Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 28, 2020
Case Laws in this Newsletter:
GST
Income Tax
CST, VAT & Sales Tax
Indian Laws
Articles
News
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Centre Released ₹ 1,65,302 Crore as GST Compensation to States/UTs for the FY 2019-20 against cess collection of ₹ 95,444 crore
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DGGI books 3 firms for Tax evasion of more than ₹ 600 Crore
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Single window system to be set up soon for industrial clearances and approvals;
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Tariff Notification No. 62/2020-Customs (N.T.) in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver
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Clarification on FRDI Bill
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Are Dynamic Shifts Underway in the Indian Economy?
(Shri Shaktikanta Das, Governor, Reserve Bank of India - July 27, 2020 – Addressed to CII National Council, Mumbai)
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Detention of goods along with the vehicle - invoices did not bear continuous numbers - The entertainment of such a doubt by the authority cannot be a justification for detaining the goods in question, especially when they were admittedly accompanied by tax invoices as also e-way bills that clearly indicated the particulars that were required by Rule 46 of the GST Rules - The detention in the instant case cannot be justified under Section 129 of the GST Act. - HC
Income Tax
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TP Adjustment - working capital adjustment - No document whereby the assessee has made any request before the learned transfer pricing officer or before the learned dispute resolution panel with respect to granting of working capital adjustment. Even in the transfer pricing study report it could not be shown that assessee himself has claimed any working capital adjustment while preparing its comparability analysis - Additions confirmed - AT
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Set–off of business loss against the other heads of income while completing the assessment - we admit the additional ground considering the fact that the AO has also accepted the loss while computing the income of the assessee, however, whether such loss can be set–off against income from other heads is subject to verification by the AO. - AT
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Deduction u/s 10B denied - alternative claim of deduction u/s 10A was not entertained by the CIT(A) primarily for the reason that the assessee had not claimed the same in original returns filed - even if the audit report is not filed in Form No.56F along with the original return, it is not fatal, provided the assessee subsequently files the same and satisfy all other conditions mentioned for claiming deduction u/s 10A of the I.T.Act - AT
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Reopening of assessment - Return filed beyond the time prescribed u/s 139(4) and therefore, was treated nonest by the AO - AO has exceeded his jurisdiction in reassessing issues other than the issues in respect of which the proceedings are initiated and reasons for the initiation of those proceedings cease to survive. - AT
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Penalty u/s 271D - violation of Section 269SS - reasonable cause to be entitled to the benefit of Section 273B - In view of 2 decisions of tribunal, favoring the assessee, matter restored back to ITAT for fresh consideration - HC
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Exemption u/s 54F - capital gains earned by the assessee during the previous year - Whether tribunal was right and justified in granting exemption u/s 54F when the unutilised portion of the sale proceeds were not deposited in the capital gains account scheme before the due date for filing of return u/s 139(1)? - Held Yes - HC
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Order u/s 197 - refusing to grant a certificate of deduction of tax at source (TDS) at NIL rate - In the event the petitioner is aggrieved by the said reasoned order, it shall be open to the petitioner to file appropriate legal proceedings in accordance with law - HC
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Unexplained cash credits u/s 68 - unsecured loans - non appearance of the parties to the proceedings before the Ld. AO cannot be a sole ground for taking adverse inference against the assessee, more particularly, when the assessee has filed necessary evidences to prove loans taken from above parties. - AT
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Undervaluation of closing stock - method of valuation of the marble block - assessee has failed to justify the quantum of defective stock of marble blocks and its realizable value, thereby the addition made by the AO is hereby confirmed. - AT
VAT
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Rejection of application filed under the Amnesty Scheme - the State's appeal would be rendered infructuous on a settlement arrived at under Section 31A is an inevitable consequence on deposit of amounts determined under sub-section (7) - there is no power given to the State to reject an application and the requirement under sub-section (7); on the filing of an application, is determination of the amounts due as tax, and other amounts, and intimation for the purpose of settlement in installments not exceeding six and not travelling beyond 31.03.2020. - HC
Case Laws:
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GST
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2020 (7) TMI 635
Detention of goods along with the vehicle - invoices did not bear continuous numbers - power to detain a vehicle in the course of transit - section 129 of CGST Act - HELD THAT:- In the instant case, it is not in dispute that e-way bills did accompany the goods. It is also not in dispute that the transportation was covered by tax invoices. The objection of the respondents is only that the invoices did not bear continuous numbers and hence they suspect that the invoices bearing serial numbers that fell between the numbers on the invoices produced at the time of transportation, could have been used for transportation of other goods that had not been brought to the notice of the Department. The entertainment of such a doubt by the authority cannot be a justification for detaining the goods in question, especially when they were admittedly accompanied by tax invoices as also e-way bills that clearly indicated the particulars that were required by Rule 46 of the GST Rules - The detention in the instant case cannot be justified under Section 129 of the GST Act. The respondents are directed to forthwith release the goods detained by Ext.P4 notice - petition allowed.
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2020 (7) TMI 634
Freezing of petitioner's bank accounts - Section 159 (5) of the Central GST Rules, 2017 - HELD THAT:- The present petition is disposed of with the directions to the authority concerned to positively decide the same on or before 27.07.2020 by passing a speaking order.
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2020 (7) TMI 633
Revocation of cancellation order - cancellation of registration of petitioner - contention of the petitioner is that the orders of the Assessing Authority and of the First Appellate Court cannot be sustained now in view of the Central Goods and Services Act (Removal of Difficulties Order), 2020 issued under Section 172 of the Act - HELD THAT:- It was held in the Gazette Notification issued on 25.6.2020 about the time limits of filing application - Learned Standing Counsel did not dispute that the Gazette Notification. The order dated 10.1.2020 passed by the Assessing Authority and the Appellate Order dated 13.2.2020 are set aside - The application dated 7.12.2019, which was filed by the petitioner for the revocation of the cancellation order dated 19.9.2019, shall now be decided in accordance with law within a period of 15 days from the date of production of a copy of this order.
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Income Tax
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2020 (7) TMI 632
Order u/s 197 - refusing to grant a certificate of deduction of tax at source at NIL rate, on payments to the petitioner company by its customers - HELD THAT:- Respondents while issuing the impugned certificate has placed detailed reasons on record - the petitioner had in its own application for grant of certificate of deduction of tax at source at NIL rate under Section 197 had mentioned the applicable rates as 2% and/or 10% during Financial Year 2020-21. She also states that the projected gross receipts during this Financial Year 2020-21 is projected to be 78% more than the preceding year according to the petitioner itself. Since detailed reasons are stated to be available on record, the present writ petition and the pending application are disposed of with a direction to the respondents to furnish a copy of the reasons to the petitioner within a week. In the event the petitioner is aggrieved by the said reasoned order, it shall be open to the petitioner to file appropriate legal proceedings in accordance with law. It is clarified that all the rights and contentions of the parties are left open.
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2020 (7) TMI 631
Interest received under Section 28 of the Land Acquisition Act, 1894 - HELD THAT:- Different High Courts subsequent to the judgment of CIT Vs. Ghanshyam Dass HUF [ 2009 (7) TMI 12 - SUPREME COURT] have held that tax is payable on the interest received under Section 28 of the Land Acquisition Act, under the head income from other sources . Most of the applications filed by the petitioner are barred by limitation under the same Circular dated 9th June, 2015, relied upon by the learned counsel for the petitioner. Keeping in view the limited prayer sought in the writ petition, the same is disposed of with a direction to the respondent to decide the applications filed by the petitioner within eight weeks in accordance with law.
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2020 (7) TMI 630
Exemption u/s 54F - capital gains earned by the assessee during the previous year - Whether tribunal was right and justified in granting exemption u/s 54F when the unutilised portion of the sale proceeds were not deposited in the capital gains account scheme before the due date for filing of return u/s 139(1)? - HELD THAT:- Revenue stake involved in the present case is much below the limit of rupees one crore for withdrawal of the appeal by the Revenue, since the present case involved some audit objection because of exemption in the said Circular, the learned counsel for the Revenue press the appeal on merits. After hearing both the learned counsel, we are satisfied that the finding of the facts arrived at by the learned Tribunal are perfectly in order and justified and correct on the basis of facts stated in the quoted paragraph 8 of the order. The assessee has clearly satisfied the conditions for availing the benefit of exemption under section 54F of the Act, as it has purchased new property and has taken the possession within the stipulated period of three years, as aforesaid. Thus, we do not find any perversity in the said findings of facts given by the learned Tribunal.
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2020 (7) TMI 629
Penalty u/s 271D - violation of Section 269SS - reasonable cause to be entitled to the benefit of Section 273B - HELD THAT:- We find that the Tribunal did not examine the nature of transaction and the issue as to whether the CIT(A) was justified in accepting the cause shown by the assessee to be a reasonable cause to be entitled to the benefit of Section 273B - The decision, which has been referred to in paragraph 8 of the impugned order, does not relate to the assessee. Tribunal referred to the said decision and allowed the Revenue s appeal and affirmed the penalty imposed by the Assessing Officer. We find that there is no discussion as to why those two decisions rendered by the Coordinate Bench of the Tribunal in the assessee s own case respectively dated 31.10.2013 [ 2013 (10) TMI 1327 - ITAT CHENNAI] and 22.7.2014 [ 2014 (7) TMI 1329 - ITAT CHENNAI] could not be applied to the facts and circumstances of the present case. In the instant case, there are two decisions of the Coordinate Bench of the Tribunal, which held that the assessee had a reasonable cause and consequently entitled to the benefit of Section 273B of the Act. Therefore, in our considered view, the decision in the case of the assessee s brother M.Sougoumarin [ 2018 (5) TMI 1731 - MADRAS HIGH COURT] is distinguishable on facts and this decision cannot be applied to the facts and circumstances of the case on hand. We are not inclined to examine the merits of the matter nor make an attempt to answer the substantial questions of law, as we are of the considered view that the matters require to be reconsidered by the Tribunal for the reasons we have set out in the preceding paragraphs. It is for the Tribunal to take note of the fact and deal with the earlier orders passed by its Coordinate Bench which ended in favour of the assessee. - substantial questions of law are left open.
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2020 (7) TMI 628
Disallowance u/s 40A(3) - assessable income was arrived by applying a percentage rate on unaccounted turnover - HELD THAT:- This Court in the case of CIT Vs. Mohammed Dhurabudeen [ 2007 (7) TMI 635 - MADRAS HIGH COURT] wherein it was held that when the income of the assessee was computed by applying GP rate and no deduction was allowed in regard to purchases of the assessee, there was no need to look into the provisions of Section 40A(3) and Rule 60DD(j) of the Relevant Rules, that no disallowance could have been made in view of the provisions of Section 40A(3) of the Act read with Rule 60DD(j) of the Relevant Rules as no deduction was allowed and claimed by the assessee in respect of purchases and that when the GP rate was applied, that would take care of everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases by the assessee. CIT(A) considered the facts, applied the law in the aforementioned decision and partly allowed the appeal filed by the assessee. This order has been confirmed by the Tribunal after examining the facts. No substantial question of law
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2020 (7) TMI 627
Reopening of assessment - Return filed beyond the time prescribed u/s 139(4) and therefore, was treated nonest by the AO - Belated return filed - HELD THAT:- In the instant case, the AO had initiated proceedings u/s 147 for escapement of income which was the returned income filed prior to issue of notice u/s 148 in the belated return and as well as in the return filed in response to notice u/s 148 and since the AO has accepted the said returned income and proceeded to make various other additions without issuing fresh notice u/s 147/148, therefore, we are of the considered opinion that the AO has exceeded his jurisdiction in reassessing issues other than the issues in respect of which the proceedings are initiated and reasons for the initiation of those proceedings cease to survive. We, therefore, hold that the various other additions made by the AO are not in accordance with the law being without jurisdiction and, therefore, are to be deleted. Penalty levied u/s 271(1)(c) - HELD THAT:- Since, in the quantum appeal we have deleted the various additions made by the AO and partly sustained by the CIT(A), therefore, the penalty does not survive. Accordingly the order of the CIT(A) partly sustaining the penalty levied by the AO u/s 271(1)(c) is set aside and the AO is directed to cancel the penalty. - Decided in favour of assessee.
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2020 (7) TMI 626
Unexplained cash deposits found in his bank accounts - HELD THAT:- There were cash withdrawals made by the assessee from his bank accounts during the year under consideration and since there was nothing to show that the said cash withdrawals were utilised by the assessee somewhere else, the same, can be treated as available to the assessee except to the extent that some of the said withdrawals were required to be used by the assessee for his personal and households expenses. Some of the payments made by the assessee by cheques as reflected in his bank accounts were towards the personal and households expenses and if the same are taken into consideration along with the other facts of the case including the quantum of salary income of the assessee, consider it fair and proper to treat the cash withdrawals made by the assessee from his bank accounts as utilised for personal and households expenses to the extent of ₹ 3,00,000/- i.e. ₹ 25,000/- p.m. It thus follows that the cash withdrawals made by the assessee during the year under consideration from his bank accounts to the extent of ₹ 7,75,000/- can reasonably be treated as available with the assessee to explain the cash deposits made by him in the bank accounts during the year under consideration.Sustain the addition of ₹ 15,13,000/- made by the AO and confirmed by the Ld. CIT(A) on account of unexplained cash deposits found to be made by the assessee in his bank accounts to the extent of ₹ 7,38,000/- and allow partly the assessee s appeal. Appeal of the assessee is partly allowed.
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2020 (7) TMI 625
Deduction u/s 10B denied - alternative claim of deduction u/s 10A was not entertained by the CIT(A) primarily for the reason that the assessee had not claimed the same in original returns filed - audit report is not filed in Form No.56F along with the original return - HELD THAT:- The basis of denying the claim of deduction u/s 10B of the I.T.Act is on account of the dictum laid down by the Hon ble Delhi High Court in the case of CIT v. Regency Creations Limited [ 2012 (9) TMI 627 - DELHI HIGH COURT] wherein it was held that the assessee not having got the necessary approval from the appropriate authority under the statute, was not entitled to deduction u/s 10B of the I.T.Act. However, the above said judgment of the Hon ble Delhi High Court was modified in the Review Petition in the case of CIT v. Valiant Communications Ltd. [ 2012 (9) TMI 627 - DELHI HIGH COURT] wherein the matter was remitted to the Tribunal to consider the assessee s alternative claim u/s 10A of the I.T.Act. In the instant case, the registration obtained by the assessee from the Director, STPI, Thiruvananthapuram constitutes as a valid approval for the purpose of deduction u/s 10A of the I.T.Act.The Delhi High Court in the case of CIT v. Technovate E Solutions P.Ltd. [ 2013 (3) TMI 372 - DELHI HIGH COURT] after considering the CBDT Instruction No.1 of 2006 dated 13.03.2006 and the letter issued by the Board dated 06.05.2009, held that when the EOU has obtained registration from the Director of STPI, the same is entitled to deduction u/s 10A of the I.T.Act. Therefore, the registration dated 23.03.2006 obtained by the assessee from the Director of STPI, Thiruvananthapuram is sufficient compliance for the purpose of claiming deduction u/s 10A of the I.T.Act. Deduction u/s 10B and 10A of the I.T.Act is pari materia. When claim u/s 10B of the I.T.Act was denied, the assessee made alternative claim u/s 10A of the I.T.Act. The alternative claim of deduction u/s 10A of the I.T.Act was not considered by the A.O. nor the CIT(A). In the interest of justice and equity, the issue of claim of deduction u/s 10A of the I.T.Act is restored to the A.O. The A.O. shall examine whether the assessee has satisfied the conditions mentioned for claiming deduction u/s 10A of the I.T.Act and accordingly grant deduction. The assessee had filed audit report in Form No.56F for claiming alternative claim of deduction u/s 10A of the I.T.Act. The provision regarding the filing of audit report along with the return of income is only directory and not mandatory. The audit report can be filed either during the course of assessment proceedings or during the appellate proceedings. We rely on the judgment of the Hon ble Delhi High Court in the case of CIT v. Web Commerce (India) Private Limited [ 2008 (12) TMI 13 - HIGH DELHI COURT]. Therefore, even if the audit report is not filed in Form No.56F along with the original return, it is not fatal, provided the assessee subsequently files the same and satisfy all other conditions mentioned for claiming deduction u/s 10A of the I.T.Act. Appeals filed by the assessee are partly allowed for statistical purposes.
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2020 (7) TMI 624
Stay petition - Stay extended by the Tribunal beyond the period of one year - stay of recovery of outstanding demand for a period of 180 days from this day or till disposal of the appeal - HELD THAT:- As relying on M/S. SAP LABS INDIA PVT. LTD. VERSUS ADDL. COMMISSIONER OF INCOME-TAX, RANGE 12, BANGALORE. [ 2016 (2) TMI 398 - ITAT BANGALORE] there is no change in the facts and circumstances of the case and further we notice that the delay in disposing of the appeal is not attributable to the assessee, we are of the view that the stay already granted by the Tribunal deserves extension. Accordingly we extend the stay for further period of 180 days commencing from the date of this order or till the date of disposal of the appeal, whichever period expires earlier. We make it clear that the assessee should not seek adjournment on the date of hearing without reasonable cause, failing which the present stay order shall be subjected to review by the Division Bench hearing the appeal - Stay application filed by the assessee is allowed.
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2020 (7) TMI 623
Capital gain computation - Applicability of section 50C - HELD THAT:- Provisions of section 50C was introduced to curb the menace of unaccounted cash being infused in the real estate transactions. Quite often the actual sale consideration paid for acquiring immovable property is more than the sale consideration disclosed in the sale deed executed. In order to overcome the escapement of Capital Gain Tax on such transactions, Section 50C was introduced in the Statute, so as to at least adopt the market value of the State Revenue Authority as the sale consideration for the purpose of computing Capital Gain under the provisions of the Act. To avoid genuine hardships to the assessee, the provisions of Section 50C(2) provided for referring the matter to the Valuation officer of the Revenue to determine the actual market value of the immovable property sold by considering all the relevant factors which may not have been considered by the State Valuation Authority. In the case of the assessee, the value of the property is already determined by the State Government which is nothing but the amount of ₹ 46,22,878/- coupled with certain TDS rights. No compensation is paid by way of cash for acquisition of the land in the case of both the assessee. It is apparent that the assessee have not actually transferred their immovable property consisting of land and building but have only transferred their right to receive the amount of the compensation and the TDR rights and both these asset do not fall under the category of immovable property. There is no finding by the Ld. Revenue Authorities that the market value of the TDR rights received by the assessees coupled with the amount is at par with the SRO value of the property. It is also evident that the transaction is a distress transaction causing mental agony due to loss arising out of land acquisition and wastage of land. Provisions of section 50C of the Act cannot be invoked in the hands of both these assessee. Hence set aside the order of the CIT (A) and direct the Ld. AO to delete the addition made invoking the provisions of section 50C of the Act in the case of both the assessee. Appeals of the assessee are allowed.
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2020 (7) TMI 622
Addition made on account of interest on interest free deposit received - HELD THAT:- As could be seen from the facts on record, identical addition of interest on interest free security deposit was made by the AO in assessee s own case in the assessment year 2012 13. When the dispute ultimately came up for consideration before the Tribunal [ 2018 (2) TMI 1987 - ITAT MUMBAI ] the Tribunal after considering the submissions of the parties and relevant facts and materials on record, though, upheld the decision of the Assessing Officer in computing interest on interest free security deposit received by the assessee, however, the quantum was reduced from 10% to 9%. Disallowance of interest expenditure - HELD THAT:- Similar disallowance was made by the Assessing Officer in assessment year 2012 13, which was confirmed by Commissioner (Appeals), however, the assessee did not contest such disallowance before the Tribunal. Even otherwise also, the assessee had not established on record that the interest expenditure is directly incurred for earning interest income. That being the case, we uphold the disallowance made by the Assessing Officer and confirmed by learned Commissioner (Appeals). Set off of business loss against the other heads of income while completing the assessment - HELD THAT:- As it appears from the facts on record, this issue was not raised by the assessee before learned Commissioner (Appeals). This is evident from the grounds of appeal attached with Form no.35. Therefore, there was no occasion on the part of learned Commissioner (Appeals) to examine the issue. It is before the Tribunal the assessee has raised the issue by way of additional ground. Though, we admit the additional ground considering the fact that the AO has also accepted the loss while computing the income of the assessee, however, whether such loss can be set off against income from other heads is subject to verification by the AO. Accordingly, we restore the issue to the file of the Assessing Officer for deciding afresh in accordance with law after providing due opportunity of being heard to the assessee. This ground is allowed for statistical purposes.
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2020 (7) TMI 621
TP Adjustment - addition on account of provision of Software Development Services by the assessee to its AE - Comparability selection - HELD THAT:- Assessee is engaged in provision of Software Development Services to its AE. For benchmarking aforesaid international transaction, Transactional Net Margin Method (in short TNMM) is applied. Where TNMM method is applied, it takes care of certain marginal differences between the functioning of the tested party and the finally selected comparables. However, if the module of working is different, then such a concern cannot be held to be functionally comparable and cannot be selected in the final list of comparables. The Hon ble Delhi High Court in Rampgreen Solutions vs. CIT [ 2015 (8) TMI 931 - DELHI HIGH COURT] while adjudicating similar issue of application of TNMM method and whether functionality being same was sufficient held that the comparable transaction/entities must be selected on the basis of similarity with the control transaction/entity. The comparability of controlled and uncontrolled transactions had to be judged inter alia, with reference to comparability factors as indicated under Rule 10B(2) of I.T. Rules. Whether a concern which fails service revenue filter applied by the TPO, can this be excluded from final list of comparable? - We find that the TPO had mentioned the same to be at 74% whereas the learned AR for the assessee claims that it is 75% and on the other hand the learned DR for the Revenue points out that the employee service revenue filter comes to 84.93%. In view of the dis-similarity in the figures proposed by the AO / TPO, the learned AR for the assessee and learned DR for the Revenue, we remit this issue to the file of AO / TPO to verify the stand of the assessee and in case it fails to service revenue filter, which is proposed by the TPO himself then the said concern is to be excluded from the final list of comparable. Exclusion of Persistent Systems Limited - As in assessee s own case, relating to assessment year 2007-08 and pointed out that the said concern was held to be functionally similar to the assessee. The learned AR for the assessee fairly pointed out that the issue was decided against the assessee by the Tribunal. Accordingly, we find no merit in the plea of the assessee and the said concern i.e. Persistent Systems Limited is to be included in the final list of comparable. Wipro Technology Services Limited concern having such huge brand value and owning intangibles cannot be compared with the concern providing BPO services. The Delhi Bench of the Tribunal in Bechtel India (P.) Ltd.[ 2016 (9) TMI 196 - DELHI HIGH COURT] had excluded Wipro Technology Services Limited on the ground of high related party transaction. We further find that the said concern was also engaged in sale of software products. In these facts and circumstances, we direct the exclusion of Wipro Technology Services Ltd,. Sasken Communication Technologies Limited is not functionally comparables to the assessee and same needs to be excluded from the final list of comparable. Thirdware Solutions Limited - we look at the annual report of the concern i.e. Thirdware Solutions Limited, we find that it was engaged in implementation and consulting services of software and business intelligence. It has also declared Revenue from sale of license, Software Services, export from SEZ and STPI. However, the segmental details are not available and the same is to be excluded from the final list of comparable. Adjustment made on account of receivables from AE - case of the Revenue is that as the assessee has not received the amount due from the AEs, within the stipulated period then interest adjustment needs to be made on account of interest due on Receivables, as this was an International Transaction - HELD THAT:-The assessee during the year under consideration had not avail any loan from AEs or unrelated third parties and was not incurring any interest cost. There was similar delay in receipt of receivables from others and the assessee was not charging any interest on delay in receipt of receivables against services rendered to unrelated third parties. Following the ratio laid down in Kusum Healthcare Ltd.. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] and also in line with the findings of the Tribunal in M/s. Global Logic India Ltd. (supra), we find no merit in making any adjustment on account of interest due on receivables from its AE. Appeal of assessee allowed.
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2020 (7) TMI 620
TP Adjustment - adjustment of arm s-length price with respect to the outstanding debtors - HELD THAT:- It is apparent that associated enterprise is only paying assessee the amount which is enough for defraying expenditure to keep it afloat and keeping all other sums in the form of outstanding trade receivable. In view of above peculiar facts, where total shareholders funds are available with its associated enterprise as an interest free trade receivable clearly shows that outstanding receivable from the associated enterprise is not at all the transaction of sale of goods/services to the assessee. In view of this, agreeing with the view of the coordinate bench in assessee s own case in earlier year, order of the learned transfer pricing officer cannot be found fault with in considering the overdue outstanding receivable from its associated enterprise as a separate international transaction. AR argument that if a working capital adjustment has been given to the assessee then there cannot be any addition/adjustment with respect to the outstanding receivable from its associated enterprise is devoid of any merit for the peculiar facts in this case wherein total shareholders funds are enjoyed by the associated enterprise as outstanding receivable. No document whereby the assessee has made any request before the learned transfer pricing officer or before the learned dispute resolution panel with respect to granting of working capital adjustment. Even in the transfer pricing study report submitted by the assessee which is placed the learned authorised representative could not show us that assessee himself has claimed any working capital adjustment while preparing its comparability analysis. In transfer pricing study report the assessee has stated what kind of assets it has employed and it has not stated that any working capital has been employed by the assessee. Even otherwise the assessee could not show us what is the difference in working capital of the assessee compared with comparable companies. Thus the adjustment of working capital was not at all there in case of assessee for this year. In view of this, we reject this argument. - Decided against assessee.
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2020 (7) TMI 619
Unexplained cash credits u/s 68 - unsecured loans - parties have not responded to notice issued u/s 133(6) - HELD THAT:- Assessee has discharged its initial burden cast upon, it under the provisions of 68 - Once initial burden cast upon on the assessee has been discharged by filing necessary evidences, then the burden shifts to the revenue to prove that the credits found in the books of accounts of the assessee is income earned from undisclosed source of income. AO has primarily relied upon the fact that the parties have not responded to notice issued u/s 133(6) to draw a conclusion against the assessee that the purported loans taken from those parties are non genuine in nature, ignoring legal position that non appearance of the parties to the proceedings before the Ld. AO cannot be a sole ground for taking adverse inference against the assessee, more particularly, when the assessee has filed necessary evidences to prove loans taken from above parties. This legal position is supported in the case of CIT vs Lovely Exports Pvt.Ltd. [ 2008 (1) TMI 575 - SC ORDER ] held that if, the share application money is received by the assessee company from alleged bogus shareholders, the names are given to the Ld. AO, then the department is free to proceed to reopen their individual assessment in accordance with law, but the sum found credited in its books cannot be regarded as undisclosed income of the assessee. - Decided in favour of assessee.
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2020 (7) TMI 618
Undervaluation of closing stock - method of valuation of the marble block - basis of valuing stock as defective stock on lumpsum basis or on estimated basis - AR submitted that during the year only stock of marble block is considered defective and valued at net realizable value - CIT(A) has returned a finding that there is no evidence to show 50% of stock of marble block is defective and also there is no justification for valuing such stock at 55% of its value - HELD THAT:- AO has returned a finding that even in the stock register, the assessee has not mentioned any stock as defective and no differentiation or marking was given in the stock register. AO has carried out the necessary verification of stock register and such a finding of the AO has not been rebutted before us and thus attains finality. Further, how the assessee has arrived at net realizable value @ 55% of cost is not clear. AR has referred to range of value at which marble blocks were sold during the year and in the subsequent financial year 2015-16, however, what is the percentage of realization or at what profit/loss margins, the blocks were sold has not been specified - assessee has failed to justify the quantum of defective stock of marble blocks and its realizable value, thereby the addition made by the AO is hereby confirmed. In the result, the ground of appeal is dismissed. Disallowance u/s 14A read with Rule 8D - HELD THAT:- As noted that investment in shares of SBBJ has been made in the earlier years as is evident from the computation done by the AO wherein there is no change in the value of investment at the beginning of the year and at the close of the year. In AY 2013-14, the ld CIT(A) has given a finding that interest free funds were more than investment made by the assessee and disallowance of interest was deleted which was subsequently upheld by the Coordinate Bench. However, disallowance on account of administrative expenses was sustained at ₹ 13,414. Therefore, following the earlier year, the disallowance of administrative expenses of ₹ 2,974 as made by the AO is upheld for the impugned assessment year. In the result, the ground of appeal is dismissed.
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CST, VAT & Sales Tax
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2020 (7) TMI 617
Rejection of application filed under the Amnesty Scheme introduced by Section 31A of the Kerala Value Added Tax Act, 2003 - rejected on the ground that there is an appeal intended by the State from the order of the first appellate authority - Circular No.2/2020 - HELD THAT:- There is no ambiguity in the provision which introduced the Amnesty Scheme. It provides for settlement of all pending tax dues and even the tax applicable, with reference to a penalty imposed where there is no best judgment assessment made or contemplated. The requirement is, filing of an application before the dates specified and the withdrawal of the appeals filed by the assessee. There is no requirement of a specific provision requiring the State to withdraw the appeal filed, since the settlement arrived at on the basis of the statutory provision is binding on the Department. Here we emphasize sub-section (2), which contemplates cases in which revenue recovery proceedings have already been initiated; which proceedings have to be withdrawn when the matter is settled under Section 31A. That the State's appeal would be rendered infructuous on a settlement arrived at under Section 31A is an inevitable consequence on deposit of amounts determined under sub-section (7) - there is no power given to the State to reject an application and the requirement under sub-section (7); on the filing of an application, is determination of the amounts due as tax, and other amounts, and intimation for the purpose of settlement in installments not exceeding six and not travelling beyond 31.03.2020. Circular No.2/2020, which was issued on the basis of an Amnesty Scheme introduced in the year 2020. There was a specific contemplation of cases in which appeals have been filed by the State, wherein the requirement is to make settlement on the basis of the demand raised in the original assessment order. There are no reason to interfere with the impugned judgments of the learned Single Judge - appeal dismissed.
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Indian Laws
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2020 (7) TMI 616
Grant of anticipatory bail - cheating - sale of Gold - total mismatch as regards the contents of the FIR and the investigation which has been carried out on the basis of the FIR - HELD THAT:- Admittedly, the FIR was registered with allegation of cheating with the complainant regarding the sale of gold by the complainant and his mother Usha Rani with the firm M/s. Kartike Gold Enterprises owned by petitioner No.1. Later on, by registering two DDR Nos.49 and 50 dated 19.06.2020, certain new facts on the basis of the complaints given by the petitioners were added in the present FIR, a procedure which is unknown to the criminal law. There is no such provision in Cr.P.C. for amending the contents of the FIR wherein new allegations are with regard to different transactions like the agreement to sell as set up by the complainant. This Court is of the considered opinion that the entire case is based upon the documentary evidence for which the custodial interrogation of the petitioners is not required - this petition is allowed and the petitioners are directed to be released on interim bail, to join the investigation, subject to the conditions envisaged under Section 438(2) of the Code of Criminal Procedure, 1973.
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2020 (7) TMI 615
Grant of Regular Bail - fake sale - persuading the complainant to purchase the apartment in the complainants name - main allegation against the applicant is that he is the ultimate recipient of ₹ 46,40,000/- taken by way of a loan from the bank, against an equitable mortgage, on the basis of a sale deed which is alleged to be fake and forged - HELD THAT:- The applicant has not cooperated in the investigation, the only aspect cited is that the applicant did not give to the I.O. original documents relating to the sale of goods against which money was received by the applicant/M/s Harshit Enterprises from M/s Heico Electronics. However, this demand of the I.O. must be taken as answered on point of fact, when the original, signed office copies of invoice/s dated 28.03.2014 were delivered by the applicants counsel to the I.O. in court, as recorded in order dated 27.09.2017 made by the Sessions Court; and copies thereof were also placed on the court record. It is reasonable to assume that the original invoices would have been delivered to the person upon whom the invoices were raised, in this case M/s Heico Electronics, and would therefore not have been available with the applicant. None of the grounds for continuing the applicants judicial custody as an undertrial is made-out in the present case - That insofar as the applicant committing any further offence is concerned, in this case that ground is purely speculative as is the ground of possible inducement, threat or promise being extended to any prosecution witness or other such person - That insofar as the possibility of the applicant absconding from trial, that ground also appears to be farfetched and can be taken-care of by imposing appropriate conditions of bail. This court is persuaded to admit the applicant to regular bail subject to conditions imposed.
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