TaxTMI 
TaxTMI 
2022 (7) TMI 1592
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....unting to Rs. 6,31,42,956/-. 3. On the facts and circumstances of Rs.NIL the case and in law the Learned PCIT has grossly and unfairly erred in concluding that the re-opening of assessment on account was justified on account of the Ld.AO not including interest received from tata power amounting to Rs.67,044/- in the computation of Income form part of assessment order u/s139(1) of the Act. 4. On the facts and circumstances of Rs.NIL the case and in law the Learned PCIT has grossly and unfairly erred in directing that Hubtown Limited is a party covered u/s 40A(2) (b) of the Act. 5. On the facts and circumstances of Rs.NIL the case and in law the Learned PCIT has grossly and unfairly erred in directing / confirming applicability of penalty provisions under section 271AA of the Act for failure to report payment of interest on Rs.15,00,00,000 amounting to Rs. 15,00,00,000/- to Hubtown Limited as a Specified Domestic Transaction under the provisions of Section 92D of the Income Tax Act. 6. On the facts and circumstances of the case and in law the Learned PCIT has grossly and unfairly erred in directing that the penalty provisions of section 271BA were ....
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....cts/claims and considered the assessment order passed u/s 143(3) of the Act is erroneous and prejudicial to the interest of revenue and issued notice u/s 263 of the Act dated 30.01.2019 read as under: 2. On perusal of Financial Statements for the year ending 31/03/2014 under the head "Other Income" that the assessee has received interest from fixed deposits to the tune of Rs.91,624/- and interest from loans of Rs.6,30,51,332/-. Further, during assessment proceedings, the assessee has filed revised computation of income. On perusal of revised computation, it is observed that the assessee has shown Rs.91,336/- on account of interest received from Tata Power under the head Income from Other Sources'. The assessee has received interest from bank fixed deposits and interest on loans to the tune of Rs.6,31,42,956 /- ( 91,624/- + 6,30,51,332) which have assessed as Business Income. Hence, the A.O. has erred in treating the interest received from fixed deposits and interest on loans to the tune of Rs.6,31,42,956 / - as Income from Business' as against Income from Other Sources' by setting off of the brought forward business losses against the interest income. In view o....
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.... on or before the said date which will be considered before any order u/s 263 of the Act is passed. 4. In compliance to the notice, the assessee has filed the reply letter dated 20-02-20219 online as under: a. Alleged Error in treating the interest received from fixed deposits and interest on loans to the tune of Rs.6,31,42,956/- as 'Income from Business' as against 'Income from Other Sources' by setting off the brought forward business losses against the interest income. With regards to the above, assessee states that in earlier years it had acquired development rights / FSI for consideration which was partly paid by issue of debentures. These funds were utilised for the construction of the project and has a direct link to the business of the assessee. Later, when some of the units of the project were sold, the resulting funds were used to pay of the existing liabilities of the Company. The Company has received the above interest from funds received on sale of the FSI to JV and were temporarily set apart to pay of the debentures issued by it to pay for the acquition and construction of the same project. Thus, a global view of the whole facts of....
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.... Tax Act, 1961 On facts of the case: Assessee states that the shareholding of the Company comprised of different classes of shares. These shares represented the actual ownership as well as investor shares which were held in a protective capacity to basically protect the investments made in the Company. The actual owners were entitled to dividend only after settling the dues / dividend / Return on Investments of the investor shares. Certified copy of details of different classes of shares and their rights and obligations - Exhibit 9 b. With regards to the grounds raised, assessee submits that M/s Hubtown Limited had, during the year under review, held 100% of "B Class" of the shares of the assessee Company. These shares are not ordinary shares and do not represent the ordinary shareholders of the company who are the final and actual owners of the company. These shares are held in a protective capacity to safeguard the investments made in assessee company. c. For all decisions relating to the operations and management of Giraffe, Hubtown was required to take prior consent of the Investors. The Investors had protective rights whereby all de....
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....hat the levy or non-levy of penalty would not have any impact on the present assessment order whatsoever which would result in the principal requirement of the section of the order to be erroneous or prejudicial to the interest of the revenue, not being satisfied. g. Assessee respectfully submits that even considering the facts of the case, the stated M/s Hubtown Limited does not have any necessary beneficial interest in the share-holding of the Company and is not a related party u/s 44A(2) (b) of the Act, considering which there is no legal ground to hold the assessee company liable to furnish an Audit report u/s 92E of the Act. h. Without prejudice to the above, Assessee Company further states that the proposed levy of penalty provisions may themselves be "out of jurisdiction". It is emphasized that though assessment proceedings stand on completely independent and separate footings from the penalty proceedings, the Assessment Order is required to initiate proposed levy of Penalty Proceedings for the same to be legally enforceable. Attention in this regards is invited to the decision of the Hon'ble Delhi High Court reported in Addl. CIT vs. JK. D'Costa (1....
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....eous or prejudicial to the interest of the Revenue because of the failure of the ITO to record his opinion about the leviability of penalty in the case." Assessee company states that though the above relates to penalty sought to be levies u/s 271(1) (a) or 273(b) of the Act, the principal explained would be applicable to facts of the present case as well. 5. Whereas the Pr.CIT was not satisfied with explanations and dealt on the facts of the case in respect of claims made by the assessee and the domestic transfer pricing issues/penalty. The Pr.CIT finally observed that the order passed U/sec143(3) of the Act is erroneous and prejudicial to the interest of revenue and has set aside the assessment and issued the directions to the AO for de novo assessment. The observations of the Pr.CIT at Para 6 to 7 read as under: 6. The above facts clearly establish that the assessment has been completed without carrying out necessary enquires into the various issues and that the AO has not applied his mind on the issues under consideration and consequently the order of the AO is erroneous in so far as it is prejudicial to the interest of revenue. It is now settled position in....
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....iction u/s. 263 is concerned, once the contention of non-application of mind on the part of the AO on a particular issue is satisfied, the invoking the provisions of section 263 is proper and justified. It was further observed that there was no doubt that the issue which was a subject matter of 263 order was a complex matter and there was a possibility of two views but when the AO had not expressed any view while framing the assessment then the question of substitution of the view by the CIT did not arise. Similarly, in the case of Ninestar Enterprises Pvt. Ltd vs ACIT, 30 taxmann.com 57 (Hyd.) as reported the CIT passed a revision order u/s 263 setting aside assessment on various grounds such as while allowing assessee's claim of long term capital gain, the AO omitted to examine dates of acquisition of bonus shares; there was no evidence of receipt of dividend warrants to claim exemption under section 10(34) of the Act and therefore, expenditure incurred on exempt income was allowed ignoring the provisions of section 14A of the Act. On account of these facts the Hon'ble ITAT has held that perusal of the assessment order passed by the AO does not show any applicati....
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....ncome surrendered was, in fact, earned by the assessee. It was held that an assessment made on income surrendered by assessee without making an enquiry whether the same was in fact taxable in the hands of the assessee was erroneous and prejudicial to the interest of revenue. In the case of Rishi Gagan Trust vs. ITO in 31 ITD 515 (Bom.) the Hon'ble jurisdictional ITAT 'B' bench noted that the assessee received certain amount in gift from a nonresident donor at Dubai. The AO while completing the assessment for the AY 1983-84 accepted it as a genuine gift on the basis that both the donor and doner had made the declaration in this behalf before the Consulate General at Dubai and the foreign remittance of the gift had been received through bank. The CIT, acting under section 263, set aside the assessment on the ground that proper and full enquiries had not been made by the AO while accepting this gift. On account of these facts the ITAT has held that when the AO completed the assessment, the financial capacity the donor to make the gift was not enquired into by him. The pieces of evidence and line of enquiry was only in relation to the identity of the parties, the r....
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....assed a fresh as per law after conducting necessary enquiries and investigations and after giving reasonable opportunity of being heard to the assessee 6. Aggrieved by the order, the assessee has filed an appeal before the Honble Tribunal. At the time of hearing, the Ld. AR submitted that the Pr. CIT has erred in set aside the order of the A.O without considering the fact that the assessee has complied with the letters and filed the details in the assessment proceedings. Whereas, on the first disputed issue with respect to chargeability of the interest income under income from business or income from other sources the Ld. AR submitted that interest received on fixed deposits and interest on loans are treated as business income and company has received the funds from sale and were temporarily set apart to pay of the debentures issued. The Ld. AR submitted that the income cannot be offered under income from other sources and there is a direct nexus with the projects and supported his submissions with the judicial decision. On the second disputed issue with respect to not assessing interest received from Tata Power which resulted in underassessment the Ld.AR has nothing to say and ....
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....r the purpose of business activities and there is no dispute. We support our view relying on the ratio of the jurisdictional Honble High Court decision in the case of CIT Vs. Lok Holdings, [2010] 189 taxman 452 (Bombay). Accordingly, we are of the view that the A.O. has rightly allowed the claim and disclosure of interest under income from business. 9. On the second disputed issue with respect to interest received from Tata Power which resulted in underassessment to the tune of Rs. 67,044/-. We find that there was an error in assessment order u/s 143(3) where the net interest was offered as income by the assessee but however the A.O. has not considered the interest income for the computation of assessed income. The Ld. AR submitted that it is a mistake apparent from record and rectification petition u/s 154 of the Act is filed. We considering the facts and submissions do not find any infirmity in the directions of the Pr.CIT to the A.O. 10. On the third disputed issue, with respect to nonlevy of penalty u/s 271AA of the Act for failure to report the specified domestic transaction u/s 92D(1) and Sec 271BA of the Act for failure to furnish the audit report. The contentions of t....
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.... invalid and bad in law - Held, yes [Para 6] Similarly in the case of Ashish Subodchandra Shah Vs. Pr. CIT, [2021] 129 taxmann.com 140,(Ahmedabad Tribunal) has observed as under: The assessee was an individual and running proprietorship concern in the name and style of 'G.P. Textiles. He has filed his return of income for the Assessment year 2014-15 declaring total income at Rs. 33,98,080. This return was selected for scrutiny assessment and ultimately, the Assessing Officer has passed assessment order under section 143(3). The Commissioner while going through the assessment order formed an opinion that in Form No. 3CEB the assessee has shown a domestic transaction. According to him, it is a specified domestic transaction and its value is more than Rs. 5 crores. Therefore, this transaction should have been referred to the TPO by the Assessing Officer for determining arm's length price, and only thereafter the assessment order should have been framed. He further opined that this action of the Assessing Officer is erroneous which has caused prejudice to the interest of the revenue. Accordingly, he initiated revisionary proceedings under section 263. ....