AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 1110
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....ssessment passed u/s. 143(3) of the Act has been set aside with the direction to the Ld. AO to pass a fresh assessment order by considering the three issues which are as under: (i) Relating to donation made by the assessee and its claim of deduction u/s. 80G of the Act for which AO had not obtained the proof of receipts of donation and certificate of the nine donees; (ii) Disallowance u/s. 40(a)(ia) of the Act in respect commission paid to the Managing Director/Directors of the assessee company for nondeduction of tax at source as well as non-compliance of section 197 of the Companies Act, 2013; (iii) In respect of double claim of depreciation on fixed assets of SEZ unit at Falta. 2.1. Brief facts of the case are that assessee filed its return of income on 25.10.2017 reporting total income of Rs.74,31,92,720/-. The case was selected for scrutiny assessment u/s. CASS. Statutory notices were issued and served through the Departmental ITBA portal. Assessee complied with these notices by making submissions through departmental ITBA portal on various dates along with relevant documentary evidence. After considering the submissions of the assessee filed thro....
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....crore (Rs.1.44 crore as per Companies Act) on computation of total income of FALTA SEZ Unit and the same (Rs.1.44 crore) was again charged in the main Industry account under the head Other Expenses (It was not adjusted while computing the business income under Schedule BP). Thus, the depreciation of SEZ unit was double charged (One at SEZ Unit and again at main Industry) which resulted in underassessment of income by Rs.1.44 crore involving a tax effect of Rs.66.29 lakh." 2.2. On the above three issues observed by the Ld. Pr. CIT, a show cause notice was issued u/s. 263 of the Act dated 21.02.2022 for which a detailed reply was submitted by the assessee along with relevant documentary evidence. The written submission furnished by the assessee before the Ld. Pr. CIT, on each of the three issues is reproduced in the impugned order u/s. 263 from pages 2 to 6. After considering the submissions made by the assessee on the three above listed issues, Ld. Pr. CIT concluded that the papers submitted before him were not submitted in the course of assessment proceedings and, therefore, were not verified by the AO in the assessment completed by him. He also noted that whether the approval g....
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.... to whom donation of Rs.95 lakh has been made are found to be untrue. However, no detail has been provided in respect of, which all three trusts have been found to be untrue. On the allegation of Ld. Pr. CIT that proof of payment of donation and certificate from the donees for the donation made are not found in the assessment records, Ld. Counsel referred to the abovementioned pages in the paper book wherein it has been categorically noted that money receipts as well as 80G certificates were filed on 01.03.2019 before the Ld. AO and the same were resubmitted before the Ld. Pr. CIT on 07.03.2022. Ld. Counsel also referred to "Schedule 80G" of the income tax return form wherein details of donations entitled for deduction u/s. 80G are to be furnished. In the said schedule, name and address of the donation, PAN of donee, amount of donation and eligible amount of donation entitled for 50% deduction, without qualifying limit, has been duly furnished. This is placed at page 40 of the paper book. In respect of observation made by the Ld. Pr. CIT relating to four charitable trusts namely, Swarnim Foundation, Vishnu Charitable Trust, Jashidi and HP Bhudia Charitable Trust for which it was al....
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....ACES" portal of the Income Tax Department. Also, all the documents relating to the payment of commission which forms part of the salary of the two directors, Form-16, tax challans, working for both the directors and TDS quarterly returns for all are placed on record both before the Ld. AO and the Ld. Pr. CIT. Ld. Counsel further submitted that Ld. AO had called for and examined the issue of TDS on all the applicable amount of payments including this one relating to payment of commission to the two directors which form part for their salary subjected to TDS u/s. 192 of the Act. According to the Ld. Counsel, the conclusion drawn by Ld. Pr. CIT that no tax has been deducted on the payment of commission and the same is to be disallowed u/s. 40(a)(ia) of the Act is without examination of the records and without considering the applicable provisions of the Act. He also submitted that issue relating to violation of the provisions of section 197 of the Companies Act, 2013 was never raised in the show cause notice issued u/s. 263 of the Act by the Ld. Pr. CIT though he has drawn his conclusion to set aside the assessment order on this aspect also. For section 197 of the Companies Act, 2013,....
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....n of eligible profits for deduction of SEZ, Ld. Counsel thus submitted that the allegation of double claim of depreciation of Rs.1,44,01,181/- is ill founded. He also submitted that all the details relating to the claim of depreciation in respect of the assessee as a whole and also in respect of Falta SEZ unit were submitted before the AO who had examined the claim in detail. He also pointed out that Ld. Pr. CIT has merely directed the AO to verify this issue through the income tax return without pointing out how it is erroneous and prejudicial to the interest of revenue. 4. Per contra, Ld. CIT, DR emphasized that AO has not undertaken the requisite examination and has simply taken the records submitted by the assessee to allow the claim made by it and completed the assessment. Ld. Pr. CIT has rightfully raised these three issues and has set aside the assessment for the purpose of re-examination by the Ld. AO which does not lead to any prejudice to the assessee. He placed reliance on the order of the Ld. Pr. CIT. 5. We have heard the rival contentions and perused the material available on record and given our thoughtful consideration to the submissions made. In respect of fir....
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....ry eligible limit for the assessee for claiming deduction u/s. 10A was of Rs.23.57 Cr. but against this, it had restricted the deduction of Rs.7.50 Cr. only, owing to its planned capital expenditure in future. We note that all these working details were furnished in the course of assessment proceedings filed with e-portal and were also placed before the Ld. Pr. CIT in the revisionary proceeding. 5.3. From the above factual matrix of the three issues raised by the ld. PCIT, we find that he has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 of the Act. We observe that in the course of proceedings u/s 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the Ld. PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon....