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2016 (7) TMI 1697 - DELHI HIGH COURT
Direction to SHO to supply certain documents - validity of calling for documents at the preliminary stage of framing of charge - Section 207 of Cr.P.C. - HELD THAT:- A bare reading of provisions contained in Section 207 of Cr.P.C. shows that it is the obligation of the Magistrate to see that all the documents which are necessary for the accused for proper conduct of his defence, are furnished to him well before the trial - A conjoint reading of section 173(5), 173(6) and first proviso attached to Section 207 of Cr.P.C. leaves no scope of doubt that it is the bounden duty of the police officer to forward to the Magistrate all the statements mentioned in subsection (5)(b) of Section 173 of Cr.P.C. without any exception so as to enable the Magistrate to discharge his duty under Section 207 of Cr.P.C. by furnishing copies of such statements to the accused. In case the police officer considers that the disclosure of any part of such statements would not be expedient in the public interest nor essential in the interest of justice, he is supposed to append a note in his forwarding memorandum to the Magistrate to that effect along with his reasons for withholding such statements or parts thereof from the accused.
It is settled law that an impartial and fair opportunity in a trial is the legal right of an accused. Justice can only be ensured if the rules of procedure are diligently adhered to. No court shall allow breach of these principles - In the instant case, accused persons / respondent nos. 2 to 5 are not seeking to produce any document nor are they seeking to produce any material to prove their innocence but they have called upon the Investigating Officer of the case to supply the statement of witnesses recorded during the course of investigation report of the committee which was received by the Investigating Officer during the course of investigation.
Relying upon judgment, in Ashutosh Verma [2014 (12) TMI 1405 - DELHI HIGH COURT], this Court observed that the petitioner cannot be denied an access to the documents in respect of which prayers have been made in the petition merely because CBI does not consider it relevant. If there is a situation that arises wherein an accused seeks documents which support his case and do not support the case of the prosecution and the investigating officer ignores these documents and forward only those documents which favour the prosecution, in such a scenario, it would be the duty of investigating officer to make such documents available to the accused.
Reverting to the case in hand, accused persons called upon the Investigating Officer to supply documents / statements as mentioned in the applications. In fact, in the charge-sheet also there was a reference that during the course of investigation, the Investigating Officer had received the inquiry report etc. Under the circumstances, in order to do substantial justice to both the parties, the application moved by the respondent nos. 2 to 5 was allowed. The State has not challenged the impugned order meaning thereby it is not averse to supply the documents as ordered by the learned Trial Court.
The impugned order does not suffer from any infirmity which calls for any interference - the petition is dismissed.
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2016 (7) TMI 1696 - ITAT MUMBAI
Disallowance of commission paid - HELD THAT:- AR and DR agreed that the issue stands decided against the assessee by the order of the Tribunal for the earlier years.
Addition u/s 40A(9) - contribution to Marine Navy Officers Welfare Fund and Utmal Employees Welfare Fund - HELD THAT:- Identical issue was decided in favour of the assessee by the Tribunal, while adjudicating the appeal for A.Y. 1997-98 [2013 (10) TMI 1581 - ITAT MUMBAI] wherein the CIT(A) has directed the Assessing Officer to allow deduction - Decided in favour of assessee.
Slump sale - Failure to treat the transfer of Bangalore undertaking as slump sale and disallowing depreciation - HELD THAT:- If ongoing concern is sold for a lump sum amount it has to be treated a slump sale and had to be taxed as such. In such cases itemized sale of the assets is not there-an amount is paid for transferring an independent unit. To find out the facts of the case we would like to refer to the agreement entered in to by the assessee with the JV company.
We find that in the agreement the assessee had specifically mentioned that the property was valued at Rs.59.31 crores for registration purposes. It is further found that in application made u/s.230A of the Act, the total sale consideration for transfer of construction manufacturing undertaking was mentioned and no separate value for land and building was indicated. Considering the above, we are of the opinion that no value was assigned to plot of land and building while transferring the assets to the JV and that the assessee had transferred the business at a lumpsum consideration by way of slump sale without assigning any individual value to various assets and liabilities.
We find that one of the reasons, given by the FAA, for not considering the transaction a slump sale was that the purchaser had assigned cost to the assets acquired by it.It is a coincidence that the AO for the assessee happened to be the AO for the JV also and from the return of income of the JV he found that the purchaser had shown exact cost of each of the assets.In our opinion, it cannot be the deciding factor.A purchaser of a going concern has to assign cost to the assets received by it. Accounting standard mandates that the entity acquiring a going concern has to get its assets valued. But, valuation report obtained by the purchaser do not prove at all that the assets had the same value for the seller .Once an assessee sells the lock stock and barrel of a unit for that assessee individual items loose existence. In the case before us, there is nothing on record to show that the value shown by the JV was the itemized value of the assets owned by the assessee.
Thus we hold that the sale of earth moving manufacturing unit was a slump sale. Here, we want to make it clear that the assessee would not be entitled to claim loss for the transaction in question. Decided partly in favour of assessee.
Computation of deduction u/s.80HHC - Respectfully following the orders of the Tribunal in earlier years part of the issue, raised by the assessee, is decided in its favour on Inclusion of scrap sales and other items of miscellaneous income in the total turnover, Set off of loss of export of trading goods against profit on export of manufactured goods.
Unclaimed credit balance in the total turnover - HELD THAT:- While deciding the appeal, filed by the assessee, the first appellate authority (FAA) followed the order of his predecessor of the earlier AY. and decided the issue against the assessee. We find that the issue is covered in favour of the assessee by the decision of Jeyar Consultants(supra), relied upon by it. Therefore, we decide issue in favour of the assessee.
Section 80HHC calculation and reduction of 90% of gross interest receipt from the profits of business disregarding interest paid by the assessee - HELD THAT:- Tribunal while deciding the issue for A.Y. 1997-98 [2013 (10) TMI 1581 - ITAT MUMBAI] allowed assessee ground of appeal - Thus decided in favour of assessee.
Set off of losses on export trading goods against profit on export of manufactured goods to be decided against assessee.
Reduction 90% of miscellaneous income received from profits of business - In the case of Sharda Gums [1999 (12) TMI 114 - ITAT JODHPUR] issue of interest income has been decided. It does not deal with the other items. Thus, the cases relied upon by the assessee are of little help to the resolve the issue. But, on the other hand the stand taken by the departmental authorities is also defective. We find that the AO and the FAA have relied upon the case of K K Doshi [2000 (8) TMI 74 - BOMBAY HIGH COURT] that stands reversed by the Hon’ble Apex Court [2007 (10) TMI 61 - SC Orde].Therefore, we are of the opinion that the issue needs a fresh adjudication at the level of the AO.
Addition u/s 14A - reducing the amount claimed as exempt under section 10 (15)and 10(33) - HELD THAT:- We find that while deciding the appeal for the AY.1997-98 [2013 (10) TMI 1581 - ITAT MUMBAI], the Tribunal had disallowed the expenses relating to interest on tax free bonds @ 2%, and had held that strategic investments made by the assessee, should be excluded for 14A disallowance. Following the same, ground raised by the assessee is allowed in its favour, in part.
Computing book profit u/s 115JA - HELD THAT:- AR and DR stated that this issue stands decided in light of the decisions delivered in the cases of Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT], TRF Limited [2010 (2) TMI 211 - SUPREME COURT] The second item with regard to computation under section 115JA is about disallowance made under section 14A of the Act. Respectfully, following the judgment of Vijaya Bank (supra) and TRF Ltd.(supra)we allow the appeal filed by the assessee. Second item being of consequential nature, stands allowed for statistical purposes.
Disallowance of professional fees for projects not materialized - HELD THAT:- Identical issue was decided against the assessee by the Tribunal while deciding the appeal for A.Y. 1990-91 and 1993-94 wherein as held even though the proposed projects may he intimately connected to the existing business carried on by the assessee, the assessee-company was in fact exploring the prospectus of new units. Those units were not ultimately successful; we can say that they were all aborted projects. Therefore, those expenses are to be treated in the nature of loss of capital instead of revenue expenditure deductible in computing the income of the running business. Even though the items of expenditure may be in the nature of revenue expenses per se, those expenses were incurred not in connection with the business carried on by the assessee-company but those expenses were incurred for the business which were proposed by the assessee-company to commence and carry on. This line of distinction cannot overlooked. Therefore, in the light of the statutory provision governing the subject, we hold that this expenditure cannot be allowed. Decided against assessee.
Calculation of book profit for deduction u/s 80HHC - We direct the AO to follow the decision of Bahary Information Technology System Pvt. Ltd. [2011 (10) TMI 19 - SUPREME COURT] while calculating the book profit for deduction u/s.80HHC.
Disallowance of claim for loss in computation of value of work-in-progress on construction contracts - HELD THAT:- DR and the AR conceded before us that identical issue was decided in favour of the assessee by the Tribunal, while deciding the appeal in [2013 (10) TMI 1581 - ITAT MUMBAI] for A.Y. 1997-98 - Decided against revenue.
Expenditure on construction of jetty, expenses on cement plants, expenses on cement plants (towards setting up of new captive power section) depreciation, interest and commitment charges in respect of borrowings made for cement projects, Mining lease, Mining Development expenses and charges, including commitment charges, in respect of borrowings made for cement projects is to be allowed as issue decided in favour of the assessee by the Tribunal in [2013 (10) TMI 1581 - ITAT MUMBAI] for AY.1997-98.
Interest u/s 244A of the Act - HELD THAT:- At the time of hearing the AR for the assessee submitted that this issue is considered and decided in favour of the assessee by the Tribunal for AY.1997-98 [2013 (10) TMI 1581 - ITAT MUMBAI] DR could not controvert the claim made by the AR.Therefore, respectfully following the above order of the Tribunal, last ground is decided against the AO.
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2016 (7) TMI 1695 - ITAT CHENNAI
Disallowance u/s 14A r.w.r.8D under normal computation as well as in computing book profit /s 115JB - HELD THAT:- Normal computation - Since this issue is relating to the assessment year 2007-08, the provisions of Rule 8D will not be applicable in the case of the assessee as it came into effect from 24.03.2008. On earlier occasion, in the case of M/s. Hyundai Motor India Ltd. [2015 (9) TMI 962 - ITAT CHENNAI] this Bench of the Tribunal had observed that disallowance of 2% to 5% of the dividend income earned would suffice for meeting the requirement of section 14A of the Act. Accordingly, we hereby direct the Assessing Officer to disallow 5% of dividend income as allowable expenditure invoking the provisions of section 14A of the Act while computing the profit and loss under normal computation.
MAT computation - We hereby direct the AO to compute the profit and loss of the assessee under section 115JB of the Act without making disallowance of expenditure under section 14A. See M/S. BEACH MINERALS COMPANY PVT LTD. [2015 (8) TMI 1031 - ITAT CHENNAI]
Addition of foreign exchange loss relating to interest on loan for acquisition of fixed assets under normal provisions as well as u/s 115JB - Under normal provisions - HELD THAT:- As observed by the Revenue that the assessee had debited to its profit & loss account net foreign exchange loss related to interest on the loan obtained for acquiring assets. Therefore, the learned Assessing Officer added the same to the profit of the assessee by capitalizing the interest and added the same to the cost of the asset by virtue of section 43A of the Act, but however gave the benefit of depreciation @ 15%. No infirmity in the orders of the Revenue on this issue because section 43A of the Act provides that such expense has to be capitalized. AO has capitalize the loss and granted the benefit of depreciation. Hence the order of the Revenue is hereby confirmed on this issue.
Under section 115JB of the Act - The same ratio mentioned herein above in para 4.3 will be applicable because section 43A of the Act and section 115JB of the Act both has a legal fiction and therefore section 43A of the Act cannot be imposed while making computation under section 115JB of the Act. Hence, the interest expense cannot be excluded from the book profit u/s 115JB of the Act.
Addition in relation to interest on loan for acquiring fixed assets under normal computation as well as in computing book profit u/s 115JB - HELD THAT:- No infirmity in the order of the Revenue because there is no section in the Act for granting deduction towards provision made for bad and doubtful debts. Further Explanation I(c )& (i) to section 115JB of the Act clearly provides that the book profit has to be increased by (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities (i) the amount or amounts set aside as provision for diminishing in the value of any asset. Accordingly this issue is decided against the assessee.
TP Adjustment - Determining the arm’s length price of the international transaction relating to the commission paid by the assessee towards availing marketing services - AO adopting the internal cup method disallowed the commission paid to its AEs - As sbmitted that the scope of transactions between both the AEs is altogether different and that for the sale made through Saint Gobin Exprover, the AE Saint Gobain Exprover only acted as a commission agent and products were directly sold by the assessee to the purchaser - HELD THAT:- We are of the considered view that in the interest of justice, the matter needs to be remitted back to the file of the learned TPO for de novo consideration. Accordingly, we hereby remit the matter back to the file of the learned TPO for hearing the issue afresh.
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2016 (7) TMI 1694 - ITAT DELHI
Nature of expenses - Royalty payment - capital or revenue expenditure - AO treated it as a capital expenditure - A.R. submitted that the assessee has been incurring royalty expenditure every year, by virtue of license agreement entered into between the assessee and company in Germany - HELD THAT:- On perusal of the order passed by this Tribunal for Assessment Year 2004-05 we observe that the co-ordinate bench of this Tribunal has analyzed the agreement and the nature of the amount paid by the assessee pursuant to the agreement. It has also been observed therein that the royalty payment is a running expenditure incurred by the assessee every year.
D.R. / Ld. A.O. has not been able to bring out contrary facts, we are in agreement with the submissions of the learned counsel for relating to disallowance of royalty amount is covered in favour of the assessee by the order of the Coordinate Bench of the Tribunal rendered in assessee's own case as followed the decision of Sarda Motor Industrial Ltd [2009 (9) TMI 159 - DELHI HIGH COURT] held assessee has not obtained any benefit of enduring nature. The royalty is payable on the basis of volume of sales year to year. In the event of termination of agreement has to discontinue uses of material provided return everything in this respect. Hence it cannot be said that any benefit of enduring nature accrued to the assessee - DR only contended that the agreement also provided training to the assessee's employees, which cannot be returned in any case. We do not find any cogency in this aspect of this agreement as training expense of employee cannot be treated as capital expenditure. - Decided against revenue.
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2016 (7) TMI 1693 - ITAT MUMBAI
Allowability of claim of depreciation on fixed assets acquired for the objects of the Trust - Assessment of trust - HELD THAT:- As perused the orders of the Revenue Authorities as well as the cited judgments of Hon’ble High Court of Bombay in the case of CIT vs. Institute of Banking [2003 (7) TMI 52 - BOMBAY HIGH COURT] wherein it was held “that the Tribunal was right in law in direct the Assessing Officer to allow depreciation on the assets, the cost of which had been fully allowed as application of income under section 11 in the past years.
Thus we are of the opinion that the issue of allowability of depreciation on depreciable assets should be decided in favour of the assessee.
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2016 (7) TMI 1692 - GUJARAT HIGH COURT
Dishonour of Cheque - rebuttal of statutory presumption - acquittal of accused - HELD THAT:- The cheque was issued by the accused and it has returned unpaid by banker of the accused for want of sufficient fund in his account. Therefore, unless and until, the complainant is unable to identify the handwriting in such cheque, it cannot be said that accused has not issued the cheque at all. In all such cases, one basic thing to be recalled is that before filing of a complaint, a statutory notice is must and therefore, in present case also, the complainant has issued statutory notice of 31st December, 2004 by RPAD which is served upon the petitioner as per endorsement on acknowledgment slip of RPAD which is produced on record and thereafter, if petitioner fails to reply to such notice, prima-facie, it is to be believed that he has no defence to put forward and he is simply trying to kill time before he is obliged to pay the amount of cheque in question.
In absence of any cogent and reliable evidence by the accused and as aforesaid, when documentary evidence relied upon by the petitioner- accused is not sufficient to rebut the presumption, practically, there is no substance in the revision, more particularly, when there are concurrent findings of two Courts below confirming the conviction.
In the present case, there is no issue regarding relationship between the parties. There is no issue or evidence regarding misuse of cheque or loss of cheque and therefore, because the complainant is silent on certain facts which otherwise are not material and relevant for the consideration of commission of offence under the Negotiable Instruments Act, it cannot be said that petitioner has succeeded in proving his innocence or that he has rebutted the evidence of the complainant so as to confirm the acquittal in his favour.
Thus, considering the settled legal position that otherwise revisional jurisdiction is limited which does not permit re-appreciation of the entire evidence when there are two concurrent findings of fact by two Courts below. Therefore, in view of the above facts and circumstances of the case and discussion, there is no substance in the revision application, and hence, revision application is dismissed.
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2016 (7) TMI 1691 - ITAT PUNE
Levy of penalty u/s 271D - competent authority to levy penalty - assessee had accepted loan / deposit in cash from his wife - violation of provisions of section 269SS - JCIT observed that the assessee had failed to prove the business exigency forcing him to accept the amount in cash and further the said transactions were conducted against some business urgency also and there was no major shortage was proved by the assessee - HELD THAT:- Under the provisions of section 272A(3)(c) of the Act, it is provided that any penalty imposable under sub-section (1) or (2) of the said section shall be imposed by the Joint Director or Joint Commissioner in respect of cases other than the cases covered in clauses (a) & (b) of sub-section (3).
As considered by the CBDT that the statutory provisions clearly state that the competent authority to levy penalty is the Joint Commissioner, therefore, only the Joint Commissioner can initiate proceedings to levy penalty and such initiation of penalty proceedings could not be done by the AO. The CBDT has further acknowledged that statement in the assessment order that the proceedings under section 271D and 271E of the Act are initiated is consequential since the initiation is by an authority who is incompetent. The proceedings in this regard can be initiated only by issuance of notice by the JCIT and the same has to be initiated in the course of assessment proceedings or any other proceedings under the Act. In the above said circumstances, penalty order passed in the present case by way of reference made by the Assessing Officer to JCIT vide letter dated 03.05.2012 is beyond limits prescribed, where the assessment order was completed on 28.12.2011. Hence on this count, penalty order merits to be dismissed and the same is so dismissed.
Merits of levy of penalty under section 271D assessee was running business of contractor and his wife was a civil engineer and was also carrying on her activities. During the course of present assessment proceedings, the assessee had accepted cash from his wife. The wife of assessee was also attached to construction business of the buildings as civil engineer. The assessee claims that where he had received the aforesaid cash amount in cash from his wife, then no adverse interference is called for.
There is merit in the claim of assessee as the intention of introducing the present section 269SS of the Act was to prevent the adjustment of entries by way of cash loans. However, the assessee has received the said cash from his wife and in such circumstances, there is no merit in holding the assessee to have defaulted and being liable for levy of penalty under section 271D - On this count also, we direct the AO to delete penalty levied u/s 271D.
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2016 (7) TMI 1690 - SECURITIES APPELLATE TRIBUNAL, MUMBAI
Mandation of WTM of SEBI to pass order - Order passed by the WTM of SEBI or not? - validity letter issued by the Chief General Manager when no order passed by WTM of SEBI - HELD THAT:- WTM had instructed that a note be prepared and accordingly, a note was prepared and put up for approval of WTM on June 23, 2016. It is further stated in the said affidavit that alongwith the said note, draft letters to be sent out to the appellant were also placed before the WTM of SEBI. The said note as also draft letters were approved by the WTM on June 27, 2016 and, accordingly, letter dated July 8, 2016 was issued to the appellant, thereby communicating the decision of the WTM of SEBI disposing off the representation of the appellant.
When questioned as to whether there is any order passed by the WTM of SEBI, counsel for SEBI fairly stated that there is no order passed by the WTM of SEBI.
Thus, it is evident that the WTM of SEBI permitted the Chief General Manager to issue a letter to the appellant that the representation made by the appellant has already been disposed off by the WTM of SEBI, when in fact no order was passed by the WTM of SEBI.
In these circumstances, it is apparent that the WTM of SEBI sought to represent that he has already passed an order, when in fact there was no order passed by the WTM of SEBI.
As per the order passed by this Tribunal [2016 (5) TMI 1610 - SECURITIES APPELLATE TRIBUNAL MUMBAI] WTM of SEBI was required to pass an order by June 24, 2016. Accordingly, having heard the appellant on June 21, 2016, the WTM of SEBI was duty bound to pass an order by June 24, 2016. If for any administrative constraints it was not possible to pass an order within the stipulated time, then the WTM of SEBI ought to have sought extension of time, which the WTM of SEBI has failed to do.
Instead, the WTM of SEBI resorted to a totally impermissible mode of representing that an order has been passed when in fact no order was passed by him. In such a case, informing the party that an order disposing of the representation is already passed, without actually passing an order, is nothing but an attempt to mislead in the matter. We strongly condemn the irresponsible approach adopted in the matter.
Since the WTM of SEBI has not passed any order, we would have directed the WTM of SEBI who had heard the appellant on June 21, 2016 to pass an order immediately. However, we are informed that the said WTM of SEBI is travelling.
In these circumstances, we quash the letter issued by the Chief General Manager on July 8, 2016 and direct SEBI to assign the matter to any other responsible WTM of SEBI who shall pass an order on the representation of the appellant within two weeks from today after giving an opportunity of hearing to the appellant. It would be open for such WTM of SEBI to hear the representation of the appellant as also the representation made by the Respondent No. 2 together and pass appropriate order thereon.
Since we are distressed with the manner in which the WTM of SEBI has discharged his quasi judicial duties which is highly detrimental to the interests of the securities market, we direct the registry to forward a copy of this order to the Hon’ble Finance Minister and also to the Chairman of SEBI for information-we disposed of the appeal in the aforesaid terms subject to payment of costs quantified at ₹ 1 lac to be paid by SEBI to the appellant within one week from today.
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2016 (7) TMI 1689 - ITAT PUNE
Income taxable in India - royalty receipts - taxability of consideration for facilitating grant of user rights in off-the-shelf software and provision of related support services - India-US Tax Treaty - HELD THAT:- As common point between the parties that the issue relating to the taxability in India of consideration received for facilitating grant of user rights in software to Indian entities was decided against the assessee by the Tribunal in 2013 (8) TMI 952 - ITAT- PUNE] relating to assessment year 2004-05 and 2006-07 and [2015 (2) TMI 1391 - ITAT PUNE] relating to assessment year 2007-08.
Receipt of IT charges by the assessee from CIL and CSSL during the year under consideration - As assessee in the year consideration had provided services to the Indian entities and had received charges in respect of desktop/laptop software licence and internet mail and had determined the value of transactions by allocating cost based on cost estimates
TPO adopted the actual cost incurred by the assessee in order to determine the adjustment, if any, to be made on account of international transactions.
Main plea of the assessee before the authorities below was that cost allocation based on cost estimates was an accepted method for the purpose of determining the arm's length price and if the actual cost allocation results in any erosion of overall base of India, then no adjustment is required to be made to the value of international transaction. This has to be seen from the angle that where the assessee is a foreign company and is recipient of internet mail charges and desktop/laptop service charges from the Indian entities, then in cases where it is held that the assessee should have been charged higher amounts from the Indian entities, then the same would result in reduction of overall tax base of India. In such circumstances, the Indian Transfer Pricing provisions are not to be applied.
DRP in assessment year 2007-08 and the AO in assessment year 2009-10 has not made any adjustment in the hands of assessee on account of internet mail service charges and desktop/laptop service charges though identical international transactions were carried out in the later years also. In the totality of the above said facts and circumstances of the case, we reverse the order of CIT(A) and direct the Assessing Officer to delete the addition. Ground of assessee allowed.
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2016 (7) TMI 1688 - DELHI HIGH COURT
Interest on the amount of the bills that have been cleared is still outstanding - HELD THAT:- With the Court having reiterated the directions issued by it in the order dated 29th March 2016 and having dismissed the application of the Department seeking its modification, the above understanding of the Department is not tenable. The reason behind requiring payment of interest on the outstanding amount is to incentivise prompt action by the Department while at the same time compensating the counsel for delays in the settlement of bills for which delay they cannot be held responsible.
The Department will, without any delay, issue instructions consistent with the directions issued in para 7 of the order dated 29th March 2016 to the effect that if there is a delay beyond three working days after the clearing of the bill for payment in making actual payment through RTGS, then the Department will be liable to pay interest on the amount paid to the counsel for the period of delay at the same rate at which refunds are made to the Assessees.
Petition disposed off.
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2016 (7) TMI 1687 - ITAT CHANDIGARH
Disallowance of prior period expenses - AO made disallowance by observing that for the prior period expenses cannot be allowed as assessee is following mercantile system of accounting and that the assessee has not submitted any basis for determination as to when they crystallized - assessee as regularly followed same system of accounting - assessee submitted that assessee has submitted all the details pertaining to the expenses claimed under the head ‘prior period expenses’. No case has been made out that any voucher is missing or that expense is not genuine, branches spread over a vast area. The assessee is debiting the expenses split over to the subsequent years and the Assessing officer had been allowing the same - HED THAT:- As system of accounting of the assessee has been regularly accepted by the Department in the past. There is no change in the facts and circumstances of the case. It has also been submitted that necessary details were duly submitted before the Assessing officer that all of the expenses are supported by proper vouchers and supporting evidence. It is not the case of the AO that any short coming has been noted in the vouchers. This is also not the case that any distortion in profit has been observed as compared to preceding year in view of the above said expenditure. In these circumstances, in our considered opinion, the Revenue has no cogent reason why the prior period expenses claimed by the assessee which have been consistently so claimed and allowed by the Department in earlier years should be disallowed in the current year.
The case laws referred by assessee above duly support the above proposition. In this regard we may gainfully refer to the Hon'ble Delhi High Court decision in the case of CIT Vs. Jagjit Industries Limited [2010 (9) TMI 58 - DELHI HIGH COURT] held that if a particular accounting system has been followed and accepted and there is no acceptable reason to differ with the same, the doctrine of consistency would come into play. The said accounting system has been followed for a number of years and there is no proof that there has been any material change in the activities of the assessee as compared to the earlier years. Nothing has been brought on record to show that there has been distortion of profit or the books of account did not reflect the correct picture in the absence of any reason whatsoever, there was no warrant or justification to depart from the previous accounting system which was accepted by the department in respect of the previous years.
This system of accounting has been regularly followed and the Department has not disputed about this in the past. We also agree with the contention that the Assessing Officer has clearly erred in drawing adverse inference on the crystallization of these expenditures. It is not the case of the AO that any voucher of the assessee company has been found to be Jacking credibility. Thus assessee appeal allowed.
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2016 (7) TMI 1686 - ITAT VISAKHAPATNAM
Valuation of Tenali house property - Real owner - assessment in whose hand? - CIT(A) has considered the value of the site as per the registered sale deed and as far as cost of construction of the building is concerned, has given 15% deduction by taking into consideration the local rates (PWD rates) and 10% deduction to self supervision, thus directed the A.O. to adopt the total value of the Tenali house property including site and construction - objection raised by the Ld. Counsel for the assessee in respect of assessment which has to be made in the hands of the assessee’s wife - HELD HAT:- After careful consideration of the assessment order and also order passed by the Ld. CIT(A), keeping in view of the specific observations made by the ITAT that there is no evidence of record which suggest that assessee’s wife had some independent source of income. It is trite law that in the case of house wife, it is the customary practice of house holder to purchase property in the name of the wife, particularly when lady is a house wife and no regular source of income is proved.
A.O. keeping in view of the observations made by the ITAT, called the assessee to explain the source of investment. The assessee’s wife was not able to substantiate the source. Therefore, based the observation made by the Hon’ble ITAT, assessment was completed. On appeal, the Ld. CIT(A) has given partial relief. We find that there is no infirmity in the order passed by the Ld. CIT(A). This ground of appeal raised by the assessee is dismissed.
Loss incurred in business in the block assessment period for set off against the income - assessee has submitted that the loss incurred by the assessee in his business in the block assessment period may be set off against the income - HELD THAT:- We find that the A.O. has passed the consequential order in respect of the construction of the Tenali House property keeping in view of the observations made by the Hon’ble ITAT. From the ITAT order this issue is not emanating, therefore, this ground raised by the assessee cannot be adjudicated. Therefore, this ground of appeal raised by the assessee is dismissed.
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2016 (7) TMI 1685 - SUPREME COURT
Maintainability of petition - permission to petitioner to file documents before the Additional Director, Directorate of Revenue Intelligence (DRI), Mumbai - HELD THAT:- The writ petition can be disposed of at this stage by permitting the petitioner to file documents before the Additional Director, Directorate of Revenue Intelligence (DRI), Mumbai, within eight weeks hence. Thereafter, the said authority shall intimate the petitioner so that the petitioner can appear and explain and answer the queries of the authorities.
Petition disposed off.
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2016 (7) TMI 1684 - SUPREME COURT
Power of Court to transfer a civil or criminal case pending in any Court in the State of Jammu and Kashmir to a Court outside that State and vice versa - Section 25 of the Code of Civil Procedure and Section 406 of the Code of Criminal Procedure - HELD THAT:- This Court has by a long line of decisions given an expansive meaning and interpretation to the word 'life' appearing in Article 21 of the Constitution. In MANEKA GANDHI VERSUS UNION OF INDIA [1978 (1) TMI 161 - SUPREME COURT], this Court declared that the right to life does not mean mere animal existence alone but includes every aspect that makes life meaningful and liveable, (to be checked). In SUNIL BATRA VERSUS DELHI ADMINISTRATION [1978 (8) TMI 228 - SUPREME COURT] the right against solitary confinement and prison torture and custodial death was declared to be a part of right to life.
Even if the provision empowering courts to direct transfer from one court to other were to stand deleted from the statute, the superior courts would still be competent to direct such transfer in appropriate cases so long as such courts are satisfied that denial of such a transfer would result in violation of the right to access to justice to a litigant in a given fact situation.
One of the questions that fell for consideration in that case was whether this Court could in exercise of its powers under Articles 136 and 142 withdraw a case pending in the lower court and dispose of the same finally even when Article 139A does not empower the court to do so. Answering the question in the affirmative, this Court held that the power to transfer cases is not exhausted Under Article 139A of the Constitution. This Court observed that Article 139A enables the litigant to seek transfer of proceedings, if the conditions in the Article are satisfied. The said Article was not intended to nor does it operate to affect the wide powers available to this Court under Articles 136 and 142 of the Constitution.
In the cases at hand, there is no prohibition against use of power Under Article 142 to direct transfer of cases from a Court in the State of Jammu and Kashmir to a Court outside the State or vice versa. All that can be said is that there is no enabling provision because of the reasons which we have indicated earlier. The absence of an enabling provision, however, cannot be construed as a prohibition against transfer of cases to or from the State of Jammu and Kashmir. At any rate, a prohibition simplicitor is not enough. What is equally important is to see whether there is any fundamental principle of public policy underlying any such prohibition. No such prohibition nor any public policy can be seen in the cases at hand much less a public policy based on any fundamental principle - The provisions of Articles 32, 136 and 142 are, therefore, wide enough to empower this Court to direct such transfer in appropriate situations, no matter Central Code of Civil and Criminal Procedures do not extend to the State nor do the State Codes of Civil and Criminal Procedure contain any provision that empowers this Court to transfer cases. We accordingly answer the question referred to us in the affirmative.
The transfer petitions shall now be listed before the regular bench for hearing and disposal on merits.
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2016 (7) TMI 1683 - DELHI HIGH COURT
Deemed suspension - Whether any departmental inquiry has been initiated against the respondent? - whether, any charge sheet has been filed in the criminal court from the date of registration of the FIR against the respondent? - HELD THAT:- While, there can be no quarrel to the proposition that merely because a period of suspension is long, that by itself cannot be a ground to withdraw the order of suspension - the decisions of the Supreme Court in Allahabad Bank [1997 (3) TMI 569 - SUPREME COURT] and in Rajiv Kumar [2003 (7) TMI 686 - SUPREME COURT] sought to be relied upon by the learned counsel for the petitioner are not applicable to the facts of the present case.
The present case can be decided on the touchstone of the law laid down by the Apex Court in the case of Ajay Kumar Choudhary [2015 (6) TMI 592 - SUPREME COURT]. In this case the respondent was arrested on 20.09.2013 based on an FIR No. 16/2013. He was thereafter placed under deemed suspension. The respondent was released on bail on 01.11.2013. Till date neither any departmental proceedings have been initiated against him by the petitioners nor a charge-sheet has been filed in the criminal court.
There are no infirmity in the order passed by the Tribunal which would require us to interfere in the proceedings under Article 226 of the Constitution of India. No ground is made out to entertain this petition - petition dismissed.
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2016 (7) TMI 1682 - ITAT CHENNAI
Validity of adjustment proposed by TPO u/s 92CA (5) - order of the DRP as not in consonance with the provisions of sec.144C - HELD THAT:- DRP in this case, against the provisions of the Act, passed a very non-speaking order, though the assessee’s counsel made a voluminous submission before the DRP against the draft assessment order. It is accepted by the DRP that it has to be considered every point of dispute and pass a speaking order.
Contrary to this, the order passed by the DRP very critic and there is no addressing the issues raised by the assessee mentioned herein above and it was not properly adjudicated.
Being of, we are not in a position to uphold the order of the DRP as it is not consistent with the provisions of sec.144C of the Act.
We find that the Supreme Court in the case of Sahara India [2008 (4) TMI 4 - SUPREME COURT] has held that even “an administrative order has to be consistent with the rules of natural justice”. The same view has been taken in the case of GAP International Sourcing India (P) Ltd. vs. DCIT [2010 (12) TMI 94 - ITAT, NEWDELHI]
Further, in the case of M/s. Adobe Systems India Private Ltd. [2011 (1) TMI 933 - ITAT NEW DELHI] held that when the DRP passed the order in cursory and laconic order without going into the details of the submissions, it should be decided afresh. Considering all these facts and circumstances, we are inclined to the remit the issues back to the DRP to pass a speaking order on the disputed issues.
Hence, we remit the issue back to the file of DRP to consider the objections of the assessee in proper perspective and pass a speaking order.
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2016 (7) TMI 1681 - GUJARAT HIGH COURT
Unaccounted income - unaccounted interest receipts - documentary evidence seized during the search and the statement of the other family members - whether ITAT right in law in deleting the addition made on the proportionate share of interest and treated by it as undisclosed income of the respondent for the block period? - HELD THAT:- Revenue would not be justified in resting its case on the loose paper and documents found from the residence of a third party even if such documents contain narrations of transactions with the assessee-Company. See Chuharmal v. CIT [1988 (5) TMI 1 - SUPREME COURT]
Also in the absence of any opportunity having been given to the assessee to cross-examine the person from whose possession loose papers were recovered, the same could not be relied upon. See S.C. Sethi case [2006 (3) TMI 60 - HIGH COURT, RAJASTHAN] - Decided in favour of assessee.
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2016 (7) TMI 1680 - DELHI HIGH COURT
Suit for recovery of principal amount together with interest for the period prior to the institution of the suit together with future interest - guilty of acts of misappropriation or not - pleading is that assets of the defendant company alleged to have been sold fraudulently were sold in the lifetime of Shri Sudhir Sareen.
HELD THAT:- If the defences which are in violation of laws and amount to defrauding the taxation authorities cannot be permitted to be taken. A litigant cannot be permitted to take a stand in the Court diametrically opposite to the stand taken by it before Taxation Authorities. If the courts permit such stand to be taken in the course of judicial proceedings and should the courts come to the rescue of such a litigant, in this case for avoiding the recovery of dues which the litigant elsewhere has represented to be due from her, I am afraid the courts would be becoming privy to abuse of their own process.
In Ram Sewak Vs. Ram Charan [1981 (11) TMI 190 - ALLAHABAD HIGH COURT] the parties had been keeping double set of accounts for evading payment of income-tax and sales tax; the trial court reported the matter to the Taxation Authorities; the High Court held that the court should have refused to entertain the suit on the ground of public policy as it involved directing the recovery of an amount found to be due to either party as a share of the profits which had been deliberately concealed by the parties from the books of account in order to evade the payment of taxes. It was further held that no court can countenance a deliberate evasion of the tax laws of the country and to lend the aid of the Court for recovering an amount which had been deliberately kept concealed by the parties in order to evade payment of the taxes due thereon. It was yet further held that if the court was to do so, it would amount to aiding and abetting of the evasion of the laws by the Court itself.
It is not open to the defendant to before this Court contend that the monies which the defendant in its books of accounts and balance sheet has shown as loan from the plaintiff and repayable to the plaintiff (and on the basis whereof the defendant has been assessed for tax) are not a loan from the plaintiff but "in the nature of gift" from the plaintiff and not repayable to the plaintiff.
Supreme Court, in Karam Chand Thapar & Bros. (P) Ltd. Vs. Commissioner of Income Tax, Calcutta [1971 (8) TMI 29 - SUPREME COURT] held the circumstance that the assessee was showing the shares as investment shares in its books of accounts as well as in the balance sheet, though not conclusive, but is relevant circumstance on which reliance could be placed upon and necessary inference drawn. It was further held that the explanation, that the Company had to do so because of provisions of the Company Law, was unfounded.
It is not the case of the defendant in the present case that the plaintiff Company was authorised to make gift or that the defendant Company was authorised to receive gift. For this reason, the defence of the amount being by way of gift or in the nature of gift cannot be entertained - there are no basis in law to put the present suit to trial insofar as the claim of the plaintiff company for recovery of principal amount of Rs. 1.48 crores is concerned.
In the entirety of the facts and circumstances, it is deemed appropriate to award interest to the plaintiff company on the said sum of Rs. 1.48 crores w.e.f. 1st April, 2015, at the rate of 8% per annum till the date of this decree and for a period of three months from the date of this decree within which time the defendant company is expected to discharge its debt under the decree. However if the decretal amount is not paid within three months herefrom, with effect from the expiry of three months, the principal amount of Rs. 1.48 crores shall incur interest @ 15% per annum. Further, if the payment of the entire decretal amount is made within three months, the plaintiff company shall not be entitled to any costs of the suit; however if no such payment is made, the plaintiff company shall also be entitled to costs of this suit. Counsel's fee assessed at Rs. 55,000/-.
Application disposed off.
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2016 (7) TMI 1679 - BOMBAY HIGH COURT
Additional liability on account of exchange rate fluctuation allowable as a deduction in the computation of the applicant's business profits - HELD THAT:- Tribunal while allowing the Revenue's appeal followed its order in the case of the applicant assessee for AY 1985-86 on an identical issue. The applicant assessee being aggrieved filed an application for Reference to the Tribunal and it on an identical question a Reference was made to this Court.
On 21st August 2014 [2014 (9) TMI 283 - BOMBAY HIGH COURT] this Court answered the identical question referred to it in Reference No. 271 of 1997 in favour of the applicant assessee and against the Revenue. This by following the decision of the Apex Court in Commissioner of Income Tax Vs. Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT]
Decided in favour of the applicant assessee and against the Revenue.
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2016 (7) TMI 1678 - SC ORDER
Invalid CIS scheme - non seeking registration with SEBI - violation of CIS Regulations - collection of subscription amount after the ex-parte interim order - refund to investors - HC upholding the decision of SEBI that the Appellants have floated and operated CIS without registering with SEBI and hence in violation of CIS Regulations, since the schemes are closed by the Appellants voluntarily and substantial amount is refunded to the investors, we grant extension of two years time from the date of this order to the Appellants to enable them to pay the balance amount refundable to the investors.
HELD THAT:- No substance in these appeals, therefore, the civil appeals are dismissed.
Pending application, if any, stands disposed of.
As clarified that the respondent shall not collect further amount from the investors until it is registered as CIS and shall also give details to the SEBI with regard to the amount disbursed by it, at the end of every quarter. The first such statement shall be given in the first week of October about the payments made up to 30th September, 2016.
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