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Showing 1 to 20 of 1653 Records
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2017 (4) TMI 1657
Applicability of provisions of Section 167B - Whether assessee is to be taxed as AOP? - HELD THAT:- We find that the assessee an Air Force, Navy Farm owner’s welfare association has been registered under the Societies Registered Act 1860.
Vide certificate dated 23.10.2000 this fact has been acknowledged by the ld. Assessing Officer also in the second para of the assessment order. The only dispute is that whether the assessee should be taxed @ maximum marginal rate applicable, AOP or not.
Assessee has also claimed that status is of an artificial juridical person and not AOP. However the Learned CIT(Appeals) has rejected this contention and held that the assessee is an AOP.
Neither the AO nor CIT(Appeals) have examined the aspect from the provisions of section 167B which provide exception for application of maximum marginal rate in the case of society which is registered in the Societies Registered Act 1860.
Accordingly the only falls limited purposes the matter is set aside to the file of the Assessing Officer to examine the applicability of section 167B in the case of the assessee accordingly to decide the issue in accordance with the law. Appeal of the assessee is partly allowed for statistical purposes.
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2017 (4) TMI 1656
Accrual of income - real income - void OR voidable contract - as argued transaction of income was reversed by the assessee as there was no legally enforceable right to such income under a void contract - as per CIT(A) since the assessee had performed their part of contract as agreed between the parties, there was no justification to hold that no lawful income had arisen to the assessee on the ground of non-est contract - HELD THAT:- The contracts entered without obtaining the consent of the Board are to be termed as “voidable at the option of the Board” in the case of the Companies having share capital below 1 crore, but there is no corresponding or analogous provision in the Companies Act for a similar situation in case of Companies having share capital above Rs. 1 crore.
AR produced before us by way of Paper Book a copy of extract of Section 297 of the Companies Act, 1956 from A. Ramaya Guide to the Companies Act, 2006 Edition and Relevant extracts of Indian Contracts Act, 1972 which clearly stated that in the absence of approval of Central Government, where necessary, the contract shall be void.
Nothing contrary to this is produced before us and this statement supplements the observations of the Ld. CIT (A) to the effect that want of consent in respect of the Companies with share capital below Rs. 1 crore is voidable at the option of the Board, whereas it would render the contract void ab initio in case of Companies share capital more than Rs. 1 crore.
In this case, the assessee alleges that on the contract becoming void ab initio, the transaction of income from ICICI Home Financing Co. Ltd. was reversed by the assessee since there was no legally enforceable right to such income on the contract being declared as void ab initio. On this aspect there is no denial of fact by the Revenue.
Thus, no real income had accrued to the assessee under a void contract as such the addition made on the basis of the income under a void contract and that too which was reversed subsequently, is unsustainable. Decided in favour of assessee.
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2017 (4) TMI 1655
Abatement of suicide - conviction u/s 306 of the Indian Penal Code (IPC) - Whether the prosecution has successfully proved the liability of accused under Section 306 of IPC beyond the scope of all reasonable doubts? - HELD THAT:- The High Court has found that the trial court has acquitted the accused on the ground that the deceased was not fit to write Ex. PW-10/A and PW-10, Dr. Sanjay, had not issued the certificate that the deceased was in a fit mental condition to give the statement on 24.07.2008. The High Court has observed that it had perused Ex. PW-10/A wherefrom it was reflectible that the victim had written that the accused would be responsible for her death.
As far as reliability of evidence of PW-1 and PW-9, the parents of the victim are concerned, the reasons for not treating their version as reliable is based on the fact that they had not reported the incident in writing to the Gram Panchayat. On a perusal of the evidence in entirety, it is found that the High Court has appropriately dislodged the analysis made by the trial court. The evidence has to be appreciated regard being had to various circumstances. It is to be noted that the accused has been acquitted in the earlier offence and he has become a constant nuisance for the victim. In such a situation, the poor parents had no other option but to make a complaint to the Gram Panchayat. To hold that their evidence is reproachable as the complaint was not given in writing manifestation of perverse approach. On a perusal of the evidence in entirety, we find that the testimonies of the parents are absolutely unimpeachable and deserve credence.
Whether Section 306 IPC gets attracted. Submission of the learned counsel for the appellant is that even assuming the allegation is accepted to have been proved, it would not come within the ambit and scope of Section 306 IPC as there is no abetment? - HELD THAT:- The word ‘abetment’ has not been explained in Section 306 IPC. In this context, the definition of abetment as provided under Section 107 IPC is pertinent. Section 306 IPC seeks to punish those who abet the commission of suicide of other. Whether the person has abetted the commission of suicide of another or not is to be gathered from facts and circumstances of each case and to be found out by continuous conduct of the accused, involving his mental element.
In Randhir Singh and another v. State of Punjab [2004 (10) TMI 647 - SUPREME COURT], the Court has observed that 'Abetment involves a mental process of instigating a person or intentionally aiding that person in doing of a thing. In cases of conspiracy also it would involve that mental process of entering into conspiracy for the doing of that thing. More active role which can be described as instigating or aiding the doing of a thing is required before a person can be said to be abetting the commission of offence under Section 306 IPC.'
Whether there has been abetment in committing suicide? - HELD THAT:- In the instant case, the accused had by his acts and by his continuous course of conduct created such a situation as a consequence of which the deceased was left with no other option except to commit suicide. The active acts of the accused have led the deceased to put an end to her life. That apart, we do not find any material on record which compels the Court to conclude that the victim committing suicide was hypersensitive to ordinary petulance, discord and difference in domestic life quite common to the society to which the victim belonged. On the other hand, the accused has played active role in tarnishing the self-esteem and self-respect of the victim which drove the victim girl to commit suicide. The cruelty meted out to her has, in fact, induced her to extinguish her life-spark - the High Court has not reversed the judgment of acquittal solely on the basis of dying declaration. It has placed reliance on the evidence of the parents and also other witnesses. It has also treated the version of the Pradhan of the Gram Panchayat as credible. All these witnesses have deposed that the accused after his acquittal engaged himself in threatening and teasing the girl. He did not allow her to live in peace.
The right to live with dignity as guaranteed under Article 21 of the Constitution cannot be violated by indulging in obnoxious act of eve-teasing. It affects the fundamental concept of gender sensitivity and justice and the rights of a woman under Article 14 of the Constitution - the High Court has absolutely correctly reversed the judgment of acquittal and imposed the sentence. It has appositely exercised the jurisdiction and we concur with the same.
Conclusion - The High Court's conviction of the accused under Section 306 IPC upheld, agreeing that the evidence demonstrated the accused's active role in abetting the deceased's suicide.
Appeal dismissed.
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2017 (4) TMI 1654
Benefit of Cenvat credit given solely on the basis of photocopies of the documents - Tribunal on the basis of the material and after hearing counsel for the parties including the departmental representative, confirmed that In terms of the report from the Range Superintendent, Raipur, the Commissioner stood informed that the photocopies were genuine. It was therefore that the Tribunal also relied on the documents which were photocopies - HELD THAT:- There are no question of law, much less any substantial question of law, arises for decision in this appeal under Section 35G of the Central Excise Act, 1944.
Appeal dismissed.
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2017 (4) TMI 1653
Unfair trade practice - Jurisdiction of Monopolies and Restrictive Trade Practices Commission to entertain the complaint regarding the alleged arbitrary increase in the cost of an immovable property by the Ghaziabad Development Authority under Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 - HELD THAT:- It will be noticed that "unfair trade practice" will fall under this Section only when "goods" or "the provision of any services" are involved. In particular, the unfair trade practice alleged and found in favour of the complainant is under Sub-clause (ii) of Sub-section (1) under which a person falsely represents that the services are of a particular standard, quality or grade.
It is gound that the alleged arbitrary up-ping of the amount to be paid towards the house, which is an immovable property, cannot possibly be said to be a false representation by the Ghaziabad Development Authority that services are of a particular standard, quality or grade. This is for two reasons. First and the foremost, there is no false representation by the Authority, inasmuch as what was communicated to the complainant was only an estimated cost of the house in question. That estimate was revised later owing to several factors. This itself would show that there is no false representation within Section 36A(1)(ii) of the Act. Secondly, what was given was allotment of a house which is an immovable property, and not services of any kind.
Conclusion - The transactions involving immovable property do not fall under the jurisdiction of the Commission as defined under Section 36A of the Act, which pertains to goods and services.
The impugned order must be set aside as it is outside the jurisdiction of the Commission - Appeal allowed.
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2017 (4) TMI 1652
Constitutional validity of Regulation 35 and the proviso to Regulation 37(1) of the Competition Commission of India (General) Regulations, 2009 as well as Regulation 6 of the Competition Commission of India (Lesser Penalty) Regulations, 2009 - bid-rigging cartel in the market for Conveyor Belt Sector in India - commercial and confidential price sensitive information prior to submission of bids.
HELD THAT:- As is evident from the material available on record, suo moto proceedings have been initiated under Section 26(1) of the Act and an order has been passed by CCI directing the Director General to investigate whether there is any contravention of Section 3 of the Act. The report by the Director General is yet to be submitted. Though the petitioners in the present petitions have challenged the validity of certain statutory Regulations, it is apparent that their main grievance is regarding the letter dated 11.01.2016 whereby the CCI rejected the request of the petitioners for inspection of the records and supply of certified copies of the documents. A perusal of the letter dated 11.01.2016 shows that the request of the petitioners was rejected on the ground that (i) the information sought is confidential in terms of the provisions of the Act and the Regulations made thereunder and (ii) the matter has been referred to the Director General for investigation and the same is currently pending, thus, the request may be referred to the Director General directly in terms of the provisions of CCI (General) Regulations, 2009.
It is also a settled principle of law that the requirement of principles of natural justice must depend on the circumstances of the case, the nature of the enquiry, the rules under which the tribunal is acting, the subject matter to be dealt with and the consequences that may visit a person after such enquiry from out of the decision pursuant to such enquiry - the respondents cannot be held to have committed any error in rejecting the request of the petitioners for inspection of the documents.
Since the power to make subordinate legislation is derived from the enabling Act, it is fundamental that the delegate on whom such a power is conferred has to act within the limits of authority conferred by the Act. Rules cannot be made to supplant the provisions of the enabling Act but to supplement it.
As held in Supreme Court Employees’ Welfare Association Vs. Union of India [1989 (7) TMI 333 - SUPREME COURT], the validity of a subordinate legislation is open to question if it is ultra vires the constitution or the governing Act or repugnant to the general principles of the laws of the land or is so arbitrary or unreasonable that no fair minded authority could ever have made it. It was also held that the rules are liable to be declared invalid if they are manifestly unjust or oppressive or outrageous or directed to be unauthorized and/or violative of the general principles of law of the land or so vague that it cannot be predicted with certainty as to what it prohibited or so unreasonable that they cannot be attributed to the power delegated or otherwise disclose bad faith.
Conclusion - Though delegated legislation can also be challenged as being unreasonable, the unreasonableness is not to be judged in the same standard as unreasonableness of administrative action. The delegated legislation can be struck down unreasonable only if it is manifestly arbitrary or if so unreasonable that Parliament never intended to confer such power on the Regulator.
It cannot be held that the impugned regulations are either arbitrary or unreasonable, much less, the same are contrary to the parent Act - the validity of the impugned Regulations upheld - petition dismissed.
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2017 (4) TMI 1651
Jurisdiction of the Bar Council of India (BCI) to remand disciplinary proceedings back to the State Bar Council after statutory transfer under Section 36B(1) of the Advocates Act, 1961 - Quashing of initiation of the disciplinary proceedings - whether after transfer of a disciplinary proceeding, as per the mandate enshrined under Section 36B(1) of the Advocates Act, 1961 to the Bar Council of India (BCI) from the State Bar Council, can the BCI, instead of enquiring into the complaint and adjudicating thereon, send it back to the State Bar Council with the direction to decide the controversy within a stipulated time?
HELD THAT:- There can be no trace of doubt that the original jurisdiction to deal with the complaint stands transferred to the BCI. Once the original jurisdiction is transferred, to rely upon the language that the BCI may dispose of would include any manner of disposal which would include a remand, cannot be thought of. That is neither the legislative intendment nor the legislative purpose. The legislature, as found, never intended a complaint made against an Advocate either from the perspective of the complainant or from the delinquent to be transferred to BCI, again to be sent back.
It appropriate to state that there is a distinction between an appellate jurisdiction which the BCI exercises under Section 37 and the original jurisdiction under Section 36B(1). While exercising the appellate jurisdiction, the BCI can remand the matter to the State Bar Council. In this context, reference to a three-Judge Bench in Narendra Singh v. Chhotey Singh and another [1983 (8) TMI 303 - SUPREME COURT], would be apt.
The Court thereafter addressed the issue of scope and ambit of jurisdiction of a quasi-judicial body whose jurisdiction is defined in such as “as it deems fit”. It referred to the authorities in Raja Ram Mahadev Paranjype v. Aba Maruti Mali [1961 (12) TMI 96 - SUPREME COURT] and opined that the discretionary jurisdiction has to be exercised keeping in view the purpose for which it is conferred, the object sought to be achieved and the reasons for granting such wide discretion. A reference was made to the decision in O.N. Mahindroo v. District Judge, Delhi [1970 (9) TMI 114 - SUPREME COURT] wherein this Court has held that dealing with an appeal under Section 38, the jurisdiction of the Court was not restricted, for the Court is dealing with an appeal not only on law but also on appeal on facts.
Once a complaint is made by a litigant, it has to follow a definite procedure and is required to be dealt with as per the command of the Act to conclude the disciplinary proceeding within a period of one year from the date of receipt of the complaint or the date of initiation of the proceedings at the instance of the State Bar Council - Every member of the Disciplinary Committee is aware that the proceeding has to be concluded within one year. The complainant and the delinquent advocate are required to cooperate. Not to do something what one is required to do, tantamount to irresponsibility and the prestige of an institution or a statutory body inheres in carrying out the responsibility. One may not be always right in the decision but that does not mean to be shirking away from taking a decision and allow the matter to be transferred by operation of law to the BCI. A statutory authority is obliged to constantly remind itself that the mandate of the statute is expediency and the stipulation of time is mandatory. It will not be erroneous to say that the Disciplinary Committee is expected to perform its duty within a time frame and not to create a blameworthy situation.
The order passed by the Disciplinary Committee of the BCI set aside - appeal allowed.
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2017 (4) TMI 1650
Denial of exemption u/s 11 - Treating corpus donations as anonymous donations taxable u/s 115BBC - AO after going through the object clauses of the assessee trust observed that the assessee trust is not a religious trust - HELD THAT:- We have observed that the assessee has shown additions to corpus donations - The assessee has submitted in paper book filed with the tribunal copies of some of such direction letters of donation issued by the donors whereby instructions are issued by the donors that the donations shall form part of the corpus of the trust.
The names of the donors were given in the letters but the addresses and PAN of the donors were not given. These are standard letters which are identical for all the donors. The said letters contained the name of village/taluka/district and State of the donor but the addresses, father’s name and PAN of the donors are not there. Another peculiar feature is that it is a common direction letter issued by multiple donors ranging from 2-5 donors and Demand draft/Pay order mentioned in said common donation letter are also same being consolidated amount covered for the donation in the said letter as donated by 2-5 donors.
We find that assessee is not a religious trust hence the amount is hit by provisions of Section 115 BBC of the Act and the onus is on the assessee to prove that it is covered by exceptions to chargeability to tax as is provided by provisions of Section 115BBC of 1961 Act, namely that the assessee maintained a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed or else it is a religious trust.
The selection of donors shall be on random basis at the sole discretion of the AO, which short listed list of donors shall be supplied by the AO to the assessee for necessary compliance as per our above directions. If so required for ensuring compliance of Section 115BBC of 1961 Act and for establishing genuineness of the said donations the AO can enhance the number of persons to be produced by the assessee before him higher than minimum stipulated by us as above.
Denial of the exemption for 15% of income being set aside for accumulation to be spent for charitable purposes in the next year as provided u/s 11(1) - The assessee had stated that the trust was actively considering launching of projects in the next year after plans are finalized and the amount so aside was spent in the next year. In our considered view and in the interest of justice and fair play, this claim of the assessee that the said amount was kept for launching of project next year after plans are finalized and was spent in the next year accordingly also need verification and as such the matter is set aside and restored to the file of the A.O. for proper verification with respect to the contentions of the assessee to be decided by the AO in accordance with law. The evidences and contentions of the assessee in its defense shall be admitted by the AO in set aside proceedings in the interest of justice.
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2017 (4) TMI 1649
Joint and several recovery of Rs. 5,32,50,000/- from defendants - time limitation - Legitimacy of the claim against defendants No. 1 to 3 - HELD THAT:- The judgment of the single Judge of this Court in Zile Singh [2007 (11) TMI 714 - DELHI HIGH COURT] merely follows (i) BENGAL NAGPUR RAILWAY COMPANY VERSUS RUTTANJI RAMJI [1937 (12) TMI 11 - BOMBAY HIGH COURT] by observing that the provisions contained in the Interest Act, 1978 are almost similar to the provisions contained in the Interest Act, 1839; and, (ii) judgment of the Division Bench of the Madras High Court in Batliboi & Co. Ltd. v. Beama Mfg. Pvt. Ltd. [2005 (10) TMI 618 - MADRAS HIGH COURT]. Both the said judgments, on interpretation of the provisions of the respective Interest Act, held pre-suit interest to be payable thereunder only if conditions of the statute were satisfied. The Privy Council further held that interest cannot be recovered as damages under Section 73 of the Indian Contract Act, 1872.
In the facts and circumstances of the present case, denial of pre-suit interest to the plaintiff appears to be inequitable. It cannot be lost sight of that the defendant, inspite of showing the sum of Rs. 50 lakhs as payable to the plaintiff in the balance sheet, took a false stand before the Court.
A Division Bench of this Court in Bank of Maharashtra v. G.K. Enterprises [2005 (5) TMI 699 - DELHI HIGH COURT] to have, relying on SECRETARY, IRRIGATION DEPARTMENT, GOVT. OF ORISSA VERSUS GC. ROY [1991 (12) TMI 268 - SUPREME COURT] held that interest is recoverable both at law and in equity on money obtained by fraud or conversion and retained by the defendant and that it is always open to the Court, as the Interest Act is not exhaustive of all claims of interest, to appreciate the facts of each case and then to grant interest in cases not coming strictly within the purview of the said Act, on principles of justice, equity and good conscience. The said binding judgment unfortunately remained unnoticed in Zile Singh [2007 (11) TMI 714 - DELHI HIGH COURT]
As far as the rate of interest, pre-suit, pendente lite and future is concerned, the suit is found to have been instituted first on 27th April, 2016. In the facts and circumstances, it is deemed appropriate to award interest for a period of three years prior to the institution of suit @ 9% per annum, interest pendente lite and future, on the sum of Rs. 50 lakhs @ 12% per annum - a decree is passed in favour of the plaintiff and against the defendant Swift Initiative Pvt. Ltd. for recovery of Rs. 50 lakhs with interest @ 9% per annum with effect from 1st November, 2013 till institution of suit and interest @12% per annum with effect from the date of institution of the suit i.e. 27th April, 2016 till the date of realisation.
Application disposed off.
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2017 (4) TMI 1648
Remand of the case to the writ Court has occasioned due to the reason that both, the writ Court and the Appellate Court did not set out even the factual controversy nor dealt with the submissions urged by the appellant - HELD THAT:- The need to remand the case to the writ Court has occasioned due to the reason that both, i.e., the writ Court and the Appellate Court did not set out even the factual controversy nor dealt with the submissions urged by the appellant and nor examined the issues in the context of relevant provisions of the Act which governed the controversy.
In order to appreciate the factual and legal controversy involved in the lis, the least which is expected of is that the order which decides the lis between the parties should contain the brief facts involved in the case, the grounds on which the action is impugned, the stand of the parties defending the action, the submissions of the parties in support of their stand, legal provisions, if any, applicable to the controversy involved in the lis, and lastly, the brief reasons as to why the case of one party deserves acceptance or rejection, as the case may be.
The writ Court should have issued notice of the writ petition to the respondents and then decided the writ petition on merits by reasoned order rather than to dismiss it in limine - The impugned order and the order of the writ Court are set aside - Appeal allowed in part.
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2017 (4) TMI 1647
Impoundment of passport under Section 10(3)(e) of the Passport Act, 1967 - violation of valuable rights guaranteed under Article 19(1)(g) and Article 21 of the Constitution of India - HELD THAT:- It appears from the impugned order that the authorities have been merely guided by the instructions or the report by the Central Bureau of Investigation without independent application of mind in furtherance of discharge of their statutory duty cast upon them under the Indian Passports Act, 1967.
It is admitted that the petitioner was released on bail without any condition as averred in the affidavit and no travel restriction has been imposed by the CBI Court. The said fact is very crucial, which has not been taken into consideration either by the first respondent or 5th respondent. More over, no reason has been spelt out in the impugned order that there is any possibility of petitioner fleeing the country escaping from the clutches of law. Such an apprehension on the part of the respondents has not been either explicitly or implicitly found in the order passed by the 1st and 5th respondent. Such being the case, the order passed by the 1st respondent impounding the passport without any legally acceptable reason and without any independent application of mind cannot be sustained.
There are no hesitation to hold that the impugned order passed by the 1st and 5th respondents cannot be legally sustained - the matter is remanded to the first respondent for fresh consideration of the petitioner's claim for restoration of the passport to the petitioner after due consideration of all relevant facts, legal position, other materials that has been placed on record by the petitioner and pass a reasoned order within a period of four weeks from the date of receipt of a copy of this order.
Petition disposed off by way of remand.
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2017 (4) TMI 1646
Benefit of deductions u/s 80IB - Determination of Manufacturing Activities - as submitted assessee is not involved in any manufacturing activity and is only engaged in mining blocks and cutting them into tiles and polishing them - HELD THAT:- As contended that the word ‘production’ is to be construed as a wider meaning than ‘manufacture’ and in view of the observations made by the Supreme Court in Sesa Goa Ltd [2004 (11) TMI 14 - SUPREME COURT] the view taken by the Tribunal is just and proper.
In CIT vs. Goverdhan Prasad [2017 (3) TMI 1951 - RAJASTHAN HIGH COURT] similar view was taken.
Taking into consideration the activity which is carried out, in view of the above, we are in complete agreement with the view taken by the Tribunal. The issues are answered in favour of the assessee and against the department.
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2017 (4) TMI 1645
TDS u/s 195 - disallowance u/s 40(a) - payments made to foreign entities - HELD THAT:- In this case it was held that the expression "professional services" in article 14 of the Agreement for Avoidance of Double Taxation between Germany and India is wide enough to include services, if any, rendered by the applicant as an engineer and marketing consultancy services rendered by the applicant were in the nature of professional services falling u/s 14 of the Double Taxation Avoidance Agreement between India and the Federal Republic of Germany.
The conditions mentioned in the said article were clearly satisfied, as there was no permanent establishment in India in the facts and circumstances of the case. The professional fees and fee for independent personal services receivable by the applicant were not taxable in India. Where an individual (who is not a salaried employee) renders independent, personal services in the foreign state, then such independent personal services are covered by Article-14 whereby they would only be taxable in the foreign state where the independent individual is resident.
So in this case, the payee who an individual is rendering such professional or independent personal services is only taxable under Article-14 in Germany where he is resident. The payment has been made to foreign payee abroad for the services rendered outside India. Since income itself was not chargeable to tax in India, therefore, there was no liability of the assessee to deduct tax u/s 195(1) and hence section 40(a)(ia) is not applicable. The assessee thus get relief.
Payment to Huntswood Marketing Ltd., London - The assessee submitted that this is a payment for consultancy charges towards Designing services provided to the assessee outside India The consultancy services involved were in relation to information concerning designs and patterns of readymade garments available in the foreign market. Managerial or consultancy or technical services referred under FTS involve provision of expert opinion based on individual technical or professional knowledge. Such services cannot be FTS either under the Act or under the DTAA because no technical or managerial or consultancy services were provided by the foreign payee.
The nature of payment made to Huntswood Marketing Ltd. does not qualify to be exempted under the category of services under DTAA. In this case, the foreign payee is providing designing services which is nothing but technical services as defined under DTAA between India and UK. Thus, the addition has rightly been confirmed by the CIT(A). Accordingly, we find no infirmity in the order of learned CIT(A) who has passed a very reasoned order and accordingly all the grounds of the Revenue as well as the grounds raised in the cross objection by the assessee are dismissed.
Disallowance of amount out of interest paid on account of notional interest on the said interest free advance given against purchase of guest house property - Actual interest being paid to banks on various business loans and limits is less than the rate of interest of 14.5% applied by the AO - HELD THAT:- Two facts needed to be established by AO in the case of disallowance of interest on borrowed fund u/s. 36(1)(iii) against interest free advance given to sister concerns. First is the nexus between the borrowed funds and the commercial expediency. The schedule 1 & 2 of the relevant balance sheet shows reserves & surplus, share capital that indicates availability of interest free funds. The assessee claims that advances were made from interest free funds. The facts of this case have to be considered in the light of the judgment of Bharti Televentures [2011 (1) TMI 326 - DELHI HIGH COURT] the assessee was found to be having an adequate non- interest bearing fund by way of share capital and reserves. Even otherwise the advances were found to be made to the subsidiaries for business considerations which is nothing but commercial expediency of the assessee but being in the factually opposition reflected from the record of the assessee, the onus that laid on it stood discharged.
It is defined that 'Commercial expediency' is one of wide import and includes such expenditure as a prudent business man incurs for the purpose of business. The assessee has explained the commercial need supported by documentary evidences. Unless AD brings some other facts to contradict the explanation and the documents submitted in support of such explanation, the same has to be treated as true. Comparison of interest paid to other directors on debentures and not charging interest on the advance given to other director is a business decision of the assessee. Such comparison does not indicate nexus between the borrowed fund and the interest free advance given to related parties. The need to establish the nexus is more important in the scenario when out of total interest expenses on borrowed fund Rs. 1,49,99,992/- an amount of Rs. 1,02,22,500/- is disallowed.
The basic requirements of disallowances that is nexus between interest bearing fund and interest free advance and adequacy of interest free fund are not analysed by AO during assessment proceedings. The assessee explained before the AO that advance was given for some business purposes which did not materialize. Hence, the same has been received back during the subsequent year. Thus, in the absence of any finding, contrary to the explanation given by assessee, it cannot be held that the loan was not given for any business purpose.
Assessee having adequate non-interest bearing fund it can be inferred that the loan given has no bearing on the interest expense claimed by assessee on the borrowed fund. CIT(A) has rightly deleted the disallowance and we find no infirmity in the order of learned CIT(A). Accordingly grounds of the Revenue are dismissed.
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2017 (4) TMI 1644
Challenge notice issued by the opposite party-Bank under Section 13(4) of the SARFAESI Act - direction to opposite party no.1-Bank not to take over the physical possession of the mortgage property of the petitioner - HELD THAT:- Keeping in view the fact that petitioner is the guarantor and the mortgaged property is his residential house, it is directed that in the event the petitioner deposits an amount of Rs.10,00,000/- with the Bank-opposite party no.1 within four weeks hence along with an application for one time settlement/rephasement of the loan amount, the Bank shall consider the same in terms of its existing guidelines and as has been done in similar other cases and take a decision thereon within f our weeks thereafter.
Till a final decision is taken on the application of the petitioner for one time settlement/rephasement, no coercive action shall be taken in respect of the property of the petitioner, pursuant to the notice dated 24.05.2016 under Annexure-2 series to the writ petition.
Petition disposed off.
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2017 (4) TMI 1643
Validity of assessment u/s 153A - Incriminating material was found during the search or not? - HELD THAT:- The department has not found any incriminating document or unexplained cash, stock or other assets or unexplained credit or unexplained expenses. In these cases the assessee filed return u/s 139(1) on 29/10/2005 for AY 2005-06 and on 21/10/2009 for AY 2009-10. The last date of issue of notice u/s 143(2) of Income Tax Act was 31-10-2006 and 30/09/2010 respectively. The search was conducted on 11/11/2010. Since no incriminating documents were found for the AY 2005-06 and AY 2009- 10 and no assessment proceedings were pending before the AO, therefore, no assessment could have been made. See Kabul [2015 (9) TMI 80 - DELHI HIGH COURT]
GP estimation - Rejection of books of accounts - unaccounted sales - AO estimation of unaccounted sales by extrapolating the GP rate of 72% - HELD THAT:- Assessee has made certain disclosure of income during certain assessment years. The AO has also found defects in the books of account and we have sustained the rejection of books of account. Considering all these aspects, we are of the view that estimating the profit @ 58% on the declared sales shall meet the ends of justice. In the result, the Ground No. 3 of the assessee's appeal is partly allowed. However, wherever the disclosure made in the return of claim u/s 153A of the Act is over and above the estimated income on the basis of profit @ 58%, same shall be maintained. The appeal filed by the assessee stands partly allowed.
Maintainability of revenue appeal on low tax effect - Reduction of GP rate - HELD THAT:- Revenue has questioned only reduction of GP rate. The Revenue has not questioned the reduction of sales made by ld CIT(A). Furthermore, the Revenue has not questioned the quantum of relief given by ld. CIT(A). In view of the above facts and circumstances, it is held that the grievance of the revenue is on the reduction of GP rate made by the ld. CIT (A) from 72% to 62% and the tax effect should be calculated on the basis of grounds of appeal raised by the Revenue. We noticed from the above chart that the tax effect is not more than Rs. 10 lacs in the appeal filed by the revenue, which are dismissed in limine, in view of Circular No. 21/2015 F No 279/Misc. 142/2007-ITJ (Pt) 10th December, 2015. Thus the above appeals of Revenue are dismissed.
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2017 (4) TMI 1642
Addition of staff welfare expense u/s 40A(9) - HELD THAT:- The issue is covered by the decision of the Co-ordinate Bench in assessee’s own case Assessee is a PSU governed by statutory as well as internal regulations for incurring the expenditure, its approval as per a hierarchical administrate frame work. On facts neither of the auditors i.e. statutory and tax auditors have indicated anything adverse in respect of staff welfare expenditure. It is also a fact that the staff welfare expenditure is incurred through various bodies in consultation with such staff unions. These facts coupled with findings of CIT (A) that expenditure is genuine. Wholly for business purposed and allowed in various earlier years even after verification have neither been dislodged by revenue nor controverted in any manner except raising a specious plea that issue may be set aside again.
No lawful justification exists to support it. In pat so many years even after re-verification AO himself has allowed such expenditure. Such orders may have been passed after the impugned assessment order was passed respectfully following case of Radha Soami Satsang [1991 (11) TMI 2 - SUPREME COURT] we cannot gloss over the obvious legal position that revenue by its AO has allowed the staff welfare expenditure in successive assessment years after direction of Hon'ble High Court and ITAT - Decided in favour of assessee.
Allowability of publicity and PR expense - HELD THAT:- As decided in own case amount deserves to be allowed as it is not disputed that it was incurred for sending Gujarat Earthquake relief in the form of a truckload of food items consequent to chittorgarh district Collectors Clarion Call. The amount being for social good and for discharge of corporate social responsibility is allowable as business expenditure u/s 37(1).Decided in favour of assessee.
Allowability of depreciation on APGPCL shares - HELD THAT:- As decided in own case it is the intangible asset in form of right to procure power at cost which qualified for depreciation u/s 32 of the Act. Given that there is no separate consideration for value of shares an value of such intangible rights, the asessee and AO have to come up with an appropriate methodology. On the limited issue of determining the valuation the intangible rights which otherwise qualify for depreciation u/s 32(1)(ii) of the Act, the matter is set aside to the file of AO to examine the same after providing reasonable opportunity to the assessee.
Depreciation on assets retired from active use - HELD THAT:- As decided in own case as long as the machinery was available for use, though not actually used, it feel within the expression "used for the purpose of the business" and the assessee could claim the benefit of depreciation. An actual user was not required as had been contended by the Revenue. Use and discarding were not in the same field and could not stand together. However, a harmonious reading of the expressions "used for the purpose of the business" and "discarded" it would show that "used for the purposes of the business" only means that the assessee had used the machinery for the purpose of the business in earlier years.
The discarded machinery would not be actually used in the relevant previous year as long as it was used for the purposes of business in the earlier years. The Tribunal was correct in directing the assessing officer to recomputed depreciation after reducing the scrap value of the assets which had been discarded and written off in the books of account for the year under consideration from the written down value of the block of assets. Actual user of the machinery was not required with respect to discarded machinery ad the condition for eligibility for depreciation that the machinery being used for the purpose of the business would mean that the discarded machinery was used for the purpose of the business in the earlier years for which depreciation had been allowed. Decided in favour of assessee.
Nature of expenses - Ghosunda Damn expenses - HELD THAT:- As decided in own case benefit received by the assessee company on account of the expenditure incurred cannot be said to be an advantage in the capital field. We are in agreement with the view taken by the CIT(A) and affirmed by the ld. ITAT that the object and effect of the expenditure made by the assessee is to facilitate its trade operation and enable the management to conduct business more efficiently or more profitably.
Undervaluation of closing stocks of ore - HELD THAT:- In view of the judgment of British paints [1990 (12) TMI 2 - SUPREME COURT] we find force into the contention of the revenue that the value of stock is to be adopted either on cost ore net realizable value. The assessee has to demonstrate the value so adopted by furnishing the evidences in support thereof. In the present case, the assessee has failed to discharge this requirement of law, therefore, in order to compute the correct value this issue is restored to the file of the AO for decision afresh. AO is hereby directed to make on the spot enquiry for verification of the correct value of the stocks of ore. We are unable to accept the contention of the assessee that the stock of ore is merely soil and has no realizable value. In our considered view, there has to be same basis for adopting a certain value of such stocks. Revenue's appeal is allowed for statistical purposes.
Deduction u/s 80IA - AO as reduced claim u/s 80IA with regard to CPP, Jawar and CPP Debri on the ground that Head Office Expenses have not been allocated - HELD THAT:- As identical issue was in the year 2004-05 we find that the certain expenses which are common to both to the Head Office and Captive Power Plant has not been allocated. Therefore, the issue is restored to the file of the Assessing Officer for re-computation of reduction. AO would re-work allocation of the expenses related to the director's fees, auditor's fees and donation for charity. To this extent, the order of the Ld. CIT(A) is modified. This ground of the Revenue's appeal is partly allowed for statistical purpose.
Disallowance of technical feasibility and other consultancy expenses - HELD THAT:- Identical issue was before the Co-ordinate Bench own case wherein These expense had been incurred by the assessee for getting feasibility study for increase the height of Gossunda Dam and conducting geological work of excavation. The expenses related to conduct geological work paid to M/s Mineral Exploration to facilitate that the business should go on more profitable or to make earning of the profit. It does not make any change in proper earning apparatus of the company or had not brought any capital assets in existence. The ITAT had allowed these expenses in A.Y. 1991-92 and 1998-99 as revenue expenditure. The issue being identical to A.Y. 1991-92 and 1998-99, we also find that these expenses are having nature of revenue expenses as no capital assets had been brought in existence and incurred thee expenditure for smooth running of the business.
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2017 (4) TMI 1641
Delay filling appeal before High court - Condonation of delay of 97 days in filing the appeal allowed.
Inordinate delay of 1144 days in re-filing the appeal - The Court finds that the standard excuse that the Department is putting forth in all such applications for condonation of delay in re-filing the appeal is the change of Standing Counsel for the Department and the failure by the earlier counsel to inform the Department about the appeal lying in defect. This explanation does not impress the Court.
It is not possible to accept that no one in the Department followed up on the filing of appeals and allowed a period of almost 1144 days to elapse before the appeal could be re-filed. The Department has a cell in the High Court which is under the supervision of a Deputy CIT. He ought to be keeping track of the filing of appeals and should be able to know if any appeal entrusted to the panel counsel for filing has not been listed even once before the Court for a long time.
The application for condonation of the delay of 1144 days in re-filing the appeal is dismissed.
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2017 (4) TMI 1640
Sale of business assets - gain on soft drink business assets sold - Slump sale or capital gain - ITAT held that the transaction in a slump sale sand not an itemised sale - ITAT deleted addition holding that the sale of business assets was not an itemised sale and thus is not exigible to tax - ITAT justification in holding that the assets such as goodwill, know how, etc. were transferred and the cost of acquisition of these assets cannot be ascertained inspite of the specific provisions of Section 55(2)(a) - HELD THAT:- As required to be noted that when the agreement was entered into between the parties, the parties recorded total assets and no individual assets was required to be given in the MOU by the independent party that the party is running the unit along with only the property and not any other liability. In that view of the matter the individual valuation which has been put forth in pursuance to the letter of the Assessing Officer on the basis of book value in the list of individual is not established but taking into consideration the agreement between the parties the second value which has been rightly pointed out was for the purchaser for the purpose of arriving at a price of assets.
We are of the opinion that the Tribunal has not committed any error in allowing the appeal. In our considered opinion the three issues which are raised are answered in favour of the assessee.
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2017 (4) TMI 1639
Doctrine of Repugnancy - Acquisition proceedings under the provisions of the KIAD Act - Section 3(1) and Sections 28 to 31 of the KIAD Act are repugnant to the provisions of the 2013 Act or not - applicability of Section 24 of the 2013 Act to an acquisition initiated under the provisions of the KIAD Act - deemed divesting of the acquired land in terms of Section 24(2) of the 2013 Act - decision in the case of The Special Land Acquisition Officer, KIADB, Mysore v. Anasuya Bai, [2017 (1) TMI 1828 - SUPREME COURT] would entail dismissal of these petitions?
Whether Section 3(1) and Sections 28 to 31 of the KIAD Act are repugnant to the provisions of the 2013 Act - HELD THAT:- The State Government cannot any longer exercise power under Section 3 of the KIAD Act without conforming to the pre-requisites as prescribed under the 2013 Act, nor work the other provisions of the Act without also adhering to other mandatory provisions of the 2013 Act and the Rules thereunder. The Scheme under the KIAD Act as it prevails is inconsistent with the provisions of the 2013 Act in terms of Article 254(2) of the Constitution of India and is hence no longer valid as an independent enactment.
Whether Section 24 of the 2013 Act is applicable to an acquisition initiated under the provisions of the KIAD Act? - HELD THAT:- Section 24(2) of the 2013 Act is applicable to an acquisition initiated under the provisions of the KIAD Act.
Whether there could be a deemed divesting of the acquired land in terms of Section 24(2) of the 2013 Act, which provides for a lapsing of the acquisition proceedings if the conditions specified therein are satisfied, notwithstanding the deemed vesting of the land in terms of Section 28(5) of the KIAD Act? - HELD THAT:- By virtue of Section 24(2) at whatever point of time the vesting of land may have taken place, there is a divesting, in terms thereof, as it provides for a 'lapsing' of the acquisition proceedings, if the conditions specified therein are satisfied.
Whether the decision of the Apex Court in The Special Land Acquisition Officer, KIADB, Mysore v. Anasuya Bai, [2017 (1) TMI 1828 - SUPREME COURT], would entail dismissal of these petitions. (Incidentally, after these petitions were heard and reserved for Orders, the Apex Court having rendered the above decision it is necessary to address this issue)? - HELD THAT:- The recent decision of the Apex Court in Civil Appeal No. 353/2017, the Special Land Acquisition Officer, KIADB, Mysore vs. Anasuya Bai did not involve a challenge to the constitutional validity of the provisions of the KIAD Act and hence does not advance the case of the respondents.
The petitions to be posted for hearing on facts and the merits of each case for final disposal.
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2017 (4) TMI 1638
Rejection of Bail application - Extortion of money and property - HELD THAT:- After investigation, final report Under Section 173 of the Code of Criminal Procedure has been filed against the Appellant and four other persons on 19th October, 2016. The case against the Appellant is almost similar to that of other co-accused who have been enlarged on bail. The Accused has been in custody for the past six and half months. No criminal antecedents have been reported against the Appellant.
It is just and proper to enlarge the Appellant on bail subject to the conditions imposed - bail application allowed.
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