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Showing 81 to 100 of 1763 Records
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2016 (11) TMI 1688
Maintainability of application - alternative remedy available to the Petitioner by way of revision - failure to make loan repayment - Section 156(3) of the Code of Criminal Procedure - HELD THAT:- The order of the High Court has no legs to stand in view of the law laid down by this Court in PRABHU CHAWLA VERSUS STATE OF RAJASTHAN AND ORS. [2016 (9) TMI 1595 - SUPREME COURT]. In view of the divergent opinions of this Court in the case of DHARIWAL TOBACO PRODUCTS LTD. AND ORS. VERSUS STATE OF MAHARASHTRA AND ORS. [2008 (12) TMI 811 - SUPREME COURT] and MOHIT ALIAS SONU AND ANOTHER VERSUS STATE OF U.P. AND ANOTHER [2013 (7) TMI 1005 - SUPREME COURT], the matter was placed before the three Judge Bench of this Court. The three Judge Bench took the view that Section 482 begins with a non-obstante clause to state "nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice". As Section 397 of Code of Criminal Procedure is attracted against all orders other than interlocutory, a contrary view would limit the availability of inherent powers Under Section 482, Code of Criminal Procedure only to petty interlocutory orders. A situation is wholly unwarranted and undesirable.
Thus, mere availability of alternative remedy cannot be a ground to dis-entitle the relief Under Section 482 Code of Criminal Procedure - also it is felt that the learned Judge without appreciating any of the factual and legal position, in a mechanical way, passed the impugned order, which warrants interference by this Court.
The matter is remanded to the High Court for reconsideration in the light of the settled legal position - Appeal allowed by way of remand.
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2016 (11) TMI 1687
Income from house property - allowability of Maintenance charges against lease income - allowability of impugned charges/taxes from lease income which has been disallowed by revenue primarily on the ground that the assessee has offered income only against one property - HELD THAT:- When Income is calculated under the head House Property, then besides statutory deduction of 30% u/s 24, an assessee is entitled only for deduction with respect to taxes levied by any local authority. Therefore, society maintenance charges levied by the Society which is not a local authority are not at all allowable to the assessee. Therefore, we held so and accordingly, maintenance charges of four flats are not allowable under the head ‘Income from House Property’.
As assessee has contended that Godown has been used by assessee for business purposes and therefore, we restore this matter to file of AO for limited purpose of verifying assessee’s claim that the godown was used for business purpose during impugned AY or not and if so, allow the deduction for municipal taxes under the head ‘Business Income’. So far as regarding, municipal taxes for four properties are concerned, a combined perusal of Statement of Total Income for AY 2006-07 & 2005-06 strengthens the claim the assessee that lease income has been offered on receipt basis as per TDS certificates to avoid mismatch of TDS credit. Therefore, we held that municipal taxes relating to four properties are allowable under the head ‘Income from House Property. The appeal of the assessee against Ground Nos. 1 to 3 is partly allowed.
Disallowance u/s 43B - We find that assessee had filed return of income for AY 2006-07 on 06/11/2006 whereas the 43B claim of the assessee for AY 2005-06 has been disallowed by AO vide order dated 05/12/2007 and affirmed by CIT(A) order dated 25/03/2009. Therefore, there was no occasion with the assessee to claim the same in statement of total income. Therefore, this matter is also restored to AO for limited purpose of verifying the 43B payment made by the assessee and allow the same to the extent of ₹ 7,70,986/-, if the same has not been allowed in AY 2005-06 consequent to Tribunal’s order. The ground nos. 3 to 6 of the assessee is allowed for statistical purposes.
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2016 (11) TMI 1686
Addition u/s 40(a)(ia) - disallowance of interest expenses - technical error in furnishing the declaration in Form 15G/15H wherein certain columns of the Forms were not filled-up by the payee - HELD THAT:- Genuineness of the deposit received and the payment of interest on the same for the relevant assessment years has never been doubted by the income tax authorities. The declaration has been furnished by the persons who are in receipt of the interest stating that their income is below the threshold limit for taxation and no tax need to be deducted. The disallowance made for the relevant assessment year is for the reasons that there is a technical error in furnishing the declaration in Form 15G/15H wherein certain columns of the Forms were not filled-up by the payee.
The mistakes found in the declaration are of technical nature and the assessee could have got it corrected, had he been given an opportunity, instead of taking to the extreme step of adding back the entire interest payment. AO and the CIT(A) instead of giving an opportunity to the assessee to correct the Form 15G/15H had straight away invoked the provisions of section 40(a)(ia) of the Act and disallowed the interest expenditure. Non furnishing of statement to CIT as mentioned in Rule 29C(5) only entails the assessee for penalty u/s 272A(2) of the Act and not for a automatic disallowance of interest expenditure by invoking the provision of section 40(a)(ia).
Non filling up of the column in Form 15G/15H by the payee’s are only technical default, which could have been corrected had the assessee been given an opportunity. The assessee should be given an opportunity to correct the technical error with regard to the defaults that is containing in Forms 15G/15H. Therefore, the matter is remitted to the Assessing Officer. The assessee shall produce the corrected Form 15G/15H for the relevant period from the payee and shall submit the same to the Assessing Officer. If the corrected forms in 15G/15H are submitted, there shall be no disallowance of interest expenditure. Appeal filed by the assessee is allowed for statistical purpose.
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2016 (11) TMI 1685
Unexplained cash deposits u/s 68 - whether the cash deposited was coming out of the cash available with the assessee being a NRI, which was kept by him for last two years? - HELD THAT:- It was not brought on record why he has withdrawn so much of money and what made the assessee to keep such huge money in hand. But, on record, submitted by the assessee, we find that he had sufficient money. Even the AO could not bring any proof that the assessee has in fact utilized or applied the cash withdrawn two years back, except making a remark that there is no possibility of keeping such amount by the assessee being a NRI. He has not brought on record, why he cannot keep so much of cash in hand and no contrary findings were given by him against the submissions of assessee. AO has made the addition merely on conjectures/surmises/suspicion and no proper reasons were given why he cannot keep the cash in hand except the remark of being an NRI.
In our view, the Hon’ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. [1954 (10) TMI 12 - SUPREME COURT] has held that the AO cannot complete the assessment purely on guess and without any reference to evidence or any material at all. Also in the case of Umacharan Shaw & Brothers [1959 (5) TMI 11 - SUPREME COURT] has held that AO cannot complete the assessment merely on suspicion which cannot take the place of proof in these matters.
Thus we hold that the AO made the assessment merely on suspicion and without bringing any cogent material on record to establish that assessee cannot keep the cash in his hand being a NRI. Accordingly, we uphold the order of the CIT(A) in deleting the addition - Decided against revenue.
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2016 (11) TMI 1684
CENVAT Credit - input services - crane hired for the purpose of using shifting the goods in the factory premises and expansion of the factory site - HELD THAT:- Wide coverage of the “input services” under Rule 2(l) of the Cenvat Credit Rules, 2004 enables appellant to be entitled to Cenvat credit of the service tax paid.
Appeal allowed.
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2016 (11) TMI 1683
Estimation of income - bogus purchases - CIT-A restricted the addition @12.5% - HELD THAT:- Revenue’s plea is entirely misconceived since the said co-ordinate bench merely admitted assessee’s additional evidence to direct the CIT(A) for afresh adjudication of the issue. The lower appellate authority has duly considered the same in its order to agree with the Assessing Officer’s findings in principle that the assessee has not been able to prove genuineness of its grey cloth purchases. It thereafter is of the opinion that it is not the entire purchases but only the gross profit element therein has to be added @12.5% of the amount in question.
DR fails to dispute the fact that assessee’s sales/exports of the grey cloth already stand accepted. Nor does it file before us any material to conclude that the above percentage of the addition is in any way unreasonable. We thus find no reason to interfere with the lower appellate order restricting the impugned bogus purchases addition in peculiar facts of the case. It is made clear that the above percentage shall not be treated as a precedent in any preceding or succeeding assessment year in assessee’s cases. Decided against revenue.
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2016 (11) TMI 1682
Reopening of assessment u/s 147 - payment of excise duty adjusting the excise duty towards the sale of old stock - HELD THAT:- AO was of the view that during the assessment proceedings it was found that the assessee is manufacturing utensils and sold them under payment of Central Excise Duty through Modvat credit. It was found that the assessee company has utilised the Modvat credit. Company has also concealed the sales - Assessing Officer was of the view that as per the books of accounts the provisions of excise duty on finished goods, as appearing in the books of accounts, as on 1.4.2002 was ₹ 732279/-. Out of the said provisions of excise duty, the assessee has adjusted the amount of ₹ 661612/- towards sale of old stock during the year under consideration. Thus, the assessee has made payment of excise duty adjusting the excise duty towards the sale of old stock. This, this was a new information. Assessing Officer has reopened the assessment and the reopening is justified. AO has reopened the assessment on the information which was available to him. CIT(A) is not justified in allowing the appeal on the ground that the reopening is not correct.
AO reopened the assessment order on the ground that the assessee has utilised the amount of Modvat credit as per the audit report which did not tally with the excise duty debited to the profit and loss account - The assessee has shown excise duty payment in his return of income. AO has taken up two figures of excise duty from the return of the assessee that the excise duty of ₹ 7512186/- claimed as expenses in profit and loss account and in tax audit report Modvat credit claimed was ₹ 7743268/-. Therefore, when these two figures were picked up from the return of income and audit report filed by the assessee, it cannot be proved that the Assessing Officer has any information.
Assessing Officer has, by booking the two figures, come to the conclusion that there are unaccounted sales but there is no tangible material to come to the conclusion that there is escapement of income from assessment and, therefore, the reopening of the case cannot be sustained. We find that the learned CIT(A) has verified the accounts, reconciliation statement of excise duty paid which was filed before the Assessing Officer and the learned CIT(A) and the learned CIT(A) has held that there is no reason to believe that there is separation of sale to the extent of ₹ 5160039/-. We also get support from the order in the case of Kelvinator of India Ltd. and Orient Craft Ltd. [2010 (1) TMI 11 - SUPREME COURT]. We, therefore, find no merit in this appeal of the revenue and dismiss the same.
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2016 (11) TMI 1681
Disallowance u/s 14A r.w.r. 8D - disallowing the expenses relatable to exempted income - HELD THAT:- Admittedly, the only exempted income earned by assessee on account of dividend is ₹ 20,000/-. As we find that this issue is covered in favour of assessee as far as restricting the disallowance to the extent of exempted income only and for this placing reliance on the case of Daga Global Chemicals Pvt. Ltd. [2015 (1) TMI 1204 - ITAT MUMBAI] direct the AO to restrict the disallowance at ₹ 20,000/- and hence, this issue of the assessee’s appeal is partly allowed.
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2016 (11) TMI 1680
While allowing the writ petition by the order under appeal, certain findings were recorded by the learned Single Judge with regard to the enforcement of the Prevention of Money Laundering Act, 2002 on interpretation of the provisions of the said Act - the findings so recorded by the learned Single Judge shall not be construed as conclusive and binding precedent until further orders.
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2016 (11) TMI 1679
Rectification of mistake - TP Adjustment - Tribunal observed assessee is the owner of two television channels, viz., The National Geographical Channel and FOX International Channel” - As submitted that the FOX International Channel is not owned by the assessee - HELD THAT:- It is pertinent to note that the assessee was having “Principal to Agent” relationship under “Advertising Sales Representation Agreement” dated 01-07-2004 entered with NGC India effective from 01-09-2004. The above said agreement was terminated and a new agreement was entered on 01-05-2006, wherein the assessee sold advertisement and sponsorship air time to NGC India. The tax authorities, after examining the agreements and related facts, came to the conclusion the relationship between the assessee and NGC India continues to be that of “Principal and agent”. The above said decision was upheld by the Tribunal by making a modification, viz., the Tribunal held that the provisions of Article 5(4)(a) of India-US DTAA shall be applicable. Thus we notice that the Tribunal has taken a conscious view in the matter. In view of the above, there was no necessity to deal with other submissions made by the assessee.We do not find any merit in the contentions of the assessee that there was incorrect appreciation of facts.
Whether “advertisement airtime” is “Goods” or not? - We notice that the assessing officer has discussed at length about this issue in the assessment order. We notice that the Tribunal has considered this issue in paragraph 18 & 19 of the order and has taken a conscious view that the advertisement airtime is not “goods”, by duly considering the characteristics of “airtime”. We notice that the Tribunal has taken into consideration the above said decisions in paragraph 18 of the order. In effect, the Tribunal has come to the conclusion that the “airtime” is not goods, since it is only allocation of a portion of telecasting time.Since the Tribunal has taken a view in this matter, the same cannot be considered to be a mistake apparent from record.
Taxability of “Distribution revenue”- We notice that the Tribunal has restored the matter to the file of the AO with the observation that the AO has not critically examined the provisions of India-US DTAA and also the provisions of sec. 9(1)(vi) of the Act. We are unable to agree with the contentions of the assessee. As submitted by Ld D.R, the power of the Tribunal is wider and it is entitled to take its own decision as it thinks fit to dispose of the issues considered by it. The Tribunal, in respect of the above said issue, took the view that the same requires reconsideration at the end of the AO by considering the amendment brought in sec. 9(1)(vi) of the Act. Hence the Tribunal found it not necessary to address various contentions urged in that regard. Accordingly we are of the view that the Tribunal has taken a view in this matter and the same cannot be rectified u/s 254(2) of the Act.
It is an undisputed fact that a counsel named Ms. Sheetal Shah appeared on behalf of the assessee on 4th September, 2015 and hence her name was marked on that date. With regard to the submission made with regard to the time gap between the date of hearing and the date of order, the same may be outside the scope of sec. 254(2) of the Act. However, we notice that the Tribunal has considered all relevant facts necessary to adjudicate the issue from the angle from which it was considered.
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2016 (11) TMI 1678
Disqualification of Directors - Section 164 (2) (a) r/w Section 167 (1) (a) of the Companies Act 2013 - principles of res-judicata - retrospective effect or not - declaration of cease to continue as directors.
Whether this CA is hit by resjudicata or not? - HELD THAT:- It is not permissible in the light of the principle laid under Section 11 (IV) of CPC to seek removal of them as directors on another legal ground. No doubt it is true that if new legislation comes and gives new jurisdiction with retrospective action relating back to the acts in the past, it is altogether different situation. But when new Act has been in even before filing earlier CA 201/2015 for the removal of R4&R5 as directors, it can't be taken out separately subsequently after waiting until earlier application was dealt with - the applicant cannot take out a sentence from the order saying that since he is given liberty to seek interlocutory order on additional facts, he is entitled raise on the same facts by invoking another legal point. The applicant ought to have raised all these legal scores in the former application itself - thus, the relief sought by the applicant in this CA is held as hit by constructive resjudicata.
Whether the disqualification set forth in Section 164(2)(a) r/w 167(1) (a) of the Act 2013 has retrospective effect or not? - HELD THAT:- In the present case non-filing of financial statements before this enactment would not tantamount to disqualification to become Director or to continue as Director, new enactment made non-filing of financial statements for three consecutive years as disqualification and amounts to an offence only to the act after 1.4.2014 - If this disqualification is construed as applicable to the past acts, it is obviously unfair to the people conducted the affairs of the company under the impression that non-filing of financial statements for three years is not a default and not an offence - Therefore, this provision has to be read as applicable to the situations where non-filing has started, at the most in the past and continuing while this enactment has come to into existence and also to future non-filing but not to be considered as applicable to the past acts for it is an established proposition that an Act has to be considered retroactive only when it has been explicitly mentioned in the Act - decided against petitioner.
Whether the applicant can seek NCLT to declare that R4 & R5 cease to continue as directors in terms of Sections 164 (2) (a) r/w 167 (l)(a) of the Act 2013 in the CP filed u/s 397 and 398 of the Companies Act 1956/u/s 241 & 242 of the Companies Act 2013 or not? - HELD THAT:- This applicant himself sought for holding AGMs for the years 2009-10 to 2013-2014, accordingly meetings were held, resolutions were passed by supplying all the statements after audit, therefore, if at all financial statements are not filed for the years mentioned, it can't be said as an act prejudicial to the interest of the applicants - this Bench has not found any merit in the argument the petitioner counsel taken out for declaring that R4&R5 ceased to continue directors of the company for it is in violation of the provision of law.
Application dismissed.
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2016 (11) TMI 1677
Validity of reopening of assessment u/s 147 - jurisdiction of AO to issue notice u/s.148 when time for issuance of notice u/s.143(2) of the Act has not expired before the issuance of notice - HELD THAT:- According to proviso to section 143(2) at the relevant time, no notice u/s.143(2)(ii) shall be served on the assessee after the expiry of 12 months from the end of the month in which the return is furnished. In the present case, the return of income was furnished by the assessee on 14.2.2008 and, therefore, notice u/s.143(2) (ii) of the Act could have been issued to the assessee on or before 28.2.2009.
It is also not in dispute that notice u/s.148 of the Act was issued to the assessee on 6.10.2008, which was much prior to the expiry of time for issuing notice u/s.143(2) of the Act. Therefore, the notice issued u/s.148 of the Act is bad in law - Hence, the reassessment order passed in pursuance to this notice is also bad in law. Cancel the reassessment order dated 31.12.2009 passed u/s.143(3)/147 of the Act and allow the grounds of appeal of the assessee.
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2016 (11) TMI 1676
Income accrued in India - PE in India - receipts from airlines relating to booking of segments from India - installed computers in the premises of the travel agents for the purposes of display of airlines information - DTAA entered into between India and Spain - Whether CIT(A) erred in holding the computers on the desks of the travel agents/airlines, through which the bookings are made using the appellant's Computer Reservation System (CRS) constitutes a fixed place of business and, therefore, a PE of the appellant in India, in terms of paragraph (1) of Article 5 of the DTAA between India and Spain? - HELD THAT:- This issue is covered against the assessee by the order of Tribunal in the case of assessee itself for A.Y. 1996-97 to 1998-99, wherein the Tribunal observed The computers so connected and configured which can perform the functions of reservation and ticketing is a part and parcel of the entire CRS. The computers so installed require further approval from AIPL who allows the use of such computers for reservation and ticketing. Without the authority of AIPL such computers are not capable of performing the reservation and ticketing part of the CRS system. The computer so installed cannot be shifted from one place to another even within the premises of the subscriber, leave apart the shifting of such computer from one person to another. Thus the appellant exercises complete control over the computers installed at the premises of the subscribers. In view of our discussion in the immediately preceding para, this amounts to a fixed place of business for carrying on the business of the enterprise in India. But for the supply of computers, the configuration of computers and connectivity which are provided by the appellant either directly or through its agent AIPL will amount to operating part of its CRS system through such subscribers in India and accordingly PE in the nature of a fixed place of business in India. Thus the appellant can be said to have established a PE within the meaning of para 1 of art. 5 of Indo-Spain treaty.
Whether the exception provided in para 3 of art. 5 applies so as to hold that there is no PE in India? - The function of the PE in India is not only to advertise its products. The activity of the appellant is developing and maintaining a fully automatic reservation and distribution system with the ability to perform comprehensive information, communication, reservation, ticketing, distribution and related functions on a worldwide basis. The computers installed at the premises of the subscribers are connected to the global CRS owned and operated by the appellant. Using part of the CRS system, the subscribers are capable of reserving and booking a ticket. Thus it cannot be considered as ‘solely for the purpose of advertising’ of such CRS system. Similarly it is not in the nature of ‘preparatory or auxiliary’ character. It is difficult to distinguish between the activities which are ‘preparatory or auxiliary’ character and those which are not. The decisive criteria is whether or not the activity of the fixed place of business in itself forms an essential and significant part of the activity of the enterprise as a whole. Since part of the function is operated in India which directly contributes to the earning of revenue, the activities as narrated above carried out in India are in no way of ‘preparatory or auxiliary’ character. Thus the exception provided in para 3 of art. 5 will not apply and hence as stated above, the assessee shall be deemed to have a PE in India.
Whether the assesses has a PE in India in the form of a dependent agent? - In the present case we find that AIPL is totally dependent on the appellant. The entire business of AIPL is to provide data processing and software development services together with relative distribution of ‘Amadeus products’ to the subscribers in India. AIPL has also an authority to enter into agreements with the subscribers. AIPL installs the computers, configures the computers for accessing the CRS and also provides connectivity through SITA nodes. Thus functionally as well as financially it is dependent entirely on the appellant. It can therefore, be said that AIPL is a dependent agent of the appellant. - Decided against assessee.
Attribution of income to the ‘PE’ of assessee company in India - HELD THAT:- As decided in assessee's own case where the entire activities of an enterprise are not carried out in a Contracting State where the PE is situated, then only so much of the profit as is attributable to the functions carried through the PE can be taxable in such source State. While dealing with the question as to what is such part of income as is reasonably attributable to the operations carried out in India, we have held that only 15 per cent of the revenue generated from the bookings made within India is taxable in India.
Same proportion has to be adopted here while computing profit attributable to the PE. We have also held that since the payment to the agent in India is more than what is the income attributable to the PE in India, it extinguishes the assessment as no further income is taxable in India. It is to be noted that even in the first assessment framed by the AO, the entire expenses in the form of remuneration paid to AIPL were held as allowable deduction and were reduced while computing the income of appellant. If that be the case, the income attributable to PE in India being less than the remuneration paid to the dependent agent, it extinguishes the assessment and requires no further exercise for computation of income. We accordingly hold so and in view of the same the income of the appellant for asst. yrs. 1997-98 and 1998-99 will be ‘nil’.
Allowability of project development expenses incurred/allocated to the Indian activity and levy of interest u/s. 234A and 234B - HELD THAT:- Since we have held that the remuneration paid to the dependent agent is exceeding the income attributable to the PE in India, the question of allowability of various expenses as are in appeal do not survive. - Decided in favour of assessee.
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2016 (11) TMI 1675
Declaration of permanent injunction - declaration to declare his easementary right over the suit schedule cart track - permanent injunction restraining the defendants from interfering with his right of enjoyment of such easementary right - burden to prove - evidence to discharge the onus - Section 6(c) of the Transfer of Property Act, 1882 - HELD THAT:- An "easement" is a right conferred for the beneficial enjoyment of the dominant heritage and the owner of such dominant heritage is called dominant owner while the land in which such easement right is to be exercised is a servient heritage and that the owner of such servient heritage is called as servient owner - what cannot be transferred is only an easement exclusively without transferring the dominant heritage, namely, the land for which such easement right is conferred in the servient heritage. In other words, a transfer of dominant heritage would automatically pass the easement right also to the person in whose favour such transfer takes place. To put it more clearly, the easement right and dominant heritage cannot be transferred separately by segregating one from the other to two different persons, since such easementary right would automatically follow the right on the dominant heritage if such dominant heritage is transferred to another person - the contention of the learned counsel for the appellant cannot be sustained. The lower appellate Court has rightly decreed the suit taking into consideration of the existence of Ex.A1 agreement followed by the sale deeds marked as Exs.A2 to A4 in favour of the plaintiff - Decided against appellant.
One more aspect to be noted in this case is that the defendants 1 and 2, who are the parties to the agreement under Ex.A1, though filed their written statement, have, however, not chosen to contest the matter latter. They remained exparte. They were not even examined as witnesses on the side of the defendants. Needless to say that any amount of pleading without there being any evidence in support of such pleading, cannot be looked into or sustained or held to be proved especially, when the other side disputes such claim. Admittedly, the 3rd defendant, who is the appellant herein, is only a subsequent purchaser during the pendency of the suit. He was impleaded as a party defendant only at a later point of time - Therefore, he is not competent to speak anything about the intention of the parties to Ex.A1. If the defendants 1 and 2 have not come forward to contest the suit and dispute the claim of the plaintiff, the 3rd defendant, a subsequent purchaser, cannot dispute the claim of the plaintiff, when such claim is based on the agreement under Ex.A1 entered into between the vendors of the plaintiffs and the defendants 1 and 2. In fact, the mischief mongers are the defendants 1 and 2 who dishonestly executed the sale deed in favour of the 3rd defendant in respect of suit 'B' Schedule, knowing fully well that they are bound by the terms of earlier agreement for easementary right under Ex.A1 fastened on such property.
The trial Court failed to consider all these aspects and erroneously dismissed the suit which the lower Appellate Court has set right by reversing such findings and decreeing the suit - the substantial questions of law raised in this appeal are answered against the appellant.
Appeal dismissed - decided against appellant.
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2016 (11) TMI 1674
Maintainability of appeal - low tax effect - Effect of subsequent circulars - HELD THAT:- As tax effect for the impugned assessment years were less than Rupees Two lakhs and by virtue of Circular No.5/2008, dated 15.05.2008 of CBDT, the appeals will not maintainable.
Substitution of the earlier circulars with subsequent circulars would not in any way affect the applicability of earlier circulars, in so far as it covered direct tax matters other than income tax. Accordingly, we are of the opinion that appeals of the Revenue are not maintainable.
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2016 (11) TMI 1673
Capitalisation of revenue expenditure - CIT(A) noticed that the assessee has incurred these expenditure as per contractual obligation in the joint venture project as per the agreement entered and held that the entire claim if allowable as revenue expenditure - HELD THAT:- As pointed out to us that the order passed by the ld. CIT(A) in A.Y. 2009-10 was challenged by the Revenue by filing appeal before the Tribunal and the Tribunal, [2016 (6) TMI 1399 - ITAT MUMBAI] has upheld the view taken by the ld. CIT(A).
As gone through the order passed by the co-ordinate Bench of this Tribunal and noticed that identical issue was considered by the Tribunal in para 14 of its order. We further noticed that the Tribunal upheld the view taken by the ld. CIT(A) in para 14.4 of its order. Consistent with the view taken therein, we uphold the order passed by the ld. CIT(A) on this issue. - Decided against revenue.
Disallowance of part of interest expenditure by treating the same as relating to WIP - CIT(A) noticed that he has considered an identical issue in A.Y. 2009-10 and has accepted the claim of the assessee and accordingly by following the same, the ld. CIT(A) set aside the order passed by the A.O. on this issue - HELD THAT:- As decided in own case [2016 (6) TMI 1399 - ITAT MUMBAI] issue decided against revenue
Addition of notional interest to the rental income - A.O. took a view that notional interest on interest free deposit is required to be considered as part of rental income in order to arrive at a fair market value of rent u/s 23(1)(a) - A.O. computed the interest @ 12% on the interest free deposits and added the same to the rental income declared by the assessee - CIT-A Deleted the same by following his decision rendered for A.Y. 2009-10 - HELD THAT: - We have gone through the order passed by the co-ordinate Bench of this Tribunal for A.Y. 2009-10 [2016 (6) TMI 1399 - ITAT MUMBAI]and noticed that an identical issue was discussed by the Tribunal in para No. 7 of its order and in para No. 7.3 of the order, the Tribunal has upheld the view taken by the ld. CIT(A). We have also noticed that the ld. CIT(A) has followed the decision rendered by the Hon’ble Delhi High Court in the case of Asian Hotel Ltd. [2007 (12) TMI 274 - DELHI HIGH COURT]Accordingly, we uphold the order passed by the ld. CIT(A) in this year also on this issue.
Assessment of hire charges under the head income from house property - HELD THAT:- We noticed that the tribunal has rendered this decision [2016 (6) TMI 1399 - ITAT MUMBAI]wherein it was observed that the amenities provided by the assessee constituted an integral part of the premises, i.e., it was seen that the amenities provided by the assessee consisted of electrical panels, AHU rooms and fire control system, water tanks, elevator etc. In view of the above, the Tribunal has accepted the view of the ld. CIT(A) that these amenities constitute integral part of the house property. Since there is no change in facts, consistent with the view taken by the Tribunal in AY 2009-10, we uphold the order passed by the ld. CIT(A) in this year also on this issue.
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2016 (11) TMI 1672
Exemption u/s 10A - STP I unit and non-STP unit are using the same infrastructure, employees, etc - According to the D.R., STP I unit has not satisfied the condition stipulated u/s 10A - HELD THAT:- Objection of the D.R. is that STP I unit and non-STP unit are using the same infrastructure, employees, etc as examined by this Tribunal in the assessee's own case, for the earlier assessment year, and this Tribunal found that the assessee is eligible for exemption under Section 10A of the Act. In view of the above order of this Tribunal, there is no reason to take a different view for the year under consideration. Therefore, by placing reliance on the order of this Tribunal for the earlier assessment year, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
Exclusion of foreign currency expenditure from the export turnover - HELD THAT:- Even though no argument was advanced from either side, this Tribunal finds that both denominator and numerator shall be the same. Therefore, once the expenditure incurred in foreign currency was excluded from total turnover, the same is also to be excluded from export turnover. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
Appeal filed by the Revenue is dismissed.
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2016 (11) TMI 1671
TP Adjustment - upward adjustment of notional guarantee fees made by AO u/s 92CA - HELD THAT:- We find that this issue is now covered, in favour of the assessee, by a decision of the coordinate bench in the case of Siro Clinpharm Pvt Ltd Vs DCIT and vice versa [2016 (5) TMI 633 - ITAT MUMBAI] . While holding that no arm’s length price adjustment can be made in the hands of the assessee, on respect of corporate guarantees issued without incurring any costs,
As amendment in Section 92B, at least to the extent it dealt with the question of issuance of corporate guarantees, is effective from 1st April 2012. The assessment year before us being an assessment year prior to that date, the amended provisions of Section 92 B have no application in the matter. For this reason also, the impugned ALP adjustment must stand deleted. See ANSAL LAND MARK TOWNSHIP (P) LTD.[2015 (9) TMI 79 - DELHI HIGH COURT]- Decided in favour of assessee.
Disallowance u/s 14A - as per assessee no expenditure was incurred to earn such exempt income - HELD THAT:- We are inclined to accept the plea of the assessee to the extent that no part of interest expenses can be disallowed under section 14A inasmuch as the assessee indeed had interest free funds much in excess of investments yielding tax exempt income. Because of an inherent flaw in the formulae set out in rule 8D(ii), as noted by a coordinate bench in the case of ACIT Vs Champion Commercial Co Ltd [2012 (10) TMI 24 - ITAT, KOLKATA] and as approved by Hon’ble Delhi High Court in the case of PCIT Vs Bharti Overseas Pvt Ltd [2015 (12) TMI 1423 - DELHI HIGH COURT] application of this formulae does give incongruous result inasmuch as when no part of interest bearing funds are employed in investments yielding tax exempt income, there cannot be any disallowance of interest expenses.
When assessee an has interest bearing as also interest free funds available to him, as long as interest free funds are cover to such investments, it cannot be assumed that interest bearing funds are used for the purpose of tax exempt investments. The presumption thus is in favour of the assessee as a matter of routine, and unless it is proved to be incorrect. Accordingly, disallowance is to be deleted. - Decided in favour of assessee.
Disallowing advances written off as bad debts in the books - HELD THAT:- AO has proceeded on the assumption that the deduction is claimed as bad debts, and it was for this reason that he disallowed the claim on the ground that the related income is not shown to have been included in income of the earlier years. These small amounts have stated to become unrecoverable in the course of carrying on of the business. Given the facts of this case, and clear position that deduction was claimed for the business loss, the objection taken by the Assessing Officer was clearly unwarranted. The impugned disallowance cannot, therefore, be sustained - bearing in mind smallness of the amounts written off, we deem it and proper to delete the impugned disallowance. - Decided in favour of assessee.
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2016 (11) TMI 1670
Computation of deduction u/s.10AA - excluding foreign exchange gain from the profits of the business - HELD THAT:- Foreign currency expenditure cannot be considered as part of export turnover and at the same time, it also cannot be formed part of the total turnover as held by ITO Vs. SAK SOFT LTD. [2009 (3) TMI 243 - ITAT MADRAS-D]. Accordingly, we direct the AO not to include the same in export turnover as well as total turnover while computing deduction u/s.10A of the Act. Accordingly, this ground of Revenue is remitted back to the file of AO to reconsider.
DRP directing the AO to include forex gain from profits of the business for computing deduction u/s.10AA - HELD THAT:- This issue came for consideration before the jurisdictional High Court in the case of CIT Vs. Pentasoft Technogies Ltd. [2010 (7) TMI 75 - MADRAS HIGH COURT] wherein held that gain due to fluctuation in foreign exchange rate directly related to export sales could not be treated as other than part of profit from export of the assessee. Accordingly, we do not find any infirmity in the direction of the DRP and the same is confirmed.
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2016 (11) TMI 1669
Nature of expenditure - expenditure towards construction of compound wall, store room, underground sewage, design charges and temporary repairs to the building - revenue or capital expenditure - AO treated the expenditure as capital in nature and allowed depreciation at the rate of 10% - HELD THAT:- Admittedly, the assessee incurred expenditure for construction of compound wall, watch tower, godown, underground drainage, etc. This Tribunal is of the considered opinion that the assessee has constructed compound wall, sewage drain, godown, etc. for permanent use in the business. It cannot be said that the infrastructures created by the assessee are for temporary use of the assessee. Therefore, the Assessing Officer has rightly treated the expenditure as capital in nature and allowed depreciation at the rate of 10%. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
Disallowance u/s 14A r.w.r. 8D - Whether there was no direct expenditure under first limb of Rule 8D(2)? - Referring to limb (ii) of Rule 8D(2), the Assessing Officer found that under Rule 8D(2), disallowance was made - HELD THAT:- For the purpose of limb (ii), the Assessing Officer has to compute the disallowance by following the method prescribed under Rule 8D(2)(ii). Similarly, for the purpose of limb (iii), the Assessing Officer has to take 0.5% of the average of value of investment which resulted in income which would not form part of total income. Therefore, for the purpose of limb (iii) alone, the disallowance cannot be extended beyond the income which does not form part of total income. Rule 8D(2) provides disallowance of average of all the three limbs therein. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
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