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Showing 81 to 100 of 1481 Records
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2022 (6) TMI 1401 - ITAT HYDERABAD
Allocation of the common expenses - CIT(A) accepting the cost of goods sold as the basis for allocation of the common expenses - assessee claiming deduction under section 10 (1) as engaged in the business of seed production, research, marketing of field and vegetable crops and wind power generation - HELD THAT:- It is pertinent to note that as rightly observed by the Ld. CIT(A) every methodology of estimation suffers from limitation and such limitations causing variations how to be smooth and on consistent application of the same principle.
CIT(A) was of the opinion that inasmuch as for the earlier assessment years the assessee adopted the basis of cost of goods sold as a reasonable method of apportionment of the agricultural and non-agricultural expenses out of the common expenses.
As both the cost of goods sold and also the turnover of different activities, to be the basis for allocation of the common expenses to have their own way and cess and variations, what is required is the following of the consistent method. Inasmuch as there is no dispute that the assessee has been consistently following the method by forgetting the common expenses on the basis of cost of goods sold, the rule of consistency demands that the same shall not be disturbed for a particular assessment year because it goes against the interest of Revenue. We, therefore, accept the reasoning adopted by the Ld. CIT(A) and hold that there is nothing wrong in the Ld. CIT(A) accepting the cost of goods sold as the basis for allocation of the common expenses.
Allowing the “provision for sales returns" - It is a fact that the assessee supplies seeds to its distributors located in the states of Kerala, Andhra Pradesh and Karnataka and after the season is complete the sales distributors identify the stock of seeds of various varieties which are not sold by the end of Ruby season of plantation.
No perversity in the findings of the Ld. CIT(A). In view of the seasonal nature of the business and also the short shelf life of the seeds, it is imperative for the assessee to take into account the quantity of unsold seats at the end of the year and the need to revalidate their further utility and to take them into stock in the next season. In the circumstances it cannot be said that the provision for sales returns is unascertained or unreasonable. With this view of the matter, we allow the contentions of the assessee and uphold the findings of the Ld. CIT(A).
Decided against revenue.
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2022 (6) TMI 1400 - SUPREME COURT
Fixation of the seniority of the Munsiffs (Batch of 2003) for promotion to the post of Sub-Judge in the State of Jammu & Kashmir (Now Union Territory) - whether the interse seniority of the Munsiffs appointed by way of direct recruitment on the recommendations of the State Public Service Commission should be fixed/ determined on the basis of the roster points or in terms of the order of their interse merit at the time of their selection?
HELD THAT:- The inter se merit list of the selected candidates can be prepared as a combined effect of several factors like written test, objective test, vivavoce and/or other parameters as may have been prescribed keeping in view the special requirement of service. Similarly, though not concerned in the present case, even in a case of promotion based on merit-cum-seniority, seniority by itself is not the only qualification for promotion to a selection post. If the criteria for promotion is merit-cum-seniority, the comparative merit has to be evaluated in which seniority will be one of the factors only. However, in the case of merit-cum-seniority even a junior most person may steal a march over his seniors and jump the queue for accelerated promotion.
The question as to whether the determination of inter se seniority would depend upon the filling up of the vacancies so far as the reserved categories are concerned, having regard to the roster points, in our opinion, is no longer res integra - In Ajit Singh v. State of Punjab, [1999 (9) TMI 989 - SUPREME COURT], a five Judge Bench of this Court has laid down the law that It deserves to be noticed that the roster points fixed at Level 1 are not intended to determine any seniority at Level 1 between general candidates and the reserved candidates.
Thus, the principle of law discernible from all the aforesaid decisions of this Court is that the roster system is only for the purpose of ensuring that the quantum of reservation is reflected in the recruitment process. It has nothing to do with the interse seniority among those recruited. To put it in other words, the roster points do not determine the seniority of the appointees who gain simultaneous appointments; that is to say, those who are appointed collectively on the same date or are deemed to be appointed on the same date, irrespective when they joined their posts. The position of law as discussed about could be said to be prevailing even while the High Court of Jammu & Kashmir decided by a Full Court Resolution to determine the seniority on the basis of roster points.
There is no jurisdictional infirmity or any other infirmity in the impugned judgment passed by the High Court warranting interference - Petition dismissed.
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2022 (6) TMI 1399 - ITAT CHANDIGARH
Deduction u/s 80IC - substantial expansion - period of deduction limited to 10 years - definition of “initial assessment year” as contained in section 80IC(8)(v) - 10th year of claim of tax holiday - HELD THAT:- Following the decision in case of Pr. CIT Vs. M/s Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] where the undisputed facts are that the assessee has started its business activity on 11.7.2005 falling between the period 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh and has carried out substantial expansion in the financial year 2011-12 and the year under consideration being the 10th year of claim of tax holiday, it shall be eligible for claim of deduction @ 100% and not 25% of profits and gains from its business as held by the lower authorities.
Therefore, respectfully following the decision of PCIT vs Aarham Softronics (supra) wherein as held that its earlier decision in case of Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT] doesn’t lay down correct law, the findings of the CIT(A) are set-aside and the matter is decided in favour of the assessee and against the Revenue and the grounds of appeal of the assessee are thus allowed.
Disallowance of claim of deduction u/s 80-IC on account of exchange rate fluctuation - as submitted by A/R that the difference in the foreign exchange rate is a part and parcel of income derived from eligible business and the same should be allowed - HELD THAT:- There is always a difference between the exchange rate at the time of booking of the invoices and the subsequent realization thereof at the time of receipt of payment and thus the exchange rate fluctuation is clearly flowing from the eligible business and, therefore eligible for deduction u/s 80-IC - As decided in case of DCIT vs. Ansysco [2016 (12) TMI 1764 - ITAT CHANDIGARH] wherein it was held that where the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuations is to be treated as trading receipts/receipts from manufacturing activity and which is eligible for claiming deduction u/s 80-IC - Assessee is eligible for claim of deduction u/s 80-IC in respect of foreign exchange fluctuations. Basis the invoices placed on record and following the Coordinate Bench decisions referred supra, the claim of the assessee is allowed.
Disallowance of expenditure related to gifts, charity and donations - given the fact that the assessee was eligible for claim of deduction u/s 80-IC to the extent of 25%, the amount of disallowance was restricted to 75% - HELD THAT:- Where the claim of the assessee has been allowed @ 100% instead of 25% u/s 80IC, even where the whole of the expenses are disallowed on merits, the profits so enhanced and adjusted taking into consideration the disallowance will be eligible for 100% tax holiday and thus, the assessee shall be eligible for relief. In the result, the ground of appeal is allowed.
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2022 (6) TMI 1398 - ITAT DELHI
Disallowance u/s 14A r.w.r. 8D - Sufficiency of own funds - HELD THAT:- On perusal of the balance sheet of the assessee as on 31.03.2016 we observed that the assessee has share capital and reserves and surplus as on 1.04.2015 at 145173.31 lakhs and whereas the investments during the year under consideration stood at 1957.39 lakhs.
In the case of South Indian Bank Ltd. Vs. CIT [2021 (9) TMI 566 - SUPREME COURT] it has been held that if investments in securities is made out of common funds and the assessee has availed non-interest bearing funds larger than the investments made in tax-free securities then in such cases disallowance u/s 14A cannot be made. On observing the balance sheet, we find that the assessee has sufficient own funds much more than the investments. Thus we delete the disallowance made under Rule 8D(2)(ii) made - Decided against revenue.
Disallowance relating to prior period expenses - CIT-A deleted the addition - HELD THAT:- For the assessment year 2009-10 [2014 (11) TMI 1174 - ITAT DELHI] accepted the claim of the assessee for netting off of prior period income against prior period expenses. Decided against revenue.
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2022 (6) TMI 1397 - ITAT CHENNAI
Disallowance u/s 40A(3) - cash payment to various suppliers exceeding specified limit - assessee could not prove that the cash payment was due to exceptional or under unavoidable circumstances - HELD THAT:- Upon perusal of documents, we find that that the assessee has not made cash payment directly to the suppliers but deposited the same directly into their bank accounts. In support, the assessee has placed on record bank deposit slips.
This is stated to have been done on the request of the suppliers and the suppliers themselves have furnished the bank account details to the assessee to ensure fast receipt of payment without delay. It could be also noted that genuineness of the payment or the existence of the suppliers is not under doubt. Assessee has placed on record complete details of suppliers along with their addresses, bank details with copies of deposits slips for each of payment transferred to them.
On the basis of all these documentary evidences, we are of the considered opinion that impugned disallowance is not justified on the facts and circumstances. Hence, by deleting the same, we allow the appeal.
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2022 (6) TMI 1396 - ITAT NAGPUR
Disallowing depreciation on Air and Water Pollution Control Machine - Assessee has claimed depreciation at 100% of the actual cost and not on the valuation as per valuation report - principle of consistency - HELD THAT:- While analyzing the entry we have to see the description of plant as a whole and not the description of various items – small and big which go to constitute the plant. We have no doubt that the plant installed was the plant of air and water pollution control which was admittedly put to use after 30th September.
On the very same plant and machinery the very same A.O. has allowed balance depreciation of 50% in A.Y.2014-15 and that order is final. In view of this fact, we see no reason for lower authorities to disallow depreciation for A.Y.2013-14 the year in question.
Here there is no question of arguing that principle of resjudicata is not applicable and hence the finding of A.Y.2014-15 cannot be said to be binding in A.Y.2013-14. On the same plant and machinery the same A.O. in one year allows depreciation at the prescribed rate of 100% and in another year on the same machinery the same A.O. totally disallows the depreciation. This is most inconsistent, and illogical. Applying the principle of consistency as is firmly established by the decision in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] and Quest Investment Advisor Pvt. Ltd. [2018 (7) TMI 479 - BOMBAY HIGH COURT] the depreciation as claimed by the Assessee in the year in question i.e. A.Y.2013-14 is allowable.
Disallowing Selling and Distribution Expenses - A.O. considered the expenses at higher side, therefore disallowed to the extent of 2.95% - CIT-A restrict the disallowance at 1% of such expenses - HELD THAT:- In the present case it is worth noting that, higher commission than what is claimed in this year has been allowed in earlier and later years - no justification to make disallow of 1% and thereby retain addition - CIT(A) has specifically mentioned that he has perused relevant copies of accounts and bills etc. and has not found any defect in the accounts. Similarly the department has always accepted the accounts which are duly audited. No defect of any nature has been pointed out or proved.
The claim of the Assessee, in our view, cannot be said to be unreasonable. There was neither any material or basis before ld CIT(A) to make an adhoc disallowance of 1% of expenses - Decided in favour of assessee.
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2022 (6) TMI 1395 - ALLAHABAD HIGH COURT
Seeking grant of bail - Huge amount invested by the investors were deposited in the account of sister companies of the GIPL to which applicant was one of the Directors - Amounts so deposited in the accounts of sister companies of GIPL were diverted for another purposes to another person. Investors are still awaiting for their return of hard-earned money - HELD THAT:- As is evident from the record, applicant is not named in the F.I.R. He was not the Director, Office Bearer or Manager of the GIPL. He was Director of sister companies of GIPL. There is no evidence to show that the applicant at any point of time induced or propagate to invest money in the Bike Bot Scheme launched by the GIPL. Cheques said to have been issued in the matter were issued by one Karan Pal Singh. No amount has been credited in the personal account of the applicant. Thus, keeping in view the entire facts and circumstances of the case and comparing the same with the ingredients of alleged offences, the orders granting bail to co-accused Sanjay Goel, Satinder Singh Bhasin, Smt. Rekha, Dinesh Pandey and Vijay Kumar Sharma and also taking into consideration the settled principles of law for granting bail, without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail.
Let the applicant Manoj Tyagi involved in Case Crime Nos. 385 of 2019, 873 of 2019, 697 of 2019, 432 of 2019 and 362 of 2019 under Sections 409, 420, 467, 468, 471, 201, 120-B IPC, Police Station Dadri, District Gautam Budh Nagar be released on bail on furnishing each a personal bond and two heavy sureties in each cases in the like amount to the satisfaction of the court concerned subject to the conditions imposed - application allowed.
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2022 (6) TMI 1394 - ITAT BENGALURU
Addition of interest income under the head income from other sources - Assessee in process of setting up of a plant - whether assessment is bad in law as the AO has exceeded his scope and there is lack of jurisdiction? - HELD THAT:- The assessee was in the process of setting up of a plant. AO took the view that the interest income is assessable under the head “Income from other sources” and the business loss claimed by the assessee should be capitalised. Accordingly he computed NIL income under the head business. Accordingly, the AO assessed entire interest income under the head income from other sources.
CIT(A) confirmed the assessment of interest income following the decision rendered in the case of Tuticorin Alkali Chemicals & Fertilisers Ltd [1997 (7) TMI 4 - SUPREME COURT]
CIT(A) has confirmed the assessment by following the decision rendered by Hon’ble Supreme Court. Accordingly, no reason to interfere with the order passed by Ld CIT(A).
Though the assessee has raised a legal ground challenging the scope of assessment proceedings, no material was placed before me in support of the said ground. Accordingly, reject the same.
Appeal filed by the assessee is dismissed.
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2022 (6) TMI 1393 - ITAT INDORE
Rectification u/s 254 - registration u/s 12A - assessee filed application to CIT in Form No. 10A - assessee filed application in Form No. 10A on 31.03.2000 for grant of registration and on the basis of this application, the procedure of registration was set in motion - HELD THAT:- We observe that the CIT issued certain notices to the assessee on the basis of the application dated 31.03.2000 and the assessee too complied with those notices. Realizing that no decision was coming from CIT and more particularly being aware of the fact that there was a change in jurisdiction from ITO, Ward-2 to Circle-1(1), the assessee refiled a copy of the original application alongwith documentary evidences on 07.01.2004.
AR has pointed out that the filing on 07.01.2004 is a mere re-filing of documents to facilitate the registration process and there was no fresh application. We observe that the application was in fact filed on 31.03.2000 and not on 07.01.2004. We also find that it is not a case of revenue that the application dated 31.03.2000 was rejected by CIT as there is no such material produced before us. In such circumstances, therefore, there is no justification to grant registration from 01.04.2003. In fact, the CIT ought to have granted registration from 01.04.1999.
Direct the CIT(E) to rectify his order and grant registration from 01.04.1999. Appeal of assessee is allowed.
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2022 (6) TMI 1392 - ITAT KOLKATA
Scope of assessment u/s 153A - completed/unabated assessments - proof of incriminating material as found during search - addition u/s 68 - HELD THAT:- As in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] in its concluding paragraph has observed that, on the date of the search, the assessments for assessment years 2002-03, 2005-06 and 2006-07 already stood completed and the returns in these years were accepted u/s 143(1) of the Act and these acceptance of returns processed under Section 143(1) of the Act was construed by the Hon’ble Delhi Court as completion of assessments and this acceptance of return, according to the Hon’ble Delhi High Court, could be tinkered with if some incriminating material was found at the premises of the assessee.
In the present case AO was of the view that the assessee company was having assets of real value in lieu of shell company shares.
AO did not make any analytical investigation or recorded any specific findings. He has acted vaguely and recorded a general finding in a superficial manner touching upon large number of entities. His grievance is that in this year, the assessee has been possessing real assets which were ultimately procured by transacting with shell companies. There is no trail of those shell companies from where the assessee has raised equity capital for the first time or as to how the assessee has utilized the available funds in making investment in the assets of real value. The Assessing Officer just disbelieved the submissions of the assessee.
In assessment year 2008-09, when first time capital was raised, its genuineness was accepted by the Revneue. When over a period of time, capital has been used and an asset was created, then the source of such asset cannot be enquired into because it has already been accepted in the earlier year when capital was raised by the assessee. Apart from the above, AO has also not made reference to any seized material which has been fortified to believe that capital raised by the assessee in assessment year 2008-09, was through transactions with shell companies.
AO has failed to establish that the assessee has routed its unexplained money through shell companies. When, the Assessing Officer frames the assessment generally by making reference to various events without the help of any seized material no addition can be made u/s 153A of the Act. The assessment order does not even make any reference to the panchnama accepting the evidence found at the premises of the assessee.
CIT(A) has rightly held that there was no incriminating material seized during the course of search authorizing the Assessing Officer to make an addition in the assessment framed u/s 153A/143(3) - Decided against revenue.
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2022 (6) TMI 1391 - ITAT PUNE
Rectification of mistake u/s 254 - AO made disallowance on account of application of section 14A r.w.r. 8D(2)(iii) and charged interest u/s 234A and 234B - Misc. application seeking rectification of order of the Tribunal stating that the Tribunal has wrongly presumed that in any case where there is an addition of more than Rs. 10 lakhs in a case selected under CASS prior written approval is needed from concerned CIT- HELD THAT:- Revenue by filing this Misc. application desires this Tribunal to review its own order, which in our considered opinion, the Tribunal does not have any power u/s 254(2) of the Act to review its order. The power vested with the Tribunal relates to the mistake apparent from record only.
Tribunal after considering the grounds raised in the appeal decided the appeal and passed the order. If the Revenue has any grievance against the order of the Tribunal, the Revenue can go before the Hon’ble High Court by filing appeal u/s 260A of the Act. The Tribunal cannot review its own order in the garb of power vested u/s 254(2) of the Act. Review of the order will tantamount to rehearing of the appeal which power is not vested with the Tribunal. The Tribunal after considering the submissions of both the parties has passed the order discussing the provisions of the law. In our opinion, there is no mistake much less apparent from record in the order of the Tribunal.
In the instant case the Tribunal has already given precise findings on law and facts as per all the materials / documents / evidences placed before it. Such finality of order cannot be disturbed u/s 254(2) of the Act petition in absence of any mistake apparent from record.
Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric & Trading Company [1992 (11) TMI 32 - BOMBAY HIGH COURT] has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment - Misc. application filed by the Revenue is dismissed.
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2022 (6) TMI 1390 - CESTAT KOLKATA
Submission of additional evidence in the form of Certificate issued by M/s Tata Steel Limited for the debit notes in respect of the goods supplied by them as per the enclosure therein - HELD THAT:- The Certificate issued by Shri Sanjit Kumar Sinha, Sr.Manager Accounts (Indirect Taxation) on behalf of M/s Tata Steel Limited, is not contained any date of issue. However, as the said Certificate was not provided before the original authority during adjudication, in the interest of justice, the same may be produced before the original authority for appreciation of facts of the case and decide the same in the light of the Certificate issued by M/s Tata Steel Limited.
The additional evidence filed by the appellants are admitted and it is also proceeded to decide the issue finally - the appeal deserves to be allowed by way of remand to the original authority - appeal is allowed by way of remand.
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2022 (6) TMI 1389 - CALCUTTA HIGH COURT
Money Laundering - Provisional attachment order (against four immovable properties and five bank accounts of the petitioners) - proceeds of crime - reasons to believe - siphoning off of funds - HELD THAT:- The general conclusion in respect of the immovable properties is that proceeds of crime have been siphoned off from the I-Core Group to the 1st petitioner and DPMPL for over a decade and has been concealed/changed in form. The order records that "now it is barely possible to track down the trail of the whole POC from the complex web of account transactions" - There are no independent factual findings for the five bank accounts which have been provisionally attached.
The narration of facts and the conclusions arrived at with regard to the ‘proceeds of crime’ acquired by the petitioners show a singular absence of a causal connection between the two. The findings under each head of immovable property (except Flat Nos. 9F and 9G where there is no finding) is that the petitioners acquired ‘proceeds of crime’ from their association with I-Core Group. The order also records that the ‘proceeds of crime’ have been identified and are therefore liable to be attached. The finding is also that the petitioners have acquired property by indirect payment out of the ‘proceeds of crime’.
The impugned order in the present case falls short on several counts. Besides the lack of a factual nexus between the acquisition of the immovable property and the identification of the property as ‘proceeds of crime’, there is also no reference to the property being derived from any direct or indirect criminal activity relating to a scheduled offence. There is also a stark absence of the basis of any apprehension of risk that the property may be wasted or dealt with in a manner so as to render the “proceedings” under 5(1)(b) infructuous. The general conclusion in paragraph 11 of the impugned order is that the petitioners will frustrate further proceedings.
The factual narration containing random statements of facts cannot satisfy the requirement of reasons to believe being recorded in writing - Having regard to all the facets of the impugned order of attachment which have been challenged in this writ petition, this Court is accordingly of the considered view that the impugned order of attachment fails to fulfill the requirements of the relevant provision of the PMLA and should hence be quashed.
Application disposed off.
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2022 (6) TMI 1388 - MADRAS HIGH COURT
Settlement of case by Income Tax Settlement Commission - petitioner was assessed before an authority in a different State - Writ Filled challenging Order of the Settlement Commission rejected on the ground that the petitioner was assessed before an authority in a different State - HELD THAT:- This Court in Mulberry Skills Ltd Vs. Settlement Commission [2020 (9) TMI 771 - MADRAS HIGH COURT] wherein a writ filed in identical circumstances, challenging an order of the Settlement Commission, came to be rejected on the ground that the petitioner was assessed before an authority in a different State. In that case the assessee in Karnataka, whereas, in the present case the Assessing Authority/R3, is in the State of Kerala. Writ appeal is dismissed leaving it open to the appellant to move the High Court of Karnataka if they are so advised
In this matter as well, it open to the petitioner to move the Kerala High Court, if they are so inclined. Writ Petition stands dismissed. Connected writ miscellaneous petitions are closed.
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2022 (6) TMI 1387 - MADRAS HIGH COURT
Validity of Government Order in G.O.Ms. 181, dated 09.04.2020, passed by the 1st respondent and the consequential Gazette Notification, issued by the 2nd respondent in S.O. No. 46, dated 14.06.2020 - investigation of the complaint made by the 3rd respondent - misappropriation - conspiracy - breach of trust - Jurisdiction of Delhi Special Police Establishment namely CBI - HELD THAT:- The petitioners are the office bearers of Indian Red Cross Society. The third respondent seems to have given a complaint on 27.03.2020, addressed to the fifth respondent, making certain allegations with regard to the affairs of the Indian Red Cross Society. Pursuant to which, the said Government Order has been passed by the first respondent granting consent of the State Government for investigation to be conducted by Central Bureau of Investigation (CBI). This Government Order is challenged on the ground that the nature of allegations made in the complaint is beyond the scope of Section 3 of the Delhi Police Establishment Act and the Society in question is neither financed by the State or Central Government and it is a Society registered under Societies Act.
In the present case on hand, A5 is the Deputy/Joint Secretary of Indian Red Cross Society, National Head Quarters, which is situated at India Red Cross Society at No. 1, Red Cross Road, New Delhi-110001, which is well within the jurisdiction of the Delhi Special Police Establishment namely CBI, which is also the contention of the petitioner/A5. Hence, in the logical view, the G.O.(Ms) No. 181, dated 09.04.2020 itself is not mandatory.
The attention of this Court was also invited to the Judgment of the Hon'ble Supreme Court in State Vs. N.S. Ghaneswaran, reported in ([2013 (1) TMI 966 - SUPREME COURT]), wherein it is held that CBI can register FIR as per the procedure traceable in CBI Manual 6.10.1. Hence, there is no illegality in CBI registering FIR.
With regard to the first contention that the Indian Red Cross Society do not receive any grants from the Government is not correct. Indian Red Cross Society has been formed on the corpus available from public donation, as could be seen from the Act. Further, prime properties have been allotted by the Central Government as well as respective Governments for the Headquarters and its branches throughout India on concessional charge recognizing the public service rendered by the IRCS. This is the special privilege given to IRCS - Though IRCS state that it was only for the service rendered payments received and Red Cross Society not earned income is not proper, as could be seen from the ledger account of the said two projects. The Health and Family Welfare Department confirms the Grants-in-Aid given to IRCS, Tamil Nadu Branch.
In this case, the petitioners herein are given privileged status and benefits on the office they held in IRCS. Thus, the position is clear that 'public duty' means, a duty in discharge of which, the State, the public of the community at large has an interest - the petitioners discharging the public duty is not in dispute. Hence, the case against the petitioners under the Prevention of Corruption Act can proceeded.
As regards the second contention is concerned, issuance of G.O.(Ms) No. 181, dated 09.04.2020, for fraudulent activities by issuing Notification under Section 6 of the Delhi Special Police Establishment Act is a colourable exercise, non-est and cannot be revisited - In this case, on the complaint of the third respondent, finding no involvement of State Government Officials and also finding seriousness of the offence and the involvement of Headquarters Officials and others, found it appropriate, for CBI to conduct investigation, hence the case was transferred. It is seen that Section 6 of the DSPE Act only stresses that consent has to be obtained only from the State. It is seen, that in this case, under Section 6 of the DSPE Act, the CBI obtained consent. The second respondent issued a Notification under Section 5 of the DSPE Act on 12.06.2020. Thereafter, 17-A approval under the Prevention of Corruption Act was obtained on 19.12.2020 from seventh respondent, thereafter, FIR registered on 28.12.2020. Consent obtained to avoid any future complication, in abundant caution. Nothing more.
Locus of the third respondent - HELD THAT:- The questioning of locus, of the third respondent is not proper, since it is settled legal proposition that anybody can set the law in motion, except where the statute enacting or creating an offence indicates to the contrary - the third respondent not only being Deputy Secretary of the Governor, even as a commoner, when an offence, coming to his knowledge as per Section 39 of Cr.P.C. has lodged the complaint.
Thus, it is seen that the grant of consent under Section 6 of the DSPE Act, 1946, is more in the nature of an administrative Order and does not require enormous rejigging, as the issue is whether to allow the investigation to be done by the CBI or not.
This Court finds the contentions raised by the petitioners are unreasonable, not sustainable. Hence, all the Writ Petitions are dismissed.
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2022 (6) TMI 1386 - ITAT HYDERABAD
TP adjustment - interest on trade receivables balances from associated enterprises by applying interest rate of 14.75% being SBI short term deposit interest rate - As per assessee if interest is charged, such interest should only be at LIBOR and not SBI short term deposit rates - HELD THAT:- In our view, in the present case, the outstanding receivables by the assessee are required to be benchmarked. It is an admitted fact that the outstanding receivables by the assessee are more than 30 days as held by the DRP.
In the light of the above, respectfully, following the decision of Zeta Interactive Systems (India) Pvt. Ltd. [2022 (6) TMI 1383 - ITAT HYDERABAD] we modify the order passed by the DRP and direct the TPO to compute by applying 6% interest rate on outstanding receivable at the year end as against 14.75% and recompute the adjustment to be made to the total income of the assessee.Appeal of the assessee is partly allowed.
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2022 (6) TMI 1385 - ITAT BANGALORE
Denying of exemption u/s 11 by invoking the first proviso to section 2(15) - assessee argued that civil works carried out by him are not commercial in nature by mentioning that they are fund-raising activities - HELD THAT:- We are of the opinion that similar issue came for consideration before this Tribunal in the case of Zilla Nirmithi Kendra [2022 (2) TMI 1362 - ITAT BANGALORE] as held that the application of income generated by the business is not relevant consideration and what is relevant is whether the activity is so inextricably connected or linked with the objects of the trust that it could be considered as incidental to those objectives. It was contended by the assessee that the surplus funds generated from the construction business was spent towards charitable activities and therefore, the assessee is entitled for exemption under section 11(4). This contention is not acceptable. Initially, the assessee carried on the business itself which is not at all property held under trust. This activity is a business activity and the provisions of section 11(4A) is applicable. The tribunal held that there is no nexus between the activities carried on and the objects of the assessee that can constitute an activity incidental to the attainment of the objects, namely, to promote cause of charity, mission activities, welfare, employment, diffusion of useful knowledge, upliftment and education and to create an awareness of self reliance among the members of the public etc. Being so, the assessee is not entitled for any exemption under section 11. Decided against assessee. Also see M/S. NIRMITHI KENDRA case [2018 (11) TMI 117 - ITAT COCHIN]
Income tax liability - tax on income of a State - assessee being a State under Article 12 of the Constitution, is exempted from the levy of Union Tax under Article 289 of the Constitution - HELD THAT:- Assessee is not a State but it is registered as a Society and hence it is to be treated as an AOP or Trust for the purpose of Taxation.
The assessees Dakshina Kannada Nirmithi Kendra & Udupi Nirmithi Kendra are separate entities and distinct from state, having its own legal identity. It could sue or be sued in its own name. It has its own assets & liabilities. But only when the State Government decides that purpose of Nirmithi Kendra has been achieved and there is no need to continuation of this Nirmithi Kendra, then it may pass the order of dissolution of the same. In that event, the income, assets, liabilities of the Nirmithi Kendra will be vested with the State Government and not otherwise. Thus, it is apparent from the record that the Hon’ble Supreme Court has already dealt with this matter and we are completely agreeing with the argument of Ld. D.R. and the Article 289 of the Constitution cannot be applied to the assessee’s case. Accordingly, this additional ground of the assessee is dismissed.
Disallowance u/s 43B - AO disallowed an amount in respect of expenditure claimed towards labour cess outstanding - HELD THAT:- As per this Act, certain payments could be claimed as expenses in the year in which they have been paid and not in the year in which the liability to pay such sum was incurred. In other words, certain statutory expenses are allowed to be claimed in the year of payment only. In the case of this payment of it has not been paid within the due date of filing return of income and which was paid only on 21.3.2014 and the said payment cannot be allowed as in the assessment year under consideration. Accordingly, we dismiss this ground of the assessee in AY 2013-14. However, the assessee has liberty to claim on actual basis in the year in which it was paid.
Activities carried on by the assessee along with object clause of the Trust Deed - No infirmity in the order of the lower authorities in observing that the assessees’ herein carried out activities not in accordance with the object clauses mentioned in Trust Deed. Accordingly, this additional grounds in both cases are also dismissed.
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2022 (6) TMI 1384 - ITAT MUMBAI
TDS u/s 195 - remittance of amount to the co-broker in Singapore - assessee company is an Indian broker for placement of reinsurances placed with insurers domicile in India to work in conjunction with overseas brokers - reinsurance contract is between Indian insurers and the non-resident insurance companies - HELD THAT:- From the perusal of the profit and loss account of the assessee, it is seen that it reflects only brokerage as its income. All the monies received by the Assessee from the Indian Insurance companies, i.e., Indian Cedents is held in a bank account which is classified as the “Client Money Account” and this is required to be maintained in accordance with Clause 27 of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 read with Schedule V thereto.
The monies lying in this account are not assessee’s money and the assessee is only the trustee of the monies as per IRDAI Regulations and hence the monies are not available to it. Monies in this account are to be paid to the NRRs either directly or through co-brokers not later than 2 weeks from receipt thereof. This account is reflected in the balance sheet of the Assessee with a corresponding liability "Reinsurance Premium payable to Reinsurers" and hence to assume that said premium is Assessee’s income is fallacious.
CIT(A) has rightly held that, when assessee is merely a broker and does not have any ownership on the premium amount transferred to NRR, then there was no liability to deduct TDS for remitting the said amount to the co-broker in Singapore.
AO’s contention that assessee is DAPE of AB Singapore - The assessee has earned brokerage during FY 2015-16 (AY 2016-17) from 275 transactions for doing brokerage business with various NRRs without any involvement of AB Singapore and hence, assessee cannot be recognised as DAPE of AB Singapore.
Applicability of para 8 of Article 5 - As here it is not the case where assessee has any authority to conclude contracts on behalf of AB Singapore and conditions with respect to stock of goods are also not applicable. It is also not a case here that assessee secures order only on behalf of AB Singapore. Thus, Article 5 (8) is not applicable in the present case.
Applicability of Article 5(9) - In any case, assessee is an independent broker under IRDAI and has earned majority of brokerage (73%) from NRRs without having any transaction with AB Singapore or involvement of AB Singapore. Its activities are not wholly or exclusively devoted to AB - financial statements of the assessee for the relevant financial year i.e. FY 2015-16 have been filed. This break up of its revenue was filed before the Ld. CIT (A) as additional evidence which has been accepted by CIT (A)- as seen that assessee received brokerage from more than 76 NRRs and majority of them without involvement of AB Singapore. Thus, the condition of Article 5(9) is also not satisfied.
Thus hold:
Firstly, the assessee and AB Singapore are independent brokers facilitating payments between Cedants and NRRs.
Secondly, the premium paid by the assessee to NRRs through AB Singapore is not the income of AB Singapore, but a remittance of funds received by the assessee from insurer AICI for onward transfer to NRRs.
Thirdly, neither NRR nor co-broker AB Singapore have PE in India and thus, premium is not chargeable to tax in India.
Lastly, the assessee received its brokerage income from more than 76 NRRs and not done work wholly and exclusively for AB Singapore and hence, assessee is not a DAPE of AB Singapore.
Decided against revenue.
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2022 (6) TMI 1383 - ITAT HYDERABAD
TP Adjustment - Comparable selection - HELD THAT:- E-Zest Solutions Ltd - we deem it fit and proper to remand this issue back to the file of the CIT (A) for the purpose of considering afresh whether E-Zest Solutions Ltd is having functional dissimilarities with that of the assessee or not. The assessee is directed to produce all the financials including the Annual General Report and other documents to prove that E-Zest Solutions Ltd is functionally dissimilar to that of the assessee.
Comparables Acropetal Technologies (Seg)., ICRA Techno Analytics Ltd. and Persistent Systems & Solutions Ltd. Acropetal Technologies (Seg.) - Admittedly, once the assessee itself is making a case of inclusion of these 3 companies before the lower authorities and the CIT (A) based on the submission of the assessee is passing the order, then it cannot be stated that the assessee is aggrieved by the order passed by the CIT (A). Since the assessee is not aggrieved by the order passed by the CIT (A) with respect to inclusion of these three companies, therefore, the assessee does not have a right to challenge the order of the CIT (A) for exclusion of these companies before us.
Interest on receivables - CIT (A) fixing the interest at 8% - HELD THAT:- Outstanding receivable by the assessee from its AE, is required to be benchmarked, so as to ensure that they should not be any shifting of profit from assessee to its AE.
Application of 8% interest, though in strict sense, would be contrary to the principles of TP analysis as the transfer pricing officer was required to bring the comparable either internal comparable or the external comparable by applying CUP method and then fix the rate of interest on the delayed receivables from the AE. However, with a view to give a quietus to the issue , we are of the opinion that instead of 8% interest rate, rate of interest of 6% be applied on outstanding receivable at the year end .
In our considered opinion, the submission of the assessee that LIBOR+200 points require to be applied, cannot be upheld in these facts of the case , as it will amount to shifting of profit from assessee to its AE, which cannot be countenanced under Chapter X of the I.T. Act. Moreover, the rate of interest on loan transaction ( LIBOR + points ) cannot be equated with delayed receipt of the outstanding amount by assessee from its AE, as both stands on different premises having different purpose and nature. In fact if outstanding receivable are due for a longer period, then assessee would be required to deploy more resources either in the form of debt/equity to meet out the cash flow/working capital requirements. Ground partly allowed.
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2022 (6) TMI 1382 - ITAT PUNE
Income deemed to accrue or arise in India - income from Information Technology Support Services and income from Management Services - royalty or Fees for Technical Services (FTS) - HELD THAT:- As relying on assessee's own case [2019 (7) TMI 402 - ITAT PUNE] Extant payment received by the assessee can neither be considered as royalty u/s 9(1)(vi) of the Act nor as fees for technical services and therefore, the same cannot be included in the total income of the assessee. Grounds No. 1 and 2 of the assessee's appeal are allowed.
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