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2019 (3) TMI 2059 - MADRAS HIGH COURT
Prayer for a direction to the respondents 1 and 2 to consider the reply given by petitioner to the SCN - Violation of principles of natural justice - HELD THAT:- When the petitioner has given reply dated 03.01.2019 giving detailed reasons, the same has to be considered on merits by passing a reasoned order, therefore, recording the submission made by the learned Standing Counsel appearing for respondents 1 and 2 that the reply will be considered.
The writ petitions are allowed and the respondents 1 and 2 are directed to consider the reply given by the petitioner, on merits and pass a detailed order within a period of four weeks from the date of receipt of a copy of this order.
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2019 (3) TMI 2058 - SUPREME COURT
Maintainability of Anticipatory bail application under SC/ST Act - High Court Registry rejected numbering of the petition and dismissed the Anticipatory Bail Petition on the issue of maintainability under SC/ST Act - HELD THAT:- The nature of judicial function is well settled under our legal system. Judicial function is the duty to act judicially, which invests with that character. The distinguishing factor which separates administrative and judicial function is the duty and authority to act judicially. Judicial function may thus be defined as the process of considering the proposal, opposition and then arriving at a decision upon the same on consideration of facts and circumstances according to the Rules of reason and justice.
The act of numbering a petition is purely administrative. The objections taken by the Madras High Court Registry on the aspect of maintainability requires judicial application of mind by utilizing appropriate judicial standard. Moreover, the wordings of Section 18A of the SC/ST Act itself indicates at application of judicial mind. In this context, the statement of the Attorney General is accepted, that the determination in this case is a judicial function and the High Court Registry could not have rejected the numbering.
The High Court Registry could not have exercised such judicial power to answer the maintainability of the petition, when the same was in the realm of the Court. As the power of judicial function cannot be delegated to the Registry, the order cannot be sustained, rejecting the numbering/registration of the Petition, by the Madras High Court Registry. Accordingly, the Madras High Court Registry is directed to number the petition and place it before an appropriate bench.
Petition disposed off.
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2019 (3) TMI 2057 - BOMBAY HIGH COURT
Right of third party to challenge the award of the Lok Adalat before the High Court - litigating sides had excluded the third party from the litigation - HELD THAT:- The property situated in Survey No. 104 which is known as Vadjai area, was the suit property in the 2000 suit for partition and separate possession and the same survey number involving a larger area of land in Vadjai area was the suit property in the 2017 suit, in which these Petitioners were excluded. As such, if at all there is any fraud played by the Plaintiff (Bhausaheb) or the Defendants (Kondabai and Lahanabai) in the 2017 suit, it relates to the property Survey No. 104 in Vadjai area and which, therefore, fortifies the contention of the Petitioners that the property admeasuring 3 Acres 35 Gunthas, which was subject matter of the 2000 suit is the suit property in the 2017 suit, which is shown to be admeasuring 7 Acres 19 Gunthas.
In the light of the law laid down by the Honourable Supreme Court in BHARGAVI CONSTRUCTIONS & ANR. VERSUS KOTHAKAPU MUTHYAM REDDY & ORS. [2017 (9) TMI 1731 - SUPREME COURT] and STATE OF PUNJAB & ORS. VERSUS SHRI GANPAT RAJ [2006 (9) TMI 556 - SUPREME COURT], that the third party would be covered by the meaning "aggrieved person" and as is held by the High Court of Andhra Pradesh in the matter of Batchu Subba Lakshmi [2009 (12) TMI 1064 - ANDHRA PRADESH HIGH COURT], such a third party can challenge the Lok Adalat award provided the ground of fraud and misrepresentation is, prima facie, made out.
The impugned Lok Adalat award is quashed and set aside - petition allowed.
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2019 (3) TMI 2056 - MADRAS HIGH COURT
Maintainability of petition - availability of alternative remedy - Violation of principles of natural justice - opportunity of hearing not provided to petitioner - HELD THAT:- As seen from the impugned assessment order, the petitioner has not been afforded the right of personal hearing by the respondent. Further, on merits no explanation was given by the petitioner in his reply dated 06.05.2015 to the pre revision notice dated 22.04.2015, but he has simply stated that in view of the pendency of Special Leave Petitions before the Supreme Court challenging the amendment made by the Government of Tamil Nadu, based on which the proposal for revision of assessment has been made, he has not given any explanation on merits.
Further under the revision of assessment order, the petitioner has been assessed to pay Rs.14,47,431/- with huge penalty of Rs.21,71,147/- - this court is of the considered view that that the impugned order dated 09.11.2015 passed by the respondent has to be quashed.
The impugned assessment order dated.09.11.2016 passed by respondent against the petitioner is hereby quashed and matter is remanded back to the respondent for fresh consideration and the respondent shall pass final orders in accordance with law - the writ petition is disposed of by way of remand.
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2019 (3) TMI 2055 - ITAT MUMBAI
Revision u/s 263 - assessee was subjected to reassessment proceedings u/s 147 - estimation of income on bogus purchases - assessee was saddled with estimated addition of 12.5% by AO - Pr.CIT noted that the assessee was not maintaining any quantitative register and could not substantiate the delivery of the material and therefore, the full disallowance was to be made as against 12.5% estimated by AO keeping in view the decision Hon’ble Apex Court rendered in N.K.Proteins Ltd [2017 (1) TMI 1090 - SC ORDER] - HELD THAT:- We find that the co-ordinate bench of this Tribunal in the cited case of Rajal Enterprises [2018 (10) TMI 2028 - ITAT MUMBAI] when the assessee was able to link the purchases with corresponding sales, the logical conclusion which one can arrived at is, the assessee might not have purchased goods from the declared source but from some other parties. In that event, only the profit element embedded in the bogus purchases can be considered for addition. Therefore, the decision of the AO to restrict the addition to 10% of the bogus purchases is in tune with the consistent view of the tribunal and different high courts in similar nature of cases. That being the case, in our view, the exercise of power under section.263 of the Act in the facts of the present case is invalid. Accordingly, the impugned order passed by the leaned PCIT under section 263 of the Act deserves to be quashed. Decided in favour of assessee.
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2019 (3) TMI 2054 - GUJARAT HIGH COURT
Application for Anticipatory Bail u/s 438 of the Code of Criminal Procedure, 1973 - inquiry initiated by the Directorate of Revenue Intelligence - HELD THAT:- Taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, at this stage, I am inclined to grant anticipatory bail to the applicant. This Court has also considered the aspects that; (i) the applicant was called for interrogation pursuant to the summons issued by the respondent department and the applicant had cooperated with the investigation and his statement was recorded twice on 20.7.2018 and 16.8.2018; (ii) another importer is protected by Division Bench of this Court by passing interim order; (iii) another importer viz.Deepak Agarwal is released on regular bail by this Court vide order dated 7.12.2018. In the said order, this Court has observed that the offence under the Customs Act is compoundable and the maximum sentence is of seven years; (iv) so far as the said accused is concerned, it is also observed that during the course of investigation, remand of the said applicantaccused was not sought and entire investigation is based on documents; (v) entire quantity of alleged high-speed diesel as per the report is lying in the custody of the respondent department, therefore, I am inclined to exercise the discretion in favour of the applicant.
In the result, the present application is allowed - At the trial, the Trial Court shall not be influenced by the prima facie observations made by this Court in the present order.
Rule is made absolute to the aforesaid extent. Direct service is permitted.
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2019 (3) TMI 2053 - KARNATAKA HIGH COURT
Seeking dispensation of deposit of 25% of the award amount as it is required to be deposited under Section 105 of the Act - Section 151 of Code of Civil Procedure, 1908 - HELD THAT:- It is clearly seen that deposit of 25% of award amount is statutory requirement before filing the appeal. The 1st respondent-KAT has no discretion to waive payment of such deposit. In that view of the matter, the application which is filed in I.A.No.3 is rejected by the KAT. On going through the reasons assigned for rejection of the application in I.A.No.3, the same appears to be just and proper. Therefore, question of interfering with the same does not arise.
This writ petition is dismissed.
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2019 (3) TMI 2052 - DELHI HIGH COURT
Extension of the age of retirement for medical practitioners covered by AYUSH from 62 years to 65 years, as in the case of allopathic doctors - HELD THAT:- In judgment dated 24.08.2017 passed in a batch of original applications including one bearing No. 2712/2016 titled Dr. Santosh Kumar Sharma vs. Union of India & Ors. [2018 (11) TMI 1950 - DELHI HIGH COURT], which involved exactly the same question, the CAT had ruled in favour of the AYUSH medical practitioners and held that they are entitled to benefit of the retirement age of 65 years at par with allopathic doctors working for the government.
Following the decision made by the Co-ordinate Bench in North Delhi Municipal Corporation vs. Santosh Kumar Sharma & Ors., and in other matters mentioned above the present petition stands dismissed, on the grounds and for the reasons already considered and decided by the Co-ordinate Bench in the aforesaid matter.
Petition dismissed.
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2019 (3) TMI 2051 - CESTAT DELHI
SSI Exemption - clubbing of clearances for determining value of clearances - Whether the value of duty paid engine fitted chassis supplied by owner of chassis for manufacture / fabrication of body on such chassis has to be included for determining aggregate value of clearance for the purpose of Notification No. 8/2003 dated 01 March, 2003? - Extended period of limitation - suppression of facts or not - HELD THAT:- It is apparent that the transaction between the appellant and the supplier of the duty paid Automobile chassis was on principal to principal basis and, therefore, the consideration charged for the body building by the appellant from the supplier of duty paid automobile chassis will constitute the transaction value for the purpose of valuation of excisable goods for the purpose of charging the duty of excise.
The transaction between the appellant and its principal manufacture i.e. supplier of duty paid automobile chassis is only for fabrication charges which the appellant undertook on the duty paid chassis of the automobile. It is beyond comprehension as to how the value of the excisable product which has been manufactured by some other assessee / person and which is duty paid can be included in the aggregate value of the clearances of small scale industry manufacturer, which is only undertaking the fabrication work of body. Only fabrication charges of the body which have been built on the duty paid chassis need to be taken for determining the aggregate value of the clearance for the purpose of Notification No. 8/2003 dated 01 March, 2003 as that is the transaction value between the chassis supplier and the body building unit. Thus, the demand under the show cause notice and impugned order in appeal is legally not sustainable.
Extended period of limitation - suppression of facts or not - HELD THAT:- The show cause notice was issued on 18 February, 2014 by invoking the extended time proviso under section 11 A of the Central Excise Act, 1944 by alleging that the appellant had indulged in fraud, suppression of facts, mis-representation with an intent to evade duty. None of these elements are present in the present case. The Department has also not adduced any evidence to support its claim that the appellant indulged in any of the activities, such as fraud, misrepresentation, suppression etc. with an intent to evade payment of duty. The issue at hand is primarily a matter of interpretation and same cannot be taken as suppression of facts with a malafide intent to evade payment of duty. Thus, the demand under the impugned Show cause notice is also barred by limitation, and therefore, the demand of Central Excise duty is also legally not sustainable.
The impugned order in appeal deserves to be set aside and is set aside - Appeal allowed.
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2019 (3) TMI 2050 - MADRAS HIGH COURT
Duty drawback - time limitation - absence of a provision for time limitation in Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - HELD THAT:- In the instant case, the two shipping bill Nos. 11 and 29, dated 18.07.1986 and 13.02.1987, wherein the sanctioned letter fixing erroneous rate was made on 17.10.1987. The recovery letter came to be issued on 04.04.1989 and adjudication came to be made on 16.10.1989. The withdrawal was shown on 04.05.1990 and the show cause notice was issued on 28.05.1990. The only explanation given in the impugned order in the revision is that since Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 does not prescribe a time limitation, the ground of limitation cannot be relied upon.
Section 28 of the Act relates to recovery of duties, short levies duties or erroneously refunded within its prescribed time limitation of six months from the relevant date, from the date of notice. Though the section relates to recovery of duties, an analogy can be drawn from the said provisions for identifying what a “reasonable time” could be in a case of this nature, since Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 has been framed by invoking the powers conferred under Customs Act. By drawing an analogy from Section 28 of the Customs Act and applying it to the facts of the present case it is seen that the notice, being one made after a period of six months, cannot be held to be done within a reasonable time.
This Court is of the view that the impugned orders passed in these Writ Petitions are liable to be rejected on the ground of delay - Petition allowed.
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2019 (3) TMI 2049 - CESTAT CHENNAI
Restoration of appeal - HELD THAT:- It is mentioned that adjournment notices will not be issued by the Tribunal hereafter and the parties are advised to take note of the adjournment dates from the official website of the CESTAT.
Dictated and pronounced in open court.
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2019 (3) TMI 2048 - CESTAT ALLAHABAD
CENVAT Credit - input services - Outdoor Catering Services - HELD THAT:- The issue of availment of Cenvat Credit in respect of Outdoor Catering Services stands held against Appellant in their own case reported as M/S HINDUSTAN COCA-COLA BEVERAGES PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, HAPUR [2019 (1) TMI 2033 - CESTAT ALLAHABAD] where it was held that the Cenvat Credit of Service Tax on Outdoor Catering Services is not available to the appellant and as such, denial of the same is upheld.
The issue stands settled against them in their own case - the demand is confirmed - As regards the penalty, the same is set aside - appeal disposed off.
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2019 (3) TMI 2047 - ITAT RANCHI
Provision made and expenses not actually accrued - warranty expenses booked by the assessee under the head ‘provisions for warranty expenses’ disallowed - as per AO liability had not been ascertained or incurred - AO has held that these expenses were not ascertained and were adhoc in nature which could not be claimed as expenses for the year under consideration - HELD THAT:- The expenses had been claimed under the head’ warranty expenses’ and the assessee had been claiming this consistently on the same basis as a contractual liability.
We note that the provision was made as per Note 27(D) to the balance sheet. The assessee company had written back sum under the head ‘ Excess Provision Written back and shown as ‘ Other income’ for the impugned assessment year.
Coming to the judgment in the case of Bharat Earthmovers [2000 (8) TMI 4 - SUPREME COURT] allowability of a liability has to be judged as
1. a business liability has to definitely arise in the accounting year.
2. there should be certainly about the incurring of the liability.
3. it should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible.
4. the liability has to be allowed although the liability may have to be quantified and discharged at a future date.
It would have to be seen whether the facts of the case of the assessee meets with the criteria settled by the Hon’ble Supreme Court.
On perusal of the facts of the case it is seen that the liability had definitely arisen in the accounting year and there was certainty about this. The appellant company had made a reasonable estimate of claiming at 0.5% of sales based on past expenses and technical estimates. The appellant company also stated that on the expiration of the warranty period the balance amount is offered for tax as income. Decided against revenue.
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2019 (3) TMI 2046 - ITAT MUMBAI
Validity of revision u/s 263 - Challenging the jurisdiction of Ld. PCIT in passing the impugned order questioning validity of assessment order passed by AO u/s 143(3) r.w.s. 144C(13) - non-disposal of aforesaid jurisdictional issue by learned Pr. CIT - HELD THAT:- We find that the identical ground has already been decided [2018 (7) TMI 2330 - ITAT MUMBAI] in view of non-disposal of aforesaid jurisdictional issue by learned Pr. CIT which is purely legal issue which goes to the root of the matter as to whether learned Principal CIT is competent and empowered to invoke its revisionary powers within provisions of Section 263 with respect to the assessment order of the AO which is passed u/s 143(3) r.w.s. 144C(13) of the 1961 Act in pursuance of direction issues by learned DRP .Several other contentions were also raised in grounds of appeal on merits but keeping in view the jurisdictional issue involved in this appeal which were raised before learned Principal CIT and which was not disposed of by learned Principal CIT in its revisionary order dated 28.03.2016 passed u/s. 263 of the 1961 Act , we consider it appropriate and deem fit to restore this matter back to the file of learned Principal CIT for disposal of this jurisdictional ground which is a legal ground as to competence of learned Pr. CIT to revise an assessment order passed by the AO u/s 143(3) r.w.s. 144C(13) in pursuance to directions given by learned DRP and which in our considered view goes to the root of the matter , along with all other grounds raised by the assessee to decide de-novo in proceedings u/s. 263 more so when both the parties have also agreed and conceded that this matter needs be restored to the file of learned Principal CIT for disposal of the jurisdictional ground and other grounds as the said jurisdictional issue despite being raised by the assessee before learned Pr. CIT in proceedings conducted u/s 263 was not decided by learned Pr. CIT vide its order dated 28.03.2016 passed u/s 263 of the 1961 Act.
Thus we apply the same findings in the present case which are applicable mutatis mutandis in the present case and restore the issues back to file of learned PCIT for deciding afresh with similar directions as were given above.
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2019 (3) TMI 2045 - KARNATAKA HIGH COURT
Validity of judgment of conviction delivered by the trial Court - Courts below failed to take note of the fact that statement of accused under section 313 of Cr.P.C. was recorded based on the sworn statement, which was recorded before taking cognizance and proceeded erroneously - HELD THAT:- All the Procedure adopted to the lower court is erroneous. The lower appellate Court also failed to notice the said fact and erroneously confirmed the judgment of the lower appellate Court.
Having taken note of the procedural irregularity committed by the Courts below, the impugned order needs to be set aside and the matter is required to be remanded back to the lower Court to consider the matter afresh in accordance with law by giving an opportunity to the present petitioner and also if any need arises, by giving an opportunity to the complainant also dispose of the matter in accordance with law.
The matter is remanded back to the trial Court to consider the matter afresh, on merits, in accordance with law - Revision petition allowed.
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2019 (3) TMI 2044 - MADRAS HIGH COURT
Cancellation of competitive examination conducted for appointment to the post of Lecturers in various disciplines in the Government Polytechnic Colleges - mal-practices committed by the outsourcing agency, entrusted with the work of evaluation, by using the scanned images of the OMR Sheets - tampering - HELD THAT:- The Board without doing any kind of homework or detailed study to decide as to whether it would be possible to segregate the tainted candidates from the non-tainted ones, cancelled the examination and the very selection to the detriment of those who were not in any way responsible for tampering with the scanned copies of the OMR Sheets. We are of the considered view that the learned single Judge at the Madurai Bench was correct in the finding that the Board should have segregated the tainted candidates from non-tainted candidates and proceeded with the selection process, instead of cancelling the entire examination. The learned Single Judge at the Principal Bench was not justified in taking a view contrary to the view taken by a Coordinate Bench in the very same subject matter.
The order passed by the learned single Judge at the Madurai Bench confirmed - the notification issued by the Teacher's Recruitment Board pursuant to the decision taken on 8 February 2018 for cancelling the examination conducted on 16 September 2017 on the basis of the notification No. 06/17 dated 28 July 2017 is quashed.
Appeal allowed.
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2019 (3) TMI 2043 - ITAT AHMEDABAD
Time limit for set off of unabsorbed depreciation - AO observed that Sec. 32(2) does not permit depreciation to be carried forward for more than eight years - HELD THAT:- As carefully considered the order passed by the Coordinate Bench in [2018 (4) TMI 1422 - ITAT AHMEDABAD] as held restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y. 1997-98 up to the A.Y. 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever.
Thus carry forward of unabsorbed depreciation concerning impugned assessment years could be set off in subsequent years without any set time limit. See Gujarat Lease Finance Ltd [2017 (5) TMI 1555 - ITAT AHMEDABAD] Decided in favour of the assessee.
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2019 (3) TMI 2041 - ITAT MUMBAI
MAT Computation - Addition of corporate tax paid at Saudi Arabia in the computation of Book Profit u/s 115JB - HELD THAT:- According to the provision us/ 115JB of the Act, the AO while computing the income u/s 115JB of the Act has only the power of the examining whether the books of account are certified by the authority under the companies Act and having the properly manufactured in accordance with Companies Act. AO has limited power of revenue increases and deduction and has no jurisdiction to go behind the profit and loss account accept to the profit of explanation to Section 115JB - Since the amount of AAD has been reduced and there is no debit in profit and loss account, therefore, the amount did not enter the stream of the income for the purpose of determining of net profit at all and, therefore, clause (b) of Explanation 1 is not applicable to the present case.
Since no addition can be raised except this according to special provision mentioned in the provision u/s 115JB of the Act, therefore, the finding of the CIT(A) is not justifiable, hence, by relying upon the law laid down in Apollo Tyres Ltd [2002 (5) TMI 5 - SUPREME COURT] and National Hydroelectric Power Corporation Ltd. [2010 (1) TMI 281 - SUPREME COURT] we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee.
Addition in computing book profit u/s 115JB of the Act in respect of expenditure on computer software - Since the claim of the assessee nowhere falls within the purview of the Explanation of 115JB of the Act, therefore, the addition is not liable to be sustainable in the eyes of law. Accordingly, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee.
Non-exclusion of profit on sale of investments in computation of book profit u/s 115JB - Since, this issue has been decided against the assessee while deciding the issue in question in the assessee’s own case for the A.Y. 2002-03 therefore, the present issue is hereby decided against the assessee and in favour of the revenue.
Disallowance of Railways/insurance claims written off - We set aside the finding of the CIT(A) on this issue and restored the matter before the AO to decide the matter of controversy afresh on similar lines which has been directed by Hon’ble ITAT in the assessee’s own case relevant to the A.Y. 2002-03.
Setting off of unabsorbed depreciation of the current previous year with long term capital gain of the current previous year instead of setting it off with long term capital loss brought forward from earlier years - The assessee wanted to set off in future but the Assessing Officer declined the claim of the assessee on account of this fact that the claim is against provision of income tax. The CIT(A) has also declined the claim of the assessee on the basis of this fact that Section 71 deals with inter head adjustment and have precedence over section 74 of the Act. Nothing seems to contrary to the law. No law in support of the claim of assessee has been produced before us, therefore, taking into account, all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage.
Nature of income - treatment of interest on tax refund as income from other sources - HELD THAT:-It is not related to the business of the assessee. The law relied by the Ld. Representative of the assessee speaks some other facts. The income received as interest on income tax refund is liable to be treated as income from other sources, therefore, in the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, we decide this issue in favour of the revenue against the assessee.
Addition of PF and Labour Welfare fund made u/s 43B - HELD THAT:- As we noticed that the assessee has paid all the relevant payment before due date for filing return of income. The CIT(A) has correctly allowed the claim of the assessee in view of the decision of Devidayal (Sales) Pvt. Ltd. [2003 (10) TMI 606 - ITAT MUMBAI] and A.P.L (India) P. Ltd. [2004 (10) TMI 261 - ITAT BOMBAY-E]
Nature of receipt - capital investment subsidy received from Government of West Bengal - HELD THAT:- CIT(A) has allowed the claim of the assessee on the basis of the decision in the case of CIT Vs. PJ Chemicals Ltd. [1994 (9) TMI 1 - SUPREME COURT] and DCIT Vs. Reliance Industries Ltd. [2003 (10) TMI 255 - ITAT BOMBAY-J]. At the time of argument, the Ld. Representative of the assessee has also placed reliance upon the decision of CIT Vs. Shree Balaji Alloys [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] in which such type of incentive held as capital receipt in the hands of industrial unit. No doubt, the issue has been remanded in the assessee’s own case for the A.Y. 2001-02 and A.Y 2002-03 [2015 (10) TMI 172 - ITAT MUMBAI], but, there is no need to remand the case being this issue has been settled.
Nature of expenses - expenditure on Jukehi Road at Kymore in computing total income under normal provision of the Act - As per CIT(A) impugned expenditure did not result in creation of any asset of enduring nature to the appellant since the ownership vests with the Government of Madhya Pradesh, thus deleted addition - HELD THAT:- Since the matter of controversy has duly been covered and decided in favour of the assessee in the assessee’s own case and L.H. Sugar Factory and oil Mills (P) Ltd. [1980 (8) TMI 1 - SUPREME COURT] therefore, in the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage.
Nature of receipts - Sales Tax Subsidy in computation of book profit u/s 115JB - as per CIT(A) sales tax subsidy availed by various units of the appellant constitutes capital receipt in the hands of the appellant - HELD THAT:- The objectives of all the scheme specifies economic developments, regional development, development of backward area etc., and hence it is capital receipt and is not chargeable to tax. Accordingly, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage also. It also covered the MAT provision.
Allowance of claim of Long Term Capital Gain in respect of sales of land at Kaza mines and Nimabur at Kaza South - FMV determination - HELD THAT:- As noticed that the CIT(A) has observed that the assessee has an option to consider fair market value as on 01.04.1981 as the cost of acquisition for the purpose of computing capital gains and in view of the provision of Section 55(2)(b) of the Act. The assessee was also entitled to reduce indexed cost of improvement as per provisions of second proviso to Section 48 of the Act. Accordingly, the CIT(A) has directed to assess the long term capital gain in accordance with law. No ambiguity seems apparent on record - CIT(A) has specifically directed to apply the provision mentioned in the Act. The facts are not distinguishable at this stage also. On appraisal of the above said finding, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage.
Addition in respect of provision for bad and doubtful debts in computing book profit u/s 115JB - HELD THAT:- As noticed that the CIT(A) has allowed the claim of the assessee on the basis of decision CIT Vs. Usha Martin Industries Ltd. [2006 (12) TMI 171 - ITAT CALCUTTA] and CIT Vs. Echjay Forgings P. Ltd. [2001 (2) TMI 56 - BOMBAY HIGH COURT]. The addition can only be raised in view of the provision u/s 115JB of the Act and in Explanation to sub section 2. The case of the assessee nowhere fall within the ambit of the said section, therefore, in the said circumstances, the CIT(A) has rightly deleted the said addition, hence, allowed the claim of the assessee. The facts are not distinguishable at this stage also. No contrary law to the law relied by the assessee has been produced before us.
Provision for Director’s Retirement Benefit in computing Book Profit U/s 115JB - HELD THAT:- As decided in assessee own case CIT(A) correctly concluded provision for director’s retirement benefit cannot be considered as unascertained liability since the same has been calculated on the basis of actuarial valuation and is squarely covered by the decision of Hon’ble Apex Court in the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT]. Therefore, provision for director’s retirement is an allowable deduction in computing profits and gains of business or profession. Further, in my view additions made in computing book profit u/s 115JB on the ground that the same has been added back in the computing total income under normal provisions of the Act is not tenable.
Addition made in respect of VRS expenditure pertaining to earlier years, Capital expenditure, Deferred revenue expenditure, debited to P&L Account in computing Book Profit u/s 115JB is to be deleted as relying on Apollo Tyres Ltd. [2002 (5) TMI 5 - SUPREME COURT] in computing book profit u/s 115JB is to be deleted.
As computation of income under the normal provision of the Act has nothing to do with computation of book profit u/s 115JB of the Act in which specifically adjustment has been given in Explanation to Section 115JB(2) of the Act. No doubt, the addition which nowhere fall within the provision of Section 115JB of the Act and Explanation (2) of the Act is not required to be added to the income of Assessee, therefore, in the said circumstances, the same is not required to be added while computing the book profit u/s 115JB of the Act. Since the matter of controversy has been adjudicated by the CIT(A) judiciously and correctly, therefore, the finding of the CIT(A) is not liable to be interfere with at this appellate stage deciding in favour of the assessee.
Addition made in respect of revenue generated from trial run production in computing of book profit u/s 115JB is to be deleted as relying on Bipin Chandra Magan Lal case [1960 (11) TMI 13 - SUPREME COURT] wherein it has been held that there is a distinguishable relationship between the assessable income and the profits of business concern in a commercial sense.
Treatment in the accounts, in respect of revenue generated during construction period, is in accordance with the Guidance note on “Expenditure incurred during the construction period” which is issued by the Institute of Chartered Accountant of India, which is an authoritative body in the matter of laying down the accounting standard. That being so addition made by the AO on the ground that the same has been added back in computing income under normal provisions of the Act and the said amount should have been credited in the profit and loss account is neither justified nor tenable.
MAT computation u/s 115JB - Foreign exchange gain and capital subsidy received towards purchase of assets have been adjusted against the cost of the fixed assets in view of the provisions of Section 43A and Explanation 10 to Section 43(1) respectively. Therefore, the same cannot be added back in computing the book profit. Further, State Capital Investment Subsidy received from WBIDC constitute capital receipt in the hands of the appellant, hence, non taxable as discussed while deciding the issue above. Hence, the same is not added back in computing book profit u/s 115JB of the Act. So far as the refund of sales tax is concerned, the same has been added to the profit and loss account and accordingly, the deduction was given. The interest income in connection with deposit with ARV Society and in sum Deposited with MSEB has been disallowed being income of the assessee. The claim of the assessee was partly allowed.
Provision of Wealth Tax in computing book profit u/s 115JB is to be allowed in view of the decision of Echjay Forgings (P) Ltd. [2001 (2) TMI 56 - BOMBAY HIGH COURT] and JCIT Vs. Usha Martin Industries Ltd. [2006 (12) TMI 171 - ITAT CALCUTTA]
Provision for additional gratuity in computing book profit u/s 115JB is to be allowed.
Allowance of claim of exclusion of write back of excess provision made in earlier years in computing book profit u/s 115JB - Mineral Right Tax and Cess on Coal and Limestone written back in the assessment year was created prior to 01.04.1997, therefore, falls under the provision of clause (i) of Explanation to Section 115JB(2) of the Act. So far as the provision for employees incentive is concerned, the same is not required to be deducted in computing book profit u/s 115JB(2) of the Act. Accordingly, the deduction was partly allowed. The CIT(A) has also relied upon the case cited as Hitkari Fibres Ltd.in allowing claim [2003 (5) TMI 196 - ITAT BOMBAY-H]
Write back of share premium account is an allowable deduction in view of clause (i) of Explanation to Section 115JB(2).
Provision for contingencies in computation of book profit u/s 115JB issue is covered against the assessee due to insertion of clause (i) to Explanation 1 to Section 115JB vide Finance No. 2 Act, 2009 w..e.f 01.04.2001 and also in accordance with law settled in the assessee’s own case.
Allowance of claim additional gratuity on provisional basis under normal provisions confirmed.
Addition in respect of provision for Director’s Retirement Benefit - If a business liability had definitely arisen in the accounting year and was capable of being estimated with reasonable certainty, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. Following the principle laid down by the Apex court Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] and the decision of the Tribunal delivered for the AY.1990-91 we decide ground against the AO.
Appeal filed by the revenue and the appeal filed by the assessee is hereby ordered to be partly allowed.
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2019 (3) TMI 2040 - SECURITIES AND EXCHANGE BOARD OF INDIA
Financial mismanagement and diversion of funds in subsidiary for the benefit of promoters / group companies - Diversion of Funds through fixed deposits - HELD THAT:- A detailed investigation of the fund diversion in this case is necessary to find out the role of each entity in the alleged routing of funds. However, pending detailed investigation, a remedial action is required to be taken by way of an interim ex-parte order to protect the interests of shareholders of REL as funds to the tune of Rs. 2315.09 Crores (approx.) have moved out from RFL for the ultimate benefit of erstwhile promoters of REL.
Direction by virtue of section 19 read with sections 11(1), 11(4)(d) and 11B of the SEBI Act - REL and RFL (i.e. Noticee nos. 1 & 2) shall initiate steps to recall all the loans, amounting to Rs.2315.09 Crores (approx.) extended, either directly or directly, to the Noticee nos. 3 to 25 along with due interest, within three months of the date of this order who inturn pending completion of the investigation and till further orders, not dispose of or alienate any of their assets or divert any funds, except for meeting expenses of day-to-day business operations, without the prior permission of SEBI.Noticee nos. 24 and 25 shall not associate themselves with the affairs of REL and RFL, in any manner whatsoever, till further directions
The preliminary findings are made on the basis of the report of the forensic auditor. The Noticees may file their replies, if any, to SEBI within 21 days from the date of receipt of this order. In the event the Noticees intend to avail an opportunity of personal hearing, they may indicate the same in their replies.
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2019 (3) TMI 2039 - ITAT AHMEDABAD
TP Adjustment - Interest paid by the assessee towards loan - assessee has paid interest at the rate LIBOR + 3% p.a. as agreed with the AE - scope of rule of consistency - TPO has benchmarked the rate of interest for the assessee at the rate of LIBOR + 0.77 percent and accordingly the excess interest was disallowed - HELD THAT:- It is an undisputed fact that the assessee has paid interest on the money borrowed from its AE at the rate of LIBOR+300 basis points in the assessment year 2006-07 which was accepted by the TPO in the assessment framed u/s143(3) r.w.s. 92CA(3).
Thus, the order of the TPO for the assessment year 2006-07 has reached its finality. Therefore, in our considered view the TPO cannot take different view until and unless there is a change in the facts and circumstances.
There is also no ambiguity that the assessee has paid the interest in the year under consideration which was also there during the assessment proceedings for the assessment year 2006-07. As there was no change in the facts and circumstances, we are of the view that no disallowance on account of interest expenses for the year under consideration is warranted.
We are of the considered opinion that the rate of interest paid by torrent pharmaceutical Ltd cannot be compared with the rate of interest on the money borrowed with the assessee.
Thus we hold that the rate at which the interest paid by the assessee to AE is at arm's length and no adjustment is warranted. We also make clear that the finding should not be used /quoted as a precedent in other cases as we are allowing the appeal of the assessee on the basis of the rule of consistency. Hence, the ground of appeal of the assessee is allowed, and the ground of appeal of the Revenue is dismissed.
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