Tribunal's order in the first round of litigation in [2022 (5) TMI 1487 - ITAT BANGALORE]. The issue of capital gains and business income has reached finality.
Addition u/s 14A - Issue was remanded by the Tribunal to the file of the learned CIT(A) for fresh adjudication on merits. CIT(A) inadvertently rendered a finding on the issue of capital gains and business income, against which the Revenue has filed the present appeal.
Revenue's second round of appeal on an issue that has already attained finality in the first round of litigation is not maintainable. Hence, the same stands dismissed.
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