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Showing 41 to 60 of 1569 Records
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2021 (9) TMI 1531
Income taxable in India - gains arising from transfer of CCDs - treating the gains on sale of CCDs to be taxable - interest income or capital gain - HELD THAT:- An undisputed fact that identical issue arose in assessee’s own case for A.Y. 2011-12 & 2012-13. For A.Y. 2011-12, the Hon’ble Delhi High Court [2014 (8) TMI 9 - DELHI HIGH COURT] has held that the gain on CCDs to be treated as capital gains.
We further find that the Co-ordinate Bench of Tribunal in assessee’s own case for A.Y. 2013-14 [2021 (9) TMI 1530 - ITAT DELHI] by following the decision of Hon’ble Delhi High Court, dismissed the appeal of the Revenue. Before us, no distinguishing feature in the facts in the year under consideration and that of earlier years has been pointed out by the Revenue. Further no material has been placed by Revenue to demonstrate that the decision rendered by Hon’ble Delhi High Court in assessee’s own case for A.Y. 2011-12 has been stayed/ set aside/ overruled by higher judicial forum. Considering the totality of the aforesaid facts, we find no reason to interfere with the order of CIT(A) [2021 (9) TMI 1530 - ITAT DELHI]and thus the grounds of Revenue are dismissed.
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2021 (9) TMI 1530
Income taxable in India - gains arising from transfer of CCDs - taxability as capital gains OR interest income - CIT(A) held that the gains arising to the assessee on the transfer of Compulsorily Convertible Debentures (CCDs) is in the nature of capital gains and shall not be taxable in India under Article 11 of the DTAA between India and Mauritius - HELD THAT:- The issue has been dealt by the Hon’ble Authority of Advance Ruling (AAR) [2012 (4) TMI 154 - AUTHORITY FOR ADVANCE RULINGS] while dealing with Article 11 and Article 13 as held that the entire gains arising to the applicant on the sale of equity shares and CCDs are not exempt from capital gain tax in India under DTAC with Mauritius. The gains arising on the sale of CCDs being interest within the meaning of Section 2(28A) of the Act and Article 11 of the DTAC and are taxable as such.
Against the above ruling of AAR the assessee filed writ petition before Hon’ble Delhi High Court [2014 (8) TMI 9 - DELHI HIGH COURT] has decided the issue against the findings of the AAR and has held that pre-mature exit options as recorded in the SHA and the minimum return assumed by Vatika on its investment are clearly commercial agreements between the parties. These by itself do not change the legal nature of the transaction entered into between the parties. The terms of the arrangements between Vatika and the petitioner reveal that the JV was a genuine commercial venture, in which both partners had management rights. The call and put options were defined commercial options capable of being elected by the parties. In our opinion, there is, thus, no reason to ignore the legal nature of the instrument of a Compulsorily Convertible Debenture or to lift the corporate veil to treat the JV Company and Vatika as Single entity. In view of the above, the writ petition is allowed and the impugned ruling is set aside.
As held that the revenue has not accepted the above order of Hon’ble Delhi High Court and has filed SLP before Hon’ble Supreme Court which is pending for adjudication and made addition on the amount in contravention to the existing ruling of the Hon’ble Jurisdictional High Court.
Thus grounds raised by the revenue that the appeal has been filed before the Tribunal solely based on the foundation that the SLP filed by the revenue has been admitted and notice has been issued in this case. Since, at this juncture the order of the Hon’ble High Court prevails on the substantive question of law which stands adjudicated in favour of the assessee, we hereby dismiss the appeal of the revenue.
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2021 (9) TMI 1529
Resolution Plan being approved by the Committee of Creditors is pending for approval of the Adjudicating Authority - HELD THAT:- It goes without saying that the submissions sought to be made by the appellant could be the matter for consideration of the Adjudicating Authority, of course, strictly in accordance with law. In that regard, suffice it to say that any observations made in the impugned order shall not be of prejudice to the appellant in making the relevant submissions; and consideration thereof by the Adjudicating Authority.
The appeal stands dismissed.
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2021 (9) TMI 1528
Income taxable in India - royalty receipts - amounts paid by the concerned persons resident in India to non-resident for foreign software suppliers - HELD THAT:- Assessee submits that the substantial questions of law raised herein are squarely covered by the ruling of the Hon’ble Apex Court in the case of Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT] held that amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act.
Revenue could not dispute the same. Substantial questions of law are answered in favour of the assessee and against the revenue.
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2021 (9) TMI 1527
Validity of notice issued u/s 153C - writ direction or order to quash and set aside the impugned notices u/s 153C and the order disposing off the objections along with the show Cause Notices issued for A.Y. 2016- 17, A.Y. 2017-18 and A.Y. 2018-19 - HELD THAT:- For the reasons to be followed which for the paucity of time, order not being dictated today.
The petition is not entertained.
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2021 (9) TMI 1526
Penalty levied u/s. 271(1)(c) - Furnishing of inaccurate particulars of income in respect of process loss - Assessee has submitted that wastage was borne by the assessee in case of export sale and in case of local sale it was borne by the parties - in the assessment made u/s. 143(3), AO has made disallowance of processed loss - CIT(A) after reducing the sale made from wastage product i.e. chindri, fandrages restricted the disallowance - HELD THAT:- We have gone through the judicial pronouncement referred by the ld. counsel in the case of CIT, Ahd Vs. Reliance Petro Products P. Ltd. [2010 (3) TMI 19 - SUPREME COURT] wherein it is held that mere making of the claim which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee.
Such claim in the return of income cannot amount to inaccurate particulars of income. In the light of the above facts and findings, we consider that only on the basis of not accepting the claim made by the assessee, the levy of penalty u/s. 271(1)(c) is not appropriate. Accordingly, the Assessing Officer is directed to delete the penalty. Therefore, this ground of appeal of the assessee is allowed.
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2021 (9) TMI 1525
Validity of N/N. 26/2017- Custom, dated 29.06.2017 to the extent amending N/N. 16/2015- Customs, dated 01.04.2015 - Validity of Trade Notice 11/2018, dated 30.06.2017 to the extent it is stated therein under Chapter 5 that importers would need to pay IGST - sanction of refund and interest thereon at the appropriate rate after first directing reversal of the entries of utilization of the subject credit and debiting the said amount from credit ledger consequently available with the petitioner or in such other manner as deemed appropriate - HELD THAT:- Issue Notice for final disposal making it returnable on 21.10.2021.
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2021 (9) TMI 1524
Offence under SEBI Act - synchronized trading, reversal trading and self-trading - appellants made unlawful gains - trading noticees received funds from the financing notices which were directly transferred to the stock brokers against the pay in obligation of the trading noticees - WTM directed the appellants to pay the said amount jointly and severally alongwith interest at the rate of 12% per annum.
HELD THAT:- Any person who has made profits or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act or Regulations made thereunder would be liable to disgorge an amount equivalent to the unlawful gain or loss averted by such contravention.
Thus, disgorgement can only happen if the person contravenes the provisions of the Act or Regulations. Secondly, the disgorgement is equivalent to the wrongful gain made or loss averted. Thus, disgorgement cannot exceed the amount of wrongful gains.The concept of disgorgement under the SEBI laws is based on the principle that a person in possession of wrongful gains by which he is enriched may be asked to part with the amount equivalent to such gains alongwith interest.
Black’s Law Dictionary defines disgorgement as “The act of giving up something (such as profits illegally obtained) on demand or by legal compulsion.” To disgorge means to deprive a person of the value by which he is unjustly enriched. Further, disgorgement is an equitable remedy designed to deprive a wrong doer of his unjust enrichment. It aims in ensuring that a person in possession of the wrongful gain does not continue to enjoy them. Section 11B of the Act only talks about disgorgement of unlawful gains/profits. The concept of “net profits” is not existing in Section 11B but the same has been carved out by Courts exercising equitable jurisdiction. Some Courts have granted only deduction of statutory dues, others have granted other legitimate expenses.
Disgorgement in our opinion is an equitable remedy under Section 11B of the Act meant to prevent the wrongdoers from enriching himself by his wrong by wresting ill-gotten gains from the hands of the wrongdoer. The provisions relating to disgorgement is thus remedial in nature and is not punitive.
Thus, legitimate expenses can be deducted while arriving at net profit. The respondent in this case has only allowed statutory deductions expended as a deduction while arriving at the net profit but did not allow deduction of administrative expenses and brokerage incurred by the wrongdoer.
We are in agreement with the findings given by the WTM in this regard. In our opinion net profit from wrongdoing is the gain made by any business or investment, where both the receipts and payments are taken into account. We are further of the opinion that the appellant will not be allowed to diminish the show of profits by putting in unconscionable expenses or other inequitable deductions even though entire profits of a business may result from the wrongdoings of the appellants and therefore are not entitled for the deductions as prayed by them.
Section 37(1) of the Income Tax Act debars an assess claiming any deduction from business profits any expenditure which may be incurred for any purpose which is an offence or which is prohibited by law. The aforesaid principle equally applies to SEBI laws since disgorgement is not a penalty nor is punitive as held by this Tribunal in Gagan Rastogi vs. SEBI [2019 (10) TMI 1047 - SECURITIES APPELLATE TRIBUNAL, MUMBAI]
Administrative expenses and brokerage charges are in the nature of business expenses and are not legitimate expenses for the purpose of claiming deductions in order to arrive at the net profit. Disgorgement being an equitable remedy and even though the profits results from wrongdoings, the appellants were rightly denied administrative expenses and brokerage. For the reasons stated aforesaid all the appeals are devoid of merit and are dismissed.
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2021 (9) TMI 1523
Cancellation of compensatory leave for adjudication to the Industrial Tribunal - whether the Appellant can be allowed to raise a contention that it is not an Industry within the meaning of I.D. Act? - HELD THAT:- After considering the fact of loss of confidence in the employee and a long time gap, this Court granted compensation of Rs. 15 lakhs in full and final settlement to the employee without granting reinstatement. In the said case before this Court, there was no inquiry held for establishing misconduct. A finding was recorded that the acts of employee prima facie constitute misconduct. In our view, considering the aims and object of the Appellant and the serious nature of misconduct proved against the Respondent, instead of granting reinstatement, by balancing the conflicting interests, appropriate compensation needs to be awarded. Moreover, considering the nature of the misconduct proved against the Respondent, the grant of reinstatement will not be in the interest of justice. The long gap of 17 years will be also one of the considerations for not granting reinstatement especially considering the nature of the activities of the Appellant and the conduct of the Respondent.
In the case of Talwara Cooperative Credit and Service Society Ltd. [2008 (10) TMI 731 - SUPREME COURT], this Court has held that the fact whether an employee after dismissal was gainfully employed is within his special knowledge and therefore, considering the principles laid down in Section 106 of the Indian Evidence Act, 1872, the burden is on the employee to come out with a case that he was not gainfully employed during the relevant period.
In the present case, at no stage, even such a plea has been made by the Respondent. Even in the counter filed to these appeals, no such statement has been made. The amount of back wages payable up to June, 2010 was deposited in this Court. The said amount of Rs. 4,43,380/- has been withdrawn by the Respondent in the year 2010. From the year 2004, when order of compulsory retirement was passed, the Respondent has not worked with the Appellant. Moreover, he has not even pleaded that from the date of the compulsory retirement till date, he was not gainfully employed.
The Respondent has used the amount of Rs. 4,43,380/- for the last 11 years. His gross salary in the year 2004 was Rs. 5788/- per month. Taking overall view of the various factual aspects which we have discussed above, we find that compensation in the range of Rs. 6,50,000/- to Rs. 7,00,000/- in lieu of reinstatement will be just and proper in the facts of the case. Thus, after taking into consideration the sum of Rs. 4,43,380/- already received by the Respondent, a sum of Rs. 2,50,000/- will be payable by the Appellant to the Respondent.
The appeals allowed in part by setting aside the order of reinstatement of the Respondent and the order of payment of back wages to the Respondent - the Appellant further directed to pay total compensation of Rs. 6,50,000/- to the Respondent inclusive of the sum of Rs. 4,43,380/- already paid to the Respondent.
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2021 (9) TMI 1522
CENVAT Credit - input services - outward transportation of goods (GTA Services) - place of removal - period from 2009-10 to 2013-14 - it was held by High Court that Appellants are eligible for the cenvat credit of service tax paid on outward freight.
HELD THAT:- Leave granted.
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2021 (9) TMI 1521
Validity of Assessment passed u/s 144C as objections before DRP are pending - As argued if the petitioner had informed the first respondent within 30 days period that it intends to file objections before the DRP, first respondent would have awaited the directions of DRP - HELD THAT:- Revenue counsel very fairly submits that the period of limitation stood extended owing to the Covid-19 situation and in the light of the typed-set of papers forming part of the case file, it is clear that the petitioner has gone before the DRP. Therefore, the first respondent has to await directions from DRP as the objections of the writ petitioner are pending with DRP.
Order - The impugned Assessment Order is set aside solely on the ground that objections before DRP are pending and directions of DRP under 144C(5) has to be awaited under 144C (13).Though obvious it is made clear that this Court has expressed no opinion or view on the merits of the matter.
On DRP issuing directions, the first respondent shall proceed with the assessment de novo on its own merits, in accordance with law and complete the exercise as expeditiously as the business of the first respondent would permit.
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2021 (9) TMI 1520
Approval of the Resolution Plan - HELD THAT:- This Bench, after having seen the figures mentioned by the Resolution Professional, is not convinced that the fair value of the assets have been projected in the proper manner. It is also surprising that the Resolution Plan Applicant is bidding with the amounts very close to that of fair value as projected in the Resolution Plan. In view of the same, with the powers vested in this Bench, it is ordered that the revaluation of the assets of the company by the experts under the supervision of the Official Liquidator, Ministry of Corporate Affairs, in-charge of this particular area, under whose jurisdiction the company is situated.
This application for the approval of the Resolution Plan is kept in abeyance and the Official Liquidator is directed to provide the exact figures/value of the assets and exact valuation details within three weeks from the date of the receipt of this order - List the matter for further consideration on 05.10.2021.
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2021 (9) TMI 1519
Fraudulent GDR issue - Company did not make adequate disclosure under the Listing Agreement and that certain monies had also been diverted - WTM passed an order of debarment and the AO passed the order of imposition of penalty on directors - HELD THAT:- H.S. Anand [director] - Subsequent order of the AO finding the Director Anand guilty is patently erroneous and cannot be sustained. Once an AO comes to a conclusion that Mr. H.S. Anand had nothing to do with the day-to-day affairs of the Company and was only associated in providing technical expertise on product quality and was not involved in any financials of the Company it was no longer open to the AO to take a different view on another GDR issue when the facts and modus operandi were all common. We are of the opinion that the regulator should be consistent in its stand and should not take contradictory views on the same issue.
In view of the categorical finding that being a non-executive independent director, the said appellant was never involved in the day-today affairs of the Company nor was part of the decision making process relating to the GDR issue, the said appellant cannot be held guilty only on the basis of being a signatory to a resolution. In Prafull Anubhai Shah vs. SEBI, [2021 (6) TMI 1159 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] we have held that being a signatory to a resolution is not sufficient to point fingers of committing a fraud. Thus, the order of the AO imposing a penalty upon Mr. H.S. Anand and the order of the WTM debarring him for one year cannot be sustained.
Non-executive independent director [Mr. I.S. Sukhija] the application of the respondent seeking permission to bring on record the additional documents cannot be allowed as it does not come within the parameters of the grounds given in Order 41 Rule 27 of the Code of Civil Procedure. Nothing has been stated as to why these documents which are in the public domain could not be considered by the authorities while considering the matter.
Nothing has been brought on record to indicate as to why such documents which was within their knowledge could not be brought on record. In any case, reliance upon these documents are misplaced. Merely because Mr. I.S. Sukhija was the Chairman of the Audit Committee does not mean that he was party to the fraudulent scheme, if any. The observations made by the authorities in the impugned orders that he should have raised questions as to why the GDR proceeds was not brought into the Company’s account or why the loan was given to the Vintage from the GDR proceeds are not matters which comes under the purview of the audit committee.
In any case, we find that there was no need to raise such questions as the loan in one case was paid immediately and in the other case was paid within a couple of months. Further, the evidence which has come on record indicates that the GDR proceeds were utilized for the purpose for which the resolution for issuance of the GDR was passed. Thus, the finding of the authorities that a fraud has committed by the Company is patently erroneous.
When the proceeds have come into the Company and have been utilized for the purpose of setting up a subsidiary in UAE the funds have been utilized for the purpose for which the GDR was issued. Thus, in our view merely because the appellant Mr. I.S. Sukhija was part of the resolution which approved the issuance of the GDR and opening of a bank account with Euram Bank does not lead to a conclusion that the appellant was part of the scheme of the alleged fraud which in any case was not in existence. Thus, imposition of penalty by the AO and debarment by the WTM was wholly erroneous on this appellant.
Managing Director of the Company [Mr. Gurmeet Singh] violation is nondisclosure of the Loan Agreement and the Pledge Agreement under the Listing Agreement for which penalty was rightly imposed upon the Managing Director - quantum imposed is wholly excessive and does not commensurate with the misconduct. There is nothing on record to indicate that any shareholder or investors have suffered any loss on account of conversion of GDR into equity shares which was sold in the Indian market. Thus, we are of the opinion that for non-disclosure of the Loan Agreement and the Pledge Agreement to the Stock Exchange under the Listing Agreement the penalty of Rs. 20 lakh in each GDR issue would be just and proper in the circumstances of the case and the debarment against Mr. Gurmeet Singh is upheld.
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2021 (9) TMI 1518
Fraudulent and Unfair Trade Practices relating to Securities Market - issuance of the GDRs - inadequate disclosures to the investors - Investigation revealed that the Company made selective disclosure to Bombay Stock Exchange (BSE) and suppressed material information, namely, that Euram Bank was authorized to use the proceeds in connection with a loan and that the execution of the loan agreement and the pledge agreement was not disclosed - Penalty imposed - HELD THAT:- The company is now under liquidation. The loan taken by Vintage has been repaid to the company. US$ 8.3 million was transferred to the account of the company and US$ 6 million was transferred to its subsidiary in UAE as per the GDRs offering. Thus, a genuine GDRs issue was made by the company which was not fraudulent nor the proceeds of the GDRs has been diverted to a third entity. In fact, there is no specific allegation about the non-utilization of the GDRs in the show cause notice. Thus, there cannot be any violation of any fraud or inducement under Regulations 3 and 4 of the PFUTP Regulations.
AO while considering the factors under Section 15J of the SEBI Act found that there is nothing on record to show or indicate any disproportionality given or unfair advantages made by the appellants nor anything has come on record to show any loss suffered by the investors.
In view of this specific finding coupled with the fact that no fraudulent scheme was initiated by the company, we are of the opinion that the findings given by the WTM and the AO against the appellants Pradip Mundhra and Sanjay Taparia relating to the penalty is excessive and arbitrary and is required to be modified.
Appeals of Jaiprakash Kabra, Gopaldas Maheshwari and Rajesh Jhunjhunwala being covered by the decision of this Tribunal in Praful Shah [2021 (6) TMI 1159 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] the impugned orders of the AO in so far as it relates to these appellants are quashed. Their appeals are allowed with no order as to costs.
In so far as the appeals of Pradip Mundhra and Sanjay Taparia are concerned, they being on the helm of the affairs of the the company on a day to day basis, they are responsible for nondisclosure of vital information. However, the penalty imposed by the AO and the WTM are disproportionate and excessive, therefore, while affirming the findings of violation in so far as it relates to nondisclosure, the penalty of Rs. 50 lac imposed by the AO is reduced to Rs. 20 lac each and debarment of five years made by the WTM is reduced to two years and six months. The appeals of Pradip Mundhra and Sanjay Taparia are partly allowed.
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2021 (9) TMI 1517
TP adjustment - international transactions in connection with payment of brand royalty and payment of professional fees - benchmarking the international transaction without appreciating the fact that the said international transaction is closely interlinked to the manufacturing activity of the Appellant - HELD THAT:- The crux of the discussions wherein in the Tribunal’s order for the assessment year 2009-10, it has observed that the assessee had paid brand royalty under two agreements, first, at 0.5% under the agreement dated 01.07.2008 and then again under another agreement dated 05.04.2001. The duplicate amount of royalty earlier paid was directed to be disallowed.
The relevant part of this Tribunal order [2021 (7) TMI 681 - ITAT PUNE] for the assessment year 2010-11 in assessee’s own case remit the matter to the file of AO/TPO for redetermining the ALP of the international transaction of payment of Royalty and disallow the duplicate payment of brand Royalty in terms indicated above in the Tribunal order - Ground allowed for statistical purposes.
Management services fess and payment of professional fees - Tribunal observed that in its own order for the assessment year 2009-10 [2019 (4) TMI 1505 - ITAT PUNE] following the view taken for the preceding year held that the assessee did avail services from its AE and the authorities below were not justified in coming to the conclusion that no services were obtained by the assessee.
We set aside the impugned order on this score and remit the same to the file of the AO/TPO for fresh determination of ALP of the international transaction of payment of management services fee in accordance with the observations and directions given in the Tribunal order passed for the assessment year 2009-10 [2019 (4) TMI 1505 - ITAT PUNE] and 2010-11 [2021 (7) TMI 681 - ITAT PUNE]. Thus, Grounds allowed for statistical purposes.
Disallowance u/s. 37 in respect of royalty expenditure incurred by the assessee - CIT(Appeals) had taken a view that the assessee is engaged in manufacture of equipments through licenses from group concerns. Royalty has been paid in respect of technical know-how obtained for manufacturing of equipments. Since the technology and designs have been used by the assessee in its manufacturing, the royalty for the same cannot be said to be for nonbusiness purposes.
Similarly, brand royalty has been paid for the use of brand on the products manufactured by it. It was therefore an admitted fact that assessee was using the Brand name and logo on its manufactured products. These payments, therefore, cannot be considered as meant for nonbusiness purposes in respect of transfer pricing adjustment. This view of the Ld. CIT(Appeals) was left unaltered and relief provided to the assessee was sustained by the Tribunal.
Before us also, DR submitted that there is no difference on the facts and circumstances for this year also and the issue is covered in favour of the assessee. That when the facts and circumstances are similar and that a view has already been taken which is factually analyzed, therefore, on same parity of reasoning under same set of facts and circumstances, we allow this ground of appeal. Thus, Ground No.2 raised in appeal by the assessee is allowed.
Disallowance u/s.37 in respect of legal and professional fees incurred by the assessee on account of HR, legal, IT, finance, sales, marketing and other ancillary services - As decided in own case assessment year 2010-11 [2021 (7) TMI 681 - ITAT PUNE] CIT(A) has given cogent reasons for deleting the disallowance inasmuch as the AO simply adopted the TPO’s reasoning without showing as to how the same applied to the non- AE transactions as well. Further, the expenditure contains payment for Testing fees and also Generic service fee. To this extent, we approve the view taken by the ld. CIT(A).
TDS u/s 195 - non deduction of tds on commission on sale to overseas sales agents - HELD THAT:- As decided in Kikani Exports Pvt. Ltd [2014 (9) TMI 96 - MADRAS HIGH COURT] wherein it was held that the services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services and therefore, section 9 of the Act is not applicable to the instant case and consequently, section 195 of the Act does not come into play. The assessee has further submitted that it is a settled position of law that the retainer ship charges/commission paid to overseas non-resident agents for promoting assessee’s business in foreign countries is not in the nature of fees for technical services and therefore, is not liable to be taxed in India. Thus no statutory obligation to make TDS u/s.195 of the IT Act in respect of the commission paid to overseas sales agents.
Disallowance u/s.14A r.w. Rule 8D - AO proposed to the assessee that the expenditure incurred in relation to the dividend income in respect of this investment is required to be disallowed - assessee objected to the same on the ground that no dividend income has been received during the year with regard to this investment - HELD THAT:- It is a settled position of law that when no exempt income has been received by the assessee then there cannot be any disallowance u/s.14A of the Act. This view was also taken in the case of HOLCIM INDIA P. LTD. [2014 (9) TMI 434 - DELHI HIGH COURT] and based on this decision of the Hon’ble Delhi High Court, the Ld. DRP had directed the Assessing Officer to delete the addition. Therefore, we are of the considered view on the given facts and circumstances, there is no need for interference with the findings of the Ld. DRP and relief provided to the assessee is sustained.
Revenue appeal dismissed.
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2021 (9) TMI 1516
Refusal to terminate the proceedings in two first appeals arising out of a Scheme decree passed in respect of a temple governed by the Bombay Public Trusts Act, 1950, despite the appellants seeking to withdraw the appeals - view taken by the High Court is that the proceedings in the appeals cannot be terminated merely because of the withdrawal of the appeals by the appellants, since the rights of 3rd parties are also involved is correct or not.
HELD THAT:- Such a view may not be correct due to the following reasons:-
(i) This Court, by its order dated 22.11.2013, which we have extracted above, has permitted in no uncertain terms, the withdrawal of the appeals. Thereafter it is not open to the High Court to proceed with the hearing of the appeals.
(ii) The procedure sought to be adopted by the High court, namely to hear the appeals in the interest of third parties, despite the appellants seeking to withdraw them, is possible only in two circumstances namely, (a) when there are cross objections, which can independently proceed in terms of Order XLI Rule 22(4) CPC; or (b) when a transposition takes place in terms of Order XXIII Rule 1A CPC. In this case, there were no cross objections and hence Order XLI Rule 22(4) has no application. There was also no transposition and hence 3rd parties cannot seek to continue the appeals;
(iii) Proceedings for the framing of a Scheme for the administration of a Trust are no doubt proceedings in rem. Therefore, up to the stage of passing of the final decree approving a Scheme, even 3rd parties are entitled to intervene and object to the whole or part of the Scheme. But once the final decree approving the Scheme is passed, any person objecting to the final decree should independently file an appeal and cannot ride piggyback on the appellants’ shoulders. If they choose to do so they have to fall once the appellants withdraw the appeals;
(iv) In any case it was the appellants before the High Court who have given an undertaking to this Court at the time of hearing of SLP(C)No.27929 of 2012 that they shall not move the Charity Commissioner for modification or variation of the Scheme. Such an undertaking is not binding on third parties. Therefore, it is not as though the rights of 3rd party intervenors are completely obliterated. They always have their own remedies in law and they cannot insist upon their grievances being addressed to in the appeals filed by the appellants herein.
The impugned order of the High Court dated 05.03.2015 is set aside - appeal allowed.
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2021 (9) TMI 1515
Estimation of business income - difference in the gross receipts between the books of accounts and the annual statement of the department (26AS) - substitution and adoption of receipts as appearing in Form 26AS in place of entries shown as per audited book and estimation of business income/net profit thereon @ 8% discarding the book results - assessee submitted that the difference in the gross receipts between the books of accounts and the annual statement of the department (26AS) is on account of timing difference in recognition of income.
HELD THAT:- Both the orders are totally non-descript and has nothing worth to say for substitution of book results with estimated profits. Noticeably, in the assessment order, the AO has categorically made an averment to the effect that books of accounts have been produced by the assessee and test checked. The AO has not made mention of any material which could questions the correctness and bonafide of the book results declared.
AO is stoically silent on any kind of deficiency in books or excessive claim of any expenses etc. which could substantiate his action. It is incumbent upon the AO to record the inconsistency or incorrectness in the books which prevents the AO to ascertain true income chargeable to tax. The AO has neither rejected the books nor a single voucher was alleged to be unverifiable.
The pre-condition for estimating business income, where the assessee maintains books of account is that the books of assessee should be found to be unreliable or otherwise not realistically capable for demonstrating the income of assessee. Without this first step, the fact that the gross profit/net profit is low cannot by itself be a ground for taking a view that it is open to the AO to make good alleged deficiency in profits declared. Thus, the action of the AO requires to be cancelled and set aside on this score alone being devoid of any legitimacy.
Gross profit rate/net profit rate cannot be estimated cursorily and in a routine manner without showing as to how the book results are superfluous.AO has not brought any material which has any reasonable nexus to the estimation.
As rightly stated on behalf of the assessee, even the best judgment assessment cannot be done in a vindictive manner and should be based on reasonable and fair estimations.
AO in the instant case has not crossed the barrier to enable it to go into arena of estimation. The estimation is permissible only on showing that the books of accounts are so defective that it is not possible to ascertain the truthfulness of the profits arising therefrom.
The onus is upon the Revenue to show that either the books of account maintained by the assessee were incorrect or incomplete or that the method of accounting adopted by him was such that true profits of the assessee cannot be deduced therefrom. For rejection of books of accounts, the AO is required to demonstrate specific defects in the books of accounts produced by the assessee and also as to how the books of accounts produced by the assessee is not giving clear picture of the profit earned from the business activity.
Even where the books are rejected, the discretion must be used by the AO judiciously. We also find considerable substance in the plea of the assessee for not indulging estimates of such whopping nature particularly when lesser net profit rates of 2.19% and 1.10% declared in A.Y. 2016-17 and A.Y. 2017-18 has been endorsed by the Revenue itself in regular assessments.
Hence, on giving due weightage to the peculiar facts and circumstances of the case, we find merit in the plea of the assessee for reversal of its consequent substitution by the actual income as per books as offered. Thus, we reverse the action of the lower authorities and restore the position of the assessee. Decided in favour of assessee.
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2021 (9) TMI 1514
Deduction u/s 80HHC - simultaneous deduction under Section 80HHC and 80IB on the same profits - whether deduction u/s 80IA should not be deducted from the profits and gains of business before computing ? - HELD THAT:- It is not disputed before us that the above substantial questions of law were considered in the case of Micro Labs Ltd [2015 (12) TMI 708 - SUPREME COURT] In the light of the difference of opinion between the Hon'ble Judges, the matter has been directed to be placed before the Hon'ble Chief Justice of India, so that the matter can be referred to a larger Bench.
Tax Case Appeal is allowed and the order passed by the Tribunal, as well as the Commissioner of Income Tax (Appeals), Large Taxpayer Unit, Chennai, are set aside and the matter is restored to the file of the Assessing Officer, who shall await the decision of the larger Bench of the Hon'ble Supreme Court, in the reference made in the case of Micro Labs Ltd. (supra).
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2021 (9) TMI 1513
Rejection of plaint under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 - rejection on the ground that the suit filed in the year 1987 challenging the action of the competent authorities under the Act carried out way back in 1963 and 1964 was hopelessly barred by limitation - bar under Section 85 of the Act on the jurisdiction of Civil Court.
Rejection of plaint on the ground of limitation - HELD THAT:- The Plaintiffs assert in no uncertain terms that notices were never ordered to them nor served on them. Therefore, the answer to the issue regarding limitation, will depend upon the evidence with regard to the issuance and service of notice and the knowledge of the Plaintiffs. Hence, the Trial Court as well as the High Court were not right in rejecting the plaint on the ground of limitation, especially in the facts and circumstances of this case.
As observed by this Court in P.V. GURU RAJ REDDY AND ORS. VERSUS P. NEERADHA REDDY AND ORS. [2015 (2) TMI 1363 - SUPREME COURT], the rejection of plaint Under Order VII Rule 11 is a drastic power conferred on the Court to terminate a civil action at the threshold. Therefore, the conditions precedent to the exercise of the power are stringent and it is especially so when rejection of plaint is sought on the ground of limitation. When a Plaintiff claims that he gained knowledge of the essential facts giving rise to the cause of action only at a particular point of time, the same has to be accepted at the stage of considering the application Under Order VII Rule 11.
The City Civil Court as well as the High Court refused to follow the procedure prescribed by Section 85-A of the Act, on the short ground that the same could be invoked only in cases where the issues covered by the Act have not already been settled, decided or dealt with by an authority competent under the Act to do so. Supporting the view taken by the Trial Court and the High Court, it is contended by Mr. Aniruddha Joshi, learned Counsel for some of the contesting Respondents that as against the orders passed Under Section 32-G and 32-M, an alternative remedy of appeal is provided under Clauses (mb) and (n) of Sub-section (1) of Section 74 of the Act. The Collector is the appellate authority Under Section 74.
The Civil Court was obliged to see at least whether the appointment of a Receiver for the administration of the Estate of a deceased person would actually fall within the mandate of Clause(d) of Sub-section(1) of Section 88-B.
The Trial Court as well as the High Court were clearly in error in rejecting the plaint Under Order VII Rule 11(d) - Appeal allowed.
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2021 (9) TMI 1512
Delay in filing the appeal before CIT(A) - delay in filing the appeal was stated to be medical issues of the Learned Counsel - HELD THAT:- We find that Hon'ble Supreme Court in the case of N. Balakrishnan vs. M. Krishnamurthy [1998 (9) TMI 602 - SUPREME COURT] has held that as long as the conduct of the applicant does not, on the whole, warrant to castigate him as an irresponsible litigant, generally, the delay be condoned.
It has further held that rules of limitation are not meant to destroy the right of parties but they are meant to see that parties do not resort to dilatory tactics. It has further held that in every case of delay there can be some lapse on the part of litigant concerned, however, that alone is not enough to turn down his plea and to shut the door against him.
It is a settled law that in matters of condonation of delay, a highly pedantic approach should be eschewed and a justice oriented approach should be adopted and a party should not be made to suffer on account of technicalities. Before us, no material has been placed by Revenue to demonstrate that the delay in filing the appeal before CIT(A) by the assessee was due to some mala fide intention on its part.
In view of the well settled principle of natural justice that sufficient opportunity of hearing should be afforded to parties and no party should be condemned unheard, we are of the view that the delay in filing the appeal before CIT(A) needs to be condoned. We accordingly condone the delay.
Since the CIT(A) has not decided the appeal on merits, we are of the view that one more opportunity be granted to the assessee to present its case. We therefore restore the matter back to the file of CIT(A) to decide the issue on merits afresh in accordance with law. Needless to state that CIT(A) shall grant adequate opportunity of hearing to both the parties. Thus the grounds of assessee are allowed for statistical purpose.
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