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Showing 201 to 220 of 420205 Records
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2024 (11) TMI 1278
Valuation of captively consumed goods - valuation of goods is required to be determined on the basis of cost of production, as prescribed by the Institute of Cost & Works Accountants of India in the Cost Accounting Standard-4 (CAS-4), in accordance with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Section 4 (1)(b) of theCentral Excise Act, 1944 or not - denial of CENVAT credit to recipient sister units - penalty under Section 11AC of the Central Excise Act, 1944 - HELD THAT:- It is an admitted fact on record that the appellants have themselves computed the differential duty liability and also paid the same along with interest, upon finalization of the books of accounts in form CAS-4 for effecting supply of goods to their sister units. The differential duty was paid and the same was invoiced to the sister units, by issuance of the supplementary invoices. Rule 9 of the Rules of 2004, has prescribed various documents, based on which CENVAT credit shall be taken by the manufacturer. Sub-rule (1)(b) of Rule 9 ibid recognizes ‘supplementary invoice’ as the proper document for availment of CENVAT credit based thereon. However, there is an embargo being created in the said sub-rule that whenever any additional amount of duty became recoverable from the manufacturer of excisable goods on account of any non-levy or short levy, by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of statute, then taking of CENVAT credit of such additional duty is prohibited.
In the present case, the books of accounts for the year 2011-2012 were required to be finalized by September, 2012, which was in fact complied with by the appellants inasmuch as such compliance part has not been disputed by the department. Further, we also notice that in the letter dated 15.05.2014, the jurisdictional Range Superintendent had informed his counterpart in the Audit wing, mentioning that the audit para does not appear to be sustainable and that based on the statement along with invoices particulars furnished by the sister units, the draft SCNs were prepared by him. Thus, under such circumstances, it cannot be said that the appellants had suppressed any material particulars to the department or indulged into any malpractice, with an intent to evade payment of additional amount of Central Excise duty.
In view of the fact that issuance of supplementary invoices by the units in H-25 and B-82/1, are the prescribed documents under Rule 9 of the Rules of 2004, denial of the CENVAT credit to the recipient units cannot be questioned inasmuch as there is no element of fraud, collusion, wilful misstatement etc., in making payment of such additional duty into the Government exchequer. Therefore, we are also of the considered opinion that taking of CENVAT credit by the recipient units viz., E-60,61,62 and B-82/1 on the basis of the supplementary invoices issued by the manufacturing units is in conformity with the CENVAT statute.
There are no merits in the impugned orders, insofar as confirmation of the adjudged demands on the appellants are concerned - Therefore, the impugned orders are set aside - the appeals are allowed in favour of the appellants.
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2024 (11) TMI 1277
Imposition of condition relating to 'C' form over and above what has been contained in the Notification - Whether the Notification under Section 8(5) would run in parimeteria with the rates of tax stipulated in the Schedule and whether the conditions stipulated in Section 8(4) have to be read into the Notification itself? - HELD THAT:- Reference may be made to the decision of the Jharkhand High Court in TATA MOTORS LIMITED VERSUS STATE OF JHARKHAND AND OTHERS [2012 (9) TMI 911 - JHARKHAND HIGH COURT]. In that case, the benefit of reduced rate of tax per a Notification issued under Section 8(5) of the CST Act had been refused on the ground that the parties were unregistered dealers - In that case as well, the assessee has unfortunately not brought to the notice of the Bench the judgment in the case of DEPUTY COMMISSIONER OF SALES TAX VERSUS AYSHA HOSIERY FACTORY (P.) LTD. (AND OTHER APPEALS) [1992 (1) TMI 303 - SUPREME COURT] and what has been cited are the judgements STATE OF RAJASTHAN AND ANOTHER VERSUS SARVOTAM VEGETABLES PRODUCTS (AND OTHER APPEALS) [1996 (4) TMI 405 - SUPREME COURT] and several other judgments. However, and fortuitously for the assessee in that case, the High Court has been persuaded to make distinction between the applicability of a Section 8(5) Notification in the case of a transaction under Section 8(1) of the CST Act vis-a-vis a transaction under Section 8(2) of the CST Act.
In the former, the rate of tax stipulated is qua the registered dealer, whereas in the latter, the rate of tax stipulated is qua the unregistered dealer. In our respectful opinion, this distinction is one without a difference as Section 8(5) makes no distinction between its applicability qua a situation falling either in Section 8(1) or 8(2), unless the Notification under Section 8(5) itself makes such distinction, stipulating that the reduced rate is applicable only on transactions falling either under Section 8(1) or 8(2). In the Notification in question, it is an omnibus reduction of rate and there is no denial of rate to any specific category of transaction.
The impugned order of assessment is quashed and this Writ Petition is allowed.
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2024 (11) TMI 1276
Assessment of turnover under the Tamil Nadu General Sales Tax Act, 1959 for the periods 1996-97, 1997-98, and 1999-00 - inclusion of freight charges in the sale price of cement - HELD THAT:- None of the orders of assessment conduct an examination of the nature envisaged by the AAC in remand order dated 31.08.2000. No doubt, the assessing authority has attempted a cursory comparison of the transactions pre and post 05.10.1996 in the order for the period 1996 – 97, noting that the sale price was Rs. 84,975/- for 10 tonnes of white cement vide invoices upto 5.10.96 and Rs. 85,670/- for 10 tonnes vide invoice dated 26.11.1996.
It cannot be understood how the above figures support the department’s contention that there has been suppression of freight in the second invoice dated 26.11.1996 as that figure is, in fact, higher than the sale price pre 05.10.1996. As far as 1997 – 98 is concerned, there is no question of comparison, as all the transactions have taken place post 05.10.1996. In this case, there is reference to a single invoice dated 31.3.1995 and again, it cannot be appreciated how, based on this invoice, the assessing officer comes to the conclusion of suppression.
As far as 1998 – 99 is concerned, three invoices had been examined, one dated 31.3.1995, the second, a depot transfer invoice dated 17.02.1999 and the third, an invoice dated 14.02.1999. Learned Additional Government Pleader would draw attention to the fact that the depot transfer invoice relates only to a transfer between Kottayam and Coimbatore and was for a sum of Rs. 74,644/-. This price would, admittedly, not include a component of freight.
The object of Section 12A of the TNGST Act is to bring to tax turnover that, according to the authority, has been supressed by reduction of sale price in the accounts of an assessee. The suppression, in this case, is said to be the freight. An important factor in this matter is that the books of the petitioner have not been rejected and the assessments are based on the books. The admitted position is that the books reflect the component of freight charges and the cost of cement.
The impugned orders are set aside - these writ petitions are allowed.
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2024 (11) TMI 1275
Seeking grant of bail - smuggling of huge commercial quantity of heroin - recording of statements u/s 67 of Narcotic Drugs and Psychotropic Substances Act, 1985 - existence of other corroborative evidences or not - right of Accused of speedy trial - HELD THAT:- Admittedly the record show that present Applicant and Accused No. 1 were partners in a firm dealing with clearing of the consignment. It is also claimed that Accused No.1 and the present Applicant are related with each other. In such circumstance, phone calls between Accused Nos. 1 and 2 are but natural, on personal front as well as on business transaction - The transactions which have been pointed out on behalf of the respondent are only with regard to charge of fees with regard to clearance of the consignment. Such amounts are only in few thousand and not having any suspicion with regard to the contention of dealing in drugs.
The Clearing Agent or a person who is facilitating the agent to clear the consignment is not supposed to know an exact material which is found in the said consignment though such bills required to be mentioned about it. Admittedly such consignment was received from a foreign country and it requires customs clearance since the customs authorities suspected some foul play, they alerted the DRI and accordingly raid was conducted - Applicant was not present when the consignment was opened and search was carried out. It was Accused No.1, who was present during the search of the said consignment and he was responsible for clearing the said consignment though claimed for and on behalf of Accused Nos.2 and 4. Thus the material which has been collected by the complainant qua the present Applicant is not enough to sufficiently corroborating the case and existence of the call details and forwarding of the bills to Accused No.1 cannot be considered as presumption of the knowledge of the Applicant about the drugs concealed in the said consignment.
In the case of SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION & ANR. [2022 (8) TMI 152 - SUPREME COURT], the Apex Court has observed that prolong incarceration and inordinate delay engaged in the conclusion or the trial would certainly affect the right of Accused of speedy trial and in such circumstance, Section 37 of NDPS Act or such provisions under the Special Acts would not be an impediment to grant bail. The Apex Court further observed that the person seeking bail is still an Accused and not a convict and thus he is entitled for a speedy trial and if it is not possible to decide his case as enshrined under Article 21 of the Constitution and if he is kept inside without any progress in the matter, such Accused is certainly entitled to be released on bail.
Similar observations are found in the case of ANKUR CHAUDHARY VERSUS STATE OF MADHYA PRADESH [2024 (5) TMI 1463 - SC ORDER] by the Apex Court which consider the embargo under Section 37 of the NDPS Act. The Apex Court found that failure to conclude trial within a reasonable period resulting in prolong incarceration militates against the precious fundamental right guaranteed under Article 21 of the Constitution of India and as such, conditional liberty overriding the statutory embargo created under Section 37 of the NDPS Act could be considered.
Coming back to the matter in hand, it is no doubt true that a huge commercial quantity of heroin was found in the container, but except statement under Section 67 of NDPS Act which is otherwise not admissible in evidence as far as admissions/ confessions of the present Applicant are concerned, there is hardly any corroborative evidence. Thus the provisions of Section 37 of the NDPS Act would not be considered as an embargo in the present matter even though commercial quantity was detected and seized - Applicant is in custody from last 3 years and till date there is absolutely no progress in the said matter. The conclusion of trial in near future is again a remote possibility. Accordingly, I am of the considered opinion that the Applicant is entitled for the bail in connection with the present matter. However, on strict conditions.
Applicant shall be released on furnishing a personal bond of Rs.1 Lakh with two solvent sureties in the like amount to the satisfaction of the Learned Special Court and on the fulfilment of conditions imposed - bail application allowed.
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2024 (11) TMI 1274
Misconduct under the Chartered Accountants Act, 1949 - removal of respondent’s name from the Register of Members for a period of six months - scope of the disciplinary proceedings - HELD THAT:- The present disciplinary proceedings cannot be said to have been affected due to the absence of the complainant.
Admittedly, respondent had purchased the shares in the year 1997, but denied having sold them to the complainant. Surprisingly, the signatures on the share transfer deed has been admitted by the respondent. He tried to render an explanation that an employee of the broker made him sign the blank transfer deed on the pretext that it was needed for some unrelated share delivery issue, which may have been fraudulently used for the purpose of selling shares to the complainant. However, the explanation given does not look probable, inasmuch as, respondent is a qualified Chartered Accountant and it is difficult to believe that he would sign blank transfer deed - Respondent has also failed to render any explanation for four years delay in applying for duplicate share certificates. No satisfactory explanation for four years delay in applying for duplicate share certificates has been put forth by the respondent. The continued receipt of dividends after the sale of certificates reflects an attempt on his behalf to take benefit from shares, he no longer owned.
It is well settled that the scope of interference with the decision of any Authority under Article 226 of the Constitution of India is limited. Even though, it was contended on behalf of the respondent that the decision of the Disciplinary Committee was perverse and unreasonable, the said contention is found to be wholly bereft of any merit - the Disciplinary Committee found that respondent had failed to act in a bona fide manner and the said conduct was derogatory in nature and highly unbecoming of a Chartered Accountant and brought disrepute to the profession.
The punishment awarded to the respondent is not unduly harsh. The recommendation of the Council to the effect that the name of respondent be removed from the Register of Members for a period of six months, accepted - Reference disposed off.
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2024 (11) TMI 1273
Maintainability of appeals filed by the Revenue before the ITAT on low tax effect - HELD THAT:- On perusal of the circular dated 15.03.2024, which was later on, amended by Circular No. 09/2024, vide order dated 17.09.2024 issued by CBDT supersedes the circular dated 11.07.2018 and 08.08.2019, it is seen that it does not provide exception clause wherein the appeal can be filed notwithstanding that the tax effect entailed is less than the monitory limits under the exception given.
The issue involved herein is no longer resintegra and present Income Tax Appeal stands allowed keeping in view non-existence of exception clause as well as monitory limit as per Circulars dated 15.03.2024 read with Circular dated 17/09/2024. Accordingly, order dated 31/05/2022 passed in M.A. Nos. 11 and 12/JAB/2020 (Annexure A/7) is hereby set aside.
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2024 (11) TMI 1272
Penalty proposals u/s 271B - breach of the procedure contemplated u/s 44AB - non filling of the audit report as mandated under the said provision within the time limit specified - whether the assessee Societies had demonstrated a reasonable cause for the delay in submitting audit reports as mandated u/s 44AB of the I.T. Act before the Assessing Authority? - HELD THAT:- It can be seen from a perusal of the statutory framework that the assessee Co-operative Societies had virtually no control over the completion of the audit by the statutory auditors. We also note that there is nothing on record that would suggest that the delay occasioned by the statutory auditors in finalising the audit reports was in any way attributable to the conduct of the assessees in these appeals. We make this observation at this stage because we notice that, unlike the findings of the Assessing Authority and the First Appellate Authority, the observations of the Tribunal in the orders impugned before us are suggestive of such lethargy on the part of the assessees without there being any tangible material before the Tribunal based on which it could arrive at such a finding. We also find that, at any rate, the audit reports were made available before the Assessing Authority at the time of completion of the assessment, and hence, there was really no prejudice caused to the Department in the matter of finalisation of assessment.
The appellants/assessees before us cannot be seen as persons who did not establish a reasonable cause for the belated filing of the audit reports before the Assessing Authority. The peremptory phraseology used in Section 273B of the I.T. Act therefore mandated that no penalty under Section 271B be imposed on them. For the same reason, and since reasonable cause was demonstrated by the assessees in the instant cases, the decision of Peroorkkada [2020 (1) TMI 624 - KERALA HIGH COURT] would have no application to the case of the appellants before us. We therefore set aside the impugned orders of the Appellate Tribunal, to the extent it confirms the penalty under Section 271B of the I.T. Act on the appellants/assessees, and allow assessee appeal.
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2024 (11) TMI 1271
Writ application challenging validity of assessment passed u/s 153C - Unexplained income to be taxed u/s 69A - HELD THAT:- Both learned counsel would bring to the notice of the Court that post institution of the writ appeals, the appellants have instituted statutory appeals, the details of which are extracted below, before the Commissioner of Income Tax (Appeals). They would also confirm that they have raised all necessary grounds in those appeals, including on the aspect of assumption of jurisdiction
We see no reasons to entertain these writ appeals as the appellants are seen to be riding two horses, which is impermissible. Hence, these writ appeals are dismissed. It is made clear that none of the observations made by the learned Judge in order dated 18.01.2024 will stand in the way of the appellant in the adjudication of the appeals, that shall be decided in accordance with law.
Addition of amount of “unexplained income” to the accounts of both the directors - appellants is primarily aggrieved by the fact that, while directing de novo assessment Ld' Judge has added a caveat that 'the unexplained income u/s 69A of the Income Tax Act, 1961' shall be added to the income of the appellants - We see some merit in this contention, as the assessment has been remanded to be re-done, de novo. Hence, it is appropriate that the question of unexplained income to be taxed under Section 69A, also be considered by the assessing authority, in accordance with law. The contents of paragraph 115 shall not be read as a direction to the assessing officer, who is at liberty to conduct the assessment proceedings afresh.
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2024 (11) TMI 1270
Correct head of income - receipts of rent collected by the appellant in relation to leased property - business income OR Income from House Property OR Capital gain - HELD THAT:- In these appeals we are concerned with an assessee who has been consistently seen as deriving income from letting out house property owned by it. It is on that basis that it has been assessed in all the assessment years prior to, and subsequent to, the assessment years under consideration in these appeals. Merely for the reason that in the said assessment years, the assessee effected a sale of some of its properties, it cannot be seen as having embarked upon a business of buying and selling properties in those years, even if it was authorized to do such business as per its Memorandum of Association.
The sale of properties by the assessee in the two years under consideration in these appeals must be seen as merely incidental to the activity of letting out of properties for rent carried out by it in the years prior and subsequent to the said two years. The said sale transactions cannot have the effect of changing the very nature of the income earning activity consistently carried on by the assessee, and accepted by the Department. Thus, we are of the view that the income derived by the assessee, from the sale of properties owned by it, during the two years under consideration in these appeals, can only be assessed under the head of 'capital gains' and not as 'business income'.
Period of limitation - jurisdiction of Appellate Tribunal to consider the rectification application belatedly - Appellate Tribunal being a creature of the Statute cannot extend its jurisdiction beyond what is expressly conferred on it under the Statute. we find considerable force in the contention of the learned counsel for the appellant that the Appellate Tribunal did not have the jurisdiction to consider the rectification application belatedly preferred by the Revenue, based on the liberty granted to it by the Tribunal while dismissing the Revenue's appeals in the earlier round of litigation.
The time permitted for filing an application under Section 254 (2), for rectifying a mistake in an order passed by the Appellate Tribunal under Section 254 (1) is six months from the end of the month in which the order under Section 254 (1) was passed. In the instant cases, the applications under Section 254 (2) were preferred by the Revenue beyond the said period and it was these applications that the Appellate Tribunal allowed while restoring the appeals to file and passing final orders thereon against the appellant assessee.
It is also debatable whether, while restoring the appeals before it and deciding them against the assessee, after having dismissed the appeals earlier citing low tax effect, the Appellate Tribunal was merely exercising its power of rectification of mistakes or whether it was in effect exercising a power of review that it did not have under the Statute. In either event, the exercise by the Appellate Tribunal was without jurisdiction and hence void ab initio.
Decided against revenue.
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2024 (11) TMI 1269
Validity of Faceless assessment order in violation of the principles of natural justice and in a manner contrary to the provisions of the Income Tax Act - petitioner was not issued a show cause notice-cum-draft assessment order, as per requirement of the provisions of Section 144B as retrospectively brought into effect from 01 April 2021 by the Finance Act, 2022 - HELD THAT:- The principles of natural justice are statutorily recognized in the provisions of Section 144B of the IT Act. Any non-adherence to the mandatory requirement of the statutory provisions and such principles as recognized by it, would render the assessment order patently illegal.
The action of the respondents which is contrary to the mandate of the statutory provisions or in breach of the principles of natural justice would be rendered illegal and invalid. It needs no elaboration that when an order under a statute is to be passed which would entail civil consequences, causing a prejudice to the person, against whom it is being passed, such order would be required to be passed in strict adherence to the principles of natural justice i.e. after issuance of a show cause notice and an opportunity of a hearing being granted.
It is well settled that an order passed in breach of the principles of natural justice would be required to be held to be vitiated, non-est and a nullity. In the present case, the impugned assessment order is passed without issuance of a show cause notice and an opportunity of a hearing being granted to the petitioner. As noted above, Section 144B inheres the application of the principles of natural justice. For such reasons, the impugned order would be manifestly illegal and a nullity in the eyes of law.
This is a fit case, wherein the impugned order would deserve to be quashed and set aside, so that further appropriate procedure as recognized by law under the relevant provisions of the IT Act can now be followed and an appropriate assessment order in accordance with law passed. Petition allowed.
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2024 (11) TMI 1268
Tender bid disqualified by the Technical Evaluation Committee - as alleged petitioners had submitted documents, which were not in conformity with Clause 13(h) of the NIT - petitioners’ counsel submits that the petitioners’ technical bid had been rejected on the ground that the petitioners had not submitted the copy of the income tax returns for the years 2022-23 - documents required under Clause 13(h) would come within the ambit of the “Average Annual Financial Turnover” provided as per Clause 3(b) of the NIT
HELD THAT:- Average Annual Financial Turnover would have to be considered to be different than an Income Tax Return and the exemption given under Clause 3(e) to MSEs, from submitting the “Average Annual Financial Turnover” in Clause 3(b) does not include within it’s ambit Clause 13(h) of the NIT. There is also no provision for submission of the “Average” income tax returns for the last 3 years in either Clause 3(b) or Clause 3(h). Though the Income Tax Return can be supportive of the Average Annual Financial Turnover, the Average Annual Financial Turnover cannot be said to be the same as an Income Tax Return or vice versa.
As an Income Tax Return cannot said to be an Average Annual Financial Turnover document, this Court holds that the relaxation provided to MSEs under Clause 3(e) would not cover the Income Tax Returns required to be submitted by a bidder under Clause 13(h). As the petitioners have submitted only the Income Tax Returns for 2 years, which is not in consonance with the requirement of filing the Income Tax Returns for 3 years, this Court does not find any infirmity with the decision of the respondent authorities in disqualifying the petitioners Technical Bid.
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2024 (11) TMI 1267
Invoking extraordinary jurisdiction of the High Court during pending appeal and review proceedings - Validity of reopening of assessment - illegality of the notice issued to the petitioner u/s 148 - petitioner as fairly submitted that the petitioner has come before the Court after the petitioner had already filed an appeal against the impugned assessment order, as also the petitioner has filed a Review Application before the Principal Chief Commissioner u/s 264 and both the proceedings are pending - revenue would submit that much prior to the decisions of this Court in Hexaware [2024 (5) TMI 302 - BOMBAY HIGH COURT] as also in Siemens [2023 (9) TMI 552 - BOMBAY HIGH COURT] the petitioner in the present case has availed of an alternate remedy
HELD THAT:- We find much substance in the contention as urged by Mr. Sharma on behalf of the revenue. Once the petitioner has availed of an alternate remedy as provided under the Act, namely, of a substantive appeal being filed, and if the assessment order as also the notices issued to the petitioner prior thereto under Section 148A and under Section 148 are contrary to the substantive provisions of Section 151A and Section 151 of the Act, as interpreted by this Court in Hexaware and Siemens (supra), the Appellate Authority as also the Revisionary Authority being bound by the said decisions of the jurisdictional High Court, need to consider such legal position. Thus, the petitioner is not precluded from raising all such contentions, as raised before us in the present proceedings, before the said authority.
The proceedings which are pending before the CIT(A) as also the Revisionary proceedings, be decided considering the contentions of the petitioner, namely, as to whether the impugned assessment order as also the notice under Section 148 of the Act is illegal when tested on the law as declared by this Court in the aforesaid decisions.
We are of the opinion that an approach ought not to be followed that when the appellate authority is already seized with the proceedings, we entertain writ petitions to adjudicate, what can certainly be adjudicated by the appellate authority, considering the said decisions of this Court.
Accordingly, we are not persuaded to entertain the present proceedings which assail the assessment order dated 15 March 2024 when appeal is already filed by the petitioner as also the revision proceedings are pending.
Order:- The petitioner shall pursue the proceedings before the CIT(A) against the impugned assessment order as also the proceedings before the Revisionary Authority. It is open to the petitioner to raise contentions in regard to the illegality of the notice issued to the petitioner under Section 148, in the light of the decisions of this Court in Hexaware and Siemens (supra). Till the proceeding before the Appellate Authority or Revisionary Authority are decided, the impugned assessment order shall remain stayed.
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2024 (11) TMI 1266
Estimation of income - Bogus purchases - Tribunal partly allowed the appeal of the Revenue and restricted the disallowance at 6% of the amount of the unexplained purchases - HELD THAT:- As decided in PANKAJ K CHOUDHARY [2023 (3) TMI 1402 - GUJARAT HIGH COURT] the view taken and the conclusion arrived at by the appellant Tribunal are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. No substantial questions of law.
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2024 (11) TMI 1265
Assess the income of rent received by co-owners as income of A.O.P. (Association of Persons) - appellant and co-owners purchased property jointly and rented out godowns and plinths - HELD THAT:- The rent was being paid by the Government Companies jointly in the hands of co-owners treating them as a single landlord and the amount was also being deposited in the single account. The loans were also raised for construction of the godowns in the name of M/s Y.S. & Co-owners. In view thereof, it is factually not disputed that the action was to be taken by the Revenue against the assessee as an AOP.
The order passed by the CIT (Appeals) treating the same to be the income received individually on the specified shares is solely based on the sale deed regarding purchase of land. There is no defined share to the rental income and AOP has jointly received the income. There is no division in terms of the law and all of them were co-landlords of each rented out property. In ITO vs Ch. Atchaiah [1995 (12) TMI 1 - SUPREME COURT] the Apex Court held that merely if the members of an AOP have been assessed individually, the revenue would not be barred to assess such income in the hands of AOP if the income relates to AOP.
The decision taken by the ITAT, therefore, on the issue of the rental income being that of AOP does not warrant any interference and question no.(i) is, accordingly, answered in favour of the Revenue.
Income from house property - Plinth constructed would be treated as a building or not? - income received for letting out the plinth to be treated as a house property - Plinth level as per P. Ramanatha Aiyar’s Advanced Law Laxicon, 5th Edition (2017) means “the level of the floor of building just above the surrounding ground.”
Thus, if a land where construction has been made upto plinth level, cannot be treated to be a house property and is open land with the outlining construction on which further walls and columns would be constructed and thereafter a roof shall be constructed on the said columns and walls to complete a building. Construction of plinth, therefore, can in no manner be said to be construction of a building.
In fact a plinth and an area surrounded by the plinth, where no construction has been done would be a land not appurtenant to the building because construction on the plinth can be done separately. In no circumstances, it can be treated a plinth, therefore, to be falling within the definition of a building. The depreciation, therefore, could not have been allowed and would not be entitled for treating as building within the meaning of Section 26 of the Act. The said question is, therefore, answered in favour of the Revenue. We, accordingly, set aside the observations of the ITAT on this aspect.
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2024 (11) TMI 1264
Additions on account of excessive shortage and scrap value of discarded cables - abnormal increase in wastage - AO observed that assessee had shown wastage of 76,336 Kgs. on consumption of 5,85,295 Kgs. which worked out to 13.04% as against wastage shown @ 8.66% of last year on spinning of worsted yarn - HELD THAT:- Trading account and the stock has been found to be within the satisfaction of the Income Tax authorities and the AO had accepted the same. The wastage of 13.04% shown by the assessee has been held to be more higher than the wastage shown for the previous year i.e. 8.66%.
From the perusal of the record, as maintained by the assessee, shown in the tabular form for the various assessment years from 1975-76 upto 1983-84, we find that the wastage percentage was varying from 13.64% and increased upto 16.43% and decreased to 8.66% only for a period of three months in the year 1982-83, while in the year 1983-84 remained consistent to 13.04%. Thus, it cannot be said that the wastage has been shown on the higher side for the year 1983-84. Moreover, this Court find that the Income Tax Authorities had accepted the earlier wastage percentage without any demur.
This Court, however, is also satisfied and accept the contention of the assessee that since the stock production and consumption records were maintained under the supervision of the Excise Authorities and there is no objection raised with regard to the said stock. The Assessing Officer has not objected to the total stock maintained, it could not have proceeded on a presumption alleging higher wastage shown by the assessee.
The income-tax department throughout accepted the trading account of the assessee and there is no dispute regarding the quantity of cotton shown to be consumed as per the books of account maintained by the assessee and no material to show and to establish that the increase in percentage of wastage was attributable to any suppression of weight or any suppression of production. The Assessing Officer without mentioning any irregularity in the accounts and accepting it could not make addition without giving any reasoning and fresh computation.
The closing stock is valued as per the computation by the assessee regarding the profits and losses and if the books of account of the assessee including rate at which closing stock had been valued are accepted by the Assessing Officer, the addition to the net profit could not be made without recomputing the trading result of the assessee and if as per Section 145(1) of the Act, the trading account of the assessee are accepted to be correct and complete, the Assessing Officer without re-computing cannot make additions to the net profit. Thus, the addition on account of excessive shortage is held to be not sustainable in the eyes of law.
Addition of profit u/s 41(2) on the sale of copper wire - A perusal of the assessment order and the explanation given by the assessee shows that the assessee explained each and every question put by the Assessing Officer. Further inspite of the fact that the Assessing Officer himself personally visited the factory premises alongwith the Inspector Sh. S.K.Gupta, and nothing was found to show that the assessee has tried to evade tax, the Assessing Officer on assumptions and presumptions made addition as profit. The reasoning given by the Assessing Officer for such an addition is found to be contrary to the facts.
We hold that the Tribunal has erred in assessing the additions made by the Assessing Officer. Accordingly, the reference is answered in favour of the assessee and against the revenue.
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2024 (11) TMI 1263
Revision u/s 263 - Disallowance u/s 14A - assessee has not declared any exempt income - HELD THAT:- We observed that the assessee has not declared any exempt income during the year even though it has made several investments as recorded in its balance sheet.
As far as disallowance of section 14A is concerned, it is settled law, as per which no disallowance can be made wherein no exempt income is declared by the assessee during the year. It is fact on record that assessee has not earned any exempt income during the year and ld. PCIT has invoked the provisions of section 14A with the observation that investments do have potential to earn exempt income in the future and it has hidden and embedded expenses in making such investments which are exempt from tax.
Accordingly we are inclined to set aside the order passed u/s 263 of the Act and ld. PCIT has not brought on record any mistake apparent on record or the action of the assessing officer is against the law. Assessee appeal allowed.
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2024 (11) TMI 1262
Revision u/s 263 - CIT directing AO to levy penalty u/s 271B - delay filling tax audit report - HELD THAT:- It is a fact that tax audit report was furnished by the assessee before the Learned AO before the completion of assessment. Hence the tax audit report was indeed made available before the completion of assessment before the Learned AO. We hold that the tax audit report is only meant for providing guidance to the Learned AO to understand the various compliances made by the assessee under various provisions of the Act. Since the Tax Audit Report was indeed made available before the Learned AO by the assessee before the completion of assessment proceedings, the larger purpose of provisions of Section 44AB read with Section 139 of the Act stood complied with and there is no need to levy penalty under Section 271B of the Act
We hold that this is not a fit case for levy of penalty u/s 271B - Hence, PCIT was not justified in invoking revision jurisdiction under Section 263 of the Act by directing the Learned AO to levy penalty under Section 271B of the Act. Assessee appeal allowed.
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2024 (11) TMI 1261
Validity of Revision u/s 263 by CIT - reasons for selection of the case for scrutiny through CASS was not examined and order is passed in prima facie view, without making enquiries and verification which should have been made - PCIT has raised 11 issues which required verification, which the AO has failed to carry out
HELD THAT:- AO has issued several notices to the assessee on various dates on all the issues and assessee has submitted relevant information as called for. Based on the submissions made by the assessee, the AO completed the assessment and taken one of the possible views in all the issues for which assessment was initiated. However, ld. PCIT has reviewed the assessment order and according to ld. PCIT, the verification carried out by the AO is not justified and he should have properly verified. Accordingly, he has invoked the Explanation 2 to section 263 of the Act. It is also brought to our notice that as regards issue no.7, no doubt raised by ld. PCIT, however in order giving effect to the revision order, AO has not made any addition after due verification.
As relying on Clix Finance India (P.) Ltd. [2024 (3) TMI 157 - DELHI HIGH COURT] we are inclined to observe that the AO has duly verified various issues raised by the ld. PCIT and he has taken one of the possible views. Now ld. PCIT has invoked Explanation 2 to section 263 of the Act with a view that AO has passed the order without making an enquiry or verification, is not justified as per various documents submitted before us. Thus, we are inclined to set aside the order passed u/s 263 - Assessee appeal allowed.
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2024 (11) TMI 1260
Credit of TDS - as per DR claim of the assessee is not in conformity with the provisions of Rule 37BA(3)(ii) - HELD THAT:- The provisions of section 199 of the Act, deals with credit for taxes deducted and as per the said provisions, any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government, shall be treated as a payment of tax on behalf of the person from whose income, the deduction was made. Rule 37BA(3)(ii) of the Income Tax Rules, 1962, deals with the credit for tax deducted at source and paid to the Central Govt. and as per said rule credit for TDS shall be given for the A.Y for which such income is assessable.
We find, there is no dispute with regard to the provisions of section 199 r.w Rule 37BA(3)(ii) of the Income Tax Rules, 1962, however, whether the said provision is applicable to the given facts of the present case are not is to be seen.
Admittedly, the assessee has received mobilization advances of Rs. 157.65 crores on which the TDS of Rs. 3,15,30,612/- has been deducted.
CIT (A) has recorded a categorical finding that the works allotted to the appellant for which mobilization advance has been paid was cancelled. Once the contract awarded to the appellant got cancelled and no income accrues to the assessee from the said contract, then the question of spreading the income over the years does not arise and consequent Rule 37BA(3)(ii) cannot be applied to the assessee.
Since the findings of the facts recorded by the learned CIT (A) that, works awarded to the appellant has been cancelled and mobilization advances received from the principal has been returned net of taxes, in our considered view, the assessee has rightly claimed credit for TDS deducted on said mobilization advance, because there is no income to be offered in the subsequent financial years.
No error in the reasons given by the learned CIT (A) to allow credit for the impugned A.Y - Decided against revenue.
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2024 (11) TMI 1259
Denial of registration u/s 12AB - the fund raising programme carried out by the assessee trust by way of coupon sales and mega lucky draw were in the nature of business activities which is not identical to carry out the object of the trust and violation of conditions specified in Section 12AB(4) - HELD THAT:- As undisputed fact that the assessee trust made the fund raising programme “Adbhut Hungama” by selling donation coupon for Rs. 500/- each and also given prices worth of Cars to Tea Mugs. The surplus out of this fund raising programme were utilized for buying Six Dialysis machines, CT Scan machines, 4 Catract operating equipments and establishing Blood Bank, Skin Bank at various places at Gujarat and Rajasthan. Ld. CIT(E) has elaborately considered fund raising programme in his impugned order, but to failed address the activities carried out by the assessee trust and thereby denied registration u/s. 12AB of the Act which is in our considered opinion is against the provisions of law. The Ld. CIT(E) is not disputing the Medical Equipments, Machines donated to various institutions to carry out medical relief to the needy and poor.
Hon’ble High Court in UNITED WAY OF BARODA [2020 (3) TMI 233 - GUJARAT HIGH COURT] on an identical issue wherein the trust organizing Garba event at Baroda during Navratri period by selling tickets and the surplus out of that Garba event is used for charitable purposes which was held to be not in the nature of trade commerce or business.
The Hon’ble High Court confirmed the Coordinate Bench decision of this Tribunal and dismissed the appeal filed by the Revenue stating the object of introducing the first proviso is to exclude the organizations which are carrying on regular business from the scope of "charitable purpose". An activity would be considered 'business' if it is undertaken with a profit motive, but in some cases, this may not be determinative. Normally, the profit motive test should be satisfied, but in a given case the activity may be regarded as a business even when the profit motive cannot be established/ proved. In such cases, there should be evidence and material to show that the activity has continued on sound and recognized business principles and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business.
We have no hesitation in holding that the one-time fund raising programme carried out by the assessee trust is not an organized activities in the nature of business akin to selling of lottery tickets. Since the surplus were been invested in buying medical equipment and establishing Blood Bank and Skin Bank at various parts of Gujarat and Rajasthan. There is no question of violation of Section 12AB(4) of the Act. Thus we hereby set aside the order passed by the Ld. CIT(E) and direct him to grant exemption u/s. 12AB of the Act.
Application of provisions of Section 13 at the stage of registration - The provisions of Section 13 of the Act can be invoked only at the time of assessment and not at the time of grant of registration under Section 12A of the Act.
Our view is further supported by the decision of Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016 (9) TMI 8 - GUJARAT HIGH COURT] wherein on the issue of denial of grant of registration us 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration.
In the case of United Way of Baroda [2020 (3) TMI 233 - GUJARAT HIGH COURT] the Hon’ble High Court held that sales of tickets for Garba events during Navratri period does not amount to “trade”, “commerce” and “business” as occurring in the first Proviso to Section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. Thus the Hon’ble High Court held that denial of exemption u/s. 11 during the assessment proceedings is also held to be not correct on sales of tickets for Garba events. Thus the assessee cannot be denied registration u/s. 12AB of the Act. Assessee appeal allowed.
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