The most important stories on the Income Tax Appellate Tribunal (ITAT) that were published at Taxscan between November 4 and November 11, 2023, are critically summarized in this Round-Up.
No Corroborative Evidence to show Bogus Purchase: ITAT sets aside Income Tax Addition Yashaswi Fish Meal and Oil Company vs Deputy Commissioner of Income-tax CITATION: 2023 TAXSCAN (ITAT) 2593
The Bangalore bench of the Income Tax Appellate Tribunal(ITAT) set aside the addition made under the Income Tax Act, 1961 in the absence of corroborative Evidence
A two-member bench of Shri Chandra Poojari, Accountant Member and Smt Beena Pillai, Judicial Member observed that the Assessing Officer(AO) has made the addition only based on the sworn statement of the managing partner. Without rejecting the books of accounts the AO cannot make any additions towards bogus purchases. The Tribunal deleted the addition made on the premise of bogus purchase in all these assessments. âAs there was no corroborative material to support the addition and the statement has already been retracted, the addition based on no supporting evidence cannot be made.â, the bench concluded.
Disallowance of Bogus LTCG is Invalid in Absence of Incriminating Material: ITAT Deputy Commissioner of Income Tax vs Bajrang Lal Bamalwa CITATION: 2023 TAXSCAN (ITAT) 2596
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that disallowance considering the allegation of Bogus Long Term Capital Gain (LTCG) is not valid in the absence of incriminating material.
A two-member bench of Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member observed that âIn absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word âassessâ in Section 153 A relates to abated proceedings (i.e. those pending on the date of search) and the word âreassessâ to completed assessment proceedings.â A perusal of these assessment orders would indicate that in five scrutiny cases of the sale of shares, i.e. TFCIL, gain earned by the assessee was accepted as genuine by the Department itself. Out of these five cases, two are in the re-assessment under section 147 and these assessment orders have been framed after more than one year of the search. The ITAT dismissed the appeal of the revenue.
Mere whims and fancies by AO, Ignoring Sustainable Vital Evidence: ITAT deletes Addition u/s 69A of Income Tax Act Chander Lekha Vashishtha vs ITO CITATION: 2023 TAXSCAN (ITAT) 2598
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition under Section 69A of the Income Tax Act, 1961 due to mere whims and fancies of the Assessing Officer and ignoring the sustainable vital evidence produced by the assessee.
The Single member bench comprising of Chandra Mohan Garg (Judicial member) held that merely, because the assessee was holding big amount of cash in her hand, the accumulation of cash from declared income, cash rental and salary income cannot be disbelieved unless the Assessing Officer establishes that the assessee had used the amount of the income accrued to her during earlier period, for some other purposes and there was no cash in hand at the time when the cash by deposited to her bank account.
The Assessing Officer was not correct in making addition under Section 69A of the Income Tax Act and the CIT(A) was also not justified in upholding the addition to the extent of Rs. 9 lakhs ignoring the entire facts and circumstances, cash flow statement and income shown and returned by the assessee. Therefore, the sole grievance of assessee was allowed and Assessing Officer is directed to delete the addition of Rs. 9 lakhs as upheld by the CIT(A)
Donation received by assessee Trust are not Anonymous Donation u/s 115BBC of Income Tax Act when Complete Records of donors has maintained: ITAT Gian Sagar Educational and Charitable Trust vs DCIT CITATION: 2023 TAXSCAN (ITAT) 2597
The Income Tax Appellate Tribunal (ITAT), Delhi bench held that donations received by the assessee trust are not anonymous donations under Section 115BBC of the Income Tax Act, 1961 when complete records of donors have been maintained.
After reviewing the facts and records, the two-member bench of M. Balaganesh (Accountant member) and Chandra Mohan Garg, (Judicial Member) held that provisions of Section 115BBC of the Act would not be applicable if records of Donation received by assessee Trust are completely maintained.
Files Return of Income Belatedly without filing Form No.10B to claim deduction u/s 11 or 12 of Income Tax Act: ITAT directs Re-adjudication in respect of Condonation Petition ITO (Exemptions) vs M/s. Papathiyammal Pitchai Educational Trust CITATION: 2023 TAXSCAN (ITAT) 2592
The Income Tax Appellate Tribunal (ITAT), Chennai bench directed readjudication in respect of condonation petition filed for belatedly filed return of income without filing Form No.10B to caim deduction under Section 11/12 of the Income Tax Act , 1961
After reviewing the facts and records, the two-member bench of Manoj Kumar Aggarwal (Accountant member) and V. Durga Rao (Judicial Member) directed readjudication in respect of a condonation petition filed by the assessee. P.Sajit Kumar, counsel appeared for revenue and S. Sridhar counsel appeared for assessee.
ITAT allows Interest Expenses claimed u/s 36(1)(iii) towards Loans advanced to subsidiary companies for Commercial Expediency Intervo Technologies Pvt. Ltd vs Addl. CIT CITATION: 2023 TAXSCAN (ITAT) 2591
The Income Tax Appellate Tribunal (ITAT), Delhi bench allowed interest expenses claimed under Section 36(1)(iii) of the Income Tax Act, 1961 towards the loan advanced to subsidiary companies for commercial expediency.
After reviewing the facts and records, the two-member bench of Girish Agrawal, (Accountant member) and Chandra Mohan Garg,(Judicial Member) allowed the interest expenses claimed under Section 36(1)(iii) of the Income Tax Act towards the loan advanced to subsidiary companies for commercial expediency.
Exemption u/s.11 of Income Tax Act shall not be granted when activities of Trust are in Nature of Trade, Commerce or Business:ITAT M/s.SAE India vs The Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 2590
The Income Tax Appellate Tribunal (ITAT), Chennai bench held that exemption under Section 11 of the Income Tax Act , 1961 should not be granted when activities of trust are in nature of trade , commerce or business
After reviewing the facts and records, the two-member bench of Manjunatha.G (Accountant member) and Manomohan Das, (Judicial Member) exemption under Section 11 of the Income Tax Act should not be granted when activities of trust are in nature of trade , commerce or business
ITAT disallows Indexed cost of Acquisition and improvement on Failure to produce Conveyance DeedShri Padmanabhan Mohan vs The Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 2586
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has disallowed the indexed cost of acquisition and improvement on failure to produce conveyance deed.
The two-member Bench of Manjunatha G, (Accountant Member) and Manomohan Das, (Judicial Member) observed that the assessee failed to furnish evidence regarding the payment of registration fees. We agree to the observation of the Ld. CIT(A) that payment of stamp duty and registration fees can be ascertained from the conveyance deed under which the assessee acquired the property. The Bench dismissed the appeal filed by the assessee holding that mere claims without any evidence could not be accepted, whether the assessee was an NRI or resident that was immaterial. As he, the assessee claimed registration charges, evidence thereof had to be furnished. Moreover, the assessee failed to submit the conveyance deed through which the assessee acquired the property in 2008. The total sale consideration of an immovable property could also be ascertained from such conveyance deed
Sale and Purchase Transaction in Own account does not Meet Facilitation as Commission Agent: ITAT upholds Determination of Income u/s 44D of Income Tax Act Naresh Kumar & Sons HUF vs The Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 2587
The Raipur Bench of Income Tax Appellate Tribunal (ITAT) upheld the determination of income under Section 44D of the Income Tax Act 1961 holding that the sale and purchase transaction in its own account would not meet the facilitation as the commission agent.
A single Bench of Ravish Sood, (Judicial Member) observed that the assessee would have rendered services as a commission agent then it would have merely acted as a facilitator and not carried out purchase/sale transactions on its own account. Be that as it may, as the assessee had failed to substantiate its aforesaid claim of having rendered services merely in the capacity as that of a commission agent. The appeal of the assessee was dismissed.
Relief to Amazon Textiles: ITAT allows Suo motto Disallowance as Disallowance should not Exceed Exempt Income D.C.I.T vs Amazon Textiles Pvt. Ltd CITATION: 2023 TAXSCAN (ITAT) 2585
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Amazon Textiles allowing suo motto disallowance as disallowance should not exceed the exempt income.
The two-member Bench of Waseem Ahmed, (Accountant Member) And Siddhartha Nautiyal, (Judicial Member) observed that Itispertinent to note that the amount of disallowance under section 14A read with Rule 8D of Income Tax Rules could not exceed the amount of exempted income as held by the Delhi High Court in case of PCIT v. Caraf Builders & Constructions (P.) Ltd. Further, the SLP filed by the revenue against such order was dismissed by the Supreme Court in PCIT v. Caraf Builders & Constructions (P.) Ltd that disallowance under the provision of Section 14Ar.w.r. 8D of Income Tax Rules could not exceed the exempted income in the given facts and circumstances. The Bench dismissed the appeal filed by the revenue and allowed the cross objection filed by the assessee.
âTransfer of propertyâ completes only after extinguishing rights of owners : ITAT allows capital gain exemption Rajamanikam Meerabai vs The Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 2583
The Income Tax Appellate Tribunal (ITAT), Chennai bench while allowing capital gain exemption held that transfer of property has completed only after extinguishing the rights of owners.
After reviewing the facts and records, the two-member bench of Manjunatha.G, (Accountant member) and Mahavir Singh,(Vice President) observed that ownerâs right to property ger extinguished on the date of registration of sale deed i.e., 19.07.2007 and the assessment of capital gain can only be made in assessment year 2008-09 and not in this assessment year 2006-07. Therefore, the bench allowed the capital gain exemption.
ITAT quashes reassessment framed u/s.143(3) of Income Tax Act beyond 4 years on absence of establishing failure on part of assessee ACIT vs The Villupuram District Central Co-operative Bank Ltd CITATION: 2023 TAXSCAN (ITAT) 2584
The Income Tax Appellate Tribunal (ITAT), Chennai bench quashed reassessment framed under section 143(3) of the Income Tax Act, 1961 beyond 4 years in absence of establishing failure on part of assessee.
After reviewing the facts and records, the two-member bench of Manjunatha.G, (Accountant member) and Mahavir Singh,(Vice President) observed that In the absence of any failure on the part of the assessee to disclose fully and truly all material facts and assessment framed under Section 143(3) of the Income Tax Act and now reopening beyond 4 years which is against the provisions of the Income Tax Act. K. Ravi, counsel appeared for assessee and N.B. Som, counsel appeared for revenue.
CIT (A) can Enhance any Issue which touched upon by AO in Assessment Order : ITAT upholds Enhancement of Income made u/s 251(2) of Income Tax Act ACIT vs The Villupuram District Central Co-operative Bank Ltd CITATION: 2023 TAXSCAN (ITAT) 2584
The Income Tax Appellate Tribunal (ITAT), Chennai bench held that Commissioner Income Tax (Appeals) [CIT(A)] could enhance any issue which was touched upon by an Assessing Officer in the Assessment Order. Therefore, the bench upheld the enhancement of income made under Section 251(1) of Income Tax Act, 1961.
After reviewing the facts and records, the two-member bench of Manjunatha.G, (Accountant member) and Mahavir Singh, (Vice President) upheld the enhancement of income made under Section 251(1) of Income Tax Act. Therefore, the bench dismissed the above ground.
Partial relief of Disallowance u/s 40 40A(3) on Bogus Purchase without seeking Remand Report: ITAT upholds Partial relief as no Additional Evidence is taken Income Tax Officer vs Balajay Infrastructure Pvt. Ltd CITATION: 2023 TAXSCAN (ITAT) 2582
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has upheld the partial relief as no additional evidence was taken while dealing with partial relief of disallowance under Section 40A(3) of the Income Tax Act 1961 on bogus purchase without seeking remand report.
The two-member Bench of Annapurna Gupta, (Accountant Member) and Siddhartha Nautiyal, (Judicial Member) dismissed the appeal observing that, âWe observe that while passing the order, LCIT(Appeals) has not taken any additional evidence on record, which formed the basis of granting part relief to the assessee. CIT(Appeals) while affording part relief to the assessee, passed the order on the presumption that the purchase was in fact bogus, a fact which was already highlighted in the assessment order. While we are of the view that in case the appellate order passed by CIT(Appeals), which takes into account additional evidences filed by the assessee as the basis of affording relief to the assessee, the same is liable to be set aside if remand report is not sought from the concerned Assessing Officer
Time taken for legal Remedy against Special Audit shall be excluded from Prescribed Time Limit: ITAT deletes Penalty u/s 27I(1)(b) of Income Tax Act Apeejay Education Society vs The DCIT CITATION: 2023 TAXSCAN (ITAT) 2581
The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 27I(1)(b) of Income Tax Act holding that ties taken for legal remedy against the special audit shall be excluded from the prescribed time limit.
The two-member Bench of Aakash Deep Jain, (Vice President) and Vikram Singh Yadav, (Accountant Member) observed that the penalty order had been passed by the AO on 3.05.2019 holding the assessee in violation of directions issued under Section 142(2A) of the Income Tax Act whereas the AO himself had extended the time limit for submission of the audit report to 21.06.2019.
The Bench allowed the appeal filed by the assessee holding that, âWhere the assessee is seeking a legal remedy available under the law against the action of the AO in ordering the special audit, the time taken from filing the writ petition to the disposal of the writ petition (even though no stay was granted) by the High Court deserve to be excluded. Apparently, considering the same where the AO has extended the time limit for submitting the report of the special auditor, the same cannot be held against the assessee.â
ITAT deletes TDS demand against Resident Transporter of goods as Payment was less than Threshold Limit M/s. Air Transport Corporation vs ITO-TDS CITATION: 2023 TAXSCAN (ITAT) 2580
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the Tax Deducted at Source (TDS) demand against resident transporter of goods as payment was less than the threshold limit.
The two-member Bench of V. Durga Rao, (Judicial Member) and Manoj Kumar Aggarwal, (Accountant Member) observed that the assessee had furnished the complete details of rental payment i.e., Godown Location, address of the Godown, name & PAN of landlord and payment made to each of them. And the payment to each of these parties was less than the threshold limit of Rs.1.80 Lacs and therefore, the assessee was not liable for TDS on these payments considering the provisions of Section 194I of the Income Tax Act. The Bench allowed the appeal filed by the assessee noting that, âThe assessee may be temporarily hiring the godown and may not be successful in furnishing adequate documentary evidence to the satisfaction of lower authorities. For that lapse, the assessee had already suffered disallowance under Section 40(a)(ia) of the Income Tax Act. But, nevertheless, the details as furnished before lower authorities were sufficient to make a reasonable conclusion that the assessee was not liable for TDS on these payments.
Exemption u/s.11 of Income Tax Act shall not be allowed when receipts from activity of GPU is excess of prescribed profit as per section 2(15) :ITAT Ramsahaimal Sahuwala & Sons Charitable Trust vs The ACIT CITATION: 2023 TAXSCAN (ITAT) 2579
The Income Tax Appellate Tribunal (ITAT), Chennai bench held that exemption under Section 11 of the Income tax act, 1961 should not be allowed when receipts from activity of General Public Utility (GPU) excess of prescribed profit as per section 2(15)of the Income Tax Act.
After reviewing the facts and records, the two-member bench of Manjunatha.G, (Accountant member) and Mahavir Singh (Vice President) held that exemption under Section 11 of the Income tax act, 1961 should not be allowed when receipts from activity of General Public Utility (GPU) excess of prescribed profit as per section 2(15)of the Income Tax Act.
Deduction Claimed u/s.36(1)(viia) Income Tax Act shall not exceed provision made for Bad and Doubtful Debts in Books of Accounts: ITAT The ACIT vs The Villupuram District Central Co-operative Bank Ltd CITATION: 2023 TAXSCAN (ITAT) 2577
The Income Tax Appellate Tribunal (ITAT), Chennai bench held that deduction claimed under Section 36(1)(viia) of the Income Tax Act, 1961 should not exceed provisions made for bad and doubtful debts in books of accounts.
After reviewing the facts and records, the two-member bench of Manjunatha.G, (Accountant member) and Mahavir Singh,(Vice President ) relied upon the decision of Karnataka High Court in the case of CIT vs. Syndicate Bank, has explained the provisions and held that the condition precedent for claiming deduction under section 36(1)(viia) is that a provision for bad and doubtful debts should be made in the accounts of the assessee. Therefore, the assessee is entitled to deduction to the extent provision is made in the accounts subject to the limit mentioned in section 36(1)(viia) of the Act K. Ravi, Counsel appeared for assessee and N.B. Som, Counsel appeared for revenue.
âCorpus Donationsâ received by assesseeâs Trust will include in total income of Trust, if exemption u/s 11 Income Tax Act denied :ITAT M/s.Ramsahaimal Sahuwala & Sons Charitable Trust vs ACIT CITATION: 2023 TAXSCAN (ITAT) 2576
The Income Tax Appellate Tribunal (ITAT), Chennai bench held that corpus donation received by assessee trust would include in total income of trust when exemption under Section 11 of the Income Tax Act 1961 denied.
It was observed by the tribunal that the voluntary donation received by a trust that, when the trust is not eligible for exemption under section 11 of the Act, is directed to be income of the trust and forms part of the trustâs corpus. After reviewing the facts and submissions, the two-member bench of Manjunatha.G, (Accountant membera) and Mahavir Singh, (Vice President) held that corpus donation is income when Section 11 of Income Tax Act benefit is not applicable
Difference in Opening Stock and Closing Stock due to Clerical Mistake in ITR: ITAT upholds deletion of Addition ITO vs Shri Roshan Lal Sharma CITATION: 2023 TAXSCAN (ITAT) 2570
The Income Tax Appellate Tribunal (ITAT) Delhi bench observed that difference in the opening stock and closing stock of assessee arised due to the clerical mistake of Filing Income Tax Return. Therefore the bench upheld the deletion of addition
After considering the facts submitted and circumstances, the two member bench of Dr. B R R Kumar (Accountant Member) and Astha Chandra (Judicial Member) upheld the deletion of additions by the CIT(A) and observed that the difference in opening stock and closing stock of assessee had arisen due to the clerical mistake of Filing Income Tax Return. Therefore, the bench dismissed the appeal of the revenue.
Notice for penalty u/s 274 of Income Tax Act proceedings is initiated against inaccurate particulars of income not for Concealment of Income: ITAT deletes Penalty 9 Shivaji Dattatray Sonawane vs ITO CITATION: 2023 TAXSCAN (ITAT) 256
The Income Tax Appellate Tribunal (ITAT) Pune bench held that notice for penalty under Section 274 of the Income Tax Act, 1961 proceedings is initiated against inaccurate particulars of income not for the concealment of the income .Therefore the bench deleted the penalty imposed under section 271(1)(c) Income Tax Act, 1961.
After analyzing the assessment order and fact of the case the two member bench of Inturi Rama Rao (Accountant Member) and Partha Sarathi Chaudhury, (Judicial Member) held observed that notice under Section 274 r.w.s. 271(1)(c) of the Income Tax Act has been issued for concealment of particulars of income, whereas the actual penalty had been levied for furnishing of inaccurate particulars of income. Therefore the bench allowed the appeal of the assessee.
Payments made in Compensatory Nature are not interest u/s 194A of Income Tax Act, for purpose of Deduction of TDS: ITAT Trimex Industries Pvt. Ltd vs The ACIT CITATION: 2023 TAXSCAN (ITAT) 2568
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT), ruled that the payments made in compensatory nature are not interest under Section 194A of Income Tax Act, 1961 for purpose of deduction of tax deducted at source (TDS).
A Two-Member Bench comprising Mahavir Singh, Vice President and Manoj Kumar Aggrwal, Accountant Member observed that âWe have heard rival contentions and gone through the facts and circumstances of the case. We noted that the payments made to APMDC is clearly in the nature of compensatory and these cannot be called as interest which are contemplated in the provisions of section 194A of the Income Tax Act, for the purpose of deduction of TDS. Hence, we find no infirmity in the order of CIT(A), who has rightly deleted the disallowance and we confirm the same. Accordingly, this appeal of the Revenue is dismissed.â
Presence of Common Management and Unity of Control: ITAT rules Revenue cannot disallow Interest Expenditure Trimex Industries Pvt. Ltd vs The ACIT CITATION: 2023 TAXSCAN (ITAT) 2568
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that the Revenue cannot disallow interest expenditure on the presence of common management and unity of control.
A Two-Member Bench comprising Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member observed that âEven in these subsidiaries and that of the assessee, there is common management and unity of control is there. Once this fact is there, the Revenue cannot disallow the interest expenditure because it is incurred for the purpose of business. Hence, we allow the interest and direct the AO accordingly. The appeal of the assessee is allowed.â
Filing of Statement as Neither Employees entitled to ERS Nor Company has Obligation against Relief u/s 89: ITAT directs Re-adjudication Anita Anil Rangale vs ACIT CITATION: 2023 TAXSCAN (ITAT) 2567
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has directed the re-adjudication of the statement has been filed as neither the employees entitled to Early Retirement Scheme (ERS) nor the company had any obligation against the relief under Section 89 of the Income tax Act 1961.
A single Bench of R.S. Syal, (Vice President) allowed the appeal filed by the assessee and seaside the impugned order remitted the matter to the file of the AO with a direction to decide the issue afresh in the hue of the above additional evidence as per law after allowing a reasonable opportunity of hearing to the assessee.
Discrepancies found in Document produced for Registration of Trust u/s 12AA of Income Tax Act: ITAT directs Re-adjudication Shree Sangli Kutch Jain Seva Samaj vs CIT (Exemption) CITATION: 2023 TAXSCAN (ITAT) 2562
The Income Tax Appellate Tribunal (ITAT), Pune bench, directed re-adjudication with respect to discrepancies found in documents produced by the assessee trust for obtaining registration under Section 12AA of the Income Tax Act, 1961.
After reviewing the facts and records, the two-member bench of Inturi Rama Rao (Accountant Member) and Partha Sarathi Chaudhury (Judicial Member) remitted the matter back to the file of the CIT(E) and directed a de novo adjudication in accordance with the principles of natural justice.
Insurance Activities Carried out by Cooperative Society do not fall with Banking Business: ITAT upholds Disallowance of Deduction u/s 80P of Income Tax Act The Indur Intideepam Producers vs The Income Tax Officer CITATION: 2023 TAXSCAN (ITAT) 2566
The Income Tax Appellate Tribunal (ITAT) Hyderabad bench held insurance activities carried out by cooperative society did not fall with banking business. Therefore, the bench upheld the disallowance of deduction claimed by the assessee under Section 80P of the Income Tax Act, 1961. After considering the facts submitted by the both parties, the two member bench of R.K. Panda, (Vice President) and Laliet Kumar, (Judicial Member) held that activities of the insurance do not fall within the realm of the banking activities as banking activities are separate and distinct from the insurance activities. Therefore, it was concluded that the deduction claimed by the assessee in the return income with respect to insurance business should be disallowed.
ITAT deletes Penalty imposed u/s 271(1)(c) of Income Tax Act on Estimated Quantum Addition based upon information from Sales Tax Department Jaisingh H. Solanki vs ITO CITATION: 2023 TAXSCAN (ITAT) 2565
The Income Tax Appellate Tribunal (ITAT) Mumbai bench deleted the penalty imposed under Section 271(1)(c) of the Income Tax Act ,1961 on estimated quantum addition based upon information from the sales Tax Department.
After considering the facts and circumstance, the two member bench of Amarjit Singh (Accountant Member ) and Aby T. Varkey, (Judicial Member) deleted the penalty imposed under Section 271(1)(c) of the Income Tax Act on estimated quantum addition based upon information from the sales Tax Department. Therefore the bench allowed the appeal of the assessee. During the appeal proceedings no one appeared for assessee. Ujjawal Kumar Chavan counsel appeared for the revenue.
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