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2020 (6) TMI 834 - ITAT BANGALORE
TP Adjustment - comparable selection in ITES Segment - HELD THAT:- Exclusion of companies as functionally dissimilar with that of assessee. We direct the TPO to exclude (i) Infosys BPO Limited (ii) TCS e-serve Ltd. (iii) BNR Udyog Ltd. (iv) Excel Info ways Ltd, from the list of comparables for determination of ALP in ITES Segment. And in the case of (v) Universal Print Systems Ltd, the comparable is restored to the file of TPO for fresh adjudication.
Negative Working Capital Adjustment - TPO not properly computed in ITES segment for determination of ALP - We find the TPO in ITES segment has computed arithmetic mean margin on cost at 28.11% and negative working capital adjustment of -8.70% and worked out adjusted margin for determination of ALP at36..81%. Ar even before the tribunal could not demonstrate that the working capital adjustments based on OECD guidelines are not applicable to financials of the assessee. We have dealt on disputed issue in Software Development Segment (SDS) in Para 7, above relying on the decision of Tecnotree Convergence Pvt. Ltd. Vs. DCIT [2018 (6) TMI 1688 - ITAT BANGALORE] in the case of and dismissed the ground of appeal and the same decision shall equally apply. Accordingly, we dismiss this ground of appeal in ITES segment.
TDS u/s 40(a)(ia) on software expenses - HELD THAT:- Prima facie, the assessee is engaged in software development services and ITES and incurred expenses for purchase of software and AMC charges. Ar emphasized on revenue expenditure but could not support with evidences. Further there is no clarity in respect of deduction of tax at source. Hence, considering the facts and circumstances, we are of the opinion that the assessee has to establish that recipient/payee has paid the tax on income and discharged tax obligation. Accordingly, we restore this issue to the file of Assessing officer for examination and verification of facts and allow the ground of appeal for statistical purpose.
Computation of the book profits u/s 115JB on provision for loyalty bonus - Ar submitted that the loyalty bonus should not be considered for calculation of the book Profit u/sec 115JB and relied on the co-ordinate Bench decision in assessee own case for the Asst. Year 2008- 09 - HELD THAT:- We, considering the decision of co-ordinate bench and to compare the facts of present case, restore this disputed issue for limited purpose to the file of A O for verification and allow the ground of appeal of the assessee for statistical purposes.
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2020 (6) TMI 833 - SUPREME COURT
Illegality in entertaining the joint revision filed against the vacancy order as well as the final order - HELD THAT:- The High Court has patently erred in holding, that the revision entertained by the District Judge against the vacancy order dated 4.6.2003 along with the final order of release dated 31.5.2007 was not tenable. The learned judge has totally erred in observing, that the order of the High Court dated 23.8.2006 dismissing the writ petition had attained finality since it was not challenged before this Court. The learned judge ought to have taken into consideration, that though the vacancy order was challenged in a writ petition, the High Court vide order dated 23.8.2006, while dismissing the writ petition had reserved the right of the Petitioners (Appellant and proforma Respondent No. 3 herein) before it to challenge the vacancy order along with the final order passed Under Section 16. The observation of the learned judge, that the High Court in its earlier order dated 23.8.2006, could not have granted liberty to challenge the vacancy order along with the final order is also contrary to the settled principles of judicial propriety.
This Court in the case of Sarla Ahuja v. United India Insurance Co. Ltd. [1998 (10) TMI 555 - SUPREME COURT] had an occasion to consider the scope of proviso to Section 25-B(8) of the Delhi Rent Control Act, 1958. This Court found, that though the word 'revision' was not employed in the said proviso, from the language used therein, the legislative intent was clear that the power conferred was revisional power - It could thus be seen, that this Court has held, that the High Court while exercising the revisional powers under the Delhi Rent Control Act, 1958 though could not reassess and reappraise the evidence, as if it was exercising appellate jurisdiction, however, it was empowered to reappraise the evidence for the limited purpose so as to ascertain whether the conclusion arrived at by the fact-finding court is wholly unreasonable.
The revisional powers conferred upon the District Judge under the U.P. Act, 1972 are almost analogous with the revisional powers of the High Court that have been interpreted by this Court in the aforesaid judgments. It is found, that the said principles can be aptly made applicable to the revisional powers of the District Judge under the U.P. Act, 1972. If the said principles are applied to the facts of the present case, it could be seen, that the learned District Judge was fully justified in interfering with the order passed by the Rent Controller and Eviction Officer.
In the present case, the approach of the High Court in exercising the jurisdiction Under Article 227 of the Constitution of India was totally erroneous - the exercise of jurisdiction by the High Court Under Article 227 in the present case was patently unwarranted and unjustified.
The order of the High Court dated 26.10.2017 is quashed and set aside - appeal allowed.
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2020 (6) TMI 832 - SUPREME COURT
Enhancement of age of superannuation of General Duty Medical Officers and specialists working in the Central Government and its allied institutions to sixty-five years - HELD THAT:- The appellant moved an application for recall of the order, on which, as we have noted earlier, the High Court directed that the first respondent should be paid salary for the period for which she was working. The fundamental objection of the appellant to the direction of the High Court is that though the first respondent has failed before the Tribunal, the High Court has, at the interim stage, virtually allowed the writ petition. There are merit in the submission.
The High Court was not justified in issuing the first interim direction that it did on 12 September 2018, which was followed by the subsequent interim order dated 23 January 2020 effectively granting the final relief at the interim stage. The correctness of the order of the Tribunal declining relief is yet to be determined by the High Court. Since the proceedings are pending before the High Court, we have not embarked upon the merits of the case which is set up by the first respondent before the High Court. We, however, find that the interim orders of the High Court virtually amount to the grant of final relief and ought not to have been passed.
The impugned interim orders dated 12 September 2018 and 23 January 2020 is set aside - appeal allowed.
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2020 (6) TMI 831 - ITAT AHMEDABAD
Disallowance of Interest Expenses u/s 36(1)(iii) - interest free advances to the Appellant's sister concern - AO has alleged that the said advances have been made for non-business purposes and consequently, interest incurred thereon cannot be claimed as deduction - HELD THAT:- CIT(A), in first appeal, has confirmed the aforesaid action of disallowance by AO placing reliance on the order of the CIT(A) on similar facts concerning AY 2011-12 but the disallowance made by the Revenue authorities on similar facts has been reversed by the ITAT for the same assessee.
Similar reversal of disallowance was stated to have been done by the co-ordinate bench [2019 (5) TMI 2000 - ITAT AHMEDABAD] concerning AY 2013-14.
Also as pointed out on behalf of the assessee that interest free funds in the form of capital/reserves etc. is substantially in excess of the interest free advances given by the assessee. The interest free capital and reserves are stated to be in the vicinity of Rs.26 Crores as against the interest free advance of Rs.31 Lakhs in question. It was thus claimed that in the instant case, interest free funds available at the disposal of assessee are sufficient to meet the interest free advances and thus a presumption would arise that interest free advances were lent from interest free funds and not borrowed funds.
In view of the decision of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and similar approach adopted by the co-ordinate bench in earlier years, we find sufficient reasons to admit the claim of the assessee for reversal of disallowance favourably. Decided in favour of assessee.
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2020 (6) TMI 830 - ITAT BANGALORE
Penalty u/s 271FA - not filing the AIR for the relevant AY - main contention of AR before the Tribunal was that there is reasonable cause as mandated u/s 273B for not filing the AIR for the relevant AY - A.R. submitted that the assessee is a co-operative bank and the co-operative banks were specifically included in rule 114E only w.e.f. 1.4.2016 only, there was an ambiguity as to whether the co-operative banks are required to comply with the provisions of rule 114E of the rules or not. Hence, there was delay in filing the annual information return - HELD THAT:- We notice that an identical issue has been considered by this bench in the case of The Mandya Dist. Co-op. Central Bank Ltd [2020 (3) TMI 1455 - ITAT BANGALORE] as held as original provisions of Rule 114E of Income tax Rules did not include “co-operative bank” and it was inserted only in the amended provisions of Rule 114E, which came into effect from 1.4.2016. Accordingly, in our view, there is merit in the submission of the ld A.R that there existed an ambiguity as to whether the co- operative banks are required to comply with the provisions of Rule 114E of the Act, meaning thereby, the bonafide belief of the assessee shall constitute reasonable cause in terms of sec.273B of the Act for the failure in furnishing the AIR for the year under consideration.
In this view of the matter, the impugned penalty is liable to be deleted. Appeals of the assessee are allowed.
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2020 (6) TMI 829 - CHHATTISGARH HIGH COURT
Inaction on the part of the respondents so far as return of additional tax to be paid by the petitioner in the light of the introduction of the new tax regime under the GST Law - HELD THAT:- The writ petition stands disposed of with a direction to the respondent No.2 to take a decision on the representation that the petitioner has made for the refund of the additional tax burden suffered by the petitioner.
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2020 (6) TMI 828 - TELANGANA HIGH COURT
Seeking to appoint an Arbitrator for resolution of disputes between the parties - construction of ADM-cum- Tech Accommodation (13) rooms at Hakimpet, Hyderabad - accord and final satisfaction as pleaded by the respondents through the Final Bill, as pleaded by the respondents in terms of Condition No.65 of IAFW 2249 (GCC) - applicant prima facie established coercion and undue influence in signing the Final Bill or not.
HELD THAT:- It is pertinent to note that the applicant failed to offer any plausible explanation for not raising the issue of coercion and undue influence immediately after payment under Final Bill. The applicant, after receiving the payments under Final Bill, had signed ‘no further claim’ certificate. Since the full and final payment is made in the Final Bill and the applicant signed ‘no further claim’ certificate, as the arbitration application is liable to be dismissed on that ground alone, since the applicant signed the same without any protest/objection. A party who comes to the court, must come with clean hands. When fraud, undue influence and coercion is pleaded, at least some factual foundation must be laid in the pleadings, which is lacking - In the present application, by way of passing reference made allegations of undue influence and coercion, as such, this application is liable to be dismissed on that ground alone. When once there is full and final satisfaction, there exists no arbitral dispute, as rightly contended by the learned counsel for the respondents.
Since invocation of arbitration is prior to Amendment Act, 2015, the provisions of said Act, 2015 are not applicable to such arbitral proceedings which have commenced in terms of the provisions of Section 21 of the Principal Act, unless otherwise agreed by the parties - When once one of the parties adopts a path of full understanding and executes a document in furtherance of the same, it is not open to him to take recourse of arbitration thereafter.
In the decision relied upon by the learned counsel for the respondents in PK. RAMAIAH VERSUS C& MD NATIONAL THERMAL POWER CORPORATION NTPC [1993 (10) TMI 346 - SUPREME COURT], the Hon’ble Apex Court held that if accord and satisfaction is established, no arbitral dispute exists for referring the matter to arbitration.
There is no merit in the Arbitration Application. Accordingly, the same is dismissed.
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2020 (6) TMI 827 - ITAT DELHI
Disallowance u/s 14A - AO has made the above disallowance by holding that disallowance under section 14A is to be made mandatorily irrespective of the fact whether assessee has received any exempt income during the year or not - DRP has deleted the disallowance and held that in the absence of any exempt income during the year, no disallowance can be made - DRP also has held that the interest free funds are sufficient to meet that investment made by the assessee - HELD THAT:- The issue is covered in favour of the assessee by various judgments of the Jurisdictional High Court including the above judgment of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] - we uphold the Order of the DRP deleting the above said disallowance and Ground of Revenue’s appeal are dismissed.
Addition of expenditure incurred on Club Membership for its employees - AO disallowed it same has not been incurred wholly and exclusively for the purpose of the business - DRP has directed to delete the disallowance holding that this Club Membership expenditure incurred by the assessee for its employees has been considered as perquisite in the hands of the employees as salary income and tax has been paid thereon - HELD THAT:- The finding of the Ld. DRP is correct. We are further of the view that any expenditure incurred on employees by the employer, whether by way of salary or by way of perquisites, is business expenditure as the employees are working for the business. What the employer provides to employees is a consideration for the services rendered by such employees. Such consideration can be in cash by way of salary or allowances or in kind by way of various perquisites. The Club Membership fee is one such perquisite which is extended by the employer to its employees. So long the fee is paid for the employees who are working with the employer for the business being carried on by such employer, the fee so paid is an expenditure incurred wholly and exclusively for the purpose of business. Decided against revenue.
Addition on account of the Service Fees - As per AO this expenditure has not been incurred wholly and exclusively for the purpose of business as the assessee has not furnished any details regarding the actual service being provided and the nature of services offered - HELD THAT:- As regards the issue of allow ability of expenditure under section 37(1), from the facts, it is evident that assessee has submitted all the details and evidences in support thereof. Thus, the contention of the AO that the assessee has not furnished any details and evidences is factually incorrect.
DRP has examined these details and after examination it has held that the payments are in consideration of the services rendered by the AEs by giving reference to page 37 & 38 of the Paper Book. Thus, the issue that these expenditures have been actually incurred for availing the services cannot be doubted. As regards the value for such services, the issue has been the subject matter before TPO and he has not drawn any adverse inference. Thus, the AO cannot draw any adverse inference on the basis that there is no justification for payment of such amount to AE. The contention of the Ld. AR on this issue that it is not permissible for the Revenue to step in the shoes of the assessee/ businessman and take the business decisions is correct. In view of the above analysis, we uphold the order of the DRP and ground of the Revenue’s appeal is dismissed.
Addition on account of Staff Welfare expenses - AO made an ad-hoc disallowance of 50% out of the above expenditure on the ground that the onus is on the assessee to justify the claim of the expenditure and that the assessee has failed to discharge this onus by not producing the complete details and by not producing the supporting bills/vouchers - HELD THAT:- Merely not mentioning the name of the employees cannot be a ground to disallow the same considering the fact that it is a case of a company. In the case of a firm or a proprietorship concern, there could have been a doubt whether such expenditures have been incurred on the employees or on the Partners/Proprietors. Ad-hoc disallowance is otherwise not sustainable. However, the AO, in the Assessment Order, has stated that the assessee has failed to discharge its onus by producing details and complete evidences in support thereof. Though, the assessee has filed the details before the Ld. DRP along with the supporting evidences, apparently the same has not been examined by the Ld. DRP. Considering this fact, we deem it fit to set aside this issue to the file of the AO with the direction to restrict the disallowance only to such expenditure which assessee is not able to support with evidence.
TDS u/s 195 - non-deduction of tax on purchases made from Mitsui & Co. Ltd. Japan - existence of the PE in India - HELD THAT:- From the facts explained by the Ld. AR, it is clear that a coordinate Bench of the ITAT in the case of Mitsui & Co. Ltd. Japan [2016 (4) TMI 1447 - ITAT DELHI] has held that Mitsui & Co. Ltd. Japan does not have a PE in India. In the absence of any PE, there is no obligation to deduct tax. Further, it is also a fact that these purchases are off-shore supplies which cannot be subjected to tax in India and if that be so, there is no requirement to deduct tax at source.DRP has also examined this issue and has held that off-shore supplies were not related to the activities by the PE of such an AE in India - Decided against revenue.
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2020 (6) TMI 826 - SC ORDER
Relevant date for calculation of interest - date from which, the simple interest at the rate of 8% per annum, in terms of Section 33(2) of the Goa Value Added Tax Act, 2005 (the said Act ) becomes payable, on the amount refundable under the provisions of the said Act - it was held by Bombay High Court that upon obtaining necessary sanction under Rule 30 of the said Rules beyond the period of 90 days from the date of the order of refund, or from the date of application for refund under Section 10(3) of the said Act, the Authorities cannot avoid payment of interest upon expiry of this period, on the specious plea that actual refund cannot be made without sanction under Rule 30 of the said Rules.
HELD THAT:- There are no ground to interfere with the impugned order(s) passed by the High Court. The special leave petition is, accordingly, dismissed.
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2020 (6) TMI 825 - ITAT KOLKATA
Addition on account of balance commission - assessee had shown commission receipt of amount less that as per TDS certificates total commission receipt - assessee’s second round of appeal before this Tribunal - HELD THAT:- Form 26AS is maintained by the Income-tax Department. In such a scenario, in the interest of justice and since it is second round of assessee’s appeal, and keeping in mind that there should be finality of the issue as deciding as infra.
First of all, Form 16A is generated by M/s. Unipay Marketing Pvt. Ltd, which is payer and the assessee who is the payee has no control over it. Even if the amount is paid it should have been accounted for in assessee’s bank account, which is not the case of the AO. Simply because there is difference in the claim of assessee in respect of TDS credit and the corresponding income, the AO has made the addition which cannot be accepted when the Form 26AS gives a different picture, which also assessee has no control; and 26AS Forms are generated by the Income-tax department and the figures come close to the assessee’s contention.
Therefore, assessee’s income should be taken as Rs. 3,95,030/-, which is shown in Form 26AS (downloaded from the Income tax Department website) and she should be given TDS credit of only Rs. 39,569/- as reflected in the Form 26AS - direct the AO to adopt these figures and compute the taxable income of assessee accordingly as per law.
Unexplained cash credit - As submitted money was deposited by four persons on four (4) different occasions into two different bank accounts of the assessee and that it was not her money, but, only she has collected their money from those four (4) different parties named in the assessment order for on-ward transferring to M/s UniPay - HELD THAT:- As noted that though she filed notarized Affidavits of the two parties who claimed that they had deposited amount in assessee’s bank account, but the ld. AR failed to show by means of any evidence to suggest that the money deposited in assessee’s bank account was used only as pass through entry through her bank account and thereafter this money has flown out of the assessee’s bank account to M/s. Unipay 2u Marketing P.Ltd.
AR failed to do so by adducing any evidence. Therefore, addition of Rs. 5,92,100/- cannot be faulted as such. However, taking into consideration the fact that this is second round of appeal and since we have already held that the assessee has received an amount of Rs. 3,95,030/- as her income while deciding the ground no. 2, therefore, this amount should be telescoped with the amount deposited in the bank account of assessee. This ground of assessee is partly allowed.
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2020 (6) TMI 824 - ITAT AHMEDABAD
Exemption u/s 11 - denying the benefits of Section 11 and 12 by invoking proviso to Section 2(15) r.w.s. 13(8) - accumulation of 15% - AO opined that the receipt describes above represent the activities carried out are in the nature of advancement of any other object of general public utility therefore same is covered by the proviso to section 2 (15) - assessee contended that it does have any business undertaking and the proceeds collected against services were utilized for the furtherance of it charitable objective - HELD THAT:- The issue involved in the case on hand has already been decided by this tribunal in the own case of the assessee [2019 (10) TMI 973 - ITAT AHMEDABAD] in its favour.
As the issue involved has already been decided by this tribunal in the own case of the assessee in its favour. Accordingly we set aside the finding of the learned CIT(A) and direct the AO to allow the benefit of the exemption to the assessee under section 11 and 12 of the Act. Hence the ground of appeal of the assessee is allowed.
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2020 (6) TMI 823 - SUPREME COURT
Rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 - plaint came to be rejected by the trial Court under Order VII Rule 11(d) of the CPC on the ground that it was barred by law of limitation, as it was filed beyond the period of three years prescribed in Article 113 of the Limitation Act, 1963.
HELD THAT:- It is well established position that the cause of action for filing a suit would consist of bundle of facts. Further, the factum of suit being barred by limitation, ordinarily, would be a mixed question of fact and law. Even for that reason, invoking Order VII Rule 11 of the CPC is ruled out. In the present case, the assertion in the plaint is that the appellant verily believed that its claim was being processed by the Regional Office and the Regional Office would be taking appropriate decision at the earliest. That belief was shaken after receipt of letter from the Senior Manager of the Bank, dated 8.5.2002 followed by another letter dated 19.9.2002 to the effect that the action taken by the Bank was in accordance with the rules and the appellant need not correspond with the Bank in that regard any further. This firm response from the respondent-Bank could trigger the right of the appellant to sue the respondent-Bank. Moreover, the fact that the appellant had eventually sent a legal notice on 28.11.2003 and again on 7.1.2005 and then filed the suit on 23.2.2005, is also invoked as giving rise to cause of action.
Reverting to the argument that exchange of letters or correspondence between the parties cannot be the basis to extend the period of limitation, for the view taken hitherto, the same need not be dilated further. Inasmuch as, having noticed from the averments in the plaint that the right to sue accrued to the appellant on receiving letter from the Senior Manager, dated 8.5.2002, and in particular letter dated 19.9.2002, and again on firm refusal by the respondents vide Advocate’s letter dated 23.12.2003 in response to the legal notice sent by the appellant on 28.11.2003; and once again on the follow up legal notice on 7.1.2005, the plaint filed in February, 2005 would be well within limitation. Considering the former events of firm response by the respondents on 8.5.2002 and in particular, 19.9.2002, the correspondence ensued thereafter including the two legal notices sent by the appellant, even if disregarded, the plaint/suit filed on 23.2.2005 would be within limitation in terms of Article 113.
In the fact situation of the present case, rejecting the plaint in question under Order VII Rule 11(d) of the CPC, cannot be sustained - this appeal succeeds and the plaint stands restored to the file of the trial Court to its original number for being proceeded in accordance with law.
Appeal allowed.
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2020 (6) TMI 822 - ITAT DELHI
Reopening of assessment u/s 147 - reason to believe - link between the tangible material and the formation of the reasons to believe that income had escaped assessment - cash found to be deposited in the Savings Bank Account - HELD THAT:- As in the proforma for recording reasons for initiating proceedings u/s 148 of the Act under Item No. 8A, the question is “Whether any voluntary return had been filed” and the answer is mentioned as “No”. Whereas Exhibit Nos. 6 and 7 show that the return of income was field with Ward 2(1), Ghaziabad on 30.03.2010 and notice u/s 148 is dated 03.02.2016.
This clearly shows that the AO issued notice mechanically without applying his mind. Such action of the Assessing Officer did not find any favour with the Hon'ble High Court of Delhi in the case of RMG Polyvinyl [2017 (7) TMI 371 - DELHI HIGH COURT]
Assessing Officer has wrongly assumed jurisdiction and accordingly, notice u/s 148 of the Act is hereby quashed thereby quashing the assessment order.- Decided in favour of assessee.
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2020 (6) TMI 821 - DELHI HIGH COURT
Seeking writ of habeas corpus (to produce the body before the court) for production of his sister - petitioner submits that despite Gulfisha Fatima being granted bail, she was illegally continued to be kept in custody - Learned ASJ extended the judicial remand custody of Gulfisha Fatima upto 25.06.2020, between the date of filing of this petition, and the date of return of the notice/ hearing of the petition - whether the said order has been passed by the learned ASJ-02 without jurisdiction?
HELD THAT:- The submission of Mr. Pracha that the learned ASJ-02, Shri Dharmender Rana was not competent, and did not have the jurisdiction to direct extension of judicial remand of Gulfisha Fatima vide his order dated 28.05.2020 upto 25.06.2020 is completely misplaced and we reject the same.
The NIA Act primarily is an Act to constitute the National Investigation Agency, and to provide for trial of cases entrusted to and investigated by the NIA in respect of scheduled offences, by a Special Court. In the present case, it is not even the petitioner’s submission that the Central Government has entrusted the investigation of the case registered against the detenue Gulfisha Fatima under UAPA to the NIA. The UAPA does not state that all cases under the said act necessarily have to be investigated by the NIA. Section 43 of the UAPA prescribes the ranks of Police Officers competent to investigate offences under Chapters IV and VI of the said Act by different Police Organisations.
Thus, it is clear that apart from NIA, the other police establishments are equally competent to investigate cases under the UAPA. This position is also clear from Section 6(7) of NIA Act, which clears doubts, if any, by declaring that till the NIA takes over the investigation of the case, it shall be the duty of the officer-in-charge of the police station where the case is registered, to continue to investigate.
Section 45 only lays down the restriction of grant of prior sanction by the Central Government, or the State Government, as the case may be. It does not state that only a Special Court constituted under the NIA Act would have jurisdiction to try offences under the UAPA. Just because UAPA is one of the enlisted enactments in the Schedule to the NIA Act, it does not follow that every offence under the UAPA has necessarily to be investigated by the NIA, and that the trial of such case necessarily has to proceed before the Special Court - thus, it is clear to us that Shri Dharmender Rana, ASJ-02 was competent to deal with bail application, as well as the aspect of remand of Ms. Gulfisha Fatima when he passed the orders on the application moved by the State to seek extension of judicial remand of Gulfisha Fatima, and remanded her to judicial custody till 25.06.2020 vide his order dated 28.05.2020.
The present writ petition is not maintainable since the detenue Gulfisha Fatima is in judicial custody under orders passed by the learned ASJ-02, Shri Dharmender Rana who was competent to do so - Petition dismissed.
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2020 (6) TMI 820 - ITAT MUMBAI
TP Adjustment - Upward adjustment u/s. 92CA(3) - Adjustment in respect of sale of Di-Penta to AE at lower rate than the rate at which the same product is sold to non-AE in domestic market - HELD THAT:- The assessee had sold substantially large quantity of Di-Penta to its AE in Germany i.e. 18,500 Kgs @ Rs.256/- per Kg, whereas, the assessee sold same product in the domestic market at Rs.333/- per Kg. Undisputedly, the quantity of product sold in the domestic market was mere 460 kgs. Thus, where there is huge difference in the volume of sales to AE and non-AE, comparison of rates between the two transactions is unfair. The assessee was justified in offering volume discount to AE, as the quantity sold to AE was more than 40 times the quantity sold to non AE in domestic market. Assesse had offered volume discount to AE on a product that was slow moving and had miniscule demand. The assessee had already stopped manufacturing of the said product. This fact is evident from annual accounts of the assessee for the Financial Year ending on 31/03/2010. The assessee temporarily stopped manufacturing Di-Penta since January 2009, as there was global economic slowdown and the demand for the product had reduced substantially.
In the case of Clarient Chemicals (India) Ltd [2013 (11) TMI 1703 - ITAT, MUMBAI] in principle accepted volume discount to AE, where there was substantial difference in volume of sales to AE and Non-AEs.
In the case of ITO vs. Adidas India Marketing (P) Ltd [2016 (4) TMI 663 - ITAT DELHI] accepted discount on export of goods to AE where the assessee had sold old stock/ slow moving items to its AE.
Thus upward adjustment made in respect of sale of Di-Penta to AE is unjustified and hence, deserves to be deleted. We hold and direct accordingly. The ground No.1 of the appeal is allowed.
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2020 (6) TMI 819 - ITAT HYDERABAD
TDS u/s 195 - Levy of interest u/s. 201(1) - CIT-A concluded assessee is not bound to deduct tax at source as per provisions of section 201(1) because the vendors / recipients were not liable for LTCG tax since they had claimed deduction U/s. 54F of the Act by depositing the entire sale proceeds in LTCG scheme account - if the assessee had deducted tax at source and remitted to the Government treasury then the Revenue would have been bound to refund the TDS to the vendors with interest U/s. 244A of the Act since the vendors do not have any liability towards LTCG tax by virtue of their claim of deduction U/s. 54F - CIT (A) deleted the demand raised by the DIT (IT) towards the charge U/s. 201(1) of the Act and levy of interest U/s. 201(1A) - HELD THAT:- Order of the ld. CIT (A) for deleting the demand raised by the DIT (IT) towards the charge U/s. 201(1) of the Act and levy of interest U/s. 201(1A) of the Act, without verifying the compliance of the relevant provisions of section 54F of the Act by the NRI vendors, is not justifiable. Since the Ld.DCIT had categorically mentioned in his Order that the NRI vendors had not remitted the sale proceeds in the LTCG Scheme account, the CIT(A) ought to have obtained a remand report from the Ld.DCIT before coming to the conclusion that the assessee had deposited the sale proceeds in the LTCG Scheme account.
Decision cited by the assessee in the case of GE India Technology CEN Pvt Ltd [2010 (9) TMI 7 - SUPREME COURT] is not applicable to the case of the assessee because in that case it was well established at the time of receipts by the NR that they are not liable to tax in India with respect to the income earned out of such receipts. Similar, though not identical, are the facts with respect to the other cases cited by the Ld. AR. Accordingly, We hereby set aside the Order of the Ld.CIT(A).
Assessee Company would be relieved from deducting tax at source from the NRI vendors to whom the assessee had made payment for purchase of their residential property as decided in the Cases cited by the LD.AR. Needless to mention that if the entire sale proceeds is deposited in the LTCG Scheme account, then the same would be under the control of the Revenue and the Revenue would be in a position to recover the LTCG tax arisen subsequently on the non- compliance of the other provisions of Section 54F - if the assessee Company had deducted tax and remitted to the Government Treasury then the same would be credited to the NRI’s account by the Revenue as tax paid and accordingly dealt with in the relevant assessment year while computing the tax liability of the NRI vendors.
Therefore, in the interest of justice, we hereby remit the matter back to the file of the Ld.DIT(International Taxation) with directions to examine whether the assessee had complied with the first proviso U/s. 201(1) of the Act and whether the recipient NRI’s are not liable for LTCG tax during the relevant assessment year by virtue of their entire sale proceeds being deposited in the LTCG Scheme account within the stipulated period under the Act., during the relevant assessment year and if it is found to be in order then delete the demand raised on the assessee U/s. 201(1) and 201(1A) - Appeal of the Revenue is allowed for statistical purposes.
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2020 (6) TMI 818 - BOMBAY HIGH COURT
Registration of fake and fraudulent domain names - seeking to ensure the continued suspension of and block access to fraudulent domain names - HELD THAT:- The internet is a network of networks. Every machine linked to any network has an IP address. Internet service providers assign these IP addresses and these may be static or dynamic (changing with each login). When this happens, the login being provided by an ISP, it is always possible to determine the country where the login originates. An 'access blocking' instructions only serves to block access to a remote website or server (possibly overseas) from an IP address of domestic origin, i.e. from the country ordering the block. Any such 'block' is easily circumvented by masking the originating country IP of the user. He or she only needs to use any of the commonly available VPN products. A VPN is a Virtual Private Network. A VPN user establishes a secure connection to another network over the internet, thus by-passing region-restrictions, shielding browsing activity and so on - the access to such bypassing technology is still not common, and the average user may not know about it or even how to use it. But VPN products are available for mobile phone platforms as well now. Therefore, other than lulling an applicant into a completely hollow and faux sense of safety (and conceivably giving some ill-informed government functionary an entirely unwarranted sense of power or authority), blocking access achieves next to nothing.
A 'continued suspension' is therefore not possible or practicable at least in the current technology - Upon that end of registration period, there is a further period of two to three weeks as a cooling-off period for the registrant to apply for re-registration in case the registration has inadvertently lapsed. Obviously, that cooling-off period would also be covered by the present order. However, once the domain name is released from registration by one domain name registrar then it is released worldwide across the entire cyber system and network of the internet. This means that any person can then attempt and will succeed in getting a registration through any other registrar or even the very same registrar by a process that is entirely automated and requires no manual intervention - it is therefore not possible to allow the prayer to include the words 'ensure continue suspension of and block access to'. This will conceivably put the Defendant No. 1 in a state of being constantly in threat of contempt proceedings. Therefore, those words will be excluded.
Disclosure of registrant information from Endurance Domains, GoDaddy and Porkbun as also from the .in registry and NEIE in respect of the offending registration - HELD THAT:- Relief granted only against Endurance Domains, GoDaddy and Porkbun, not against the .in registry and NEIE.
So far as Endurance Domains, GoDaddy and Porkbun are concerned, this is a matter that should lend itself to a structured resolution that would result in no longer requiring these parties to continue as party defendants to the Suit. What needs to be established is a working protocol within the limits of what the technology can do and what the law permits.
Application disposed off.
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2020 (6) TMI 817 - ITAT DELHI
TP Adjustment - applicability of principle laid down in the Advance Pricing Agreement[APA] for benchmarking the international transactions - HELD THAT:- As when undisputedly there is no change in the FAR of the taxpayer in the year under assessment vis-à-vis years covered under APA and consolidated margin (OP/OC) computed as per APA at 19.26% is much more than the consolidated margin agreed upon between the taxpayer and the CBDT for the years covered under APA at 16.60% for both the segments, APA though not specifically applicable to the year under assessment, is having persuasive value to the dispute between the parties for other years.
Hon’ble Delhi High Court in the case of PCIT vs. Ameriprise India Pvt. Ltd [2016 (3) TMI 1272 - DELHI HIGH COURT] held that when under the APA entered into between the taxpayer and the CBDT under section 92CC aforementioned cost plus pricing methodology has been implicitly accepted, the APA has persuasive value to the dispute in question for other years.
We are of the considered view that when in the APA entered into between the taxpayer and the CBDT though for the roll back years and subsequent years, application of most appropriate transfer pricing method and arm’s length price of these transactions have already been agreed upon between the taxpayer and CBDT and there is no change in the FAR and nature of international transactions entered into during the year under consideration vis-à-vis earlier years and subsequent years, principle laid down in the APA for benchmarking the international transactions in question shall have a guidance value. Moreso these days, it is endevour of the Union of India to stop avoidable litigations and this case falls in the category of cases where litigation can be minimized.
As brought on record by the taxpayer the consolidated margin (OP/OC) for the year under assessment as 19.26% as against ALP agreed upon between the parties to the appeal under APA at 16.60%. So, we are of the considered view that transfer pricing adjustment made by the AO/TPO/CIT(A) by applying Transfer Pricing principles is not sustainable, hence ordered to be deleted subject to the verification of computation of margin made by the taxpayer as per APA referred. - Decided against revenue.
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2020 (6) TMI 816 - SC ORDER
Furnishing of bank guarantee on account of security deposit - mobilisation advance against a bank guarantee - HELD THAT:- There are no ground to interfere against the Order impugned in the Special Leave Petitions. The Special Leave Petitions are, accordingly, dismissed.
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2020 (6) TMI 815 - AUTHORITY FOR ADVANCE RULING, CHHATTISGARH
Classification of supply - supply of goods or a supply of service - composite supply or mixed supply - rate of tax - supply of pure food items such as sweetmeats, namkeens, cold drink and other edible items from sweetshop which also runs a restaurant - input tax credit - HELD THAT:- The applicant has a sweetshop in the ground floor and a restaurant at the first floor of the same building. In a case where two or more goods or a combination of goods and services are involved or supplied together earlier under the Service Tax regime this mechanism was called bundled service which is rendering of a service or services with another element of service of services, wherein service tax law dealt with pure services and not with goods per se. In the changed regime of GST the concept introduced dealt with goods as well and is linked with the concept of Principal Supply. Under GST law, supplies which are bundled with two or more supplies of goods or services or combination of goods and services are classified, with distinct characteristics, as (i) Composite Supply (ii) Mixed Supply. As already discussed, Composite supply is ore where two or more goods or services or both are together, in a natural bundle and in a normal course of business, provided one of which is a principal supply. However, principal supply will be that supply which is predominant over other supplies - in order to identify -if the particular supply is a Mixed Supply, the first requisite is to rule out that the supply is a composite supply. A supply can be a mixed supply only if it is not a composite supply. As a corollary it can be said that if the transaction consists of supplies not naturally' bundled in the ordinary course of business then it would be a mixed Supply. Once the amenability of the transaction as a composite supply is ruled out, it would be mixed supply, classified in terms of a supply of goods or services attracting highest rate of tax.
The activity of the applicant from their restaurant comes under the purview of "restaurant services", falling under Heading 9963 leviable to GST rates on services as stipulated under Notification No. 11/2017-Central Rate (Tax) dated 28.06.2017 (as amended time to time) - the rate of GST on activity shall be 5% as on date.
Input tax credit - HELD THAT:- The applicant cannot avail credit on the GST paid on the goods and services used in their said activity in terms of notification.
In case where goods are supplied to customers through sweetshop counter having no direct or indirect nexus with restaurant service i.e. any stand alone customer who visit such sweet shop exclusively for purchase of any item of any quantity across the counter without visiting the restaurant, the billings of such sales are also done separately, such exclusive sales to such exclusive stand alone customer across the counter cannot be clubbed with restaurant service, it being an exclusive transaction of supply of goods independent of restaurant service - These sales do not satisfy the basic requirement of a ‘composite supply’ i.e. 'these cannot be treated as' being naturally bundled and supplied in conjunction with each other'. Such across the counter soles [rom sweetshop definitely requires dissimilar treatment, it being completely independent of restaurant activity at such supply would continue unhindered, irrespective of whether the restaurant is dosed or open, either temporarily or permanently. Hence such sales will be treated as supply of goods with applicable GST rates on the items supplied / sold and for only such exclusive supplies input tax credit stands admissible.
In case the goods supplied from the restaurant are billed under restaurant head then in such a situation such transaction will purely depend upon the constituents of each individual supply and as to whether same satisfies the conditions/ingredients of a & composite supply' or 'mixed supply', as defined under section 2(30) and 2(74) of the CGST Act respectively.
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