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Showing 21 to 40 of 1587 Records
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2022 (9) TMI 1568 - ITAT RAIPUR
Grant of approval u/s.80G - Rejection of application observing that the activities of the assessee company are commercial in nature and the company has also not specified or explained for requirement of 80G approval for the company - Assessee granted registration u/s 12AA and the same is continuing - HELD THAT:- Admittedly, the company was granted registration u/s 12AA and is still enjoying the same, in such a situation, finding of the authorities below that the activities of the trust are not charitable, holds no ground and are liable to be held erroneous.
Another ground for rejection of the approval u/s 80G was that the company is involved in commercial activities selling of books/college bags/ etc apart from generating income from tuition fee/hostel fee/bus fee.
On this aspect we are of the view that these are the activities incidental to the main and predominant object of the assessee company, which are for survival and fulfilment of the main objects, thus approval u/s 80G cannot be denied on this argument. This view of ours is find support from the finding of the coordinate bench of ITAT Mumbai in the case of Green Education Trust [2016 (6) TMI 979 - ITAT MUMBAI] - CIT(E) has took a wrong stand in rejecting the application of the assessee in granting approval u/s 80G. We therefore of the view that the order of the Ld CIT(E) deserves to be set aside with a direction to grant approval u/s 80G to the assessee, as sought vide its application in form 10G. Consequently, the sole ground of the appeal of the assessee is allowed.
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2022 (9) TMI 1567 - DELHI HIGH COURT
TP Adjustment - characterization of infra group services transaction - ITAT deleted the addition made holding that the payment made for intra group services was for commercial expediency - HELD THAT:- Admittedly, the issue pertaining to infra group services is covered by the judgement of this Court [2016 (9) TMI 244 - DELHI HIGH COURT] in assessee’s own case ITAT as agreeing with assessee contention that agreement between the Assessee and its AE was a composite one and could not be split up for the purposes of holding that some services are at arm’s length and some are not as on viewing the agreement as a whole. It was not within the purview of the TPO to determine if some of the services resulted in any actual benefit to the Assessee or not.
Not considering interest on outstanding receivables as an international transaction as per Section 92 (B) read with Section 92F(v) - Appellate Authorities below have accepted the contention of the assessee that the assessee was justified in not charging interest on the delayed payments by the AEs and in not levying any interest on delayed payments made by the non-AEs, as the debtor days given to the non-AEs were more than the debtor days given to the AEs. ITAT also recorded that at times 120 days are given to the non-AE entity for payment from billing date. Furthermore, the Authorities below accepted the contention of the assessee that during the Financial Year 2008-09, the assessee had net monthly balance payable to the AEs as opposed to monthly balance receivable from the AEs as alleged by the Assessing Officer.
Consequently, given the concurrent findings of facts by the Appellate Authorities below that the debtor days given to the AEs are less than the debtor days given to non-AEs, no substantial question of law arises.
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2022 (9) TMI 1566 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Seeking stay of Extra Ordinary General (EOGM) meeting - Sections 241 and 242 of the Companies Act - HELD THAT:- The Appellant has filed two Company Petitions bearing CP 38 of 2022 and CP 41 of 2022 under Sections 241 and 242 of the Companies Act, 2013 which are still pending before the Tribunal and the next date of hearing is fixed on 06th October, 2022 in the matter before the Tribunal.
The instant Appeal is disposed off with a request to the National Company Law Tribunal (New Delhi Court V) to expedite the matter without giving unnecessary adjournment and consider all these issues raised by the Appellant and Respondents and pass appropriate orders at an early date, not later than three months from the date of this order.
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2022 (9) TMI 1565 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Declining to stay holding of EGM - It is the case of the Appellant that the Respondents had resorted to this Act by force as they could not do so by way of any judicial proceedings and hence fall within the provisions of section 242 (4) of Companies Act - HELD THAT:- The EGM was convened by majority shareholders of the Company and the requisition of the meeting per se cannot be said to be at fault. We have also taken into consideration the reliefs sought for in I.A. No. 3084 of 2022 whereunder, the Applicant/Appellant sought for stay of the operation of the effect of the resolution passed during the EGM dated 20.07.2022 and also stayed of the removal of the independent Directors. A perusal of the impugned order shows that the matter is posted on 07.09.2022.
The instant Appeal disposed off with a request to the National Company Law Tribunal (Kolkata Bench, Kolkata) to take up the matter on the fixed date i.e. 07th September, 2022 and decide the matter at the earliest and consider all these points raised by the parties.
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2022 (9) TMI 1564 - SUPREME COURT
Suit for the specific performance of contract - seeking to enhance the amount towards the alternative claim for damages - High Court committed any material irregularity or jurisdictional error going to the root of the matter in passing the impugned order or not - applicability of provisions of Order II Rule 2 CPC to an amendment application - amendment of plaint for the purpose of enhancing the amount towards damages could be said to be hit by the doctrine of constructive res judicata or not - judgment and order passed by a coordinate Bench of this Court in the case of LIFE INSURANCE CORPORATION OF INDIA VERSUS SANJEEV BUILDERS PVT. LTD. AND ORS. [2017 (10) TMI 1650 - SUPREME COURT] between the same parties has any bearing on the present appeal or not - present appeal is covered by the proviso to Section 21(5) and Section 22(2) resply of the Specific Relief Act, 1963 or not.
HELD THAT:- One of the cardinal principles of law in allowing or rejecting an application for amendment of the pleading is that the courts generally, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of filing of the application. But that would be a factor to be taken into account in the exercise of the discretion as to whether the amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interest of justice.
In RAGU THILAK D. JOHN VERSUS S. RAYAPPAN & OTHERS [2001 (1) TMI 992 - SUPREME COURT], this Court also observed that where the amendment was barred by time or not, was a disputed question of fact and, therefore, that prayer for amendment could not be rejected and in that circumstances the issue of limitation can be made an issue in the suit itself like the one made by the High Court in the case on hand.
Again, in VINEET KUMAR VERSUS MANGAL SAIN WADHERA [1984 (1) TMI 348 - SUPREME COURT], this Court held that if a prayer for amendment merely adds to the facts already on record, the amendment would be allowed even after the statutory period of limitation.
Applicability of decision in Life Insurance Corporation of India - HELD THAT:- A coordinate Bench of this Court took the view that impleading the respondent No. 3 therein as the plaintiff No. 3 would cause a serious prejudice to the appellant. This Court took the view that no explanation was offered for an inordinate delay of twenty-seven years, which was overlooked by the High Court. Even while allowing the appeal filed by the appellant herein, the coordinate Bench of this Court observed that mere delay would not be a ground for rejecting the amendment. However, in the facts of the case, since the parties not being rustic litigants and all the respondents therein being companies and the dispute being a commercial litigation, the amendment could not have been permitted after twenty-seven years of the suit, as it would take away the substantial rights of defence accrued in favour of the appellant (LIC).
The judgment and order passed by the coordinate Bench of this Court in the Life Insurance Corporation of India has no application so far as the present appeal is concerned. The appellant herein cannot succeed in the present appeal merely on the strength of the judgment and order passed by this Court in the Life Insurance Corporation of India.
Order II Rule 2 of the CPC - HELD THAT:- The expressions "omits to sue" and "intentionally relinquish any portion of his claim" give an indication as to the intention of the legislature in framing the said rule. The term 'sue' can mean both the filing of the suit and prosecuting the suit to its culmination, depending on the context of the provision. In the present case, the legislature thought it fit to debar a plaintiff from suing afterwards for any relief which he/she has omitted without the leave of the court or from suing in respect of any portion of his claim which he intentionally relinquishes. Order II Rule 2(1) provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action - if the two suits and the relief claimed therein are based on the same cause of action then the subsequent suit will become barred under Order II Rule 2 of the CPC. However, we do not find any merit in the contention raised on behalf of the appellant herein that the amendment application is liable to be rejected by applying the bar under Order II Rule 2 of the CPC. Order II Rule 2 of the CPC cannot apply to an amendment which is sought on an existing suit.
Applicability of principle of constructive res judicata - HELD THAT:- The principle of constructive res judicata has no application in the instant case, since there was no formal adjudication between the parties after full hearing. The litigation before this Court has come up at the stage when the courts below allowed the amendment of plaint for the purpose of enhancing the amount towards damages in the alternative to the main relief of specific performance of the contract.
Specific Relief Act, 1963 - HELD THAT:- Section 22 has a non-obstante provision which overrides the CPC. A plaintiff who claims specific performance of a contract for the transfer of immovable property, may in an appropriate case ask for possession, partition and separate possession of the property, in addition to specific performance. The plaintiff may also claim any other relief including the refund of earnest money or deposit paid, in case the claim for specific performance is refused. Corresponding to the provisions of sub-section (5) of Section 21, sub-section (2) of Section 22 stipulates that such relief cannot be granted by the court unless it has been specifically claimed. However, the proviso requires that the court shall at any stage of the proceedings allow the plaintiff to amend the plaint to claim such relief where it has not been originally claimed on such terms which may appear just.
The Specific Relief (Amendment) Act, 2018 - HELD THAT:- It cannot be successfully urged that a suit for specific performance falling under the provisions of the Act, 1963 would not be governed by the provisions of the CPC. It is, therefore, clear that to such a suit the provisions contained in Order VI Rule 17 of the CPC would apply and a plaintiff who has earlier failed to incorporate the reliefs for compensation or who has incorporated the reliefs for compensation but seeks amendment in the same, could seek the permission of the court to introduce these reliefs by way of amendment.
It is important to note that sub-section (5) of Section 21 of the Act 1963 was originally introduced to resolve the confusion over whether the court had the power to grant compensation in a claim for specific performance in absence of any pleading to that effect under the provisions of the Act 1963. Prior to the enactment of the Act 1963 the Law Commission in its 9th Law Commission Report while referring to the diverse opinions expressed by the High Courts recommended that in no case should compensation be decreed unless it is claimed by a proper pleading.
In Somasundaram Chettiar [1950 (3) TMI 36 - MADRAS HIGH COURT], the Madras High Court held that the rationale for not allowing a claim for damages in a suit for specific performance without a specific pleading is based on the principle that the plaintiff must establish its claim for damages and the defendant must be put on notice and correspondingly have an opportunity to adduce evidence that the damages claimed are excessive or that the plaintiff has not suffered any damages.
The impugned order passed by the Division Bench of the High Court should not be disturbed - appeal dismissed.
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2022 (9) TMI 1563 - DELHI HIGH COURT
Taxable income deemed to accrue in India - income from supply of CAS and middleware products to Indian customers - whether fall under the 'royalty' as defined under Section 9(1)(vi) of the Income Tax Act, 1961 (‘the Act’) and Article 12(3) of the India-Swiss DTAA.
HELD THAT:- Admittedly, the questions of law urged in the present appeal are covered by the decision of the Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein held amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195.
Though the review petition in Engineering Analysis (supra) is pending before the Supreme Court, yet there is no stay of the said judgment till date.
Consequently, in view of the judgments of the Supreme Court in Kunhayammed and Others Vs. State of Kerala And Another, (2000 (7) TMI 67 - SUPREME COURT) and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras (1992 (4) TMI 183 - SUPREME COURT) the present appeal is covered by the judgment of the Supreme Court in Engineering Analysis (supra). No substantial question of law.
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2022 (9) TMI 1562 - ITAT PUNE
TP Adjustment - determining the ALP of international transaction related to Business Support Services - correctness of the CIT(A)’s action reversing assessment findings making TP adjustment(s) in assessee’s back office support services segment - CIT(A)’s admittedly appears to have gone by the assessee’s “advance pricing arrangement (APA)” with the CBDT adopting cost + 15% mark up to reverse the TPO’s arm’s length price computation coming to 20.75% - Revenue’s case is that the said agreed mark up is applicable from FYs 2011-12 to 2014-15 whereas we are in AY 2010-11 only - HELD THAT:- We make it clear that Chapter X in the Act is in the nature of a “SPECIAL PROVISION RELATING TO AVOIDANCE OF TAX” i.e. an anti avoidance measure introduced by the legislature.
Hon’ble apex court’s recent landmark decisions PCIT V/s Wipro Ltd [2022 (7) TMI 560 - SUPREME COURT], Commissioner V/s Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT] & CIT V/s. GM Knitting Industries (P) Ltd.[2015 (11) TMI 397 - SC ORDER] have settled the law that the relevant provisions in the Act ought to be put to stricter interpretation only.
Faced with this situation, we reverse the CIT(A)’s findings in issue going against sec. 92CC(4) r.w.s.(9A) of the Act (supra) and direct him to re-decide all of the assessee’s grounds in the lower appeal afresh as per law. This Revenue’s appea is allowed for statistical purposes.
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2022 (9) TMI 1561 - CESTAT MUMBAI
Bill of entry for clearance of import of goods declared as "PVC Compound TZ'' - Whether co-polymers of vinyl chloride/vinyl acetate would fall under the broad category of polymers of vinyl chloride under heading 3904 and eligible for benefit of Notification No. 21/2002 in Sr. No. 480 - HELD THAT:- In the present case there is no dispute to the classification of the goods and classification as claimed by the appellants under heading no 39042290 has not been amended/ modified by the lower authorities. Further during the argument both the sides have relied upon HSN explanatory notes and technical literature to establish that the impugned goods are/ are not “poly vinyl chloride”. We do not find any merits in the submissions made because the classification of the goods have been made under 3904
Thus, it is quite evident that by classifying the goods under CTH 3904 22 90, revenue admits that the impugned goods are Poly vinyl chloride as that is the single dash entry preceding the CTH in which the classification has been held. Having held, so revenue cannot for deciding the claim to exemption, hold a contrary view. The exemption at Sl 480, is admissible to all poly vinyl chlorides classifiable under heading 3904.
Impugned order is set aside and the appeal allowed.
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2022 (9) TMI 1560 - ITAT AHMEDABAD
TP Adjustment - Addition on account of Corporate Guarantee Charges - HELD THAT:- In our view, since the issue is directly covered in favour of the assessee in its own case for assessment year 2012-13 and 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] wherein held no sound basis for disturbing the arm's length computation of these corporate guarantees, issued by the assessee in favour of its AEs abroad, taken at 1% which has been approved for earlier assessment years as well - we hereby allowing this ground of appeal filed by the assessee.
Addition on account of Interest Imputation on Optionally Convertible Loans advanced - HELD THAT:- As decided in own case A.Y. 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] whenever the assessee's right to exercise the option of converting the loan into equity comes to an end, the assessee is entitled to interest on the commercial rates. It is not even the case of the authorities below that the interest so charged by the assessee, in a situation in which the right to exercise the option has come to an end, is not an arm's length price. Keeping in mind all these factors, as also entirety of the case, we deem it fit and proper to delete the arms length price adjustment in respect of interest which, according to the revenue authorities, should have charged on the optionally convertible loan granted to the AEs.
Addition on account of Reimbursement of Expenses - HELD THAT:- Respectfully following the observations of the ITAT in assessee’s own case for assessment year 2012-13 and assessment year 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] we are of the considered view that the TPO has erred in fact and law in holding that the arm’s-length price in respect of these cost to cost reimbursements should be determined at “Nil”. High Courts in various cases have held that the TPO cannot determine the arm’s-length price of transaction as “Nil” on ad- hoc basis without employing any of the prescribed methods as the same is against the scheme of the Act.High Court’s have also held on various occasions that the TPO’s jurisdiction is limited to determine the arm’s-length price of a transaction and does not have the jurisdiction to examine the allowability of expenses as provided in section 37 of the Act. Decided in favour of assessee.
Product registration expenses/reimbursement of expenses for product registration support services - HELD THAT:- As decided in own case 2006-07 to 2010-11 and assessment years 2012-13 and 2013-14 assesses does indeed deserve to succeed on this point for the short reason that even the Assessing Officer has admitted that the issue is covered by the binding judicial precedents in assesaee's own case and the additions have been made, so to say, keep the issue alive. AR fairly agree that this issue is settled in favour of the assessee. The relief granted to the on this point in past has achieved finality, we uphold the plea of the assessee, and direct the Assessing Officer to treat the product registration expenses and product support service expenses as revenue expenditure.
Addition on account of trademark registration fees and patent fees - HELD THAT:- As decided in assessee own case for assessment year 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] we uphold the plea of the assessee and direct the Assessing Officer to delete the impugned disallowance.
Addition as non-eligible expenditure u/s 35(2AB) - addition on the ground that the amount allowed by the DSIR was less as compared to deduction claimed by the assessee - HELD THAT:- ITAT Pune Tribunal in the case of DCIT v. Force Motors [2021 (9) TMI 244 - ITAT PUNE] while dealing with identical issue held that prior to amendment in 2016, section 35(2AB) does not provide any methodology of approval to be granted by prescribed authority vis-a-vis expenditure from year to year and therefore, order of Assessing Officer in curtailing expenditure and consequent weighted deduction claimed under section 35(2AB) on ground that deduction cannot exceed claims approved by prescribed authority, had rightly been set aside.
Bangalore Tribunal in the case of Provimi Animal Nutrition India Pvt. Ltd [2020 (12) TMI 177 - ITAT BANGALORE] held that prior to 1-7-2016, Form 3CL granting approval by prescribed authority in relation to quantification of weighted deduction under section 35 (2AB) had no legal sanctity and it was only with effect from 1-7-2016 with amendment to rule 6(7A)(b) that quantification of weighted deduction under section 35(2AB) has significance.
Thus the position is clear that prior to amendment introduced w.e.f. 01/07/2016, the deduction u/s 35(2AB) of the Act would be available to an assessee having an approved in-house R&D facility by the prescribed Authority Act and there is no mention of approval of the ‘quantum’ of expenditure in the law as it stood prior to that date. The mandate of quantification of expenditure has been put in place only w.e.f. 01.07.2016. In view of the above observations, we allow this ground of appeal of the assessee.
Eligibility for weighted deduction u/s 35(2AB) - R&D expenses in respect of clinical trial and bio-equivalence study - HELD THAT:- As per ruling for assessment year 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] held that this issue is settled in favour of the assessee by decisions of the coordinate benches in assessee's own case, These decisions hold good as on now, and we are respectfully bound by those decisions as on now, Of course,, whatever we hold does, and shall always, remain, subject to what Hon'ble Courts above decide as and when that happens, In this view of the matter, we uphold the plea of the assessee, and, direct the Assessing Officer to delete the impugned disallowance - Decided in favour of assessee.
Disallowance of depreciation on Hummer car - vehicle is owned by the director of the company and the above asset is not owned by the assessee company - HELD THAT:- Since the issue is directly covered in favour of the assessee in his own case for assessment years 2009-10 and 2010-11 [2017 (4) TMI 462 - ITAT AHMEDABAD] and assessment years 2012-13 and 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] held car was used for the purpose of business and the Assessing Officer has himself allowed the running and maintenance expenses of this car and the registration of car in the name of driver was a matter of convenience as it gave advantage to the assessee in terms of road tax - once it is not in dispute that the vehicle was owned in substance, by the assessee and the vehicle was used for the purposes of its business, there cannot be any legally sustainable reasons for declining the depreciation respectfully following the orders passed on the assessee’s own case, we hereby allowing this ground of appeal filed by the assessee.
Adjustment of disallowance u/s 14A for computation of book profits u/s 115JB - HELD THAT:- This issue is settled in favour of the assessee by decisions of the coordinate benches in assessee's own cases.
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2022 (9) TMI 1559 - ITAT DELHI
Disallowance u/s 14A r.w.r. 8D - exempt income earned or not? - Assessee submitted assessee did not receive any exempt income and the CIT (Appeals) deleted the disallowance following the decision of Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COURT] for the reason that the assessee did not receive any exempt income during the assessment year under consideration
HELD THAT:- We observe that recently in the case of PCIT Vs. Era Infrastructure (India) Ltd.[2022 (7) TMI 1093 - DELHI HIGH COURT] following the decision of Sedco Forex International Drill. [2005 (11) TMI 25 - SUPREME COURT] and the decision of M.M. Aqua Technologies Ltd. [2021 (8) TMI 520 - SUPREME COURT] held that the Amendment to section 14A of the Act which is for removal of doubts cannot be presumed to be retrospective.
Similar view has been taken in the recent decision in Telecommunications Consultants India Ltd. [2022 (8) TMI 1486 - DELHI HIGH COURT]. Thus, no infirmity in the order passed by the ld. CIT (Appeals) in deleting the disallowance made under section 14A read with Rule 8D of the Act. Ground raised by the Revenue is rejected
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2022 (9) TMI 1558 - ITAT JAIPUR
Assessment of trust - Addition on the basis of valuation report received from the DVO - CIT(A) directed AO to reduce the valuation made by the DVO by 20% - HELD THAT:- Assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 1 of the assessee is dismissed.
Corpus donation - assessee has not produced any evidence to show that 50% of development was the donation received with the specific direction for corpus fund, therefore, the addition is hereby confirmed - HELD THAT:- As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 3 of the assessee is dismissed.
Addition for surplus for both funds of students - HELD THAT:- As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 4 of the assessee is dismissed.
Addition confirmed as non furnishing complete address of the person from whom corpus donation was claimed to have been received by the appellant - HELD THAT:- As assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A).Thus Ground No. 5 of the assessee is dismissed.
Disallowance of capital expenditure on account of Inverter - addition made by the AO in respect of the inverter claimed as application in form of purchase of inverter is also confirmed because the appellant has failed to furnish any documentary evidence to substantiate the claim - HELD THAT:- As assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). Thus Ground No. 6 of the assessee is dismissed.
Exemption u/s 11 and 10(23C) denied - appellant had not submitted Form No. 10 as required u/s 11(2)(a) of the Act before the due date of filing of return of income - HELD THAT:- As appellant was required to apply Rs.1,15,60,989/- whereas the appellant had applied only Rs.1,08,63,975/-. The appellant had not submitted Form No. 10 as required u/s 11(2)(a) of the Act before the due date of filing of return of income. Thus, the accumulation of income was more than 15% of the gross receipts.
As the appellant had failed to fulfill the condition laid down u/s 11 (2)(a), hence the action of the AO denying the benefit of Section 11(2) of the appellant is held to be fully justified and in accordance with the provisions of law. Further, the AO has also discussed the objects of the Trust - we agree with the view of the AO that the Trust was not existing solely for education purposes. Therefore, the exemption denied by the AO u/s 10(23c)(iiiad) is also held to be valid and in accordance with the provisions of law. As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). Thus Ground Nos. 7,8 &9 of the assessee are dismissed.
Assessee appeal dismissed.
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2022 (9) TMI 1557 - DELHI HIGH COURT
TDS u/s 195 - withholding tax deducted at source (TDS) - Present writ petition filed challenging the certificate issued u/s 195(2) directing the Google Cloud India Pvt. Ltd. (GCI) to deduct tax at source at the rate of 10% at the time of making payment to the Petitioner - Petitioner further seeks a direction to permit GCI to make payments to the Petitioner without deduction of tax at source during financial year 2022-23 relevant to assessment year 2023-24 under the Google Cloud Services Reseller Agreement - HELD THAT:- Issue notice. Learned senior standing counsel accepts notice on behalf of Respondent Nos.1 and 2. He prays for and is permitted to file a counter affidavit within six weeks. Rejoinder affidavit, if any, be filed before the next date of hearing.
Registry is directed to tag the present writ petition along with WP(C) No.8720/2021 and list for final hearing on 13th January, 2023.
Appropriate directions in regard towards the interim arrangement - although the impugned order directs 10% withholding, the deposit of 8% by GCI plus 2% Equalisation Levy admittedly being paid by GCI on remittances to the Petitioner should not be construed as any non-compliance of the impugned order so as to attract the provisions of Section 201 of the Act on GCI - HELD THAT:- As Respondent No. 2 has made the payments under consideration liable for a withholding at the rate of 10% in accordance with section 115A of the Act read with the DTAA. We direct that purely as an interim measure, the Petitioner would be entitled to receive its payment from GCI subject to a deduction of 8% to be paid progressively for financial year 2022-23 relevant to assessment year 2023-24 as well. This interim arrangement is being made under the orders of this Court. The deposit of 8% should not be treated as any non-compliance of the impugned order.
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2022 (9) TMI 1556 - CALCUTTA HIGH COURT
Revision u/s 263 quashed by ITAT - netting off of interest expense with interest income - distinction between “lack of enquiry” and “inadequate enquiry” - Whether ITAT was correct in holding that the view taken by AO was not unsustainable in law, when, in fact, excess relief in contravention to Section 80IA involving the meaning of “Profit derived from business” was erroneously allowed by the Assessing Officer, causing prejudice to the Revenue? - HELD THAT:- After having appraised itself about the legal position, more particularly the decision of Malabar Industries Ltd. v[2000 (2) TMI 10 - SUPREME COURT] the tribunal took note of the contention of the assessee that the overdraft facility has been granted on the security of the fixed deposit and, therefore, the interest on the overdraft and the interest on the fixed deposits are inter-linked.
Assessee has used its fixed deposits for taking overdraft facilities without encashing the fixed deposits and the interest on the overdraft has a direct nexus with interest accruing in the fixed deposit and, therefore, the interest on the overdraft has been adjusted with the fixed deposit interest and the net interest income has been shown as other income.
Tribunal has noted that the assessing officer had enquired into this aspect and had taken one of the plausible view of netting off of interest expense with interest income, in the light of the decision of ACG Associated Capsules (P) ltd. [2012 (2) TMI 101 - SUPREME COURT].
Tribunal after going through the entire records placed before it has recorded a finding that the assessing officer, after making proper enquiry and proper application of mind has framed the assessment under Section 143(3) of the Act and, therefore, the assessment order cannot be termed to be ‘erroneous’ and ‘prejudicial to the interest of revenue.’ The tribunal also noted the settled distinction between “lack of enquiry” and “inadequate enquiry” and if it is a case of an inadequate enquiry, the law is settled that an order u/s 263 cannot be passed.
Tribunal on analysing the factual position has granted relief to the assessee. Thus, no substantial question of law arises.
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2022 (9) TMI 1555 - ITAT BANGALORE
Accrual of income in India - income deemed to accrue or arise in India - sales and marketing services rendered by the assessee to foreign marketing companies - whether it would not fall within the ambit of FTS as defined under section 9(1)(vii) or under Article 12 of DTAA? - AR submitted that the assessee is not providing any technical / managerial or consultancy services - HELD THAT:- In the instant case, the assessee is not providing any technical, managerial or consultancy services rather has been engaged to act as authorized business partner to market and promote the products or services of MSSPL outside India - in fact, the AO/DRP have not even concluded as to what is the nature of services rendered by the assessee. The decision regarding what are the products/services that are to be developed or provided, the price to be charged to the customer etc. are solely taken by MSSPL.
The assessee does not play any role in the decision-making process. Further, once the assessee procures the orders, it is at the discretion of MSSPL whether to sell the product or render services to identified customers.
As decided in Panalfa Autoelectrik Ltd [2014 (9) TMI 706 - DELHI HIGH COURT] held that commission paid by the assessee to its foreign Agent for arranging export sales and recovery of payments could not be regarded as fee for technical services under section 9(l)(vii) of the I.T. Act. The High Court held that the skill, business acumen and knowledge acquired by the non-resident were for his own benefit and use.
Also see Bangalore tribunal in the case of Deccan Creations (P.) Ltd [2021 (12) TMI 707 - ITAT BANGALORE] had held that services of foreign agents in the form of providing the data related to market trends and requirements of customers does not constitute as managerial services, as these services are usually provided by any agent. Thus, sales commission paid to foreign agents on the value of sales affected through them cannot be treated as technical services
Thus the income received towards sales commission does not satisfy the definition of "FTS" under the Act as it is not in the nature of Managerial, Technical or Consultancy Services.
Taxability as per DTAA - scope of 'made available' clause - As per Memorandum of Understanding ("MOU") on Article 12 of the Treaty, entered into by the Government of India and the Government of USA on May 15, 1989, the technology is considered "made available" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se mean that technical knowledge, skills, etc., are made available to the person purchasing the service.
AO has stated that marketing services rendered by the assessee are technical in nature and which are used by MSSPL for development of business, which results in enduring benefit. Accordingly, the A.O. has concluded that make available is satisfied as there is transfer of skill and knowledge which falls within the ambit of technical services. DRP has also confirmed the view of the A.O. The AO and DRP has erred in not appreciating that what should be made available is technical knowledge, experience, skill etc. Making available service does not make available knowledge, experience, skill etc. MSSPL has to approach the assessee every time to get new customers and maintain relationship with existing customers. The test of make available as envisaged in the DTAA is therefore not satisfied in the instant case.
We hold that the sales and marketing services rendered by the assessee to MSSPL would not fall within the ambit of FTS as defined under section 9(1)(vii) or under Article 12 of DTAA.
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2022 (9) TMI 1554 - ITAT RAJKOT
Addition u/s 41(1) - cessation or remission of liability - DR before us contended that the liability has ceased to exist - Assessee contended that the impugned sundry creditors are arising against the purchases which were made in the earlier years and no doubt of whatsoever was raised about such purchases. Furthermore, the creditors have not been written back in the books of accounts
HELD THAT:- Condition precedent is that there should be an allowance or deduction in the assessment for any year in respect of allowance, expenses or trading liability incurred by the assessee and thereafter in any previous year if the creditor waives any such liability, then assessee is liable to tax under section 41(1)
The provisions of Section 41(1)(a) of the Act casts a burden on the assessee to establish remission and cessation of liability in relevant assessment year where benefit has been obtained earlier by the assessee.
Coming to the facts of the present case, we note that the assessee itself has admitted during the assessment proceedings that it is not approaching to the creditors namely M/s Khodiyar Enerprise, Krishna Enterprise, Karan Enterprise and SK Corporation as it is reluctant to make the payment.
The liabilities appearing in the books of accounts of the assessee against 3 parties[supra] are not actually payable if we see the facts in aggregation. Shri Kirit Kumar Jani, the alleged proprietor of Khodiyar Enterprise has appeared and admitted that he is not the proprietor of the concern namely Khodiyar Enterprise. Likewise, he also admitted that is not into any kind of business dealing of whatsoever with the assessee.
Parties namely M/s Krishna Enterprise and SK Corporation are also not genuine. It is for the reason that TIN/ VAT reflected on so called invoices raised were not belonging to them and were immediately cancelled after registration. Thus, it can be inferred that the liabilities shown by the assessee with respect to these parties were bogus. However, the assessee was allowed deduction on account of purchases from these bogus parties in earlier year.
Be that as it may be, we find the assessee before the lower authorities has claimed that, on the advice of auditor, the outstanding balance from the parties namely M/s Khodiyar Enerprise, Krishna Enterprise, and SK Corporation has been written back in the books in the F.Y. 2014-15 as liability no longer required. The assessee to this effect also furnished a working sheet of liability written back as no longer required in F.Y. 2014-15.
Thus no addition under section 41(1) of the Act on account of cessation of liability is required to be made in the year consideration, otherwise same will lead to double addition as the assessee has already offered the same in the F.Y. 2014-15 i.e. A.Y. 2015-16. However, before parting, we would like to give direction to the AO to delete the addition paid by him after necessary verification whether the impugned amount of sundry creditors has suffered to tax in the financial year 2014-15 corresponding to assessment year 2015-16.
Addition u/s 41(1) in respect of the party namely M/s Kabra Brothers, we note that the difference in the amount shown by the assessee as liability viz of viz the amount shown by the party M/s Kabra Brother is arising mainly on account of the entries recorded in the books of accounts. The assessee has issued letter of credit to the party - The assessee was liable to make the payment after the period of 90 days which was falling in the subsequent financial year. However, the other party got these letter of credit discounted and received the payment which was adjusted against the account of the assessee. This fact can also be verified from the certificate issued by the party placed on page 98 of the paper book.
Thus, the difference was arising only on account of book entries. The assessee actually made the payment in the later year whereas the party has accounted the receipt in the same financial year which has resulted the difference in the balance as discussed above. Thus to our understanding no addition is warranted under the provisions of section 41(1) of the Act. At the time of hearing the learned DR has also not brought anything on record contrary to the finding of the learned CIT-A. Thus, we do not find any infirmity in the order of the learned CIT-A and accordingly we uphold the same. Thus the AO is directed to delete the addition made by him.
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2022 (9) TMI 1553 - PUNJAB & HARYANA HIGH COURT
Maintainability of petition - alternative remedy available to petitioner to approach the Debt Recovery Tribunal under Section 17 of the Act - claim of refund - seeking quashing of the e-mail dt.15.12.2021 issued by respondent No. 2 forfeiting the said amount deposited towards the earnest money by him - suppression of factum by secured creditor like SBI of the pendency of litigation in respect of the secured asset being put to sale, from persons intending to participate in the e-auction - It is the contention of the petitioner that it was the duty of the Bank to disclose about the pending litigation in the e-auction notice, and suppression of the said fact by the Bank is contrary to law.
Maintainability of petition - alternative remedy available to petitioner to approach the Debt Recovery Tribunal under Section 17 of the Act - HELD THAT:- If there is a violation of the provisions of the Act by the respondent-Bank while taking steps to recover it's dues under the Act, the Writ Petition can be entertained by this Court, and it is not necessary to relegate the parties to avail alternative remedy.
Though counsel for respondents have placed reliance on the decision of the Supreme Court in the case of Aggarwal Tracom Pvt. Ltd. v. Punjab National Bank [2017 (11) TMI 1523 - SUPREME COURT] to contend that the Writ Petitions under Article 226 of the Constitution of India cannot be entertained when effective statutory remedy is available to the aggrieved person, in a later judgment rendered in the case of AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [2018 (2) TMI 25 - SUPREME COURT], the Supreme Court held that there are well defined exceptions to the rule of exhaustion of alternative remedy as laid down in decision of COMMISSIONER OF INCOME TAX & OTHERS VERSUS CHHABIL DASS AGARWAL [2013 (8) TMI 458 - SUPREME COURT] and one of such exceptions mentioned in Para 15 of the said judgment is “where the statutory authority has not acted in accordance with the provisions of the enactment in question.” - the plea of the respondent that the Writ Petition ought to be dismissed in view of existence of alternative remedy under Sec.17 of the Act is rejected.
Whether it was proper for a secured creditor like SBI to suppress from persons intending to participate in the e-auction being conducted by it under the SARFAESI Act, 2002, the factum of the pendency of litigation in respect of the secured asset being put to sale by it? - HELD THAT:- It is settled law that persons holding positions of trust have to act in a bonafide manner and transparently and cannot mislead persons sought to be affected by their actions by suppressing material facts and circumstances.
Rule 8(6)(f) of the Rules protects the interest of the intending purchaser to be put on notice as to encumbrance as otherwise, he or she would be purchasing property, and simultaneously buying litigation as well, and the intending purchaser may not bid in the event, if he or she came to know any encumbrance over the property. That is why the Rules specifically contemplate a provision for the Authorized Officer, while notifying the sale, to specifically state as to the encumbrance. Merely by mentioning in the e-auction notice that the sale is on as is where is basis, as is what is basis and whatever there is basis, the Bank is not absolved of its statutory obligation of disclosing the “encumbrances” attached to the property brought for sale by way of tender or any auction or sale by public auction.
In Joginder Singh [2022 (7) TMI 1505 - PUNJAB AND HARYANA HIGH COURT] also there was civil litigation pending in respect of the secured asset which was not disclosed in the tender/public notice issued the Bank, and this Court has held that if such a fact had been disclosed, the petitioner might not have participated in the tender issued by the Bank at all as no intending purchaser wants to buy a fresh litigation or take on other unknown liabilities against third parties, and the action of the Bank was arbitrary and contrary to the provisions of the Act of 2002.
It was not proper for a secured creditor like SBI to suppress from persons intending to participate in the e-auction being conducted by it under the SARFAESI Act, 2002, the factum of the pendency of litigation in respect of the secured asset being put to sale by it; and that it ought to have refunded the amount deposited by petitioner, instead of forfeiting it.
The email dt.15.12.2021 (Annexure P-16) issued by respondent No. 2 to the petitioner is set aside; and respondents 1 to 3 are directed to refund within 4 weeks Rs. 16,08,250/- to the petitioner with interest @ 7% per annum from the date such deposit(s) were made till the date of refund - petition allowed.
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2022 (9) TMI 1552 - SUPREME COURT
Non-calling of petitioners for recording their statements - HELD THAT:- The reasons have been penned down for issuing notice in order dated 30.03.2022. It is not disputed that the appellants have been cooperating with the investigation. The whole issue arises out of records and documents.
In view of the aforesaid facts and circumstances, the order dated 30.03.2022 is made absolute - appeal disposed off.
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2022 (9) TMI 1551 - TELANGANA HIGH COURT
Cancellation of GST Registration of petitioner - non-filing of returns for a continuous period of six months - HELD THAT:- It would be in the interest of justice to remand the matter back to respondent No. 1 to reconsider the entire matter regarding cancellation of registration as cancellation of GST registration would have an adverse Impact on the petitioner restraining him from carrying on his business activities.
Petition disposed of by way of remand.
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2022 (9) TMI 1550 - CALCUTTA HIGH COURT
Validity of reassessment proceedings - order u/s 148A(d) and subsequent notice u/s 148 challenged on the ground of violation of principle of natural justice by not affording any opportunity of personal hearing before passing the impugned order.
Let this matter appear on 7th November, 2022 under the same heading.
In the meantime status quo, as of today, on the aforesaid impugned order under Section 148A(d) of the Act shall be maintained.
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2022 (9) TMI 1549 - SUPREME COURT
Application for discharge filed by the Appellant under Section 227 of the Code of Criminal Procedure, 1973 - whether the Appellant is entitled to be discharged of the proceedings initiated against him under the PC Act?
Inclusion an amount of Rs. 55,000, recorded as the balance amount in the Appellant’s bank account during the check period - HELD THAT:- The difference in the figures was not explained by the Prosecution. Accordingly, the Special Judge (Vigilance) and the High Court failed to reconcile such a simple and straightforward inconsistency in the Prosecution’s evidence. It is opined that only an amount of Rs. 11,998, recorded in the Appellant’s Bank Passbook during the checkperiod as the balance amount, is validly admissible as expenditure under this head.
Inclusion of an amount of Rs. 53,467 as expenditure towards repayment of the loan from the BSFC - HELD THAT:- The amount repaid towards loan instalments was already deducted from Appellant’s gross salary, and the deducted figure was recorded as the total disposable income with the Appellant during the check period. Hence, the loan repayment cannot be separately counted as an expenditure yet again. This is a glaring mistake. The Special Judge (Vigilance) as well as the High Court did not consider this objection on the ground that a roving inquiry is not permissible the stage of discharge.
Inclusion of Rs. 1,58,562 as the value of the articles found during a search conducted in Appellant’s house on 21.02.2000, twelve years after the check period of 1974 to 1988 - HELD THAT:- There is nothing to indicate, even prima facie, that these articles found during the search in the year 2000 were acquired during the check period. In the absence of any material to link these articles as having been acquired during the check period, it is impermissible to include their value in the expenditure. It is opined that the Appellant’s objection about inclusion of this amount in the list of expenditure is fully justified. Unfortunately, even this objection, which did not require much scrutiny of the material on record, was not considered by the Special Judge (Vigilance) or the High Court.
The Special Judge (Vigilance) was bound to conduct a similar inquiry for coming to a conclusion that a prima facie case is made out for the Appellant to stand trial. Unfortunately, the High Court committed the same mistake as that of the Special Judge (Vigilance).
Appeal allowed.
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