Maintainability of appeal against an interlocutory order - Whether the proviso to Section 2(1) of the Act, 2006 is an absolute bar to entertain an appeal against an interlocutory order without considering the scope of the order and without considering whether the interlocutory order has decided the rights of the parties and has an element of finality attached to it? - HELD THAT:- Even an interlocutory order may be final in certain respects. In Madhu Limaye [1977 (10) TMI 111 - SUPREME COURT], the Apex Court held that it is neither advisable nor possible to make a catalogue of orders to demonstrate which kinds of orders would be merely, purely or simply interlocutory and which kinds of orders would be final. However, examples are given of one or two orders which may be interim in nature and do not bring the entire proceedings to a closure but decide matters of moment and have an element of finality attached to them. A writ Court, by way of interim relief may grant admission to the petitioner in a medical college. This order virtually amounts to allowing the writ petition and could be termed as an order having an element of finality attached to it. On the other hand, the order refusing to grant interim relief would be an interlocutory order - Another example would be where an order of demolition is challenged in a writ petition in which demolition is to take place in a day or two. If the writ Court does not grant an order of stay, the said petition would virtually become infructuous. This order can also be termed to have an element of finality attached to it.
The proviso to Section 2(1) of the Chhattisgarh High Court (Appeal to Division Bench) Act, 2006 bars appeals against those interim orders which are totally interlocutory in nature, do not decide matters of moment and do not have an element of finality attached to them. Conversely, if the order vitally affects rights of the parties having bearing on the final adjudication of the case, then even though the order is interim, it cannot be termed as interlocutory order and an appeal would lie. An appeal would also lie against those orders which cannot be undone at the time of final hearing and which have an element of finality attached to them. The orders, effect of which cannot be undone at the time of final hearing, cannot be termed to be interlocutory orders and in such eventuality, an appeal would lie against such orders.
The Appellate Tribunal ITAT DELHI dismissed the appeal as withdrawn by the assessee on 12th January 2017. The department had no objection to the withdrawal. The order was pronounced by Shri Kuldip Singh, Judicial Member.
TP Adjustment - selection of MAM - whether CIT(A) erred in by deleting the entire addition on account of transfer pricing by without going to merits of case and facts and ignored the TPO’s contention submitted through remand report and the directions of Hon’ble ITAT that the Arms Length price of international transactions of the appellant should be determined at entity level by following TNM method? - HELD THAT:- When this appeal came up for hearing, learned representatives fairly agreed that this appeal is ill-conceived inasmuch as the impugned order only gives effect to the Tribunal’s order which is already in appeal before the Hon’ble High Court. The grievance before us is thus clearly misplaced. Appeal dismissed.
Classification of services - Business Auxiliary Services or Courier Service? - consideration received by the appellant for co-loading service for business associates/franchise in connection with delivery of consignments - HELD THAT:- The findings of the Original Authority regarding tax liability of the appellant under Business Auxiliary Services, is devoid of any legal merit. He mentioned the clarification dated 31.10.1996 is for Courier Services. Business Auxiliary Services was brought to tax net thereafter only and hence, the appellants are liable to tax.
The Original Authority failed in giving reasons as to what type of service has been rendered by the appellant to service recipient on behalf of the client. As per the details available and the submissions made by the appellant, it is clear that appellants have arrangements with other Courier Agencies to help them out in transport and delivery of articles, goods etc. The appellant is not dealing with any customer directly and receiving any consideration from the customer. In fact, the arrangement between the appellants and other Courier Agencies is two party arrangements with no role for the customer in such arrangement.
There are no merit in the impugned order and accordingly same is set aside - appeal allowed.
Estimation of income - bogus/unverifiable purchases - rejection of books of accounts - HELD THAT:- AO had applied 25% gross profit rate on unverified purchases which has been confirmed by the ld. CIT(A) which was the subject matter of appeal before the Coordinate Bench who has set aside the issue relating to estimation of profits and restored the matter back to the file of the AO to decide the same afresh.
From the perusal of records, it is also noted that the provisions of Section 153(2A) of the Act were not brought to the notice of this Tribunal. We accordingly recall the order passed by the Coordinate Bench of this Tribunal [2015 (5) TMI 1253 - ITAT JAIPUR] and direct the Registry to fix the matter for fresh hearing in due course.
Nature of loss - Foreign Fluctuation loss - contracts which remained unsettled and unexpired till the end of the relevant Financial Year -notional loss OR actual loss - AO treated it as notional loss and not actual loss on the ground that forward contract in respect of impugned loss were outstanding as on 31/03/2009 and remained unsettled and therefore loss was not crystallized as on 31/03/2009 - CIT(A) accepted the claim of the assessee - HELD THAT:- No error in the conclusion by CIT(A) as placing the reliance upon the decision of CIT vs. Woodward Governor India (P) Ltd. [2007 (4) TMI 118 - DELHI HIGH COURT] which clinches the issue.
Gains on the similar transactions were returned in the earlier AY 2007-08 which has been merrily accepted by the Revenue. Therefore, the Department ought not to have taken a different stand in similar circumstances in the subsequent year.
While “mark to market” (MTM) refers to losses computed as on a particular date with reference to prevailing Exchange rates in respect of contracts that have not matured and are open contracts, such loss are required to be taken cognizance of. We concur with the view of the CIT(A) that the loss incurred is a real loss and not mere a notional loss of provisional nature. In the ultimate analysis there is no revenue effect and only concerns the timing of taxation of loss/profit. Accordingly, we decline to interfere with the order of the CIT(A).
Addition of interest expenses - advance to certain parties for raw-material - as per AO business expediency for such advances have not been established and treated the advance given by the assessee as non-business purpose and invoked the provisions of section 36(1)(iii) - CIT(A) deleted the addition - HELD THAT:- We do not find any infirmity in the action of the CIT(A) in deleting the disallowance of interest. With the assistance of the Ld.AR, we note that the interest-free own funds is far more in excess vis-à-vis interest-free advance. In these facts, it is difficult to draw presumption adverse to the assessee. We therefore decline to interfere with the order of the CIT(A) in respect of ground No.2 as well. Accordingly, the appeal of the Revenue is dismissed.
Delayed Employees’ Contribution to PF/ESIC - CIT(A) allowed claim of assessee - HELD THAT:- We take a note of the fact that the payment on account of Employees’ Contribution to PF has been actually made before the due date of filing of the albeit with some delay. CIT(A) after taking note of the legislative amendment and judicial pronouncements on the issue accepted the plea of the assessee and reversed the disallowance made by the AO correctly. Decided in favour of assessee.
Calling for entire record of the case - Counsel for the petitioner has contended that this contention has been raised at final stage which is not permissible - HELD THAT:- Taking into consideration the decision of Delhi High Court in the case of UNION OF INDIA THROUGH COMMISSIONER CENTRAL EXCISE COMMISSIONERATE DELHI-II VERSUS M/S. IND METAL EXTRUSIONS PVT. LTD. & ANR. [2013 (1) TMI 225 - DELHI HIGH COURT], it is opined that the view taken by Delhi High Court is required to be accepted and the same is accepted.
The writ petition is dismissed only on preliminary ground.
Penalty u/s. 271D and u/s. 271E - assessee company has taken loan in cash on different dates & repaid the same in cash in contravention of section 269SS & 269T - HELD THAT:- We find that the assessee has taken diverse stands at different points of time. In the assessment proceedings, initially the assessee stated that no cash payment has been received. In the penalty proceedings, it was stated that cash payment was received as share application money and was repaid to Loan creditors on rejection of the offer by the Board of Directors. The appellant could not bring any evidence on record to support his claim regarding the amount received from Loan creditors towards share application money and the rejection of the share capital allotment by the Board.
The appellant has also failed to rebut the finding of the authorities below that once, both the depositors were the directors of assessee company, there was no reason to believe that the proposed offer of share capital allotment was withdrawn, for which no evidence is laid on record. The assessee also could not adduce any evidence before us to support its stand that the amount so received from Loan creditors was repaid by way of cheques or the amounts received was mentioned twice by the AO. The cash book submitted was not found authentic, as it was an extract typed on A-4 size paper as mentioned by the CIT(A) in the impugned order.
Thus no justification to interfere with the conclusions of the ld. Authorities below that the appellant has taken loan in contravention of section 269SS and has repaid the same in contravention of section 269T of the Act entailing penalty u/s. 271D and 271E - Decided against assessee.
Income taxable in India - income on account of providing corporate guarantee - India and France DTAA - assessee is non-resident company, having two subsidiaries, in India - HELD THAT:- The Tribunal in order [2016 (3) TMI 1096 - ITAT MUMBAI] found that guarantee commission, received by France Company neither accrued in India nor deemed to be accrued in India, therefore, not taxable in India under the Income Tax Act. Furthermore, as per Article-23.3, income can be taxed in India only if arises in India and since, in the instant case, the income arose in France, as the guarantee was given by the assessee, a French company to BNP Paribas, a French Bank, in France, therefore, Article-23.3 has no applicability as income arose out of India. Respectfully, following the decisions of the Tribunal, these grounds of the assessee are allowed.
Disallowance u/s 14A r.w.r. 8D - CIT(A) deleted the expenditure on account of interest because the assessee received the interest free fund from India Value Fund - HELD THAT:- CIT(A) has applied the provision of section 14A r.w.r. 8D (111) @ 0.5% on the basis of the finding of the Godrej & Boyce Mfg. Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] on account of administrative and managerial expenses to the tune of Rs.63,250/-. No illegality and infirmity has been seen in the finding of the CIT(A) in question. CIT(A) has passed the order on this issue judiciously and correctly which is not require to be interfere with at this appellate stage. Hence this issue is decided in favour of assessee against the revenue.
Capital receipt - Compensation receipt on termination of contract - AO disallowed the said compensation paid for ASTA and RCA treating the same as capital expenditure within the meaning of section 28(va) - HELD THAT:- CIT(A) has dealt both the transactions separately. The first transaction was in connection with the payment on account of termination of agreement with SIPL. The Assessing Officer dealt the said transaction as capital in nature. The appellant entered into an agreement with SIPL for procuring advertisement from clients. Dispute arose, therefore, the said agreement was terminated in view of the termination. The appellant company paid an amount as compensation. It is to be decided what should be nature of this kind of payments. The CIT(A) dealt the matter in view of the law settled in CIT Vs. Glaxo Laboratories India P. Ltd. [1977 (11) TMI 34 - BOMBAY High Court] wherein such type of transaction was held to be business expenditure. The assessee also relied upon the law settled in J & S (P) Limited [1984 (5) TMI 40 - DELHI HIGH COURT] and Empire Jute Co. Ltd. [1980 (5) TMI 1 - SUPREME COURT] and Alembic Chemical Works [1989 (3) TMI 5 - SUPREME COURT] No authority contrary to the said law has been produced before us. The factual position is quite same which has been dealt by the CIT(A) in question. No doubt in the said circumstances, we are of the view that the CIT(A) has decided the matter judiciously and correctly on this point.
Coming to the transaction in connection with the payment on account of non competing the business of the appellant for another 2½ years - This controversy has also been adjudicated by the CIT(A) on the basis of the finding in case of Guffin Chem P. Ltd. [2011 (3) TMI 6 - SUPREME COURT] The relevant para has been produced above while enumerating the finding of the CIT(A) in which this type of transaction has been dealt as capital receipt. Depreciation has rightly allowed accordingly. We are of the view that the said transaction has also been dealt by the CIT(A) in accordance with law specifically in view of the circumstances when no distinguishable facts and law have been produced before us.
Nature of expenses - treatment of computer software license fees - revenue or capital expenditure - HELD THAT:- It is not in dispute that the revenue has already dealt this issue while deciding the matter in the A.Y.2009-10 in which the said transaction has been treated as revenue expenditure. On the basis of the said decision, the present issue has been decided by the CIT(A) in favour of the assessee in the present A.Y. i.e. 2008-09. Nothing came into the notice that the finding of the CIT(A) for the A.Y.2009-10 on this issue is under challenged or not. - Decided in favour of assessee.
Nature of receipts - interest income - Business income or income from other sources - HELD THAT:- This issue was also there in appellant’s case in A.Y.2007-08 wherein the undersigned held that the interest income earned on FDs made with the bank as margin money for obtaining bank guarantee, etc. was assessable under the head business income. Following the appeal order of A.Y.2007-08, the A.O. is directed to assess the interest income under the head business income.
Demand of Differential duty - 100% EOU - clearances to the DTA without authorization - benefit of concessional rate of duty @ 50% under Notification No. 23/2003 denied - HELD THAT:- At the time of clearance of the scrap in DTA the SION norms were not available to the appellants. However, the same has since been fixed by the DGFT vide their letter dated 23.2.2009. The concessional rate of duty @ of 30% envisaged under Notification no. 23/2003 dated 31.3.2003 is available in cases where such scrap has been allowed to be cleared in DTA. The differential duty has been demanded for different periods by Revenue by taking that view that since no norms were available at the time of clearance of the scrap, the same are to be considered as cleared without authorization and hence not entitled to the benefit of the notification. Since the input output norms have since been fixed by the DGFT the benefit of concessional rate for the scrap will be available to the appellants.
It is considered necessary to remand the matter to the original adjudicating authority for verifying the calculation of the quantum of scrap cleared by the appellants during various periods covered under the present appeals - appeal allowed by way of remand.
Income taxable in India - bonus payments Pertaining to services rendered in China - tax paid in a Contracting State - methods of elimination of Double taxation u/a 23 - assessee held dual employment one with the original employer at the home country and another with the economic employer at the host entity and accordingly divided the salary compensation in two parts - AO disallowed a portion of the bonus attributing it as compensation for exercising his employment in the home country - DR submitted that the assessee not entitled for benefit of under article 15(1) since the assessee is a non resident and as per Article 23 of the DTAA between India and China allows exemption only to a resident of India - HELD THAT:- As decided in Shri Swaminathan Ravichandran [2016 (8) TMI 1498 - ITAT CHENNAI] in view of the specific condition under Article 23 of the India- China DTAA, the assessee is not eligible to claim relief under article 15(1) since the assessee is non-resident and as per Article 23 of DTAA between India and China allows exemption only to a resident Indian. Under the above facts and circumstances, the assessee is not eligible to claim exemption under section 5(2) of the Income Tax Act .
Thus we are inclined to hold that the assessee is not entitled for exemption under Article 15(1) of the Double Taxation Avoidance Agreement (DTAA) between India and China - Ground raised by the assessee is dismissed.
TP Adjustment - sub-contracting cost paid to A.Es - whether should form part of the operating cost of the assessee for determining the arm's length price? - HELD THAT:- DRP in case of assessee’s A.E. (TOIVL) for assessment year 2011-12 and Transfer Pricing Officer’s order in assessee’s case for assessment year 2012- 13, there cannot be any manner of doubt in coming to the conclusion that the sub-contract payment made by the assessee to its A.E. was merely in the nature of pass through cost as the assessee has passed on the work of off-shore drilling operation to its A.Es on back-to-back basis and it has acted merely as an intermediary in obtaining the contract and passing on the same to the A.E. and for which it has been remunerated on cost plus mark-up basis by the A.E.
We hold that sub-contract payment cannot be considered as part of the operating cost of the assessee for determining the arm's length price. Accordingly, we direct the AO to determine the arm's length price of the international transaction relating to the provision of Support service by the assessee to its A.E. after excluding the sub-contracting cost paid to A.E. from its cost base.
In the course of hearing as well as in the written submission, it was submitted by the learned Authorised Representative if the sub-contract cost paid to the A.E. is not included in the cost base, the margin of the assessee would be higher than the margin of comparables considered by the Transfer Pricing Officer himself. Hence, the issue relating to comparables need not be gone into. As we have accepted assessee’s claim in relation to non-inclusion of sub-contract cost paid to the A.E. in the cost base of the assessee, the other issues relating to comparability analysis having become academic in nature, we do not intend to adjudicate them.
Benami Transactions - absolute and exclusive owner of the suit property - suit filed by the Plaintiff to declare that the plaintiff is the absolute and exclusive owner of the suit property and for consequential relief for permanent injunction restraining the defendants, their men, agents and servants in any way interfering with the plaintiff's peaceful possession and enjoyment of the suit property and for costs.
FACTs:- The Plaintiff married one Yasodha as his first wife, she died in the year 1979. Thereafter, he married one Vijayalakshmi and Subsequently divorced her in the year 1985. After divorce the first defendant joined with the plaintiff in the year 1986 and they lived jointly as husband and wife. Two sons namely Kalaiarasan and Thellamuthan were born to them. The Plaintiff was a retired Government Servant. Since he was working at the time of purchase of the suit properties, he purchased the same in the name of the first defendant under the Sale Deeds dated 9.11.1994 and 24.10.1994. The properties were purchased in the name of the first defendant for the sentimental reasons
HELD THAT:- Relationship between the parties are admitted. The first defendant is the third wife of the plaintiff. Admittedly the title deeds for the suit properties stands in the name of the first defendant. According to the plaintiff, he had purchased the property in the name of the first defendant. On the other hand, in the Written Statement, it has been alleged that the first defendant purchased the properties out of her own funds, she borrowed money from her parents and sisters. Now the plaintiff filed the suit for declaration of title contrary to the documents of title. So the entire burden is upon the plaintiff to prove that he had purchased the property in the name of the plaintiff. Purchasing the property in the name of the wife and daughter is not covered under the Benami Transaction Prohibition Act. However even in the plaint the plaintiff was reluctant to describe that the first defendant as his wife. Whatever it is the burden is upon the plaintiff to prove his case.
order to prove that the property was purchased by him, he has chosen to file original title deeds Ex.A1 relating to suit Item No.1. The plaintiff is none other than the husband of the first defendant. In the said circumstances, mere possession of document with the husband does not create any inference about the title of the property.
Considering that portion of the evidence and in the absence of any documents to show the receipt of money from her parents, this Court has no option except to hold that the first defendant had no sufficient source to purchase the property. Considering the contribution of the plaintiff to purchase the property Ex.A14 passbook was filed by the plaintiff, on the date of Ex A3 24.10.1994 a sum of Rs 27,000 was withdrawn from the plaintiff's savings account through the witness in EX A3 namely Anbumani. Considering all those circumstances this Court finds there are chances of purchasing the property by the plaintiff in the name of the first defendant.
In this case, the plaintiff as well as the defendant executed Mortgage deed and sale deed in order to settle the score between them . The mortgage deeds executed by the plaintiff infavour of some third parties are without any right to execute such mortgage. The sale deed executed in favour of D2 is hit by Lis pendens.
Further, with reference to cause of action, there is no evidence to show that the defendants are tried to disturb the possession of the plaintiff.
Additional issue - Whether the second defendant is the bona fide purchaser for the value? - During the pendency of the suit, the DW2 viz the second defendant has purchased the property Item No.1 on 15.5.2013. This suit was pending from the year 2009. When the suit is pending, there is no question of bonafide purchaser for value. It is clearly hit by lis pendens. She had purchased the property without the original title deed. That itself would create doubt on the second defendant's bonafide. Getting sale deed without perusing the original sale deed which is in possession of the plaintiff and filed in to the Court itself shows that the second defendant is not a bonafide purchaser. Hence this Court answers this Additional Issue against the second defendant.
Unrecorded and unexplained transactions - Addition made on the basis of seized loose papers - treatment ot voluntary disclosure made u/s 132(4) - HELD THAT:- When entire entries of seized documents are to be considered, it cannot be taken in part or peace-meal and whole document should be considered as a whole. We find that the seized material, documents were found during the course of search, therefore, the entries recorded thereon whether it is a receipt or expenditure, has to be accepted as genuine.
Therefore, for taxing, the real income is required to be taxed and not the receipts when document contains receipts and expenditure. Therefore, peak of the debit and credit entries of the seized documents is to be considered and set off of carried forward, disclosure or income being taxed either being accounted or unaccounted income is to be allowed. Therefore, to this extent, we find that the findings given by the ld. CIT(A) is justified.
We find support from case of Tirupati Construction [2015 (8) TMI 83 - ITAT AHMEDABAD] relied upon by assessee, wherein it was held that only peak of debit and credit entries of the seized papers/diaries could be assessed in the hands of the assessee and there was no justification for adding the entire receipts side of the seized papers and, accordingly, there is no merit in the grounds of appeal of the Revenue with regard to this issue and, accordingly, dismissed. In the light of these facts, all the grounds of the Revenue are treated as dismissed for all the assessment years under appeal.
Net profit estimation - Taking highest of the adjusted NP ratio - HELD THAT:- CIT(A) has applied uniform net profit rate of 5% for all the assessment years under appeal, which, in our view, is not correct approach as each assessment year is a separate assessment year and net profit rate of the same can be varied for assessment year to assessment year.
We note that net profit ratio @ 5% for adjusted profit and loss account for each of the assessment year cannot be applied while considering net profit rate of on unaccounted sales and expenses resulting into unaccounted transaction. Therefore, the net profit rate for the relevant assessment years under appeal as worked out by the ld. CIT(A) after analyzing transaction from each year would be most appropriate to apply for working out net profit on account of unaccounted sales for the respective assessment years. Therefore, we are of the considered opinion that adjusted net profit rate pertaining to concerned assessment years as worked out by the ld. CIT(A) for each assessment year under appeal would be reasonable to apply while calculating unrecorded profit. Accordingly, the sustainable addition would be worked out after allowing the peak, set off of brought forward balances as allowed by the ld. CIT(A). Directions to compute adjusted net profit ratio.
Contribution of amount for the welfare of the employees of the Drugs Control Department of the respondent State - HELD THAT:- It is suggested a figure at Rs.10 lakhs for this purpose which is acceptable to the petitioners, and he states, on instructions, that Hindustan Unilever Limited would pay the aforesaid amount and deposit the same with the office of the Drugs Control Department. The Department shall spend the said amount in some welfare activity/ project for the benefits of the employees of the Drugs Control Department of the State of Uttar Pradesh.
Deduction u/s 10A - Computation of deduction - Whether foreign currency expenditure incurred by the appellant should not be reduced from export turnover for the purpose of computing the deduction ? - whether plea of the appellant that if communication expenses attributable to rendering business process outsourcing/IT enabled services are excluded from export turnover, the same should also be reduced from TTO in computing the deduction u/s 10A? - HELD THAT:- We find that this issue is covered in favour of the assessee by the judgment of M/s Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein it was held that the total turnover is the sum total of export turnover and domestic turnover and therefore, if an amount is reduced from the export turnover then the total turnover also automatically goes down by the same amount. Hence, we decide this issue in favour of the assessee and the A.O. is directed to recomputed the amount of deduction allowable u/s 10A in the light of this judgment of the Hon’ble Karnataka High Court.
TP Adjustment - MAM - claim of consideration of internal TNMM - HELD THAT:- We find force in the submission of the ld. AR of the assessee that this issue should go back to the file of the TPO for fresh decision because this was the claim of the assessee before the authorities below that internal TNMM of the assessee for its substantial transaction with unrelated parties should also be considered to decide the ALP but this aspect of the matter has been brushed aside by the TPO and DRP. Hence, we set aside the order of the AO on TP issue and restore the matter to the file of the AO/TPO for a fresh decision, after examining the claim of the assessee for consideration of internal TNMM.
Appeal of the assessee is partly allowed for statistical purposes.
Enforcement of an Award - It is the case of the petitioners that the petitions under Section 34 of the said Act would be governed by the unamended provisions of, inter alia, Sections 34 and 36 and, therefore, the petitioners would have the right of an automatic stay on the filing of the petitions under Section 34 of the said Act - HELD THAT:- Supreme Court in Thyssen[1999 (10) TMI 636 - SUPREME COURT]where, after, considering several earlier decisions, the Supreme Court observed in paragraph 32 (which we have already extracted above) that the principles enunciated in the judgments show as to when a right accrues to a party under a repealed Act. The Supreme Court observed that it is not necessary that for the right to accrue, legal proceedings must be pending when the new Act comes into force. Furthermore, and more importantly, the Supreme Court observed that to have the award enforced when arbitral proceedings commenced under the old Act under that very Act was certainly an accrued right. In other words, all the aspects of enforceability of an award entail an accrued right both in the person in whose favour the award is made and against whom the award is pronounced. It will also be noticed that the Supreme Court made it clear that for the right to accrue, there is no necessity that legal proceedings must be pending when the new Act comes into force.
The Supreme Court in Thyssenobserved that the right to have the award enforced (which also comprises of the negative right of the award debtor to not have it enforced till his objections under Section 34 of the said Act are heard and decided) is certainly an accrued right. Given the fact that the amended Section 36 takes away the right of an automatic stay of enforcement of an award, it is clear that the amendment introduced in Section 36 by virtue of the Amending Act would definitely impinge upon the accrued right of the party against whom the award is given after the arbitral proceedings have been held under the unamended provisions. Since an accrued right is affected, unless a contrary intention appears in the amending statute, the amendments would have to be treated as prospective in operation. Prospective from the standpoint of commencement of the arbitral proceedings.
While Section 9 pertains to interim measures which may be directed by the court prior, during arbitral proceedings or after the making of the award, Section 17 deals with the interim measures which may be ordered by an arbitral tribunal. If the interpretation of the respondents is to be accepted, then, in respect of arbitral proceedings commenced prior to 23.10.2015, the amended provisions would apply to proceedings under Section 9 of the said Act, but not to Section 17 thereof. This would result in a serious anomaly - if the expression “to the arbitral proceedings” used in the first limb of Section 26 is given the same expansive meaning as the expression “in relation to arbitration proceedings” as appearing in the second limb of Section 26, then, the matter becomes very simple and does not result in any anomaly. All the arbitral proceedings (and here we mean the entire gamut, including the court proceedings in relation to proceedings before the arbitral tribunal), which commenced in accordance with the provisions of Section 21 of the said Act prior to 23.10.2015, would be governed, subject to an agreement between the parties to the contrary, by the unamended provisions and all those, in terms of the second part of Section 26, which commenced on or after 23.10.2015 would be governed by the amended provisions.
Section 26 of the Amending Act, if a narrow view of the expression “to the arbitral proceedings” is to be taken, is silent on those categories of cases where the arbitral proceedings commenced prior to 23.10.2015 and where even the award was made prior to 23.10.2015, but where either a petition under Section 34 was under contemplation or was already pending on 23.10.2015 - In the facts of the present case, the amendment to Sections 34 and 36, which pertain to the enforceability of an award, certainly affect the accrued rights of the parties.
The petitions filed by the appellants under Section 34 of the said Act would have to be considered under the unamended provisions of the said Act and consequently, the appellants would be entitled to automatic stay of enforcement of the award till the disposal of the said petitions - the impugned order, to the extent it imposes a condition on the appellants / petitioners to deposit a sum of Rs 2.7 crores, is set aside - Appeal allowed.
Bogus purchases - HELD THAT:- It is noted in the assessment order that the notices sent to the parties were returned back by the Postal authorities with remark ‘left’ and the Inspector also reported that the parties did not exist at the addresses provided by the assessee. CIT(A) has also found it fit to treat the purchases from the 10 parties as bogus.
Though assessee has reiterated the submissions made before the lower authorities, which has been reproduced by the CIT(A) yet we find that the same are merely generalised submissions and do not address the specific verification exercise carried out by the AO. Therefore, insofar as the stand of CIT(A) to treat the purchases from the 10 parties as bogus is concerned, the same is hereby affirmed.
Estimation of income - CIT(A) sustaining the addition to the extent of 12.5% - CIT(A) who followed the judgments of Hon'ble Gujarat High Court in the case of Bholanath Poly Fab Pvt. Ltd [2013 (10) TMI 933 - GUJARAT HIGH COURT] and Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] to hold that assessee had indeed made purchases though not from the named parties but from other parties in grey market. For this reason, the addition has been partly sustained to the extent of probable profit on the amount of such purchases. The approach adopted by the CIT(A) is expressly supported by the judgments of Hon'ble Gujarat High Court having regard to the factual situation in the instant case. Therefore, we affirm the ultimate decision of CIT(A) to sustain the addition to the extent of 12.5% of the amount of disputed purchases.
Addition as Prior Period Expenditure -assessee is following mercantile system of accounting, the expenditure relating to prior period is not allowable in the current year - Prior Period Income was shown on account of excess interest as income on FDR - assessee submitted that out of Prior Period Expenses FBT expenses are not allowable expenses and this is not expenditure. Balance amount are the expenses received, have arisen, sanction, could not be estimated accurately in the previous year and have been paid during the year under consideration, hence, allowable expenditure
HELD THAT:- Assessee did not argue with regard to Prior Period Expenses. In the absence of any argument and any challenge to the findings of authorities below, no interference is called for on this matter. The addition is, therefore, confirmed.
Remaining addition CIT(Appeals) found from the submissions of the assessee that the claim of the assessee is based on the fact that in earlier years, the income from FDR was shown excessive, therefore, excess income declared in the earlier year was claimed as expenditure in assessment year under appeal - As admitted that assessee has not incurred any expenditure in this year on this amount and he was not able to satisfy as to how the excess income shown in earlier year can be claimed as expenditure in the current year. He has also not been able to satisfy as to under which provision of law the assessee shall be entitled for deduction on account of excess income shown in preceding assessment year.
CIT(Appeals) was, therefore, justified in holding that in case any income has been shown in excess in any earlier year, the only reedy for the same is by revising the return for the said year. There is no provision under Income Tax Act to support the explanation of the assessee that such excess income can be claimed as expenditure in subsequent year.
As assessee submitted that since assessee has no remedy now, therefore, assessee made a claim of reduction of the income by claiming it as expenditure. The submission of assessee is without substance and has no merit at all. Appeal of the assessee dismissed.
9911796707
