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2017 (6) TMI 1393 - KERALA HIGH COURT
Jurisdiction - Authority being subordinate to the Commissioner for Commercial Taxes, could not have modified the orders passed by the Commissioner in exercise of his powers under Section 94 of KVAT Act? - sale effected to an industrial unit within the SEZ - deemed exports or not - HELD THAT:- The sale by registered dealers like the appellants to units within the SEZ do not qualify to be deemed exports and instead their entitlement, for statutory benefits are governed by the provisions of Section 8 of the CST Act and Section 6 of the KVAT Act. Viewed in that manner, the conclusion as contained in impugned clarification will have to be sustained.
Whether the appellants should refund the amounts already refunded to them on the strength of Annexure-I. Annexure-I was issued by the Commissioner in exercise of his powers under Section 94 of the KVAT Act? - HELD THAT:- That Annexure was modified by the Authority which came into existence only by the impugned proceedings. Therefore, until the impugned proceedings were issued, the department was bound by Annexure-I and it is on that basis that refunds were also allowed to the assessee. That apart, the Commissioner also has not issued any clarification that the impugned order would be retrospective as empowered under Section 94(2).
While legality of the impugned order is upheld, the appellants shall not be liable to refund any amount already refunded to them on the strength of Annexure-I order dated 15.09.2007.
Appeal disposed off.
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2017 (6) TMI 1392 - ITAT BANGALORE
TP Adjustment - Global Sale and Marketing Activity Fees and MAM applied by the TPO - HELD THAT:- The international transactions of the assessee involve charges for raw material and components, sales and manufacturing goods, reimbursement of expenses, payment towards royalty and management fees, charges of capital equipment, payment of intra-goods services, charges of material, commission income, rendering of software services, reimbursement of expenses and Global Sale and Marketing Activity Fees. The TPO has accepted all other transactions except the international transactions regarding Global Sale and Marketing Activity Fees.
International transactions of the assessee are comprising of revenue receipt from the AE as well as revenue payment to the AE. Therefore in these facts and circumstances of the case, we find that when the other international transactions regarding revenue receipt from the AE are tested under the TNMM analysis then the transaction of fee payment by the assessee towards the services rendered by the AE should not be separately tested but all the international transactions having receipt from the AE and payment to the AE shall be clubbed together and then has to be analysed under TNMM.
DRP has directed the TPO to determine the ALP in respect of the Global Sale and Marketing Activity Fees instead of considering the ALP at NIL. Therefore in principle we do not find any error or illegality in the directions of the DRP however having regard to the peculiar facts and circumstances of the case wherein the assessee is having multiple and diversified international transactions involving receipt as well as payment, we are of the considered view that the payment in respect of management fees as well as Global Sale and Marketing Activity Fees shall be considered as operating cost and has to allocated in the ratio of turnover of the other international transactions and then the ALP of the other international transactions has to be determined under TNMM analysis.
Thus we set aside the entire issue of determination of ALP and TP Adjustment to the record of the TPO/A.O. for carrying out fresh exercise of determination of ALP in respect of international transactions by considering the payment in respect of management fees and Global Sale and Marketing Activity Fees as part of the operating cost and allocating the same in the ratio of the turnover of the other international transactions.
Foreign tax credit and TDS credit not granted despite the directions of the DRP - assessee has also filed a petition under Section 154 of the Act which is pending disposal before the TPO/A.O - HELD THAT:- There is no quarrel on the point that the AO is bound to follow the directions of the DRP and pass the final order in pursuant to the directions of the DRP. Accordingly, we direct the AO to strictly give effect to the directions of the DRP and dispose of the petition filed by the assessee u/s 154 of the Act.
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2017 (6) TMI 1391 - ITAT MUMBAI
Book profits computation u/s115JB - debenture redemption reserve - whether it is not a ‘reserve’ within the meaning of explanation 1(b) of the section 115JB? - HELD THAT:- In our considered opinion, having regard to the judgment of Raymond Ltd. (2012 (4) TMI 127 - BOMBAY HIGH COURT] as well as the decision JSW Energy (2013 (7) TMI 192 - ITAT MUMBAI] the impugned issue is no longer res integra. In the case of JSW Energy (supra), the Tribunal was considering the deductibility of the amount set apart as Debenture Redemption Reserve for the purposes of computing the book profits u/s 115JB of the Act.
After detailed discussion, it has been held that adjustment of the amount of Debenture Redemption Reserve made while computing the book profits u/s 115JB of the Act is permissible and is within the purview of the law. The decision of CIT(A) is in consonance with the aforesaid legal position and even before us, no contrary decision has been brought out by the Revenue and as a consequence, we hereby affirm the decision of CIT(A) on this aspect. Thus, the Revenue fails in its appeal.
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2017 (6) TMI 1390 - SUPREME COURT
Levy of market fee on the said produce - goods were bought and sold at the market place or not - HELD THAT:- Applicability of Section 17 of Rajasthan Agricultural Produce Markets Act, 1961 read with Rule 58 of Rajasthan Agricultural Produce Market Rules, 1963 would depend upon the question as to whether agricultural produce is bought and sold by the licensee in the market area. It is also the common case of the parties that the answer to the aforesaid issue would depend upon the question as to when and at what stage the title in the goods passes, if the entire transaction takes place outside the State of Rajasthan and the ownership in the goods also passes outside Rajasthan, then the market fee is not payable. It is also the common case of the parties that answer to the aforesaid question would depend upon the applicability of Section 4 read with Section 19 of the Sale of Goods Act, 1930, which provisions are to be applied keeping in view the terms and conditions on which the goods are sold.
The very distinction between the sale and agreement to sell enumerated in the aforesaid provision points out that a sale takes place when the property in goods is transferred from the seller to the buyer. If transfer of property in the case is to take place at a future time or subject to conditions that are stipulated in the contract of sale of goods, then the contract is merely an agreement to sell. Section 19 is contained in Chapter-Ill of the Sale of Goods Act, title whereof is "Effects of the Contract (Transfer of Property as between Seller and Buyer)".
The title in goods is transferred from the seller to buyer only on the sale of goods. As to when such a sale fructifies and the property passes is to be ascertained from the intention of the parties having regard to the terms of the contract. If no such intention can be gathered from the terms of the contract, the property in goods passes where the goods are in a deliverable state and there is unconditional contract for sale of specific goods.
Once the goods bought are agricultural produce on which market fee is leviable in terms of Schedule attached to the Act, then the market fee is payable. If it is used as raw material for manufacturing purpose thereafter would be of no consequence.
It is to be first ascertained whether agricultural produce was bought and sold in the market area or not is the question which needs to be determined in each case after applying the principles of law - The High Court would be required to ascertain this on the basis of terms and conditions of sale in each case and that would determine the fate of each of the writ petitions filed by the Appellants. This exercise is not done and after dealing with the case of Arihant Udhyog, other writ petitions are also dismissed.
Thus, except Arihant Udhyog, where we have upheld the judgment of the High Court, orders of the High Court in other cases are set aside and writ petitions are remanded back to the High Court to decide them in the light of the law stated by us in this judgment.
Appeal dismissed.
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2017 (6) TMI 1389 - ITAT MUMBAI
Addition u/s 68 - unexplained loan - as per AO assessee has failed to prove the identity, genuineness and creditworthiness of the loan creditors and the loan creditors are not found at the address given and loan creditors are showing nominal income and hence, accumulation of fund to such an extent is not possible - contention of the assessee that he had discharged initial burden cast upon him by filing confirmation letters along with other evidences to prove the identity, genuineness of the transaction and creditworthiness of the parties. Once, three ingredients are proved, the assessee doesn't required to prove the sources of source.
HELD THAT:- Assessee has furnished confirmation letters in respect of all loan creditors. We further observed that the assessee has filed income tax returns along with bank statements of all loan creditors. All the loan creditors are assessed to Income tax and loans has been given by cheque.
We further observed that the A.O has summoned trustees of the trust who had appeared before the A.O and given a statement u/.s 131, wherein they have clearly admitted that they have advanced loan to the assessee. In respect of remaining three parties, though they are not appeared before the A.O, the assessee has filed necessary details that these loans have been repaid by cheque in the next financial year.
Therefore assessee has discharged his initial burden cast upon him by filing identity, genuineness and creditworthiness of the parties. Once, three aspects has been proved, then the onus shifts to the A.O to prove otherwise. In this case, the A.O ignoring all evidences filed by the assessee, simply made additions on the simple reason that creditors are not having sufficient source of income to explain loan given to the assessee. If at all, the A.O having any doubt on the capacity of the loan creditors, he is free to proceed against the loan creditors as per the law, but he cannot make additions towards, loan creditors u/s. 68 of the Act, once the assessee has discharged his initial burden.
In this case, on perusal of the facts available on record, we find that the assessee has filed necessary evidences to prove the identity, genuineness of the transaction and creditworthiness of the parties. Therefore, we are of the considered view that the A.O was erred in making additions towards unsecured loans u/s. 68 - Decided in favour of assessee.
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2017 (6) TMI 1388 - ITAT DELHI
TP Addition u/s 92CA(3) - MAM selection -TNMM or CUP Method - aggregation-approach under TNMM for benchmarking international transactions relating to royalty and FTS at entity level rejected - HELD THAT:- As decided in assessee own case Hon’ble Delhi High Court at New Delhi [2017 (1) TMI 389 - DELHI HIGH COURT] the issue was remanded back to the file of the TPO and the direction was given to apply the TNMM at the entity level. The Hon’ble Jurisdictional High Court in the aforesaid order by following the judgment in the case of Magneti Marelli Powertrain India Pvt. Ltd. [2016 (11) TMI 123 - DELHI HIGH COURT] remitted the issue back to the file of the TPO for reconsideration.
Thus we remand this issue back to the file of the AO/TPO to be decided as has been directed. Appeal of the assessee is allowed for statistical purposes.
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2017 (6) TMI 1387 - BOMBAY HIGH COURT
Demand of Service tax alongwith interest - Manpower Recruitment or Supply Agency Services - word “recruitment” and “supply” in Section 65(68) of the Finance Act, 1994, referred to same services or then services of different nature? - HELD THAT:- It is agreed position between the parties that issues arising in the present appeal stand concluded against the Revenue and in favour of respondent-assessee by virtue of decision of this Court in COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX VERSUS M/S. SHRI SAMARTH SEVABHAVI TRUST, M/S. AMRIT SANJIVANI SUGARCANE TRANSPORT CO. PVT. LTD., M/S. GODAVARI KHORE CANE TRANSPORT COMPANY (P) LTD. AND M/S. GANESH ARPIT SUGARCANE TRANSPORT PVT. LTD. [2015 (3) TMI 1170 - BOMBAY HIGH COURT] where it was held that it appears that the Appellate Tribunal has rightly come to the conclusion that the respondent's work, though provided services to the sugar factory, did not come within the mischief of the term “Manpower Recruitment or Supply Agency”.
All the substantial questions of law are answered in favour of respondent-assessee and against the appellant-Revenue.
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2017 (6) TMI 1386 - ITAT CHENNAI
Reopening of assessment u/s 147 - deduction u/s.36(1)(viia) - HELD THAT:- As rightly relied upon by the Ld.DR on the Hon’ble Supreme Court judgment in the case of [1997 (10) TMI 5 - SUPREME COURT] re-opening of the case on the basis of factual error pointed out by the Audit Party is permissible under law.
What is brought to the notice of the AO by the Audit Party was the factual error and it is a fact that the assessee had claimed the deduction against the provisions made by under NPA and there was prima facie case for under assessment - Therefore, we do not find any error in the re-opening of assessment and uphold the issue of notice u/s.148 - CIT(A) also relied on the decision in the case of CIT v. Raman & Co [1967 (7) TMI 2 - SUPREME COURT] and we uphold the order of the Ld.CIT(A) and dismiss the ground of the appeal of the assessee on this issue.
Addition made u/s.36(1)(viia) - assessee has created NPA provisions and claimed the deduction in respect of the provisions for bad and doubtful debts - AR argued that the assessee has already made the provision in the earlier years which was unadjusted and brought forward in the books - HELD THAT:- In Income Tax, each year is an independent and the income has to be computed as per the system of accounting regularly followed by the assessee. Therefore, the deduction can be made by the assessee only on the basis of the expenditure debited to the Profit & Loss A/c from the previous year relevant to the AY under consideration. No expenditure which is not debited to the Profit & Loss A/c in the year under consideration is permissible for deduction.
In the instant case, the assessee has not debited the expenditure relating to the provisions for bad and doubtful debts. Therefore, the deduction u/s.36(1)(viia) is permissible to the extent of the amount debited to the Profit & Loss A/c or as per the permissible limits specified u/s.36(1)(viia) whichever is less. The contention of the assessee that the reserves already created in the earlier years is available in the books of accounts which remained unadjusted is not an acceptable proposition and not as per the Income Tax Act - the deduction is permissible only to the extent of provisions actually created in the books of accounts for the relevant Assessment Year. Decided against assessee.
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2017 (6) TMI 1385 - ITAT BENGALURU
TP Adjustment - MAM - adopting TNMM at entity level - assessee contended that the assessee-company submitted that TP study report adopting TNMM at entity level and this was accepted by the TPO and therefore, there was no need of separate bench marking in respect of transactions of royalty and technical fee as the same formed part of operating expenditure - HELD THAT:- In the present case, the TP study submitted by the assessee was accepted by the TPO. However, the TPO had chosen to make a separate bench marking in respect of transaction of royalty and management fees.
There is no dispute that there was a close nexus between these transactions and other transactions. Therefore, it requires aggregation of these transactions with other transactions, and the most appropriate method is to adopt TNMM at entity level for the purpose of the bench marking the transactions.
Accordingly, we remand the matter back to the file of the TPO/AO to aggregate transaction of royalty and management fee with other transactions and bench mark the same with other transactions by adopting TNMM at entity level.
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2017 (6) TMI 1384 - KERALA HIGH COURT
Dishonour of Cheque - absence of due service of statutory demand notice - vicarious liability of Director - acquittal of the accused - Section 138 and 141 of NI Act - HELD THAT:- Section 141 again does not lay down any requirement that in such eventuality, the individual directors must individually be issued separate notices under Section 138 and that the persons, who are in charge of the affairs of the company and running its affairs must naturally be aware of the notice of demand under Section 138 of the Act issued to such company and that it is precisely for this reason that no notice is additionally contemplated to be given to such directors. That the opportunity to the "drawer" by issuing statutory demand notice is considered good enough for those who are in charge of the affairs of such company, etc., and if it is their case that the offence was committed without their knowledge or that they had exercised due diligence to prevent such commission, it would be a matter of defence to be considered at the appropriate stage, etc. Therefore, it is crystal clear that in a case, where the drawer of the dishonoured cheque is a company, then statutory demand notice should mandatorily be served on the drawer company but that separate individual notices to the individual directors and officials of the company is not mandatory.
The Appellate Court cannot be found fault with in any manner in rendering the impugned view. Since the prosecution is not maintainable as against the drawer company in view of this ground, then the prosecution against the individual director would also crumble to the ground as the offence under S. 138 of the N.I. Act is essentially and primarily attracted as against the drawer of the cheque. If no offence is made out against the accused drawer company, then the question of convicting the individual Directors and officials of that company on the basis of vicarious liability under Section 141 of the N.I. Act does not arise. For these reasons, the Lower Appellate Court was fully right in holding that all the accused are entitled for acquittal.
Therefore, without the basic averment in the complaint that the drawer of the dishonoured cheques in question is the company and not the individual director, it is not right and proper to convict the accused company for the above said offence. That apart, in the facts and circumstances of a case like this, even if an application for amendment of averments in the complaint had been filed, it could not have been allowed as it could have caused serious prejudice to the accused company - Going by the legal principles laid down by this Court in the decisions of this Court as in Linda John Abraham v. Business India Group Company & ors. [2013 (2) TMI 572 - HIGH COURT OF KERALA], HAFSA RAHMAN T VERSUS STATE OF KERALA AND ORS. [2017 (4) TMI 1615 - KERALA HIGH COURT] as well as the rulings of the Apex Court as in UP. Pollution Control Board v. M/s. Modi Distillery & Ors. [1987 (8) TMI 449 - SUPREME COURT], S.R. Sukumar v. S. Sunaad Raghuram [2015 (7) TMI 1260 - SUPREME COURT], such a plea for amendment of the averments in the complaint could not have been entertained at all in the facts of this case. This is all the more so, inasmuch as in the facts of this case, any plea for such amendment was not brought forth before the issuance of summons to the accused company.
This Court is constrained to uphold the view taken by the appellate sessions court that the accused persons are entitled for acquittal - Appeal dismissed.
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2017 (6) TMI 1383 - ITAT MUMBAI
Procedure when assessee claims identical question of law is pending before High Court or Supreme Court u/s 158A - Tribunal disallowing depreciation on the block of assets still in existence disregarding the provisions of section 32 of the Act - Whether Tribunal is justified recasting the audited book results for the purpose of computation of book profit under section 115JB?”
HELD THAT:- As per section 158A of the Act, assessee has filed the appeal for assessment years 2006-07 and 2007-08 before the Hon’ble Bombay High Court. Assessee has given undertaking in form No.8, rule 16. Therefore, all these matters are restored to the file of AO and the AO is directed to decide the appeals as per the outcome of the Hon’ble Bombay High Court.
In the result, all the appeals are restored to the file of the AO and AO is directed to decide the matters as per the decision stated above.
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2017 (6) TMI 1382 - ITAT CHENNAI
TDS u/s 192 - Addition u/s 40a(ia) - disallowance of payments made to employees - whether sec 40(a)(ia) being not applicable as no amount was payable as at the year-end? - Revenue denied the claim on the basis that the expenditure has been merely routed through the books of its sister concerns, which were inoperational, so that their staff was surplus - HELD THAT:- Section 40(a)(ia) places an additional burden, i.e., of deduction of tax at source and its payment to the credit of the Central Government qua the specified sum/s, for its deduction in computation of business income, so that the very fact of its invocation implies that the condition of deductibility is otherwise met.
The applicability of TDS in such a case would depend on the nature of the payment and the work done (by the sister concerns). If, on the other hand, the debit notes state of only the employees having been deputed to the assessee-company, which may deploy them for any work it deems fit and proper for the purpose of its business, it would be a case of the employees being made available to the assessee-company. The payment in such a case would have to be directly to the concerned persons in-as-much as they stand seconded, i.e., are on deputation, to the assessee-company, even as they continue to be the regular employees of and on the rolls of their parent firms. The TDS in this, latter case would be on ‘salary’, i.e., as against on the aggregate payments made/credit allowed (during the year) directly to the sister concern/s, as the obligation to pay salary thereto, on account of second-ment/deputation, is on the assessee-company. How, we wonder, could this be regarded as a case of reimbursement of expenditure? The assessee need not have credited, or routed the transaction through, the account of the sister concern/s. That is, considered either way, it is not a case of reimbursement of expenditure. This is precisely what the Revenue means when it states that the assessee-company has merely routed the expenditure through the account of the related parties, and that therefore nothing turns thereon.
Be that as it may, where, however, the concerned employees, or the sister concerns, as the case may be, have discharged their tax liability on the relevant income/s, the assessee-company, following the procedure enshrined in s. 40(a)(ia) r/w. s. 201 (as amended by Finance Act, 2012), claim saving from the rigor of s. 40(a)(ia). This is as the said amendments have been clarified by the Hon'ble Courts, as in the case of CIT v. Ansal Landmark Township (P.) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] as curative and, therefore, retrospective.
Amendment, by precluding application of s. 40(a)(ia) in cases where the payee/creditor has discharged the tax liability on the relevant sum for the relevant year, only seeks to operationalize and apply the decision Hindustan Coca Cola Beverages (P.) Ltd.[2007 (8) TMI 12 - SUPREME COURT] The matter, accordingly, setting aside the impugned order, is, for fresh determination, on the lines indicated above, restored to the file of the AO, to do so by issuing definite findings of fact. The assessee, on whom the burden to establish its’ claims lie, shall be allowed proper opportunity to represent its case before him. Assessee’s appeal is allowed for statistical purposes.
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2017 (6) TMI 1381 - ITAT BANGALORE
TP Adjustment - ALP determination - arrangement between the assessee and its AE - HELD THAT:- Since the issue in dispute is arising from identical facts and circumstances as in the earlier/later years, it is, therefore, covered by the decision of the co-ordinate bench of the Tribunal in the assessee's own case for asst. years 2004-05 to 2007-08 and asst. year 2009-10.
In this factual view of the matter, and following the aforesaid decisions of the co-ordinate benches of the Tribunal (Supra), we hold that where the TPO has accepted the transaction to be at ALP in the hands of the AE, then he cannot take a different stand in the case of the other party to the transaction, i.e, the assessee therein in the case on hand and accordingly set aside the orders of the AO/TPO on this issue. Consequently, the grounds raised by the assessee are allowed as indicated above. Assessee appeal allowed.
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2017 (6) TMI 1380 - JHARKHAND HIGH COURT
Illegal transfer of property of Trust - misappropriation of property of deity - HELD THAT:- It is an admitted fact that the properties were endowed to the deity i.e. Shree Ram Jankiji and the trust was formed in 1948 for the purpose of serving the deity and also for managing the properties of the deity. From recital of the trust deed, it is also quite clear that the property belongs to the deity, which has been mentioned in 1987 deed that since unwarranted elements have entered into the Committee and the properties are being mismanaged, it was felt necessary to cancel the earlier deed of trust and reconstitute a fresh one. This was the background of constituting and registering the fresh trust deed of 1987. Clause 9 of the trust deed of 1987 clearly prohibits the committee/sevayat or any one from selling or transferring or settling any land of the temple/deity. The Founder of the Trust deed of 1948 and that of 1987 was Mahanth Shree Janki Jivan Sharan, Chela-late Sri Ramdas Paramhans. Suddenly, on 20.9.2005, a separate deed was created and registered. From perusal of 2005 trust deed, one can understand that since some of the old trustees died or some of them are unable to perform the duty, it is necessary to reconstitute it.
This Court, prima facie, feels that this permission of the Board obtained in the year 1994 is by misrepresentation/fraud. This permission became the basis of the order of the Judicial Commissioner. An act, which is prima facie, bad and fraudulent in nature, cannot get validation by the order of the Judicial Commissioner. Thus, prima facie, the order of the Judicial Commissioner, which may be based on misrepresentation and fraudulent act, cannot be relied upon. It is well settled principle that fraud vitiates everything - in the trust deed of 1987, there was a specific bar of transfer or sale of properties. If that be the situation, then how in the year 1994, a permission was obtained and subsequent connected action was taken by the trustees to transfer the properties. All these actions genuinely create a great doubt about the intention of the trustees and, prima facie, this Court feels that the deed of 2005 was prepared against the wishes of the founder of the trust with some ulterior motive.
The Central Bureau of Investigation (C.B.I.) is directed to investigate and take appropriate action at the earliest and conclude the same, preferably within six months from today. All the parties will cooperate with the investigation. The State should take all consequent action for restoring the lands in favour of the deity, depending upon the final outcome of the C.B.I. investigation.
Petition allowed.
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2017 (6) TMI 1379 - CESTAT NEW DELHI
CENVAT Credit - input services - port services - Cargo Handling Services - Customs House Agent's Services - Insurance services - Motor Vehicle insurance - Premises, equipment insurance - Transit Insurance of excisable goods - Insurance of cash during transit - Insurance of employee of appellant - Courier Services - HELD THAT:- After hearing both the parties and perusal of record, it appears that Cenvat Credit of all the above services have been allowed in various decisions of Hon’ble High Courts and Tribunal. The issue is no longer res integra since all services are covered by various decisions in favour of the appellant.
Reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, RAJKOT VERSUS ROLEX RINGS (P.) LTD. [2008 (2) TMI 295 - CESTAT, AHMEDABAD], COMMISSIONER OF CENTRAL EXCISE, RAIPUR VERSUS M/S BHILAI ENGINEERING CORPORATION LTD. [2015 (12) TMI 1268 - CESTAT NEW DELHI] and COMMISSIONER OF C. EX. & CUS., VAPI VERSUS APAR INDUSTRIES LTD. [2010 (8) TMI 407 - CESTAT, AHMEDABAD].
There are no reason to sustain the impugned order - appeal allowed.
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2017 (6) TMI 1378 - NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD
Composite Scheme of Arrangement between Aditya Birla Nuvo Limited, Grasim Industries Limited and Aditya Birla Financial Services Limited and their respective shareholders and creditors (Scheme) - change of shareholding pattern
HELD THAT:- Considering the entire facts and circumstances of the case and on perusal of the Scheme and the proceedings, it appears that the requirements of the provisions of sections 230-232 of the Companies Act, 2013 are satisfied. The Scheme is genuine and bona fide and in the interest of the shareholders and creditors. I, therefore, accordingly allow the Company Petitions and approve the Scheme.
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2017 (6) TMI 1377 - ITAT JAIPUR
Unexplained investment u/s 69 - investment in an agricultural land - source of loan amount could not be explained - AO observed that the assessee had made investment in an agricultural land the source of investment was stated to be source of the source of loan taken to the other persons was claimed to have been taken from Smt. Anita Kumari was doubted by the AO - HELD THAT:- AO made addition on the ground that the source of the source of loan amount could not be explained. CIT(A) in his order has observed that the AO in his remand report, reported that source of loan was stated to be cash withdrawal from the bank account of her husband. Moreover, the factum of sale of agricultural land by the Husband of Smt. Anita Kumari is not disputed by the Revenue.
CIT(A) has adopted a possible view with regard to availability of fund from deposit in the banks accounts of Smt. Anita Kumari.
AO did not bring any material on records suggesting that the cash belonged to the assessee. Hence, we see no merit into the ground of the revenue. Appeal of the revenue is dismissed.
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2017 (6) TMI 1376 - ITAT MUMBAI
Allowable Revenue expenses u/s 37(1) - cost towards development of software products, solutions and management - treatment as expenditure as incurred for the purpose of setting up a new project -Expenditure incurred on development of a product of the same line of business - HELD THAT/:- We find assessee is engaged in the business of developing software, that it had debited an amount as exceptional item in its books of accounts under the head developing a new item, that the expenditure of the product pertained to the AY. 2004-05 to AY. 2007-08, that in the year under consideration it abandoned the development of the software, that it claimed the expenditure as revenue expenditure.
Expenditure incurred on development of a product of the same line of business, in our opinion, held to be allowed as revenue expenditure. It is possible that the assessee, may due to certain reasons, abandoned the product but that would not make the expenditure of capital nature. Entries in the books of accounts are important to a certain extent only. What is to be seen is the real nature of the expenditure. In the case under consideration the incurring of expenditure is not in doubt, the AO has not held that expenditure was not incurred for development of software i. e. for the existing business of the assessee. See IL & FS Education and Technology Services Private Ltd [2013 (4) TMI 992 - ITAT CHENNAI] , M/S BINANI CEMENT LTD.[2015 (3) TMI 849 - CALCUTTA HIGH COURT] and Indoram Synthetic India Private Ltd. [2009 (9) TMI 635 - DELHI HIGH COURT]
Thus we hold that the order of the FAA does not suffer from any legal or factual infirmity. As far as case of EID Perry[2001 (11) TMI 25 - MADRAS HIGH COURT] is concerned, we would like to state that in that matter the Hon’ble Madras High Court had held that it was clear from the assessee’s own case that the expenditure was incurred for the purpose of setting up a new project. The case before us, is not of ‘setting up of new project’. In that matter the assessee, a manufacturer of sugar, wanted to set up a new project for the manufacture of methanol. Thus, the case is of no help to decide the issue. Effective ground of appeal against the AO.
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2017 (6) TMI 1375 - MADRAS HIGH COURT
Dishonor of Cheque - rebuttal of statutory presumption - discharge of burden to prove - acquittal of accused - main contention of the revision petitioner is that there was a business transaction between him and the respondent/complainant and he has given a signed blank cheque to the respondent for the business transaction and the same has been misused by the complainant and filed a false case against him - HELD THAT:- The signature of the cheque was not in dispute. The letters written in words, figures and date of the cheque were written in bold letters, whereas the name of the complainant was written in different hand writing. This fact also create serious doubt about the transaction. If really the accused has issued the cheque in the name of the complainant on the same day, the style of handwriting must be one and the same in all aspects. Whereas the accused has written the complainant name in different hand writing and filling up other columns in other hand writing also highly improbable and in fact, the same creates serious doubt about the issuance of the cheque by the accused to the complainant at the relevant time. When these materials more than probable from the admission of P.W. 1 and materials, the burden is shifted on the complainant to establish that the cheque is supported by valid consideration. But the material documents and the cross examination of the complainant clearly indicates that she has not discharged her burden as prescribed in law.
This Court after scanning the entire evidence of P.W. 1 as discussed above, have serious doubt about the legally enforceable debt. From the admissions of P.W. 1 in the cross examination, the legal presumption attached to the cheque has been dislodged by the accused. The burden shifted on the complainant to establish the consideration has not been proved in the manner known to law. Therefore, the legally enforceable debt cannot be inferred merely on the cheque. Hence, this Court is of the view that the findings of the Court below has to be interfered with and the same is interfered.
The revision case is allowed - the revision petitioner/accused is acquitted from the charges.
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2017 (6) TMI 1374 - ITAT DELHI
Disallowance of expenses debited during the year on estimate basis - Addition of some of the expenses claimed are disproportionate and also that some of the expenses are not vouched and verifiable - HELD THAT:- CIT (Appeals) observed that variation in expense of one head in a year as compared to earlier year cannot be the basis to make an addition, especially when overall gross profit and net profit was showing an increasing trend. He noted further that when books of accounts were duly audited and AO did not point out any specific defects in the books of accounts and no expenses had been found to be of non-business nature, the ad-hoc disallowance of Rs.2 lakhs made by the AO was not warranted. We fully concur with the finding of the ld. CIT (Appeals) as even an estimation of disallowance needs some basis to justify the action of the AO in this regard as just and reasonable. It is an established proposition of law that even discretion is to be exercised judiciously. While examining the action of the AO in making the ad-hoc disallowance in question, CIT (Appeals) has noted that books of accounts were duly audited and no specific defects were found therein by the AO nor was any allegation that expenses had been incurred for non-business purposes. He has further noted that the assessee has shown better trading result during the year in comparison to last three years and there was increasing trend. The first appellate order is thus reasoned one and does not need any interference by the Tribunal. The same is upheld. Ground No. 1 is accordingly rejected.
Disallowance being the amount of revenue expenditure under various heads of expenditure capitalized in the books of accounts as intangible know-how and new brand development, which the assessee in its return of income had claimed as revenue expenditure - HELD THAT:- The Hon’ble Supreme court in the case of Empire Jute Company [1980 (5) TMI 1 - SUPREME COURT] has been pleased to hold that it is only when an enduring advantage is in the capital field that the expenditure would be disallowable. If advantage of enduring benefit is in the Revenue field it would be on the Revenue account.
The Hon’ble jurisdictional High Court of Delhi in the case of CIT Vs. Siti Financial Consumer Fin. Ltd. [2011 (3) TMI 622 - DELHI HIGH COURT] has been pleased to hold that advertisement and publicity expenses even when substantial, having been incurred to facilitate business, no advantage in capital field is resulted. Again in the case of CIT Vs. Usha Iron & Ferro Metal Corporation Ltd. [2007 (5) TMI 170 - DELHI HIGH COURT] the to hold that the expenditure incurred by the assessee towards improving its business was for the expansion of its existing business.
Merely because the assessee treated the amount as a capital expenditure in its books, it would not be bound by as there is no estoppels against the law and just assessment is the object of the Legislature under the provisions of the I. T. Act. The first appellate order on the issue is comprehensive and reasoned one to which we fully concur with. The same is upheld. Ground No. 2 is accordingly rejected.
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