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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter December 1, 2020 Case Laws in this Newsletter: GST Income Tax Service Tax CST, VAT & Sales Tax Articles Security Transaction tax should be treated like TDS and TCS and credit should be allowed accordingly- a point of view and suggestion for next budget. News Punjab chooses Option-1 to meet the GST implementation shortfall Income Tax Department conducts searches in Tamil Nadu Notifications GST 89/2020 - dated 29-11-2020 - CGST Seeks to waive penalty payable for noncompliance of the provisions of notification No.14/2020 – Central Tax, dated the 21st March, 2020. - Non issuance of invoice having Dynamic Quick Response (QR) code GST - States 66/2020-State Tax - dated 24-11-2020 - Himachal Pradesh SGST Seeks to amend Notification No. 35/2020-State Tax, dated the 23rd June, 2020 65/2020-State Tax - dated 24-11-2020 - Himachal Pradesh SGST Seeks to amend Notification No. 35/2020-State Tax, dated the 23rd June, 2020 62/2020-State Tax - dated 24-11-2020 - Himachal Pradesh SGST Himachal Pradesh Goods and Services Tax (Tenth Amendment) Rules, 2020. 56/2020-State Tax - dated 24-11-2020 - Himachal Pradesh SGST Seeks to amend Notification No. 46/2020-State Tax, dated the 12-11-2020 31042-FIN-CT 1-TAX-0039/2019 - dated 23-11-2020 - Orissa SGST Commencement of section 7 of the Odisha Goods and Services Tax (Amendment) Act, 2019 w.e.f. 10th November, 2020 Highlights / Catch Notes GST Classification of services - Online Information and Database Retrieval Services - Type-3 test administrative solution offered by the Respondent Company to its clients in India - When the Type-3 computer-based test is viewed as a whole, the scoring done by the human scorer is to be regarded as being within the realm of minimum human intervention. As such the ingredient of ‘minimum human intervention’ required to classify the service as OIDAR is also satisfied. - The decision of the lower Authority that the Type-3 test is not an OIDAR service, cannot be accepted - AAAR Visit to Get Source Income Tax Assessment u/s 153A - Validity of statement recorded during search - If the statements of copies were provided to the petitioner's father before his demise, he could have retracted his statements is concerned, the said contention will have to be necessarily rejected, in view of the fact that under Section 132(A) a request will have to be made by the person from whose custody any books of account or other documents were seized. In the case on hand, as seen from the documents filed along with the typed set of papers, this Court does not find any such request made by the petitioner's father during his life time seeking for copies of sworn statements given by him at the time of search under Section 132(A) of the Income Tax Act. - HC Visit to Get Source Assessment u/s 153A - In the case on hand, the search was conducted on 10.08.2017 and the relevant six assessment years immediately preceding the assessment year relevant to the previous year, in which search was conducted, are 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 and relevant assessment year for the date of the search is 2018-19. Therefore, the contention of the learned Counsel for the petitioner that the assessment orders have been passed by the respondent for the year 2018-19 without authority under Law under Section 153A of the Income Tax Act, is rejected by this Court. - HC Visit to Get Source Nature of expenditure - Revenue expenditure u/s 37(1) or capital expenditure - royalty payment for user of technical know-how and intellectual property rights along with the right to manufacture for a temporary period - the assessee has incurred an expenditure which gives him enduring benefit, therefore, the same has to be treated as capital expenditure. - HC Visit to Get Source Rectification u/s 254 - Addition u/s 68 - non-consideration of certain facts in Order of the Tribunal - ignoring the material already on record on the part of the learned Tribunal was a mistake apparent on the face of record u/s 254 and Tribunal has, in our opinion, rightly recalled its order and rectified the mistake and it has rightly set aside the additions under Section 68 of the Act and they are only findings of facts based on relevant material. - HC Visit to Get Source Reopening of assessment u/s 147 - Once the Assessing Officer records the reasons that he has reason to believe that income has escaped assessment, it confers jurisdiction to re open the assessment. However, the tribunal in a cryptic and cavalier manner without adverting to the reasons assigned by the Assessing Officer held that AO has not mentioned therein anywhere that the assessee has failed to disclose truly and fully all material facts necessary for computing its income due to which the income has escaped tax. - HC Visit to Get Source Excess rent paid to the related party - Disallowance invoking the provision of section 40A(2)(b) - Since this definition provided u/s 56(2) is only for the said clause of section 56(2) therefore, the same cannot be applied in respect of provisions of section 40A(2) when a general definition of term “relative” is provided u/s 2(41) of the Act. - AT Visit to Get Source Addition u/s 68 - Loan taken from shell company - There is no dispute with regard to utilization of funds in the business and applied for the business purpose. As long as it is utilized in the business and the assessee has demonstrated that it has repaid the same along with the relevant interest, it does demonstrate that the present transaction made by the assessee is proper and for the purpose of business, therefore the transaction can only be treated as genuine business transaction. - Additions deleted - AT Visit to Get Source Levy of penalty u/s 271D - assessee had received the amounts in cash as loan from HUF - there cannot be any better reason for receipt of cash deposits than the death of Karta or Managing Director of the company. It is also not disputed that all the cash receipts were duly accounted in the books of the assesse as well as the HUF. There were no unaccounted transactions. - No penalty - AT Visit to Get Source Revision u/s 263 - Levy of tax @60% on undisclosed income - AO completed the assessment after considering the explanation offered by the assessee. In the explanation, the assessee has explained as to why the same should be treated as business income and the provisions of section 69 and section 115BBE are not applicable. - Therefore revisiting the same issue which was already considered by the AO constitutes difference of opinion and on difference of opinion revision u/s 263 is not permissible. - AT Visit to Get Source Correct head of income - treatment of interest income - The activity of advancing loans, in such a case, would become assessee’s business and naturally, the interest earned thereupon would constitute Business Income for the assessee. - The rule of consistency would demand that their being no change in facts or circumstances, the accepted position should not be disturbed. - AT Visit to Get Source Investment from undisclosed source, USL, interest disallowance - All the bank statements of the loan parties have been duly submitted before the AO. The revenue has not disputed the presence of the primary documents before the ld. CIT(A) at this juncture. Hence, it can be held that the assessee has discharged the primary onus to prove the loans whereas the revenue has not acted upon such evidences filed by the assessee to bring anything contra - Additions deleted - AT Visit to Get Source Deduction u/s 80IB - there is substantial force in the claim of the assessee that deduction u/s 80IB has to be allowed on the amount of profits and gains derived by him the eligible business within the meaning of the said statutory provision, as finally determined. - Disallowance of expenses claimed by the assessee as regards his eligible business would increase its income which again will be exempt u/s 80IB. - AT Visit to Get Source Service Tax Business Auxiliary Services - promotion or marketing of goods produced or provided by or belonging to the client - transfer of right to use - As issue has already been settled in favour of the appellant, therefore, we hold that no demand of service tax is sustainable against the appellant - AT Visit to Get Source VAT Cancellation of Registration Certificate - legal heirs - deemed dealer on the death of dealer - When it is an admitted fact that the petitioner is a legal heir of the deceased dealer, this Court is of the considered view that the legal heirs are deemed to be dealers on the death of deceased, as per the provisions of Section 26 of the Tamil Nadu Value Added Tax Act, 2006. - The amendment shall take effect retrospectively, from the date of death of deseased i.e., 09.06.2013. - HC Visit to Get Source Case Laws: GST 2020 (11) TMI 956 Classification of services - Online Information and Database Retrieval Services - Type-3 test administrative solution offered by the Respondent Company to its clients in India - minimum human intervention - levy of integrated tax on the supply of said services to non-taxable online recipients in India - lower Authority had held that the Type-3 test does not qualify for classification as OIDAR service - HELD THAT:- There is no dispute on the fact that there is an element of human intervention involved in the process of scoring the essay responses in the Type-3 test. What needs to be decided is whether the extent of human intervention is minimum or not. Since there are no guidelines in Indian laws regarding the concept of minimum human intervention in electronically provided services, we refer to the European Commission VAT Committee Working Paper No 896 wherein the notion of minimal human intervention was discussed in the context of determining whether or not a service can be said to fall within the definition of electronically supplied services. The European VAT Committee had agreed that for the assessment of the notion of minimal human intervention , it is the involvement on the side of the supplier which is relevant and not that on the side of the customer. We have already detailed the entire process involved in conducting the Type-3 test and it is seen that scoring by a human scorer is just one of the processes involved in a computer-based test. One of the major benefits of a computer based test is the facility of obtaining immediate grading. While grading of multiple-choice questions is done instantaneously using an algorithm, grading of essays involves the use of AES (Automated Essay Scoring) which is a specialized computer program to assign grades to essays. The Respondent has an entity in the United States which has developed an AES for reliable scoring of essay responses in a computer-based test. How does one know that the automatic scoring system works well enough to give scores consistent with consensus scores from human scorers? Any method of assessment must be judged on validity, fairness and reliability. An AES would be considered valid if it measures the trait that it purports to measure and it would be considered reliable if its outcome is repeatable. Before computers entered the picture, essays were typically given scores by two trained human raters. If the scores differed by more than one point, a more experienced third rater would settle the disagreement. In this system, reliability was measured by the degree of agreement among the human raters. The same principle applies to measuring a computer program s performance in scoring essays. The focus here is on a computer-based test where the intent is to also assess the performance of the candidate using an automated system. The reliability of the AES is validated by the near agreement to the score given by the human scorer. For this reason, we hold that the involvement of the human element in the assessment of essay responses is well within the realm of minimum human intervention . Further, even from the perspective of the candidate, the human involvement is minimum in the entire process of the Type-3 computer-based test starting from the manner of registering for the test, the actual test-process and the outcome of the test, as all stages are automated. The Respondent accepts the electronic request for a rescore of the essay and returns the result to the candidate electronically. The candidate who is the service receiver has received a fully digitally provided service. When the Type-3 computer-based test is viewed as a whole, the scoring done by the human scorer is to be regarded as being within the realm of minimum human intervention. As such the ingredient of minimum human intervention required to classify the service as OIDAR is also satisfied. The decision of the lower Authority that the Type-3 test is not an OIDAR service, cannot be accepted - service provided for the Type-3 test is classifiable as an OIDAR service. 2020 (11) TMI 955 Profiteering - Respondent had not passed on the benefit of rate reduction to the Applicant as well as other Customers as per the provisions of Section 171 (1) of the CGST Act, 2017 - HELD THAT:- It has been revealed that the Respondent had not passed on the benefit of rate reduction to the above Applicant as well as other Customers for the period from 15.11.2017 to 31.10.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. It is also revealed from the perusal of the CGST Act and the Rules framed under it that no penalty had been prescribed for violation of the provisions of Section 171 (1) of the above Act, therefore, the Respondent was issued show cause notice to state why penalty should not be imposed on him for violation of the above provisions as per Section 122 (1) (i) of the above Act as he had apparently issued incorrect or false invoices while charging excess consideration and GST from the buyers. However, from the perusal of Section 122 (1) (i) it is clear that the violation of the provisions of Section 171 (1) is not covered under it as it does not provide penalty for not passing on the benefit of rate reduction and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the above Act - Since, no penalty provisions were in existence between the period w.e.f. 15.11.2017 to 31.10.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 08.05.2019 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped. 2020 (11) TMI 954 Profiteering - Respondent had not passed on the benefit of rate reduction to the Applicant as well as other Customers as per the provisions of Section 171 (1) of the CGST Act, 2017 - HELD THAT:- It has been revealed that the Respondent had not passed on the benefit of rate reduction to the above Applicant as well as other Customers for the period from 15.11.2017 to 31.10.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. It is also revealed from the perusal of the CGST Act and the Rules framed under it that no penalty had been prescribed for violation of the provisions of Section 171 (1) of the above Act, therefore, the Respondent was issued show cause notice to state why penalty should not be imposed on him for violation of the above provisions as per Section 122 (1) (i) of the above Act as he had apparently issued incorrect or false invoices while charging excess consideration and GST from the buyers. However, from the perusal of Section 122 (1) (i) it is clear that the violation of the provisions of Section 171 (1) is not covered under it as it does not provide penalty for not passing on the benefit of rate reduction and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the above Act - Since, no penalty provisions were in existence between the period w.e.f. 15.11.2017 to 31.10.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 08.05.2019 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped. Income Tax 2020 (11) TMI 953 Assessment u/s 153A - principles of natural justice has been violated by the respondent, while passing the impugned assessment orders - as per assessee no fair hearing was given to him by the Assessing Officer - whether the respondent has afforded a fair hearing to the petitioner in the assessment proceedings and whether the objections raised by the petitioner were considered by the respondent? - HELD THAT:- As seen from the impugned assessment orders, adequate opportunity of hearing was provided to the petitioner by the respondent and only thereafter, the impugned assessment orders for the seven assessment years have been passed. As seen from the impugned assessment orders, each and every objection raised by the petitioner has been considered by the respondent. As seen from the impugned assessment orders, each and every objection raised by the petitioner in his written representation has been considered by the respondent, who has rejected the same by giving reasons. Whether the reasons for rejection given by the respondent is correct or not cannot be held to be violations of principles of natural justice. If the petitioner is aggrieved, his only remedy is to file the statutory appeal. The respondent has adhered to the principles of natural justice by providing a fair hearing and by giving the petitioner sufficient opportunity to raise all the contentions and the respondent has also given reasons for rejecting the objections raised by the petitioner under the impugned assessment orders. New plea raised by the petitioner before this Court that the assessment orders have been passed without authority under Law , since the operation conducted at the premises of the asseesee on 10.08.2017, according to him, is only a survey under Section 133A of the Income Tax Act and not a search under Section 132(4) - Said plea taken before this Court is absolutely baseless. Nowhere in the written representation submitted by the petitioner on 08.11.2019 before the respondent, the said plea was taken. In all the representations made during the course of impugned assessment proceedings, the petitioner has admitted that the operation conducted by the respondent on 10.08.2017 is only a search proceeding under Section 132(4) of the Income Tax Act. Contention of the petitioner that all the statements recorded by the respondent from his father are in typed format and have been prepared by the respondent to their whims and fancies - It cannot be a ground for filing these Writ Petitions, as the said objections were not raised by the petitioner during the course of the assessment proceedings. Even if such a plea is taken, this Court under Article 226 of Constitution of India, cannot decide the said plea and it is only the statutory appellate authority concerned to decide the same based on the material and evidence available on record. The appellate authority is also a fact finding authority and therefore, the petitioner can get redressal from the statutory appellate authority and this Court under Article 226 of Constitution of India, is not the correct forum. If the statements of copies were provided to the petitioner's father before his demise, he could have retracted his statements is concerned, the said contention will have to be necessarily rejected, in view of the fact that under Section 132(A) a request will have to be made by the person from whose custody any books of account or other documents were seized. In the case on hand, as seen from the documents filed along with the typed set of papers, this Court does not find any such request made by the petitioner's father during his life time seeking for copies of sworn statements given by him at the time of search under Section 132(A) of the Income Tax Act. Evidentiary value of loose sheets - Loose sheets picked up during search under Section 132 of the Income Tax Act, falls within the definition of document , mentioned in Section 132(4) of the Income Tax Act and therefore, it has got evidentiary value. Therefore, the contention raised by the learned Counsel for the petitioner that loose sheets seized during the search under Section 132 of the Income Tax Act does not have any evidentiary value, is rejected by this Court. Impugned assessment orders for the year 2018-19 passed without any authority under law - As seen from Section 153(A)(1)(b) of the Income Tax Act, it is clear that the Assessing Officer shall pass order of assessment for six assessment years, immediately preceding the assessment years relevant to the previous year, in which search is conducted and of the relevant assessment year. In the case on hand, the search was conducted on 10.08.2017 and the relevant six assessment years immediately preceding the assessment year relevant to the previous year, in which search was conducted, are 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 and relevant assessment year for the date of the search is 2018-19. Therefore, the contention of the learned Counsel for the petitioner that the assessment orders have been passed by the respondent for the year 2018-19 without authority under Law under Section 153A of the Income Tax Act, is rejected by this Court. For the foregoing reasons, there is no merit in these Writ Petitions, as principles of natural justice has not been violated by respondent, while passing the impugned assessment orders and the consequential demand notices. Therefore, the only remedy available to the petitioner is to file the statutory appeal under Section 264A of the Income Tax Act, which he has failed to exercise till date. The decision relied upon by the learned Standing Counsel for the respondent in the case of Commissioner of Income Tax and others vs Chhabil Das Agarwal [ 2013 (8) TMI 458 - SUPREME COURT] , while dealing with the alternate statutory remedy, is squarely applicable for the facts of the instant case. Writ Petitions are dismissed. 2020 (11) TMI 952 Levy and quantification of penalty and compounding fee - Addition of expenditure incurred as fee for minor deviation from the initially sanctioned plan and to bring the actually constructed structure in conformity with the modified plan as per building bye laws of the assessee on the ground that such payment amounted to penalty not falling under Section 37(1) - HELD THAT:- Admittedly, the first substantial question of law has been answered against the assessee by a Bench of this Court vide order [ 2013 (10) TMI 1545 - KARNATAKA HIGH COURT ] It is also not in dispute that against the aforesaid order, an appeal has been filed which is pending before the Supreme Court. Therefore, in the facts and circumstances of the case, we deem it appropriate to direct the Assessing Officer to give effect to his order with regard to the issue involved in the first substantial question of law Disallowance u/s 14A invoking the provisions of Rule 8D(2)(iii) - HELD THAT:- We we find from the order passed by the Tribunal that the submissions made by the Assessing Officer, particularly in the light of the decision of this Court in the case of CANARA BANK [ 2014 (1) TMI 1586 - KARNATAKA HIGH COURT ] and the decision of the Supreme Court in GODREJ BOYCE MANUFACTURING CO. LTD. [ 2017 (5) TMI 403 - SUPREME COURT ] have not been considered by the Tribunal. The order passed by the Tribunal as well as the Commissioner of Income Tax (Appeals) insofar as it pertains to the issue involved in the second substantial question of law, is hereby set aside and the matter is remitted to the Assessing Officer to decide the issue involved in the second substantial question of law in the light of the decision above. 2020 (11) TMI 951 Nature of expenditure - Revenue expenditure u/s 37(1) or capital expenditure - royalty payment for user of technical know-how and intellectual property rights along with the right to manufacture for a temporary period - HELD THAT:- Distinction between capital and revenue expenditure with reference to acquisition of technical information and know-how has been spelled out in various cases and the primary test to ascertain whether a expenditure is a capital expenditure or revenue expenditure is the same viz., enduring nature test, which means where the expenditure is incurred which gives enduring benefit, it will be treated as capital expenditure.See HONDA SIEL CARS INDIA LTD. [ 2017 (6) TMI 524 - SUPREME COURT] . In the present case from perusal of the relevant clauses of the agreement, it is clear that the assessee is a joint venture company and under the agreement has been granted non transferable licence to manufacture / assemble the Hitachi licence products within the territory using technical know-how furnished by Hitachi and to sell otherwise dispose of the Hitachi licence products. The products shall be sold only under the trade / brand name of Tata Hitachi - even expiry of the 11 years from the date of commercial production, the assessee is entitled to continue the manufacture and sale of Hitachi licence products for the aforesaid term of the agreement. Under the agreement, the assessee has incurred an expenditure which gives him enduring benefit, therefore, the same has to be treated as capital expenditure. AO as well as the tribunal rightly held that payment of royalty made by the assessee is a capital expenditure and is not a permissible deduction under Section 37(1) - Decided against the assessee. 2020 (11) TMI 950 Rectification u/s 254 - Addition u/s 68 - non-consideration of certain facts in Order of the Tribunal - HELD THAT:- Rectification of the earlier order dated 16.3.2016 passed by the Tribunal falls within the four corners of Section 254 and when once the learned Tribunal, particularly, the same Member of the Tribunal admitted that the record or Paper Book before the Tribunal already contained relevant material which was lost sight of and ignored by the learned Tribunal, there was a justifiable cause for recall and rectification of the earlier order and considering the materials which was already on record of the learned Tribunal and the learned Tribunal, therefore, rectified the order and granted the requisite relief by deleting the additions under Section 68 of the Act with respect to the said two Dealers. Contention of Revenue that the said material was never before the original Assessing Authority or before the first Appellate Authority and therefore, the Tribunal has erred in taking the same into account, is rather misconceived. Powers of assessment vested with all the three Authorities including the Appellate Authorities are co-extensive in law and there is no prohibition in law in producing the relevant materials before the permission of the second Appellate Authority viz., the Tribunal. There is no dispute or question raised about the manner in which the said documents were placed before the learned Tribunal. It is only the question whether the learned Tribunal failed to take note of the said relevant evidence while passing the original Appellate Order. Since Tribunal found that the said material was already on the record of the learned Tribunal, when it passed the order on 16.3.2016, we cannot doubt that the material was produced before the learned Tribunal in a doubtful manner. No such objection was raised by the Revenue before the learned Tribunal itself. Therefore, the question of material being on record of the learned Tribunal is beyond the pale of doubt and the finding of the learned Tribunal binds us. Additions under Section 68 - Tribunal, after considering the materials which were already on the record of the Tribunal, like TIN Number, PAN Number, Invoices, etc., of these two Trade Creditors/Sellers and it has granted the requisite relief to the Assessee, we do not find any question of law to be arising on this issue - with regard to the scope of Section 254 we find that ignoring the material already on record on the part of the learned Tribunal was a mistake apparent on the face of record u/s 254 and Tribunal has, in our opinion, rightly recalled its order and rectified the mistake and it has rightly set aside the additions under Section 68 of the Act and they are only findings of facts based on relevant material. - Decided in favour of assessee. 2020 (11) TMI 949 Reopening of assessment u/s 147 - assessee has not disclosed the fact regarding handing over of possession of the property to the developer pursuant to JVA - tribunal holding that disclosure of JVA and advance receipt from JVA amounts to disclosure - whether handing over of possession which would amount to transfer under Section 2(47) liable for capital gains was not disclosed by the assessee? - HELD THAT:- From perusal of the reasons recorded by the Assessing Officer while re opening the assessment, it is evident that Assessing Officer has recorded a finding that due to non disclosure of transaction of joint development agreement entered into by the assessee with M/s Godrej Properties Ltd. on 22.01.2004, towards transfer of land, the income has escaped assessment. AO has recorded reasons for arriving at the conclusion that income has escaped assessment. Once the Assessing Officer records the reasons that he has reason to believe that income has escaped assessment, it confers jurisdiction to re open the assessment. However, the tribunal in a cryptic and cavalier manner without adverting to the reasons assigned by the Assessing Officer held that AO has not mentioned therein anywhere that the assessee has failed to disclose truly and fully all material facts necessary for computing its income due to which the income has escaped tax. Thus, from the perusal of the order passed by the tribunal, it is evident that the order passed by the tribunal suffers from the vice of non application of mind and the finding recorded by it referred to supra is perverse. Decided in favour of the revenue. 2020 (11) TMI 948 Entitled to deduction u/s 10B - Tribunal held that the Appellant's Unit 1 was not entitled to deduction for the assessment year 2008-09, on the basis that the ten consecutive assessment years for the purposes of the said provision would begin from the assessment year 1997-98, when the Appellant commenced manufacture, and not from the assessment year 1999-00 when the Appellant actually started claiming the relief under Section 10B - HELD THAT:- Section 10B of the Act prior to amendment by Income Tax (second Amendment) Act, 1998 with effect from 01.04.1999 granted tax holiday for a period of five years falling within a period of eight years beginning with the Assessment Year in which the manufacture / production of article or things has begun. Once an assessee began manufacture, it could choose the year from which it would start claiming deduction and from that year, it would be entitled for deduction for five consecutive years within a period of eight years. The assessee started manufacture in the Assessment Year 1997-98 but did not claim deduction under Section 10B of the Act, for that year as well as subsequent Assessment Year viz., 1998-99. For the first time, the claim for deduction under Section 10B of the Act was made for the Assessment Year 1999-2000. Ten year period would begin from the year in which assessee first claimed the deduction. Substantial question of law framed by a bench of this court is answered in favor of the assessee and against the revenue in the result, the order of the tribunal insofar as it holds that unit No.1 of the assessee is not entitled to deduction under Section 10B of the Act is hereby quashed. 2020 (11) TMI 947 Disallowance u/s.14A - Tribunal setting aside and remitting the issue to the file of the AO to reconsider in accordance with the guidelines laid down by the Bombay High Court in the case of M/s. Godrej Boyce Manufacturing Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] - HELD THAT:- Singular contention that the Tribunal while passing the impugned order has directed the Assessing Officer to decide the issue in view of the law laid down by the Bombay High Court in the case of M/S. GODREJ BOYCE MANUFACTURING CO. LTD. , [2010 (8) TMI 77 - BOMBAY HIGH COURT] and there are several other judgments on the issue, which have been remitted for consideration before the Assessing Officer and the order of the Tribunal be modified and the Assessing Officer be directed to decide the issue remitted to him as per the extant position of law. The aforesaid submission has not been fairly opposed by learned counsel for the assessee. It is not necessary for us to deal with the substantial questions of law framed by this Court. As agreed to by learned counsel for the parties, the order dated 18.07.2012 passed by the Tribunal is modified and the Assessing Officer is directed to decide the issue remitted to it in accordance with the extant legal position 2020 (11) TMI 946 Entitlement for prior period expenses and expenditure on excise transport fees - not claimed in original return and assessing authority has not made any addition in this regard or otherwise - whether the Tribunal is right in law in not remitting back the matter back to assessing authority to consider the issue as same was not adjudicated earlier? - HELD THAT:- It is well settled in law that Tribunal is the final fact finding authority and this Court in exercise of powers under Section 260A of the Act can interfere with the findings of fact only when the same are shown to be perverse - See SUDARSHAN SILKS SAREES VS. CIT [ 2008 (4) TMI 5 - SUPREME COURT ] Rule 46A(3) of the Income Tax Rules, 1962 applies to the appellate authority namely Commissioner of Income Tax (Appeals) and not the Income Tax Appellate Tribunal. It is not in dispute that the assessee had produced the material which it had produced before the Tribunal, even before the Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) failed to take note of the material produced by the assessee and did not call for the remand report. The Supreme Court, in NATIONAL THERMAL POWER [ 1996 (12) TMI 7 - SUPREME COURT ] while dealing with the power of the Tribunal, held that Tribunal may pass such orders as it thinks fit after giving both the parties an opportunity of being heard and there is no reason to restrict the power of the Tribunal only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Tribunal recorded the finding that the expenses were incurred during the relevant Assessment Year and therefore, the claim was allowable, by placing reliance on the decision of Supreme Court in 'KEDARNATH JUTE MFG. COMPANY LIMITED Vs. CIT' [ 1971 (8) TMI 10 - SUPREME COURT ] The aforesaid finding is a finding of fact which is based on meticulous appreciation of evidence on record. The Tribunal, by placing reliance on the decision of the Supreme Court in BHARAT EARTH MOVERS, [ 2000 (8) TMI 4 - SUPREME COURT ] has held that a business liability should arise in the accounting year and it should be capable of estimated with reasonable certainty and if these requirements are satisfied, the liability cannot be said to be contingent one - The only ground which has been taken is that the matter ought have been remitted by the Tribunal to the Assessing Officer. Since the Commissioner of Income Tax (Appeals) has dealt with the claims of the assessee on merits, therefore, the Tribunal has rightly dealt with the claims of the assessee on merits and there is no need of remand in the fact situation of the case. - Decided in favour of assessee. 2020 (11) TMI 945 Amortisation and brokerage expenses with respect to securities of (held to maturity) HTM category - Allowable revenue expenses or not? - whether loss on sale of securities of (held to maturity) category is allowable as a deduction? - HELD THAT:- The finding of fact is to the effect that securities are held as stock-in-trade and that the income from sale there from is offered to tax as revenue. In the light of the admitted facts as seen from the order of the authorities, the expenditure incurred by the assessee towards broken 4 period is liable to be allowed as revenue expenditure. There is no infirmity in the order of the Tribunal in this regard. The question stands answered in favour of the assessee, following the judgment of the Bombay High Court in American Express International Banking Corporation Vs. CIT [ 2002 (9) TMI 96 - BOMBAY HIGH COURT] - Decided against revenue. 2020 (11) TMI 944 Disallowance of godown rent - assessee has neither filed copy of rent agreement in support of tenancy nor filed a confirmation in support of the claim - CIT(A) noted that the confirmation has been filed without the details of PAN No., complete address and identity of the person, thus confirmed addition - HELD THAT:- The entire claim of payment of rent cannot be denied when the assessee is utilizing godown for his business purposes. Though the godown has been owned by the father of the assessee however the liability to pay rent cannot be denied merely because of relationship between the tenant and the landlord being son and father. Thus without conducting any enquiry either by the AO or by the CIT(A) through remand report, the disallowance of the entire claim of godown rent is not justified. Once the assessee has produced the confirmation of the godown rent payment, the same cannot be rejected without conducting a proper enquiry. Hence, in the facts and circumstance of the case, this issue is remanded to the record of the AO to conduct a further enquiry and verify the claim by examining the recipient of the claim. Disallowance of bonus to staff - assessee has failed to establish the claim when neither the bonus register nor the bills and vouchers were produced by the assessee - CIT(A) has granted part relief and restricted and allowed the claim of the expenditure partly - HELD THAT:- CIT(A) has accepted the fact that the department has accepted the claim of bonus paid to the staff in the earlier year. Once the bonus paid to the staff in the earlier year is accepted then the claim for the year under consideration cannot be restricted based on the criteria of the amount paid in the earlier year. Therefore, the restriction of the claim by the CIT(A) is not based on a proper criteria or some reasonable basis. Accordingly, the disallowance of ₹ 30,326/- is set aside and the claim of the assessee is allowed. 2020 (11) TMI 943 Disallowance u/s.14A r.w.r. 8D - Computation of deduction - HELD THAT:- AO had duly recorded his satisfaction as to why the computation mechanism provided by the assessee is incorrect and also had applied the computation mechanism provided in Rule 8D(2)(iii) of the Rules by considering all the investments. Special Bench of Delhi Tribunal in the case of Vireet Investments vs. ACIT [ 2017 (6) TMI 1124 - ITAT DELHI] categorically held that only those investments which had actually yielded exempt income should be considered for the purpose of working out the disallowance under third limb of Rule 8D(2) of the Rules. Assessee had furnished the workings for the same on without prejudice basis in page 7 of the paper book. The ld. AO is directed to go through the same and re-compute the disallowance u/s.14A by considering only those investments which had actually yielded exempt income under Rule 8D(2)(iii) of the Rules. On such re-computation, the ld. AO is also directed to reduce the sum of ₹ 5,40,000/- being the amount already disallowed voluntarily by the assessee. Ground Nos.1 1.3 raised by the assessee are allowed for statistical purposes. Deduction of education cess u/s.37(1) - additional ground raised by the assessee - HELD THAT:- As in the light of the decision of the Hon ble Supreme Court in the case of NTPC Ltd [ 1996 (12) TMI 7 - SUPREME COURT] , the additional ground raised by the assessee is admitted and taken up for adjudication We find that the issue raised in additional ground is squarely covered in favour of the assessee by the decision in the case of Sesa Goa Ltd., vs. JCIT [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] wherein it was categorically held that the expression cess ought not to be read or included in the expression any rate of tax levied as appeared in Section 40a(ii) - Additional ground raised by the assessee is allowed. 2020 (11) TMI 942 Excess rent paid to the related party - Scope of the term Relative - Disallowance invoking the provision of section 40A(2)(b) - Whether expenditure incurred by the assessee is purely for the purpose of business and payment of Rent has not been found to be excessive or unreasonable? - HELD THAT:- As assessee has contended that the recipient at Serial No.(1) and (3) namely Alka Bajaj and Preeti Bajaj are sister-in-law of the assessee and therefore do not fall in the definition of relative as provided u/s 2(41). This fact is not disputed by the Revenue and therefore, the payment to these two persons would not fall in the ambit of provisions of section 40A(2) when the transaction is not with the relative of the assessee as provided u/s 40A(2)(b)(i) -There is no dispute that the definition of the term relative provided u/s 2(41) of the Income Tax Act. Therefore the sister-in-laws of the assessee are not included in the said definition of relative u/s 2(41) of the Income Tax Act. Since this definition provided u/s 56(2) is only for the said clause of section 56(2) therefore, the same cannot be applied in respect of provisions of section 40A(2) when a general definition of term relative is provided u/s 2(41) of the Act. Hence, the provisions of section 40A(2) cannot be invoked in respect of transaction of payment of rent to Alka Bajaj and Preeti Bajaj who are not falling in the definition in term of relative provided u/s 2(41) . Excess /unreasonable payment to the specified person - Quantum of rent cannot be considered in absolute terms as to whether it is excess or unreasonable without considering the rate of rent paid by the assessee in terms of per square feet or per square meter. Further the comparison of the rent paid by the assessee is also depends upon various factors being the locality of the each property if the same are not situated at one place and therefore there cannot be a standard criteria of fair market rent to be applied for all the properties without considering the criteria such as locality, nature of property and other advantage or disadvantage attached to a particular property. Hence, the fair market rent required to be determined by considering all these factors and by bringing on record the comparable cases for each of the property as per their location, category and advantage or disadvantage attached to them. The AO failed to conduct the minimum enquiry to ascertain the fair market rent of these properties. Once the transaction of payment of rent is not found to be bogus or ingenuine then the disallowance of the expenditure u/s 40A(2)(b) is not warranted in the absence of a definite finding that the payment made by the assessee is excessive or unreasonable in comparison to the fair market rent. When the AO has not conducted any enquiry to determine the fair market rent so as to hold that the payment made by the assessee on account godown/shop rent is excessive or unreasonable, the disallowance made by the AO is contrary to the provisions of section 40A(2) - Decided in favour of assessee. 2020 (11) TMI 941 Addition u/s 68 and 69 - CIT-A deleted addition admitting additional evidence - HELD THAT:- There is no proper averment by the Assessing Officer with regard to the admission of additional evidences particularly when huge additions have been made which included the amount added u/ss. 68 69 which are carried forward from the earlier years, and this fact is clearly borne out from the material already on record before Assessing Officer. The additional evidences were in the form of confirmed copy of ledger accounts, confirmations and bank statement, etc. Since, as brought on record by the Ld. CIT(A) there was a clear violation of natural justice by the Assessing Officer, therefore, we hold that Ld. CIT(A) was justified in not only admitting the additional evidence but has also given due opportunity to the Assessing Officer to examine the same. The remissness on the part of the Assessing Officer cannot partake the principles of natural justice. Accordingly, ground no.1 as raised by the Revenue is dismissed. Addition on account of share capital and share premium - CIT(A) has deleted the addition by observing that addition u/s.68 cannot be made, because the amount of ₹ 3 crore are being carried forward from earlier years which is evident from letter filed before the Assessing Officer and there has been no increase in paid up share capital - HELD THAT:- CIT-A fact findings has not been controverted by the Assessing Officer and accordingly, the addition made u/s.68 was deleted. On these facts, we do not find any infirmity either in law or on facts because such an addition cannot be made u/s.68 in the relevant Assessment Year. Accordingly, ground no.2 as raised by the Revenue is dismissed. Unsecured loan addition - HELD THAT:- Most of the unsecured loan where in fact paid back during the year and only amount of ₹ 2,88,000/- was received in this year as fresh loan. Ld. CIT(A) examined the genuineness of fresh loan of ₹ 2,88,000/- and found that identity and creditworthiness of the lender M/s. DMC Education Ltd. and also the genuineness of the transaction has been substantiated by the assessee by way of various documentary evidences. The aforesaid finding of the Ld. CIT (A) based on proper appreciation of facts cannot be tinkered without any contrary material to rebut. Accordingly, the finding of the Ld. CIT (A) is upheld. Undisclosed investment in equity instruments - HELD THAT:- Out of total addition of ₹ 1,31,27,449/-, amount of ₹ 48,27,449/- pertains to the earlier year which is not in dispute and accordingly the Ld. CIT(A) has rightly deleted the said amount from the addition made by the Assessing Officer. With regard to the balance amount, we find that there is a clear cut finding based on material on record that investments have been made by the assessee through proper banking channels and each and every entry have been duly explained from the books of account and bank statement. Once the investments have been made through cheques duly disclosed in the books of account, the same cannot be added as investment made outside the books or from undisclosed sources u/s.69. Therefore, the order of the Ld. CIT(A) is upheld and accordingly the grounds raised by the Revenue is rejected. 2020 (11) TMI 940 Deduction u/s 80I 80 IA - whether as appellant is engaged in manufacture of LPG for which 80%(appx.)of gas was processed, the authorities below erred in holding that appellant is not an industrial undertakings engaged in manufacture or production of different article or thing? - disallowance of 50% of LPG profits on an estimated basis - HELD THAT:- As decided in own case [ 2020 (10) TMI 1125 - ITAT DELHI] issue in favour of assessee. Amortization of leasehold expenses - amortization of leasehold expenses paid by the assessee to various local government authorities for lease on rent. The AO was of the firm belief that the same is of capital in nature and hence, not allowable - HELD THAT:- We find that this issue is no more res integra as the same has been decided against the assessee and in favour of the revenue by the Hon ble Delhi High Court in assessee s own case in assessment year 1997-98 [ 2012 (11) TMI 325 - DELHI HIGH COURT] - Since the issue has been decided against the assessee by the Hon ble Jurisdictional High Court, this ground is accordingly dismissed. Taxation of sales and interest income relating to new plan - As during the relevant previous year a new plant namely LPG plant at Pata was commissioned - HELD THAT:- Assessee has rightly netted off the expenditure during trial run with the income of trial run and the balance has been rightly transferred to capital work in progress. We accordingly, direct the AO to delete the revenue of ₹ 15.09 crores from the head income from other sources Deduction of the provision of wage revision - HELD THAT:- As decided in GAIL INDIA LTD. VERSUS CIT, DELHI-IV [ 2015 (4) TMI 152 - ITAT DELHI] Provision for wages made towards impending pay revision, should be allowed as a deduction. The Ld. CIT(A) has not made any effort to prove that the quantum of provision made is unrealistic or imaginary. Under these circumstances we hold that the claim of the assessee is allowable Expenditure on new project - part of its business of exploration and production of gas, explores, on a regular basis, various business opportunities and possibilities for further developing the existing business - HELD THAT:- There is no dispute that the assessee is engaged in the business of exploration, production and distribution of gas. In furtherance, of its business ONGC was engaged to collect seismtic data for different contract areas for which ONGC incurred expenditure of ₹ 35.80 lacs which was reimbursed by the assessee and claimed as expenditure - authorities below have erred in treating the same as being incurred in respect of new line of business as the same was very much for the existing business. A similar view was taken by the Tribunal in assessment year 1996-97 (Supra). Therefore, we find merit in the claim of the assessee and accordingly direct the AO to delete the addition Claim of expenditure of technical / consultancy fees in respect of newly commissioned plant - a new plant namely UP Petrochemicals Plant at Pata was commissioned - HELD THAT:- Since the expenditure of ₹ 8.03 crores has been incurred after the commissioning of the plant and since this expenditure was necessary for the smooth functioning of the operation of assessee and the same had been incurred to overcome certain initial technical glitches. It is definitely of revenue in nature. We accordingly direct the AO to delete the addition of ₹ 8.03 crores. The ground allowed Disallowance made u/s. 14A - AO has applied the adhoc interest @12% per annum for computing the disallowance HELD THAT:- AO has nowhere examined the availability of own funds with the assesee. In our considered opinion, if sufficient interest free funds are available and even if there are borrowed funds, the presumption would be that the investment have been made out of own funds. Our view is fortified by the decision of Reliance Utility and Power [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] . However, we are of the view that certain administrative expenses has to be disallowed for earning this exempt income. In our considered opinion, the disallowance of ₹ 5 lacs should meet the end of justice. Disallowance on account of foreign exchange fluctuations - HELD THAT:- In the present case it is an admitted fact that the addition to the actual cost was made on account of exchange rate variation and not on account of acquisition of any capital fixed assets. In our considered opinion, the addition to the actual cost of fixed assets is amended by the provisions of section 43A - section 43A nowhere states that where the cost of fixed assets is increased on account of any exchange rate variation there is deemed acquisition of any fixed asset. Considering the facts in totality, we direct the AO to allow the claim of the assessee. Payment in connection with LAN/WAN - Allowable revenue expenses - HELD THAT:- As relying on EMPIRE JUTE COMPANY LIMITED [ 1980 (5) TMI 1 - SUPREME COURT] the said consultancy payment made by the assessee to EIL was to enhance the existing infrastructure of the assessee in IT segment. This was definitely for the benefit of the management to conduct the business of the appellant in the more efficient manner. We are therefore, of the considered view that such consultancy fee should be allowed as revenue expenditure and accordingly we direct the AO to do the same Expenditure on right of use - HELD THAT:- Only the right to use of land is acquired by the Central Government and not by the appellant. The assessee is merely incurred the expenditure to obtain the right to use i.e. right to lay the pipeline and nothing more. No title or interest has been passed from the owners to the assessee. Therefore, on the given facts the said expenditure deserve to be allowed. We accordingly direct the AO to delete the impugned addition. The ground no. 12 is allowed. Additional grounds relating to claim of depreciation on the expenditure treated as capital in nature become infructuous. Disallowance of payment of tax under section 43B - HELD THAT:- Assessee has claimed deduction of expenses aggregating to ₹ 7.95 crores out of the said payment tax amounting to ₹ 6.67 crores has been paid by the assessee before the due date of filing of return. Therefore, to this extent, no disallowance should be made as laid down by the Hon ble Supreme Court in the case of Allied Moto [ 1997 (3) TMI 9 - SUPREME COURT] . We further find that assesee suo moto disallowed ₹ 1,19,56,547/- u/s. 43B of the Act, therefore, no further disallowance need to be made. This additional ground is accordingly allowed. Deduction on account of prior period adjustments - HELD THAT:- We are of the view that when there is no revenue leakage whether the expenditure is allowed during the year under consideration or in the year of claim should not make any difference and even if such expenditure are allowed during the year and it will result into the adjustments being made in subsequent assessment years that will only increase unnecessary paper work and unnecessary pressure on the revenue as well as assessee. Being tax neutral and revenue neutral, we direct the AO to allow the expenditure in the year of its claim. The additional grounds are treated as allowed. Depreciation on Jamnagar-Loni-Pipeline and Gandhar LPG Plant - AO was of the opinion that the work of Jamnagar Loni Pipeline was completed after 31.3.2001 and the same was not ready and not put to use on or before 31.3.2001 - HELD THAT:- Assessee has successfully commissioned the Jamnagar Loni Pipeline and the LPG Gas Processing Plant Gandhar and is very much eligible for claim of depreciation on the capitalised cost thereon. We accordingly, direct the AO to allow the depreciation of Jamnagar Loni Pipeline and Gandhar Plant. Disallowance of payment of penalty - HELD THAT:- Facts on record show that this amount was capitalised alongwith cost of project and transferred to IEDC account as it was incurred before the completion of the project. However, the AO without applying his mind disallowed the same stating that penalty paid is not allowable expenditure. We are of the considered view that since the assessee has never claimed this amount of expenditure, there is no question of any disallowance. We accordingly, direct the AO to delete the addition. Prior period adjustments - AO was of the opinion that this being prior period expenditure cannot be allowed in the year under consideration - HELD THAT:- Such disallowance and claim in the year of incurring the liability would add much add paper work and unnecessary rounds of assessment when the effect is tax neutral and revenue neutral. We accordingly direct the AO to allow the expenditure in this year. It is to avoid unnecessary ground work. Interest levied u/s. 234C - HELD THAT:- As cheque no. 985562 dated 14.9.2001 was deposited and acknowledged by the Bank on 15.09.2001 which is the due date of payment for the advance tax. Merely because the amount was credited in the Government Treasury on 17.9.2001 since 16.09.2001 was a Bank Holiday, it cannot be considered that assessee has defaulted any payment of advance tax. On given facts, we direct the AO to delete the interest levied u/s. 234C Levy of interest u/s. 234D - HELD THAT:- We are in the assessment year 2002-03 and section 234D was inserted in the Act w.e.f. 01.06.2003. Since the provisions is not applicable in the year under consideration, hence, there cannot be any levy of interest u/s. 234D. 2020 (11) TMI 939 TP Adjustment - adjustment on account of adjustment of software development services segment for exclusion of only two comparables namely Infosys technologies Ltd and Tata Elexi Ltd - HELD THAT:- Infosys technologies Ltd - In view of huge turnover of the comparable company, relying on the decision of Pentair water private limited [ 2016 (5) TMI 137 - BOMBAY HIGH COURT] and Agnity India technologies Ltd [ 2013 (7) TMI 696 - DELHI HIGH COURT] the above comparable is directed to be excluded. Tata Elxis Ltd - comparable company is a design company that blends technology, creative and engineering to help customers transform ideas into world-class products and solutions. DRP though has considered the above functions of the comparable company however it is directed that the comparable company provides software development services which are similar to the IT services provided by the assessee. In view of this we find that the direction of the learned dispute resolution panel is not based on the appreciation of the functions and the product profile of the comparable company. In view of this, we direct the learned transfer pricing officer to exclude the above comparable. Adjustment on account of the overdue receivable from the associated enterprises - working capital adjustment allowed - HELD THAT:- When working capital adjustment is granted to the assessee there is no requirement once again of making any adjustment on account of the overdue receivable from associated enterprises as the sundry debtors outstanding of the assessee includes outstanding receivable from associated enterprise. In view of this, we direct the learned transfer pricing officer to delete the adjustment on account of outstanding receivable from associated enterprise. 2020 (11) TMI 938 Exemption u/s 10A - denial of exemption as no evidence for software export made through STPI and clearance received from STPI given - HELD THAT:- Assessee has discharged the burden with regard to software development and export of software services by furnishing necessary information to the STPI and also before the AO. Merely because of some defects, the same cannot be brushed aside and deny the exemption claimed by the assessee u/s 10A - It is for the department to establish that the assessee has not made software exports or prove that the information furnished by the assessee is false or incorrect. No such exercise was done by the department. No adverse observations were made by the STPI with regard to exports. Though PF, ESI payment does not establish the salary payments, they definitely show that the assessee has engaged the personnel for carrying the work - AO has not conducted any enquiries either with the clients of the assessee or with the STPI to show that the assessee has neither developed the software nor exported the same to the foreign company. STPI is a Government Agency which monitors the activities of the assessee company and collecting timely reports for export of software. The very fact that the STPI has permitted expansion of operations shows that the assessee company was engaged in software development which is proposed for expansion of the existing activity at a broader level. All these facts show that the assessee is carrying on software activity in the STPI and made the exports. Once there is evidence for software export made through STPI and clearance received from STPI by softex forms and the receipt of foreign exchange remittances, it is for the department to bring evidence to deny the exemption u/s 10A of the Act. In the instant case, no such evidence was brought on record by the AO. - Decided in favour of assessee. Disallowance made u/s 14A - scope of assessment u/s 143(3) r.w.s. 153A - HELD THAT:- As discussed while discussing the issue of deduction u/s 10A, we have observed that no incriminating material was found in respect of the claim made u/s 10A - Similarly, during the course of search, no evidence was found relating to income derived by the assessee u/s 14A - For the A.Y. 2009-10, the time limit for issue of notice u/s 143(2) got expired and the assessment became completed. Therefore, we hold that the disallowance made by the AO u/s 14A is outside the scope of assessment u/s 153A r.w.s. 143(3). Accordingly, we set aside the orders of the lower authorities and delete the addition made by the AO. Appeal of the assessee for the A.Y. 2009-10 in respect of addition made u/s 14A stands allowed. Disallowance @0.5% of the average investment u/s 14A - HELD THAT:- In the instant case, there was no dispute that the assessee has earned dividend income and provisions of Rule 8D attracts. Accordingly, the AO made the disallowance applying Rule 8D, hence, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The appeals of the assessee on this ground is dismissed. Addition being opening balance of the advances received by the assessee - HELD THAT:- The assessee had admitted the income, stating that the advances were no more payable to the customers. The assessee had admitted the income u/s 132(4) and subsequently filed the return of income and paid the taxes. No addition was made by the AO to the returned income. Therefore, there is no grievance to the assessee. Having paid the taxes and filed the return of income, if there is mistake in the return of income , the assessee ought to have filed the revised return of income within the time allowed under the Act. Alternatively, the assessee ought to have taken remedial measures by filing the petition u/s 264 before the Ld.CIT(A). In the instant case, the assessee has neither agitated the addition before the AO nor filed the revision petition u/s 264 of the Act or the revised return. It is also observed from the order of the Ld.CIT(A) that the assessee has not retracted the statement given u/s 132(4) before the AO. All the above facts show that the assessee has admitted the income voluntarily having belief that the advances constitute income. Therefore, we are of the view that filing additional ground before the CIT(A) seeking relief was nothing but an afterthought. The assessee has not established the fact that the admission was made erroneously with supporting evidences regarding the existence of the liability. During the appeal hearing, the Ld.AR pressed for relief of ₹ 4.23 crores. No evidence was placed by the Ld.AR to support the claim of outstanding advance. For a query from the bench, the Ld.AR admitted that there is no evidence of payment of ₹ 4,23,00,000/- to the foreign company subsequently. No reason to interfere with the order of the Ld.CIT(A). Accordingly, we hold that the Ld.CIT(A) rightly confirmed the addition and the same is upheld. The appeal of the assessee on this ground is dismissed. Addition of balance amount of the opening balance - HELD THAT:- In the instant case, the AO neither brought any evidence to disprove the genuineness of outstanding liability nor found any material evidencing that the liability was written off by the assessee or the company has waived the advance. No material was brought on record by the AO to show that the liability was not in existence. The AO also failed to establish that the liability outstanding was related to the deduction or loss claimed by the assessee with regard to trading liability in respect of the earlier years. Therefore, the addition made by the AO is unsustainable. Difference of turnover in STPI and the turnover declared in the P L account - HELD THAT:- AO did not bring any evidence to show that the assessee has suppressed the turnover by reconciling the turnover of the assessee with the invoices raised and the turnover declared to the STPI. In the instant case the books of accounts were audited and the entire sales were export sales and no domestic sales / cash sales by the company. No evidence was brought on record to show that the assessee has received the sums over and above the sales admitted in the return of Income. The turnover is supported by invoices, therefore, there is no reason to suspect the turnover admitted by the assessee in the books of accounts. Addition made of notional interest on advances made - HELD THAT:- The assessee submitted that the amounts were given as advances for purchase of property and subsequently, the lands were also purchased and registered in respect of some properties. It was also explained that in the case of M.Durga Reddy, due to some problem, the sale deed was cancelled and the amount was received back. In the case of Veenus Developers, due to defective construction, the sale agreement was cancelled. The above explanation of the assessee shows that the amounts were advanced for acquiring the properties and the AO misdirected himself because of the promissory note of M.Venkata Narayana found bearing interest. No material was found by the department evidencing the charging of interest on amounts advanced by the assessee or indicating the finance business. The AO did not make any cross verifications with the borrowers of money to support the case of department. No evidence was brought on record to show that the assessee was receiving interest. In the absence of any material to show that the assessee was receiving interest, we have no reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed. Charging of notional interest on outstanding advances - HELD THAT:- Assessee has to pay back the deposits or the amounts collected from unsuccessful candidates to the respective candidates. Merely because of operations, the company is ceased, the company cannot escape the liability and the AO is also not permitted to treat the same as income. Once receipt is accepted and shown as liability, unless, it is established that the amounts need not be refunded to the unsuccessful candidates or the liability is proved to be bogus, the AO is not permitted to tax the same amount. Since the names of the candidates are available, the AO ought to have made enquiries with the candidates and made the addition in respect of the candidates who surrendered the amounts. Since no such evidence was brought on record, the addition made by the AO is unsustainable, hence, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. 2020 (11) TMI 937 Addition u/s 68 - Loan taken from shell company - HELD THAT:- Assessee is engaged in the business of providing security personals consisting of security guards to provide security to various industries, individuals etc. During this year, Assessee has taken unsecured loans from 7 parties to the extent of ₹ 6 crores and the details are already placed on record. All these companies gave the unsecured loans through the banking channel and the assessee has already declared the details of the parties in its tax audit report with the details like address, PAN and details of loan taken. In order to verify, the assessing officer issued the show cause notice and summons to all the parties. Assessee has submitted all the relevant information required to substantiate that the transactions are genuine. The assessee has received the funds through banking channel and recorded the same in its books of account and filed relevant information in order to prove the identity by filing PAN and address of the parties, in few cases the parties have moved their place of work and upon enquiry assessee was able to bring on record the present address. On record that the parties are in existence as per the ROC records and they are traceable with the fact that they ve filed the PAN detail and letter of confirmation. As discussed above, as long as the assessee submits the PAN and other details to trace the parties from whom assessee has taken unsecured loans and as per the financial records, all the parties are in a position to lend money to the assessee and the transactions are routed thru banking channel and there are no findings on record of the revenue that there is no involvement of cash deposits in the immediate past to the unsecured loan transaction. There is no dispute with regard to utilization of funds in the business and applied for the business purpose. As long as it is utilized in the business and the assessee has demonstrated that it has repaid the same along with the relevant interest, it does demonstrate that the present transaction made by the assessee is proper and for the purpose of business, therefore the transaction can only be treated as genuine business transaction. The genuineness has to be seen in two aspects, one, whether it is sourced from the concerns, who can be traced and second, whether it is sourced for the business requirement and utilized for the purpose of business. In the given case, the parties can be traced and it is utilized for the purpose of business. Therefore all the criteria mentioned in the provisions of section 68 were fulfilled by the assessee and we do not agree with the tax authorities who assessed the income of the assessee with the presumption and assumption, they also applied criteria for assessing the introduction of share capital and premium with the unsecured loan taken by the assessee, further applying the concept of human probabilities in the present transaction is far-fetched and it demonstrate that they rely on presumptions. We allow the grounds raised by the assessee relating to addition u/s 68 - Decided in favour of assessee. 2020 (11) TMI 936 Penalty @30% on undisclosed income u/s 271AAB - No search was conducted u/s 132 but only survey u/s 133A was conducted - HELD THAT:- From plain reading of section 271AAB, it is observed that for invoking penalty u/s 271AAB, search u/s 132 is required to be initiated, whereas in this case, there is no evidence put forth by the department initiating search u/s 132 of the act Since no search was conducted u/s 132 and only survey u/s 133A was conducted and the assessment order was passed u/s 153C r.w.s. 143(3) of the act. Therefore, we hold that the Ld.CIT(A) has rightly cancelled the penalty levied u/s 271AAB of the Act and we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. - Decided in favour of assessee. 2020 (11) TMI 935 Levy of penalty u/s 271D - assessee had received the amounts in cash as loan from HUF - CIT(A) found that the transactions between the assessee company and the HUF were trade transactions and the same cannot be held as loan between the assessee and the HUF - sufficient and reasonable cause for receiving the cash from HUF - HELD THAT:- It is undisputed fact that HUF is undertaking gold savings scheme and has been collecting the subscriptions from subscribers and advancing amount to the company for jewellery redemption purchases made by scheme subscribers. Though it is placed under the unsecured loans, prima facie, it is business transaction since, HUF has deposited the amounts with the assessee company for redemption of jewellery purchases under the scheme. Therefore, though the assessee has placed the same as unsecured loans, the cash receipts were trade transactions. Department has not brought on record to show that the cash receipts accepted by the company do not represent the scheme subscriptions for redemption of the jewellery as stated by the assesse. The bank transaction stated to have been examined by the Ld.CIT(A) and given a finding that the company has made payments on behalf of the HUF. The same was not controverted by the Ld.DR during the appeal hearing. All the deposits were settled with sale of jewellery or the account transfers and thus proved to be trade transactions. The department also did not bring any material to show that the cash received by the company was subsequent to the revival of the bank account in the case of HUF and the transactions were not the trade transactions - there cannot be any better reason for receipt of cash deposits than the death of Karta or Managing Director of the company. It is also not disputed that all the cash receipts were duly accounted in the books of the assesse as well as the HUF. There were no unaccounted transactions. Therefore, we are of the view that there was a sufficient and reasonable cause for accepting the cash deposits. - Decided against revenue. 2020 (11) TMI 934 Revision u/s 263 - scrutiny assessment - as per CIT undisclosed income, the excess stock and excess cash required to be brought to tax @60% as per section 69 r.w.s. 115BBE, however AO taxed the same at normal rates - HELD THAT:- On going through the assessment order, we find that though the AO made the addition of as undisclosed income, no addition was made u/s 69 - AO did not invoke section 68/69 separately in the assessment order. The income required to be taxed @60% in case the undisclosed income representing section 68 to section 69C of the Act. In this case, the AO has not invoked any such section. AO called for the information regarding excess stock and excess cash and also called for explanation of the assessee as to why both the items should not be taxed u/s 69 applying the tax rate @60%. The assessee furnished explanation and explained that both the items constitute business income but not unexplained income within the meaning of section 69 of the Act, hence submitted that the same to be taxed at normal rates. AO completed the assessment after considering the explanation offered by the assessee. In the explanation, the assessee has explained as to why the same should be treated as business income and the provisions of section 69 and section 115BBE are not applicable. The assessee also relied on various case laws supporting his argument as to why the excess stock/cash should be treated as business income. Therefore, it is apparently clear from the records that though the AO did not mention specifically with regard to verification of the issues, the AO examined the issues in detail, considering the facts and the case laws relied upon by the assessee, taken a conscious decision to assess the excess stock/cash as business income instead of unexplained investment u/s 69 of the Act. Therefore revisiting the same issue which was already considered by the AO constitutes difference of opinion and on difference of opinion revision u/s 263 is not permissible. See SPECTRA SHARES SCRIPS PVT. LTD. [ 2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT] and G.V.R. ASSOCIATES [ 2017 (4) TMI 393 - ITAT VISAKHAPATNAM] - Decided in favour of assessee. 2020 (11) TMI 933 Denying deduction u/s 54F(3) - as per the joint development agreement dated 29/07/2010, the transfer of land given for development purpose amounts to transfer within the meaning of section 2(47) and thus development agreement dated 29/07/2010 is antivirus to the provisions of section 54F(3) - assessee stressed that she has purchased only land to construct a residential house and transferred the said land to the developer, therefore ld.AR argued that the assessee has not violated any of the provisions of section 54 F(3) - HELD THAT:- From combined reading of the development agreement, MoU and facts placed before us it is understood that the assessee has sold the 03 pieces of land and constructed a residential unit within the time specified in section 54F - As per the statement of facts placed before CIT(A) the entire transaction was completed within the time allowed u/sec. 54Fwhich clearly reveals that there were no separate transactions. By any stretch of imagination AC shed of 50 sq.ft. cannot be stated to be a residential house and at best it can be called as a security guard s room for guarding premises. Residential unit comprises of kitchen, bed rooms, hall, toilets etc. Therefore we are of the considered view that the assessee has sold the 03 pieces of land and constructed a single residential unit comprising of 3296 sq.ft. as a duplex unit as mentioned in development agreement and MoU for which the assessee had spent a sum of ₹ 65,88,000/- + registration charges and additional sum of ₹ 40.00 lakhs as per MoU dated 29/07/2010 aggregating to ₹ 1,11,47,230/- and the assessee is entitled for deduction u/sec. 54F and withdrawal of deduction allowed u/sec. 54F by the AO is bad in law. Allow the appeal of the assessee. 2020 (11) TMI 932 Bogus purchases u/s 69C - CIT-A restricted the addition to 25% of the alleged bogus purchases - HELD THAT:- As relying on own case [ 2018 (2) TMI 346 - ITAT MUMBAI] we direct the ld. AO to adopt the profit percentage @12.5% minus gross profit already declared by the assessee with regard to the disputed purchases. No arguments by way of any contrary decisions were submitted by the ld. DR before us with regard to the impugned issue. Accordingly, the grounds raised by the assessee as well as by the revenue on merits are disposed off in the aforesaid manner. 2020 (11) TMI 931 Denial of carry forwarding of short-term capital loss - assessee s case is that the assessee was never heard on this aspect and was never asked to produce any material in support of their claim - HELD THAT:- Refering to submission on behalf of the assessee that given an opportunity, the assessee would cooperate with AO for verification of the claim of the assessee in respect of carry forward short term capital loss thus the assessee is entitled to an opportunity to submit the material, if any, for verification of the entitlement to carry forward short term capital loss and therefore, we set aside the impugned finding of the ld. CIT(A) and remand the matter to the file AO for verification of the claim - Decided i favour of assessee for statistical purposes. Unexplained investment - assessee has been contending before the authorities below that two items of investment in Reliance Mutual Fund was wrongly shown in the AIR received by the department and it can be an inadvertent mistake by the person providing information in AIR - HELD THAT:- Assessee file the confirmation dated 15.06.2008 from Reliance Mutual Fund to say that the assessee has not made any investment of ₹ 8.00 lacs on 02.04.2004 and ₹ 8.5 lacs on 25.08.2004. This establishes that some mistake had crept in while providing information in AIR by the person and the confirmation issued by Reliance Mutual Fund confirms the same. Since, there is no investment to the tune of ₹ 8.00 lacs and 8.5 lacs on 02.04.2004 and 25.08.2004, no addition could be made concerning the same.Allow ground No. 2 of the assessee and direct the deletion of this addition. Disallowance towards club expenses - assessee claims to have incurred legitimately and thus eligible as revenue deduction - as per AO disallowance made as Tax Auditors of the assessee company pointed out these expenses to be personal in nature - HELD THAT:- Assessee is a company and there cannot be any personal expense, and in view of the decision in the case of CIT vs. United Glass Manufacturing Company Limited [ 2012 (9) TMI 914 - SUPREME COURT] the club expenses of a company are allowable as revenue deduction. We, therefore, while respectfully following the decision of Hon ble Supreme Court, allow the expenses and direct the Learned Assessing Officer to delete these expenses. Disallowing the provision for bad and doubtful debt and advances and provision for deferred tax by adding it to the book profit u/s. 115JB for MAT - CIT(A) confirmed this addition by referring to the retrospective amendment to Section 115JB w.e.f. 01.04.2001 by way of Finance Act, 2008 - HELD THAT:- Though the assessee placed reliance on certain decisions like AppolloTyres Ltd. Vs. CIT [ 2002 (5) TMI 5 - SUPREME COURT] and HCL Comnet Systems Services Ltd. [ 2008 (9) TMI 18 - SUPREME COURT ] in view of retrospective amendment to section 115JB, we cannot find fault with the findings of the ld. CIT(A) in confirming these additions. 2020 (11) TMI 930 Dismissal of appeal for non prosecution by CIT(A) - as argued CIT-A failed to apply his mind to the issues which arose from the impugned order - HELD THAT:- We are not impressed with the dismissal of the appeal by the CIT(A) for non-prosecution, without application of mind by him to the issues which were assailed by the assessee by preferring the appeal before him. Once an appeal is preferred before the CIT(A) then it is obligatory on his part to dispose off the same on merits. We are of a strong conviction that it is not open for the CIT(A) to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. Rather, a perusal of Sec.251(1)(a) and (b), as well as the Explanation to Sec. 251(2) reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. In our considered view, the CIT(A) is not vested with any power to summarily dismiss the appeal for non-prosecution - See PREMKUMAR ARJUNDAS LUTHRA (HUF) [ 2016 (5) TMI 290 - BOMBAY HIGH COURT] . Thus dismissal of the appeal by the CIT(A) for non-prosecution, thus, set aside the same to his file with a direction to dispose off the appeal on merits. Appeal of the assessee is allowed for statistical purposes. 2020 (11) TMI 929 Penalty u/s 271(1)(c) - defective notice u/s 274 - non striking of irrelevant words in notice - Addition u/s 68 - HELD THAT:- In notice, irrelevant words in the penalty notice have not been struck of and, thus, the notice does not specify as to under which the limb of section 271(1)(c) was the penalty being proposed to imposed. Right from the assessment proceedings, AO has been inconsistent in his approach regarding the imposition of penalty. In the assessment order AO has recorded satisfaction for imposition penalty for furnishing of inaccurate particulars of income whereas in the notice dated 03.03.2014 issued u/s 274 penalty proceedings have been initiated for concealing particulars of income/furnishing inaccurate particulars. In the penalty order, the penalty has been imposed for furnishing inaccurate particulars of the income as the assessee could not prove that there was no concealment. In the penalty order, the penalty is ultimately imposed for concealing/furnishing inaccurate particulars of income. Thus, apparently the assessee was not made aware of the charge for which the penalty was being proposed to be imposed and was finally imposed. See M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee. 2020 (11) TMI 928 Correct head of income - treatment of interest income earned by the assessee - business income or income from other sources - Disallowance u/s 14A since assessee earned exempt dividend income - assessee is stated to be a resident corporate entity and a non-banking financial company (NBFC) -HELD THAT:- We concur with Ld. AR s submissions that the assessee was registered as NBFC with RBI and would earn interest income by advancing loans. The activity of advancing loans, in such a case, would become assessee s business and naturally, the interest earned thereupon would constitute Business Income for the assessee. In fact, it is the plea of Ld. AR that such income was always offered to tax as Business Income and the said treatment was never disturbed. The rule of consistency would demand that their being no change in facts or circumstances, the accepted position should not be disturbed. Since the assessee failed to make effective representation before Ld. first appellate authority, we deem it fit to remit the matter back to the file of Ld. CIT(A) for re-adjudication in the light of arguments put forth by Ld. AR before us. If the interest income has been accepted to be the Business Income in all the other years, the said treatment should not be disturbed in this year. Consequently, the assessee would be eligible to claim the deduction of business expenditure, if otherwise found in order. Since the matter of disallowance u/s 14A was not adjudicated by Ld. CIT(A) in view of the fact that entire business expenditure was disallowed as well as confirmed, the same may also be re-adjudicated in the set aside proceedings. Appeal allowed for statistical purposes. 2020 (11) TMI 927 Investment from undisclosed source, USL, interest disallowance - additions are made on the facts of the case and the documentary strength impounded during the survey u/s.133A - HELD THAT:- No separate addition on account of unsecured loans is warranted as the income of the assessee has been estimated for the year is found to be on incorrect interpretation of the ratio laid down by the Hon'ble Courts. CIT(A) misread the judgments and combined, transplanted, bamboozled herself in considering the items of P L account with that of balance sheet items interchangeable. The case laws referred pertains to purchases, disallowances u/s. 40A(3) and on account of expenses on trading account. Extrapolation of judgments rendered in connection with the items of trading account cannot be extended to the addition of unsecured loans which is balance sheet item. The unsecured loans do not have impact on the estimation of gross profit as they do not constitute a part of the trading account. Hence, the issue of unsecured loans has to be adjudicated independently on the merits of the case. With regard to the loans from four people, while the ld. DR argued that even the copy of the bank statement has not been furnished by the assessee thus failing to discharge the primary onus in the case of the loans received from various parties, we find from the paper book, the relevant documents proving identity, genuineness and creditworthiness of the loaners. All the bank statements of the loan parties have been duly submitted before the AO. The revenue has not disputed the presence of the primary documents before the ld. CIT(A) at this juncture. Hence, it can be held that the assessee has discharged the primary onus to prove the loans whereas the revenue has not acted upon such evidences filed by the assessee to bring anything contra. The addition has been made without conducting any enquiry on the grounds that the assessee has not filed the primary documents necessary to prove the genuineness of the loans, the observation of which, we find contrary to the facts on record. Hence, the addition made on account of the loans from the above parties is directed to be deleted. Disallowance of Interest - AO held that the assessee has advanced to various parties and no interest has been received - AO calculated interest @ 12% on these advances and disallowed and deducted the same from the interest expenses paid - HELD THAT:- The total expenditure on account of interest claimed by the assessee was ₹ 30,41,080/- out of which an amount of ₹ 24,56,648/- has been paid to the bank on account of the CC limit raised. The remaining amount of ₹ 5,84,432/- has been paid nearly to 25 outstanding unsecured loan parties. Hence, it cannot be said that the amount debited on account of interest hasn't been utilized for business purpose. The notional interest calculated on the advances given is without any legal basis and hence hereby directed to be deleted. Undisclosed Investment - HELD THAT:- Since, the advance has been duly reflected in the balance sheet, no addition on this account is required. That leaves us with the question whether the interest accrued on this amount can be brought to tax or not. We find that the assessee has been following mercantile system of accounting and the fact of advance given to M/s. S.K. Traders is not in dispute. Hence, in tune with the accounting procedure and as per the impounded document, the interest @3% per annum stands accrued to the assessee on the advance of ₹ 65,23,720/- which the assessee omitted to show as interest receipt. Hence, we confirm interest @ 3% on the principle amount of ₹ 65,23,720/-. The principle amount of ₹ 65,23,720/- stands reflected in the name of M/s. S.K. Traders, in the regular books of accounts of the assessee, hence, we hold that no addition of this amount is required. Unexplained investment based on the impounded material - HELD THAT:- As specifically asked the revenue as to the statement recorded on the date of survey and the reply of the assessee pertaining to these transactions on the date of survey. We find no mention of statement recorded at the time of survey either on the assessment order or in the order of the ld. CIT(A). No statement recorded at the time of the survey has been produced even before us as to what the transactions pertain to. No enquiries have been conducted by the revenue to substantiate to unexplained investments. The figures pertaining to three different years cannot be brought to taxation without proving as to what type of transactions the document signifies. Hence, in the absence of any primary, secondary or corroborative evidences, no addition can be made based on the impounded document. The revenue could not even prove with certainty to whom the document belongs nor tested the hand writing on the document either by the way of statement or by the way of forensics. Hence, keeping in view the entire gamut of events peculiar to the facts of this case, we hereby hold that no addition is warranted in the hands of the assessee for the instant year. Estimation of GP - Having heard the arguments and keeping in view the market averages, the GP is reduced to 25% from 35% on the sale of scrap and from 15% to 10% on the sale of other electronic goods. The AO is hereby directed to re-compute the taxable income taking into consideration the revised GP rate. 2020 (11) TMI 926 Bogus purchases - estimation of income - HELD THAT:- As relying on M/S MOHOMMAD HAJI ADAM CO. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] addition in respect of purchases which were found to be bogus in the case of the assessee before them was to be worked out by bringing the G.P. rate of such bogus purchases at the same rate of other genuine purchases. We thus respectfully following the aforesaid judgment of the Hon ble High Court direct the A.O to restrict the addition insofar the bogus/unproved purchases aggregating to ₹ 2,08,51,002/- in the case before us is concerned, by bringing the G.P. rate on the amount of such bogus purchases at the same rate as that of other genuine purchases. Accordingly, for the limited purpose of giving effect to our aforesaid directions the matter is restored to the file of the A.O. Disallowance u/s 40A(3) - cash purchases against which payments in excess of ₹ 20,000/- on any single day were made - HELD THAT:- In the case of Western India Bakers (P) Ltd. [ 2002 (10) TMI 231 - ITAT BOMBAY-E] had concluded, that when a provision of law is to be applied, it is to be seen that all the circumstances alliunde to the application of such provision did exist. It was observed by the Tribunal, that if it was not possible to find out how the violation of the provision was done, then addition could not be made on the basis of inferences and surmises. Observing, that in the case before them, as it was not known at what point of time and how the assessee had violated the provisions of Sec. 40A(3), therefore no addition on that count was warranted. Accordingly, in the backdrop of our aforesaid observations, we are of the considered view that as the revenue had failed to dislodge the claim of the assessee, and therein prove to the contrary that he had made payments towards purchase of goods from the open/grey market exceeding the prescribed limits contemplated in Sec. 40A(3), therefore, the disallowance made by the A.O cannot be sustained and is liable to be vacated. Deduction u/s 80IB - Increase in profit due ot disallowance of expenses - HELD THAT:- Claim of the assessee for deduction u/s 80IB is in order and the disallowance of the same by the A.O cannot be sustained. Accordingly, the order of the CIT(A) is set aside and the disallowance of the assessee s claim for deduction u/s 80IB is vacated - there is substantial force in the claim of the assessee that deduction u/s 80IB has to be allowed on the amount of profits and gains derived by him the eligible business within the meaning of the said statutory provision, as finally determined.Disallowance of expenses claimed by the assessee as regards his eligible business would increase its income which again will be exempt u/s 80IB. Penalty u/s 271(1)(c) as regards such addition/disallowance above which in itself is backed by a process of estimation cannot be sustained and is therefore deleted. 2020 (11) TMI 922 Deduction u/s 80IA(4)(iii) - conditions laid down by the Ministry of Commerce for the same have not been fulfilled by the assessee as noted by AO after physical verification of the premises - tribunal allowed deduction - Whether unit means separate floor - whether the appellate authorities were correct in holding that one of the lessee occupying more than 50% of the allocable area would not amount to occupation of 50% of the allocable area by an unit, admittedly when more than 50% of the allocable area was occupied by one lessee (unit) and the same was contrary to the conditions contemplated under the Industrial Park Scheme 2002 for claiming deduction under Section 80IA(4)(iii) of the Act under which the assessee has undertaken not to allow single unit to occupy more than 50% of the allocable industrial area and recorded perverse finding? HELD THAT:- No dispute with the legal proposition that in order to claim the benefit of deduction under Section 80IA(4)(iii) of the Act, the conditions mentioned in the Scheme have to be complied with. In the present case the order of the Tribunal is cryptic and no finding has been recorded by the Tribunal whether or not the assessee has fulfilled the conditions laid down in the scheme. Tribunal has recorded a finding that an identical issue has been dealt by it in the case of PIRAMAL PROJECTS P. LTD. [ 2011 (2) TMI 92 - ITAT, BANGALORE ] and the case of the assessee is also similar. However, no reasons have been assigned by the Tribunal. The Tribunal is the final fact finding authority and has to record the reasons for its conclusions. Since the Tribunal has failed to assign any reasons for recording the finding with regard to the fact whether or not the assessee has fulfilled with the terms and conditions laid down in the scheme, we are left with no option but to quash the order passed by the Tribunal. Not necessary to answer the substantial questions of law. The Tribunal shall decide the matter afresh. Service Tax 2020 (11) TMI 925 Business Auxiliary Services - promotion or marketing of goods produced or provided by or belonging to the client - transfer of right to use - demand of interest and penalties - extended period of limitation - HELD THAT:- The issue has been dealt by this Tribunal in appellant s own case for the earlier period, wherein this Tribunal observed that The imposition of restrictions or conditions in respect of the usage and consumption of the concentrate, by the seller cannot alter that position. Hence there are no merit in the submission of the Authorized Representative that this transaction was not a truncation of sale but only transfer to use . As issue has already been settled in favour of the appellant, therefore, no demand of service tax is sustainable against the appellant - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2020 (11) TMI 924 Cancellation of Registration Certificate - legal heirs - deemed dealer on the death of dealer - TNVAT Act - CST Act - The petitioner is the wife of deceased. The other legal heirs of the deceased have given no objection for amendment of the registration certificate, in favour of the petitioner and her son - The petitioner has also made a request for amendment of the registration certificate in favour of herself and her son to the respondent. Despite the same, the respondent has passed the impugned orders cancelling the registration certificate on the ground that the petitioner will have to apply for fresh registration under the Tamil Nadu Value Added Tax Act, 2006 Held that:- When it is an admitted fact that the petitioner is a legal heir of the deceased dealer, this Court is of the considered view that the legal heirs are deemed to be dealers on the death of deceased, as per the provisions of Section 26 of the Tamil Nadu Value Added Tax Act, 2006. The amendment shall take effect retrospectively, from the date of death of deseased i.e., 09.06.2013. This exercise shall be done by the respondent, within a period of eight weeks from the date of receipt of a copy of this order. Petition disposed off. 2020 (11) TMI 923 Principles of Natural Justice - Reversal of Input Tax Credit - deemed assessment was made in respect of the Petitioner for the year 2010-2011 - TNVAT Act - HELD THAT:- The receipt of the replies dated 07.09.2013 and 17.09.2013 sent by the Petitioner in response to the notice dated 30.08.2013 issued by the Respondent has not been rebutted. As such, the submissions made by the Petitioner deserve acceptance and the impugned order entailing adverse civil consequences to the Petitioner in violation of the principles of natural justice and the statutory requirements cannot be sustained, and it is quashed and the matter has to be decided afresh by the Respondent. It is incumbent upon the Respondent, after affording full opportunity of personal hearing to the Petitioner, to deal with each of the contentions raised by the Petitioner and pass reasoned orders on merits and in accordance with law following the prescribed procedure in consonance with the principles of natural justice and communicate the decision taken to the Petitioner under written acknowledgment. Petition allowed by way of remand.
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