TaxTMI 
TaxTMI 
2025 (8) TMI 1732
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....rds carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated the facts of the case are that the assessee filed its return of income on 10/10/2018 declaring total income at Rs. 1,74,81,92,230/-. The return was selected for scrutiny as per selection criteria under CASS on the ground as under :- "1. Verification of Duty Drawback received as shown in the Export Import Data. 2. Claim of Large Value Refund. 3. Sale consideration of the property in ITR is less than sale consideration of property reported in the documents present with the department Property sold at a consideration (shown in ITR) less than the value as per Stamp authority) (u/s 50C or any other relevant section). 4. Mismatch in expenditure of personal nature reported in Audit Report and ITR. 5. Lower amount disallowed u/s 40(a)(ia) in ITR(Part A-OI) in comparison to audit report. 6. Large "any other amount allowable as deduction" claimed in Schedule BP of return. 7. Non-compliance to Income Computation & Disclosure Standards. 8. Taxable income show....
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....hensive income of Rs.4,22,40,716/- while computing taxable income. This has led to an underassessment of income of Rs.4,22,40,716/-, resulting in a short levy of tax as well as interest. 2.1. On perusal of the assessment records, it is observed from the computation sheet filed by the assessee that an amount of Rs.6,87.44,074/- was disallowed u/s 40(a)(ia) of the I.T. Act being 30 percent of expenditure of Rs.22,91,46,913/- claimed during the year due to the reason that no tax was deducted at source on such expenditure. In form 3CD under clause 21(b)(ii)(A), these expenses such as payment to contractors, legal and profession fee, sales promotion etc. were provided during the year on estimated basis as the bills were not received before the end of the previous year and these expenses are only a provision made during the year and the exact liability would be known only when the bills are received and booked. Being provision made in the books, they are not an allowable expense as per the provisions of section 37 of the Income-tax Act. Accordingly, entire expenditure is liable to be disallowed as they are in the nature of provisions. While completing the assessment u/s 143(3) r....
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....udicial to the interest of the revenue. 6.1. Facts on record show that the AO issued notice u/s 142(1) of the Act dated 11/11/2020 and raised the queries as under :- 1. "Detailed note on Duty Drawback received as shown in the Export Import Data along with supporting documentary evidence. 2. Audited Balance Sheet and Profit & Loss Account statements (Along with all notes to accounts) for AY 2018-19 3. Tax Audit Report for AY 2018-19 4. With respect to Income for the year under consideration and the claim of refund during the year, kindly submit the below specified details: i. Furnish computation of income for the relevant AY. ii. Provide a brief note about the nature of business activity carried out by you during the year under consideration. iii. Furnish the details of deductions, exemptions and rebate claimed during the year along with suporting documents. iv. Furnish the statement of set off/adjustment of current year/carried forwareded loss against any income of the year under consideration. v. Provide the comparision of income reported, deductions/exemptions/rebate claimed, current year/carried ....
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....2nd September, 2021 The Addl./ Joint / Dy. / Asst Commissioner of Income Tax, National e-Assessment Centre, Delhi. Sir, Re: M/s. Procter and Gamble Health Limited (" the assessee company") PAN: AAACE 2616 F Assessment Year: 2018-19 Assessment Proceedings 1. Further to and in continuation of our earlier submission dated 07.10.2019,26.11.2020, 18.01.2021 and 05.03.2021 in connection with the assessment of total income of the assessee company for the year ended 31st March, 2018 relevant to the Assessment Year 2018-19, we, under instructions from the assessee company, submit as under: 2. Claim of "Other amounts allowable as deduction* in Schedule-BP in ITR The breakup of other amounts claimed as deduction of Rs. 8,10,62,410/- is as under: - (i) Reversal of Provision for VAT on Royalty - Rs. 7,11,797/- (ii) Bad debts written off of against Provision for doubtful debts - Rs. 2,65,84,253/- (iii) Provision for Doubtful debts Written Back to Profit & Loss A/c - Rs. 1,15,25,643/- (iv) OCI Adjustment pertaining to Re-measurements of defined benefit obligation - Rs. 4,22,40,716/- 3....
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....ct of the same is as under. A) In the year in which provisions were made Provision for Doubtful debts (Expense A/c) -------- Dr To Provision for doubtful debts (BS) B) The year in which the Bad debts are w/off i.e, impugned Assessment Year Provision for doubtful debts (BS)Dr To Respective Debtors A/c 4.4 . The sales made to the respective debtors was accounted as income and offered to the tax in the year in which invoices were raised to the respective debtors. Hence, the same should be allowed as Bad debts u/s 36(l)(vii) r.w.s 36(2) of the Act as the same are written off during the year under reference 4.5 We also draw your attention to judicial pronouncement of Judicial Pronouncement in respect of TRF Ltd Vs CIT (2010) 190 taxmann.com 391 (SC) and CBDT circular no. 12/2016 dated 30th May 2016 wherein CBDT has instructed that bad debts should be allowed even if debt not established to be irrecoverable. 4.6 In view of the above, bad debts w/off of Rs. 2,65,84,253/- is claimed as admissible deduction in computing the income for the year under reference. 5. Reversal of Excess Provision for doubtful debts ....
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....et us know so that the same can be furnished. Further, if your goodself are in not agreement of any matter or are proposing to take any adverse view we request you to provide opportunity for further submissions in the matter and also grant us "Video Conference" in the matter. 8. We trust the above meets your requirements. Yours faithfully For M.A. Parikh and Co. Chartered Accountants" 7. It can be seen from the above that specific query was raised by the AO to which specific reply was filed by the assessee. The profit and loss account for the year ended 31/03/2018 is as under :- "Mere Limited Statement of Profit and Loss for the year ended 31st March 2011 (All amounts are in Rupees. except share data and as stated) 7.1. And the income has been computed as under :- *** This space has been left blank intentionally. P.T.O. *** 7.2. A perusal of the profit and loss account shows that the assessee did not claim expenditure and in the computation of income, the assessee has first claimed the amount as deduction and then added back the same. This is in respect of the first issue raised by the ld. PCIT. In our view, specific qu....
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..... Details of expenses incurred on agents commission. B. It is also observed that you have debited an amount of Rs 1.06,95477/- in you P & L account on account of Corporate Social Responsibility. This is not a business expense hence non deductible u/s 37. The Corporate Social Responsibility expenses may be deducted after tax not before tax. You are hereby show cause as why CSR expenses shall not disallowed and added back to your total income? Your reply must reach to this office in given time. Please note since the case is being time barred by limitation, so no more opportunity may be granted. If you fail to reply in time, then it may be assumed that you have nothing to say in this matter and assessment order may be passed on the basis of material available on record. Yours faithfully, Additional / Joint / Deputy / Assistant Commissioner of Income Tax/ Income-tax Officer, National e-Assessment Centre, Delhi" 11. And the detailed reply was filed by the assessee along with the statement showing ledger-wise details of sales promotion expenses which run through pages 156 to 270 of the paper book. 12. The allegation of the ld. P....
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....ned D-mat account in order to verify the share trading activities claimed by the assessee. Moreover the before passing the assessment order, sale, purchase and closing stocks were also examined by the Assessing Officer. Thus, the basis to invoke section 263 of the Act factually did not exist as there was due enquiry by the Assessing Officer during the assessment proceedings leading to the assessment order dated 28 March 2014. Thus, it is amply clear that the Assessing Officer has applied his mind while accepting the claim of the Respondent of operating loss of Rs.8.79 crore making the proceedings under section 263 of the Act bad in law. In any event, the view taken on fact by the Assessing Officer is a possible view and the same is not shown to be bad." 15. Similar view was taken by the Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi 390 ITR 292. The relevant findings read as under :- "12. In the present facts, the Assessing Officer was satisfied, consequent to making an enquiry and examining the evidence produced by the Assessing Officer, establishing the identity and creditworthiness of the donor as also the genuineness of the gift. The CIT in his o....
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.... where no enquiry whatsoever has been conducted by the AO with respect to the claims under consideration. However, this leads us to an ancillary question- whether the mandate of law for invoking the powers under Section 263 of the Act includes the cases where either an adequate enquiry has not been made and the same has not been recorded in the order of assessment or the said authority is circumscribed to only consider the cases where no enquiry has been conducted at all. 22. Reliance can be placed on the decision of this Court in the case of CIT v. Sunbeam Auto Ltd.[2010] 189 Taxman 436/[2011] 332 ITR 167 (Delhi)/[2009] SCC OnLine Del 4237, wherein, it was held that if the AO has not provided detailed reasons with respect to each and every item of deduction etc. in the assessment order, that by itself would not reflect a non-application of mind by the AO. It was further held that merely inadequacy of enquiry would not confer the power of revision under Section 263 of the Act on the Commissioner. The relevant paragraph of the said decision reads as under :- "17. We have considered the rival submissions of the counsel on the other side and have gone through the rec....
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....g Officer had applied his mind. Once such application of mind is discernible from the record, the proceedings under section 263 would fall into the area of the Commissioner having a different opinion. We are of the view that the findings of facts arrived at by the Tribunal do not warrant interference of this court. That being the position, the present case would not be one of "lack of inquiry" and, even if the inquiry was termed inadequate, following the decision in Sunbeam Auto Ltd. [2009] 227 CTR 133/[2011] 332 ITR 167/[2010] 189 Taxman 436 (Delhi) (page 180) : "that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter." No substantial question of law arises for our consideration." 24. In Ashish Rajpal as well, this Court was of the view that the fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect to transactions carried out by the assessee. 25. Further, the decision of the Hon....
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....re possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. (See Rampyari Devi Saraogi v. CIT[1968] 67 ITR 84 (SC) and in Tara Devi Aggarwal v. CIT (1973) 3 SCC 482 : 1973 SCC (Tax) 318 : (1973) 88 ITR 323." [Emphasis supplied] 26. Recently, the Hon'ble Supreme Court in the case of CIT v. Paville Projects (P.) Ltd. [2023] 149 taxmann.com 115/293 Taxman 38/453 ITR 447 (SC)/[2023] SCC OnLine SC 371, while relying upon Malabar Industrial Co. Ltd., has discussed the sanctity of twofold conditions for the purpose of invoking jurisdiction under Section 263 of the Act. The relevant paragraph of the said decision reads as under :- "27. Learned counsel appearing on behalf of the assessee has heavily relied upon....
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....was an actual loss and only the net loss of Rs. 114.05 lacs after setting of gain of interest rate swap was claimed as deduction. However, we find that both these issues were duly examined by the AO vide Questionnaire dated 2.11.2004 (Page 1-2 of the Paper Book) to which replies dated 9.12.2004, 20.12.2004 and 6.1.2005 (Page No. 3-39 of Paper Book-1) were furnished and, therefore, the finding of the Ld. CIT that the issues were not examined properly was not correct. Even the Ld. CIT has not pointed out the definite and specific error in the original assessment order and observed that the inquiry made by the AO was inadequate or improper without first pointing out the error in the original assessment order passed by the AO, particularly because both the aforesaid issues were duly examined at the stage of the original assessment proceedings, hence, the impugned order is beyond jurisdiction, bad in law and void-ab-initio." 29. It is discernible from the aforenoted findings of the ITAT that both the claims were duly examined during the original assessment proceedings itself and neither there was any error nor the same was prejudicial to the interests of the Revenue. Thus, the ....
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....38,721 729,891.274 VI Other Comprehensive Income A Items that will not be reclassified to profit and loss Remeasurements of post-employement benefit obligation ₱ (42,240,716) (5,524,516) Income tax related to items that will not be reclassified to profit and loss 14,618,667 1,911,925 B Items that will be reclassified to profit and loss . VIII Total Comprehensive Income for the year 978,816,672 726,278,683 IX Earnings per equity share (Face value of Rs. 10/- each) 34 (1) Basic 60.60 44.00 (2) Diluted 60.60 44.00 Significant accounting policies 2 The accompanying notes form an integral part of these Financial Statements = 2> IV 2> Document 2 MERCK LIMITED Statement showing revised computation of total income for the year ended 31st March, 2018 Assessment Year 2018-2019 Reference of Amount in Rupees Sr.No. Particulars Note No. Clause No. of Form No 3CD Amount Amount 1 DETERMINATION OF TOTAL TAXABLE INCOME A BUSINESS INCOME Profit after tax as per Statement of Profit & Loss Account 97,88,16,672 Income Tax 67.20.33,592 Less: Income Tax related to other Comphersenive Income 1.46.18,667 1,....
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.... reversal 17.719 66,75,49,149 BUSINESS INCOME 1,67,28.10,103 Capital Gain on Sale of Flat Short term capital gains on depreciable asset Sale Proceed of Ashutosh Flat 8,70,00,000 Less : Transfer Fees Paid to Society (11,25,000) Less : Brokerage Paid (30,43,529) Net Consideration 8,28,31,471 Less : Opening WDV of block of asset of Flat (48,68,713) Short term capital gains 7,79,62,758 Gross Total Income 1,75.07,72,861 Deduction under Chapter VI-A Less Deduction under section 80JJAA 25,80.632 TOTAL TAXABLE INCOME 1,74,81,92,229 SAY 1,74,81,92,230 Less: Non taxable / Considered Separately Less: Amounts allowable In view of provisio under section 40(a)(1) of the Act since the tax deducted at source is paid MERCK LIMITED Statement showing revised computation of total Income for the year ended 31st March. 2018 Assessment Year 2018-2019 = TAX POSITION Tax payable @ 30 % Add: Surcharge @ 12% 52.44,57,669 6,29,34.920 58.73,92.589 1.76.21.778 Add: Education Cess 3% Tax Payable as per Normal Provision (A) 60,50,14,367 35,63.72.562 Tax Payable as per MAT under Section 11....
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.... Various Partees 1.4 Not Paid 67,679.454 20.303,836 TDS on Technical & Professional Services Legal & Prof Various Parties Total 229,146,913 68.744.074 C&F Canteen Conference The Company prevides for accrued liability on an estimate basis in respect of costs and expenses for which bills / invoices are not received as upto the year end and deducts tax thereon upon receipt of bills in accordance with the provisions of Chapter XVII-Bi of the Act. (b) The amounts which have been disallowed under section 40(a)(ia) are allowable in computing the total income of the previous year( s) in which the amount of tax deducted at source and paid and should be allowed accordingly The details have been provided and certified by the Management. We have applied audit tests including test verification of details in accordance with prevalent Auditing Standards and the Guidance note on Tax Audit. Document 4 Sr. No. Date of payment Amount of provision amount disallowed Nature of payment Descriptions of payment Name & address of the payee 4,831,878 TDS on Contracts Not paid 16,106,261 Various Parties 1 C&F Canteen 1,362,741 408,822 Not paid 2 ....