Applicability of provisions of section 92A - relationship of AE between the Assessee Company and GLATIPL - Held that:- As per the explanation, amendment carried out in sub section (2) of section 92A by Finance Act, 2002 w.e.f. 01.04.2002, as reproduced by the tribunal in Para 11 reproduced above, mere participation of one or more persons in the management or control or capital of both the enterprises shall not make them AE unless the criteria specified in sub section (2) are fulfilled.
We have seen that even as per the learned DR of the revenue, clause (j) of sub section (2) of section 92A is attracted but this claim is also devoid of merit because he could only point out that one director of the assessee company and of GLATIPL is common but this fact alone does not establish that the said common director is controlling GLATIPL when the said company is a subsidiary of ILSGL and the assessee company or its directors are not having any relationship with ILSGL or director of ILSGL. Hence, by respectfully following this tribunal order, we hold that since the parameters laid down in sub section (1) and (2) of section 92A are not fulfilled, there is no relationship of AE between the Assessee Company and GLATIPL and therefore, the provisions of Chapter X of I. T. Act have no application.
Disallowance of Transportation charges - Disallowance of Expenses under Explanation to section 37 (1) and Addition made on account of sale of Land - Held that:- Hence in line with the tribunal order in A.Y. 2010 - 11 in assessee's own case, we delete first two disallowances i.e. (1) Disallowance of Transportation charges, and (2) Disallowance of Expenses under Explanation to section 37 (1) and in respect of third issue i.e. Addition made on account of sale of Land, we set aside the order of CIT (A) on that issue and restore the matter to A.O. for a fresh decision with same directions as were given by the tribunal in A. Y. 2010 - 11. Ground No. 6 is allowed in this manner.
Utilization of CENVAT Credit - Default in payment of monthly duty beyond 30 days from the due date - Rule 8 (3A) of Central Excise Rules, 2002 - Held that:- Appellant relies upon the judgement of Hon’ble Gujarat High Court in the case of Indsur Global Ltd. Vs Union of India [2014 (12) TMI 585 - GUJARAT HIGH COURT], where it was held that the relevant portion of Rule 8 (3A) relating to bar of utilization of cenvat credit by such defaulters to be ultra vires. The Hon’ble Madras High Court has also set aside the proceedings pending on this count - but Revenue points out that the above High Court judgement has been appealed against to the Supreme Court and the same has been ordered by the Hon’ble Supreme Court to be tagged along with SLP in the case of Commissioner Versus A.R. Metallurgicals P. Ltd. [2016 (1) TMI 1380 - SUPREME COURT].
The appeal is remanded back to original adjudicating authority with the direction for denovo consideration, based on the parameters of the final ruling of the Hon’ble Supreme Court in the matter.
Levy of fees u/s 234E - demand raised u/s 234E on statements processed u/s 200A before 01.06.2015 - Held that:- We have considered the recent decision of Hon’ble Karnataka High Court in the case of Shri Fatheraj Singhvi & Ors (2016 (9) TMI 964 - KARNATAKA HIGH COURT) wherein the issue of levy of fees u/s 234E on statements processed u/s 200A before 01.06.2015 has been categorically discussed by the Hon’ble High Court and in para 24 of the said order it was held that “no demand for fee u/s 234E can be made in intimation issued for TDS deducted u/s 200A before 01.06.2015”.
We have also gone through the judgment of Hon’ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd. (2014 (9) TMI 576 - SUPREME COURT) wherein the Hon’ble Apex Court has discussed in detail the general principle of concerning retrospectively and held that unless contrary intention appears, a legislation is presumed not to have a retrospective operation - we set aside the order of ld. CIT (A) and direct the AO to drop the demand raised of ₹ 4,200/- u/s 234E on statements processed u/s 200A before 01.06.2015. Thus grounds raised by the assessee are allowed.
Non-speaking SCN - SCN does not speak the reason of disallowance proposed by that notice - Held that:- There is no cause stated in the present SCN how Revenue is prejudiced by the act of the appellant. Added to the above, appellant also says that requirement of maintenance service of the building of the appellant who is a man power recruitment agency, cannot be ruled out - both on legality as well as on merits appellant succeeds - appeal allowed.
Undisclosed income - unexplained money u/s 69A - additions in the hands of partnership firm on the basis of statement of partner recorded u/s 131 on oath - Held that:- the statement recorded by the partner of the firm is binding upon the assessee. The survey was conducted on 5.9.2008 and 9.9.2008 and it was specifically put to the partner of the firm that you have not maintained the books of accounts of the firm, therefore, he has made additions in the hands of the firm. Therefore, under these circumstances, we are of the view that the statement was binding upon all the partners of the firm.
Reliance on various decision by the assessee - Held that:- As in many cases admissions are retracted in subsequent proceedings, therefore, they should not force the assessee to admit the undisclosed income but in this case there was no retraction.
The contention of the learned counsel for the assessee that the Assessing Officer should have independently come to the conclusion that there was additional income and there was no material to indicate that there was such income, is not correct. The burden lay on the assessee to establish that the admission made in the said statement was wrong as in fact there was no additional income. The burden is upon the assessee to prove that he has no additional income.
In this case one of the partners has made confession of additional income, but he has not retracted from the statement admitting the additional income. Therefore, we are of the view that the assessee has not discharged the burden lay upon it. - Decided against the assessee.
Depreciation on assets leased out - treatment of expenditure on construction of jetty at its cement plant in Gujarat as revenue in nature - deduction of provision for unforeseeable losses in valuing workinprogress of construction contracts - interest expenditure on capital borrowed - per-operative expenditure - mining development expenditure
Held that:- Appeal admitted on substantial questions of law being Question No. (1).
Whether on the facts and in the circumstances of the case and in law the Tribunal was correct in allowing depreciation on assets leased out, when the related transactions were purely financial transactions.
Other questions / grounds, appeal of the revenue not entertained.
Royalty - data processing cost paid by the assessee - TDS liability on data processing cost paid by the assessee to the head office - Existence of Permanent Establishment (PE) of the foreign bank - Scope of amendment to ection 9(2) - DTAA between India and Germany - Held that:- the impugned payment made by the Branch to the H.O. towards reimbursement of cost of data processing cannot be held to be covered within the scope of expression “royalty” - Decided in favor of assessee.
Maintainability of appeal - Held that:- The matters have been coming up on Board repeatedly and were being adjourned in the interest of justice - the appellants are not interested in pursuing the appeals - the appeals are dismissed for non-prosecution.
Disallowance u/s 14A r.w.r 8D - assessee had not earned any exempt income during the year - where no fresh investment has been made and no dividend has been earned by the assessee during the year under consideration, the question which arises is whether any disallowance could be made on account of expenses attributable to earning of exempt income.
Held that:- In view of judicial precedents, there is no merit in the orders of authorities below in the absence of any exempt income earned by the assessee during the year. No disallowance was warranted under section 14A of the Act read with Rule 8D of the Rules and the same is thus, deleted. - Decided in favor of assessee.
Non appearance of assessee / petitioner in the case - Held that:- in the absence of any representation or petition seeking time, the only alternative left is to dismiss the appeals of the assessee in limine. - Before parting it is appropriate to add that in case the assessee is able to show that there was a reasonable cause for non-representation on the date of hearing, it would be at liberty if so advised to pray for a recall of this order. The said order was pronounced on the date of hearing itself in the open Court.
Depreciation on asset used for busniss purpose - ship neither used nor intended to be used as indicated in the Director's Report - Held that:- The impugned order of the Tribunal has allowed the Respondent Assessee's appeal on the issue of depreciation by following its order in the case of the same Respondent Assessee in Assessment Year 1985-86. Revenue has accepted the Tribunal's order for the Assessment Year 1984-85. Further, no distinguishing feature in the subject Assessment Year to that existing in the Assessment Year 1984-85 has been brought to our notice. Thus, the issue raised in the question as proposed being accepted by the Revenue - decided against revenue
Allowance of expenditure being fees paid to the Registrar of Company for increase in the authorized share capital of the company - allowable business expenditure - Held that:- This very issue arose for consideration before the Apex Court in General Insurance Corporation [2006 (9) TMI 116 - SUPREME COURT], wherein the Court held that in case of issue of bonus shares, there is no increase in capital structure of the assessee before it. It does not give rise to any inflow of fresh funds as the capital employed continues to remain the same. Nor is there any benefit of enduring nature received on issue of bonus shares. Therefore, the expenses incurred for issue of bonus shares are to be allowed as revenue expenditure.
Investment allowance on the foreign exchange fluctuations - Held that:- The impugned order of the Tribunal has allowed the Assessee's appeal before it by following its order for the Assessment Year 1984-85 in the Assessee's own case. The Revenue has not brought anything on record to show that it was aggrieved by the order of the Tribunal for Assessment Year 1984-85 and it had appealed to a higher forum. Therefore, the Revenue could have no grievance with the impugned order as it merely follows its order for the earlier Assessment Year 1984-85 which has been accepted by it. Also in case of Associated Bearing Co. Ltd. vs. CIT [2005 (10) TMI 75 - BOMBAY HIGH COURT] held investment allowance on the increased amount, consequent to foreign exchange fluctuations, is allowable.
Addition being interest attributable to the interest free advances made to subsidiaries u/s 36 - Held that:- We proceed on the basis that the Revenue has accepted the Tribunal's order for the Assessment Year 1985-86. Further, no distinguishing features in the subject Assessment Year to that existing in the Assessment Year 1985-86 have been pointed out. Therefore, the question as raised herein does not give rise to any substantial question of law. Thus, not entertained.
Disallowance of sundry contributions made to the unrecognized entities u/s 40A(9) - tribunal deleted the addition - Held that:- The impugned order of the Tribunal merely follows its orders for the Assessment Years 1983-84, 1985-86, 1993-94, 1994-95 and 1995-96. Therefore, as they have been accepted by the Revenue and no distinguishing features in the subject Assessment Year to that existing in the Assessment Years 1983-84, 1985-86, 1993-94, 1994-95 and 1995-96 have been pointed out, no substantial question of law arises. (d) In the circumstances, the question as raised does not give rise to any substantial question of law. Thus, not entertained.
Appeal admitted on question 5 - “Whether the Tribunal was correct in law in deleting the disallowance of ₹ 2,00,000/being penalty paid u/s 125 of the Custom Act, following the decision of the Apex Court in the case of Ahmadabad Cotton Mfg. Co. Ltd. [1993 (10) TMI 1 - SUPREME COURT], without appreciating that the above decision of the Apex Court (dated 15/10/1993) was delivered prior to the insertion of explanation to section 37 of the Income Tax Act by the Finance (No.2) Act, 1998 with the retrospective effect from 01/04/1962, according to which the above penalty was not allowable as deduction.
Entitled to deduction under Section 80IA - ‘initial assessment year’ - entitled to claim deduction u/s 80IA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section - Held that:- SLP dismissed.
Whether issuance of a notice, under sub-Section (5) of Section 34 of the Arbitration and Conciliation Act, 1996 is mandatory or directory?
Whether an order, entertaining an application, which is made contrary to the provisions of Section 34(5) of the 1996 Act, by omitting to serve advance notice on the opposite party by the application, would be amenable to Article 227 or 226 of the Constitution of India?
Whether a District Judge, while exercising power under Section 34 of the 1996 Act functions as a Civil Court or a Court other than a Civil Court?
Held that:- A party may be prevented for divergent reasons from filing its written statement in time. The reasoning, once put forwarded, and the court finds the same as exceptional, there is ground for accepting the written statement even when the same is found to have been filed beyond the time prescribed under the law. Here, the same analogy does not fit in or can be applied. The State has not cited any exceptional reasons. In fact, no reason has been cited, at all, for not having issued the notice prior to challenging the award under Section 34 of the 1996 Act. Issuance of a previous notice and filing of an affidavit cannot be claimed to be prevented under any situation. The requirement is simple and can always be followed.
Whether the present appeal is maintainable and whether the original petition was under Article 227 or 226 of the Constitution of India? - Held that:- Since the filing of the proceeding under Section 34 of the 1996 Act before the learned District Judge is against the statute, the subsequent order, dated 18.07.2016, cannot cure the initial illegality - Patent appeal not maintainable.
Adjustment for the value of corporate guarantees received by the taxpayer form its AEs - Held that:- Corporate guarantee provided by the assessee gives the benefit to the AE and such benefit was passed on by the assessee to the said AE and therefore should have been charged at ALP. Accordingly, we set aside this issue to the record of the A.O./TPO to recomputed the ALP by considering the arm’s length guarantee fees at 0.5% and further by providing appropriate adjustment for corporate guarantee received by the assessee from its arm’s length.
TP Adjustment in respect of the loan provided to AE - Held that:- The transaction of loan/advance is clearly defined in Section 92B(1) as international transaction being lending or borrowing money or any other transaction having bearing on the profits, income, loses or assets of enterprises. We find that the Tribunal has been taking a consistent view on this issue as far as the transaction of lending money to the AE being international transaction however, the arm’s length rate has been accepted by the Tribunal by considering LIBOR rate as the transaction is in foreign currency. Therefore interest rate prevailing in the economic geography of AE shall be taken into consideration. Accordingly, we direct the Assessing Officer / TPO to apply LIBOR + 2% as ALP.
TP Adjustment in respect of outstanding receivable from the AE for abnormal period - Held that:- This issue has been considered and decided by this Tribunal in a series of decisions including the decision in the case of M/s. Dell International Services India Pvt. Ltd. Vs. JCIT [2016 (6) TMI 1275 - ITAT, BANGALORE] - we set aside this issue to the record of the A.O./TPO with the direction to redo the determination of ALP in respect of providing software development services by considering the proper working capital adjustment in comparable price. In case after giving the necessary adjustment the international transaction of the assessee is found at arm’s length then there is no question of separate adjustment on account of allowing credit period on receivable from the AE.
Exclusion of expenses from export turnover while computing the deduction under Section 10A - Held that:- The Hon’ble Karnataka High Court in the case of CIT v M/s Tata Elxsi Ltd. & Others [2011 (8) TMI 782 - KARNATAKA HIGH COURT] had held that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover in the denominator.
Setting off unabsorbed depreciation against the profits of the eligible units - Held that:- Following the latest judgment of the Hon’ble High Court in case of M/s Yokogawa India Ltd [2011 (8) TMI 845 - KARNATAKA HIGH COURT]as well as Co-ordinate Bench decision in case of M/s Safran Aerospace India Pvt. Ltd. [2015 (1) TMI 773 - ITAT BANGALORE] we decide this issue in favour of assessee and direct the AO to allow the claim of deduction u/s 10A of the IT Act,, without setting off of brought forward losses/unabsorbed depreciation
Disallowance of lease charges on the ground of unascertained liability as well as non-deduction of taxes at source under Section 40(a)(ia) - Assessing Officer found that this amount of ₹ 6,41,61,438 has been added back in the computation under regular provisions of Act as an uncertained liability but was not added back while computing book profit under Section 115JB - Held that:- . The concept of disclosure in notes to Accounts would amount to disclosure in the financial statement is applied if an item of income or expenditure is required to be part of profit and loss account as per Part II of Schedule VI of the Companies Act but the same was not disclosed in the profit and loss account and has been disclosed in thenotes forming part of financial accounts. Therefore the said disclosure in the notes to accounts would be treated as disclosure of particular income or expenditure as the case may be in the profit and loss account for the purpose of computation of book profit under Section 115JB of the Act. In the case on hand since this was not a permissible provision as per Accounting Standard therefore it was not required to be disclosed in the profit and loss account and accordingly the disclosure made in notes to accounts would not change the nature of provision as accrued expenditure. In view of the facts and circumstances as discussed above, we do not find any error or illegality in the orders of the authorities below on this issue.
Brought forward losses or unabsorbed depreciation whichever is lessor has to be allowed as deduction - Held that:- Despite the directions of the DRP, the Assessing Officer while passing the final assessment order has not allowed this claim of the assessee which is a gross disrespect and derogation on the part of the Assessing Officer to the binding orders/directions of the DRP. Accordingly, we direct the Assessing Officer to recompute the book profit under Section 115JB as directed by the DRP. We make it clear such a conduct of the Assessing Officer is unwarranted and depreciable and goes even against the interest of revenue being a self inflecting injury. Even if the directions of the DRP are not acceptable to the Assessing Officer, the remedy is to file the appeal after passing the final order in terms of the directions of the DRP
Benefit of N/N. 6/2002-CE - supply of plastic power cables and stainless steel wire to Thermal Power project - denial on the ground that the goods cleared by them do not fall under Customs Tariff Heading 9801 - Held that:- The Tribunal in Paramount Communication Ltd. [2016 (7) TMI 863 - CESTAT NEW DELHI] held that exemption cannot be denied as the goods manufactured by the appellant cannot be classified under Customs Tariff Heading 9801. Apparently, the condition of Project Import required cannot be literally imposed on Indian manufacturer for exemption under N/N. 6/2002-CE.
Benefit of notification cannot be denied - appeal allowed - decided in favor of appellant.
Maintainability of petition - Reason-ability of Stay allowed by Tribunal - Held that:- The Tribunal has imposed a very reasonable condition. In fact, it has partly allowed the appeals and brought down the amount which is to be deposited. In the circumstances and when the Tribunal has not acted arbitrarily or capriciously nor violated any provisions of law, we cannot entertain these writ petitions. They are dismissed.
Depreciation on capital assets - whether the Tribunal was justified in allowing depreciation claimed by the assessee on capital assets for which capital expenditure has already been allowed in the year under consideration? - Held that:- Delay condoned.
Leave granted. To be heard along with PR COMMISSIONER OF INCOME TAX (EXEMPTION) JAIPUR VERSUS M/S. SHRI RAM NIWAS DHAM TRUST [2016 (7) TMI 1457 - SUPREME COURT]
The Tribunal has partly allowed the appeals and brought down the amount which is to be deposited - when the Tribunal has not acted arbitrarily or capriciously nor violated any provisions of law, we cannot entertain these writ petitions - petition dismissed.
CENVAT Credit - input service - Sales Commission - Held that:- Reliance placed in the case of M/S ESSAR STEEL INDIA LTD. VERSUS COMMISSIONER OF C. EX. & SERVICE TAX, SURAT-I [2016 (4) TMI 232 - CESTAT AHMEDABAD], where it was held that the definition of the 'input services' includes services used in relation to 'sales promotion' and these activities can rightly be described as sales promotion activities. Sales promotion activities undertaken at given point of time also aims at sales of goods which are to be manufactured and cleared on future. Any advertisement given as a long term impact cannot be treated as post-clearance activities and, therefore, sales promotion has been specifically included in the definition of input services - credit allowed - appeal dismissed - decided against Revenue.
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