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2018 (7) TMI 2346
Condonation of delay filing appeal before the CIT(A) - delay of 540 days in filing of the appeal - assessee submitted that he was not properly advised by the tax practitioner, who had received the order - HELD THAT:- Assessee has been prevented by sufficient cause from filing of this appeal in time. Both the assessee and the tax consultant have filed affidavits giving the facts. Hence, we condone the delay in filing of the appeal before the ld. CIT(A).
While doing so in terms of the judgment of Vijay Vishin Meghani [2017 (10) TMI 248 - BOMBAY HIGH COURT] we direct the assessee to pay costs of ₹ 10,000/- to the revenue.
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2018 (7) TMI 2345
Fixation of fees by the University - in compliance with the scale fixed by the Government as well as the Committee on Fixation of Fee or not - scope of Educational Institution - Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992 - plea of estoppel - HELD THAT:- The High Court was completely in error in observing that for the application by the provisions of 1992 Act an educational institution must always be specified by the Government by notification. The requirement of specification of notification is only in respect of "any other educational institution or class or classes of educational institutions" and has not to be read with (I) part of definition, which part of the definition is an independent and stand alone provision and does not require any specification by the Government.
Whether University in the present case answers the description in (I) Part of Section 3(b) of 1992 Act? - HELD THAT:- Section 4 shows that under Sub-section (1) the Government is empowered to regulate the tuition fee or any other fees or deposits in the manner prescribed therein. But in relation to imparting of education leading to a degree in medicine or engineering, Sub-section (2-A) has been given an overriding effect by incorporating non-obstante provision. Sub-section (2-A), unlike Sub-section (1), does not require any notification by the Government. If an institution carries on activity of imparting education leading to a degree or diploma as spoken of in Sub-section (2-A) of said Section 4, the fee structure has to be that which is fixed by the Committee. The legislative intent is very clear and no educational institution which comes within the scope of Sub-section (2-A) can receive or collect any fees in excess of the amount fixed by the "Committee on Fixation of Fee".
Whether the University by virtue of Section 4(13) and 20(1)(m) of 2013 Act could charge, collect and receive tuition fee without the intervention of "Committee on Fixation of Fee" as contemplated by Section 4(2-A) of 1992 Act? - HELD THAT:- If a particular modality is prescribed by the Legislature any action in defiance or ignorance of such modality cannot be protected or preserved on the plea of estoppel. The reliance placed on the decision of this Court in Cochin University of Science and Technology [2008 (5) TMI 755 - SUPREME COURT] was also misplaced. In that case students who had taken admission in NRI Quota, thereafter contended that their fee structure be slashed to the same level as applicable to non NRI students. The concept of estoppel was pressed into service while rejecting said submission but that cannot be a ground to deny the express protection available under a legislation.
Thus, the University was not entitled and competent to devise its own fee structure in the present matter without having the fee fixed by the Committee on Fixation of Fee as contemplated under 1992 Act. The matters shall therefore have to be referred to said Committee and the University is directed to place the entire material including its balance-sheet and accounts before the Committee on Fixation of Fee within two weeks from the date of this Judgment. The Committee shall thereafter bestow attention and fix appropriate fee structure for the academic year 2013-14 onwards. It goes without saying that if the fee structure fixed by the University is found by the Committee to be inappropriate, consequential benefit and advantage shall be given to each and every student. The Committee shall fix the appropriate fee structure for the current academic Session 2018-19 as well. The entire exercise shall be completed by 31.08.2018.
The impugned judgement set aside - appeal allowed.
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2018 (7) TMI 2344
Seeking grant of bail (successive bail application) - Smuggling - recovery of poppy straw - contraband substances or not - offences under Section 15/18 NDPS Act - whether a successive application for bail will or will not lie before this court? - HELD THAT:- The law evolved on the subject is that the jurisdiction of the Sessions Court and the High Court to consider an application for the grant of bail is concurrent. If the Sessions Court has rejected an application for bail, the High Court can consider the prayer afresh particularly when the order of the rejection of the bail is bad and perverse on the face of it.
What gets revealed from the order of the trial court is that the quantity of the contraband recovered from the possession of the accused does not fall within the parameters of commercial quantity but it is an intermediary one and, therefore, the application of the applicants had to be considered under the provisions of 497 Cr. PC. It is only on the application of the rigor of Section 37 of NDPS Act to a given case that bail can be withheld. In any case which does not fall within the purview, scope and definition of Section 37 of the NDPS Act, grant of bail has to be considered on the agility and celerity of Section 497 Cr. PC. Therefore, a realistic view and a pragmatic approach has to be taken in such a case.
The settled position of law as evolved by the Supreme Court in a catena of judicial dictums on the subject governing the grant of bail is that there is no strait jacket formula or settled rules for the use of discretion but at the time of deciding the question of “bail or jail” in non-bailable offences. Court has to utilize its judicial discretion, not only that as per the settled law, the discretion to grant bail in cases of non-bailable offences has to be exercised according to rules and principle as laid down by the Code and various judicial decisions. In bail applications, generally, it has been laid down from the earliest times that the object of bail is to secure the appearance of the accused person at his trial by reasonable amount of bail. The object of bail is neither punitive nor preventative.
There appears to be no reasonable ground for declining bail to the applicants. The maxim of the law of bails which has its application to the case on hand where the quantity of narcotics recovered from the applicants falls within the scales of an intermediary quantity, for which the punishment provided is upto 10 years and a fine of rupees one lac is “bail and not jail”.
The applicants are admitted to bail, in case they furnish a personal bond to the tune of Rs. 50,000/- each with a surety of the like amount each to the satisfaction of the learned Court below on the terms and conditions fulfilled - bail application allowed.
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2018 (7) TMI 2343
Deduction u/s. 80IA(4)(iii) - assessee was not able to submit notification of CBDT which is mandatory as per Rule 18(C)(4) of the I.T. Rules for claiming deduction u/s. 80IA(4)(iii) - HELD THAT:- The issue raised by the revenue in the grounds of appeal has already been addressed by the Tribunal in assessee’s own case for the AY 2007-08 wherein held that there is nothing to suggest that deduction u/s. 80IA(4)(iii) is allowable from the date of Notification by the CBDT. In coming to the aforesaid conclusion, the Tribunal has placed reliance on the decision of Creative Infocity Ltd. [2012 (4) TMI 117 - GUJARAT HIGH COURT] In view of the aforesaid decision of the Tribunal in assessee’s own case, which decision was also followed by the Tribunal in assessee’s own case for the AYs 2009-10 to 2011-12, we are of the view that there is no merit in this appeal by the revenue. Consequently, the appeal by the revenue is dismissed.
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2018 (7) TMI 2342
Addition u/s. 68 - unexplained cash credit of share allotment to foreign company - as argued by AR that Cash Credit on account of Share Application money received from non-resident company is not subject to deemed addition u/s. 68 - HELD THAT:- The law is section 68 is not apply to remittances made in India by non-resident is strengthened by the proviso to u/s. 68 inserted w.e.f. asst. yr. 2013-14. According to the said proviso, if an assessee company, in which public are not substantially interested, receives money by way of share capital, then the source of funds of resident shareholder has to be established by the assessee in order to get out of the kin of the deeming provision u/s 68. Hence, the proviso talks of the source being established only when the shareholder is a resident of India. There is no such requirement if shareholder is a non-resident. Therefore, the creditworthiness of the shareholders, if he is a non-resident, does not have to be established by the assessee in respect of remittance received by him.
From the record, we also found that the assessee company has received 2 letters of confirmation in respect of money paid by Sweden Company towards share application for investment in shares of the assessee company.
Basis of premium was not required till AY 2012-13 and amendment about basis of premium on allotment of shares came thereafter. Moreover the Assessee was a subsidiary of the company to whom shares were allotted. Reasons for premium has been elaborated vide letter filed with the AO during the assessment proceedings. We observe that there was property justification for the shares issued to holding company at premium of Rs. 10.00 per share. No merit for the addition so made by the AO. Decided in favour of assessee.
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2018 (7) TMI 2341
Seeking direction to withdraw the notice issued by it under SARFAESI Act 2002 - HELD THAT:- From the record, it is found that the personal and individual assets of a Director is not the subject matter of the 'corporate insolvency resolution process' and the moratorium only extends to the assets of the 'Corporate Debtor'. This has also been held by the Adjudicating Authority.
For the reason aforesaid no interference is called for. The appeal is accordingly dismissed.
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2018 (7) TMI 2340
Addition on account of peak of negative cash as undisclosed investments - benefit of telescoping - Whether the Appellate Tribunal [2018 (2) TMI 2112 - ITAT AHMEDABAD] has erred allowing benefit of telescoping the original disclosure made against negative cash balance in books of accounts which was never a part of the disclosure made by the assessee in the return of income especially when F.D.R. are not part of books of accounts of the assessee?
Assessee submitted that such negative balance was on account of payment made out of the unaccounted income, and therefore, it was submitted that when the entire unaccounted income found during the search was offered as a part of the overall disclosure, the same cannot be added in the total income as undisclosed investment.
HELD THAT:- It is required to be noted that the Tribunal has rightly observed that such negative balance was made on unaccounted income and when necessary entries were made in the books of accounts, it is bound to result in negative cash balance. We are in complete agreement with the view taken by the learned Tribunal. Considering the aforesaid facts and circumstances of the case and more particularly when the entire unaccounted income, which was found during the search, was offered as part of overall disclosure, Tribunal has rightly held that the assessee shall be entitled to the benefit of telescoping of negative cash balance against the disclosure made.
Tribunal has rightly allowed the assessee the benefit of telescoping the original disclosure made against the negative balance in the books of accounts. Decided against revenue.
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2018 (7) TMI 2339
Revision u/s 263 - Scope of phrase “prejudicial to the interest of the Revenue” u/s. 263 - No or inadequate enquiry - HELD THAT:- AO has mentioned declaration total loss and book loss u/s 115JB in its return filed on 29/09/2011, which was processed u/s 143(1). Later on the case of the assessee was selected for scrutiny under CASS, therefore, statutory notice under section 143(2) and thereafter notice u/s 142(1) along with questionnaire were issued to the assessee. The assessee attended the proceedings from time to time and furnished the necessary details and the same were examined and placed on record. AO has also mentioned the nature of activities done by the assessee and has also mentioned disallowance of interest income on FD from Banks and interest on advances given to the contractor assessment order, it has been mentioned that the details furnished by the assessee, during scrutiny proceedings were verified and found that the assessee reduced as sum from WIP and the sources of income etc.
AO has also made discussion with respect to various interest income which were transferred to WIP and the assessee was asked to provide justification as to why the same should not be considered as income. The assessee was also asked to provide the working of 80IA of the Act and revised working of deduction u/s 80IA considering the eligibility of interest income and deduction. Subsequently, the assessee was show cause as to why the income from other sources of SEZ unit should not be disallowed for working of profit of SEZ unit and taxed separately. Discussion has also been made about rent from building and lease premium of land located at SEZ and held that it was income from other sources, not eligible for deduction under section 80IAB - Discussion has also been made with respect to disallowance u/s 14A r.w. Rule- 8D of the Rules and thereafter calculation has been made.
The assessment was framed after examination/verification of facts and on application of mind, therefore, the contention of the Revenue that due verification was not made is not substantiated from facts.
To sum up the issue, admittedly, an incorrect assumption of fact or an incorrect application of law would satisfy the requirement of order being erroneous u/s. 263 of the Act. The phrase “prejudicial to the interest of the Revenue” u/s. 263 of the Act, has to be read in conjunction with the expression “erroneous” order by the Assessing Officer. Every loss of Revenue as a consequence of assessment order cannot be termed as prejudicial to the interest of Revenue, meaning thereby, “prejudice” must be prejudice to the Revenue administration.
We set aside the order of the ld. Principal Commissioner invoking of revisional jurisdiction u/s 263 of the Act, being not within the parameters of the law, as the assessment was framed by the AO after considering necessary details filed by the assessee and on examination of the same. It is not the case that the assessment was framed in a hasty manner or without considering the factual matrix/necessary details. The jurisdiction u/s 263 of the Act could not be assumed merely stating that adequate enquiry was not made by the AO - Appeal of the assessee is allowed.
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2018 (7) TMI 2338
Liability of the respondent – Assessee to pay additional duties of customs under the Customs Tariff Act, 1975 - HELD THAT:- Having perused the order of the High Court of Delhi which decided the matter in favour of the respondent – Assessee, relying upon the decision of the Delhi High Court in the case of MODI RUBBER LIMITED, MODI NAGAR, UP. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [1986 (12) TMI 41 - HIGH COURT OF DELHI AT NEW DELHI] and also the decision of this Court in the case of UNION OF INDIA VERSUS AHMEDABAD ELECTRICITY CO. LTD. [2003 (10) TMI 47 - SUPREME COURT], it is opined that the present is a case where the High Court ought to have decided the matter taking into account the provisions of Chapter 40 of the Customs Tariff Act, 1975 read with Chapter Note 6.
The present, therefore, appears to be a case of incomplete adjudication and, therefore, would require a fresh adjudication.
The order of the High Court is set aside and the appeals are allowed.
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2018 (7) TMI 2337
Seeking restoration of name of the company in the Register of companies - Sections 248 and 455 of the Companies Act, 2013 - HELD THAT:- The respondents are restrained from acting any further on the basis of the notice dated 1st June, 2018 being ‘Annexure – P2’ at page 65A of the writ petition without the leave of this Court. The interim order passed shall be operative for a period of six weeks or until further orders whichever is earlier.
Let this matter appear for hearing four weeks hence.
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2018 (7) TMI 2336
Exemption u/s 11 - assessment of trust - whether the donations were anonymous or not in terms of section 115BBC? - HELD THAT:- The provision of section 115 BBC provides that any income by way of anonymous donation shall be taxed in the manner provided in clause (i) and (ii) of sub section (I). Sub section (3) mainly provides the meaning of ‘anonymous donation’ which has been defined as voluntary contribution, where the person receiving such contribution does not maintain any record of the identity indicating the name and address of the person making such contribution and such other particulars as maybe prescribed.
Ostensibly in the present case the assessee has given the identity by giving the name and address of the corporate of the companies who have given the donations and not only that, their copy of the audited balance sheets, profit and loss account, income tax return, bank statement, etc., has been provided of all the 9 corporate entities and their return before the Registrar of the Companies. Hence the conditions which have been laid down in sub section 3 and onus which is cast upon the person receiving the donation has been fully discharged.
The entire case of the AO is that the donation received by the assessee trust by these companies were in fact were operated by accommodation entry providers and they do not have much income and the bank statement revealed that the amounts even come in their bank account from various bank accounts which has been inferred by the AO that assessee must have routed its unaccounted money through various donors in order to get donation. Such observation perhaps would have been relevant if the same would have been scrutinised u/s 68.
Here the provision clearly states only the anonymous donation should be taxed and if the donations have been come from known sources, then it cannot be treated as anonymous donations, therefore, the Ld. CIT(A) has rightly held that the donation received by the assessee cannot be taxed u/s 115BBC(I) . The other observation of the Ld. CIT (A) was that AO is justified for making such addition u/s 68, however still the assessee will get exemption u/s 11, because the same have been applied for charitable purpose. This finding has become purely academic which does not require any adjudication. Decided against revenue.
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2018 (7) TMI 2335
Revision u/s 263 interpreting Section 44 BB - Following substantial question of law is framed:-
“Whether the Income Tax Appellate Tribunal was right in setting aside and quashing the order passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961 interpreting Section 44 BB of the afore-stated Act.
To be shown in ‘Regular List’, as per its turn.
Liberty is granted to the parties to file papers/documents, which were filed before the Assessing Officer/Commissioner of Income Tax/Income Tax Appellate Tribunal.
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2018 (7) TMI 2334
Determination of jurisdiction of High Court for SEBI violations - Jurisdiction of Mumbai HC or Andhra Pradesh HC - listing of the stocks and shares of that fifth respondent with the appellant appears to have been made the subject matter of the writ petition by levying challenge to the decision of the appellant to de-list the fifth respondent's shares and stocks - HELD THAT:- As decision to de-list the shares was taken by the appellant at Mumbai and the trading of the shares is also at Mumbai and suspension of that has also been in compliance with the prescriptions made and imposed on the appellant. Predominantly, the territorial jurisdiction therefore falls exclusively within the jurisdiction of Mumbai Courts may, including the High Court of Judicature at Mumbai.
When notice is issued to the public at large informing a particular fact situation, without any adverse decision as against any particular person, particularly, the noticee, it would not be appropriate for the writ Court to deal with the matter as if the authority which issued such public notice has to face litigations in various High Courts of India, rather than confining such litigation to the territorial jurisdiction of the High Court within whose territorial limits, that authority is; and, from where that notice was issued. On a plain consideration of the situation in hand, we do not see that this Court has territorial jurisdiction over the matter in hand. We hold so.
In view of the finding recorded above that this Court does not have the territorial jurisdiction to entertain the writ petition from which this appeal arises, the jurisdiction exercised by the learned Single Judge in granting the impugned interlocutory order is also unsustainable. In the result, this Writ Appeal is allowed vacating the impugned order, leaving open all issues inter se the appellant and respondent Nos. 1 and 5.
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2018 (7) TMI 2333
Non-quantification of interest and not giving option as per first proviso to Section 11AC (unamended) of the Central Excise Act, 1944 - failure to comply with the circular dated 22.5.2008 issued by the Central Board of Excise & Customs - HELD THAT:- It is quite vivid that the adjudicating authority while passing the order neither quantified the interest payable under proviso to Section 11B nor gave option to the petitioner to pay the reduced penalty in terms of first proviso to Section 11AC of the Act of 1944, which is in breach of the circular of the Central Board of Excise & Customs and contrary to the judgment rendered by the Delhi High Court in K.P. Pouches (P) Ltd. [2008 (1) TMI 296 - DELHI HIGH COURT]. In fact, the adjudicating authority ought to have quantified the statutory interest payable by the petitioner and further given option to the petitioner in the original order as mandatorily required by the judgment of the Delhi High Court in K.P. Pouches (P) Ltd. and later explained by the Central Board of Excise & Customs.
Thus, the order passed by the adjudicating authority non-quantifying statutory interest payable to the petitioner and not giving option to pay reduced penalty is held to be bad. The matter is remitted to the adjudicating authority who shall quantify the interest payable under Section 11B of the Act of 1944 by the petitioner and shall also give option to the petitioner to reduce penalty in terms of proviso to Section 11AC of the Act of 1944 - petition allowed.
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2018 (7) TMI 2332
Dishonour of Cheque - presumption Under Sections 118 and 139 of the N.I. Act was not rebutted by the Respondent - judgment of conviction and sentence passed against the Accused set aside - HELD THAT:- Under Section 139 of the N.I. Act, once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability. This presumption is a rebuttable one, if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan.
In the present case, the Respondent has failed to produce any credible evidence to rebut the statutory presumption - The Appellants have proved their case by overwhelming evidence to establish that the two cheques were issued towards the discharge of an existing liability and legally enforceable debt. The Respondent having admitted that the cheques and Pronote were signed by him, the presumption Under Section 139 would operate. The Respondent failed to rebut the presumption by adducing any cogent or credible evidence. Hence, his defence is rejected.
The impugned order passed in Criminal Revision Petition is hereby set aside, and the order of Conviction and Fine passed by the Trial Court is restored - Appeal allowed.
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2018 (7) TMI 2331
Computation of deduction u/s 10A - treatment to lease line and interest expenses from both the export turnover or/and total turnover for the purpose of deduction - HELD THAT:- The issue is covered by the decision of the Hon’ble Supreme Court in the case of Commissioner of Income-tax, Central – III vs. HCL Technologies Ltd [2018 (5) TMI 357 - SUPREME COURT] as held if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software u/s 10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature.
Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also.
Allocation of recruitment cost for Section 10A units deriving STPI and Non STPI units of the same Assessee is just and fair. We do not find any substantial question of law to be arising out of the said Order of the learned Tribunal.
TP Adjustment - comparable selection - HELD THAT:- The controversy involved herein is no more res integra in view of the decision of this Court in M/s Softbrands India Pvt. Ltd. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT] as held that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed.
57. We make it clear that the same yardsticks and parameters will have to be applied, even if such appeals are filed by the Assessees, because, there may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an ‘Arm’s Length Price’ in the case of the assessees with which the assessees may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all a sufficient reason to invoke Section 260-A of the Act before this Court.
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2018 (7) TMI 2330
Validity of revision order against order passed by AO u/s 143(3) r.w.s. 144C(13) in pursuance to the direction of the Ld. DRP - Jurisdiction of CIT - As argued assessment order passed by AO u/s 143(3) r.w.s. 144C(13) of the 1961 Act is in pursuance to directions of learned DRP which in itself is a body consisting of collegiums of 3 Senior Judicial Functionaries of the Revenue and hence learned Pr. CIT cannot sit on judgment of collegiums of three senior functionaries of Revenue which are not below the rank of Commissioner of Income-tax - HELD THAT:- As both the parties have agreed and conceded that in view of non-disposal of aforesaid jurisdictional issue by learned Pr. CIT which is purely legal issue which goes to the root of the matter as to whether learned Principal CIT is competent and empowered to invoke its revisionary powers within provisions of Section 263 with respect to the assessment order of the AO which is passed u/s 143(3) r.w.s. 144C(13) of the 1961 Act in pursuance of direction issues by learned DRP.
Thus we consider it appropriate and deem fit to restore this matter back to the file of learned Principal CIT for disposal of this jurisdictional ground which is a legal ground as to competence of learned Pr. CIT to revise an assessment order passed by the AO u/s 143(3) r.w.s. 144C(13) in pursuance to directions given by learned DRP and which in our considered view goes to the root of the matter.
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2018 (7) TMI 2329
Exemption u/s 11 - non granting registration u/s 12A as public and charitable trust - main object of the trust deed was to build Hindu temple and install idol of Shri Krishna as per Hindu shastras - HELD THAT:- Assessee trust was constituted for establishment of Hindu temple at village Ganthovli, Madhura and install the idol of Lord Shri Krishna and according to Hindu shastras. The trust funds include movable or immovable properties including the money offered before the deity in the temple would be part of the funds and to invite a priest for any Hindu religious discourses and to facilitate and to provide accommodation to all religious priests/Gurus for promoting pushtimargiya religion and discourses. It was also provided in the trust deed that funds of the trust would be utilised for running and maintenance of the temple, organizing schools, literature, scholarship to students, librarian reading room build cemeteries, maintenance of gaushalas, orphanage, gardens, gymnasium, to establish and maintain or grant aid to old age homes, orphanages, help to poor, destitute, widows and aged people, to establish and maintain institutions for physically handicapped people, to grant relief to the victims of natural calamities, to construct and manage cemeteries, murdghats and burial grounds besides other charitable objects etc. for the public at large and not confined to any caste, creed, colour, religion or sex. Looking to the overall objectives of the trust we are not in agreement with the finding of the Ld. CIT(E) that it is a religious trust.
Hinduism is not a religion but a way of life which has been held by the Constitution bench of the Hon’ble Supreme Court. Moreover, the temple and other facilities are created not for the particular community but for the public at large. Therefore, the conclusion that it is meant for a particular religion is wrong. The case of the assessee is supported by the decision of the co-ordinate bench of the Tribunal in the case of Shiv Mandir Devsttan Panch Committee Sanstan Nagpur vs. CIT-1 [2012 (11) TMI 352 - ITAT NAGPUR] wherein the co-ordinate bench has held that Hindu is a way of life but not a religion
We are of the considered view that the trust is for the charitable purposes and not for the religious purposes as held by the Ld. CIT(E) and therefore we set aside the order of the Ld. CIT(E) and direct him to grant registration as charitable trust. Appeal of assessee allowed.
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2018 (7) TMI 2328
TP Adjustment - royalty payment made to associate enterprise - Nil ALP determined - HELD THAT:- As decided in own case [2018 (6) TMI 1843 - ITAT KOLKATA] the lower authorities have been very fair in not holding the assessee’s royalty transactions to be a sham ones. They have applied benefit and commercial expediency test in the instant case whilst computing nil ALP. We see no reason to approve the same these two tests of benefits and commercial expediency are not to be invoked as per the above legal position. The impugned action of the lower authorities under challenge is therefore held to be not sustainable.
Quantification impugned ALP - TPO admittedly applied ‘CUP' method in his order (supra). He appears to have treated the tax payer itself as a valid comparable as it had not paid any royalty to the very payee in earlier assessment years. This made him to adopt nil price of the impugned royalty so as to make the adjustment in question. No reason to concur with such a course of action since the assessee itself having paid Nil amount in the past to the AE, cannot be taken as a valid comparable. This tribunal in the case of Technimont ICB India (P) Ltd. [2013 (9) TMI 595 - ITAT MUMBAI] has concluded long back that a transaction between payee and its AE is not an uncontrolled one so as to be taken as a comparable. We accept the assessee’s instant first substantive ground both on legality as well as on quantification therefore. The impugned ALP adjustment stands deleted accordingly.
Disallowing provision for leave encashment u/s 43B(f) - HELD THAT:- This issue deserves to be remitted back to the Assessing Officer for taking a fresh call after the hon’ble apex court’s decision in the Revenue’s special leave petition converted to appeal staying operation of hon’ble jurisdictional high court’s judgment in Exide Industries Ltd.. [2007 (6) TMI 175 - CALCUTTA HIGH COURT] deleting identical disallowance as well as holding the statutory provision itself to be unconstitutional. We accept this fair stand and direct the AO to keep the instant issue in abeyance to be decided after the hon’ble apex court’s final verdict in the department’s appeal hereinabove.
Assessee’s appeal is treated as partly allowed.
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2018 (7) TMI 2327
TP Adjustment - MAM selection - determination of arm’s length price of international transaction - HELD THAT:- Since there is no factual and functional difference in the activities of assessee for the year under consideration as compared to the Previous Year, respectfully following the above observation of Co-Ordinate Bench in assessee’s own case for A.Y.2009-10 we direct Ld.TPO to benchmark international transactions by using TNMM as most appropriate method at entity level.
Provision for service tax on rent expenses in the books of accounts - AO treated the entire amount as an unascertained liability and disallowed it - HELD THAT:- Considering the legal position of applicability of service tax on rental income, the liability to collect and deposit service tax on rent income was on the landlord which was in dispute before Hon’ble High Courts for a considerable period of time. It is an admitted position that assessee has made payment as per invoice raised by landlord in Assessment Year under consideration for Gurgaon premises whereas insofar as the Bangalore premises are concerned no payment was made as the invoice was not released.
We therefore direct Ld.A.O, to verify if service tax liability towards Bangalore premises has been made by assessee as subsequently the law was absolutely clear and the burden was cast upon the landlord to mandatorily collect service tax, to be deposited with Government. Assessee is directed to provide all the bills/invoices raised by the landlord in respect of both the premises and A.O. is directed to verify actual payment made and to allow as per law. This ground raised by assessee stands allowed for statistical purposes.
Nature of expenses - disallowance of service tax considering it as prior period expenses - HELD THAT:- . On perusal of order passed by Service Tax Department party has claimed a rebate which is not corresponding with the amount of service tax and cess paid by the party during the material period. As the party has not submitted copies of ST-3 returns of the relevant period, it is not a certain double how the duty element, rebate of which is claimed has been discharged by the party.
We therefore direct Ld.AO to verify the actual amount paid by assessee and accordingly allow the claim.
TDS credit denied - since assessee has not offered income to tax, it was not eligible for credit of TDS - HELD THAT:- As AR submitted that customers of assessee had duly deducted and deposited taxes while making payment to assessee, which is why it is reflected in the form 26 AS of assessee. We direct Ld. AO to verify the claim of TDS credit and allow as per law.
Working capital adjustment - HELD THAT:- As there is no difference in the FAR analysis as well as the factual matrix for year under consideration vis-a-vis Assessment Year 2009-10, we do not find any infirmity in granting working capital adjustment of tested party and comparables, provided the necessary details/data have been provided by assessee.
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9911796707
