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Showing 41 to 60 of 1528 Records
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2022 (6) TMI 1488
Assessment u/s 153A - MAT determination - computation of book profits u/s. 115JB - return of income filed in response to notice u/s. 153C of the Act had recomputed the profits u/s. 115JB after adjusting impairment of assets and depreciation on Windmill - HELD THAT:- CIT (A) did not go into the merits of the case stating that the assessee’s the return of income filed in response to notice u/s. 153C of the Act had recomputed the profits u/s. 115JB after adjusting impairment of assets and depreciation on Windmill. This contention of the CIT (A) is not correct as there is no estoppel in tax laws.
CIT (A) ought to have examined the adjustment under the provisions of the Act before deciding whether the said adjustments are correctly done in accordance with law. He cannot confirm the adjustments merely based on the fact that the assessee himself has made such adjustment. On the issue of whether the AO / CIT (A) can make adjustments to book profits computed u/s. 115JB, we notice that similar issue came up for consideration before this Tribunal in the case of DCIT v. M/s. Cauvery Aqua Pvt. Ltd. [2017 (10) TMI 638 - ITAT BANGALORE] as held that the AO was not competent to go into the computation of ‘Book Profits’ u/s 115JB of the Act except to the limited extent of making additions and reductions as laid out in Explanation (1) to sec. 115JB of the Act. We find that the ld CIT (A) has also tested the claim of depreciation as per the provisions of Explanation (1) to sec. 115JB while coming to the view that the AO was not authorized to make the addition while re-working the extent of depreciation claimed by the assessee.
The accounts of the assessee have been certified by the Statutory Auditors. The accounting policies followed by the assessee have not been found fault with by the Statutory Auditors or the authorities concerned under the Companies Act. In such cases, the AO is not permitted to make any variation by holding that the assessee has not followed the mandate of the Accounting Standards and the provisions of Companies Act while preparing its financial statements. The object of sec. 115JB of the Act is to bring to tax the book profits as shown by the company to its shareholders and keeping in view the aforesaid object behind sec. 115JB of the Act and the judicial pronouncements on the scope of the ‘AO’s powers computing the book profits, we do not find any reason to interfere with the impugned order passed by the ld CIT (A) on this issue and therefore uphold the same
We are of the considered view that the issue should go back to the CIT(Appeals) to examine the case afresh on merits and decide the adjustment to be made under section 115 JB in accordance with the provisions of the Act.
Justification for the AO to hold that the write off of investments amounts to diminution in the value of assets - On perusal of the materials on record it is clear that the investments have indeed been written off by the assessee in the books of accounts and it is not provision made. Therefore it will not fall within the Explanation to section 115JB(2). In view of the above and respectfully following the decision of the coordinate bench of the Tribunal in the case of M/s. Cauvery Aqua Pvt. Ltd. (supra), we delete the addition made by the AO. Thus, this appeal is partly allowed.
Validity of assessment order passed u/s. 153A r.w.s. 143(3) - assessment without any incriminating material - HELD THAT:- In the present case, the time limit for issue of notice u/s. 143(2) has expired on 30/09/2012 and the search happened on 18/12/2012. Hence on the date of search the proceedings for the assessment year 2011-12 would be ‘unabated proceedings’ and the additions made in the assessment would be restricted to materials found in the course of search which are incriminating. We notice that the various additions made by the AO are not related to any incriminating materials found in search - Thus additions made by the AO for the assessment year 2011-12 is to be deleted.
Disallowance made u/s.14A with reference to the provisions of Rule 8D(2)(ii) & (iii) - HELD THAT:- We notice that coordinate bench of the Tribunal in assessee’s own case [2014 (8) TMI 1249 - ITAT BANGALORE]had directed the AO to examine and include only interest that is not attributable to any particular income / receipt for the purpose of arriving at the disallowance u/s. 8D(2)(ii) of the I.T. Rules - thus we direct the AO to recompute the interest and the disallowance should be restricted to the amount of exempt income earned by the assessee.
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2022 (6) TMI 1487
Nature of expenses - Allowability of Data Automation Expenses - CIT(A) deleted addition - assessee debited a sum treating it as revenue in nature - HELD THAT:- As relying on own case own case for AYs 2010-11 & 2012-13 to 2014- 15 [2022 (5) TMI 1645 - ITAT BANGALORE] we uphold the order of the CIT(Appeals) in treating the data automation expenses as revenue expenditure.Therefore, the appeal of the revenue is dismissed.
Deduction u/s. 80JJA - 30% additional wages paid to new workmen recruited/joined in the year 2006-07 - as per AO Section 80JJAA is applicable only to an industrial undertaking that has engaged in manufacture or production of article or thing and not applicable to IT/ITES/Software development companies as they are not engaged in manufacture or production of article or thing - HELD THAT:- Respectfully following the decision of the jurisdictional High Court in assessee’s own case for AY 2008-09 [2021 (4) TMI 1049 - KARNATAKA HIGH COURT] we hold that assessee is entitled for deduction u/s. 80JJA and delete the disallowance made in this regard wherein held software engineer in a software industry is a workman within the meaning of section 2(s) of the Industrial Disputes Act so long as the Software engineer does not discharge any supervisory role.
The period of 300 days as mentioned under section 80JJAA of the Act could be taken into consideration both in the previous year and the succeeding year for the purpose of availing benefit under section 80JJAA. It is not required that the workman works for entire 300 days in the previous year. Thus software engineer being workman having satisfied the period of 300 days, the assessee is entitled to claim deduction under section 80JJAA. - Decided against revenue.
Disallowance of expenses on discontinued capital project - Capital or revenue expenditure - HELD THAT:- We notice that this issue was held against the assessee in its own case for the AY 2008-09 [2020 (3) TMI 1195 - ITAT BANGALORE] as held that damages though was in connection with a claim for not engaging the services of the contractor in future for other contracts cannot be regarded as having no nexus with the capital work in progress written off in the books of accounts of the Assessee and therefore to that extent the claim for deduction and cannot be allowed as deduction and were rightly held to be capital expenditure by the revenue authorities.
We uphold the disallowance. The disallowance u/s. 40(a)(ia) of the Act is already allowed by the CIT(Appeals) and the question of double disallowance does not arise for the present year.
Nature of expenses - Write-off of capital work-in-progress - Assessee incurred certain expenditure towards Cafetaria upgradation and breakout area upgradation and expenses incurred were in the nature of payments for planning, designing and architecture fees and as projects were closed and therefore the expenses towards the same were written off - AO treated the amount as an addition to the fixed asset i.e., building, and disallowed the entire amount claimed - HELD THAT:- Invoices are raised for design & planning and for part completion of the work. We see merit in the submissions of the ld. AR with regard to the key observations of the Hon’ble Supreme Court in the case of Empire Jute Co. [1980 (5) TMI 1 - SUPREME COURT] in classification of expenditure as revenue and capital - Thus we are of the considered view that the above expenditure written off towards discontinued project of Cafeteria and breakout area expansion does not bring any benefit of enduring nature to the assessee and hence it is allowable as a revenue expenditure u/s. 37 of the Act. This ground of the assessee is allowed.
Disallowance of repairs & maintenance expenditure - whether the expenditure was incurred in ‘own premises’ or ‘leased premises'? - HELD THAT:- Details of invoices have not been looked into by the lower authorities, and in our view, this aspect needs to be examined by the revenue authorities for the purpose of deciding its allowability. We are also the view that the additional evidence filed by the assessee before the CIT(Appeals) goes to the root of the matter for deciding the issue and therefore we admit the additional evidence filed before the CIT(Appeals). Hence, we remit this issue back to the AO to examine the evidence submitted by the assessee.
Disallowance of lease rentals paid on equipment and motor cars - HELD THAT:-In the computation of total income of the assessee’s that the assessee has added to the profit as per the P&L A/c the finance charges on lease and reduced lease rentals paid. Therefore, whatever be the position with regard to the books of account in compliance with AS-19; as far as computation of the total income for the purpose of the Act is concerned, the assessee has made claim only for deduction on account of lease rentals paid. There is no basis for the Revenue authorities to come to a conclusion that the assessee has adopted a colourable device with a view to gain tax advantage. In this regard, we find that the AO as well as the CIT(A) have quoted various clauses of the lease agreement out of context, ignoring the main clause in the agreement which clearly lays down that the assessee is only a lessee and the lessor is the owner of the assets leased. In such a scenario, the conclusion of the Revenue authorities cannot be sustained. The assessee is entitled to claim deduction on account of lease rentals paid as it is a Revenue expenditure.
Applicability of the provisions of section 40(a)(ia) - Hon’ble High Court of Karnataka in assessee’s own case on an identical issue for Assessment Year 2008-09 [2021 (4) TMI 1049 - KARNATAKA HIGH COURT] held that neither provisions of 194I nor 194C of the Act are attracted to lease financing of motor vehicles and therefore there could be no disallowance under section 40(a)(ia) of the Act.
Applicability of provisions of section 40(a)(ia) of the Act in respect of lease rentals paid for lease of equipment is concerned, it is seen from the submission made by the Assessee before the CIT(A) that the Assessee has duly deducted tax at source on payment of lease rentals. On a perusal of the order of the Revenue authorities, we do not find any specific discussion on this issue - we deem it fit and proper to remand the question whether the lease rentals were subjected to TDS by the Assessee.
Disallowance of profit on foreclosure of leased assets - HELD THAT:- We are of the view that the profit on foreclosure of leased assets is purely a notional entry in compliance with the requirements of AS-19 and no income can be said to have accrued to the assessee by reason of such accounting treatment. As made clear by the Assessee that as per tax treatment for the purpose of the Act is concerned, the treatment accorded was that the Assessee was only a lessee of the assets and could neither gain or lose on foreclosure of the lease.
Allowing lease rentals as a deduction, we have already held that the said expenditure is a revenue expenditure and therefore the entire premise on which the impugned addition has been made by the Revenue authorities does not survive. Hence, the addition made as above is directed to be deleted and ground No.7 is allowed.
Disallowance of software development expenses - HELD THAT:- Entire issue of disallowance in respect of software development expenses should be set aside for fresh examination by the AO in the light of the several contentions that were raised before the CIT(A), which were not considered in proper perspective by the CIT(A).The entire issue with regard to various aspects of the additions especially the additions under section 69C of the Act have be looked into afresh. The AO will afford opportunity of being heard to the assessee in the set aside proceedings.
Nature of expenses - expenditure on information technology support services - HELD THAT:- The deduction claimed should be allowed. The expenditure in question was purely a revenue expenditure and cannot be disallowed as capital expenditure.
Disallowance of employee stock option expenses - HELD THAT:- It is pertinent to mention that the accounts of the assessee had not been finalized as on 15.05.2009 and therefore this sum was claimed as a deduction. It is because of the wrong date given in the submission before the AO dated 18.12.2012 that the AO has taken the view that the invoices are not pertaining to previous year relevant to Assessment Year 2009-10. In the light of the evidence available on record, we are of the view that the disallowance made by the AO and sustained by the CIT(A) has to be deleted and a sum being a revenue expenditure pertaining to Assessment Year 2009-10 has to be allowed as a deduction. We hold and direct accordingly.
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2022 (6) TMI 1486
Denial of benefit of N/N. 230/86 dated 03.04.1986 - denial on the ground that the respondent was using power for transferring the material to over head tanks/barrels - HELD THAT:- From the grounds of appeal of the department, it is noticed that no submissions have been made on the stand of the respondent and the findings of the lower authority that the issue involved in the present case being similar to earlier case, the decision of this Tribunal in SHALIMAR PAINTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA [2000 (5) TMI 141 - CEGAT, KOLKATA], as upheld by the Hon’ble Supreme Court in COLLECTOR OF CENTRAL EXCISE VERSUS RAJASTHAN STATE CHEMICAL WORKS [1991 (9) TMI 73 - SUPREME COURT], would be binding on both sides. Since the Department in its appeal has not made any submission to distinguish the decision of this Tribunal, on facts, we are bound by the earlier decision of this Tribunal, especially when the appeal of the department was rejected by the Supreme Court. Therefore, without going into the submissions of the Department in its appeal, it is held that since the facts and circumstances of the present case are similar to the facts of the earlier case, the earlier decision given by the Tribunal is required to be followed.
The appeal filed by the department is dismissed.
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2022 (6) TMI 1485
Addition u/s 68 - bogus LTCG - denying section 10(38) - HELD THAT:- This tribunal’s recent co-ordinate bench decision in Ravi Bhaskar Wattamwar [2020 (1) TMI 690 - ITAT PUNE] held it is crystal clear that PS IT I&SL is a penny stock company and the assessee obtained only accommodation entries in the garb of long term capital gain from transfer of its shares, for which an appropriate addition has rightly been made and upheld by the authorities below - The fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise. It was held that the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. The gain was accordingly held to be rightly assessed as undisclosed income. Similar view has been taken by the Hon’ble Delhi High Court in Suman Poddar [2019 (9) TMI 1089 - DELHI HIGH COURT]
We adopt the foregoing detailed reasoning mutatis mutandis to uphold the learned lower authorities’ action making the impugned disallowance/addition in very terms. The assessee fails in his sole substantive grievance.
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2022 (6) TMI 1484
Addition u/s 68 - bogus LTCG - scrips as of penny stock - HELD THAT:- AO disallowed the claim of the assessee by holding these scrips as of penny stock and the modus operandi is nothing but to provide accommodation LTCG to beneficiaries relying upon the information received from the Directorate of Investigation Wing which was found to be general modus operandi employed by the various entry operators in most of the cases by the CIT(A).
However, in none of the cases any evidence was available justifying the assessee involved in such scam. In the absence of any cogent material brought by the Revenue establishing the assessee earned or incurred bogus gain or losses only on the basis of suspicion or assumption addition made by the authorities below has been found to be not sustainable and, thus, deleted. See SMT. KRISHNA DEVI, HARDEV SAHAI GUPTA (GARG) , SMT. BINDU GARG [2021 (1) TMI 1008 - DELHI HIGH COURT] and PREM PAL GANDHI [2018 (1) TMI 1080 - PUNJAB AND HARYANA HIGH COURT]
We allow the appeal preferred by the assessee by deleting the addition made by the authorities below. Hence, assessee’s appeal is allowed.
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2022 (6) TMI 1483
Adoption of stamp duty valuation u/s 50C for the purpose of computing the capital gains - Transfer of Leasehold Rights - HELD THAT:- We find no merit in the Revenue’s argument in principle that section 50C gets attracted even in case of transfer of leasehold rights which does not come within the nature and ambit of specified asset(s) of “land or building or both” in the statutory provision. We thus, conclude that the learned CIT(A) has rightly adopted stricter construction whilst accepting the assessee’s arguments. We also deem it proper to quote hon’ble apex court’s recent landmark decision in Commissioner of Customs Vs. Dileep Kumar & Co [2018 (7) TMI 1826 - SUPREME COURT] settling the law that taxing provisions in a fiscal statute have to be strictly construed only.
The fact also remains that the assessee appears to have transferred its building as well, as it is evident from its submissions dated 15.03.2016 filed before the AO. That being the case, we are of the view that section 50C is very much applicable regarding the assessee’s “building” as it indeed cover within the specified category of asset u/s 50C(1) of the Act.
We, therefore, partly reverse the CIT(A)’s lower appellate findings granting full relief to the assessee and restore this latter issue of transfer of assessee’s building back to the AO for his fresh adjudication on merits as per law within three effective opportunities of hearing. Revenue’s appeal is partly allowed for statistical purposes.
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2022 (6) TMI 1482
Dishonour of Cheque - refusal to accept the examination-in-chief of the accused - Section 315 of the Cr.P.C. - HELD THAT:- Bare perusal of the provision of Section 315 would indicate that accused person can be competent witness, provided there is a written permission or there is a written request made to the concerned court at the instance of accused. Thus, in view of the provision of Section 315 of the Cr.P.C., accused person can be a competent witness, but before that, accused is required to request in writing to the concerned Court.
It appears that the petitioner by relying upon the judgment in the case of Rakeshbhai Maganbhai Barot [2019 (1) TMI 2047 - GUJARAT HIGH COURT], straightaway, sought to submit his examination-in-chief. Admittedly, no written request made to the concerned court as envisaged in Section 315 of the Cr.P.C. Keeping in mind this peculiar and distinguishing fact and the mandate of Section 315 of the Cr.P.C., in my considered opinion, both the courts below have committed no mistake in not accepting the examination-in-chief of the present petitioner.
The accused preferred an application at Exh. 128 and wherein, written request appears to have been made for submitting evidence on affidavit by way of examination-in-chief. However, in the instant case, no such written request came to be made by the petitioner to the concerned Magistrate and straightaway, moved an application Exh. 80, submitting examination-in-chief.
The present petition is bereft of any merits and thereby, requires to be dismissed - Petition dismissed.
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2022 (6) TMI 1481
Unexplained cash credit u/s.68 - loan received by the assessee and disallowance of interest paid on such loan - HELD THAT:- We find that assessee had also enclosed the bank statements of the lender company which proved sufficient creditworthiness available with the lender company and there was absolutely no cash deposits made in the said bank account before advancing the loan to the assessee company.
Hence, the allegation levelled by the AO is factually incorrect in this regard. The loan transaction had been made through regular banking channels by account payee cheques and the said transaction is also duly reflected and disclosed in the books of accounts of the lender company.
This proves the genuineness of the transaction of the loan. We find that the lender company is duly assessed to income tax which is evident from the income tax return acknowledgement enclosed before the lower authorities. This clearly proves the identity of the lender. The assessee had also filed confirmation from the lender confirming the loan transactions.
All the aforesaid facts were also duly confirmed by the lender directly before the ld. AO in response to notice issued u/s.133(6) by the ld. AO. We also find from the ledger account of the lender enclosed in the paper book that the loan has been subsequently repaid by the assessee in the A.Y.2013-14. This loan has been duly subjected to interest which has been duly subjected to deduction of tax at source.
All these transactions collectively prove that the entire loan transaction is genuine and hence, there is absolutely no case made out by the Revenue to make out an addition u/s.68 of the Act in the peculiar facts and circumstances of the instant case. Accordingly, the addition made u/s.68 of the Act is hereby directed to be deleted.
Since the loan transaction is treated as genuine, interest paid on such loan is squarely allowable as deduction u/s.36(1)(iii) - Assessee appeal allowed.
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2022 (6) TMI 1480
Assessment u/s 153A - whether seized material found during the course of search? - HELD THAT:- The issue is squarely covered in favour of the assessee in the case of Shri Krishna Kumar Singhania & Ors. [2018 (1) TMI 131 - ITAT KOLKATA] which were covered into the same search and Co-ordinate bench has allowed the appeal in favour of the assessee by holding that no addition can be added in unabated assessment year where there is no incriminating seized material. Decided in favour of assessee.
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2022 (6) TMI 1479
Penalty u/s 271AAB against dead person - undisclosed income - partial relief was granted to the assessee by ITAT - HELD THAT:- Tribunal has extracted the findings rendered by the Commissioner (Appeals) from which we find that the entire facts have been analysed and, thereafter, partial relief was granted to the assessee. Before the Tribunal, on behalf of the appellant/assessee it was contended that in the penalty proceedings notice was issued against the dead person and, therefore, initiation of penalty proceeding itself is not sustained. The Tribunal noted the facts and agreed with the assessee. The Tribunal also took into consideration the decision of ALAMELU VEERAPPAN [2018 (6) TMI 760 - MADRAS HIGH COURT]
We find that CIT(A) as well as the Tribunal has analysed the facts and then rendered the decision. Therefore, no substantial questions of law arising for consideration in this appeal.
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2022 (6) TMI 1478
Rejection of proposal for grant of environment clearance in respect of Laigura Stone Quarry - whether the land in question where the Laigura Stone Quarry situates belongs to the Revenue Department or the Forest Department and if so, does it come under the proposed reserved forest area? - HELD THAT:- Referring to the pleadings and documents available on record under Annexure-M/6 series, the letter dated 03.09.2021 of opposite party no. 6 addressed to the Additional Govt. Advocate makes it clear that the proposed reserved forest has not yet been notified under Section-21 of the Orissa Forest Act, 1972 as reserved forest. As such, the notification dated 28.01.1980, which was issued under Section-4 of the Orissa Forest Act, 1972 declaring that it has been proposed to constitute as reserved forest lands of Mauza Langposh Baliturei of Lamna Forest Division under Mahulpali Police Station of Kuchinda Tahasil in the district of Sambalpur, the limits of which have been demarcated by cairns and line cleared to a width of 20' or by natural boundaries as specified therein, has not been given effect to.
The legislators of the State of Odisha enacted Orissa Forest Act, 1972 giving paramount consideration to the protection and management of the forests and forest produce. Chapter-II of the Orissa Forest Act, 1972 deals with "Reserved Forest". Section-3 thereof provides that the State Government may constitute any land which is the property of the Government or over which the Government have proprietary rights of the reserved forest in the manner provided therein.
In view of aforesaid provisions of law, the procedure which is required to be followed to declare the forest as reserved under Section 21 of the Orissa Forest Act by issuing notification, but the same has not yet been done so far as the present quarry area is concerned.
In absence of any materials available on record with regard to compliance of the provision of law, the order passed by the Divisional Forest Officer vide letter dated 16.10.2020 under Annexure-11 issuing clarification regarding proposal of environment clearance of Laigura Stone Quarry over an area of 4.81 acres or 1.95 hectare at village Laigura, Tahasil- Kuchinda in the district of Sambalpur cannot sustain in the eye of law and consequential order of rejection passed by opposite party no. 7 dated 26.10.2020 referring to the letter of the Divisional Forest Officer addressed to the Tahasildar, Kuchinda refusing to grant environment clearance of the proposal under Annexure- 12 cannot also sustain in the eye of law.
The writ petition is accordingly allowed.
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2022 (6) TMI 1477
Suit for recovery of money - excess order supplied which was not initially placed in the order - the demand of excess bags were on urgent basis - demand of difference price due to changes in the rates as well - levy of liquidated damages for late supply.
Whether the trial Court erred in awarding price difference for 33,000 and 9,000 bags in favour of the plaintiff? - HELD THAT:- There are no illegality in the observation of the trial court that evidence of DW. 2 would show that the defendant used to orally place orders even beyond the quantity specified in the accepted tender and later on regularized such oral orders through its purchase orders. When once the defendant accepted the two supplies and regularized them in accordance with the earlier tender documents, the defendant had to pay the price quoted in the said tenders. Hence, the claim of the plaintiff for 33,000 bags @ Rs. 10.25 ps per each bag and Rs. 9.45 ps. per bag for 9,000 bags is valid and he is entitled to the difference of price from Rs. 8.75 ps., to Rs. 10.25 ps. amounting to Rs. 49,500/- and Rs. 6,210/- towards price difference for 9,000 bags from Rs. 8.75 ps., to Rs. 9.45 ps., for a total amount of Rs. 55,710/- - answered in favour of the plaintiff as against the defendants.
Whether the claim of the plaintiffs for Rs. 1,18,000/- towards loss incurred on 25,000 bags for selling it as scrap @ 50% price on account of not taking delivery by defendants is proper? - HELD THAT:- The evidence of DW. 1 would disclose that without any contract, they accepted the supply of bags for 1,00,000 and issued a telegram to stop supply on 11.12.1993. This would support the evidence of PW. 1 that their company supplied 1,09,000 bags by 05.12.1993 and on 7.12.1993 the defendant company released formal order No. 40893 for 1,00,000 bags only and during the said period the defendant company telephoned the plaintiff company from Ramagundem Unit as well as from their Delhi office to supply bags without waiting for formal order. The plaintiff company further printed 25,000 bags on 6/7.12.1993, but the order was placed for 1,00,000 bags only on 07.12.1993. The said order was received by the plaintiff company on 08.12.1993. The defendant company had not taken delivery of 25,000 bags which were printed on 06/07.12.1993 i.e. before getting the formal order - legal notice issued by the plaintiff to the defendant marked under Ex. A39 dated 25.09.1995 also supports the said contention of the plaintiff - in view of the oral and documentary evidence of PW. 1, DW. 1 and Ex. A39, the plaintiff is entitled to claim 50% value of the 25,000 bags @ Rs. 9.45 ps. (the rate agreed by the defendants for supply of 1,00,000 bags on 07.12.1993) for Rs. 1,18,000/- as claimed by the plaintiff. Accordingly, this question is also answered in favour of the plaintiff as against the defendant and the judgment of the trial Court in this regard is upheld.
Whether awarding of liquidated damages of Rs. 1,63,471/- in favour of the defendants is proper? - HELD THAT:- The observations of the trial Court and the relief granted were contradictory to each other. The trial Court while stating that it was accepting Ex. A42, which accepted the liquidated damages only for an amount of Rs. 62,653/-, stated in the last sentence that the defendant was entitled to claim liquidated damages of Rs. 1,63,471/- as per Ex. A42, which was erroneous - the plaintiffs failed to confront DW. 3 with Ex. A42 relied by them and failed to question the witness with regard to the said discrepancies pointed out by them and admitted about the delays in the supplies which was liable for damages to be paid as per the contract, this point is answered in favour of the defendants as against the plaintiff. The defendants are entitled to claim liquidated damages for Rs. 1,63,471/-, as such the plaintiff is not entitled to claim the said amount and interest on it.
Whether deducting Rs. 4,89,919/- as penalty by the defendants is in accordance with the terms and conditions of the contract? - HELD THAT:- The document marked under Ex. B1 would disclose that the defendants had issued a memo on 05.04.1994 i.e. after the entire supplies of the bags was completed and a punitive penalty was also imposed on them. The evidence of DW. 5 also would disclose that they imposed higher penalty of 62% of the normal penalty without consulting the plaintiff. When the terms of the contract would not call for imposing punitive penalty, imposing the same after using the bags is also considered as improper - But, when punitive penalty is imposed, there must be evidence of damage suffered by the defendants. In the absence of the same and when the goods were utilized without rejection, imposing penalty on the plaintiff is considered not in accordance with law and terms and conditions of the contract. Hence, this point is answered in favour of the plaintiff as against the defendants and the observations of the trial Court on this aspect is considered not proper and as such, the same is liable to be set aside.
Whether the plaintiffs are entitled to claim interest @24% per annum? - HELD THAT:- As per Section 4 of the said Act, which was existing as then, buyer should be liable to pay interest to the supplies on outstanding dues beyond the appointed day at a rate which was 5% points above the floor rate - As the trial Court had not granted interest at the said rate and granted only 12% interest, the same is also considered as not proper. As Section 5 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 also specifies that notwithstanding anything contained in any agreement between the supplier and a buyer, the buyer shall be liable to pay compound interest (with monthly interest) at the rate mentioned in Section 4 of the of the Act on the amount due to the supplier, this point is also answered in favour of the plaintiff holding that the plaintiff is entitled to claim compound interest @ 24% per annum.
Whether the judgment of the trial Court is in accordance with law or needs any interference by this Court in these appeals? - HELD THAT:- The judgment of the trial Court is upheld on the aspects of awarding price difference of Rs. 55,710/- on 42,000 bags, awarding Rs. 1,18,000/- towards 50% value of the 25,000 bags, but is set aside on the aspect of entitlement of the plaintiff for the amount towards liquidated damages and imposing penalty of Rs. 4,89,919/- in favour of the defendants and awarding interest only at the rate of 12% per annum on the amount due to the plaintiff.
Appellants are entitled to deduct an amount of Rs. 1,63,471/- towards liquidated damages - Appeal allowed in part.
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2022 (6) TMI 1476
Addition u/s 153A - Addition made on the basis of material seized alongwith the statement as recorded during search and also confronted to the assessee - Addition u/s 68 - HELD THAT:- There is contradictory approach of the AO in making wrong addition on this account. It is also noteworthy to mention that AO made the addition on the basis of statements of Harpal Yadav who gave his search statement u/s 132(4) in relation to the loose paper found in his premises but no material on this account was found in the possession of the assessee.
As per the provisions of Sec. 153C, the material, if any, on the basis of which addition is to be made was not found in the premises of assessee then neither action could be taken under section 153A nor any addition u/s 153A can be made. The addition if any could have been made only after issuing notice under section 153C after recording the satisfaction by the AO of other search persons. In the present case the AO has not assumed any jurisdiction under section 153C rather than made the addition u/s 153A.
Thus the assessment as well as addition u/s 153A are wrongly made and liable to be deleted. Further the AO has also made the addition u/s 68 which is also incorrect or wrong in view of above deliberations. Thus in view of the above facts, circumstances and legal position of the case, the addition sustained by the ld. CIT(A) is deleted and grounds of appeal of the assessee are allowed.
Long Term Capital Gain - Addition was made on the basis of statement of Sh. Nirmal Kedia who purchased the land from assessee and paid the On-Money to the assessee and statement has been given u/s 132(4) - HELD THAT:- The same addition was also made in the hands of M/s Kedia Real Estate LLP on account of On-Money Paid by him to the assessee. On perusal of the record and material before us, it is found that Sh. Nirmal Kedia has retracted from his statements and the assessee has also nowhere admitted receiving any On-Money from M/s Kedia Real Estate LLP and no documents or evidence has been found either in the possession of the assessee or in the possession of M/s Kedia Real Estate LLP except only a statement of Sh. Nirmal Kedia, who had retracted the same later on. To this effect, the ld. CIT(A) and this Bench has deleted the addition in the hands of M/s Kedia Real Estate LLP [2019 (6) TMI 426 - ITAT JAIPUR] Thus we concur with the findings of the ld. CIT(A). Thus the appeal of the Revenue is dismissed.
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2022 (6) TMI 1475
Cancellation of an endorsement of cancellation on the passport of the petitioner by respondent No.2 and not permitting the petitioner to travel from Bengaluru to Philippines - violation of Articles 14, 19 and 21 of the Constitution of India - whether the respondent-Bank is justified in requesting respondent Nos.1 and 2 to prevent the petitioner from travelling outside the Country and to issue LOC against the petitioner? - HELD THAT:- It is true that the respondent-Bank is conferred with the power to request respondent Nos.1 and 2 to issue LOC against a person who has committed fraud or default against the Bank. It is for the Bank to take a decision as to, in which case the Bank could request LOC. Just because power is conferred to request issuance of LOC, such power cannot be exercised arbitrarily. Bank has to take a conscious decision by examining as to whether the petitioner’s case falls within the ambit of fraud or default which would affect economic interest of the Country. In the instant case, value of the secured property is more than the amount due from the petitioner to the 3rd respondent-Bank. In that circumstance, 3rd respondent-Bank is not justified in requesting for issuance of LOC.
The petitioner is not leaving the Country to avoid repayment of loan of the Bank, but the petitioner is employed in Philippines and she had come to India to tender her evidence in a pending matrimonial case.
The decision relied upon by the learned Assistant Solicitor General on Dr. Bavaguthuraghuram Shetty [2021 (5) TMI 1037 - KARNATAKA HIGH COURT] case would have no application to the facts of the present case. In the said case, the petitioner was due to the Bank in a sum of Rs.2800.00 Crores and the same would definitely affect the economic interest of the Country.
The action of the respondents is arbitrary, unreasonable and unfair in the peculiar facts and circumstances of the case. Any action of the State if it is arbitrary and unreasonable is liable to be interfered.
The petitioner is directed to deposit a sum of Rs.10,00,000/- with the 3rd respondent-Bank, which could be adjusted towards the dues and furnish a solvent surety to the satisfaction of 3rd respondent-Bank - On deposit of Rs.10,00,000/- and on providing a solvent surety by the petitioner, the 3rd respondent-Bank shall forthwith request respondent Nos.1 and 2 to withdraw the LOC and to permit the petitioner to travel outside the Country.
The petition allowed in part.
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2022 (6) TMI 1474
Jurisdiction of initiation of proceeding in question - appropriate officer under the State GST Act - jurisdiction of the respondent DRI officer - HELD THAT:- Prima facie the petitioner has been able to make out a case for an interim order and considering this aspect there will be conditional stay of the impugned adjudication order dated 4th March, 2022 and subject to deposit of 10% of the demand in question by the petitioner within ten days from date and if such payment is made by the petitioner within the time stipulated herein, no coercive action shall be taken against the petitioner for recovery of the demand in question.
List this matter for final hearing after ten weeks.
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2022 (6) TMI 1473
Procedural irregularity - lack of opportunity of personal hearing, prior to the framing of assessment - violation of the principles of natural justice - According to the respondent, the website of the income tax department specifically provides for a link that has to be activated for availing of an opportunity of personal hearing. The petitioner has not activated the link, and thus, the question of personal hearing does not arise - HELD THAT:- In our considered view, this cannot constitute a fatal flaw that would stand in the way of an effective and efficacious opportunity of hearing. Admittedly the petitioner has sought an opportunity of hearing in the written submissions filed and this constitutes a legitimate request that cannot be brushed aside by the authorities.
The contention of the respondents is rejected and the impugned order set aside. The assessment shall be framed after affording adequate opportunity to the petitioner in line with the following directions. Learned counsel for the petitioner would submit that there are additional written submissions to be made and seeks liberty to file additional written submissions, for which, learned Senior Standing Counsel does not express any objection.
Hence, the petitioner is permitted to upload its written submissions along with any other supporting materials, if any, within a period of four (4) weeks from date of receipt of a copy of this order. Upon receipt of the additional written submissions and materials, if any, a link for personal hearing shall be sent to the petitioner, the petitioner heard and orders passed within a period of four (4) weeks from date of conclusion of personal hearing. For the aforesaid purpose, the respondent shall open the portal forthwith for a period of four (4) weeks, so as to enable the petitioner to file its additional written submissions to the show cause notice.
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2022 (6) TMI 1472
Commission income from accommodation entries - addition on substantive basis in hand of accommodation entry provider - addition in hands of assessee on protective basis - HELD THAT:- CIT(A) in the instant case has upheld the addition on the reasoning that the Income-tax department has not accepted the percentage estimated by the Tribunal in the case of Sh. Bhanwarlal Jain [2021 (8) TMI 1316 - ITAT MUMBAI], and further appeal has been preferred - CIT(A) has ignored that he, being a appellate authority, is required to follow the decision of the higher appellate forum irrespective whether the department has preferred appeal again the same, unless the decision of that appellate forum has been stayed by the higher appellate forum.
CIT(A) cannot confirm an addition on protective basis. He is required to decided the issue either way and cannot proceed with keeping an addition on substantive in one case and protective in other case that too even after a finding of the higher appellate forum i.e. ITAT. We accordingly, reject this approach of the Ld CIT(A) and set aside his finding on the issue on dispute. Respectfully following the finding of the ITAT in the case of Sh. Bhanwarlal Jain the protective addition made in the case of the assessee in respect of commission income from accommodation entries is deleted. Decided in favour of assessee.
Addition for low gross profit declared in trading activity - AO has made addition at the rate of 10.32% on the sales turnover to compensate the low gross profit rate of the assessee - CIT(A) upheld the gross profit rate addition made by AO - HELD THAT:- We find that tribunal in the case of Sh. Bhawarlal Jain (2021 (8) TMI 1316 - ITAT MUMBAI) has given a specific finding that 70 associate concerns of Sh. Bhanwarlal Jain were engaged in providing only accommodation entry and no real business was carried, which was recorded in their books of accounts. The assessee also being one of the concern out of those 70 concerns, the Ld. CIT(A) has correctly rejected the claim of the assessee that it was engaged in any trading activity. Once it is held, that assessee was not engaged in any trading activity, there is no justification for making any addition for low gross profit rate in such trading activity. The finding of the Ld. CIT(A)accordingly set aside. Decided in favour of assessee.
Commission from accommodation entries enhanced by the CIT(A) - HELD THAT:- When it is evident that after the finding of the Tribunal in the case of Sh. Bhanwarlal Jian, no addition can be made on protective basis in the case of the assessee, there is no question of further enhancement of said commission income from accommodation entry and that too on substantive basis. The enhancing of such commission income from accommodation entries of bogus sales is without any reasoning and totally unjustified. We reject this action of Ld. CIT(A).
CIT(A) has enhanced the commission income without providing any show cause notice to the assessee, which is in violation of the section 251(2) - In the impugned order there is no mention of any opportunity provided to the assessee by way of issue show cause notice, before making the addition and therefore this addition is unsustainable on the ground of violation provision of section 251(2) of the Act also.
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2022 (6) TMI 1471
Recovery of dues - priority of dues - first charge over the property mortgaged by the respondents No.4 to 7 under Section 26-E SARFEASI Act or not - HELD THAT:- The writ-applicant Bank undisputedly auctioned the subject property on 25.2.2021 and PRA Realities LLP being the highest bidder submitted the bid of Rs.3,41,00,000/- and in accordance with the sale notice has deposited the entire amount as per the Rules. The writ-applicant Bank is the secured creditor and having auctioned the subject property under the SARFEASI Act, the writ-applicant would have first charge over the subject property.
The ratio as laid down in PATTECH FITWELL TUBE COMPONENTS VERSUS THE STATE OF GUJARAT [2022 (6) TMI 202 - GUJARAT HIGH COURT] squarely covers the present issue. The dues of the secured creditor i.e. writ-applicant Bank shall have priority over the dues of the respondent No.2 over the subject property.
In the facts of the present case, in the revenue records undisputably the charge of respondent No.1 is at a later point of time i.e. 14.12.2015 and 7.6.2018 which is subsequent to the mortgage with the writ-applicant Bank i.e. 8.6.2012 and 26.10.2013, being the secured creditor. In view of above, as per the provisions of Section 26-E SARFEASI Act also, the balance tilts in favour of the writ-applicant Bank and then in favour of the present writ-applicant. Accordingly, there is no hesitation in holding and declaring that the respondent No.1 State authorities cannot claim first charge over the subject property.
It is hereby directed that the writ-applicant shall have the first charge over the property mortgaged by the respondents No.4 to 7 under Section 26-E SARFEASI Act and the same would overwrite the charge of the respondent No.3 under Section 48 of the GVAT, 2003. The respondent authority is further directed to post and certify a mutation entry to record the certificate of sale dated 19.3.2021 for the subject land.
The writ-application succeeds and is hereby allowed.
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2022 (6) TMI 1470
Revision u/s 263 by CIT - Addition u/s 56(2)(viib) - PCIT said AO has neither enquired about the claim of the assessee that the property was under litigation during the course of assessment proceedings nor brought to the notice of the Assessing Officer by the assessee - as argued AO has passed order after seeking an approval of the ACIT, u/s 153D - AR had admitted that details of the property were disclosed by the assessee in pursuant to the notice issued u/s 142(1) and the same was duly examined by the AO and no additions were made on the basis of the documents filed by the assessee. Moreover it was submitted that notice u/s 153A r.w.s 143(3), the addition can only be made by the AO in respect of the documents / incriminating material found during the course of search
HELD THAT:- As during the assessment proceeding u/s 153A r.w.s. 143(3), AO is duty bound to make the addition in respect of the incriminating documents found during the course of search or in respect to the additions which are relatable to the material seized during the search. AO is not required to make any addition in respect of the material / document came to its possession on account of post search enquiries, though this issue may be debatable within the jurisdiction of Hon’ble Telangana High court.
CIT in the impugned orders had nowhere stated that the documents were filed by the assessee in response to notice under section 142(1) of the Act and that the documents found during the course of search were incriminating in nature. Unless the requirement of law, namely existence of the incriminating document is fulfilled, the Assessing Officer could not make the addition and therefore, the Assessing Officer has rightly not made any addition.
The reliance on explanation 2 to section 263 of the PCIT was incorrect, as Assessing Officer had made enquiries from the assessee and assessee had provided all information to the Assessing Officer, therefore, PCIT’s finding was factually incorrect, as it was not born out of the record.
Moreover, we agree with the view taken in the case of M/s. Indian Roadways Corporation Ltd. [2018 (10) TMI 1495 - ITAT KOLKATA] wherein the identical view was decided by the Kolkata Tribunal in favour of the assessee. Therefore, on this count alone, the order passed by the ld.PCIT is required to be annulled .
There is another reason for annulling the order passed by the ld.PCIT, as in the present case, the Assessing Officer before passing the assessment order has taken the approval of ld.ACIT under section 153D
Also in the case of Dhariwal Industries Limited, Pune [2017 (1) TMI 260 - ITAT PUNE] on similar facts, had annulled the order passed by ld.PCIT. Therefore, we have no hesitation to take a similar view, more particularly, when one of us (namely Hon’ble A. M.) was a party to the decision.
Another reason to annul the order passed by the ld.PCIT was that the ld.PCIT had directed the Assessing Officer to make the additions after invoking the provisions of section 56(2)(vii)(b) of the Act on the premise that there is difference in consideration for which the property was purchased vis-à-vis the SRO value. In our view, the addition under section 56(2)(vii)(b) is a deeming provision, based on this notional addition can be made.
We hereby hold invocation of jurisdiction section 263 of the Act by ld.PCIT was not correct. In our considered opinion, once all the material including the sale deeds and other litigation documents were available on the record before the PCIT, then it is the duty of the ld.PCIT to give a specific finding as to how the provisions u/s 56(2)(vii)(b) are applicable and why the order of Assessing Officer was passed without proper enquiry. Therefore, PCIT’s finding that the order passed by AO was erroneous and prejudicial to the interest of the Revenue, can not be upheld. Decided in favour of assessee.
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2022 (6) TMI 1469
Revision u/s 263 - Principal CIT held the assessment framed u/s 143(3) as erroneous insofar prejudicial to the interest of Revenue - correct head of income - assessee was liable to declare the income under the head income from house property on notional basis under section 22 read with section 23 of the Act but the assessee has not done so - HELD THAT:- The Finance Bill 2017 seeks to amend section 23 w.e.f. 1st April, 2018 which lays down the determination of annual value in case of house property for the purpose of calculating the Income under the head "House Property" income particularly in case of deemed let out property.
This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year 2018-19 and subsequent years.
A plain reading of the above provisions makes it clear that the amendment for charging the tax on the notional rent with respect to the properties held as stock in trade was applicable from the assessment year 2018-19 and subsequent assessment year. As such, the amended provision is not applicable for the year under consideration. Thus the question of calculating the rental income with respect to the units of the properties held as stock in trade does not arise.
Thus we hold that there was no error in the order of the AO framed u/s 143(3) which is causing prejudice to the interest of revenue. For invoking the provisions of section 263 of the Act, it is necessary that the twin conditions should be satisfied. The order should be erroneous and prejudicial to the interest of revenue. Once there is no error the order of the AO, the same cannot be subject to the provisions of section 263 - In view of the above and after considering the facts in totality, we hold that there is no error in the assessment framed by the AO u/s 143(3) causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned PCIT is not sustainable and therefore we quash the same. Hence the ground of appeal of the assessee is allowed.
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