TaxTMI 
TaxTMI 
2025 (4) TMI 1988
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....d in the circumstances of the case, the Commissioner of Income Tax (Appeals) is right in law in holding that the contribution amounting to Rs. 84,71,00,000/- in Eastern Express Project is an allowable expenditure made wholly and exclusively for the business purpose ignoring the main object of the assessee for which it has been constituted and transport service cannot be said to be akin to the Financing activities and developing the Industrial Estates etc. ? 3. a) Whether on the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) is right in law in deleting the disallowance made by the assessing Officer towards grants / contribution of Rs. 78,11,91,600/- for Industrial & Infrastructure Development Projects/ Scheme, ignoring the aspect that the grants are directly related to the business of the Assessee Corporation and are to be considered for the purpose of taxability within the meaning of Section 28 of the Income Tax Act, 1961 under the head 'Profit and Gains from Business and Profession'? b) Whether on the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) is right in law in applying the p....
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....(Appeals) has erred in restricting the disallowance under Section 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962 ignoring the fact that no separate accounts had been maintained by the Assessee? 5 a) Whether on the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) is right in law in deleting the disallowance under Section 36(1)(iii) of the Income Tax Act, 1961 on account of interest related to diversion of funds for non business purposes by holding the issue as covered in view of decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Reliance Industries Limited, reported as [2019] 4 1 0 ITR A 66 (SC) notwithstanding the aspect that the Assessee did not discharge the onus cast upon him to prove with cogent material /evidence that the funds diverted were for business consideration / commercial expediency within the meaning of Section 36(1)(iii) of the Income Tax Act, 1961? b) Whether on the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) grossly erred in law, aiding the issue of disallowance under Section 36(1)(iii) of the Income T....
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....unds, relating to merits of the case, therefore, are rendered academic in nature. 3.1 It was submitted by the Ld AR since the assessment order has been held by the Tribunal as void, and therefore no addition can be made in the hands of the assessee, in the appeal of the Revenue, arising from the same assessment order. 3.2 It was further submitted that the Revenue feeling aggrieved by the order passed by the Tribunal in ITA No. 1369/Chd/2019 had filed the Misc. Application No. 2/Chd/2022 on 17/05/2024. 3.3 The Tribunal had dismissed the M.A filed by the Revenue by an speaking order dt. 09/08/2024 and in the said order the Tribunal in para 11 has held as under: 11. In view of the aforesaid discussions and considering the entirety of facts and circumstances of the case, the various grounds of appeal taken in the present misc. application are disposed off as under: Grounds of Misc. application Findings i) Whether on the facts and in the circumstances of the case, the order passed by the Hon'ble Income Tax Appellate Tribunal is vitiated being obtained fraudulently by the Assessee by suppressing the order of the Hon'ble jurisdictional High ....
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....al before the Hon'ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the same will amount to review of the decision already taken by the Coordinate Bench. v) Whether on the facts and in the circumstances of the case, the Hon'ble. Income Tax Appellate Tribunal is right in law in adjudicating the reference under Section 142(2A) of the Income Tax Act, 1961 under the guise of limitation for passing an order of assessment whereas the Hon'ble High Court declined to interfere in the challenge laid to the special auditor report, limitation etc. and the adjudication suffers from, the vice of principal of estopple, waiver, acquiescence etc ? Should the Revenue is aggrieved with the said findings of the Coordinate Bench, the appropriate action lies in filing appeal before the Hon'ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the same will amount to review of the decision already taken by the Coordinate Bench. vi) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is right in adjudicating the issue in Appe....
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....essee under law. 3.4 It was submitted that the Revenue is already in appeal before the Hon'ble High Court against the order passed by the Tribunal in ITA No. 1369/Chd/2019 and M.A. 3.5 It was submitted by the Ld. AR that the present appeal of the Revenue is required to be dismissed being originated from the same assessment order which was held by the Tribunal as void. 4. Per contra the Ld. DR submitted that the present appeal is on a peculiar fact as the method of accounting adopted by the assessee have been changed by the assessee for the first time in A.Y. 2014-15 and prior thereto the assessee has not declared any profit on the mercantile principle. It was submitted that for the first time in the A.Y 2014-15 the assessee has opted for the mercantile method of accounting the outcome of the assessment proceedings for the A.Y 2014-15 would have the cascading effect on the subsequent assessment year which are pending before the Tribunal. It was also submitted that the assessee, taking into account various entries while filing the return of income for A.Y. 2014-15 had already factored in primary aspect which was objected to in the appeal of the Revenue. 4.1 The Ld. DR sub....
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....urisdiction, void ab-initio and is thus barred by time limitation as the very reference to the special audit u/s 142(2A) of the act is illegal and bad in law." The Hon'ble ITAT in the assessee's appeal (ITA No. 1369/Chd/2019) has held the order passed by the Assessing Officer as barred by limitation.(Copy enclosed). The relevant extract of the Order is as under: 34. The assessment order passed therefore in the extended period, as a consequence of the invalid reference, we hold, is barred by limitation and hence void. 35. Since we have held the assessment order to be void on account of an invalid reference to special audit for the aforesaid reasons, the remaining arguments with respect to the same are not being dealt with by us. The additional ground of appeal raised by the assessee is, therefore, allowed. It is pertinent to mention that since the assessment order itself was held to be void and barred by limitation, the Hon'ble Bench allowed the appeal of the assessee without going into the merits of the case rendering them as academic in nature. The relevant extract of the finding of the Hon'ble Bench is as under: 36. Both the parties we....
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....g on merit by Hon'ble Punjab and Haryana Court whereby the assessee has challenged the special audit report and it was left open to the assessee to challenge the same during the regular appellate proceedings. We therefore find that it is incorrect on part of the Revenue to read and interpret the said order so passed by the Hon'ble Punjab and Haryana High Court to hold that the report of the special auditor has become final including the matter relating to limitation. In view of the liberty so granted by the Hon'ble High Court to challenge the adverse view so taken by the Assessing officer and matters connected therewith, where the assessee corporation has taken the additional ground of appeal in its appeal filed before the Tribunal whereby the assessment order passed u/s 143(3) has been challenged by way of additional ground of jurisdiction and bared by limitation as reference to special audit u/s 142(2A) has been claimed to be illegal and bad in law and where the same has been admitted by the Coordinate Bench and adjudicated upon, we find that there is no mistake apparent from record and any action can be contemplated or sought within the provisions of section 254(2) of the Act. I....