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Showing 61 to 80 of 1686 Records
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2020 (1) TMI 1626 - CESTAT NEW DELHI
Valuation - disbursement of Capital Subsidy to the appellant industry, by way of Form 37-B (vouchers) - utilization of such vouchers in discharge of their sales tax liability - amount received from the State Government by way of capital subsidy is required to be added in the assessable value of the excisable goods cleared or not?
HELD THAT:- The said issue is no longer res integra and the Division Bench of this Tribunal in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI], has held that the view of the Revenue that VAT liability discharged by utilising the investment subsidy granted through Form 37B vouchers cannot be considered as VAT not paid for the purpose of valuation under Section 4 of the Central Excise Act, 1944. The State Government has, instead of disbursing the capital investment subsidy by cash or cheque, issued Form 37B vouchers, which could be used for the purpose of payment of sales tax liability. It was also held that after setting up of the industry initially the assessee was required to remit the VAT to the Government.
As per eligible criteria, the capital investment subsidy is disbursed in Form 37B Challan/Vouchers. Such challans are as good as cash, but can only be used for payment of VAT/Sales Tax in the subsequent period. Such capital investment subsidy cannot form part of the assessable value under Section 4 of the Central Excise Act for calculation of the duty.
The impugned order is set aside - Appeal allowed.
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2020 (1) TMI 1625 - DELHI HIGH COURT
Validity of Arbitral Award - loss allegedly incurred in the risk sale - petitioner's bid for purchase of 250 MT of the goods @ ₹ 42,810/- per MT was accepted - respondent contended that the petitioner had failed to lift the goods, as a result of which it was compelled to sell the material to third parties at the risk and cost of the petitioner.
The principal legal ground urged by petitioner, was that the proceedings of the arbitration themselves were vitiated by an improper invocation of the arbitration.
HELD THAT:- The petitioner's contention is that it had not received any notice of commencement of arbitration in terms of Section 21 of the Act, and Rule 15 of the ICA Rules. This contention must be examined in the context of the correspondence between the parties - In the present case, however, although the petitioner did not formally participate in the arbitral proceedings, its communications to the ICA did highlight the objection under Section 21. The petitioner's challenge on this ground must be examined on its merits in this petition, and the respondent's preliminary objection is rejected.
The petitioner's contention on the basis of Section 21 of the Act is wholly unmerited. The provision requires a party to send a request to the counter-party for the dispute to be referred to arbitration. The respondent's communication dated 14.12.2012 meets that requirement - The petitioner's reliance on Rule 15 of the ICA Rules also does not take its case much further. Rule 15(i) requires a notice of request for arbitration to be sent to the ICA and to the other party. The respondent herein had already given the notice of request for arbitration to the petitioner as aforesaid. Its communication dated 16.04.2013 to the Registrar of the ICA included all the documents contemplated by Rule 15(ii). The Rules, on a plain reading, require compliance of Rule 15(ii) in the communication addressed to the Registrar. Rule 15(i) requires that the proposed respondent in the arbitration also be given notice of the request for arbitration, but does not necessitate that the same communication be addressed both to the Registrar and the respondent. It is, in fact, specifically contemplated by Rule 18 that the statement of claim and attached documents would be sent subsequently by the Registrar to the respondent.
It has been held in several judgments of the Supreme Court, including Associate Builders vs. Delhi Development Authority, [2014 (11) TMI 1114 - SUPREME COURT], that re-appreciation of evidence is not open to the Court under Section 34. It is evident from the above extract of the award itself that this is not a case where the award was entirely unsupported by evidence, or where the arbitrator failed to consider any material evidence. The petitioner chose not to participate in the arbitration proceedings or to bring its own evidence and arguments before the arbitrator. The learned arbitrator therefore rightly proceeded on the evidence led by the respondent.
The petitioner has failed to make out any grounds for interference with the impugned award under Section 34 of the Act - The petition is dismissed with costs assessed at ₹ 50,000/-.
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2020 (1) TMI 1624 - BOMBAY HIGH COURT
Maintainability of appeal - existence of substantial questions of law or not - Appellant seeks to canvass that dismissal of Central Excise Appeal No.6/2017 would not automatically mean that the present appeal does not give rise to any substantial question of law - HELD THAT:- The questions of law framed in the present appeal and the Central Excise Appeal No.6/2017 are the same. If it is the endeavour of the Appellant to distinguish this appeal by presenting reframed questions of law, the same shall be done by the concerned Officer by filing an affidavit. Stand over to 4 February 2020.
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2020 (1) TMI 1623 - ITAT PUNE
Addition on account of Sales Tax exemptions - assessee claimed exemption on account of Sales Tax and Purchase Tax subsidy and treated the same as capital receipt - AO held the same as revenue in nature - HELD THAT:- We find the order of this Tribunal in assessee's own case for A.Y. 2009-10 [2017 (5) TMI 1513 - ITAT, PUNE] held that the receipt on account of Sales Tax and Purchase Tax is capital in nature - As discussed above, the CIT(A) while adjudicating the issue placed reliance on the order of this Tribunal in assessee's own case for A.Ys. 2006-07, 2007-08 and 2008-09 held that the assessee is entitled to claim exemption on account of Sales Tax and Purchase Tax, therefore, we find no infirmity in the order of CIT(A) and it is justified. Thus, ground Nos. 1 to 6 raised by the Revenue are dismissed.
TP Adjustment - action of CIT(A) in excluding functionally companies in the field of software services - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list. As accepted filter to take RPT is only 25% companies companies exceeding it need to be rejected.
Allocate unallocable expenses to each segment in proportion to segmental turnover to total turnover - HELD THAT:- As for A.Y. 2010-11 [2019 (5) TMI 97 - ITAT PUNE] TPO included certain companies on segmental basis in the list of comparables in the software development services segment as well as the other segments of the assessee. While calculating the operating profits of the relevant segments of these companies, the TPO did not take into their unallocated expenses. The Tribunal held all common expenses cannot be apportioned in the universal ratio of sales or gross revenue from different segments, each having its own separate features and characteristics and the allocation depending upon the nature of expenses and appropriate allocation key and directed the AO/TPO to allocate common unallocated expenses on the basis of relevant keys as the case may be after allowing an opportunity of hearing to the assessee.
Disallowance made u/s. 40(a)(i) - HELD THAT:- As relying on assessee own case for A.Y. 2010-11 [2019 (5) TMI 97 - ITAT PUNE] Tribunal remanded the similar issue to the file of AO for deciding the same afresh in the light of filing of additional evidences by the assessee and prayed to remand the same to the file of AO.
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2020 (1) TMI 1622 - SC ORDER
Valuation - undervaluation of goods - demand based on consumption of fuel, increase in price of goods after initiation of investigation etc - HELD THAT:- Delay condoned.
Tag with Civil Appeal Nos. 3133-3135 of 2018.
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2020 (1) TMI 1621 - SUPREME COURT
Territorial Limits - Validity of inclusion of Nediyathuruthu island within CRZ - seeking a declaration that the CRZ Notification of 1991 is not applicable to the island - seeking police protection for completing the construction of the resort - direction for proceedings for the removal of encroachments to be continued - review of an order passed in a writ petition filed by the local fishermen claiming rights over the stake nets in the island, directing the demolition of the constructions put up by the project proponent - continuation of proceedings for removal of encroachments.
HELD THAT:- The primary object of the Notification dated 14.03.2017 appears to be to address the issue as to how to deal with the projects and activities carried out without obtaining prior environmental clearance. The Notification seeks to declare the projects and activities requiring prior environmental clearance under EIA Notification, 2006, but carried out without obtaining such clearance, as cases of violation of the EIA Notification, 2006 and it seeks to provide an opportunity to those violators to avail the benefit of a onetime clearance. The Notification dated 14.03.2017 does not deal with cases of violation of CRZ Notifications.
Basis of the CRZ Notification 2019 issued on 18.01.2019 - HELD THAT:- Paragraph 10.2 of the CRZ 2019 Notification states that all inland islands in the coastal backwaters and islands along the mainland coast shall be covered by the Notification. It further states that in view of the unique coastal systems of backwater islands and islands along the mainland coast, along with space limitations in such coastal stretches, CRZ of 20 meters from the HTL on the landward side shall uniformly apply. However, paragraph 10.2(ii) states that activities shall be regulated as under: (a) existing dwelling units of local communities may be repaired or reconstructed within 20 meters from the HTL of these islands, but no new construction shall be permitted in this zone; (b) foreshore facilities such as fishing jetty, fish drying yards, net mending yard, fishing processing by traditional methods, boat building yards, ice plant, boat repairs and the like maybe taken up in CRZ limits subject to environmental safeguards.
Under the 2011 Notification the areas identified in the Notification had to be declared as CVCAs only through a process of consultation with local fisher, etc. Guidelines are to be put in place for identifying, notifying and implementing CVCA but 2019 Notification straightaway treats the named areas as CVCAs and vests their management with the Authority with the involvement of coastal communities. Therefore, the alternatives claimed by the appellants also do not appear to be viable for them.
Appeal dismissed.
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2020 (1) TMI 1620 - ITAT MUMBAI
TP Adjustment - comparable selection - action of the AO/TPO of cherry-picking TTK Healthcare Limited ('TTK Healthcare') as a comparable company - HELD THAT:- The comparability of each company needs to ascertained only after matching the functional profile and the relevant reasons for the other company.
The principle of res judicata cannot be applied in the cases where the assessment of different year is involved. The concept of transfer pricing is directly linked to the computation of income on year to year basis and it cannot be an issue which is settled once for ever. Every year the transactions vary and the facts of the case also vary for calculating the taxable income. The selection of the PLI depends on the factual position of the case, on comparable companies and FAR analysis which may vary on year to year basis.
The issue raised by the Ld. counsel in respect of TTK Healthcare delineated at para 3 hereinbefore need to be re-examined by the AO/TPO. Therefore, we set aside the order of the AO and restore the matter to him to pass an order afresh on the issues emanating from the above grounds of appeal after giving reasonable opportunity of being heard to the appellant. We direct the appellant to file the relevant documents/evidence before the AO. Thus the 1st & 2nd grounds of appeal are allowed for statistical purposes.
Non-deduction of tax at source u/s 195 - foreign remittances reflected in Annual Information Report (AIR) downloaded from Income Tax System for the financial year (FY) 2010- 11, wherein on certain payments tax was deducted and tax was not deducted on certain payments - HELD THAT:- We agree with the contentions of the Ld. counsel that (i) no income can be said to be accrued or deemed to be accrued in India on account of remittance towards participation fees for a conference held outside India ; (ii) the payment can be characterized as FTS u/s 9(1)(vii) of the Act, only when a person pays to another person a payment for rendering of services which is in the nature of consultancy, technical or managerial in nature; further, professional services is not covered by the definition of FTS u/s 9(1)(vii) of the Act. Thus the said payments in the instant case cannot be characterized as FTS u/s 9(1)(vii) as no services in the nature of consultancy, technical or managerial have been provided to the appellant.
Duo Contrusting is a tax resident of Germany and as such, provisions of India-Germany DTAA shall be applicable; the remittance towards participation in a conference does not specifically fall under any Article of India-Germany DTAA as the said remittance is not in the nature of royalty or FTS. Also the said remittance should be construed in the nature of business income of the payee and in absence of PE of the payee in India, the said sum should not be subject to tax in India. We find that as per Article 21 of the India-Germany DTAA dealing with ‘Other Income’, any income not dealt with any of the Article of DTAA can be taxed only in Germany.
Payment to Right Management Singapore Pte Ltd.- We agree with the contentions of the Ld. counsel that it is a tax resident of Singapore eligible to claim benefit under the provisions of India-Singapore DTAA ; as per Article 7 of the said DTAA, business profits of Right Management can be taxed only in Singapore unless Right Management is carrying its business through a PE situated in India.
As per Article 12(4)(b) of the said DTAA, consideration towards technical knowledge, skill etc. would be considered as FTS only if the technical knowhow, skill etc. is made available to the recipient of the services. Further, Right Management has not transferred or made available any technical knowledge or skills to the appellant and therefore, payments made to Right Management are not in the nature of FTS and not liable to tax in India having regard to the provisions of the said DTAA. Since participation fees for attending seminar is not taxable in India, the question of TDS on aforesaid payment does not arise.
Payments to Global Data Ltd. for obtaining market analysis and forecast report we find that the said expenses were booked in the FY 2009-10 and only remittance was made during the FY under consideration i.e. FY 2010-11 and as such the question of disallowance of expenses which has not been claimed for the FY under consideration i.e. FY 2010-11 shall not arise.
Payments to F. Hoffman La Roche AG, Switzerland (‘F. Hoffman Switzerland’) towards reimbursement of taxes of employee it is found that the appellant has not claimed the said payment of expat tax which was recovered from the employee as the same has not been passed through the profit and loss account. In this regard, the question of disallowance of the said expenses shall not arise.
Payment to Hoffman La Roche Inc, USA towards reimbursement of salary - No tax is required to be deducted again at the time of reimbursing salary cost to Roche Group companies; otherwise, the same will result in double taxation i.e. one at the time of payment of salary/social security to the employees in India and second at the time of reimbursement to group companies.
Payment to Roche Germany towards other reimbursement viz. travel and stay, conference participation fees and web access charges it is a mere reimbursement of expenses and cannot be construed as a “fee” for services rendered since what is achieved by a reimbursement is mere repayment of what has been already spent and is not a reward or compensation for services rendered. Further, the transactions relating to reimbursement of expenses to AE have been subject matter of TP assessment and the fact that the reimbursement of various expenses are at actual cost, with no profit element has been accepted by the TPO. Further, the DRP has granted relief in case of reimbursement of expenses of similar nature paid to other Roche group companies against which the Department has not filed appeal before the Tribunal.
Payments to Genentech Inc towards reimbursement of relocation expenses to Mrs. Rita Kale, we observe that reimbursement of expenses does not constitute income and accordingly should not be subject to TDS.
Reimbursement of expenses to Sanofi Aventis Bangladesh Ltd. we observe that the appellant had submitted copies of debit notes, third party invoices, salary statement of the employee, TRC of Sanofi, No PE certificate, Form No. 15CA and 15CB and these documents establish that payments pertain to pure cost reimbursement.
Reimbursement of special discounts and additional support the actual amount of special discount i.e. the difference of local sales price of Sanofi and the discounted price at which Sanofi had sold the products as directed by the appellant, is reimbursed by the appellant to Sanofi. Also the appellant has not adjusted the said special discount against sales to Sanofi and instead recorded it as a separate transaction.
Reimbursement of promotional expenses we find that the appellant has reimbursed promotional cost incurred by Sanofi (on behalf of the appellant) on actual basis without any element of mark up or profit thereon.
Reimbursement of cost of manager we find that as per the arrangement between the appellant and Sanofi, the appellant will provide the technical, scientific and marketing support including training of engineers, salesmen to Sanofi for sale of its products. It is observed that Mr. Mostafa Jamal Anwar (‘Mr. Mostafa’) has been appointed in Bangladesh exclusively for advertisement and promotion of the appellant’s products and for providing various services to the new customers (end user) like providing guidance on usage of the products, its benefits etc. and Sanofi has recovered the actual salary cost of Mr. Mostafa and other related costs incurred by Sanofi from the appellant. Further, even if the aforesaid payments are considered as FTS, the same should not be subject to tax in India in the absence of specific Article of FTS in India-Bangladesh DTAA.
Reimbursement of expenses to JL Morison Sons & Jones (Ceylon) Ltd it is observed that as per the arrangement between JL Morison and the appellant, the former buys products and re-sells them on its own account and the business between the them is on a principal-to-principal basis and the role of JL Morison is to promote sales of products of the appellant and not to manage the appellant’s business -appellant had submitted copies of debit notes, third party invoices, salary agreement of the employee and TRC of JL Morison and these documents establish that the payments pertain to pure cost reimbursements.
Reimbursement of special discounts - actual amount of such special discount i.e. the difference of local sales price of JL Morison and the discounted price at which JL Morison has sold the products as directed by the appellant is recovered from the appellant. Also the appellant has not adjusted the said special discount against sales to JL Morison and instead recorded it as a separate transaction.
Reimbursement of cost of manager - It is found that as per the agreement the appellant will provide the technical, scientific and marketing support including training of engineers, salesmen to JL Morison for the sale of its product and Mr. Sujeewa Kruppu has been appointed in Sri Lanka exclusively for advertisement and promotion of the appellant’s products and for providing various services to the new customers (end user) like providing guidance on usages of the products, its benefits etc. Further, JL Morison has recovered the actual salary cost of the said personnel and other related costs incurred by JL Morison from the appellant. There is merit in the contentions of the Ld. counsel that (i) even if the aforesaid payments are considered as FTS, the same should not be subject to tax in India in the absence of specific Article of FTS in India-Sri Lanka DTAA; (ii) even if the appellant would have directly paid third party vendors in Sri Lanka (instead of JL Morison incurring such expenses and claiming recovery from the appellant), still no TDS obligation would have arisen considering the nature of payment such as special discounts etc.
Thus we delete the disallowance of expenses. 3rd ground of appeal is allowed.
Disallowance of payments towards expenses - non-deduction of tax at source u/s 195 - said expenses were booked in earlier Financial Year ('FY') 2009-10 and only - HELD THAT:- The said expenses were booked in FY 2009-10 and only remittance was made during the FY under consideration i.e. FY 2010-11. Therefore, we have no hesitation in deleting the disallowance made by the AO. Thus the 4th ground of appeal is allowed.
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2020 (1) TMI 1619 - SC ORDER
Maintainability of SLP - Petition for grant of regular bail - Money Laundering - siphoning of funds - it was held by the High Court that This court finds substance in the argument of the learned Counsel for the SFIO that since, as per the charge-sheet the petitioner is given to manipulations, for earning commissions, therefore, it cannot be denied that by nature, the petitioner could be manipulative. Hence, this court has no reason to believe that if the petitioner is released on bail, he is not likely to influence the witnesses of the case and also not likely to destroy the evidence against him. The past conduct of the petitioner has also not been exemplary.
HELD THAT:- There are no reason to interfere with the impugned order passed by the High Court - SLP dismissed.
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2020 (1) TMI 1618 - SC ORDER
Maintainability of appeal on low effect - Disallowance of loss on foreign exchange forward contract loss - Whether the said loss was a notional loss and hence cannot be allowed? - HC Concluded issue against the Revenue and in favour of the Assessee - HELD THAT:- The petitioner, on instructions, issued by the Department of Revenue, Ministry of Finance vide F. No.390/Misc./116/2017-JC dated 22.08.2019, seeks permission to withdraw this Special Leave Petition along with pending applications there in due to low tax effect.
Permission granted, subject to just exceptions - The special leave petition and pending applications are dismissed as withdrawn, leaving question of law open.
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2020 (1) TMI 1617 - CESTAT AHMEDABAD
CENVAT Credit - denial on the ground that the credit has been availed after six months of date of issue of invoice - HELD THAT:- The issue is squarely covered by the decision of Hon’ble High Court of Delhi in the case of Global Ceramics Pvt. Ltd. [2019 (5) TMI 1432 - DELHI HIGH COURT] where it was held that in these circumstances, credit cannot be denied for the invoices issued prior to 01/09/2014 when the time limit for availing the Cenvat Credit introduced.
Appeal allowed.
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2020 (1) TMI 1616 - CESTAT CHENNAI
Maintainability of appeal - despite three opportunities the pre-deposit is not paid - assessee has already opted for the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by filing the required applications under the said scheme - HELD THAT:- Both the cases are dismissed.
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2020 (1) TMI 1615 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Existenc eof debt and dispute or not - HELD THAT:- The restructuring proposal vide letter dated 03.02.2017 regarding settlement of its outstanding debt was sent by the Respondent. Subsequently vide letter dated 13.02.2017 the petitioner approved restructuring of debt of the Respondent. The total lability which was determined by way of restructuring was to be paid in four tranches i.e. (i) Rs. 10,00,000/- on the approval, (ii) Rs. 11,00,000/- on 25.03.2017, (iii) Rs. 62,67,085/- on 15.06.2017 and (iv) Rs. 75,86,471/- on 15.09.2017. The instalment which fell due on June 15, 2017 was not cleared within the default period i.e. 30 days as stipulated in clause 10 of the restructuring letter. As a result, restructuring dated 13.02.2017 was revoked by the Petitioner and a letter of revocation was issued to the Corporate Debtor. It is pertinent to note that in any case we are not to determine the amount of unpaid debt (default) and it shall be open for determination by Committee of Creditors.
After a reading of Section 7 of the Code along with Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, we are satisfied that a default has occurred and the application under sub section 2 of Section 7 is complete. The IRP proposed does not have any disciplinary proceedings pending against him.
Petition admitted - moratorium declared.
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2020 (1) TMI 1614 - ITAT AHMEDABAD
Disallowance of carry forward of losses on account of unrealized amount of advances - Applicability of provisions of section 139(3) - case of the assessee before the CIT(A) that bank under liquidation shall not have any taxable income till the liability of DICGCI is fully paid off due to diversion of income at source - HELD THAT:- Board of Director of Bank was superseded and official liquidator being an official of cooperative department of Government of Gujarat was appointed to administer realization of assets and repayment of liabilities. Bank under liquidation was also authorized to approach Deposit Insurance and Credit Guarantee Corporation Ltd. (DICGCI) being subsidiary of Reserve Bank of India for the purposes of reimbursement of insurance claim of deposit with bank under liquidation within the limit of Rs. 1 Lakh or less and accordingly DICGCI has paid bank under liquidation which was utilized for the purpose of repayment of depositors to the extent of Rs.1 Lakh.
According to DICGCI Act, bank was authorized to realize its assets and advances coercively and whatever proceeds are realized, bank could utilize such proceeds for repayment of liabilities of depositors and other liabilities. In view of the aforesaid mandate available by virtue of DICGCI Act, a deficit arose in the hands of the assessee in the process of recovery and repayment. It was the case of the assessee before the CIT(A) that bank under liquidation shall not have any taxable income till the liability of DICGCI is fully paid off due to diversion of income at source.
CIT(A) has examined the issue threadbare and has recorded a finding in favour of the assessee for non-applicability of Section 139(3) as relying on Power Company Ltd. [1995 (11) TMI 5 - SUPREME COURT] therefore entire interest income and share dividend income is diverted at source and bank under liquidation has no discretion or authority to apply such funds as it wishes and hence such funds are not available to appellant as income and therefore such income is not taxable in the hands of appellant. In view of facts and ratio laid down in the case laws ground No.1 & 2 are allowed.
As appellant has not made any submissions on capital nature of receipts subsequent to liquidation as per contention raised in ground No.3. In view of lack of factual submissions as regards capital nature of receipts in the event of liquidation, unable to deal with such ground, therefore, ground No.3 is hereby dismissed
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2020 (1) TMI 1613 - CHHATTISGARH HIGH COURT
Recovery of loan - Recovery of tax dues / revenue payable - 'priority' and 'first charge' - Secured Creditor - preference/priority in getting the debts - Auction of property - Applicability of provisions of Section 26E of the SARFAESI Act introduced with effect from 01.09.2016 - Notification was issued later - the primary contention raised by the Appellant is that the above provision has not come into effect. The next contention is that it cannot have retrospective effect, having allegedly brought into effect only from 01.09.2016; whereas the 'Revenue Recovery Certificate' was issued by the District Collector much prior to that date i.e. on 20.08.2015.
HELD THAT:- the provision (Section 26E) may not be applicable in the case of payment already effected pursuant to such steps by the State Government on request of other creditors as that clock cannot put back to 'zero' to start afresh. Unlike this, even in a case where the Bank has not taken any steps under the SARFAESI Act in respect of the security interest created much earlier and even if, the State has initiated the recovery proceedings invoking the machinery under the RR Act, later, if steps are taken by the Bank, projecting their claim, then the 'payment' cannot be effected to any others ignoring the 'priority' by the secured creditor. This being the position, the contention raised by the Appellant that Section 26E of the SARFAESI Act is prospective and hence, not applicable to the case in hand, since the 'Revenue Recovery Certificate' was issued prior to introduction of Section 26E does not hold any water and it stands repelled.
Applicability of amended provisions - effective date - The Central Government consciously issued a notification bringing the above provisions declaring the priority rights by way of notification dated 01.09.2016 bearing No. S.O. 2831 (E), in the statute book and as such, priority of the secured creditors are declared and notified insofar as RDB Act is concerned. Whether non-issuance of notification in respect of Section 26E of the SARFAESI Act, as dealt with Section 18 of the Amendment Act 44 of 2016, was a conscious decision or whether it was an inadvertent omission, lingered in our minds, which persuaded us to probe further. Ultimately, it has been noted that the Central Government has now issued a notification bearing No. S.O. 4619/E dated 26.12.2019 , published in the Gazette of India dated 26.12.2019 to the effect that Sections 17 to 19 of the SARFAESI Act (Act 44 of 2016) will come into force from 24.01.2020. Thus, it is explicitly clear that Section 26E of the SARFAESI Act was never brought into force on 01.09.2016 and it is being brought into force only with effect from 24.01.2020
In the above circumstances, we find that the ruling rendered by the learned Single Judge, observing in paragraph-7 that Section 26E of the SARFAESI Act has already come into effect from '01.09.2016' is a factual mistake. This being the position, the finding given with reference to the said provision and the further declaration/observation in 'paragraph-9' are declared as not correct or sustainable and hence, it is set aside.
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2020 (1) TMI 1612 - ITAT MUMBAI
Rectification of mistake u/s 254 - Addition u/s 40(a)(ia) - time limit for passing an order under Sec.201 - TDS on service coupons - HELD THAT:- As the Tribunal [2019 (8) TMI 230 - ITAT MUMBAI] had principally found favour with the aforesaid claim of the assessee, therefore, it had restored the matter to the file of the A.O, with a direction that in case the assessee satisfied the conditions in sub-section (1) of Sec.201, then it is not to be treated as an assessee in default, and resultantly as per the second proviso of Sec.40(a)(ia) no disallowance under the said statutory provision would be called for in its hands.
Admittedly, the aforesaid two aspects on the basis of which the validity of the disallowance under Sec.40(a)(ia) was inter alia assailed before us by the assessee had advertently remained omitted to be adjudicated upon while disposing off the appeal.
As we have already restored the matter to the file of the A.O, therefore, in all fairness we direct him to also consider the aforesaid claims of the assessee in the course of the ‘set aside’ proceedings. viz. (i) that, no disallowance under Sec.40(a)(ia) could be made after the expiry of the time for passing of order under Sec. 201 of the Act; and (ii) that, in case the disallowance is sustained, the same is liable to be restricted to the extent of 30% of the total amount of service coupons. On the basis of the aforesaid observations our order passed while disposing off the appeal of the assessee i.e Mahindra & Mahindra Ltd. Vs. DCIT, Range 2(2), Mumbai [2019 (8) TMI 230 - ITAT MUMBAI] is modified to the said extent.
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2020 (1) TMI 1611 - ITAT KOLKATA
Maintainability of appeal before ITAT - low tax effect - HELD THAT:- Assessee has furnished a working showing that the tax effect involved in each of these three appeals is less than the monetary limit of Rs.50,00,000/- fixed by the C.B.D.T. for filing the appeal by the Revenue before the Tribunal and this position is not disputed even by the ld. D.R In the Circular No. 17/2019 dated 8th August, 2019 issued by the C.B.D.T. the monetary limit for filing the appeal by Revenue before the Tribunal is revised to Rs.50,00,000/-.
As further clarified in the said Circular, the monetary limit so revised is applicable even to the pending appeals and the same are directed to be withdrawn or not pressed. We accordingly treat these appeals as withdrawn/not pressed on account of low tax effect in view of the CBDT Circular No.17/2019 dated 8t h August, 2019 and dismiss the same. Appeals filed by the Revenue are dismissed.
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2020 (1) TMI 1610 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Direction to the 'Committee of Creditors' to pay the fees and cost incurred by the 'Interim Resolution Professional' - Liquidation of Corporate Debtor - HELD THAT:- Admittedly, Mr. B. Santosh Babu performed the duty of the 'Interim Resolution Professional' and constituted the 'Committee of Creditors' and thereafter, continued to function even beyond 30 days with designation of the 'Interim Resolution Professional' and as he moved an application for liquidation (though designated "continue as Interim Resolution Professional"), we agree with the observations made by the Adjudicating Authority that the 'Committee of Creditors' is to pay the fees and cost incurred by Mr. B. Santosh Babu, 'Interim Resolution Professional', who also acted during the resolution process beyond 30 days till the date of liquidation having not allowed to continue as Liquidator.
If Mr. B. Santosh Babu- 'Interim Resolution Professional' who continued till the order of impugned order of liquidation was passed, would have been allowed to continue as Liquidator and only in such case, the payment could have been made to him as Liquidator in terms of Section 34(8) of the 'I&B Code'.
Application disposed off.
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2020 (1) TMI 1609 - ITAT MUMBAI
Disallowance of leave encashment provision - AO had made disallowances by rejecting the contention of the assessee that provision of section 43B(f) had been held to be constitutionally invalid - HELD THAT:- It is an admitted fact that the provision of section 43B(f) had been held to be constitutionally invalid by the Hon’ble Kolkata High court in the case of Exide Industries Ltd [2007 (6) TMI 175 - CALCUTTA HIGH COURT]. On the basis of said decision, the assessee has claimed deduction for provision for leave encashment, as if provision of section 43B(f) is not in the statute. But, fact remains that subsequently, the Hon’ble Supreme Court has stayed operation of the decision [2008 (9) TMI 921 - SC ORDER] of Hon’ble Kolkata High court in the case of Excide Industries Limited (supra), vide its order dated 08/09/2008. However, it has laid down certain conditions for claiming deduction for provision for leave encashment. Thus, as per the interim order of the Hon’ble Supreme Court, the initial stay granted by the Hon’ble Supreme Court gets vacated. Further, in the said interim order the Hon’ble Supreme court held that the assessee can claim deduction by paying tax on the amount claimed as deduction, as if section 43b(f) is on statute book. However, till final outcome of the decision of the Hon’ble Supreme Court, the revenue will not recover interest and penalty which may accrue - We set aside the issue to the file of the Ld. AO and direct him to adjudicate the issue afresh, as per the final decision of the Hon’ble Supreme Court, in the case of Exide Industries Ltd (supra).
Disallowances u/s 40(a)(ia) - non deduction of tax at source - CIT(A) after going through the details submitted by the assessee noted that provision made by the assessee had no scientific basis and more than 50% of the liability was non-existent - HELD THAT:- This matter needs to be examined by the Ld. AO, in light of various averments made by the assesee, including reversal of excess provision in subsequent financial year and deduction of TDS on said amounts, as and when, payment is made to the parties. Hence, we restored the issue to the file of the Ld. AO with a direction that if any disallowances is made in the year under consideration, the Ld. AO shall consequently allow deductions to the assessee in the year of actual payment or reversal, as a case may be.
Short term capital gain from transfer of units of mutual funds invested out of idle funds of borrowings of the project division and consequent enhancement of interest income from fixed deposits under the head income from other sources - HELD THAT:- It is amply clear that in order to consider whether the income earned is of revenue or capital in nature, it is important to take into account whether the funds were inextricably linked to setting up of the project. If the assessee is under obligation to use interest income in prescribed manner, then such income should be reduced from the cost of the project. If the income earned from the investment can be utilized for any purpose as per the total discretion of the assessee, as it was in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. [1997 (7) TMI 4 - SUPREME COURT] then such income would be considered as revenue in nature liable to be taxed u/s. 56 of the Act. As pointed out hereinabove, funds of the assessee were inextricably connected with the project and the assessee had to credit any investment income to the TRA main income.
Therefore, any income arising from investment made from borrowed funds should be reduced from work-in-progress as has been held in the various judicial pronouncements referred above. We further submitted that the decisions relied upon by the CIT(A), such as Tuticorin Alkali (supra), have been duly considered and covered by the aforesaid various judgments relied upon by the assessee. Therefore, the income earned by the assessee from investments made out of funds that are inextricably connected with the project should be reduced from work-in-progress.
As submitted that if income arising from the investment is considered as taxable income of the assessee under the Act, then the assessee should be granted deduction in respect of interest paid on borrowed funds which had been utilized in making investments giving rise to impugned income - The assessee is eligible for deduction of interest cost from the corresponding income arising out of investments made out of borrowed funds.
We direct the Assessing Officer to grant such deduction while arriving at taxable income arising from such investment.
This is without prejudice to the main finding that the income itself is not taxable and should go to reduce the cost of the project.
We are of the considered view that short term capital gain derived from sale of units of mutual funds and interest earned from fixed deposits kept in banks out of idle funds of project is rightly credited to capital working progress account, during the implementation period of the project. Hence, we direct the Ld.AO to delete additions made towards short term capital gain derived from sale of units of mutual funds. We, further direct the ld. AO to delete enhancement made by the ld. CIT(A) towards interest income earned from fixed deposits with banks invested out of idle funds of project.
Additional ground claiming passenger service fees –security component not to be in the nature of income and the same ought to have been excluded from the total income of the assessee - HELD THAT:- It is an admitted fact that the Tribunal had considered an identical issue for AY 2008-09 [2017 (2) TMI 640 - ITAT MUMBAI] and after considering relevant facts, including agreement between the assesee and the AAI and also instructions, dated 19/01/2019 issued by MOCA held that PSF-SC collected by the assessee could not be characterized as income u/s 2(24) r.w.s 5 of the I.T.Act, 1961, on the ground that the assessee has collected PSF exclusively for the purpose of security of the airport and also the assessee does not have any control over utilization of funds except for the stated purpose, as per agreement between the parties.
We, further noted that although, the Tribunal, further observed that in case, there was any violation in utilization of the funds, as per the agreed terms, then the Ld. AO would be at liberty to treat such misappropriation as income of the assessee. But, said observations has been expunged by the Tribunal. Form the above, it is very clear that the issue is fully covered in favour of the assessee by the decision of Tribunal for AY 2008-09 and as per which PSF-SC could not be characterized as income within the definition of income as defined u/s 2(24) and consequently, needs to be excluded from total income of the assessee.
We are of the considered view that PSF-SC collected by the assessee towards security of airport and to be utilized as per terms of agreement between the parties could not be regarded as income of the assessee and hence, needs to be excluded from total income. Therefore, we direct the Ld. AO to exclude PSF-SC from total income of the assessee. Appeal filed by the assessee is allowed for statistical purposes.
Amount paid on account of upfront fees is in the nature of an intangible asset eligible for depreciation @25% as applicable to intangible assets - We are of the considered view that the Ld.CIT(A) was right in deleting additions made by the Ld. AO towards excess depreciation and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue.
Expenditure incurred for realignment of Nallah in forecourt of proposed integrated terminal, reallocation of CPWD staff and other operational expenditure are revenue expenditure.
Amount paid to AAI towards retrenchment compensation is allowable as deduction u/s 37(1)
Nature of expenditure - development fee collected by the assessee being treated as capital receipts by the Ld.CIT(A) instead of holding it has revenue receipts - HELD THAT:- We find that a similar issue had been considered by the co-ordinate bench in assessee’s own case for earlier assessment years and after considering relevant facts, it was held that development fees collected from passengers could not be regarded as income of the assesee within the meaning of section 2(24) of the I.T.Act, 1961.
Disallowances u/s.14A r.w.s Rule 8D - facts with regard to the impugned disputes are that during the year under consideration, the assessee had not earned any exempt income - HELD THAT:- Admittedly, the assessee had not earned any exempt income for the year under consideration. Once, there is no exempt income, then the question of disallowances of expenditure incurred in relation to said exempt income does not arise.
Disallowances of employees contribution of ESIC u/s 36(1)(va) r.w.s. 43B - HELD THAT:- It is an admitted fact that the assesee had remitted employees contribution to ESIC before filing the return of income. In fact, the payments have been made within due date as per respective statute and delay is only on the part of banks in realizing the cheques. Once, the payments have been made on or before due date of filing return of income, then they same cannot be disallowed u/s 36(1)(va) r.w.s.43B of the I.T.Act, 1961. This legal proposition is supported by the decision of Hindustan Organics Chemicals Ltd. [2014 (7) TMI 477 - BOMBAY HIGH COURT] and Ghatge Patil Trasnports Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT]. Therefore, by respectfully following the above two decisions, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue.
Disallowances of excess depreciation on taxiways and aprons as plant and machinery as against depreciation by treating the same as building - HELD THAT:- As we have allowed the assessee depreciation @15% for A.Ys. 2009-10, 2010-11 and 2011-12 also. Facts and circumstances being similar and respectfully following the order of the Tribunal in the asessee’s own case, which has been relied upon by the Mumbai International Airport P Ltd. [2017 (11) TMI 905 - ITAT MUMBAI] we see no reason to interfere with the impugned order. We uphold the same and dismiss the ground raised by the Revenue.
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2020 (1) TMI 1608 - BOMBAY HIGH COURT
Nature of expenditure - Revenue share of licence fees - Whether revenue expenditure allowable as deduction u/s 37(1) - HELD THAT:- Question No. (i) is covered against the Revenue passed by this Court in [2016 (4) TMI 1410 - BOMBAY HIGH COURT] involving this very assessee. Without recording separate reasons, therefore, this question is not considered.
Disallowance of interest expenditure towards interest free loan to the subsidiary - HELD THAT:- Question No. (ii) is covered by the virtue of the decision of the Supreme Court in the case of S.A. Builders Ltd [2006 (12) TMI 82 - SUPREME COURT]. Hence, this question is also not entertained.
No substantial question of law in this Appeal
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2020 (1) TMI 1607 - TELANGANA HIGH COURT
Legality of invocation of Bank Guarantee - fraudulent or not - tri-partite agreements - seeking grant a decree of permanent injunction restraining defendant No.1 from invoking/enforcing the Bank Guarantee - HELD THAT:- Once the Court below had found that the Bank Guarantees furnished by the 1st respondent to the appellant are irrevocable, that they were rightly invoked under Ex.P39 and such invocation does not amount to fraud, the Court below ought to have rejected both the applications and denied relief to the 1st respondent.
The law relating to invocation of Bank Guarantees is well settled. In Himadri Chemicals Industries Ltd. Vs. Coal Tar Refining Co. [2007 (8) TMI 704 - SUPREME COURT], the Supreme Court had summarized the principles for grant or refusal to grant an injunction restraining the enforcement of a Bank Guarantee or letter of credit, holding that Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit.
Having perused the contents of the plaint filed by the 1st respondent in the instant case, it is found that the allegations therein do not constitute prima facie a plea of egregious fraud and at best amount to an alleged breach of contract by the appellant. As pointed out already even the Court below had observed that invocation of Bank Guarantees does not amount to fraud - It cannot also be said that by mere invocation of Bank Guarantees, any irretrievable harm or injustice would be caused to the 1st respondent. Even if the amount covered by the Bank Guarantees is paid to the 4th respondent, which is one of the creditors of the appellant, if the 1st respondent were to succeed in the suit or in the arbitration proceedings, it can still recover the amount from the 4th respondent, which is a public sector financial institution.
Appeal allowed.
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