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Showing 201 to 220 of 1215 Records
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2021 (11) TMI 1016
Condonation of delay - appeal of the assessee as time barred by 1969 days - assessee also contended that since it was an addition made u/s 50C by assuming the sale consideration equivalent to the amount on which stamp duty was paid; therefore it was necessary to ascertain the true value of the property u/s 50C(2) - there were co-owners in whose cases a valuation report was called for from the DVO and they were waiting the outcome of those appeals - HELD THAT:- This application does not disclose any reason for not challenging the order of the CIT(A) - This exercise was going on in the case of other co-owners and, therefore, the assessee did not file the appeal. When the appeals of the other co-owners have been decided, the assessee also thought to file the appeal. We are not impressed by all these contentions. It is the assessee who should have taken vigilant step in his own case.
Assessee could file application before the AO u/s 50C(2) - He could raise plea before the learned CIT(A), but after the decision of the learned CIT(A), he has accepted the result and did not chose to file the appeal for long six years. There is hardly any plausible explanation for this delay. Therefore, we do not find any merit in the explanation for condonation of delay. The appeal of the assessee is, therefore, dismissed being time barred.
Application u/s 154 - sale consideration for the purpose of computation of capital gain - in one of the co-owner’s case, a reference was made to the Valuation Officer who determined the value of the property - For doing the complete justice to an assessee, the learned First Appellate Authority ought to have treated it as an apparent error. Each co-owner should have been treated at par. It is pertinent to observe that the quasi-judicial authorities are being respected not on account of their powers to legalize the injustice on technical ground, but for their capabilities of removing injustice and is expected to do so. In the present case, the learned First Appellate Authority failed to remove the injustice with the assessee. We deem it that there was an apparent error available on record. The valuation report is in existence though in the case of other assessees and, in the moment it is brought to the notice of the learned CIT(A), it should have taken cognizance of that report. Considering that aspect of the matter, we allow the application of the assessee moved under Section 154 of the Act and set aside the impugned order dated 23.01.2019. The error committed in the order dated 26.08.2013 is rectified. The Assessing Officer is directed to take sale consideration in the hands of the assessee equivalent to the amount taken in the case of Prakash Chunilal Shah and Chirag Prakash Shah. Though we have not interfered in the order of the learned CIT(A) dated 26.08.2013 because the appeal was time barred before us, but by rectifying the error, which is a proceeding well taken by the assessee within the limitation, the assessee is able to achieve the same result.
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2021 (11) TMI 1015
Seizure of the goods and conveyance imposing tax and penalty - Section 129(3) of the Central Goods and Service Tax Act read with Section 20 of the Integrated Goods and Service Tax Act - HELD THAT:- Learned Standing Counsel has opposed the petition stating that Section 129 of the Act starts with a non-obstante clause, which has not been considered in the aforesaid judgements that have been cited by the learned counsel for the petitioner.
The matter requires consideration - List this matter on 22.12.2021 alongwith record of Writ-Tax Nos. 1019 of 2021, 1020 of 2021 and 1021 of 2021.
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2021 (11) TMI 1014
Seizure of goods alongwith vehicle - in the e-way bill, the vehicle number was not mentioned - Section 109 of the U.P. Goods and Services Tax Act, 2017 - maintainability of second appeal provided for under the provisions of Section 112 of the Act - HELD THAT:- Shri Agrawal, learned counsel for the petitioner has pointed out the order passed under Section 129(3)(Form GST MOV-9) in which the amount of tax and penalty have been assessed by the authority concerned. It is contended that the entire amount of tax so assessed in the aforesaid order under Section 129(3) of the Act, has been paid in full. Evidence whereof has been enclosed by way of challan and corresponding statements have been made in paragraphs 10, 17 and 23 of the writ petition.
Matter requires consideration.
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2021 (11) TMI 1013
Refund of unutilized input tax credit (ITC) - export of iron ore fines - export duty is nil as a result of an exemption notification - HELD THAT:- In earlier writ petition of the Petitioner i.e. W.P.(C) No.26685 of 2021, the challenge was to two instructions dated 8th June and 25th June 2021 issued by the Joint Commissioner of CT and GST (Law) at Cuttack instructing Circle Heads in Odisha to treat such export as duty paid and refusing the refund - This Court had in the said writ petition on 8th September 2021, while issuing notice directed that no further steps would be taken vis-à-vis the Petitioner by the Opposite Parties pursuant to those impugned notices. The Petitioner in the said writ petition had also challenged the show cause notice (SCN) dated 21st July 2021 which was pertaining to the period April 2019 to March. 2020.
A development that has taken place subsequent to the above order passed by this Court is that the GST Council at its 45th Meeting on 17th September 2021 decided inter alia to issue a clarification in respect of goods for which the export duty is in fact not paid. It was clarified that “only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54 (3) of the CGST Act, 2017 from availment of refund of accumulated ITC.” - As a result of the above decision of the GST Council, a fresh circular dated 20th September 2021 has been issued by the Central Board of Indirect Taxes and Customs (CBITC), GST Policy Wing, Ministry of Finance, Government of India in which one of the questions addressed is, at serial No.3, “whether the first proviso to section 54(3) of the CGST/SGST Act, prohibiting refund of unutilized ITC is applicable in case of exports of goods which are having NIL rate of export duty?”
It is seen that since the instruction dated 25th June 2021 stands withdrawn, clearly the earlier instruction dated 8th June 2021 which is in the same vein also does not survive. Therefore, one of the prayers of the previous petition as well as the present petition challenging the aforementioned circulars does not survive - Since the impugned SCN has been issued only as result of the circulars, it also does not survive and is accordingly set aside.
A direction is now issued to the Opposite Party-authority to reprocess the refund application of the Petitioner in light of the fresh circular issued on 20th September 2021 (Annexure-14) and convey the decision to the Petitioner thereon not later than 7th February, 2022. It is made clear that whatever the technical issues for reprocessing the refund application should be resolved by the authority as expeditiously as possible and in a manner to ensure compliance with the timeline set by this Court in this order.
The rejection of the refund application does not survive and is hereby set aside - Petition allowed.
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2021 (11) TMI 1012
Sanction of GST refund claim in respect of goods exported - seeking direction to third respondent to refrain from suspending or withholding the GST refund claims filed by the petitioner in respect of the future exports - HELD THAT:- Considering the refund claims and the drawbacks claims are pending for a long period even though the petitioner appears to have complied partially with the requirements called upon as far as the GST refund claim is concerned, this Writ Petition is disposed by directing the respondent to pass appropriate in respect of GST refund claims and the drawback claims, within a period of thirty (30) days from the date of receipt of a copy of this order.
Petition disposed off.
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2021 (11) TMI 1011
Request for transfer of files of enquiry to a place of petitioners' choice - seeking grant of copy of statements recorded by respondents in the process of investigation into non-collection of tax for outward supply of rice - Section 67 of the CGST/KGST Act - request of petitioner not considered - principles of natural justice - HELD THAT:- While refusing to consider the request of the petitioners, the Proper Officer failed to state any reason. The officer had not mentioned that giving copy of the statements would cause prejudice to the investigation. The request of the petitioners for issuing copies of statements already recorded by the investigating officer, as mentioned earlier was refused to be considered. There is a marked distinction between refusing to consider and rejecting an application for reasons. The Proper Officer ought to have considered the request and either granted copies of the statements or rejected such requests for reasons to be recorded, rather than avoiding consideration of such request.
Order XVI of the CPC deals with power to summon witnesses to give evidence or for production of documents. By conferring the power of summoning a witnesses to give evidence or to produce a document as provided in Order XVI of the CPC, the nature or character of the investigation or inquiry being conducted under Chapter XIV of the Act will not be changed. The power to summon or produce a document is distinct from the nature of proceedings conducted. Merely because the source of power to summon witnesses and power to direct production of documents is referable to CPC, that does not alter the nature of investigation or inquiry being conducted. It remains to be an investigation or inquiry. Therefore, the contention raised by the petitioners on the basis of section 70 of the Act is rejected.
This Court is of the view that Ext.P10 order is liable to be set aside and the first respondent is directed to reconsider the application of the petitioners for giving a copy of the statements already obtained in the course of investigation and pass fresh orders - Petition allowed.
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2021 (11) TMI 1010
Revocation of Cancellation of registration passed by the proper officer - proper officer in terms of the provision of Section 29 of the CGST Act, 2017 r/w Rule 22 of CGST Rules, 2017 - HELD THAT:- The appellant in his appeal memo has referred the Order for Cancellation of registration dated 18.03.2021 against which the appeal is filed. During personal hearing the authorized representative defended the case for appeal against Order for Rejection of application for revocation of cancellation dated 23.05.2021 and requested to allow appeal by way of revocation of registration.
On being out the appellant has agreed to the error on his part and submitted that while filing appeal date of order against which appeal is filed wrongly considered for REG-19 instead of Order of rejection of revocation application (REG-05) - on account of inadvertent mistake, particulars of disputed order dated 18.03.2021 (REG-19) were wrongly entered of Registration passed by the learned Superintendent. This was a genuine clerical mistake which has caused ab-initio incorrectness in appeal memo. That the appellant has deposited of interest and be considered as the requirement has been complied.
The adjudicating authority/proper officer has rejected the application for revocation of cancellation of registration as the appellant has not complied with the provisions of Section 30 of the CGST Act, 2017 by not filing the revocation application within the prescribed time limit. In this context, the appellant submitted that due to corona pandemic and financial problem he could file GST returns and reply to the SCN issued by the proper officer - the adjudicating authority/proper officer has passed the order for rejection of Application for Revocation of Cancellation of registrations due to non-compliance of Section 30 of the CGST Act. In this context, the appellant submitted in their written submissions due to Covid-19 lock down and financial problem application of revocation of cancellation of registration within the prescribed period before the proper officer.
The appellant has filed returns upto date of cancellation of registration hence, it is found that the appellant has substantially complied with the above said provisions of the CGST Act/Rules, 2017 in the instant case. Therefore, the registration of appellant may be considered for revocation by the proper officer.
Appeal allowed - decided in favor of appellant.
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2021 (11) TMI 1009
Deduction u/s. 54F - As per AO assessee has not appropriated the amount of long term capital gains for the purpose of purchase of residential house before the due date of filing of return of income u/s. 139(1) - main contention of the ld. DR is that the assessee did not utilize the amount of capital gains in purchasing a residential house nor deposited in any capital gain account - HELD THAT:- Admittedly, the assessee had not filed return of income u/s. 139 of the Act which is available up to 31-07-2012 but the assessee filed return of income on 02- 09-2013 which is well within the time available u/s. 139(4).
The entire sale proceeds in acquisition of new residential house prior to filing of return of income u/s. 139(4) of the Act which was not disputed by the ld. DR. The ld. AR also placed on record various decisions in the case laws compilation and submitted that the benefit of section 54F of the Act is allowable when the assessee acquired the new asset before filing of return of income u/s. 139(4) of the Act. It is noted as per the case laws as submitted by the ld. AR, which held that the requirement of utilization of capital gain amounts before the date of furnishing of return of income u/s. 139 of the Act, which include all sub-section 139 of the Act including sub-section (4)
If, the capital gain amount is utilized before the due date of filing of return of income u/s. 139 of the Act i.e. 31-03-2014 u/s. 139(4) of the Act. Therefore, it is clear that section 139 includes all sub-sections but not confined to sub-section (1) of section 139 of the Act alone. It is evident that the assessee invested amount of capital gains before the time available u/s. 139(4) of the Act and therefore, in our opinion the assessee is entitled to claim deduction u/s. 54F - Appeal of assessee is allowed.
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2021 (11) TMI 1008
Deduction u/s 80P(2)(a)(i) denied - interest from investment in Co-operative banks, nationalised banks - whether, interest income earned by assessee is eligible for deduction u/s 80P(2)(d) of the Act, whereas the deduction is one claimed u/s 80P(2)(a)(i) ? - HELD THAT:- As relying on M/S POTTERS COTTAGE INDUSTIRAL CO-OPERATIVE SOCIETY LTD. [2021 (9) TMI 137 - ITAT BANGALORE] we direct the Ld.AO to verify the interest earned on investment earned from co-operative societies and to consider the claim of assessee in accordance with law under section 80P(2)(d)
Benefit of exemption u/s. 80P for transactions done with nominal or associate member - Whether transactions with nominal or associate members can not in anyway forbid the appellant from claiming the benefit of exemption u/s. 80P? - HELD THAT:- In respect of associate/nominal members, Hon’ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] has held that the expression “Members” is not defined in the Income-tax Act. Hence, it is necessary to construe the expression “Members” in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co-operative societies Act. In view of this, the facts are to be examined in the light of principles laid down by the Hon’ble Supreme Court in Mavilayi Service Cooperative Bank Ltd. (supra). Accordingly, we remit this issue of deduction u/s.80P(2)(a)(i) of the Act to the file of Ld.AO to examine the same de novo in the light of the above judgment.
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2021 (11) TMI 1007
Validity of Assessment u/s 153A /153C - Mandation of recording satisfaction note for the purposes of initiating the proceedings u/s.153C - as contended by the ld. DR that the satisfaction was not only recorded in the file of the searched person but also in the file of the other person, namely, assessee before us - Deemed dividend addition u/s 2(22) - HELD THAT:- The procedure to be adopted for initiating proceedings under section 153A against a person who has not been searched, has been prescribed in the provisions of section 153C wherein a situation, the Assessing Officer having the jurisdiction over the other person is different from the Assessing Officer having jurisdiction over the person in respect of whom the search has been conducted. Before notice can be issued under section 153C, the Assessing Officer has to be satisfied that undisclosed income found during search operations belongs to the third person. A clear and plain reading of section 153C leaves no doubt that recording of satisfaction by the Assessing Officer of the person searched is mandatory and it has to precede the initiation of proceedings against the other person (not searched).
If we look into the satisfaction note in the file of the searched person namely, Model Construction Pvt. Ltd. It is abundantly clear that there is no recording of satisfaction by the Assessing Officer that the document seized during the search at the premises of Model Construction Pvt. Ltd. Belongs to the assessee and were incriminating in nature. In our view, unless there is a recovery of the document belonging to the other person, section 153C of the Act cannot trigger.
In the present case there is neither the recording of satisfaction by the AO of the searched person that the documents belong to the other person nor there is any finding that the documents so found were incriminating in nature. In our view a detailed scheme has been provided for initiation of Section 153C i.e. first there would be a satisfaction in the file of the AO of the searched person and thereafter transmission of the file along with the incriminating document to the AO of the other person and thereafter recording of satisfaction by the AO of the other person and issuance of notice u/s.153C of the Act and completion of proceedings. In the absence of the fundamental and foundational fact of recording satisfaction by the AO of the searched person no proceeding u/s.153C of the Act can be initiated by the other person. In the present case, there is no satisfaction in the file of AO of the searched person and accordingly, the issuance of proceedings u/s.153C of the Act were without of any basis.
Assuming the proceeding can be initiated without there being any satisfaction in the file of the AO whether the satisfaction on record in the file of the assessee reproduced hereinabove can be said to be satisfaction in the eyes of law.
It is fundamental that in the satisfaction note, it is not only essential to mention the PAN No. of the assessee, his address and other details by the Assessing Officer and invariably the satisfaction note should not be forming part of the order sheet and it should be separately recorded as is satisfaction note showing the application of mind by the Assessing Officer of the assessee before us. Admittedly, the application of mind is conspicuously missing in the order sheet (satisfaction) as neither the description of the document were mentioned nor how those document leads to evasion or concealment of non-disclosure of income by the assessee in all these years.
None of the document belongs to the assessee before us, and, therefore, it cannot be said to be relevant or incriminating in nature.
We may also like to point out that as confirmed by the ld. CIT-DR that none of the additions were made by the AO on the basis of the seized document and were only made u/s.2(22)(e) of the Act as is clear, from the grounds of appeal raised by the revenue before the ITAT, which were not pertaining to the seized document.
In terms of the directions of the Hon’ble High Court in SAVESH KUMAR AGARWAL [2013 (7) TMI 805 - ALLAHABAD HIGH COURT] we hereby decide the verification of the jurisdictional parameter for initiation of proceedings u/s.153C of the Act in favour of the assessee and against the revenue.
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2021 (11) TMI 1006
Ex-parte orders passed by CIT-A - Belated payments of employee's contribution to PF and ESI - HELD THAT:- We find that the CIT(A) had given only one opportunity to the assessee in both the AYs 2018-19 and 2019-20. On the given date of hearing none appeared on behalf of the assessee before the Ld. CIT(A) but, filed written submissions through e-mail/ITBA Module and requested the Ld. Revenue Authorities to dispose off the appeals on the basis of the assessee's written submissions .
CIT(A) adjudicated the appeals based on the material available on record. In this situation, considering the issues involved in the appeal as well as the prayer of the Ld. AR, in the interest of justice, We hereby remit the matter back to the file of Ld. CIT(A) in order to consider the issues involved in the appeals for the A.Y. 2018-19 and A.Y. 2019-20 afresh and decide the matter on merits by providing one more opportunity to the assessee of being heard. Appeals filed by the assessee are allowed for statistical purposes
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2021 (11) TMI 1005
Disallowance u/s 14A under rule 8D2(ii) in respect of interest expenditure - case of the assessee has been selected for scrutiny under CASS and statutory notices were duly issued and served upon the assessee - HELD THAT:- Three investments in growth funds, in foreign companies and in properties have to be excluded while calculating the average investments. Similar adjustment are required to be made in the figures of investments in the corresponding previous year ended on 31.03.02013 as stated hereinabove. We note that the average investments come to ₹ 135,63,19,992.50. Similarly, the average own funds the calculation whereof is extracted above are ₹ 136,10,03,859/-. It is apparent from the above calculation that assessee’s average own funds are more than the average value of investments and in our considered opinion , no disallowance is called for under rule 8D2(ii).
The case of the assessee is squarely covered by the decisions as referred to above by the Ld. A.R. in support of his arguments. In the case of CIT vs. HDFC Bank Ltd.[2014 (8) TMI 119 - BOMBAY HIGH COURT] and it has been held that where the interest free funds as well as own funds employed in the business are more than the investments in the shares and securities yielding exempt income, in that case no disallowance is to be made. Similar ratio has been laid in another decision in the subsequent decision in the case of HDFC Bank [2016 (3) TMI 755 - BOMBAY HIGH COURT] that where assessee’s own funds are more than the investments made in shares and securities no disallowance is to be made under section 14A. In view of the facts of the instant case and the ratio laid down by the Jurisdictional High Court we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the disallowance as made under rule 8D2(ii). - Decided in favour of assessee.
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2021 (11) TMI 1004
Adjustments while processing the return of income u/s. 143(1) - Disallowance of employees contribution to PF and ESI - HELD THAT:- In the instant case, there is no dispute that the return was processed u/s. 143(1) and there was no scrutiny assessment made u/s. 143(3) of the Act. It is settled issue that no debatable issues are permitted to be made adjustments u/s. 143(1) of the Act. In the instant case, what was added in the intimation u/s. 143(1) was the employees contribution to PF and ESI - employees contribution to PF and ESI is also allowable deduction, if, the same is paid before the due date for filing the return of income. This Tribunal in the case of Andhra Trade Development Corporation [2021 (5) TMI 263 - ITAT VISAKHAPATNAM] held that debatable issues are not permitted to be made adjustments while processing the return of income u/s. 143(1).
Since, the facts are identical respectfully following the view taken by this Tribunal, we hold that the addition made by the CPC u/s. 143(1) is unsustainable, accordingly deleted. The appeal of the assessee is allowed.
Employees contribution to PF and ESI is allowable deduction if the same is paid before the due date of filing the return of income. See M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA [2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] - thus we hold that on merits also, the assessee succeeds in appeal. Accordingly, appeal of the assessee is allowed.
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2021 (11) TMI 1003
Penalty u/s 271(1)(c) - Defective notice - allegation of non specification of charge - CIT-A deleted the penalty levy - HELD THAT:- As in the case of Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] observed that the levy of penalty has to be clear as to the limb under which it is being levied. As per Hon'ble High Court, where the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court further held that the standard proforma of notice under section 274 of the Act without striking of the irrelevant clauses would lead to an inference of non-application of mind by the Assessing Officer.
Coming to the instant case, as the mind of the AO while issuing notice u/s. 274 of the Act was not clear, under which limb the penalty supposed to be levied, and without specifying any charge under which the Assessee was to reply and to defend its case, the penalty is not leviable as held by the various Courts. Hence, we have no hesitation to uphold the impugned order. - Decided against revenue.
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2021 (11) TMI 1002
Addition u/sec. 69A - Assessee had received on-money over and above the consideration mentioned in the registered sale deeds - Commissioner held that the provisions of section 69A are not applicable in Assessee's case and the AO has erred in applying the provisions of this section - HELD THAT:- In the instant case, it is an admitted fact that no money was found at the time of survey conducted u/sec. 133A, however, certain information was found qua selling of flats at higher rate than the rate recorded in the sale deeds, however the AO without corroboration and fulfilling the ingredients of section 69A of the Act made the addition u/s. 69A of the Act, hence we are in concurrence with the finding of the Ld. Commissioner qua non-application of the provisions of section 69A to the issue in hand, consequently no interference is warranted qua conclusion drawn by the Ld. Commissioner.
Department has also raised a grievance that the Ld. Commissioner erred in directing the AO to estimate the profit @ 15% on unaccounted sale receipts, when the provisions of section 69 of the Act clearly applicable to the facts of the present case - Commissioner while deciding non-applicability of the provisions of section 69A of the Act to the case of the Assessee, directed the AO to estimate profit @15% on unaccounted sale receipts. We are of the considered opinion that the ld. Commissioner though decided that section 69A of the act is not applicable to the facts of the case, however used his own wisdom by considering the peculiar facts and circumstances while following the decision in the case of Jay Builder [2012 (12) TMI 1194 - GUJARAT HIGH COURT] by estimating profit @15% on unaccounted sale receipts. The direction of the Ld. Commissioner is based on the judgement of Hon'ble High Court and even otherwise in favour of the Revenue Department and against the Assessee, therefore, on overall consideration, no interference is called for on this issue as well.
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2021 (11) TMI 1001
Disallowing the payment of commission paid by the assessee to three persons - HELD THAT:- These are undisputed fact that the assessee is engaged in the business of manufacturing of sprinklers which used in the agriculture and had maintained his targets from the previous years and had made payments to the respective persons on account of commission payment through account payee cheques and all those accounts are audited and required TDS had also been deducted. Since, engaging of these persons for enhancing of sales is specifically within the notice and knowledge of the assessee and the assessee has discharged his burden of proving the existence of circumstances for engaging the persons for enhancing the sales and had making payment towards commission @ 1.5% to the respective persons and apart from this nothing has been brought on record by the A.O. to controvert the said facts placed on record by the assessee alongwith supportive documents. Therefore, we see no reasons to disbelieve the specific averments and supportive documents made by the assessee to this effect. Therefore, we direct to delete the addition made qua this issue.
Trading addition - HELD THAT:- We noticed that the assessee's proprietorship firm M/s. Jamna Industries is manufacturing of Sprinkler System and its Spare Parts and the assessee has maintained complete books of account including stock register. All the sales, purchases and expenses are fully vouched and verifiable. There is no change in the method of accounting as compared to preceding years. The books of account are duly audited. All the books of account and record of the unit were produced before the A.O.. All the details of purchases were furnished before the lower authorities and maintained stock register, production record and finished stock register of the unit. The assessee also filed complete stock chart of Raw Material, Finished Goods showing opening stock, purchase, manufacturing, sales and closing stock alongwith audit balance sheet before the Revenue authorities. Since the A.O. checked the books of account and also checked the manufacturing records and no any defect was pointed out then in that eventuality, sustaining of addition on account of trading addition is no legs to stand, therefore, we direct to delete this addition.
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2021 (11) TMI 1000
Addition of software usage charges received treated as royalty - use the copyrighted software - proof of parting with copyright as envisaged within the meaning of Section 14 of the Copyright Act - HELD THAT:- The assessee has merely transferred the right to use copyrighted software ANTIFOG and that it had not transferred the copyright itself to Trigo India. TRIGO India was authorized to have access to and make use of the copyrighted software ANTIFOG. In the Software License Agreement entered into, it is evident that the assessee i.e. Trigo SAS is ‘Licensor’ and TRIGO Quality Production Services Pvt. Ltd. which is Indian Company as a ‘Licensee’. That the various clauses of this Software License Agreement verified the fact that copyright of the software ANTIFOG is very much with Trigo SAS (Licensor) and that the Trigo India (Licensee) has been authorized to use the software ANTIFOG as per various terms and conditions specified in this Software License Agreement.
There is no difference in facts of the present case as compared to the facts of the judgment in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] which was referred by the Tribunal in Ansys Inc. [2021 (6) TMI 513 - ITAT PUNE] There has been no parting with copyright as envisaged within the meaning of Section 14 of the Copyright Act by the Licensor (assessee) to Licensee who is given access to only use the copyrighted software against which assessee’s receipts cannot be taxed as royalty. Therefore, respectfully following the judicial precedents mentioned aforesaid on this issue - Grounds No.1 & 2 raised in appeal by the assessee are allowed.
Addition of management service fees received by the assessee treating it as ‘fees for technical services’ - HELD THAT:- Whatever services were provided by the assessee to Trigo India, no technical knowledge was made available by the assessee to the Indian Entity. Rather, it is a case of providing a service involving technical knowledge, which got consumed with its provision itself. Since such services simply involve use of technical knowledge and do not result into handing over some technical know-how to the recipient of the services.
DR could not bring on record any materials/evidences to suggest that the facts and circumstances in the case of the present assessee was different from the case of the M/s. Faurecia Automotive Holding [2019 (7) TMI 402 - ITAT PUNE] Moreover, on going through the services agreement, it is absolutely clear that whatever services were rendered by the assessee to the Trigo India was services of such nature which got immediately consumed on delivery. There is no part of technical know-how made available by which the Indian Entity could have used services later on its own - Also as relying on the case of CIT Vs. De Beers India Minerals Pvt.Ltd [2012 (5) TMI 191 - KARNATAKA HIGH COURT] we allow Grounds No. 3 & 4 of the assessee.
Levy of education cess on the tax liability computed under the provisions of the India France DTAA - HELD THAT:- . Having heard the parties herein and considering the decision of the Mumbai Bench of the Tribunal in the case of Sunil V Motiani [2013 (12) TMI 1105 - ITAT MUMBAI] to hold that tax payable @ 12.5% under Article 11(2) of FTAA is inclusive of surcharge and education cess. - on the same parity of reasoning, we provide relief to the assessee. Thus, Ground No.5 raised in the appeal by the assessee is allowed.
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2021 (11) TMI 999
Revision u/s 263 by CIT-A - inadequacy in enquiry on share application money - Addition u/s 68 - HELD THAT:- The assessee has established not only the source of loan obtained but has also adequately demonstrated before the AO the source of money in the hands of the share applicants. A small portion of cash deposited by lender doesn't necessarily signify any collusion with assessee. The relevant facts were present before AO and were scrutinized. Thus, the burden of proof cast upon the assessee was broadly discharged.
A presumption can be safely drawn that the AO was armed with reasonable evidences to draw satisfaction with the explanation offered by the assessee towards receipt of share application money from various parties and consequently it can be said that the statutory discretion was exercised in favour of the assessee based on tell-tale evidences furnished by the assessee in this regard. The action of the AO thus cannot be wholly disregarded as untenable or implausible more so, where share applicants attended the enquiry and deposed on oath for the subscription made. The share applicants are assessed to tax and confirmed the subscription. On these facts, a question would arise as to whether it was incumbent upon the AO to disregard such evidences and hold the explanation to be unsatisfactory in terms of Section 68 of the Act or not. Having regard to the prerogative vested with the AO towards the extent and manner of inquiry for drawing satisfaction, it is difficult to hold that the action of the AO is unintelligible. In our view, the AO has not committed any error in not chasing 'will o the wisp' in the absence of any brazen circumstances. In the light of aforesaid discussion, the basis of issuance of show cause notice under s. 263 of the Act does not appear to be tenable in law in the peculiar set of facts. Consequently, the assumption of jurisdiction under s. 263 of the Act will have to be regarded as without authority of law.
As noted, the share applicants have unequivocally confirmed the share subscription. In such facts, it will be difficult to discredit the share application money received per se and make additions in the realm of s. 68 of the Act in the hands of the assessee in place of the share applicants where 'source of source' allegedly remains unproved in the opinion of the PCIT. Therefore purported inadequacy in inquiry as alleged, cannot be stated to be 'erroneous' per se in so far as assessee is concerned, even if, such inaction of AO towards fuller enquiry is branded as 'prejudicial to the interest of Revenue'. Therefore, the mandatory twin conditions of Section 263 is also not found to be fulfilled when tested on the touchstone of taxability of share application money in the hands of assessee on the grounds of unproved source of source.We thus concur with the plea on behalf of the assessee that S. 263 proceedings cannot be inflicted upon the assessee in these circumstances. - Decided in favour of assessee.
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2021 (11) TMI 998
Estimation of income - bogus purchases - CIT-A confirming addition being 25% of the bogus purchases - CIT (A) treated the balance amount of purchases in cash which is the violation of the provisions of section 40A(3) - HELD THAT:- There remains no ambiguity to the fact that the assessee has not debited any purchases in its profit and loss account. Admittedly, the audited financial statements were available before the AO during the assessment proceedings. Thus, the finding of the AO that the assessee has not furnished any supporting documents to justify it’s (the assessee) contention, is contrary to the facts available on record. Once, it is established beyond doubt that the assessee has not debited the purchases in the profit and loss account, the question of making any disallowance either treating them as bogus or against the violation of the provisions of section 40A(3) of the Act does not arise. On this count only, the assessee succeeds in its appeal.
At the time of hearing, there were various arguments which were advanced by both the sides being the learned AR and the DR. However, we do not find any reason to entertain the argument of both sides for the reason that the assessee has not made claim of expenditure on account of purchases in its audited financial statement. Thus the ground of appeal of the assessee is allowed.
Estimation of income of Bogus purchases - A.Y. 2013-14 - HELD THAT:- The income which has been generated to the assessee out of such bogus transaction of purchase and sales. There is no standard jacket formula to work-out the income from the bogus activity carried out by the assessee. Some element of guesswork is required to determine the income of the assessee which is embedded in the bogus activities carried out by the assessee. It is also pertinent to note that the assessee has already disclosed the income in its income tax return for ₹ 77,07,990.00 which is inclusive of the income earned by the assessee with respect to its bogus purchases. Accordingly, in the interest of justice and fair play, we are inclined to estimate the gross profit at the rate of 8% of such bogus purchases as discussed above. Accordingly, we set aside the order of the learned CIT (A) and direct the AO to estimate the gross profit on the purchases at the rate of 8% of the purchases.
Violation of the provisions of section 40A(3) - There in conclusive evidence that cash were paid in violation section 40A(3) i.e. cash payment above ₹ 20,000/- was made in a day to a particular supplier. Further the AO has doubted the genuineness of the purchase. In this scenario we are of the view that once the genuineness of transaction is doubted then only profit embedded under such transaction should be brought to tax - See VIJAY PROTEINS LTD. VERSUS COMMISSIONER OF INCOME TAX [2015 (1) TMI 828 - GUJARAT HIGH COURT] - we set aside the order of the learned CIT (A) with the direction to the AO to confirm the addition to the extent of 6% of the purchases as discussed above.
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2021 (11) TMI 997
Reopening of assessment u/s 147 - Disallowance u/s 14A - Mandation of recording satisfaction - HELD THAT:- Though the original assessment was completed u/s.143(3) of the Act, the AO has not examined application of Section 14A r.w.R.8D of the Income Tax Rules, 1962. Therefore, the change of opinion does not arise. Thus, the AO had rightly reopened the assessment.
So far as tangible material is concerned, we find that the Assessing Officer after examining the entire file, has come to a conclusion that the suo-muto disallowance made by the Assessee is not correct and that the Assessee has not followed the formula prescribed in the Act to calculate the dividend income u/s.14A r.w.R.8D of the Income Tax Rules, 1962. Therefore, the reopening is based on the material available on record which is sufficient to reopen the assessment. The tangible material available to the Assessing Officer in this case is the balance-sheet on the basis of which the assessment is reopened.
In our opinion, the balance-sheet which is the tangible material and supposed to have been considered by the Assessing Officer while passing the Assessment Order u/s.143(3) of the Act had totally ignored the balance-sheet. If at all he has considered, he has not even passed the assessment order by ignoring the provisions of law, i.e. Section 14A r.w.R.8D of the Income Tax Rules, 1962 - As in this case, tangible material is clearly available to the Assessing Officer and therefore the Assessing Officer validly reopened the assessment. In view of the above, we upheld the reopening made by the Assessing Officer u/s.147. - Decided against assessee.
Addition u/s 14A r.w.r.8D - In the assessment order, the Assessing Officer has not discussed details of the own and borrowed funds. In the order of the Commissioner of Income Tax (Appeals), CIT(A) has categorically given a finding that the Assessee has not maintained separate books of account, year-wise to prove that only interest-free source has been utilized for investments.
By considering the above findings Commissioner of Income Tax (Appeals) and by keeping in view the facts and circumstances of the case, we are of the opinion that one more opportunity should be given to the Assessee to substantiate his case before the Assessing Officer. In so far as the application of Section 14A of the Income Tax Act, 1961 r.w.R.8(2)(iii) of the Income Tax Rules, 1962 is concerned, this argument is neither placed before the Assessing Officer nor before Commissioner of Income Tax (Appeals). This argument is placed for the first-time before us. This issue is also to be examined by considering the relevant facts and materials.
We set aside the order passed by the learned Commissioner of Income Tax (Appeals) and we remit back this issue to the Assessing Officer with a direction to re-compute the disallowance u/s.14A r.w.R.8D of the Income-Tax Rules, 1961, in the light of the decision of the Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities and Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT] as held in respect of the interest disallowance that “if there are funds available both, interest-free and overdraft and/or loans are taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds are sufficient to meet the investments”.
As regards, disallowance of other expenses, Section 14A r.w.R.8D(2)(iii), the Delhi Special Bench of this Tribunal in the case of ACIT Vs. Vireet Investment Private Limited [2017 (6) TMI 1124 - ITAT DELHI] wherein has held that “only those investments are to be considered for computing the average value of investment which yielded exempt income during the year.”
Accordingly, the Assessing Officer is directed to consider only those investments which yield exempt income for the year under consideration is to be considered. - Decided partly in favour of assessee.
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