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Showing 81 to 100 of 2149 Records
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2019 (4) TMI 2077 - PUNJAB AND HARYANA HIGH COURT
Dishonor of cheque - initial complaint was filed on 15.06.2015 and the amendment had taken place on 02.08.2018, which came into force w.e.f. 01.09.2018 - direction to deposit 20/25% of the amount of compensation awarded by learned trial Court while suspending their sentence during pendency of the appeal(s) in view of the provisions of Section 148 of the Negotiable Instruments (Amendment) Act, 2018 - HELD THAT:- A coordinate Bench of this Court in CRR No.9872 of 2018, titled as M/s Ginni Garments and another Versus M/s Sethi Garments [2019 (4) TMI 1248 - PUNJAB AND HARYANA HIGH COURT] after taking into consideration the provisions of Section 143-A and Section 148 of the Amendment Act, 2018, held that Trial Courts, directing the accused to deposit up to 20% of the cheque amount as interim compensation; are challenged, are allowed. Consequently, the Orders challenged in those petitions are set-aside.
The point involved in the present case(s) has already been decided and the same is squarely covered by the judgment rendered in M/s Ginni Garments - petition disposed off.
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2019 (4) TMI 2076 - CESTAT AHMEDABAD
Levy of service tax - composite contract - works contract service - erection, commissioning or installation service - manufacturer of lifts at the sites of customers - HELD THAT:- The submission on behalf of appellant that the dispute is squarely covered by the earlier decision of the Tribunal in COMMISSIONER OF CENTRAL EXCISE, INDORE VERSUS M/S KEHEMS ENGINEERING PVT LTD, M/S KEHEMS ENGINEERING PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [2015 (8) TMI 640 - CESTAT NEW DELHI] is not without merit - There are three definitions that are relevant for resolution of the dispute. The service sought to be taxed in section 65 (105) (zzd) of Finance Act, 1994 has remained unchanged since 1st July 2003 save that “erection” was incorporated on 10th September 2004. The targeted provider of the service, described as “commissioning and installation agency” in section 65(105)(zzd) was, prior to 10th September 2004, defined in section 65(29) and, thereafter” expanded by incorporation of “erection” to reflect the amendment in section 65(105)(zzd). In our opinion, it is the third, pertaining to the activity that was sought to be taxed, as amended from time to time, that requires our attention.
The legal position is, thus, unambiguously clear. The tax liability on “erection, commissioning or installation” prior to 1st June 2007 was limited to execution of work that did not involve supply of materials and that, prior to 16th June 2005, even such service simpliciter did not extend to “lifts” owing to which the demand in the impugned order is without authority of law.
Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 2075 - DELHI HIGH COURT
Seeking restraint on respondent no.2 from accepting or admitting Form DIR 12 or any other forms - Illegal termination of the petitioner (whole-time director of the respondent no.4-Company) - HELD THAT:- Counsel for respondent no.4, who appears on advance notice, admitted that the petitioner is a Director as on date and there is no process started for removing him as a whole time Director from respondent no.4 company.
Since the petition is at pre mature stage, the same is not maintainable and dismissed accordingly.
Petition dismissed.
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2019 (4) TMI 2074 - CESTAT MUMBAI
Utilization of Advance License Scheme - it is allege that duty free imported raw materials as per the Bills of Entry were transferred/sold without using the same in the manufacture of export products against fulfilment of the export obligations - contravention of the conditions laid down under Notification Nos. 43/2002-Cus., dated 19.04.2002 and 93/2004-Cus., dated 10.09.2004 - subrule (2) of Rule 19 of the Central Excise Rules, 2002 - HELD THAT:- The Notification Nos. 43/2002 dated 19.04.2002 and 93/2004 dated 10.09.2004, as amended have provided the conditions vide para (v) that “the export obligation as specified in the said licence (both in value and quantity terms) is discharged within the period specified in the said licence or within such extended period as may be granted by the licensing Authority by exporting resultant products, manufactured in India which are specified in the said licence and in respect of which facility under rule 18 or rule 19 of the Central Excise Rules, 2002 has not been availed.” - In this case, it is an admitted fact on record that in respect of the license no. 310272122 dated 01.06.2004, the appellant had already achieved the requisite export obligation as per the confirmation provided by the licensing authority in the letter dated 23.11.2005.
The appellant had also paid the central excise duty along with interest in respect of the raw material procured by it without payment of central excise duty. Hence, requirements of the above referred notifications have been duly complied with by the appellant. The factual aspects of non-achievement of the export obligation and payment of central excise duty by the appellant have not been specifically disputed by the department - the appellant cannot be saddled with the adjudged demands confirmed against it in the impugned order.
There are no merits in the impugned order - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 2073 - ITAT MUMBAI
Income accrued in India - Attribution of the income - Addition holding that the assessee has permanent establishment in India - addition on account attribution of income being recipient of such commission income - HELD THAT:- Assessee earned sales revenue from India arising from above business activity. The rights and responsibilities under the agency agreements between the Assessee and Hempel India created Agency Permanent Establishment (PE) of the assessee in India as per Article 5(4) of the India - Singapore Tax Treaty. In consideration of the services rendered by the Hempel India to the assessee, the former charges commission based on percentage of sales to the later under the arm's length principle. In view of the above, the learned Counsel for the assessee took us through the Tribunals order in assessee's own case for AY 2014-15 [2019 (2) TMI 2044 - ITAT MUMBAI] wherein Tribunal has considered this issue and held that there is no dispute about the existence of assessee's agency PE in India but held that a foreign company is liable to be taxed in India on so much of its business profit as is attributable to its PE in India. The Tribunal accepted the assessee's cost plus 8.17% markup as commission on sales and deleted the addition made by AO / DRP, who estimated the profit of assessee PE at an adhoc rate of 25% of the sales.
Respectfully following the Tribunal's decision in assessee's own case as the facts and circumstances are exactly identical in this year also, we delete the addition made by AO and affirm by DRP. This issue of assessee's appeal is allowed. Since we have already held that no further income could be attributed to its agency PE again, once transfer pricing analysis of the transaction between assessee and its agent in India has been undertaken. Appeal of assessee allowed.
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2019 (4) TMI 2072 - ITAT CHENNAI
Depreciation on the goodwill and knowhow - determination is what is the actual cost in the hands of the respondent-assessee company - HELD THAT:- The provisions of s. 32 of the Act lays down that the depreciation shall be allowed to the assessee on the actual cost of the asset. The term “actual cost” is defined under the provisions of s. 43(1) of the Act. The expression actual cost had come-up for interpretation before Hon’ble High Court of Delhi in the case of CIT V. Dalmia Dadri Cement Ltd.[1980 (2) TMI 51 - DELHI HIGH COURT]
In the present case, admittedly there was no cost involved on the acquisition of goodwill, know-how in the hands of the firm. The goodwill, know-how was merely created by book entry by debiting the goodwill, know-how and crediting partners’ accounts. This partners’ account was not treated as a part of capital accounts of the partners’ of the firm. Therefore, the question that arises is whether or not the act of creating goodwill, know-how is a colourable device adopted with the intention of inflating the cost in order to claim higher depreciation. It is important to note here that the seller firm as well as the successor company is owned and controlled by very same persons. No doubt, the respondent-assessee filed a report of valuation on goodwill, knowhow done by M/s. G.Sekar Associates, Charted Accountant Chennai, the said report does not contain report of valuation on goodwill, know-how of M/s. RMKV Silks. In respect of other concerns, it is not clear on what basis he assumed normal profits and super profits and the multiplying factors applied to value the goodwill, know-how he merely discussed the theory and principles governing the valuation of goodwill, know-how. Thus, the valuation report is bald cannot be accepted as the basis of valuation of goodwill, know-how. No credence can be given to the valuer’s report.
Whether or not the act of creation of goodwill, know-how by debiting to goodwill and knowhow and crediting to the partners’ account is valid under law? - It is a fundamental principle under the Partnership Act that during the subsistence of the partnership the value of interest of each partner qua the assets of the firm cannot be isolated or carved out from the value of the partners’ interest in the totality of the partnership asset. It is only when a partner retires or the partnership is dissolved what partner receives is his share in the partnership firm.
The action of the Assessing Officer in determining the actual cost at Nil in the hands of the successor company i.e., respondent-assessee cannot be found fault with. Merely because, the firm had recorded the value of goodwill, knowhow at certain price the same would not conclusively establish the correctness of the claim, if the Assessing Officer is of the opinion that the transaction is by way of subterfuge or device in order to avoid tax which the assessee is otherwise liable to pay or that the transaction is illusory or colourable or that the assessee has acted fraudulently. The material pointed to be noted is that the partners of the erstwhile firm and the Members and Directors of the assessee-company are the same. They adopted the character of the corporate entity for the purpose of availing inflated depreciation and expenditure and benefiting the Directors in the form of interest income. Therefore, it is a fit case to disregard the corporate entity and treat as one entity by lifting the corporate veil.
In the light of above, the Assessing Officer had rightly exercised his duty by determining the actual cost of the goodwill, know-how at nil.
CIT(A) had not examined the issue in proper perspective, failed to examine the relevant provisions of the Act finally passed superficial order allowing claim of the respondent-assessee. Therefore, we reverse the order of ld. CIT(A) and restore the order of assessment on this issue. Appeal of revenue allowed.
Interest expenditure claimed on the partner’s credit balances standing in the books of accounts of the company as liabilities - liabilities in the form of credit balance of partners of the firm were taken over by the respondent-assessee company in terms of the business takeover agreement, respondent-assessee is liable to pay interest on such credit balances and such interest was claimed as deduction in the hands of the respondent-assessee - HELD THAT:- The allowance of interest as a deduction is governed by provisions of s. 36(1)(iii) of the Act, an assessee is entitled to deduction only that part of the amount paid by him for the money borrowed which can be genuinely regarded as interest. The interest payable on a loan of money not any other asset acquired under a contract.
The another important point to be noted is that the assessee firm had not credited the goodwill, know-how to the capital accounts of the partner - it is a device adopted by the assessee and as well as respondent-assessee to claim deduction in the hands of the company and benefit the partners of the erstwhile firm and who are also the Directors of the assessee firm. It is again another dubious device adopted with an intention of avoiding the payment of taxes. In fact, the segregation of the partners’ accounts into capital and current account is only for operation convenience and it constitutes one account only namely capital accounts of the partners. By segregating the capital account, into capital and current account, the seller firm conveniently avoided payment of capital gains on slump sale transaction by availing the exemption conferred under the provisions of s. 47(xiii) of the Act.
Thus, viewed from any angle the interest paid on the credit balance of the partners of the seller firm is not allowable as a business deduction. The ld. CIT(A) had not examined the issue in proper perspective. Hence, we reverse the findings of ld. CIT(A) and restore the order of assessment.
Addition on account of under valuation of closing stock - HELD THAT:- The principle is well settled to the extent that an assessee may value the stock at the cost or market rate but is not entitled to value below both. The fact that the wrong valuation of stock was accepted by the Department in the earlier years and Assessing Officer had failed to notice the defect in the valuation cannot be a bar to adopt the correct method of valuation in the current year. As regards to the issue of following the decision of Co-ordinate Benches on the similar issue, we feel that it has no relevance since, our decision is premised on the well accepted principles of law and facts peculiar to the case followed the ration on decision of Hon’ble High Court of Madras and Allahabad High Court. Thus, we do not find any merit in the ground of appeal filed by the assessee. Accordingly, we dismiss the ground of appeal No.2 filed by the assessee.
Allowability of provision made for liability towards unredeemed bonus points - HELD THAT:- It is only on the subsequent purchases, there is an obligation on the part of the assessee-company to redeem the points which results in outflow of resources, it is only at this point of time the liability can be recognized. Indisputedly, in the present case, the liability is recognized at the time of earning the bonus points. The number of points earned would only enable the assessee to estimate the liability of the obligation. Further, the Assessing Officer had made a note of material fact that the assessee-company has an absolute discretion to withdraw the scheme without assigning any reasons. This goes to show that there is no absolute obligation on the part of the assessee-company to redeem the bonus points earned. These facts would go to show that the conditions required for recognizing the liability for the purpose of provision does not stand satisfied. The principles governing the allowability of provision of warranty cannot be applied to the provision of the kind on hand for the reason that the provisions for warranty is based on the principle of matching, which has no application to the provision on hand.
CIT(A) without properly appreciating the scheme of the bonus points had wrongly applied the ratio of the decision of the Hon’ble Supreme Court in the case of Rotorck Controls India P. Ltd. [2009 (5) TMI 16 - SUPREME COURT]. Therefore, we reverse the findings of the ld. CIT(A) and confirm the action of the Assessing Officer in making the addition of provision for liability for bonus card points. Hence, this ground of appeal filed by the Revenue is allowed.
Nature of expenditure - whether the expenditure incurred by the respondent-assessee on interior decoration, false ceiling and wooden structures carried out on the leased premises constitutes whether revenue or capital expenditure? - HELD THAT:- On bare reading of the above Explanation, it is clear and categoric that the expenditure contemplated in the said Explanation is capital in nature as the assessee enjoying the lease hold rights on the building is deemed to be the owner of the building. Once the assessee is deemed to be the owner of the building, any improvements or decoration carried out on the building partakes the character of the building, and by refurbishing, decorating or by doing interior work in the building an enduring benefit was derived by the assessee for the period of occupation and therefore, the expenditure incurred cannot be treated as revenue expenditure.
The language of the Explanation 1 is very plain and clear and there was no scope to give a different meaning. It is the bounden duty of the Courts to give literal meaning to the expressions and phraseology used by the legislature in the absence of any ambiguity in the provisions. The decision relied upon by the ld. Counsel for the assessee i.e., CIT v. Madras Auto Service (P.) Ltd. [1998 (8) TMI 1 - SUPREME COURT] etc. are rendered prior to introduction of Explanation 1 to s. 32(1) of the Act and therefore, the principles laid down in the said decisions have no application after insertion of the Explanation 1 to s. 32(1) of the Act. The ld. CIT(A) without properly appreciating the legal provisions governing the issues had granted relief. Therefore, we reverse the findings of ld. CIT(A) and restore the assessment order on this issue. Hence, this ground of appeal filed by the Revenue is allowed.
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2019 (4) TMI 2071 - ITAT PUNE
TP adjustment on account of CBUs and on account of royalty - selection of MAM - comparable selection - assessee had selected TNMM method as most appropriate method, wherein the margins of assessee were 8.58% - HELD THAT:- The assessee was engaged in carrying out all the activities i.e. import of raw materials, import of CBUs and also import of spare parts from its associated enterprises and other transactions. All these transactions are to be benchmarked under the umbrella of manufacturing activity on an aggregate basis and after applying TNMM method, margins shown by assessee needs to be compared with the mean margins of finally selected concerns. In this regard, Authorized Representative for the assessee stressed that in the instant year, the factual aspects to this extent were different as the TPO had taken note of selection of comparables by assessee and rejected 6 of them. The said deliberations are in part (vii) at pages 241 to 243 of Paper Book.
The mean margins of balance comparables worked out to 6.28%. However, in all fairness, since the TPO in the final analysis applied RPM method and not TNMM method, we direct the TPO / Assessing Officer to verify the stand of assessee in this regard and where the said 6 concerns, which were finally selected by him are comparable, may be adopted for benchmarking the transactions under TNMM method. The margins shown by assessee on an aggregate basis were 8.58% and if on verification, the mean margins of comparables are at 6.28%, then no addition is to be made in the hands of assessee on this count. Hence, grounds of appeal No.2, 4 and 5 as pressed by assessee are allowed. The grounds of appeal No.3, 8 and additional grounds of appeal No.13 and 14 would become academic and hence, the same are dismissed. The issue in ground of appeal No.7 i.e. benefit of +/-5% range is consequential and hence, the same is also dismissed. The ground of appeal No.1 is general and does not need any adjudication.
Adjustment made on account of royalty payment, wherein the TPO had applied CUP method by comparing with unit rate of Maruti Udyog Ltd. - The Tribunal in assessment year 2005-06 held that payment of royalty is to be benchmarked along with other transactions by applying TNMM method under the umbrella of manufacturing activity and the Assessing Officer was directed to include the said payment while applying transfer pricing provisions. The issue raised in the present appeal vide ground of appeal No.6 is identical and following the same parity of reasoning, we accordingly direct the Assessing Officer / TPO to include payment of royalty and aggregate the same along with other international transactions undertaken by assessee.
Nature of expenditure - Disallowance of balance royalty as capital expenditure - Tribunal in 2005-06 noted that the issue stands covered by earlier orders of Tribunal in assessment years 2002-03 to 2004-05 and following the same parity of reasoning, it was held that the said balance royalty payment of ₹ 3.30 crores is to be allowed as revenue expenditure in the hands of assessee. Following the same parity of reasoning as in paras 61 and 62 of order of Tribunal relating to assessment year 2005-06, we allow this ground of appeal in favour of assessee.
Project Assistance Technical Fees were disallowed as capital expenditure - Tribunal in assessment years 2002-03 to 2004-05 and also in the appeal of Revenue in assessment year 2005-06. The Tribunal following the same parity of reasoning as in earlier years, has upheld the order of CIT(A) in assessment year 2005-06 in directing the Assessing Officer to allow Project Assistance Technical Fees as deductible expenditure under section 37(1) of the Act. The relevant findings are in paras 63 and 64 and following the same parity of reasoning, we direct the Assessing Officer to allow the claim of assessee as expenditure.
Payment of Star Diagnostic - payment towards its usage for a year which was disallowed being capital expenditure - The said Star Diagnostic was the property of Daimler AG and payment of usage charges was to be made only when the same was used by assessee and on its usage, no new capital asset comes into existence. In the entirety of the said facts and circumstances, the said expenditure merits to be allowed as revenue expenditure in the hands of assessee. We further find that similar expenditure has been claimed by assessee starting from assessment year 1999-2000 onwards. The expenditure has been allowed in the hands of assessee either by CIT(A) or DRP in earlier years and from assessment year 2008-09, no disallowance on this account has been made by Assessing Officer in the hands of assessee. In view thereof, following the consistency approach, we find no merit in the disallowance made in the hands of assessee.
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2019 (4) TMI 2070 - BOMBAY HIGH COURT
Income accrued in India - distribution revenue (subscription charges) - income taxable u/s 44DA - why the said amount should not be treated as royalty income u/s 44DA as assessee is having dependent agent PE and itself offered income in its hand on net basis? - Tribunal held that such amount cannot be added separately because it had been already included in the pool and in the combined rate of 27.18% (PSM), therefore retaining this amount would amount to double taxation - HELD THAT:- We gather that the Tribunal is correct is making the above observations. We notice that there is no dispute about the quantification of 50% of total distribution. The assessee having disputed the income arising out of such revenue collection and Tribunal having accepted the same, the department is not in Appeal against such decision of the Tribunal. No question of law therefore arises.
Pay interest under section 234B on non deduction of tax at source - HELD THAT:- The assessee being the payee, relies on the decision of this Court in case of Director of Income Tax (international Taxation) Vs. NGC Network Asia LLC,[2009 (1) TMI 174 - BOMBAY HIGH COURT]. Apart from the said judgment, we note that if the revenue’s first question is not entertained, the applicability of question of interest under section 234B of the Act would have of must similar grounds. In any case, when the decision of Bombay High Court covers the field, we do not see any reason to entertain the Appeal.
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2019 (4) TMI 2069 - ORISSA HIGH COURT
Validity of proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court - HELD THAT:- The Central Government has issued a notification dated 07.12.2016 in respect of transfer of proceedings/cases from the High Court to the NCLT vide notification dated 07.12.2016, which has been issued in exercise of power conferred under sub-sections (1) and (2) of Section 434 of the Companies Act, 2013 (18 of 2013) read with subsection (1) of section 239 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) by framing a rule by the Central Government called “ The Companies (Transfer and Pending Proceedings) Rules, 2016. Such transfer was challenged before this Court by filing W.P.(C) No.712 of 2017 and this Court stayed such transfer of cases to the NCLT, Kolkata. But, subsequently, due to establishment of National Company Law Tribunal, Odisha, Cuttack Bench, Cuttack, this Court disposed of the writ petition on 20.03.2019 stating that the NCLT, Odisha, Cuttack Bench, Cuttack has been established and, therefore, all company matters be transfer to the NCLT, Odisha, Cuttack Bench, Cuttack.
Accordingly, this case stands transferred to the NCLT, Odisha, Cuttack Bench, Cuttack for just and proper adjudication.
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2019 (4) TMI 2068 - BOMBAY HIGH COURT
Reservation as regards entitlement of the original petitioner to claim the retiral benefits and the monetary benefits - HELD THAT:- This Court, while delivering the order, has directed the respondent No.1 to disburse the retiral and monetary benefits to the original petitioner, as permissible in law. The order passed by us on 23rd July 2017 is a self explanatory order and no further clarification is required to be issued.
The review petition seeking modification of the order dated 23rd July 2018 is devoid of substance - review petition dismissed.
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2019 (4) TMI 2067 - JHARKHAND HIGH COURT
Principles of natural justice - cross-examination of witnesses have never been provided despite several requests by this petitioner - Department is relying upon the statements of such several witnesses - HELD THAT:- It appears from the show-cause notice which is at Annexure-1 that the respondent-department is relying upon the statements of six witnesses whose names have been referred in para 17 of the memo of this writ petition for which cross-examination was sought for by this petitioner. Despite several requests for cross-examination of the witnesses whose names have been referred in para 17 of the memo of the writ petition, the same was never afforded by the respondents.
Reliance placed in the case of AYAAUBKHAN NOORKHAN PATHAN VERSUS THE STATE OF MAHARASHTRA & OTHERS [2013 (8) TMI 563 - SUPREME COURT] where it was held that The aforesaid discussion makes it evident that, not only should the opportunity of cross-examination be made available, but it should be one of effective cross-examination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice.
Thus, it has been held by Hon’ble the Supreme Court that whenever the Union of India is relying upon the statements of the witnesses in which show-cause notice issued under the Central Excise Act and when the cross-examination is demanded by the assesse, the same ought to be given.
In the present case, despite several requests by the petitioner vide his letters dated 10th December, 2010 (Annexure-2), 21st December, 2012 (Annexure-5), 30th September, 2013(Annexure-10 and 10/1), 25th February, 2015 (Annexure-13 and 13/1), 23rd March, 2015 (Annexure-16) and 26th May, 2016 (Annexure-25), the respondents have not granted cross-examination of the witnesses whose names have been referred in paragraph 17 of the memo of the writ petition. Thus, there is violation of principle of natural justice by the Department. Thus, cross-examination of the witnesses whose names have been referred in paragraph 17 ought to have been given by the respondents - the respondents are directed to permit the petitioner to cross-examine the witnesses whose names are referred in paragraph 17 and whose names have been referred in the aforesaid letters which are written by this petitioner.
Petition allowed.
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2019 (4) TMI 2066 - DELHI HIGH COURT
Permission for withdrawal of present petition - HELD THAT:- In view of the fact that the Supreme Court is seized of the issue raised by the petitioner in the present petition, judicial propriety demands that we refrain from hearing arguments on the said issue and await a decision by the Supreme Court.
Having regard to the fact that the Supreme Court has yet to decide the pending SLP (Crl.) 9360/2018, he has instructions to withdraw the present petition while reserving the right of his client to approach the competent court vested with jurisdiction, for the remaining relief, as may be permissible in law.
Leave, as prayed for, is granted. The petition is disposed of.
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2019 (4) TMI 2065 - SUPREME COURT
Refund of SAD - time limitation - It was held by Delhi High Court that where the payment of Special Additional Due (SAD) and refund was involved, statutory interdicts could not be varied or altered by mere executive instructions and circulars - HELD THAT:- List these matters along with Civil Appeal arising out of Special Leave Petition (C) No.11646 of 2017.
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2019 (4) TMI 2064 - ITAT MUMBAI
Disallowance of amount of expenditure held to be relatable to dividend income, while determining the book profits chargeable to tax u/s 115JB - HELD THAT:- A perusal of the audited accounts of the assessee-company clearly indicates that the company has its own funds aggregating to Rs.2596.58 crores, more than the borrowed capital of Rs.1,060.71 crore, whereas the investment portfolio is just Rs.555.68 crores. We further find that on identical facts in AY 1992-93, the Tribunal has decided the issue in favour of the assessee and held that there is no scope for allocation of interest expenses towards investment income. Also in AY 1993-94 and AY 1994-95, in assessee’s own case on similar facts, the Tribunal held that no interest is to be allocated towards investment income. The department’s reference to the High Court on the issue and SLP to Supreme Court has been rejected.
Facts being identical, we follow the above orders of the Co-ordinate Bench in assessee’s own case and allow the 1st ground of appeal.
Disallowance in respect of Contribution to Tatachem DAV public School - HELD THAT:- Similar issue has been decided in favour of the assessee-company in AYs 1992-93 to 2001-02, wherein the orders of AY 1992-93 have been confirmed in appeal by the High Court. It is stated that the Department’s SLP to Supreme Court does not contain this ground. Further, it is stated that payment to Tatachem DAV School has been specifically considered in AY 1996-97, 1997-98 and 2000-01 as reflected in the CIT(A)’s order for the said years.
Disallowance of in respect of Prior Period Expenses - HELD THAT:- A perusal of the accounts clearly indicates that the delay in booking of the expenses was due to the late receipt of bills or events occurring during the year, for which the liability had crystallized after the balance sheet date. Further, we find that each of the above expenses were incurred to earn income, which was accounted and offered for tax during the current year. Similar issue arose before the Tribunal in assessee’s own case for AY 1986-87 [2014 (5) TMI 956 - ITAT MUMBAI], AY 1993-94, AY 1996-97 and AY 1997-98 - We find that the above issue has been decided in favour of the assessee by the Tribunal in the aforesaid orders. Therefore, facts being identical, we follow the said orders of the Co-ordinate Bench in assessee’s own case and allow the 3rd ground of appeal.
Disallowance of various expenses - HELD THAT:- It is found that during the year under consideration, M/s L&T was awarded a contract for expansion of the assessee’s existing Cement facilities. The proposal of expansion was dropped and the contract was cancelled. In terms of agreement, L&T asked for compensation for cancellation of contract and a sum of Rs.1,62,25,000/- was paid to them. The payment to L&T was made for expansion in existing line of business. However, due to change in market conditions, the contract was cancelled and the assessee-company had to pay compensation towards cancellation. In view of the above factual scenario, the cancellation of contract was for business reasons. Therefore, we hold that the same is allowable as revenue expenses u/s 37(1) of the Act.
In respect of the expenses of Rs.5,08,200/-, it is found that a sum of Rs.5,08,200/- was paid by the assessee-company to M/s N.M. Raiji & Co. for carrying out due diligence i.e. of financial records of Paradeep Phosphates and National Fertilizers Ltd. (both Government of India Companies). It is no way connected with the acquisition of these companies. Hence, we hold the above as allowable as business expense u/s 37(1) of the Act.
As regards the expenses of Rs.31,41,657/-, we find that during the year under consideration, the above amount was paid to ING Bank for working out final viability and financial tie-up for Paradeep Phosphates. The project was finally not awarded to the assessee-company, as its offer was below the bid price. Also it is found that the payment was only towards financial arrangement. Thus it is deductible u/s 36(1)(iii) of the Act. Similar is the payment of Rs.1,15,000/- to SBI Capital Market and Rs.15,00,000/- to Bank of America towards fees for NFL Project and thus allowable as revenue expenses.
As regards the expense of Rs.66,000/-, it is seen that the same was paid towards interior designing of MD’s office at Lovedale. No new capital was created. Hence, we hold the same as allowable expense u/s 37(1) of the Act.
As regards the expense of Rs.66,69,101/-, it was spent towards basic engineering fees for expansion in Cement Division and making certain technological changes. The project was ultimately dropped since it required heavy capital investment. Also it is seen that the design and drawing were received by the assessee-company in a book form. We agree with the contentions of the Ld. counsel that design and drawing represents some technical information which keeps on changing. Hence, we hold the above expenses as allowable u/s 37(1) of the Act.
Finally, regarding expenses of Rs.41,50,756/- it is found that as per the directions of the Pollution Control Board, the assessee-company was required to grow trees all around its Cement Plant. The expenses were incurred towards growing of plantations, making drainage system for watering those trees. Definitely by growing the trees around the Cement Plant, the assessee-company did not acquire any capital asset. As this is only for Pollution Control, we hold it as allowable u/s 37(1).
Disallowance u/s 14A - HELD THAT:- As noted the assessee’s own funds during the impugned assessment year is much more than the investment. Thus the disallowance of interest expenses u/s 14A does not arise. Before us, the Ld. counsel submits that the assessee-company accepts the disallowance of Rs.5,98,950/- u/s 14A as determined by the Ld. CIT(A) as reasonable and does not press the above ground of appeal.
Interest income as disallowable while determining the deduction u/s 80HHC - HELD THAT:- We set aside the order of the Ld. CIT(A) on the above issue and restore the matter to the file of the AO to re-compute the deduction u/s 80HHC by following the above decision in ACG Associated Capsules (2012 (2) TMI 101 - SUPREME COURT] -Thus this ground appeal is allowed for statistical purposes.
Disallowance in respect of Machinery Hire Charges - Assessee argued the same were allowable on the matching concept for use asset used for the purpose of business - HELD THAT:- In the instant case, in the financial year 1994-95, the assessee entered into sale and lease back agreements with L&T, Bajaj Auto and HDFC Ltd. The lease agreements provided for certain lease deposit and annual rent. During the year under reference, an amount of Rs.2,58,92,853/- was amortized and provided towards lease deposit. We find that on the basis of above facts, the present case is distinguishable from the above case laws relied on by the Ld. counsel.
We are of the considered view that the amount paid as consideration for obtaining the lease is for the acquisition of a capital asset which enables the lessee to carry on its business. It is a capital expenditure. It cannot be split up into the number of years of the duration of the lease in order to claim a proportionate fraction as revenue expenditure each year. The acquisition is of exclusive right or privilege over the lease, it a strong point that the consideration paid is on capital account. Receipts and payments in connection with acquiring or disposing of lease are usually on capital account.
Treatment of sale of assets as a slump Sale and subjecting the same to Tax as a Short Term Capital Gain - HELD THAT:- Having perused the documents, we find that in the instant case the sale of individual assets for a lump sum consideration cannot be treated as a slump sale. The fact remains that such itemized sale is essentially different from sale of an entire going concern (including all assets and liabilities). As the basic conditions for transfer of undertaking for treating the sale as a slump sale is not satisfied, we hold that the provisions of section 2(42C) are not applicable in the present case.
Claim of the assessee of loss on sale of right in lease hold land of detergent division as capital loss, we find that the assessee has acquired the right to use the lease hold land in the financial year 1991-92. In the instant case the conditions stipulated in section 45 of the Act so as to bring a transaction chargeable under the head ‘capital gains’ are fulfilled and therefore, the gains/loss arising on transfer of such right would be liable to capital gains. Accordingly, the assessee has rightly claimed the loss on sale of right in the lease hold land as a capital loss.
Disallowance made u/s 40A(9) being payments made to various institutions - these expenses were not wholly and exclusively incurred for the business purpose and does not directly relate to the business activity of the assessee - CIT-A deleted the addition - HELD THAT:- We find that the above issues have been decided by the ITAT in favour of the assessee in assessee’s own case for earlier assessment year.
Disallowance of preliminary expenses and share issue expenses - addition on the ground that these are capital in nature - In respect of preliminary expenses claimed u/s 35D, the AO held that the conditions of section 35D are not satisfied - HELD THAT:- It is found that these expenses pertained to Babrala Fertilizer Division, which commenced production effective from 20.12.1994 and for the first time claim was made in the AY 1995-96. The total expenses incurred on initial share issue and preliminary expenses in year 1990-91 were of Rs.67,45,825/- and were treated as miscellaneous expenses and shown under separate head of balance sheet. When the project commenced production on December 1994, deduction @ 1/10th was claimed. The cost of Fertilizer project was more than Rs.1,400/- crore and this amount of Rs.65,00,000/- is less than 0.10%. This claim was allowed in the very first year i.e. AY 1995-96.
Additions for subscription of brand equity treating it as business expenditure - HELD THAT:- CIT(A) following the order of the Tribunal in assessee’s own subsidiary i.e. Rallies India Ltd. correctly allowed the appeal filed by the assessee.
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2019 (4) TMI 2063 - MADRAS HIGH COURT
TDS on the compensation payable to the petitioner - deposit the entire amount as originally ordered by the authority under the Workmens Compensation Act - First respondent would submit that in view of the requirement under the provisions of Income tax, deduction has been made towards TDS and it is not for the second respondent to deduct or insist the TDS on the compensation payable to the petitioner - HELD THAT:- If there is a conflict between a Social Welfare Legislation and a Taxation Legislation, Social Welfare Legislation should prevail since it subserves larger public interest and the compensation like the present one which is being paid to the petitioner, there should not be any income tax deduction thereon at all.
This Court is in complete agreement with the ratio laid down by the learned Single Judge of this Court in the above referred decision, and this Court is of the view that in the matters of compensation of this nature, the provisions of income tax cannot be invoked for the purpose of deducting tax at source. Therefore, the deduction by the second respondent appears to be unjust, arbitrary and irrational and also contrary to the beneficial provisions of the Workmen Compensation Act.
This Court is of the view that the first respondent is directed to recover a sum of Rs.97,580/- and deposit the same within a period of two weeks from the date of receipt of a copy of this order. It is once again made clear that the second respondent is not entitled to deduct any amount towards TDS on the amount that is payable to the petitioner under the provisions of the Workmen Compensation Act. On recovery of the TDS amount, which is deducted, the entire amount is liable to be paid to the petitioner.
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2019 (4) TMI 2062 - MAHARASHTRA REAL ESTATE APPELLATE TRIBUNAL
Maintainability of application - Seeking refund of amount along with interest including compensation - allottees seeking withdrawal firm the project - Allottees could not get the possession of their respective flats even after period of 6 to 7 years and Allottees had already paid about 90% of the price of their respective flat price to the promoter - applicability of Section 13 of RER Act, 2016 - Section 18 of RER Act - HELD THAT:- Allottees spent Rs. 90,00,000/- for purchase of flat and waited for 7 to 8 years and are not hopeful of getting the possession of the Hat in near future and allottees were shocked to know in due course that the flats situated in Evershine Cosmic project which they decided to purchase were not having legal approval and thereafter, three flats situated in Gaurav Wood project of sister concern of promoter which were offered to be given to the allottees in lieu of two flats were also not having legal sanction - Since, the projects are governed by RER Act and rights and obligations of promoter and allottees are also governed by RER Act, and allotment letters issued by promoter in favour of allottees are still in force and promoter received 90% of the price of each flat i.e. Rs. 90,00,000/- for each flat from each allottees about 8 to 9 years back, allottees are justified in taking the shelter of Section 18 of RER Act, 3016 by selecting the option of withdrawing from the project and claiming the refund of entire amount paid to the promoter along with interest including compensation.
The complaints filed by Allottees are maintainable under Section 13 of RER Act. 2016 and consequently impugned order stands set aside - the complaints are maintainable and Section 18 of RER Act, 2016 is also attracted to the present dispute and allottees are entitled to get refund of the amount along with interest including compensation from the promoter in view of Section 18 of RER Act, 2016, Rate of interest shall be as per Rule 18 of Maharashtra Real Estate (Regulation and Development) Registration of Real Estate Project, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017.
Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 2061 - SC ORDER
Approval of the ‘Resolution Plan’ - it was held by NCLAT that If no amount is given to the promoters/ shareholders and the other equity shareholders who are not the promoters have been separately treated by providing certain amount in their favour, the Appellant cannot claim to have been discriminated.
HELD THAT:- There are no reason to interfere with the impugned judgment passed by the National Company Law Appellate Tribunal, New Delhi - appeal dismissed.
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2019 (4) TMI 2060 - ITAT MUMBAI
Addition u/s. 68 - unsecured loans and interest thereon relating to said unsecured loans - Burden to prove the identity, creditworthiness of the creditors and the genuineness of the transactions - addition on the ground that the creditors have not responded, only meager incomes were shown by the creditors, truncated bank statements were filed and assessee has not proved that the lender is proprietor of the concern from which loan has been taken by the assessee - HELD THAT:- As in the case of M/s. Shree Laxmi Estate Pvt ltd.[2017 (12) TMI 1658 - ITAT MUMBAI] and M/s. Shree Laxmi Developers Laxmi Developers [2017 (12) TMI 1658 - ITAT MUMBAI] held that once the assessee has discharged his initial burden the burden shifts to the Assessing Officer to prove otherwise. The Coordinate Bench considered the submissions as well as the material placed before the lower authorities and concluded that when once the assessee furnished all the details in respect of the loan transactions assessee has discharged its initial burden and the burden shifts to the assessee. It was held that no addition can be made only on the basis of information received from the investigation wing without there being any evidences to disprove the loan transactions from the creditors
We find that, the assessee has discharged its initial onus of proving the identity, genuineness and creditworthiness of the creditors by providing all necessary details as stated in earlier paragraphs and thus the assessee has discharged identity, genuineness and creditworthiness of the creditors. Assessing Officer has not controverted the evidences furnished by the assessee. No further enquiries have been made by the Assessing Officer to disprove the evidences furnished by the assessee.
As in view of the evidences furnished by the assessee, we are of the view that the assessee has discharged his onus of proving the identity, genuineness and creditworthiness of the creditors and fulfilled the requirement of ingredients of section 68 of the Act. Thus, the addition made u/s. 68 of the Act without any enquiry is liable to be deleted. Thus, we direct the Assessing Officer to delete the addition made u/s. 68 - Decided against revenue.
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2019 (4) TMI 2059 - SUPREME COURT
Validity of fresh proceedings u/s 7 of IBC - NCLT proceedings have been stayed in a petition filed under Sections 8 & 9 by an operational creditor - HELD THAT:- It is clear that the applicant is a financial creditor and has been thwarted, at the out set, by the order dated 12.12.2018 stating that as the NCLT proceedings have been stayed in a petition filed under Sections 8 & 9 by an operational creditor, a fresh proceeding under Section 7 of the Code cannot continue.
Application disposed off.
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2019 (4) TMI 2058 - SC ORDER
Determination of lease - Sub-letting of premises - perpetual lease - no press activity carried out in demised premises - transfer within the prohibited category under clause XIII (3) of the lease agreement. - violation of dominant purpose for which the lease was granted - HELD THAT:- Issue notice, returnable within four weeks.
There shall be stay of the further proceedings pursuant to the High Court’s order.
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