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2019 (10) TMI 1567 - MADRAS HIGH COURT
Benami transaction - relationship of the parties in the Suit - Family Arrangement - Whether the property mentioned in 'A' Schedule to the Plaint has been purchased by the 1st Plaintiff from and out of the funds of the First Plaintiff and income from the 'B' Schedule property? - HELD THAT:- A reading of the Family Arrangement shows that it is not a mere Partition between the heirs of Late C.M. Sundararaj. It records certain obligation which are in effect relinquishments of rights over the properties by the heirs of C.M. Sundararaj. While the First Defendant relinquishes his share in the Besant Nagar Property, the Plaintiffs 1 & 2 relinquished their right over the Industrial land namely, the B Schedule property. The very fact that the Family Arrangement is in writing, under which the parties, who are the members of the family relinquish their interest in the property the same requires registration and proper stamping in accordance with law. In the absence of such registration and proper stamping, the document cannot be construed as valid.
It is seen from the instrument itself that it was executed on 1.6.1994 and the Second Plaintiff has not signed it, though she figured as a party to the instrument. There are no Attestors also. As already concluded that the explanation offered by the Defendant for non-production of the original is unconvincing. Therefore, considered opinion that the Family Arrangement, dated 1.6.1994 cannot said to be a full fledged Family Arrangement brought about in the presence of the elders of the family in order to settle the disputes between the members of the family. The instrument, which results in relinquishment of share in a particular item of property by one of the members is not valid without being registered and duly stamped under law. Hence, thus issue is answered in favour of the Plaintiffs and against the First Defendant.
It is not a case, where the Plaintiffs seek a Declaration of the title to the property or recovery of possession of the property alleging that a document, which confess title is invalid. It is a settled position of law that the relief of setting aside the document would arise only in a case where the Plaintiffs seek to invalidate the Title, which had vested in a person, who is shown as Purchaser under the document. That is not the case on hand. The Plaintiffs seek partition on the ground that the Defendant holds the property in trust on their behalf also. Therefore, prayer for setting aside the document is not required. If the document is set aside, neither the Defendant nor the Plaintiffs would get title. The property will revert back to the Owner namely, Tamil Nadu Small Industries Development Corporation. Therefore, the plea that a Decree for Partition cannot be passed unless the document is set aside is liable to be rejected. Hence, Issue is also answered in favour of the Plaintiffs and against the First Defendant.
First Plaintiff had sent several Letters and Telegrams to the First Defendant either seeking Maintenance or complaining about his inaction in non-payment of the Loan. The First Defendant has not denied the contents of any of these Letters. These Letters would show that the First Plaintiff had paid the monthly instalments for purchase of the 'A' Schedule property from and out of the income from the 'B' Schedule property. It is therefore, clear that the 'A' Schedule property also has to be treated as part of the estate of C.M. Sundararaj. Accordingly, the Issue No. 1 is decided in favour of the Plaintiff and against the First Defendant to the effect that the funds for the purchase of 'A' Schedule property were provided by the First Plaintiff and income from the 'B' Schedule property, therefore, it also forms part of the estate of the deceased C.M. Sundararaj.
Prohibition created by the Section 4 of the Prohibition of Benami Property Transactions Act, 1988 - Once it is concluded that the property was purchased from and out of the income from the estate of C.M. Sundararaj and monies that belonged to the First Plaintiff in the name of the First Defendant, the transaction may not take the colour of a Benami Transaction as defined u/s 2(9) of Prohibition of Benami Property Transaction Act, 1988 as amended by 43 of 2016.
As already seen Section 2(9)-A(b)(i), exempts a transaction between persons, who stand in a fiduciary capacity towards the other from being termed as a Benami Transaction. Here, the transaction is between the mother and the son. Therefore, the fact that the mother had contributed funds for the purchase of the property in the name of her son having been proved, we do not think that the claim of the First Plaintiff with reference to 'A' property could be said to barred by the provisions of the Prohibition of Benami Properties Transaction Act, 1988. Hence, this issue is answered in favour of the Plaintiff and against the First Defendant.
Contention of the First Plaintiff that the said property was purchased in her name from and out of the Sale proceeds of the property of C.M. Sundararaj situate at Besant Nagar - As it is clear that though the property stands in the name of the First Plaintiff she was not the absolute Owner of the said property. Since the entire consideration for purchase of the said property came out of the estate of C.M. Sundararaj and therefore the Plaintiffs and the First Defendant would have an equal share in the Suit property. Therefore, Issue is answered in favour of the Plaintiffs and against the First Defendant.
As regards the 'D' Schedule property - A perusal of the Plaint would show that the Plaintiff has sought for a Decree for Partition of the entire 'A' to 'D' Schedule properties. The Plaintiff, who is the owner of the property as per the Settlement Deed, dated 3.6.1994 namely Ex. P17 has come forward seeking partition of the property and also acknowledging that the said property was also purchased from and out of the income from the estate of Late C.M. Sundararaj, I do not see any difficulty in concluding that the 'D' Schedule property is also liable for Partition. This issue is also answered in favour of the Plaintiffs concluding that they are entitled to relief of Partition and separate possession of Schedule 'A' to 'D' properties.
Limitation - As already concluded that the Family Arrangement, dated 1.6.1994 has been brought about by undue influence and coercion. It is contended by the learned Counsel appearing for the First Defendant that the relief of setting aside the Family Arrangement, dated 1.6.1994 is barred by limitation. He would also draw my attention to the Article 58 of the Limitation Act, to contend that the period of limitation being 3 years and once it is claimed that the document was brought about by coercion and undue influence, the Suit should have been filed within 3 years from the date of the document as the right to sue first accrues on the date of the document and not later.
Suit will stand decreed declaring the Family Arrangement,as void, ab initio and non-est in the eye of law, declaring the sales made by the First Defendant in favour of the 3rd & 4th Defendants would not bind on the Plaintiff share in the Suit 'B' Schedule property. The property sold by the First Defendant to the 3rd Defendant would be allotted to the share of the First Defendant. There will be Preliminary Decree declaring the 1/3rd each share of the Plaintiffs 1 & 2 in the Suit 'A' to 'D' Schedule properties. As regards the sales made in favour of the 3rd Defendant by the First Defendant, the first sale, dated 7.3.2001 is prior to the filing of the Suit hence, the said property sold under Sale Deed, dated 7.3.2001 namely, Ex. P42 would be allotted to the share of the First Defendant while working out equities at the time of Final Decree. Considering the relationship between the parties, the parties are directed to bear their own Cost. The Suit in other respects will stand dismissed.
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2019 (10) TMI 1566 - KERALA HIGH COURT
Refund of service tax rejected - whether the application for refund preferred by the petitioner was within time as contemplated under the statutory provisions - HELD THAT:- Ext.P4 order rejecting the claim of the petitioner for refund on the ground of limitation is one that does not suffer from any jurisdictional error or violation of the rules of natural justice, so as to warrant an interference with the same in these proceedings under Article 226 of the Constitution of India. This is more so because against Ext.P4 order, the petitioner has an effective alternative remedy by way of an appeal before the Appellate Authority under the Act, where factual aspects regarding the date from which the period of limitation has to be computed, can be gone into as also the question as regards applicability of the decisions of the Supreme Court/High Court to the facts of the petitioner's case.
Accordingly, without prejudice to the right of the petitioner to move the Appellate Authority, the writ petition, in its challenge against Ext.P4 order, is dismissed.
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2019 (10) TMI 1565 - ITAT MUMBAI
Addition u/s 68 - discharge of onus - receipt of accomodation entry - HELD THAT:- After the assessee has adduced evidence to establish prima facie onus shifts to the Department.
In the instant case, the AO has not done even preliminary inquiry to disprove the contentions of the assessee.
AO has failed to disprove the contention of the assessee that (i) the loan taken from Ahuja Group and repaid are genuine and reflected in its books of accounts and there is no cash receipt or cash withdrawal, (ii) Shri Ahuja had nowhere in the statement admitted to having given any accommodation entry to the assessee, (iii) even if Shri Ahuja maintained parallel books, it is of no concern to the assessee who had reflected the loan transactions in his books of accounts, (iv) if it is presumed that Rs.35 lacs given to the assessee by Ahuja group is an accommodation entry and out of this Rs.25 lacs has been repaid, there is no sense of making an addition of an entry amounting to Rs.61,50,000/-, which is Rs.1.50 lacs more than the amount of loan given and repaid.
Though the onus shifted to the AO, he failed to disprove the contentions of the assessee. Therefore, in view of the above factual scenario and position of law, we uphold the order of the Ld. CIT(A). Appeal filed by the revenue is dismissed.
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2019 (10) TMI 1564 - CESTAT CHANDIGARH
Exemption to small service provider exemption when service turnover does not exceed Rs. 4 lakhs under N/N. 6/2005-S.T., dated.1-3-2005 - Denial of exemption on the ground that the appellant is providing branded services - HELD THAT:- The facts are not in dispute that the appellant is a provider of services on behalf of M/s. HFCL and receiving commission from them. The appellant receiving collections under the brand/trade name of M/s. HFCL and the appellant is rendering Business Auxiliary Service to M/s. HFCL under its own name. Therefore, the appellant is not providing any branded services. In that circumstance, the benefit of exemption under Notification No. 6/2005-S.T., dated 1-3-2005 cannot be denied to the appellant. Therefore, there are no merits in the impugned order and the same is set aside.
Appeal allowed.
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2019 (10) TMI 1563 - ITAT KOLKATA
TP upward adjustment - payment of interest on loan - MAM selection - assessee is engaged in the business of development of residential and commercial complex - HELD THAT:- In the present case, in our opinion, the rate charged by SBI is to be considered as the interest rate that was prevailing in the market and interest rate of 12.5% charged by SBI from M/s SCKPL can be used as comparable in the assessee’s case, since the loan received SBI was advanced to the assessee without any mark-up.
M/s SCPKL had borrowed funds from SBI and paid interest @12.5% p.a and charged interest at the same rate without identifying any mark up, since the cost of fund to the related party was only 12.5%. had opined by the TPO and AO to grant loan at a rate below the rate of 12.5% i.e @ 9.5% then there would have been a loss of 3% interest to M/s SCPKL.
The cost plus method is the most appropriate method for determination of arm’s length price of the interest on loan and we find no infirmity in the order of CIT(A) and it is justified. Accordingly, we delete the addition on account of transfer pricing adjustment. Appeal of the Revenue is dismissed.
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2019 (10) TMI 1562 - CESTAT CHENNAI
Assessment and demand of CVD - requirement of affixing retail sale of the Set Top Boxes, the RSP/MRP - case of appellant is that Department has demanded duty without any legal basis since there is no sale of the Set Top Boxes - HELD THAT:- On perusal of the facts of the case, it is seen that in the agreement entered by the appellant with the subscribers, it is clearly stated that the hardware (Set Top Box) will always remain the property of M/s. Tata Sky Ltd. and the ownership cannot be transferred. It is also stated that such hardware cannot be moved from the address without prior written consent of the appellant. This would go to show that there is indeed no sale of the Set Top Boxes to the subscribers. Further, it has been submitted by the Ld. Counsel for the appellant that the value of the Set Top Boxes is shown as capital assets in their Financial Statements.
The decision in M/S. BHARTI TELEMEDIA LTD. AND M/S. DISH TV INDIA LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) NHAVA SHEVA [2015 (9) TMI 1196 - CESTAT MUMBAI] categorically holds that the levy of CVD cannot sustain when there is no sale of Set Top Boxes. The Board Circular No. 1020/8/2016-CX dated 11.03.2016 has accepted the said decision and clarified that in identical circumstances, CVD cannot be demanded.
The impugned order is set aside - Appeal allowed.
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2019 (10) TMI 1561 - ITAT DELHI
Reopening of assessment u/s 147 - unexplained investment - HELD THAT:- AO has issued notice u/s. 133(6) of the Act to the purchaser but no response was received, meaning thereby that assessee has taken the bogus entry to evade the tax. Therefore,AO as well as Ld. CIT(A) have rightly held that party from whom the purchases were made by the assessee, were found to be bogus and that is the reason for which it was not produced during the assessment proceedings. Not having doubted the consumption / sales, the motive behind obtaining bogus bills thus, appears to be inflation of purchase price so as to suppress true profits.
Assessee has failed to place on record any relevant material/evidence to controvert the well reasoned findings of the revenue authorities. Hence, no infirmity in the findings of the revenue authorities and upheld the finding of the Ld. CIT(A) on the issue in dispute in sustaining the addition - Decided against assessee.
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2019 (10) TMI 1560 - SUPREME COURT
Right of pre-emption - the right sought on the ground of vicinage - Respondent sought to dispute the apparent consideration set out in the Sale Deed vide this application by alleging that only a sum of Rs. 2,50,000/- had been paid as consideration for sale, and that an inflated sum had been set out in the Sale Deed as a result of collusion and conspiracy between the transferor and the transferee, being the Appellants herein.
HELD THAT:- The historical perspective of this right was set forth by the Constitution Bench of this Court, as far back as in 1962, in the Bhau Ram [1962 (3) TMI 132 - SUPREME COURT] case. The judgment in the Bishan Singh and Ors. [supra] case preceded the same, where different views, expressed in respect of this law of preemption, have been set out, and thereafter the position has been summarized. There is no purpose in repeating the same, but, suffice to say that the remedial action in respect of the right of pre-emption is a secondary right, and that too in the context of the "right being a very weak right." It is in this context that it was observed that such a right can be defeated by all legitimate methods, such as a vendee allowing the claimant of a superior or equal right to be substituted in its place. This is not a right where equitable considerations would gain ground.
The second aspect of importance is that given the aforesaid position, even the time period for making the deposit, Under Section 8(1) of the said Act, has been held to be sacrosanct, in view of the judgment of this Court in the Gopal Sardar [2004 (3) TMI 743 - SUPREME COURT] case. The very provision of Section 8(1) of the said Act came up for consideration and, as held in that case, if the time period itself cannot be extended and if Section 5 of the Limitation Act would not apply, while interpreting Section 8 of the said Act, then the requirement of deposit of the amount along with the application, within the time stipulated is sacrosanct. The amount to be deposited is not any amount, as that would give a wide discretion to the pre-emptor, and any pre-emptor not able to pay the full amount, would always be able to say that, in his belief, the consideration was much lesser than what had been set out.
Now turning to Section 9 of the said Act, from which, apparently, some judgments of the Calcutta High Court have sought to derive a conclusion that an inquiry into the stated consideration is envisaged. However, the commencement of Sub-section (1) of Section 9 is with "on the deposit mentioned in Sub-section (1) of Section 8 being made" Thus, for anything further to happen Under Section 9 of the said Act, the deposit as envisaged Under Section 8 of the said Act has to be made. It is only then that the remaining portion of Section 9 of the said Act would come into play.
The question now is as to what would be the nature of inquiry which has been envisaged to be carried out by the Munsif. If Section 9, as it reads, is perused, then first, the amount as mentioned in the sale transaction is to be deposited, as per Sub-section (1) of Section 8 of the said Act. Once that amount is deposited, the next stage is for the Munsif to give notice of the application to the transferee. The transferee thereafter, when enters appearance within the time specified, can prove the consideration money paid for the transfer "and other sums." Such other sums, if any, are as "properly paid by him in respect of the land including any sum paid for annulling encumbrances created prior to the day of transfer and rent or revenue, cesses or taxes for any period." The inquiry, thus envisaged, is in respect of the amount sought to be claimed over and above the stated sale consideration in the document of sale because, in that eventuality further sums would have to be called for, from the pre-emptor - when the inquiry is being made by the Munsif, whether in respect of the stated consideration, or in respect of any additional amounts which may be payable, the pre-requisite of deposit of the amount of the stated consideration Under Section 8(1) of the said Act would be required to be fulfilled.
Thus, the pre-requisite to even endeavour to exercise this weak right is the deposit of the amount of sale consideration and the 10% levy on that consideration, as otherwise, Section 8(1) of the said Act will not be triggered off, apart from making even the beginning of Section 9(1) of the said Act otiose - thus the impugned order and the view adopted would make a weak right into a 'speculative strong right', something which has neither historically, nor in judicial interpretation been envisaged.
Whether the Respondent can now be granted time to deposit the balance amount? - HELD THAT:- When the direction was so passed, in pursuance of the order of the appellate court, the Respondent still assailed the same. The requirement of exercising the right within the stipulated time, in respect of the very provision has been held to be sacrosanct, i.e., that there can be no extension of time granted even by recourse to Section 5 of the Limitation Act.
Once the time period to exercise a right is sacrosanct, then the deposit of the full amount within the time is also sacrosanct. The two go hand-in-hand. It is not a case where an application has been filed within time and the amount is deficient, but the balance amount has been deposited within the time meant for the exercise of the right - there cannot be any extension of time granted to the Respondent now, to exercise such a right. This is, of course, apart from the fact that this speculative exercise on behalf of the Respondent has continued for the last fourteen years, by deposit of 50% of the amount.
The Respondent is entitled to the refund of the amount deposited by him, together with interest, if any, earned on the same, in case it has been kept in an interest bearing deposit - Appeal allowed.
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2019 (10) TMI 1559 - CALCUTTA HIGH COURT
Cheating - breach of contract - IPO was not provided (as agreed upon) - fraudulent or dishonest intention at the time of making the representation, exists or not - HELD THAT:- In the First Information Report, the complainant company described how the accused persons induced the complainant company to purchase shares in question for the purpose of investment and issued a letter dated 29.03.2008 stating falsely that the shares in questions were allotted to the complainant company. From the materials placed on record it appears that the petitioners falsely informed the complainant that the shares were allotted.
Learned Counsel for the petitioners has argued that the transaction in question between the parties as revealed from the contents of the First Information Report was purely a sale transaction or commercial transaction and the question of cheating does not arise at all. At the time of perusal of the First Information Report, it appears that the petitioners induced the complainant company to purchase the shares in question by misrepresentations and false assurance.
In view of the provision contained in Section 420 of the Indian Penal Code, the intention of the offender who induces the complainant is the decisive in discerning whether the offence of cheating was committed or not. In fact, it cannot be denied that many a cheatings are being committed in the course of commercial and also money transactions - In the present case, the allegation in the First Information Report disclosed the offences alleged. Moreover, the allegations made in the F.I.R. disclosed that the petitioners induced the complainant to purchase share or invest money by wilful misrepresentation.
It is true that the complaint discloses that there was a commercial transaction between the parties but at the same time, it cannot be overlooked that the averments made in the complaint/F.I.R. prima facie reveal the commission of an cognizable offence. Allegation contained in the F.I.R. involve appreciation of evidence. Moreover, when complaint discloses that the commercial transaction between the parties involves criminal offences, then the question of quashing the complaint cannot be allowed - the continuance of criminal proceedings against the present petitioners/accused would not be an abuse of the process of the Court. Hence, the prayer for quashing of the proceedings and setting aside the impugned order are hereby dismissed.
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2019 (10) TMI 1558 - KERALA HIGH COURT
Review application - Gambling/offence or not - playing rummy for stakes" within the club premises - HELD THAT:- There is no dispute about the fact that in view of the notification, playing rummy is excluded from the provisions of the Act and in the impugned judgment the Division Bench has also held that the element of skill is predominant than the element of chance. But the question is whether if rummy is played for stakes, will it amount to violation of the provisions of the Gaming Act or not.
This aspect of the matter has to be decided on a case to case basis. What is the manner in which the games are conducted and how it is being conducted through online methods and what are the stakes involved in the matter are all issues which may arise for consideration. If it is just playing rummy without any side betting, the notification protects the parties involved in it. But, in a case where rummy is played for stakes, the issue might be different which has to be dealt with on a case to case basis. Therefore, the application of notification SRO No. 1045/1976 will have to be adjudged depending on a case to case basis.
Review petitions are dismissed.
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2019 (10) TMI 1557 - BOMBAY HIGH COURT
Deduction u/s 80P(2)(a) and (d) - HELD THAT:- It has not been shown to us that the respondent has in any manner breached Section 80P(2)(a) and (d) of the Act. Thus, no substantial question of law arises for our consideration. Thus, not entertained.
Deduction u/s 80P(4) - Tribunal allowing the relief to the assessee by holding that the assessee being Co-operative Credit Society is not a Co-operative Bank hence entitled for deduction u/s 80P(4) - HELD THAT:- We find that the issue raised herein was a subject matter of consideration by this Court in Commissioner of Income Tax Vs. Shri Kulswami Co-op. Credit Society Ltd. [2017 (3) TMI 1799 - BOMBAY HIGH COURT] wherein identical issues raised by the Revenue were not entertained. This as it did not give rise to any substantial question of law. The impugned order of the Tribunal dismissed the Revenue’s appeal before it by relying upon the decision of its co-ordinate bench in the case of Kulswami Co-operative Society [2014 (4) TMI 355 - ITAT MUMBAI] No substantial question of law.
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2019 (10) TMI 1556 - PUNJAB AND HARYANA HIGH COURT
Seeking grant of anticipatory bail - company SEL had neither repaid the principal amount nor the interest accruing thereon (loan taken from Co-operative society) - money of the Cooperative Society siphoned off - jurisdiction of the court at Gurugram to entertain a complaint, the office of the company of the petitioner, namely, Sambhav Energy Limited, is situated at Chennai - HELD THAT:- This court does not find any substance in the question of Jurisdiction. Rather, this court finds substance in the argument of the learned counsel for the SFIO, wherein by relying upon the judgment of the Supreme Court in SERIOUS FRAUD INVESTIGATION OFFICE VERSUS NITTIN JOHARI & ANOTHER [2019 (9) TMI 570 - SUPREME COURT], he has submitted that the courts at Gurugram have the jurisdiction. As held by the Hon’ble Supreme Court, since the office of the main company, controlling all the companies involved in the fraud, are situated at Gurugram, and all other coconspirators are participants in the chain of sequences, constituting the offences, therefore, it cannot be said that the Special Court at Gurugram does not have the jurisdiction.
Whether the petitioner is entitled to be protected against his arrest or not? - HELD THAT:- This court is of the view that although right to seek anticipatory bail is not a fundamental right, yet an individual is having a right to life and liberty, as granted by Article 21 of the Constitution of India. However, the said right can very well be curtailed by the procedure established by law. The normal procedure for curtailing the liberty of a person accused in offence is that the accused can be arrested even without warrants from the court. Same is the situation under the new Companies Act as well and the authorized officer/designated officer can arrest a person even without warrants issued from a court. However, to ensure that an innocent person is not unduly harassed by taking him into custody, the courts have been conferred a special power under Section 438 Cr. P.C. - So far as the present case is concerned, the investigation of the case is already complete. The investigating officer of the case had not even considered it appropriate to arrest the petitioner during the investigation. Therefore, the investigation of the case is not going to be hampered in any manner if the petitioner is granted concession of anticipatory bail. So far as the allegations against the petitioner are concerned, this court is of the considered opinion that for the purpose of anticipatory bail, the petitioner has been able to explain his position to a considerable degree, so as to make this court exercise its power under Section 438 Cr.P.C.; for protecting him against his arrest.
Although even the counsel for the SFIO has not disputed the fact that the twin conditions, as prescribed under Section 212 (6) are not attracted in the case against the petitioner, however, keeping in view the education, antecedents and character of the present petitioner, this court is of the opinion that the petitioner is not likely to flee from the course of justice. There is nothing on record to suggest that if the petitioner is granted concession of anticipatory bail, he would influence any witness in the case. As stated above, he had already left the company much before the start of the investigation.
The petitioner may appear before the trial court on or before the next date of hearing fixed before the trial court - Petition allowed.
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2019 (10) TMI 1555 - ITAT DELHI
TP Adjustment - payment of development cost - enhancement of its income by ALP adjustment - Whether international transaction pertaining to payment of development cost does not satisfy the arm’s length principle ? - HELD THAT:- It is not in dispute that the assessee has claimed the payment of development cost of Rs.1.98 crores as not an international transaction. It is equally true that the TPO proceeded by treating the same as an international transaction and determined the ALP as nil and enhanced the income of the taxpayer by Rs.1.98 crores.
In our considered view once the assessee has challenged the enhancement of its income by ALP adjustment, it was incumbent upon the CIT(A) to decide the appeal on merits of the case. We are of the considered view that CIT(A) ought not have dismissed the appeal. In the interest of justice and fair play we restore the entire issue to the files of the CIT(A). The CIT(A) is directed to decide the appeal afresh - Assessee appeal is treated as allowed for statistical purpose.
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2019 (10) TMI 1554 - MADRAS HIGH COURT
Principles of natural justice - validity of assessment order - passing of impugned order in total non-application of mind to the objections filed by the petitioner that too by a different officer, when the objections were filed before another officer - objections are over ruled by single line observation that they are not acceptable - HELD THAT:- It is seen that the previous Assessing Officer issued notices of proposal to the petitioner on 28.11.2016 and 13.04.2017. It is further seen that the petitioner filed their detailed reply on 06.01.2017 and 24.04.2017. The Assessment Orders referred to the filing of such reply and in fact extracted the same also in the Orders of Assessment - However, the fact remains that though, such reply was filed as early as in the month of January and April of 2017, the impugned Orders of Assessment were passed in the month of June, 2019, admittedly, by a different Assessing Officer also by not providing any personal hearing to the petitioner.
Perusal of the Assessment Orders also supports the claim of the petitioner that the same came to be passed without discussing any of the objections raised by the petitioner and giving independent reasonings and findings on those objections.
This Court is satisfied to set aside the impugned order only for the purpose of remitting the matter back to the Assessing Officer to redo the assessment after giving an opportunity of personal hearing to the petitioner and also by considering the objections already filed by them on 06.01.2017 and 24.04.2017 - Petition allowed by way of remand.
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2019 (10) TMI 1553 - ITAT KOLKATA
Disallowance of prior period expenses - assessee regularly followed mercantile system of accounting - HELD THAT:- Coming to the facts of the present appeal, we note that the Revenue was unable to bring to our attention any material or fact to disprove the assessee’s explanations furnished before the lower authorities in support of its claim that the liability to pay the expenses charged under the head ‘prior period’ crystallized during the FY 2011-12.
We also find from the details of the expenses that the assessee had claimed deduction in respect of items which were revenue in nature and fully allowable in arriving at its business income.
Revenue also did not controvert the Ld. AR’s submissions that no deduction in respect of these expenses was allowed in the prior years and tax rate in the earlier years and in the current year were same and therefore irrespective of the year of deduction allowed, the revenue effect was tax neutral. In this regard, the reliance placed by the Ld. AR on the decision of Adani Enterprises Ltd [2016 (7) TMI 1250 - GUJARAT HIGH COURT] is found to be relevant. For the reasons set out in the foregoing we do not see any reason to interfere with the order of the Ld. CIT(A) and accordingly we dismiss this ground of the Revenue.
Provision for diminution in the value of investments - HELD THAT:- As consequent to granting of loans due to extraordinary and compelling circumstances, the loan was converted into preference shares but such fact by itself did not change or alter the basic character of the transaction.
As apparent that the preference shares in M/s Transafe Services Ltd were not acquired by the assessee for the purpose of earning dividend and capital appreciation. Such preference shares were acquired at the dictate of the CDR cell of the RBI and which was binding on the assessee being the promoter of the subsidiary. We further find that only after it was found that almost entire net worth of the subsidiary was eroded, the loss incurred by the assessee was recognized in the books.
We therefore find merit in the Ld. AR’s submission that even though the nomenclature used was provision for diminution in value of investment, the same was in the nature of provision for ascertained business loss and therefore allowable. We find that since the provision was for ascertained loss, in Note No. 10 of the audited accounts, the value of investment in M/s Transafe Services Ltd was disclosed at Rs.147.63 lacs i.e. after netting off the loss provided in the P&L Account of the relevant year. Applying the principle laid down by the Hon’ble Apex Court in the case of Vijaya Bank Ltd [2010 (4) TMI 46 - SUPREME COURT] we do not find any infirmity in the Ld. CIT(A)’s order.
In the extraordinary circumstances such loans was converted into preference shares which consequently eroded in the value because of the sustained losses of the subsidiary. Merely because the loss was debited under the nomenclature ‘provision’ did not alter the basic character of the transaction and the loss incurred due to non-recoverability of the amounts advanced in the ordinary course of business could not be disallowed by the AO.
Even with regard to the Revenue’s objection to the relief allowed by the Ld. CIT(A) while computation of book profit u/s 115JB, we find that the objection of the Ld. CIT, DR are soundly countered by the Hon’ble Gujarat High Court in their judgment in the case of Pr.CIT Vs Torrent Pvt Ltd [2019 (6) TMI 709 - GUJARAT HIGH COURT] - Ground No. 2 of the Revenue is therefore dismissed.
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2019 (10) TMI 1552 - ITAT DELHI
TP Adjustment - marketing and sales support services provided by the assessee to its AE - comparables finally selected to benchmark the international transaction of the assessee - assessee is against the selection of Apar Chematek Lubricants Ltd., on the ground that it fails the related party transaction filter. HELD THAT:- TPO himself at page 14 had applied the RPT filter with 25% threshold, we find no merit in the order of the authorities below in including sale Apar Chematek Lubricants Ltd as functionally comparable to the assessee. The earnings of the said concerns were 100% of the Revenue earned from its holding company. Since the concern fails to fulfill the RPT filter, the same is directed to be excluded from the final list of the comparables. Accordingly, we hold so.
Info Edge (India) Ltd. - Where the assessee was provided marketing and sales support services to its AE then a concern which is engaged in providing Internet based services through web portal for different services i.e. recruitment / matrimony related services, estate services, education related services, then such a concern is not functionally comparable to the assessee. The said concern cannot be included in the final set of comparables. Accordingly, we hold so.
MM TV Limited - The source of Revenue in the case of MM TV Limited is from advertising income and it also owned intangibles; as against the assessee which was providing support services and did not own any intangibles. Accordingly, we hold that such a concern cannot be held to be functionally comparable to the assessee and has to be excluded from the list of the comparables. Accordingly, we hold so.
Media Research Users Council registered as not-for-profit body of members representing advertisers, advertising agencies, publishers, and broadcast/other media -We find merit in this plea of the assessee on the ground that the said concern was registered as not-for-profit body of members representing advertisers, advertising agencies, publishers, and broadcast/other media. It undertook research work for the benefits of its own members only and the revenue earned was from the membership fee charged to the members. On the other hand, the assessee was providing marketing and sale support services to its AE. Accordingly, we direct its exclusion from the final set of comparables.
Assessee appeal allowed.
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2019 (10) TMI 1551 - KERALA HIGH COURT
Validity of order of assessment finalised against the appellant/writ petitioner - whether an exercise to examine the errors pointed out in the assessment cannot be undertaken in the writ petition unless a re-examination of relevant circumstances are made? - seeking maintenance of status quo with respect to recovery based on the assessment, for a period of six weeks from the date of the judgment - HELD THAT:- True, that existence of an alternate statutory remedy is not an absolute bar for entertaining the writ petition. But whether the error pointed out against the assessment need to be examined by exercise of powers vested under Article 226 of the Constitution of India or whether the petitioner need to be relegated to avail the statutory remedy, is a matter of discretion left with the writ court to decide. If the Single Judge was reluctant to exercise the discretion in favour of the assessee/writ petitioner, it cannot be said that there occurred any an illegality, irregularity or impropriety, which warrants interference in an intra-court appeal. Therefore we are not persuaded to entertain the above writ appeal.
However, learned counsel for the appellant made an appeal to this court for indulgence to extend the period stipulated in the impugned judgment for facilitating the appellant to seek the appellate remedy. If the appellant files the statutory appeal against the impugned assessment within two weeks from today, the stay application if any accompanying such appeal shall be disposed of by the appellate authority within four weeks from the date of filing of such appeal. Collection and recovery of the amounts due under the impugned assessment shall be kept in abeyance for a period of six weeks from today, in order to facilitate the appellant to take appropriate steps.
Petition disposed off.
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2019 (10) TMI 1550 - ITAT KOLKATA
Validity of Revision u/s 263 - non-service of notice u/s 263 - HELD THAT:- The non-service of notice u/s 263 of the Act does not in this case render the order passed u/s 263 of the Act, bad in law.
We now see whether there was violation of principles of natural justice can be cured by setting aside the matter to the file of the ld. CIT(A) with a direction to give the assessee company a fresh opportunity of being heard. - We set aside the matter to the file of the ld. CIT with a direction to give the assessee an opportunity of being heard and pass a fresh order u/s 263, in accordance with law. The assessee is directed to appear before the ld. Pr. CIT within 30 days of receipt of the order - Appeal of the assessee is allowed for statistical purposes.
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2019 (10) TMI 1549 - ITAT KOLKATA
Eligibility for deduction u/s 80-IB - Manufacturing activity - activity of converting raw material into final product - converting poultry mash feed into pellet feed - whether change in the basic component or new or different article came into existence? - HELD THAT:- We find the Co-ordinate Bench of this Tribunal considering the order for A.Y. 2010-11 [2017 (4) TMI 1612 - ITAT KOLKATA] in assessee’s own case, wherein, it was held that the business of the assessee is eligible for deduction u/s 80-IB assessee's eligible undertaking itself was carrying out the complete activity i.e. from grinding till the pelletization. The raw materials once consumed could not be reconverted into the same position, Its utility gets changed, The prime raw materials such as, maize, soya oil, rice bran etc. can no more be regarded to be the rice bran, soya oil, maize. Decided against revenue.
Addition on account of netting off the interest income - HELD THAT:- We find the issue is covered by the consolidated order of this Tribunal in assessee’s own case for Assessment Years 2008-09, 2011-12 & 2012-13 [2018 (1) TMI 1709 - ITAT KOLKATA] to hold that only net interest income after adjusting the interest expenditure is liable to be excluded while computing the profit eligible for deduction under section 80IB. We, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and upholding the same, we dismiss the appeal of the Revenue.
Disallowance u/s 14A r.w.r. 8D(2) - Assessee argued assessee made investment in group companies which were for strategic business purposes and the said investments did not yield any exempt income during the year and without considering the same, the Assessing Officer disallowed the expenditure u/s 14A r.w.r 8D(2) - HELD THAT:- We find that no dividend was earned in the investments made in shares of the group associate companies in all cases but however the said issue is covered in favour of the Revenue by the decision Maxopp Investments Ltd. [2018 (3) TMI 805 - SUPREME COURT] The ld. AR submits that the assessee has no objection in remanding the matter to the file of Assessing Officer for his fresh examination in terms of the judgment of Hon’ble Supreme Court in the case of Maxopp Investments Ltd. (supra).
We deem it proper to remand the matter to the file of Assessing Officer for his verification in the facts and circumstances of the case in terms of judgment of Hon’ble Supreme Court in the case of Maxopp Investments Ltd. (supra) and pass orders accordingly. Thus Ground Nos.7 & 8 raised by the Revenue are allowed for statistical purposes.
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2019 (10) TMI 1548 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Condonation of delay in filing appeal - Approval of Resolution Plan - HELD THAT:- Under Section 61(2) of the ‘I&B Code’, this Appellate Tribunal is empowered to condone the delay in preferring the appeal not more than 15 days after the period of 30 days in preferring the appeal. For the said reason, no relief can be granted in an appeal, which is not maintainable.
Appeal dismissed.
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