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2023 (8) TMI 1634
Disallowance of employees contribution to Provident Fund/ESIC u/s 36(i) - as submitted that the impugned employee’s contribution towards PF and ESIC has been paid and deposited before the due date allowed u/s 139(1) although the assessee has remitted the payment belatedly and beyond the due dates specified in respects Acts - HELD THAT:- The issue towards taxability of belated employees’ contribution to Provident Fund/ESIC is no longer res initegra in the light of the judgment of Checkmate Services (P.) Ltd. [2022 (10) TMI 617 - SUPREME COURT]
Tribunal in Cemetile Industries [2022 (12) TMI 354 - ITAT PUNE] had expressed a view that such adjustment/disallowance is also permissible in the proceedings carried out under Section 143(1) of the Act. Very recently, in Savleen Kaur & Others [2023 (2) TMI 51 - ITAT DELHI] has also taken a similar view and upheld the action of the Revenue. In parity with the view taken by Co-ordinate Benches, we do not see any merit in the appeal of the assessee on first principles.
In the case of Sentinel Consultants Pvt. Ltd. [2023 (6) TMI 1419 - ITAT DELHI] observed that order that month during which the disbursement of salary is actually made would be relevant for the purposes of determination of due date.
Consequently, we consider it expedient to restore the issue back to the file of AO for factual verification and redetermination in the issue on the light of determination made in the case of Kanoi Paper and Industries Ltd. [2001 (5) TMI 139 - ITAT CALCUTTA-E] The AO shall thus re-compute the amount of disallowance u/s 36(i)(va) of the Act, if any, on the above basis, in accordance with law and allow relief under Section 36(i)(va) of the Act where it is found that deposits have been made towards PF/ESIC within the due date from the close of month of actual disbursement of salary/wages. Appeal of the assessee is allowed ex parte for statistical purposes.
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2023 (8) TMI 1633
Condonation of delay in filing a review application - Section 5 of the Limitation Act, 1963, in view of Section 21 & 22 of the Administrative Tribunal Act, 1985, and Rule 17(1) of the Central Administrative Tribunal (Procedure) Rules, 1987 - HELD THAT:- Since, the present issue is relating to condonation of delay in filing the review before the Tribunal, this Court finds that section 22(3)(f) of the Administrative Tribunal Act, 1985 relates to the power of a Central Administrative Tribunal to review its own decision. Therefore, as far as the power of the Administrative Tribunal to review its own decision is concerned, sufficient power has been vested as per the statute itself. Apparently, the extent of power to be exercised by the Tribunal can be well understood from the provision that the said power of review is to be found under the larger umbrella of section 22 (3) of the Act, 1985.
The power of review vested with an Administrative Tribunal is equated to a Civil Court and, thus, while considering and disposing of any review application, the Administrative Tribunal is to follow the Code of Civil Procedure. Thus, by necessary implications the provisions of review as found under the Civil procedure Code i.e Section 114 and Order XLVII Rule 1 of the Civil Procedure Code came to be incorporated along with the power of review of an Administrative Tribunal - the power of the Tribunal to review its judgment has been well explained by the Hon’ble Supreme Court in the case of Ajit Kumar Rath v. State of Orissa [1999 (11) TMI 861 - SUPREME COURT] and Gopalbandhu Biswal Vs Krishna Chandra Mohanty [1998 (4) TMI 550 - SUPREME COURT], wherein the Hon’ble Supreme Court had held review power of a Tribunal to be similar as has been granted to a Civil Court under Section 114 or under Order XLVII Rule 1 of the Civil Procedure Code. In any case, the power of review is not absolute and is hedged in by the restrictions indicated in Order XLVII Rule 1 of the Civil Procedure Code and the same can be exercised on the application of a person on restricted grounds of discovery of new and important matter; or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the order was made.
Apparently, the Apex Court in the Commissioner of Sales Tax, U.P. Vs. Madan Lal Dan & Sons. Bareilly [1976 (9) TMI 135 - SUPREME COURT] has held that for the purpose of determining any period of limitation prescribed for any application by any special or local law, the provisions contained in Section 12(2), inter alia, shall apply in so far as, and to the extent to which they are not expressly excluded by such special or local law, and noted that there was nothing in the U.P. Sales Tax Act expressly excluding the application of Section 12(2) of the Limitation Act.
The provisions of Section 5 of the Limitation Act would be applicable to a review Application field before the Administrative Tribunal as the provisions of limitation are not specifically barred by the Administrative Tribunal Act or the Rules framed therein. However, the Tribunal should exercise great caution while applying the said provision of the limitation Act, so as to balance between a right of a party to review the order on limited legally permissible grounds available to him and public policy which provides for finality of a lis between the parties - Hon'ble Supreme Court in Union of India & others vs. Chitra Lekha Chakraborty [2008 (10) TMI 743 - SUPREME COURT], wherein the Apex Court held that since there is a specific provision in Rule 17 of the Administrative Tribunals Rules for filing of Review applications before the Central Administrative Tribunal, Section 5 of Limitation Act was not applicable to a petition under Rule 17.
Conclusion - This Court holds that an application for condonation of delay in Review Application filed before the Central Administrative Tribunal (Procedure) Rules, 1987 is maintainable and accordingly, it is held that the Tribunal can condone the delay under Section 5 of the Limitation Act, if it is satisfied that sufficient cause for not preferring an application within the time has been supplemented.
The impugned order is quashed - petition allowed.
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2023 (8) TMI 1632
Entitlement to sale certificates filed in Book No. 1 u/s 89(4) of the Registration Act, 1908 - purchase of properties through public auctions conducted under the SARFAESI Act - HELD THAT:- Section 78 of the Act empowering the State Government to prepare a table of fees on various items like for the registration of documents, for searching the Registers etc. Accordingly in respect of registration of documents in Books 1 and 4, i.e., under Section 89(4) of the Act, the revised table of fees prepared under Section 78 of the Act and approved by the State Government was published for general information in accordance with the provisions of Section 79 of the Act, where there are several schedules given, now after schedule 4, a new schedule, i.e., 4A has been inserted by virtue of the said amendment.
Under this new schedule 4A, filing a sale certificate under sub-section (2) or sub-section (4) of Section 89 of the Act requires a fee, i.e. Rs. 11/-for every rupees hundred or part thereof on the market value of the property. That means, 11% of fee to be paid by every sale certificate holder who seeks for filing of the same either under Section 89(2) or under Section 89(4).
In the G.O. No. 28, dated 28.03.2023 as quoted herein above, the Government has stated that the Inspector General of Registration has stated that, the Hon'ble Supreme Court of India has ordered to file the sale certificate issued by the authorised officer of the bank under Section 89 of the Registration Act, 1908 without insisting stamp duty and registration fee. Therefore the Inspector General of Registration has proposed to levy filing fee for the sale certificate which is sent for filing whether issued by the Civil Court or Revenue Officer or Authorised Officer of the Bank, under Section 78 of the Registration Act, 1908 - in the notification annexed to the G.O, it has been made clear that, the amendment hereby made shall come into force on 23rd March 2023. Therefore only from the date of issuance of the G.O. No. 28, this amendment would come into effect i.e., prospectively.
Conclusion - The sale certificates issued by authorised officers under the SARFAESI Act are not compulsorily registrable and should be filed in Book No. 1 without the imposition of additional stamp duties or registration charges.
Petition allowed.
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2023 (8) TMI 1631
Addition u/s 68 - unsecured loan taken by the assessee from the companies - Onus to prove - CIT(A) deleted addition - HELD THAT:- In view of the fact and circumstances of the case as well as having considered the documentary evidence produced by the assessee and analyzing the transactions recorded in the documentary evidences we find that the assessee has duly discharged its onus to prove the identity of the loan creditors, the capacity of the loan creditors and the genuineness of the transactions.
So far as the identity of the loan creditors is concerned the department has not disputed the same and the capacity of the loan creditor has been duly established by producing audited financial statements, tax audit report, bank account statements, return of income of the lender companies and no defect was pointed out by the AO in the documentary evidence produced by the assesse.
The transactions are through banking channel and the assessee produced the bank account statement of the assessee as well as the loan creditor companies to show that there is nothing in the bank account statement as well as ledger account to reflect that assesse’s own money has routed back through these lender companies. Rather the assessee has repaid part of the loans prior to the search and seizure action in this case. Therefore, all these facts and record go to prove that the transactions are genuine and nothing has been brought on record except reference to certain investigation reports to doubt the transactions duly recorded in the books of account as well as in the bank account statement. No error or illegality in the impugned order of the CIT (A) qua this issue of addition made by the AO u/s 68 of the Act on account of unsecured loan.
Disallowance of interest paid by the assessee on these loans which was deleted by CIT(A) - We further note that all the transactions of interest payment are duly reflected in the books of account of assessee as well as lender companies and are subjected to TDS. These transactions are also reflected in the bank account of the assessee as well as lender companies, therefore, there is no reason to doubt the payment of the interest by the assessee after deducting TDS through banking channel and duly recorded in the books of account.
Once the addition made on account of unsecured loan is deleted then the interest on the said loan added by the AO as consequence to the disallowance of the loan amount would not survive. Accordingly we do not find any reason to interfere with the impugned order of the Ld. CIT (A) qua this issue.
Addition u/s 69 on account of unexplained investment - HELD THAT:- AO has made addition contrary to the record which was rejected by holding that in the books of M/s A & A Shelters partnership firm unsecured loan is shown as taken from M/s Purvi Finvest Ltd but ultimate source of this loan is the unaccounted income of the assessee solely on the basis of the statement of Shri Naveen Jain.
Assessee has otherwise produced all the relevant documentary evidences to show that it is a genuine transaction of loan between M/s A & A Shelters and M/s Purvi Finvest Limited and therefore, in absence of any material or other fact to show that this loan amount is assessee’s unaccounted income transferred to the partnership firm in the garb of unsecured loan from M/s Purvi Finvest Limited the addition made by the AO is not sustainable.
AO has even not conducted any inquiry on this issue and simply made addition based on the statement which does not disclosed any fact leading to the conclusion that the transaction as found recorded in the books of M/s A & A Shelters is in fact unaccounted income of the assesse. This ground of revenue’s appeal is dismissed.
Addition made on account of on money received for booking of plots - HELD THAT:- CIT (A) has confirmed the addition by ignoring all these explanation and relevant evidences available on record. Therefore, the impugned order of the CIT (A) confirming the addition without even verifying the correct facts on the record produced by the assessee is not sustainable.
Once the assessee has produced the relevant documents to manifest that some of the alleged plots have been sold by the assessee through registered sale deeds and duly recorded in the books of account and also declared in the turnover of the assessee then the addition on account of undisclosed income in respect of sale of these plots is highly arbitrary and unjustified.
When the assessee has explained that another plot was booked in the name of Ankush S/o R.C. Chourasia against booking amount of Rs. 50,000/- received through Cheque and the details of the booking and Cheque produced before the AO in the ledger account then the addition to the extent of the said plot is also not justified. The remaining plots are claimed to be part of the inventory of the assessee company which could be verified from the books of account however, neither the AO nor Ld. CIT (A) took pain to verify this fact from the books of the assesse. Accordingly addition made by the AO and confirmed by the Ld. CIT (A) without considering correct facts as recorded in the books of account as well as other relevant evidence produced by the assessee in the shape of sale deeds and transactions through banking channel is highly arbitrary and hence same is deleted.
AO has made addition u/s 68 of the Act on the ground that entries found in the seized documents from Shri Shri Hemandra Singh Nabeda are not recorded in the books of account. Once the addition is made on the basis of these entries not recorded in the books of account being on money received by the assessee against the sale of plot then the provision of section 68 cannot be invoked. This finding of the AO is self-contradictory as in one had it is held that these transactions are not recorded in the books of account and on the other hand Ld. AO has made the addition u/s. 68 of the Act which can be done only when the entries are found in the books of account and the assessee failed to explain the source of the credit recorded in the books of account.
Addition u/s 68 on account of cash received against sale of plots not recorded in the books of account - addition based on the seized documents which is register found during the course of search from the office premises of the assessee - HELD THAT:- The seized documents cannot be accepted as admissible evidence in part. Hence to the extent of addition made by the AO towards the cash receipt is duly based on the seized material. Since the said transaction of cash is not found recorded in the books of account therefore, applying the provisions of section 68 of the Act is not justified. Hence we restrict the addition of the said amount of Rs. 2,77,350/- as unaccounted business income of the assessee and not u/s 68 of the Act. The orders of the authorities below are modified accordingly.
Validity of assessment order for want of valid approval u/s 153D - HELD THAT:- When the AO has obtained the approval u/s 153D and assessee has not brought before us anything to show contrary ground no.7 of the assesse’s appeal is dismissed.
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2023 (8) TMI 1630
Computing Transfer Price of Power for the purpose of Deduction u/s 80-IA in respect to its eligible power undertakings - rejecting the assessee's claim of Reliability charge merely on the contention that such claim has not been made vide the return of income - HELD THAT:- As differentiated hereinabove that the decision of Wipro Ltd. [2022 (7) TMI 560 - SUPREME COURT] is clearly not applicable as the assessee is not making new claim but revising the claim of price of power supply, in the facts of the present case. On the contrary, in view of our categorical finding above and also keeping in view the decision of National Thermal Power corporation Ltd. [1996 (12) TMI 7 - SUPREME COURT] Jute Corporation of India [1990 (9) TMI 6 - SUPREME COURT] we are of the view that assessee could raise additional ground before ld. CIT (A) as well as before us for revising claim of deduction already made in the return of income.
Granting the higher rate on account of commitment of Uninterrupted Power Supply to the cement unit - As relying on M/s Hindustan Zinc Limited [2022 (11) TMI 1498 - ITAT JODHPUR] apart from state of Haryana and Uttarakhand as stated by the assessee, Government of Bihar, West Bengal and Maharashtra has also approved the rate for uninterrupted and continuous supply of power. The Coordinate Bench Tribunal, Jodhpur after noting that state electricity boards of various states do charge a premium of 10% to 15% over and above the normal rate of power for uninterrupted power supply, had allowed a 15% premium on the transfer price of power adopted by the assessee in the said case. D/R had nothing to defend against the aforesaid contention of the assessee.
Therefore, respectfully following the case of Hindustan Zinc [2022 (11) TMI 1498 - ITAT JODHPUR] we are of the view that reliability charge @15% of Grid rate of Rs. 7.15 per unit which comes to Rs. 1.10 per unit should be allowed to the appellant instead of Rs. 1.50 per unit as claimed. Thus ground no. 1 of appeal is therefore partly allowed.
Disallowance made on account of claim of Education Cess - HELD THAT:- As identical view has been upheld in case of Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT] Thus, Education and Secondary Higher Education Cess were held to be allowable expenses and no addition was warranted under section 40(a)(ii) as the law stood before the enactment of Finance Act 2022. Subsequently, the Finance Act, 2022 brought about a retrospective amendment in the Income Tax Act whereby the “Education and Secondary Higher Education Cess” (‘Education Cess’) paid by an assessee is clarified to be a disallowable expense.
In light of the amendment in section 40(a)(ii) effected retrospectively, it is held that Education Cess is not an allowable Expense and the ground raised by the assessee is not tenable and the same is dismissed.
MAT - exclusion of profit on sale of investment and profit on sale of fixed assets while computing book profit u/s 115JB - HELD THAT:- The issue is covered against the assessee by the decision in assessee’s own case [2015 (3) TMI 759 - ITAT JAIPUR] for the assessment year 2008-09.
Exclusion of deduction u/s 80IA & 80IC in computing Book Profit under section 115JB - HELD THAT:- The issue of allowability of deduction under section 80IA while computing MAT provisions under section 115JB of the Act has already been decided against the assessee in the case of Safeflex International Ltd. [2019 (9) TMI 299 - ITAT JAIPUR] as held exemption u/s 10AA allowed under normal provisions cannot be allowed to be reduced while computing Book Profit under section 115JB.
Claim of depreciation on expenditure incurred in respect to acquisition of leasehold rights on land u/s 32(1)(ii) being business or commercial right of similar nature - appellant has submitted that such rights have been acquired for carrying on the business and hence is in the nature of “business or commercial right” eligible for deprecation @ 25% u/s 32(1)(ii) - HELD THAT:- Expenditure incurred on acquiring the land is a capital expenditure and hence cannot be allowed. However, the expenditure incurred on acquiring land on lease is different from the expenditure incurred on acquisition of land. On acquiring land on lease from the government, the assessee has to pay certain upfront premium on lease which is the price paid for acquiring the rights of land and not the land itself and the ownership of the land vests with the lessor of the land. The lessee is liable to return the land to its original owner after the expiry of the lease and does not have ownership rights over the land.
On such facts, courts have held that such rights acquired by the assessee which is used for the purpose of its business is an intangible asset in the nature of business or commercial right. Such intangible assets being "business or commercial right" is entitled to depreciation u/s 32(1)(ii) - AO is directed to grant depreciation @25% on such leasehold rights acquired in accordance with section 32(1)(ii) of the Act. The additional ground no. 1 raised by the assessee is allowed.
Allowability of interest paid on late deposit of TDS as business expenditure u/s 37(1) - HELD THAT:- We find merit in the contention of the ld. A/R of the assessee that the issue in question is squarely covered in favour of the assessee in the case of Resolve Salvage & Fire India [2022 (4) TMI 906 - ITAT MUMBAI] to hold that the interest paid on delayed payment of TDS u/s 201(1A) is an allowable deduction.
Disallowance of deduction u/s 80IA in respect of captive power plant - HELD THAT:- We find force in the argument of the ld. A/R and the observations as made by CIT (Appeals). The provisions of the Act give the assessee an option to adopt the transfer price of power in accordance with any of the clause as stated under section 80-IA(8) of the Act i.e. either as goods or services would ordinarily fetch in the open market or the ALP as defined in Section 92F(ii) of the Act.
It is further observed form the order of ld CIT (A) that ‘open market value' standards as stated under amended section 80IA(8) and ‘arm's length price' standards as stated under section 92F would ordinarily yield the same results.
We can conclude that ld. CIT (A) has rightly held that meaning of arm's length price as required u/s 92BA read with section 92F is identical to the meaning of "open market value” as defined in Section 80-IA(8) of the Act and accordingly all the judicial pronouncements and principles held therein, rendered before the amendment brought under section 80-IA(8) of the Act including that of Hon'ble Jurisdictional High Court and Jaipur Tribunal in assessee's own case for earlier year would equally apply for the year under consideration post amendment brought under section 80IA(8) of the Act.
Why rate at which power is sold to 3rd parties including Power distribution companies should not be considered as internal CUP and hence considered for computing arm's length price under the Transfer Pricing regulations? - There is no long term commitment available to 3rd parties from Power units unlike available to CMU. This assured long term supply of committed power by the Power unit to the Cement Unit cannot be compared with power sold to 3rd parties where there are no such commitments. Secondly, Power sold to 3rd parties represent distress sale of excess power generated and not utilised by the CMU. Since Power cannot be stored, it has to be compulsorily sold at whatever price is available and hence such sale price cannot represent market price. Thirdly, rate at which power is sold to 3rd parties will not be available to all the customers in the market since this sale rate does not cover various cost factors like transmission bottlenecks for scheduling of open access, transmission losses, and regulatory charges which are all on buyers account and not on the Power undertaking. Therefore, the sale price charged is subdued and does not represent the full landed cost of power to the ultimate consumer.
Thus, we are of the view that the CIT (A) has rightly held that sale rate of Generating Companies does not represent actual market value.
Disallowance on account of deduction u/s 80IA on account of Solid Waste - CIT(A) allowed claim - HELD THAT:- On perusal of the record, we noticed that similar claim of the assessee has been allowed by the AO for the preceding assessment year 2013-14 [2018 (1) TMI 785 - ITAT JAIPUR] and for the subsequent assessment years viz. 2015-16 to 2017-18, the TPO has accepted the method adopted by the assessee for computing transfer price. Thus we do not find any scope left for any dispute after TPO has himself accepted the computation method adopted by assessee in earlier year as well as in later years. When year after year, department has not disputed the computation method adopted by assessee, rejecting the same in one particular year, without any change in the facts and law, is not justified. Accordingly the order of the ld. CIT (A) is upheld. This ground of the Revenue is dismissed.
Disallowance on account of deduction u/s 80IA on account of Water Treatment System - CIT(A) allowed claim - HELD THAT:- We noticed that similar claim of the assessee has been allowed by the AO for the preceding assessment years 2011-12 and 13-14 vide order dated 30.04.2012 and 16.12.2014 respectively. AO adopted the rate of Rs. 2.50/ltr and Rs. 2.75/ltr for the assessment years 2011-12 and 2013-14 respectively determining the Fair Market Value of Water consumed captively, allowed the claim of the assessee. The method adopted by the appellant for determination of realizable market value of water was consistently accepted by the departmental authorities from assessment years 2011-12 to 2013-14. Reference may be made to the decision of A T & S India (P) Ltd [2018 (5) TMI 900 - ITAT KOLKATA] wherein it was held that when the department has been consistently accepting the assessee’s method of benchmarking for 3 consecutive previous years, the revenue authorities are bound to have consistency in its views. However, for the assessment year under consideration, we find that the AO determined the ALP based on a fresh analysis even when there was no change in facts for AY 2014-15 as compared to earlier years. Accordingly the order of the ld. CIT (A) is upheld. This ground of the Revenue is dismissed.
Deduction u/s 80IA of Rail system due to adjustment of Transfer Pricing - HELD THAT:- We find that the AO determined the ALP based on a fresh analysis even when there was no change in facts for AY 2014-15 as compared to earlier years. The AO without giving any cogent reasons rejected the benchmarking adopted by the appellant and undertaken fresh transfer pricing analysis. CIT (Appeals) has discussed the matter at great length and following the OECD Transfer Pricing Guidelines and Practice Manual for Multinational Enterprises and Tax Administrations, partly allowed the claim of the assessee AS directed to allow deduction u/s 80IA on account of Rail Infrastructure Facility System - AO is directed to re-check this working carefully while giving appeal effect.
Disallowance on account of sales tax subsidy and electricity duty exemptions received by assessee in nature of capital receipt and the AO computed total income under regular provisions while computing book profit u/s 115JB - HELD THAT:-Similar view was expressed by the Jurisdictional Tribunal while deciding the matter vide its consolidated order for the assessment years 2007-08 to 2009-10 and for assessment years 2012-13 & 2013-14 holding that sales tax subsidy received by the appellant under RIPS 2003 is in the nature of capital receipt and hence is not chargeable to tax under regular provisions nor under the provisions of section 115JB. We further find that the decision of the jurisdictional Tribunal for the assessment years 2006-07 to 2009-10 has also been upheld by the Hon’ble Rajasthan High Court in assessee’s own case for AY 2006-07 for AY 2007-08, 2008-09 [2017 (8) TMI 1588 - RAJASTHAN HIGH COURT] and for AY 2009-10 [2017 (8) TMI 1337 - RAJASTHAN HIGH COURT] Decided against revenue.
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2023 (8) TMI 1629
Cancellation of petitioner's GST Registration - non-filing of returns for the successive periods of six months - Appeal dismissed on the ground of time limitation - HELD THAT:- It is evident that in the present case, the impugned order passed on 11.01.2023 was duly placed on the web portal on the very same day. However, petitioner filed e-appeal on 06.06.2023 with a delay of one month twenty-four days and the appellate authority rejected the appeal on the ground that it is filed beyond the condonable period.
As can be seen from the impugned order dated 27.06.2023, the 1st respondent has rejected the appeal on the ground that the appeal was filed beyond the condonable period of one month twenty-four days. In that view of the matter and as the GST Tribunal has not been constituted as per the provision of the Act, so as to enable the petitioner to pursue his further legal remedies, in the interest of justice, it is considered apposite to allow the writ petition and condone the delay in filing the appeal and remit the matter back to the 1st respondent for fresh consideration, however with certain conditions imposed.
Petition allowed.
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2023 (8) TMI 1628
Freezing of demat account of the Company in the liquidation on account of non-compliance of Regulation 33 of the LODR - SAT jurisdiction to entertain the appeal filed by the liquidator of LML Ltd. against the refusal by BSE to defreeze the shares held - HELD THAT:- In the instant case, the demat account of the Company in the liquidation i.e. the appellant has been frozen on account of non-compliance of Regulation 33 of the LODR which has nothing to do with the insolvency process or liquidation process under IBC. Thus, the appeal was rightly filed by the Liquidator before this Tribunal.
We, therefore, hold that in view of the interpretation of Section 60(5) of the IBC and the decision in Gujarat Urja Vikas Nigam Ltd. [2021 (3) TMI 340 - SUPREME COURT] the jurisdiction of this Tribunal is not ousted under Section 60(5)of the IBC. The appeal is maintainable.
Company went in liquidation in March, 2018 prior to the suspension of the securities of the VCCL Company which occurred on 26th November, 2018. All subsequent action by SEBI would be in contravention to Section 52 of the IBC and direction (e) of NCLT order dated 23rd March, 2018 as extracted in the earlier part of the order.
The impugned communication issued by the respondent no.2 is quashed. The appeal is allowed. The misc. applications are also accordingly disposed of.
A direction is given to respondent nos.1 and 2 to defreeze the demat account of the appellant forthwith. The respondents will ensure and pass appropriate orders permitting the Liquidator to sell the shares of VCCL and shares of other listed companies held in its demat account. Such orders will be passed within two weeks.
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2023 (8) TMI 1627
Denial of benefit of exemption u/s. 11 - assessee did not file audit report in Form No. 10B - HELD THAT:- The assessee’s Income and Expenditure Account shows that “Surplus of Income over Expenditure”. In addition, there is “Amount transferred to Reserve or Specific Funds”. The assessee has claimed deduction for various expenses.
It goes without saying that income tax is charged on the income and not the gross receipts. Income is determined by reducing the expenses incurred, described under various sections in Chapter IV-D of the Act. If the benefit of exemption u/s.11 is not available, the total income needs to be computed in accordance with the regular provisions of the Act.
Thus where the AO has charged tax on gross receipts, we cannot countenance the same. The resultant impugned order also deserves to be set aside. We order accordingly and remit the matter to the file of the AO for deducing the total income in accordance with the law after considering the deductibility of various expenses noted in the Income and Expenditure Account. Appeal is allowed for statistical purpose.
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2023 (8) TMI 1626
Disallowance on account of Employees Stock Option Plan ("ESOP") claimed by the Appellant u/s 37(1) - HELD THAT:- During the year under consideration the assessee company had granted options to its employees under the scheme of ESOP’s to purchase its securities at a price lower than the market value price. Assessee had followed the intrinsic value-based method of accounting for stock options granted based on the Guidance Note on Accounting for Employees Share-based payments issued by ICAI.
The assessee company during the course of assessment explained that ESOP issued to the employees was revenue expenditure for the company in the interest of the business of the company so that talents of the employees is retained in the company to perform and compete in the market place.
As in assessee case itself for assessment year 2009-10 & 2011-12 [2015 (6) TMI 1200 - ITAT MUMBAI], 2010-11 [2017 (11) TMI 1860 - ITAT MUMBAI] as held that ESOP expenses is an allowable deduction u/s. 37(1).
Disallowance u/s 14A r.w.Rule 8D - CIT(A) has dismissed the ground of appeal of the assessee by referring the amendment made by Finance Act 2022 to Sec.14A by inserting a non-obstante clause that the provision of this section shall apply and shall be deemed to have always applied in a case where exempt income has not accrued or arisen or has not been received during the previous year relevant to assessment year and the expenditure has been incurred during the said previous year in relation to such exempt income - HELD THAT:-The Hon’ble Delhi High Court in the case of Chem Investment Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] held that provision of Sec. 14A will not be applied in case no exempt income is received or receivable during the relevant previous year.
As in the case of PCIT Vs. Era Infrastructure (I) Ltd. [2022 (7) TMI 1093 - DELHI HIGH COURT] held that amendment made by Finance Act 2022 to Sec. 14A by inserting non-obstante clause and explanation will take effect from 01.04.2022 and cannot be presumed to have retrospective effect. Therefore, we delete the addition made by the assessing officer u/s 14A of the Act.
Disallowance u/s 14A in computing book profit u/s 115JB - We find that in the case of ACIT Vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] held that disallowance made u/s 14A cannot be added for computing book profit u/s 115JB of the Act. Therefore, we find that decision of ld. CIT(A) in sustaining the addition is not justified.
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2023 (8) TMI 1625
Addition u/s 69C - assessee had purchased two plots from NODPL - excel sheet was found in which the name of the assessee was mentioned and from the contents thereof, it was clear that the assessee had given on-money towards purchase of the aforesaid two flats - HELD THAT:- Firstly, the additions have been made on the basis of excel sheet found at the premises of the third party i.e. Mr. Murlidhar M. Trivedi. However, apart from the fact that the name of the assessee has been mentioned in the aforesaid excel sheet, there is no further corroborative evidence which substantiates that the assessee had in fact made on-money payment with respect to the aforesaid two properties.
Secondly, admittedly, the assessee had furnished all relevant documents viz. copies of agreements, details of cheque payments etc. towards purchase of the aforesaid two products.
Thirdly, it is a settled law that additions cannot be made solely on the basis of notings / jottings in relation toward transaction, without any corroborative evidence for sustaining the addition. In the case of Vinit Ranawat [2015 (6) TMI 608 - ITAT PUNE] ITAT held that no addition can be made in the hands of the assessee on the basis of papers found with the third party when there was no business connection between the assessee and that third party.
Fourthly, it is a settled principle of law that no addition can be made on the basis of statement of a third party, without allowing the assessee an opportunity of cross-examining the person on the basis of whose statement the addition has been made. The Hon’ble Supreme Court in the case of Andaman Timber Industries 62 taxmann.com 3 (SC), held that when statements of witnesses are made the basis of demand, not allowing the assessee to cross-examine the witness is a serious flaw which makes order a nullity, as it amounts to violation of principles of natural justice.
In the instant facts despite a specific request made by the assessee to cross-examine the person on the basis of whose statement the addition was made, such opportunity of cross-examination was not granted to the assessee.
Fifthly, we also observed that the AO in the assessment order has not brought out the locus standi of Mr. Murlidahr M. Trivedi, on the basis of whose statement the addition were made in the hands of the assessee. Mr. Murlidhar M. Trivedi in his affidavit merely stated that the transactions in question pertained to NODPL and from his statement, it is not clear as to how Mr. Murlidhar M. Trivedi is related to NODPL since neither is he a Director or a Authorized person or an employee of NODPL. Therefore, it is not clear as to what evidentiary value does the statement of Shri Murlidahr M. Trivedi carry and what is his “locus standi” to make such statement which can implicate the assessee. Decided against revenue.
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2023 (8) TMI 1624
Penalty u/s 43 of Black Money Act - failure to disclose investment in foreign entity, in the return of income filed under the Income-tax Act - HELD THAT:- From the chart it appears that there was slight confusions in the mind of the Assessee qua disclosure of investment as sometime disclosed in Schedule FA and sometime disclosed in Schedule ‘holding status’ only; but it is undisputed fact that the Assessee has duly disclosed the investment in its books of account continuously.
Assessee may be belatedly, but infact shown / disclosed the said investment in Schedule FA as well as in Schedule ‘Holding Status’ while filing its return of income u/s153A.
From the provisions of section 153A(1)(a), it is clear that for processing the return filed in response to the notice under section 153A same provisions of the Act shall be applicable as applicable to the return filed u/s 139 of the Act, therefore return furnished u/s 153A can be treated at par with the return furnished under section 139 of the Act .
Case in hand is not the case of deliberate or malafide or dishonest action or non-action or breach or defiance or disregard of statutory provisions of law, but infact, as the Assessee had shown the foreign investment in Schedule ‘FA’ initially in the AY 2012-13 itself when such investment was made and thereafter occasionally in Schedule ‘Holding Status’ but continuously in its books of account, therefore there is no justification for imposition of penalty - Decided in favour of assessee.
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2023 (8) TMI 1623
Issuance of summons - some of the accused were residing at a place beyond the area covered by the jurisdiction of the learned Magistrate - non-compliance with the mandatory requirement of Section 202(1) of CRPC - HELD THAT:- There cannot be any doubt that in view of the use of word "shall" in sub-section 1 of Section 202 of the CRPC and the object of amendment made by the Act No. 25 of 2005, the provision will have to be held as mandatory in a case where the accused is residing at a place outside the jurisdiction of the learned Magistrate. In fact, in paragraph No.12 of the aforesaid decision relied upon by the learned counsel appearing for the petitioner, this Court held that in a case where one of the accused is a resident of a place outside the jurisdiction of the learned Magistrate, following the procedure under subsection 1 of Section 202 of the CRPC is mandatory.
In the case of Vijay Dhanuka [2014 (3) TMI 1103 - SUPREME COURT], this Court found that before issuing summons, the learned Magistrate had examined the complainant and two other witnesses on oath and therefore, on facts, this Court found that a substantial compliance with sub-section 1 of Section 202 of the CRPC was made.
Conclusion - In this case, even substantial compliance has not been made by the learned Magistrate. It is true that evidence was recorded before charge and at that stage, an objection was raised by the respondents. Considering the mandatory nature of sub-section 1 of Section 202 of the CRPC, in the facts of this case, non-compliance thereof will result into failure of justice. Hence, there are no error in the impugned order of remand passed by the High Court.
SLP dismissed.
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2023 (8) TMI 1622
Method of valuation - Section 4 or Section 4A of the Central Excise Act, 1944? - Air Circuit Breakers, MCCB and Switch Fuse etc. cleared through dealers, distributors etc. to Industrial Consumers - HELD THAT:- Following the judgment of this Tribunal in their own case for earlier period, this Tribunal in ABB INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BANGALORE [2023 (5) TMI 1426 - CESTAT BANGALORE] decided the issue observing that the goods are assessable under Section 4 of the Central Excise Act, 1944 being meant for Industrial Consumers even though initially cleared to channel partners, distributors etc.
The impugned order is set aside - appeal allowed.
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2023 (8) TMI 1621
Education/recruitment scam - Verification of candidates appointed without requisite qualifications in the TET 2014 examination - HELD THAT:- It has already been brought to the knowledge of the Court that the persons involved in the crime relating to the recruitment scam and the municipal scam are more or less the same, the modus operendi and proceeds of crime in both the scam are intermingling with each other.
As the investigation in respect of both the scams will continue simultaneously, the investigation shall be a Court monitored one and the officers are required to file the report of investigation before this Court as and when directed.
The report filed by the Assistant Director, Enforcement Directorate signed on August 29, 2023 is taken on record. It appears therefrom that the investigating agency has prepared a list of the selected suspected teachers whose names/roll numbers were found in the seized documents/digital records obtained from various accused persons. The list of the said candidates shall immediately be forwarded by the Enforcement Directorate to the West Bengal Board of Primary Education for verification. The Board shall verify the credentials of the said candidates and if it appears that any of the candidates in the said list was appointed dehors the provisions of law, then prompt necessary steps shall be taken against him/her.
The Court, by order dated July 14, 2023, directed the investigating officers to place on record the details of the beneficiaries of the education scam. In the report filed today by CBI, the list of the teachers who were allegedly appointed dehors the rules, has been annexed. The details of the other beneficiaries, who received the money in lieu of providing service to the unemployed youth, shall be placed before this Court on the adjourned date.
The matter stands adjourned till September 14, 2023 for taking note of the updates in the instant case.
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2023 (8) TMI 1620
Revision u/s 263 - Denial of exemption u/s. 11(2) - Form 10 has not been filed / has been filed beyond due date as prescribed u/s. 139(1) - HELD THAT:- As the ld. AO has given all the facts in the assessment order which unequivocally proved that all the facts and evidences were called for from the assessee during the assessment proceeding such as return of income, audit report in Form 10B, Form 10 etc. and AO after examination of all the details/documents allowed the claim /deduction u/s 11(2) of the Act. In our opinion, the instant issue is not the case of no enquiry was conducted by ld. AO and as such exercising of jurisdiction by ld. CIT(E) is wrong and cannot be sustained. Accordingly, we set aside the order passed by ld. CIT(E) on this issue and direct the AO to allow the claim made by the assessee u/s 11(2) of the Act.
Accumulated amount - mistake had happened while entering figure by assessee under column 4 which reads “Amount applied for charitable/religious purposes upto the beginning of the previous year.” - The assessee inadvertently shown a wrong figure before the ld. AO and from the perusal of the aforesaid fact, we find that assessee had applied the fund as per the revised schedule by rectifying the same and copy of the same placed before us at page 26 of the Paper Book. Therefore, the alleged fault pointed out by the ld. CIT(E) based on the mistake of fact which crept into while filing column 4 of Schedule-I and it cannot termed as the assessee had surplus fund u/s 11(2) of the Act. Therefore, the apprehension of ld. CIT(E) that assessee has claimed double deduction is erroneous and on wrong assumption of fact.
CIT(E) has erroneously usurped the revisional jurisdiction u/s 263 of the Act on this issue.
Expenses met out available balance of specific funds reflected under reserve and surplus as alleged by CIT(E) in his revisionary order that assessee has claimed double exemption - Assessee has made a clear calculation by showing that no double exemption of a particular amount has claimed by the assessee. Therefore, view taken by ld. CIT(E) is not correct and liable to be quashed.
Assessee has shown a correct calculation by showing that no double exemption had claimed of particular amount as alleged by ld. CIT(E) in impugned order. Therefore, the apprehension of CIT(E) that assessee has claimed double deduction in view of wrong assumption of fact. AO rightly did not draw any adverse inference on the issue which pointed out as fault by ld. CIT(E) in his revisionary order.
Appeal of the assessee is allowed.
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2023 (8) TMI 1619
Penalty proceedings u/s. 271AAB (1) - income surrendered by the assessee in the statement recorded u/s 132(4) - as argued non specifying under which clause of Section 271AAB(1) the penalty is being levied - HELD THAT:- From a plain reading the provisions of Section 271AAB, it can be seen that, it begins with the stipulation that the AO may direct the assessee and the assessee shall pay the penalty as per clause (a) to (c) so satisfied in sub-section (1) to Section 271AAB.
As per sub-section (3) of Section 271AAB, the provisions of section 274 and section 275 as far as maybe applied in relation to penalty under this section which means that before levying the penalty, the Assessing officer has to issue a show cause granting an opportunity to the assessee. Thus, the levy of penalty is not automatic but the Assessing officer has to decide based on facts and circumstances of the case.
Levy of penalty u/s 271AAB is not mandatory or automatic, same needs to be examined, whether there is any basis for levy of penalty or non-levy thereof and the same will depend upon the facts and circumstances of the case.
We hold that the addition confirmed does not fall in the ambit of definition of undisclosed income as contemplated in Explanation to section 271AAB - Appeal of the assessee is allowed.
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2023 (8) TMI 1618
Disallowance towards employees contribution to PF & ESI u/s. 36(1)(va) r.w.s. 43B - HELD THAT:- Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. [2022 (10) TMI 617 - SUPREME COURT] has considered the issue of disallowance of employees’ contribution to PF & ESI beyond due date specified under respective Acts, but within due date prescribed u/s. 139(1) of the Act, and after considering relevant provisions of the Act, held that belated payment of employees’ contribution to PF & ESI cannot be allowed as deduction in terms of provisions of Sec. 36(1)(va) r.w.s. 43B of the Act.
We are of the considered view that belated payment of employees’ contribution to PF & ESI cannot be allowed as deduction in terms of provisions of Sec. 36(1)(va) r.w.s. 43B of the Act, and thus, we reject the arguments of the assessee and upheld the disallowance of employees’ contribution to PF & ESI. Appeal filed by the assessee is dismissed.
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2023 (8) TMI 1617
LTCG arising from Compulsory Acquisition of Land under the National Highway Act, 1956 - HELD THAT:- Hon’ble Supreme court in the case of UOI vs. Tarsem Singh others [2019 (9) TMI 1480 - SUPREME COURT] observed that the provisions of RFCTLARR Act, 2013 are applicable to land acquired under national highway Act and the compensation has to be calculated and paid in accordance with the provisions of RFCTLARR Act, 2013.
As in the case of NHAI v. Modan Singh and Others [2023 (4) TMI 1396 - PUNJAB AND HARYANA HIGH COURT] wherein it has been held that the RECTLAAR Act, 2013 would apply to cases wherein award has been awarded prior to 31.12.2014 but compensation is not paid yet till 31.12.2014, even though the said acquisitions have been done under the NHAI Act, 1956.
In the instant case, it is a matter of record that the award of compensation was not paid yet till 31.12.2014 and was paid only on 19.05.2015 as evident from bank statement
Thus, we hold that the decision of Ld. CIT(A) is infirm and perverse to the facts on record. Accordingly, we set aside the impugned order, and as such, the addition is deleted. Decided in favour of assessee.
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2023 (8) TMI 1616
Addition on account of facility management service - HELD THAT:- The agreement was admittedly entered into with an unrelated party and the same was claimed to have been executed with an intention of further business activities of the assessee in the long run and contribute to its revenue and profits.
The action of the AO was based on analyzing the agreement by applying the yardstick of business expediency and commercial prudence, accordingly, the AO held the same to be colorful device to buy loss by the assessee company.
CIT(A) on analyzing the facts also found that the agreement with PBC was between two independent unrelated parties on an Arm’s length basis. To question any agreement on the ground of business expediency or prudence of an agreement entered with the independent unrelated party during the ordinary course of business which is beyond power vested on the A.O.
Hon'ble Courts have time and again held that when an attempt by the Department to judge any transaction by applying yardstick of business expediency or commercial prudence has not found favour of the Revenue.
We observed that the AO in scrutiny process u/s 143(3) of the Act for Assessment Year 2014-15 allowed the Facility Management Charges to the assessee company. Decided against revenue.
Disallowance as allocation expenses - DR submitted that the expenses claimed by the Mumbai & Bangalore Branches under the head of conveyance and travelling expenses reported and maintenance etc. cannot be viewed as revenue expenses - HELD THAT:- The assessee company operates with its head office located at Gurgaon and Branches at Mumbai and Bangalore. It also operates with unified structure for the head office and Branches with a common management and complete unity of control, inter communication, business organization and management.
Merely because no revenue were recorded in the books of the branches, cannot lead to a conclusion that those branches are not carrying out any business.
It is settled law that once a business has been set up, the entire revenue expenditure incurred is allowable irrespective of whether any revenue is generated there from or not. It is not in dispute that the entire expenditure has been incurred by the assessee company on running its business irrespective of head office or branches. It is not the case that the Branches of Mumabi and Bangalore are independent undertaking/unit for which independent balance sheet required to be drawn. In-fact, the nature of the expense which inter alia includes expenses like repair and maintenance has not been found to be capital in nature, whereas travelling expenditure cannot be held to be capital expenditure.
Disallowance of expenses claimed as Bad Debts - assessee could not produce any documentary evidence to show that the amount became Bad Debts and added the same to the income of the assessee in terms of Section 36(1)(vii) - HELD THAT:- Assessee had provided services of “I Love British” for the Financial Year 2013-14, in which the same was considered as revenue and amount recoverable as Sundry Creditors. Company had made full effort to recover the amount and sent various communications for such recovery, though the Company could not recover the amount despite of continuous reminders and follow up, finally the same has been considered as Bad Debts and claimed as expenses. Considering the fact that the assessee company had made full effort to recover the amount and sent various communications for such recovery, but could not recover the same despite continuous follow up and reminders and the said debt has been written off in its account which meets requirement of provision of Section 36(1)(iii) of the Act.
As relying on Morgan Securities and Credits Pvt. Ltd. [2006 (12) TMI 106 - DELHI HIGH COURT] and T.R.F. Ltd. [2010 (2) TMI 211 - SUPREME COURT] we find no error or infirmity in the order of the CIT(A) in deleting the above said disallowance.
Disallowance for delayed payment of provident fund and ESI - HELD THAT:- Disallowance made by the A.O. for delayed payment of provident fund and ESI is hereby reversed and the addition made by the A.O. on the said ground is sustained.
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2023 (8) TMI 1615
Prayer for admission of petition - compounding of offences - advancement of an inter-corporate loan - violation of Section 185 of the Companies Act, r/w. Section 441 of the Companies Act, 2013 - HELD THAT:- In the instant case, it cannot be forgotten that the Appellant, Suo moto, voluntarily had sought Compounding of the Non-compliance / Violation of the Statutory Mandate, enshrined in Section 185 of the Companies Act, 2013, by filing a Petition, before the Tribunal, for Compounding of the Offence.
It is to be remembered that in Law, a Company, is a Separate Juristic Entity vis-à-vis its Directors, and therefore, can neither claim Reliefs nor Plead on their behalf. As such, the Appellant / Managing Director of ‘2nd Respondent / Company, to the extent of claiming Reliefs, for its Erstwhile Directors, is not maintainable in Law, as opined by this Tribunal.
The Appellant Company / a subsidiary of a Foreign Company, the Company and the Directors, are expected to comply with the provisions of Law, true letter and spirit. In fact, the Company and its Directors, are liable, for the relevant period, to the maximum Fine of Rs.25,00,000/-, in terms of Section 185 of the Companies Act, 2013. 50. In the light of foregoing deliberations, on a careful consideration of contentions advanced, on behalf of the respective sides, taking into account of the facts and circumstances of the present case, in a holistic and conspectus manner, keeping in mind that the Default, remained for one year and six days, this Tribunal, comes to a consequent conclusion, that in as much as the Appellant is liable for the Violations, and Non-compliances committed by it, by means of Section 185 of the Companies Act, 2013, the impugned order, dated 20.12.2018, in CP No. 615 / BB / 2018, passed by the National Company Law Tribunal, Bengaluru Bench, to the extent of imposing Compounding Fee on the Appellant and its Directors, and Prosecution against Former Directors, is free from any Legal Infirmities.
Conclusion - The Appellant Company / a subsidiary of a Foreign Company, the Company and the Directors, are expected to comply with the provisions of Law, true letter and spirit. In fact, the Company and its Directors, are liable, for the relevant period, to the maximum Fine of Rs.25,00,000/-, in terms of Section 185 of the Companies Act, 2013.
Appeal dismised.
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