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Showing 1 to 20 of 1215 Records
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2021 (11) TMI 1218
Transfer Pricing Adjustment u/s 92CA relating to inter unit transfer - disallowing claim of deduction u/s 80IC by reducing profits of the eligible undertaking by making transfer pricing adjustment on inter-unit transfer price of goods procured by the eligible unit from non-eligible unit during the relevant previous year - HELD THAT:- Goods were not purchased by the eligible unit at Haridwar from non-eligible unit(s) owned by the appellant since in respect of inter-unit transfer of goods, what had happened is that the aforesaid components were first purchased by non-eligible units at Gurgaon, Neemrana and Dharuhera from third parties and were thereafter transferred at the same purchase price to the eligible unit at Haridwar. In such a transaction, no value addition in such components was carried out by the non-eligible units.
The non-eligible units in the aforesaid transaction merely incurred the cost of purchase on behalf of the eligible unit, which was subsequently debited to such unit. Accordingly, the aforesaid transaction was not in the nature of inter-unit purchase and sale of goods, covered within the provisions of section 80IA(8) read with section 80IC(7) - in the absence of any enhancement in the market price of the aforesaid component, no substitution of actual material cost was warranted by applying provision of section 80IA(8) read with section 80IC(7) of the Act for the purpose of computing deduction under the latter section.
The aforesaid issue stands squarely covered in favour of the assessee, by the order passed by Hon’ble Tribunal in the preceding assessment years, i.e. AY 2010-11 to AY 2013-14, wherein identical disallowance made by the assessing officer has been deleted as held that for the purpose of computing market price of inter-unit transfer of goods, when the non-eligible units procured goods at market price from third party vendors and supplied the same to the eligible unit at the same purchase price no further substitution of such price is warranted in terms of section 80IA(8) of the Act and the transaction was a genuine business transaction borne out of commercial expediency. Decided the issue in favor of the assessee.
Inclusion of the freight amount in the valuation of the closing stock - It would be pertinent to point out that the aforesaid issue stands decided in favour of the assessee by the order of the Delhi Bench of the Tribunal in the assessee’s own case for the assessment year 2007-08, 2008-09, 2010-11 and 2011-12 wherein deleted the impugned addition on the ground that the assessee was following consistent system of accounting, which was unnecessarily disturbed by the Revenue, without change in facts. It was further held that, tinkering with the accounting method was unjustified, when the exercise did not materially alter the profits of the assessee company. Decided the issue in favor of the assessee.
Estimation of scrap value - appellant has erred in not estimating the value of scrap lying in the factory premises as on the last date of the previous year, viz., 31.3.2016, which should have been credited to profit and loss account as part of the closing stock - HELD THAT:- As in appellant’s own case for the assessment year 2010-11 and 2011-12, wherein the Tribunal accepted the method as followed by the appellant of accounting income on sale of scrap on a consistent basis and deleted the impugned addition on the ground that the appellant was not dealing in scrap and/or holding the scrap as inventory, and thus was not required to value the closing stock after taking into account the value of scrap. The Tribunal, in coming to the aforesaid conclusion, laid emphasis on the fact that such transaction was revenue-neutral and held that considering the size of the appellant company, it could not be expected to keep quantitative tally of miniscule items. Decided the issue in favor of the assessee.
Disallowance of the prior period expenditure - Issue is covered by the order passed by the Hon’ble Tribunal in the appellant’s own case for assessment year 2008-09, wherein, the Hon’ble Tribunal taking into consideration the finding of the DRP principally decided the issue in favor of the appellant and remanded the matter to the file of the assessing officer for correcting calculation errors. Decided the issue in favor of the assessee.
Disallowance of advertisement expenditure - It would be pertinent to point out that the Hon’ble Tribunal, in the immediately preceding assessment years, viz. AY 2010-11 and 2011-12, has decided the issue in favour of the appellant following the order for assessment year 2008-09 holding that the provision was made on rational and scientific basis, and thus the same was to be allowed as business deduction, notwithstanding that part thereof was reversed in the succeeding year. Tribunal, also held that the disallowance cannot be made on the issues, which are revenue neutral. The aforesaid issue, it would be noted, is also covered in favour of the appellant by the decision of the Hon’ble Tribunal in appellant’s own case for the assessment year 2008-09, wherein the Tribunal reversed the action of assessing officer in disallowing provision on the ground that the amount reversed there against in the succeeding year exceeded 15% of the amount of provision. The Tribunal held that the said approach followed by the AO had no valid basis and was purely ad-hoc. The Tribunal also held that the assessing officer was bound to follow the practice and stand taken by the Department on this issue in the earlier years and, accordingly, restored the matter back to the file of the assessing officer to reconsider the issue, having regard to the method of making provisions followed by the appellant and accepted by the Revenue in preceding years. Also in the order passed for assessment year 2009-10 and 2015-16, the Hon’ble Tribunal has decided the issue in favor of the appellant by following the orders passed for the assessment year 2010-11 to 2013-14. In the aforesaid order, the Tribunal also held that the provision for advertisement expenses was also allowable while computing book profit u/s 115JB of the Act. Decided the issue in favor of the assessee.
Disallowance of the excessive purchase consideration paid to the related parties - Delhi Bench of Tribunal in the appellant’s own case for assessment year 2007-08 and 2008-09, wherein identical disallowance made in that year was deleted on the ground that since in the first place, the parties were not related to the appellant company in terms of section 40A (2), disallowance on ground of excessive purchase price could not have been made under that section. Further, the Tribunal held that the transactions were entered by the appellant on account of commercial expediency and when the recipients had paid tax on payments received from the appellant company, disallowance could not be made by applying provisions of section 40A(2).Decided the issue in favor of the assessee.
Payment received on behalf of Hero Honda FinCorp. Ltd. (HFCL) deemed as dividend u/s 2(22)(e) - In AY 2007-08, the Hon’ble Tribunal decided the issue in favour of the appellant holding that appellant’s intention did not reflect that the amount was received as loan or advance to as to attract the provisions of section 2(22)(e) of the Act. The Hon’ble Tribunal further held that the appellant was holding the money as a custodian and the amount would be exempted in terms of clause (ii) section 2(22)(e) since the amount was given in the ordinary course of business. Decided the issue in favor of the assessee.
TDS u/s 194H - Disallowance u/s 40(a)(ia) for alleged default of non-deduction of TDS on quarterly target and turnover discount and Sales Discount - We find that the identical issue has been decided by the coordinate bench in assessee’s own case for earlier years holding that no disallowance u/s 40 a(ia) could have been made for non-deduction of tax in the hence of the assessee. The coordinate bench followed the decision of the honourable jurisdictional High Court. No distinguishing features were shown to the assessee, which shows that there are changes in the facts and circumstances of the case or under the provisions of the law. Therefore, the judicial precedent deserves to be followed as above sum is not in the nature of discount on which tax is required to have been deducted by the assessee Under the provisions of Section 194H . Decided the issue in favor of the assessee.
Gains from sale of investments income treated - business income or capital gains - DR could not show that the facts in this case are different from the facts for which the coordinate benches have decided the issue in favour of the assessee for several earlier years. It was also not shown to us that the assessee has changed the it’s characteristics from investor to the trader or holding those shares on mutual funds as stock in trade. Further when the Department had itself in earlier years taxed such transaction Under the head capital gains, respectfully following the decision of the coordinate bench in assessee’s own case for earlier years we also hold that the income is chargeable to tax Under the head the capital gains and not income from business of profession. Decided the issue in favor of the assessee.
Disallowance u/s 14A with respect to the computation of such disallowance under rule 8D of the income tax rules 1962 - We find that the issue is squarely covered in favour of the assessee by the order of the coordinate bench wherein for assessment year 2007 – 08 and 2008 – 09 the issue is set-aside to the file of the learned assessing officer to decide the issue afresh with respect to the satisfaction recorded by the learned assessing officer with respect to the SUO Moto disallowance made by the assessee in the returned income. The learned assessing officer is further directed to consider the arguments raised by the assessee. AO is also required to note the fact that the assessee has huge interest free funds available more than the amount invested in the securities that resulted into earning of tax-free income during the year therefore, no interest disallowances u/s 14 A read with rule 8D of the income tax rules could be made. Further, if the learned assessing officer crosses the threshold of showing that the satisfaction was recorded with respect to the disallowance offered by the assessee about its correctness, then also the learned assessing officer is further directed to only take into consideration those investments which resulted into tax free income during the year for purpose of working out any further disallowance Under this Section.
Proportionate cost of Model Fee considered in valuation of closing stock - This issue is squarely covered in favour of the assessee for the assessment year 2010 – 11 and 2011-12 and further for assessment year 2012 – 13 and 2013 – 14 no distinguishing features were pointed out before us. It was not shown before us that the expenditure incurred by the assessee is for any new line of business. In view of this respectfully following the decision of the coordinate bench in assessee’s own case for earlier years we allow this ground of appeal and direct the learned assessing officer to delete the disallowance.
Disallowance of reimbursement of foreign traveling expenses to directors/employees - We find that the identical issue has been decided in favour of the assessee deleting the above disallowance for the earlier assessment year. The learned departmental representative could not point out that any of such expenditure are incurred which are disallowable u/s 37 (1) of the act or after in nature.
Disallowance of expenditure on account of Royalty on the ground of being capital in nature on the ground that the appellant had received benefit of enduring nature - This issue has been considered by the coordinate bench in assessee’s own case for assessment year 2011 – 12 to 2013 – 14 and 2015 – 16 where the royalty payment made in terms of license agreement has been held to be an allowable revenue deduction.
Disallowance u/s 80IC on account of profit attributable to advertisement and marketing activities carried out at Head Office - We find that identical issue has been decided by the coordinate bench in the case of the assessee for assessment year 2000 – 11 in assessment year 2011 – 12 where the coordinate bench has held that for the purpose of working out eligible deduction u/s 80 IC of the income tax act the actual expenses incurred at the head office are to be a located between various profit centres on a rational and scientific basis accordingly the coordinate bench deleted the disallowance.
Disallowance of deduction u/s 80-IC in respect of interest income earned by eligible unit on loans given to employees/vendors - Tribunal in AY 2010-11 and AY 2011-12, after examining the nature of the aforesaid incomes, held that other incomes in the nature of Interest on loan to employees, interest on loan to vendors for working capital support, freight recovery, sundry sales, cash discounting from vendors and exchange fluctuation gain, etc. earned by a unit eligible for deduction under Section 80IC of the Act shall be considered as incidental to the activity of carrying out manufacturing and thus eligible for deduction under that section. Accordingly, the aforesaid issue stands squarely covered in favour of the appellant.
Disallowance of depreciation of CED Paint Shop - Put to use test not satisfied - Merely the accounting entry in the books of accounts of the capitalisation of the asset is at the end of the financial year, the depreciation cannot be disallowed. Even otherwise the assessee has claimed depreciation for half of the year and looking at the number of the units produced by the assessee it cannot be said that the CED plant was not setup/installed/put to use on or before 31/3/2016. The assessee has produced overwhelming evidences of setting up of and putting the asset to use on or before 31/3/2016. In view of this we direct the learned assessing officer to delete the disallowance of the depreciation.
Disallowance of excess depreciation on intangible assets in form of software - We find that the assessee has purchased the software, used it on computers. Merely because the software so purchased independently of the computer they cannot be held to be not called software eligible for depreciation at the rate of 60%. Accordingly we allow ground number 19 of the appeal of the assessee and direct the learned assessing officer to allow the depreciation on the computer software at the rate of 60%. Ground of the appeal of the assessee is allowed.
Disallowance of deduction u/s 80-IC because of interest income earned by eligible unit from loan to employees/vendors and security deposit - Interest on loans given to subsidized rate to the employees and interest on loan provided for working capital support to the vendors as well as interest income on security deposit couldn’t be considered as other income. The identical issue has been considered by the coordinate bench in assessee’s own case for assessment year 2011 – 12 to assessment year 2013 – 14 and decided in favour of assessee.
Non-allowance of depreciation on lease-hold rights in land - allowability of legitimate claim, though not claimed in the original return of income - As the purpose of assessment is to compute the correct taxable income of the assessee as per the provisions of the Act and even if any deduction/ claim is not made in the return of income by the assessee, it is open to the assessee to resile from the said position. The assessing officer was duty bound to consider and allow such claim suo moto, while framing the draft assessment order - Thus, AO ought to have allowed depreciation claimed by the appellant under section 32(1)(ii) of the Act on leasehold rights acquired in land in accordance with the finding of the Hon’ble Tribunal in appellant’s own case for earlier years.
Claim of education cess as a deductible expenditure - We find that the above issue is squarely covered in favour of the assessee by the decision of CHAMBAL FERTILISERS [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and Sesa Goa . [2020 (3) TMI 347 - BOMBAY HIGH COURT] wherein education cess has been allowed as deduction.
Not allowing credit for TDS - We direct the learned assessing officer to verify the tax deduction at source credit claimed by the assessee and grant credit of the same in accordance with the law.
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2021 (11) TMI 1217
TP Adjustment - comparable selection - inclusion of one comparable namely, SK Pipe Fitting Pvt. Ltd. in case of trading segment - HELD THAT:- Since, the product range is different, we hold that two different industrial output cannot be treated as crossing the barrier of FAR. Hence, we direct to exclude this comparable.
Capital Adjustment - whether PLR is to be applied or base rate is to be applied for capital adjustment? - HELD THAT:- PLR is the benchmark rate used for setting up the interest rate on floating rate loans. Base rate is referred to the minimum interest rate that financial institutions could offer and lending below the base rate was not permitted unless the RBI made exceptions in certain cases. The average cost of fund plays an instrumental role in determining the base rate. PLR is generally used for floating rate loans. We have gone through the Circular of RBI/DBR/2015-6/20 Direction DBR. Dir.No. 85/13.03.00/2015-16. The Base Rate system is aimed at enhancing transparency in lending rates of banks and enabling better assessment of transmission of monetary policy.
Accordingly, guidelines were issued for implementation by banks replacing the BPLR system with Base Rate system effect from July 1, 2010. As per the circular Base Rate shall include all those elements of the lending rates that are common across all categories of borrowers. Hence, we direct that Base Rate be applied for according economic adjustment.
Appeal of the assessee is partly allowed.
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2021 (11) TMI 1216
Invocation of force majeure clause - whether the Applicant is liable to pay any escalation on Variable Fee attributable to movement of containers by Rail as per the agreement, especially when the Bank Guarantees furnished by the Applicant were/are not covered any amount other than Fixed Fee and Variable Fee @Rs.405/TEU”? - HELD THAT:- This court has already opined in Dinesh Gupta v. Anand Gupta [2020 (9) TMI 1322 - DELHI HIGH COURT], Augmont Gold Pvt Ltd v. One97 Communication Ltd [2021 (9) TMI 1572 - DELHI HIGH COURT] and Sanjay Arora v Rajan Chadha [2021 (10) TMI 1460 - DELHI HIGH COURT] that the restraints which apply on the court while examining a challenge to a final award under Section 34 equally apply to a challenge to an interlocutory order under Section 37(ii)(b). In either case, the court has to be alive to the fact that, by its very nature, the 1996 Act frowns upon interference, by courts, with the arbitral process or decisions taken by the arbitrator. This restraint, if anything, operates more strictly at an interlocutory stage than at the final stage, as interference with interlocutory orders could interference with the arbitral process while it is ongoing, which may frustrate, or impede, the arbitral proceedings.
The pre-eminent consideration, which should weigh with the arbitrator while examining a Section 17 application, is the necessity to preserve the arbitral process and ensure that the parties before it are placed on an equitable scale. The interlocutory nature of the order passed under Section 17, therefore, must necessarily inform the court seized with an appeal against such a decision, under Section 37. Additionally, the considerations which apply to Section 34 would also apply to Section 37(ii)(b).
The view, of the learned arbitrator, that no case for injuncting invocation of the bank guarantees by the respondent at that stage existed, does not suffer from any infirmity, let alone patent illegality - No case for interference with the order dated 17th June 2020, therefore, exists.
The present case is not even one of non-consideration of the material placed by the appellant. Indeed, Mr. Sibal, very fairly, did not fault the learned arbitrator for not considering the material placed on record. His submission was that the learned arbitrator had not recorded reasons for rejecting the said material. In exercise of my appellate jurisdiction under Section 37(2)(b), it is not convinced that a case for interference with the impugned order, on this ground, exists. The learned arbitrator was clearly alive to the material placed by the appellant, and has seen the said material. He has, therefore, summarized the contentions of the appellant and the respondent, qua the aspect of force majeure. Having done so, the learned arbitrator has held that the additional material placed on record by the appellant did not convince him to revisit his earlier view.
The learned arbitrator having opined, prima facie, on this aspect one way, at the interlocutory stage, no case for interference under Section 37(2)(b) can be said to exist. For this reason, therefore, it cannot be said that the impugned order deserves to be set aside merely for want of what Mr. Sibal would call sufficient reasons in dealing with the force majeure plea advanced by the appellant.
Conclusion - i) The appellant's invocation of force majeure was unjustified, given that operations continued during the pandemic, and the appellant failed to demonstrate substantial disruption. ii) The learned arbitrator having opined, prima facie, on this aspect one way, at the interlocutory stage, no case for interference under Section 37(2)(b) can be said to exist.
There are no reason to interfere in this appeal which is accordingly dismissed.
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2021 (11) TMI 1215
Challenge to setting aside the eligibility lists of the Superintending Engineers (Civil) for promotion to the post of Chief Engineer (Civil) Level-II - inclusion of names of the Respondents-original writ Petitioners for promotion to the post of Chief Engineer (Civil) Level-II by granting them relaxation in minimum length of service in accordance with the U.P. Government Servants Relaxation in Qualifying Service for Promotion Rules, 2006 - HELD THAT:- It is required to be noted that the learned Single Judge issued the writ of mandamus commanding the competent authority to grant the relaxation as per Rule 4 of the Relaxation Rules, 2006 in qualifying service and consequently has quashed and set aside the eligibility lists dated 18.03.2019 and 10.05.2019. At the outset, it is required to be noted that as such as per Rule 5(iii) of the Rules, 1990, one of the conditions to be eligible is that the Superintending Engineer must have completed 25 years of service (including at-least three years' service as Superintending Engineer). It is an admitted position that the original writ Petitioners did not fulfill the eligibility criteria as they did not have the qualifying service of having completed 25 years of service. Thus, the eligibility lists were prepared by the department absolutely as per Rule 5(iii) and Rule 8(iii) of the Rules, 1990. The names of the original writ Petitioners were excluded from the eligibility list of Superintending Engineer for promotion to the post of Chief Engineer on the ground that they did not fulfil the eligibility criteria as per Rule 5(iii) of the Rules, 1990. Therefore, as such, the High Court ought not to have set aside the said eligibility lists, which as such were prepared absolutely in accordance with the Rules, 1990.
Conclusion - The eligibility lists prepared were found to be in accordance with the applicable rules.
Appeal allowed.
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2021 (11) TMI 1214
Eligibility to participate in the bidding process for allotment of 5 Star Hotel Plot - change of user for part of the plot and subdivision of plot in breach of the terms and conditions represented in the Tender document and letter of allotment - transfer of part of the subdivided plot with change of user before execution of agreement to lease was consistent with Condition No.16 of the General Terms and Conditions of Tender and Condition No.21 of the letter of allotment or not - change of user and subdivision of plot has adversely affected the object of development of 5 Star Hotel in Navi Mumbai or not - legality of change of user and subdivision of plot and transfer of part of the plot.
Whether M/s. Metropolis Hotels was eligible to participate in the bidding process for allotment of 5 Star Hotel Plot, in accordance with Clause 4(c) of the invitation of offer? - HELD THAT:- The perusal of the bid document clearly indicates that the Respondent - M/s. Metropolis Hotels at the time of applying for the bid had duly disclosed that the firm had already applied for registration and had also forwarded the Registration Form and Partnership Deed along with the tender documents. Subsequently, on 16.01.2009 the Registrar of the firms issued the certificate of registration in favour of the Respondent - M/s. Metropolis Hotels - Having considered the communication and legal opinion tendered before accepting the highest bid, CIDCO's law officers did their due diligence, who opined that partnerships being creatures of contracts, the requirement of Board resolutions and other technical objections raised were not an essential condition. Therefore, at this stage it may not be equitable to review such issues in detail.
Whether change of user for part of the plot admeasuring 23,000 m2 and subdivision of plot in breach of the terms and conditions represented in the Tender document and letter of allotment? - HELD THAT:- The CIDCO has fairly conceded that the power of change of land of use does exist with CIDCO and has, on multiple occasions, been used to change the land use pattern. Most importantly, in the present case, after accepting the change of user fee, the authorities cannot post-facto question the same.
CIDCO has not been able to show as to how the its own order was illegal or arbitrary. Moreover, they have not been able to identify whether the consideration taken by CIDCO at that time was deficient. The prevailing circumstances and changes in the factual conditions need to be appropriately considered. It may be noted that delay in construction of Navi-Mumbai airport, economic slump and loss-making endeavors by similarly situated hotels are 'material considerations' and the order has appropriately taken the same into account.
The change of land use from five-star hotel to partly residential-cum-commercial purpose cannot be said to be illegal or arbitrary.
Whether transfer of part of the subdivided plot of admeasuring 23,000m2 with change of user in favour of M/s. Shishir Realty Pvt. Ltd. before execution of agreement to lease was consistent with Condition No.16 of the General Terms and Conditions of Tender and Condition No.21 of the letter of allotment? - Whether change of user and subdivision of plot has adversely affected the object of development of 5 Star Hotel in Navi Mumbai? - Whether change of user and subdivision of plot and transfer of part of the plot was legal, just and proper? - HELD THAT:- There is no substantial violation portrayed by the Appellants herein with respect to allotment of the scheduled land. Further, the tender documents, as analyzed above, make it clear that the CIDCO had the power to change the land use, sub-divide and transfer the plots and accordingly, has been carried out in terms of the same. In this context, we may only observe that 'good faith standards' applicable in Government contracts, serve an important purpose in reinforcing the 'reliance interest' in contracts.
Even, the High Court while passing the impugned judgment has correctly held that Respondents-lessees have acted pursuant to the permission granted by CIDCO. Moreover, after getting the commencement certificate and other necessary clearances, the Respondents-lessees borrowed a substantial sum of money from other financial institutions for the development of the plot. However, due to the ongoing dispute, no development could take place for the past decade.
By merely using grounds of public interest or loss to the treasury, the successor public authority cannot undo the work undertaken by the previous authority. Such a claim must be proven using material facts, evidence and figures. If it were otherwise, then there will remain no sanctity in the words and undertaking of the Government. Businessmen will be hesitant to enter Government contract or make any investment in furtherance of the same. Such a practice is counter-productive to the economy and the business environment in general.
Conclusion - There is an element of abuse of bureaucratic power behind subsequent change in the tender allotment. After conducting a tender process and receiving money, the Government backtracked which led to this present prolonged litigation. The impugned order of CIDCO, inter alia, annulling the allotment on hyper-technical grounds cannot be sustained for being contrary to the doctrine of fairness. The reasons stated in the aforesaid order are perverse and per-se based on extraneous considerations. As analyzed above, any substantive violation of law or tender conditions not identified, which mandate annulling the allotment and subsequent arrangements, thereby proving the conduct of the Appellant authority to be disproportionate.
There are no merit in the appeal of the Appellants herein. Accordingly, these civil appeals are dismissed with costs.
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2021 (11) TMI 1213
Revision u/s 263 - Allowability of bad debts - HELD THAT:- In the instant case, the assessee has been regularly showing the income under the head profits from the business and hence dwelling into the issue of speculation doesn’t arise.
The similar issue has been ad judicated in the case of M/s U.K. Paints India Ltd. [2020 (12) TMI 440 - ITAT DELHI] with specific reference to the NSEL losses.
The issue of allowability and claim of bad debts has been adjudicated by the Hon’ble Supreme Court in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] and also in the case of CIT Vs. Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT] by the Hon’ble Jurisdictional High Court.
The only reason for resorting to provisions of Section 263 by the ld. PCIT was that the CBDT has directed not to allow the bad debts in view of the recovery proceedings out of liquidation. The CBDT has also informed the field authorities that 10% of the outstanding amounts have already been received by the brokers and hence the bad debts may not be allowed. We hold that the assessee cannot be forced to wait till the recoveries are made.
The assessee is liable to treat the recoveries and offer the same as income in the year and the bad debts are recovered. The CBDT which had a list of 744 brokers who have claimed the deduction can also monitor the recoveries from the liquidator effectively from time to time and intimate the field authorities who in turn can examine whether the amounts recovered are duly offered to tax or not.
This would aid in garnering accurate revenues without infringing the judgment of Hon’ble Apex Court in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT]. The incurring of loss and the interplay between Section 36(2)(ii) and Section 28 have been dealt by this Tribunal in the case of U.K. Paints [2020 (12) TMI 440 - ITAT DELHI]
Since the order of the AO is not erroneous and pre judicial to the interest of revenue, we hereby hold that the order passed u/s 263 is liable to be obliterated - Decided in favour of assessee.
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2021 (11) TMI 1212
Appellant not sure whether the appeal had been served or not - HELD THAT:- Board was released on Friday, i.e.,12th November 2021 and as an Advocate on record we would expect Mr. Pinto to check his file and inform the court whether the appeal has been served. In any case, it is four and half years since the appeal was filed and it is rather unfortunate that the revenue being the biggest litigant in this court, does not even bother to ensure that after filing of appeals copies are served on respondent and file affidavit of service. Everyday many matters get adjourned because the Advocates are unable to assist the court on this service aspect.
Commissioner of Income Tax (Judicial) of Mumbai and Pune, is directed to ensure that every appeal filed by them, which are pending admission, is served on respondent within two weeks from today and affidavit of service is filed within one week thereafter. If such service is not effected and affidavit of service is not filed, the appeals will stand dismissed without further reference to the court.
Time given for service may appear to be a little short but the fact is appellant had more than 4 years to serve.
Subject to above order being complied with, this appeal be listed on 7th December 2021.
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2021 (11) TMI 1211
Refund claim of the TDS - non filling of ITR online/e-file - Income Tax Return filed by the petitioner treated defective u/s 139 - HELD THAT:- Admittedly, as per Section 139 of the Act, the petitioner was required to file the ITR online, which he failed to do. That apart, after August 2018, the petitioner has approached this Court vide present writ petition after a lapse of more than three years.
We are unable to accept the claim of the petitioner as we find that the claim of the petitioner is barred by delay. The petitioner ought to have made claim for recovery within a reasonable time after 17.07.2018. On ascertaining what is reasonable time for claiming refund, the courts have often taken note of the period of limitation prescribed under the general Law of Limitation for filing of suits for recovery of amount due to them the same being three years.
The Hon'ble Supreme Court in the case of Municipal Corporation of Greater Bombay Vs. Bombay Tyers International Ltd. and others, [1998 (3) TMI 678 - SUPREME COURT] has approved of the aforesaid principle. WP dismissed.
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2021 (11) TMI 1209
Addition towards the loan received treated as bogus loan - addition loans as bogus cash credit has been done solely on the basis of information received from Investigation wing regarding the search in case of Praveen Jain and bogus companies being operated by him - HELD THAT:- Assessee has duly submitted the loan confirmation and bank statement - AO has not even bothered to issued notice to the concerned parties. He has put the onus of providing the ITR of these parties to the assessee.
In our considered opinion, this is a failure on the part of AO to discharge the duty cast upon him. It is not the case that AO is not having the name and address of the parties. These are all corporate entities. When the loans were through banking channel and confirmation was produced by the assessee.
The onus was upon the AO to properly enquire and bring on record cogent evidence to sustain the addition. Simply on the basis of search and seizure made at other place, addition cannot be made in the hands of the assessee without any enquiry by the AO himself.
There is no independent enquiry by AO and no opportunity has been afforded to the assessee to controvert the statements of parties, which have been relied by the AO. Appeal by the assessee stands allowed.
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2021 (11) TMI 1208
Maintainability of the present petition under Article 227 of the Constitution - Validity of the Section 8 application under the Arbitration and Conciliation Act, 1996 - HELD THAT:- In Deep Industries Ltd. v. Oil and Natural Gas Corporation Limited [2019 (11) TMI 1632 - SUPREME COURT] the Supreme Court observed that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Arbitration Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy so that interference is restricted to orders which are patently lacking in inherent jurisdiction. It was further observed in the M/S. DEEP INDUSTRIES LIMITED VERSUS OIL AND NATURAL GAS CORPORATION LIMITED & ANR. [2019 (11) TMI 1632 - SUPREME COURT] that, if petitions under Articles 226 and 227 of the Constitution of India against orders passed in appeals under Arbitration Act were entertained, the entire arbitral process would be derailed and would not come to fruition for many years.
The present petition under Article 227 of the Constitution of India against the impugned order allowing the Section 8 application would not be maintainable. All grounds in respect of existence and validity of the arbitration clause can be raised by the petitioner before the Arbitral Tribunal.
The entire case of the petitioner is based on the admission made by the respondent in respect of its alleged liability towards the petitioner. Nowhere has the petitioner disputed the existence of the arbitration clause. The impugned order has correctly noted that there is no specific admission made by the respondent. Therefore, the judgment of this Court in FENNER (INDIA) LTD. VERSUS BRAHMAPUTRA VALLEY FERTILIZER CORPORATION LTD. [2016 (1) TMI 1512 - DELHI HIGH COURT] has been correctly distinguished. It may also be noted here that the Order 12 Rule 6 application was filed by the petitioner only after the Section 8 application had been filed by the respondent. As is being observed by the Supreme Court in Hindustan Petroleum Corporation Ltd. [2003 (7) TMI 493 - SUPREME COURT] once there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of the said agreement.
In the present case, the petitioner has not denied the existence of the arbitration agreement. The only case put by the petitioner is that in light of the admission made by the respondent, there is no arbitrable dispute to be referred for arbitration.
No merit is found in the petition - Petition dismissed.
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2021 (11) TMI 1207
Validity of Adjudication Order passed under FEMA - real owner of confiscated money - petitioner made a submission that the money confiscated belongs to the petitioner and he made a claim for return of property - respondent has categorically stated that an appeal against the adjudicatory order shall lie with the Special Director (Appeals)
HELD THAT:- Perusal of the adjudicatory order reveals that the money was confiscated from the Manager of the petitioner and therefore, opportunity was given to the person from whom, the money was confiscated. Under these circumstances, if at all, the petitioner claims that he is the owner of the money, it is for him to initiate appropriate steps before the authority. Contrarily, this Court cannot issue a direction to provide an opportunity to the writ petitioner in the adjudicatory process, wherein admittedly the money was not confiscated from the petitioner, but from his Manager.
The story narrated by the petitioner in detail requires no merit consideration as all those facts are to be established with reference to the documents and evidences including oral evidences.
The various statements, cases registered and the adjudicatory process would reveal that the facts are to be investigated and a trial is required for the purpose of culling out the truth behind these allegations. However, such an elaborate adjudication cannot be done in a writ proceedings under Article 226 of the Constitution of India and merely based on the affidavit, return of property, which were confiscated by the Enforcement Directorate, cannot be released nor in an adjudicatory process, where the authorities forming an opinion that opportunity is to be given to the person from whom the confiscation is made, should not be interfered with this by this Court in the writ petitions.
Petitioner made a submission that there is a provision for appeal and even in the impugned order, it is stated that the petitioner if aggrieved, may file an appeal. If so, it is for the petitioner to prefer an appeal in a prescribed format and complying with the procedures as contemplated.
However, the relief sought for in the present writ petition cannot be granted and consequently, the writ petition stands dismissed.
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2021 (11) TMI 1206
Interpretation of Section 24(1)(a) of The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Whether the two-year period specified Under Section 11A of the Land Acquisition Act, 1894 will apply even after the repeal of the 1894 Act, or the twelve-month period specified in Section 25 of the 2013 Act will apply for the awards made under Clause (a) of Section 24(1) of the 2013 Act? - HELD THAT:- In the present case, Clause (a) to Section 24(1) of the 2013 Act would apply as the land acquisition proceedings initiated under the 1894 Act had not culminated into an award till the repeal of the 1894 Act. Section 24(1)(a) partly nullifies the legal effect of savings Under Section 6 of the General Clauses Act as it hybridizes application of the 1894 Act and the 2013 Act. While preserving validity of the acquisition proceedings by issue of declarations under the 1894 Act, it states that all the provisions for determination of compensation under the 2013 Act shall apply. The Section consciously saves the legal effect of the notifications issued Under Section 4 and/or Section 6 of the 1894 Act and obviates the necessity to issue a fresh notification under the 2013 Act. This 'perseveration of the determination date' for the computation of compensation for the awards made Under Section 24(1)(a) of the 2013 Act is a thought through legislative invocation that curtails time delays and cost escalation of infrastructure projects, as well as checks the post-acquisition notification malpractices, and at the same time ensures that the landowners are entitled to the benefit of the enhanced compensation as per the 2013 Act.
Section 11A of the 1894 Act and Section 25 of the 2013 Act prescribe two different periods of limitation with adverse consequences, as on failure to make the award the acquisition proceedings lapse. The choice is between Section 11A of the 1894 Act and Section 25 of the 2013 Act.
Law of limitation is generally regarded as procedural as its object is not to create any right but prescribe periods within which legal proceedings should be instituted for enforcement of rights or adjudication orders should be passed. Statutes of limitation, therefore, have retrospective effect insofar as they apply to all legal proceedings brought after they come into force. However, the laws relating to limitation have been held to be prospective in the sense that they do not have the effect of reviving the right of action which is already barred on the date of their coming into operation, nor do they have the effect of extinguishing a right of action subsisting on the date. In this sense, the limitation provisions can be procedural in the context of one set of facts and substantive in the context of a different set of facts.
Section 25 of the 2013 Act applies to awards made Under Section 24(1)(a) of the 2013 Act and the period of limitation of twelve months would commence from 1st January 2014.
Whether the award has been passed within the period stipulated Under Section 25 of the 2013 Act or the acquisition proceedings have lapsed? - HELD THAT:- Inasmuch as the High Court had, on 26th May 2014, stayed the operation of the notification dated 19th March 2014, and subsequently modified the order on 23rd September 2014 permitting publication of the awards, the intervening period of 129 days between 26th May 2014 until 23rd September 2014 and in any case of 79 days from 26th May 2014 till the new notification dated 13th August 2014 was issued must be excluded. Ordinarily, an award made or passed before 31st December 2014 would be valid. However, owing to the abovementioned intervening period of 79 days, it could be made up to 20th March 2015. Be it noted that the specific case of the landowners before the High Court was about lapsing of acquisition proceedings owing to the mandate of Section 11A of the 1894 Act. It was not even remotely suggested that the acquisition proceedings had lapsed even in terms of the mandate of the new legislation being 2013 Act, in particular Section 25 thereof. In other words, the High Court was essentially called upon to answer the assail in reference to the lapsing provision in the 1894 Act. However, as aforesaid, that will have no bearing on the fact situation of the present case, to which the regime predicated in Section 25 of the 2013 Act ought to apply.
The High Court had to consider the case made out by the landowners regarding subject award being not made within the specified period Under Section 11A of the 1894 Act, to save acquisition proceedings. It, therefore, became necessary to examine the plea of the landowners that the concerned officials backdated the award as 30th October 2014.
The prima facie opinion noted by the High Court on the factum of backdating of the subject award would not make any difference to the outcome of the relief pursued by the landowners by way of writ petition for a declaration that the subject acquisition proceedings had lapsed. Such declaration, cannot be issued in the fact situation of the present case.
The impugned judgment setting aside the award and holding that the acquisition proceedings had lapsed is, accordingly, set aside. It is held that the acquisition proceedings had not lapsed and the award is legal and valid - Appeal allowed.
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2021 (11) TMI 1205
Seeking direction to Respondent to stall all further proceedings in respect of e-auction conducted on 23.12.2019 - direction to work on the alternate way by dividing the property and sell a portion of the land as per market value to meet the demand - seeking to grant sufficient time for the Applicant to make payment to the Financial Creditor and pass such other order as this Hon'ble Tribunal may deem fit to pass in the circumstances of the case and thus render justice.
HELD THAT:- The Liquidator has carried out his duties as per the provisions and the timelines prescribed under IBC, 2016 and that the Applicant, who is a promoter/suspended Director of the Corporate Debtor is being dissatisfied with the properties being sold by the Liquidator through e-auction process. Further, it is pertinent to note that the Applicant has not made any grounds for this Tribunal to interfere in the sale process carried out by the Liquidator. All the grounds raised by the Applicant are frivolous and not sustainable in the eye of law - when the entire sale process is complete and in the absence of any legal infirmities on the part of the Liquidator in conducting the e-auction process and also in view of the extension of timelines granted by this Tribunal in IA/335/2020 to the 2nd Respondent, the grounds raised by the Applicant are required need to be brushed aside.
It is now well settled that this Tribunal and also the Appellate Tribunal has no powers to 'Review' or 'Recall' its own judgment and the appropriate remedy for the aggrieved person is only to file an Appeal.
There is no violation committed on the part of the Liquidator and the Liquidator has acted as the Act and Regulations of IBC and IBBI - Application dismissed.
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2021 (11) TMI 1204
Validity of assessment order u/s 143 - as argued proper opportunity was not provided to the petitioner to submit reply to the aforesaid notice u/s 143(3) - Due to imposition of lockdown in the State of Tamil Nadu, where the headquarter of the petitioner-Company is situated and petitioner's accountant who is also the authorized signatory, was suffering from Covid-19, the petitioner filed an on-line application for adjournment on the portal of respondent No. 2, but without assigning any reason it was rejected - as per respondent notice to the petitioner u/s 143(3) was served well in advance on 6.5.2021. The petitioner waited for the entire period upto 21.5.2021 and at the last moment submitted the request for adjournment
HELD THAT:- Having regard to the fact that the enormous tax liability of Rs. 15,24,18,329/- has been created and the assertion of the respondents, in their counter that no request for adjournment was received, has been found to be incorrect, in view of the reply received by the petitioner from the respondents, which is placed on record with the rejoinder and remains un-rebutted.
But this is sought to be clarified by stating that it may not have received on the portal of the assessing officer due to technical glitch. Even if that be so, the petitioner can not be made to suffer on that account. Beside the reasons, which the petitioner gave in his application seeking further time to file reply to the notice, have not at all been considered.
In any case, the return was likely to become time barred only after 30.6.2021. We are, therefore, persuaded to entertain the writ petition, as in our view, the appropriate course would be to provide opportunity of hearing to the petitioner to file reply to the notice and also if it desires, provide virtual hearing and then pass a fresh assessment order.
We allow the writ petition and set aside the impugned order and remit the matter to respondent No. 2-National Faceless Assessment Centre, for passing fresh order of assessment, requiring the petitioner to file reply to the notice within 15 days.
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2021 (11) TMI 1203
Initiation of prosecution based on the inspection report - offences punishable under sections 420, 406, 409, 465, 467, 468 and 471 read with 34 of the Indian Penal Code, 1860 - HELD THAT:- In a given case, where the offences are alleged to have been committed in the capacity of the members of the committee, or the office bearers of the society, a first information report may be registered. Unquestionably, the law does not require that before registering the first information report, there must be an audit report and a finding of the commission of offences recorded by the auditor. However, where the allegations of commission of the offences are solely based on the audit conducted under section 81 of the Act, 1960, then the peremptory procedure prescribed in sub-section (5B) of section 81 is required to be scrupulously followed. Since the FIR in question is based on the report of the auditor appointed under section 81(3)(c) of the Act, 1960, it is not open for the respondents to fall back on the general proposition that anybody can set the criminal law in motion and the police are duty-bound to register the FIR de-hors the statutory prescription.
The conspectus of the aforesaid consideration is that the initiation of the prosecution is legally unsustainable on both the counts. One, the inspection report being an outcome of the audit, which was stayed by this Court by order dated 16th April 2019. Two, the first information report is registered in contravention of the provisions contained in sub-section (5B) of section 81 of the Act, 1960.
In the event, the authorities have initiated the prosecution after following the procedure prescribed in section 81(5B) of the Act, 1960, those prosecutions must proceed in accordance with law. We have not at all delved into the merits of the allegations. Nor the observations hereinabove shall be construed as an expression of opinion on the merits of the allegations in the subsequently lodged first information reports.
Petition allowed.
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2021 (11) TMI 1202
Seeking stay of approval of Resolution Plan - investigation sought of the whole Corporate Insolvency Resolution Process - Adjudicating Authority had not appreciated the aspects in right earnest and dismissed the application by passing the Impugned Order - principles of natural justice - HELD THAT:- This Tribunal on going through the Impugned Order passed by the Adjudicating Authority is of the considered view that the Adjudicating Authority had rightly observed that in view of Resolution Plan being approved on 07.06.2021, the said interlocutory application had become an infructuous one. This Tribunal is in complete agreement with the view arrive at the Adjudicating Authority which is free from legal flaw viewed in that perspective the instant Company Appeal is devoid of merits.
Appeal dismissed.
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2021 (11) TMI 1201
Revenues taxable u/s 44BB(2) - service tax includable in the gross revenue for computing profits under presumptive provisions of section 44BB or not ? - assessee is a non-resident company and offered revenues to taxation on account of ongoing contract entered with ONGC Ltd.- HELD THAT:- It is seen that the issue of excludability of service tax in the gross receipts is squarely covered by the judgment of Mitchell Drilling International Pty Limited. [2015 (10) TMI 259 - DELHI HIGH COURT] wherein as held that service tax being statutory levy should not form part of gross receipts as per provisions of section 44BB of the Act.
Hon’ble High Court of Uttarakhand in the case of DIT International Taxation Vs M/s Schlumberger Asia Services Ltd. [2019 (4) TMI 1177 - UTTARAKHAND HIGH COURT] held that the amount reimbursed to the assessee (service provider) by the ONGC (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in clauses (a) and (b) of sub-section(2) of Section 44BB of the Act. The Hon’ble Court is clearly spelt that even otherwise, it is not every amount paid on account of provision of services and facilities which must be deemed to be the income of the assessee under Section 44BB. It is only such amounts, which are paid to the assessee on account of the services and facilities provided by them, in the prospecting for or extraction or production of mineral oils, which alone must be deemed to be the income of the assessee.
Thus we hold that the service tax receipts do not form part of receipts for computation of income in the section 44BB of the Income Tax Act. Decided in favour of assessee.
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2021 (11) TMI 1200
Disallowance u/s 37(1) - payments of reinsurance premium made by the appellant to non-resident re-insurers - addition as same is prohibited under the Insurance Act, 1938 - HELD THAT:- The above question was considered by this Court in the matter of Cholamandalam General Insurance Company Ltd [2019 (2) TMI 335 - MADRAS HIGH COURT] wherein after finding that no inference could be drawn as done by the Tribunal therein, that there can be a bar or prohibition under the Insurance Company Act, which prohibits ceding with foreign reinsurance outside India, remanded the matter back to the Tribunal.
We are informed that the matters are pending before the Tribunal pursuant to the order of this Hon'ble High Court in [2019 (2) TMI 335 - MADRAS HIGH COURT]. We are thus inclined to remit the matter back to the Tribunal, issuing the very same directions and directing the Tribunal to examine the above aspects in these appeals as well.
Disallowance u/s 14A in computation of Income of an Insurance Company - HELD THAT:- We find that the issue stands resolved by the decision of Oriental Insurance Company Ltd [2020 (3) TMI 507 - DELHI HIGH COURT] wherein as clear that Section 14A of Income Tax Act, 1961 stands excluded while computing the Income Tax of an Insurance Company, in view of the non-obstante clause contained in Section 44 of Income Tax Act, 1961, the questions of law stand decided against the assessee.
Whether the profit on sale of investments by the appellant company is exempted? - As appellant and the respondent have submitted that the matter may be remitted to the Tribunal to re-examine the issue in the light of the order of the Division Bench of this Court in the matter of United India Insurance Co. [2019 (7) TMI 387 - MADRAS HIGH COURT].
Though the question of disallowance of exemption under Section 10(23G) we are informed by the learned counsel for the appellant on instructions that the same has not been pressed. In view of the above, the question of law stands decided against the assessee.
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2021 (11) TMI 1199
Rectification of mistake - error apparent on the face of the record - levy of GST - one-time concession fee for a long-term lease - applicability of Section 142 of the GST Act, 2017 - HELD THAT:- It is evident that, the concession period was to commence from the Appointed Date and Appointed Date shall be deemed to occur only when each and every Condition Precedent is either satisfied or waived. The second installment of upfront concession Fee along with applicable taxes, was credited in ledger of the 'Applicant on 16.01.2018. Hence, the condition precedent to pay Upfront Concession Fee with applicable taxes was fulfilled only on 16.01.2018. The Applicant has not submitted any document to show that other conditions precedent have not been fulfilled, hence, it is presumed that they are fulfilled. Thus, Appointed Date shall be deemed to occur on 16.01.2018. Accordingly, the concession period commenced from 16.01.2018 although the agreement was executed on 9.12.2016.
The GST Act, 2017 came into effect on 01.07.2017. Hence, the provisions of GST Act, 2017, would apply as the GST Act, 2017, came into force prior to the commencement of the concession period. In the instant case, the Upfront Concession Fee is a consideration received by the Applicant for provision of service and it fits into the definition of 'consideration' as envisaged under sub-section 31 of Section 2 of the GST Act, 2017. The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of Section 13 of GST Act 2017.
It is evident that, if tax was leviable on services under Chapter V of the Finance Act, 1994 (32 of 1994), then no tax shall be payable under the GST Act - in the instant case the provisions of Section 142 (11) (b) would not apply as the concesssion period commenced from 16.01.2018 although the agreement was executed on 9.12.2016.
In the instant case, the subject transaction of the Applicant does not fulfill the requirements of exemption Notification No. 41/2016-S.T dated 22.9.2016 and hence was not eligible for the benefit of Notification No. 41/2016-S.T dated 22.9.2016.
There was no error apparent on the face of record in the Order dated 22.03.2019, passed by the Appellate Authority - the rectification application is rejected.
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2021 (11) TMI 1198
Benefit of deduction u/s 80P(2)(d) - interest income received by a cooperative society from other cooperative societies - HELD THAT:- On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society.
In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) is that interest was received from cooperative bank has no legs to stand as a cooperative bank is also a cooperative society. This issue was considered in the case of CIT vs. Totagars Cooperative Sale Society,[2017 (7) TMI 1049 - KARNATAKA HIGH COURT] wherein referring to case of Totgars Co-operative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon’ble Supreme Court in the aforesaid case (supra) not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act.
From material on record it is not clear that whether the entire interest income was received from cooperative bank or other bank? - In the circumstances, we remit the matter to the file of the AO for the purpose of verifying whether entire interest income was received from other cooperative bank, if so, allow the same or otherwise restricted the exemption to the extent of income received from other cooperative banks. Grounds raised by the assessee are partly allowed for statistical purposes.
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