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Showing 1 to 20 of 1465 Records
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2016 (4) TMI 1466 - SUPREME COURT
Refusal to quash the criminal proceedings - Forgery - mis-appropriation of funds and breach of trust - HELD THAT:- As regards the commission of offences under the Information Technology Act, 2000 the allegations are that the Appellant had, with fraudulent and dishonest intention on the website of Devi Consultancy Services i.e. www.devidcs.com that the former is a sister concern of Devi Polymers. Further, that this amounts to creating false electronic record. In view of the finding, no offence is made out Under Section 66 of the I.T. Act, read with Section 43. The Appellant was a Director of Devi Polymers and nothing is brought on record to show that he did not have any authority to access the computer system or the computer network of the company. That apart there is nothing on record to show the commission of offence Under Section 65 of the I.T. Act, since the allegation is not that any computer source code has been concealed, destroyed or altered.
The acts of the Appellant did not have any dishonest intention while considering the allegations in respect of the other offences. In the circumstances, no case is made out Under Sections 65 and 66 of the I.T. Act, 2000.
The High Court seems to have over looked these circumstances and has merely dismissed the petition Under Section 482 of the Code of Criminal Procedure on the ground that it requires evidence at a trial to come to any conclusion - the criminal proceedings initiated by the Respondent constitute an abuse of process of Court and it is necessary to meet the ends of justice to quash the prosecution against the Appellant.
The prosecution is quashed - Appeal allowed.
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2016 (4) TMI 1465 - SC ORDER
Commissioning or installation of construction service - Activity of laying, jointing, testing and commissioning of PSC Pipes, construction of pumps, civil structures, supply, delivery and commissioning of submersible pump set and turbine pump sets, maintenance etc. - it was held by High Court that It was an activity in public interest, to take care of the civic amenities liable to be provided by the State. Therefore, the Tribunal was right in holding in favour of the Assessee - HELD THAT:- Leave granted.
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2016 (4) TMI 1464 - MADHYA PRADESH HIGH COURT
Power under Section 482 of Cr.P.C. - Magisterial Court has taken cognizance against the applicants of the offence under Sections 147, 148, 323, 325, 307 and 302 read with Section 149 of IPC - right of investigating officer to keep the investigation pending - HELD THAT:- Investigation would be complete if the investigation officer would be in a position to opine that crime was found committed and hence charge sheet is filed with the final conclusion of the investigation officer. A clear distinction needs to be drawn amongst power under Section 173(8) of Cr.P.C. for further investigation, which would not result in subsequent reinvestigation. An investigation officer cannot be allowed to reinvestigate his own conclusions.
As held by the Apex Court in cases of MITHABHAI PASHABHAI PATEL AND ORS. VERSUS STATE OF GUJARAT [2009 (5) TMI 1004 - SUPREME COURT] and VINAY TYAGI VERSUS IRSHAD ALI @ DEEPAK AND ORS [2012 (12) TMI 1130 - SUPREME COURT], that under the power of Section 173(8) of Cr.P.C. only further investigation can be done by the investigation officer though the investigation agency is changed, but re-investigation or "de novo" investigation cannot be done. Hence when chargesheet is filed, the investigation officer has no right to reserve the investigation for few accused under Section 173(8) of Cr.P.C. because he is not permitted under that provision to reopen the case or reinvestigate the matter.
The provisions of Section 173(8) of Cr.P.C. does not give any right to the investigating officer to keep the investigation pending against few accused persons. It is for him to complete the investigation of the case within a period prescribed under S. 167 of Cr.P.C. and if he wants to ensure as to whether any offence is made out against any person or not then such conclusion should be obtained prior to filing of charge-sheet against any of the accused persons. After due investigation, it is a right of the police to declare some of the accused persons as absconding or at the time of filing of charge-sheet he may file the report under Section 169 of Cr.P.C. against some of the accused persons with the opinion that no offence is made out against them but the police has no right to reserve the investigation against few accused persons under the residuary provisions of Section 173(8) of Cr.P.C. either to give advantage to a particular accused person or otherwise. If such procedure is not followed then the Magistrate can refuse to take cognizance of the case because the investigation is incomplete and arrested person can be released on bail under Section 167(2) of Cr.P.C.
There is no reason to invoke the inherent power of this Court in favour of the applicants. It would be apparent that the applicants have challenged the order dated 01-11-2013 in a revision as well as with the petition before this Court and again started re-agitating that order by filing of application where such procedure could not be adopted. A litigant cannot be permitted to agitate a particular objection again and again. In such circumstances, looking to the conduct of the applicants, present petition is hereby dismissed at motion stage with imposition of costs of Rs. 5,000/- against the applicants. The costs be deposited before the High Court Legal Services Committee within a month from the date of this judgment.
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2016 (4) TMI 1463 - PUNJAB AND HARYANA HIGH COURT
Smuggling - recovery of 6 kgs of opium from possession of petitioner - Report of chemical examiner having not been received within a period of 180 days which expired on 29.1.2016 - whether challan without the report of chemical examiner presented within a period of 180 days could be said to be a challan as per the legal requirements of Section 173 (2) Cr.P.C. read with Section 173 (5) Cr.P.C., dis-entitling the accused for the default bail under Section 167 (2) Cr.P.C?
HELD THAT:- A Division Bench of this Court in VARINDER SINGH SANDHU AND ORS. VERSUS STATE OF PUNJAB [2015 (11) TMI 1900 - PUNJAB AND HARYANA HIGH COURT], has held that where an application for extension of time is filed by the PP before the expiry of 180 days for report of FSL having not been received, the accused would not be entitled to the benefit of Section 167 (2) Cr.P.C.
This Court in RAVINDER VERSUS STATE OF HARYANA [2014 (9) TMI 1284 - PUNJAB AND HARYANA HIGH COURT] has granted the default bail under Section 167 (2) Cr.P.C. when the cognizance had been taken by the trial Court without having obtained report of chemical examiner, observing that a report not accompanied by chemical examiner report would be a no charge-sheet. The Andhra Pradesh High Court in Matchumari China Venkatareddy and others Vs. State of AP, [1993 (3) TMI 391 - ANDHRA PRADESH HIGH COURT], has held that filing of charge sheet under Section 173 (2) Cr.P.C. was not complete unless it is accompanied by the papers contemplated under Section 173 (5) Cr.P.C. The Bombay High Court in Sunil Vasantrao Phulbande and another Vs. State of Maharashtra, [2002 (2) TMI 1362 - BOMBAY HIGH COURT] has granted benefit of Section 167 (2) Cr.P.C. to accused holding that incomplete charge sheet cannot be treated as police report at all as contemplated under Section 173 (2) Cr.P.C.
Following the judgment of Apex Court in Satya Narain Musadi’s case [1979 (9) TMI 197 - SUPREME COURT] which has been followed by the High Court of Andhra Pradesh in Matchumari China’s case, and by Calcutta High Court in Raghubirsaran Jain and another Vs. State and another, [1995 (6) TMI 203 - CALCUTTA HIGH COURT], it is opined that the petitioners herein should have been released, in peculiar circumstances of this case, as indefeasible right had accrued to them under Section 167 (2) Cr.P.C. on presentation of incomplete challan without the report of chemical examiner and the prosecution agency having not availed the benefit of Section 36 A (4) of the NDPS Act within a period of 180 days. In a case under the NDPS Act, a right of bail under Section 167 (2) Cr.P.C. of an accused can be defeated by the prosecution agency by availing the remedy under Section 36 A (4) of the NDPS Act subject to the fulfillment of the statutory requirement of Section 36 A (4) of the NDPS Act which is to be considered in each case on individual merits by the concerned trial Court/ Special Judge. The right under Section 167 (2) Cr.P.C. cannot be defeated by merely filing an incomplete challan.
The facts and circumstances of Narendra Kumar Amin’s case [2015 (1) TMI 1456 - SUPREME COURT] are not applicable to the facts of the present case as the challan presented in the said case fulfilled all the requirements of Section 173 (2) Cr.P.C. In the present case, without availing the remedy under Section 36 A (4) of the NDPS Act, an attempt had been made by the prosecution agency to defeat the rights of the petitioner by presenting challan within a period of 180 days without the report of chemical examiner which report had not been received even till the date of filing of the present revision petition.
The order passed by the Special Judge, Ludhiana dated February 3, 2016 dismissing the application under Section 167 (2) Cr.P.C. is hereby set aside. Petitioners are ordered to be released on bail on their furnishing bail bonds/ surety bonds to the satisfaction of the trial Court - petition allowed.
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2016 (4) TMI 1462 - CALCUTTA HIGH COURT
Seeking grant of bail - right to seek police remand - Challenge to rejection of prayer for police remand - HELD THAT:- The denial of police custody to the investigating agency in the instant case was not due to any fault on the part of such agency or due to operation of any supervening circumstance beyond the control of the parties, namely, state of health of the accused person etc. On the other hand, the denial of such right was due to an erroneous order passed by the Court below. Hence, merely setting aside the impugned order dated 18.3.2016 rejecting police remand would not cure the prejudice caused to the entitlement of the investigating agency to seek police remand which was scuttled by the said illegal order of the Magistrate. Investigating agency had rightly availed of its valuable right to seek police remand within the first 15 days of detention of the accused but was denied the same due to a wrong order passed by the Court.
Applying the maxim "actus curiae neminem gravabit" to the facts of the case, it is held that such erroneous order cannot defeat the right to seek police remand and the matter is accordingly remitted to the Magistrate for consideration of the prayer for further police remand as if such consideration is being made as on 18.3.2016.
In CENTRAL BUREAU OF INVESTIGATION SPECIAL INVESTIGATION CELL-I VERSUS ANUPAM J. KULKARNI [1992 (5) TMI 191 - SUPREME COURT], the prayer for police remand, in fact, was granted by the Magistrate but could not be availed of due to the health condition of the accused. Under such circumstances, the Apex Court held that further prayer for police remand could not have been entertained and granted after lapse of 15 days of detention. In the instant case further prayer for police remand was within the stipulated period but was illegally denied by the Court. Hence, the ratio of the aforesaid report is of no assistance to the petitioner.
Bail cannot be granted to accused - the learned Magistrate is directed to consider the prayer for further police remand of the accused forthwith positively by Friday i.e. 08.04.2016 and pass appropriate order thereon in accordance with law in the light of the observations made in this order.
Application disposed off.
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2016 (4) TMI 1461 - SC ORDER
Demand of service tax - Reverse charge mechanism - Overseas Commission Agent - it was held by CESTAT that the appellants claimed benefit of exemption Notification 14/2004 dt.10.9.2004 which was denied by the lower authorities, the demand of service tax under reverse charge confirmed against the appellants is set aside - HELD THAT:- Appeal admitted.
Tag with Civil Appeal Nos. 8676-8678 of 2015.
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2016 (4) TMI 1460 - SC ORDER
Subsidy with respect to Sales Tax payable - Tribunal holding that the subsidy received by the assessee cannot be reduced from written down value for purpose of computing depreciation of wind mills - as per assessee subsidy was not linked to any capital asset and accordingly, the same should not be reduced from the cost of asset for the purpose of granting depreciation - As held by HC[2011 (6) TMI 853 - GUJARAT HIGH COURT] Tribunal committed no error as CIT (A) as well as Tribunal both concurrently found that subsidy was not for the purpose of acquisition of the assets but was by way of incentive for encouraging development of alternative source of energy. It had, in fact, come on record that windmills were acquired in the earlier years. The Sales Tax incentive was granted by the State Government during the year in question. It, thus, remains established that the incentive was not given for acquisition of the wind mills but for development of wind farm by way of alternative source of energy - HELD THAT:- The special leave petition is dismissed.
Application, if any, also stands disposed of.
Subsidy received - Tribunal holding that the subsidy received by the assessee cannot be reduced from written down value for purpose of computing depreciation of wind mills - Whether cannot be reduced from written down value for purpose of computing depreciation of wind mills? - as per HC [2011 (8) TMI 1189 - GUJARAT HIGH COURT] Tribunal committed no error. CIT (A) as well as Tribunal both concurrently found that subsidy was not for the purpose of acquisition of the assets but was by way of incentive for encouraging development of alternative source of energy. It had, in fact, come on record that windmills were acquired in the earlier years. The Sales Tax incentive was granted by the State Government during the year in question. It, thus, remains established that the incentive was not given for acquisition of the wind mills but for development of wind farm by way of alternative source of energy - HELD THAT:- Delay condoned. The special leave petition is dismissed.
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2016 (4) TMI 1459 - BOMBAY HIGH COURT
Reduction of Equity Share Capital - procedure prescribed under Section 101(2) of the Companies Act dispensed with - HELD THAT:- No objector has come forward to oppose the proposed reduction. Since the requisite statutory procedure has been fulfilled, the Company Scheme Petition is made absolute.
Petitioner to publish notices in the same newspapers i.e., ‘Free Press Journal’ in English language and ‘Navshakti’ in Marathi language, both having circulation in Mumbai and also in the Maharashtra Government Gazette about registration of Order and minutes of reduction by the concerned Registrar of Companies, Maharashtra.
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2016 (4) TMI 1458 - BOMBAY HIGH COURT
Reduction of Share Capital - HELD THAT:- In view of the averments made in paragraph Sixteen and Seventeen (16 & 17) of the Affidavit in support of summons for Direction interalia stating that the proposed Reduction of Share Capital would not in any way adversely affect the interests of any of the Applicant’s Unsecured Creditors or the ordinary operations of the Applicant or the ability of the Applicant to honour its debts in the ordinary course of business.
In view of the above, the procedure prescribed under Section 101(2) of the Companies Act, 1956 is dispensed with.
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2016 (4) TMI 1457 - GUJARAT HIGH COURT
Seeking release on Regular Bail - Fraud - misappropriation of huge amount of money - HELD THAT:- The undisputed facts is that the applicant was Chairman of MEGA and was responsible for the transaction being a head of the Company. However, the investigation is over and time was granted to the State Government for further investigation which has also been completed and supplementary charge-sheet has been submitted on 27.1.2016. In the case of Sanjay Chandra v. Central Bureau of Investigation, [2011 (11) TMI 537 - SUPREME COURT] the Hon'ble Supreme Court has dealt with most important judgments of the Hon'ble Supreme Court itself and has released the accused who were facing charges for 2G Spectrum scam wherein public exchequer has lost thousands of crores of rupees.
The Hon'ble Supreme Court has, after considering the decisions of Kalyan Chandra Sarkar v. Rajesh Ranjan, [2005 (1) TMI 704 - SUPREME COURT], Gudikanti Narasimhulu v. Public Prosecutor, [1977 (12) TMI 143 - SUPREME COURT], Vaman Narain Ghiya v. State of Rajasthan, [2008 (12) TMI 446 - SUPREME COURT], State of U.P. v. Amarmani Tripathi, [2005 (9) TMI 659 - SUPREME COURT] has ultimately held that the applicant can be released on bail by imposing appropriate conditions.
It is pertinent to note that the applicant is behind bar since 14.5.2015 and investigation is over. The Court has not even framed charge in the matter. There are about 12 accused and about 100 witnesses and there is voluminous record of documents which are relied upon by the prosecution. It is also pertinent to note that the applicant was released on temporary bail and has surrendered in Jail in time. It is not the case that he has ever tried to misuse the liberty granted to him.
It is opined that this is not a heinous crime wherein there is an apprehension that he may tamper with the prosecution witnesses or is danger to the Society at large. The case is based on documentary evidences which is required to be proved by the prosecution at the time of trial.
Considering the entire facts and circumstances of the case and the papers of investigation and charge-sheet and supplementary charge-sheet, the application requires consideration. Hence, the application is allowed and the applicant is ordered to be released on bail subject to the conditions imposed.
Bail application allowed.
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2016 (4) TMI 1456 - ITAT DELHI
TP Adjustment - Determination of ALP of royalty transactions at NIL against transaction value - AR submitted that TPO has determined the ALP holding that the taxpayer did not produce any cost benefit analysis at the time of entering into the agreement with its AE showing that the royalty rate is not fixed based on expected benefit - HELD THAT:- Assessee has entered into technical assistance agreement with Stanley Electric Company Japan on 01.04.2007 for grant of nonexclusive and nontransferable license without a right to sub-license, to manufacture and sale license product in India using the technical information of Stanley Electric Company. Since 1990 the royalty is being paid by the Assessee to Stanley @3% of sales.
During the period from 1990 to 1994 the two parties were unrelated party hence the royalty contract was made under uncontrolled conditions and the payment of royalty by the Assessee to AE can be considered as comparable uncontrolled price for the purpose of bench marking the royalty payment for the year.
Accordingly, Assessee in its TP Study report has said that the payment of royalty is at Arm’s length price as the agreement is in accordance with industrial policy of the Govt. In its TP study report assessee applying the TNMM method and submitted that the above transaction is also conducted at an ALP.
On the identical facts and circumstances in the case of the assessee in [2015 (10) TMI 2509 - DELHI HIGH COURT] has not admitted the appeal of the revenue with respect to the determination of ALP of royalty relying on the decision of CIT Vs. EKL Appliances Ltd. [2012 (4) TMI 346 - DELHI HIGH COURT] and CIT Vs. Sony Ericson Mobile Communication [2015 (3) TMI 580 - DELHI HIGH COURT] held that royalty payment cannot be disallowed on the basis of the so-called benefit test and the domain of the TPO is only to examine as to whether the payment based on the agreement adheres to the arm's length principle or not - we direct the ld. TPO/AO to delete the adjustment made on account of ALP of royalty payments.
Disallowance u/s 14A r.w.r. 8D - mandation of recording satisfaction - HELD THAT:- Recording of satisfaction on the correctness of claim of the assessee on disallowance u/s 14A before invoking rule 8 D of the Income tax rules 1962 is mandatory. The language of section 14A provides that AO must record a satisfaction if he was unsatisfied with any incorrect claim of the assessee. If he failed to record such a finding then it cannot be said that he rightly invoked provision of section 14A of the act for application of rule 8D. See Taikisha Engineering India Ltd [2014 (12) TMI 482 - DELHI HIGH COURT]
Also assessee had own funds far in excess of the amount invested in investments earning tax free income. In such a case presumption is that own funds have been used to finance the investment activities.
As in case of CIT Vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that when interest free funds are available then the presumption would be that such interest free funds are invested or advanced as interest free loan. If the presumption is applied to the facts of this case then there cannot be any disallowance on account of interest expenditure. Therefore on two counts i.e. non-recording of satisfaction and interest free fund far in excess of investments, we do not incline to uphold disallowance made u/s 14A - Decided in favour of assessee.
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2016 (4) TMI 1455 - DELHI HIGH COURT
Seeking appointment of a retired Judge of the Supreme Court as an Arbitrator for adjudication of the disputes between the parties - HELD THAT:- The present petition has been filed under both Sections 11(5) and 11(6) of the Act. The fundamental procedure for invocation of this Court's jurisdiction under Section 11(5) of the Act, i.e. failure on part of the parties to agree on a procedure for appointment of Arbitrator under Section 11(2) of the Act is not made out.
Appointment of an independent and impartial Arbitral Tribunal does not append the recent changes brought about in the Act, including Section 12(5) and the Seventh Schedule to the Act or in any manner contrary to the rule of law. Although, it is mentioned here and is appreciated the fairness of the learned Senior counsel for the petitioner who has made his submission that he is merely arguing the matter on legal issue otherwise he and his client have full faith and respect for the learned sole Arbitrator appointed. He submits that since it is an important legal issue therefore, he is making his submissions on legal issue only.
The petitioner's argument that the appointment of the Arbitral Tribunal is bad in view of Item 22 of the Fifth Schedule to the Act is entirely frivolous and without any basis whatsoever. Insofar as the petitioner's challenge in terms of Item 24 of the Fifth Schedule is concerned, the said argument has no consequence as Justice Shah (Retd.) has been appointed as an Arbitrator in relation to similar disputes between the same parties under two Purchase Orders pertaining to the same project at Annupur.
The Arbitral Tribunal has already been constituted and has entered into reference who has already ensured the compliance of the provision under the amended Act about no conflict. Now, the petitioner cannot be allowed to change the Arbitral Tribunal - Even, besides the stipulation of the agreement/purchase order governing the parties, this Court inclines to appoint Hon'ble Mr. Justice A.P. Shah (Retd. Chief Justice) as sole Arbitrator to decide the dispute between the parties.
There is no merit in the petition and the same is accordingly dismissed.
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2016 (4) TMI 1454 - SC ORDER
Valuation - Determination of duty payable - HELD THAT:- Appeal admitted.
Issue notice - Mr. Alok Yadav, learned counsel accepts notice on behalf of the respondent(s), therefore, the service of notice is waived.
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2016 (4) TMI 1453 - ITAT INDORE
TCS Credit to partnership firm - in intimation u/s 143(1) claim of TCS was restricted as reflected in the 26AS Form of the assessee - assessee is a partnership firm doing the business of liquor and all the partners are license-holders and they have formed partnership to carry on the business of liquor - HELD THAT:- From TCS Certificate, it is found that all these TCS certificates were in the name of the persons having their own PAN Numbers, TCS collected of such persons is allowed in the hands of the assessee partnership firm.
TCS was claimed in the name of different persons. The assessee is entitled to get credit of TCS.
We find that as per Rule 37BA, which has been amended from 1.4.2009, in above situation, the person to whom the payment has been made or credit has been given on the basis of information relating to deduction of tax furnished by the Deductor to the income of tax authorities or the persons authorized by such authority.
Rule 37BA provides that where any income on which the tax has been deducted at source is assessable in the hands of persons other than deductee, the credit for tax deducted at source, as the case may be, shall be given to the persons and not to the deductee.
We find that in this case, the assessment was made u/s 143(1). Therefore, in the interest of justice and fair play, we are of the view that the matter requires verification. AO is directed to give credit of this tax, which is effective from 01.04.2009 and the new rule has been amended from 2011. Therefore, the credit may be given for 24.10.2011 to the assessee after verifying whether the credit has been claimed or not in the hands of partners. If the partners have not claimed TCS certificate, the credit may be given to the partnership firm as per the decision of Bhooratnam & Company, [2013 (1) TMI 478 - ANDHRA PRADESH HIGH COURT] - Appeal of the assessee is allowed for statistical purposes.
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2016 (4) TMI 1452 - ITAT MUMBAI
Revision u/s 263 - issue of lack of application of mind of AO to the figures relating to purchase price and sale price of “beneficial interest” qua its market rate of Rs. 6.83 Crs - HELD THAT:- Principal CIT should clearly demonstrate the errors and revenue loss and not tax loss alone. Principal CIT is not allowed to assume jurisdiction u/s 263 under the guise of AO’s failure to conduct adequate inquiries. In principle, the aspect of AO’s failure is an unending process and it is difficult to find end to it. AO has to stop his inquiries somewhere given the time restrictions imposed on him for completing the assessment. Principal CIT cannot invoke the amended provisions of Explanation-2 (a) to section 263 of the Act to justify his order.
We dismiss the Ld CIT-DR’s reliance on the order of the ITAT in the case of Crompton Greaves Ltd. [2016 (2) TMI 169 - ITAT MUMBAI] we find the same constitutes obiter dicta only and has no binding nature. In any case, we find that it is not a case of completing regular assessment “without making inquiries or verification, which should have been made” [clause (a) of Explanation-2 to section 263(1) of the Act is relevant].
The clause (a) reads as - 'The order is passed without making inquiries or verification which should have been made'.
The above provisions apply only to the cases of orders passed by AO without making inquiries or verification at all, which should have been done. Unlike in the case of Marigold Nariman Pvt Ltd [2015 (8) TMI 174 - ITAT KOLKATA] heavily relied by the AO, in the instant case, AO made inquiries on the matter of transactions leading to short term capital loss. Therefore, in our opinion, the order passed u/s 263 of the Act on this issue is invalid.
Generation of long term capital gains and assessee’s claim of the same u/s 10(38) - Assessee became the owner of such shares resultantly. These shares were traded involving the SE platform electronically and de-mat accounts of the parties involves evidences the same. There is no sustainable unfavourable finding of the fact by the Principle CIT on the rates / shares involved and payments. The allegation of the Principal CIT and Ld DR is that the AO should have done more probing into the transactions and the allegation of collusive / synchronous transactions.
We also find that the AO undertook the cross verification exercise in order to verify the claims with broker. The proceedings initiated by the AO u/s 133(6) of the Act evidences the same. In our opinion, it is very clear that allegations by the Principal CIT are based on suspicion, which is unsustainable in law. There is no iota of evidence against the assessee that supports the collusiveness. Regarding as based allegations, we find that the principles of probability should take care. As such, we find there is no sustainable revenue loss reported by the Principal CIT. Actually, assessee gained in the process. In our opinion, as per the claim of assessee u/s 10(38) of the Act cannot constitute a revenue loss as it is otherwise a legitimate one. Thus, it is a case of suspicion of the Principal CIT rather than any allegations with substance. Therefore, we dismiss the finding of the Principal CIT and hold that the CIT has wrongly assumed jurisdiction.
Long term capital loss on sale of shares - We find that the inquiries of the AO cannot be considered “perfunctory or inadequate”. We need to consider the time limitation to the AO / the work load on any AO of this period. On merits also, it is not the case of Principal CIT that preferential shares of RPG-CITHL are sold below price. There were sold at face values. Of course, after indexation benefits were claimed, the capital losses are reported. Regarding shares of Saregama, we find that they are “quoted shares” and the sale price are competitive even if they are “off-market transactions”. Prevailing price of the shares on Bombay Stock Exchange are placed on record.
Regarding shares of CFL also, we find that the relevant financial statements reveals that the capital of company is eroded its worth and Chartered Accountants also certified this fact in their Annual Reports of the company. Regarding, purchase prices, we find that issue is not relevant to the year consideration. Reasons for the same includes that the shares in question were acquired in the earlier AYs and there are no new purchases in the year under consideration.
We are of the opinion, the AO conducted reasonable inquiries into the basic facts material to the making of the assessment. It is obviously not the case of “lack of inquiries” by the AO during the assessment. The documentation cited above in this order suggest the above finding. We cannot understand why the AO should travel into zone of “purchase price” of the shares of CFC, Saregama RPGCITHL as they were acquired in the past.
Any addition on the account of purchase price in this year is unsustainable in law. It is a settled legal principle. Any addition relating to investment should be made in the year of investment. Regarding sale price also, the same are competitive qua the prices quoted in BSE and the financials, as the case may be. No adverse data is placed by the CIT on records. CIT also failed to demonstrate the “loss of revenue” as required when he assumes jurisdiction u/s 263 - We also noticed that both the Principal CIT and CIT-DR have not listed / elaborated the meaning of the expression “all aspects” used by them while commenting on the AO’s failure to carryout inquiries.
Thus, it is the case of AO conducting the inquiries during the regular assessment proceedings, forming an opinion in the matter with due application of his mind and not making any addition after due inquiries. With so much of evidence on records in support of the above, we cannot hold AO failed to make “meaningful inquiries”. Thus, we dismiss the arguments of Ld DR and allow the views of the Ld Counsel for the assessee. Accordingly, we hold, Principal CIT erroneously assumed jurisdiction on this issue too.
Principal CIT cannot resort to “hit and run” approach. He is under legal obligation to enlist the details of inquiries not done by the AO, the manner of conducting such inquiries etc and quantify or demonstrate the revenue in clearly expressed language in his order. Therefore, on the facts of the present case and the settled legal propositions in force, we are of the opinion that the Principal CIT wrongly assumed jurisdiction u/s 263 on all these issues raised by him. Considering the inquiries done by the AO clearly made out in the records above, we are of the opinion that this is not the case of “inadequate inquiry or improper inquiry or perfunctory inquiry”. Therefore, we restore the order of the AO originally passed on 19.3.2014. Accordingly, ground nos.1 to 3 raised by the assessee are allowed.
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2016 (4) TMI 1451 - SUPREME COURT
Existence of binding extradition treaty in terms of Section 2(d) of the Extradition Act, 1962 between India and Chile or not - principle of reciprocity - general principles of international law for extraditing the Petitioner from India.
HELD THAT:- All international agreements to which India (or British India) was a party would devolve upon the Dominion of India and the Dominion of Pakistan and if necessary the obligations and privileges should be apportioned between them. There is no limitation in the above Order that it is only with regard to the 627 treaties mentioned by the Expert Committee No. IX on Foreign Relations - the reference is to "all international agreements". Quite clearly, the extradition treaty between the United Kingdom of Great Britain and Ireland and Chile was a part of all the treaties entered into (by India or British India) and in terms of the above Order the rights and obligations in that treaty devolved upon the Dominion of India and the Dominion of Pakistan.
Attention drawn to the Consular Manual (Revised Edition 1983) issued by the Ministry of External Affairs. This appears to be an internal document for the benefit of officers of the Ministry of External Affairs. This makes a reference in Chapter 8 to Annexure III on extradition treaties with foreign countries executed by the Government of the United Kingdom on behalf of India prior to January 1938 and still in force. In that list is mentioned the Extradition Treaty with Chile executed on 26th January, 1897. It may be recalled that the Gazette of India of 12th November, 1898 reproduced the Order in Council published in the London Gazette of 12th August, 1898 pertaining to the Extradition Treaty between the United Kingdom of Great Britain and Ireland and the Republic of Chile. Therefore, not only was the Extradition Treaty recognized as binding on the Government of the United Kingdom of Great Britain and Ireland but also that it was in force in India.
There is more than sufficient material to conclude that from 1897-1898 onwards, the Government of British India and the Government of India considered itself bound by the Extradition Treaty entered into with the Republic of Chile on 26th January, 1897 and the Government of India has always been of the view that the Extradition Treaty is in force in India - both from the point of view of Chile and India, the Extradition Treaty is in existence and binding upon each State.
Proceedings in the International Court of Justice - HELD THAT:- The notification of 30th May, 1974 of the Government of Pakistan was only with reference to succession by Pakistan to the rights and obligations of British India to all treaties binding upon her before partition including, of course, the General Act of 1928. That is all. The response notification of 18th September, 1974 given by the Minister of External Affairs to the Secretary-General of the United Nations therefore confined itself to the General Act of 1928 and the effect of the Indian Independence (International Arrangements) Order, 1947 and must be appreciated in that context. The Government of India was explicit that it was not a party and was never bound by the General Act of 1928.
The counter-memorial had nothing to do with any treaty with any country, much less the Extradition Treaty, nor did it concern itself with any issue other than the issue of the jurisdiction of the International Court of Justice to adjudicate the dispute between Pakistan and India in the context of the General Act of 1928. The contents of the counter-memorial did not validate the Report of the Expert Committee, as indeed it could not. This is the error made by learned Counsel for the Petitioner in appreciating the proceedings before the International Court of Justice.
The Extradition Treaty was in existence and it was not unilaterally terminated or repudiated is also clear from two major overt acts: firstly, the statement of the Prime Minister in Parliament recognizing an Extradition Treaty with Chile and secondly, the statutory enactment, namely, the Extradition Act, 1962 which specifically gave recognition through Section 2(d) thereof to all extradition treaties entered into prior to 15th August, 1947. If there was any controversy whether the Government of India recognized itself as bound by the Extradition Treaty, then that was put to rest by the notified order of 28th April, 2015 Under Section 3(1) of the Act (gazetted on 29th April, 2015 with a corrigendum issued on 11th August, 2015) whereby the Government of India made the Act applicable to the Republic of Chile. This left absolutely no manner of doubt that India was bound by the obligations under the Extradition Treaty. These public and overt acts after Independence confirm and acknowledge, on behalf of India, the existence and binding nature of the Extradition Treaty between India and Chile.
A political question - alternative view - the contention is that the word of the Government of India on the existence of a treaty should be accepted. It is difficult to fully accept the proposition in the broad manner in which it has been stated - HELD THAT:- In Sayne v. Shipley in a discussion pertaining to the 1903 treaty between the United States and the Republic of Panama, it was held, referring to Terlinden v. Ames and Ivancevic v. Artukovic that the conduct of foreign affairs is a political function but the advice that a treaty is still in effect is not conclusive though it is entitled to great weight and importance.
There are a few other decisions on the subject, but there is none that crystallizes the extent to which the judiciary can go in the matter of determining whether a treaty is subsisting or not. The matter is certainly not free from doubt, but it does appear that there cannot be complete judicial abstinence in the matter as mentioned in Sayne.
Thus, it does appear though, that the reason for terminating an extradition treaty would be a political question, so also whether India should enter into an extradition treaty with a foreign State and whether India should issue a notified order Under Section 3(1) of the Act making the Act applicable to a foreign State would also be a political decision. But whether a treaty exists between India and a foreign State may not necessarily be a political question or a political decision - a lot depends on 'governmental action' which would certainly be of 'controlling importance' though not conclusive. Nevertheless, we are clear that if the Executive were to inform the Court that there exists a treaty between India and a foreign State, the Court would defer to the decision of the Executive and would not ordinarily question the information.
Applicability of Section 34-B of the Act - HELD THAT:- Section 2(e) of the Act defines a foreign State to mean any State outside India and it includes every constituent part, colony or dependency of such State. A request made by the Embassy of a foreign State is as good as a request made by the foreign State itself. If this is not accepted, it will lead to an absurd situation where the Head of State or the Head of the Government of a foreign State would be required to make a request for extradition. This is simply not an acceptable proposition.
Extradition and reciprocity - HELD THAT:- For invoking the principle of reciprocity, there need not even be an extradition treaty between India and the foreign State as is apparent from a reading of the decision of this Court in Abu Salem. In fact, India did not have any extradition treaty with Portugal and yet it made a request for the extradition of Abu Salem on the basis of reciprocity. It is only around the time that the request was made that the Government of India issued a notified order Under Section 3(1) of the Act directing that the provisions of the Extradition Act, 1962 other than Chapter III shall apply to the Republic of Portugal.
The submission of the learned Additional Solicitor General that on the basis of a request made by Chile as contained in the Note Verbale of 22nd September, 2015 the Petitioner could have been validly detained and placed under provisional arrest Under Section 34-B of the Act, on a reciprocal basis, Extradition Treaty or no Extradition Treaty between India and Chile. The further requirement (in terms of Section 34-B of the Act) would however be for Chile to make a formal request for extraditing the Petitioner from India on the basis of credible evidence against her of having committed an extradition offence punishable both in Chile as well as in India.
Thus, it is concluded that:-
i). There is a binding extradition treaty between India and Chile and that the provisions of the Extradition Act, 1962 (other than Chapter III thereof) are applicable to the Republic of Chile in respect of the offences specified in the Extradition Treaty.
ii). The extradition proceedings pertaining to the Petitioner are pending before the Additional Chief Metropolitan Magistrate, Patiala House Courts, New Delhi.
Petition dismissed.
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2016 (4) TMI 1450 - DELHI HIGH COURT
Seeking an opinion of the Court a contingent on which would be the finalization of an agreement between the two parties - Order 36 of the Code of Civil Procedure - Gambling - games of skill - business activity, protected under Article 19 (1) (g) of the Constitution of India - HELD THAT:- The petitioner submits that he does not wish any academic question to be answered and at this stage prays that permission may be granted to the parties to withdraw their reference which they had made before the Trial Judge.
Permission is accordingly granted to the petitioner to withdraw this revision petition - Petition dismissed.
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2016 (4) TMI 1449 - RAJASTHAN HIGH COURT
Cenvat Credit - supplier paid the duty on clearance of goods procured locally under ARO or Invalidation Letter - Whether the Notification No. 44/2001-CE (NT) dated 26th June, 2001 has been complied with by the party or not - it was held by High Court that Since the supplier who has supplied the goods and which are stated to excisable, to the assessee before us, he has recovered the price and on such recovery including of the Tax component divested itself completely of the title in the goods, then, the apprehension of the revenue has no basis. In the given facts and circumstances, the anxiety is taken care of.
HELD THAT:- Now the matter is pending before the Hon’ble Apex Court in Special Leave to Appeal No. 16788/2015 titled as Commissioner of Central Excise & Customs, Thane-I v. M/s. Oleofine Organic Pvt. Ltd. The issue therein is same as involved herein.
These appeals are dismissed and would be covered by the judgment of the Bombay High Court, however, the revenue would be at liberty to seek revival of the appeals, if finally the Apex Court allow the appeal preferred by the revenue against the judgment of Bombay High Court.
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2016 (4) TMI 1448 - BOMBAY HIGH COURT
Deduction u/s 80IA(4) - Tribunal held that the condition provided in clause (b) of Section 80IA(4)(i) is not mandatory, and therefore, the assessee is entitled to get deduction under Section 80IA(4) - HELD THAT:- Revenue very fairly states that the questions framed herein stands concluded by the decision of this Court in the Commissioner of Income-Tax vs. All Cargo Global Logistics Pvt. Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT] in favour of the respondent – assessee.
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2016 (4) TMI 1447 - ITAT DELHI
Characterising of service end commission activities of the assessee company - Performing trading activity for its AE Japan or worked as a service provider? - HELD THAT:- As decided in assessee own case [2015 (8) TMI 922 - ITAT DELHI] determining the issue in favour of the assessee that the assessee company has performed routine, preparatory and ancillary activities in nature and have not created any intangibles as its role was limited to that of a routine coordination and support service provider. So, the ld. TPO/DRP have erred in recharacterizing the service end commission activities of the assessee company as equivalent to its trading segment.
Inflation of total cost by TPO/DRP - The said value was recorded sale/purchase by the AEs and was never a cost to the assessee - HELD THAT:- In view of what has been discussed above and by following the order passed by the coordinate Bench in assessee’s own case on identical facts qua the AYs 2007-08 and 2008-09, we are of the considered view that the adjustment made by the AO in compliance to the order passed by TPO/DRP for benchmarking the international transaction qua AYs 200910 and 2010-11 is not sustainable in the eyes of law as
(i) TPO/DRP have illegally and arbitrarily included the cost of sales incurred by the assessee company’s AE, for which the assessee company has rendered support services to work out the profit for determination of the ALP;
(ii) Identical and similar issue has been decided by the Tribunal in case of Mitsubishi Corporation India P Ltd. [2014 (10) TMI 702 - ITAT DELHI] by following the judgment rendered in case of Li and Fung India Pvt. Ltd. [2014 (1) TMI 501 - DELHI HIGH COURT] and held that the TPO was not justified in re-characterizing the transaction as trading transaction and it has also been held that cost of sales incurred by the AE cannot be included to work out the profit for determination of the ALP;
(iii) Nature of services rendered by the assessee company to its AE since 2003 are the same and it has been consistently benchmarking its international transaction relating to the business support services using TNMM as the most appropriate method as OP/TC as PLI, as has been used in the instant case;
(iv) As has been discussed in the preceding paras and as has been held by the coordinate Bench of the Tribunal in assessee’s own case qua the AYs 2007-08 and 2008-09 that when the FOB value of the goods on which commission/ service income is earned amounting to Rs. 4005.37 crores for AY 2009-10 and Rs. 5057 crores for AY 2010-11 is not to be added to the cost base of the assessee’s international transaction, the assessee’s international transactions computed by using TNMM as the most appropriate method and PLI selected is GP/OC i.e. berry ratio, the international transaction in question are at arm’s length;
(v) Comparables chosen by the TPO to determine the arm’s length price of the international transaction entered into by the assessee company are not correct one because all the comparables are of trading company and not of support services provider as in the case of assessee company. Decided in favour of the assessee.
Disallowance u/s 14A - HELD THAT:- By applying the law laid down in judgment cited as Cheminvest [2015 (9) TMI 238 - DELHI HIGH COURT] in the similar facts and circumstances of the case, when assessee has not earned any exempt income during the years under consideration, as is evident from the documents lying i.e. profit & loss account and audited balance-sheet, section 14A would not be applicable in the instant case. Hence, the disallowance confirmed by the DRP is not sustainable in the eyes of law.
Disallowance of expenditure on account of leased rent, staff welfare and commission income adjustment relates to prior period - AR contended that the assessee had in fact never claimed the said amount as deduction in the return of income - HELD THAT:- A perusal of the audited profit & loss account statement apparently shows that assessee has never claimed prior period expenses during the year under consideration in Income-tax return and as such, the question of disallowing the same does not arise. So, we hereby decide this ground in favour of the assessee.
Addition u/s 37 (1) - expenditure on account of payment of service fee paid abroad - expenditure has not been incurred wholly and exclusively for the purpose of business and on the ground that the assessee has merely submitted copies of the agreement of the assessee with the aforesaid companies and no evidence is available on the file - HELD THAT:- Keeping in view the fact that in the succeeding year, AY 2011-12, the DRP has decided this issue in favour of the assessee and deleted the entire addition of service fee paid to the same parties to whom this fee was paid. So in view of the matter, this issue is required to be restored to the AO to decide afresh in the light of the order dated 14.12.2015 passed by DRP qua AY 2011-12 in assessee’s own case after providing an opportunity of being heard to the assessee. Consequently, this ground is determined in favour of the assessee.
Expenditure on logistic and warehousing support service - Addition u/s 37 (1) on the ground that the same has not been incurred wholly and exclusively for the purpose of business and the assessee has failed to offer any justification for making the aforesaid payment on account of commercial expediency nor the assessee has furnished copy of agreement with M/s. Panasonic India Pvt. Ltd. and nor placed on record detailed computation of losses - HELD THAT:- AR, contention, that the amount in question has been incurred under terms of the outsourcing agreement with respective agencies, and placed on record the copy of agreement, lying at pages 7 onwards of the paper book has been overlooked by the AO as well as DRP and as such, we are of the considered view that this issue is also required to be restored to the AO to decide afresh after providing an opportunity of being heard to the assessee to adduce evidence in this regard. So, this ground is also determined in favour of the assessee.
TDS u/s 195 - Purchase from PE in India - HELD THAT:- Undisputedly, this issue is covered by the order passed by the DRP in assessee’s own case qua AY 2011-12 as held that no TDS is applicable u/s 195 on offshore supplies. When the assessee company has no PE in India it is not liable to deduct tax at source. So in the light of the facts and circumstances of the case and the fact that this issue has been decided by the ld. DRP qua the subsequent AY 2011-12 in favour of the assessee, this issue is also restored to the AO to determine afresh.
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