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Showing 521 to 540 of 420306 Records
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2024 (11) TMI 1033
Deduction u/s. 80IA - initial assessment year for claiming deduction - Tribunal held that the unabsorbed depreciation and carried forward losses of the earlier years which had already been set off against the other income, could not be notionally carried forward and taken into consideration for the purpose of computation of deduction u/s. 80IA - HELD THAT:- The issue arising in the first two substantial questions of law are covered in favour of the assessee by a judgment of Supreme Court in the case of Velayudhaswamy Spinning Mills Ltd [2010 (3) TMI 860 - MADRAS HIGH COURT].
Disallowance of agency commission paid to non-resident without deducting tax at source, u/s. 40[a][i] - HELD THAT:- The facts are admitted to the effect that the commission agents are situated abroad. The factum of rendition of services abroad is also admitted. It is also not in question that no payments were made in India and that the commission was remitted through banking channels directly to the agents.
In the facts of the present case, Circular No.786 issued by the Central Board of Direct Taxes, is clear to the effect that export commission would not be liable to tax. There has admittedly been no determination of tax made by any other authority holding the recipients of the commission to be taxable in India. Hence, the determination of taxability made by the assessee, and the decision to remit without deduction, is, in this case, unimpeachable. Hence, we see no infirmity in the order of the Income Tax Appellate Authority having accepted the case of the assessee. The third substantial question of law is also answered in favour of the assessee.
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2024 (11) TMI 1032
Reopening of assessment u/s 147 - Income chargeable u/s 5(2) - assessment funds transferred from the NRE account of the petitioner's husband to the petitioner's domestic bank account - HELD THAT:- The question as to whether the petitioner's husband was a non resident Indian was found as not having been established by the petitioner with documentary evidence. Similarly with regard to the amount it is found that the petitioner failed to prove the genuineness of the sources with material evidence.
All these are essential questions of fact which are disputed. It is trite law that this Court under Article 226 of the Constitution, would be loathe in interfering with the orders of assessment when there is an effective alternative remedy available, more so, when there is a need to examine disputed questions of facts, for examination of disputed question of facts is normally alien to jurisdiction under Article 226 of the Constitution.
This Writ Petition challenging the impugned order is rejected. The petitioner is at liberty to file an appeal, if any appeal is filed within a period of 3 weeks from the date of receipt of copy of this order, the same shall be entertained without reference to limitation, subject to complying with other conditions relating to appeal including pre-deposit if any. It is made clear that have not examined the merits and the observation is only for the limited purpose of examining whether the writ petition ought to be entertained or otherwise.
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2024 (11) TMI 1031
Validity of assessment proceedings u/s 153A/153C - satisfaction note for initiation of proceedings u/s 153C - satisfaction note as drawn u/s 153C by the AO of the searched person that seized documents/digital data/information found in the course of search indicates that the other person namely, the assessee herein has purchased a property in which some cash component is involved and such information/document etc. has bearing on the determination of total income of other person namely, the assessee - HELD THAT:- While search in the instant case was carried on 06.01.2021 i.e. previous year relevant to AY 2021-22, the documents were handed over in the previous year relevant to AY 2022-23. Based on such matrix, the assessment upto Assessment Year 2021-22 stood covered within ambit of section 153C. This being so, domain for assessment qua undisclosed income for Assessment Year 2021-22 falls within sweep of section 153C of the Act.
AO has committed substantive error in proper appreciation of jurisdictional provisions of section 153C of the Act by excluding AY 2021-22 from the ambit of section 153C of the Act erroneously based on actual date of search rather than based on date of receipts of incriminating documents. In order to frame assessment based on the searched document, the notice ought to have been issued under section 153A r.w.s. 153C of the Act.
The regular assessment passed by issuance of notice u/s 143(2) of the Act without aid of section 153C of the Act despite ‘satisfaction note’ from AO of searched person thus, is not supportable in law. The impugned assessment framed under section 143(3) of the Act thus, is void ab-initio as rightly pleaded on behalf of the assessee. Hence, the assessment order passed is vitiated in law and requires to be quashed at the threshold. Assessee appeal allowed.
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2024 (11) TMI 1030
Addition u/s 69A - unexplained cash deposited in the current bank account of the assessee’s sole proprietorship concern - validity of invoking of Section 115BBE by AO - assessee is running a petrol pump allotted by BPCL - HELD THAT:-Monthly details of purchase sales have also been placed before us and there is no major increase in sales during the demonetization period and they have normally been consistent throughout the year. Therefore, we are of the considered view that the alleged cash deposit is from sale of petroleum products at the petrol pump allotted by BPCL (a public sector undertaking) which is run by the assessee in the name of M/s. Pappu Fuel Station.
Determination of Net profit earned during the year - Assessee has declared a net profit of Rs. 3,07,646/- and gross profit of Rs. 9,29,949/- on the gross sales of 3.23 Crore. Books of accounts have been audited by the Chartered Accountant Farm namely Sujit Mishra and Associates dated 30.09.2017. Quantitative records are duly maintained. Gross profit margine at the petrol pumps are normally ranging between Rs. 1.5 to Rs. 3 per litre for petrol and around Rs. 2 to Rs. 3 for diesel. Considering this aspect, we find that the assessee has disclosed the net profit in consonance with the generally accepted market practice and the same should be accepted as the net profit for the year.
We, accordingly sustain the addition of Rs. 3,07,646/- being the net profit from petrol pump and delete the remaining amount of addition of Rs. 2,59,70,084/- and partly allow the grounds of appeal raised on merits of the case.
Invocation of Section 115BBE - Since the alleged cash deposits are on account of business activity carried out by the assessee and has been duly explained and no addition has been sustained u/s 69A provisions of Section 115BBE of the Act will have no application.
Appeal filed by the assessee is partly allowed.
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2024 (11) TMI 1029
Validity of reassessment proceedings - as alleged notices were time barred by limitation - Withdrawal of approval u/s 10(23C) - lapses found during the course of survey conducted on the assessee as well as during search and seizure operation u/s 132 and survey u/s 133A on the founder of the society, wherein the assessee-Society Founder was found to have been indulging in syphoning off the money of the society - HELD THAT:- As relying on Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT]. Assessing Officer was required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. In this context, the assessee’s contentions is worth merit that the notices issued under section 148 of the Act under the new regime dated 21.07.2022 for A.Y. 2018-19, on 22.07.2022 for A.Y. 2019-20 and dated 26.07.2022 for A.Y. 2020-21 were clearly barred by limitation.
As on the date of reference, there was no valid proceeding pending before the ld. Assessing Officer, whereas for making any reference to the ld. PCIT by the ld. Assessing Officer during a pending proceeding is sine quo non, which were not there in the instant cases as these notices were clearly time barred by limitation. Therefore, on this count, we are inclined to quash the orders passed by the ld. PCIT withdrawing the approval under section 10(23C)(vi) of the Act.
Second proviso to section 143(3) of the Act was brought on the Statute Book w.e.f. 1st April, 2022 and is accordingly applicable for A.Y. 2022-23 onwards -We observe that the AO is vested with the power to make reference during the course of pending proceedings before him but in the instant case a reference was made by the ld. AO under 2nd proviso to section 143(3) of the Act, which was not applicable to the assessments under consideration and thus the reference is also invalid and, therefore, the consequent orders passed by the ld. PCIT under section 10(23C)(vi) of the Act withdrawing the approval for all these assessment years are invalid and accordingly quashed. The ld. Case of the assessee finds support from the decision of Lakhmi Chand Charitable Society [2024 (8) TMI 1297 - ITAT DELHI] wherein similar issue has been decided by the Coordinate Bench.
Reference was made in terms of 2nd proviso to section 143(3) to ld. PCIT (Central), Patna to whom the ld. Assessing Officer was subordinate - We are of the opinion that it is not permissible under the Act and is invalid. Rather it was the ld. Commissioner (Exemption) having territorial jurisdiction as specified in Column 4 of the Notifications Nos. 52/2014 and 53/2014 both dated 22nd October, 2014, who was the appropriate authority to approve or withdraw the approval. Even on this account, the ld. PCIT’s jurisdiction is invalid and not sustainable in the eyes of law.
Decided in favour of assessee.
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2024 (11) TMI 1028
Denial of benefit of extension to interest u/s 234A - assessee had opportunity to remit the self-assessment tax before 31st October 2021 but did not do so -interest u/s 234A is compensatory OR penal - HELD THAT:- We note that assessee deposited interest u/s 234A for one month i.e., (from the original due date i.e., 31st October 2021 till the deposition of taxes i.e., 29th November 2021). However, the CPC / Ld. AO computed interest till the date of filing return i.e. 7th March 2022 and Ld. CIT(A) upheld that action of CPC / Ld. AO on the contention that the assessee had opportunity to remit the self-assessment tax before 31st October 2021 but did not do so and CBDT Circulars do not grant the benefit of extension to interest u/s 234A.
We find considerable cogency in the contention of the Ld. AR that the decision of Dr. Prannoy Roy [2001 (12) TMI 68 - DELHI HIGH COURT] which was upheld by Hon’ble Supreme Court in the case of CIT vs Prannoy Roy [2008 (9) TMI 150 - SUPREME COURT], fully supports the case of the assessee, wherein, it has been held that the interest u/s 234A is compensatory and not penal in nature and interest is payable where tax has not been deposited prior to due date of filing the Income tax return.
Thus, irrespective of date of filing of ITR, interest u/s 234A of the Act, shall accrue on the balance of taxes outstanding from the first date immediately following the due date and shall cease to accrue on the date of payment by installment /when paid in parts) or on the date of full discharge of entire tax liability computed on the total income. See Milind Madhav Padhye [2023 (4) TMI 726 - ITAT PUNE] Decided in favour of assessee.
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2024 (11) TMI 1027
Best judgment assessment u/s 144 - Unexplained Investment u/s 69 (in Mutual Funds) - additional evidences were submitted by the assessee under rule 46A of the IT Rules - HELD THAT:- We observed that assessee is a non-resident and maintaining non-residential status for more than 15 years. The assessee is a regular filer of return of income declaring income sourced from India. We observed that AO has made the addition with the observation that no response was received from the assessee. Based on that, he proceeded to complete the assessment u/s 144 of the Act based on the information available on his record. We observed that there is no proper opportunity was extended to the assessee during the current assessment proceedings because of that assessee has submitted various information after draft assessment order.
However, the AO has not considered those informations. Even before ld. CIT (A), assessee has submitted additional informations under Rule 46A of the Rules. Ld. CIT (A) as per information available on record remanded the matter back to Assessing Officer. However, the Assessing Officer did not accept or verify the additional evidences forwarded by the ld. CIT(A).
CIT(A) deleted the additions made by the AO on investment in mutual fund during the current assessment year - We observed that the findings given by ld. CIT (A) are based on the information very much available on record and it is also fact on record that assessee is an NRI and all the source of income are from his salary income earned by the assessee outside India - No reason to disturb the findings of the ld. CIT (A) considering the fact that all the informations are traced from the bank statements submitted by the assessee. Therefore no reason to disturb the findings of the ld. CIT (A). Accordingly, ground raised by the Revenue is dismissed.
LTCG on sale of equity oriented mutual funds - Since the transaction falls u/s 10(38) accordingly ld. CIT (A) deleted the addition - CIT (A) has considered various informations submitted before Assessing Officer as well as in remand proceedings. Therefore, we are inclined to accept the findings of ld. CIT (A) that these transactions are covered by section 10(38) of the Act. Hence, we do not see any reason to disturb the findings of ld. CIT (A). Accordingly, ground no.(ii) raised by the Revenue is dismissed.
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2024 (11) TMI 1026
Scope of assessment framed u/s 153C - HELD THAT:- We noticed that the satisfaction recorded by the Assessing Officer of the assessee was only on 18.01.2021, therefore, the assessment proceedings initiated u/s 153C in AYs 2011-12, 2012-13 & 2013-14 are outside the jurisdiction. Accordingly, the assessment of these assessment years are set aside as void ab initio.
Addition of rental income based on valuation report for AYs 2014-15 to 2016-17 - We observed that a document was found during the search conducted in the case of Harvansh Chawla and valuation report was dated 08.04.2010 seized from the premises of Harvansh Chawla. Since the valuation report was 09.04.2010, the material found in the search pertains to AY 2011-12.
Since the valuation report was dated 08.04.2010, we are in agreement with the submission of the ld. AR that it was only a valuation per se and there is no record which shows that the above said property was rented out as per the valuation report found during the search. It is another matter whether the valuation report can be termed as incriminating material without corroborating with the assessee’s books of account or return of income.
It is settled law that incriminating material found during the course of search is year specific was that addition could be made in the case of unabated assessment. Since the material found/valuation report is dated 08.04.2010 it cannot be considered as an incriminating material. Even the Assessing Officer has not verified and recorded a satisfaction that this valuation report was actual or the same was acted upon by the assessee.
Merely because certain documents were found in the premises of third party, the same cannot be utilised to make the addition as incriminating material without there being corroboratory evidence to show that such income was not offered to tax.
In this case, we observed that merely based on the availability of valuation report, the Assessing Officer proceeded to make addition without properly giving explanation how it can be treated as incriminating material in the case of the assessee, as held in the case of CIT vs. Sinhgad Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT].
Thus, we are inclined to delete the addition made by the AO and sustained by the ld. CIT (A) and the appeal for AY 2014-15.
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2024 (11) TMI 1025
Validity of reopening of assessment - Addition of alleged bogus purchases - reasons to believe - HELD THAT:- In assessment order there is no allegation that the assessee has taken any bogus accommodation entries from the bogus concerns of Deepak Sharma named in the reasons for reopening the assessment. It is a well settled law that if no addition is made on the basis of reasons recorded for reopening, no other addition can be made. The reasons for reopening should coincide with the addition made in the reassessment proceedings.
Further, third party statement recorded subsequent to the reasons recorded, cannot form basis of Assessing Officer’s “reasons to believe” to reopen the assessment. In the instant case, there is no coherence in the reasons recorded for reopening and the addition made in the assessment order. There is utter nonapplication of mind by the Assessing Officer while recording reasons for reopening. In facts of the case, we have no hesitation in holding that reopening of assessment lacks Assessing Officer’s, “reasons to believe” for reopening of assessment.
Reassessment proceedings are held invalid, hence, quashed. The assessee succeeds on ground no.1 of appeal.
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2024 (11) TMI 1024
Characterization of profit/receipts - profit on sale of land - business income or long-term capital gain - holding period of asset - HELD THAT:- Hon'ble Supreme Court in the case of CIT vs. Madan Gopal Radhey Lal [1968 (9) TMI 14 - SUPREME COURT] has held that a trader may acquire a commodity in which he is dealing for his own purposes and hold it apart from the stock in trade of his business. There is no presumption that every acquisition by a dealer in a particular commodity is acquisition for the purpose of his business; in each case the question is one of intention to be gathered from the evidence of conduct by the acquirer and his dealings with the commodity.
Since the assessee in the instant case has held the land for more than five years without carrying out any developmental activity on the same, the Revenue in the preceding and succeeding assessment years has accepted the treatment of the assessee in claiming the long term capital gain on account of sale of land even though she was also a director in various concerns at that time, therefore, in view of the above discussion and in view of the detailed reasoning given by the Ld. CIT(A) / NFAC on this issue, no infirmity in his order deleting the addition made by the AO. Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed.
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2024 (11) TMI 1023
Denial of deduction u/s 54B - land sold was barren land on which no agricultural activity is carried out - According to the AO as per the provisions of section 54B only agricultural land purchased after the date of transfer is allowed as deduction - HELD THAT:- The assessee has purchased the new agricultural land before the land in question was sold, the investment in the land was also made jointly i.e. in the name of the assessee as well as Mr. Santosh Vitthal Mhsurkar and the assessee did not offer any clarification to indicate his share in the said investment, if any.
It is the submission of assessee that he was running a dairy firm and the land sold was used for growing grass and therefore, it was an agricultural activity. It is also his submission that in the case of one of the co-owners i.e. Mr. Santosh Vitthal Mhsurkar, the AO in the order passed u/s 144/147, dated 13.03.2024 for assessment year 2016-17 has accepted the land as agricultural land, therefore, the assessee being a party to the same sale deed for the same land, the AO cannot take a different view. It is also his submission that the various documents filed before the Assessing Officer as well as the Ld. CIT(A) / NFAC evidencing the sale of milk to dairy, cattle food, farm pesticides and medicines, details of crop revenue, etc. were completely ignored by the lower authorities.
We find some force in the above arguments of assessee. A perusal of the assessment order of Mr. Santosh Vitthal Mhsurkar/coowner shows that the AO has accepted the land sold as ancestral agricultural land and is not a capital asset as per section 2(14) of the Income Tax Act, 1961.
This order was passed by the Assessing Officer after the order passed by the Ld. CIT(A) / NFAC and this was accepted as an additional evidence. In the instant case, the assessee is the consenting party No.2 to the sale of the said land and the same sale deed.
We further find that the various documents filed by the assessee in the paper book were not considered by the Ld. CIT(A) / NFAC. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (11) TMI 1022
Treatment to income surrendered - Additional income declared during course of survey proceedings - additional income which was offered in the return of income under the head ‘Income from other sources’ - AO treated it as income from unexplained sources’ and to be added u/s 68 r.w.s. 115BBE - assessee explained that the amounts in question are nothing but income from land business which are received in cash and are over and above the regular income. Thus, the source of income has clearly been explained as out of business and not from any other activities - HELD THAT:- A perusal of the assessment order clearly shows that the assessee has categorically given the details of the land with survey number etc from which he has received excess cash which was not recorded in the books of account and which was surrendered during the course of survey and offered in the tax return. Thus, the assessee has categorically stated the nature and source of income during the course of survey itself which was offered to tax in the return filed. Under these circumstances, we have to see as to whether the provisions of sections 68, 69, 69A, 69B, 69C or 69D r.w.s. 115BBE of the Act are to be attracted or not.
As decided in the case of Hari Narain Gattani [2020 (10) TMI 559 - ITAT JAIPUR] that where the assessee surrenders undisclosed income during search action for relevant year, it is not necessary that tax rate has to be charged as per provision of section 115BBE.
We find in the case of Bajaj Sons Ltd. [2021 (5) TMI 956 - ITAT CHANDIGARH] has held that where director of assessee-company surrendered a certain sum during search and the Assessing Officer treated said sum as income from unexplained sources and invoked provisions of section 115BBE and charged tax at a higher rate, since the Assessing Officer had not pointed out any unexplained credit in the books of account, provisions of sections 68, 69, 69A, 69B, 69C and 69D were not attracted on surrendered amount and aforesaid surrender not being covered under the provisions of sections 68, 69, 69A, 69B, 69C and 69D, provisions of section 115BBE were not attracted. Assessee appeal allowed.
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2024 (11) TMI 1021
Penalty u/s 271(1)(c) - defective notice u/s 274 - no specific limb of the penalty indicated - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that notice dated 24.11.2016 u/s 274 r.w.s. 271 (1)(c) of the Act was issued to the Assessee wherein, no specific limb of the penalty indicated i.e., whether it is for concealment of particulars of income or for furnishing of inaccurate particulars of income, which is not sustainable in the eyes of law and illegal, as per the settled law. Assessee appeal allowed.
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2024 (11) TMI 1020
Addition u/s 68 - Bogus share transaction - assessee had carried out the transactions have been alleged to have been indulged in price manipulations and the SEBI had also passed an order regarding irregularities and synchronized trades carried out in the shares by the said broker - HELD THAT:- Since the AO has not established that the assessee was involved in price rigging and further the AO did not find fault with any of the documents furnished by the assessee.
We noticed earlier that the AO has assessed the sale consideration of shares as unexplained cash credit u/s 68 of the Act. It is pertinent to note that the purchase of shares made in an earlier year has been accepted by the Revenue. The sale of shares has taken place in the online platform of the Stock Exchange and the sale consideration has been received through the stock broker in banking channels. Hence, in the facts of the case, the sale consideration cannot be considered to be unexplained cash credit in terms of sec. 68 of the Act.
Accordingly, we set aside the order passed by the Ld.CIT(A) on this issue and direct the AO to delete the addition made u/s. 68 of the Act relating to sale consideration of shares. Decided in favour of assessee.
Assessment of the deposits made into the bank account and disallowance of claim of interest expenditure u/s 24 - In the interest of natural justice, we set aside the order passed by the Ld.CIT(A) on both these issues and restore them to the file of the AO for examining them afresh. We also direct the assessee to fully co-operate with the AO for expeditious completion of assessment.
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2024 (11) TMI 1019
Addition u/s. 41(1) - addition on account of unproved Sundry Creditors holding that existence of liabilities is not proved - evidence that the liability has ceased to exist and that too in the year under appeal or not? - Revenue’s endeavour to invoke section 68 - HELD THAT:- AO had held the assessee not to have proved identity, creditworthiness and genuineness despite availing various opportunities. He therefore concluded in para 5 of the impugned credits lacked genuineness which inturn, represented the assessee’s sundry credits only, in the regular course of business. Learned departmental representative could hardly dispute the clinching fact emerging from the assessee’s paper book that it had duly filed all the relevant details of the said sundry credits which also had been having opening balances as well as settlement(s) finalized in the relevant previous year and afterwards.
Sofaras the Revenue’s endeavour to invoke section 68 herein is concerned, we do not find any discussion in the assessment order as to how the assessee’s relevant details had failed to discharge its onus even if it is presumed that this not an instance of cessation of liability u/s. 41(1) of the Act. We conclude in these peculiar facts and circumstances that be it section 41(1) cessation of liability addition or that section 68 unexplained cash credits, the learned Assessing Officer could not have made the impugned addition in assessee’s hands on both counts. Rejected accordingly.
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2024 (11) TMI 1018
Addition on account of cash deposited in bank account - Addition u/s.69A on account of unexplained cash deposit - AO’s allegation that assessee has shown inflated cash sales - HELD THAT:- Assessee is a Wholesaler for Sapat Brand Tea. During the assessment proceedings, assessee had explained that the amount deposited was out of the Opening Cash Balance and Sales made. However, AO rejected assessee’s submission and made the addition.
As observed from the above table that during the month of October & November, there has been substantial increase in the Cash Sales of the assessee in all the three Financial Years. Assessee claimed that these were the months of Festivals. Therefore, AO’s allegation that assessee has shown inflated cash sales during October, 2016 to deposit his unaccounted cash is unsubstantiated. Because, consistently there is increased cash sales as compared to other months. It is also a fact that assessee’s Books of Accounts are audited.
The Audit Report along with Profit and Loss Account, Balance Sheet and its Annexures were filed before the Assessing Officer. AO has not pointed any defect in these Books of Accounts or Audit Reports. CIT(A) has also not pointed out any defect in the Audit Report. Assessee had also filed copy of all the bank statements before the Assessing Officer.
There were regular cash deposits even before the Demonetization. Assessee had submitted before the AO details of monthly cash sales, details of monthly purchases. Assessing Officer has not doubted Assessee’s purchases or sales. The entire sales and purchases are reflected in the Profit and Loss Account and AO has not brought out on record any evidence to rebut the assessee’s claim. AO has merely made addition based on surmises and conjectures.
Thus, AO’s allegation that cash deposited on 11.11.2016 and 15.11.2016 are out of unaccounted sales is baseless. We have already reproduced the details of cash sales shown by the assessee much before the Demonetization. Therefore, in these factual background, there is no reason to doubt the cash deposits made on 11.11.2016 and 15.11.2016. Assessee appeal allowed.
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2024 (11) TMI 1017
Upward TP adjustment on account of AMP expenses - HELD THAT:- We find an identical issue raised in assessee's own case for assessment year 2012- 2013 [2023 (3) TMI 656 - ITAT BANGALORE] which subsequently followed in A.Y. 2017-18 [2022 (12) TMI 1542 - ITAT BANGALORE] - The Tribunal in assessee's own case followed the dictum laid down in the case of Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT], case of Sony Ericsson Mobile Communications India (P.) Ltd. [2015 (3) TMI 580 - DELHI HIGH COURT] directed the A.O. to delete the AMP TP adjustment and the mark up thereon wherein held that if an Indian entity has satisfied the TNMM i.e. the operating margins of the Indian enterprise are much higher than the operating margins of the comparable companies, no further separate adjustment for AMP expenditure was warranted.
This is also in consonance with Rule 10B which mandates only arriving at the net profit by comparing the profit and loss account of the tested party with the comparable. As far as MSIL is concerned. its operating profit margin is 11.19% which is higher than that of the comparable companies whose profit margin is 4.04%. Therefore, applying the TNMM method it must be stated that there is no question of TP adjustment on account of AMP expenditure - Appeal of the revenue is hereby dismissed.
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2024 (11) TMI 1016
Tax relief in regard to income earned in Japan, Nepal and Singapore - Income earned by the assessee from professional services in forieng countries - HELD THAT:- As perused the decision of Amarchand & Mangaldas & Suresh A. Shroff & Co. [2023 (6) TMI 1445 - ITAT MUMBAI] pertaining to AY 2017-18 wherein the provisions of Article 12 and Article 14 of the India- Japan Double Taxation Avoidance Agreement are discussed and it is held that Article 12 of the DTAA provides that income from professional services or other activities of independent characters would be taxable in the resident country, i.e., India. However, clause 4 of the Article 12 provides that such payments would not constitute ‘fee for technical services’ only if such payment is made to an individual for carrying out independent professional services referred to in Article 14. Thus conclusions arrived at by the Japanese tax authorities, directing tax withholdings from the payments made to the assessee by its Japanese clients, cannot be said to unreasonable or incorrect, and hold that the assessee was wrongly declined tax credit on the facts of this case
Thus, we find merit in the submission of the assessee and allow the claim of deduction. Decided against revenue.
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2024 (11) TMI 1015
Disallowance of interest on his own funds - AO found that the assessee has paid interest @ 12% to the people from whom he had borrowed the money and received interest @ 12.5% from the company whom he had lent the money - HELD THAT:- The undisputed fact is that the assessee had lent money out of the borrowed funds. Assessee was charging interest @ 12.5% and was paying interest @12%. It is also not in dispute that the assessee has lent out funds out of borrowed capital till October, 2017 on which gross interest received - Thereafter, since November, 2017, the assessee has lent money out of his own funds.
The total interest paid by the assessee was Rs. 2,42,26,347/-. Thus, the assessee was eligible for claim of deduction of interest payments totaling to Rs. 2,42,26,347/-. However, a perusal of the computation of income shows that the assessee has claimed deduction of interest only to the extent of Rs. 2,02,76,955/- which means that the assessee has suo moto disallowed Rs. 39,49,392/-, which can cover all the apprehensions of the AO. Therefore, no reason for a further disallowance of Rs. 63,48,487/-. The AO is directed to delete the disallowance.Decided in favour of assessee.
Maturity profits from Keyman Insurance Policies which was taxed as profit in lieu of salary - We are of the considered opinion that on identical set of facts, the Co-ordinate Bench in the case of Mihir Parikh [2024 (2) TMI 1194 - ITAT DELHI] wherein held benefit inured owing to the combined effect of a prudent investment and statutory exemption provided under Section 10(10D) of the Act, the section does not envisage of any bifurcation in the amount received on maturity on any basis whatsoever. Nothing can be read in Section 10(10D) of the Act, which is not specifically provided because any attempt in that behalf as contended by Revenue would be tantamount to legislation and not interpretation.Therefore, in the light of above-mentioned binding precedents, we are of the considered view that the authorities below were not justified in denying the benefit of exemption to the assessee. Decided in favour of assessee.
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2024 (11) TMI 1014
Revision u/s 263 - Section 50C applicable to a charitable trust - AO has not considered the value of the property as per provisions of Section 50C and therefore, difference between the stamp duty value and transaction value was not examined by the AO and no explanation was submitted by the assessee - HELD THAT:- It is apparent that the assessee has offered capital gain in assessment year 2017 – 18, the property was transferred in that year, property got registered in current assessment year. The capital gain offered by the assessee have been assessed to income tax in assessment year 2017 – 18 under section 143 (3) of the act. Therefore, even if, the action u/s 263 is required to be taken, it should have been taken in assessment year 2017 – 18 and not in assessment year 2018 – 19.
Even otherwise in the case of the assessee, a trust, according to provisions of section 11 (1 A) where a capital asset is sold, transferred, the net consideration is required to be utilized for acquisition of another capital asset in those circumstances, the net consideration is deemed to have been applied for charitable purposes to the extent consideration is utilized. Net consideration is defined in explanation (iii) meaning the full value of the consideration received or accruing as a result of the transfer of the capital asset. Therefore, there is no provision under section 11 (1A) to substitute the net consideration with full value of the deemed consideration.
Section 50 C of the act applies only for the purposes of computation of capital gain under section 48 of the act. Provisions of section 48 of the act does not apply to a charitable trust in view of provisions of section 11 (1A) of the act, so far as the facts of this assessee are concerned.
Though assessee has relied upon several judicial precedents to support its case that in case of a charitable trust provisions of section 50 C does not apply, but even on the facts of the present case also we do not find that there should have been any addition on account of stamp duty value of the property in assessment year 2018-19, when the property is transferred in assessment year 2016 – 17 and revenue has accepted the same by framing an assessment order u/s 143 (3) of the act. Therefore, even otherwise, the stamp duty value of the property would not have any impact on the income of the assessee for assessment year 2018 – 19. Thus, the order itself is not prejudicial to the interest of revenue.
Therefore, we do not find that the assessment order passed by the learned assessing officer for assessment year 2018 – 19 is erroneous insofar as prejudicial to the interest of the revenue - Assessee appeal allowed.
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