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TMI Tax Updates - e-Newsletter
July 3, 2023
Case Laws in this Newsletter:
GST
Income Tax
Securities / SEBI
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Migration of credit for advance tax and tax deducted at source (TDS) post merger - Claim of credit of taxes paid by Polaris in the merged entity of Virtusa - Since the basic grievance of the petitioner has been redressed, we are of the view that the consequential refund is required to be remitted to the petitioner at an early date with applicable interest in accordance with law. - HC
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Addition u/s 68 - cash capital introduced by partners shown to be loan taken - The cash component in which form the capital was introduced in the firm was small compared to the total capital introduced. Secondly, there is no bar against introducing the capital by way of cash. Thirdly, it was shown that the partners had taken loan of Bajaj Finserv Ltd. to the tune of Rs. 4.5 crores, out of which Rs. 4 crores was introduced in the firm by way of capital. - Additions were rightly deleted by the CIT(A) and ITAT - HC
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Income Taxable in India - Salary - foreign assignment allowance received by the assessee for the services rendered outside India - the foreign assignment allowance that was topped up to the TCC of the assessee, though it was transferred by the employer from their bank account in India to the Axis bank’s nostro accounts, is not taxable in India. - AT
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LTCG - Long term capital assets or short term - Period of holding of assets - Part of the property (i.e. 66.92 sq.mtr. outof 302.86 sq.mtr.) held with the assessee less than 36 months as the same was conveyed to the daughter of the appellant on 16.03.2006 and reversed back on 30.07.2015 - Assessee is eligible for the benefit of LTCT and exemption u/s 54F only for the area of land admeasuring to 235.94 sq.mtr. - AO directed to recompute the long term capital gain accordingly - AT
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Excess jewellery found during the course of search - Jewellery belonging to family member (i.e sone and wife) or not? - person to whom said jewellery belongs - Excess jewellery found in the name of son of the appellant and wife of the assessee cannot be assessed in the hands of the assessee - AO directed to delete the additions - AT
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Weighted deduction for expenses incurred towards clinical trial expenses - Explanation to section 35(2AB) - The section allows the expenditure incurred towards clinical trial by the approved entity and, therefore, we see no reason to deny the benefit of weighted deduction or the expenditure incurred by the assessee towards clinical trial - AT
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Validity of reopening of assessment u/s 147 - Purchase the immovable property on which TDS has been deducted - TDS statement (Form 26QB) shows the amount of purchase of property twice - The notice to the petitioner has been based only for the aforesaid reasons, whereas the impugned order would further add new reasons for the order. The petitioner had not been given an opportunity to answer and explain the same. - Proceedings set aside - Petitioner / assessee allowed to submit the reply and opportunity of personal hearing shall be given to the assessee - HC
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Additions based on amount shown in the TDS statement, 26AS - Merely because the TDS has been shown to have deducted and deposited in assessee’s account that itself is not the absolute proof of assessee having received any sum/income from the said deductor especially when the assessee has specifically denied any transaction with the said deductor. - AT
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Nature of receipts - sale of carbon credits - Carbon credits cannot be considered as an income in the assessment year 2012-13 and insertion of new section 115BBE of the Act, which was introduced from 1.4.2018 is only prospective in nature and cannot be applied to the assessment year 2012-13. - AT
Customs
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Exemption of deposits into ECL - Scheme extended till 30-9-2023 - Seeks to amend Notification No. 18/2023-Customs (N.T.) dated the 30th March 2023 - Notification
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Exemption of deposits u/s 51A (4) of the Customs Act, 1962 - Implementation of notification deferred till 1.10.2023 - Seeks to amend Notification No. 19/2022-Customs (N.T.) dated the 30th March 2022 - Notification
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Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver - Notification
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Launch of “Self Customs Pass for Importer/Exporter " functionalities in CBLMS, in conformity with regulation 3(b) of CBLR 2018 — Mumbai Customs
DGFT
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Amendment in import policy condition of Cigarette lighters Covered under CTH 9613 of Chapter 96 of Schedule -I (Import Policy) of ITC (HS) 2022 - Notification
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Amnesty scheme for one time settlement of default in export obligation by Advance and EPCG authorization holders - Public Notice
FEMA
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Use of International Credit Card while outside India - Approval of RBI is not required for making payment by a person towards meeting expenses - Amendment in Foreign Exchange Management (Current Account Transactions) Rules, 2000 - Notification
SEBI
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Implementation of circular on upstreaming of clients’ funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs) - Circular
Case Laws:
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GST
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2023 (7) TMI 35
Maintainability of petition - non-availability of alternative remedy of appeal - Violation of principles of natural justice - Non-speaking order - contention raised by the petitioner has not been properly dealt with - HELD THAT:- On perusal of the impugned order, it is found that the same contains reasons and it is a detailed order and sufficiency of the reasons to the satisfaction of the petitioner cannot be a ground for avoiding alternative remedy by way of appeal since the impugned order is an appealable order under the relevant provisions of the WBGST Act - Furthermore, this is not a case where the impugned order has been passed in violation of principles of natural justice or the order has been passed by the authority having inherent lack of jurisdiction and it is also not a case that the ground or the issue raised in this writ petition is barred under the statute for adjudication by the Appellate Authority. The petition is dismissed on the ground of availability of alternative remedy by way of appeal.
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Income Tax
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2023 (7) TMI 34
Reopening of assessment u/s 147 - reasons to believe - failure on the part of the Petitioner to furnish bank account statements pertaining to Avash Logistic bearing Account with M/s YES Bank Ltd., in which transactions were made reflecting payments made to Mr. Vasudev Thacker and his son which according to the assessing officer had resulted in under assessment of the Petitioner's taxable income - HELD THAT:- It cannot be said that there was any failure on the part of the Petitioner to disclose fully and truly the material facts during the regular assessment. Even otherwise, we are of the opinion that the assessing officer would have no reason for the formation of his belief that income had escaped assessment inasmuch as payments were made by the joint venture companies to Mr. Vasudev Thacker and to Mr. Nishant Thacker and reopening if at all ought to have been considered in those cases. There was no tangible material with the assessing officer, which would form a basis for the assessing officer for his 'reason to believe' that payments made to Mr. Vasudev Thacker as also to his son Mr. Nishant Thacker resulted in generation of cash, which ultimately found its way to the Petitioner. In the absence of any such specific information, which ought to have been reflected in the reasons recorded, it can be said that the jurisdictional requirements have not been fulfilled in the present case. While it may be true that as against the alleged payment of Rs. 153 crores paid to Mr. Vasudev Thacker, he admitted to have received only amount of Rs. 130 crores, which led to a disclosure by the Petitioner to the extent of Rs. 23 crores, yet the same cannot be made a basis for reopening. It needs to be pointed out that it is not the case of the Respondent-revenue that the entire amount, which had been received by Mr. Vasudev Thacker as also Mr. Nishant Thacker was never used for purchase of parcels of land for establishing the project, for which Special Purpose Vehicle companies were created. If that is so, one fails to understand as to why only four entries recorded in the reasons recorded, were picked up by the AO. Decided in favour of assessee.
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2023 (7) TMI 33
Stay of demand - direction to pay 20% of outstanding demand as per CBDT office memorandum - stay application preferred before the PCIT beyond the period of limitation - revenue prays for adjournment to obtain instruction on the fact of stay application filed - HELD THAT:- We are not inclined to grant adjournment. This is because it will appear from impugned letter that the ITO was uncertain on whether stay application had been filed elsewhere, that is before appellate authority. That means, the stay application made before the AO was not considered for order being made under sub-section (6) of section 220. We quote below relevant sentence from impugned letter. If you have applied for stay of above-mentioned demands, please furnish the copy of the order of the stay of demand granted, if any. On our above appreciation of the fact situation, it is not necessary for us to express any opinion on the orders of the Delhi High Court and the Supreme Court, relied upon by petitioner. Impugned letter is set aside and quashed. AO is directed to consider the stay application and pass order under provision in sub-section (6) in section 220.
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2023 (7) TMI 32
Unlawfull adjustment of refund admittedly due against the demand for this AY without prior intimation u/s 254 - stay as granted ignored - HELD THAT:- When stay is granted it would continue till the disposal of the Appeal and not only for a period of six months u/s 220(6) of the ITA. This Court in t he case of Hindustan Unilever Ltd. [ 2015 (7) TMI 366 - BOMBAY HIGH COURT] held that in view of the stay u/s 220(6) of the Act, the time to make the payment stands extended till the disposal of the appeal by CIT (Appeals). Non-giving of intimation in writing prior to setting off the amount payable against the amount to be refunded is fatal. This Court in Jet Privilege (P) Ltd. [ 2021 (8) TMI 593 - BOMBAY HIGH COURT] and BPCL [ 2021 (11) TMI 1158 - BOMBAY HIGH COURT] held that the requirement of prior intimation u/s 245 of the ITA was a mandatory requirement and failure to comply with this mandatory requirement of prior intimation would make the entire adjustment wholly illegal. Order: - The adjustment for AY 2021-22 against the demand for AY 2015-16 2016-17 and adjustment for AY 2017-18 against the demand for AY 2016-17 are quashed and set aside and refund or such additional amount as may have been determined be paid to the Petitioner within two weeks from the receipt of the order along with interest thereon u/s 244A up to the date that payment is received.
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2023 (7) TMI 31
Difference in payment received as per Section 26AS and as per books - disallowance of payment of employees contribution towards PF after due date - ITAT deleted the addition - HELD THAT:- Tribunal has specifically observed that AO has not verified the claim of the assessee and the total contract amount was only of Rs. 1.2 crore and the assessee has raised RA Bills of Rs. 8.32 crore during the relevant financial year. The assessee has received amount of Rs. 8.32 crores, out of which as per the books of account, as per the bank statement is of Rs. 7.7 crores only, which was received in the current year. It is also observed by the tribunal that the CIT (Appeals) has rightly deleted the addition after verification of bank account, contract amount which was received by the assessee on the basis of running bills. Thus, after considering the facts and circumstances of the present case, the tribunal has rightly dismissed the appeal preferred by the present appellant - No substantial questions of law arises for consideration.
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2023 (7) TMI 30
Migration of credit for advance tax and tax deducted at source (TDS) post merger - Claim of credit of taxes paid by Polaris in the merged entity of Virtusa - HELD THAT:- Today when the matter is called upon Standing Counsel submits on the basis of written instruction that challan from Polaris to Virtusa has been successfully migrated. Earlier such migration could not be uploaded as manual order could not be uploaded. The migration order finally got uploaded manually on 07.06.2023 and credit for advance tax and TDS was allowed resulting in a refund. Petitioner submits that direction may be issued to the respondents to release the refund to the petitioner in a time-bound manner. Since the basic grievance of the petitioner has been redressed, we are of the view that the consequential refund is required to be remitted to the petitioner at an early date with applicable interest in accordance with law. Let the refund along with applicable interest be remitted to the petitioner within a period of eight weeks from the date of receipt of a copy of this order. This disposes of the writ petition.
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2023 (7) TMI 29
Validity of assessment u/s 153C - petitioner was issued six separate notices of even date u/s 153C - petitioner had asked for 30 days to respond to the said notice - HELD THAT:- As via notice dated 14.03.2023, 30 days time had been granted to file the return.Unfortunately for the petitioner, the AO passed the impugned assessment orders dated 28.03.2023, without granting the time sought for by the petitioner. Although representations were made thereafter by the petitioner for each of the assessment years on 12.04.2023, requesting the respondent to refrain from initiating penalty proceedings, there has been no movement in the matter. Given this position, AO had put the petitioner on an extremely tight leash. AO expected the petitioner to gather information for six AYs within two days, which by any yardstick was not a practical timeframe. This is especially so, as the AO, while issuing notice under Section 153C of the Act, had granted 30 days to the petitioner to file the return of income concerning the AYs in issue. Thus, for the foregoing reasons, we are inclined to set aside the impugned assessment orders.
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2023 (7) TMI 28
Addition u/s 68 - cash capital introduced by partners out of the loan taken by partner from the Bajaj Finserv Ltd. - as submitted that all the partners had bank account, therefore capital could have been introduced through cheque in favour of the firm and assessee did not explain as to when the loan from Bajaj Finserv Ltd. was taken as claimed - ITAT confirmed the finding of the Commissioner observing that the assessee had explained the partners source - HELD THAT:- The cash component in which form the capital was introduced in the firm was small compared to the total capital introduced. Secondly, there is no bar against introducing the capital by way of cash. Thirdly, it was shown that the partners had taken loan of Bajaj Finserv Ltd. to the tune of Rs. 4.5 crores, out of which Rs. 4 crores was introduced in the firm by way of capital. ITAT further endorsed the findings of the Appellate Commissioner to note that the partners were assessed to tax and therefore accounts were audited. All these particulars were not doubted even by AO at the time of assessment proceedings, it was observed. The concurrent findings are reasonable and properly arrived at. They are in the nature of findings of facts required to be upheld. No substantial question of law.
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2023 (7) TMI 27
Income Taxable in India - Income deemed to accrue or arise in India - foreign assignment allowance received by the assessee for the services rendered outside India - assessees received salary which includes the component of the foreign allowance received outside India - assessees are the employees of IBM India Private Limited, which is an Indian company who sent the assessees on long term assignment to various countries - HELD THAT:- In the case of Bodhisattva Chattopadhyay [ 2019 (11) TMI 1031 - ITAT KOLKATA] the facts are identical wherein assessee was found to be a non-resident and the assessee received the foreign assignment allowance which the employer transferred from the employer s bank account held in Bangalore to Axis Bank nostro account for top up to the TCC and also that the employer affected TDS on the entire remuneration that was paid to the assessee both in India and abroad - the foreign assignment allowance that was topped up to the TCC of the assessee, though it was transferred by the employer from their bank account in India to the Axis bank s nostro accounts, is not taxable in India. The Tribunal repelled contentions of the Revenue as to the double non-taxation of this amount, because it was not subjected to any tax in the host country, stating that such a fact is immaterial to decide the issue, because the question effectively is whether such foreign assignment allowance is taxable in India or not? For such question, the subjection of the said amount to tax in the host country is totally irrelevant. Since the issue involved in these appeals has consistently been dealt with by the Tribunal and also by the higher fora, we respectfully follow the view taken in all the cases. We accordingly accept the contentions of the assessees and reject the plea taken by the Revenue.
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2023 (7) TMI 26
Deduction u/s 54F - income on the sale of property has been held to be short term capital gain - Part of the property (i.e. 66.92 sq.mtr. outof 302.86 sq.mtr.) held with the assessee less than 36 months as the same was conveyed to the daughter of the appellant on 16.03.2006 and reversed back on 30.07.2015 - reckoning of holding period of asset - HELD THAT:- Assessee was in position of the entire plot of land since 01.01.1979 but the Schedule of property mentions therein only in respect of 66.92 sq.mtr. and not 302.86 sq.mtr. and therefore, the title transferred to the daughter is of course in respect to this portion of area of land of measuring about 66.92 sq.mtr. and not the total area 302.86 sq.mtr Legally, the assessee has been conferred with the right of possession of the entire plot of land measuring about 302.86 sq.mtr. only by way of the deed of rectification dated 31.07.2015 but the same relates back to the original date of allotment dated 01.01.1976 when under the University Staff Housing Scheme the assessee was allotted with the same plot of land. Under these facts and circumstances, admittedly, the assessee is entitled to the claim of long term capital gain under Section 54 of the Act in respect of balance of land measuring 235.94 sq.mtr. which was never conveyed by way of deed of sale by the appellant to her daughter. We, therefore, accept the contention made by the Ld. Senior Counsel appearing for the assessee and direct the Ld. AO to calculate the capital gain in respect of the area of land admeasuring to 235.94 sq.mtr. and grant relief to the assessee. Assessee s appeal is partly allowed.
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2023 (7) TMI 25
Excess jewellery found during the course of search - Jewellery belonging to family member (i.e sone and wife) or not? - person to whom said jewellery belongs - in whose hands said additions can be made for excess jewellery found during the course of search? - HELD THAT:- If a person is major and having known source of income and also filing income tax returns, then the assets including jewellery if any belongs to said person needs to be assessed in the hands of the person, who filed return of income even though jewellery found during the course of search is in a common premises. In this case, admittedly jewellery belongs to the son of the appellant was found in his bedroom, but not in the appellant s bedroom. Similarly, jewellery belongs to the wife of the assessee found in the locker belongs to her. Therefore, excess jewellery found in the name of son of the appellant and wife of the assessee cannot be assessed in the hands of the assessee. Assessing Officer directed to delete additions made towards excess gold jewellery, diamond jewellery and silver articles found in the possession of son and wife. Additions towards remaining Jewellery - HELD THAT:- When the assessee has explained source for purchase of new gold jewellery and diamond jewellery and such source is available to explain the shortage or excess gold jewellery and diamond jewellery found during the course of search, the AO ought to have allowed telescopic benefit towards excess jewellery. CIT(A), without appreciating relevant facts simply sustained additions made by the AO. - AO directed to delete additions made towards excess gold jewellery and diamond jewellery found during the course of search and assessed in the hands of the assessee. Appeal filed by the assessee is allowed.
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2023 (7) TMI 24
Validity of Reopening of assessment u/s 147 - Change of opinion - issues already examined in original assessment proceedings - HELD THAT:- In this case in the original assessment proceedings both the issues [for which the reopening proceeding initiated] were there and the assessee has furnished the necessary details and the order has been passed by the AO after making adjustment in the return of income u/s 143(3). Thereafter merely based on the audit objection, the assessment proceedings cannot be reopened merely on the same material which is already placed on record. We also noted that in the original assessment proceedings the issue related to the claim of the depreciation and interest paid on late payment of deposit of TCS is already forming part of the records. The issue raised by the Revenue is nothing but a change of opinion and the law does not permit the change of opinion on the same issue which has been examined by the ld. AO while passing the assessment order. As the issue on depreciation and interest payment has already been verified in the original assessment proceedings and the AO has already considered the claim of the assessee based on the submission placed before him. We also take note of the fact that in the reasons recorded in this case is that assessee has paid interest payment of TCS and claim on higher rate of depreciation is already decided based on the submission made by the assessee. Therefore, reopening is done merely based on the same material already on record. Decided in favour of assessee.
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2023 (7) TMI 23
Weighted deduction for expenditure towards Scientific Research u/s.35(2AB) - assessee has claimed a weighted deduction @ 200% - as per AO amount not approved by DSIR and therefore the weighted deduction cannot be allowed - contention of the assessee entire expenditure incurred by the assessee towards scientific research is eligible for weighted deduction since prior to 01/07/2016 there is no sanctity to the amount mentioned in Form 3CL certified by the DSIR - HELD THAT:- As relying on case of Strides Arcolab Limited [ 2023 (5) TMI 1101 - ITAT MUMBAI] hold that the assessee should be allowed the weighted deduction as has been claimed in the return of income and accordingly direct the assessing officer to delete the disallowance made in this regard. Since we have held the ground raised with regard to weighted deduction in favour of the assessee the alternate plea that if weighted deduction under section 35(2AB) is not allowed, then 100% of the expenditure should be allowed under section 37(1) has become academic. Accordingly the grounds raised in this regard do not warrant any adjudication. Weighted deduction for expenses incurred towards clinical trial expenses - HELD THAT:- As already held that the approval by DSIR of the facility from which the scientific research expenditure are incurred is the deciding factor for allowing the expenditure, which in assessee s case is available on record. The section allows the expenditure incurred towards clinical trial by the approved entity and, therefore, we see no reason to deny the benefit of weighted deduction or the expenditure incurred by the assessee towards clinical trial. Accordingly, we direct the Assessing Officer to allow the additional 100% of the deduction since the assessee in the computation of income has already claimed 100%. Allowance of MAT credit - allowance of credit towards Minimum Alternate Tax (MAT) is inclusive of surcharge and education cess as per the normal provisions and the MAT provisions - HELD THAT:- As relying on case of Tata Motors Ltd [ 2021 (7) TMI 207 - ITAT MUMBAI] we direct the Assessing Officer to include surcharge and education cess for the purpose of giving credit under section 115JAA. Short Grant of TDS - AR submitted that the AO has not granted credit for the TDS claimed by the assessee in the return of Income and prayed for a direction in this regard - HELD THAT:- We accordingly direct the Assessing Officer to verify and allow the claim of the assessee in accordance with law. Incorrect computation of interest u/s.234A - AR submitted that the assessee has filed the return of income for the assessment year before the due date for filing the return of income and therefore submitted that the levy of interest u/s.234A is not warranted - HELD THAT:- AO has stated that the return of income of the assessee for the Assessment year 2014-15 has been filed on 29.11.2014 Therefore there is merit in the submission of the ld AR that the levy of interest u/s.234A is not warranted since the interest under section 234A is levied for delay in furnishing the return of income. We therefore direct the AO to verify and delete the interest after giving a reasonable opportunity of being heard to the assessee. Refund of DDT - as argued appointed date as per the sanction of the court is prior to the date of declaration of dividend. Pursuant to the amalgamation the 6 companies have merged with the assessee company and therefore they cannot be any payment of dividend to these companies by the assessee and accordingly DDT paid on this dividend should be refunded to the assessee - HELD THAT:- As in the case of Torrents private limited [ 2013 (2) TMI 149 - GUJARAT HIGH COURT] the assessee is entitled for refund of excess dividend tax paid along with statutory interest as applicable. The facts in assessee's case are similar to the above case and therefore in our view the ratio laid down by the Hon'ble High Court is applicable in assessee's case also. Accordingly we direct the assessing officer to examine the facts of assessee's case and process the refund along with statutory interest in accordance with law. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly. Incorrect consideration of interest u/s 234C - As submitted that AO there is no shortfall in payment of advance-tax based on the income returned by the assessee - AR further submitted that the interest under section 234C is charged for the shortfall in the payments of advance-tax on the income returned and not income assessed - HELD THAT:- We direct the Assessing Officer to verify and allow the claim of the assessee in accordance with law after giving reasonable opportunity of being heard to the assessee.
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2023 (7) TMI 22
TP adjustment - comparable selection for software development segment - HELD THAT:- Akshay Software Technologies Limited [Akshay Software] is engaged in providing professional services and procurement, implementation and support of ERP products and services in India and Dubai and total employee benefit expenses is 93.90% of the revenue from operations and as per Note No.25 expenditure in foreign currency which is 93.69% of the revenue from operations of Akshay Software - thus we remit this issue to the TPO/AO for fresh consideration following the decision of the Pune Tribunal in SAS Research Development India P. Ltd [ 2023 (1) TMI 1201 - ITAT PUNE] after providing opportunity of hearing to the assessee and decide the issue in accordance with law. Evoke Technologies Private Ltd.- Assessee itself has submitted that Evoke Technologies P. Ltd. is engaged in diversified activities as mentioned supra. However, the ld. AR of the assessee submitted before us that this company is engaged only in software development services. Considering the submissions from both the sides, we think it fit to send the matter back to the AO/TPO for fresh consideration. If the above comparable companies passes the FAR analysis it can be considered as comparable. The assessee is directed to submit necessary documents along with the complete Director s report of the Evoke Technologies Ltd. to substantiate its claim. Sagarsoft India Limited and Sasken Communication Technologies Limited - As submitted that these companies pass all the filters applied by the TPO. Considering the arguments from both the sides, FAR analysis of these above two companies has not been done by the lower authorities. Therefore, this issue is remitted back to the TPO/AO for fresh consideration. Assessee is directed to produce necessary documents for substantiating its case. Adopting inappropriate filter like 15% RPT filter, in the process of selecting comparables - The coordinate Bench of the Tribunal in the case of JCIT, LTU (OSD) v. Circle-1, Bangalore vs M/s.Toyota Kirloskar Motors Private Limited ( 2021 (9) TMI 12 - ITAT BANGALORE ) has held that the RPT ratio has to be consistently calculated on an aggregate basis taking the ratio of RPT income plus RPT expenses by sales. Thus we direct the AO to calculate RPT ratio on aggregate basis considering the RPT income plus RPT expenses by sales for all the comparable companies. Exclusion of these 3 companies i.e., Larsen Toubro Ltd., Persistent Systems Ltd. Infosys Ltd. from the final list of comparables. Exclusion of Nihilent, Infobeans, Thirdware Solutions Ltd. and Aspire Systems (India) P. Ltd. from the comparables. As assessee has submitted that the revenue authorities have incorrectly computed the operating profit margin of Aspire Systems (India) Ltd. We remit this issue to the TPO/AO for proper computation of the operating profit margin and decide the issue only with regard to Aspire Systems (India) P. Ltd. in accordance with law in the light of the decision in SanDisk India Device Design Centre Pvt. Ltd. [ 2022 (6) TMI 1299 - ITAT BANGALORE] which has been extracted above. Exclusion of Inteq Software Pvt. Ltd. from the comparables as is not a suitable comparable vis-avis the taxpayer which is a routine software development service provider working on costplus mark up model. Cybage Software Pvt. Ltd company is rendering software services as well as developing software products unlike the assessee. Following the above decision of the Pune Tribunal, we direct exclusion of Cybage Software Pvt. Ltd. from the comparables. Provision for doubtful debt - treatment of provision for doubtful debt as non-operating in nature - AR submitted that provision for bad or doubtful debt is to be treated as operating expenses and considered be as operating in nature while computing operating margins of comparables - HELD THAT:- A query was raised to the ld. AR whether the provision for doubtful debts relate to the present assessment year or other year, but the ld. AR was unable to reply. Therefore, the case law relied by the ld. AR is not applicable. We remit this issue to the AO/TPO for verification of this issue afresh after providing opportunity to the assessee. If the doubtful debts is relating to the current assessment year, then it should be treated as operating expenditure. But if it relates to other years, then it cannot be allowed as operating expenses as held by the Tribunal in the case of Marvell India Pvt. Ltd.[ 2018 (4) TMI 1599 - ITAT BANGALORE] . TPO considering the Fixed Assets written off as operating in nature while computing margins of the assessee - AR submitted that fixed assets written off should be excluded from the operating cost, while computing the margins of the assessee - HELD THAT:- DRP has directed the AO/TPO to consider the fixed assets write off as non-operating as fixed assets being a balance sheet of item and write off of the same cannot have impact on operating profits of a particular year. Besides, the write off relate incomes/expense are in no way related to the operating revenue earned during the year, and hence cannot be taken into account in determining the operating profit for the year - we remit this issue to the AO/TPO to follow the directions of the DRP on this issue. Adoption of Cash PLI for computation of arm s length price confirmed. Risk adjustment - As relying on M/S. CAPCO TECHNOLOGIES P. LTD [ 2018 (3) TMI 1932 - ITAT BENGALURU] we remit this issue to the AO/TPO for fresh examination and direct the assessee to provide the details of quantification of risk adjustment in above terms. Notional interest on receivable beyond the credit period - HELD THAT:- Notional interest on receivable is an international transaction, therefore this argument of the assessee is rejected. The TPO has applied 6 months LIBOR + 300 basis points whereas the ld. DRP has directed for applying SBI fixed deposit rate. During the course of hearing, it was brought to the notice of both the parties that while calculating the notional interest on receivables, 6 months LIBOR + 300 basis points beyond the credit period shall be considered by the TPO for giving effect on this issue. Corporate tax adjustment towards depreciation on goodwill - depreciation on goodwill arising on account of amalgamation - HELD THAT:- During the course of hearing on different dates, both the parties argued extensively and filed written synopsis which are stated hereinabove. In the written submissions filed by the assessee, it is stated that the goodwill has arisen for the excess consideration paid and it has been recorded as per the scheme approved by the Hon ble High Court. We note that the assessee has stated that goodwill is recorded in the books of accounts on the difference between the net assets (total assets liabilities) taken over by the assessee and consideration paid to the amalgamating company on the one hand, and on the other, it is stated that the intangibles are collectively reflected as goodwill. This aspect requires verification at the end of the AO. We also note that no separate value has been assigned to these intangibles of the rejoinder extracted above. It is also not clear whether the amalgamating company has claimed revenue expenditure or depreciation on these intangibles. We therefore remit this issue to the AO to verify the above aspects and also examine that no double benefit is given to the amalgamating/amalgamated company. Accordingly, the AO shall decide the issue afresh as per law, after giving proper opportunity of being heard to the assessee. This issue is allowed for statistical purposes.
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2023 (7) TMI 21
Validity of reopening of assessment u/s 147 - Purchase the immovable property on which TDS has been deducted - TDS statement (Form 26QB) shows the amount of purchase of property twice - HELD THAT:- The notice to the petitioner has been based only for the aforesaid reasons, whereas the impugned order would further add new reasons for the order. The petitioner had not been given an opportunity to answer and explain the same. Therefore, taking into account the fact that the very basis of the demand is erroneous and the impugned order proceeds to give new reasons, which the petitioner has not been given an opportunity to defend, the impugned order is set aside. The notice issued u/s 148A(b) shall be treated as an additional show cause notice and the petitioner shall submit his explanation to this additional show cause notice within a period of two weeks from the date of receipt of a copy of this order. Decided in favour of assessee.
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2023 (7) TMI 20
Carry forward and set off of unabsorbed depreciation without any limitation of period - carry forward after period of 8 years - HELD THAT:- As the provisions of section 32(2) was introduced by Finance Act, 1998 and further came to be amended by the Finance Act, 2000. The provisions introduced by the Finance Act, 1996 was clarified by the Finance Minister to be applicable with the prospective effect. The court referred to the relevant circular of the Central Board of Direct Taxes and attached purposive and harmonious interpretation keeping in view the purpose of amendment of section 32(2) and held that the assessee becomes entitled to the benefit within the ambit of section in view of the clear language of the section. The questions framed as substantial question of law on the ground of carry forward of unabsorbed depreciation without any limitation period, does not arise as the issue is settled in General Motors India (P) Ltd. [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] as held that once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997- 98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. No substantial question of law.
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2023 (7) TMI 19
Deduction of provision for leave encashment / unearned leave - AO has disallowed actual payment towards leave encashment on the ground that it has credited to provision for leave encashment - It was the claim of the appellant that the reduction in the provision for leave encashment has been withdrawn from liability from the provision for leave encashment shown in the balance sheet, but instead of crediting it to the liability account, the amount has been reduced (credited) to the actual amount of leave encashment paid to the employees during the year - HELD THAT:- The assessee has filed a detailed note explaining the actual payment of leave encashment and amount withdrawn from provision for leave encashment. We find that the arguments of the assessee appears to be correct, going by method of accounting followed by the assessee for claim of deduction towards payment for leave encashment and provision for leave encashment in the books of accounts. But fact remains that, facts needs to be verified from the AO. Therefore, we set aside the issue to the file of the AO and direct the AO to re-examine the claim of the assessee in light of arguments that the assessee is making provision for leave encashment in the books of accounts and adding back the same in the memo of computation of taxable income and further claiming deduction towards payment for leave encashment u/s. 43B(f) - AO is directed to verify the claim of the assessee and decide the issue in accordance with law. Appeal filed by the assessee is allowed for statistical purposes.
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2023 (7) TMI 18
Penalty u/s 271(1)(c) - deduction claimed u/s 54F as denied to the assessee and consequently thereto the income of long term capital gain was determined - HELD THAT:- Considering the findings of the Tribunal in assessee own case [ 2023 (6) TMI 517 - ITAT JAIPUR] we are of the considered view that when the quantum appeal is allowed and the deduction has been granted by this Tribunal consequently the penalty cannot hold its leg and therefore, we vacate the consequential levy of penalty - Decided in favour of assessee.
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2023 (7) TMI 17
TDS u/s 195 - disallowance of software support charges u/s. 40(a)(i) for non-deduction of tax - HELD THAT:- We find that the issue is now stands covered in favour of the assessee by the decision of Hon ble High Court of Madras in assessee s own case for earlier assessment years [ 2021 (12) TMI 1447 - MADRAS HIGH COURT] wherein following the decision of M/s. Engineering Analysis Centre of Excellence Pvt Ltd [ 2021 (3) TMI 138 - SUPREME COURT] upheld the order of the Tribunal in allowing relief to the assessee towards payment made to non-residents for software support charges without deduction of tax at source u/s. 195. No error in the reasons given by the CIT(A) to delete additions made by the AO towards disallowance of software support charges u/s. 40(a)(i) for non-deduction of tax at source u/s. 195 - Decided in favour of assessee.
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2023 (7) TMI 16
Levy of late filing fees levied u/s 234E - delay in filing of TCS return as concerned chartered accountant of the assessee to the effect as his office was not properly working due to outbreak of Covid-19 pandemic - HELD THAT:- A small period of delay in filing of TCS return, we are of the view that the assessee was prevented by sufficient cause for not filing the TCS return in time which was beyond the control of the assessee. Therefore, the late filing fees imposed by the AO u/s 234E of the Act is ordered to be deleted. Appeal of the assessee stands allowed.
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2023 (7) TMI 15
Disallowance of expenses - assessee has claimed an expenditure towards various expenses besides claiming expenses relating to land - AO disallowed 80% of the various administrative expenses - HELD THAT:- The detail of expenses claimed by the assessee is given at page 29 of the assessment order. On a perusal of the same, we noticed that a sum has been incurred towards salary and bonus. The remaining expenses claimed by the assessee which consisted of various administrative expenses like advertisement, car expenses, depreciation, rent, telephone, travelling etc., which are normally incurred by a business concern. Accordingly, we are of the view that disallowance of 50% confirmed by the learned CIT(A) is also on the higher side. We note from the orders passed by the tax authorities that they have not made any adverse observation in respect of various administrative expenses claimed by the assessee. Accordingly, we are of the view that this issue can be put to rest if the disallowance is restricted to 5% of the aggregate amount of expenses - Decided partly in favour of assessee.
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2023 (7) TMI 14
Disallowance of depreciation and various expenditure - assessee is a qualifying Tonnage tax company - applicability of provisions of Section 28 to 43C are not applicable while computing the Tonnage tax income - CIT-A deleted the addition - HELD THAT:- As per order dated 30th May, 2014. To the Tonnage tax company, special provision are applicable and the profits are computed from operating qualifying ships on the Tonnage income of the assessee u/s 115VP of the Act. The provisions of Section 28 to 43C of the Act are not applicable while computing the Tonnage tax income. The claim of the depreciation is also not separately allowed. It is not the case of the AO that the certificate for Tonnage tax scheme originally granted to the assessee on 17th February, 2005 and subsequently, renewed on 30th May, 2014 is not applicable to the assessee. In view of the above facts, the disallowance made by the CPC of depreciation and various expenditure are correctly deleted. No infirmity in the order of the CIT (A) in deleting the disallowance of expenditure as well as the depreciation made by CPC. We confirm the order of the CIT (A) - Decided against revenue.
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2023 (7) TMI 13
Unaccounted/concealed income - reflection of credit of TDS in Form 26AS in assessee s account deducted by one M/s Loop Mobile (India) Ltd. - assessee could not prove or confirm from the said deductor that the assessee has not received any sum from the said company - HELD THAT:- Since the assessee has alleged that it did not have any business link with M/s Loop Mobile (India) Ltd. and that it has not received any sum/income from the said company and that the TDS credit was wrongly made by the said company in favour of the assessee and that the assessee had made efforts to contact the said company and get the entry reversed, however, since the said company was not traceable and that the said credit of TDS by the said company was under some error or mistake, hence, the impugned additions without verification of proper facts by the Assessing Officer were not justified. Merely because the TDS has been shown to have deducted and deposited in assessee s account that itself is not the absolute proof of assessee having received any sum/income from the said deductor especially when the assessee has specifically denied any transaction with the said deductor. The same can be a result of any mistake or error also. The impugned additions made by the lower authorities are set aside and the matter is restored to the file of the AO to make appropriate enquiries in this respect from the deductor /from the ITR/assessment records, if any, of the deductor and verify the contention of the assessee. Appeal of the assessee is treated as allowed for statistical purposes.
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2023 (7) TMI 12
Estimating the suppression of sales - Addition @ 200% by extrapolation based on the evidence available for 3 months - evidence was found during the course of survey indicating the suppression of sales - HELD THAT:- In the absence of evidence indicating about the suppression of sales @ 200% of the sales return by the assessee and its ground concerns as well as any statement recorded from the responsible persons about the suppression of the sales for the entire year as found for the first three months of the financial year, we find that the ld. CIT(A) has rightly apportioned the amount of suppression among the four assessees and directed the Assessing Officer to adopt the total income determined which has been considered as the undisclosed income of the assessee and its group concerns. GP around 20 to 32% in the same line of business in respect of any other assessees has nothing to do in the present case. We find no reason to interfere with the order passed by the ld. CIT(A) and thus, the grounds raised by the Revenue are dismissed.
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2023 (7) TMI 11
Estimation of Net Profit - Rejection of books of accounts - estimated the profit at the rate of 8% on turnover in terms of section 44AD - CIT(A) for deleting the estimated - HELD THAT:- CIT(A) for deleting the estimated addition of net profit had duly taken into account the remand report obtained from the learned AO, wherein, no adverse inferences were drawn about the manner in which books of account were maintained by the assessee - the other discrepancies noticed by the learned AO in the books of account submitted before him in the remand proceedings were duly added by CIT(A) in his appellate order. Hence, no infirmity in the order of learned CIT(A) as the deletion of estimated addition on net profit was made based on the remand of the learned AO - once an issue has been accepted by the learned AO in the remand report, the learned AO would be precluded from filing further appeal to the Tribunal as he could not have any grievance in the matter. This issue is settled by the decision of Smt. B. Jayalakshmi [ 2018 (8) TMI 208 - MADRAS HIGH COURT] Addition of unsecured loan u/s 68 - CIT-A deleted the addition - HELD THAT:- We find that the assessee had provided confirmation of loan from the creditor, ITR of creditor, evidence for receipt of loan through banking channel and evidence of repayment of loan through banking channels in subsequent years. All these additional evidences were duly admitted by CIT(A) and a remand report was called for from the learned AO. The learned AO sought to examine the veracity of the evidences from DCIT, Central Circle, Dhanbad, Jharkhand. Since, no reply was received from Dhanbad Office, the learned AO did not make any adverse comments on the evidences filed by the assessee. CIT(A) also concluded that since all the documents were duly placed on record by the assessee and no adverse comments has been made by learned AO, there is no scope for making any addition under section 68 of the Act. This goes to prove that the assessee, on its part, has discharged its primary onus caused in terms of section 68 of the Act by proving the three necessary ingredients thereon. No infirmity in the order of learned CIT(A) in granting relief to the assessee in this regard. Accordingly, the grounds raised by the Revenue are dismissed.
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2023 (7) TMI 10
Reopening of assessment u/s 147 - review v/s reopening - tangible material to initiate reopening -original return of income as scrutinized u/s 143(3) - case was reopened within 4 years - HELD THAT:- The perusal of assessment order would show that Ld. AO has not referred to any tangible material coming into his possession which would lead to formation of a belief that certain income escaped assessment in the hands of the assessee. Apparently, reassessment has been initiated on the same set of material as available before Ld. AO during the course of original assessment proceedings. This being so, the reassessment proceedings would be nothing would review of the order which is impermissible. The case law of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] support the case of the assessee wherein it was held that in the absence of any new tangible material, the case could not be reopened on mere change of opinion. Reasons must have a live link with formation of belief. Thus we would hold that the reassessment proceedings were nothing but the review exercise undertaken by Ld. AO which is impermissible. Therefore, the reassessment proceedings are bad in law and hence, liable to be quashed. Decided in favour of assessee.
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2023 (7) TMI 9
Correct head of income - Income from letting of space in mall - income from house property OR business income - HELD THAT:- We observe that Hon ble Ahmedabad ITAT in assessee s own case 2011-12 to A.Y. 2015-16. [ 2019 (8) TMI 1431 - ITAT AHMEDABAD] , [ 2019 (11) TMI 1078 - ITAT AHMEDABAD] , [ 2021 (9) TMI 543 - ITAT AHMEDABAD] , [ 2021 (3) TMI 68 - ITAT AHMEDABAD] respectively has decided this issue in favour of the assessee for various assessment years. In the case of Chennai Properties Investments Ltd. [ 2015 (5) TMI 46 - SUPREME COURT] held that where in terms of memorandum of association, main object of assessee-company was to acquire properties and earn income by letting out same, said income was to be brought to tax as business income and not as income from house property . In the case of Rayala Corporation (P.) Ltd. [ 2016 (8) TMI 522 - SUPREME COURT] held that where assessee-company was engaged in business of leasing out its house properties to earn rent, income so earned as rent should be treated as 'business income', and not as 'income from house property'. CIT(A) has not erred in facts and in law in holding that the aforesaid income qualifies as business income of the assessee. Decided against revenue.
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2023 (7) TMI 8
Best judgment assessment order u/s 144 - books of accounts rejected - estimating the net profit of the assessee at 10% of the total turnover by CIT(A) - HELD THAT:- Once the books of accounts have been rejected by the CIT(A) u/s 145(3) stating that the contents therein are not reliable and thereafter, he had arrived at the net profit of the assessee at 10% then in such scenario such estimation of net profit shall cover all other expenses and additions whatsoever. Meaning thereby, once the income is arrived at on percentage of net profit while rejecting the books of accounts, then such estimation of income is conclusive of all other expenses in the case of the assessee and after such estimation of income rejecting the books of accounts there is no scope for any further addition for any other expenses. Directly on the point of estimation of net profit the Hon ble Madhya Pradesh High Court in the case of CIT Vs. Purshottamlal Tamrakar Uchehra [ 2003 (3) TMI 10 - MADHYA PRADESH HIGH COURT] has held that once the net profit is applied while determining the income of the assessee then section 40A(3) of the Act is not applicable. Reverting to the facts of the present case, when the ld. CIT(A) has rejected the books of accounts u/s 145(3) of the Act and had arrived at net profit at 10% that would cover all expenses and disallowances and therefore, the contention of the department that certain expenses have been allowed without verifying, the issue now becomes irrelevant and immaterial. No infirmity with the findings of the d. CIT(A) which is therefore, upheld. This part of the ground in revenue s appeal is dismissed. CIT(A)'s order where he had directed the A.O to examine the expenses claimed and genuineness of the creditors and the profit shown by the assessee for A.Y. 2014-15 - We hold that the relevant year before us is A.Y. 2013-14 and not A.Y. 2014-15. Therefore, the determination on the issue pertaining to the taxation for A.Y. 2014-15 in the case of the assessee is not the subject matter of adjudication for the relevant assessment year 2013-14 and hence this part of the findings in the CIT(A) s order is set aside as premature and infructuous. We order accordingly. This part of the revenue s contention is accepted and allowed. Appeal of the Revenue stands partly allowed.
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2023 (7) TMI 7
Nature of receipts - sale of carbon credits - revenue or capital receipts - HELD THAT:- Admittedly, the issue came for consideration before this Tribunal in assessee s own case for AYs 2013-14 2014-15 [ 2020 (11) TMI 174 - ITAT BANGALORE] held that the sale of carbon Credit is a capital receipt and his finding on this aspect has attained finality because no appeal is filed by the revenue against this finding of Ld. CIT (A). Once it is accepted that the receipt in question is a capital receipt, this judgment of Hon ble Calcutta High Court rendered in case of CIT vs. Ankit Metal Power Ltd. [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT] becomes applicable as duly considered the judgment of Appollo Tyres [ 2002 (5) TMI 5 - SUPREME COURT] and held that where a receipt is not in the nature of income at all, it cannot be included in Book Profit under Section 115JB . Also see M/S. CHEMPLAST SANMAR LIMITED case [ 2019 (12) TMI 1272 - ITAT CHENNAI] as held the receipts arising to the assessee herein on the sale of carbon credits is held to be capital receipt. Carbon credits cannot be considered as an income in the assessment year 2012-13 and insertion of new section 115BBE of the Act, which was introduced from 1.4.2018 is only prospective in nature and cannot be applied to the assessment year 2012-13. These grounds of revenue are dismissed.
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2023 (7) TMI 6
Exemption u/s 11 - application for registration of Trust u/s 12AB rejected - CIT(E) dismissed the application of the assessee by holding that the assessee has furnished incomplete details, despite several opportunities - as argued by assessee application was rejected without giving adequate opportunity to the assessee / applicant to present its case on merits HELD THAT:- As in view of the facts as noted above, in the interest of justice, the case is being set-aside to the file of Ld. CIT(Exemption) for denovo consideration of the application of the assessee Trust for registration u/s 12AB and to pass appropriate orders after considering the documents filed by the applicant / assessee in accordance with law. Hence, the matter is being set-aside to the file of Ld. CIT(Exemption) with the above direction.
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2023 (7) TMI 5
Foreign tax credit - procedural lapses - Denial of claim as Form 67 was filed after the due date of filing of the return of income - HELD THAT:- As it has consistently held that filing of Form 67 is procedural in nature and the assessee should not be 2023 (2) TMI 1154 - ITAT KOLKATA] wherein similar issue was decided in favour of the assesesee, wherein also Form 67 was filed after the due date of filing of the return of income but the claim of the assessee was allowed by this Tribunal. Thus as the ld. D.R. having not placed any binding precedence in favour of the revenue, direct the ld. Assessing Officer to accept the Form 67 filed by the assessee and allow the eligible foreign tax credit in accordance with law and allow the grounds of appeal raised by the assessee.
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2023 (7) TMI 4
Unexplained investment - case of the Revenue that the investments in fixed deposits have not been explained by the assessee and therefore the same were added as income - contention of the assessee that the fixed deposits made by the assessee with Kotak Mahindra Bank are out of the savings and salary income - HELD THAT:- AR has pointed to the bank statements of the bank and from those bank statement he has demonstrated the receipt of salary and has also co-related the making of fixed deposits to be out of the salary received by him. Assessee has also demonstrated that the fixed deposits made are out of the salary income earned by the assessee. The copy of the bank statement filed by the assessee reveals that there are sweep in and sweep out of the deposits and the making of the fixed deposits from the saving bank account has also been certified by the bank. Before us Revenue has not pointed that the submissions of the assessee are false or incorrect - We are of the view that the AO was not justified in making the addition as unexplained investment. We therefore direct the AO to delete the addition made. Thus the grounds of the assessee are allowed.
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Securities / SEBI
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2023 (7) TMI 3
Compulsory delisting against the company - Payment of reinstatement fee to the Exchange - As decided in [ 2022 (3) TMI 1540 - THE SECURITIES APPELLATE TRIBUNAL MUMBAI] respondent is entitled to levy fee for the purpose of revocation of suspension of trading in securities and the same is binding on companies desirous of such revocation - HELD THAT:- No reason to interfere with the impugned judgment and order [ 2022 (3) TMI 1540 - THE SECURITIES APPELLATE TRIBUNAL MUMBAI] and[ 2022 (10) TMI 1180 - THE SECURITIES APPELLATE TRIBUNAL MUMBAI] passed by the Securities Appellate Tribunal, Mumbai. Civil Appeals are accordingly dismissed. 3 Pending applications, if any, stand disposed of.
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2023 (7) TMI 2
Offence under SEBI Act - fraudulent scheme of issuing GDR with an ulterior motive - whether the appellants had played part in the fraudulent scheme of issuing GDR with an ulterior motive? - HELD THAT:- No ground to interfere with the impugned order passed by the Securities Appellate Tribunal [ 2022 (3) TMI 1539 - THE SECURITIES APPELLATE TRIBUNAL MUMBAI] The civil appeal is, accordingly, dismissed.
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Central Excise
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2023 (7) TMI 1
SSI exemption availed - production of two commodities, namely Notebooks and Exercise Books and Writing and Printing Paper Sheets falling under Chapter Heading Nos. 4820 and 4820 respectively - Department alleged that the Appellant has treated the manufacture of writing and printing paper as trading activity and did not include their value in the total value of clearances, for the purpose of availing the said exemption. Whether the process adopted by the Appellant amounts to manufacture or not, as per the definition of manufacture as defined in section 2(f) of the Central Excise Act, 1944 read with the Section and Chapter Notes of the First Schedule to the Central Excise Tariff Act, 1985? - HELD THAT:- In the instant case, the Appellant purchased Jumbo Paper Rolls from traders as well as from manufacturers. The raw material, i.e. Jumbo Paper Rolls cannot be used in the same roll form for use as Writing Paper. It needs to be cut into smaller size, may be ruled or not, depending upon its end use, and organized into set of papers for selling in retail market. The Appellant with the aid of machines cut those rolls into different sizes - the activities undertaken by the appellant does not change the nature of paper. It does not bring a new commodity with a distinct name, character and use. The writing paper remains as writing paper only, even after cutting. Hon ble Supreme Court has decided a similar issue in S.R. Tissues [ 2005 (8) TMI 111 - SUPREME COURT ] wherein the Hon ble Apex Court has held that the process of cutting/slitting of Jumbo Roll of Plain Tissue Paper into smaller size will not amount to manufacture as defined in Section 2(f) of the Central Excise Act, 1944 - the decision in the case of S.R Tissues squarely covers the present case on hand. In this case the Hon ble Supreme Court held that cutting/slitting of Jumbo Roll of Plain Tissue Paper into smaller size will not amount to manufacture. Thus, the activity of converting jumpo rolls into writing and paper sheets undertaken by the Appellant does not amount to manufacture. Accordingly, the clearance of such goods will be considered as Trading and the value of traded goods will not includable in the assessable value for the purpose of computing the value of clearances to determine the eligibility of the benefit of the notification 8/2003 dated 01.03.2003. After excluding the value of traded goods, the value of clearances of the Appellant was within the limits prescribed for availing the benefit of the exemption under Notification 8/2003 dated 01.03.2003, in the respective Financial Years during the period under dispute. The demands confirmed in the impugned orders are not sustainable - Appeal allowed.
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