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Showing 41 to 60 of 1634 Records
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2023 (8) TMI 1594
Cost Accountants can be treated equivalent to Chartered Accountants for the appointment of Director (Finance) in CPSE or not - violation of Articles 14 and 16 of the Constitution - issuance of writ of mandamus to set aside the preference clause without challenging the decision of the expert committee or the minutes of the meeting - HELD THAT:- There exists distinction between the role and responsibility of Chartered Accountants and Cost Accountants as the said provision only provides for Chartered Accountants as explanation of the term ‘accountants’ which is not replaceable with the Cost Accountants. Therefore, it is established that the Chartered Accountants are treated differently than Cost Accountants in some statues and there can be no embargo upon the authorities to treat them differently.
Whether treating two qualifications differently would amount to discrimination, thereby violating the fundamental right of the petitioner as provided under Article 14 of the Constitution of India? - HELD THAT:- On perusal of Article 14 of the Constitution of India, it is clear that the denial of equality by the state is prohibited and the breach of the same amounts to violation of the fundamental rights of the citizens. At the same time, the Article 16 also permits reasonable classification based on intelligible differentia. In order to analyse whether the said condition has been met in the instant case, it is imperative to look into the judicial dicta dealing with the similar issue and whether the settled position of law can be made applicable in the instant case.
In the case of T.R. Kothandaraman v. T.N. Water Supply & Drainage Board [1994 (9) TMI 357 - SUPREME COURT], the Hon’ble Supreme Court examined the classification created for separate qualification and held that the nature of the job does permit the Government to prefer better qualified persons if the job entails the work to be handled specifically by a person having specific qualification.
In the case of Chhattisgarh Rural Agriculture Extension Officers Assn. v. State of M.P., [2004 (4) TMI 668 - SUPREME COURT (LB)], the Hon’ble Supreme Court allowed the state to differentiate for the appointment on the basis of different qualifications and held that the state cannot be said to have acted illegally in granting a higher pay scale for the higher qualification.
On perusal of the relevant paragraphs of the aforementioned judgments, it is clear that the state can create classifications based on the qualifications. Therefore, it is well within the power of the state to create separate classification based on the reasonable differentia - In the instant case, it is already established that the Cost Accountants and the Chartered Accountants are not similarly placed as the same are defined and governed under two separate statutes of the Parliament. On perusal of the Section 288 of the Income Tax Act, 1961, it is also made out that some legislations do specifically provide for ‘Chartered Accountants’ instead of the Cost Accountants as an explanation to the term ‘Accountant’. Hence, the difference in both the profiles has already been established.
Thus, it is crystal clear from the above discussion that the Cost Accountants and the Chartered Accountants cannot be similarly placed for appointment to the post of Director (finance) in the respondent Organization and treating them differently does not amount to discrimination and violation of fundamental rights as enshrined in the Constitution of India - on establishment that no prejudice was caused to the petitioner by preferring Chartered Accountants over the Cost Accountants, and the classification as created for the post of Director being well within the bounds of the respondent Body, this Court is inclined to answer the issue in favour of the respondents and against the petitioners.
Whether the court can issue a writ of mandamus to set aside the preference clause without challenging the decision of the expert committee or the minutes of the meeting? - HELD THAT:- In the instant case, even though it is contended that this Court while exercising its power under Article 226 of the Indian Constitution can set aside the preference clause from the said Advertisement/JD, it is imperative to satisfy the question of whether the writ of mandamus can be issued to direct the respondents to do away with the preference clause inserted in the Advertisement/JD when the decision of the expert committee stemming from the meeting dated 19th August, 2021, is not under the challenge before this Court.
It is imperative to refer to the settled position of law with regards to the said issue. In Bachhaj Nahar v. Nilima Mandal [2008 (9) TMI 967 - SUPREME COURT], the Hon’ble Supreme Court had discussed the purpose of pleadings at length and held that allowing a particular relief without there being a prayer for the same would lead to miscarriage of justice where it was held that 'The question before a court is not whether there is some material on the basis of which some relief can be granted. The question is whether any relief can be granted, when the defendant had no opportunity to show that the relief proposed by the court could not be granted. When there is no prayer for a particular relief and no pleadings to support such a relief, and when the defendant has no opportunity to resist or oppose such a relief, if the court considers and grants such a relief, it will lead to miscarriage of justice. Thus it is said that no amount of evidence, on a plea that is not put forward in the pleadings, can be looked into to grant any relief.'
In Bharat Amratlal Kothari v. Dosukhan Samadkhan Sindhi [2009 (11) TMI 942 - SUPREME COURT], the Hon’ble Supreme Court discussed the scope of Writ Court and held that even though the courts have wide discretion in deciding the writs, they cannot grant a relief not prayed by the petitioner - in light of the settled principles regarding both issuance of mandamus and principles governing the grant of reliefs, this Court is not inclined to delve into an issue which is not prayed for in the petition. Therefore, this sub-issue is also answered in favour of the respondents.
Where the question of whether this Court can set aside a decision taken by the high level expert committee needs to be decided? - HELD THAT:- In the instant case, it is clear that the petitioner has not questioned the constitution of the respondent Body rather, has only challenged the preference clause inserted in the qualification section of the Advertisement/JD notified by the respondent Body for the vacant post of Director (Finance) in the respondent Organization - Hence, it is a settled principle of law that the decisions taken by such experts need not be questioned until and unless there is clear bias on part of the experts and mala fide is established by adducing sufficient evidence or the constitution of the committee is under challenge which is not the case in the instant petition.
In light of the foregoing discussion and the settled principle of law, this Court does not find any compelling reasons to get into the decision made by the expert committee as it is assumed that the experts looked into all the aspects relating to the selection process and then decided to prefer the Chartered Accountants over Cost Accountants and this sub issue is also answered in favour of the respondents.
The instant petition is devoid of merits and is dismissed.
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2023 (8) TMI 1593
Foreign exchange gain on restatement of external commercial borrowings - Whether liable to tax as it is on the capital account? - brought forward book loss in computation of income and Section 115JB - As decided by HC [2022 (9) TMI 1539 - KARNATAKA HIGH COURT] adjustment on account of foreign exchange rate fluctuation is required to be made to actual cost at the end of every year after amendment of Section 43A with effect from 01.04.2003 and upheld CIT(A)'s order that the gain arising on account of exchange fluctuation are not liable to tax as it is on the capital account. CIT(A) and the ITAT placing reliance on CBDT Circular No.495 dated September 22, 1987, have rightly held that the cumulative brought forward losses or unabsorbed depreciation should be considered for set off.
HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The special leave petition is, accordingly, dismissed.
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2023 (8) TMI 1592
Re-assessment proceedings - validity of fresh notice issued u/s 148 after 4 years when original notice was withdrawn during the judicial proceedings - no clear evidence of withdrawal of earlier notice - original notice was issued within the time limit - should the reassessment process be allowed to continue? - As decided by HC [2018 (5) TMI 1547 - GUJARAT HIGH COURT] in absence of withdrawal of the first notice of reassessment, the proceedings would survive making the subsequent notice of reopening invalid - HELD THAT:- As in terms of Circular No. 17/2019 dated 08.08.2019 issued by Government of India, Ministry of Finance, Department of Revenue, Central Board Direct Taxes, Judicial Section, since the amount of tax involved is low, we are not inclined to interfere with the impugned order.
The special leave petitions are, accordingly, dismissed.
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2023 (8) TMI 1591
Reopening of assessment u/s 147 - unsecured loan given to a corporation - information had been received from the Income Tax Officer, Ward No.9(2), Ahmedabad, which revealed that the assessee had given an unsecured loan during the year under consideration - HELD THAT:- There was infact no material available and there was justifiable reason to indicate on the basis of the long term capital gain statement, copies of the documents of the land in question, copies of the ledger account of Bhumi Corporation etc., to suggest that the loan was advanced to M/s. Bhumi Corporation and that the transaction was genuine. He would also invite the Court’s attention to the Statement of Accounts to indicate the worth of the petitioner.
Thus, in light of the decision of Jayesh Govind bhai Bala [2016 (6) TMI 700 - GUJARAT HIGH COURT] in absence of any evidence and fresh material on record, we find that the reasons indicated by the author of the notice are vague and presumptuous. On this ground alone, the impugned notice is quashed and set aside.
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2023 (8) TMI 1590
Validity of assessment order passed - notice and draft assessment order to the wrong e-mail - gross violation of the principles of natural justice - HELD THAT:- The court is of the view that the order has to go as the order has been passed without proper intimation of notices to the petitioner.
Although the notices have been sent to some of the e-mails of the petitioner and were hosted in the portal for the petitioner to access the same, the petitioner had not no proper informations at Head Quarters about communication of the notice where office of the petitioner would have been statimed for the purpose of Income Tax Compliances.
Merely because, intimations were sent to one of the Branch Officers of the petitioner is not sufficient for completing the assessment, particularly. when notice u/s 142(1) of Income Tax Act 1961 was earlier sent to the correct e-mail ID of the petitioner which was also responded.
The impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits.
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2023 (8) TMI 1589
Transfer u/s 127 - Petitioner’s cases have been transferred from respondent no.2, i.e., Dy. CIT, Central Circle-22(2) to respondent no.4, i.e., Dy. CIT, Central Circle-2, Faridabad.
HELD THAT:- The record shows that the petitioner was issued a notice before the impugned order had been passed. This notice was issued on 18.01.2023.
The record also shows that the petitioner has filed its objections/reply to the said notice on 23.01.2023.It appears that while passing the impugned order dated 25.07.2023, the objections/reply filed by the petitioner on 23.01.2023 were not taken into account.
The best way forward would be to set aside the impugned order dated 25.07.2023, with liberty to the AO to pass a fresh order, albeit, as per law.
AO, before passing a fresh order, will accord a personal hearing to the authorized representative of the petitioner. For this purpose, the AO will issue a notice indicating the date and time of the hearing to the petitioner.
Writ petition is disposed of, in the aforesaid terms.
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2023 (8) TMI 1588
Wrongful ITC Credit - petitioner accused had agreed to deposit 10% of the amount allegedly claimed as Wrongful ITC Credit - HELD THAT:- The basis for the FIR in this case was alleged claim for wrongful ITC - which the revenue alleged was to the extent about Rs.12 Crores. That appears to be a matter of adjudication which is to be done in accordance with the provisions of the Central Goods and Services Tax Act, through the adjudicatory process. There is no information forth coming as the fate of those proceedings – whether show cause notice was issued and, if so, what is the result thereof. The counter affidavit of the revenue, filed before the High Court is a part of the record. It reiterates the contents of the complaint and the alleged wrongful credit claimed by the petitioner.
The interim order dated 30.01.2023 is hereby confirmed. The petitioner shall be enlarged on bail subject to such terms and conditions as the trial Court may impose, other than the condition of requiring pre-deposit - Petition allowed.
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2023 (8) TMI 1587
Existence of Permanent Establishment (PE) in India - incomes to accrue or arise in India - HELD THAT:- Sales of the assessee in India are effected through its distributors. The sales and marketing team of SanDisk India engage in educating the customers about SanDisk products. Once a customer is interested in a product, the distributors of the assessee are notified who would then negotiate the price and place the purchase order with the assessee.
Therefore, it is not forthcoming from the statements recorded that SanDisk is totally responsible for concluding contracts on behalf of the assessee.
AO has not brought on record any other material to support his case. Therefore, reliance on the statements of employees of SanDisk India are not conclusive of existence of permanent establishment of the assessee in India.
We further draw support from the decision in the case of Net App B.V [2017 (7) TMI 420 - ITAT DELHI] wherein under similar facts and circumstances, the Tribunal concluded that the Indian company engaged in providing marketing support services with no authority to conclude contracts, did not constitute a permanent establishment of the foreign entity. Assessee appeal allowed.
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2023 (8) TMI 1586
Dowry harassment - Jurisdiction - power of High Court to quash the FIR and chargesheet under Section 482 of the Code of Criminal Procedure - offense under Section 498A of the Indian Penal Code and the Dowry Prohibition Act - misuse of the legal process by the complainant in implicating the appellants - HELD THAT:- The most significant aspect to be taken note of presently is that Bhawna admittedly parted ways with her matrimonial home and her in-laws in February, 2009, be it voluntarily or otherwise, but she did not choose to make a complaint against them in relation to dowry harassment till the year 2013. Surprisingly, FIR No. 56 dated 09.02.2013 records that the occurrence of the offence was from 02.07.2007 to 05.02.2013, but no allegations were made by Bhawna against the Appellants after she left her matrimonial home in February, 2009. Significantly, Bhawna got married to Nimish on 02.07.2007 at Indore and went to Mumbai with him on 08.07.2007. Her interaction with her in-laws thereafter seems to have been only during festivals and is stated to be about 3 or 4 times - No specific instance was cited by her in that regard or as to how he subjected her to such harassment from Delhi. Similarly, Abhishek became a judicial officer 6 or 7 months after her marriage and seems to have had no occasion to be with Bhawna and Nimish at Mumbai. His exposure to her was only when she came to visit her in-laws during festivals. Surprisingly, Bhawna alleges that at the time of his own marriage, Abhishek demanded that Bhawna and her parents should provide him with a car and Rs. 2 lakhs in cash.
The fact that Bhawna confessed to making a vicious complaint against Abhishek to the High Court clearly shows that her motives were not clean insofar as her brother-in-law, Abhishek, is concerned, and she clearly wanted to wreak vengeance against her in-laws. The allegation levelled by Bhawna against her mother-in-law, Kusum Lata, with regard to how she taunted her when she wore a maxi is wholly insufficient to constitute cruelty in terms of Section 498A Indian Penal Code.
Bhawna herself claimed that Nimish came to her brother's wedding in 2012, but she has no details to offer with regard to any harassment for dowry being meted out to her by her mother-in-law and her brothers-in-law after 2009 - even for that period also, her allegations are mostly general and omnibus in nature, without any specific details as to how and when her brothers-in-law and mother-in-law, who lived in different cities altogether, subjected her to harassment for dowry.
Most damaging to Bhawna's case is the fact that she did nothing whatsoever after leaving her matrimonial home in February, 2009, and filed a complaint in the year 2013 alleging dowry harassment, just before her husband instituted divorce proceedings.
Bhawna's allegations against the Appellants, such as they are, are wholly insufficient and, prima facie, do not make out a case against them. Further, they are so farfetched and improbable that no prudent person can conclude that there are sufficient grounds to proceed against them. In effect, the case on hand falls squarely in categories (1) and (5) set out in Bhajan Lal. Permitting the criminal process to go on against the Appellants in such a situation would, therefore, result in clear and patent injustice. This was a fit case for the High Court to exercise its inherent power Under Section 482 Code of Criminal Procedure to quash the FIR and the consequential proceedings.
Appeal allowed.
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2023 (8) TMI 1585
Oppression and mismanagement - Respondent No. 1 company is a quasi-partnership or not - Family settlements - Alleged acquisition of shares by Respondent No. 2 and Late Trimbak Bedekar with a view to reduce the petitioners to minority - it was held by NCLAT that 'The Petition is only partly allowed as against the Respondents No. 1 to 5 with an order that Respondents No. 1 to 5 shall buy out the shareholding of the Petitioners on a fair value to be determined by an independent registered valuer to be appointed on the basis of consensus between the parties within a period of one month from today.' - HELD THAT:- It is not required to interfere with the impugned order.
The civil appeal stands dismissed.
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2023 (8) TMI 1584
Rectification of mistake u/s 254 - not adjudicating ground no. 1, 2, 3 & 5 - HELD THAT:- We find that the appeal of the assessee was heard by us on 20.12.2022 and issues were discussed on merits in detail. However, while deciding the issues involved in the appeal by us, we have adjudicated ground no. 4 and did not adjudicate ground no. 1, 2, 3 & 5 on wrong assumption that these grounds are connected and consequential to ground no. 4 of the appeal.
Since issues were dealt on merits and same ought to have been dealt by this Tribunal, we find that apparent mistake has occurred in framing the impugned order which needs to be rectified and the grievance of the assessee can be addressed only by recalling the impugned order. We therefore find merits in the contention of the ld. counsel for the assessee and thus recall our order [2023 (3) TMI 1224 - ITAT KOLKATA].
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2023 (8) TMI 1583
Disallowing Employee's contribution to PF/ESIS - HELD THAT:- When there is no delay in payment of EPF/ESIC which is in violation of due date given in respective Acts, then no disallowance can be made u/s 36(1)(va). It has been further brought to our notice that on similar fact in case of group company of the assessee, M/s Modern Facility Management Pvt. Ltd where the coordinate bench of the ITAT vide order dated 05/07/2023 has set aside the matter to AO to verify the additional evidence and delete the addition since there is no delay as per revised certificate of the Tax auditor.
We also find from perusal of the records that in the case of assessee, salary due and payable is only in the subsequent month, when the client certifies the attendance of the employee so deputed at his place and as per the agreement salary is payable to such employee within 10 days in next month. Thus, salary payable and salary paid falls due in subsequent month and therefore, the due date as per the PF and ESCI Act also falls in subsequent to the month when the salary is due.
This is evident from the copy of ledger account of the salary as noted above and it is seen that there is no delay in most of the payments which is evident from documents appearing at pages 197-207. Later on, the tax auditor have also clarified that there is no delay. Accordingly, we set aside this issue to the file of the ld. AO to examine the details and the revised certificate of the auditor and if it is found that there is no delay, then no disallowance should be made as in the case of the assessee the delay is to be seen when the salary payable and salary paid falls due in subsequent month and the due date has to be reckoned from the subsequent month. The AO is directed to verify and grant consequential relief.
Issue of gratuity payment tax auditor due to oversight in AY 2018-19 reported the said gratuity provision in form 3CD as disallowable u/s 43B of the Act. Based on this report the said amount was added to the total income in the intimation issued u/s 143(1) of the Act. Later when the said fact was brought to the attention of tax auditor, he realised his mistake and issued a certificate that since the said provision is based on actuary valuation hence the same is allowable u/s 40A(7)(b) of the Act. Section 40A(7)(b) states that a provision made by the assessee by way of contribution towards an approved gratuity fund or for the purpose of payment of any gratuity that has become payable during the previous year, however, would not be hit by section 40A(7)(a). The provision made by the assessee as per valuation of actuary is amount payable to the employee as per AS-15 of ICAI. Hence considering these facts, the Tax auditor issued certificate clarifying the above position of law. Copy of certificate of tax auditor. Since the adjustment u/s 143(1) of the Act was carried out based on the report of the Tax Auditor and since the tax auditor has clarified by issuing a certificate withdrawing his comment in the earlier report, hence it has been argued before us that the said disallowance is no longer sustainable.
Thus, looking to the fact that now the tax auditor have issued the certificate clarifying the said position of law and the adjustment have been made only based on earlier report of the tax auditor therefore, we direct the ld. AO to consider the revised certificate of the tax audit report and we admit all the additional evidences filed before us and direct the ld. AO to verify and grant consequential relief and to work out disallowance as per revise certificate of tax auditor.
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2023 (8) TMI 1582
Assessments framed in the name of non-existent entities - corporate death of an entity upon amalgamation - HELD THAT:- As relying on MARUTI SUZUKI INDIA LIMITED [2019 (7) TMI 1449 - SUPREME COURT] assessment order passed in the name of non-existent entity is invalid.
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2023 (8) TMI 1581
Rectification u/s 154 filed by the assessee for deduction of revenue expenditure from book profits under section 115JB - assessment order u/s 143(3) was passed wherein the tax liability was determined by the AO under the provisions of section 115JB of the Act being higher than the tax liability computed under the normal provision of the Act
HELD THAT:- There is no dispute that the assessee has incurred revenue expenditure during the year however only a part has been shown and debited in the P&L Account and the remaining amount has been shown in the balance sheet.
Where the book profit have to be determined in terms of profit/loss account prepared in accordance with Part II Schedule VI of the Companies Act, the profit and loss account shall be so made out as clearly to disclose the results of the working of the company during the period and shall disclose every material feature including credits or receipts and debits or expenses in respect of non-recurring transactions or transactions of an exceptional nature, the whole of the revenue expenditure incurred by the assessee amounting to Rs 35,67,94,891 (and not just a part thereof as shown currently at Rs. 15,313,959/-) during the previous year has to be reduced while calculating the net profit. There is no concept of part recognition of revenue expenditure in Part II Schedule VI of the Companies Act and therefore, where the assessee has debited a part of the revenue expenditure in the profit/loss account, the profit/loss account so prepared is not in accordance with Part II Schedule VI of the Companies Act and has apparently been done for presentation to and consumption of the shareholders.
We therefore find that these facts are clearly emerging from the books of accounts so prepared by the assessee and as so reflected on the face of the balance sheet and profit/loss account and does not require any long drawn process of reasoning or analysis and therefore where the tax liability has been computed under section 115JB of the Act, the book profit have to be determined in terms of Part II of Schedule VI of the Companies Act which necessarily include the book profit after allowing deduction for whole of the Revenue expenditure.
We therefore find that the facts of the present case are pari materia with the facts as well as the issue (Section 115JA has been substituted by Section 115JB) before Hon’ble Karnataka High Court and the application of the assessee seeking rectification under section 154 of the Act drawn support rightly from the decision of the Hon’ble Karnataka High Court [2015 (1) TMI 1023 - KARNATAKA HIGH COURT]
if we look at the order of the AO rejecting assessee’s application under section 154, he has merely rejected the application stating that since the assessee has not claimed the deferred revenue expenditure in the return of income, its claim does not came under the purview of Section 154 of the Act. We therefore find that even the AO has not disputed that these facts are emerging on the face of the record and only because the assessee has not claimed the same while filing the return of income, the said claim has been denied.
We find that the AO is apparently guided by the decision of Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] wherein dealing with the power of the Assessing officer, it was held that the AO cannot entertain a claim for deduction otherwise than by filing a revised return. We find that the matter has since travelled to the ld CIT(A) and even the ld CIT(A) has not allowed the claim of the assessee and there is nothing under law that the ld CIT(A) cannot entertain such claim during the course of appellate proceedings. All that is required is that there has to be mistake apparent from record which we have seen above is clearly emerging from the records that the profit/loss account so prepared by the assessee doesn’t account for whole of the revenue expenditure which is a mandatorily requirement under the Companies Act and which forms the basis for determination of book profits for the purposes of computing the MAT liability in terms of sub-section (2) of section 115JB of the Act.
We set-aside the order of the CIT(A) and direct the AO to allow the necessary relief to the assessee by allowing whole of the revenue expenditure while computing the book profits for the purposes of levy of MAT liability u/s 115JB of the Act. Assessee appeal allowed.
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2023 (8) TMI 1580
TP Adjustment - analyzing the arm’s length analysis of intra-group services - Evidence for Services Rendered - HELD THAT:- What is required to be seen while analyzing the arm’s length analysis of intra-group services that it needs to satisfy prima facie following tests, broadly: i) need test; ii) rendition test; iii) benefit test; iv) duplicative services test; and v) shareholders activity test. In the transfer pricing study report assessee has given not only given the detailed business overview and the activities carried out by the assessee but also what were the services which were required for carrying out those activities.
As seen that the assessee had clearly established the need and the benefit derived from each and every services and also produced huge documentary evidences for actual rendition of services. Thus, it cannot be held that either there was no rendition of services or there is no benefit derived by the assessee from these services.
It is not necessary for the assessee to prove that for each and every benefit except for proving prima facie, what benefit has been derived for carrying out the activities and the need of such services. If these are proved and substantiated by the documentary evidences, then it cannot be held that the entire payment made for receiving such services is to be adjusted holding that transaction should be ‘Nil’. Assessee had also demonstrated objective analysis of each of the Intragroup services rendered and resulting into some kind of qualitative and quantitative benefit. Even the cost allocation i.e. charging method is also appears to be based on proper allocation key which too demonstrated with the actual cost. Accordingly, the entire adjustment which has been made by the ld. TPO/ AO is directed to be deleted. Assessee appeal allowed.
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2023 (8) TMI 1579
Validity of reopening of assessment - difficulty in filing the response - petitioner expressed in its communication that it had been served with the notice dated 30.03.2023 only on 14.04.2023, and therefore there was no way that the petitioner could file response by 10.04.2023 - HELD THAT:- This aspect of the matter was not taken into account by the Assessing Officer (AO) while passing the order under Section 148A(d) of the Act.
According to us, the best way forward would be to set aside the impugned order dated 17.04.2023 passed u/s 148A(d) with liberty to the AO to pass a fresh order.
It is ordered accordingly. AO will pass a fresh order after considering the reply which the petitioner has furnished on merits, via communication dated 18.04.2023.
AO will also accord personal hearing to the authorized representative of the petitioner. For this purpose, a notice will be issued to the petitioner, setting out the date and time of hearing.
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2023 (8) TMI 1578
LTCG - exemption claimed u/s. 54B - benefit for purchase of two agricultural land from two different person - HELD THAT:- Payment transaction was not completed by the assessee against the said purchase of land considering that the statement of the seller are contradictory facts and figures as given in the case of laws. The statement submitted in the assessment proceedings to rebut this version of the AO. The assessee submitted that he had duly invested the sale consideration for purchase of agricultural land and therefore, the deduction u/s 54B cannot be denied.
Law does not confer condition the assessee should execute sale deed to claim the exemption and therefore, both the claim for purchase of land is allowable. Considering the finding of ld. CIT(A) in detail and argument placed by both the parties and on perusal of the records. We find that it is not under dispute that the assessee has out of the income of capital gain offered it purchase two properties for which the assessee has paid the money. The seller have also been exempted by the Assessing Officer and they have also confirmed that the assessee has purchased the land from them. The source of payment made by the assessee is also proved to be invested in the said agriculture land.
As decided in Dharmendra J. Patel [2023 (3) TMI 1045 - ITAT AHMEDABAD] we are of the considered view that the assessee should be allowed the benefit of deduction under section 54B of the Act since the purchase in the new property has been made out of advances received towards sale of agricultural properties held by the assessee.”
CIT(A) justification in allowing the indexed cost of acquisition claimed by the assessee - As noted that the assessee has sold the ancestors land which was purchased before 01.04.1981 and therefore, the assessee has worked out the indexed cost of acquisition in respect of agriculture land sold at Rs. 23,34,480/- however, the ld. AO has allowed indexed cost to the extent of Rs. 13,15,488/- only. Thus, the dispute is that the assessee has taken fair market value land at Rs. 2,74,000/- as on 01.04.1981 whereas the AO has computed it without giving proper opportunity to the assessee at Rs. 1,54,000/-.
AO has not discussed or provided any evidence of arriving indexed cost. Therefore, considering this fact, the ld. CIT(A) stated that the arbitrarily taking value at Rs. 1,54,000/- by the AO is not justified and not in the interest of principles of natural justice. Not only that we observe that in the present appeal, the ld. AO through, ld. DR did not present any supporting evidence to support the value of Rs. 1,54,000/- whereas the assessee has claimed the fair market value at Rs. 2,74,000/- as on 01.04.1984 for total area of 11 bighas is based on that actual consideration and document executed on that date.
DR did not controvert this fact and has not supported the value of furnishing any evidence before us as taken by the ld. AO. Thus, we do not see any infirmity in the finding of ld. CIT(A) so far as to allow the indexed cost of acquisition to the assessee as claimed in the return of income. Thus, the ground No. 3 raised by the revenue is dismissed.
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2023 (8) TMI 1577
Disallowance of salary expenses made to related party covered u/s 40(A)(2)b) -Ad-hoc addition made to the returned loss - assessee has paid salary to the relatives of the directors who, as per their qualification and experience, are not eligible for such high salary and AO held that the assessee can hire employee of same qualification and experience on a one half of the salary given to the relatives - CIT(A) affirms the action of the AO holding that there is no justification and correlation between the payment of the salary and their contribution to the company.
HELD THAT:- We find that the AO has not brought anything on record by giving comparable cases to prove that the salary paid to these 11 persons are more than the market average. The disallowance made by the AO was certainly on ad-hoc basis and without any cogent material on record, hence, the disallowance made is hereby directed to be deleted. Appeal of the assessee is allowed.
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2023 (8) TMI 1576
Deductions claimed u/s 35(1)(ii) for bogus donations - donation to a organization who initially enjoyed a registration u/s 35(1) which was subsequently withdrawn with retrospective effect -
Whether the Tribunal was right in allowing the deductions claimed by the assessee under Section 35(1)(ii) for the donation to a organization who initially enjoyed a registration u/s 35(1) which was subsequently withdrawn with retrospective effect? - HELD THAT:- Tribunal followed the decision in case of Narbheram Vishram [2018 (11) TMI 1314 - ITAT KOLKATA] Apart from certain factual similarities the Tribunal in the said decision has also taken note of the decisions of the Hon’ble Supreme Court holding that there is no provision for withdrawal of recognition under Section 35(1)(ii) of the Act.
The view taken by the learned Tribunal in the impugned order is supported by the decision of General Magnets Ltd. [2001 (7) TMI 23 - CALCUTTA HIGH COURT] wherein the Court after taking note of various decisions namely CIT v. Ethelbari Tea Co. [2000 (6) TMI 3 - CALCUTTA HIGH COURT] B.P. Agarwalla and Sons Ltd. [1993 (7) TMI 36 - CALCUTTA HIGH COURT], K.M. Scientific Research Centre v. Lakshman Prasad [1996 (9) TMI 34 - ALLAHABAD HIGH COURT], Seksaria Biswan Sugar Factory Ltd. v. IAC [1990 (3) TMI 47 - BOMBAY HIGH COURT], CIT v. Bhartia Cutler Hammer Co. [1997 (12) TMI 91 - CALCUTTA HIGH COURT], Chotatingrai Tea Estate Pvt. Ltd. v. CIT [1998 (12) TMI 81 - GAUHATI HIGH COURT] held that for the mistake committed by the department the assessee should not suffer. The withdrawal of approval to the society for retrospective effect is itself bad and no assessee should suffer for the mistake of the department. The department has power of withdrawal but in such cases withdrawal can be only with prospective effect. Further it was held that if the donation to the approved society is genuine, in that case withdrawal with retrospective effect does not affect the right of the assessee for deduction of the amount which has accrued to the assessee on the basis of the payment to an approved society u/s 35CCA of the Act. Decided against revenue.
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2023 (8) TMI 1575
Undisclosed income - Income surrendered by director at the time of survey - undisclosed income that the directors had offered in their respective hands - “right person” v/s "wrong person" - HELD THAT:- On a careful perusal of the statements of the directors of the assessee company, during the assessment proceedings, it transpires that income of Rs. 1.10 crore (supra) was admitted by them as their respective undisclosed income and he directors, on being queried about the source of investment had in unequivocal terms stated that the same was sourced out of their respective undisclosed income. The respective directors disclosed Rs. 1.10 crore (supra) qua the undisclosed income they garnered during the year under consideration and not in the hands of the assessee company.
As when the source of the investment towards unexplained stock/franchisee fee/furniture was duly explained to have been made out of the investment made by the directors, as admitted by them in their respective statements, though out of their undisclosed income, the same cannot be held as an unexplained investment in the hands of the assessee company.
Our conviction above is fortified on a perusal of Section 69 of the Act, which therein contemplates that it is only when the assessee does not explain the nature and source of the investments; or the explanation offered by him is not in the opinion of the A.O satisfactory, the value of the investment may be deemed to be the income of the assessee of such financial year. As the aforesaid factual position that had been canvassed by the directors of the assessee company, i.e., investments towards unexplained stock/franchisee fee/furniture was sourced out of their undisclosed income, had neither been controverted by the lower authorities nor anything proving to the contrary has been brought to our notice by the Ld. DR, therefore, we find no justification for the A.O. to have held the investments mentioned above as having been sourced out of an unexplained source in the hands of the assessee company.
As observed in the case of ITO vs. Ch. Atchaiah [1995 (12) TMI 1 - SUPREME COURT] Income Tax Officer can and must tax the right person and the right person alone. The Hon’ble Apex Court observed that the “right person” means the person who is liable to be taxed, according to law, concerning a particular income. It was further observed that the expression “wrong person” is used as the opposite of the expression “right person.” Based on its observation above, the Hon’ble Apex Court had concluded that merely because a wrong person is taxed concerning a particular income, the A.O. is not precluded from taxing the right person concerning that income.
Thus as amount of Rs. 1.10 crorewas liable to be looked into by the A.O in the hands of individual directors for the reason that they had duly admitted the same as their undisclosed income for the year in question. Ground of Appeal No.1 raised by the assessee is allowed.
Unrecorded cash found during survey proceedings - Assessee had failed to come forth with any explanation concerning the addition mentioned abovesustained by the CIT(Appeals); therefore, we uphold the same. Thus, the Ground of appeal No.2 raised by the assessee is dismissed.
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