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Showing 1 to 20 of 2099 Records
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2019 (2) TMI 2104 - ITAT PUNE
Claim of deduction u/s 80IA(10) against profits of SEZ unit - curtailing the deduction claimed under section 10AA of the Act by assessee against profits of its SEZ unit - assessee was initially running STPI unit in which it was providing consultancy by way of developing specifications for manufacture, and this unit was being run by assessee for the past several years and was closed in October, 2011 during the year under consideration - assessee claims that services provided by it were highly technical and software developed by it could be used by customer for generating automated engineering drawings which were incidental to output based on customers input parameters and hence, the margins earned by assessee were on higher unit.
Whether AO had jurisdiction to question the margins of assessee and come to a finding that the margins were high and compute the profits eligible for deduction under section 10A of the Act by applying net profit rate to the total receipts? - HELD THAT:- AO has invoked the provisions of section 80IA(10) r.w.s. 10AA(9) of the Act and has observed that profits earned by assessee in SEZ unit are more than ordinary profits.
Said profits are earned by assessee on providing knowledge based software development with programming to two concerns i.e. Sandvik and Siemens. It is not the case of Revenue that the said two concerns are closely connected to the assessee.
Admittedly, the assessee was providing designing, consultancy without programming to the said concerns from its STPI unit but that unit was closed after the assessee got recognition for SEZ unit, which was separately established at different place. The services which are provided from SEZ unit are high end services which were specifically for knowledge based software development. In the absence of Revenue discharging its onus of establishing an arrangement between the parties for earning more than ordinary profits and where no such arrangement existed between the parties, merely because the assessee has earned higher margins does not justify invoking of provisions of section 80IA(10) of the Act. The provisions of section 10AA of the Act are in respect of newly established units in Special Economic Zones. As per subsection (9), it is provided that provisions of sub-section (8) and sub-section (10) of section 80IA of the Act, which so far as may be, applied in relation to the undertaking referred to in section as they apply for the purpose of undertaking referred to in section 80IA of the Act.
In order to curtail the deduction claimed under section 10A/10B/10AA of the Act, onus is on the Revenue Department to prove that extraordinary profits are earned by the person are because of an arrangement between the parties.
The customers of two units were same but once SEZ unit was established, STPI unit of assessee was closed. SEZ unit has shown high profits but in the absence of authorities establishing any arrangement between assessee and its customers of arranging its affairs in such manner that it has resulted in earning of extraordinary profits, provisions of section 80IA(8) and 80IA(10) r.w.s. 10AA(9) of the Act cannot be invoked. Section 80IA(8) of the Act in any case refers to the transfer of any goods or services of eligible business being transferred to any other business carried on by the assessee or vice-versa. It is not the case of Revenue that any goods or services have been so transferred between STPI and SEZ unit. Hence, invoking of provisions of section 80IA(8) of the Act is misplaced. Accordingly, we find no merit in the orders of authorities below in curtailing the deduction claimed under section 10AA of the Act by assessee against profits of its SEZ unit.
During the course of hearing, the assessee has filed re-casted Profit and Loss Account for two units and has worked out that expenses to the tune of ₹ 17,53,709/- be allocated to SEZ unit. Bifurcation of expenses in different heads have been furnished by assessee in tabulated chart and in view thereof, we hold that expenses to the tune of ₹ 17,53,709/- debited to STPI unit are to be re-allocated to SEZ unit and consequently, the assessee is entitled to claim the deduction under section 10AA of the Act on the reduced profits of ₹ 7.31 crores. The said reduction in deduction claimed under section 10AA of the Act is on the principle that expenses which are common to both units i.e. STPI and SEZ, then expenses which relate to the functioning of both the units have to be appropriately allocated to exempt unit also. Accordingly, exercise of reallocating expenses of SEZ unit.
Before parting, we may also point out that in assessment year 2013-14, the Assessing Officer has not re-computed the deduction claimed under section 10AA of the Act against profits from SEZ unit.
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2019 (2) TMI 2103 - ITAT DELHI
Validity of additions based on valuation report - Referring the matter to DVO u/s 142A without first rejecting the books of account - addition u/s 69 being unexplained investment in the factory building - HELD THAT:- AO in the instant case has not rejected the books of account before making a reference to the DVO.
We find in the case of Lucknow Public Educational Society (2011 (3) TMI 1326 - ALLAHABAD HIGH COURT] has held that u/s 142A(1) the assessing authority cannot refer the matter to the DVO without first rejecting the books of account.
We find also in the case of CIT vs Subhash Chandra Gupta [2013 (12) TMI 784 - ALLAHABAD HIGH COURT] has held that the Assessing Officer cannot refer the matter to the DVO without first rejecting the books of account.
Thus unless and until the books of account are first rejected by the Assessing Officer, the Assessing Officer is not justified in making reference to the DVO u/s 142A and if reference is held to be had in law, the DVO’s report is to be ignored and cannot be the basis to make the addition. Thus AO is not justified in referring the matter to the DVO u/s 142A(1) without first rejecting the books of account.
So far as the observation of the ld.CIT(A) that the assessee has not produced the books of account completely as per requirement of the Assessing Officer is concerned, the same is contrary to the facts. The finding of the CIT(A) shows that the assessee has maintained regular books of account. The reply of the assessee before the Assessing Officer as well as the observation given by the Assessing Officer in the body of the assessment shows that the assessee has produced the books of account. Decided in favour of assessee.
Addition u/s 68 - share application money received by the assessee from the three persons - Addition made as assessee failed to produce the above parties for his examination and the letters issued to the above three parties were not complied with since one letter was returned unserved and the other two parties did not respond - Assessee argued that proper opportunity was not granted to the assessee - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate with evidence to his satisfaction regarding the identity and credit worthiness of the share applicants and the genuineness of the transaction. The Assessing Officer shall decide the issue as per fact and law. Assessee's ground allowed for statistical purposes.
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2019 (2) TMI 2102 - DELHI HIGH COURT
Dishonour of Cheque - share transfer took place or not - whether cheque amount was part payment given by respondent-complainant to accused-company or not - HELD THAT:- The stand taken by petitioner is refuted by respondent’s counsel who submits that the stand taken on behalf of petitioners pertains to the merits of this case, which cannot be pre-judged and is required to be considered after the evidence is recorded by trial court. This court is of the prima facie opinion that the averments made in the complaints in question and the agreement between the parties, justifies summoning of petitioner and no case to quash complaints in question and the summoning order is made out.
These petitions and the applications are disposed of with liberty to petitioners to raise the pleas taken herein, before the trial court at the appropriate stage.
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2019 (2) TMI 2101 - ITAT DELHI
TP adjustment on account of outstanding receivables - DRP directed to give working capital adjustment and re-compute the interest chargeable on outstanding net receivables by applying LIBOR + 400 bps - HELD THAT:- We note that the Tribunal [2017 (10) TMI 111 - ITAT DELHI] for assessment year 2012-13 in case of the assessee, following the decision of Kusum Health Care Pvt. Ltd. [2017 (4) TMI 1254 - DELHI HIGH COURT] held that "no separate adjustment on account of interest receivable is required when working capital adjustment has already been made to the margins of the comparables while comparing the margin of the assessee under the TNMM.
We set aside the finding of the DRP complied by the Assessing Officer in the impugned order and delete the adjustment on account of the interest receivables. In the result, the grounds of the appeal of the assessee are allowed.
Disallowance towards "stock written off" - AO disallowed the claim in respect of obsolete inventory on the ground that the assessee did not furnish any report from any Engineer, production head or certificate from the third party that said inventory has become obsolete - DRP found that no such report from the Engineer or production head or third-party certificate was produced before the learner DRP, thus the Assessing Officer was directed to verify the submission of the assessee and bring out the facts properly and passed a speaking order on the issue - HELD THAT:- As the assessee failed to produce any certificate from the expert third-party, respectfully following the finding of the Tribunal [2018 (2) TMI 1525 - ITAT DELHI], we reject the contention of the assessee and dismiss the grounds of appeal raised by assessee in this regard.
Disallowance as excess depreciation claimed on fixed assets acquired by the assessee from NCR Corporation India Private Limited. - HELD THAT:- The issue in dispute being identical to the issue decided by the Tribunal (supra), respectfully following the same, the issue of excess depreciation claimed is restored to the file of the Ld. Assessing Officer for verification and decide in view of the direction of the Tribunal [2018 (2) TMI 1525 - ITAT DELHI]. The ground of the appeal is accordingly allowed for statistical purposes.
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2019 (2) TMI 2100 - ALLAHABAD HIGH COURT
Validity of show-cause notice issued by the department on the basis of drat audit report - HELD THAT:- The show-cause notice which was issued by the department was presumably issued on the basis of the notion that the assessee was liable to tax on the amount so received by it - Rule 6 of the Service Tax Rules, 1994 makes it abundantly clear that the service tax is payable on an amount which is received and not on an amount which may be received in future. The conclusion drawn by the Tribunal that the show-cause notice is bad and not in accordance with Rules is, therefore, correct.
The question of law is, therefore, answered in favour of the assessee and against the department - appeal dismissed.
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2019 (2) TMI 2099 - CALCUTTA HIGH COURT
Change in name under the provisions of Section 21 of the Companies Act, 1956 - new company coming into existence or not - liability to pay permission/transfer fees - HELD THAT:- It is correct that a company is a juristic entity separate from its share holders. The company functions of itself through its board of directors while the share holders are only entitled to participate in the elections and receive dividend. All the share holders jointly cannot be said to be the company as defined under Section 3 of the Companies Act, 1956. The share holders are also free to transfer their shares at will, however, of course subject to statutory restrictions and compliance. Even with the entire transfer of share holding the company continues to exist by its name and is liable for any breach of the agreements entered into by it.
In the instant case, even if the transfer of entire share holding of BNK had been transferred in 2009 it did not amount to a new company coming into existence which is different from BNK, in fact BNK continued to be liable as a sub lessee even after transfer of its entire share holding. Any action as to breach of any covenant of the sub lessee ought to have been brought against BNK till its change in name irrespective of who held what shares of and in the said BNK.
It is found that there is virtually no change between the two which could have created a doubt in our mind that BNK and GVSPL are different companies. This is also not a case where the corporate veil has to be lifted to probe into or hold transfer of the lease hold interest with the transfer of shares.
There are no infirmity and/or perversity therein which requires to be interfered with in an Intra-Court Mandamus Appeal - appeal dismissed.
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2019 (2) TMI 2098 - SUPREME COURT
Stay on transfer of proceedings from one Bench to another - Whether the Chairman of the Tribunal, sitting singly and exercising his power under Section 25 of Administrative Tribunals Act, 1985, to transfer proceedings from one Bench to another, could have stayed proceedings before a two member Bench and rendered interim orders passed by that Bench inoperative?
HELD THAT:- The Chairman of the Tribunal is an entity distinct from the Tribunal and exercises administrative powers and such other powers as are expressly conferred o him under the Act. Section 5(4)(a) of the Act empowers the Chairman to discharge in addition to the functions of the Judicial Member or the Administrative Member, of the Bench to which he is appointed, the functions of the Judicial Member or the Administrative Member of any other Bench - A perusal of Section 5 indicates that the Chairman is empowered to discharge administrative functions of constituting Benches by transferring a Member from one Bench to another, authorizing the Judicial Member or the Administrative Member appointed to one Bench to discharge the functions of Judicial Member or Administrative Member of another Bench.
A careful reading of the provisions of the Act and in particular Sections 14 and 15 thereof in juxtaposition with Article 323A of the Constitution leaves no manner of doubt that an Administrative Tribunal constituted under the Act to give effect to Article 323A of the Constitution exercises all the jurisdiction powers and authority exercisable by all the Courts before commencement of the Act and has all the attributes of a Court of law except that it is not bound by the strict rules of procedure embodied in the Civil Procedure Code or the strict rules of evidence prescribed by the Evidence Act, as observed above. All norms of judicial propriety and judicial discipline apply as much to the Tribunal as to Courts including the High Court.
An interim order passed by a court, on consideration of the prima facie case made out by an applicant, should ordinarily have been vacated by a Bench of coordinate strength after giving open notice to the applicant. If the Chairman was of the considered opinion that there was urgency in the application for vacating the interim order, the Chairman ought to have assigned the application for vacating and/or vacation of the interim order to a Bench of two or more Members to consider whether the interim order should continue or be vacated. The Chairman could also have exercised his power to suo motu transfer the proceedings to another Bench without prior notice. The order of stay of the proceedings before the Nainital Bench is without jurisdiction and unsustainable in law.
The Chairman, like the Chief Justice of the Higher Courts or the Chief Judge of subordinate courts, may be higher in order of protocol and may have additional administrative duties and responsibilities. However, the Chairman, acting judicially, is equal to any other Member. The Chairman, being one amongst equals, could not have stayed proceedings pending before a larger Bench - the Division Bench rightly allowed the writ petition.
The appeal is dismissed with costs, quantified at Rs.25,000/-, to be deposited with the Supreme Court Legal Services Committee within four weeks from the date.
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2019 (2) TMI 2097 - SUPREME COURT
Illegal gratification - Bribe - Contention of the appellant is that mere proof of receipt of money by the accused in the absence of proof of demand of illegal gratification is not sufficient to prove the guilt of the accused - conviction of the appellant under Section 7 and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 - HELD THAT:- The following issue requires consideration by the larger Bench:-
The question whether in the absence of evidence of complainant/direct or primary evidence of demand of illegal gratification, is it not permissible to draw inferential deduction of culpability/guilt of a public servant under Section 7 and Section 13(1)(d) read with Section 13(2) of Prevention of Corruption Act, 1988 based on other evidence adduced by the prosecution.
The matter be placed before the Hon’ble Chief Justice for appropriate orders.
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2019 (2) TMI 2096 - CESTAT CHANDIGARH
Application for stay in impugned order - Ld. Commissioner has dropped the proceedings against the respondent who is a Customs Broker - HELD THAT:- On going through the Regulation 19 of the Custom Broker Licensing Regulations, 2018, only the Customs Broker or F-card holder can file an appeal before this Tribunal against the order of the Commissioner of Customs (General) under the Customs Brokers Licensing Regulations, 2018.
Admittedly, there is no provision of filing the appeal by the Revenue. In these circumstances, question of stay of operation in the impugned order does not arise. Consequently, stay application as well as the appeal are dismissed.
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2019 (2) TMI 2095 - ITAT DELHI
Addition on account of depreciation - assessee has claimed depreciation @ 30% on machinery claimed as commercial vehicle - AO noticed assessee is not doing business of motor buses, motor lorries, motor taxies used in a business of running them on hire, thus assessee is entitled to depreciation @ 15% which is applicable to plant & machinery - assessee submitted that the ld.CIT(A) has passed an ex parte order for which the appeal is pending before the Tribunal against such ex parte order and various decisions relied on by the assessee at the time of hearing before the Assessing Officer were not considered like decision of M/s Sayeed Iqbal [2014 (1) TMI 744 - ITAT JODHPUR] wherein it has been held that depreciation on tippers, road rollers and JCB will be allowable @ 40% as against 25% allowed by the AO treating these machinery as plant and machinery and not under the category of motor vehicles - HELD THAT:- We deem it proper to restore the issue to the file of the Assessing Officer with a direction to decide the issue afresh in the light of various decisions cited above. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The first issue raised by the assessee in the grounds of appeal is accordingly allowed for statistical purposes.
Addition u/s 68 - partner introduced the money in the firm - assessee has not furnished any cash flow statement to establish the withdrawal and the deposit of cash during the course of appeal proceedings - Addition n the hands of the partnership firm stating that there is no exigency for introduction of such loan in the shape of cash - HELD THAT:- Although the assessee has not explained such business exigency, however, it is a fact that there are withdrawals from the bank account of the partner apart from his declaration of income u/s 44AD of the IT Act. The Revenue has not proved that the Partner after withdrawal of the money from the bank has utilized the money otherwise than for investing in the partnership firm. There is nothing on record to show that the partner has utilized the money for acquisition of any capital asset or spent the money towards some marriage in the family or on other such occasions where huge cash is required to be invested or expended.
It has been held in various decisions that when a partner introduces the money in the firm either in the shape of capital or loan to the partnership firm, addition, if any, can be made only in the hands of the partner and not in the hands of the partnership firm as long as the partner confirms to have invested towards capital or as loan to the firm. Since the partner in the instant case has admitted to have invested in the firm in the shape of unsecured loan and the withdrawals from the bank account has not been disputed by the Revenue, therefore, we are of the considered opinion that addition, if any, could have been made in the hands of the partner, namely, Shri P.K. Wadhwa but, certainly not in the hands of the partnership firm. As long as the partner has sufficient means to explain the source of such loan, the Revenue cannot treat the same as unexplained cash credit u/s 68 in the hands of the partnership firm merely stating that there is no exigency for introduction of such loan in the shape of cash - Decided in favour of assessee.
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2019 (2) TMI 2094 - DELHI HIGH COURT
Harsh conditions imposed for the provisional release of its goods by the Deputy Commissioner - bank guarantee - HELD THAT:- In view of the statement made, it is open to the petitioner to approach the Commissioner with an appeal, within three days. The Commissioner shall decide the appeal at the earliest, preferably within two weeks from the date of the receipt of the appeal in accordance with law.
Petition disposed off.
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2019 (2) TMI 2093 - ITAT JAIPUR
Accrual of income - interest on FDRs held for and on behalf of Central and State Government - assessee company is a State Government Company and whose entire share capital is being held through Governor of Rajasthan and is working as Nodal Agency for implementation of various Central/State Government Schemes for which funds are provided by Central/State Government - HELD THAT:- Assessee has received interest on the FDRs which were made to park various amounts with the bank. There is no dispute that the amount which was put into the fixed deposit was received by the assessee from the Government for the purpose of disbursement of the same in the various schemes/projects sponsored by the Government.
Interest earned by the assessee on the fixed deposit of the amount which is received from the Government for disbursement to the various schemes/projects for which the assessee is a Nodal Agency to implement such projects/schemes such interest will not be the income of the assessee. Accordingly, following the decisions of Karnataka Urban Infrastructure Development & Finance Corporation [2009 (1) TMI 243 - KARNATAKA HIGH COURT] as well as Rajasthan Avas Vikas & Infrastructure Ltd [2016 (4) TMI 1099 - ITAT JAIPUR] we hold that the interest received by the assessee is not assessable to tax but it was received on behalf of the Government and will be forming part of the funds to be disbursed for implementation of various schemes and projects for public welfare. Hence, the addition made by the assessee is deleted. This issue is common for both the years, therefore, it stands adjudicated for assessment years 2013-14 & 2014-15.
Status of the assessee is a Government company - As we have already discussed the facts and memorandum of association wherein the objects of the assessee has been set out. From the objects and purpose of creating the assessee it is clear that the state Government is helping more than 98% shares of the assessee, therefore, this issue though is only academic in nature, however, once the Government is holding more than 98% shares then the assessee company is a Government company.
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2019 (2) TMI 2092 - ALLAHABAD HIGH COURT
Expedite the hearing on stay application - petitioner has prayed at the moment that his appeal which is pending before the Commissioner of Income Tax, Gomit Nagar may be expedited - HELD THAT:- Facts of the case are that according to C.B.D.T. Circular dated 31.07.2017 the amount of 20% of the demand has to be deposited. Then stay application can be heard on merits. Admittedly the petitioner has not deposited the amount of Rs.20% under the C.B.D.T. Circular.
In view of the admitted position that 20% of the amount deposited has neither been deposited nor any request to grant time to deposit the same is being made. We cannot expedite the hearing on stay application.
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2019 (2) TMI 2091 - SUPREME COURT
Permission for claim in quantum meruit under Section 70 of the Indian Contract Act, 1872, when parties are governed by contract - whether the appellant was justified in adjusting this amount from the dues payable to the respondent by deduction from the bills raised by the respondent? - HELD THAT:- In Alopi Parshad and Sons Ltd. v. Union of India, [1960 (1) TMI 41 - SUPREME COURT], this Court dealt with an arbitration award which, inter alia, awarded certain amount on the basis of quantum meruit. In setting aside the Award on the ground of error apparent on the face of the record, this Court held Compensation quantum meruit is awarded for work done or services rendered, when the price thereof is not fixed by a contract. For work done or services rendered pursuant to the terms of a contract, compensation quantum meruit cannot be awarded where the contract provides for the consideration payable in that behalf. Quantum meruit is but reasonable compensation awarded on implication of a contract to remunerate, and an express stipulation governing the relations between the parties under a contract, cannot be displaced by assuming that the stipulation is not reasonable.
In Mulamchand v. State of M.P., [1968 (2) TMI 116 - SUPREME COURT], this Court held that the provisions of Section 175(3) of the Government of India Act are mandatory in character and based on public policy. Therefore, the formalities that are stipulated when contracts are entered into on behalf of the Government cannot be waived or dispensed with.
As has been correctly held by the impugned judgment, a maximum of 12% can be levied as liquidated damages under the contract, which sum would amount to a sum of INR 25 lakh. Since this clause governs the relations between the parties, obviously, a higher figure, contractually speaking, cannot be awarded as liquidated damages, which are to be considered as final and not challengeable by the supplier. This being the case, the appellant can claim only this sum. Anything claimed above this sum would have to be refunded to the respondent.
The impugned judgment of the TDSAT upheld - appeal dismissed.
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2019 (2) TMI 2090 - ITAT PUNE
Deduction u/s. 80P(2)(d) - interest earned out of surplus funds from investment made in any bank - HELD THAT:- Assessee society is engaged in the business of accepting deposits from members and granting them credit facilities which is in the nature of banking business and deposits in question were made in the course of the said business of the assessee society.
Therefore, we find that the present case of the assessee is squarely covered by the decision of NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. [2015 (1) TMI 1004 - ITAT PUNE] - Therefore, we observe that whenever, the credit society is carrying on business of accepting deposits from members and providing them credit facilities, it is allowable for deduction u/s. 80P(2)(ai) - Hence, we do not find any infirmity in the order of the Ld. CIT(Appeals) and relief provided to the assessee is thereby sustained.
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2019 (2) TMI 2089 - ITAT AHMEDABAD
Addition u/s. 14A r.w. Rule 8D - as contended that assessee company was having sufficient interest free fund for making investment and CIT(A) has erred in sustaining the impugned addition - HELD THAT:- As demonstrated from the material on record that the assessee was having sufficient interest free fund in the form of share capital and free reserves as against the investment made from which exempt income was earned.
After considering the decision of Reliance Utilities Power Ltd, [2009 (1) TMI 4 - BOMBAY HIGH COURT] we consider that there was no merit in disallowing the interest expenses . However, we sustain the addition in respect of administrative expenditure as computed by the assessing officer under para 6 of the assessment order as investment cannot be made without incurring administrative and other expenses. Accordingly, this appeal of the assessee is partly allowed.
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2019 (2) TMI 2088 - CESTAT ALLAHABAD
Demand of service tax alongwith interest and penalty - providing certain services to various banks such as HDFC, ICICI, Kotak Mahindra Bank etc. and was registered for payment of service tax for the period from 01.04.2010 to 10.07.2014 - HELD THAT:- The appellant was paying service tax and was filing ST-3 returns. Further, the differential service tax was demanded on the basis of information received from third party without examining whether the payments made by the third party to the appellant was in respect of taxable service provided by the appellant. In the absence of such information that the demanded service tax was lawfully payable by the appellant, such demand is not sustainable.
The impugned order is set aside - appeal allowed.
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2019 (2) TMI 2087 - CESTAT AHMEDABAD
Valuation - Commercial or Industrial Construction Service - value of the free supplies material should be added in gross value or not - Commercial or Industrial Construction Service - exemption under N/N. 15/2004-ST - HELD THAT:- This issue has been settled by SC in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT] where it was held that value of the goods/materials cannot be added for the purpose of aforesaid notification dated September 10, 2004, as amended by notification dated March 01, 2005.
Thus, for the purpose of computing the gross value of Commercial or Industrial Construction Service value of free supplies material by the service recipient need not be added in the gross Value of service.
The impugned order set aside - appeal allowed.
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2019 (2) TMI 2086 - ITAT AHMEDABAD
Addition of fair rental income - Income from house property - rate of rent to be charged from the related parties - assessee is the owner of a building consisting of some floors for which declared the gross rent only under the head house property - Revenue alleges that the actual rent received/receivable is less than the reasonable expected rent - HELD THAT:- As rent should be decided on the basis of the sum which can be reasonably expected from the letting out the property during the year or the actual rent received/receivable, whichever is higher.
CIT (A) has determined the fair rent of the property at Rs. 248/- per Square feet on the basis of the rent received by the assessee from the bank of Baroda in the assessment year 2011-12 as increased by 5% p.a. As no dispute that the bank vacated the property on 30th June 2010. Assessee claimed that the fair rent for the property under consideration is of the same amount received by it from its associated enterprises.
Thus once the assessee has disputed the fair rent, then the lower authorities are under the obligation to reject the contention of the assessee with cogent reasons. As such the authorities below were under the obligation to determine the fair rent of the property in the manner as discussed. But the authorities below have not determined the fair rent without considering the procedures prescribed under the law.
The rent charged by the assessee from the bank of Baroda cannot be the basis for determining the fair rent of the properties as property was rented out by the assessee to the bank of Baroda in the year 1998, and in every rental agreement, there is an escalation clause for enhancing the amount of rent. Rent charged by the assessee from the bank was based on the agreement which was made in the year 1998. Rent charged by the assessee from the bank in the year, 2010 was not based on the fair market rent.
There is a time gap of 1 year & 9 months when the assessee received the last rent from the bank of Baroda and the year of consideration. As such there can be certain factors which can affect the fair market rate in any manner which have not been considered while determining the fair market rent.
The issue on hand needs to be examined in the manner as discussed above - restore this issue to the file of AO as stipulated above. Thus, the ground of appeal of the assessee is allowed for statistical purposes.
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2019 (2) TMI 2085 - ITAT BANGALORE
TP Adjustment - comparable selection - Assessee as Providing ITES services - HELD THAT:- Accentia Technologies Ltd., and Acropetal Technologies Ltd., should be excluded from the list of comparable companies as functionally dissimilar.
ICRA Online Ltd. is concerned, the RPT in the case ICRA Online Ltd., needs to be verified by the TPO and if the RPT is more than 15% of the total revenue of this company then the same should be excluded.
Jeevan Scientific Technology is concerned, the TPO is directed to examine the comparability of this company as was directed by the Tribunal in the case of Swiss Re Shared Services India Pvt. Ltd [2016 (7) TMI 1359 - ITAT BANGALORE].
TPO is directed to compute the ALP as per the directions given above after affording opportunity of being heard to the assessee.
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