Deduction u/s. 80IA(4) -contractor v/s developer - as per ao while executing the project, had acted in the capacity of a contractor, therefore, the deduction cannot be allowed to the assessee as pre-requisite of the section to enable the assessee to claim deduction is that he should be a developer - HELD THAT:- As in the own case [2014 (11) TMI 1266 - ITAT MUMBAI] issue 80IA(4) was decided by the Tribunal. The facts and circumstances in the case during the year under consideration are exactly same. Respectfully following the order of the Tribunal, we direct the A. O. to allow the claim for deduction u/s 80IA(4) of the Act.
Disallowance made u/s. 14A r. w. Rule 8D - HELD THAT:- As in the own case [2014 (11) TMI 1266 - ITAT MUMBAI] profit was much more than the investment in the joint venture company therefore the disallowance made by the A. O. by invoking the provisions of section 14A of the Act was not justified. Accordingly the A. O. directed to delete the same.
Disallowance of interest u/s 36(1)(iii) - We found that the cash profit of the assessee company that have been earned during the year as reduced by the amount of investment in joint venture company, was in excess to the monies advanced to Chafal as on the cut-off date, therefore it can be safely presumed that advance have been given against profits of the year and not out of interest bearing funds. This view has been supported by the decision of Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] Fact that no further advance was given during the year and no disallowance was made in the preceding year also supports the case of the assessee. Accordingly we do not find any merit in the action of the A. O. in disallowing the interest u/s 36(1)(iii) - Decided in favour of assessee.
Disallowance being grant given by the appellant to Sabarmati Salt Farmers Society and claimed as deductible expenditure u/s.36(1)(xii) - HELD THAT:- It is essential to bear in mind the fact that the reason of disallowance, in the original assessment proceedings, was that there was, according to the AO, a possibility of the amount coming back to the assessee, and, for that reason, amount could not be treated as having been spent.
Merely because the assessee has not been able to file the fund utilization report cannot be ground enough to disallow the claim of the assessee. There is no dispute that the amounts were advanced in the course of the business of the assessee, and it has not even been case of the AO either, and, there is also no dispute that this amount is no longer recoverable from the Sabarmati Salt Farmer’s Society as it has been wound up. In these circumstances, the objection taken by the AO, in the original assessment proceedings, does not hold good any longer.
In any case, as the assessee rightly claims, it is at best, even going by the improvised version of the AO, a case of bad debt or a loss incidental to business which is allowable anyway. CIT(A)’s action of upholding the disallowance, for want of fund utilization report, is thus unsustainable in law and on the facts of this case. The approach adopted by the authorities below in interpreting the terms of remand is too pedantic and hyper technical to meet our approval. The directions given by the Tribunal are to be interpreted in the light of its object and context. That consistently has been approach of the Hon’ble Courts above.
We uphold the plea of the assessee and direct the Assessing Officer to delete the impugned disallowance. - Decided in favour of assessee.
TP Adjustment - Selection of MAM - DRP adopting of internal TNMM - HELD THAT:- We are unable to persuade ourselves to subscribe to the view arrived at by the DRP in respect of the authenticity of the segmental reporting, veracity of the bifurcation of the expenses pertaining to marketing efforts and various risks associated with the sales pertaining to the Non-AE transactions, which as alleged by the DRP had been bifurcated to the AE segment and not shown on actual basis, as well as the misconceived observation that the assessee had resorted to a comparison between the Non-AE segment local sales of India, as against the AE segment, which we find is absolutely incorrect.
We are afraid that a claim of an assessee cannot be dislodged merely on the basis of allegations and surmises, but can only be so done on the basis of substantial material which could go to irrebutably disprove and consequently dislodge the claim of the assessee, with a clear observation as to what fairly could be held to be the correct state of affairs.
We thus not being persuaded to subscribe to the observations of the lower authorities, therein set aside the order of the AO passed u/s 143(3) r.w.s 144C(13), to the extent the latter had given effect to the order of the DRP and therein set aside the rejection of the internal TNMM as the most appropriate method adopted by the assessee for benchmarking the international transactions of the assessee with its AE’s, and restore the matter to the file of the AO to give consequential effect to the same.
Disallowance u/s 14A read with Rule 8D - Expenditure incurred to earn exempt income - HELD THAT:- We respectfully follow the decision of the Coordinate Bench of this Tribunal for A.Y. 2010-11 [2017 (3) TMI 1051 - ITAT KOLKATA] and direct the Assessing Officer to restrict the disallowance under section 14A read with Rule 8D to the extent of exempt dividend income. Ground No. 1 of the assessee’s appeal thus is partly allowed.
MAT computation - addition made on account of excise duty refund and interest subsidy while computing book profit under section 115JB - HELD THAT:- As relying on assessee own case [2017 (3) TMI 1051 - ITAT KOLKATA] we direct the Assessing Officer to delete the addition made on account of excise duty refund and interest subsidy while computing the book profit of the assessee-company under section 115JB of the Act and allow Ground No. 2 of the assessee’s appeal.
Disallowance made under section 14A read with Rule 8D while computing the book profit of the assessee-company under section 115JB - HELD THAT:- As observed that this issue is consequential to the issue involved in Ground No. 1 of the assessee’s appeal for AY 2011-12, which has been decided by us in the foregoing portion of this order. Following our conclusion drawn in AY 2011-12 on the said issue, we direct the Assessing Officer to restrict the disallowance under section 14A read with Rule 8D to the extent of exempt dividend income. Ground No. 3 of the assessee’s appeal thus is partly allowed.
Addition interest subsidy and excise duty refund in computing the income of the assessee under the normal provisions of the Act - HELD THAT:- As decided in own case [2017 (3) TMI 1051 - ITAT KOLKATA] incentives, designed to achieve a public purpose, cannot be construed as production or operational incentives for the benefit of assessees alone. It was further held that making of additional provision in the scheme that the incentives would be available to the eligible industrial units from the date of commencement of commercial production and that these are not to be allowed for creation of new assets cannot be viewed in isolation to treat the incentives as production incentives. Such provisions are intended to ensure that the incentives are made available only to the bona fide industrial units so that the larger public interest of eradicating unemployment is achieved. The Court finally concluded that the incentives received by way of excise duty refund and interest subsidy are capital receipts in the hands of the assessee and therefore not chargeable to tax. - Decided against revenue.
Seeking grant of anticipatory bail - financial dealings with the complainant, to which agreement dated 01.06.2012 has been executed, is violated - State opposes the bail application and seeks time to file status report - HELD THAT:- The petitioner is directed to join the investigation and in the event of his arrest he be released on anticipatory bail in the sum of Rs.20,000/- with one surety of the like amount to the satisfaction of IO/SHO concerned till the next date with the condition that he shall not contact, threaten or coerce the complainant or any of family members of the complainant during this period or indulge in any illegal activities and that he shall not leave India without prior permission of the Court. The amount of Rs.15 Lakhs as offered by the petitioner be handed over to the complainant in the presence of IO, without prejudice to the rights and contentions of the parties.
The appeal was filed with defects and re-filed after 54 days, challenging an order passed by the National Company Law Tribunal. The Appellate Tribunal dismissed the appeal due to exceeding the 45-day limit for condonation of delay.
Condonation of delay of more than 45 days in filing appeal - inherent power under Rule 11 of the NCLAT Rules 2016, to condone the delay - grievance of the appellant is that Registrar of the NCLAT has not made any endeavour to decline to register the appeal on failure to remove the defects within 7 days as prescribed under sub-clause (4) of Rule 26 - HELD THAT:- As per the provisions of the NCLAT Rules 2016 read with Section 422 of the Companies Act 2013, if defects are not removed within 7 days and the defects are removed after 7 days i.e. beyond the period prescribed under the rules, the appeal is treated to be a fresh appeal. Such procedure is followed so that the appellants may get advantage of 'court fee' prescribed under the NCLAT Rules and may use the same 'paper book' which are generally voluminous. If the Registrar General would have refused to register the appeal after 7 days, as per clause (4) of Rule 26, the appellant would have filed a fresh appeal with fresh court fee with separate sets of paper book, separate affidavit, separate vakalatnama which would be disadvantageous to the appellants.
Appeal was filed on 31st March 2017, and the defect was to be removed within 7 days i.e. by 7th April 2017. Therefore, no extension of time could have been granted even by the Registrar to remove the defects particularly when the Appellate court has no power to condone delay after 90 days of receipt of judgment which expired on 7th April 2017 in the present case.
In the present case, curiously the applicant has not explained the delay and laches on his part. It has not explained that why the appeal was not filed within 45 days of receipt of the certified copy of the judgment i.e. by 21st February 2017. They have also not explained the delay for preferring the appeal for another 38 days i.e. till 31st March 2017 when it was filed - Though it was open to the applicant to file a petition before Appellate Tribunal with prayer to ignore the minor defects, no such application was filed by appellant. The appeal was taken back on 3rd April 2017 and they re-filed on 1st May 2017 i.e. beyond the period of 90 days from the date of receipt of judgment passed by Tribunal, when Appellate Tribunal had no jurisdiction to entertain the appeal.
The unexplained delay on the part of the applicant and laches on his part show that applicant does not deserve exercise of inherent power - application dismissed.
Unexplained deposits in bank accounts - main grounds are with reference to considering the peak of the amounts as taxable and not each and every individual deposits as there were withdrawals as well - HELD THAT:- Admittedly, Assessee is not in a position to justify fully the large number of deposits. Assessee before CIT(A) furnished certain sources for cash deposits and withdrawals, particularly amounts borrowed by cheques and drawn in cash. Considering that there is no allegation that Assessee has made unexplained investments and/or indulging any business, there is nothing on record to say that the withdrawals cannot be a source of subsequent deposits. In these circumstances, Assessee request for bringing to tax the peak credits can be accepted.
Even though this working is not verifiable by us in the absence of complete details of domestic expenditure or expenditure which is in nature of outgoing out of the withdrawls and the Receipt-Payment statement. Since this aspect was not examined by A.O, we set aside the issue to the file of the A.O to examine the peak credit, based on receipts and payments statement of Assessee and the consolidated deposits and withdrawals in the five banks and to bring to tax only the amount of peak credit / deficit cash as the case may be. Assessee should be given due opportunity by AO to file necessary details. The grounds raised by Assessee are accordingly considered allowed.
None appeared on behalf of assessee at the time of hearing of appeal - HELD THAT:- As assessee is no more interested in prosecuting the appeal. Hence, the appeal filed by the assessee is liable to be dismissed for non-prosecution.
As in the case of Commissioner of Income-tax vs. Multiplan India (P) Ltd.[1991 (5) TMI 120 - ITAT DELHI-D] reference filed by the revenue before the Tribunal, which was fixed for hearing. But on the date of hearing nobody represented the revenue/appellant nor any communication for adjournment was received. There was no communication or information as to why the revenue chose to remain absent on that date. The Tribunal on the basis of inherent powers, treated the reference filed by the revenue as un-admitted in view of the provisions of Rule 19 of the Appellate Tribunal Rules, 1963.
In the result, we treat this appeal as unadmitted and dismiss the same in limine.
Disallowance u/s 14A r.w.r 8D - Assessee submits that assessment year being 2006-07, the provisions of Rule 8D have no application - HELD THAT:- As perused the order of this Tribunal in Assessee’s own case for earlier assessment years. The Coordinate Bench considered similar situation for the assessment years 2004-05 and 2005-06 [2016 (4) TMI 1427 - ITAT MUMBAI] and directed that 2% of the dividend income be disallowed as expenses attributable for earning dividend income u/s 14A
Following the said order, we direct the Assessing Officer to compute the disallowance at 2% of the exempt income during this assessment year also u/s 14A of the Act. Appeal of the Assessee is partly allowed.
Review Order - error apparent on the face of record or not - no period of limitation in the writ petition - HELD THAT:- Section 3 of the Limitation Act, 1963 which is not applicable per se to the writ proceedings, enjoins a duty upon the Court to take into consideration the period of limitation. Though in a writ petition, there is no period of limitation, but delay and laches is important aspect which is required to be taken into consideration to consider as to whether a litigant has slept over his rights or has invoked the jurisdiction of the Court with due diligence.
Once the Court has recorded a finding that the petitioner has approached this court after delay and laches, we find that only because the plea was not raised in a reply to the writ petition is not a ground for review of the order, as it is not an error apparent on record.
Dishonor of Cheque - presumption of service of notice - rebuttal of presumption - delay in the conclusion of the case - HELD THAT:- Facts of the present case shows that despite institution of the complaint case in the year 2013 by the opposite party No. 2 against the applicant, the case could not be concluded for one reason or the other without any fault on the part of opposite party No. 2. The conduct of the applicant shows an effort on his part to defeat the very object of Section 138 which has been enacted to enhance the acceptability of cheque in settlement of liabilities by making the drawer liable for payment of amount for which the cheque was dishonoured.
Perusal of Section 27 of the General Clauses Act, as clearly indicates that there is a presumption of service by registered post. The provisions of the aforesaid Section 27 of the Act regarding presumption of service has been interpreted by Hon'ble Supreme Court and it has been held that there is a rebuttable presumption of service by registered post - It has also been well settled by Hon'ble Supreme Court that when notice is sent at the correct address by registered post and neither acknowledgment nor undelivered registered cover is received back then there is presumption of service although rebuttable. The burden to rebut presumption lies on the party challenging the factum of service.
In the present case it is undisputed that the notice under Section 138(b) of the N.I. Act was sent by the opposite party No. 2 by registered post to the applicant at the correct address. The facts in this regard have been clearly stated in the complaint filed by opposite party o.2. The drawer of the cheque i.e. the applicant has completely failed to rebut the presumption about the service of notice. He has also failed to show that he had no knowledge that the notice was brought to his address or that the address mentioned at the cover, was incorrect or that the letter was never tendered. Under the circumstances, there is presumption of service of notice sent by opposite party No. 2 to the applicant herein by registered post.
Denial of benefit under abatement claim - allegation is that appellant has not supplied the plant, machinery, equipment to the customers, while providing erection, commissioning and installation services - N/N. 19/2003 -ST dated 15.1.03 and 01/2006-ST dated 1.2.2006 - HELD THAT:- Since the learned Commissioner (Appeals) upon verification of the contract entered into between the appellant and the service-receiver has held that claim of abatement is not permissible as per the contents of the notification, the impugned order cannot be interfered with at this juncture, being passed upon verification of the factual aspects.
Disallowance u/s 14A r.w.r 8D - Excess of own funds - assessee submits that the investment during the year were from the surplus available and thus, the investments were not out of borrowed funds, therefore, it is stated that no disallowance u/s 14A be made - HELD THAT:- As in Avon Cycles Ld. vs. CIT [2014 (9) TMI 207 - PUNJAB & HARYANA HIGH COURT] it is held that where funds utilized by assessee were mixed funds and part of it was invested in earning tax free dividend income, it was held that the interest paid on borrowed fund was also relatable to interest on investment made in tax free funds. Therefore, interest expenditure relatable to investment in tax free funds was to be computed under provisions of Rule 8D (2)(ii).
In CIT vs. HDFC Bank Ltd [2016 (3) TMI 755 - BOMBAY HIGH COURT] it is held that the presumption laid down in CIT vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT]with regard to investment in tax-free securities coming out of the assessee’s own funds in case they are in excess of the investments made in securities (notwithstanding the fact that the assessee concerned may also have taken some funds on interest) applies, when applying section 14A of the Act. It is reiterated again in HDFC Bank Ltd. [2016 (3) TMI 755 - BOMBAY HIGH COURT]
The order of the Ld. CIT(A) on the above issue is set aside and the same is restored to the file of the A.O. to make an order keeping in mind the principles delineated here-in-above after giving a reasonable opportunity of being heard to the assessee. Thus, 1st ground of appeal is allowed for statistical purposes.
Addition as unproved purchases - HELD THAT:- We find that the transactions with Ashirwad Broker, Lalitbhai Dalal, Madhav Broker do not figure in the order passed by the Tribunal in the assessee’s own case for the A.Y. 2007-08. Therefore, the issue in instant appeal is to be decided on its own facts. The Hon'ble Supreme Court in State of Kerala vs. Shaduli Grocery Dealer [1977 (3) TMI 160 - SUPREME COURT], recognized the importance of oral evidence by holding that the opportunity to prove the correctness or completeness of the return of income necessarily carries with it the right to examine witness and that includes equally the right to cross-examine witness. Thus, the order of the Ld. CIT(A) on the above issue is set aside and the same is restored to the file of the A.O. to pass an order after examining the above three parties and allowing the assessee to cross-examine them. The assessee is directed to file the relevant details before the A.O. Thus, the 2nd ground of appeal is allowed for statistical purposes.
Disallowance of commission paid to the managing director and the executive director u/s 36(1)(ii) - HELD THAT:- We find that the same issue arose before the ITAT ‘F’ Bench Mumbai in assessee’s own case for the immediate preceding assessment year 2007-08. The Tribunal observed that (i) the Ld. CIT(A) has rightly held that the A.O. has not demonstrated that the expenditure incurred was excessive, (ii) the directors have declared the commission in their return of income and are being assessed to tax at maximum marginal rate. Therefore, the Tribunal dismissed the appeal filed by the revenue on the above issue.
Under valuation of Stock valuation - valuation of the product sold by the assessee which was sarees - addition based on statement recorded during survey - only discrepancy noted by survey team was regarding valuation of stock and when that was confronted to the Director, he accepted that the stock was under valued in the books - HELD THAT:- As rightly taken note by the Ld. CIT(A), the length of each saree is approximately at 6.5 meters and nobody prevented the survey team from taking the measurement of each sarees. On this plea rejecting the purchase bills produced by the assessee was not correct and the CIT(A) has rightly held that the AO had also not found any defects in the books of account which were examined in the course of survey and also in the course of assessment proceedings. The Ld. CIT(A) has also noted that the AO has verified the purchases and sales by issue of notices u/s. 133(6) and 131 of the Act.
CIT(A) rightly held that the survey team failed to bring any evidence of any concealed income or under valuation of stock and, therefore, in the light of the retraction made by the assessee and the statement given before the survey team, without any material, the addition made cannot stand the scrutiny of law. CIT(A) rightly took note of the fact that the AO has not pointed out any specific item of stock or entry which is not entered into the books of account. As we noted earlier, the survey team could not point out that there was any excess stock or unrecorded stock found either during survey or during the assessment proceedings.
The sole basis of making the addition was based on the statement recorded during survey on 28.03.2011 and 131 statement recorded on 12.04.2011 which cannot be the basis for making the addition when the facts remain that the assessee has retracted the statement. As in the case of Pullangode Rubber Produce Co. Ltd.[1971 (9) TMI 64 - SUPREME COURT] held that the assessee should be given opportunity to say that admission is incorrect or does not say the correct state of facts.
Since the assessee has produced the books of account as well as the purchase bills which have been verified by the AO, the addition made by the AO has rightly been deleted by the Ld. CIT(A). CIT(A) has also took note of the fact that the rate of net profit and gross profit declared by the assessee is higher than that of the results of the earlier years and in 2006-07 the department has accepted the net profit and gross profit offered by the assessee and since the net profit and gross profit is higher than that of the earlier years, we do not find any justification in making the addition, therefore, we do not find any infirmity in the order of the Ld. CIT(A) and, therefore, we dismiss this ground of appeal of revenue.
Disallowance of sum paid to the customers - difference in the letter heads of both the parties when compared with that of the initial reply given by the said parties to the AO - HELD THAT:- We note that the AO partly disallowed the discount allowed to Awatram & Sons and Pooja Sarees on the ground that from the initial reply the AO got from the said parties he could not verify the veracity of the claim made by the assessee. However, when the assessee was confronted with the said fact, the assessee confronted the said parties who after verification of their books handed over the confirmation of the discount given by the assessee which was duly produced by the assessee before the AO. However, the AO did not accept the said confirmation from the parties on the ground that there were difference in the letter heads of both the parties when compared with that of the initial reply given by the said parties to the AO.
We note that the AO has not doubted the sales to the said parties. However, he doubted the genuineness of the confirmation given taking note of the different letter heads used by the said parties. When the AO confronted the assessee with the initial reply, the AO got from the said parties u/s. 133(6) of the Act, the assessee in turn confronted the said parties and once they had issued confirmation after verification which has been placed before the AO, the AO ought to have verified the veracity of the said confirmation letter if he has any doubt by calling the said parties before him or by deputing the Inspector to find out the veracity of the letter heads, rather than disbelieving the confirmation letter only on the basis of surmises and conjectures which cannot stand the scrutiny of law and, therefore, the Ld. CIT(A) has rightly deleted the addition which warrants no interference from our part and, therefore, we dismiss the revenue’s ground of appeal.
Reopening of assessment u/s 147 - claim of loss - as loss was suffered in sale and purchase of shares which had no connection with the business of the assessee as a share broker there is in fact tangible material to come to the conclusion that income escaped assessment which we have already discussed. There is thus no question of any change of opinion - HELD THAT:- SLP dismissed. However, the question of law is left open.
Reopening of assessment u/s 147 - Period of limitation to issue notice - HELD THAT:- The Tribunal in the impugned order has commented and stated that in the affidavit/service report submitted by the Inspector, the date of the notice was mentioned as 30.10.2001. This is clearly a clerical or typographical error as the date on the notice is 31.10.2001 and it is clearly reflected in Annexure A. It is not the case of either party that the notice was issued on 30.10.2001. Of course, there cannot be any doubt that department should have taken precaution and should have issued notice well in advance, as they knew that the limitation period for service would expire on 31.10.2001. Had care been taken this entire exercise and appeal would have been avoided.
In view of the facts stated above question of law is answered in favour of Revenue and against the respondent.
Notice u/s 143(2) within period of limitation - Addition u/s 68 - HELD THAT:- The matter is required to be remitted back to the tribunal in view of the fact that tribunal has committed an error in deleting the disallowance and wrongly allowed the appeal preferred by the assessee ignoring the submissions made by the department in this regard.
The issue is answered in favour of the department. The matter is remitted back to the tribunal to decide the same afresh in accordance with law. The order of tribunal is set aside.
Validity of SCN - time limitation - HELD THAT:- Issue Notice returnable on 14th June, 2017. By way of ad-interim relief, the respondents are restrained from taking any coercive action pursuant to the impugned order-inoriginal.
Disallowance of exemption u/s. 54F - disallowance of exemption claimed by the assessee u/s. 54F - assessee did not claim any deduction subsequently, the assessee filed a revised return u/s. 153A wherein the assessee claimed deduction u/s. 54F of the Act in respect of a new flat purchased by her - HELD THAT:- There is merit in the contention of the assessee, as the claim of the assessee is supported by the decision rendered by Hon'ble Bombay High Court in the case of B.G. Shirke Construction Technology P. Ltd.[2017 (3) TMI 879 - BOMBAY HIGH COURT] There is no dispute with regard to the fact that the present assessment falls in the category of abated assessment and hence the entire assessment is open before the AO.
The claim of the assessee for deduction u/s 54F of the Act can be entertained in the facts and circumstances of the present case. The assessee has also demonstrated before CIT(A) that she is holding only one residential house on the date of sale of commercial property. It has been submitted that the house, where she resides, does not belong to her. If that be the case, the assessee shall be entitled for deduction u/s. 54F - assessee has chosen not to disclose the ownership details of the house where she is residing, i.e., whether it belongs to some other family members or it was rented flat. Accordingly we set aside the order passed by Ld CIT(A) and restore the same to the file of the Assessing Officer with the direction to allow the claim of the assessee u/s. 54F - Decided in favour of assessee.
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