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2022 (9) TMI 1548 - MADRAS HIGH COURT
Maintainability of petition - availability of alternative remedy of appeal - Petition filed only for the reason that the statutory time limit had expired by the time the petitioner came to be aware of the order - HELD THAT:- The order is stated to have uploaded on the website of the portal, but the petitioner has not been intimated about such uploading by any means. It is only when coercive recovery was taken to recover the demand under the order that the petitioner states that it came to be aware of the impugned order having come to be passed.
In such circumstances and in view of there being no objection to the request of the petitioner to file a statutory appeal, time of two (2) weeks from today is granted to the petitioner to file an appeal. Appeal, if filed within the time as granted, shall be taken on file without reference to limitation, but ensuring compliance with all other statutory conditions, including pre-deposit.
Petition dismissed.
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2022 (9) TMI 1547 - ITAT MUMBAI
Unaccounted cash receipt found in books impounded during survey - CIT(A) deleted addition - HELD THAT:- A sum Partly has been deleted for the reason that advances are received from the customer, is less than the total amount shown by the assessee as received advance in the books of accounts and therefore to that extent the addition also deserves to be deleted. Furthermore it is apparent that the impounded material did show the agreed value of the consideration as well as the amount received against that consideration.
The balance of this sum is naturally not received by the assessee and therefore it could not have been considered as income of the assessee as the same has not been received at all. Such is the case with respect to the sum with respect to annexure A – 8, pertaining to annexure A – 9 and pertaining to annexure A – 10 of Kandivali project.
Further sum as mentioned in the second remand report clearly shows that this amount is not appearing in any of the impounded material, same has been included by the learned assessing officer on the basis of the balancing figure of the amount receivable, and amount received. Therefore if the amount is not received and is merely a balancing figure, the same could not have been taxed as income of the assessee as it is not at all received.
Naturally, the sum pertains to assessment year 2007 – 08 and assessment year 2009 – 10 and therefore naturally they could not have been added in the hands of the assessee for assessment year 2008 – 09 and therefore same are deleted. Obviously, whether the same are taxable in the hands of the assessee or not in those years were required to be dealt with by deciding the appeal of the learned assessing officer for those respective years.
Duplicate entries have been deleted by the learned CIT – A . Therefore as the amount of addition sustained by the learned CIT – A is higher than the amount of the balance addition after removing [1] amounts not received, [2] duplicate entries,[3] amounts not appearing in the impounded material and [4] amount received against the advance is less than the amount appearing in the books and a[5] amount pertaining to different years, the learned CIT – A deleted those additions. There is no infirmity pointed out by the learned departmental representative in the order of the learned CIT – A. No evidence is produced before us with respect to the fact that either any of the amount is received or the amount stated to be pertaining to the different years is pertaining to this year and duplicate entry stated by the learned assessing officer and confirmed by the learned assessing officer in remand report is incorrect. Nothing has been shown before us from the impounded material that the advances received by the assessee against the sale of the property are not accounted for in the books of account.
In view of this, the learned CIT – A has taken the correct view after considering the two different remand report obtained from the learned assessing officer and the rejoinder of the assessee. It is further to be considered that in the second remand report the learned CIT – A has given a categorical direction to the learned assessing officer to examine particular aspect with respect to each of the items appearing in the impounded material.
AO on examination of the impounded material came with the finding that the total addition should have been of ₹ 751,981,580 – however out of which the sum of ₹ 748,451,911/– is required to be excluded for the respective reasons as stated above. Therefore, it is apparent from the order of the learned CIT – A that he has not gone by the addition made in the assessment order of ₹ 619,105,369/– but he has considered the amount of addition required to be made as per the learned assessing officer as per the first remand report amounting to ₹ 751,981,580/– . Out of this, he has given a detailed explanation for deleting the addition of sum of ₹ 748,451,911/– and he sustained the addition of ₹ 9,136,813/- which is higher than the balance amount of ₹ 35,29,669/- (75,19,81,580 -74,84,51,911). Therefore, we confirm the order of the learned CIT – A deleting the addition.
Validity of reopening of assessment - jurisdiction of AO to make the assessment - HELD THAT:- As the notice has been issued by the learned assessing officer who had no jurisdiction over the assessee, such notice has not been issued validly. If a valid notice is not issued u/s 143 (2) of the act for making an assessment, assessment order passed cannot be upheld. The honourable Supreme Court in case of Asst Commissioner of income tax versus Hotel Blue moon [2010 (2) TMI 1 - SUPREME COURT] categorically held that notice u/s 143 (2) is mandatory for completing assessment. Therefore, as in the present case the assumption of jurisdiction for making an assessment has not been validly assumed by issuing the notice by the assessing officer who was authorised to issue such notice, the assessment cannot be upheld.
Amount is received in cash by the assessee is only money which are not recorded in the books of account - Assessment year 2007 – 08 - CIT(A) deleted addition - HELD THAT:- On careful consideration we find that the assessee has shown advances in its books of accounts Under the head advance received from customers. Therefore, it is apparent that the amount has already been recorded in the books of accounts the addition has been correctly deleted by the learned CIT – A.
The amount was found to be the bank balances and is cash on hand. Both the items are related to regular books of accounts and therefore there could not have been added as undisclosed income of the assessee which is rightly deleted by the learned CIT – A. Secondly, a sum written in the seized material, have been extrapolated by the learned AO by adding 2 zeros in making at ₹ 11 lakhs. We find that such extrapolation is unwarranted unless it is mentioned in the impounded material. There is no mention of such extrapolation in the impounded material and therefore the addition to the extent of ₹ 11 lakhs could not have been made and therefore same is deleted by the learned CIT – A the addition to the extent of ₹ 11,000/– is sustained. Further a sum of ₹ 1,751,440/– is not reflected in the impounded troopers and therefore correctly deleted. We further find that amount of ₹ 121,001/– has been considered twice, therefore same also correctly deleted by the learned CIT – A.
Now we find that the learned CIT – A has deleted the addition holding that same is pertaining to assessment year 2008 – 09 and therefore same cannot be considered in assessment year 2007 – 08. This finding has been given by the learned CIT – A without first ensuring that the same has been added in the assessment year 2008 – 09 or not. Therefore, we direct the learned assessing officer to examine that if the amount of ₹ 2,862,000 has been already added in assessment year 2008 – 09 then same may be deleted in this year is there cannot be any addition of the same amount in two different assessment years.
Addition made by AO with respect to the own money is not in fact the receipt of the money but the payment for purchase of land and other brokerage expenses which are already accounted for in the books of accounts of the assessee and therefore they are not own money and cannot be added as income of the assessee. Those are correctly deleted by the learned CIT – A.
Coming to the addition wherein the learned CIT – capital has deleted the addition stating that it is not related to the appellant as it was not reflected anywhere in the impounded material. If the same amount is deleted, for the reason that it did not belong to the assessee or not pertaining to the business of the assessee, the learned CIT – A noted that to whom it belongs to.
We found that at serial number 8 the transaction with respect to bhakti trading Co is mentioned on 5/9/2006 amount in ₹ 20 lakhs. The explanation of the assessee that these transaction is not in cash but through bank. Similarly at serial number nine there is a transaction in the name of VSK enterprise dated 4/10/2006, this also stated by the assessee to be transaction through cheque. However no details of recording of these entries in the books of the assessee is shown. Thus merely because the assessee has mentioned it to be a bank transaction, it cannot be deleted. Therefore the learned CIT – A has deleted this addition only on the expression of the assessee. Accordingly, we direct the assessee to show before the learned assessing officer with respect to the above two entries whether they are recorded in the books of accounts through cheque in the books of the assessee on and if they are related to some other party, the assessee should give name and address of those parties to the learned assessing officer for examination determine that those are not unaccounted receipts of the assessee.
The solitary ground raised by the learned assessing officer with respect to the addition is partly allowed.
Undisclosed/unaccounted income during the survey conducted - Assessment year 2009 – 10 - CIT appeal held that the assessee has already included the above sum as an advance because the project is continuing an income would be offered on the basis of method of accounting, the relevant expenses are also shown, none of them are shown to be bogus or not genuine or unsupported by proper vouchers and bills. Therefore, the addition is not required to be made as assessee already accounted for the receipt. The findings of the learned CIT – A are supported by verification of the accounts as well as the explanation of the assessee and remand report is of the learned assessing officer which were part of appellate proceedings for assessment year 2008 – 09. In the result the solitary ground of the appeal of the learned AO deserves to be dismissed.
Audit u/s 44AB - As assessee does not have any turnover, there is no question of audit of accounts Under that Section. Therefore same is also deserves to be dismissed.
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2022 (9) TMI 1546 - DELHI HIGH COURT
Delhi High Court jurisdiction to decide the legality and validity of a notice issued u/s 148 - as argued there is no order passed u/s 127 transferring jurisdiction to Respondent No.1 in Mumbai - Respondents submits that this Court has no territorial jurisdiction to decide the legality and validity of a notice issued by Respondent No.1 under Section 148 of the Act, especially in view of the fact that the initial notice under Section 148 of the Act had been challenged by the Petitioner by way of writ petition before the Bombay High Court.
HELD THAT:- In the opinion of this Court, since the Petitioner had initially approached the Bombay High Court, the averments in the said writ petition would have a material bearing. Accordingly, the Petitioner is directed to place on record a copy of the writ petition filed by it in Mumbai High Court challenging the notice issued under Section 148 of the Act dated 30th June, 2021, within a week.
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2022 (9) TMI 1545 - ITAT SURAT
Disallowance on account of interest - disallowance of interest expenses, the assessee stated that they have not charged interest from Gharda Chemicals Ltd., against amount outstanding - HELD THAT:- We find that Ld. CIT(A) granted relief to assessee by following the decision of Tribunal in assessees own case in [2013 (8) TMI 518 - ITAT AHMEDABAD] for AY 2009-10 dated 19.07.2013. We find that similar set of fact, similar disallowance was made by Assessing Officer in AY 2009-10, on appeal before Ld. CIT(A) the disallowance was confirmed on account of interest free credit. On further appeal before Tribunal, the disallowance to holding Co. was deleted. Considering the decision of Tribunal on similar set of fact on similar ground of appeal in AY 2009-10, therefore respectfully following the binding precedent, we affirm the order of Ld. CIT(A).
Addition on account of closing stock and finished goods viz., MPB & Quinalphos - reply of assessee was not accepted by Assessing Officer by taking view that assessee has not furnished the used stock of work-in-progress of MPB as also Quinalphos have been valued, work-in progress of MPB has been furnished as on 31.03.2014 - AO on perusal of details in respect of opening stock and closing stock summary of work-in-progress of finished products, this finished stock was valued less than that of opening stock - HELD THAT:- We find that the assessee is consistently changing their stand with regard to valuation of opening and closing stock of finished goods viz; MPB and Quinalphos. While making submission before us, the ld AR for the assessee submits that the details given in her written submissions are final and she is ready to explain before the assessing officer that there is no inconsistency in the stand of the assessee on the opening and closing stock of finished goods viz; MPB and Quinalphos. We find that there is variation in the stand of the assessee, therefore, we restore this issue of opening and closing stock of finished goods i.e. MPB and Quinalphos to the file of assessing officer to consider the submissions of the assessee, as submitted before us and pass the order in accordance with law. Needless to direct that before passing the order, the assessing officer shall allow reasonable opportunity to the assessee of being heard. In the result, Ground No. 1 in assessees appeal is allowed for statistical purpose.
Undervaluation of closing stock of various finished goods - substantial increase of quantum of damaged goods - HELD THAT:- No doubt that certain percentage of product/ goods produce by the assessee is bound to damage or expired by efflux of time or by other factor effecting the chemical composition of such pesticides. It is also common feature that neither the expired chemical nor the damaged goods of assessee can secure the price in the market, moreover, most of the product of the assessee may prove hazardous to the environment, even if in the damaged position is not disposed in control manner. Thus, we are of the view that in such circumstances the assessee may be allow certain percentage of cost of damaged product. However, we find that the assessee has not provided the quantity of such damaged or unsaleable product and valued it without justifying with the comparable cases. Similarly, we also find that the assessing officer has also not brought any contrary evidence on record to disbelieve the contention of the assessee. Therefore, to avoid the possibility of revenue leakage, we are of the view that the disallowance to the extents of 25% (25% of 2.227 Crore), on account of undervaluation of closing stock would be sufficient to meet the end of justice. Thus, remaining disallowance is deleted. The assessing officer is directed accordingly.
Nature of expenses - repairs and maintenance charges - revenue or capital expenditure - HELD THAT:- We find that the assessing officer while treating the expenses as capital in nature has not given any basis of his observation if his observation is based on any material or evidence and is basically general in nature. We find that the ld. CIT(A) while deleting the addition clearly held that the assessing officer has not brought any material on record to prove that some of those items are independent machine or apparatus, which can be used independently for manufacturing activities. Further, the assessing officer has not explained the technical aspect of the items to prove that the replaced items are independent machine which could be used independently. The ld CIT(A) concluded that finding of the assessing officer is not based on any material or evidence and are general in nature, thus he is not correct in treating such expenditure as capital in place of revenue.
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2022 (9) TMI 1544 - NATIONAL COMPANY LAW TRIBUNAL CUTTACK BENCH
Preferential, fraudulent, and undervalued transactions under sections 43,45 and 66 of Insolvency and Bankruptcy Code 2016.
Preferential Transactions - HELD THAT:- The 4th respondent is not related party to the corporate debtor; this transaction had taken place in the financial year 2015-2016. The CIRP commenced against the corporate debtor on 26.04.2018. As per section 43(4)(b) any transaction made within a year prior to the date of commencement of insolvency termed as preferential transaction. In this case the disputed transaction happened in the financial year 2014-2015 three years prior to the date of commencement of insolvency date. Here the look back period exceeded one year as mentioned in section 43(4)(b) of IBC 2016, hence the transaction referred here is not a preferential transaction.
Fraudulent Transactions - HELD THAT:- The Section 66 (1) of Insolvency Bankruptcy Code, 2016 should read along with Section 35 (1) (n) of IBC, 2016. If the contention of the respondent is accepted then there will not be any avenue available to the Liquidator who found the fraudulent transactions of the corporate debtor during liquidation process, to proceed against them, this will not the intention of the statue, hence it is held that this petition filed by the liquidator alleging certain fraudulent transactions against the corporate debtor is maintainable.
Purchase of Rice husk from Related parties at a reasonably High Price - HELD THAT:- There is no material to show that the suspended directors of the corporate debtor reasonably knew that the commencement of insolvency proceeding against the corporate debtor was inevitable and the suspended directors failed to take due diligence to minimise the potential loss to the creditors. The purchase was made in the year 2015, the look back period exceeded three years from the date of commencement of CIRP. The Vendors who supplied rice husk are not arrayed as respondents. In the scenario it is answered that the fraudulent transaction alleged against the corporate debtor is not proved.
Interest free Advance to Ashirwad Trading Company, Kamal Associates and Parsa Kente Collieries Limited - HELD THAT:- As per section 66(1) of IBC 2016 if the Adjudicating Authority arrived to the conclusion that the transactions were carried out in fraudulent manner, it can order against persons who were knowingly parties to the such fraudulent business transactions to make such contribution to the corporate debtor. The applicant stated that the supra mentioned amounts are remains as an outstanding amount payable to the corporate debtor. The respondent 1 & 2 failed to take any steps to recover the same but the applicant has not whispered what steps he has taken to recover the amount. In this scenario the afore mentioned three companies are necessary parties to this application. In the absence, said companies no fruitful order can be passed. Further fails to recover the outstanding amounts will not amounts to fraud, at most it can be termed as negligence act. In these circumstances it is concluded that on the applicant side failed to establish these transactions are fraudulent transactions as alleged.
Fraudulent write off of Debtor from the Books of the Corporate Debtor - HELD THAT:- There is major difference exist between a loan is waived off and write off. If the loan is waived off thereafter no action can be taken to recover the said loans but if the loan is write off, the loan can be recovered through legal process. In short, write off will not extinguish the rights of the lender to recover the amount, it is only for audit purposes write of is made - the write off of debt will not amounts to fraudulent Transactions.
Advance Payment Made to Fatehpur East Coal Pvt. Ltd. A potentially Related Party and Later on adjustment of the said payment by way of purchase of shares - HELD THAT:- There is a difference between wrongful trading and fraudulent trading, the element of negligence exists in wrongful trading but element of deceit will not there. On the applicant side not explained how the above transaction is termed as fraudulent transaction. In the circumstances it is concluded that since the incident taken much before the commencement of corporate insolvency resolution process date and in the absence of elements of deceit, the applicant failed to prove this transaction is a fraudulent transaction.
Excess Payment made to various suppliers but Receipt of payment, Goods or services not booked - HELD THAT:- In the case of fraudulent transactions, the person or persons who were benefited because of the fraudulent acts of the suspended directors of corporate debtor also to be added as party to arrive just and correct conclusion and also if the guilt is proved to get back the benefit acquired by them. In this case five vendors of Rice husk are not arrayed as parties to this application, this amounts to non-joinder of necessary parties - the transactions under the caption of fraudulent transactions are not proved.
Undervalued Transactions - HELD THAT:- As per section 46(1)(ii) of IBC 2016, the transactions made with related party within period of two years preceding the insolvency commencement date is the under-value transaction. In this case look back period exceeded two years from the date of commencement of CIRP against the corporate debtor hence, the transactions referred in the application does not fall under value transactions.
Thus, the transactions styled as preferential, fraudulent, and undervalued in the petition are not proved hence the petition is liable to be dismissed.
Application dismissed.
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2022 (9) TMI 1543 - RAJASTHAN HIGH COURT
Territorial jurisdiction questioned - recourse to the remedy of appeal before the Tribunal or its bench having the territorial jurisdiction - HELD THAT:- Though number of grounds have been raised by the petitioner in these two writ petitions, taking into consideration that issues of jurisdiction were not raised when the proceedings were pending but are being raised after the assessment orders have been passed, in our opinion, all these issues can be taken up by taking recourse to the remedy of appeal before the Tribunal or its bench having the territorial jurisdiction.
Since we are not inclined to entertain the writ petitions and relegating the petitioner to take recourse of appeal before the Tribunal, the period during which these writ petitions remained pending shall be excluded for the purpose of counting limitation in filing the appeal before the Tribunal.
We also place on record the submission made by learned counsel for the Revenue that there is already a bench of Income Tax Appellate Tribunal in Jodhpur and in urgent matters, if sitting is not taking place at Jodhpur, the matters are taken up at Jaipur.
Be that as it may. Since objection of existence of alternative remedy has been raised by learned counsel for the Revenue, we direct that as soon as the appeal is filed by the petitioner before the jurisdictional bench of the Tribunal, the Tribunal shall ensure hearing of the said appeal within a period of seven days from the date of submission of the appeal along with the stay application.
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2022 (9) TMI 1542 - TELANGANA HIGH COURT
Validity of assessment order - imposition of tax on lease rentals under section 5-E of the APGST Act - constitutional validity of section 5E(b) of the APGST Act - HELD THAT:- As held by the honourable apex court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [1996 (12) TMI 50 - SUPREME COURT], the power under article 226 has to be exercised to effectuate the regime of law and not for abrogating it. Even while acting in exercise of the said constitutional power, the High Court cannot ignore the law, nor can it override it. The power under article 226 of the Constitution of India is conceived to serve the ends of law and not to transgress them.
In the instant case, since the clause (b) of section 5E of the A. P. Act 6 of 1957 was read down by the honourable apex court as indicated above holding that the situs of sale would be the place where the property in goods passes and not the place of location of the goods where they are put to use, the respondent are under obligation to review the assessment of tax for the years 1995-96 to 1997-98 of the petitioner and consequently, the petitioner is entitled for refund of tax paid by it for the said assessment years.
It is borne by record that the tax paid by the petitioner for the assessment years 1995-96, 1996-97 and 1997-98 was Rs. 2,20,880, Rs. 21,17,129 and Rs. 28,35,996 respectively. Therefore, the respondents are directed to refund the tax paid by the petitioner, i. e., Rs. 2,20,880, Rs. 21,17,129 and Rs. 28,35,996 for the assessment years 1995-96, 1996-97 and 1997-98 respectively, to the petitioner, within a period of sixty (60) days from the date of receipt of a copy of this order.
Petition allowed.
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2022 (9) TMI 1541 - CESTAT NEW DELHI
Rectification of mistake - imposition of 100% penalty under section 11AC readwith Rule 25 of Central Excise Rules, 2002 - extended period of limitation - HELD THAT:- Section 11AC prescribed a mandatory penalty for non-levy or short levy or non-payment or short payment or erroneous refund of duty by reason of fraud or collusion or any willful statement or suppression of facts or contravention of any provision of the Act or the Rules made thereunder with an intent to evade payment of duty. These are the same elements which are required to confirm duty invoking the extended period of limitation - the demand of duty upheld by invoking extended period of limitation in the final order and, therefore, penalty under section 11AC invariably follows and there is no discretion in the matter - there is no mistake in not giving a separate finding on the penalty under section 11AC.
Computation by adjusting the cenvat credit available on inputs used was not considered - HELD THAT:- There are no provision in the Act or Rules by which the duty can be determined after deducting the cenvat credit which may be available on the inputs as claimed by the assessee. Of course, if duty is payable, the assessee will be entitled to cenvat credit as per the Cenvat Credit Rules and may also able to use the cenvat credit to pay the duty. This, first, of course, will be subject to verification of the availability of cenvat credit as per the rules.
Thus, instead of reproducing the findings of the Adjudicating Authority, the final order of the Tribunal has endorsed his findings. Therefore, the assertion in the application by the Revenue that the Tribunal has set aside any demand in the concluding paragraph of the final order is factually incorrect and misconceived.
Application disposed off.
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2022 (9) TMI 1540 - SC ORDER
Withdrawal of exemption u/s 10B in the Revised Return and claim of carry forward of loss - As decided in [2022 (7) TMI 560 - SUPREME COURT] filing a revised return u/s139(5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee - assessee filed its original return under section 139(1) and not under section 139(3). Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139(5) can only substitute its original return under Section 139(1) and cannot transform it into a return under Section 139(3), in order to avail the benefit of carrying forward or set-off of any loss u/s 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under Section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or setoff of any loss - HELD THAT:- Application for listing Review Petition in open court is rejected.
Having carefully gone through the Review Petition, the order under challenge and the papers annexed therewith, we are satisfied that there is no error apparent on the face of the record, warranting reconsideration of the order impugned.
The Review Petition is, accordingly, dismissed.
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2022 (9) TMI 1539 - KARNATAKA HIGH COURT
Foreign exchange gain on restatement of external commercial borrowings - Whether liable to tax as it is on the capital account? - Assessee’s case is, it has borrowed funds for external commercial borrowing to avail capital assets. In the restatement of the account to be made every year, there is bound to be a change in the value of the borrowings in view of fluctuation in the foreign exchange - HELD THAT:- ITAT in its order has referred to CIT(A)'s order and rightly recorded that the fluctuation in the rates of foreign exchange can result in either a gain or a loss because of value of the currency which appreciates or depreciates on the date of computation namely 31st March of the relevant accounting year. Placing reliance on CIT vs. Woodward Governor India (P) Limited [2009 (4) TMI 4 - SUPREME COURT] ITAT has held that the adjustment on account of foreign exchange rate fluctuation is required to be made to actual cost at the end of every year after amendment of Section 43A with effect from 01.04.2003 and upheld CIT(A)'s order that the gain arising on account of exchange fluctuation are not liable to tax as it is on the capital account.
MAT computation - brought forward book loss in computation of income and Section 115JB - HELD THAT:- As perused the explanation to Section 115JB of the Act. Clause 2(iii) of Explanation 1 (i) of Section 115JB makes it clear that the amount of loss brought forward or unabsorbed depreciation whichever is less as per the books of accounts must be permitted to be set off. The CIT(A) and the ITAT placing reliance on CBDT Circular No.495 dated September 22, 1987, have rightly held that the cumulative brought forward losses or unabsorbed depreciation should be considered for set off.
In view of unambiguous language employed in the statute, no exception can be taken with ITAT’s order confirming the CIT(A)’s order holding that the assessee is entitled to claim set off. So far as the actual amount is concerned, the ITAT has remitted the matter to the Assessing Officer. However, on principle, the ITAT has rightly held that the assessee is entitled to claim set off.
Substantial questions of law are answered in favour of the assessee and against the Revenue.
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2022 (9) TMI 1538 - ITAT DELHI
Disallowance u/s 40(a)(i) - payment made for management services to non-resident AEs - assessee furnished that it had paid sum to its group entities outside India under the head management charges - CIT(A) held that the payments made towards management services to non-resident AEs by the assessee are not FTS and not liable for deduction of TDS u/s 195 - HELD THAT:- On perusal of the assessment order it is noticed that the AO gives a finding that the agreements show that the companies provided highly technical services and can be rendered only by a person who has high degree of expertise. It was also the observation of the Assessing Officer that the expertise which is available to the respective companies is made available to the assessee company for using the same in its managerial decision making process. While coming to such conclusion the AO failed to refer to any specific clause of the agreement where the non-resident AE companies provide highly technical services.
AO failed to list out what are the highly technical services the companies are providing to the assessee company. AO also failed to show that under which clause the expertise available with the companies is made available to the assessee company for using the expertise by the assessee in its managerial decision making process.
We also observe that the issue has been decided in favour of the assessee during the assessment years 2010-11 and 2014-15 by the ld. CIT (Appeals) and the Revenue has accepted these decisions by not filing further appeals to this Tribunal. It is also noticed that for the assessment year 2012-13 the Assessing Officer did not make any disallowance for non-deduction of TDS on management service charges paid by the assessee to its AEs.
No valid reason to interfere with the findings of the ld. CIT (Appeals) in holding that the managerial services charges paid by the assessee to its non-resident AEs is not liable to TDS under the provisions of section 195 of the act. Thus, we sustain the order of the ld. CIT (Appeals) and reject ground No. (a) of grounds of appeal of the Revenue.
Disallowance of management charges u/s 37 - CIT(A) deleted addition - HELD THAT:- CIT (Appeals) has examined the evidences furnished and came to the conclusion that the expenses incurred towards management services are for the purpose of business and such services are routine and recurring in nature and qualify as Revenue expenditure. It is also the submission of assessee that the Assessing Officer in any of the earlier assessment years or in subsequent assessment years these expenses were disallowed invoking the provisions of section 37(1) of the Act. No infirmity in the order passed by the ld. CIT (Appeals) in allowing these expenses as Revenue expenditure incurred by the assessee for its business purposes. Decided against revenue.
Disallowance made towards PF and ESI - CIT(A) deleted addition - HELD THAT:- On perusal of the order of the ld. CIT (Appeals) we observe that the payments towards PF and ESI were made within due date for filing return of income u/s 139 of the Act and the ld. CIT (Appeals) following the decision of the Hon’ble Delhi High Court in the case of CIT Vs. AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT] held that there was no justification in making disallowance towards PF and ESI contributions. We see no infirmity in the order passed by the ld. CIT (Appeals). This ground of appeal is dismissed.
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2022 (9) TMI 1537 - SC ORDER
Disposal of the uncleared cargo by way of auction - Right of Customs Department - it was held by NCLAT that No interference is called for against the impugned order dated 3rd July, 2018 passed by the Adjudicating Authority prohibiting the Customs Authority from selling the assets of the ‘Corporate Debtor’ - HELD THAT:- There are no ground to interfere with the impugned order passed by the National Company Law Appellate Tribunal. The civil appeal is, accordingly, dismissed.
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2022 (9) TMI 1536 - DELHI HIGH COURT
Income taxable in India - receipts earned from supply of software - whether taxable in India under Section 9(1)(vi) of the Income Tax Act, 1961, read with Article 12 of the India-USA Double Tax Avoidance Agreement (DTAA)? - As revenue says that the issue is covered against the revenue by the judgement titled Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT] and a review petition has been filed against the said judgement, which is pending consideration in the Supreme Court.
HELD THAT:- We may note that the issue which arises for consideration is: whether receipts earned from supply of software are taxable in India under Section 9(1)(vi) of the Income Tax Act, 1961, read with Article 12 of the India-USA Double Tax Avoidance Agreement (DTAA).
Accordingly, the appeals preferred by the revenue are closed. Liberty is, however, given to the appellant/revenue to revive the appeals in case the decision rendered by the Supreme Court in the aforementioned review petition favours the revenue.
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2022 (9) TMI 1535 - GUJARAT HIGH COURT
Levy of penalty under section 112(a) of CA - appellant was not involved in either import or export of the goods in dispute - appellant has not aided or abetted or omitted to do any act for which the goods in disputes were liable for confiscation - HELD THAT:- When against the very order impugned, the appeal by one of the respondents came to be decided, the present appeal shall be governed by the said decision. The reasons supplied by the Division Bench in M/S. ADANI ENTERPRISES LTD FORMERLY KNOWN AS ADANI EXPORT VERSUS COMMISSIONER OF CUSTOMS KANDLA [2022 (7) TMI 105 - GUJARAT HIGH COURT] shall form part of the reasoning of this order - In the said decision dated 9.6.2022, the show cause notice are held to be without authority of law and the questions of law are kept open.
Tax appeal disposed off.
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2022 (9) TMI 1534 - SC ORDER
Business loss claim on account of permanent diminution in the value of the investment made in the equity shares in one of the subsidiaries of the assessee in USA - According to AO this loss was not allowable u/s 37 since the expenditure could not have been considered as a revenue expenditure.
HELD THAT:- Issue notice with respect to question no.2 before the High Court, reproduced in para 3 of the impugned judgment and order passed by the High Court only, making it returnable on 14.11.2022.
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2022 (9) TMI 1533 - SUPREME COURT
Suit for specific performance - money lending transaction or not - denial of execution of the sale deed - HELD THAT:- The plaintiff himself has admitted in the plaint that the suit property is jointly owned by the defendant, his wife and three sons. A specific objection was also taken by the defendant in his written statement with regard to nonjoinder of necessary parties. Since the suit property was jointly owned by the defendant along with his wife and three sons, an effective decree could not have been passed affecting the rights of the defendant’s wife and three sons without impleading them.
It can thus be seen that what has been held by this Court is that for being a necessary party, the twin test has to be satisfied. The first one is that there must be a right to some relief against such party in respect of the controversies involved in the proceedings. The second one is that no effective decree can be passed in the absence of such a party.
In view of the plaintiff’s own admission that the suit property was jointly owned by the defendant, his wife and three sons, no effective decree could have been passed in their absence.
Thus, no error can be noticed in the judgment of the High Court. The appeals are therefore liable to be dismissed.
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2022 (9) TMI 1532 - NATIONAL ANTI-PROFITEERING AUTHORITY
Profiteering - Respondent had not passed on the benefit of reduction in the rate of tax to the customers by way of commensurate reduction in the price of the product sold by him - contravention of provisions of section 171 (1) of the CGST Act, 2017 - HELD THAT:- There is no dispute with regard to the reduction of the tax in respect of subject products supplied by the Respondent with effect from 15-11-2017. The Government by Notification No. 41/2017-CT (Rate), dated 14-11-2017 has reduced rates on subject products. In view of the above said facts and the records, the Authority has observed that the Respondent, M/s. Raj & Company was a distributor of M/s. L Oreal India Pvt. Ltd. The Authority finds that M/s. L Oreal India Pvt. Ltd. was investigated by the DGAP for allegations of profiteering and not passed on the benefit of reduction of GST rate after the said Notification dated 14-11-2017 and the Authority has found them violating the provisions of section 171 of the CGST Act, 2017 for the products sold by them for the period from 1-4-2018 to 31-12-2018, and, this Authority vide Order No. 26/2022 dated 23-6-2022, has also confirmed profiteering to the tune of Rs. 186,39,57,058/- against M/s. L Oreal India Pvt. Ltd. for the period from 15-11-2017 to 31-12-2018.
This Authority is of the opinion that the amount of profiteering calculated against the Respondent might have been already calculated and confirmed against M/s. L Oreal India Pvt. Ltd. as the period of investigation in the present case is already covered in the period of investigation in case of M/s. L Oreal India Pvt. Ltd. and the products on which profiteering has been calculated in the present case, have been included in the case of M/s. L Oreal India Pvt. Ltd. - considering the above facts on record and to avoid the duplication and doubling of confirming of profiteered amount, this Authority directs the DGAP to re-investigate/re-examine the matter and make sure whether the amount of profiteering calculated in the present case has already been considered in the case of M/s. L Oreal India Pvt. Ltd. or not, under rule 133(4) of the CGST Rules, 2017.
Application disposed off.
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2022 (9) TMI 1531 - CALCUTTA HIGH COURT
Section u/s 80IA - insolvency proceedings - Assessee submitted that the application filed by the financial creditor under Section 7 of the Insolvency & Bankruptcy Code 2016 (IBC) before NCLT, Kolkata was admitted for initiating the corporate resolution process in respect of assessee company and the NCLT by order dated March 13, 2019 declared moratorium for the purposes of referring to in section 14 of the IBC.
NCLT has approved the resolution plan submitted by the company on 24th February, 2020. Since the resolution plan has already been approved, the instant appeal has become infructuous and accordingly stands dismissed without any order as to costs.
Further in the assessee’s own case appeal filed by the revenue for the other assessment years were also dismissed on similar grounds.
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2022 (9) TMI 1530 - NATIONAL ANTI-PROFITEERING AUTHORITY
Profiteering - purchase of Flat - non-adherence of period of six months provided in rule 133 of the CGST Rules, 2017 - contravention of section 171 of CGST Act - HELD THAT:- Without going into the merits and the other submissions made by the Respondent and the Applicants at this stage, this Authority finds this case must be reinvestigated by the DGAP based on the above directions of this Authority. Thus, the DGAP is directed to reinvestigate the matter as per the provisions of rule 133(4) of the CGST Rules, 2017 and submit his report before this Authority.
The Hon'ble High Court of Delhi, vide its Order in the case of Nestle India Ltd. v. Union of India [2020 (2) TMI 671 - DELHI HIGH COURT] has held that the limitation of period of six months provided in rule 133 of the CGST Rules, 2017 within which the authority should make its order from the date of receipt of the report of the Directorate General of Anti Profiteering, appears to be directory inasmuch as no consequence of non-adherence of the said period of six months is prescribed either in the CGST Act or the rules framed thereunder.
Matter on remand.
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2022 (9) TMI 1529 - ITAT AHMEDABAD
Rectification of mistake - as calculating disallowance in respect of operating revenue of manufacturing segment @ 1.5%, the Bench has wrongly applied 2% of the same - HELD THAT:- The paragraph 7 of order categorically deals with the percentage of operating revenue on the identical facts in case of the assessee in different years and finally applied 2% of the operating revenue of manufacturing segment, which was worked out at Rs.2,20,88,379/- and therefore disallowance was made Rs.10,47,454/- against the assessee in respect of the operating revenue of manufacturing segment.
We do not find any error apparent on the face of the record which could at all be prayed for rectification. Hence MA filed by the Revenue is dismissed.
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