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2022 (6) TMI 1528
Returned income shown by the assessee u/s 44AD treated as unexplained money u/s 69A - assessee is not maintaining any books of accounts and return of income has been filed under section 44AD - HELD THAT:- Since the assessee is involved in a small business activity and filed return of income under presumptive provisions under section 44AD of the Act and the assessee had already submitted sales account before all the authorities and the assessee had also filed capital position along with the return of income showing the cash balance kept in locker.
Considering the same as abnormal profit, the Assessing Officer has not educed sufficient evidence to show that the income of the assessee which falls under the provisions of section 69A of the Act.
Since the assessee is not maintaining any books of account and in such situation only net profit as per provisions of section 44AD of the Act is required to be estimated as a net profit and not the entire turnover. The assessee submitted that the cash deposited pertains to his retail business. The assessee filed the sales register which has not been discarded by any of the authorities below.
Considering the total turnover sale of the assessee, net income determined under section 44AD of the Act shown by the assessee has to be accepted, as there is no provision in the Income Tax Act, 1961, to reduce the income of the assessee. It is also admitted fact that in the earlier years the department has accepted income U/s. 44AD of the Income Tax Act.
The income determined under section 69A of the Act is directed to be treated as regular return of income of the assessee and returned income shown by the assessee is hereby directed to be accepted.
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2022 (6) TMI 1527
Unexplained jewellery - Addition on substantive basis at the hands of the assessee - HELD THAT:- While deciding the issue in the first round in case of assessee’s wife Commissioner (Appeals) held that out of jewellery weighing 1046.90 gms, jewellery weighing 488.84 gms was owned by the assessee. The aforesaid decision of learned first authority was also upheld by the Tribunal [2013 (10) TMI 1601 - ITAT DELHI].
It is to be noted, after examining the facts and evidences brought on record thoroughly, learned Commissioner (Appeals) has recorded a factual finding that jewellery worth of Rs.1,86,100/- representing 211.46 gms stands explained. Whereas, Commissioner (Appeals) has recorded a categorical finding that the assessee could not file any evidence in respect of source of acquisition of jewellery weighing 221.44 gms. Even, at this stage also, the assessee has not brought any material to explain the source of investment in jewellery weighing 221.44 gms. Thus, in absence of any contrary material brought on record by the assessee to point out any error in the factual finding of learned Commissioner (Appeals), we do not find any reason to interfere with the decision of learned Commissioner (Appeals). Ground raised is dismissed.
Unexplained investment in equity shares - As after examining the facts and materials on record, including the seized materials, he has given a categorical finding that the investment in shares not reflected in the records of the assessee works out to Rs.1,45,904/-. The aforesaid factual finding of Commissioner (Appeals) remains uncontroverted before us.
Unexplained deposit in foreign bank accounts - As could be seen from the observations of Commissioner (Appeals), he has given a factual finding that there is no evidence with the Revenue to prove that the deposits made in the said bank account was to the tune of Rs.50 lakhs. However, in the same vein, he has directed the AO to make necessary inquiry regarding the deposits made in the same bank account and subject to such inquiry sustained the addition to the extent of Rs.25 lakhs while deleting the balance amount of Rs.25 lakhs. Commissioner (Appeals) has given a categorical finding that the assessee had not disclosed the allowance amount of 4000 GBP received from Ms. Thiara. No material has been brought before us to controvert the factual finding of learned Commissioner (Appeals).
Unexplained life insurance premium paid abroad - This issue was decided against the assessee by the Tribunal in earlier round of litigation which was accepted by the assessee. That being the factual position on record, this cannot be a subject matter of dispute now.
Undisclosed income of the assessee based on seized material As observed by Commissioner (Appeals) in the impugned order, assessments in case of the concerned entities are pending due to stay granted by Hon’ble Delhi High Court. Thus, learned Commissioner (Appeals) while deleting the additions at the hands of the assessee, has observed that additions, if any, has to be considered in the case of M/s. Seasons Creation Pvt. Ltd., M/s. Mela Ram Jaggi & Sons and M/s. Duke Hosiery. In our view, the aforesaid decision of learned Commissioner (Appeals) being in conformity with the direction of the Tribunal in the earlier round of litigation, no interference is called for. Accordingly, this ground is dismissed.
Addition on account of unexplained foreign travel - As decided by CIT it is apparent from the submissions made and records produced before me that the averment of the revenue, that no details were filed, is not factually correct. The identity of and confirmation from Mr. B S Thiara regarding giving GBP 4000 was filed not only before the CIT(A) but also before the AO during the subsequent assessment proceedings. No verification has been made nor any evidence adduced or reasons cited by the revenue to contradict the evidence filed by the appellant. Therefore, the addition made cannot be sustained. Also Since the source of the purchase of FC is from these firms, the addition cannot be sustained in the hands of the appellant and is, accordingly, deleted.
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2022 (6) TMI 1526
TP Adjustment - Adjustment on depreciation to the assessee - HELD THAT:- Issues stands covered by the order of this Tribunal passed in assessee’s own case for A.Y. 2004-05 [2022 (2) TMI 1500 - ITAT BANGALORE] wherein it has been held that the depreciation adjustment is to be granted whereby the rates of depreciation is different vis-a-vis the comparable companies. Further as regards whether adjustment should be made in the hands of the tested party i.e., the assessee or the comparable companies, the Mumbai Tribunal decision in the case of Pangea 3 & Legal Database Systems (P) Ltd. [2021 (2) TMI 1322 - ITAT MUMBAI] held that where rates of depreciation were different in case of assessee and comparable companies, Rule 10B(1) permits an adjustment in the hands of the tested party also and depreciation adjustment has to be allowed.
Excluding comparables by applying turnover filter excluding certain comparables from the final list - Exclusion of Maple e Solutions Ltd, Nucleous Netsoft & GIS Ltd., Wipro BPO Solutions Ltd.,Cosmic Global Ltd, Vishal Information Technology Ltd and Saffron Global Ltd. as functionally dissimilar.
Risk adjustment - As no details were furnished by assessee in respect of risk, assumed by the comparable companies with that of the assessee that needs to be adjusted while computing the ALP. Principally we agree that the adjustment is to be computed in accordance with Rule 10D, however, the details are to be furnished by the assessee in respect of the comparables without which the risk cannot be computed. We therefore modify the directions of the Ld.CIT(A) by directing the assessee to provide all relevant information to the AO/TPO for computing the risk undertaken by the comparables vis-à-vis that of the assessee for adjustment to be granted.
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2022 (6) TMI 1525
Penny Stock Cases - Identical issue was considered by this Court in the case of Swati Bajaj [2022 (6) TMI 670 - CALCUTTA HIGH COURT] wherein all the appeals were allowed
HELD THAT:- It is not disputed before us on either side that the decision will cover the case on hand.
Thus, following the decision of Swati Bajaj, the appeal is allowed and the substantial question of law, which has been suggested is answered in favour of the revenue.
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2022 (6) TMI 1524
Addition under the head ‘income from house property' - HELD THAT:- In this case, it is an admitted undisputed fact that the property was vacant throughout the year and it was not let out. Therefore, as held in the case of Smt. Godavaridevi Saraf [1977 (9) TMI 24 - BOMBAY HIGH COURT] the decision of Hon’ble High Courts of other States are binding on this Tribunal (Pune Bench).
Therefore, respectfully following in the case of Vivek Jain [2011 (1) TMI 897 - ANDHRA PRADESH HIGH COURT] and Sushma Singla [2016 (12) TMI 1298 - PUNJAB AND HARYANA HIGH COURT] we hold that the assessee’s rent for the said property shall be calculated as per provisions of Section 23(1)(a) of the Act and Section 23(1)(c) will not be applicable in the case of assessee for the said property. Ground No.1 of the Appellant assessee is dismissed.
Annual lettable value (ALV) calculation - AO has calculated ALV based on the fair rent for FY 2013-14 - AR submitted that the ALV shall be calculated based on Municipal lettable value - None of the Lower Authorities have discussed whether Rent Control Act is applicable to the relevant property or not.
As in the case VIMAL R. AMBANI [2015 (4) TMI 407 - BOMBAY HIGH COURT] has held that “Accordingly, while determining the annual letting value in respect of properties which are subject to rent control legislation and in cases where the standard rent has not been fixed, the AO shall determine the same in accordance with the relevant rent control legislation. If the fair rent is less than the standard rent, then it is the fair rent which shall be taken as annual letting value and not the standard rent. This will apply to both, self-acquired properties and general cases where property is let out.
While carrying out the exercise u/s 23(1) of the Act, the Departmental authorities shall follow these guidelines reproduced above provided in the Full Bench decision of the Delhi High Court and followed by a Division Bench of this court in the case of Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT]”. Therefore, this issue is set-aside to the file of the AO for verifications. If the property is under Rent Control Act, then the AO shall determine the Annual Value as per the guidelines given by the Hon’ble Bombay High Court in the above referred decision. If the impugned property is not under Rent Control Act, then Municipal Valuation shall be considered as Annual Lettable Value. Accordingly, this Ground No.2 is allowed for statistical purpose.
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2022 (6) TMI 1523
Reopening of assessment notice with shorter period to respond - giving a mere 7 days’ time to the Petitioner/assessee to furnish a reply to the said notice - HELD THAT:- The time granted to the Petitioner/assessee to submit reply to the said notice appears to be unreasonable short and the Petitioner/assessee cannot be blamed for not being able to file the reply within such a short period. Thus, it appears that there is a violation of principle of natural justice. Therefore, the prayer made on behalf of the Petitioner/assessee appears to be reasonable.
Order passed u/s 148A(d) and the notice issued u/s 148 of the Act are quashed - Decided in favour of assesse.
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2022 (6) TMI 1522
Deduction u/s 80IA - profit derived from the eligible power plant by apportionment of more expenses - apportionment of expenditure between Power Plant and Sponge and Iron unit - HELD THAT:- As observed that a similar issue was involved in assessee’s own case for earlier years right from AY 2008-09 and when the same reached to the Tribunal initially for AY 2008-09 Tribunal upheld the appellate order of the CIT (A) giving similar relief to the assessee on the issue under consideration and decided that certain expenses were not attributable to the Power Plant Division as they were exclusively related to manufacturing activities of the Sponge Iron Unit. Tribunal also noted that previous decisions in the assessee's own case for earlier years (AY 2008-09 and AY 2009-10) had set a precedent for not apportioning such expenses to the Power Plant Division.
The assessee has not charged the price to its associate concern at an higher rate. It is commensurate to the market rate. Considering the finding of the ld. CIT(A) on this issue, we do not see any reason to interfere in it. AO has rightly been directed not to exclude a sum from eligible profit for grant of deduction under section 80IA. Decided against revenue.
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2022 (6) TMI 1521
Disallowance of additional depreciation u/s 32(1)(iia) - benefit of additional depreciation u/s 32(2)(iia) is available in full as soon as the new assets are purchased and the fact that the said assets were put to use for less than 180 days does not affect such benefit - HELD THAT:- In assessment year 2013-14, since the assets were utilized for less than 180 days period, it had claimed additional depreciation @10% as against the eligibility of additional depreciation being 20%. The balance 10% of the additional depreciation has been claimed by the assessee in the year under consideration.
The lower authorities had disallowed the claim of additional depreciation only for the reasons that the assets on which the assessee has claimed additional depreciation were not installed / added during the year under consideration but were added in earlier financial year. We find that identical issue arose before in the case of M/s. Godrej Industries Ltd. [2018 (12) TMI 64 - BOMBAY HIGH COURT] wherein after considering the decision of Rittal India (P) Ltd. [2016 (1) TMI 81 - KARNATAKA HIGH COURT] and other decisions cited therein has decided the issue in favour of the assessee.
Assessee is eligible for claiming additional depreciation u/s 32(1)(iia) of the Act and therefore the same should not have been denied by the AO. We thus direct the AO to allow the claim of additional depreciation thus allow the ground of assessee.
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2022 (6) TMI 1520
Disallowance u/s.36(1)(va) - late deposit of the Employees’ share of EPF and ESI etc.- HELD THAT:- It is an admitted position that the assessee did deduct employees’ share of EPF and ESI and paid the same after the due date under the respective legislations but before the time stipulated for filing return u/s 139(1).
In our opinion, this issue is no more res integra in view of several judgments allowing deduction u/s 36(1)(va) of employees’ share of contribution deposited after due date under the respective Acts but before the date prescribed u/s 139 of the Act.
As decided in Nipso Polyfabriks Ltd.[2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT] there exists no difference between employees or employer’s contribution and both are to be allowed as deduction if deposited before the due date.
Effect of amendment to Explanation 2 below section 36(1)(va) providing that the provisions of section 43B shall not apply for the purpose of determining the due date under this clause w.e.f. 01.04.2021 - The Memorandum explaining the provisions of the Finance Bill, 2021, provides that this amendment will take effect from 1st April, 2021 and will, accordingly apply in relation to assessment year 2021- 2022 and subsequent assessment years. Since the assessment year under consideration is 2019-20, which is anterior to the amendment carried out with effect from A.Y. 2021-22, we hold that the position of law as set out by various Hon’ble High Courts including the one in CIT vs. Nipso Polyfabriks Ltd [2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT] squarely applies , thereby not warranting any disallowance since the amount in question was admittedly deposited before due date u/s 139(1) of the Act. The addition is therefore, directed to be deleted. Assessee appeal allowed.
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2022 (6) TMI 1519
Maintainability of the writ application - delay in filing application - corrupt practices in the recruitment of primary school teachers - HELD THAT:- Serious allegation by one responsible person, who was none other than the Ex-Additional Director of CBI and a Cabinet Minister of the State Government in the first five years of the Government, has come before this court which is serious corrupt practice. This aspect is to be thoroughly investigated by the CBI and such investigation is required to be started forthwith. The Police of this State is otherwise very efficient but controlled by some persons in power and cannot act freely which is common knowledge and without showing any disrespect to the Police authority it is held that CBI is the appropriate authority to investigate the matter.
CBI shall have every power to call and interrogate the said Chandan Mondal and it is expected that the erstwhile Additional Director, Mr. Upendra Nath Biswas will fully cooperate with the CBI to expose the scam of selling jobs as has been alleged. The CBI shall register a case in this regard and start investigation. CBI shall have every power to take into custody the said Chandan Mondal for interrogation if he does not cooperate with CBI.
This matter will appear on 15th June, 2022 when the report of the West Bengal Board of Primary Education will be filed in the form of an affidavit and a status report of CBI will also be filed before this court in a sealed cover.
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2022 (6) TMI 1518
Returned income shown by the assessee u/s 44AD - Addition u/s 69A - assessee has shown the abnormal amount of profit U/s. 44AD to explain the money found and seized from locker - department has further relied on statement recorded U/s. 131 and stated assessee has kept cash in his locker and stated that the source of income is retail business and does not have any documents to prove cash found in the locker - HELD THAT:- It is admitted fact on record that the assessee has not been maintaining any books of account and opted to file return of income u/s 44AD - assessee had already submitted copy of sale account before the Dy. Director of Income Tax (Hqs.) and also before the Assessing Officer as well as before the learned CIT(A). Provisions of section 44AD do not put obligation on the assessee to maintain the books of account, as the income has been assessed as per section 44AD of the Act. The addition made by the Assessing Officer under section 69A of the Act and there is no bar under section 44AD of the Act. The only fetter provided under section 44AD of the Act is the applicability of the provisions of sections 32 to 38 of the Act.
Since the assessee is involved in a small business activity and filed return of income under presumptive provisions under section 44AD of the Act and the assessee had already submitted sales account before the authorities below and the assessee had also filed capital position along with the return of income showing the cash balance kept in locker. Considering the same as abnormal profit, the Assessing Officer has not educed sufficient evidence to show that the income of the assessee which falls under the provisions of section 69A of the Act. Since the assessee is not maintaining any books of account and in such situation only net profit as per provisions of section 44AD of the Act is required to be estimated as a net profit and not the entire turnover. The assessee submitted that the cash deposited pertains to his retail business. The assessee filed the sales register which has not been discarded by any of the authorities below. Considering the total turnover sale of the assessee, net income determined under section 44AD of the Act shown by the assessee has to be accepted, as there is no provision in the Income Tax Act, 1961, to reduce the income of the assessee. It is also admitted fact that in the earlier years the department has accepted income U/s. 44AD of the Income Tax Act. Thus income determined under section 69A of the Act is directed to be treated as regular return of income of the assessee and returned income shown by the assessee is hereby directed to be accepted.
Addition u/s 68 - amount shown as opening balance as on 1st April 2017, in the capital position filed by the assessee before AO - AO stated that no supporting document was filed by the assessee regarding opening balance - As per CIT(A) Assessee is not doing any business activity and has added the opening balance as unexplained cash credit u/s 68 - HELD THAT:- We find that there is no merit in making the addition on account of opening capital in the case of the assessee u/s 68 of the Act, as we are of the considered opinion that the aforesaid provisions of section 68 are not applicable to the present case of the assessee. We further find that the assessee has also filed copy of computation of income, acknowledgement of income and copy of capital position.
Assessee had filed return of income u/s 44AD showing income for the assessment year 2017-18, and paid taxes accordingly. The aforesaid return of income has been accepted by the Department and no addition has been made. We also find a copy of capital position in which the capital of Rs.3.67 lakh has been accepted by the Department and no addition has been made and profit of the assessee was accepted under section 44AD of the Act by the Department. Since the closing balance of Rs.3.67 lakh has been accepted in the return of income for the previous year relevant to the assessment year 2017-18 i.e., as on 31st March 2017, therefore, there is no justification in making any addition of opening capital and not accepting the opening capital as on 1st April 2017, at Rs.3.67 lakh. Addition u/s 68 deleted. Decided in favour of assessee.
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2022 (6) TMI 1517
Mining activities in and around Jamua Ramgarh Wildlife Sanctuary - Constitution of buffer zones on eco-sensitive zones (ESZ) in respect of national parks and wildlife sanctuaries - divergence of views among the various stakeholders - HELD THAT:- The Guidelines framed on 9th February 2011 appears to be reasonable and the view of the Standing Committee is accpeted that uniform Guidelines may not be possible in respect of each sanctuary or national parks for maintaining ESZ. It is opined, however, that a minimum width of 1 kilometre ESZ ought to be maintained in respect of the protected forests, which forms part of the recommendations of the CEC in relation to Category B protected forests. This would be the standard formula, subject to changes in special circumstances. The CEC’s recommendation is considered that the ESZ should be relatable to the area covered by a protected forest but the Standing Committee’s view that the area of a protected forest may not always be a reasonable criteria also merits consideration. It was argued that the 1 km wide “nodevelopmentzone” may not be feasible in all cases and specific instances were given for Sanjay Gandhi National Park and Guindy National Park in Mumbai and Chennai metropolis respectively which have urban activities in very close proximity. These sanctuaries shall form special cases.
In the given facts concerning the Jamua Ramgarh Sanctuary, the margin of 25 metres as contemplated in the 1994 Mineral Policy of the State of Rajasthan is grossly inadequate. Jamua Ramgarh sanctuary is treated as a special case for fixing the ESZ as in the past, the buffer zone varied from 25 metres to 100 metres. ESZ of 500 metres would be a reasonable buffer zone, within which subsisting activities which does not come within the prohibited list as per the Guidelines of 9th February 2011 could be carried on. But for commencing of any new activity which would be otherwise permissible, the ESZ norm of one kilometre shall be maintained for Jamua Ramgarh sanctuary.
Application disposed off.
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2022 (6) TMI 1516
Deduction u/s 80IA - assessee company carries on the business of contract work in respect of construction of Water Treatment Plants (WTP), Sewage Treatment Plant (STP) etc. - Deduction denied as assessee was not a developer of the projects but had carried out the project only as a work contractor - CIT (A) had found the facts relating to these projects identical to the remaining 9 projects and accordingly allowed the assessee’s claim for deduction u/s. 80IA - HELD THAT:- We see no reason to interfere in the order of the CIT (A) since admittedly the assessee's claim of deduction with respect to projects listed at serial no. 1 to 9 already stand examined and adjudicated upon by the ITAT in the preceding years wherein they were found to be eligible to grant to deduction u/s. 80IA.
As for the remaining two new projects undertaken by the assessee during the year since the Ld. D.R. has been unable to distinguish the finding of the CIT (A) on facts that the scope of work relating to these two projects was identical to the other nine projects which were held to be eligible for the deduction u/s. 80IA by the ITAT, the order of the ld. CIT (A) allowing assessee’s claim of deduction vis a vis the remaining two project also is upheld. The order of the ld. CIT (A) therefore allowing assessee’s claim of deduction u/s. 80IA is upheld.
Treating interest income as income from other sources and not as the profit derived from the projects eligible u/s. 80IA - HELD THAT:- We have gone through the decision of Shah Alloys [2016 (8) TMI 1191 - GUJARAT HIGH COURT] and we find that, while dealing with the claim of deduction u/s 80-IA of the Act on interest earned on Margin Money kept with Banks, it was categorically held that the same being incidental to the business activities of the assessee and assessable as Income from Business and Profession, it was eligible to deduction u/s 80-IA of the Act.
The Hon’ble Court held the issue to be covered by its earlier decision of Nirma Industries Ltd. [2006 (2) TMI 92 - GUJARAT HIGH COURT]. The facts in the present case before us are on identical lines wherein the FD’s earning interest were required to be made by the banks for issuing Bank Guarantees and Performance Guarantees to the assessee which was a necessary prerequisite as per the terms of the tender issued awarding projects to it. The interest income earned on these FD’s were incidental to its business, and have been assessed as Business Income also. The decision of the Hon’ble Jurisdictional High Court therefore squarely applies in the present case and the interest income is therefore eligible for deduction u/s 80-IA of the Act.
Disallowance being the delayed employees' contribution to PF u/s. 2(24)(x) r.w.s. 36(i)(va) - assessee fairly admitted that the issue stood covered against the assessee by the decision of the Hon’ble Jurisdictional High Court in the case of GSRTC Ltd[2014 (1) TMI 502 - GUJARAT HIGH COURT]
Addition u/s. 56(2)(viib) - determination of the excess consideration received by the assessee on issue of shares exceeding its fair market value - assessee had received share premium during the year by issuing shares of Rs. 10 at a premium of Rs. 140 per share - shares to be issued by the assessee at more than its FMV and made addition of the difference u/s 56(2)(vii)(b) - assessee had adopted the second method to justify the fair market value of the shares by including the value of goodwill to the assets held by it, the Revenue authorities had merely insisted on the valuation being done as per the first method i.e. Rule 11UA prescribed by the Rules in this regard - HELD THAT:- Undoubtedly the assessee had justified fair market value of shares issued by submitting a calculation, including in the value of assets the value of goodwill as on the date of issue of shares. The said calculation was rejected by both the authorities below for the reason that the FMV could have been calculated only as per Rule 11UA of the Rules. This basis of the Revenue we find is not in accordance with law. The section as reproduced above clearly gives two options to the assessee for calculating the FMV of shares, one of which is as per Rule 11UA of the Rules and the other based on the value of assets as on the date of the issue of shares.
The ITAT Ahmedabad Bench in the case of Unnati Inorganics Pvt. Ltd. [2019 (9) TMI 553 - ITAT AHMEDABAD] has held that as per the second method, all assets including those not shown in the balance sheet are also to be considered. Since the assessee has included goodwill for the purpose of calculating the FMV even if it is not included in the books of accounts of the assessee, the assessee is well within its right to consider the value of the same for determining the fair market value of shares. The Revenue authorities clearly have failed to examine the issue correctly in the light of the prevailing position of law. We consider it fit therefore to restore the issue back to the A.O. to examine afresh the issue of determination of FMV of shares issued during the year as prescribed in law u/s 56(2)(vii)b) of the Act. Needless to add the assessee be given due opportunity of hearing in this regard.
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2022 (6) TMI 1515
Assessment of trust - depreciation u/s 32 - as to whether the Assessee can claim double deduction - HELD THAT:- Both the parties point out that the view taken by the Tribunal in favour of the Respondent – Assessee following the decision in case of CIT vs. Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY HIGH COURT] has been approved by the Supreme Court in the case of Rajasthan & Gujarati Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] This question of law as sought to be urged therefore, does not arise for consideration as a substantial question of law having already been answered against the Revenue.
Whether the Pharmacy/Chemist Shop run by Assessee, which is a Hospital, can be considered as an independent entity? - Tribunal had followed the decision of this Court in case of Baun Foundation Trust [2012 (4) TMI 172 - BOMBAY HIGH COURT]. The Tribunal has also referred to other decisions of the coordinate benches of the Tribunal. The Division Bench of this Court has taken a view that if on the analysis of fact, it is found that running of Pharmacy/Chemist Shop is not a predominant activity of the Trust and is incidental to dominant object, the Pharmacy cannot be considered as an independent unit. On factual position is concerned, the finding of fact has been rendered by the Commissioner of Income Tax (Appeals), the Pharmacy run by the Hospital - Assessee was integrally attached to the activities of Assessee which finding of fact has been confirmed by the Tribunal. Nothing is shown to us how this finding recorded is perverse. No substantial question of law.
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2022 (6) TMI 1514
Re-characterizing the sale of the land in return filed u/s. 148 - classification of Gain on sale of land - "capital gains" v/s "business income" - gain/accretion on sale of the lands in question was to be assessed under the head “Profit and Gain of Business or Profession” as claimed by in his return filed u/s. 148
HELD THAT:- As observed by the Hon’ble Supreme Court in the case of CIT Vs. Sun Engineering Works P. Ltd.[1992 (9) TMI 1 - SUPREME COURT] the jurisdiction of the A.O in the course of reassessment proceedings initiated u/s. 147 of the Act is confined to only such income which has escaped tax or has been under-assessed and does not extend to revising, reopening or reconsidering the whole assessment; or permitting the assessee to re-agitate questions which had been decided in the original assessment proceedings.
Also, as observed by the Hon’ble Apex Court the proceedings u/s 147 of the Act is for the benefit of the revenue and an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless the same was relatable to 'escaped income' - even in cases where the claims of the assessee during the course of reassessment proceedings relating to the escaped assessment are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed and the income for the purposes of 'reassessment' cannot be reduced beyond that originally assessed.
As in the case before us the assessee in the garb of reassessment proceedings which were initiated by the AO for assessing his escaped income u/s. 147 of the Act, had tried to seek re-characterizing the sale of the land in question as transaction of sale of stock-in-trade as against that claimed by him as sale of a capital asset in his original return of income, therefore, raising of the aforesaid claim of the assessee clearly falls beyond the realm of Section 147 of the Act, and thus, had rightly been rejected by the lower authorities. No infirmity in the view taken by the lower authorities who had rightly rejected the assessee’s claim for assessing the gain/surplus arising from sale of the lands in question as his business income, uphold the view taken by them.
Applicability of Section 50C of the Income-tax Act for recomputing capital gains - As the income of the sale of land in question was to be brought to tax under the head “capital gains”, therefore, the claim of the assessee that the provisions of section 50C would not stand triggered qua the lands in question which were held by him as stock-in-trade fails on the said count itself.
Deduction u/s 54B - Also, finding no infirmity in the declining of the assessee’s claim for deduction u/s. 54B of the Act by the A.O, for the reason that the same was not substantiated on the basis of any supporting documentary evidence, we uphold the order of the CIT(Appeals) to the extent he had concurred with the view taken by the AO. Thus, finding no merit in the appeal filed by the assessee before us, we dismiss the same.
Decided against assessee.
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2022 (6) TMI 1513
Penalty u/s 271(1)(c) - increase in gross profit - CIT(A) deleted penalty levy - HELD THAT:- CIT(A) while deleting the penalty on the addition of increase in G.P. has given a finding that the addition on which the impugned penalty has been levied has been deleted in the appellate proceedings and, therefore, the penalty on such addition does not survive. Before us, no material has been placed by the Revenue to point-out any fallacy in the findings of the Ld. CIT(A) nor has Revenue placed any material to demonstrate that the addition on which the impugned penalty has been levied has been upheld by higher Judicial Forum. Appeal of the Revenue is dismissed.
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2022 (6) TMI 1512
Denial of deduction u/s 11(1)(a) - there is no balance left to accumulate 25% at gross receipts - AR submitted that manner of computation done by AO is not correct and that the deduction under section 11(1)(a) should be adjusted first before considering any other deduction - HELD THAT:- Though the Act does not specify the chronological order in which the deductions under section 11 are to be allowed, the sequence of the section implies that the deduction under section 11(1)(a) is to be deducted first before considering any other deduction. From the plain reading of section 11(1)(a) it is clear that 25% of income of the trust should be allowed as a deduction.
Hon’ble Supreme Court in the case of CIT Vs. Programme for Community Organisation [2000 (11) TMI 4 - SUPREME COURT] held that 25% should be calculated on the gross receipts of income and not on the net income.
The ratio laid down by the Hon’ble Supreme Court in the case of Programme for Community Organisation (supra) is that for the purpose of accumulation of income, the gross receipts of the Trust need to be considered. We notice that the assessee in the computation of income has claimed the deduction u/s. 11(1)(a) on the net income. We also notice that the AO in the computation disallowing depreciation did not give deduction under section 11(1)(a) and has directly gone into 11(2) deduction. This in our view is not the right way.
We remand the issue back to the AO to recompute the income of the assessee as per the law. The AO is directed to consider the ratio laid down by the Hon’ble Supreme Court while recomputing the total income of the assessee and give a reasonable opportunity of being heard to the assessee. Assessee appeal is allowed for statistical purposes.
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2022 (6) TMI 1511
Application restraining a secured creditor from proceeding with auction under the provisions of Sections 13 and 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Order XXXIX Rule 1 and 2 - HELD THAT:- On careful perusal of the impugned judgment, the learned trial Court was perfectly justified in rejecting the application for a temporary injunction restraining the secured creditor from proceeding with the measures provided under Section 13(4) of the SARFAESI Act as the jurisdiction of the Civil Court is barred in view of Section 34 of the said Act.
The Apex Court in the case of M/S. Sree Anandhakumar Mills Ltd. vs M/s. Indian Overseas Bank and Ors [2018 (5) TMI 2183 - SUPREME COURT] was considering the legality of the order passed by the High Court of Madras holding civil suit for partition and injunction maintainable notwithstanding the provisions of Section 34 of SARFAESI Act.
The upshot of the position of law crystallized by the judgments of the Apex Court is that any person aggrieved against any measures under the provisions of the SARFAESI Act is entitled to approach the Debt Recovery Tribunal or Appellate Tribunal, and Civil Court has no jurisdiction to entertain such matters. SARFAESI Act overrides other laws in terms of Section 35; if they are inconsistent with the provisions of the Act, which takes relief is sweep Section 9 as well. It is not in dispute that in the present case, respondent no.5 has proceeded against secured assets of the borrower, i.e. respondent no.1. Thus, the learned trial Court was justified in rejecting the application for a temporary injunction against the respondent no.5-secured creditor.
Tthe Civil Court could not have granted an injunction restraining the secured creditor from enforcing measures under Section 13 of the SARFAESI Act. Therefore, there are no merits in the appeal - The appeal is dismissed.
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2022 (6) TMI 1510
Penalty u/s 271B for failure to get accounts audited - assessee’s turnover exceeds Rs. One crore the assessee was liable to get his books of account audited - HELD THAT:- In the instant case, it is proved that all the goods viz. the milk products and the vegetables belongs to the principle “Mother Dairy”. The assessee sells goods on behalf of the principle Mother Dairy on commission basis. The senior Manager of Mother Dairy has also confirmed these facts. The receipts are sent back to the Mother Dairy through ECS on regular intervals. What the assessee gets in this case is only the Commission income.
The rate of commission is also determined by the “Mother Dairy fruit and vegetable Pvt. Ltd.” The assessee increased the product value as per the distributor margin indicated by the Mother Dairy from time to time and as per shop to shop based on the locality. Revenue has wrongly considered the gross turnover as the sale of the assessee instead of the commission/margin amount earned by the assessee. Hence, keeping in view, the peculiar facts in the instant case and the provisions of 271B and 273B, we hold that the penalty levied be obliterated. Decided in favour of assessee.
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2022 (6) TMI 1509
Estimation of income - bogus purchases - HELD THAT:- We note that the issue under consideration is squarely covered by the decision of Pankaj K. Choudhary [2021 (10) TMI 653 - ITAT SURAT] and there is no change in facts and law, therefore respectfully following the binding precedent, we confirm the addition at the rate of 6% of bogus purchases / accommodation entry in respect of bogus purchases.
Validity of reopening of assessment - HELD THAT:- As gone through the entire gamut of facts and circumstances, we are of the view that not only there existed new information with the AO from the credible sources, but also that he has applied has mind and recorded the conclusion that the purchases claimed were non-genuine/mere accommodation entry on bogus purchases, and therefore bogus, (clearly meaning that what was disclosed was false and untruthful).
As observed earlier not only there existed new information with the AO from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine/bogus and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. Therefore, we dismiss the ground raised by the assessee challenging the validity of reassessment.
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