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TMI Tax Updates - e-Newsletter
February 1, 2020
Case Laws in this Newsletter:
GST
Income Tax
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Supply of goods or supply of services - supply of food items at Railway Platforms which include only counter sale of packed food items, drinks and cooked item - As per the agreement, the nature of work provided by the appellant as "Supply of Catering Service" - GST rate is 5% without ITC.
Income Tax
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Income-tax (3rd Amendment) Rules, 2020 - Prescribes electronic modes of payments - Further withdraws the facility for making payment in Cash in case of Bank holidays or where Banks are closed due to strike etc.
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Deduction u/s 10A - Though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI.
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Fringe Benefit Tax - Since there was no employer-employee relationship between the assessee on one hand and the doctors on the other hand to whom the free samples were provided, the expenditure incurred for the same cannot be construed as fringe benefits to be brought within the additional tax net by levy of fringe benefit tax
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Addition u/s 68 - unsecured loan - the assessee had discharged the onus which was on him to explain the three requirements - It was not required for the assessee to explain the sources of the source.
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Addition on account of remission of loan - Section 41(1) of the IT Act does not apply since waiver of loan does not amount to cessation of trading liability. It is a matter of record that the Respondent has not claimed any deduction under Section 36(1)(iii)
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Deemed dividend u/s 2(22)(e) - loan made to a share holder by the Company in the ordinary course of business - it is not in dispute that both the companies were having money lending as the substantial part of their business - No additions
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Shifting loss incurred at the time of shifting of securities from AFS to HTM category - The said shifting loss is squarely allowable as deduction. But the assessee had provided the revised workings of the said loss before the ld. CIT(A) which resulted in an enhancement - Additions confirmed.
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Rectification of the order u/s 254 - Assessment u/s 153C - It is mandatory to record satisfaction by the AO of the searched person before transmitting record to the AO of other persons to whom documents were found during the course of search - Order recalled - Matter restored for re-hearing.
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Rejection of books of accounts - recognition of income - Development of housing project - assessee has not followed percentage completion method as per the Guidance Note issued by ICAI - The Guidance Note issued by the ICAI is recommendatory. The same do not override the choice of method of accounting to be followed by the assessee provided under the Act.
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Period and timing of Personal hearing before the CIT(A) - hearing the appeals and making the tax practitioners, advocates and Chartered Accountants to wait till 9 PM to 10 PM on daily basis has to be avoid.
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Intimation u/s 143(1) as appealable order u/s 246A - CIT(A) had wrongly mentioned in the order reproduced herein above that no appeal lies against the intimation issued by the CPC under section 143( 1) of the Act unless the assessee approaches the CPC for rectification - there is no requirement in law to approach to the CPC for rectification of the order
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Condonation of delay in filing appeal before CIT(A) - merely on technicalities, the Government cannot retain a single pie of taxpayer which is not authorized by law. - merely because there was a technical flaw or violation of not filing the appeal initially by electronically which was admittedly complied by the assessee subsequently, this Tribunal is of the considered opinion that the appeal of the assessee cannot be thrown away.
DGFT
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Amendment in Export Policy of Personal Protection Equipment/Masks - Export is prohibited with immediate effect till further orders.
Corporate Law
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Relaxation of additional fees and extension of last date in filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013- UT of J&K and UT of Ladakh
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Relaxation of additional fees and extension of last date of filing of AoC-4 NBFC (Ind AS) and AoC-4 CFS NBFC (Ind AS) for FY 2018-19 under the Companies Act, 2013
Indian Laws
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Key Highlights of Economic Survey 2019-20
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Integration of “Assemble in India for the World” into ‘Make In India’ Can Raise India’s Export Market Share to About 3.5 % by 2025 and 6 % by 2030
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India Jumps up 79 positions in World Bank Doing Business Rankings, Improving From 142 In 2014 To 63 in 2019
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Theme of the Economic Survey 2019-20 - Enable Markets, Promote 'Pro-Business' Policies and Strengthen 'Trust' in the Economy
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Around 2.62 Crore New Jobs Created in Rural and Urban Areas Between 2011-12 and 2017-18 Among Regular Wage/Salaried Employees
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India’s Share in World’s Commercial Services Exports Rise to 3.5 Per Cent in 2018: Economic Survey 2019-20
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Address by the President of India Shri Ram Nath Kovind to the joint sitting of Two Houses of Parliament
LLP
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central Government hereby directs that the provisions of section 460 of the Companies Act, 2013 (18 of 2013) shall apply to a limited liability partnership from the date of this notification in the official Gazette.
Case Laws:
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GST
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2020 (1) TMI 1169
Filing of form GST ITC-01 - input tax credit - Section 18 of the CGST and GGST Acts, 2017 - HELD THAT:- This writ application is disposed off with a direction to the Joint Commissioner of State Tax, Mahesana Division, Mahesana to immediately look into the request made by the writ applicant to upload ITC-01 vide representation dated 13th January 2020 at Annexure : 'N' to this petition and also look into the communication dated 18th October 2019 referred to above of the office of the Commissioner, Central GST Gandhinagar. The Joint Commissioner of State Tax is, accordingly, directed to take an appropriate decision in this regard and communicate the same to the writ applicant within two weeks from the date of receipt of the writ of this order. Application disposed off.
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2020 (1) TMI 1168
Release of seized goods alongwith truck - Section 129(1)(a) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- The writ applicant should file an appropriate reply to the show-cause notice and make good his case that there is no breach of any of the provisions of the Act or the Rules. We are not inclined to entertain this writ application at the stage of show-cause notice. Ultimately, even if the final order is passed under Section 130 of the Act, the same is appealable under Section 107 of the Act. Application disposed off.
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2020 (1) TMI 1167
Levy of GST on ocean freight - reverse charge - Vires of N/N. 8/2017 Integrated Tax (Rate) dated 28th June 2017 and the Entry 10 of the N/N. 10/2017 Integrated Tax (Rate) dated 28th June 2017 - HELD THAT:- This Court in the case of MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA 1 OTHER [ 2020 (1) TMI 974 - GUJARAT HIGH COURT] where this Court declared the N/N. 8/2017 Integrated Tax (Rate) dated 28th June 2017 and the Entry 10 of the N/N.10/2017 Integrated Tax (Rate) dated 28th June 2017 are declared as ultra vires the Integrated Goods and Services Tax Act, 2017 on the ground of lack legislative competency. Petition disposed off.
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2020 (1) TMI 1166
Release of detained goods and vehicle - furnishing of bank guarantee - HELD THAT:- The 2nd respondent adjudication officer will ensure that the further proceedings pursuant thereto, be adjudicated and finalised after affording reasonable opportunity of being heard to the petitioner without much delay, preferably within a period of 3 to 4 weeks from the date of production of a certified copy of this judgment. While doing so, the 2nd respondent will specifically consider and advert to the plea made by the petitioner that, the abovesaid transaction is effected by the 1st transaction entered into by the petitioner, and that he was not having thorough knowledge relating to the fine tuned aspects emanated from the Goods and Service Taxes Act and the Rules framed thereunder, and that a sympathetic consideration may be made in this case. Petition disposed off.
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2020 (1) TMI 1165
Validity of SCN - case of petitioner is that the SCN is vague and does not, contain any specific allegation against the petitioner and does not discloses as to on what basis the respondents are claiming the amount as demanded - HELD THAT:- The counsel for the petitioner has drawn our attention to the said notice which does not clearly state whether the same has been issued on account of non-payment of tax; short payment of tax; erroneous refund of tax or; availment of erroneous input tax credit and its utilisation. All that emerges is that the petitioner s registration under the GST Act has been cancelled and consequently, notice has been issued. The impugned SCN stands withdrawn with liberty to issue a fresh one.
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2020 (1) TMI 1164
Seizure of goods alongwith the truck - allegation that the petitioner was not able to show the relevant papers - sub-section (6) of Section 67 read with Section 129 of the Uttarakhand Goods and Services Tax Act, 2017 - HELD THAT:- The order impugned is indeed appellable, which gives rights to the petitioner to get his goods and the vehicle released, provided the petitioner gives a security in the form of bank guarantee to the concerned Department. Since the petitioner has an alternative remedy, no interference is being called for in the matter - Consequently, the writ petition is dismissed on ground of alternative remedy.
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2020 (1) TMI 1163
Reimbursement of differential tax amount - change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 01.07.2017 - grievance of the petitioner is that in view of the introduction of the GST, petitioner is required to pay tax which was not envisaged while entering into the agreement - HELD THAT:- The petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the aforesaid revised guidelines dated 10.12.2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 29.02.2020. Petition disposed off.
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2020 (1) TMI 1127
Classification of supply - supply of goods or supply of services - supply of food items at GMUs (General Minor Units) at Railway Platforms which include only counter sale of packed food items, drinks and cooked item - input tax credit - benefit of Serial No. 7(ia) of Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 - Input Tax Credit (ITC) of GST paid on license fees to Indian Railway or IRCTC - consequences for wrong availing of ITC - challenge to AAR decision. HELD THAT:- After addition of Entry No. 7(ia) in the Notification No. 11/2017, the issue, regarding classification of the supply of goods, by the Indian Railways, Indian Railways Catering and Tourism Corporation Ltd., or their licensees, whether in trains or at platforms, has attained finality that the same would be classified as Supply of Service - it is not the duty of the Authority either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain. The Authority cannot add words to a statute or read words into it which are not there. Hence, it is the bounden duty and obligation to interpret the statute as it is. It is contrary to all rules of construction to read words into a statute which the legislature in its wisdom has deliberately not incorporated. Thus we are in unison with the Advance Ruling Authority that the activity provided by the appellant correctly falls under Entry No. 7(ia) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 (as amended). The contention of the appellant that they involved in the Supply of goods is not tenable in the light of letter dated 15-4-2019 and License Agreement entered into between Divisional Railway Manager (Commercial), NCR, Agra and the appellant, which clearly spells the nature of work provided by the appellant as Supply of Catering Service . Accordingly, the N/N. 11/2017-Central Tax (Rate), dated 28-6-2017(as amended) is squarely applicable on them. The appellant has quoted case laws prior to GST era, whereas with the introduction of GST, the ambiguity in taxation has been removed to a greater extent. We observe that after introduction of Sl. No. 7(ia) in the Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 '(as amended) the Law is very much clear that the GST rate on supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms, will be 5% without ITC. The order passed by the Authority for Advance Ruling is just and proper and no interference is required in the said ruling - appeal disposed off.
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Income Tax
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2020 (1) TMI 1162
TDS u/s 194H - discounts given by the assessee to the distributors of prepaid SIM cards - HELD THAT:- Following the earlier decision of this Court in M/s. Reliance Communications Infrastructure Ltd. [ 2019 (7) TMI 1371 - BOMBAY HIGH COURT ] we are of the view that the Tribunal was justified in holding that the provisions of Section 194H of the Act was not applicable on discounts given by the assessee to the distributors of prepaid SIM cards. - Decided in favour of assessee.
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2020 (1) TMI 1161
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Section 14A of the Act deals with expenditure incurred in relation to income not includible in total income. As per sub- Section (1) of Section 14A, for the purpose of computing the total income, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income. In Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT ] examined the expression does not form part of the total income as appearing in sub-Section (1) of Section 14A of the Act. Delhi High Court held that the said expression envisages that there should be an actual receipt of income which is not includible in the total income during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. It was clarified that Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. This view has been followed in several decisions by this Court. No substantial question of law arises
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2020 (1) TMI 1160
Violation of principles of natural justice - demand notice under Section 156 - attachment notice that was issued under Section 281B prior to passing of the assessment order - HELD THAT:- Income tax officer has not acted without jurisdiction. Whether such jurisdiction has been exercised incorrectly and/or there is an error in such exercise is a different issue to be tested under the statutory appeal available under the Act. The Supreme Court in Balmiki Prasad Singh [ 2018 (9) TMI 1936 - SUPREME COURT] upheld the order of the High Court setting aside the assessment order on the grounds of violation of the principles of natural justice. In the present case, there is no such violation of principles of natural justice, and therefore, the judgment has no precedential value in the present case. The extra ordinary jurisdiction under Article 226 of the Constitution is required to be sparingly used only when the Court finds that the action of the State is completed without jurisdiction, in violation of the principles of natural justice and/or the order passed is palpably illegal. In my view, none of the above conditions are applicable in the present case. Accordingly, I do not find any reason to interfere with the assessment order. With regard to the provisional attachment, the reasons recorded by the officer and the explanation given by Mr. Trivedi are not acceptable to me as this is a provision to be used only in rare situations where the bona fide of the assessee is in question or there has been a clear case of evasion of tax. Taxability of ₹ 74.5 crores is a debatable issue. The Income Tax officer has himself changed the goal post by first charging the amount under Section 28(iv), and thereafter, under Section 28(ii)(a). In a situation wherein the officer is himself not certain of the taxability, the use of a drastic provision such as Section 281B is not tenable. Moreover, no reasons have been provided in the attachment notice. Submission of Mr. Trivedi that the amount of tax being large, and therefore, the provisional attachment was resorted to, is not a good enough reason and is rejected by this Court. If the above reason were accepted then in all cases of high demands, provisional attachment would become the norm. I am unable to accept the logic, and therefore, the attachment order is quashed and set aside. Writ petition is disposed of with liberty given to the petitioner to file an appeal and stay petition before the Commissioner of Income Tax (Appeals) within a period of 30 days from date. The Commissioner of Income Tax (Appeals) is directed to grant an opportunity of hearing and thereafter pass a reasoned order in respect to the stay petition forthwith
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2020 (1) TMI 1159
Deduction u/s 10A - computation before adjusting business loss/depreciation - Whether Tribunal was justified in not considering the Circular No. 7/DV/2013 dated 16.7.2013 of the CBDT which clarifies the position of law on the issue? - whether Tribunal was justified in holding that business loss and depreciation of the assessee were not liable for set-off against the current years' business profits? - HELD THAT:- All the three questions are covered by the decision of the Supreme Court in Commissioner of Income Tax Vs. Yokogawa India Ltd [ 2016 (12) TMI 881 - SUPREME COURT] as held from a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. Though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI.
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2020 (1) TMI 1158
Liability of directors of private company in liquidation - petitioner seeks quashing of the notice of demand under Section 156 as well as the consequential garnishee notices and individual recovery notices issued to the directors of the petitioner under Section 179 - HELD THAT:- When the petitioner has filed the statutory appeal against the order of assessment and has also parallely filed an application for stay before the administrative Commissioner; without taking a decision either on the appeal or on the prayer for stay, it was not justified on the part of the revenue authority in issuing the impugned notices. In the circumstances, rejection of the prayer for stay by the AO when the appeal is pending before the first appellate authority and the stay prayer is pending before the administrative Commissioner, in our view, would not be of much consequence. Therefore, taking an overall view of the matter, we feel that the appeal filed by the petitioner under Section 246-A of the Act, which has been registered as CIT (A)-20.Mumbai/10324/2018-19 should be heard and decided by the first appellate authority in accordance with law within a period of four weeks from the date of receipt of an authenticated copy of this order. Ordered accordingly. During this period of four weeks, the impugned notices under Section 179 as well as under Section 226(3) of the Act shall remain in abeyance.
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2020 (1) TMI 1157
Depreciation on wind mill - Windmill was put to use for more than 180 days - HELD THAT:- With regard to the question as to whether the respondent is entitled to 100% depreciation allowance, even though windmill was put to use beyond 180 days, it is already covered by the Judgment in the case of B.Loganathan Vs.Income Tax Officer, Ward VIII (3), Chennai [ 2019 (3) TMI 1003 - MADRAS HIGH COURT ] -first question of law is answered against the Revenue. Whether the failure of the respondent to choose the Written Down Value entitling him 100% allowance will deny him the said allowance or he has to get 7.8% allowance alone as per the Straight Line Method of depreciation - the failure of the auditor cannot be put against the respondent - Moreover, the issue has already been covered by the Judgment of this Court in the case of Commissioner of Income-tax, Coimbatore Vs. Kikani Exports (P) Ltd [ 2019 (3) TMI 1003 - MADRAS HIGH COURT ] and hence, this is also answered against the Revenue.
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2020 (1) TMI 1156
Reopening of assessment u/s 147 - specific information received by the AO from his counterpart at Surat - addition u/s 14A added back to the book profit of the assessee u/s 115JB which amount was not disclosed by the assessee in the original return of income and thus, escaped assessment - HELD THAT:- As decided in M/S. BENGAL FINANCE INVESTMENTS PVT. LTD. [ 2015 (2) TMI 1263 - BOMBAY HIGH COURT] relying on M/S ESSAR TELEHOLDINGS LTD. [ 2015 (5) TMI 810 - BOMBAY HIGH COURT] an amount disallowed u/s 14A of the Act cannot be added to arrive at the book profit for purpose of Section 115JB of the Act, TDS u/s 194J on MICR charges to MICR Centre managed by State Bank of India - Assessee in its reply had clearly stated that assessee had deducted tax at source and paid into government account, details of which were provided in the reply - HELD THAT:- Basic issue as to whether tax is deductible at source on MICR charges itself is debatable. Assessee had referred to several decisions of the Tribunal including a coordinate bench at Mumbai wherein it was held that there is no obligation to deduct tax at source in such a transaction. When that is the position, we fail to understand as to how the Assessing Officer could invoke jurisdiction under Sections 147/148 of the Act. Therefore, the first appellate authority was justified in deleting such addition. Regarding the third deletion, it is quite evident that assessee had disclosed details of TDS made from the payments to the caterer. Such information was furnished from the record of the bank where payments were made and in support of the payments, internal vouchers were furnished. If the AO had any further doubt in this regard, he could have very well verified the record of the bank by issuing notice to the bank in question. Thus, the addition made by the AO was rightly deleted by the first appellate authority. AO was not justifying in taking the view that assessee had failed to disclose fully and truly all material facts for the purpose of assessment of his income for the assessment year under consideration and the Tribunal is correct in taking the view that Assessing Officer could not have issued notice to reopen the concluded assessment in the facts and circumstances of the case. - Decided in favour of assessee.
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2020 (1) TMI 1155
Fringe Benefit Tax - employer-employee relationship - assessment was reopened on the ground that distribution of free samples was in the nature of fringe benefit and therefore, the expenditure incurred by the assessee on the same was includible for the purpose of fringe benefit tax - HELD THAT:- For levy of fringe benefit tax, relationship of employer and employees is the sine qua non and the fringe benefits has to be provided by the employer to the employees in the course of such relationship. In Tata Consultancy Services Ltd [ 2015 (5) TMI 518 - BOMBAY HIGH COURT] this Court referred to Circular No. 8/2005 of CBDT which indicated that the objective of taxing perquisite of fringe benefit is both on the ground of equity and economic efficiency. Thereafter, this Court held that the basis of fringe benefit tax is the benefit or perquisite which emanates out of an employer-employee relationship which is a pre-requisite for levy of fringe benefit tax Tribunal recorded as a finding of fact that in the course of its business, assessee distributes free samples to the doctors and others the expenditure for which the assessee claims is not covered within the meaning of sales promotion for the purpose of fringe benefit tax. Tribunal also noted that no case was made out by the Income Tax authorities that the expenditure incurred by the assessee on distribution of free samples to doctors and others involved any employer-employee relationship. Since there was no employer-employee relationship between the assessee on one hand and the doctors on the other hand to whom the free samples were provided, the expenditure incurred for the same cannot be construed as fringe benefits to be brought within the additional tax net by levy of fringe benefit tax - Decided in favour of assessee.
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2020 (1) TMI 1154
Certificates u/s 197 at the lower rate of 1.5% - Revenue prescribing withholding tax at the rate of 10 % in respect of the Petitioner s contract with THDC India Limited - Petitioner was issued withholding tax certificate at rate of 1.5 % of payments made by THDC India Limited in pursuance of the contract which continues to remain in force and is operational in the current year - HELD THAT:- The notification dated 31.12.2018 issued by the Directorate of Income Tax (Systems) of the CBDT by resort to Rule 28 (2) of the Income Tax Rules, 1962 cannot enlarge the scope of the Respondents to consider the assessed, returned or estimated income for a period in excess of the last four previous years. Rule 28 (2) is merely an empowering rule, which empowers the named authorities looking after the systems to lay down procedure, format and standards for insuring secured capture and transmission of data, and uploading of documents and for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing of form No. 13. Respondents have not taken into consideration the tax already paid by the Petitioner in the previous years and the computation tendered in Court proceeds on the assumption that no payment has been made by the Petitioner. On that premise, tax as well as interest under Section 234B and 234C have been added, which cannot be the case. Following the earlier orders of this court in Bently Nevada LLC v. Income Tax Officer, Ward-1(1)(2), International Taxation Anr. [ 2019 (7) TMI 1503 - DELHI HIGH COURT] and Lufthansa Cargo AG V. Deputy Commissioner Of Income Tax And Anr. [ 2019 (11) TMI 759 - DELHI HIGH COURT] we quash the impugned order dated 05.07.2019 issued by the Respondents prescribing withholding tax at the rate of 10 % in respect of the Petitioner s contract with THDC India Limited. Also direct the Respondents to consider the matter afresh and issue a fresh withholding tax certificates under Section 197 of the Act after taking into account the aspects taken note of hereinabove. Till then, the Petitioner shall continue to remain bound by the withholding tax certificate issued in respect of the immediately preceding year i.e. at the rate of 1.5% qua the payments received by it from THDC India Limited.
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2020 (1) TMI 1153
Addition u/s 68 - unsecured loan - whether initial onus laid down on the Appellant was duly discharged ? - HELD THAT:- In view of discharge of burden by the assessee, burden shifted to the revenue; but revenue could not prove or bring any material to impeach the source of the credit. Though Mr. Walve, learned standing counsel, has pointed out that the creditor had no regular source of income to justify the advancement of the credit to the assessee, we are of the view that the assessee had discharged the onus which was on him to explain the three requirements, as noted above. It was not required for the assessee to explain the sources of the source. In other words, he was not required to explain the sources of the money provided by the creditor Smt. Savitri Thakur i.e. Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur. We are of the view that the Tribunal was not justified in sustaining the addition to the total income of the assessee as undisclosed cash credit under section 68 of the Act. - Decided in favour of assessee.
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2020 (1) TMI 1152
Condonation of delay of 253 days in filing the appeal by the assessee - cancellation of the registration of the assessee as a Charitable Trust under section 12AA(3) - HELD THAT:- We are of the opinion that Tribunal was not justified in refusing to condone the delay of 253 days in filing the appeal by the assessee. We are of the further view that it would be in the interest of justice if the appeal of the assessee is heard and decided on its own merit; after all, the issue relates to cancellation of the registration of the assessee as a Charitable Trust under section 12AA(3) of the Act.
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2020 (1) TMI 1151
Disallowance of loss of foreign exchange - speculative loss OR business loss - HELD THAT:- Assessee had entered into foreign exchange export contracts with banks to the extent of its export orders. In other words, every foreign exchange forward contract was against a specific export order. Therefore, Tribunal held that assessee did not deal in foreign exchange but had entered into foreign exchange forward contract with banks to safeguard itself against possible foreign exchange losses on account of export sale proceeds to be received. Tribunal concurred with the view taken by the Commissioner of Income Tax (Appeals) that these transactions were not speculative in nature and the resultant foreign exchange losses were consequently not speculated loss but allowable business loss. Such contracts were incidental to the assessee s business of manufacture and export of fruit pulp and allied products and therefore, did not represent speculative transactions. As referred to and relied upon by the Tribunal, this was also the view taken by this court in Badridas Gauridu case [ 2003 (1) TMI 61 - BOMBAY HIGH COURT ] This position has been again reiterated in Commissioner of Income-Tax Vs. D. Chetan and Company [ 2016 (10) TMI 629 - BOMBAY HIGH COURT ] held that forward contract in foreign exchange when incidental to carrying on business of cotton exporter and done to cover up losses on account of differences in foreign exchange valuations, would not be speculative activity but a business activity. - Decided in favour of assessee.
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2020 (1) TMI 1150
Revision u/s 263 - AO did not verify the reasons for sales of land at low rates , AO did not bring to tax unaccounted cashfound during survey AND AO also failed to verify the applicability of section 45(2) - Tribunal took the view that the CIT was not justified in invoking jurisdiction under section 263 - HELD THAT:- Assessee had disclosed in his return of income the aforesaid amount of ₹ 6.85 lakhs. At the end of the assessment, the said amount was taxed by the Assessing Officer under the head of income from other sources . Therefore, it was held by the Tribunal that the Commissioner of the Income Tax was not justified in treating the said amount as part of undisclosed income and assuming jurisdiction under section 263 when it was disclosed and assessed. As regards applicability of section 45 (2), Tribunal noticed that Commissioner of Income Tax had accepted applicability of the said provision and therefore, it was held that there is no error in the order of the Assessing Officer. Tribunal further held that inquiry was made by the Assessing Officer into disclosures made during the course of the assessment proceedings by the assessee. When the issue was enquired into by the Assessing Officer, the Commissioner ought not to have invoked jurisdiction under section 263 of the Act. Impugned order passed by the Tribunal does not suffer from any error or infirmity to warrant interference. No question of law, muchless any substantial question of law, arises from the said order.
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2020 (1) TMI 1149
Exemption u/s 11 - application of income for any purpose other than the object of the Trust - HELD THAT:- In the present case, Tribunal held that object of the assessee is undoubtedly promotion of sports, games and providing recreation facilities to the public at large and to the members in particular and therefore receipts on account of compensation from decorator against gymkhana function, miscellaneous income and compensation from caterer (restaurant) cannot be construed as activities in the nature of trade, commerce or business for the purpose of the proviso to Section 2(15) of the Act. This court in the case of Director of Income Tax (Exemptions) Vs. Shri Vile Parle Kelavani Mandal, [2015 (5) TMI 220 - BOMBAY HIGH COURT] has held that educational institutions require funds; activity of letting out of halls for marriages, sale and advertisement rights is not a regular activity undertaken as part of business. Income is generated by giving various halls and properties of the institution on rental basis on holidays when those are not required for educational activities. Therefore, such activities cannot be construed to be business activities, such activity being an incidental activity; and thus income generated therefrom cannot be brought to tax. This court in Shree Nahsik Panchvati Panjrapole [2017 (3) TMI 1262 - BOMBAY HIGH COURT] emphasized that the test that should be applied whether it was income earned from business or income earned from incidental activity is the test of dominant object of the trust i.e., what is the dominant object of the activity. If the dominant object of the activity is profit making, the purpose would not be charitable but if the dominant object of the activity is charitable then notwithstanding making of profit, the charitable character of the purpose would not be lost. Depreciation to assessee trust - double deduction - HELD THAT:- Issue covered by the decision of the Supreme Court in Commissioner of Income Tax-III, Pune Vs. Rajasthan and Gujrat Charitable Foundation, Poona , [2017 (12) TMI 1067 - SUPREME COURT ] whereby those questions have been answered in favour of the assessee and against the revenue.
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2020 (1) TMI 1148
Addition u/s 14A r.w.r. 8D - rule 8D applicability prospectively or retrospectively - HELD THAT:- The said issue is no longer res integra in view of the decisions of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Essar Teleholdings Ltd [ 2018 (2) TMI 115 - SUPREME COURT] and Godrej Boyce Manufacturing Company Limited Vs. Deputy Commissioner of Income Tax and another [ 2017 (5) TMI 403 - SUPREME COURT] in which the Hon'ble Supreme Court has laid down the provisions of Rule 8D of the Income Tax Rules cannot be applied retrospectively. The said Rules were introduced and brought on the Statute Book with effect from 24.03.2008 and the present assessment year involved in the present Appeal is Assessment Year 2002-03. - Decided against the Revenue.
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2020 (1) TMI 1147
Addition on account of remission of loan - waiver of loan or cessation of liability - HELD THAT:- As decided in Commissioner Vs. Mahindra And Mahindra Ltd [2018 (5) TMI 358 - SUPREME COURT ] Section 28(iv) of the IT Act does not apply on the present case since the receipts of ₹ 57,74,064/- are in the nature of cash or money. Section 41(1) of the IT Act does not apply since waiver of loan does not amount to cessation of trading liability. It is a matter of record that the Respondent has not claimed any deduction under Section 36(1)(iii) of the IT Act qua the payment of interest in any previous year. We are of the considered view that these appeals are devoid of merits and deserve to be dismissed. Accordingly, the appeals are dismissed.
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2020 (1) TMI 1146
Disallowance of provision for import exchange difference incurred on unexpired contracts at the end of accounting period - AO disallowed the claim of provision on the ground that deduction for the provision relating to the import of goods on account of exchange fluctuation is available only on the actual payment as per the provisions of Section 43A and secondly, such provision on account of currency fluctuation is representing the unascertained liabilities which is not allowable as deduction under Section 37(1) - ITAT deleted the addition - HELD THAT:- Tribunal concurring with the order passed by the CIT(Appeals) held that there was no long term loan liability, and the fixed assets were of negligible value, and therefore, the provisions of Section 43A of the Act cannot be applied in the present facts and circumstances as it deals with the capital account transaction. The Tribunal following the decision of the Supreme Court in CIT vs. Woodward Governor India Private Ltd [ 2009 (4) TMI 4 - SUPREME COURT] held that the trading liability arising on account of currency fluctuation is ascertained liability, and therefore, it is eligible for deduction. In view of the findings of fact arrived at by both the authorities, there is no infirmity in the impugned order passed by the Tribunal which is based upon the facts emerging from the record as well as the application of the decision of the Supreme Court of India in the aforesaid case. No question of law
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2020 (1) TMI 1145
TP Adjustment - ITAT remanded the matter back to the file of the Assessing Officer to decide the issue afresh by considering the decisions relied upon by the Tribunal for allocation of non-syndication fee between the assessee and associated enterprise after giving opportunity of being heard to the assessee - HELD THAT:- In the facts and circumstances of the case, we do not find any error or infirmity in the view taken by the Tribunal in remanding the matter back to the file of the Assessing Officer for a fresh decision in accordance with law. On thorough consideration, we are of the opinion that the proposed questions of law does not arise out of the impugned order of the Tribunal.
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2020 (1) TMI 1144
Bogus purchases - estimated dis-allowance of 5% alleged bogus purchases - HELD THAT:- The assessee had declared 7.31% towards profit on such alleged bogus purchases. The Tribunal took a view that in view of the profits already declared in the alleged bogus purchases in the vicinity of 7% and an estimated dis-allowance of 5% alleged bogus purchases over and above the profits already declared would cover possible suppression in profits and will balance the equity. The Tribunal also relied upon the decision of this Court in the case of C IT V/s Bholanath Poly Fab Pvt. Ltd. [2013 (10) TMI 933 - GUJARAT HIGH COURT] We should not interfere with the impugned order passed by the Tribunal as the view taken by the Tribunal is quite reasonable.
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2020 (1) TMI 1143
Addition u/s 14A - disallowance vis- -vis the administrative expenses - HELD THAT:- Although the Revenue wants this Court to go into the question of disallowance of the interest amount, yet we are not inclined to go into such question. Disallowance being Capital Expenditure - expenditure been incurred for legal assistance taken by the assessee - HELD THAT:- There is a concurrent finding recorded by both CIT(Appeals) and as affirmed by the Tribunal that the expenditure has been incurred for the legal assistance taken by the assessee on day-to-day basis for the purpose of business. Such expenditure has been treated as revenue expenditure. We are not inclined to admit this appeal on the question No.2[B], as proposed by the Revenue.
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2020 (1) TMI 1142
Addition u/s 68 - HELD THAT:- No addition can be made in respect of un-signed, unstamped, Satakhat, which has not been registered and is found from CD of computer of a person who is not connected with the assessee. In view of these facts and circumstances and in law, the addition so made by the AO is without any basis, without any corroborating evidences and without allowing due opportunity of cross-examination to the assessee and is therefore, unsustainable in law. The case laws led by the learned Authorized Representative of the assessee are also supports findings of Ld.ICIT(A). In such circumstances, we do not find any infirmity in the order of CIT(A), accordingly, same is upheld. Accordingly, appeal of Revenue is therefore, dismissed
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2020 (1) TMI 1141
Disallowance u/s 14A - HELD THAT:- From perusal of Section 14A of the Act, it is evident that for the purposes of computing the total income under this chapter, no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation of the income which does not form part of his total income under the Act. The expenditure, the return of investment and cost of requisition are distinct concepts. Therefore the word incurred in Section 14A of the Act have to be read in the context of the scheme of the Act and if so read, it is clear that it disallows certain expenditures incurred to earn exempt income from being deducted from other incomes which is includable in the total income for the purposes of chargeability to the tax. It is equally well settled that expenditure is a pay out. In order to attract applicability of section 14A of the Act, there has to be a pay out and return of investment or a pay back is not such a debit item. [See: WALFORT SHARE AND STOCK BROKERS (P) LTD [ 2010 (7) TMI 15 - SUPREME COURT] as well as MAXOPP INVESTMENT LTD. [ 2018 (3) TMI 805 - SUPREME COURT] In the instant case, the assessee has admittedly not incurred any expenditure. This case pertains to income on dividend, which by no stretch of imagination can be treated to be an expenditure to attract the provisions of Section 14A of the Act. In view of aforesaid enunciation of law by the Supreme Court, the first substantial question of law framed by this court is answered in favour of the assessee and against the revenue. Whether provisions of Section 115JA apply to the Banking Companies? - HELD THAT:- This court by an order passed [ 2020 (1) TMI 1116 - KARNATAKA HIGH COURT] 2has already held that the provisions of Section 115JA do not apply to the banking companies. Effect of section 14A amendment - HELD THAT:- Issue squarely covered by the decision of the Supreme Court in CIT VS. ESSAR TELEHOLDINGS LTD. [ 2018 (2) TMI 115 - SUPREME COURT] wherein it has been held that provisions of Section 14A read with rule 8D of the Income Tax Rules are prospective in nature and can not be applied to any assessment year prior to Assessment Year 2008-09. Accordingly, the aforesaid substantial question of law is answered against the revenue and in favour of the assessee.
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2020 (1) TMI 1140
Unexplained sundry creditors - HELD THAT:- on perusal of confirmations of the creditors placed in the paper book, we observe that the creditors have given confirmation of ₹ 21,42,479.00. Ld D.R. could not disprove the purchases and payment made by the assessee and in the absence of purchase, sales could not have been effected. In view of above, we direct the AO to delete the addition of ₹ 21,42,479/- considering the confirmations filed by the sundry creditors as noted above out of addition of ₹ 21,85,448/- confirmed by the ld CIT(A). We find that Hon ble Allahabad High Court in the case of Panchan Dass Jain [ 2006 (8) TMI 582 - ALLAHABAD HIGH COURT ] held that when the purchases and sales as also the trading result disclosed by the assessee have been accepted by the department, no addition can be made. Hence, addition of ₹ 42,969/- (₹ 21,85,448 ₹ 21,42,479) is confirmed. Ground No.1 of appeal is partly allowed. Failure to prove identity, genuineness and creditworthiness of the loan creditors - HELD THAT:- On perusal of the details filed in the paper book by the assessee, we observe that the assessee has furnished the Form No.16, Adhar No. in respect of Pervez Jamal which could prove the identity, genuineness of the transaction. Hence, the addition of ₹ 3,00,000/- is directed to be deleted. As regards to loan creditor of Shri Narayan Sahoo, we find that the assessee has filed only bank statement of the assessee in which cash amount of ₹ 5,00,000/- has been received from Shri Narayan Sahoo. Nothing is placed on record to prove the identity and creditworthiness of the loan creditor Shri Narayan Sahoo. In view of above, we confirm the addition of ₹ 5,00,000/- and partly allow Ground No.2 of appeal. Addition u/s 40(a)(ia) - rent paid for show room AND audit fees paid - HELD THAT:- . As per the amended provision to section 40(a)(ia) by the Finance Act, 2015 w.e.f. 1.4.2015, the disallowance is restricted to 30% as against 100% made by the Assessing Officer. We find that similar issue had come up for consideration in the case of Om Sri Nilamadhab Builders Pvt Ltd [ 2019 (11) TMI 1373 - ITAT CUTTACK ] we direct the AO to restrict the disallowance to 30% as against 100% made under section 40(a)(ia) of the Act. Hence, Ground Nos,.3 4 are partly allowed. Expenses incurred in connection with staff tiffin, fuel, direct labour and direct expenses - HELD THAT:- Since no evidence was filed, he made adhoc disallowance. We find that in this case, the assessment has been completed u/s.143(3) of the Act and the books of account are not rejected. We find that the nature of expenses have not been doubted or disbelieved by the Assessing Officer. We observe that the adhoc disallowance has been made on the basis of suspicion alone and no basis has been given by the AO. Hence, we direct the AO to delete the addition made on adhoc basis. Ground No.5 of appeal is allowed. Payment of sales tax and payment of entry tax - Failure to furnish evidence of the payment within the due date of filing of return u/s.139(1) - HELD THAT:- Before us also, no details were furnished by the assessee of the payment within the due date of filing of return u/s.139(1) . Hence, we confirm the addition u/s.43B Addition being RTO expenses on the ground that the assessee has not filed the ledger copy of the above expenses and no other evidence has been furnished to support the claim - HELD THAT:- The contention of ld counsel for the assessee is that RTO expenses have been accounted in the gross receipts of the assessee, which has not been disputed by ld DR. Hence, we delete the same and allow this ground of appeal of the assessee. Penalty levied under section 271D - contravention to section 269SS - HELD THAT:- Both the persons who have given cash loan to the assessee are relatives i.e. one brother and other is nephew. Therefore, the decisions relied upon by ld counsel for the assessee support the case of the assessee. We, therefore, are of the opinion that there existed a reasonable cause for accepting the cash loans. As such, the assessee may be exonerated from the rigour of Section 271D of the Act. Accordingly, we set aside the order of the ld CIT(A) and delete the penalty imposed under section 271D
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2020 (1) TMI 1139
Deemed dividend u/s 2(22)(e) - advances or loan made to a share holder by the Company in the ordinary course of business - Proof of substantial interest in other company - HELD THAT:- As the assessee was holding more than 10% of the shares in both the companies, the provisions of Section 2(22)(e) of the Act would come into play. However, the section further provides that the dividend does not include any advances or loan made to a share holder by the Company in the ordinary course of business where lending of money is a substantial part of the business of the Company.. In the case on hand, it is not in dispute that both the companies were having money lending as the substantial part of their business. Therefore, the Tribunal has rightly hold that no addition can be made by way of deemed dividend in the case of the assessee. - Decided in favour of assessee.
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2020 (1) TMI 1138
Stay petition against recovery proceedings - Whether Prima facie case requires positive evidence of certainty of victory? - claim of deduction of Agency Commission towards third party disallowed - Whether the Hon ble Tribunal erred in holding that decision of the Co-ordinate Benches of Hon ble ITAT, holding the arms-length value under the Agency Agreement to be valid, is not a prima facie case for the grant of stay against recovery proceedings? - HELD THAT:- The amount demanded, even as per the appellant is ₹ 1,98,90,582/- in the narration of facts at Paragraph No.11. He has already paid a sum of ₹ 75 lakhs. The issue with regard to the claim for deduction of Agency Commission has to be decided only by the Tribunal. Pending disposal, what has to be seen is whether prima facie case has been made out by the appellant or not. In the view of the Tribunal, prima facie case is not made out. However, taking into consideration of the previous history and the fact that the appellant has already paid a sum of ₹ 75 lakhs, this Court is of the opinion that the interest of justice would be subserved by directing the appellant to pay a further sum of ₹ 25 lakhs. Hence, the appellant is hereby directed to pay a sum of ₹ 25 Lakhs within a period of four weeks from the date of receipt of the copy of this order. On such payment, there shall be an order of stay till the disposal of the appeal.
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2020 (1) TMI 1137
Waiver of interest u/s 12-A of the Interest Tax Act - HELD THAT:- The power to grant waiver from payment of interest under the Income Tax Act, 1961 stems from sub-clause (2) (a) to section 119. The Central Board of Direct Taxes has also delegated such powers in certain cases up to particular amount with the Principal/Chief Commissioner of Income Tax. Since Section 119 of the Income Tax Act has not been incorporated in Section 21 of the Interest Tax Act, 1954, the petitioner cannot claim the benefit of the above circular for waiver of interest. Therefore, in absence of any power to grant waiver of interest under the provisions of the Interest Tax Act, 1974, the 1st respondent cannot grant waiver to an assessee under the provisions of the said Act. That apart, the authority has also decided that the petitioner was not entitled for waiver under the said circular since Finance Act No.2 of 1991 had extended the scope of interest tax to cover credit institutions and thus financial companies carrying on high purchase transactions were brought within the ambit of the Interest Tax Act, 1974. The petitioner also filed returns but failed to pay tax on such interest. Though, the 1st respondent has denied the benefit of the above circular on merits, it is evident that the said circular cannot be made applicable to waiver of interest under the provisions of the Interest Tax Act, 1974 in absence of any statutory backup.
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2020 (1) TMI 1136
TP Adjustment - Interest free funds were advanced by the assessee out of its own resource to its wholly owned subsidiary - nature of quasiequity with the principal objective of protecting the interest of the assessee - Corporate guarantee provided by the assessee would not be invoked when the advance was converted into equity - Whether any transfer pricing adjustment by way of interest income can be made with respect to those allegedly interest free funds advanced by the assessee to its subsidiary? HELD THAT:- The appeal be heard out on the above substantial question of law. As the respondent is represented by learned counsel, issuance and service of notice of the appeal is waived. The advocate-on-record for the appellant will file informal paper books by 3rd February 2020, serving at least one copy on the advocate-on-record for the respondent not later than three days before the date of hearing of this appeal. List the appeal for hearing in the monthly list of March, 2020.
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2020 (1) TMI 1135
Disallowance u/s.14A r.w.r. 8D - non recording of satisfaction - investments held as stock in trade in respect of banks - HELD THAT:- We find that on the aspect of technical issue i.e. non-recording of objective satisfaction by the ld. AO having regard to the accounts of the assessee, we find that in MAXOPP INVESTMENT LTD. [ 2018 (3) TMI 805 - SUPREME COURT] had categorically held that in the absence of said satisfaction as contemplated in Section 14A(2) / 14A(3) of the Act read with rule 8D(1) of the rules, no disallowance u/s.14A of the Act could be made by adopting the computation mechanism provided in rule 8D(2) of the rules. Moreover, on merits, in the facts of that case, the Hon ble Apex Court in the very same decision had categorically upheld the findings recorded by State Bank of Patiala [ 2017 (2) TMI 125 - PUNJAB AND HARYANA HIGH COURT] with regard to non-applicability of provisions of Section 14A of the Act in respect of investments held as stock in trade in respect of banks as placed reliance on the CBDT Circular No.18/2015 dated 02/11/2015 which decision had been accepted by the Hon ble Apex Court to that limited extent though the predominant purpose theory of making investments was rejected by the Hon ble Supreme Court. Hence, by respectfully following the aforesaid decision of Hon ble Supreme Court, we hold that the disallowance made u/s.14A of the Act in the instant case deserves to be deleted both on technical ground as well as on merits. Claim of loss on value of securities held as stock in trade in Held For Maturity category - HELD THAT:- As decided in own case [ 2018 (6) TMI 520 - ITAT MUMBAI] bank valued its investments at cost or market value whichever is less and the difference arising as a result of the valuation has to be allowed to the assessee as a loss. - Decided in favour of assessee. Disallowance made on account of shifting of securities from investments held under Available For Sale (AFS) to HTM category - HELD THAT:- We find that as per the RBI Circular dated 01/07/2011, shifting loss incurred at the time of shifting of securities from AFS to HTM category should be debited to profit and loss account as a regular expenditure. We find that the ld. CIT(A) while allowing the additional ground of the assessee had categorically agreed that the assessee had incurred valuation loss / shifting loss to have been incurred pursuant to due compliance of RBI Circular dated 01/07/2011. While that be so, how the assessee could have violated the very same RBI Circular when it comes to enhancement of ₹ 3,43,236/- by way of reversal of shifting loss. Hence, it could be safely concluded that the ld. CIT(A) had taken a contradictory stand in his order with regard to compliance with RBI Circular. In the instant case, the depreciation of investments at the time of shifting from AFS to HTM category had been debited by the assessee as an expenditure in consonance with RBI Circular dated 01/07/2011 referred to supra. The said shifting loss is squarely allowable as deduction. But the assessee had provided the revised workings of the said loss before the ld. CIT(A) which resulted in an enhancement of ₹ 3,42,336/-. We find that the assessee had not provided any evidence before us to counter the said workings given before the ld. CIT(A) and hence we do not deem it fit to interfere in the said enhancement done by the ld. CIT(A) . However, the observations made by the ld. CIT(A) for justifying the addition is not warranted. Disallowance of non-rural bad debts written off u/s.36(1)(vii) - AO disallowed the claim of bad debt pertaining to non-rural branches - HELD THAT:- As decided in own case [ 2018 (7) TMI 2067 - ITAT MUMBAI] The proviso limits its application to the case of a bank to which clause (viia) applies. Clause (viia) applies only to rural advances. This has been explained by the Circulars issued by CBDT. Thus, the proviso indicates that it is limited in its application to bad debt(s) arising out of rural advances of a bank. It follows that if the amount of bad debt(s) actually written off in the accounts of the bank represents only debt(s) arising out of urban advances, the allowance thereof in the assessment is not affected, controlled or limited in any way by the proviso to clause (vii). Accordingly, the above question is answered in the affirmative, i.e., in favour of the assessee(s). Addition made on account of interest accrued but not due on securities - assessee has accounted interest on securities in its books of account on accrual basis - HELD THAT:- As decided in own case [ 2017 (10) TMI 583 - ITAT MUMBAI] the said interest is not liable to tax qua the broken period. The right to receive interest on the Government securities vested in the respondent only on the due date mentioned in the securities. Consequently, interest accrued on the securities only on the due dates and cannot be said to have accrued to the respondent on any date other than the date stipulated therein. The contention that interest accrues for broken periods between two consecutive dates stipulated in the agreement/instrument for payment of interest is without any basis in law. If the respondent held the security upto 31st March, 2001 and sold the same thereafter, but before the date on which interest was payable as stipulated in the security, interest cannot be said to have accrued to the respondent. It is not disputed that in respect of the securities held by the respondent on 31st March, 2001, the due date for payment of interest thereon had not arrived on 31st March, 2001 and that the respondent sold some of such securities prior to the next due date for payment of interest. It is only the holder of the security on such date to whom interest can be said to have accrued. In any event interest did not accrue to the respondent on 31st March, 2001, as admittedly interest was not payable on that date as per the terms of the said securities. The appellate authorities, therefore, rightly deleted the addition Broken period interest paid on purchase of securities - HELD THAT:- Since such securities are the stock in trade of the assessee, the broken period interest paid on acquisition is in the nature of revenue expenditure. We find that this issue is covered in favour of the assessee by the decision of Hon ble Jurisdictional High Court in assessee s own case [2018 (7) TMI 2067 - ITAT MUMBAI] Applicability of provisions of Section 115JB of the Act to the assessee bank - HELD THAT:- As decided in assessee s own case [2018 (7) TMI 2067 - ITAT MUMBAI] In the case of banking companies, however, the provisions of Schedule VI are not applicable in view of exemption set out under proviso to Section 211(1) of the Companies Act. The final accounts of the banking companies are required to he prepared in accordance with the provisions of the Banking Regulation Act. The provisions of Section 115JB cannot thus be applied to the case of a banking company.
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2020 (1) TMI 1134
Unexplained jewellery found during the course of search carried out u/s 132 - HELD THAT:- Assessee has placed evidence on record to explain the source of jewellery found during the course of search in the form of affidavits given by her relatives having sufficient means, we direct the revenue authorities to delete the addition for unexplained jewellery. However our this view should not taken as a precedence as the same depends on the material facts of a particular case. Ground No.1of the assessee is allowed.
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2020 (1) TMI 1133
Rectification of the order u/s 254 - Assessment u/s 153C - satisfaction note need exhibiting fact that during the course of search certain documents belonged to other persons were found and perusal of these documents would indicate that taxable income of the assessee has escaped assessment - HELD THAT:- For taking cognizance under section 153C it is mandatory that the AO of the searched person should record a satisfaction note exhibiting fact that during the course of search certain documents belonged to other persons were found and perusal of these documents would indicate that taxable income of the assessee has escaped assessment. After this satisfaction note, he would transmit record along with these documents to the AO who has jurisdiction over such other persons. In the present case, no satisfaction was recorded by the AO of the searched person. It is mandatory to record satisfaction by the AO of the searched person before transmitting record to the AO of other persons to whom documents were found during the course of search; circumstances at which this satisfaction could be recorded has also been contemplated by the Hon ble Supreme Court. We allow these Misc. Applications, and recall the impugned order of the Tribunal. We direct the Registry to re-fix the appeals on 2.3.2020 for hearing afresh. Issue notice to both parties.
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2020 (1) TMI 1132
Rejection of books of accounts - recognition of income - Development of housing project - assessee has not followed percentage completion method whereas as per the Guidance Note issued by ICAI the assessee is required to follow percentage completion method of accounting - HELD THAT:- It is noted from the available records that the assessee is regularly following an accounting policy whereby sales is recognized by following project completion method . According to this method, the sales are recognized when the sale deed is executed and possession of the flat is given to the buyer. There is no provision under the Act which makes percentage completion method of accounting in real estate project mandatory as observed by the AO. The Guidance Note issued by the ICAI is recommendatory. The same do not override the choice of method of accounting to be followed by the assessee provided under the Act. The complete detail of subsequent recognition is also placed by the assessee at page PB 27 of the paper book. Therefore when such amount is already recognised as revenue or reflected back in the subsequent years, assessing the same in the year under consideration has resulted into double taxation. The AO has not considered the expenditure incurred by the assessee against such receipt. In the present case in the project Grandeur, total value of stock as on 31- 03-2015 was ₹ 6,10,28,779/-. Therefore, deduction on account of cost against the receipt of ₹ 3,96,99,161/- ought to have been allowed instead of assessing the receipt as income. Hence, taking into consideration the facts and circumstances, we find no reason to interfere with the order of the ld. CIT(A). Thus Ground No. 1 of the Revenue is dismissed. Disallowance of commission expenses as bogus - persons could not furnish the details of the flats or project of flat number or person to whom they has allegedly sold the flats - CIT-A granted part relief - HELD THAT:- The onus upon the assessee to prove before the Revenue authorities and to furnish the evidence with regard to rendering of services to whom alleged commission was paid. Since the assessee could not prove the actual rendering of services, therefore, the assessee is not entitled to claim commission expenses. Thus while taking into consideration the entire facts and circumstances of the case, we allow the commission expenses to Shri Akhil Boolia only and with regard to commission expenses paid to other persons are concerned, we set aside the order of the ld. CIT(A) and uphold the order of the AO. Therefore, the Ground No. 2 of the Revenue is partly allowed.
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2020 (1) TMI 1131
Period and timing of Personal hearing before the CIT(A) - tax practitioners, Advocate and Chartered Accountant to wait till 9 PM and 10 PM in his office - Power conferred on the CIT (Appeals) u/s 251 to enhance the assessment - HELD THAT:- The power conferred on the CIT(Appeals) to enhance the assessment is onerous responsibility. Such a responsibility cannot be ignored by the CIT(Appeals) by simply blaming the assessee that he has not responded to the notice of hearing. Moreover, the judicial discipline requires that the CIT(Appeals) shall pass an order by bringing on record all material facts and record his own reason for the conclusion reached therein. There should be a live link to the material available on record and the application of mind by the CIT(Appeals) while disposing of the appeal. Such a live link can be brought in only by passing a speaking order. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has to apply his mind independently to the material available on record and reappreciate the same and thereafter decide the issue afresh in accordance with law. CIT(Appeals) has to work for entire 24 hours. CIT(Appeals) has to work within the office hours as prescribed and take sufficient rest so that he may recoup his energy to do his job in the next day morning. Even though we are not blaming his working upto 10 PM in the night, there may not be any productive result after such prolonged work after the office hours. Working in the late hours upto 10 PM in the night and passing this kind of cryptic and non-speaking order will not only affect the health of the officer but also prejudice the interest of the assessee. This could have been avoided by the CIT(Appeals). Moreover, even though Saturdays and Sundays are being declared holidays for Central Government offices, including the office of the CIT(Appeals), this Tribunal is of the considered opinion that such holidays are declared by the Government of India expecting the Government employees to relax, rest and recoup energy on Saturday and Sunday so that they can work effectively and efficiently on the coming working days. Tribunal is confident that the CIT(Appeals) may confine his hearing of appeals within the working hours of the Income-tax Department so that the Chartered Accountants, Advocates and tax practitioners, who are appearing before him, may have more confidence and certainty in his functioning. It may not be wrong to continue the hearing after office hours occasionally. But hearing the appeals and making the tax practitioners, advocates and Chartered Accountants to wait till 9 PM to 10 PM on daily basis has to be avoid. CIT(Appeals) is set aside and the entire issue raised by the assessee is remitted back to the CIT(Appeals) - Appeal filed by the assessee stands allowed for statistical purposes.
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2020 (1) TMI 1130
Intimation u/s 143(1) as appealable order u/s 246A - CPC making addition on account of disallowance of expenditure indicated in the audit report in intimation u/s 143(1) - disallowance of expenditures u/s 143(1) by CPC is a debatable issue and is not a mistake apparent from record, which cannot be rectified u /s 154 - HELD THAT:- Appeal lies to the CIT(A) from an order passed / initiation given by the CPC u/s.143(1) 143(1A) of the Act if the assessee denies his liability pursuance to order passed under section 143(1) of the Act. CIT(A) had wrongly mentioned in the order reproduced herein above that no appeal lies against the intimation issued by the CPC under section 143( 1) of the Act unless the assessee approaches the CPC for rectification. From the perusal of the provision is reproduced hereinabove it is abundantly clear that there is no requirement in law to approach to the CPC for rectification of the order, if the assessee is aggrieved by the order and denies his liability as per the intimation received by him under section 143 (1) of the Act. We are of the opinion that the matter is required to remand back to the file of CIT(A) for fresh adjudication on merits as we hold that the appeal lies before the CIT(A) against the order passed u/s.143(1) of the Act by the CPC. Admittedly the assessee is affected by the order/intimation of the CPC as is clear from the facts of present case. In the light of the above, the Grounds raised by assessee are treated as allowed for statistical purposes.
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2020 (1) TMI 1129
Delay in filing the appeal electronically - condonation of delay in filing appel before CIT(A) - According to D.R., the assessee filed the appeal electronically only after the CIT(Appeals) disposed of the appeal by the impugned order - Appeal was filed manually within the period of limitation - HELD THAT:- when the assessee has a substantial right of appeal under Section 246A of the Act, such a right cannot be taken away so lightly merely because there was a violation of procedural aspect in the form of filing appeal. Sofar, the assessee was permitted to file appeal in manual / paper form. Now the Department switched over to electronical format for filing the appeal. This is the transition stage. There may be a misunderstanding in filing the appeal whether the appeal has to be filed electronically or manually. This Tribunal is of the considered opinion that whatever may be the reason for filing appeal manually, now the assessee filed the appeal electronically on 25.07.2019. Therefore, even the procedure of filing of appeal electronically has been complied with by the assessee. Therefore, throwing the assessee out of court by saying that the appeal was not filed electronically may not be justified at all. The assessment proceeding before AO and the CIT(Appeals) is a judicial proceeding as provided under Section 136 of the Act. Moreover, the very object of proceeding before the income-tax authorities is to compute the taxable income, levy tax thereon as per the law and collect the same as per the procedure prescribed for collection of tax. Therefore, merely on technicalities, the Government cannot retain a single pie of taxpayer which is not authorized by law. In this case, an effective appeal remedy is provided u/s 246A therefore, merely because there was a technical flaw or violation of not filing the appeal initially by electronically which was admittedly complied by the assessee subsequently on 25.07.2019, this Tribunal is of the considered opinion that the appeal of the assessee cannot be thrown away. At the best, we may say that there is a delay in filing the appeal electronically as provided under Rule 45. By keeping the law laid down by Apex Court in Collector, Land Acquisition [ 1987 (2) TMI 61 - SUPREME COURT] provisions of the Constitution for levy and collection of taxes and the transition period the taxpayers and the Department are passing through, this Tribunal is of the considered opinion that the delay in filing the appeal electronically has to be condoned. Accordingly, the delay in filing the appeal electronically is condoned and the impugned order of the CIT(Appeals) is set aside and the entire issue raised by the assessee is remitted back to the file of the CIT(Appeals) for consideration on merit.
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2020 (1) TMI 1128
Maintainability of appeal - Monetary limit - low tax effect - HELD THAT:- The tax effect is less than one crore and therefore, in the light of the Circular dated 8/8/2019 issued by the CBDT, fixing the monetary limit, the present appeal is dismissed as withdrawn. However, the question of law is left open. The appeals are not covered under the Exceptional Clause of the Circular dated 8/8/2019.
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CST, VAT & Sales Tax
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2020 (1) TMI 1126
Levy of sales tax - inter-state sales or intra-state sales - Form XXVIII-B as prescribed under Rule 31 of the Bihar Sales Tax Rules, 1959 issued - the claim of the petitioner as regards the counter-sales, which had been made to the consignees outside the State of Jharkhand, but claimed as sales made within the State (intra-State sales), has been rejected. HELD THAT:- The State Government itself, after the decision of the Patna High Court in Laxmi Hard Coke case [1996 (4) TMI 523 - PATNA HIGH COURT] , prescribed three types of road permits in the shape of blue coloured, pink coloured and green coloured Forms XXVIII-B. The blue coloured Form XXVIII-B was made for transportation of the goods from within the State to outside the State. This was done by the State Government in the year 1997, while the State of Bihar was unified. After the bifurcation of the State in the year 2000, the State Government of Jharkhand in its Department of Commercial Taxes, came out with the letter dated 10.01.2002, as contained in Annexure-B to the counter-affidavit, wherein it was clearly stated that unless the satisfaction about the inter-State sale, as on the four points detailed in the said letter is arrived, the transaction cannot be considered to be inter-State sale. It is found that neither in the impugned assessment order, nor in the impugned Judgement passed by the Tribunal, there is any mention that the authorities, before coming to the conclusion that the sales in question were in fact the inter-State sales, had verified the documents of the petitioner relating to the four points as detailed in the letter dated 10.01.2002. Faced with this situation, it is found that neither the impugned assessment order, nor the impugned Judgement passed by the Tribunal, can be sustained in the eyes of law, as they have held the transactions in question to be inter-State sales, only on the basis of the road permits issued by the petitioner firm. As such, both these impugned order / Judgement cannot be sustained in the eyes of law. The matter remanded back to the Assessing Authority, to determine the liability of Central Sales Tax of the petitioner afresh - petition allowed by way of remand.
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9911796707
