TMI Tax Updates - e-Newsletter dated: July 2, 2016 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

Pricing Login

Tax Management India. Com
Law and Practice : Digital eBook
Research is most exciting & rewarding

For Sales / Support:
WhatsApp

9911796707

Case Laws Acts Notifications Circulars Classification Forms Manuals Articles News D. Forum Highlights Notes

TMI - e-Newsletter TaxTMI Excess Input Tax Credit penalty appeal dismissed... TaxTMI Income Tax Assessment Notice Issued by... TaxTMI Excessive delay in issuing show cause notice &... TaxTMI Rectification: Show Cause Notice quashed for period... TaxTMI Investor locked into long-term capital gains bonds;... TaxTMI Funds received by assessee overlooked during... TaxTMI Cash deposits explained through VAT returns, cash... TaxTMI Customs duty dispute: Imported goods classified as... TaxTMI Appointment of adjudicator for corporate penalties... TaxTMI Undisclosed investments, agricultural land... TaxTMI Taxpayer's victory: AO's order upheld, PCIT's... TaxTMI Non-resident Singapore firm's software licensing... TaxTMI Excessive transport expenses deduction and TDS... TaxTMI Importer imports "Ground Colemanite (B2O3 40%)... TaxTMI Bank penalized for delayed reporting of high-value... TaxTMI Latest Case-Laws TaxTMI Latest Notifications + Circulars TaxTMI GST Council Decisions TaxTMI

Follow us:


Tax Updates - TMI e-Newsletters

Home e-Newsletters Index Year 2016 July Day 2 - Saturday ← Older Newer →
TMI e-Newsletters FAQ
You need to Subscribe a package.
Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 2, 2016 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Service Tax CST, VAT & Sales Tax Wealth tax Indian Laws TMI SMS Refund of service tax paid on Construction of Residential Complex shall be granted directly to the buyers of flat & not to the builder - Tri News Income Declaration Scheme: Government assures complete confidentiality Scheme not be extended beyond September 30 : Revenue Secretary In-principle agreement reached on all pending issues on Double Taxation Avoidance Agreement between India and Cyprus RBI Reference Rate for US $ Commerce Secretary Level Inter-Governmental Committee(IGC) reviews the status of bilateral trade Union Finance Minister Shri Arun Jaitley meets with Dr. Jim Yong Kim, President World Bank Group CBDT issues new set of FAQs to clarify queries regarding Income Declaration Scheme, 2016 Notifications Companies Law F. No. 1/5/2013 CL-V - dated 30-6-2016 - Co. Law Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 F. No. 1/33/2013-CL-V - dated 30-6-2016 - Co. Law Companies (Removal of Difficulties) Third Order, 2016 File No 1/8/2013-CL-V - dated 29-6-2016 - Co. Law Companies (Acceptance of Deposits) Amendment Rules, 2016 Customs 94/2016 - dated 1-7-2016 - Cus (NT) Appointment of Common Adjudicating Authority 93/2016 - dated 1-7-2016 - Cus (NT) Appointment of Common Adjudicating Authority Circulars / Instructions / Orders Income Tax 25/2016 - dated 30-6-2016 Clarifications on the Income Declaration Scheme, 2016 Central Excise 1033/21/2016-CX - dated 1-7-2016 Imposition of Central Excise duty on jewellery - Constitution of sub-committee of the High Level Committee Highlights / Catch Notes Income Tax Penalty u/s 271(1)(c) - Even if ld. AO has treated the amount as capital expenditure, certainly assessee will be entitled to claim depreciation but the crux is, it is allowable expenditure. Such situation certainly does not call for a penalty u/s 271(1)(c) of the Act. - AT Visit to Get Source Unabsorbed depreciation can be carried forward (for any number of years) and set off against the profits and gains of subsequent years. Visit to Get Source In view of the provisions of section 43B, Excise duty/customs duty paid by the assessee in a particular accounting year is allowable as deduction in such year Visit to Get Source If the expenditure is incurred for day-to-day business activities of the assessee and not for acquiring some asset it has to be allowed as revenue expenditure. - Mere payment to government agencies would not make any expenditure capital/revenue - AT Visit to Get Source Transfer pricing adjustment - the onus is on the TPO to show that the method adopted by the assessee for benchmarking the transactions with AEs is not the most appropriate method. - AT Visit to Get Source Provisions of section 40A(3) in respect of cash payments made to MSRTC and other Government Organisations towards purchase of scrap materials are not attracted. - AT Visit to Get Source Addition in respect of foreign buyer’s agency commission which is deducted at source from the invoice amount, by the importer at the time of making the payment - The assessee has forgone a part of the invoice amount - There is no reason to come to the conclusion that it is a case of under-invoicing to the extent of commission amount. - No addition - AT Visit to Get Source Rectification of mistake u/s 254(2) - A person cannot say at one time one thing and then turn around to suit his needs. - Application for rectification rejected - AT Visit to Get Source Condonation of delay is an exception and should not be used as an anticipated benefit for government departments. The negligence, inaction and inordinate delay in filing the appeal cannot be condoned. - AT Visit to Get Source Sale of flat acquired by her in lieu of surrender of tenancy rights - working out the taxable gains the assessee - AO treated the cost if acquisition as NIL - market value of the plot of land on the date of allotment shall be the cost of acquisition for the purpose of computing capital gains - AT Visit to Get Source Entitlement to exemption u/s 10(23C)(iiiab) - educational institute - expenditure on scientific research - in order to claim exemption under section 10(23C)(iiiab) of the Act, the approval under section 35(1)(ii) of the Act is not necessary in the present case - AT Visit to Get Source Estimation of net profits - AO without comparing earlier year results of the assessee applied 6% net profit rate without any basis and therefore, action of learned CIT(A) in deleting such addition is justified. - AT Visit to Get Source Transfer pricing issue w.r.t. to payment of trademark fee - there exists a direct nexus between the revenue earned by the assessee and the payment of royalty made to the associated enterprise for using brand name, and therefore, it would be incorrect to analyze the transaction of payment of royalty in isolation. - AT Visit to Get Source Customs Revocation of CHA license - Writ application - Misuse of IEC - allegations of misconduct against the petitioner proved - writ petition dismissed - HC Visit to Get Source Import of poppy seeds from the supplier of China - permission for import of restricted items - second respondent directed to entertain the application in accordance with law in the light of the order as reported in [2016 (4) TMI 790 - MADRAS HIGH COURT] - HC Visit to Get Source Indian Laws Arbitration proceedings - whether the disputed claim is live claim or not - The disputed claims having never been adjudicated, we are of the view that there was a dispute which needed an adjudication after looking into all relevant documents, bills and certificates which could have been appropriately examined by Arbitral Tribunal - SC Visit to Get Source Wealth-tax Net wealth - if the building under construction is not to be regarded as building then the land on which the construction is started will have to be included in the assets under clause (v) because land mentioned therein does not carry any qualification or the adjective vacant and that even otherwise the land does not lose its value as an asset simply because construction is started thereon. - HC Visit to Get Source Service Tax Refund of service tax paid under the Construction of Residential Complex Service shall be granted directly to the buyers of flat and not to the builder where builder has charged service tax from the customers - AT Visit to Get Source VAT Waiver of pre-deposit - appeal was pending before the tribunal - The mere fact that the petitioner paid 25% of the disputed tax would not by itself justify grant of stay. - HC Visit to Get Source Revision of assessment order to deny the exemption - despite the breach of condition, AO granted benefit of exemption. The action was thus clearly erroneous. Under section 67 of the Gujarat Sales Tax Act, Commissioner had power to take any order passed by the said authority in revision and pass such order as he thinks just and proper - demand confirmed - HC Visit to Get Source Valuation - reduction of discount given to customers on the sales finalized at the year end from the next year's turnover - In essence what the assessee did, was to reduce the total turnover of the assessment year 2008-09 to the extent its value after discount during the previous year had come down which would have a direct relation to the tax payable by the assessee - No demand - HC Visit to Get Source Case Laws: Income Tax 2016 (7) TMI 31 Revision u/s 263 - treatment to be given in the opening stock of the subsequent accounting year when the deduction is made under Section 43B - Held that:- There is no dispute on the point that the amount of import duty and excise duty are allowable deduction. What is dispute on behalf of the respondent is that the amount of customs and excise duty on the value of the closing stock of the petitioner-assessee should not be permitted in the assessment year 1984-85 (accounting year ending on December 31,1983), though actually paid in the year 1983, because the assessment of the closing stock of the year 1983 will be in the subsequent previous year which would be in 1984 and the relevant assessment year would be 1985-86. It is true that at the time of making the assessment for the assessment year 1985-86, the respondent will have to be careful in seeing that the petitioner does not claim further deduction for the sum for which deduction is already given. In this case, it is not the contention of the respondent that any sum payable under clause(a) of section 43B of the Act was at any time claimed by way of deduction in any previous year prior to 1983. In fact, the raw material were imported and the goods were manufactured in the year 1983, and they were cleared also in the year 1983. Therefore, their liability accrued in the year 1983, and they also paid the sum in the year 1983. In that view of the matter, the Explanation to section 43B of the Act is also not attracted in the present case. The first limb of argument that Section 145A was not on the statute book at the relevant point of time and therefore this Court may take a different view by not holding that the matter is covered by the decision of the Apex Court in case of Berger Paints [2004 (2) TMI 4 - SUPREME Court ] may require consideration of the effect of Section 43B vis-à-vis Section 145A and to find out as to whether by insertion of Section 145A on the statute book, the effect of the allowable deduction under Section 43B is diluted or nullified or not. The language of Section 43B begins with the word “Notwithstanding anything contained in any other provisions of this Act” meaning thereby a non- abstente clause to have an overriding effect over any other provisions of the Act. The resultant situation would be that the deduction so claimed and made permissible by the Tribunal in the impugned order is covered by the above referred decision of Gujarat High Court in case of Lakhanpal case read with the further decision of the Apex Court in case of Berger Paints Ltd.[ (1986 (3) TMI 42 - GUJARAT High Court). Hence, on the aspects of allowable deduction, the matter was already covered by in any case the decision of the Apex Court in case of Berger Paints India Ltd. (supra). The said legal position was prevailing at the time when the assessing officer allowed the deduction. Hence, it could not be said that the view taken by the assessing officer was erroneous in law. In any case, the treatment is to be given in the opening stock of the subsequent accounting year when the deduction is made under Section 43B of the Act, hence it could also not be said as prejudicial to the interest of Revenue. Under the circumstances, we find that the view taken by the Tribunal holding that the Commissioner was not justified in passing the order under Section 263 of the Act cannot be said as illegal but, can rather be said to be in conformity with the law laid down by the Apex Court in case of Berger Paints India Ltd., (supra). - Decided in favour of assessee 2016 (7) TMI 30 Carry forward unabsorbed depreciation against the profits and gains of subsequent years without any limit - Held that:- CIT (A) has rightly decided the issue in the light of the judgments of the Hon’ble Gujarat High court in the case of General Motors (India) Pvt. Ltd. (2012 (8) TMI 714 - GUJARAT HIGH COURT ). Therefore, we do not see any reason to interfere with the order of ld. CIT (A) wherein held Any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001, thus once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - Decided in favour of assessee 2016 (7) TMI 29 Penalty u/s 271(1)(c) - disallowance of expenditure spent on laying of cables for 950 KVA transformer as revenue expenditure - Held that:- As at the time when the expenditure of ₹ 959886/- was booked in the books as revenue expenditure the assessee was having certain belief which was duly supported with the agreement with DGVCL evidencing that the ownership and liberty regarding the use of transformer for supply of electricity to other consumers will rest upon the DGVCL only and, therefore, cost of laying of cables attached to the Transformer was treated as revenue expenditure. Certainly in such a situation when both the possible views i.e. revenue or capital expenditure are going side by side and there remains a thin line to differentiate the same. Also dispute is not in regard to the quantum of expenditure but it is with regard to nature i.e. capital/revenue. Even if ld. Assessing Officer has treated the amount of ₹ 9,59,886/- as capital expenditure, certainly assessee will be entitled to claim depreciation but the crux is, it is allowable expenditure. Such situation certainly does not call for a penalty u/s 271(1)(c) of the Act. So, assessee cannot be held for furnishing inaccurate particulars. - Decided in favour of assessee 2016 (7) TMI 28 Transfer pricing adjustment - MAM - Held that:- TP provisions were introduced in the Act to prevent the practice of transferring the profit to the AE by adopting certain dubious methods. Naturally, the target should be the transactions with the AE.s and not the all the transactions. The assessee had challenged the exclusion and inclusion of certain comparables. The DRP has not considered any of these basic issues. As stated earlier, it passed a two line order and the order is not assigning any reason for arriving at the conclusion. It is a fact that in the subsequent years the TPO has accepted the internal TNMM for TS also. We are not aware as to what distinguishing factors were there in the later years as compared to the facts of the year under consideration that the TPO had taken a diagonally opposite view. The DRP has not considered this vital issue. We agree that res-judicata is not applicable to the taxation proceedings, but, rule of consistency is very much applicable. Therefore, the DRP should have considered all the above facts and should have passed a reasoned order. In our opinion, matter needs further verification. So, in the interest of justice we are restoring back the matter to the file of the DRP who would decide the issue after hearing the assessee. It may call for comments from the TPO. Disallowance of payment made to clubs - Held that:- The action of the AO is highly objectionable and not as per the provisions of the law. The AOs have to follow the directions of the DRP-they had no choice as far as following the directions of the DRP is concerned. They are authorised to challenge the directions before the Tribunal but they cannot refuse to carry out the directions. Therefore, only on this count the appeal of the assessee has to be allowed. But, even on merits the issue is covered in favour of the assessee by several judgements relied upon by the assessee. - Decided in favour of the assessee. Disallowance made u/s. 14A r.w.r.8D - Held that:- We find that during the year under consideration the assessee had received dividend income of ₹ 37.51 lakhs, that it explain to the AO that dividend warrants were deposited into bank accounts in a routine manner along with the other checks, that the assessee had sufficient own funds to make investment, that it had made investments in subsidy companies, that on its own it had disallowed and amount of rupees 2.33 lakhs, that the AO had not given any reason as to why the calculation given by the assessee was not acceptable. He had simply applied the formula as envisaged by Rule 8D of the Rules. We are of the opinion that approach of the AO was contrary to the provisions of law.- Decided in favour of the assessee. Disallowance of product trial expenses - Held that:- While dealing with the objections filed by the assessee for the a why 2007-08 the DRP had allowed the direction under section 35 of the Act. In our opinion, the test to decide the nature of the expenditure i.e. capital or revenue expenditure the basic thing to be seen is as to whether the expenditure is for running the business of the assessee smoothly. If the expenditure is incurred for day-to-day business activities of the assessee and not for acquiring some asset it has to be allowed as revenue expenditure. In the case before us, it is a fact that no new asset came into existence. Secondly, the expenditure incurred was basically for carrying out the business. Payment to government agencies would not make any expenditure capital/revenue.- Decided in favour of the assessee. Disallowance being computer software expenses - Held that:- Expenditure incurred by the assessee on account of software and professional expenses was revenue expenditure - Decided in favour of the assessee. Disallowance of compensation paid by the assessee to Punjab Pesticides Industrial Corporation Society Limited (PPICSL) - Held that:- The expenditure was incurred considering the old relation with the PPICSL and to avoid future business complications. If an assessee makes payment which is compensatory nature, it has to be allowed. In the case before us, the payment was made in pursuance of an agreement and that was of compensatory nature i.e.it was not penal. The Hon’ble Calcutta High Court upheld the order of the Tribunal. It referred to the case of G Scammell & Nephew Ltd. (1939 (1) TMI 12 - COURT OF APPEAL) wherein it was held that the expenditure incurred for termination of a trading relationship in order to avoid losses occurring in the future through the relationship, whether pecuniary losses or commercial inconveniences, was just as much for the purpose of the trade is the making or the carrying into effect of trading agreement. Disallowance of gift expenses - Held that:- We find that the assessee had filed objections before the DRP with regard to proposed addition by the AO. However, the DRP did not adjudicate the issue. Therefore, in the interest of Justice, we are restoring that the matter to the file of the DRP to decide the issue afresh after hearing the assessee Adjustment of opening stock - Held that:- In our opinion the basic principle of taxation jurisprudence stipulate that no item can be taxed twice. Considering the fact and circumstance of the case, the AO is directed to make further verification and to allow the adjustment as per the provisions of section 145A of the Act. He is to ensure that assessee does not suffer taxation for the same amount in two different assessment years 2016 (7) TMI 27 Entitlement to exemption u/s 10(23C)(iiiab) - need of approval u/s 35(1)(ii) - whether an approval is required under section 35(1)(ii) of the Act for the assessee to claim exemption under section 10(23C) of the Act or not? - Held that:- The assessee is not a university or college or any other institution incurring expenditure for any scientific research to claim exemption under section 10(23C)(iiiab) of the Act. It is only an educational institution established for the purpose of managing science museums and drawing funds from Government of India and Government of West Bengal for maintenance and achieve its objects as provided in the memorandum at page 121 of paper book. Therefore, in our opinion, an approval is not necessary under section 35(1)(ii) of the Act to claim exemption under section 10(23C)(iiiab) of the Act. The CIT(A) has rightly dealt with the issue involving approval under section 35(1)(ii) and finding thereon, stating in other words, pending approval, the assessee is entitled to claim exemption under section 10(23C) (iiiab) of the Act. Accordingly, we hold that in order to claim exemption under section 10(23C)(iiiab) of the Act, the approval under section 35(1)(ii) of the Act is not necessary in the present case. By applying the observation of Hon’ble HIGH COURT in DIRECTOR OF INCOME TAX vs. INDIAN NATIONAL SCIENCE ACADEMY [2010 (1) TMI 40 - DELHI HIGH COURT ] to the facts of the case on hand, we hold that the assessee is not liable to pay any tax. - Decided in favour of assessee 2016 (7) TMI 26 Estimation of net profits - rejection of books of account - Held that:- Assessing Officer without pointing out any defect in sales and purchases, opening and closing stock rejected the books of account by just holding that assessee had not booked the expenditure whereas the learned CIT(A) has made a finding of fact that the expenditure was duly booked in the books of account and was reflected in the P&L accounts and payments thereof were made through bank account and in view of the above facts the rejection of books of account was not justified specially keeping in view the fact that Assessing Officer did not find any deficiency in the sales, purchases, opening stocks and closing stock of the assessee. The contention of the Assessing Officer that rent expenditure of 17,13,388/- was incurred out of unexplained sources is also not correct as learned CIT(A) in this respect has made a clear finding of fact and therefore, the basis which was taken by Assessing Officer for rejection of books of account is also not valid. The Assessing Officer without comparing earlier year results of the assessee applied 6% net profit rate without any basis and therefore, action of learned CIT(A) in deleting such addition is justified. Similarly, the assessee had declared the income on account of Duty drawback etc. separately in P&L account and therefore, the addition was not justified and learned CIT(A) has rightly deleted the same.- Decided in favour of assessee Addition on rent payment - addition u/s 69C - Held that:- The appellants books of account are audited. It was stated that the books of accounts along with bank account, vouchers were produced with supporting evidence during the course of hearing to prove that these expenditure are duly recorded in the books. The payments were vouched for. The appellant has placed the complete detail of payments. We find that Assessing Officer made the addition without any basis and which learned CIT(A) had rightly deleted.- Decided in favour of assessee 2016 (7) TMI 25 Rectification of mistake u/s 254(2) - Addition to income - assessee has offered an additional income of ₹ 15 lakhs over and above of his regular income - Tribunal found that the methodology followed by the assessee is not appropriate and reversed the findings of the CIT(Appeals) and restored that of the AO. Therefore, he requested that the above order of the Tribunal may be recalled/rectified. - Held that:- The power to rectify a mistake under section 254(2) cannot be used for recalling the entire order. No power of review has been given to the Tribunal under the I T Act. Thus, what it could not do directly could not be allowed to be done indirectly. A person cannot say at one time one thing and then turn around to suit his needs. The assessee with sole intention to go out of offer made by the assessee claimed additional expenditure, which is not as per the statement recorded during the survey u/s.133A of the Act. However, considering the modus operandi followed by the assessee, the Tribunal has taken serious objection and reversed the order of the CIT(Appeals) and confirmed the addition of ₹ 15 lakhs. In our opinion, the judgment of the Jurisdictional High Court in the case of Ramanlal Kamdar v. CIT (1976 (12) TMI 52 - MADRAS High Court ), wherein it was held that once the assessee accepts certain addition before authorities, he cannot be said to be aggrieved by that addition and cannot appeal against it before the appellate authorities. - Decided against assessee 2016 (7) TMI 24 Condonation of delay - Held that:- Though we are conscious of the fact that in a matter of condonation of delay when there was no gross negligence or deliberate inaction or lack of bonafide, a liberal concession has to be adopted to advance substantial justice, we are of the view that in the facts and circumstances, the Department cannot take advance of various earlier decisions. It is the right time to inform all the government bodies, their agencies and instrumentalities that unless they have reasonable and acceptable explanation for the delay and thee was bonafide effort, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red-tape in the process. The government departments are under a special obligation to ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for government departments. The negligence, inaction and inordinate delay in filing the appeal cannot be condoned. Law assists those who are vigilant and not those who sleep over their rights. We considering the facts and circumstances explained in affidavit and also in the light judicial decisions, decline to condone the delay in filing the appeal and accordingly dismiss the appeal as unadmitted. - Decided against the revenue. 2016 (7) TMI 23 Disallowance u/s. 40A(3) - cash payments made to MSRTC and other Government organizations towards purchase of scrap - Held that:- Since the CIT(A) has upheld the disallowance made by the AO u/s.40A(3) by following his orders for earlier years in assessee’s own case and since the Tribunal has already deleted such disallowance, therefore, in absence of any contrary material brought to our notice against the order of the Tribunal in assessee’s own case, we hold that the provisions of section 40A(3) in respect of cash payments made to MSRTC and other Government Organisations towards purchase of scrap materials are not attracted. Accordingly, the disallowance u/s.40A(3) made by the AO and upheld by the CIT(A) are deleted. - Decided in favour of assessee 2016 (7) TMI 22 Sale of flat acquired by her in lieu of surrender of tenancy rights - working out the taxable gains the assessee - cost if acquistion - AO made addition of the entire amount as Long Term Capital Gain treating the cost of acquisition of the tenancy as ‘NIL’ - Held that:- In the case of Atul G.Purnaik vs. ITO (2011 (5) TMI 576 - ITAT, Mumbai ) the assessee was allotted a plot of land to the assessee as compensation in lieu of agricultural land acquired by the government under “12.5% Expansion Scheme and the issue was determination of cost of acquisition of the said plot of land for the purpose of computing capital gain. It was held that market value of the plot of land on the date of allotment shall be the cost of acquisition for the purpose of computing capital gains. - Decided against revenue 2016 (7) TMI 21 Transfer pricing issue w.r.t. to payment of trademark fee - whether the payment of trademark fees was validly benchmarked applying TNMM as most appropriate method ? -payment of royalty - Held that:- There exists a direct nexus between the revenue earned by the assessee and the payment of royalty made to the associated enterprise for using brand name, and therefore, it would be incorrect to analyze the transaction of payment of royalty in isolation. Further, the ld. DR had raised a contention that the assessee has not demonstrated how the payment for royalty beneficial to the taxpayer. We are of the opinion that, ascertaining whether a service has actually benefitted the assessee is not within the prerogative of the tax authorities.The Hon'ble Delhi High Court in CIT v. Cushman & Wakefield (India) (P.) Ltd. (2014 (5) TMI 897 - DELHI HIGH COURT ) has held that the authority of the TPO is limited to conducting transfer pricing analysis for determining the ALP of an international transaction and not to decide if such services exist or benefits did accrue to the assessee. Such later aspects have been held to be falling in the exclusive domain of the AO. Accordingly, in view of the aforesaid, we are of the opinion that since the operating margin of the assessee at 6.96% is higher than the comparables at 2.77%, the international transaction of payment of royalty entered into by the assessee are to be considered being at arm’s length applying TNMM as the most appropriate method. Transfer pricing issue w.r.t. to Advertising, Marketing and Promotion (‘AMP’) Expenses - Held that:- the adjustment made by the TPO is squarely covered by the decision of Delhi High Court in the case of Maruti (2015 (12) TMI 634 - DELHI HIGH COURT ) and Honda Siel Power Products (2015 (12) TMI 1333 - DELHI HIGH COURT ) and therefore, in the absence of any international transaction of brand building of ‘Goodyear’ brand, undertaken by the assessee with its AE, there cannot be any adjustment under the transfer pricing provisions. Further, as held by the Hon’ble High Court, Chapter – X of the Act does not authorize the revenue to make quantitative adjustment under the transfer pricing provisions, such as AMP expense. The contention of the ld. DR about abnormal increase in advertisement expenses in comparison to preceding year, does not render any help to the Revenue, keeping in view the proportionate rise in turnover of assessee. We accordingly direct the assessing officer to delete the adjustment made on this account. Transfer pricing issue w.r.t. to export of goods - netting off of export incentive - Held that:- We uphold the order of the TPO to the extent of netting off of export incentive from the cost of goods sold and set aside the issue of netting off of rebate/discount from the cost of goods sold, to the file of assessing officer/TPO, for verification of the claim in light of our decision for the assessment year 2006-07. Needless to add that the assessee should be given reasonable opportunity of being heard. Disallowance of machinery repair expenses - Held that:- As in the appellant’s own case for the assessment year 2008-09, deleted the similar ad-hoc disallowance of 20% of expenditure incurred on machinery repair and maintenance expenses, proposed by the assessing officer. Disallowance of provision for warranty - Held that:- As during the financial year ended on 31st March 2007 the appellant, had incurred /made provision for warranty claims to the extent of ₹ 17,72,000 on the basis of past trend and experience of actual warranty claims. The provision for warranty is made on a scientific and actual basis and not an adhoc provision. The assessee has duly submitted and demonstrated the computation of its claim for warranty along with past data. In fact, the basis of computation of warranty was found to same as computed in the preceding year, i.e. AY 2006-07, in which this co-ordinate Bench of Tribunal in the assessee’s own case has allowed the appeal and directed the assessing officer to delete such disallowance. Accordingly, respectfully following the decision of the co-ordinate bench of Tribunal in the assessee’s own case for the assessment year 2006-07, we hold that provision for warranty made by the assessee is allowable. Ad-hoc disallowance of advertisement expenditure under section 37(1) - Held that:- We have already held that the advertisement expenditure incurred by the assessee is incurred wholly for the purpose of its business and profession and ought to be allowed deduction in entirety. Further, the assessing officer has clearly made an ad-hoc disallowance of advertisement expenditure incurred by the assessee, which is not permissible under the law. We are of the considered view that AO was not justified in making such ad-hoc disallowances and therefore, direct the assessing officer to delete the adjustment on this account. 2016 (7) TMI 20 Transfer pricing adjustment - selection of Comparable Uncontrolled Price (CUP) method as the most appropriate method for determining the arm’s length price of export of Floxidin 10% (50ml), disregarding TNMM applied by the assessee for benchmarking the ALP - Held that:- a perusal of the documents on record show that more than 80% (83.55%) of exports which have been benchmarked by the assessee under TNMM has been accepted by the authorities below. Where substantial part of the exports made to AEs have been accepted by the TPO and the reason has been given by the assessee for the price difference in respect of one product, we find no valid reason for adopting CUP method as the most appropriate method for benchmarking the transactions. The assessee has discharged its onus by giving the detailed reasons for difference in price. Thereafter, the onus is on the TPO to show that the method adopted by the assessee for benchmarking the transactions with AEs is not the most appropriate method. Thus, in view of the facts of the case and the decision of Co-ordinate Bench in the case of Amphenol Interconnect India Private Limited [2014 (5) TMI 1066 - ITAT PUNE ], we accept ground in favour of assessee 2016 (7) TMI 19 Addition in respect of foreign buyer’s agency commission which is deducted at source from the invoice amount, by the importer at the time of making the payment - Held that:- Even though the de facto export price for the assessee is the gross invoice value minus the commission, the exporters do not bill the de facto export prices, but show the gross amount and the buyer’s commission separately, so as to be entitled to the export incentives on the gross amounts even though these gross amounts never reach the assessee, and what the assessee gets is only the net export price. The billing pattern by the assessee is thus fully justified, on account of commercial exigencies, and that is how any commercially rationale person would behave. If the assessee does not show the break up on the invoice itself, and shows only the net amount, his export entitlements will be computed on the net amount, and will thus be lower. The assessee has forgone a part of the invoice amount, i.e. to the extent of the agreed commission paid by the foreign agent to his agent, but that is a part of the understanding at the time of negotiating the price and, therefore, the export price, for all practical purposes except for the export incentive entitlements, must stand reduced to that extent. We are not really concerned with, nor is it necessary to deal with, ethical aspect of this practice. This accounting jugglery may seem to be ex facie unethical but even if that be so, addition of the impugned amount cannot be justified for that reason. The amount deducted on account of buying agent’s commission is not part of export sales, and it cannot be added to the exports. It is not an expenditure of the assessee, and, therefore, it cannot be disallowed either. As evident from the documents regarding exchange control regulations, i.e. through the bankers in accordance with the FEDAI/RBI guidelines, there are no exchange control objections with regard to the net realizations. There is no reason to come to the conclusion that it is a case of under-invoicing to the extent of commission amount. The commission amount was not paid by the assessee, though, to the extent of commission amount, the gross export price stood reduced in effect and, accordingly, importer paid the net amount to the assessee. The gross amount is rather symbolic and must not, and has not been, even be treated as the value of exports. Thus we are of the considered view that the authorities below were in error in making the impugned addition - Decided in favour of assessee. 2016 (7) TMI 18 TDS u/s 194H - TDS liability on charges paid by the assessee to the bank for using credit card facilities - Held that:- No TDS liability in respect of payments made to banks for using credit card swiping machines. See The Commissioner of Income Tax-II Versus JDS Apparels Private Limited [2014 (11) TMI 732 - DELHI HIGH COURT ] - Decided in favour of assessee. 2016 (7) TMI 17 Revision u/s 263 - whether gain from sale of shares is to be assessed as a business income or short term capital gain/long term capital gain? - Held that:- CIT(A) did not dispute with regard to the contention of the assessee that in the books the assessee has shown share transaction as an investor. Her status as investor was accepted by the department in preceding year as well as in subsequent year. The assessee has not used any borrowed funds. It has not incurred any expenditure for portfolio management or keeping a track on the investment. The shares were not valued either at market value or at cost, whichever is lower on the close of the year. We have also perused the details of long term capital gains and short term capital gains reproduced by the ld.CIT. Only reason assigned by the CIT is that some of the shares were sold immediately after their acquisition. But the CIT nowhere pointed out that whether the deliveries of the shares were taken by the assessee or not. In our opinion, the ld.CIT failed to make a case that the assessee was trading in shares and not made investment. The reason assigned by the CIT is based only one circumstance, which was also not being conclusively demonstrated. No doubt, three scrip were sold by the assessee in very short span of time, but the total investment made by the assessee, with regard to the short term capital gain is in nine scrip. Similarly, under long term capital gain, it has purchased shares of three companies only. Therefore we are of the view that the ld.CIT could not bring sufficient material on record demonstrating the fact that the assessee was acting as trader and not an investor. Therefore, we allow the appeal of the assessee, and set aside the order passed under section 263 of the Income Tax Act, 1961 - Decided in favour of assessee. 2016 (7) TMI 16 Reopening of assessment - long term capital gains treated by AO as unexplained cash credit u/s.68 - AO has treated the share transaction as bogus on the plea that SEBI has initiated investigation in respect of Ramkrishna Fincap Pvt. Ltd. and investigation revealed that transaction through M/s Basant Periwal and Co. on the floor of stock exchange was more than 83% - Held that:- As far as initiation of investigation of broker is concerned, the assessee is no way concerned with the activity of the broker. Detailed finding has been recorded by CIT(A) to the effect that assessee has made investment in shares which was purchased on the floor of stock exchange and not from M/s Basant Periwal and Co. Against purchases payment has been made by account payee cheque, delivery of shares were taken, contract of sale was also complete as per the Contract Act, therefore, the assessee is not concerned with any way of the broker. Nowhere the AO has alleged that the transaction by the assessee with these particular broker or share was bogus, merely because the investigation was done by SEBI against broker or his activity, assessee cannot be said to have entered into ingenuine transaction, insofar as assessee is not concerned with the activity of the broker and have no control over the same. We found that M/s Basant Periwal and Co. never stated any of the authority that transaction in M/s Ramkrishna Fincap Pvt. Ltd. on the floor of the stock exchange are ingenuine or mere accommodation entries. CIT(A) decided issue in favour of the assessee, came to the conclusion that transaction entered by the assessee was genuine. Detailed finding recorded by CIT(A) has not been controverted by the department by brining any positive material on record. Accordingly, we do not find any reason to interfere in the findings of CIT(A). - Decided against revenue 2016 (7) TMI 15 Transfer pricing adjustment - valid remuneration model for benchmarking the TP adjustment - cost plus form of remuneration v/s commission based remuneration - Held that:- As relying on assessee’s own case qua the assessment years 2006- 07 and 2007-08 and case from Li & Fung India Pvt. Ltd. vs. DCIT [2011 (9) TMI 204 - ITAT, New Delhi] wherein remuneration model of markup of 5% on the operation cost without considering the value of the cost procured by the AE directly from the third party vendors in India has been held as a valid remuneration model for benchmarking the TP adjustment. So, we are of the considered view that the assessee is not into buy and sell rather it is a facilitator/service provider and its compensation model at ALP would not be commission of FOB cost of goods sourced from India, rather assessee company is entitled to cost plus remuneration and not a commission based remuneration. Bench marking the international transaction by using appropriate comparables - Held that:- TPO has not made a fair analysis of the comparables, though chosen by the assessee in its TP study for the AY 2007-08, rather relied upon his own finding for the earlier years which have undisputedly been set aside by the Tribunal. So, we are of the further opinion that the ld. TPO to benchmark international transactions afresh by examining the suitable comparables by providing opportunity of being heard to the assessee. So, file is ordered to be restored to the TPO to benchmark the international transactions in the light of the observations made hereinbefore. Disallowance of rent expenses being conversion charges paid to the Municipal Corporation of Delhi (MCD) - Held that:- DRP/AO have erred in disallowing the expenses of conversion charges claimed by the assessee and then added the same to the total income of the assessee company which are not to be considered as capital expenditure as the same have been expended for business purpose and without conversion of the property, the business would not have been started even and as such, allowable for deduction 2016 (7) TMI 14 Addition u/s 68 - amount claimed by the assessee as received from his mother-in-law - Held that:- Source of cash deposit has been explained by the assessee as business receipt, but it was not accepted by the AO. It is pertinent to note that the AO considered only deposit side of the bank account without considering the withdrawal. Further when the AO accepted the gross receipt from the business of studio, then to that extent the deposit in bank account can be considered as explained source if the expenditure incurred by the assessee from the corresponding withdrawal from the bank. Therefore this aspect of deposit and withdrawal in the bank account has not been examined by the authorities below. Accordingly we set aside this issue to the record of AO to examine the same afresh by considering the deposit as well as explaining the withdrawals by matching the same with the business receipts and business expenditure of the assessee. As regards the gift received from the mother-in-law, it is found that the source was explained as sale of agricultural land for a consideration of ₹ 10 lakhs. However, in the sale deed the consideration is stated to be only ₹ 2,20,000/-. Though the assessee produced confirmation of the purchaser of the agricultural land regarding the consideration of ₹ 10 lakhs vide agreement dt.21.01.2008, the said confirmation was not accepted by the CIT (A) on the ground that it was not produced before the AO. Apart from the confirmation of the purchaser of the agricultural land, the assessee also produced the declaration of the mother-in-law, father-in-law and other relatives regarding the gift of ₹ 7 lakhs given by the mother-in-law. Genuineness of the agreement has not been examined by the AO. Further the AO has also not examined the parties to the transaction to verify the claim of the assessee and rejected the claim at the threshold. Therefore in the facts and circumstances of the case, this issue is set aside to the record of the AO to conduct a proper enquiry and verification by examining the concerned parties to the transaction and then decide the issue after giving an opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purpose. 2016 (7) TMI 13 Estimation of business income without giving credit for the declaration made under the Voluntary Disclosure of Income Scheme [VDIS] - CIT (Appeals) has denied the benefit of declaration in the VDIS, 1997 on the ground that the assessee has failed to furnish the certificate issued by the competent authority under Section 68 (2) of VDIS, 1997 - Held that:- Merely because the concerned authority has not issued a certificate under Section 68(2), the fact of filing of disclosure of the income cannot be negated. We find that the assessee has declared income of ₹ 3,20,000 for the Assessment Year 1996-97 under VDIS, 1997 on account of investment in agricultural land, motor cycle and cash. The Assessing Officer has proceeded to estimate the business income of the assessee on the ground of household expenses and household investment of goods but the finding of the Assessing Officer is vague without giving any details of household expenditure and the alleged investment in household goods. As it is clear from the concluding part of the Assessing Officer that while estimating the business income of the assessee, the Assessing Officer has not given any reference of household expenditure, telephone expenditure and investment in household goods. Therefore in the absence of any tangible material to show that the assessee has incurred the expenditure to the extent of ₹ 3 lakhs, the estimation made by the Assessing Officer is only a guess work without supporting evidence. Since the assessee has already declared a sum of ₹ 3,20,000 under VDIS, 1997, therefore to the extent of said sum, no addition can be made as per the provisions of section 68 of the said scheme. In the facts and circumstances of the case and in view of the declaration of ₹ 3,20,000 as income under the VDIS, 1997 for the year under consideration, we delete the addition made by the Assessing Officer - Decided in favour of assessee. Unexplained cash credit under Section 68 - Held that:- There is no dispute that the assessee declared total cash of ₹ 1,57,500 comprising of ₹ 67,500 for the Assessment Year 1996-97 and ₹ 90,000 for the Assessment Year 1997-98. Therefore the cash in the bank account of the assessee to the extent of ₹ 1,20,000 is covered by the declaration made by the assessee of cash to the extent of ₹ 1,57,500 and accordingly, no addition can be made on account of cash found with the assessee to the extent of the said amount declared in the VDIS,1997. It is not the case of the Assessing Officer that apart from the cash found in the bank, the cash declared in the VDIS was also found with the assessee. Therefore in the absence of any other amount found by the Assessing Officer in cash the addition of ₹ 1,20,000 as unexplained cash credit under Section 68 cannot be made in view of the declaration made in the VDIS, 1997. Accordingly, we delete the addition made by the Assessing Officer on this count. - Decided in favour of assessee. 2016 (7) TMI 12 Revision u/s 263 - non inclusion of income from shareholders account - Held that:- Not only was the AO aware about the method of aggregation followed by the assessee, he had also taken a lawful and possible view. In the circumstances we do not find any error in the order of the AO which can be vested by a Section 263 jurisdiction. The twin conditions viz., there should be an error and such error should be prejudicial to the interests of Revenue are not satisfied. We have no hesitation in setting aside the order of CIT - Decided in favour of assessee 2016 (7) TMI 11 Acceptance of turnover - non maintenance of books of accounts - Held that:- The assessee is dealing in two kinds of businesses, viz., retail and wholesale business. In retail business, assessee is dealing in lubricant oil, having proper vouchers from manufacturers and selling it in organised sector by maintaining proper books of account. It was audited only to the extent of retail business. Where as in the wholesale business, he had not maintained any books of account, and all the vouchers relating to purchase and sales were self-made. There is no dispute with regard to the turnover. AO and CIT(A) rejected the books of both the businesses and preferred to estimate the income. Ld. AR submitted before us clearly that the retail business was audited by a Chartered Accountant as per the provisions of section 44AB. The issue before us is relating to wholesale business, which was not audited and only self-made vouchers are available. Since there is no change in the nature of business from AY 2009-10 to the current AY, we do not find any reason to adopt the rate of 3.5% on wholesale business as adopted by the AO in the previous AY 2009-10. With regard to retail business, assessee offered 3% in the AY 2009-10 and AO made some disallowance. But in the current AY 2011-12, assessee had offered only 2%. In line with the income determined in AY 2009-10, we are inclined to direct AO to assess the income of the assessee @ 3.5% of the total turnover i.e. both retail and wholesale turnover. Undisclosed income u/s 69A - Held that:- As submitted by the assessee that the sales of the wholesale business were deposited in personal savings bank. Assessee had prepared self-made vouchers to prove the sales made. As can be seen from the bank statement submitted by the assessee, the cash deposits are in small denominations ranging from ₹ 2000/- to ₹ 25000/-. Revenue has not brought any material/evidence on record contrary to the submissions of assessee to prove that the assessee had other source of income. Therefore, we are inclined to accept the contention of the assessee that these cash deposits were made out of the wholesale business. Moreover, the Hon’ble Jurisdictional High Court in the case of Maddi Sudarshnam Oil Mills Co.[1959 (2) TMI 27 - ANDHRA PRADESH HIGH COURT ] has observed that when books of account are rejected and income is estimated, Assessing Officer is not entitled to make further addition basing on the same books of account 2016 (7) TMI 10 Eligibility for deduction u/s 80IAB for interest income - whether interest income was inextricably linked to the company’s business activity and therefore eligible for deduction under section 80IAB? - Held that:- On perusal of the financial statements of the assessee company the main source of income being lease income and assessee offered interest income. Further, similar interest income for the assessment year 2007-2008 was obtained. The ld. Authorised Representative could not support with explanation whether assessee has claimed deduction u/s.80IAB of the Act for the assessment year 2008-09 on interest income. We found the assessee could not substantiate the direct nexus with the industrial undertaking and we rely on decision of Supreme Court in the case of Pandian Chemicals Ltd vs. CIT [2003 (4) TMI 3 - SUPREME Court] wherein held that interest derived by the industrial undertaking of the assessee on deposits made with the Electricity Board for the supply of electricity for running the industrial undertaking could not be said to flow directly from the industrial undertaking itself and was not profits or gains derived by the undertaking for the purpose of the special deduction under section 80HH - Decided against assessee 2016 (7) TMI 9 Adoption of method of accounting - adoption of 8% of the construction cost under work-in-progress method - whether “Project Completion Method” adopted by the assessee is correct or “Percentage of Completion Method” adopted by the Assessing Officer is correct to determine the revenue and costs of a project? - Held that:- The mere fact that there does exist a method of accounting for profits of each year is no justification for rejecting an equally recognized method of accounting whereby the profits of the adventure/project are determined when the whole adventure/project is completed; being consistently followed by an assessee, without suffering from an infirmity/ defect calling for a rejection of the same for the reason that true/fair profits of the adventure/project being not deducible thereby. The Assessing Officer having not drawn any finding that the accounts of assessee suffer from any defect nor that from the method of accounting followed by assessee, true/correct profits of assessee cannot be deduced and the assessee having been following the "completed project" method consistently, which being a recognized method of accounting, the assessee's method of accounting cannot be rejected nor is there any justification for estimating assessee's profits of the year from the assessee's business activity of building construction by resorting to applying of percentage of profit to the work-in-progress of the year. In view of the above discussion, we set aside the orders of authorities below and direct the Assessing Officer to accept the method adopted by the assessee for all the assessment years. - Decided in favour of assessee Charging of interest under section 234A - Held that:- The interest under section 234A is chargeable from the date of expiry of the notice period given under section 153A to the date of completing the assessment under section 143(3) r.w.s. 153A of the Act.The interest under section 234B is to be levied only on the additional tax levied on the enhanced income determined under section 143(3) r.w.s. 153A of the Act. Therefore, the period of charging of interest should be from the date of determination of income under section 143(1) or 143(3) to the determination of enhanced income under section 143(3) r.w.s. 153A of the Act. Accordingly, the Assessing Officer is directed to verify the period of charging interest and decide the issue afresh. Accordingly, this ground of appeals filed by the assessee is allowed for statistical purposes. 2016 (7) TMI 8 Eligibility of deduction u/s 10B/10A - STPI unit - whether the assessee was eligible for deduction under section 10B or 10A of the Act? - Held that:- The assessee is admittedly, recognized by the Director of STPI and in view of the ratio laid down by the Hon’ble Delhi High Court in CIT vs. Regency Creations Ltd. (2012 (9) TMI 627 - DELHI HIGH COURT ), we hold that the assessee is not entitled to the claim of deduction under section 10B of the Act. On the other hand, the assessee once satisfied the conditions laid down in section 10A of the Act, is entitled to the said claim of deduction irrespective of the fact that the assessee in the original return of income had not made such claim under section 10A of the Act, but had made a claim for deduction under section 10B of the Act. Following the same parity of reasoning, we uphold the order of CIT(A) in allowing the claim of assessee under section 10A of the Act. Accordingly, the grounds of appeal raised by the assessee in allowing the said deduction under section 10B of the Act are dismissed. Similarly, the appeal filed by the Revenue is against the order of CIT(A) in allowing the claim of deduction under section 10A of the Act is also dismissed. 2016 (7) TMI 7 Addition u/s 40A(2)(a) in respect of sub-contract payments - unreasonable and excessive expenditure - Held that:- The market value of services rendered by M/s. Shri Bharat Cemco Pvt. Ltd. is to be seen from the angle of contract received by the assessee. The total work contract has been sub-contracted and even if we consider the direct expenses which have been debited by the assessee as part of cost of contract, the assessee for the year under consideration has declared profit of ₹ 1.34 crores in the Hospet division. The perusal of assessment order itself reflects that the assessee to have declared income at ₹ 80,47,920/- i.e. after claiming deduction on account of salary payable to partners. Further, the concern M/s. Shri Bharat Cemco Pvt. Ltd., in turn, had filed the return of income declaring total income of ₹ 1.75 crores. In case, the profits declared by the assessee and M/s. Shri Bharat Cemco Pvt. Ltd., are considered, first of all, there is no loss of revenue. Even otherwise, we hold that where the market value of services provided by the assessee is available on record i.e. the receipts received by the assessee against the contract between the assessee and NMDC, which in turn, is sub-contracted to M/s. Bharat Cemco Pvt. Ltd., we find no merit in the order of authorities below in holding that the provisions of section 40A(2)(a) of the Act are attracted in the case. In the absence of any finding by the Assessing Officer that the payments made to M/s. Bharat Cemco Pvt. Ltd., were unreasonable and excessive, we find no merit in the disallowance of any part of sub-contract charges paid by the assessee to the said concern. Accordingly, we direct the Assessing Officer to delete the addition - Decided in favour of assessee. 2016 (7) TMI 6 Assessability of gain on purchase and sale of shares - business income or capital gain - Held that:- In the present case, it is an established position that assessee company is an investment company primarily involved in undertaking transactions in the shares of Piramal Group of companies. This feature contrasts it from an investment company, who otherwise freely operates in the market place looking for opportunities to trade in all or any available scrips in the market. Therefore, in such a situation, in our view, the onus is on the Revenue to establish that assessee has indeed undertaken trading in the shares, though the transaction have been confined to the scrips of Piramal Group of companies. Having regard to the facts and circumstances of the case, we are unable to uphold the stand of the Revenue that the purchase and sale of shares have been undertaken regularly so as to be treated as a business activity. Reference made by the CIT(Appeals) in assessment year 2001-02 to the factum of assessee not disputing the stand of Assessing Officer in assessment year 1999- 2000 is not determinative of the issue because ostensibly, the amount involved was very small and for that reason assessee did not prefer an appeal before the Tribunal, an assertion of the Ld. Representative for the assessee, which is not controverted by the Ld. Departmental Representative for the Revenue before us.Considering the entirety of facts and circumstances of the case, we hereby affirm the stand of the assessee and hold that the impugned income earned on sale and purchase of shares is liable to be assessed as capital gains, as claimed by the assessee.- Decided in favour of assessee Enhance the income on account of disallowance of interest cost - Held that:- Consequent to our decision to treat the gain on sale and purchase of shares as income assessable under the head capital gains, the interest costs incurred for investment in shares held as investment is liable to be added to the cost of acquisition of the shares for computing capital gains. In this view of the matter, the disallowance made by the CIT(Appeals) becomes untenable. - Decided in favour of assessee 2016 (7) TMI 5 Assessability of the profit on sale and purchase of shares and securities - business income u/s capital gain - Held that:- In view of the above precedent, the stand of the lower authorities in treating the assessee as a trader in shares is unsustainable. Pertinently, in the instant assessment order, the Assessing Officer has considered the ‘assessment records for the earlier years’ as well to say that the assessee is not an investor in shares. Now, if in the earlier period, the assessee has been held by the Tribunal to be an investor in shares, consequently, in the instant year also such a finding is inevitable. The Tribunal in its order has noticed that in assessment year 2004-05 the department has itself treated the assessee as an investor in shares while making the assessment under section 143(3) of the Act. Thus, having regard to the history of the case, the action of the income-tax authorities in assessing the gain on sale and purchase of shares and mutual funds as business income is untenable - Decided in favour of assessee Disallowance u/s 14A - Held that:- Quite clearly, the provisions of Rule 8D of the Rules are not applicable for the assessment year under consideration following the ratio of the judgment of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd.(2010 (8) TMI 77 - BOMBAY HIGH COURT ). Therefore, the disallowance of ₹ 6,24,577/- worked out by the Assessing Officer is not appropriate. So however, it also emerges from the record that apart from asserting that no amount debited to the P&L Account pertains to the exempt income, assessee has not lead any further material or evidence thereof. Be that as it may, in our view, it would be appropriate that disallowance of 5% of the exempt income i.e. 5% of ₹ 7,33,030/- be considered as a reasonable disallowance under section 14A of the Act in the present case. Therefore, we set-aside the order of the CIT(Appeals) and direct the Assessing Officer to restrict the disallowance under section 14A at 5% of the exempt income.- Decided in favour of assessee 2016 (7) TMI 4 Addition u/s 69A - Held that:- Once the assessee had offered an explanation fortified with documentary evidences and further corroborated by a third party, the onus reverted to the Revenue to prove that the facts were not correct. The Department was patently wrong in drawing an adverse inference based upon suspicion or perception of culpability and hence the addition cannot be sustained. The addition is accordingly deleted. - Decided in favour of assessee. 2016 (7) TMI 3 Reopening of assessment - Held that:- We quash the entire reassessment proceedings by holding that the non-issuance of the statutory notice u/s 143(2) in the instant case is an incurable defect and therefore the entire reassessment proceedings were bad in law and void ab initio. - Decided in favour of assessee 2016 (7) TMI 2 Penalty u/s 271(1)(c) - depreciation on the entire cost of factory building and land sold - admission of the additional evidences - Held that:- In the present case, it appears that the assessee was claiming depreciation on the entire cost of factory building and land at Sivakashi, Tamilnadu. Later on when the factory was sold, its value was reduced from the block of fixed assets and no long term capital gain was shown on the land. The assessee furnished additional evidences by way of computation of income for the assessment years 2010-11 to 2014-15 with balance sheet and the assessment orders. These documents are vital to decide the issue under consideration and go to the root of the matter, therefore, these are admitted. However, since these documents were not available to the ld. CIT(A) for his consideration, we, therefore, deem it appropriate to set aside this issue back to the file of the Ld. CIT(A) to be adjudicated afresh in accordance with law, after considering the additional evidence furnished by the assessee first time before the ITAT and by providing due & reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. 2016 (7) TMI 1 Reopening of assessment - non service of notice - Held that:- Notice under section 148 of the Act dated 22.03.2013 have not been served upon assessee, therefore, the re-assessment made under section 147/148 cannot be held to be valid because the same is bad in law. There is no question of service by affixture by the Inspector at the wrong address upon assessee. The ld. CIT(Appeals), therefore, in proper perspective correctly set aside the re-assessment proceedings. We do not find any justification to interfere with the order of the ld. CIT(Appeals) in allowing the appeal of the assessee Customs 2016 (7) TMI 42 Revocation of CHA license - Writ application - Misuse of IEC - allegations of misconduct against the petitioner - Held that:- We would have granted the petitioner the liberty to avail the alternative remedy, but since we have considered and discussed the merits of the case, we are not inclined to do so. We deprecate the conduct of the petitioner in making statement in paragraph 5 of CWJC No. 5540 of 2015, as discussed above. There is statement in the said paragraph that said Sheikh Khursheed resigned his post on 30.01.2013. Neither resignation letter has been brought on record nor there is any material to show that in compliance with the requirement under Clause (5) of Regulation 17 of Customs Broker Licensing Regulations, 2013, any intimation was given to the competent authority. writ applications dismissed - Decided against the applicants. 2016 (7) TMI 41 Import of poppy seeds from the supplier of China - permission for import of restricted items - conditions for registration of import contract of Poppy seeds - constitutional validity of the Public Notice was put to challenge in W.P. [2016 (4) TMI 790 - MADRAS HIGH COURT] and this Court vide order dated 05.04.2016, had set aside the Public Notice dated 27.01.2016 - Held that:- second respondent directed to entertain the application dated 18.04.2016 in accordance with law in the light of the order as reported in [2016 (4) TMI 790 - MADRAS HIGH COURT] - Decided in favor of appellant. 2016 (7) TMI 40 Delay in filing of appeal before the Commissioner (appeals) - condonation of delay - Reassessment of bill of entry - higher duty was paid due to wrong classification of import of natural rubber - Appellant has contended that the order of assessment, dated 26.08.2006, was erroneous, on the grounds that the imported goods are classifiable under CTH 4001 22 00 under CN 21/2002 Sl.No.491, which attracts duty at the rate of 20% + Nil + 2% + 4%, and at the time of assessment, the goods were classified under CTH 400110.10, which attracts higher duty and at the time of assessment, the same was not noticed by them. Held that:- When the appeal itself is time barred and when the appellate authority or the CESTAT, Chennai, cannot condone the delay, in terms of the statutory provisions, prescribing a specific period of limitation, in the light of the discussion and decisions, extracted supra, we are of the considered view that the substantial questions of law raised by the appellant cannot be held in favour of the appellant. Consequently, the Civil Miscellaneous Appeal is dismissed. - Decided against the assessee. Corporate Laws 2016 (7) TMI 34 Whether the plaintiff No.2 has authority to file suit on behalf plaintiff No.1 - lack of authorization - there was no board resolution authorizing Plaintiff No.2 to file the present suit on behalf of Plaintiff No.1 - Held that:- The Plaintiff No. 2 admittedly being the Promoter and Managing Director of the Company has not only not produced the Investment Agreement and/or Investment Agreement-I and/or the Subscription Agreement but has also not asserted before this Court that there is any inconsistency between the provisions of Articles 1 to 36 and the provisions of the Investment Agreement and/or the Investment Agreement-1 and/or the Subscription Agreement. It is therefore once again established that the Plaintiff No. 2 is trying to raise issues only with a view to keep the suit pending and delay the determination of the preliminary issue. Sub-clause (t) of Article 17A makes it clear that the litigation must be "material in the context of the Company's business" and need not actually relate to its business. A defamatory allegation concerning the Company's business, which had caused a considerable adverse impact on the Company's business leading to "substantial damages to the tune of ₹ 500 crores" can only be described as "material in the context of the Company's business". In the circumstances it is clear that as per the Plaintiffs' own case, the alleged defamatory statements are extremely material in the context of Plaintiff No.1's business and the Plaintiffs cannot be heard to say that the present suit is not in the context of the Company's business , let alone not being material to it. The present suit qua Plaintiff No. 1 is not maintainable for want of authority of Plaintiff No. 2 to file the suit on behalf of Plaintiff No.1 and the Suit is accordingly dismissed qua Plaintiff No.1 2016 (7) TMI 33 Scheme of Amalgamation - Held that:- This court is of the view that that the observations made by the Regional Director, Ministry of Corporate Affairs, have been addressed satisfactorily and hence do not survive. No directions are required to be issued to the petitioner companies. This court is of the view that based on the material on record it can be concluded that the present Scheme of Amalgamation is in the interest of the shareholders and creditors of both the companies as well as in the public interest, therefore, the same deserves to be sanctioned and the same is hereby sanctioned. 2016 (7) TMI 32 Scheme of Arrangement in the nature of Demerger and Transfer of the demerged Undertaking - Held that:- The observations made by the Regional Director, Ministry of Corporate Affairs, have been suitably addressed and hence do not survive. This court has come to the conclusion that the present scheme of arrangement is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned. Prayers in terms of paragraph 23(a), and (b) of the Company Petition No. 186 of 2016 for the Demerged Company including the Restructure of Share Capital in form of Utilisation of Securities Premium Account to the extent required as proposed vide clause 15 of the scheme are hereby granted. Similarly prayers made in terms of paragraph 17 (a) of the Company Petition for the Resulting Company are hereby granted.The petitions are disposed of accordingly. Service Tax 2016 (7) TMI 52 Refund of service tax paid under the Construction of Complex Service which was not payable - unjust enrichment - refund to be made the appellant or to the buyers of the flats - The appellant appeared and contested the show cause notice stating therein that the customers of the appellant are demanding refund of the service tax amount paid by them, in view of the clarification by the board that service tax was not payable and accordingly, the refund may be granted directly to the buyers of the flats. Held that:- the assessee is not entitled to refund, but it is customers of the assessee, who purchased flats, are entitled to the refund - the appellant have filed the details of his customers, with the revenue in the adjudication of the refund proceedings. The assessee also mentioned that the customers are pressing for refund and some of them have also approached various judicial forums, including the Consumer forum. In view of this matter, I set aside the impugned order and remand the issue back to the adjudicating authority, who shall examine the whereabouts of the person's who deposited the service tax to the appellant, for the purchase of flats, and after such verification having been carried out, shall grant refund to the buyers of the flats out of the said amount of ₹ 16,85,956/-. The Adjudicating Authority shall issue the refund cheques in favour of the respective buyers of the flats, to which the appellant assessee shall not be entitled to make any objection - Decided in favor of assessee by way or remand. 2016 (7) TMI 49 Waiver of pre-deposit - Commercial or industrial construction service - Construction of sports stadium for Commonwealth Games - construction of watch tower and raising height of security wall around Siri Fort Sports Complex for security purpose in connection with Commonwealth Games and after the Commonwealth Games, these were pulled down as they were no longer required - Held that:- appellant has made out a case for complete waiver of pre-deposit and we order accordingly staying recovery of the impugned liability during pendency of the appeal - Stay granted. 2016 (7) TMI 48 Refund - sampling, weighing and stuffing supervision and travelling charges as per evidence available cannot be covered under the scope of technical testing and analysis service and therefore refund on that count is not admissible. 2016 (7) TMI 47 Refund of service tax on services used for export of goods - Notification No. 41/2007-ST - Held that:- Following the precedents laid down by the CESTAT orders, referred to above and in view of ld. Consultant’s concession, the appeal is allowed in the following terms: (i) Claim of ₹ 8,464/- pertaining to six shipping bills is held to be time-barred. - (ii) The refund claim relating to cleaning activity and technical inspection certification service is held to be inadmissible. - (iii) The remaining amount out of the impugned refund is held to be admissible. - Decided partly in favor of assessee. 2016 (7) TMI 46 Waiver of pre-deposit - Construction services - appellant argued that most of commercial or industrial activities have taken place in respect of construction of dams and related to the structure and therefore the same is not chargeable to service tax. He also argued that the residential complexes constructed by them was used by the service recipient and therefore, the same is also not covered by the definition of “residential complexes” as defined under section 65(91a) of the Finance Act, 1994 - considering the rival submission, stay granted partly. CST, VAT & Sales Tax 2016 (7) TMI 39 Valuation - reduction of discount given to customers on the sales finalized at the year end from the next year's turnover - assessment year 2007-08 - Since this event took place during the financial year 2008-09, the assessee claimed credit of such discounted sale price and the consequential reduced tax collected from the consumers in such year. - Commissioner was of the opinion that the benefit of discounted price could be granted to the dealer only during the same year in which the event took place. - Tribunal observed that he procedure adopted by the assessee was legal and proper. - Sections 60 and 61 of the Gujarat VAT Act and Rule 43 of the VAT Rules Held that:- In terms of Sections 60 and 61 of the VAT Act thus, the assessee was entitled to issue credit notes once the amount of tax shown as charged in the tax invoice exceeded the actual tax charged in respect of the sale concerned. This is precisely what the assessee had done and claimed benefit of reduced tax collected from the purchasers. This devise, in our opinion, was not prohibited by Section 8 of the VAT Act, reliance upon which has been made by the department. In essence what the assessee did, was to reduce the total turnover of the assessment year 2008-09 to the extent its value after discount during the previous year had come down which would have a direct relation to the tax payable by the assessee. - No demand - Decided against the revenue. 2016 (7) TMI 38 Revision of assessment order to deny the exemption - Commissioner passed his revisional order on 21/22102010 and held that the petitioner was in breach of the condition of the sales tax exemption, since the petitioner discontinued the unit before the prescribed period - The Tribunal turned down the petitioner's contention that the discontinuation of the unit being on account of adverse financial conditions, cannot be seen as a breach of condition - Held that:- despite the breach of condition, AO granted benefit of exemption. The action was thus clearly erroneous. Under section 67 of the Gujarat Sales Tax Act, Commissioner had power to take any order passed by the said authority in revision and pass such order as he thinks just and proper. Had the department demanded the past dues from the petitioner, for which, the exemption was already granted, perhaps the question of applicability of section 49 and 50 of the Act may arise. However, in the present case, all that the Commissioner did was to withdraw the benefit of adjusting the ascertained sales tax liability against the surviving exemption limit. - Demand confirmed - Decided against the petitioner. 2016 (7) TMI 37 Waiver of pre-deposit - appeal was pending before the tribunal - Section 33(6) of the Act read with Rule 39 of the Andhra Pradesh Value Added Tax Rules, 2005 - claim of exemption by the retail dealers from even mentioning the date and description of the goods in the sale bills issued by them - Held that:- As the substantive appeal is still pending before the Tribunal, it would not be appropriate for us to examine the scope of Rule 26(1) of the Rules or to record any finding on whether Rule 26(1) of the Rules exempts retail dealers from even mentioning the date and description of the goods in the sale bills issued by them. Suffice it to observe that the prima facie conclusion of the Additional Commissioner in this regard cannot be said to suffer from perversity necessitating exercise interference in proceedings under Article 226 of the Constitution of India. The mere fact that the petitioner paid 25% of the disputed tax would not by itself justify grant of stay. While the petitioner’s request, that the impugned order passed by the Additional Commissioner must be set aside, necessitates rejection, it is made clear that, while paying the balance tax due in terms of the order passed by the revisional authority, the petitioner shall be given credit for the amount paid by them towards the tax due. - writ petition dismissed - Decided against the petitioner. 2016 (7) TMI 36 Disallowance of input tax credit to the petitioner on purchases - registration certificate of the supplier was cancelled with retrospective effect from 01.01.2007 - Held that:- the very initiation of the revisional proceedings was itself without jurisdiction, inasmuch as, the same was based upon material extraneous to the record of order of the officer appointed under section 16 of the Act to assist the Commissioner. Moreover, even on merits, for the reasons recorded hereinabove, the court is of the view that the impugned order passed by the Tribunal cannot be sustained. - credit allowed - Decided in favor of petitioner. 2016 (7) TMI 35 Levy of entry tax on goods vehicles - The contention raised by the petitioner is that the vehicle in question is not a motor vehicle and it operates on chains and it cannot ply in the road. - Held that:- the petitioner has purchased JS140, HD dipper, 0.63 bkt with Preclar. The photographs of the vehicle in question has also been produced before this Court which shows that the vehicle operates on chains and does not operate on inflated tyres. - Demand set aside - Decided in favor of petitioner. Wealth tax 2016 (7) TMI 50 Net wealth - whether the land on which the building was under construction is to be included in the net wealth for the purpose of charge of wealth tax u/s.2(ea) and was not excluded u/s.40 clause (v) r.w explanation 1 ? - Held that:- Tribunal was justified in holding that the CIT(A) was not justified in excluding the land on which building was under construction from the purview of charge to wealth-tax. This Court vide the aforesaid decision has held that if the building under construction is not to be regarded as building then the land on which the construction is started will have to be included in the assets under clause (v) because land mentioned therein does not carry any qualification or the adjective vacant and that even otherwise the land does not lose its value as an asset simply because construction is started thereon. We are in complete agreement with the reasonings adopted by the Tribunal. - Decided in favour of revenue and against the assessee. Indian Laws 2016 (7) TMI 51 Arbitration proceedings - whether the disputed claim is live claim or not - Hon’ble Chief Justice giving the reasons rejected the application in Arbitration Case No. 89 of 2006 holding that the claim made by the appellant is not a live claim. - Held that:- In sub-Clause (g) the period of two years under which the Government is entitled to make recovery is “from the date of payment of the undisputed portion of the final bill”. The examination of the additional materials brought on this appeal, does indicate that the case required consideration of relevant bills and certificates and determination on the question as to whether the claim laid by appellant was a dead claim and was not a live claim depended upon scrutiny of relevant documents. The pleadings in the proceeding under Section 11 by the appellant were clearly to the effect that on 10.04.2001, he was paid only undisputed part and the appellant has reserved his right to raise claim to the disputed part. The disputed claims having never been adjudicated, we are of the view that there was a dispute which needed an adjudication after looking into all relevant documents, bills and certificates which could have been appropriately examined by Arbitral Tribunal and the observation of the Chief Justice “As the appellant has failed to prima facie show this court that there was a live claim of the appellant” does not commend us. The claim raised by petitioner in the facts of the case could not have been said to be a dead claim - As a consequence thereof, the application made by the appellant under Section 11 of the Act is allowed. - Matter remitted back to High Court for appointing the arbitrator for deciding the disputes which have arisen between the parties - Decided in favor of appellant. 2016 (7) TMI 45 Power of the SC to grant pardon or remission - Conviction u/s 21 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS) - Held that:- The present factual matrix does not remotely suggest that there has been violation of any fundamental right. There is no violation of any law which affects the fundamental rights of the petitioners. The argument that when a pardon or remission can be given under Article 72 or 161 of the Constitution by the constitutional authority, this Court can exercise the similar power under Article 32 of the Constitution of India is absolutely based on an erroneous premise. Article 32, as has been interpreted and stated by the Constitution Bench and well settled in law, can be only invoked when there is violation of any fundamental right or where the Court takes up certain grievance which falls in the realm of public interest litigation - Decided against the appellant. 2016 (7) TMI 44 Acquittal of the accused from the charges u/s 8/15 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS) - Held that:- Section 43 being not attracted search was to be conducted after complying the provisions of Section 42. We thus, conclude that the High Court has rightly held that non compliance of Section 42(1) and Section 42(2) were proved on the record and the High Court has not committed any error in setting aside the conviction order. - The High Court has given the sufficient reasons and grounds for setting aside the conviction order in which we do not find any infirmity so as to interfere in this appeal. - Decided against the state. 2016 (7) TMI 43 Conviction u/s 21 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS) - Held that:- Since PW-7 himself was the gazetted officer, it was not necessary for him to ensure compliance of Section 42 - The High Court was right in upholding the procedure followed by the raiding party for ensuring compliance of Section 50 and rightly held against the appellant on this issue. We find no ground to take a different view than the one taken by the High Court and accordingly uphold the finding on this issue against the appellant. - there is no merit in this appeal - Decided against the appellant.
← Older Newer →

Quick Updates:

What's New:
Latest Case Laws

What's New:
Latest Notifications

What's New:
Latest Circulars

F: Stock damaged in recent floods

F: GST on Solar Plant

A: PENALTY ON DIRECTORS CONTRAVENING EXPORT REGULATIONS UNDER FOREIGN EXC...

A: Difference between “License” and “Royalty”

A: Penalty proceedings under Section 130 of the CGST Act cannot be initia...

N: Inland Container Depots for loading and unloading of goods - Seeks to ...

C: Guidelines to Stock Exchanges, Clearing Corporations and Depositories

T: Supreme Court Upholds Validity of Re-Assessment Notices Issued During ...

F: Transfer of ITC without filing ITC-02

F: assessment order

F: INTERMEDIARY SERVICES OR EXPORT SERVICES

H: Revision: Hospital receipts verified, partial refunds & fees paid subs...

F: ITC Issue in case of Acqusition of Company in Insolvency

H: Goods matched documents like e-way bill and invoices; detention order ...

H: Goods Inspection Matches E-Way Bill, Lack of Tax Evasion Intent Quashe...

H: Income tax reassessment validity: AO initiated proceedings u/s 147 ins...

H: Reassessment Rules Interpretation: Taxpayer Wins Over Accommodation En...

H: Sale-purchase loss disallowed unreasonably by tax officer, commercial ...

H: Building sale value can't determine depreciation; actual consideration...

H: Loan to equity conversion attracts income tax on excess share premium ...

H: Property purchase: Joint owners pay via banking channels before regist...

H: Tax exemption limit for leave encashment: Local authorities' employees...

H: Tax assessments beyond 6-year limit quashed, satisfaction note lacked ...

H: Cash found in lockers linked to temple trust and educational foundatio...

H: Microphone Tech Classification: Functionality Over Technology.

H: Exemption from Social Welfare Surcharge on duty-free imports via scrips.

H: Claim for performance pay not an operational debt under IBC; Multiple ...

A: Director Identification Number

A: No GST is applicable for the services provided by the Director under p...

A: Income Tax Act Revamp (Comprehensive Review): Status and Suggestion on...