Income TaxITAT
  •   In the instant case, the Assessee along with Shri Aditya Pratap Singh, respectively in the... ratio of 33:67 % purchased a property from M/s Macrotech Construction for a consideration of R.6,18,13,080/-. Subsequently, the Assessee jointly sold the said property on 30/04/2013 for a consideration of Rs. 8,17,37,500/- and claimed long term capital loss of Rs.61,57,119/- (33% of total long term capital gain) in the computation of income. The Assessing Officer, in order to verify the long term capital loss as computed by the Assessee, issued a notice under section 133(6) of the Act on 07/09/2016 to the builder, M/s Macrotech Pvt Ltd having address at Lodha Exelus, Appollo Mills Compound, NM Joshi Marg, Mahalaxmi, Mumbai-400011 whereby the said company was asked to furnish the details of possession of the property under consideration.  In response, said company, vide letter dated 19/09/2016 submitted that the above flat/property was handed over to the assessed and Shri Aditya Pratap Singh only on 29/04/2011 and also enclosed a copy of the possession with acknowledgement letter dated 29th April, 2011 received from the Assessee and Shri Aditya Pratap Singh along with its reply. Therefore the AO by considering the fact that possession of the property was taken by the Assessee and / or handing over by the builder only on 29th April, 2011 and the Assessee sold the property on 30/04/2013, show caused the Assessee as to why the long term capital loss cannot be disallowed and the claim should be treated as short term capital gain. Heard the Parties and perused the material available on record. The Assessee vide agreement for sale dated 06/10/2009 purchased the property under consideration of Rs.6,18,13,080/- in 17 installments as it appears from page 7 of the said sale deed and consequently, paid the amount of Rs. 2,68,13,680/- as advance on the date of execution of the agreement for sale dated 06/10/2009 itself and subsequently paid the remaining amount which is not in controversy.  The only controversy in this case involve is “whether the date of possession or the date of sale of property and / or allotment of property is required to be considered” for claiming the capital gain. On the aforesaid analyzations and the dictum laid down by the Hon’ble High Courts, the determination by the Authorities below “that the Assessee had received the possession on 29/04/2011 and sold the property on 30/04/2013, therefore, the holding period of the property was less than 36 month and, therefore, the property is required to be considered as short term capital asset and after transfer, the gain is treated as short term capital gain,” therefore is un-sustainable, hence the orders passed by the Authorities below are set aside. Resultantly, the AO is accordingly directed to recompute the capital gain of the Assessee by considering the date of allotment. In the result, the Assessee’s appeal is allowed.   show more

    Nov 22, 2023
  •   Facts include that the assessee owned three properties one being Flat No.1, Maha Maya Encl...ave, Plot No.53, VIP Area, IRC Village, Bhubaneswar, second being subplot No.36A, Plot No.61/1761/1836, Bharatpur, Bhubaneswar and third being Sub-plot No.36B, Plot No.61/1761/1836, Bharatpur, Bhubaneswar. The assessee also owns another plot of land namely Plot No.GA-722, PO: Ghatikia, Bhubaneswar. It was the submission that the assessee had sold sub-plot No.36A to one Mr Maqsood Ahmed Khan, which had given rise to capital gains tax. The sale had been done on 27.12.2014. The sub-plot No.36B which consisted of a house property was on rent to the assessee’s sister namely, Stm. Amitarani Giri. She had been staying on the said house from April, 2014 and this has also been recognized by the Pr. CIT in his order passed u/s.263 on 24.3.2020. The assessee had gifted the said property to his sister Smt. Amitarani Giri on 27.12.2014. The assessee had utilized the sale proceeds on the sale of the vacant plot No.36A for the construction of a new residential building at Plot No.GA-722, PO: Ghatikia, Bhubaneswar. It was the submission that the Assessing Officer on the ground that the assessee owned more than one residential house as on the date of sale, held that the assessee was not entitled to claim exemption u/s.54F. It was the submission that date 27.12.2014 is the specified date on which the transfer had taken place. At the beginning of 27.12.2014, the assessee, in fact, had two residential houses and two vacant plots. At the end of the specified date being 27.12.2014, the assessee remained with only one residential house and one vacant plot. It was the submission that consequently, as on the date of transfer, the assessee did not own more than one residential house, the proviso to section 54F did not apply.NCLAT stated that they have considered the rival submissions. A perusal of the facts in the present case clearly show that the basic issue to be decided is whether as on 27.12.2014, the assessee own more than one residential house or not?. It is an admitted fact that the assessee has gifted residential house being Plot No.36B, Bharatpur, Bhubaneswar to his sister, Smt. Amitarani Giri, who was already in possession as a tenant of the property. It is also an admitted fact that the assessee was residing at Flat No.1, Maha Maya Enclave, which is a self occupied property. At the beginning of the specified date being 27.12.2014, admittedly, the assessee did hold two residential properties. However, at the end of the specified date, the assessee own only one residential house. A perusal of the proviso to section 54F shows that the wording used is “ on the date of transfer of the original asset”. Though ld AR has been vehement in his argument that the meaning of the term “on the date of transfer” should be considered as the end of the specified date of transfer, I am unable to accede to the arguments because the date of transfer starts at 00 hours and ends at 23.59 hours. On the date means any time during the date and at the beginning of the date of intended transfer of the original asset, the assessee did own more than one residential house. This being so, I am of the view that the Assessing Officer and ld CIT(A) is right in denying the assessee the benefit of exemption u/s. 54F of the Act. It must be mentioned here that the interpretation brought out by ld AR itself lead to substantial question of law as to what exactly is the interpretation of the term “ on the date of transfer”. The interpretation given by ld AR though plausible is not acceptable to this Tribunal. In the result, appeal of the assessee stands dismissed.   show more

    Nov 15, 2023
  • The only issue raised by the assessee in the various grounds of appeal is against invalid exercise o...f jurisdiction u/s. 263 of the Act by Ld. Pr. CIT with the consequence that order passed u/s. 263 of the Act is also invalid.  Facts in brief are that assessee filed its return of income for the relevant assessment year on 11.09.2010 declaring total loss of Rs.6,04,635/-. The return was originally processed u/s. 143(1) of the Act. Thereafter, the case of the assessee was reopened u/s. 147 of the Act on the basis of information received from Investigation Wing that assessee is beneficiary of Rs.4,95,00,000/- received from four entities and accordingly, the income has escaped assessment. The assessment was framed u/s. 144/147 of the Act vide order dated 27.12.2017 assessing the total income at nil. The AO examined the issue and came to the conclusion that the information pertained to FY 2010-11 relevant to AY 2011-12 and not to the instant assessment for AY 2010-11 and, therefore, no disallowance was made. Thereafter, the AO reopened the assessment for AY 2011-12 u/s. 147 of the Act by issuing notice u/s. 148 of the Act dated 29.03.2018 and after looking into the matter, AO noted that transactions were duly recorded in the books of account and there was no undisclosed income and accordingly assessed them at nilvide order dated 20.11.2018. Thereafter, the assessee received a notice u/s. 154 of the Act dated 14.01.2019 in which the AO pointed out the mistake in applying provisions of section 68 of the Act which was replied on 18.03.2019 in which it was pointed out that the information did not pertain to AY 2010-11 but to AY 11-12. It was also stated before the AO that AY 2011-12 was reopened and after necessary verification, the assessment was framed u/s. 143(3)/147 of the Act for AY 2011-12 making no addition by the AO as these were duly found recorded in the books of accounts. Besides, it was pointed out that impugned issue did not qualify as mistake apparent from record and, therefore, jurisdiction sought to be invoked u/s. 154 of the Act was invalid and unreasonable. The AO did not pass any order u/s. 154 but a proposal was sent to the Ld. Pr. CIT for invoking the revisionary jurisdiction u/s. 263 of the Act on 03.04.2019. In the meanwhile, the assessee was converted into LLP w.e.f. 13.04.2015 and the same has been intimated to the AO on 12.02.2018 by registered post and copy of which is placed as annexure in the paper book. Consequently, M/s. Madhuban Dealers Pvt. Ltd. stood wound up and dissolved with a new entity coming into existence as M/s. Madhuban LLP. Thereafter, the ld. Pr. CIT issued notice u/s. 263 of the Act on 07.01.2020 in the name of M/s. Dadhuban Dealer Pvt. Ltd. a non-existent entity by observing that assessment framed u/s. 144/147 of the Act dated 27.12.2017 is erroneous and prejudicial to the interest of revenue as the AO has failed to make proper enquiries/verification in terms of clause (a) to explanation (2) of section 263 of the Act in respect of receipt of money amounting to Rs.4,95,00,000/- from four entities.The assessee sought an adjournment to reply the said show cause notice,however, the Ld. Pr. CIT proceeded with the framing of revisionary order u/s. 263 of the Act dated 13.03.2020 as ex parte order in the name of Madhuban Dealers Pvt. Ltd., a non-existent entity. Aggrieved assessee, filed an appeal before the Hon’ble ITAT, Kolkata in ITA No. 393/Kol/2020 and the coordinate Bench has set aside the matter back to the file of Ld. Pr CIT vide order dated 25.08.2021 to consider the matter afresh. ITAT stated that considering the facts and circumstances as stated above and the decision of the Hon’ble Courts as discussed above, we are inclined to hold that the revisionary jurisdiction as well as the order passed under section 263 is invalid and accordingly quashed. In the result, the appeal of assessee allowed. show more

    Nov 07, 2023
  •   ITAT stated that the compliance is not in accordance with the Circular. The Circular manda...tes that in the body of the order / communication, it has to be stated that the communication is issued manually without a DIN and the date of obtaining of the written approval of Chief Commissioner / Director General of Income-Tax for issue of manual communication. Furthermore, a reading of the aforesaid circular makes it clear that the object behind bringing the circular is for creating an audit trail. In paragraph 2, it has been very clearly mentioned that no communication shall be issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 2019, unless a computer generated DIN has been allotted and is duly quoted in the body of such communication. Paragraph 3 of the circular carves out certain exceptions to paragraph 2 by providing that under certain exceptional circumstances, enumerated in clause (i) to (v) of paragraph 3, the communication may be issued manually but only after recording reasons in writing not only in the file and with prior written approval of the Chief Commissioner/Director General of Income-tax, but, the communication issued manually in such circumstances must also state the reasons why communication is issued manually without a DIN and must also mention the date and number of written approval of the Chief Commissioner/Director General of Income-tax for issuing manual communication. In fact, in paragraph 3 of the aforesaid circular, the format for recording such reasons has been specified. Paragraph 4 of the circular makes it clear that any communication issued which, is not in conformity with paragraph 2 and paragraph 3 of the circular, shall be treated as invalid and shall be deemed to have never been issued. It is fairly well settled, a circular issued u/s. 119 of the Act has statutory force and binding on subordinate authorities working under the Central Board of Direct Taxes. A perusal of the DRP order shows that it is clear in the body of DRP order, no DIN number is mentioned nor there is any reason of not mentioning the DIN number in order of the DRP. Is such a situation, the DRP order will lose its validity. Subsequent separate communication of DIN is a superfluous exercise. Hence we hold that the impugned DRP order is invalid and shall be deemed to have never been passed. Accordingly, we quash the impugned DRP/AO order. Since, we have allowed the legal/additional ground raised by the assessee, rest of the grounds have been rendered academic and do not require adjudication.  In the result, all the appeals filed by the assessee are allowed as indicated above.   show more

    Nov 06, 2023
  •   Briefly, the facts of the case are that the appellant is a company incorporated under the ...provisions of the Companies Act, 1956. It is engaged in the business of manufacturing and sale of Yarn and Fabrics. The Return of Income for the assessment year 2013-14 was filed on 28.09.2013 declaring total income of Rs.23,44,99,020/-. The said return of income was revised on 30.03.2015 at total income of Rs.23,49,01,090/-. Against the said return of income, the assessment was completed by the Assessing Officer vide order dated 09.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at total income of Rs.27,09,46,220/-. While doing so, the Assessing Officer made disallowance of expenditure of Rs.7,26,175/- incurred on the landscaping and beautification of main gate by holding it to be a capital expenditure. However, the Assessing Officer allowed the depreciation @ 5% and the balance expenditure of Rs.6,89,867/- was disallowed by the Assessing Officer. The Assessing Officer also made disallowance of additional depreciation of Rs.3,53,55,262/-, which was disallowed in the assessment year 2012-13. The said additional depreciation was not claimed in the immediately preceding year, as the assets were used for a period of less than 180 days. This claim as additional depreciation was allowed in appeal by the ld. CIT(A). Therefore, we are not concerned with the addition on account of disallowance of additional depreciation. We are only concerned with the issue of disallowance of expenditure incurred on landscaping and beautification of main gate. It is stated that the assessee had claimed the expenditure incurred on landscaping and beautification of main gate of the factory of Rs.7,26,175/- as revenue expenditure. The nature of the expenditure was explained by the appellant vide his letter dated 16.12.2015 before the Assessing Officer, which is set out in para 3 of the assessment order. On perusal of the said explanation of the assessee, it would be reveal that the assessee had incurred the expenditure of Rs.7,26,175/- on landscaping and beautification of main gate of the factory of the appellant company. It was further explained that this landscaping was necessitated because of the fact that the existing entrance gate of the factory was very low level as result of increase in the height of National Highway No.7 (NH No.7) by 8 ft. The existing entrance gate of the factory is at very low level and lost the visibility, as it was enveloped by decorative walls. In order to increase the height of the gate as well as improve the visibility of the entrance gate of the factory, the appellant company spent an amount of Rs.7,26,175/-. However, the Assessing Officer held that the expenditure was incurred was of enduring nature and, therefore, it is a capital expenditure. Even on appeal before the ld. CIT(A), the claim of the assessee was denied.  Being aggrieved, the appellant is in appeal before us in the present appeal. Second appeal includes that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing Yarn. The Return of Income for the assessment year 2014-15 was filed on 29.11.2014 declaring total income of Rs.44,77,55,370/-. The said return of income was revised on 22.02.2016 at total income of Rs.34,36,33,490/-. Against the said return of income, the assessment was completed by the Assessing Officer vide order dated 30.12.2016 passed u/s 143(3) of the Act at total income of Rs.49,01,58,590/-. While doing so, the Assessing Officer made several disallowances, inter alia, includes the disallowance of Rs.5,75,943/- being expenditure incurred on repairs and maintenance of the access road between PC turning to Weaving Auto drawing of WBM road. According to the Assessing Officer, the expenditure given enduring benefit and, therefore, the same is capital in nature. Accordingly, the Assessing Officer held that the expenditure is capital in nature, allowed the depreciation @ 5%. ITAT stated that the issue that arises for consideration in the present appeal is whether the expenditure of Rs.5,47,146/- incurred by the appellant for improving the existing road can be considered as revenue expenditure as claimed by the appellant. The submission of the appellant is that the expenditure was incurred to cover by cement and carpet tremix process. This was necessary for smooth carrying on business of the assessee and maintain the quality to ensure the dust free, therefore, the ratio of the decision of the Hon’ble Supreme Court in the case of Empire Jute Co. Ltd. (supra) is squarely applicable to the facts of the present case, as the expenditure was incurred to bring to existence of new road. Therefore, we direct the Assessing Officer to allow the same as revenue expenditure. Accordingly, the grounds of appeal filed by the assessee stands allowed.   show more

    Nov 03, 2023
  •   Brief facts of the case are that assessee is a Multi-state Cooperative Credit Society, dul...y registered with Ministry of Agriculture, Government of India. Its membership is restricted to serving employees of the Central Bank of India. The principal business of the assessee is garnering deposits from membershareholders under various deposits and savings mobilisation schemes and lending the same to its members.  Assessee filed its return of income on 28.03.2017 reporting total income at nil. In the return, assessee had claimed deduction of its entire profit of Rs.38,61,336/- u/s. 80P(2)(a)(i) of the Act. From the examination of accounts of the assessee, Ld. AO had noted that assessee derived income mainly as interest on loan given to the members under various schemes and interest from fixed deposits. He also noted that assessee garnered deposits from its member under two schemes i.e. Thirft Fund and Guarantee Fund. He noted that on the investments side, assessee primarily invests in lending to its members. There are certain other loans like house building loan etc. which are also given to its employees. Assessee also invests in fixed deposits with banks. Assessee is required under the Co-operative Societies Act to appropriate certain amount of profit as reserve like Reserve Fund, Bad Debt Fund and Co-operative Education Fund. He also noted that assessee is running holiday homes and that income from holiday homes is Rs.3,05,700/-. ITAT stated that Considering the facts of the present case and the submissions made before us, we find force in the arguments of the Ld. Counsel for the assessee. We note that assessee is engaged in the business of providing credit facilities to its members for which it accepts deposits from and lend the same to its members. While accepting deposits, assessee promises to pay interest at a specified rate. When money is lent to the members, interest is recovered which is also at a specified rate. Difference between the two rates is the income of the assessee. However, there are periods when entire deposit received from the members cannot be lent owing to demand for loan not there from the members. In such a situation, whether the money is lent or not, assessee continues to be liable for payment of interest to its members who have made deposit with it. To cover up this liability for payment of interest, these funds are invested with banks in fixed deposit/term deposit which earned certain interest income to be set off against the interest payable to the member/depositors. Parking of funds by the assessee with banks in the form of fixed deposits to earn interest income is part and parcel of the business of providing credit facilities to its members. Assessee has received the deposits from its members only which are subjected to interest charge. The assessee is entitled for deduction of interest income earned from deposits made by it with banks which has arisen out of deposits received from its members pursuant to conduct of business of providing credit facilities to its members. Accordingly, deduction of Rs.30,93,854/- towards interest income earned from deposits with the banks is allowed for deduction u/s. 80P of the Act. Ground taken by the assessee in this respect is thus partly allowed. Since the portion of claim in respect of income from holiday home has not been pressed is, therefore, upheld to that extent. In the result, appeal of the assessee is partly allowed   show more

    Nov 02, 2023
  •   Search and seizure proceedings u/s.132 of the Act were conducted at the business and facto...ry premises of various companies and concerns relating to “Crest Topworth Group” at Raipur, Mumbai, Pune, Nagpur, Ahmedabad and other places on 10.10.2012. Also, the residential premises of the directors and key persons of various concerns of this group were also covered u/s.132(1) of the Act. The business premises of the assessee were also searched on 10.10.2012. Notice u/s. 153A of the Act dated 20.03.2014 was, inter alia, issued to the assessee company for A.Y. 2007-08 to 2012-13 a/w. notice u/s. 142(1) of the Act for A.Y.2013-14 Observing that the assessee company had made investments in the aforementioned shares at the face value, whereas their apparent value was substantially higher, the A.O., in light of provisions of Section 56(2)(vii) of the Act, directed it to furnish details as regards the rate at which shares were allotted vis-à-vis. their Fair Market Value (FMV) as of the date of allotment. The A.O was of the view that as the assessee company had received the property on allotment of shares in lieu of inadequate consideration, therefore, the provisions of Section 56(2)(vii) of the Act were validly applicable in its case. Rejecting the claim of the assessee that the word “receive” used in Section 56(2) of the Act was to be construed as “to get by a transfer,” the A.O was of the view that there was nothing available in the statute which would justify ascribing such a narrow interpretation. Accordingly, the A.O., based on his aforesaid observations, worked out an addition under the head “income from other sources” u/s. 56(2)(vii) of the Act for both the aforementioned years, viz. (i) A.Y.2012-13: Rs. 459,92,50,000/-; and (ii) A.Y.2013- 14: Rs.50,99,55,000/-. After making the aforesaid additions, the A.O. vide his consolidated order passed u/s. 153A r.w.s.143(3) AND u/s 143(3), dated 08.11.2016 for A.Y 2012-13 and A.Y.2013-14, assessed the income for the said years at Rs.459,92,50,000/- and Rs.50,99,55,000/-, respectively. ITAT stated in the totality of the facts involved in the captioned appeal, read a/w. multi-facet contentions that have been raised by the assessee before us wherein adjudication of the majority of those would require a reference of the additional documentary evidence that the assessee has placed before us, restore the matter to the file of the CIT(Appeals) with a direction to him to re-adjudicate the same after taking cognizance of the additional documentary evidence and also addressing the additional ground of appeal that has been raised by the assessee in the course of the proceedings before us. Needless to say, the CIT(Appeals) shall, in the course of the set-aside proceedings, afford a reasonable opportunity of being heard to the assessee company, which shall remain at liberty to substantiate its contentions on the basis of fresh documentary evidence. 36. In the result, the appeal of the assessee in ITA No.108/RPR/2021 for A.Y.2013-14 is allowed for statistical purposes in terms of our aforesaid observations.   show more

    Nov 01, 2023
  • On the facts and circumstances of the case, the assessment order is null and void as the same is in ...violation of CBDT Circular No.19/2019 requiring mandatory DIN . A reading of the circular makes it clear that the object behind bringing the circular is for creating an audit trail. In paragraph 2, it has been very clearly mentioned that no communication shall be issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 2019, unless a computer generated DIN has been allotted and is duly quoted in the body of such communication. Paragraph 3 of the circular carves out certain exceptions to paragraph 2 by providing that under certain exceptional circumstances, enumerated in clause (i) to (v) of paragraph 3, the communication may be issued manually but only after recording reasons in writing not only in the file and with prior written approval of the Chief Commissioner/Director General of Income-tax, but, the communication issued manually in such circumstances must also state the reasons why communication is issued manually without a DIN and must also mention the date and number of written approval of the Chief Commissioner/Director General of Income-tax for issuing manual communication. In fact, in paragraph 3 of the aforesaid circular, the format for recording such reasons has been specified. Paragraph 4 of the circular makes it clear that any communication issued which, is not in conformity with paragraph 2 and paragraph 3 of the circular, shall be treated as invalid and shall be deemed to have never been issued. It is fairly well settled, a circular issued u/s. 119 of the Act has statutory force and binding on subordinate authorities working under the Central Board of Direct Taxes. A perusal of the AO order shows that it is clear in the body of AO order, no DIN number is mentioned nor there is any reason of not mentioning the DIN number in order of the AO. Is such a situation, the AO order will lose its validity. Subsequent separate communication of DIN is a superfluous exercise. ITAT stated that Since, we have allowed the legal/additional ground raised by the assessee, rest of the grounds have been rendered academic and do not required adjudication. In the result, this appeal filed by the assessee is allowed as indicated above. show more

    Nov 01, 2023
  •   Facts, in brief, are that assessee company was incorporated on 20.04.2010 and is engaged p...rimarily in the business of providing ground handling and cargo handling services at Indian airports. As per the details available on the record, SATS Ltd., Singapore and Air India Ltd. (AIL) entered into a joint venture agreement dated 16.04.2010 for setting up the joint venture company and providing ground & cargo handling services (business division) at Indian Airports. Accordingly, SATS and AIL incorporated the assessee company on 20.04.2010 for the purpose of undertaking of the ground handling & cargo handling services at various Airports in India in accordance with the Cabinet approval. In accordance with the Joint Venture Agreement, the 'ground handling services' and 'cargo handling services' business carried out by AI-SATS (unincorporated JV) inclusive of all assets and liability was transferred to the newly established company on a slum exchange basis to the company. The business has been transferred from 1st August, 2010 (the transfer date) vide 'business transfer confirmation agreement' (BTA Agreement) between AIL, SATS and the company executed on 30.03.2011. The activities carried out by AIL or SATS through the AI-SATS (unincorporated JV) in relation to the ground handling services at Bangalore and Hyderabad airport and Cargo handling services and Bangalore Airports are stated to be carried out by the company since the transfer date. The assessee for rendering the ground & cargo handling services at Airport had claimed deduction u/s 80IA of the Act, 1961. The AO was not satisfied with its claim and show caused the assessee to explain as to how its business falls in the category of infrastructure facility u/s 80IA because 80IA (4) only covers Airport and not cargo handling etc. it was submitted that the ‘Cargo handling’ falls in the definition of ‘infrastructure facility’ and further with regard to the agreement with Bengaluru International Airport Limited ('BIAL') it was submitted that BIAL has entered into a Concession Agreement with the Government of India ('GOI') for developing, operating and maintaining the Bangalore airport. The GOI had granted BIAL the exclusive rights for development, operation, maintenance and management of the Bangalore airport. Further, the Concession Agreement authorizes BIAL to grant ‘service provider rights' to any person for carrying out the development and other activities originally entrusted on it. Accordingly, BIAL granted ‘service provider rights’ for developing the cargo handling facility, providing cargo and ground handling services at the Bangalore airport to the JV partners by way of an agreement. ITAT stated that We are of the considered view that learned AO has fallen in error in considering Airport as a facility standing in isolation and giving a very restrictive interpretation to the scope of ‘developing, operating and maintaining’ Airport. Thus, on the basis of aforesaid decision, the Bench is inclined to hold that ground handling and cargo handling services provided by the assessee are covered within the meaning of Explanation referred to Section 80-IA and assessee is entitled to claim the benefit of same. Further, The SPRH agreement of AI and SATS with BIAL, at page no. 123 of the paper book has an important recital No. 1.3 which provides that in furtherance of agreement, the SPRH was under obligation to get incorporated a joint venture company under the Companies Act, 1956 and this recital further describe the liability of SPRH for subscription of shares by AI and SATS equally and that SPRH has right to transfer this agreement to the newly incorporated JVC by way of novation of agreement. After giving thoughtful consideration to the matter on record and the contentions we are of the view that the credit contemplated in sub-section (2) of section 194C is one that enables the person who has carried out the work to make a claim for the sum. The provision of Rs.3,82,00,00,000/-, as made by assessee did not as such create a debt in favour of BIAL as the concession fee did not arise out of any contract performed by BIAL but was more in the form of royalty with uncertainty of actual amount due and therefore no income can be said to have accrued or arisen to BIAL. Further, the methodology adopted for estimation of turnover / profits and subsequently creating the year-end provision and reversing the same in next financial year, remains the same in all subsequent years. Thus, given the fact that in AY 2014-15 the Department has now accepted that the disallowance is not required to be made under section 40(a)(ia) in respect of the year end provisions for concession fee, same sustains the claim of asseessee hence appeal is dismissed.   show more

    Nov 01, 2023
  • The assessee is the subsidiary of Abacus International Pte. Limited, Singapore (Abacus Singapore). A...bacus Singapore has a Computerized Reservation system which provides travel information and reservations & facilities air booking & provided non-air solution like hotel booking, car booking, etc. specifically tailored to the Asian region. The Assessee markets and distributes Abacus system in India and signs up the travel agents in India in this regard. The assessee filed the return of income for the assessment year 2008-09 on 30/09/2008 declaring total income of Rs.6,52,65,858/- which was set off against the brought forward losses pertaining to assessment years 2000-01 and 2001-02. The case was selected for scrutiny and a reference was made to the Transfer Pricing Officer to determine the arm‟s length price of the international transaction the assessee is having with its Associated Enterprises (AEs). The TPO in the first round of transfer pricing proceedings, passed an order making an adjustment of Rs.10.29 crores which was confirmed by the DRP. The assessee went on further appeal before the Tribunal. The Tribunal vide order dated 06/12/.2013 (ITA No.7275/Mum/2012) set aside the order stating that the entire issue of transfer pricing needs to be restored back to the file of the Assessing Officer / TPO for de novo adjudication after taking into consideration the principal agreement and other relevant documents and assessee’s explanation regarding benchmarking of the margin vis-à-vis comparables. The TPO in the second round of transfer pricing proceedings, determined a TP adjustment of Rs.8,76,36,161/-. ITAT stated that the main reason for the TPO to treat the gain ECB loan, Income received in advance and Income received in advance as non-operating is that the assessee such gain is not directly related to the marketing services rendered by the assessee and that the assessee in AY 2012-13 has treated the foreign exchange loss as non-operating. In the given case, we notice that the income received in advance is against the services rendered by the assessee and other expenses relate to the reimbursement of operating expenses. Therefore it cannot be said that there is no direct nexus with the international transactions and the foreign exchange gain. Further with regard to the gain on ECB loan it is noticed that the same is obtained from the AE for the working capital requirements of the assessee. The coordinate bench in assessee's own case in AY 2010-11 has allowed the treatment of foreign exchange loss as an allowable expense on the ground that the same is taken for the working capital purpose and hence incurred for the purpose of business. Applying the ratio that the foreign exchange loss is allowable business expenditure, we see no infirmity in the claim that the same should be part of operating income for the purpose of computing ALP. Therefore we hold that the gain arising on ECB loan, Income Received in Advance and Other Expenses reimbursements should be treated as part of operating income of the assessee for the purpose of computing PLI.Hence appeal is allowed partly as the grounds with regard to transfer pricing adjustments have become academic and does not warrant separate adjudication. show more

    Jul 25, 2023
  • Briefly stated, the assessee is a non-resident company incorporated under the laws of USA and is a t...ax resident of USA. The assessee is engaged in the business of branding and talent book agency services and inter alia acts as a mediator to and in coordination with several worldwide event management company for arranging live performances by renowned artistes from around the world. During the relevant AY the assessee entered into an agreement with Big Tree Entertainment Pvt. Ltd. (“Customer”) in India to make the services of “Maroon 5” artiste available for a live musical performance at a private event held in India. In consideration thereof, the assessee received Rs. 4,15,02,000/- from the Customer after deduction of TDS of Rs. 45,32,019/- under section 195 of the Act.  For the AY 2019-20, the assessee filed its return on 27.11.2019 declaring NIL income and claimed refund of tax withheld by the Customer. The assessee’s case was selected for scrutiny under CASS and statutory notices along with detailed questionnaire were issued to which the assessee responded by filing necessary information and details electronically. The Ld. AO passed draft assessment order on 30.09.2021 under section 143(3) r.w.s. 144C of the Act proposing to tax the income received by the assessee from the Customer as “other income” under the provisions of the Act as well as Article 23 of the India-USA Double Taxation Avoidance Agreement (“India-USA DTAA”) as against the claim of the assessee that it is ‘business profit’ not chargeable to tax in India in the absence of a Permanent Establishment (“PE”) of the assessee in India. On filing objection before the Ld. Dispute Resolution Panel (“DRP”) the Ld. DRP vide its order dated 08.03.2022 upheld the finding of the Ld. AO. ITAT held Article 7(7) of the India-USA DTAA clearly defines ‘business profit’ to mean income derived from any trade or business including income from furnishing of services which are other than specified services (Royalties and FIS). It is not the case of the Ld. AO that the services rendered by the assessee are in the nature of FIS/royalty etc. In view of this, it cannot be said that the assessee was not engaged in business while rendering talent booking agency services to the Customer and hence the classification of the impugned receipts as ‘Other Income’ which is a residuary head is erroneous. Needless to say that Article 23 would apply only to items of income ‘not expressly covered’ or ‘not dealt with’ by provisions of other Articles in the relevant DTAA as held by judicial authorities in numerous decisions.  Based on the above, in our considered view the impugned receipts of the assessee from the Customer constitutes business profits and hence are not chargeable to tax in India in the absence of the PE of the assessee in India. Accordingly, ground Nos. 1, 3, 4 and 5 are decided in favour of the assessee. show more

    Jul 25, 2023
  •   The facts in brief are the assessee had filed a return of income at Nil after setting off ...unabsorbed depreciation and the case of assessee was selected for scrutiny. The assessee company is engaged in the business of manufacture and sale of cement. Ld. AO observed that out of the 10 plants only three plants are in operation and the rest are not in operation for the last 9 years. Accordingly, the company was show caused as to why depreciation on plants which have been shut down be not disallowed like previous year. Ld. AO observed that in the order of BIFR dated 05.12.2005 it has been categorically mentioned that the 2nd stage to be implemented during 2006-07 and 2007-08 is proposed to be funded out of the sale proceeds of the seven non-operating units. He thus, observed that units are completely closed down and the manufacturing activities have not been temporarily suspended. Ld. AO observed that the asset in respect of which depreciation is claimed must have been used for the purpose of business of the production and if it is found that during the year the machinery cannot be said to have been used for the purpose of the business of assessee then depreciation cannot be allowed. that when Revenue does not dispute the fact that the units are non-operating since 1996 and prior to 2003-04 all the assessment were done without any additions on account of disallowance then the principles of consistency required Revenue to have allowed the depreciation on the assets for being part to the block of assets. The BIFR directions do not override the provisions of Act. As long as the ownership of the assets continue to be with the assessee company, as for the purpose of Section 32 of the Act, the claim of assessee company fulfils the following essentials. 1 st the assets are capital in nature. 2 nd assets are still owned by the assessee company. 3 rd the depreciation was claimed on the assets forming part of the non-operating plants in the block of assets. 4 th WDV at the beginning of the year was available and the assets were used for the purpose of business or profession since they were three other working units and the company as a whole were still working. It is a settled provision of law that use for a purpose of business when applied to block of assets would mean use of block of asset and not any specific building or machinery In the light of aforesaid discussion, the bench is inclined to decide the ground raised in favour of the assessee, the appeals of assessee are allowed and Ld. AO is directed to allow the depreciation as claimed by the assessee on the block of assets for the relevant assessment years.   show more

    Jul 20, 2023
  • Brief facts of the case are that the assessee has filed the return of income for the assessment year... 2012-13 on 30.09.2012 with returned income of ₹.Nil. The return of income was processed under section 143(1) of the Income Tax Act, 1961  dated 15.03.2013. Thereafter, the case was selected for scrutiny through nd notice under section 143(2) of the Act dated 23.09.2013 was issued and duly served on the assessee. After considering the submissions of the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 27.03.2015 by making additions towards disallowance under section 14A of the Act of ₹.39,61,902/-, disallowance of ROC fees of ₹.72,412/- and addition made towards TDS difference of ₹.2,18,830/-. With regard to the disallowance under section 14A of the Act, from the details furnished by the assessee, the Assessing Officer has noted that in the balance sheet no disallowance under section 14A of the Act was shown by the assessee even though the assessee company has made investments in equity shares. When the assessee was asked as to why the provisions of section 14A of the Act should not be invoked, there was no response from the assessee. Accordingly, the Assessing Officer worked out the disallowance under section 14A of the Act at ₹.39,61,902/- and brought to tax. On appeal, the ld. CIT(A) confirmed the addition by following various decisions as well as in view of the amendment brought out in the Finance Act, 2022 to the provisions of section 14A of the Act. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the ld. CIT(A) has erroneously confirmed the addition made towards disallowance under section 14A of the Act by considering the amendment brought out in the Finance Act, 2022 to the provisions under section 14A of the Act as retrospective. However, the Memorandum of the Finance Bill, 2022 explicitly stipulates that the amendment made to section 14A of the Act will take effect from 1st April, 2022. ITAT stated that that the explanation inserted in the provisions of section 14A of the Act by the Finance Act, 2022 is prospective and not retrospective and since the assessee has not earned any exempt income, the addition made towards disallowance under section 14A of the Act is deleted in view of the decision in the case of CIT v. Chettinad Logistics (P) Ltd. (2017) 80 taxmann.com 221 as well as the decision of Hon’ble Supreme Court in the case of CIT v. Chettinad Logistics (P) Ltd. (2018) 95 taxmann.com 250 (SC). This ground of appeal is allowed. The next ground raised in the appeal relates to confirmation of disallowance of capital expenditure of ₹.72,412/-. Due to increase in share capital, the assessee has incurred expenses on account of ROC fees and the Assessing Officer has treated the same as capital in nature and disallowed the claim of the assessee, which was confirmed by the ld. CIT(A). When the Assessing Officer has treated the expenses as capital in nature, depreciation should have been allowed, which was not done in this case. Accordingly, we set aside the order of the ld. CIT(A) on this issue and remit the matter back to the file of the Assessing Officer to examine and decide the issue afresh in accordance with law by affording an opportunity of being heard to the assessee. The next ground raised in the appeal relates to confirmation of disallowance of difference in TDS deductions. As per profit and loss account, the interest income reported was only ₹.49,80,109/- as against ₹.51,98,939/- being the actual receipts as per 26AS. Before the Assessing Officer, the AR of the assessee has explained that the difference “may be TDS difference” has not been accepted and accordingly the difference amount of ₹.2,18,830/- was disallowed and added to the income of the assessee. On appeal, the ld. CIT(A) confirmed the addition by observing that since the assessee could not admit total receipts, thereby resulting in short reflection of gross receipts in the books of accounts for taxation. Before the Bench, the ld. Counsel for the assessee could not offer any convincing explanation towards short reflection of gross receipts. Accordingly, the ground raised by the assessee is dismissed. show more

    Jul 19, 2023
  • Ground No. 1 to 5 of the Revenue relate to Rule 46A(1) of the Income Tax Rules, 1962 . During the ap...pellate proceedings, the assessee filed application dated 24.01.2020 under Rule 46A for admittance of additional evidence on the ground, inter alia that the assessee was prevented by sufficient cause from producing the details / evidences / documents which were important for assessment before the Ld. Assessing Officer (“AO”). The Ld. CIT(A) admitted the additional evidence and sent a copy to the Ld. AO for his comments on admissibility and merit of the additional evidence. The Ld. AO submitted his report which has been incorporated by the Ld. CIT(A) in para 6 of his order. In this report the Ld. AO stated that the assessee has filed Form 15CA before the Ld. CIT(A) with other submissions in support of non-deduction of tax and claim of commission expenses. As various opportunities were provided to the assessee during the course of assessment proceedings and the order has been passed by taking into consideration the submission of the assessee then. The assessee submitted his rejoinder on the report of the Ld. AO before the Ld. CIT(A) which is reproduced by the Ld. CIT(A) in para 7 of his order. The grievance of the Revenue, inter alia is that the Ld. CIT(A) has not given any finding on Ld. AO’s report and assessee’s rejoinder thereof. It is also a grievance of the Revenue that the Ld. CIT(A) admitted the additional evidence and then sent it to the Ld. AO for his comments which is contrary to the Rule. It is also the view of the Revenue that veracity of evidence has no nexus with the circumstances enumerated in Rule 46A(1)(a) to (d). The actual fact is that the assessee had filed Form 15CA for each of the transactions that was made outside the country. Veracity of evidence may not have direct linkage with the circumstance enumerated in Rule 46A(1)(a) to (d) yet the same evidence has lot of legal impact in deciding the issue involved in the appeal. Admittedly the Ld. CIT(A) has complied with the mandate of allowing reasonable opportunity to the Ld. AO as envisaged under sub-rule (3) of Rule 46A. Ground No. 6 to 9 relate to disallowance of claim of commission payment of Rs. 1,54,83,082/- to Ms. Vaishali Ganatra and Sh. Rajesh Dudeja (both residents of Australia) in respect of sales made to M/s. Tech Mahindra Australia which has been deleted by the Ld. CIT(A). The relevant facts are that the assessee is engaged in the business of providing information technology consultancy services where he provides staff augmentation on contractual basis for different project of the client. He filed his return electronically on 27.07.2017 declaring income of Rs. 23,31,430/-. The return was processed under section 143(1) of the Act. His case was selected for limited scrutiny under CASS.ITAT stated  that where payment of commission has been made by the assessee to non-resident agents for rendering services of procuring sales order etc. it was not FTS but business profit and in absence of PE of such agents in India, such commission payment was not taxable in India. In essence cross objections support the order/finding of the Ld. CIT(A). We, therefore, dismiss them as infructuous. Ld. AO from the very first day of assessment was told that, the commission paid to the agents was for procuring business from a company based in Australia. Although the agents are the citizens of Australia hence, they are liable to pay their taxes in Australia only .Therefore, no liability arises to deduct TDS for the same transaction. In the result, the appeal of the Revenue and Cross Objection of the assessee both are dismissed. show more

    Jul 18, 2023
  • The fact as culled out from the records is that that assessee Company has filed its e-return of inco...me for the A.Y. 2014-15 on 24.09.2014 declaring total income of Rs.79,20,110/-. The assessee Company derives income from Business or Profession. The case was selected for manual scrutiny assessment. The notice u/s 143(2) of the IT Act, 1961 was issued on 30.09.2015 and served upon the assessee. Due to change of incumbent notice u/s 142(1) of the I.T. Act, 1961 along with questionnaire was issued on 30.09.2016. In compliance thereto, ld. AR of the assessee attended from time to time and filed written reply which were placed on the record and the case was discussed with them. As per the Search and seizure operation conducted over the group concern of Shri Bhanwarlal Jain Group is a leading entry providerin Mumbai A search revealed various incriminating documentary evidences were seized. In addition, statement of various persons were recorded. All the above clearly established the modus operandi employed by Bhanwarlal Jain, in his operation accommodation entries pertaining to bogus purchases indulged in by the group approximate to Rs. 25,000/- crores were detected. The entire bogus nature of the transactions has also been admitted by Bhanwarlal Jain in his statement recorded under section 132(4) of the I.T. Act and relevant part of the statement was extracted in the assessment order. Thus, based on the information received it is observed that the assessee Khandelwal Diamonds Private Limited is one of the beneficiaries and has obtained accommodation entries in the form of bogus purchases of Rs. 3,21,93,468/-. ITAT stated that the assessee has duly discharged its burden of proving the genuineness of book results. The assessing officer has not done any independent and proper investigation. He simply relied upon he statement of third party who also stated that he is involve in the diamond business though the modus operadi is different. Thus, merely the third person stated that he is involved in issuing accommodation bill, the book results declared by the assessee which is higher then the industry norms prescribed by the board the action of the assessing officer in estimating the profit over and above the books results confirmed by the ld. CIT(A) is not in accordance with the law. Hence, we vacate the addition of Rs. 80,48,367/-. Based on this observation the appeal of the assessee is allowed.   show more

    Jul 18, 2023

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