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2021 (11) TMI 823
Validity of reopening of assessment - As argued by petitioner-company notice issue to an entity not in existence at the relevant time, as it had merged with the petitioner-company - HELD THAT:- Prima facie, there appears to be merit in the contention advanced by petitioner-company
Respondents/revenue.says that, he will revert with instructions on this aspect of the matter. We may also note that although opportunity was given to the respondents/revenue to file a counter-affidavit in the matter; no affidavit has been filed, as yet.
List the matter for directions on 17.11.2021.
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2021 (11) TMI 822
Validity of National Faceless Assessment - as argued respondents have not issued the mandatory draft assessment order as required under Section 144B(1)(xvi)(b) - HELD THAT:- This court has in many orders held that provisions of Section 144B are mandatory. Under Section 144B(1)(xvi)(b), if there is going to be a variation prejudicial to the assessee, a draft assessment order has to be issued. Admittedly it has not been issued. It has also been held by this court that non compliance with the procedure laid down under Section 144B of the Act would make the assessment order non est in view of the provisions of sub Section 9 of Section 144B of the Act.
Since admittedly, there has been non compliance with the mandatory procedure laid down under Section 144B, the assessment order dated 13th May 2021 is also non est. The order impugned is hereby quashed and set aside. Consequent demand notice and penalty notice both dated 13th May 2021 are also quashed and set aside.
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2021 (11) TMI 821
Burden to bear the GST amount - Arbitration award- supply of the elevators - Reimbursement of amount payable on account of GST as stated in the tax invoices raised by Kone - input tax credit - contravention of provisions of Section 171 of CGST Act, 2017 or not - jurisdiction/scope of authority of the Hon’ble Arbitral Tribunal as per the provisions of the Arbitration and Conciliation Act, 1996 - Whether GST or DVAT is applicable for the transaction between the parties under the Contract Agreement? - principles of unjust enrichment - Claimant or Respondent is entitled to interests and/or costs or not?
HELD THAT:- It is apparent that the principal dispute before the Arbitral Tribunal remains unadjudicated. The issue struck by the Arbitral Tribunal was whether Kone had erred in not claiming the Input Tax Credit. Thus, the Arbitral Tribunal was required to address the question whether Kone was entitled to claim Input Tax Credit in respect of the Excise duty paid for the lifts in question prior to 30.06.2017 and if so, whether DMRC was obliged to reimburse the GST, notwithstanding, that Kone had not availed of such benefits - It is seen that the Arbitral Tribunal found both the parties wanting for not engaging in joint discussions for exploring the possibility of availing Input Tax Credit under the CGST Act. Accordingly, the Arbitral Tribunal reasoned that both the parties should equally bear the amount of Input Tax Credit that may have been possibly available.
This Court is of the view that since the impugned award does not address the dispute, the impugned award in this regard is liable to be set aside.
It is also relevant to refer to Section 28(2) of the A&C Act. The Arbitral Tribunal might decide “ex aequo et bono or as amiable compositeur” only if the parties have expressly authorized it to do so and not otherwise. The phrase “ex aecquo et bono” means according to equity and conscience. It empowers the arbitrator to dispense with consideration of the law and to take decisions on notions of fairness and equity. The term ‘amiable compositeur’ is a French term and means an unbiased third party who is not bound to apply strict rules of law and who may decide a dispute according to justice and fairness. In view of Section 28(2) of the A&C Act, the Arbitral Tribunal was required to decide the disputes in accordance with law and not render a decision in disregard of the same, in the interest of justice and equity.
It is relevant to note that there was no dispute that Kone had, in fact, paid the GST. It is also not in dispute that DMRC was required to reimburse the GST in addition to the price as fixed. The Arbitral Tribunal had rejected DMRC’s contention that DVAT was payable. In view of the Arbitral Tribunal’s findings, the onus to establish that Kone was entitled to an Input Tax Credit in respect of the Excise duty of ₹1,27,30,042/- rested with DMRC - The Arbitral Tribunal has not rendered any decision in respect of the aforesaid issues and has in fact left the disputes in this regard undecided.
Petition disposed off.
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2021 (11) TMI 820
Cancellation of registration of petitioner - absence of any reply being filed to the show cause notice - requirement of granting opportunity of hearing or not - Rule 22 of the Uttar Pradesh Goods and Services Tax Rules, 2017 - HELD THAT:- In the admitted facts of the present case, though no reply may have been furnished by the petitioner still, it was incumbent on respondent no.2 to fix a date and afford opportunity of hearing to the petitioner in compliance of the first proviso to Section 29(2) of the Act. In view of such facts, no useful purpose would be served in keeping in the present petition pending or calling for a counter affidavit as the instructions received by the learned Standing Counsel are complete with respect to the issue being dealt with by the Court.
The order dated 29.06.2019 issued by respondent no.2 is set aside - Petition allowed - decided in favor of petitioner.
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2021 (11) TMI 819
Search and seizure - Seeking release of seized cash - Revenue alleges concealment of facts - erroneous recovery by the respondents from the petitioner without proper adjudication - HELD THAT:- Admittedly, the search at the residential premises of the Director of the petitioner company was carried out on 04.03.2021. The petitioner made no complaint to the respondents at the relevant time and till the letter dated 12.10.2021 of non-supply of Panchnama and other documents in respect of the search carried out at the premises. Clearly, this plea is being set up as an afterthought by the petitioner. As far as the power to seize cash is concerned, the same need not be adjudicated in the present petition for the reason that it is an admitted fact that on the basis of the representation/letter dated 24.03.2021 referred, the cash amount so seized was released in favour of the petitioner. The said question, therefore, in the present petition is merely of an academic importance and is, therefore, left open to be adjudicated in an appropriate case.
The petitioner clearly stated that the tax liability is being discharged by it ‘voluntarily’ and requested the respondents not to issue any Show Cause Notice in relation to the search and seizure undertaken by it on 04.03.2021. Clearly therefore, the tax amount has been deposited by the petitioner voluntarily and the case of coercion now being set up by the petitioner is an afterthought.
The effect of Subsection (5) and (6) of Section 74 of CGST Act is that the assessee can by making voluntary deposit of tax, interest and penalty avail the benefit of restriction of penalty to only 15% of such tax. In the present case, the petitioner availed of this remedy and based thereon, proceedings against the petitioner arising out of the search and seizure activities carried out on 04.03.2021 were closed.
The petition is dismissed with costs quantified at ₹ 25,000/- to be deposited with Delhi High Court Legal Services Committee.
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2021 (11) TMI 818
Permission to revise the Form TRAN- 1 resulting in deprivation of the Input Tax Credit - transitional arrangement for Input Tax Credit - Section 140 of the GST Act - HELD THAT:- There seems to be a consistent view that if there is substantial compliance, denial of benefit of Input Tax Credit which is a beneficial scheme and framed with the larger public interest of bringing down the cascading effect of multiple taxes ought not to be frustrated on the ground of technicalities.
The order of the learned Single Judge is affirmed in directing the petitioner/ respondent to enable the respondent herein to file a revised Form TRAN-1, by opening of the portal and that such exercise is to be completed within a period of 8 weeks from the date of issue this order.
Appeal disposed off.
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2021 (11) TMI 817
Provisional attachment of the property - Section 83 of the Central Goods and Services Tax Act - It is the grievance of the petitioner that on 23.06.2020, respondent No.4 issued notice in the form of GST DRC-01A without considering the reply of the petitioner - HELD THAT:- The Court vide order dated 20.08.2020 quashed and set aside the Form GST DRC-01A dated 23.07.2020 and directed respondent No.4 to initiate fresh proceedings. However, the Court did not disturb the order of provisional attachment passed on 24.07.2020. It is further grievance of the petitioner that respondent No.4 had been directed to initiate fresh proceedings which should have issued in the form of GST DRC-01A instead he chose to issue notice in the form of GST DRC-01A. On 25.08.2020, the summons has been issued under Section 70 of the GST Act where certain documents have been called for.
It appears that there is challenge to the order of the assessment which has been passed without filing any appeal on the ground that the order is cryptic and challenge is made on the ground of non-reasoned order. The Court is not rightly concerned with the same as the separate petition had been preferred.
Continuation of the attachment beyond the period of one year - contravention of the provisions of Sub Section (2) of Section 83 of the CGST Act, or not - HELD THAT:- As the cause is no longer surviving and the provisional attachment made does not survive any longer by virtue of the order dated 23.09.2021, the petition is being disposed of with the word of caution to the respondents that the statutory provision needs to be complied with very strictly and stringently. There must not be any requirement for the parties to approach this Court for compliance of the provisions of law. If there are statutory remedies available, they may take recourse to, however, the State cannot insist on continuing with something which is impermissible under the law.
Petition disposed off.
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2021 (11) TMI 816
Classification of the service - activities carried out by the Appellant in India would constitute a supply of “Other Support Services”, falling under Heading 9985 or as “Intermediary Service” classifiable under Heading 9961/9962? - Levy of GST - intermediary services or not - export of services or not - zero-rated supply or not - refund of unutilized ITC - HELD THAT:- The definition of ‘intermediary’ as given in Section 2(13) of the IGST Act excludes a person who supplies such goods or services or both on his own account. It is the contention of the Appellant that the services being provided to Airbus France are on their own account and they are not engaged in supplying services on behalf of the Principal. The Appellant has placed reliance on the Education Guide 2012 issued by the CBIC under the Service Tax regime and contended that none of the conditions required for qualifying to be ‘intermediary service’ as explained in the Education Guide are satisfied in their case.
There does not seem to be any difference between the meaning of the term “intermediary” under the GST regime and pre-GST regime. In the pre-GST regime, an intermediary referred to a person who facilitates the provision of a main service between two or more person but did not include a person who provided the main service on his account. Similarly, in the GST regime, an intermediary refers to a person who facilitates the supply of goods or services or both between two or more persons but excludes a person who supplies such goods or services or both on his own account. The phrase ‘such goods or services’ used in the definition of ‘intermediary’ implies that the person should not be supplying on his risk and reward entirely, the very goods or services whose supply he is arranging or facilitating. In the instant case, the Appellant is arranging for and facilitating the Principal in procuring a supply of goods from India. He is not undertaking any supply of goods.
The Appellant is not supplying such goods on his own account and hence, the Appellant does not fall within the ambit of the exclusion contained in the definition of ‘intermediary’. Therefore, the Appellant is clearly playing the role of intermediary for Airbus France, as envisaged under Section 2(13) of the IGST Act, 2017 and we uphold the findings of the lower Authority in this regard.
As regards the classification of the services provided by the intermediary, it is found that the services of the Appellant, who is acting as an intermediary, would aptly be classified under the Heading 998599 as ‘Other support services’. The Explanatory Notes to the Scheme of Classification of Services which is a guiding tool for classification of services indicates the scope and coverage of the Heading 998599 as specifically covering business services of intermediaries and brokers under this heading - there are no merit in the Appellant’s contention of classifying their activity under Heading 998399. It is trite law that in classification matters, a specific heading is preferred to a general heading. In this case, the services of intermediaries is specifically covered under Heading 998599 and hence the intermediary service rendered by the Appellant is correctly classifiable under the said Heading.
In this case, the activity of the Appellant who is the supplier of intermediary service i.e collection of information of parties in India, analysis of potential suppliers and skill development of existing suppliers, are all very much done in India, which is the location of the supplier of intermediary service. Therefore, by virtue of Section 13 (8) (b) of the IGST Act, it automatically flows that the place of supply of the intermediary service provided by the Appellant to Airbus France, is in India. When the place of supply is in India, it does not satisfy one of the conditions for export of service, that the place of supply should be outside India - the intermediary services provided by the Appellant to Airbus France, do not qualify as export of service.
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2021 (11) TMI 815
Capital gain on distribution of assets - Conversion of the partnership firm into a private limited company - Violation of the conditions stipulated u/s 47(xiii) - transfer by way of distribution of assets - partners of the erstwhile firm derived benefit other than allotment of shares by way of loan credits in their favour on conversion of the partnership firm into a private limited company - HC held unless and until the first condition of transfer by way of distribution of assets is satisfied, Section 45(4) will not be attracted. Therefore, in the facts and circumstances of the case, we find that there is no transfer by way of distribution of asset - HELD THAT:- As the respondent has already availed the benefit under the scheme i.e. Vivad se vishwas.In view of the same, no further order is required.
Accordingly, the special leave petition is disposed of.
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2021 (11) TMI 814
Slump sale - Section 2(42C) - valuation entire unit - valuer assigned separate valuation to different parts of the unit - Effective date of sale of this unit - CRM division stood sold from the effective date - Date of transfer - Date of agreement - Disallowance of expenditure made in terms of section 14A - HELD THAT:- We see no reason to interfere. The Special Leave Petition is dismissed.
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2021 (11) TMI 813
Reopening of assessment u/s 147 - Validity of reasons to believe - HELD THAT:- There is no material which has come in the hands of respondent after the assessment order was passed on 12/3/2016 which can be considered as material fact and the same was not truly and fairly disclosed.
By letter dated 9/11/2015 petitioner had received the letter from office of the Assistant Commissioner, Office of Income Tax calling upon to furnish the documents and details of about 27 transactions/flat sales. Transaction amount has also been mentioned and the total of these transactions which is the amount mentioned in the reasons for reopening. In reply petitioner vide its letter dated 17/11/2015 provided all details and documents to the AO. Subsequently, the assessment order dated 29/2/2016 was passed. Date given as 12/3/2016 in the reasons, Shri Jain says appears to be erroneous.
We are satisfied that this is nothing but change of opinion and using the words “I have reason to believe that income chargeable to tax…. By reason of the failure on the part of the assessee to disclose fully and truly all material facts………….” in the reason for reopening is clearly an attempt to take the case out of restrictions imposed by the proviso of Section 147 of the Act - Decided in favour of assessee.
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2021 (11) TMI 812
Reopening of assessment u/s 147 - Assessment sought to be reopened after a period of 4 years - HELD THAT:- The criterion for reopening of assessment after a period of 4 years are no longer res-integra in view of the Judgment of Division Bench of this Court in the case of Ananta Landmark (P.) Ltd. [2021 (10) TMI 71 - BOMBAY HIGH COURT] wherein this Court held that where assessment was not sought to be reopened on reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of Assessing Officer about manner of computation of deduction under section 57, reopening was not justified.
When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion for commencing proceedings for reassessment. It is also held that when on consideration of the material on record, one view is conclusively taken by the Assessing Officer, it would not be open for the Assessing Officer to reopen assessment based on the very same material and to take another view.
In the facts of the present case, in view of reply filed by Petitioner (Exh.B), it is clear that the Assessing Officer was aware of the issue of AIR and ITS data. Once the Assessing Officer had applied his mind in regular assessment proceeding of Petitioner having sold 29 flats, it is not open for Assessing Officer to reopen the assessment in absence of material to show escapement of income. See Aroni Commercial Limited [2014 (2) TMI 659 - BOMBAY HIGH COURT] and in Marico Ltd [2019 (8) TMI 1337 - BOMBAY HIGH COURT] AO is reopening the assessment merely on the basis of change of opinion which is not permissible and hence could not have issued a notice of re-opening of assessment to Petitioner. - Decided in favour of assessee.
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2021 (11) TMI 811
Validity of reopening of assessment u/s 147 - A argued admittedly, notice(s) were issued to entities which were not in existence at the relevant time, as they had merged with the petitioner-company i.e., GE India Industrial Pvt. Ltd. - HELD THAT:- As the impugned notice(s) issued under Section 148 of the Act cannot be sustained, as they were issued to entities [i.e., GE India Technology Centre Pvt. Ltd. and GE India Exports Pvt. Ltd.which were not in existence at the relevant time, as they had merged with the petitioner-company i.e., GE India Industrial Pvt. Ltd.
Therefore, the impugned notice(s) dated 30.06.2021 are set aside.
The respondents/revenue will have liberty to take next steps in the matter, albeit as per law. In case any such steps are taken, the petitioner-company will have the liberty to assail the same, in accordance with law.
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2021 (11) TMI 810
Alteration of charge - main charges for the offence under Section 276(C)(1), after examination of P.W.7, in connection with the very same Assessment Year for non payment of Tax, charge under Section 276(C)(2) Income Tax Act was now sought to be added by way of alteration of charge - HELD THAT:- It is not disputed that sanction under Section 279 (1) of Income Tax Act is already been granted and sanctioned for the offence under Section 276(C)(1) and other offences. Since the expression "unless the sanction had been already obtained for a prosecution on the same facts as those on which, the altered or added charge is found", new or fresh sanction is not required, as contemplated under Section 216(5) of Cr.P.C., is present.
As stated supra, the Assessment Year is one and the same. Initial charge is for evasion of tax. Now, by way of alteration of charge, it is included to add evasion of payment of tax and hence, we do not find any error in the order passed by the Special Sessions Judge, in allowing the application.
Stage of the case - According to the petitioner, the matter is posted for argument, at this stage, whether, this type of nature of the petition can be entered - HELD THAT:- The Hon'ble Supreme Court in Dr.Nallapareddy Sridhar Reddy Vs. The State of Andhra Pradesh & Ors. [2020 (1) TMI 1412 - SUPREME COURT] has held that the stage of the proceedings is irrelevant for alteration of the charge and hence, I find no illegality or irregularity in the impugned order passed by the learned Sessions Judge.
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2021 (11) TMI 809
Revision u/s 263 by CIT - Period of limitation - Allegation of lack of adequate opportunity being provided by the ld PCIT - HELD THAT:- This is clearly a case of lack of adequate opportunity being provided by the ld PCIT. We find that the show-cause notice has been issued on 26.03.2021 at the fag end of the limitation period, which was expiring on 31.03.2021, wherein the assessee has been provided effectively one working day to respond by 29.03.2021, and the order was thereafter pronounced on 31.03.2021. We understand that being a limitation period, the ld PCIT could not have granted more time but the question is what stopped the ld PCIT to atleast initiate the proceedings earlier and why the proceedings were initiated at the fag end of the limitation period -
We believe that the assessee deserve a reasonable and sufficient opportunity to put forth his submissions and supporting documentation in response to the show-cause notice raised by the ld PCIT. We therefore deem it fit and appropriate that the matter be set-aside to the file of the ld PCIT to decide the matter a fresh as per law after providing reasonable opportunity to the assessee.
Whether assessment order has been made subject matter of Vivad Se Vishwas Scheme, the ld. Pr.CIT cannot exercise jurisdiction u/s 263 ? - PCIT is also directed to examine the contentions so raised on behalf of the assessee in terms of exercise of jurisdiction u/s 263 in context of declaration of the assessee having been accepted under the direct taxes Vivad Se Vishwas Scheme Act, 2020 prior to the issuance of the show-cause notice u/s 263 - since the ld PCIT himself is the appropriate authority who has issued Form 3 dated 23.02.2021 in the instant case and the fact that the said contentions have been advanced for the first time before us, it is relevant to afford an equal opportunity to the ld PCIT to examine such contentions raised on behalf of the assessee challenging his exercise of jurisdiction u/s 263 of the Act. Therefore, the contentions so advanced by both the parties are left open to be examined by the ld PCIT as per law and have not been adjudicated upon by us.
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2021 (11) TMI 808
Revision u/s 263 by CIT-A - essential prerequisite for assuming revisionary jurisdiction u/s 263 - AO having not inquired into the difference in the amount of sales, trade receivables and trade payments as reflected in the financial statements of the assessee and that submitted in the details to the AO, causing prejudice to the Revenue on account of income relating to sales to that extent having escaped assessment or there being unexplained investments of the assessee - HELD THAT:- It is a settled proposition of law that for assuming revisionary jurisdiction u/s 263 of the Act there has to be a clear finding of error by the PCIT/CIT in the order so sought to be revised. And this finding has to be arrived at after conducting necessary inquiry if required. In cases of inadequate inquiry there has to be a finding that the inquiry made was erroneous. And this can happen only when the PCIT/CIT himself conducts an inquiry and verification and establishes therefrom the error made by the AO, making his order unsustainable in law. The finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the AO to conduct further inquiries without a finding that the order is erroneous.
Where the assessee we find had duly furnished an explanation of the issue not allegedly found to have been examined by the AO and the Ld.Pr.CIT having not even made an effort of examining the explanation simply restoring it to the AO to do so, there is we hold no finding of error by the Ld.PCIT in the order of the AO.
We hold that the orders passed by the ld. Pr. CIT being beyond the scope of section 263 of the Act are not valid. Accordingly we set aside the revision orders passed by the Ld.PCIT for the two years under consideration. - Decided in favour of assessee.
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2021 (11) TMI 807
Addition u/s. 68 - unexplained cash credit - addition relying on the statement of Shri Raj Kumar Kothari who had retracted the statement within ten (10) days alleging threat and coercion on the part of the Investigation Wing - DR submitted that based on information from the Investigation Wing that the assessee had taken unsecured loan from ten (10) shell companies controlled and operated by Shri Raj Kumar Kothari who have accepted before the Investigation Wing that he through his legal entities (Private Limited companies) is indulging in providing bogus share capital and unsecured loan in lieu of commission - CIT-A deleted the addition - HELD THAT:- All the ten (10) lender companies are corporate entities which are incorporated by the ROC and thus the existence and status of them can be taken note by the A.O. from the master data available in the public domain/website of ROC; And it was brought to our notice that these companies are still 'active' companies which are discernable from ROC website.
All the lender companies have their respective PAN identity and the jurisdiction under whom they are assessed are available in the ITR filed by them directly to the A.O. pursuant to the section 133(6) notice issued by the A.O. and transactions have been made through account payee cheques thus A.O. of the assessee who borrows or is in receipt of credit/loan (like assessee in this case) cannot brand the lender company as lacking in creditworthiness, unless the A.O. undertakes the exercise of enquiring from the A.O. of the lender companies and in case if the A.O. of the lender companies have accepted the transactions shown by them with the assessee company, then the A.O. of the assessee company cannot impute un-creditworthiness of the lender company .
The lender companies have sufficient creditworthiness to give loan to the assessee company and cannot be termed as shell companies by simply basing his (A.O) conclusion on the strength of selected questions and answers given by Shri Raj Kumar Kothari and that too recorded on third party proceedings and which were admittedly recorded behind the back of the assessee.
Shri Raj Kumar Kothari has retracted the said statement recorded on 02.03.2016 within ten (10) days and has alleged threat and coercion on the part of officers who elicited the statement as they wished, so the statement/truth of the contents of the statement cannot be relied upon by the A.O. and doing so is bad in law; and therefore according to us, it could not have been the basis to draw adverse inference against the assessee company in respect of loan taken by it.
A.O. had summoned Shri Raj Kumar Kothari and his statement has been recorded by him from which he could not elicit any incriminating material/statement against the assessee/loan transaction or can term the assessee as a beneficiary. And neither the AO has carried out any enquiry regarding creditworthiness of the lenders from their respective AO's, without which AO of the assessee could not have drawn adverse view of un-worthiness of credit in respect of lenders as held by the Hon'ble Calcutta High Court in the case of M/s. Dataware Private Limited [2011 (9) TMI 175 - CALCUTTA HIGH COURT] so the A.O. of the assessee erred in branding the lender companies as lacking in creditworthiness.
AO could not successfully elicit incriminating evidence against the assessee and on the other hand, Shri Raj Kumar Kothari has confirmed that loan transaction with the assessee as genuine and the AO after having recorded directly the statement of Shri Raj Kumar Kothari should not have relied on the earlier statement recorded by the Investigation Wing in third party proceedings which has been retracted - AO has not found any infirmity with the documents filed by the assessee to prove the loan transactions as discussed supra. So, other than the third party statement, which did not incriminate the assessee, and which was retracted, and while giving statement to AO Shri Kothari having confirmed the loan transaction with assessee and since Shri Kothari has corroborated the transaction, the retracted statement should not have been used as the basis to draw adverse inference against the assessee. Therefore, no addition was warranted. - Decided against revenue.
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2021 (11) TMI 806
Taxability of supply of software as royalty - business connection/PE in India - AO held that the assessee had an Agency PE in India - AO directed attribution of profits of 15% from the sale of equipment - AO held that the amount received by the assessee on account of software licensing as loyalty u/s 9(1)(vi) & (vii) of the Income Tax Act, 1961 and under the Article 12 of the treaty between India and USA - HELD THAT:- As decided in own case [2017 (4) TMI 1504 - DELHI HIGH COURT] consideration received by the Assessee for supply of product along with license of software to End user is not royalty under Article 12 of the Tax Treaty. Even where the software is separately licensed without supply of hardware to the end users (i.e. eight out of 63 customers), we are of the view that the terms of license agreement is similar to the facts of Infrasoft Ltd' [2013 (11) TMI 1382 - DELHI HIGH COURT]. Accordingly, we- hold' that there was no transfer of any right in respect of copyright by the Assessee and it was a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Treaty. The receipts would constitute business receipts in the hands of the Assessee and is to be assessed as business income subject to assessee having business connection/PE in India as per adjudication on Ground - Decided in favour of assessee.
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2021 (11) TMI 805
Validity of reopening of assessment - allegation of non issue of notice under Section 143 (2) - addition of Bogus purchases - HELD THAT:- In the absence of fulfillment of mandatory requirement of issuance of notice under section 143(2) of the Act, the assumption of jurisdiction by issuance of notice of reopening itself would not be sustainable in law. Besides, section 292BB of the Act would apply with regard to failure of 'service' of notice’ and not with regard to issue of notice u/s 143(2) prior to finalization of assessment order, cannot be condoned by referring to section 292BB of the Act.
Merely because assessee participated in proceedings pursuant to notice issued under section 148, it does not obviate mandatory requirement of issue of notice under section 143(2) of the Act.This is an undisputed position of fact, as far as the present case is concerned, that assessing officer failed to issue a notice to the assessee under section 143(2) of the Act when the Assessee made a request before the assessing officer vide letters dated 23.12.2014 and dated 21.02.2015 that the original return filed should be treated as return filed in response to notice under section 148 of the Act.
AO has unequivocally admitted in his Remand Report that no notice was issued (not available on record) u/s 143(2) of the Act. The assessee has also filed an affidavit dated 31.01.2017 (duly notarized) stating that he never received notice under section 143(2) of the Act. These averments remained uncontroverted. Thus, we do not find any infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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2021 (11) TMI 804
Income taxable in India - PE in India - whether Zee Telefilms Limited (ZTL) does not constitute a Permanent Establishment (PE) of the assessee in India? - CIT(A) held that, in the absence of a permanent establishment (PE), income of the assessee is not taxable as per article 7 of the DTAA? - HELD THAT:- As decided in own case [2021 (2) TMI 95 - ITAT MUMBAI] even if there is held to be a dependent agency permanent establishment on the facts of this case, as at best the case of the Assessing Officer is, it is wholly tax neutral inasmuch as the Indian agents have been paid arm's length remuneration, and nothing further can, therefore, be taxed in the hands of the assessee.
It has not been the case of the revenue authorities at any stage that the remuneration paid to the Indian agent is not an arm's length remuneration for the services rendered by the agents concerned. There is no material whatsoever before us to show, or even indicate, that the remuneration paid to the agents is not arm's length remuneration. Under these circumstances, we see no reasons to remit the matter to the file of the Assessing Officer, for fresh round of ALP ascertainment proceedings, as prayed by the learned Departmental Representative. The plea of the assessee, as raised in the cross objections, therefore, merits acceptance. Whether there is a DAPE or not, there are no additional profits to be brought to tax as a result of the existence of the DAPE, and, therefore, the question about existence of a DAPE on the facts of this case is wholly academic.
Once we hold, as we have held above, that in the light of the present legal position, existence of dependent agency permanent establishment in wholly tax neutral, unless it is shown that the agent has not been paid an arm's length remuneration, and when it is not the case of the Assessing Officer, as we have noted earlier, that the agents have not been paid an arm's length remuneration, the question regarding existence of dependent agency permanent establishment, i.e. under article 5(4), is a wholly academic question. - Decided in favour of assesse.
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9911796707
