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Showing 101 to 120 of 1633 Records
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2022 (3) TMI 1534
Dishonour of Cheque - corporate entity in respect of which moratorium had become effective could be proceeded against in terms of Sections 138 and 141 of the Negotiable Instruments Act, 1881 or not - HELD THAT:- In P. MOHANRAJ & ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [2021 (3) TMI 94 - SUPREME COURT], a Bench of three-Judges of this Court considered the matter whether a corporate entity in respect of which moratorium had become effective could be proceeded against in terms of Sections 138 and 141 of the Negotiable Instruments Act, 1881 where it was held that The Section 138/141 proceedings in this case will continue both against the company as well as the appellants for the reason given as well as the fact that the insolvency resolution process does not involve a new management taking over.
The decision rendered in P. Mohanraj is quite clear on the point and, as such, no interference in this petition is called for - petition dismsissed.
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2022 (3) TMI 1533
TP Adjustment - Computation of Arm's Length Price - comparable selection - Tribunal directed to be excluded Infosys BPO Ltd., Eclerx Services Ltd., and Crossdomain Solutions Pvt. Ltd., as comparable companies - HELD THAT:- As comparing the functional profile of the companies with that of assessee we direct exclusion of the aforesaid 3 companies from the list of comparable companies.
TPO while determining the ALP has considered the entire turnover of the assessee and made an adjustment under section 92 of the Act whereas in law, an adjustment should be restricted only to the transactions with AE - The law is well settled that the addition on account of determination of ALP should be restricted only to the transactions with AE and it cannot be made in respect of transactions with non-AE. The Hon'ble Mumbai Tribunal in the case of Thyssen Krupp Industries India Pvt. Ltd.[2012 (12) TMI 71 - ITAT MUMBAI]held that the ALP can only be determined on the value of international transaction alone and not on the entire turnover of the assessee at entity level. Also confirmed by HC [2015 (12) TMI 1076 - BOMBAY HIGH COURT]
Thus section 92 of the Act can be applied only in respect of international transactions i.e., transactions with AE and the transfer pricing adjustment should be restricted only to the AE related transactions of the assessee. TPO/AO is directed to compute the ALP in the light of the directions as given above, after affording assessee opportunity of being heard.
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2022 (3) TMI 1532
Validity of reopening of assessment - notice issued to company amalgamated - HELD THAT:- As the noticee has already been amalgamated on 16th September, 2019 with retrospective effect from 1st April, 2018 and the department has been intimated about this amalgamation which is matters of record and such notice in the name of a non-existing company is not tenable in the eye of law since information of such amalgamation has already given to the respondent.
The impugned notices is not tenable in the eye of law and all further steps pursuant to the said impugned notices also are not tenable in the eye of law - Decided in favour of assessee.
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2022 (3) TMI 1531
Levy of Luxury Tax - internet facility provided to the guests of the Hotel concerned - HELD THAT:- Even though it is submitted by the learned Government Advocate for respondents that, they decided to prefer appeal against the said orders, of course belatedly, that may not preclude this Court from following the earlier orders based on the same subject or same point, where, those writ petitions have been allowed in a similar circumstances by giving interpretation to the concerned provision of law viz., luxury tax and therefore, the orders are followed and if the said principle enunciated in the said orders is applied to the present facts of the case, this Court has no hesitation to hold that the impugned orders cannot be sustained.
The impugned orders are quashed and the writ petitions are allowed.
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2022 (3) TMI 1530
Addition on the basis of Departmental Valuation Officer’s [DVO] - difference between the value shown by the assessee in the books of account and value estimated by the DVO of the property Spanish Garden - HELD THAT:- Once the assessee is maintaining regular books of account and in the course of its business the assessee has recorded the transactions in its books of account, then, without finding/pointing out any defect in the books of account and without holding that the books of account are rejected, then the AO cannot proceed to make addition on the basis of DVO’s report.
In the case of Sargam Cinema [2009 (10) TMI 569 - SC ORDER] has held that the assessing authority could not refer the matter to the DVO in a case where there was no categorical finding recorded by the Tribunal, then the books of account were never rejected. Appeal of assessee allowed.
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2022 (3) TMI 1529
Competence of KDM Corporation to suspend respondent No.1 Sanjay Gajanan Gharat - direction to KDM Corporation to reinstate him forthwith to the post of Additional Municipal Commissioner - whether the respondent No.1 though an employee of the KDM Corporation, can neither be suspended nor any departmental proceedings can be initiated against him by the KDM Corporation, since his selection and appointment was done by the State Government?
HELD THAT:- It could be seen that under Section 39A of the MMC Act, though the AMC will exercise all or any of the powers and perform all or any of the duties and functions of the Commissioner, the same shall be subject to the control of the Commissioner. No doubt, that the AMC would be subject to the same liabilities, restrictions and terms and conditions of service, to which the Commissioner of the Corporation is subjected. However, the legislative intent is clear that the powers to be exercised by AMCs would be subject to the control of the Commissioner - The legislative intent would also be gathered from subsection (9) of Section 2 of the MMC Act. It could be seen that in the definition of the “Commissioner”, though an acting Commissioner appointed under Section 39 of the MMC Act has been included, an AMC appointed under Section 39A of the MC Act has not been included.
Clause (a) of the proviso to subsection (1) of Section 56 of the MMC Act has been amended simultaneously by an amendment, which brought Section 39A into the statute. As such, the term “post equivalent to or higher in rank than the post of Assistant Commissioner” cannot be construed in a narrow compass. Clause (a) of subsection (1) of Section 56 of the MMC Act would also include the post of AMC. As such, the Commissioner would be a “competent authority” insofar as the post of AMC is concerned. Likewise, though the powers of the Commissioner to suspend any officer or servant except a Transport Manager being a Government Officer on deputation or the officers appointed under Section 45 of the MMC Act are without any restriction, when such suspension is with regard to a Transport Manager or an officer appointed under Section 45 of the MMC Act, though the Commissioner is empowered to suspend them, such a suspension has to be reported to the Corporation along with the reasons thereof. Such a suspension shall come to an end, if not confirmed by the Corporation within a period of six months from the date of such suspension.
In the case of PHILIPS INDIA LTD. VERSUS LABOUR COURT, MADRAS & ORS. [1985 (3) TMI 307 - SUPREME COURT], this Court had an occasion to decide the rate of overtime wages as mentioned in Section 31 of the Tamil Nadu Shops and Establishments Act, 1947. This Court found that for finding the minimum rate of overtime wages as mentioned in Section 31 of the said Act, it will have to be interpreted in the light of the provisions contained in Section 14(1) read with proviso to Section 31 of the said Act - It could thus be seen that this Court has held that the Statute must be read as a whole. It has been held that this rule of statutory construction is so firmly established that it is variously styled as “elementary rule”. It has been held that for finding out the true meaning of one part of a statute, a reference will have to be made to another part of the statute and that will best express meaning of the makers.
It is more than wellsettled that the court has to avoid the interpretation which will result in headon clash between two sections of the Act. When one section of an Act is not in a position to bring out the legislative intent, recourse will have to be made to other sections of the statute for gathering the legislative intent. An attempt should be made to see to it that the effect must be given to parts of the statute even if they may, on first blush, appear to be conflicting. One provision of the Act has to be construed with reference to other provisions in the Act, so as to make a consistent enactment of the whole statute. An attempt should be made of avoiding any inconsistency or repugnancy either within a section or between two different sections.
The finding of the High Court that in view of Section 39A of the MMC Act, the Commissioner or the Corporation will not have power to suspend or initiate departmental inquiry against the AMC, is in ignorance of the provisions of Section 56 and subsection (9) of Section 2 of the MMC Act - the High Court has totally erred in setting aside the suspension and the departmental proceedings initiated against respondent No.1. The effect of the impugned judgment is that the respondent No. 1, who has been, prima facie, found to be involved in a serious misconduct, has been left scotfree without requiring to face any departmental proceedings and directed to be reinstated in services.
The impugned judgment passed by the High Court of Judicature at Bombay is quashed and set aside - Appeal allowed.
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2022 (3) TMI 1528
TP Adjustment - Manufacturing segment - TPO has rejected the segmental profit and loss account given by the assessee and reworked the segmental profit and loss account - HELD THAT:- TPO has not given any reason for rejecting the segmental profit and loss account given by the assessee. TPO has redrawn the segmental profit and loss account on order u/s 92CA.
No basis of allocation has been given in the order. Assessee has rightly contended that section 92 of the Act can be applied only in respect of international transactions, i.e., transactions with AE.
We hold that the transfer pricing adjustment should be restricted only to the AE related transactions of the assessee. It would be just and appropriate to set aside the impugned order on this issue and remand the issue to the TO / TPO to verify the segmental profit and loss account given by the assessee. Assessee shall provide all the details including details of allocation in case in support of segmental drawn by it. The AO / TPO shall give proper opportunity of hearing to the assessee.
Capacity adjustment - We find that the settled law is that adjustment on account of capacity utilization has to be granted. The additional evidence now produced go to the root of the issue of determination of ALP on the manufacturing segment. For a proper adjudication of the issue and for substantial cause, the same is admitted and taken on record. Accordingly, we set aside the issue to the file of the AO / TPO, directing to follow the directions given in the case of IKA India Private Limited [2018 (10) TMI 49 - ITAT BANGALORE]
Foreign exchange fluctuations adjustment - TPO and the DRP have not properly analysed the submissions of the assessee. There is no analysis whether there was any adverse foreign exchange fluctuations during the relevant assessment year, which is abnormal in nature and what is its effect on the operating margin of the assessee and the comparables. These aspects needs to be analysed - it would be just and appropriate to set aside the impugned order on this issue and remand the issue to the TPO.
Impairment of loss - We observe from financial statement, that the agreement to sell is entered into on February 24, 2014 and effective date of sale is August 1, 2014 - assessee has recognised impairment loss during the current assessment year. TPO and the DRP have not properly analysed the issue and thus it would be appropriate to set aside the impugned order on this issue and remand the issue to the TPO.
Comparable selection - DRP has not properly analysed the submissions of the assessee. DRP has also observed that the annual report of the comparables was not filed by the assessee but has made general observation that TNMM requires broadly similar comparables and exactly similar companies are not required. This is not proper reason and TPO / DRP are duty bound to specifically analyse the comparables submitted by the assessee and the assessee’s objection to the comparable selected by the TPO. The assessee is also duty bound to file the annual reports and make specific submissions with respect to the comparables. Therefore, the entire TP adjustment made by the TPO in management segment is set aside. The TPO shall undertake a fresh TP analysis and make necessary TP adjustment in accordance with law, after affording reasonable opportunity of hearing to the assessee.
TP adjustment of Management Fees - adjustment was not proposed by the TPO but was unilaterally added by the DRP - TPO had apparently accepted the ALP of the management fee transaction, as no adjustment was proposed by him in the TP order - DRP suo moto decided that the ALP of this transaction as Nil and directed the AO / TPO to add the entire amount as adjustment - HELD THAT:- DRP suo moto determined the ALP of this transaction as NIL in the DRP’s directions. We find that the DRP has not adhered to the process prescribed under Rule 10B of the T.P. Regulations and no benchmarking analysis has been done by the DRP. The management charges was part of the cost base while computing the adjustment for manufacturing segment under the TNMM. The question whether the transaction of payment of management fees can be aggregated with the international transaction under the manufacturing segment also requires a fresh look in the light of the submissions made by the learned AR (since management fees is directly linked with the operation of the assessee). This aspect has not been analysed in a proper perspective. Thus issue remanded to the AO / TPO for fresh determination.
TP Adjustment of ITES Segment - comparable selection - HELD THAT:- Exclusion of companies as functionally dissimilar with that of assessee ITES segment.
Working Capital Adjustment - ITES segment - HELD THAT:- Respectfully following the decision of Huawei Technologies India (P.) Ltd. [2018 (10) TMI 1796 - ITAT BANGALORE] we also hold that the working capital adjustment is to be allowed as per actuals, after considering the decisions rendered in this order on the exclusion/inclusion of comparable companies out of/into the final set of comparables. The TPO/ AO are accordingly directed.
After proposing the TP adjustment on account of management fees, the DRP suo moto proposed disallowance of the same management fees u/s 37 - assessee has not furnished the details of the expenses - HELD THAT:- We are of the view that the protective disallowance of management fees u/s 37 of the I.T. Act needs to be considered afresh since the issue of transfer pricing adjustment of management fees has already been remitted back to the AO/TPO for fresh examination.
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2022 (3) TMI 1527
Continuance of criminal proceedings against the present appellant/accused - Section 482 Cr.P.C - whether continuance of the criminal proceedings would be a total abuse of the process of the court and the continuance of the criminal proceedings against the appellants is in no way an abuse of the process of the court?
HELD THAT:- This Court in the widely celebrated judgment of State of Haryana & Ors. Vs. Bhajan Lal & Ors. [1990 (11) TMI 386 - SUPREME COURT] considered in detail the scope of the High Court powers under Section 482 Cr.P.C. and/or Article 226 of the Constitution of India to quash the FIR and referred to several judicial precedents and held that the High Court should not embark upon an inquiry into the merits and demerits of the allegations and quash the proceedings without allowing the investigating agency to complete its task.
This Court in G. Sagar Suri & Anr. Vs. State of UP & Ors. [2000 (1) TMI 934 - SUPREME COURT] observed that it is the duty and obligation of the criminal court to exercise a great deal of caution in issuing the process, particularly when matters are essentially of civil nature.
At the outset, Respondent No. 2/Complainant alleged that the Appellants were responsible for the offence punishable under Section 420, 405, 406, 120B IPC. Therefore, it is also imperative to examine the ingredients of the said offences and whether the allegations made in the complaint, read on their face, attract those offences under the Penal Code.
Having gone through the complaint/FIR and even the chargesheet, it cannot be said that the averments in the FIR and the allegations in the complaint against the appellant constitute an offence under Section 405 & 420 IPC, 1860. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making promise being absent, no offence under Section 420 IPC can be said to have been made out. In the instant case, there is no material to indicate that Appellants had any malafide intention against the Respondent which is clearly deductible from the MOU dated 20.08.2009 arrived between the parties - The entire origin of the dispute emanates from an investment made by Respondent No. 2, amounting to Rs. 2.5 crores in lieu of which 2,50,000/- equity shares were issued in the year 25.03.2008, finally culminating into the MOU dated 20.08.2009. That based on this MOU respondent No. 2 filed three complaints, two at Delhi and one at Kolkata. Thus, two simultaneous proceedings, arising from the same cause of action i.e. MOU dated 20.08.2009 were initiated by Respondent No. 2 amounting to an abuse of the process of the law which is barred.
The order of the High Court is seriously flawed due to the fact that in its interim order dated 24.03.2017, it was observed that the contentions put forth by the Appellant vis-à-vis two complaints being filed on the same cause of action at different places but the impugned order overlooks the said aspect and there was no finding on that issue. At the same time, in order to attract the ingredients of Section of 406 and 420 IPC it is imperative on the part of the complainant to prima facie establish that there was an intention on part of the petitioner and/or others to cheat and/or to defraud the complainant right from the inception. Furthermore it has to be prima facie established that due to such alleged act of cheating the complainant (Respondent No. 2 herein) had suffered a wrongful loss and the same had resulted in wrongful gain for the accused(appellant herein).
In absence of these elements, no proceeding is permissible in the eyes of law with regard to the commission of the offence punishable u/s 420 IPC. It is apparent that the complaint was lodged at a very belated stage (as the entire transaction took place from January 2008 to August 2009, yet the complaint has been filed in March 2013 i.e., after a delay of almost 4 years) with the objective of causing harassment to the petitioner and is bereft of any truth whatsoever.
Appeal allowed.
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2022 (3) TMI 1526
Sanction of Scheme of Arrangement - Sections 230 to 232 of the Companies Act, 2013 and other relevant provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition is made absolute in terms of the prayer clauses of the said Company Scheme Petition.
The Petitioner Company No 1 be dissolved without winding up - The Appointed Date is 1st April, 2021.
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2022 (3) TMI 1525
Liquidation of Corporate Debtor - Order for closure of the liquidation process in terms of Regulations 45(3)(a) of Insolvency and Bankruptcy Board of India, Regulations, 2016 (in-brevity IBBI) on compliance in Form-H - direction to Registrar of Companies for recording the status of the corporate debtor as “active” as well as recording the names of the new directors in place of the erstwhile directors - HELD THAT:- Closure of the liquidation process in terms of Regulations 45(3)(a) of Insolvency and Bankruptcy Board of India, Regulations, 2016 (in-brevity IBBI) on compliance in Form-H of the directions passed by this Adjudicating Authority is allowed.
Status of the corporate debtor as “active” as well as recording the names of the new directors in place of the erstwhile directors is allowed.
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2022 (3) TMI 1524
Rectification of mistake - deduction u/s 42 disallowed by the AO - AO grant depreciation on the asset being Oil well and Oil field equipment at the rate of 10% - HELD THAT:- We rectify the para 26.1 of the order of the ITAT as detailed we direct the AO to allow depreciation at the rate of 60% on the oil well and oil field equipment as plant & machinery as provided Entry II(8)(xii) as Appendix I to the Income Tax Rules, 1962.
Additional depreciation u/s 32(1)(iia) which has not been adjudicated by the ITAT inadvertently - Admittedly, the assessee has requested for allowing the additional depreciation on the Oil field and oil field equipment but the ITAT has omitted to adjudicate the additional depreciation claimed u/s 32(1)(iia) of the Act inadvertently which is a mistake apparent from record within the meaning of the provisions of section 254(2) of the Act.
Thus the registry is directed to fix the case for a fresh hearing on 26/04/2022 for the limited purpose as discussed above.
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2022 (3) TMI 1523
Reversal of CENVAT Credit - common input, i.e., furnace oil used in the manufacture of exempted goods - HELD THAT:- There are no error of law in the impugned order. That apart, the impugned order of the Tribunal is based on findings of fact.
Appeal of Revenue dismissed.
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2022 (3) TMI 1522
TP Adjustment - adjustment to operating cost on account of foreign exchange fluctuation - HELD THAT:- TPO’s and Assessee’s comparable companies had an average import purchases to total purchases ratio of 10.33% and 3.65% respectively against the Assessee’s ratio of 72.60%. As a result, the Assessee is more prone to the impact of foreign exchange fluctuation.
Pre-agreed contracts with customers prevents passing the additional costs as a result of forex impact - Assessee had to oblige with the terms of contract and supply the products at the committed rate for the entire year even though there was significant increase in the cost of the products by virtue of higher cost of the components being imported vis-à-vis comparable companies selected by the Assessee who had either no imports or less significant imports - also to be noted that the Assessee may not be able to pass on the entire impact of foreign exchange to customers as it operates in the competitive environment of the automobile industry. On an analysis carried out to determine the change in selling price per unit of the products to the customer across years, it was also observed that there was no significant increase in the selling price of the Assessee to its customers in majority of products. From the same it is evident that the Assessee is unable to negotiate for an increase in sale prices to account for the impact of forex fluctuations etc.
Impact of forex fluctuations on the Assessee - Both the parties agreed that identical issue was decided by this Tribunal in Assessee’s own case for AY 2012-13 [2021 (11) TMI 1059 - ITAT BANGALORE] as held it is normal that exchange rate is subject to fluctuation due to economic conditions. While determining the ALP, one has to consider these factors, accordingly, this issue is remitted to the file of the TPO for determining the ALP after considering the above three components i.e. customs duty adjustment, air freight adjustment and foreign exchange fluctuation adjustment.
Grant of depreciation adjustment in computing operating cost of the Assessee - We are of the view that the adjustment on account of underutilization of capacity will sufficiently take care of the depreciation adjustment and no separate adjustment is required to be granted on account of difference in quantum of depreciation vis-a-vis difference in capacity utilization and cost of fixed assets. We hold and direct accordingly.
Selection of comparables - Rajsriya Automotive Industries. Pvt Ltd. - In terms of Rule 10B(2)( a) of the rules specific characteristics of property transferred or services provided in either transaction is a relevant criteria. It may be true that broadly the Assessee and the comparable Rajsriya can be said to be in automotive component manufacturing. However, the specific characteristics of the property manufactured by the Assessee is electrical/electronics parts whereas the comparable company Rajsriya is manufacture of automotive components. Therefore there is a difference in the specific characterics of the property manufactured. So also in terms of Rule 10B(2)( b) of the Rules, presence of intangible as an Asset employed would be a relevant criteria to choose comparable. That being the case, we are of the view that if on a narrower search, if sufficient number of comparable companies are available in the automobile electrical/electronics component, then it would be just and proper to disregard companies who manufacture automotive components. We hold and direct accordingly.
TVS Upasana Ltd. - We find that the reason that the Assessee was in electrical/electronic components manufacture and TVS is in manufacture of automotive/mechanical components in the automobile industry is a difference in the characteristics of the property which is a relevant criteria for choosing comparable companies. On this aspect whatever conclusions we drawn in respect of the comparable Rajsriya would be equally applicable to this comparable company also. In respect of the Related Party Transaction (RPT), the range of related party transaction would vary between 15% and 25% depending on the availability of comparable companies. If more companies are available for comparability then the percentage of RPT can be restricted to 15% and in cases where such comparable companies are not available then the range can go upto 25% to rope in more comparable companies. The fact that raw material consumption is more in the case of the Assessee does not seem to fit into any of the criteria for deciding comparability in terms of Rule 10B(2) of the Rules.
Aspee Springs Ltd. - In so far as the contention regarding the dissimilarity in the characteristics of the property and presence of R & D activities the conclusions while dealing with Rajsriya will apply to this company also. As far as the difference in own consumption of raw material and different business model, we are of the view that the conclusions while dealing with the comparable TVS will equally apply to this comparable also.
Supreme Treon Pvt. Ltd. (‘Supreme’) (formerly Supreme– Treves Private Limited) - The conclusions while dealing with Rajsriya will apply to this company also. As far as the quantum of RPT is concerned, it would be appropriate to direct the TPO/AO to consider the plea of the Assessee that the RPT percentage is more than 25% for this comparable company.
Borgwarner Morse TEC Murugappa Pvt Ltd. - Contention regarding the dissimilarity in the characteristics of the property the conclusions while dealing with Rajsriya will apply to this company also. As far as the difference in own consumption of raw material and different business model, we are of the view that the conclusions while dealing with the comparable TVS will equally apply to this comparable also. We hold and direct accordingly. As far as the quantum of RPT is concerned, it would be appropriate to direct the TPO/AO to consider the plea of the Assessee that the RPT percentage is more than 25% for this comparable company.
Munjal Showa Ltd. - We find that the DRP has not gone into the comparability of this company but has proceeded under the mistaken belief that this company was not part of the search matrix before the TPO. This was a comparable chosen by the Assessee and rejected by the TPO and it was the plea of the Assessee that this company is comparable functionally. We are therefore of the view that interest of justice would be met, if the TPO/AO is directed to consider comparability of this company afresh.
Assessee as contended that the adjustment, if any should be restricted to the proportionate value of the international transactions of the Assessee - As relying on the case of IKA [2018 (10) TMI 923 - ITAT BANGALORE] Adjustment on account of determination of ALP has to be restricted only to that part of the transaction with AE and not the entire value of the manufacturing segment as was done by the revenue authorities.
Payment of Research and Development and licence fee (Royalty) to the AE as at nil - HELD THAT:- DRP has held that as the adjustment in the manufacturing segment being made under TNMM incorporating the payment of license fee/royalty as a part of the operating cost, the adjustment comes to more than the amount of royalty and therefore, no separate adjustment is called for royalty. DRP held that in the event, the margin of the manufacturing segment is at arm’s length or the adjustment under TNMM works out to be less than the payment for license fee/royalty, then the adjustment made towards royalty would be revived. As submitted that as no adjustment with respect to royalty has been made in view of the adjustment in the manufacturing segment being more than the amount of royalty, the said ground may not be adjudicated at this stage. However, the Assessee reserves liberty to urge this ground at a later stage in the event the adjustment made towards royalty is revived. We are of the view that the prayer so made is acceptable and the liberty prayed for is granted.
Comparables for SWD services - We direct exclusion of (1) Infosys Ltd. (2) Larsen & Toubro Infotech Ltd. (3) Persistent Systems Ltd. & (4) Thirdware Solutions Ltd. from the list of comparable companies.
Exclusion of Mintree Ltd - Assessee has limited its analysis only to functions but not to the assets, risks as well as prevailing market conditions in which both the buyer and seller of services located. Hence, the companies in which more than 75% of their export revenues come from onsite operations are to be excluded from the comparability study as they are not functioning in similar economic circumstances to that of the tax payer. Hence, it is held that this filter is appropriately applied by the TPO. We are of the view that it would be just and appropriate to remand the issue of comparability of Mindtree Ltd.,to the TPO/AO afresh in the light of the principles set out above and apply the onsite revenue filter.
Functional dissimilarity - Companies functionally dissimilar with that of assessee need to be deselected from final list.
Non grant of Working Capital adjustment - A working capital adjustment is one such adjustment which is to be applied in order to adjust for the differences between the working capital positions of the tested party and of the comparable. Reliance is placed by the Assessee on the decision of this Hon’ble Tribunal in the cases of Bearing Point Business Consulting (P.) Ltd. [2014 (4) TMI 997 - ITAT BANGALORE] Therefore, it is submitted that since it is now a settled proposition of law that necessary adjustments are to be made to the margins of comparables to give effect to the differences in the working capital positions of the tested party and of the comparables, the TPO ought to have given the Assessee the benefit of the same. We are of the view prayer in this regard deserve to be accepted. This tribunal has been consistently taking a view that working capital adjustment has to be allowed. Hence, we direct the TPO/AO to allow working capital adjustment, in accordance with law.
Disallowance of provision for warranty - HELD THAT:- The claim made by the Assessee that the method followed for creating provision for anticipated liability on account of warranty stands vindicated by the fact that the actual liability on account of warranty expenses is always on the higher side. The reasons given by the DRP for not accepting the claim of the Assessee is that the provision is created as a percentage of sale, ignoring the fact that past experience is also the basis for creation of provision for warranty. We are therefore of the view that the provision for warranty has to be allowed as a deduction, as the provision created satisfies the requirements for claiming provision as a liability, as laid down in the judicial precedents. We hold and order accordingly and allow the relevant ground of appeal of the Assessee.
Disallowance of annual licence fee - AO disallowed the above for the reason that the reasons for mention “licence fee” as R & D expenses were not submitted and except the Agreement, no supporting documents were furnished with regard to technical know-how provided by the group companies - HELD THAT:- DRP disregarded the same by merely observing that submission of license agreements, raising of invoices, payments by cheques will not help the cause of the Assessee. Each and every one of the allegations of the AO has been countered by the Assessee and these have been given in the chart in the earlier paragraphs. As rightly submitted by the Assessee, the nomenclature of R & D should not be the basis to conclude that the expenditure is capital expenditure in nature. We also find that similar disallowance in the earlier AYs has been set aside by the Tribunal to the AO for consideration afresh. The issue needs to be examined afresh in the light of the evidence filed before the Tribunal and the submissions made by Assessee as above. The AO will examine the issue afresh in the light of the observations made above and in the light of the evidence and additional evidence and submissions made as above, after affording the Assessee opportunity of being heard.
Non-set off of brought forward losses - Assessee submitted that as per its return of income, an amount was brought forward under the head ‘profits and gains from business or profession’, which ought to be available for set off in terms of Section 72 - as prayed that the same be allowed to be set off against income under the head ‘profits and gains from business or profession’ - HELD THAT:- We are of the view that a direction to the AO to consider the claim of the Assessee after affording opportunity of being heard and after due verification, would be sufficient to dispose this ground of appeal. We hold and direct accordingly.
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2022 (3) TMI 1521
Continuation of meetings/proceedings of the CoC - HELD THAT:- It is considered appropriate and hence provided that the meetings/proceedings of the CoC may continue but the entire process shall remain subject to the final orders to be passed in these appeals.
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2022 (3) TMI 1520
Assessment against company in liquidation - liquidation in proceedings pending before the National Company Law Tribunal - HELD THAT:- As respondent company Moser Baer India Ltd. is not financially viable and is in liquidation before NCLT. The order also makes it clear that even if the Revenue were to succeed, the Official Liquidator would not be in a position to pay the tax amount involved in these appeals. Thus, even if the appellant-department succeeds in the present appeal, there would be no fructifying effect as the respondent company, which is under liquidation, would not be able to discharge its debts and tax liability through the liquidator. The courts are already overburdened.
. There is no purpose of flogging a dead horse. Thus, we are of the view that there is no purpose in keeping this matter alive. Hence, in view of peculiar facts and circumstances, report filed by the department and the order passed by the Apex Court in [2020 (7) TMI 760 - SC ORDER], we dispose of the present appeal
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2022 (3) TMI 1519
Validity of reopening of assessment - deposits of cash during demonetization period - As per HC petitioner as admittedly deposited in cash in his bank account and though the said entry is reflected in the return of income, yet no supporting evidences are available to prove the source of deposit therefore income otherwise chargeable to tax has escaped the assessment - HELD THAT:- Learned counsel for the petitioner prays for and is granted liberty to withdraw the present petition.
The Special Leave Petition is dismissed as withdrawn.
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2022 (3) TMI 1518
Disallowance of provision for warranty - Methodology of the appellant company for the computation of provision of warranty - HELD THAT:- We have gone through the orders of lower authorities and find that though the lower authorities had considered the decision in the case of Rotork Controls India (P.) Ltd. [2009 (5) TMI 16 - SUPREME COURT] had not applied the ratio of the said decision in right perspective. The appellant company also has failed to demonstrate before us as to how the methodology adopted by it for computation of provision for warranty satisfies the parameters laid down (supra).
Accordingly, this ground of appeal is remitted back to the file of AO for de novo consideration and decide this issue in accordance with ratio of decision in the case of Rotork Controls India (P.) Ltd. vs. CIT (supra) after providing a reasonable opportunity of hearing to the assessee. Thus, ground of appeal No.1 filed by the assessee stands partly allowed for statistical purposes.
Provision for obsolete stock - allowance of provision for obsolescence of finished goods and spares - HELD THAT:- There can be no dispute that inventory should be valued either at cost or market price, whichever is lower. In the present case, the appellant company followed inventory valuation policy, based on which item-wise analysis was carried out to determine whether a particular item or a part of finished goods has become obsolete or not and it also adopted a methodology for identification of obsolete finished goods, etc. Thus, the provision for obsolete items is clearly allowable, in view of the settled position of law that inventory should be valued at cost or market price whichever is lower in view of decision of Alfa Laval India [2003 (9) TMI 43 - BOMBAY HIGH COURT] is clearly applicable.
Provision for obsolete stock is allowable but it requires to be satisfied that the value of obsolete items of finished goods is valued on the cost or market price whichever is less. In the circumstances, we remand the matter back to the file of AO with a direction that the provision for obsolete stock be allowed as deduction subject to satisfying himself that the valuation is done based on the principle that at cost or market price or net realizable value, whichever is less. Thus, this ground of appeal is allowed for statistical purposes.
CIT(A) not admitting the ground of appeal challenging the denial of claim for allowance of difference between net present value of deferred sales tax and the deferred sales tax liability - HELD THAT:- CIT(A) had clearly fell in error in not admitting and adjudicating this ground of appeal, since this ground of appeal is purely legal in nature and requires no verification of facts, we admit this ground of appeal for adjudication. The issue in this ground of appeal is decided in CIT Vs. Sulzer India Ltd. [2014 (12) TMI 267 - BOMBAY HIGH COURT] wherein the Hon’ble High Court upheld the decision of Special Bench of Tribunal. Respectfully following this decision of the Hon’ble High Court, we direct the AO to reduce the sum from the taxable income on account of difference between the net present value of deferred sales tax and deferred sales tax liability. Thus, this ground of appeal filed by the assessee shall stands allowed.
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2022 (3) TMI 1517
Reopening of the assessment u/s 147 - non issue of notice u/s 143 - HELD THAT:- In the admitted position being that on facts in the present case, notice under Section 143 (2) of the Income Tax Act, 1961 (Act) was not issued to the Petitioner while reopening the assessment under Section 147 of the Act, Question No. (iii) is answered in the affirmative, by holding that the re-assessment is bad in law, in favour of the Assessee and against the Department.
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2022 (3) TMI 1516
Disallowance u/s 14A r.w. Rule 8D - main contention that the CIT(A) has deleted the said disallowance u/s 14A r.w. Rule 8D by ignoring the CBDT Circular No.5/2014 dated 11.02.2014 - HELD THAT:- Assessee did not claim any expenses. No deduction was claimed, therefore, there should be no disallowance expenses, hence, on this aspect also no disallowance u/s 14A r.w. Rule 8D is required. CIT(A) has also dealt with the finding of the AO.
AO computed the average value of the investment which did not yield the exempt income but CIT(A) has relied upon the decision of the case titled as Rainy Investments P. Ltd in which it is [2013 (2) TMI 602 - ITAT MUMBAI] specifically held that the share application money which is not capable to yield exempt income, is not required to be considered for computing the disallowance u/s 14A r.w. Rule 8D also.
Accordingly, considering the case of the assessee by above said angle, the CIT(A) has disallowed the addition raised in view of the provisions u/s 14A. Circular nowhere hindered the law relied by the CIT(A). Moreover, the issue of interest has duly been adjudicated in due course of law.
CIT(A) has decided the issue judiciously and correctly which is not required to be interfered with at this appellate stage. Accordingly, this issue is decided in favour of the assessee against the revenue.
Addition of transfer of shares - gift receipts as liable to be considered as Sham transaction - whether the same is liable to be taxed u/s 56(1) and 28(iv)? - As argued that CIT(A) has deleted the addition without looking at the very nature of transfer of shares in substance i.e. the creation of holding company and subsidiary company was a colourable device adopted to evade taxes - HELD THAT- We are of the view that the gift is not a colourable device to avoid the tax liability if any.
As receipt of share from the Private Limited Company for without or inadequate consideration whereas in the present case, the assessee is the recipient of shares of a listed company so the provisions u/s 56(2)(viia) of the Act is not liable to be applicable. As the provision Section 28(iv) and 56 in case of receipt of shares of a listed a company as gift is not applicable. Accordingly, we uphold the finding of the CIT(A) on this issue.
Power of the CIT(A) u/s 251 - CIT(A) issued the direction to tax the share transaction amount in the hands of the transferor - HELD THAT:- In the case of Mrs. Banoo E. Cawasji v. CIT[1981 (12) TMI 31 - MADHYA PRADESH HIGH COURT] the Hon’ble High Court has observed that the CIT(A) is not required to pass the order in the case of third party. Accordingly, we are of the view that the observation of the CIT(A) is not justifiable, therefore, we set aside the such direction and decide the issue nos. 1 to 4 in favour of the assessee against the revenue.
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2022 (3) TMI 1515
Seeking approval of the Resolution Plan in respect of Trimurti Concast Private Limited - HELD THAT:- It is found that the Resolution Plan has been approved with100%voting share. As per the CoC, the Plan meets the requirement of being viable and feasible revival of the Corporate Debtor. By and large, there are provisions for making the Plan effective after approval by this Bench.
On perusal of the documents on record, it is satisfied that the Resolution Plan is in accordance with sections 30 and 31 of the IBC and also complies with regulations 38 and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
As far as the question of granting time to comply with the statutory obligations/seeking sanctions from governmental authorities is concerned, the Resolution Applicant is directed to do the same within one year as prescribed under section 31(4) of the Code - In case of non-compliance of this order or withdrawal of Resolution Plan, the CoC shall forfeit the EMD amount already paid by the Resolution Applicant.
Subject to the observations made in this Order, the Resolution Plan in question is hereby approved - application allowed.
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