TaxTMI 
TaxTMI 
2021 (12) TMI 748
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....setting aside of the assessment order passed under section 143(3) of the Act by the Deputy Commissioner of Income Tax, Circle -8(1)(1), Mumbai ("the Assessing Officer") dated 26.12.2018 on the alleged ground that the said assessment order was erroneous and prejudicial to the interest of the revenue. 2. The learned PCIT erred in invoking the provisions of section 263 of the Act without specifying as to how the prejudice is caused to the Revenue in as much as it is not pointed out as to how the order of the Assessing Officer is erroneous in law and therefore how the interest of the Revenue is affected adversely. The Appellant prays that it be held that the action of the Learned PCIT in invoking provisions of section 263 of the Act and directing the Assessing Officer to pass a fresh assessment order be held to be ab-initio and/or otherwise void and bad in law." 3. The facts in brief are that the assessee is engaged in the business of providing long term finance for housing and nonhousing purposes. The return of income was filed on 15.10.2016 declaring loss of Rs. 123,64,90,040/-. The case of the assesse for selected for scrutiny and original assessment was framed by the AO u/s.14....
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....pe of business and the basic of loss to be taken over can only be apportioned on the basis of assets taken over which was very negligible in this case. Therefore the loss Rs. 105,36,30,422 which was set off cannot be attributed to the loss on account of the scheme of arrangement between IDMPL and the assessee and needed to be disallowed. AO has failed to verify this aspect and allowed the lose claimed by the aseessee. 1. The aforesaid aspects, which, prima facie warranted inquiry on the facts and circumstances of the case, have not been inquired into while completing the assessment. On the facts and circumstances of the case, it is clear that in respect of the aforesaid aspects, the order of the A.O. suffers from error within the meaning of Section 263 of the I.T. Act, 1961. This error has resulted in prejudice to the revenue within the meaning of Section 263 in as much as the claim of the assessee i.e. allowed in excess and /or income of the assessee has been under assessed. Accordingly, in respect of the aforesaid aspects, enumerated in foregoing paragraphs ae above, provision of Section 263 of the Income Tax Act, 1961 are clearly attracted to the facts of this case. 2. In vi....
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.... was set off in revised return of income or not. In view of these facts the PCIT has held the assessment order is not only erroneous but also prejudicial to the interest of the revenue. The PCIT directed the AO to verify whether donation already claimed by the assessee u/s.80G can be allowed as CSR. The ld. PCIT further directed the AO to verify the valuation of assets taken over by the assessee and assess the correct valuation of the assets which would be assigned to the assets as per law and further directed to verify whether the provisions of section 72A(4)(a) or section 72A(4)(b) would apply. 5. The ld Counsel of the assesse submitted that the order passed by the ld PCIT is without jurisdiction. The ld AR referred to the notice issued u/s.142(1) of the Act dated 4.10.2018 wherein the query was raised for large deduction under Chapter VIA. The ld AR submitted that the assessee replied to the above query vide letters dated 11.10.2018 and 20.11.2018 and submitted copy of the donation receipt before the AO. The learned Counsel further contended that the assessee further submitted detailed note on allowability of expenses on CSR u/s.80G vide letter dated 14.12.2018. 6. In view of ....
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....orrect in as much as ld. PCIT has directed the AO to verify whether donation claimed by the assessee can be allowed as CSR. It was argued that the above directions are contrary to the issue raised in the notice u/s.263 which was whether CSR expenses can be considered for deduction u/s.80G. It was further submitted that the claim for the loss on demerger of business of IDMPL was accepted by the AO after due consideration of the law on the subject and after proper verification and merely because the assessment order was silent does not mean that the AO has not applied his mind. It was further pointed out that the directions of the ld. PCIT in the order that the AO should verify whether business loss of Rs. 14,36,669/- which was set off by IDMPL in original return of income was set off in the revised return of income or not. It was submitted that the above directions have no relevance to the computation of income of the assessee. The ld AR finally prayed that in view of the above facts, the order of ld PCIT is wrong and may be quashed as he has no valid jurisdiction to invoke section 263 of the Act to revise the assessment. 12. The ld. DR, on the other hand, vehemently argued that th....
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....nd provisions of section 27A(4)(a) were applicable and correctly applied and accepted. 14. We have heard the rival contentions and perused the materials on records including the case cited by both the sides. From the records before us and arguments of rival parties we note that undisputedly on all issues the assessee has filed complete details before the AO in reply to queries from the AO as discussed above. It is also not in dispute that the assessee has filed detailed note on allowability of CSR expenses as donation u/s.80G and therefore the issue was considered by the AO during the assessment proceedings. Besides we note that the assessee has filed the Scheme of Arrangement of demerger alongwith all documents including financials of IDMPL, assessment orders of IDMPL determining losses, book entries incorporating the demerger in the books of the assessee. All conditions of section 2(19AA) were complied with and therefore there was a proper demerger and the same has been accepted by AO. We note that the AO issued notice u/s.142(1) of the Act dated 4.10.2018 wherein the query was raised for large deduction under Chapter VIA which was replied vide letters dated 11.10.2018 and 20.11....
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....e enables a company to carry out CSR activity through registered trust or registered society or a company after complying certain conditions specified therein. At the same time, the company can also get deduction for the amount of contribution made to such trust in accordance with the provisions of section 80G of the Act subject to and to the extent of limitation of that section. There is no disabling clause in Section 80G similar to Section 37(1) of the Act. In absence of such debar in Section 80G of the Act and CSR being donation to charitable institution holding Section 80G certificate, the deduction under section 80G was rightfully claimed by us. The above position is also supported by FAQ's on CSR Cell released by the Government of India, enclosed as Exhibit 14, and displayed on the website of Ministry of Corporate Affairs wherein it stated as under: "8. What tax benefits can be availed under CSR? No specific tax exemptions have been extended to CSR expenditure per se. Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. While no specific tax exemption has been extended to expenditure incurred on CSR, spending on severa....
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....dated 14.12.2018 submitted various documents relating to demerger which are specified hereunder:- "Note on scheme of demerger with India Debt Management Private Limited (IDMPL) The scheme of arrangement under Section 391 to 394 of the Companies Act, 1956 between IDMPL ('the demerged company') and us has been sanction by the National Company Law Tribunal, Mumbai Bench vide order dated April 5, 2017 to acquire the 'entire credit business' of the Demerged Company. The scheme became effective on April 21, 2017 on filing with the Registrar of Companies, Maharashtra at Mumbai with effect from March 31, 2016 i.e. Appointed Date. In this regard, we submit the following: * Scheme of arrangement along with copy of the order of National Company Law Tribunal, Mumbai Bench approving the scheme is enclosed as Exhibit 9 * Statement showing journal entry & relevant details with regard to scheme of demerger with IDMPL, enclosed as Exhibit 10 * Valuation Report of IDMPL confirming the swap ratio used in the demerger scheme is enclosed as Exhibit 11 * Copy of certificates for issuance of Non-cumulative Preference Shares towards purchase consideration, as Exhibit 12 * Statement of brough....
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....ed out as to how the order of the Assessing Officer is erroneous in law and therefore how the interest of the Revenue is affected adversely. The Appellant prays that it be held that the action of the Learned PCIT in invoking provisions of section 263 of the Act and directing the Assessing Officer to pass a fresh assessment order be held to be ab-initio and/or otherwise void and bad in law." 22. The facts in brief are that the assesse filed the return of income on 27.11.2015 declaring total income of Rs. 95,73,330/- which was later revised by filing a revised return on 31.3.2017 declaring total income of Rs. 4,59,65,95,240/-. The case of the assesse was selected for scrutiny and assessment u/s.143(3) of the Act was framed vide his order dated 22.12.2017. Subsequently the ld. PCIT issued show-cause notice u/s.263 for revising the assessment order passed u/s.143(3) of the Act dated 19.3.2021 for the reason that the AO failed to carry out relevant and meaningful inquiries on the following:- "The assessee filed original return on 27.11.15 declaring income of Rs. 95,73,73,330/- and revised return of income on 31/03/2017 declaring total income at Rs. 4,59,65,95,240/-. The assessment ....
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....21 on the issue of deduction u/s.80G relating to CSR expenses and also direction about grant of interest u/s.244A of the Act. 24. So far as the first reason for revising the assessment order by ld. PCIT is concerned the facts are narrated are as follow. Now, we have to examine the details and evidences produced by the assessee before AO during the course of the assessment proceedings. First of all, the ld. Counsel for the assessee Shri Yogesh Thar referred to the CASS Selection Reason and Issue which included reason for taxable income shown in the revised return being less than the taxable income shown in the original return. The relevant portion is reproduced hereunder:- Reason Code Reason Description Issue TA05.01 Taxable Income shown in revised return is less than the taxable income shown in the Original return (Part B- TTI of return) Whether reduction of income in revised return is correct. The assessee replied to the above vide letter dated 4.12.2017. The said reply is reproduced hereunder:- "Point 4 (page 2) With respect to query on taxable income in revised return being less than taxable income in original return, our client submits that the difference is on a....
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.... 1 TDS (Claimed in Revised return Rs. 16,96,81,351) 169,673,494 2 Advance Tax paid 212,881,636 Total 382,555,130 3 Tax payable as per Assessment order u/s 143(3) 323,745,685 Refund 58,809,445 4 Above refund issued as under (As per intimation u/s 143(1) dated 04.03.2015) (Interest u/s 244A Rs. 52,72,308) 43,935,816 5 Refund issued as per Assessment Order u/s 143(3) (Interest u/s 244A of Rs. 18,66,033) 14,873,537 Total Refund 58,809,353 Note: Total interest u/s 244A Rs. 71,38,341 (52,72,308+8,66,033) 30. It was submitted that initially the refund of Rs. 4,39,35,816/- was granted in the intimation u/s.143(1) including interest u/s.244A of Rs. 52,72,308/-. Subsequently, the regular assessment u/s.143(3) was completed and further refund of Rs. 1,48,73,537/- was granted alongwith interest of Rs. 18,66,033/-. Thus total interest u/s.244A was granted at Rs. 71,38,341/-. Contention of PCIT as recorded in the order u/s.263 was that the refund of Rs. 1,48,73,537/- was less than 10% of the tax de....