By Ajay R. Singh Advocate and CA Rohit Shah
1. Tax under section 115BBE-Excess stock found during survey surrendered as business income Applicability of section 115BBE
Facts:
AO sought to invoke section 69 read with section 115BBE as regards excess stock found during survey. Assessee contended that excess stock found during survey was nothing but business stock carried on by assessee which was not declared in the books of accounts and since there was direct nexus between stock found during survey and business carried on by assessee, therefore, excess stock was only to be treated as income under the head business and not under deemed income, further excess stock found during the survey was not separately and clearly identifiable but was part of mixed lots of stock found at the premises which included the declared stock and stock of sister concern also. In these circumstances, section 69 could not be invoked and it was taxable as business income.
Held:
Section 115BBE could not be made applicable particularly where assessee made a statement that excess stock was a result of suppression of profit in respect of sales made outside the books of accounts, therefore, investment in excess stock computed by department was liable to be treated as business income and to be taxed under normal provisions and not under the Chapter No. XII.
Smt. Nandini Sharma vs. ACIT/DCIT Central Circle, Amritsar[ITA No.148/Asr/2022, dated 10/10/2022] [AY 2019-20]
2. Disallowance under section 14A-Amendments to section 14A by Finance Act, 2022-No retrospective effect
Facts:
The assessee earned exempt income to the tune of Rs. 7,43,185 against which it claimed deduction of expenses of Rs. 3,02,08,627. In course of scrutiny proceedings, the AO invoked section 14A read with rule 8D, keeping in view the amendment, brought in this section w.e.f. 1-4-2022 and restricted the deduction to the exempt income of Rs. 7,43,185. On appeal, however, CIT(A) allowed the claim of deduction fully on the ground that the amendment to section 14A was prospective in nature.
Held:
The amendments to section 14A introduced by the Finance Act, 2022 shall apply from assessment year 2022-23 and onwards, and shall not have retrospective effect. In view of this, the order of CIT(A) was upheld.
DCIT v. M/s Welspun Steel Ltd. [ITA No. 2137/Mum/2021; dated 03/08/2022] [A.Y.: 2015-16]
3.ITR can’t be treated as invalid until assessee’s request for condonation of delay in furnishing ITR-V is pending
Facts:
Assessee, a non-resident, filed its return of income by declaring income from rent and interest and claimed to carry forward of losses under the head’ Capital Gains’. Further, the claim of carry forward of losses was enhanced by assessee by filing revised return. The return was processed under section 143(1), and the claim for carry forward of loss was denied contending the original return filed was invalid as the assessee failed to submit the acknowledgement of the original return to the Central Processing Centre (CPC).
The aggrieved assessee preferred an appeal to the CIT(A) but all in vain. The matter then reached the Tribunal.
Held:
The Tribunal held that the assessee had furnished its original return well within the prescribed time, and the claim of carry forward of losses was denied only on the ground that the original return filed by the assessee was invalid for non-sending of acknowledgement to CPC. The requirement of furnishing the return electronically had another procedural requirement of taking a printout of such electronically filed return and sending it to the CPC as an acknowledgement of having furnished the return electronically. This second requirement of sending an acknowledgement of filed return to the CPC is only directory, and non-compliance, or late compliance of that cannot invalidate the compliance of the first mandatory requirement, to make an otherwise valid return a non-est. Since the procedural requirement of furnishing the acknowledgement is only a directory requirement, one cannot equate its non-submission on the one hand with not filing the return at all. Further, the assessee filed the request to condone the delay for non-furnishing acknowledgement in the material time, which was still pending before the board. Thus, the original return filed by the assessee can’t be treated as invalid.
Anagha Vijay Deshmukh v. DCIT, CPC, Bengaluru [ITA No. 35/Pun/2022; dated 30/01/2023] [A.Y.: 2015-16]