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Showing 201 to 220 of 1398 Records
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2020 (10) TMI 1198
Levy of penalty u/s 271(1)(c) - Reopening of assessment - estimation of income by the Assessing Officer - HELD THAT:- Where there is no positive evidence or material beyond doubt of assessee having concealed the particulars of income or furnishing inaccurate particulars of income, mere addition in the quantum proceedings is not sufficient to hold assessee liable for levy of penalty.
Additions made by the AO were based on estimation only. A fact or allegation based on estimation cannot be said to be correct only, it can be incorrect also. Therefore, in the facts and circumstances of the case, penalty was wrongly levied by the Assessing Officer. The basis for levying penalty in the present case is only estimation, which is purely a question of fact and there is a concurrent finding of fact recorded - Decided in favour of assessee.
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2020 (10) TMI 1197
Benefit of exemption u/s.54B(1) - AO denied the assessee’s claim on the ground that the she did not deposit the amount of capital gain in the designated capital gain account maintained with a bank before the due date of filing return u/s.139(1) - HELD THAT:- It is more than clear that section 139 is to be read here as section 139(4) and not to be confined to section 139(1) alone. As per the facts obtaining in this case, it is observed that the time u/s.139(4) was available up to 31-03-2014.
The assessee opened a bank account under the designated Capital gain account scheme on 03-08-2013 and purchased a new property on 26-08-2013. It is evident that the assessee complied with the requirement of section 54B(2) seen in the light of the time limit as per section 139(4) of the Act.
It is relevant to take note of the judgment of Hon’ble Madras High court in the case of Venkata Dilip Kumar [2019 (11) TMI 416 - MADRAS HIGH COURT] held that the requirement of depositing in the capital gain account scheme u/s.54(2) is directory. If the amount is utilized within the stipulated period of two/three years while depositing in the capital gain account scheme, there can be no denial of exemption u/s.54 because the substantial requirement of purchasing new property was satisfied. Coming back to the facts of the instant case, it is seen that section 54B(1) requires purchasing of new agricultural land within the period of two years from the date of sale of earlier agricultural land. The original agricultural land in this case was sold on 12-10-2011. New agricultural land was purchased on 26-08-2013, which is well within the given period of two years from the date of transfer.
Assessee complied with the conditions for availing exemption u/s.54B. Therefore, set-aside the impugned order and direct to grant the benefit u/s.54B as claimed. - Decided in favour of assessee.
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2020 (10) TMI 1196
Estimation of income - unverified purchases - Book results have been rejected by invoking the provisions of section 145(3) of the Act and the G.P estimation @ 30% has been done and the trading addition has been made by the AO - HELD THAT:- Regarding the challenge to the rate of G.P estimated by the AO @ 30% as against declared by the assessee @ 13.82%, we find that in the first round of appellate proceedings, the matter has been considered by the Hon’ble High Court wherein in respect of appeal filed by the Revenue, the matter has been decided in favour of the assessee and the G.P rate as sustained by the Tribunal @ 17% has been confirmed and the matter has attained finality.
Similar is the finding recorded by the ld CIT(A). Therefore, the AO is directed to apply G.P rate of 17% and separate addition in respect of unverified purchases is hereby deleted. In the result, the grounds of appeal are disposed off.
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2020 (10) TMI 1195
Liability for payment of arrears of salary - Implementation of the 6th Pay Commission to his employees - Certain liability - HELD THAT:- Assessee company calculated his liability and made provision in his books of accounts and claimed as expenditure, which are placed in the record. The liability calculated by the assessee company was a fixed liability which was to be paid to its employees towards arrear salary which cannot be also taken back from the employees.
As a certain liability for the impugned assessment year. The assessee company can make provision for the certain liability which is certainly to be paid, therefore, the assessee company has rightly made provision for the arrears of salary in his books of accounts.
This is a necessary expenditure, which is required to be deducted from the profit of the assessee company for the impugned assessment year while calculating the taxable profit because the liability has been imposed by the State Government of Odisha.
Assessee has calculated exact figure which has to be paid in different instalments later on as per instructions from the State Government Odisha which actually has been paid to the assessee’s employees. Case laws relied on by the ld. DR are also not applicable in the present facts of the case. In view of this, we are of the opinion that the ld. CIT(A) is not justified in confirming the addition made by the AO in this regard. Accordingly, we set aside the impugned order passed by the CIT(A) and allow the grounds of appeal of the assessee.
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2020 (10) TMI 1194
Addition u/s 69 - investment not recorded in the books of accounts - HELD THAT:- We find that there is no specific finding which has been recorded by the ld CIT(A) regarding the source of investment being the unsecured loan taken from Shrishtianand Builders and Colonizers - AO in the remand report has also merely gone by the bank statement of Shrishtianand Builders and Colonizers and confirmed the genuineness of the loan transaction.
Where a loan transaction has been claimed to be entered into by the assessee, the necessary attributes of such loan transaction in terms of tenure, purpose, rate of interest, repayment and hypothecation/guarantee for availing such loan transaction needs to be substantiated by the assessee and which needs to be examined by the AO. Disbursement of loan and its utilization for making the aforesaid investment needs to be verified.
There is no finding recorded by either of the two authorities and the matter has been summarily decided. Such a finding clearly deserve to be set-aside and the matter needs to be examined a fresh as per law.
Unsecured loan transaction with M/s Grass Field Villa Pvt Ltd to be satisfactorily explained which we again found to be unacceptable - CIT-A referred to balance sheet, income tax return and bank statement of M/s Grass Field Villa Pvt Ltd and another firm by name of M/s Grass Field Farms and Resorts Pvt ltd to hold the transaction to be duly explained however, he has again failed to consider the necessary attributes of such loan transaction in terms of tenure, purpose, rate of interest, repayment and hypothecation/guarantee for availing such loan transaction and no finding has been recorded by him in this regard. Similar finding has been recorded by the ld CIT(A) regarding loan transaction with Mahender Kumar Meena which deserve to be set-aside to be examined afresh. During the course of hearing, the ld AR has sought to submit additional evidence by way of bank statement of Shri Ashish Choudhary in support of another unsecured loan transaction of ₹ 26,00,000/- which again needs to be verified.
Investment being made out of assessee’s own funds - No finding recorded by either of the two authorities as to the claim of the assessee regarding investment being made out of assessee’s own funds. Once the investment has been made during the year vide registered sale deed dated 21.11.2011 and the assessee claims the same to be made out of his own funds, then, it is incumbent on part of the assessee to corroborate the same with his books of accounts and the taxing authorities are required to verify the same and record a finding as to their satisfaction or otherwise of such claim being made by the assessee and whether the source of such investment has been found duly explained or not.
Source of investment through loan transaction as well as own funds in purchase of the aforesaid pieces of land through registered sale deeds dated 21.11.2011 including that of the stamp duty needs to be examined afresh. - Both the appeals of the Revenue and the assessee are allowed for statistical purposes.
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2020 (10) TMI 1193
Deduction u/s 80P(2)(a)(i) - interest income earned - assessee company was a Credit Co-operative society - Assessee not eligible for deduction in respect of the interest income earned by the appellant on the deposits kept with Bombay Mercantile Co-operative Bank Ltd and Maharashtra State Co-operative Bank Ltd. - HELD THAT:- As relying on Jawala Cooperative Urban Thrift & Credit Society Ltd. [2014 (12) TMI 1227 - ITAT DELHI] and Tumkur Merchants Souharda Credit Co-operative Ltd [2015 (2) TMI 995 - KARNATAKA HIGH COURT] assessee is entitled for the deduction u/s 80P(2)(d) in respect of the interest income earned by the appellant on the deposits kept with Bombay Mercantile Co-operative Bank Ltd and Maharashtra State Co-operative Bank Ltd. Accordingly, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. - Decided in favour of assessee.
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2020 (10) TMI 1192
Penalty u/s 271(1)(c) - unproved claim of purchases - HELD THAT:- Hon’ble Supreme Court in CIT-2 Lucknow Vs. U.P State Bridge Corporation Ltd. [2018 (8) TMI 766 - SC ORDER] observed, that where a claim of expenditure is neither found inaccurate nor could be viewed as concealment of income on the part of the assessee, then, merely because the said claim was not accepted or acceptable to the revenue, that by itself would not attract penalty under Sec. 271(1)(c).
In the case before us, as the revenue had failed to disprove to the hilt on the basis of clinching documentary evidence the authenticity of the claim of the assessee of having made purchases from the aforementioned parties, therefore, merely on the basis of the unproved claim of purchases no penalty under Sec. 271(1)(c) could have been validly imposed on it. - Decided against revenue.
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2020 (10) TMI 1191
Condonation of delay - delay of 654 days - HELD THAT:- As submitted that there has been a change in the management of the company and the present tax matter pertaining to the period prior to change of management, it was decided that the same would be handled by the erstwhile management, however, due to change of management and lack of diligence on part of ershwhile employees, the appeal could not be filed. It has been further stated that the matter came to light of the present management on 11.07.2018 when an enquiry was made by the Assessing officer for payment of outstanding demand and thereafter, the appeal papers were prepared and appeal was submitted before the Registry
As soon as it came to know of the old tax matter pertaining to the period prior to change of the management, it took steps and filed the present appeal. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing the present appeal - in exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeal as we are satisfied that there was sufficient cause for not presenting the appeal within the prescribed time and the appeal is hereby admitted for adjudication on merits.
Assessment u/s 153A - Addition u/s 40(A)(3) - HELD THAT:- Where the reassessment completed u/s 153A without any reference to the incriminating material, following the binding precedents as cited above including that of the Jurisdictional High Court, the addition made by the AO u/s 40(A)(3) is not sustainable and the same is hereby deleted. In the result, the additional ground of appeal is allowed.
Addition u/s 40A - cash payments - Contentions advanced by the ld AR that the provisions of section 40A(3) cannot be invoked in absence of any claim of the expenditure in the profit/loss account as the expenditure incurred on purchase of land has been carried forward as stock-in-trade to the subsequent year? - HELD THAT:- Said issue is no more res integra and is covered against the assessee by the decision of Attar Singh Gurmukh Singh [1991 (8) TMI 5 - SUPREME COURT] confirming the decision of Kanti Lal Purshottam & Co. v. CIT [1985 (1) TMI 31 - RAJASTHAN HIGH COURT] and Fakri Automobiles v. CIT [1985 (7) TMI 36 - RAJASTHAN HIGH COURT]
Whether genuine and bonafide transactions not covered within the sweep of section 40A(3)? -Identity of the persons from whom the purchase of various land parcels have been made by the assessee has been established and the source of cash payments is clearly identifiable in form of the withdrawals from the assessee's bank accounts and the said details were submitted before the lower authorities and have not been disputed by them. It is not the case of the Revenue either that unaccounted or undisclosed income of the assessee has been utilised in making the cash payments. The genuineness of the transaction has been established as evidenced by registered sale deeds wherein the payments through cheque as well as cash has been duly mentioned and lastly, the test of business expediency has been met as the initial payments as insisted by the sellers most of whom are farmers have been made in cash to secure the transaction.
As held in case of Smt. Harshila Chordia [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] the consequences, which were to befall on account of non- observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration for which section 40A(3) has been brought on the statute books and which has been satisfied in the instant case. - Decided in favour of assessee.
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2020 (10) TMI 1190
Revision u/s 263 - Claim of cost of improvement - variance in the stands of the two sides, the assessee and the builder - HELD THAT:- Factors such as enquiry with the owners regarding the flooring, etc., and, equally, the nature and uniformity of the difference between the two sets of flats/duplexes, etc. would only complete the enquiry, establishing, completely missing, whether the stated modification was actually carried out and, if so, at the assessee’s instance, justifying payment of additional sum by him, at whatever value, to the Builder. Again, while the assessee claims marble flooring only in the bed rooms, the report says of it being in all the rooms. What does that mean: Has the Builder, in benevolence, provided marble even where not sought by the assessee? The inspection by the inspector, i.e., assuming so, is, thus, worthless and, in any case, farcical, if not a pretense.
The said report – which does not concern the cost aspect – is to be, thus, at the highest, ignored, and, in the least, considered a sham document. That is, to be, either way, rubbished.
Coming back to our earlier observation of the Builder having in fact, rather than confirming, refuted the assessee’s stand as to the payment thereto being toward cost of improvement. To clarify matters, there was in fact no enquiry by the AO with the Builder.
AO notes a complete variance in the stands of the two sides, the assessee and the builder, and yet chooses to ignore the same, stating (in the ON) the same to be rather a reason for re-examination in the case of the Builder. The same is incomprehensible as, firstly, it is his prime duty to consider the validity of the claims of the assessee – wholly un-evidenced and, two, the avoidance of tax, if any, is, as would be apparent from the foregoing, in the assessee’s case.
Assessee has reported receipt of ₹ 45 lacs by cheque/s, as against ₹ 40 lacs stated by the Builder, toward cash component of the consideration on transfer of land. But, then, the same would stand to be confirmed with reference to the latters’ books and, where accounted, as it, being by cheque/s, would presumably be, does not result in/lead to any loss of revenue. As such, the AO seeking, on the contrary, a re-examination of the Builders’ case, is perverse and, in any case, itself proves the need for verification to resolve the contradicting claims of the parties.
Non-examination of the sale deeds by the AO, stated to be incorrect by Shri Purohit - There is a tacit admission of the relevance of the said deeds, as well as their examination by the assessing authority. He, however, could not exhibit their production in the assessment proceedings, much less their examination. Even as much as a letter or communication, i.e., in reply to the queries/requisition dated 16.3.2015, has not been brought on record. How could, one wonders, the direction by the ld. Pr. CIT for their production and examination by the AO, under the circumstances, be regarded as unjustified or not valid in law.
The assessee’s case is, in view of the foregoing, both, wholly unproved and wholly unexamined, i.e., qua the two aspects referred to by the ld. Pr. CIT.
To say, therefore, that the AO has taken a possible, reasonable view in the matter, is, under the circumstances, a complete misstatement on facts. He has, in our view, acted with haste and without due application of mind, accepting the assessee’s version, wholly unsubstantiated, without as much as causing its substantiation, much less verification thereof and, in fact, on one aspect, in face of contrary evidence/material. - Decided against assessee.
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2020 (10) TMI 1189
NRI expenses - Ad hoc & surmiseful addition of 20% - Assessee is a non-resident banking company which carries on the business of banking and other related activities through its branches in India in accordance with the provisions of Banking Regulation Act, 1949 - HELD THAT:- Revenue has allowed the complete expenses including the 20% expenses disallowed in the earlier years. Hence, this issue is no more res integra. The appeal of the assessee on this ground is allowed.
Disallowance of Expenses - Assessee interest income from foreign currency loans to its Indian customers, taxable u/s 115A(3) - AO held that under section 115A(3), no deduction is permissible for the income covered under the said provision and the corresponding expenditure is to be disallowed - HELD THAT:- As relying on own case we direct the AO to adopt the following method for working out the disallowance of indirect expenses incurred in relation to such impugned interest income.
i) Work out the ratio between the total revenue viz a viz the gross income earned by the assessee on foreign currency loan.
ii) Based on the above ratio the indirect expenses will be determined for four months for the purpose of disallowance u/s 115A of the Act.
Addition u/s 14A - Disallowance of Expenses on Tax Free interest are foreign currency Syndicated Term Loan AND Disallowance of Expenses out of Dividend Income - HELD THAT:- While there is no dispute regarding the disallowance of expenditure incurred in relation to exempt income under both the heads, the Act prescribes proper procedure of computing such disallowance u/s 14A(2). We find that the revenue has not invoked the procedure as specified under the said section wherein the AO has to record his dissatisfaction as to the correctness of the claim with regard to the accounts of the assessee. Owing to the procedural tumble, we hereby delete the disallowance made by the Assessing Officer.
Disallowance of Club Expenditure - HELD THAT:- The club membership fee is taken for promoting business of the bank and for better customer relationship. No asset of enduring in nature has been created. Hence, following the order of the ITAT for the assessment 1996-97 dealing with expenses of club membership fee and keeping in view the fact that no new asset has come into existence, we hereby delete the addition confirmed by the ld. CIT (A).
Disallowance of Fee for Technical Services u/s 37(1) - CIT-A confirmed part addition - HELD THAT:-Expenses have been incurred for Indian Banking business - on going through the Memorandum of agreement, tax report, notes to account and the details of the tax payment under Article 12 of the Indo-Australian Treaty and on going through the challans enclosed we hereby hold that the fees for access and user technology related to services for Credit Cards Services is meant for the business of the assessee’s in India and such expenses are allowable to be claimed by the assessee u/s 37(1).
Attributing income to the PE, under the DTAA - HELD THAT:- While the Assessing Officer is right that the income arising in India from transactions in India by using credit cards of foreign branches should be taxed in India, this income can only be the commission income received by the Indian branch and such commission income already stands included in the hands of the Indian branch acting as an Acquiring bank. The income to the foreign branch from the credit given to its card holders outside India cannot be taxed in the hands of the Indian branch since it has not arisen in India and also it cannot be attributed to the assets and activities of the Indian branch, as is required by Article 7 of the DTAA. - Decided against revenue.
Club expenses have been allowed as allowable business expenses by the ITAT from the assessment years 1992-93 to 1998-99.
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2020 (10) TMI 1188
Income accrued in India - taxing the receipts from TCL as 'Royalty' under Section 9(1)(vi) of the Act as well as Article 13(3)(a) of the India-UK Tax Treaty - HELD THAT:- As decided in own case [2018 (12) TMI 1321 - ITAT MUMBAI] the amounts received by the assessee from TCL for providing Satellite Telecommunication Services is not to be held as royalty in its hands. The Grounds of appeal Nos. 2 to 5 are allowed in terms of our aforesaid observations.
PE in India - Liaison Office (LO) of the assessee constituted its PE in India and that the Land Earth Stations (LES) constituted a PE of the assessee in India - HELD THAT:- A.O/DRP had in the aforesaid preceding years concluded that the LO and LES were to be treated as the PE on the assessee in India, remains the same, as are involved in the appeal of the assessee for the year under consideration, we therefore respectfully follow the aforesaid order of the Tribunal. Accordingly, in the backdrop of our aforesaid observations, we herein conclude that the assessee did not have any PE in India during the year under consideration. The Grounds of appeal Nos. 6 & 7 are allowed in terms of our aforesaid observations.
Computing of the income of the assessee attributable to its PE in India - profitability on an adhoc basis at 30% of its gross receipts from TCL by applying Rule 10 of the Income Tax Rules, 1962 - HELD THAT:- Since we have upheld the primary stand of the assessee that there does not exist any PE of the assessee in India, thus, the dispute in Ground of appeal No. 8 having been rendered as merely academic is dismissed as infructuos.
A.O levying surcharge, secondary education cess and higher secondary education cess over and above the tax computed at the rate prescribed under the India-U.K. tax treaty on the receipts of the assessee while calculating its income tax liability for the year under consideration - HELD THAT:- Tax computed at the rate prescribed under the India-U.K. tax treaty is not be subjected to any additional taxes in the form of surcharge or education cess. We thus set aside the view taken by the lower authorities and direct the A.O to recompute the tax liability of the assessee in terms of our aforesaid observations. The Ground of appeal No. 9 is allowed.
Granting TDS credit - HELD THAT:- As the adjudication of the said issue would require verification of the records, we therefore, restore the matter to the file of the A.O to verify the factual position. In case there is a short credit of TDS allowed to the assessee, then the credit for the balance amount shall be allowed by the A.O, as per law. Ground of appeal No. 10 is allowed for statistical purpose.
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2020 (10) TMI 1187
Deduction u/s 80P - whether assessee is eligible for deduction u/s.80P(2) and not engaged in banking business? - HELD THAT:- As decided in own case [2020 (8) TMI 361 - ITAT CUTTACK] Assessee society is eligible for deduction u/s. 80P(2)(a)(i) of the Act and the assessee will get the benefit of Circular issued by the CBDT No. 37/2016, dated 02.11.2016 as quoted above. Since we have allowed the legal ground of assessee, other grounds raised by the assessee on merits are for academic purposes. Thus, appeal of the assessee is allowed on legal ground.
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2020 (10) TMI 1186
Addition u/s 68 - addition made by the AO on account of credit balance appearing in the accounts of concerned two creditors having been found to be bogus - alternative recourse to sub-section (1) of section 41 suggested - HELD THAT:- Provisions of section 41(1) can be invoked only when trading liability incurred by the assessee is subsequently found to have seized to exist in the relevant year and the onus in this regard is on the AO to establish on evidence that there was indeed remission or cessation of such liability.
In the present case, this onus was not discharged by the AO and addition on account of balance appearing in the name of concerned two creditors was made by him u/s. 68 of the Act by treating the same as unexplained cash credit because of the failure of assessee to establish mainly the genuineness of said creditors. This position clearly apparent from record, we are of the view that recourse at this stage cannot be made to sub-section (1) of section 41 to confirm the addition made by the AO u/s. 68 as sought by the ld. DR.
Uphold the impugned order of CIT(A) restricting the addition made by the AO u/s. 68 thereby giving a which represented the opening balance and pertained to transactions of earlier year. - Appeal of Revenue dismissed.
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2020 (10) TMI 1185
Validity of reopening of the assessment - information received by the ITO Ward-2, Bharatpur that during the search and seizure operation under section 132(1) - jurisdiction of the AO - development of the Revenue Residency Scheme and allotment of the plots to the members - HELD THAT:- No substance in the objection raised by the assessee regarding validity of reopening of the assessment. As regards the jurisdiction of the AO who issued the notice under section 148, it is not in dispute that the ITO Ward-2 Bharatpur received the information and issued notice under section 148 was having territorial jurisdiction over the assessee. However, only after the assessee filed the return of income revealing her status as Salaried Person, the case of the assessee was transferred to the ITO Ward-3, Bharatpur who was having jurisdiction over the salaried assessees. No error or illegality in the initiation of proceedings under section 148 by ITO Ward-2, Bharatpur.
Non disposal of the objection against the notice under section 148 - Only a reply to notice issued by the AO dated 30.09.2016 and not the objections against the notice issued under section 148 dated 30.03.2016. Even otherwise, this letter was filed by the assessee at the fag end of the assessment proceedings as the assessment order was finally passed on 3rd November, 2016. Therefore, this letter cannot be considered as an objection against the notice issued under section 148 of the Act. Hence in the absence of any objection raised by the assessee, there is no question of disposal of the same by the AO. Accordingly, there is no merit or substance in ground no. 2 of the assessee’s appeal.
Addition on account of On Money paid by the assessee - addition made on the basis of the statement of 3rd party - HELD THAT:- A/R has given an evasive reply that those were not given to the assessee by the society. Thus in the absence of any contrary material, the facts brought on record by the AO which were duly supported and established by the seized material as well as the facts explained by Shri Madan Mohan Gupta in his statement cannot be disputed.
Assessee has not produced any documentary evidence to controvert the seized material and statement of Shri Madan Mohan Gupta. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT (A) confirming the addition - Decided against assessee.
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2020 (10) TMI 1184
Characterization of income - Capital or revenue receipt - disallowance received by the appellant from Dubai Almn. Company Ltd., towards advance against equity by treating the same as revenue in nature, only on the ground that the appellant has credited the same to P&L account - HELD THAT:- At the time of receipt of money and at the time of written back the amount received from DUBAL, it was revenue receipt and it never took the character of capital receipt as DUBAL took exit from the joint venture agreement before financial closure of the project and DUBAL did not claim or exercise any right or privilege against the assessee company regarding impugned amount.
The impugned amount written back to the statement of profit and loss account of the assessee is the amount funded additionally by DUBAL and same was never converted into equity shares upon occurrence of the financial closure of the project and thus, the impugned amount has been written back to the statement of profit and loss account by the assessee company is a revenue receipt and the liability against the assessee company stood ceased when the amount was written off by DUBAL without any claim in future. No hesitation to hold that the addition made by the AO and confirmed by the ld. CIT(A) is correct and sustainable.
Before we record our final findings and logical conclusion on the issue, we also feel it necessary and appropriate to consider the ratio of decisions relied upon by the assessee.
Section 41(1) of the IT Act particularly deals with the remission of trading liability whereas in that case, waiver of loan amounts to cessation of liability other than trading liability. In the case before us, the amount was written off by DUBAL and same was written back by the assessee to the statement of profit and loss account as an extraordinary item.
In the case of JSW Steel Limited [2017 (4) TMI 47 - ITAT MUMBAI] the issue before the Tribunal was whether the ld. CIT(A) erred in not reducing the net profit being waiver of dues while computing the book profits under section 115JB, wherein, the Tribunal held that the capital surplus on account of waiver of dues neither is taxable nor can be included in computation of book profit u/s. 115JB. This decision has also no application in the case at hand having distinguishable facts and circumstances. - Decided against assessee.
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2020 (10) TMI 1183
Revision u/s 263 - payment of commission to the related and unrelated parties - whether the order of the AO is erroneous and prejudicial to the interest of revenue? - HELD THAT:- Notice alongwith questionnaire was replied by the assessee regarding payment of commission alongwith required confirmations which shows that the commission payment has been made after deducting TDS @ 10% and it is not a case of Pr. CIT that payment of commission has been made by the assessee without making any TDS. This show cause notice and questionnaire issued by the AO and replied filed by the assessee alongwith relevant documents shows that the AO also made enquiry on the issue on payment of commission and TDS thereon and thereafter allowed the claim of the assessee pertaining to payment of commission. Therefore, it cannot be alleged that the AO has not made any enquiry before allowing payment of commission to the related and unrelated parties.
In reply to show cause notice u/s. 263 of the Act, the assessee categorically explained that the assessee earns commission from different companies on procuring order from Government Health Departments & Hospital & Municipal Corporation and the assessee being individual cannot move from one place to another place for enhancement of business.
Different persons received commission against work brought by them and these commission agents against receipt of commission provides services not only to procure orders but also see that proper delivery of goods are made in time and also look after that payments are received from the consignee in time. These facts have not been negated by the ld. Pr. CIT in any manner, thus, we hold that the payment of commission has direct nexus with the services rendered by the recipient of commission and it was paid against their contribution in the enhancement of business of assessee. Thus, it was to be held that the commission has been paid for the business purpose and the AO was right in allowing the same after due verification and examination through proper enquiry.
Introduction of capital - AO show caused the assessee regarding eight amounts including amount i.e. introduction of capital by the assessee and from the copy of bank statements, which shows that the assessee introduced capital by way of transfer through cheques on 27.3.2014 on 15.11.2013, to the firm Gandhi Agencies, which shows that ₹ 15 lakhs was introduced through banking channels. So far as which was introduced in cash is concerned, from the copy of balance sheet of the assessee as on 31.3.2013, it is clear that the assessee has cash in hand more than ₹ 8 lakhs, which was brought forward from financial year 2013-14 and apart from this, the assessee also received gifts from his daughter and mother.
From the copy of saving bank statement, we also notice that the assessee also withdrew ₹ 1 lakh on 31.12.2013 and the amount of cash in hand was amount withdrawn from the bank and amount of gifts is more than ₹ 13 lakhs which self-explained the source of ₹ 13 lakhs introduced in cash to the capital account by the assessee during the relevant period. Therefore, acceptance of explanation of the assessee by the AO in this regard is also justified, proper and reasonable, which cannot be held as erroneous and prejudicial to the interest of the revenue in absence of any other adverse materials brought on record during proceedings u/s. 263 of the Act.
AO had conducted sufficient and adequate enquiry on all three issues and it is not a case of no enquiry or insufficient enquiry. - Decided in favour of assessee.
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2020 (10) TMI 1182
Target Plus Scheme - Direction to the Respondents to issue balance/additional duty credit scrips - star export house - HELD THAT:- It is evident that Petitioner has submitted the no dues certificate as prescribed. The quantum of claim of the Petitioner to the extent of ₹ 4,22,16,175.00 is also admitted by the Zonal Committee, Mumbai. However, according to the customs representative dues relating to non-submission of BRC are pending.
What is required to be submitted is a certificate certifying that no dues are pending against the government including its departments - Without entering into details, we can safely say that the word ‘dues’ means something which is payable. Shorn of semantics, the word ‘dues’ means something which a person has an obligation to pay e.g., a debt or a tax; something which is enforceable. Juxtaposing the word ‘dues’ with the word ‘government’, the expression ‘government dues’ would mean something which is payable to and enforceable by the government on account of a legal obligation or a contract. Therefore, the amount due has to be first quantified by following the due process and as explained by the Supreme Court in the context of the scheme it should be payable to the government and subsisting i.e., not paid.
The Target Plus Scheme is a beneficial provision with the objective to accelerate growth in exports by giving incentives to those export houses whose exports show an annual upward trend. Initially the benefits were graded i.e., 5%, 10% and 15% depending upon the percentage of incremental growth in exports. Petitioner fell within the 15% category for the year 2005-2006. Thereafter, by an amendment on 12.06.2006, the percentage of incentives was made uniform i.e., 5% which was given retrospective effect from 01.04.2005 - Petitioner is entitled to the balance 10% benefit for the same period for which the 5% benefit was granted being within the 15% category. When one part of the benefit for a year was given, question of withholding of the remaining benefit for the same year does not arise. Exports are of the year 2005-2006. We are now in 2020. 14 years have lapsed in between. Such inordinate delay can only frustrate the very objective of the scheme.
Respondents are directed to issue the necessary licence to the Petitioner for the balance/additional benefit of duty credit scrips for the amount of ₹ 4,22,16,175.00 for the year 2005-2006 under the Target Plus Scheme within a period of four weeks from the date of receipt of a copy of this judgment - Petition allowed.
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2020 (10) TMI 1181
Grant of Bail - Oppression and Mismanagement - appointment of Applicant as Director on the basis of forged director - It is alleged that Ex-Director without discussion with other Directors prepared forged documents and ousted his wife from the Directorship - HELD THAT:- This court finds that the dispute relates to the mismanagement of the affairs of the Pvt. Ltd. Company but the FIR has been lodged under provisions of IPC and procedure under Cr.P.C has been adopted in prosecution of applicant. The Companies Act, 2013 is a complete code which provides for the procedure of conduct investigation into the affairs of the company where allegations of fraud are made against the office bearers of the company. The allegations regarding the offences committed by the applicant should have been investigated under the provisions of companies act aforesaid.
Code of Criminal Procedure, 1973 is a code by itself as far as procedure for arrest, investigation and prosecution of the offence under Companies Act is concerned. The procedure provided under the Companies Act does not excludes the application of Cr.P.C completely. Section 212(6) excludes the applicability of Cr.P.C only for the limited purpose for treating the offence under Section 447 cognizable. Section 438 of the Companies Act makes it clear Section 212(14) of the Companies Act provides that the central government has to provide whether prosecution should be launched against " the companies and its officer or employees, who are or have been in employment in the company or any other person directly or indirectly connected with the affairs of the company." Therefore it appears that when the director of company is prosecuted the company should also be arrayed as an accused. Even if the argument of the learned counsel for the informant is accepted that the applicant was illegally inducted in the company as director by fabrication of resolution, even then the prosecution under Section aforesaid can be launched against the applicant under the provisions of Companies Act since Section 212 (4) Cr.P.C clearly provides "prosecution of any other persons directly or indirectly connected with the affairs of the company".
In the present case the entire investigation has been conducted by the Investigating Officer of the police and not by the Special Fraud Investigating Officer appointed under the Companies Act. First proviso to Section 212(6)(ii) provides that no person accused of any offence under Section 447 of the Companies Act shall be released on bail. The only exception is a person who is under age of 16 years or a woman or a sick or infirm person. The applicant in this case is a woman whose prayer for bail can also be considered under Section 437(1) Cr.P.C. In the present case there is no approval from the central government for Investigating Officer to investigate the offence alleged against the applicant under Section 212 of the Companies Act, 2013. Regarding criminal history of the applicant is appears that all the case have been lodged by or at the behest of her fellow directors who are part of the same company.
The Court is of the view that the applicant has made out a case for bail - bail application is allowed.
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2020 (10) TMI 1180
Rearrangement of Shareholding - Demand of sums towards transfer fee - non-utility penalty in respect of plots owned by the petitioner - whether by change of name from TAGROS Chemicals India Limited to TAGROS Chemicals India Private Limited would tantamount to change of name in the company and therefore invite levying of transfer charges? - HELD THAT:- What has been done is rearrangement of shareholding within the family without there being a change in the total shareholding of the company. No new separate legal entity has been created - keeping in mind the provisions of Section 23(3) of the Companies Act and Section 14 thereof, what has really happened is that the change in the name of the company is only by adding the word 'private'. As per Section 13(2) of the Companies Act, any change in the name of the company shall be subject to the provisions of sub sections (2) and (3) of section 4 of the Act and shall not come into effect except with the approval of the Central Government in writing. The proviso to the said section says that no such approval will be necessary when the only change in the name of the company is deletion therefrom or addition thereto of the word 'private' consequent on the conversion of any one class of the company to another class in accordance with the provisions of the Act. Thus, any change that is brought about in the name of a company by either deletion or addition of the word 'private' would not require written approval.
What appears to be the legal position from reading the aforesaid sections is that mere change in the name of company from public to private would not tantamount to a change in the constitution of the company since this is brought out only with a view for the purpose of complying with the requirements viz-a-viz the government under the Companies Act. There is no change in the constitution thereof. Accordingly, the stand of the corporation for levying of transfer fees is bad.
Non utility charges or penalty for non utilisation of plots - HELD THAT:- It is evident from reading the notification of the Ministry of Environment and Forests dated 25.08.2009 that the Government of India enforced a moratorium on construction due to the absence of environmental clearance. The moratorium was lifted only after 7 years by a memorandum dated 25.11.2016. No environmental clearance could be obtained and no permission for construction could be granted during this period and as a result of facts beyond the control of the petitioner, the plots remained unutilised. Therefore even the recovery of penalty and non utilisation charges are without authority of law. Merely because in one of the petitions, the petitioner has paid such charges which otherwise he was not obliged to pay in view of the moratorium, that itself would not result in ousting the petitioner from the merits of that petition.
The action of the respondent Corporation in demanding transfer fee and non utility penalty in respect of the plots is held to be illegal and contrary to law - Petition allowed.
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2020 (10) TMI 1179
Approval of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of all the petitioner companies to the proposed scheme, as well as no objections filed by the regional director, northern region, the official liquidator, and the income tax department and being satisfied in view of affidavit of undertaking filed by the transferee company, there appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under section 230 & 232 of the companies act, 2013. The petitioner however remain bound to comply with the statutory requirements in accordance with law.
As a sequel, sanction is hereby granted to the scheme under section 230 & 232 of the Companies Act, 2013. The petitioner however remain bound to comply with the statutory requirements in accordance with law - Application allowed.
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