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Showing 61 to 80 of 1748 Records
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2015 (9) TMI 1698 - SUPREME COURT
Guilty of charge that appellant took ₹ 8.00 lacs from one Gurjit Singh son of Bahadur Singh of District Ludhiana, and got him sent illegally to United States of America - offences punishable Under Sections 406, 420 and 120B of Indian Penal Code (Indian Penal Code) and Under Section 13(i)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 - HELD THAT:- Rule 16.3 of Punjab Police Rules provides that when a police officer has been tried and acquitted by a criminal court, he shall not be punished departmentally on the same charge subject to certain conditions. In the present case, as is evident from Rule 16.3, requirement of not punishing the officer departmentally is not absolute, and it hinges on either of the five conditions mentioned above [(a) to (e)]. From the copy of the order of acquittal passed by the Judge, Special Court, Ludhiana (Annexure P-6), it is evident that the prosecution witnesses have turned hostile, and they appear to have been won over.
In Union of India and Anr. v. Bihari Lal Sidhana [1997 (3) TMI 604 - SUPREME COURT], this Court has observed that it is true that the Respondent was acquitted by the criminal court but acquittal does not automatically gave him the right to be reinstated into the service.
There are no illegality in the order passed by the High Court declining to interfere with the order of dismissal from service on the basis of evidence recorded in the departmental enquiry - appeal dismissed.
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2015 (9) TMI 1697 - ITAT LUCKNOW
Ad hoc disallowance of expenses - expenses claimed by the assessee are not fully verifiable, as no vouchers have been produced in respect of few expenses for verification - HELD THAT:- Ad hoc disallowance is not permissible under the law and if the Assessing Officer is not satisfied with a particular expense, he may make necessary verification and also to point out defect in the books of account, but ad hoc disallowance should not be made by making general observation. In the instant case, since ad hoc disallowance is made by making general observation, we do not find any merit in the addition made by the Assessing Officer. We accordingly delete the addition made on ad hoc basis after setting aside the order of the ld. CIT(A) - Decided in favour of assessee.
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2015 (9) TMI 1696 - ITAT AHMEDABAD
Short deduction of TDS - TDS u/s 194J OR 194I - disallowance u/s. 40(a)(ia) relating to VSAT and lease line payments - CIT(A) holds that only proportionate disallowance is to be made in view of the fact that the assessee had already deducted TDS - HELD THAT:- It is evident that the co-ordinate bench in assessee’s own case for assessment year 2006-07 holds that the disallowance in question cannot be made because of shortfall in TDS deduction as per hon’ble jurisdictional high court decision in CIT vs. Prayas Engineering Ltd Tax [2014 (11) TMI 1086 - GUJARAT HIGH COURT] and CIT vs. S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT]. The Revenue fails to draw any distinction on facts or law. CIT(A) has erred in partially confirming the Assessing Officer’s action making the impugned disallowance of VSAT and lease line charges in question. The assessee’s arguments are accordingly accepted and that of the Revenue are rejected.
Disallowance of bad debts - assessee had claimed these amounts arising from downfall/market crash in Jan, 2008 due to which wealth of investors vanished and they were not in a position to pay the same as investment in question reached to negligible value resulting in huge unpaid liabilities. - HELD THAT:- CIT(A) follows lower appellate order in preceding assessment year deciding the issue in assessee’s favour. He quotes case law of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] and DCIT vs. Shreys Morakhia [2010 (7) TMI 455 - ITAT MUMBAI] in support. We find that the co-ordinate bench (supra) has already rejected the Revenue’s identical ground in preceding assessment year. It does not point out any exception on facts or law in the impugned assessment year. The Revenue’s corresponding ground is decided in assessee’s favour.
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2015 (9) TMI 1695 - ITAT BANGALORE
Disallowance of bad debts write-off - Amount written off by the assessee is on advance given by it to one PIE Education P. Ltd. - HELD THAT:- When assessee itself had not charged any interest on the amount advanced, it cannot say that any income from such loans were taken into account for computing its total income. For the simple reason that assessee had never charged any interest on the loan to PIE Education P. Ltd, such loan cannot be treated as money lent by the assessee in the ordinary course of a business of money-lending. In our opinion, assessee is squarely hit by the limitation placed by section.36(2)(i) of the Act. Claim of the assessee also cannot be considered as a business loss, for the reason that assessee was not in the business of providing education and training. Even if we presume that assessee was carrying on a business of lending money, the amount written off here was not lent in the course of money lending business.
Coming to the judgment of Hon’ble Apex Court in the case of T. R. F. Ltd [2010 (2) TMI 211 - SUPREME COURT], the question there was whether for a claim of bad debts, write- off in the books alone was sufficient - In the judgment of Amalgamations P. Ltd [1997 (4) TMI 8 - SUPREME COURT] question was whether loss incurred for providing bank guarantee for loans taken by a subsidiary could be allowed. Assessee here has nowhere stated that PIE Education P. Ltd is a subsidiary of the assessee company, nor was the write-off in relation to any bank guarantees.
As held that solitary transaction by itself could not be considered as an impediment for construing the meaning of money lending business. As against this, assessee here had advanced the money to PIE Education P. Ltd without any agreement regarding interest and that too not as a part of its lending activity, if at all it had any. Lower authorities were justified in disallowing the sum - Ground.3 of the assessee is dismissed.
Disallowance u/s.14A on account of assessee’s own submission - HELD THAT:- Sole grievance was that the disallowance u/s.14A of the Act made on account of assessee’s own submission, was considered by the AO as a disallowance made by the latter - As admitted addition we are of the opinion that assessee cannot have any grievance now. We do not find any reason to interfere in the order of lower authorities on this issue also. Ground.4 of assessee is dismissed.
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2015 (9) TMI 1694 - TRIPURA HIGH COURT
Transfer of property in goods or not - petitioner were carrying food supplies on behalf of the Department of Food & Civil Supplies, Government of Tripura - case of petitioner is that the work being done by them of transporting these food items does not fall within the ambit of the word sale - HELD THAT:- The Commissioner of Taxes has filed a reply and has clearly admitted that the case of the petitioners is squarely covered by this judgment - We could have disposed of the matter ourselves but we are of the view that the Commissioner himself should pass appropriate orders.
The petitioner shall appear before the Commissioner of Taxes personally or through counsel on 26th September, 2015 at 11.00 a.m. On the said day, the Commissioner shall dispose of their applications for refund and shall issue orders that the amount shall be refunded along with statutory interest latest by 31st December, 2015. In case, the amount is not refunded by 31st December, 2015 then the interest shall be payable @ 12% per annum from the date of filing of the writ petitions.
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2015 (9) TMI 1693 - HIMACHAL PRADESH HIGH COURT
Refund of CENVAT Credit in cash - petitioner goes out of Modvat scheme - bar under Section 11B of the CE Act or Rule 5 of the Cenvat Credit Rules, 2002 present or not - HELD THAT:- Benefit of input/input service used in the final products cleared for export can be put to the credit of the manufacturer/provider of output service, firstly towards duty of excise; secondly towards service tax and only if, for any reason, such adjustment is not possible, refund is allowed. The third option is an exception to the rule. Only and only if the first two options cannot be exercised, the third option can be resorted to.
In the instant case, no notification also stands issued by the Central Government. Also, it is not the case of the appellant that adjustment of refund cannot take place against the first two options provided for under the Rule. It is not a case where the appellant has totally closed down his business of manufacture or export. Hence, the Cenvat credit cannot be refunded in cash.
Appeal disposed off.
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2015 (9) TMI 1692 - COMPANY LAW BOARD, NEW DELHI
Oppression and Mismanagement - Stay on increase in authorized Share Capital - Whether any stay is to be granted over an item for increase of authorised share capital in the AGM to be held on 23.09.2015? - HELD THAT:- It is evident that the respondents are in management they have been continuing in the management without any disputes for last several years, the only objection to the petitioners now is company should not go for rights Issue.
The company has been doing its business well; the petitioners have been getting revenue to their company SADL by selling its milk to R1 Company. That being the position, I don't see any point in the argument of the petitioners that company has not been giving any dividend to the shareholders. When the petitioners, through their own company, get revenue from R1 Company, they could not have said that the petitioners have been reinvesting the profits into R1 Company without any returns to the shareholders - The petitioners cannot say that company should alone go for debt not for rights issue. The minority cannot opt for the right under section 397 & 398 of the Act 1956 to stall the functioning of the company, when the act of the management is in the interest of the company. Since there is a decision to purchase dryer costing around ' 100 crores, it can't be said that there is no need to raise fund. Therefore, the argument of the petitioners counsel saying that there is no need for raising fund has no merit.
However since the respondents categorically mentioned that they will not invoke allotment of shares under B Class, the shareholding of the petitioners will not come down to 20% as stated by them, when the respondents have come forward saying that they will not allot any shares as B Class shares, there cannot be any more equity than this - here, in the case, the directors in the management indulged in all sorts of malafide acts and irregularities to dilute the aggrieved, therefore this cannot be applicable to the given facts of the case.
There are no merit to stay the agenda for increase of authorised share capital of R1 Company, this Bench hereby rejects interim relief seeking stay of the Agenda over increase of authorised share capital and also over other interim reliefs in respect of stay on minutes drawn on 16.07.2015 - the respondents are directed to file reply within 6 weeks hereof, rejoinder, if any, within 6 weeks thereof in the main petition.
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2015 (9) TMI 1691 - COMPETITION APPELLANT TRIBUNAL
Refusal to direct an investigation - Section 19(1)(a) of the Competition Act, 2002 - closure of case under Section 26(2) of the Act - whether the appellant should be non-suited on the ground that he had not approached the Commission with clean hands and that he has been representing and espousing the cause of M/s. B.S.N. Joshi & Sons Ltd.?
HELD THAT:- A reading of the plain language of Section 18 shows that the Commission is under an obligation to ensure that practices having adverse effect on competition are eliminated. The Commission is also duty bound to promote and sustain competition, protect the interest of consumers, and ensure freedom of trade carried on by other participants in markets in India. Of course, the exercise of power under Section 18 is subject to other provisions of the Act. Section 19(1) empowers the Commission to inquire into the allegations of contravention of Section 3(1) of Section 4(1) of the Act. This can be done by the Commission on its own motion or on receipt of any information from any person, consumer or their association or trade association or on a reference made by the Central Government or the State Government or a statutory authority. While determining whether or not an agreement has an appreciable adverse effect on competition under Section 3, the Commission is required to take into consideration all or any of the factors enumerated in Clauses (a) to (f) of Section 19(3) of the Act.
It is significant to note thatParliament has neither prescribed any qualification for the person who wants to file an information under section 19(1)(a) nor prescribed any condition which must be fulfilled before an information can be filed under that section. There is nothing in the plain language of Sections 18 and 19 read with Section 26(1) from which it can be inferred that the Commission has the power to reject the prayer for an investigation into the allegations involving violation of Sections 3 and 4 only on the ground that the informant does not have personal interest in the matter or he appears to be acting at the behest of someone else - In a given case, the Commission may not act upon an information filed under section 19(1)(a) but may suo moto take cognizance of the facts constituting violation of Section 3(1) or Section 3(4) of the Act and direct an investigation. The Commission may also take cognizance of the reports appearing in print or electronic media or even anonymous complaint/representation suggesting violation of Sections 3 and 4 of the Act and issue direction for investigation under Section 26(1). The only limitation on the exercise of that power is that the Commission should feel prima facie satisfied that thereexist a prima facie case for ordering into the allegation of violation of Sections 3(1) or 4(1) of the Act.
Thus, the appellant cannot be non-suited by accepting the argument of the learned counsel for the respondents that he is espousing the cause of M/s. B.S.N. Joshi & Sons Ltd. The fact that the appellant is practising as an advocate with the counsel who has been representing M/s. B.S.N. Joshi & Sons Ltd. in other cases is not sufficient to draw a dubious inference that he is prosecuting the interest/cause of M/s. B.S.N. Joshi & Sons Ltd. That apart, the respondents have not disputed that the appellant is a consumer of electricity generated and supplied by Respondent No. 2. Therefore, its locus to file an information under section 19(1)(a) cannot be questioned.
Whether the majority order of the Commission is vitiated by an error of law and calls for interference under Section 53-B of the Act? - HELD THAT:-If in exercise of the appellate power vested in it under Section 53- B the Tribunal is satisfied that the negative opinion expressed by the Commission on the issue of existence of a prima facie case is vitiated by an error of law then it may set aside the impugned order and direct an investigation under Section 26(1) of the Act - A reading of the impugned order shows that while refusing to order an investigation into the allegations made by the appellant that Respondent Nos. 3 to 5 had formed a cartel and successfully prevented competition in the matter of award of liaison work for procurement of quality coal and supervision of transportation thereof, the majority of the Commission altogether over looked the unequivocal finding recorded by the Supreme Court in the order passed in Contempt Petition No. 245/2007.
Another grave error committed by the Commission is that even though it did take cognizance of the chart containing the rates quoted by Respondent Nos. 3 to 5 for the year 2010 but totally ignored the allegations made in the information and the documents filed on 15.10.2003. Thus there is no escape from the conclusion that the view expressed by the majority of the Commission that no prima facie case is made out for directing an investigation under Section 26(1) suffers from a patent legal infirmity.
The majority order of the Commission is set aside. The Director General shall now conduct investigation into the allegations contained in the information filed by the appellant under section 19(1)(a) and submit a report to the Commission within three months. However, it is made clear that while making investigation, the Director General shall not proceed on the premise that Respondent No. 2 was a part of the cartel - Appeal allowed.
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2015 (9) TMI 1690 - ITAT MUMBAI
Long Term Capital Gain - Year of assessment - ancestral property - property has been jointly held by all the family members - HUF of the assessee has not filed return of income - assessee along with other co-owners has sold an ancestral property purchased by his Grand-father - partial share of the assessee in the sale consideration - HELD THAT:- Admittedly, the conveyance deed was executed on 31.3.2008 and the same was registered under the Registration Act on 1.7.2008. On a perusal of the conveyance deed, we notice that the possession of the property was also given to the buyers on 31.3.2008 and the assessee along with other co-owners have received the entire consideration before 31.3.2008.
Hence, we agree with the contentions of the assessee that the impugned property has been transferred during the year relevant to the assessment year 2008-09 and hence AO was not justified in assessing the same in AY 2009-10. As A.R submitted that the registration of deed on 1.7.2008 was only a formality and upon the registration of the deed, the conveyance would date back to the date of execution of the deed we find support to the contentions of the assessee in the decision rendered in the case of M. Shyamala Rao [1998 (4) TMI 113 - ANDHRA PRADESH HIGH COURT] as observed that the registration of the conveyance deed relates back to the date on which the agreement for sale was executed in favour of the buyer by the owner. In view of the above, the capital gain, if any, is assessable in AY 2008-09 only.
Whether the capital gain can be assessed in the hands of the assessee herein in his individual capacity - assessee has contended before the AO that the property belongs to the HUF and what he has received is only a share from the HUF - HELD THAT:- We notice that the tax authorities have rejected the claim on the reasoning that the HUF has not filed return of income and hence the capital gain should be assessed in the individual hands. In our view, the approach of the tax authorities cannot be uphold in view of the decision in the case of Ch.ATCHAIAH [1995 (12) TMI 1 - SUPREME COURT] wherein held ITO can, and he must, tax the right person and the right person alone. By right person, we mean the person who is liable to be taxed, according to law, with respect to a particular income.
Merely because the HUF of the assessee has not filed return of income, the assessing officer cannot assess the capital gain in the hands of the assessee in his Individual status. Since the property has been jointly held by all the family members, the same cannot be said to belong to the assessee in his individual status. In fact, the conveyance deed wasl also executed jointly by all the co-owners. AO was not correct in law in assessing the share of the assessee as capital gain in the individual status. - Decided in favour of assessee.
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2015 (9) TMI 1689 - ITAT CHENNAI
Reopening of assessment - "change of opinion" - rate of depreciation on “water supply & drainage” and some part of the block of asset viz., the value of non-productive assets - claim of excess rate of depreciation on the on-productive assets is being restricted @ 10% instead of 15% - HELD THAT:- There is a change of opinion by the AO for the purpose of reopening the assessment u/s.147. As held by the Supreme Court in the case of Kelvinator India Ltd. [2002 (4) TMI 37 - DELHI HIGH COURT] mere change in opinion would not confer jurisdiction upon the AO to initiate a proceeding u/s.147 of the Act. Therefore, we uphold the order of the CIT(Appeals) on this issue and quash the assessment order passed u/s.147 - Decided against revenue.
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2015 (9) TMI 1688 - GUJARAT HIGH COURT
Sanction of Amalgamation Scheme - allegation that the affairs of the Petitioner Company, viz, Intas Lifesciences Private Limited, have not been conducted in a manner prejudicial to the interest of its members or to the public interest - HELD THAT:- It appears that the requirements of the provisions of sections 391 to 394 of the Companies Act, 1956 are satisfied. The Scheme is genuine and bonafide and in the interest of the shareholders and creditors.
The Company Petitions is allowed and the Scheme is approved. The Scheme is hereby sanctioned. Prayers made in the respective Company Petitions are hereby granted.
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2015 (9) TMI 1687 - SC ORDER
Clearance of 'rejects' of all wool fabrics and polywool fabrics into DTA without payment of appropriate duties of 'surcharge', 'Special Additional Customs Duty' and 'Countervailing duty' (CVT) - HELD THAT:- Appeal dismissed.
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2015 (9) TMI 1686 - SUPREME COURT
Execution of agreement - Degree of specific performance or refund of amount - agreement to sale - whether in the facts and circumstances of the case, a decree of specific performance of agreement of sale should have been passed, or the decree of refund of part consideration received by the defendant, with interest, would have served the ends of justice? - HELD THAT:- Explanation 1 to sub-section (2) provides that mere inadequacy of consideration shall not be deemed to be an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Explanation 2 provides that the question whether the performance of a contract when involved hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent in the contract, be determined with reference to the circumstances accepting at the time of contract. Sub-section (3) provides that the court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
In the present case, it appears that possession was not given to the plaintiff at the time of execution of the agreement, nor the area of land agreed to be sold was clear, as such, it cannot be said that the plaintiff has done substantial acts or suffered losses due to expenditure in constructions, etc., in consequence of a contract capable of specific performance. The direction given by the High Court in the impugned order shows that the measurements of land actually agreed to be sold, are not final - instead of affirming the decree of specific performance as modified by the High Court, it will be equitable, just and proper to direct the appellants to pay back the amount of ₹ 60,000 accepted by the original defendant with interest @ 18% p.a to the respondent-plaintiff from 4-2-1992 till date, within a period of three months from today, failing which this appeal shall stand dismissed.
Appeal dismissed.
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2015 (9) TMI 1685 - ITAT INDORE
Deduction u/s 80IA - proof of manufacturing activities - need for filing of audit report alongwith the return - HELD THAT:- As in the assessee’s own case [2013 (6) TMI 882 - ITAT INDORE]wherein the ITAT has found assessee as eligible for claiming deduction u/s 80IA on Unit-2 relating to manufacturing of micro nutrient fertilizers.
Audit report was filed and the requirement of section 80IA(7) has been duly met with. Unit-II was separate and independent unit from the existing unit and the new unit commenced its production during A.Y. 1997- 98. The manufacturing of micronutrient fertilizers even has not been disputed by the Assessing Officer. It is not the case that the unit in dispute is part of earlier unit or its expansion. There is an uncontroverted finding in the impugned order that the assessee was maintaining separate accounts for both the units which are duly audited. Since the assessee has duly fulfilled the requirements of section 80IA(7) of the Act by filing the audit report before framing the assessment, we are of the view that the Assessing Officer wrongly disallowed the claim of the assessee. As per provisions of section 80IA(7), requiring filing of audit report alongwith the return is not mandatory rather it is directory and if the audit report is filed at any time before framing the assessment, the required conditions are considered to be fulfilled.- Decided in favour of assessee.
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2015 (9) TMI 1684 - ITAT CHENNAI
Assessment made u/s 144 - AO disbelieved the correctness of loss returned by the assessee and rejected such loss stating that assessee has not produced books of accounts - HELD THAT:- Commissioner of Income Tax (Appeals) stated that books of accounts were not produced even before him for verification. However the contention of the assessee was that CD was produced before the Commissioner of Income Tax (Appeals) containing the books of accounts. Taking the totality of the facts and circumstances into consideration, in the interest of justice, we are of the opinion that the assessment has to be redone afresh by the Assessing Officer. Thus, we set aside the orders of lower authorities and restore the assessment back to the file of the Assessing Officer with a direction to complete the assessment de novo and in accordance with law, after providing adequate opportunity to the assessee.
Denial of exemption u/s 10B/10A - since the approval was not given by the Board set up under Industries (Development & Regulation) Act, 1951 approval obtained by the assessee cannot be accepted as approval under section 10B of the Act for the purpose of claiming deduction - HELD THAT:- Refering to submission of the assessee that the assessee started its business in the year 1999 as a manufacturer and exporter hydraulic cylinder and its components and since then they have been filing their return claiming exemption under section 10B of the Act and the same was allowed the Department upto the assessment year 2008-09 we do not see any reason as to why the assessee should not be allowed deduction under section 10A if it is proved that assessee is entitled for deduction under section 10A instead of section 10B of the Act. Therefore, we are of the view that in case the assessee is not entitled for deduction under section 10B of the Act, the assessee’s claim shall be considered under section 10A of the Act, subject to fulfilling of the conditions therein. Therefore, we set aside the issue to the file of the Assessing Officer for de novo consideration and decide the issue refering to cases TECHNOVATE E SOLUTIONS PVT LTD [2013 (3) TMI 372 - DELHI HIGH COURT] and REGENCY CREATIONS LTD., VALIANT COMMUNICATIONS LTD. [2012 (9) TMI 627 - DELHI HIGH COURT] - Appeals of the assessee are allowed for statistical purposes.
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2015 (9) TMI 1683 - KARNATAKA HIGH COURT
Revision u/s 263 - quantum of short deduction of tax at source was admitted by the assessee and there was no further verification required by the Assessing Officer - HELD THAT:- Disallowance under Section 40(a)(ia) of the Act could not be made where there was a short deduction of tax at source and that such claim was made by the assessee in the audit report, which wasaccepted by the Assessing Officer. It also considered that the same was in consonance with the view expressed by the Tribunal earlier and confirmed by the Calcutta High Court in the case of CIT –vs- S.K.Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH] - Further, it has been held that since two views were possible to be taken by the Assessing Officer in the case of the assessee, and one of the possible views has been taken, then in such a situation the jurisdiction under Section 263 of the Act could not have been exercised.
No infirmity with the order of the Tribunal in allowing the appeal of the assessee
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2015 (9) TMI 1682 - ITAT MUMBAI
Accrual of income - Disallowance of revenue subsidies and grants - short receipt of earlier years’ income that it was not expenditure of the year under appeal - AO asked the assessee to explain why the same should not be disallowed and added back to its total income - HELD THAT: - Assessee was entitled to get subsidy @3% from the state government that as per the agreement with WB it was decided that it would get higher subsidy i. e. @4. 5%, that subsequently the state government reduced the subsidy to 3% that the assessee had in pursuance of the agreement, showed subsidy at higher rate that after resolution of the state government it decided to reverse the entries of subsidy disclosed in the earlier years. We have perused the resolution and it clearly shows that the assessee was informed by the state government about reduction in subsidy during the year under consideration only. Therefore, if the reduced the unrealised subsidy-that was disclosed in the returns of incomes of earlier years in the books of accounts for the year under appeal-it was justified.
Income shown in the returns in anticipation and not realised finally cannot be taxed. Basic principle of taxation jurisprudence lays down that income which an assessee could have,but has not earned cannot be made taxable as income accrued to him. In other words what has really accrued to an assessee has to be found out and what has accrued must be considered from the point of view of real income taking the probability or improbability of realisation in a realistic manner. See MOTOR CREDIT CO. PVT. LIMITED [1980 (4) TMI 64 - MADRAS HIGH COURT]
In the case before us the assessee came to know about the fact-that the income accrued to it in pursuance of agreement entered in to with World Bank would not be received-during the year under appeal. Therefore in our opinion the FAA has rightly held that the assessee was entitled to show lesser receipt during the year. Confirming his order we decide first ground of appeal against the AO.
Addition being interest of borrowed capital - assessee claimed expenditure in respect of various capital projects undertaken by it and which were capitalised in the books of accounts that same expenditure was claimed u/s. 36(1)(iii) - Rejection of claim made by the assessee on the ground that that the same could be allowed only if it is payable in respect of the period after the assets have been put to use in terms of the provisions of Explanation 8 to section 43(1) of the Act, that the assessee could not follow two methods of accounting one for the purposes of its books and the other for the purposes of computing its total income that even if the interest is allowable it would be disallowed u/s. 43B as proof of payment has not been produced - HELD THAT:- This issue is directly covered by the judgment of the Hon’ble Apex court delivered in the case of Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT] unlike section 37 which expressly excludes an expense of a capital nature, section 36(1)(iii) emphasises the user of the capital and not the user of the asset which comes into existence as a result of the borrowed capital. The Legislature has therefore, made no distinction in section 36(1)(iii) between “capital borrowed for a revenue purpose” and “capital borrowed for a capital purpose”. An assessee is entitled to claim interest paid on borrowed capital provided that the capital is used for business purpose irrespective of what may be the result of using the capital which the assessee has borrowed. “Actual cost” of an asset has no relevancy in relation to section 36(1)(iii) - The proviso inserted in section 36(1)(iii) by the Finance Act, 2003, with effect from April 1, 2004, will operate prospectively - Decided against revenue.
Disallowance of prior period expenses - HELD THAT:- We find that the AO had disallowed the claim of the assessee as it had not filed any evidence in that regard that the FAA had held that the assessee had itself disallowed two item that the expenditure of earlier years’ could be allowed in subsequent years. As fare as the suo motto disallowance is made we are of the opinion that the FAA was correct in holding that no addition could be made in that regard.
But for other expenses we have to consider the relevant facts. From the order of the FAA we do not find that such details were made available to him. Even if such details were filed he has not mentioned a single word about it. He has allowed the expenditure because law permits prior period expenses to be allowed. He totally forgot that the AO had made the disallowance because the claim made by the assessee was not substantiated by evidences. Before us,also no material was produced to prove that crystallization had actually taken place during the year. In our opinion,an assessee has to show the manner in which the earlier years’ expenditure was quantified in the year under appeal. Without these facts no expense can be allowed. Following particular guide line or rule governing a particular activity does not absolve the assessee from filing of documentary evidence in support of its claim for an expenditure- especially when the AO had directed it to file the same during the assessment proceedings. In the cases relied upon by the assessee the Hon’ble courts or the Tribunal had not dealt with the issue of crystallisation of expenses in a particular year. Thus, the facts are totally distinguishable. Considering the peculiar facts of the issue before us,we hold that the AO was justified in disallowing the of prior period expenses,because the assessee had failed to establish that these expenses actually crystallised during the year under consideration. Since it was following the mercantile system of accounting it had to establish that these liabilities pertaining to the previous year actually crystallised during the year under appeal. So,partly revering the order of the FAA we decide ground no. 3 in favour of the AO,in part.
Disallowance of electricity duty u/s 43B - HELD THAT:- Electricity duty is not being a sum payable by the assessee as a primary liability by way of tax, duty cess or fee, section 43B is not attracted to the assessee in respect of electricity duty collected by it for being passed on the State Govt. See KERALA STATE ELECTRICITY BOARD VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [2010 (11) TMI 127 - KERALA HIGH COURT] and M/S MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. AND VICA-VERSA [2015 (10) TMI 597 - ITAT MUMBAI].
Disallowance of loss suffered by the assessee on account of flood,cyclone/storm, theft etc. - HELD THAT:- . As far as loss of stock in concerned we are opinion that same is to be allowed as revenue expenditure. So the order of the FAA is reversed to that extent. For the balance amount we hold that the assets were forming part of block of assets. Therefore, depreciation should be allowed with regard to them. We find that issue of the claim of depreciation about assets of block has been decided in favour of the assessee by the decision of Tribunal relied upon by the assessee. Ground no. 2-3 are allowed in favour of the assessee in part.
Write off of intangible assets - AO disallowed the claim on the ground that the same was capital in nature - HELD THAT:- In the matter of Raychem RPG Ltd [2011 (7) TMI 953 - BOMBAY HIGH COURT] has held that of the software facilitated the assessee's trading operations or enabled the management to conduct the assessee's business more efficiently or more profitably then it was not in the nature of profit-making apparatus and that the expenditure was to be allowed. We find that lawyer’s fees has been held to allowable expenditure in the matter of Bombay Cycle and Motor agencies Ltd. [1979 (1) TMI 64 - BOMBAY HIGH COURT] . In that matter fees was paid to draw up lease agreement. We find that the FAA has followed the orders for AY. 99-00 and 2000-01 but has not distinguished the facts of the case of AY. 1997-98 and the facts of the matter under appeal. Order passed without giving any reason for not following the decision favouring the assessee comes under the category of non speaking order. The order of the FAA falls under that category hence cannot be endorsed. So, reversing his order we decide last ground in favour of the assessee.
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2015 (9) TMI 1681 - ITAT MUMBAI
TP Adjustment - interest calculated @ 18% on the delayed credit period on the import made by AEs beyond 180 days - HELD THAT:- Assessee has undertaken 33 transaction of exports for the value aggregating ₹ 18.45 crores, out of which in 25 transactions, the payments was received well before the expiry of credit period of 180 days. For the balance 8 transactions, in 6 transactions the delay was less than 30 days as given in the table incorporated above. If overall credit period of all the 33 transactions is to be analyzed, then it is evident that the average credit period for all the transactions is only 139 days, the working for which has been given at page 5 of the paper book.
For making any adjustment in the arms length price, a comparability analysis is to be carried out with the uncontrolled transactions to benchmark the price or profit in a third party situation.
Here in this case, neither the TPO nor the assessee has given any comparable instance as to whether in such a situation or condition an unrelated party would have charged interest. If in the majority transaction there no delay then for few transactions interest cannot be imputed, unless it is benchmarked with the transactions with some unrelated parties. However, no such comparable instance has been filed or sown before us. 8 transactions where there is a delay beyond the period of 180 days, the interest if at all, should be levied. Then same should be on the basis of LIBOR + 150 points (i.e. 1.5%) - we direct the TPO/AO to apply the interest rate of LIBOR + 1.5% and worked out the adjustment on account of interest for the transactions, which are beyond the period of 180 days. Accordingly, grounds raised by the assessee are partly allowed.
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2015 (9) TMI 1680 - ITAT AHMEDABAD
Rejection of books of accounts - addition on the basis of net profit of 3% of the gross receipts - survey proceeding u/s. 133A - HELD THAT:- The term net profit as commonly understood means the profit which has been arrived at by netting off income over the expenditure meaning thereby that whatever expenses which were due and were deductible have been deducted from the income of the Assessee before deriving the final figure of profit.
We are of the view that in a situation when once addition has been made on the basis of estimation of net profit, further addition is not called for and for this conclusion we derive support by the decision of CIT vs. Aggarwal Engg. Co. [2006 (7) TMI 188 - PUNJAB AND HARYANA HIGH COURT] wherein the Hon’ble High Court after considering the decision of Allahabad High Court in the case of CIT vs. Banswarilal Banshidhar [1997 (5) TMI 37 - ALLAHABAD HIGH COURT] held that no further addition was called for in respect of purchases and introduction of cash. Before us, Revenue has not placed on contrary binding decision in its support nor has controverted the submissions made by ld. A.R. In view of the aforesaid facts, we are of the view that apart from addition made by A.O by making estimation of net profits, no further addition on account of income declared during the course of survey was called for. Thus this ground of Assessee is allowed.
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2015 (9) TMI 1679 - ITAT MUMBAI
TDS u/ 194C or 194J - payment of carriage fees/payment charges by the assessee - HELD THAT:- We find that the Tribunal in that case relying upon the decision of the Co-Ordinate Bench in the case of ACIT Vs NGC Network (I) (P) Ltd [2014 (11) TMI 484 - ITAT MUMBAI] held that provisions of Sec. 194J are not at all applicable on the impugned payments.
A similar view was taken by the Tribunal in the case of UTV Entertainment Television Ltd [2014 (12) TMI 716 - ITAT MUMBAI] wherein also the Tribunal followed the decision in the case of NGC Network [2014 (11) TMI 484 - ITAT MUMBAI] . In the case of UTV Entertainment Television (supra), the Tribunal at para-7 has held that the impugned payments is covered by the explanation (iv)(b) under the provisions of Sec. 194C of the Act. The objections raised by the Ld. DR in respect of impugned payments being payment for royalty vis-à-vis payment for technical service is also taken care of by the Tribunal in the case of UTV Entertainment (supra) at para-2 of its order.
We are convinced with the findings of the Ld. CIT(A), therefore, no interference is called for.
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