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2019 (12) TMI 1680 - CESTAT KOLKATA
Challenged the order passed by Ld. Commissioner (Appeals) - enhancing the penalty ignoring the mandate of Regulation 5 of the Customs (Provisional Duty Assessment) Regulations, 2011 - HELD THAT:- The Commissioner (Appeals) while allowing the appeal filed by the Department had enhanced the penalty to Rs. 50,000/- On perusal of Regulation 5, it is seen that it prescribes the maximum limit of penalty. The minimum amount of penalty has not been prescribed and has been left to the discretion of the authority. The expression “which may extend to” does not relate to the minimum amount of penalty but to the maximum amount of penalty which could be imposed.
Thus, the impugned order is set aside and the order of the Adjudicating Authority is re-stored. Appeal filed by the appellant is thus allowed in the above terms.
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2019 (12) TMI 1679 - KARNATAKA HIGH COURT
Drawing the award relating to the properties in question acquired by the KIADB under the provisions of the Karnataka Industries Area Development Act, 1966 - absolute owners of the land converted from agricultural to nonagricultural purposes or not - HELD THAT:- On perusing the material on record, it is ex facie apparent that the Notification dated 20/12/2016 at Annexure-A issued under Section 28(1) of the Act, 1966 would make it clear that the compensation shall be determined in terms of the Act, 2013.
This Court in W.P.No.11209-11212/2019 [2019 (4) TMI 2150 - KARNATAKA HIGH COURT], while considering the resolution of the Board Meeting held on 27/08/2016 observed that the acquisition proceedings being initiated subsequent to the New Act, 2013 coming into force, the compensation has to be determined in terms of the provisions of the Act, 2013. Such statement indeed was made in the statement of objections filed by the KIADB in the said matter.
The endorsement dated 03/07/2019 at Annexure-H cannot be sustained and is accordingly quashed. The respondents shall determine the compensation in terms of the Act, 2013, in so far as the petitioners’ land acquired are concerned for the purpose of development by respondent No.2.
Petition disposed off.
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2019 (12) TMI 1678 - ITAT SURAT
Dismissal of appeal of the assessee for non-appearance on various dates - as alleged CIT(A) Passed non speaking order - HELD THAT:- It was the duty of the CIT(A) to pass a speaking order while disposing the appeal ex-parte. The principle audi alteram partem is the basic concept of the natural justice. The expression audi alteram partem implies that a person must be given an opportunity to defend himself which is sin qua non of every civilized society the right to notice, the right to present case and evidence, right to refer advert evidence, right to examine, right to legal representation, disclosure of evidence to party, report of enquiry be shown to the other party and reasoned decision or speaking order is must.
We find that in the instant case, though hearings were fixed on various dates but the assessee could not avail the proper hearing because of owing to the fact that an FIR was lodged against the assessee and he was taken into custody from 07.08.2018. The Hon'ble Gujarat High Court had granted bail to the assessee vide order dated 07.01.2019. And in this way the assessee was not aware regarding the passing the order of by the ld.CIT(A).
Therefore, we are of the view that the assessee must be given one more opportunity of being heard and to represent his case. Therefore, in exercise of the powers conferred under Rule 28 of Tribunal Rules, we restore back to the file of the learned ld.AO to provide one more opportunity and also thereby to consider all the points so raised by the assessee. The assessee will file necessary evidences on which he wants to rely upon. Appeal filed by the Assessee is allowed for statistical purposes.
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2019 (12) TMI 1677 - ITAT MUMBAI
Rectification u/s 154 - period of limitation - time limit for rectification of mistake under section 154(7) - dividend distribution tax paid u/s 115O for computing book profit u/s 115JB is not correct - HELD THAT:- The first rectification order was passed by the AO on 13.03.2012 at the instance of assessee. Admittedly no issue of book profit under section 115JB was the subject matter of the rectification order passed on 13.03.2012. AO issued show cause notice for rectifying the order on the issue of book profit only for the second proposed rectification.
From the above discussions, it is clear that the legal position is that the time limit for rectification of mistake under section 154(7) is to be considered from the date of the original order or in subsequent rectification order only if the said rectification order dealing with the same which is sought to be rectified.
Thus having noted that the first rectification order dealt with entirely different, it is clear that the time limit for passing the impugned order indeed expired on expiry of four years from the end of the financial year, in which, the original order sought to be rectified was passed i.e. on 31.3.2009. As relying on Ashu Engineers & Plastic Pvt Ltd [2011 (4) TMI 1519 - ITAT MUMBAI] we are of the view that the rectification order passed u/s 154 is clearly beyond the prescribed limitation of period provided u/s 154(7). Appeal of the assessee is allowed.
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2019 (12) TMI 1676 - SC ORDER
Scope of Section 17(5)(d) - construction of immovable property (shopping malls) intending for letting out for rent - input tax credit from construction against output GST on rental income - High Court held that assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay u/s 17(5)(d) of the CGST Act - HELD THAT:- The learned senior counsel appearing for the petitioners prays for time to file reply.
List after four weeks. Additional documents, if any, may also be filed by the parties in the meantime.
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2019 (12) TMI 1675 - CESTAT NEW DELHI
Rectification of mistake - time limitation - application rejected on the ground that it is filed beyond six months of passing of the impugned final order - Section 35C(2) of the Central Excise Act - HELD THAT:- No doubt the Tribunal vide order in case of NATIONAL ENGG. INDS. LTD. VERSUS COMMISSIONER OF C. EX., JAIPUR [2001 (11) TMI 104 - CEGAT, COURT NO. I, NEW DELHI] and the final Order in case of M/S. RSPL LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE, ALWAR [2019 (4) TMI 2151 - CESTAT NEW DELHI] has held that the ROM application can be entertained within six months from the date of the order. However, on the other hand, the learned Advocate has placed reliance on the decisions of Hon‟ble Gujarat High Court in case of LILADHAR T KHUSHLANI VERSUS COMMISSIONER OF CUSTOMS [2017 (2) TMI 200 - GUJARAT HIGH COURT] where it is held It is reported that the rectification application was submitted within the period of six months from the date of receipt of the order/dispatch order, and therefore, the impugned order passed by the learned CESTAT cannot be sustained and the same deserves to be quashed and set aside and the matter is required to be remanded to the learned Tribunal to consider the rectification application in accordance with law and on its own merits treating the same to have been filed within the period of limitation provided under the Act.
Further, reliance was placed on the decision of VADILAL INDUSTRIES LTD. VERSUS UNION OF INDIA [2005 (12) TMI 103 - HIGH COURT OF GUJARAT AT AHMEDABAD], wherein it is held that relevant date of six months for filing of ROM has to be reckoned from the date of receipt of the order by the appellant.
Thus, it is found that any person will notice error apparent in the order only when he receives the order and examine it. This aspect is based on the various decisions of the High Courts referred above - it is thus concluded that the relevant date for computation of six months, as envisaged in the provision of Section 35C(2) of the Central Excise Act, will be from date of receipt of the order by the appellant.
The Section 129 (B) (2) of the Customs Act, 1962 is parimateria to Section 35C(2) of Central Excise Act, 1944 and hence the decision of SUNITADEVI SINGHANIA HOSPITAL TRUST VERSUS UNION OF INDIA [2008 (11) TMI 249 - SUPREME COURT] will be applicable to Central Excise Act, as well.
Thus, it is found that all the submissions made by the appellant were not considered by the Tribunal except it got swayed by the admission on part of Shri Alok Aggaral, proprietor of the appellant accepting the clandestine removal. It is apparent from the record that the provision of Section 9D of the Central Excise Act, 1944 as mentioned to have been submitted by appellant, have not been considered while adjudicating the case rather reliance on the third party evidences for alleged clandestine removal of manufactured goods by the appellant - thus, vital aspect which are very much essential to be considered by the Tribunal could not have been considered in the said final order.
Thus, the errors as pointed out in the impugned order are errors apparent on record. Accordingly, ROM is allowed.
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2019 (12) TMI 1674 - SUPREME COURT
Eviction of the Appellant tenant Under Section 12 of the Rent Control Act - whether Section 13(2) of the Rent Control Act is ultra vires the Constitution of India, by reason of lack of legislative competence of the Chhattisgarh State legislature to enact the provision? - HELD THAT:- A law made Under Article 323B(1) of the Constitution may exclude the jurisdiction of all Courts except the jurisdiction of the Supreme Court Under Article 136 with respect to the matters falling within the jurisdiction of the said Tribunals. However, Article 323B(2) (d) or any other provision of the Constitution does not enable the State Legislature to enact law which provides for statutory appeals to the Supreme Court.
Section 13(2) of the Rent Control Act purports to confer a right of statutory Second Appeal to the Supreme Court. Even in case of concurrent findings of the Rent Controller and Rent Control Tribunal, where no serious question of law were involved, an appeal would have to be entertained and decided. Such a provision which mandates the Supreme Court to consider an appeal is clearly beyond the legislative competence of the State Legislature, as argued by the learned Attorney General. Article 200 as observed does not and cannot validate an ultra vires enactment, which the concerned Legislature lacked competence to enact.
Article 138(2) of the Constitution provides that the Supreme Court shall have such further jurisdiction and powers with respect to any matter as the Government of India and the Government of any State may by special agreement confer, if Parliament by law provides for the exercise of such jurisdiction and powers by the Supreme Court - A special agreement means, an independent agreement arrived at between the Government of India and the Government of a State through deliberations and negotiations and not just an approval of legislation by the President on the aid and advice of the Council of Ministers.
In any case, the Supreme Court may exercise further jurisdiction pursuant to a special agreement between the Government of India and the State Government on any particular issue, provided Parliament by law provides for the exercise of such jurisdiction and powers by the Supreme Court. Parliament has not enacted any such law enabling the Supreme Court to exercise jurisdiction in respect of a subject matter agreed upon between the Government of India and the State Government. Article 138(2) is not attracted.
In exercise of its extraordinary power of superintendence and/or judicial review Under Article 226 and 227 of the Constitution of India, the High Courts restrict interference to cases of patent error of law which go to the root of the decision; perversity; arbitrariness and/or unreasonableness; violation of principles of natural justice, lack of jurisdiction and usurpation of powers. The High Court does not re-assess or re-analyze the evidence and/or materials on record. Whether the High Court would exercise its writ jurisdiction to test a decision of the Rent Control Tribunal would depend on the facts and circumstances of the case. The writ jurisdiction of the High Court cannot be converted into an alternative appellate forum, just because there is no other provision of appeal in the eye of law.
The State Legislature lacked legislative competence to enact Section 13(2) of the Rent Control Act - Section 13(2) of the Rent Control Act declared ultra vires the Constitution of India, null and void and of no effect.
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2019 (12) TMI 1673 - SC ORDER
Jurisdiction - power of 'Directorate of Enforcement' to attach the property of the 'Corporate Debtor' or part thereof - CIRP process undergoing - Operational Creditor or not - Proceeds of crime - it was held by NCLAT that The Director, Deputy Director and other officers of 'Directorate of Enforcement' are prohibited from attachment of any property of the 'Corporate Debtor' (Bhushan Power and Steel Limited) without prior approval of this Appellate Tribunal.
HELD THAT:- Issue notice returnable in February, 2020.
In the meantime, there shall be stay of Provisional Attachment Order No.11/19 dated 10.10.2019 passed by the Directorate of Enforcement (ED).
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2019 (12) TMI 1672 - SUPREME COURT
Principles of Estoppel - Non-consideration of appellant’s work experience in an Army Hospital for grant of weightage and consequential selection and appointment as General Medical Officer in the State of Bihar - work experience not considered on the ground that Rule 6(iii) of the Bihar Health Service (Appointment and Service Conditions) Rules, 2013 mandated that only services rendered in employment of a hospital run by the Government of Bihar could count under the head of work experience - HELD THAT:- The underlying objective of principle of Estoppel is to prevent candidates from trying another shot at consideration, and to avoid an impasse wherein every disgruntled candidate, having failed the selection, challenges it in the hope of getting a second chance - In a situation where a candidate alleges misconstruction of statutory rules and discriminating consequences arising therefrom, the same cannot be condoned merely because a candidate has partaken in it. The constitutional scheme is sacrosanct and its violation in any manner is impermissible. In fact, a candidate may not have locus to assail the incurable illegality or derogation of the provisions of the Constitution, unless he/she participates in the selection process.
The question of permissibility of giving weightage for ‘work experience’ in government hospitals is also not the bone of contention in this case. Medicine being an applied science cannot be mastered by mere academic knowledge. Longer experience of a candidate adds to his knowledge and expertise. Similarly, government hospitals differ from private hospitals vastly for the former have unique infrastructural constraints and deal with poor masses - The appellant has thus rightly not challenged the selection procedure but has narrowed her claim to only against the respondents’ interpretation of ‘work experience’ as part of merit determination. Since interpretation of a statute or rule is the exclusive domain of Courts, and given the scope of judicial review in delineating such criteria, the appellant’s challenge cannot be turned down at the threshold.
Statutory Interpretation - HELD THAT:- There is no doubt that executive actions like advertisements can neither expand nor restrict the scope or object of laws. It is therefore necessary to consider the interpretation of the phrase ‘Government hospital’ as appearing in the Rules - The former interpretation to the term, as accorded to it by the respondents, forms a narrower class whereas the latter interpretation used by the appellant is broader and more inclusive.
Literal Interpretation - HELD THAT:- Presence of the word ‘any’ in Rule 5 is also critical. It indicates a legislative intent to bestow a broad meaning to hospitals eligible for accrual of work experience. Importing the restrictive definition of Rule 2(a) would hence lead to an anomalous situation in having both expansive and restrictive adjectives applied to the same underlying noun. Consequently, an expansive interpretation of the phrase to be adopted, and not weight to be laid on Rule 2(a), as urged by the respondents - if faced between a choice in which only a few people would be eligible versus a fairly large group, we feel that the latter ought to be adopted to have a diverse pool of applicants. This would promote merit, bring better doctors and further the Constitutional scheme of providing equal opportunity in public employment to the masses - the provisions of the Rules in the case-at-hand cannot be construed or explained by applying the principle of literal interpretation.
Purposive Interpretation - HELD THAT:- The purpose behind formulation of the Rules was to recognize the unique challenges of hospitals in Bihar and in-centivise doctors to work in nonprivate hospitals. There is some substance in the submission of learned counsel for the respondents that Bihar is predominantly poor and thus requires doctors having exposure to such challenging environment as compared to their counterparts in private hospitals. Experience in a nonprivate hospital instills sensitivity in its doctors, making them more adept to understand the ail and agony of poor patients. Such experience will undoubtedly be useful in furthering the object of Government hospitals and must be given due weightage while selecting suitable candidates. Interpreting ‘Government hospitals’ to include only a small class of persons who have worked under the Government of Bihar, is thus clearly erroneous and anti merit. Such an objective would not be defeated by the understanding of the Rules.
Thus, Rule 5 & 6(iii) of the Bihar Health Service (Appointment and Service Conditions) Rules, 2013 are construed to include the experience gained by a doctor in any hospital run by the Bihar Government or its instrumentalities, as well as any other nonprivate hospital (including those run by the Central Government, Municipalities and Panchayati Raj Institutions; or other public authorities) within the territory of Bihar. Respondents are accordingly directed to rework and prepare a fresh merit list by granting due weightage to the appellant and other similarly placed candidates, within two months.
Appeal allowed.
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2019 (12) TMI 1671 - ITAT BENGALURU
Deduction u/s. 80JJAA - workmen as employed for more than 300 days - AO disallowed deduction relating to the workmen who have not completed 300 days in the year under consideration - definition of “regular workman”[Excluding workman employed for a period of less than 300 days] - AO was of the view that the deduction u/s. 80JJAA is allowable from the profits and gains derived by the assessee to the extent of 30% of the additional employee cost incurred in the course of business during the previous year in respect of the additional wages paid to the new employees who are employed on regular basis and completed 300 days of employment - assessee submitted that deduction should not be restricted to the employees joined before 5th June but should be extended in respect of the employees completed 300 days on or before filing the return
HELD THAT:- The identical issue has been considered by the ITAT in the assessee’s own case for the assessment year 2013-14 [2019 (4) TMI 2120 - ITAT BANGALORE] and held that the assessee is eligible for deduction u/s 80JJAA on additional wages paid to the new regular workmen employed in the financial year relevant to the assessment year 2012-13 provided they continue to be qualified under the regulation of regular workmen.
Thus we consider it is deem it fit to remit the matter back to the file of AO to examine the issue in the light of the decision of this Tribunal and direct the AO to allow the deduction as per the direction given in the order supra. The assessee has to furnish the details of new workmen employed and the additional wages incurred before the AO. Accordingly, the order of the lower authorities are set aside and the issue is remitted back to the file of the AO to decide the issue afresh on merits. Assessee ground is allowed for statistical purpose.
Disallowance of commission - disallowance u/s. 40(a)(ia) as well as colourable device to inflate the expenses - HELD THAT:- With regard to the disallowance made u/s 37(1) of the Act, the AO issued the notice under section 142(1) of the Act directing the assessee to establish the marketing services rendered by the assessee and made the addition holding that the assessee did not establish the marketing services rendered by the holding company M/s. Aquarelle International Ltd. However in subsequent paragraphs though without prejudice, the AO made the addition under section 40(a)(ia) of the Act.
While making the disallowance under section 40(a)(ia) of the Act the AO made the observation that payment was genuine and the agents have rendered the services. Therefore, as rightly argued by the Ld. AR there was a contradictory finding in respect of the services rendered by the foreign agent to the assessee. CIT(A) rejected the application of the assessee for admission of additional evidence, however, the Ld. CIT(A) reached conclusions on the basis of additional evidence produced by the assessee, without even calling for the remand report.
Having rejected the application for admission of additional evidence the Ld. CIT(A) ought not to have placed reliance on the same additional evidence for concluding that the M/s. Aquarelle International Ltd., has not rendered the marketing services to the assessee. CIT(A) also ought to have called for the remand report and made verification of the facts submitted in the additional evidence before taking the additional evidence as basis for coming to conclusions - entire issue needs to be re-examined by the AO to establish whether the M/s. Aquarelle International Ltd. has rendered the services for receipt of commission or not and whether the payment is in the nature of technical services or not. Assessee ground allowed for statistical purposes.
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2019 (12) TMI 1670 - ITAT MUMBAI
Deduction u/s 80IB - sale consideration of the FSI generated from its slum development project at Mayanagar, Worli - difference between actual sale value less the value at which the TDR is disclosed in the books of account - assessee had transferred FSI to the associated concerns for Rs. 13,672/- as against ready reckoner rate of Rs. 11,520/- - CIT(A) allowed deduction -
Objection of the Assessing Officer that since deduction u/s. 80IB(10) in A.Y. 2003-04 was rejected and as it was not assailed in appeal, the assessee could not repeat the same in the year under consideration - HELD THAT:- As noted that in A.Y. 2003-04 the claim was rejected on the ground that the whole of the project was not completed. Most importantly, the assessment order for that year was passed on 30.12.2008 whereas the CBDT issued the notification, exempting notified projects from the condition of completion of the project, on 05.01.2011. Therefore, the assessee has not contested the said order. As against the above, during the relevant previous year, the entire project was completed and the FSI granted by the Government in lieu of the cost factor was in fact sold. It is, therefore, the reference made by the AO to the proceedings of A.Y. 2003-04 was illogical and uncalled for as the claim made in the year under appeal was not dependent upon that of the earlier year; and the CIT (A) was perfectly justified in refuting such argument canvassed by the AO.
Since the Mayanagar project was approved on 26.11.1998, the benefit of the Notification No. 67/2010 dated 03.08.2010 and the corrigendum issued vide Notification No. 02/2011 Income Tax dated 05.01.2011 was not available - As it is noted that the inference drawn by the Assessing Officer is contrary to the statutory provisions set out under section 80IB(10) of the Act.
If, one go through the provisions of S.80-IB(10) and notifications issued by the CBDT, it is found AO clearly erred in disregarding the proviso which mandates that the limitations prescribed in causes (a) and (b) were inapplicable to housing projects completed as per the scheme of Central or State Government. Indisputably, the Mayanagar project was sanctioned under the scheme of the Government of Maharashtra under DCR 33(10) for rehabilitation of the slum dwellers, and it was covered by the Notifications. Therefore, in view of the unambiguous language of the proviso, the project completed by the assessee was excluded from the restrictions imposed by clauses (a) and (b) of sub-s. (10) of S. 80-IB - Hence, we are of the considered view that rejection of assessee's claim for deduction u/s, 80-IB(1O) was unjustified, and it was rightly so held by the CIT(A) in his order.
We, further noted that a similar interpretation as drawn by the Assessing Officer with respect to the notification dated 05.01.2011, that it was to extend the permissible period in respect of projects approved after 01.04.2004, was considered and adjudicated by the co-ordinate Bench of this Tribunal in the case of Ramesh Gunshi Dedhia [2014 (9) TMI 653 - ITAT MUMBAI] which was relied upon before the CIT (A). In the said case, it was held that as a consequence of the proviso, the conditions prescribed in clauses (a) and (b) are relaxed if the housing project was carried out in accordance with the scheme of the Central or State Government. Since, the CIT(A) has extracted in extenso the findings recorded by the Tribunal.
Since the consideration for construction of the rehabilitation building was received in kind and not in cash/cheque, the benefit of S. 80-IB(10) of the Act would not available to the assessee - As noted that this inference drawn by the Assessing Officer is also untenable as held in various decisions, cited before and considered by the CIT (A) in his order holding to the contrary. In the premises, we are of the considered view that the CIT (A) was justified in rejecting the argument of the Assessing Officer that since the consideration was received in kind and not in cash/cheque, the assessee was not entitled to the deduction in paragraph 4.19 of his order The order of the CIT (A), therefore, does not call for any interference on this count too.
Most importantly, in A.Y. 2015-16 also, a similar claim for deduction u/s. 80-IB(10) of the Act was preferred in respect of the FSI granted and sold in identical fact-situation. We find that after taking note of the entire scheme, statutory provisions and notifications cited hereinabove, the Assessing Officer himself had granted the deduction sought for vide his order dated 28.12.2017 passed u/s. 143(3) of the Act.
We further noted that in arriving at his decision to delete the disputed disallowance during the year under consideration, the CIT (A) has also taken note of the aforesaid order dated 28.12.2017 passed u/s. 143(3) of the Act for A.Y. 2015-16 in paragraph 4.21 of his order. For all the above reasons, we are of the view that the denial of deduction claimed u/s. 80-IB(10) of the Act was unwarranted and unjustified. The reasoned order of the CIT (A) deleting the disallowance is in order and it does not call for any interference.
Objection raised by the AO that the FSI granted was sold to a group entity at an inflated rate - As we find that the statute does not prohibit such sale to group concern. Further, the ready reckoner rate is not sacrosanct, and there might be innumerable reasons for demanding higher price. In any case, the transaction under consideration is supported by a valuation report submitted to A.O. in which the rate of FSI was supported with the help of three comparable instances. Further, the inference drawn by the Assessing Officer is based upon his own theory, and neither supported by any independent verification nor after discrediting the valuation submitted by the assessee for valid reasons. We, therefore, are of the considered view that the CIT(A) was justified in refuting the aforesaid stand taken by the AO.
Thus we are of the considered view that the limitations prescribed in clause (a) and (b) of proviso to section 80IB(10) of the Act, in respect of date of commencement and completion of the project has no application to projects undertaken under the scheme of Central or State Govt. Thus, in view of the fact that the project on which the benefit of deduction was claimed u/s 80IB(10) of the Act, was approved under DC regulation 33(10) of Govt. of Maharashtra, and also notified by the CBDT u/s 80IB(10) of the Act, we are of the considered view that the assessee is entitled for deduction towards sale of FSI/TDR. The CIT(A) after considering relevant facts, has rightly allowed the benefit and deleted addition made by the AO. Hence, we are inclined to uphold the order of the ld. CIT(A) and dismissed appeal filed by the revenue.
Disallowance u/s 14A r.w.r. 8D - AO has disallowed expenditure incurred in relation to exempt income u/s 14A of the Act, by invoking Rule 8D(2)(ii) and (iii) of I.T. Rules, 1962 - HELD THAT:- We find merit in the arguments of assessee for the reasons that the Hon’ble Supreme Court, in the case of CIT vs Reliance Industries Limited [2019 (1) TMI 757 - SUPREME COURT] had considered an identical issue and held that no interest disallowances can be made u/s 14A of the Act, if own funds are sufficient to coverup the value of the investments. Also in the case of CIT vs Reliance Utility and Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT] held that when, mixed funds including own funds are more than the value of the investments, then a general presumption goes in favor of the assessee that investments made in shares is out of own funds, consequently no disallowance could be made towards interest expenditure. A similar ratio has been laid down in the case of CIT vs HDFC Bank Limited (2014 (8) TMI 119 - BOMBAY HIGH COURT]supra). Therefore, we are of the considered view that the Ld. AO was erred in disallowed interest expenditure u/s 14A, r.w. Rule 8D(2)(ii) of the I.T. Rules, 1962 and hence, we direct the AO to delete disallowance of interest expenditure u/s 14A of the I.T. Act, 1961.
Disallowance of expenditure under Rule 8D (2)(iii) - As facts with regard to exempt income earned for the year is not coming out from the orders of the lower authorities. Even, the assessee has not furnished any details with regard to exempt income earned for the year under consideration and hence, we are of the considered view that the issue needs to go back to the file of the AO. We, therefore, set aside the issue to the file of Ld.AO for the limited purpose of ascertaining the fact with regard to the exempt income earned for the year under consideration and restrict disallowance of expenditure u/s 14A to the extent of exempt income; if at all any exempt income is earned for the year under consideration. Insofar as, the arguments of the Ld. DR that if disallowances u/s.14A is restricted to the extent of exempt income, then the assessed income may go below the return income, which is not permissible under the law.
We find that in the case of M/s Sundaram Multipap [2018 (4) TMI 1204 - ITAT MUMBAI] had considered an identical issue and by following another decision of co-ordinate bench in the case of TATA Industries Limited (2016 (7) TMI 1011 - ITAT MUMBAI]upra) held the issue in favor of the assessee and accordingly, we reject the contention of the Ld. DR.
Disallowance made u/s 14A, while calculating the book profit u/s 115JB - We find that this issue has been squarely covered in favor of the assessee by the decision of Mrinalini Trading Company Ltd. [2017 (7) TMI 1365 - ITAT MUMBAI] where the Tribunal by following the order of Vireet Investments Pvt. Ltd(2017 (6) TMI 1124 - ITAT DELHI) held that computation of book profit in terms of clause (f) of Explanation (1) to Section 115JB (2) is to be made without resorting to computation as contemplated u/s 14A r.w. Rule 8D. We direct the Ld. AO to delete adjustments made towards book profit computed u/s 115JB, in respect of disallowance of expenditure 14A.
Exclusion of DRR [denture Redemption Reserve] from book profit computed u/s 115JB - HELD THAT:- DRR was created by the assessee in the present case as per the mandate given under S. 117C of the Companies Act. It is also an ascertained liability and not a mere provision as has been held in the binding judgments of the Hon'ble Bombay High Court discussed hereinabove. It may also be stated that the aforesaid judgment, rendered by the non-jurisdictional High Court, was considered but still the issue was decided in favour of the assessee by the coordinate Benches of this Tribunal in Rachana Finance & Investment P. Ltd. and Repute Properties P. Ltd. [2017 (5) TMI 1819 - ITAT MUMBAI]. Similarly, in a subsequent order in the case of Housing Development and Infrastructure Ltd. [2019 (1) TMI 2039 - ITAT MUMBAI] also, the coordinate Bench of this Tribunal, even after considering the aforesaid judgment of the Hon'ble Delhi High Court had decided the issue in favour of the assessee. In the premises, the ratio laid down in the aforesaid judgment of the Hon'ble Delhi High Court would not be applicable to the case of the assessee.
In this view of the matter and consistent with view taken by the coordinate bench, we direct the AO to delete additions made towards provisions for DRR to book profit computed u/s 115JB of the I.T. Act, 1961.
Deduction u/s 80IA(4) - AO has rejected deduction claimed towards notified industrial park u/s 80IA(4), on the ground that the benefit of the Industrial Park scheme, 2008 was not available to the assessee, since it was received the requisite approval 05/06/2006 - HELD THAT:- In view of the unambiguous language of clause 4.1 and clause 5.6 of the Industrial Park Scheme, 2008 it is not understood as to how the Assessing Officer had inferred that the industrial parks of the assessee, for which approvals were granted under 2002 Scheme were covered by the 2008 Scheme. Therefore, we are of the considered view that the rejection of the claim of the assesses which was in accordance with the statutory provisions and supported by requisite approvals and notifications was rightly reversed by the CIT (A). Further, a similar claim was made in A,Y, 2005-06 for a sum of Rs. 10,59,66,901/-. During the course of scrutiny, the Assessing Officer observed that in respect of the same properties the assessee had offered rental income as 'income from house property' in A.Ys 2001-02 to 2004-05 in the returns filed u/s. 139(1) of the Act. Hence, the treatment of such income from Industrial Parks as 'business income’ was not accepted by the Assessing Officer and, the claim of deduction u/s. 80-lA(4)(iii) of the Act was rejected. On same lines, the claim made u/s. 80-IA(4)(iii) for A,Y. 2006-07 was also declined. Since the orders of the Assessing Officer for both the years were reversed by the CIT (A), the revenue carried the matter unsuccessfully in further appeals to Tribunal.
Tribunal order in M/s. Ackruti City Ltd., (Formerly known as Akruti Nirman Ltd.) DCIT Central Cir. 36, Mumbai [2011 (6) TMI 1038 - ITAT MUMBAI] carried in proceedings u/s. 260A of the Act by the revenue but in vain. The Hon’ble High Court vide their judgment dated in Commissioner of Income-tax, Central-III, Mumbai Versus Ackruti City Ltd. 2013 (4) TMI 488 - BOMBAY HIGH COURT had dismissed such appeals.
Considering the totality of the facts and circumstances of the case, more particularly in absence of any non-compliance of statutory requirements by the assessee, the rejection of its claim for deduction u/s. 80-IA(4)(iii) of the Act was uncalled for. The CIT (A) was, therefore, perfectly justified in correcting the error committed by the Assessing Officer by passing an exhaustive; elaborate and reasoned order. Hence, we are inclined to uphold order of the ld. CIT(A) and reject grounds raised by the revenue.
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2019 (12) TMI 1669 - SUPREME COURT
Murder - framing of charges - non-application of judicial mind by the learned trial judge - HELD THAT:- In the present case, upon hearing the parties and considering the allegations in the charge sheet, the learned Second Additional Sessions Judge was of the opinion that there were sufficient grounds for presuming that the Accused has committed the offence punishable Under Section 302 Indian Penal Code read with Section 34 Indian Penal Code. The order dated 12.12.2018 framing the charges is not a detailed order. For framing the charges Under Section 228 Code of Criminal Procedure, the judge is not required to record detailed reasons. As pointed out earlier, at the stage of framing the charge, the court is not required to hold an elaborate enquiry; only prima facie case is to be seen - As held in KANTI BHADRA SHAH AND ANR. VERSUS STATE OF WEST BENGAL [2000 (1) TMI 989 - SUPREME COURT], while exercising power Under Section 228 Code of Criminal Procedure, the judge is not required record his reasons for framing the charges against the Accused.
Upon hearing the parties and based upon the allegations and taking note of the allegations in the charge sheet, the learned Second Additional Sessions Judge was satisfied that there is sufficient ground for proceeding against the Accused and framed the charges against the Accused-Respondent Nos. 1 and 2. While so, the High Court was not right in interfering with the order of the trial court framing the charges against the Accused-Respondent Nos. 1 and 2 Under Section 302 Indian Penal Code read with Section 34 Indian Penal Code and the High Court, in our view, erred in quashing the charges framed against the Accused. The impugned order cannot therefore be sustained and is liable to be set aside.
Appeal allowed.
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2019 (12) TMI 1668 - ITAT BANGALORE
Bogus LTCG - scrip being a penny stock company - exemption u/s 10(38) towards sale of equity shares denied - HELD THAT:- Relevant factors to be considered are surrounding circumstances, objective facts, evidence adduced, presumption of facts based on common human experience in life and reasonable conclusions.
In present facts of the case it is further observed that Ld. AO has not examined/called for any evidences in respect of purchase/sale of alleged scripts. Assessee is therefore directed to provide all relevant documents to establish sound financial of alledged companies and that fluctuation in price was market driven. Ld.AO shall take all evidences into consideration and then decide the issue as per law.
In the event de hors statement, there are overwhelming evidences and assessee is unable to establish genuineness of sale and purchase of alledged scripts, adverse view would be taken by holding the transaction to be sham.
AO is directed to provide all statements recorded by investigation wing to assessee, referred to in assessment order. In the event, statements recorded are not of secondary and subordinate category, cross examination has to be granted to assessee. Ld.AO is directed to re-examine the case of assessee in the light of aforestated direction in accordance with law. Assessee’s appeal stands allowed for statistical purposes.
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2019 (12) TMI 1667 - ITAT DELHI
Income taxable in India - Alleged Permanent Establishment in India of the Appellant u/a 5(1) and 5(2)(i) of the India UAE Tax Treaty - as primarily argued that as per Article 5(1), the Permanent Establishment means a fixed place of business in which the business is carried out and in the case of assessee they did not have any fixed place of business, but were present intermittently for execution of the contracts and not stayed more than nine months in any particular year - whether "at the disposal” denotes an absolute legal right/control over a place /room/cabin/space or it connotes only the right to access and use such place? - HELD THAT:- The place of disposal should not be tested from the angle of 'exclusion of others' but from the perspective of type and duration of business carried on by the taxpayer from such place. The agreement not only provides the assessee with an unrestricted right to access the hotel premises but also the complete control over such premises. This clearly establishes the fact that the hotel premises were at the disposal of the assessee in view of the length and duration of their use by the assessee and the less invasive activities being carried on there from. It can't be denied that the assessee had certain amount of physical space at its disposal in the form of hotel premises.
"Temporal" aspect or the "Permanency Test" - The operating term of the lease is 20 years. It is not the contention of the assessee that the visits of its employees are "occasional". The visits are mandated by a written contract and have been historically going on at a regular basis year after year. Although the appellant claims that the visits are only for a limited period, the truth is that the employees of the assessee have been visiting the premises of AHL year after year. Thus, the visits of the employees are NOT sporadic or one off affairs and there is a continuity and repetitiveness to it.
To quote from Hon'ble Supreme Court in the case of Formula One World Championships [2017 (4) TMI 1109 - SUPREME COURT] the appellants are trying to trivialize the issue by harping on the fact that duration of the event was three days and, therefore, control, if at all, would be for that period only the presence is neither ephemeral or fleeting, or sporadic". The indicator is not the presence of the employees for short periods in one year, it's about the continuity and repetitiveness of such presence year after year. Considering the purpose for which such visits are necessitated, terms of contract as well as the period spent as per the statement enclosed to this submission, the visits are definitely not a "one-off"/ "temporary"/ "occasional"/ "ephemeral"/ "fleeting"/"sporadic" ones. Accordingly, considering the permanency, consistency and frequency of such visits, the temporal aspect of the disposal test is also satisfied.
Whether it can be said that the business of enterprise is being wholly or partly being carried on through such place? - The term "business" is not fully or exhaustively defined; accordingly, it has the meaning that it has under the domestic law of the state applying the tax treaty, plus professional and independent services, as explicitly provided for in article 3(l)(h) of the OECD Model. Coming to the nature of business of the assessee, it describes its role is "to increase the efficiency and effectiveness of the services provided by the Hyatt Group to the Hotel Owners in South Asia and Gulf Co-operation counsel region."
Assessee had a place of business at the premises of AHL from where it can ensure and control that not only the hotel is run and managed to its satisfaction, but also the other associated processes towards the maintenance of standards and quality as well as the exploitation of its commercial rights are being carried on. The AHL thus, afford a live connection amounting to business connection.
For the very same reason, AHL also constitute a permanent establishment of the assessee in India because the assessee virtually projects itself in India, through it. Coupled with this, the fact that the salaries of the employees were paid by the assessee and the employees also came and worked in the office of AHL in India; enjoyed perquisites from AHL establish that prima facie the office of AHL can be considered as a projection of the assessee in India. Conclusion drawn by the AO that the assessee carries on its business either wholly or partly through the fixed place and accordingly, the business premises of AHL constitute a PE of the assessee within the meaning of Art- 5(1) of DTAA should be confirmed.
As regards of existence of PE under Art-5(2)(i), the AO' has clearly proved that contention of the assessee is factually incorrect and the employees have stayed beyond the requisite period thereby establishing PE under Art-5(2)(i) as well.
SOA defines that the owner AHL consents to the ownership management, licensing and operation by HISWA (the assessee). The SOA also clearly mentions that the HISWA will have complete control and discretion with regard to all aspects of operations of the hotel. It also mentions that the right of the owner AHL to receive financial returns from the operation of the hotel shall not be deemed to give the owner any right or obligations with respect to the operation or management of the hotel. These clauses clearly prove that the HISWA, the assessee is totally involved in the maintenance and operations of running the hotel even allowing the owner a very minimal role. This also clearly establishes that the hotel premises were at the disposal of the assessee in view of the length and duration of the use of the premises. Even taking into consideration, the permanency test and the temporal aspects detailed by the Hon’ble Supreme Court in the case of Formula One World Championships prove that the assessee has got fixed place of business and can be considered having a permanent establishment in view of Article 5(1) of the DTAA.
Permanent establishment it has been examined whether the assessee has got PE in relation to Article 5(1) or Article 5(2) of the DTAA. Article 5(2)(i) stipulates a PE in case of the furnishing of services including consultancy services provided that such activities continue for the same project or connected project for a period or periods aggregating more than 9 months within any 12 months period. Thus, the period of stay stipulated only in relation to invocation of Article 5(2) but not with regard to Article 5(1) of DTAA. Thus, we hold that based on the DTAA of Indo-UAE under Article 5(1), the assessee is having a permanent establishment in India.
Various clauses of SOA such as the AHL cannot unreasonably withheld or delay the appointment of GM and appointment of employees as full time members of executive staff goes to prove the extent of control and management of HISWA in the affairs of the running of the business. The agreement provides absolute control to the assessee over the day to day management administration, finance and all other sphere of the running of the hotel including opening and operating of the bank accounts. Thus, it cannot be held that the assessee is only giving consultancy services to the hotel.
The operations such as guest admission, charges for rooms, operating of bank account, overseeing, implementation and administration of the same on day to day account, recruiting, interviewing, hiring, establishing Hyatt operating standards, establishing purchasing policies with regard to selection of goods, supplies, food, beverages including vermin extermination, security, garbage removal are all managed and operated by the assessee. All these operations are controlled through the General Manager who in turn reports to the assessee in all aspects.
Based on the clauses of the Strategic Service Agreement and Strategic Oversight Agreements, we hold that the revenue’s earned by the assessee are taxable under Article 12 of the DTAA.
Determination of the profit, we hereby hold that the taxable profits may be computed in accordance with the provisions of Section 44DA of Indian Income Tax Act and Article 12 of Indo-UAE, DTAA. During the arguments, it was also submitted that the assessee has incurred losses in the assessment year 2008-09. The assessee be given an opportunity of submitting the working of apportionment of revenue, losses etc on financial year basis with respect to the work done in entirety by furnishing the global profits earned by the assesse, so that the profits attributable to the work done by the PE can be determined judiciously. The same may be considered while determining the taxable profits in India in accordance with the provisions of Section 90(2) of Indian Income Tax Act, 1961.
Assessee appeal dismissed.
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2019 (12) TMI 1666 - KERALA HIGH COURT
Dishonour of cheque - validity of order of acquittal - existence of legally enforceable debt or not - HELD THAT:- A holder of a cheque is entitled to the benefit of legal presumption under Section 118(g) of the N.I. Act that he came into possession of the instrument in due course unless it is shown to have come to the custody of the possessor by means of an offence, fraud or other unlawful means. In this case, the accused had not even put a suggestion to P.W. 1 that the cheque came to his possession otherwise than by lawful means. When the holder becomes a payee, he could successfully prosecute the drawer of the cheque under Section 138 of the N.I. Act irrespective of whether or not he had direct transaction with the drawer.
The question that arises is whether she could be charged with criminal liability if she could show by materials on record that the liability of husband undertaken by her was for a much lesser amount than what was shown in the cheque. Taking the testimonies of P.W. 1 and D.W. 2 together, it could be reasonably inferred that liability of D.W. 2 to the complainant was at the most for an amount of Rs. 30,000/-. This is what was recorded in the agreement itself going by the testimony of D.W. 2. The execution of agreement is not denied by P.W. 1 also. In my view, in the absence of complainant producing the agreement and showing that the amount actually settled as per the agreement was Rs. 1,30,000/-, the evidence of D.W. 2 alone must be preferred. The burden in this respect is only on P.W. 1 especially because the evidence on record has shown that his alleged financial transaction with accused was untrustworthy. This burden was not discharged by the complainant.
What emerges from the entire materials on record is that a blank cheque came to the possession of P.W. 1 which he filled up making it appear that it was delivered for discharge of liability larger than what the accused had undertaken for her husband. If this is the actual position, the presumption of consideration arising under Section 139 of the N.I. Act cannot attach to Ext. P1 blank cheque nor can it help the complainant to contend that the issue of cheque was in discharge of entire amount of Rs. 1,30,000/-. This is apart from the contention of D.W. 2 that he discharged his debt to complainant through the office of C.I. of Police, Nilambur - There is no reason to interfere with the same as it cannot be rejected as being perverse or absurd. Therefore, the impugned order of acquittal is only to be confirmed.
Appeal dismissed.
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2019 (12) TMI 1665 - ALLAHABAD HIGH COURT
Requirement of pre-deposit on filing appeal - quantum of pre-deposit - petitioner points out that while filing First Appeal, the petitioner had deposited 10% of the disputed tax liability as provided under subsection (6) of Section 107 of the Act - it is submitted that the petitioner is ready and willing to deposit 20% of the remaining amount of tax in dispute - HELD THAT:- The petitioner is permitted to deposit 20% of the remaining amount of tax in dispute and as soon as the said amount is deposited, the recovery proceedings for the balance amount shall remain stayed as provided under subsection (9) of Section 112 of the Act.
List in the third week of January, 2020.
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2019 (12) TMI 1664 - SUPREME COURT
Waiver of condition relating to delay in intimation and lodging of the claim, by appointing a surveyor - absence of any mention, of aspect of delay in intimation and violation of conditions of Clause 6(i) of General Conditions of Policy, in the repudiation letter, the same could be taken as defence before the NCDRC - whether the insurer had waived the condition as to delay in intimation by appointing a surveyor? - HELD THAT:- This Court in Sonell* Clocks [2018 (8) TMI 1910 - SUPREME COURT] has distinguished Galada Power on facts and held that the appointment of a surveyor cannot, as a matter of law, be construed as a waiver of the terms and conditions of the insurance policy. However, in Sonell* Clocks, the insurer had taken a specific plea in the repudiation letter that the loss was not conveyed within the stipulated period.
The law as laid down in Galada [2016 (7) TMI 1603 - SUPREME COURT] on issue still holds the field. It is a settled position that an insurance company cannot travel beyond the grounds mentioned in the letter of repudiation. If the insurer has not taken delay in intimation as a specific ground in letter of repudiation, they cannot do so at the stage of hearing of the consumer complaint before NCDRC.
Admittedly in the case at hand there was no reference of delay in intimation or lodging of the claim as stipulated in Clause 6(i) of the General Conditions of Policy in the repudiation letter - The NCDRC has failed to take into consideration this aspect of the matter and, therefore, cannot be held to be justified in rejecting the claim of the Appellant, on that ground.
The Respondent-insurer is directed to make payment of Rs. 63,43,679/-, as assessed by the surveyor, to the Appellant with interest @ 8% from the date of the filing of the claim of petition till date of payment - Appeal allowed.
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2019 (12) TMI 1663 - CALCUTTA HIGH COURT
Disowning of petitioner by Myanmar - completion of sentence for the alleged offences - It is argued that such deportation would tantamount to a death sentence against the petitioners, in view of the plight of the petitioners in Myanmar, which country has the declared policy of an all-out onslaught on the said "Rohingya" Community.
HELD THAT:- In view of the imminent plight of the petitioners, who, despite having basic human rights in consonance with the Fundamental Rights provided by the Constitution of India as well as the U.N. Charter and the norms of any civilized society, a minimum protection ought to be given to the petitioners till the writ petition is decided, in order to uphold the spirit of humanity, if not the Fundamental Rights enshrined in the Constitution of India, which is the grundnorm of all Indian statutes - the respondents are directed to file their affidavit(s)-in-opposition within January 10, 2020. Reply/replies, if any, shall be filed by the petitioners within January 17, 2020.
Let the matter appear next "For Hearing" on January 20, 2020.
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2019 (12) TMI 1662 - ITAT DELHI
Maintanaibility of appeals in ITAT - low tax effect - HELD THAT:- We find that the tax effect involves in the appeal of the Revenue is below Rs. 50 lakhs. There is no dispute that the Board’s instructions or directions issued to the Income-tax authorities are binding on those authorities, therefore, the Department should have withdrawn/not pressed the present appeal in view of the aforesaid instruction since the tax effect in the instant appeal is less than the amount of Rs. 50 lakhs.
The appeal is not maintainable in the instant case as the tax effect is less than Rs. 50 lakhs. Accordingly, it is held that appeal filed by the revenue is not maintainable.
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2019 (12) TMI 1661 - SC ORDER
Calculation of interest on refund claim - relevant date - HELD THAT:- There shall be stay of operation of the impugned judgments and orders in FEMC-PRATIBHA JOINT VENTURE VERSUS COMMISSIONER OF TRADE & TAXES [2019 (7) TMI 1993 - DELHI HIGH COURT] passed by the High Court of Delhi at New Delhi till the next date of hearing.
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