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Showing 81 to 100 of 1440 Records
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2022 (2) TMI 1361 - ITAT DELHI
TP Adjustment - depreciation adjustment was rejected by the DRP - HELD THAT:- In the case of the Honda Motor Cycle and Scooter India Pvt. Ltd. [2015 (4) TMI 502 - ITAT DELHI] it was held that where there was difference in rates of depreciation charged by comparables viz-a-viz assessee suitable adjustment was to be made to profits of comparables.
As relying on EXL SERVICE. COM (INDIA) PVT. LTD. [2014 (12) TMI 894 - ITAT DELHI] and M/S SUMI MOTHERSON INNOVATIVE ENGINEERING LTD. [2014 (2) TMI 652 - ITAT DELHI]TPO has rightly allowed the adjustment for depreciation on assets. Thus, we reverse the findings of the DRP on this issue and direct the TPO/AO to restore the depreciation adjustments on assets which was earlier allowed while passing the order u/s 92CA.
Comparable selection - TPO included Uniklinger Ltd. and Talbros Automotive Components Ltd. as comparables - Uniklinger Ltd. - As in the segment reporting the company stated that it is in the business of manufacturing and sale of fluid control products and fluid seeling products. Therefore, it is abundantly clear from the annual report of this company that this company namely Uniklinger is not engaged in the automotive industry and has a completely different product profile. Therefore, we are of the view that this company is functionally not comparable to the assessee and, therefore, we direct the TPO to exclude this company from comparables.
Talbros Automobile Ltd. - Comparable company entering into joint venture agreement and also transferring its assets to the JV Company it can be viewed that there is an extraordinary event has taken place. Further there are no segmental accounts available to establish separately the profitability from manufacturing of auto components and rendering of IT Services. In the circumstances this company cannot be considered as comparable company and accordingly, we direct the TPO to exclude this company from the comparables.
TPO excluded KMA Auto Components P. Ltd. and ANU Industries Ltd. from the list of comparable companies for the reason that annual reports/P&L Accounts are not available - TPO should re-examine these two comparables viz-a-viz the annual reports and give a fresh look into these comparables and decide afresh as to whether these two comparables selected by the assessee can be considered as comparable companies. Thus, we restore these grounds to the file of the TPO.
Working capital adjustment - We direct the TPO to examine the contentions of the assessee and to provide the details of working capital computations and after giving adequate opportunity to the assessee to carry out the directions of the DRP for granting working capital adjustment. We order accordingly. Grounds are allowed for statistical purpose.
Allowability of R&D Cess as an admissible expense - We direct the AO to carry out the DRP directions and allow R&D cess as an admissible expense and compute the income accordingly. This ground is allowed for statistical purpose.
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2022 (2) TMI 1360 - DELHI HIGH COURT
Validity of reopening of assessment - deposits of cash during demonetization period - fresh material in the possession to form the belief that the deposited cash was in the nature of undisclosed income or not? - as argued deposit of cash during the demonetization period had been disclosed in the return itself - HELD THAT:- In the present case, the reassessment notice had been issued within four years of filing of the assessment and there had been no scrutiny assessment of the petitioner. The only requirement for reopening of assessment would be ‘reason to believe’.
Courts cannot enter into the merits of the subjective satisfaction of the AO or judge the sufficiency of the reasons recorded and/or determined whether such opinion is based on tangible, concrete and new information that is capable of supporting such a conclusion. [See: Raymond Woolen Mills Ltd. vs. ITO [1997 (12) TMI 12 - SUPREME COURT]
The petitioner herein had admittedly deposited in cash in his bank account. Though the said entry is reflected in the return of income, yet no supporting evidences are available to prove the source of deposit. This Court is of the view that in the present case there is reason to believe that income otherwise chargeable to tax has escaped the assessment.
Submission that the appropriate authority had not granted sanction had not been raised by the petitioner in its objection petition and consequently, the same has not been dealt with by the Revenue while deciding the petitioner’s objections. Accordingly, in the event, the petitioner wishes to raise the issue of lack of sanction by the appropriate authority, the petitioner shall be at liberty to do so during the reassessment proceedings.
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2022 (2) TMI 1359 - CESTAT MUMBAI
Recovery of Service tax - provision of guarantee to overseas companies for which consideration had been received towards guarantees provided free of charge to their Indian subsidiaries, for rendering taxable service under section 65(105)(zm) of Finance Act, 1994 - HELD THAT:- The legislative intent to exclude ‘corporate guarantees’ is unarguable. The monitorial engagement of Reserve Bank of India arises from its own statutory empowerment and to graft that supervision on a tax statute for determining tax liability is not tenable.
The adjudicating authority has, rightly, declined to be guided by the decision of the Tribunal in KAVERI AGRI CARE PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, MYSORE [2010 (11) TMI 153 - CESTAT, BANGALORE] as it is settled law that interim orders do not offer themselves as binding precedent and the lack of elaboration of the observation therein detracts from its employability to advance the case of Revenue. The decision of the Tribunal in CCE & ST (LTU) , CHENNAI VERSUS M/S. NEYVELI LIGNITE CORPORATION LTD. [2017 (9) TMI 784 - CESTAT CHENNAI] deals with an entirely different set of facts and the explanation therein of ‘guarantee’, as commonly understood, for placing that dispute in a context is of no assistance here.
The criticality of ‘consideration’ for determination of service, as defined in section 65B(44) of Finance Act, 1994, for the disputed period after introduction of ‘negative list’ regime of taxation has been rightly construed by the adjudicating authority. Any activity must, for the purpose of taxability under Finance Act, 1994, not only, in relation to another, reveal a ‘provider’, but also the flow of ‘consideration’ for rendering of the service. In the absence of any of these two elements, taxability under section 66B of Finance Act, 1994 will not arise. It is clear that there is no consideration insofar as ‘corporate guarantee’ issued by respondent on behalf of their subsidiary companies is concerned.
The inevitability of consideration as manifesting taxable service - there are no merit in the appeal of Revenue which is dismissed.
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2022 (2) TMI 1358 - SUPREME COURT
Condonation of huge delay of 467 days - sufficient cause for delay present or not - HELD THAT:- The learned trial Court specifically observed that, in the absence of material evidence, it cannot be said that the delay has been explained. The trial Court has also observed that the Court feels that there are no merits in the application. Still the trial Court condoned the delay by observing that an opportunity of fair trial should be given to both the parties to put-forth their case on merits. The trial Court also observed that, on allowing the application for condonation of delay, no prejudice will be caused to the plaintiff and, therefore, the delay can be condoned by compensating the plaintiff by way of heavy costs. The said order has been set aside by the High Court by the impugned judgment and order.
Once it was found even by the learned trial Court that delay has not been properly explained and even there are no merits in the application for condonation of delay, thereafter, the matter should rest there and the condonation of delay application was required to be dismissed. The approach adopted by the learned trial Court that, even after finding that, in absence of any material evidence it cannot be said that the delay has been explained and that there are no merits in the application, still to condone the delay would be giving a premium to a person who fails to explain the delay and who is guilty of delay and laches.
The Court has no power to extend the period of limitation on equitable grounds. The statutory provision may cause hardship or inconvenience to a particular party but the Court has no choice but to enforce it giving full effect to the same.
SLP dismissed.
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2022 (2) TMI 1357 - ITAT MUMBAI
Addition u/s 36(1)(iii) - investments made in the shares is out of borrowed funds and the assessee has failed to prove commercial expediency - CIT-A deleted the addition - HELD THAT:- An investment in equity of another company is materially different in nature and character from an interest free advance or loan to another company. The question of diversion of funds for non-business purposes would only come into play in the case of the latter and not for in the case of investment in another company. The very foundation of the impugned disallowance therefore, is vitiated in law, as it proceed on the basis that investment in share capital of another company would amount to diversion of funds for non-business purpose. Whether such an investment yields returns in the present year or not does not make a difference.
It is pertinent to bear in mind fact that in the present case interest disallowance has been made on the premise that investment in share capital of another company amounts to diverting the borrowed funds for the business of another company but then as we noted earlier an equity investment as inherently and materially different vis-a-vis an interest-free loan and advance. That distinction has been lost sight of. In our considered view, therefore, CIT(A) was indeed justified in deleting the disallowance of interest. We approve the conclusion arrived by the learned CIT(A) and decline to interfere in the matter. Decided against revenue.
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2022 (2) TMI 1356 - ITAT HYDERABAD
Eligibility of deduction u/s 80-IA as made for the first time in the return filed u/s 153A - additional plea beyond the Revenue’s grounds that the assessees four returns herein deserve to be treated as ‘belated’ ones since filed beyond the “due date” prescribed u/s.139(1) Explanation 2(1)-(vii) r.w.s.153(1)(a) of the Act - HELD THAT:- We see no substance in the Revenue’s instant additional technical argument in light of the tribunal’s decision in Mahindra & Mahindra [2009 (4) TMI 207 - ITAT BOMBAY-H] that a departmental representative cannot raise an argument beyond the assessment findings. We wish to make it clear that the AO herein has nowhere treated the assessee’s four returns as belated ones.
As per the assessee’s stand that it had received the AO’s corresponding Section 153A notices on 10-06-2013 which stood duly complied on 09-07-2013 as it chose to file returns wherein the time prescribed only which have been accepted through out as ‘valid ones’. No rebuttal to this clinching factual aspect has come from the departmental side. We thus decline the Revenue’s instant technical argument.
Whether the assessee could raise a fresh claim of Section 80-IA deduction in a return filed u/s.153(1)(a) of the Act for the first time or not even if it had chosen not to do so in Section 139(1) regular return submitted before search ? - We wish to reiterate here that the Revenue’s case strongly relies upon Section 80-IA r.w.s.80AC of the Act inter alia stipulating that “where the assessee fails to make a claim in his return of income for any deduction, no deduction shall be allowed to him thereunder” and that “no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section(1) of Section 139”
We find no merit in the Revenue’s instant technical argument as Section 153A nowhere draws any distinction of an “abated” or “un-abated” assessment so far as an assessee’s eligibility to raise a new deduction claim under Chapter-VI therein is concerned. We thus uphold the CIT(A)’s lower appellate findings in principle.
Both the AO as well as the CIT(A) have nowhere examined the assessee’s entitlement to claim Section 80-IA deduction in the light of the alleged projects undertaken / developed in all these four assessment years on merits. Faced with this situation, we deem it appropriate to restore the instant sole issue back to the Assessing Officer for his afresh adjudication on merits in light of all legal and factual requirements enshrined in Section 80-IA of the Act. Needful shall be done within three effective opportunities of hearing. Ordered accordingly.
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2022 (2) TMI 1355 - CESTAT AHMEDABAD
CENVAT Credit on inputs - benefit of Notification No. 30/2004-CE dated. 19.07.2014 as amended by Notification No. 34/2015-CE dated. 17.07.2015 - benefit of the said notification on the ground that the condition provided in the proviso has not been complied - Board Circular No. 1005/12/2015-CX dated. 21.07.2015 - appellant has not lodged any protest at the time of assessment - failure to fulfill the conditions of Notification No. 30/2004-CE dated 09.07.2004 as amended i.e. non taking of Cenvat Credit on inputs/capital goods.
HELD THAT:- The appellant in principle entitle for exemption Notification as the condition of non availment of Cenvat Credit need not to be satisfied by the importer in respect of imported goods. The same has been clarified by the Central Board of Excise and Customs vide Circular No. 1005/12/2015-CX dated 21.07.2015.
The above circular was issued as a consequent to the Hon’ble Supreme Court judgment in the case of M/S SRF LTD., M/S ITC LTD VERSUS COMMISSIONER OF CUSTOMS, CHENNAI, COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL) , NEW DELHI [2015 (4) TMI 561 - SUPREME COURT] and AIDEK TOURISM SERVICE PVT. LTD Vs. COMMISSIONER OF CUSTOMS, NEW DELHI [2015 (3) TMI 690 - SUPREME COURT]. Wherein, it was held that the condition of non availment of Cenvat Credit on input/capital goods need not to be satisfied by the buyer/importer of such goods. In view of the above circular, the appellant was entitled for exemption from CVD at the time of clearance of the imported goods in terms of Notification No.30/2004-CE dated 09.07.2004. Needless to say that, it is a settled legal position by the Hon’ble Apex Court that board circular/instructions are binding on the departmental officers. Therefore, the Assessing Officers while assessing the Bill of Entry was duty bound to verify the eligibility of the exemption Notification No. 30/2004-CE and to extend the benefit of the same. However, the Assessing Officer has not given any heed in extending the benefit of the said notification.
The appellant are clearly entitled for the exemption Notification No. 30/2004-CE dated 09.07.2004 for exemption from CVD on the imported goods.
Appeal allowed.
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2022 (2) TMI 1354 - ITAT BANGALORE
TP Adjustment - characterisation carried out by the TPO of the assessee’s business - As submitted TPO characterised assessee differently in both the years as for A.Y. 2011-12 accepted the activity of assessee to be a manufacturer of software products, however, characterised the business of assessee as software development service provider - assessee is a manufacturer of software products, it owns and develop IP of the software product by the name CRM software - HELD THAT:- Admittedly, for both the years under consideration, assessee has been noted to be manufacturer of software product. As admitted assessee owns the development of IP of software product being CRM software. Assessee entered into agreement with its AE for being an exclusive distributor for its software product in North America, for which the AE shall pay to assessee a licence fee equal to 30% of gross revenue. This receipt by assessee has been shown as royalty income by assessee. Apart from this, the assessee sells this software directly to third party customers in Asia-pacific region. It is noted that assessee also provides software support services for the CRM software product sold to both AE as well as non-AE.
The segments of income generated by assessee are income from licence fee, payment of licence fee, income from software services.
As for A.Y. 2010-11, assessee was identically characterised in the TP study which has not been disturbed by the transfer pricing officer therein. Subsequently, assessee has been characterised in different ways in the subsequent assessment years which needs to be verified at the end of Ld.TPO. In the interest of justice and to remain consistent in the approach of characterisation of assessee’s business module, we remand the transfer pricing issues to the Ld.AO/TPO for de novo verification.
Disallowance of provision for audit fee - HELD THAT:- It is a claim of assessee that assessee was disallowed the provision towards audit fee in A.Y. 2010-11 and the same has been reversed in A.Y. 2011-12 which deserves to be allowed and disallowance of the provisions would amount to double taxation.
Thus in the interest of justice, we direct the Ld.AO to verify the details filed by the assessee and to consider the claim in accordance with law.
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2022 (2) TMI 1353 - ITAT BANGALORE
TP Adjustment - comparable selection - application of turnover filter - HELD THAT:- As decided in AUTODESK INDIA PRIVATE LTD [2018 (7) TMI 1862 - ITAT BANGALORE] high turnover is a ground for excluding companies as not comparable with a company that has low turnover.
Seven companies listed in ground raised by the Assessee whose turnover in the current year is more than ₹ 200 Crores should be excluded from the list of comparable companies.
TPO/AO is directed to compute the ALP of the international transaction of rendering of SWD services by the Assessee to AE in the light of the directions given above, after affording Assessee opportunity of being heard.
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2022 (2) TMI 1352 - SUPREME COURT
Liquidation of Corporate Debtor - HELD THAT:- In its impugned judgment in PRAKASH CHANDRA KAPOOR AND ORS. VERSUS VIJAY KUMAR IYER, LIQUIDATOR AT DELOITTE TOUCHE TOHMATSU INDIA LLP AND ORS. [2021 (12) TMI 1429 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], the National Company Law Appellate Tribunal, New Delhi has duly taken into comprehension the substance of the matter; and has been justified in issuing the directions, as contained in paragraph 35 of the impugned order, keeping in view the requirements of Section 35(1)(e) of the Insolvency and Bankruptcy Code, 2016 as also the requirements of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
There are no question of law worth consideration in this appeal - appeal dismissed.
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2022 (2) TMI 1351 - ITAT BANGALORE
TP adjustment - selection of MAM - Cost Plus Method (CPM) or Transactional Net Margins Method (TNMM) - HELD THAT:- AR at this juncture submitted that assessee do not object for the use of TNMM. Accordingly, ground no. 1 stands dismissed.
Non considering the segmental results of international transactions, submitted before the DRP - as argued internal comparables available and sufficient data were filed before the DRP which were not considered for purpose of comparability analysis - HELD THAT:- Admittedly, the transactions in a controlled transaction with a related party and an uncontrolled transactions with unrelated parties will result into more appropriate bench marking of arm’s length price. Under the circumstances, if there is availability of sufficient data of internal comparables, the Ld.TPO first should have recourse to such internal compares before moving on to external comparables. Only on insufficiency of data in respect of internal comparables, support must be drawn from the external comparables.
We therefore, direct the Ld.TPO to carry out detailed analysis of the international transactions using TNMM as MAM, based on the materials filed by assessee related to internal comparables. In the event the details filed are satisfactory, the determination must be confined to the internal comparables so filed by assessee. In the event, the details filed by assessee is not verifiable or not in accordance with law, the AO/TPO is open to carry out analysis in accordance with law. Ground raised by assessee stands allowed for statistical purposes.
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2022 (2) TMI 1350 - ITAT BANGALORE
TP Adjustment - ALP of aggregation of transaction including Royalty paid - separate analysis of Royalty as international transaction - as argued trading and manufacturing segments are intertwined and inter-related warranting a "Combined Transaction Approach" in arriving at the arm's length price - assessee submitted that assessee selected TNMM as the most appropriate method and operating margin at entity level after including royalty was compared with comparable companies - HELD THAT:- We note that assessee’s margins have been computed including royalty payment which is higher than the margin of the comparables. It is also not disputed by the revenue that the comparables in case of the comparables, the royalty, margins are computed after including royalty and research and development expenses. The view taken by the Coordinate Bench of this Tribunal in assessee’s own case [2014 (10) TMI 460 - ITAT BANGALORE] for A.Y. 2007-08 has been reproduced hereinabove wherein all these aspects have been considered. This Tribunal for A.Y. 2007-08 has deleted the adjustment made by the Ld.TPO in respect of royalty by separately bench marking the transactions. This has been fortified by the clarification given in a Miscellaneous Petition filed by the department which is also reproduced hereinabove. This view is also supported by various decisions of Coordinate Benches of this Tribunal as well as various High courts. Cojoint reading of these orders, we direct the Ld.AO/TPO to delete the adjustment proposed for royalty as a separate international transaction.
Respectfully following the above view, we direct the Ld.AO/TPO to delete the adjustment proposed towards royalty as a separate international transaction.
MAT computation u/s 115JB - provision towards warranty while computing the book profits under section 115JB - addition made as it is provision to meet contingent liability and is not an ascertained liability - AO allowed the same in normal computation - HELD THAT:- As relying on case of Toyota Kirloskar Motors P Ltd. [2013 (2) TMI 108 - KARNATAKA HIGH COURT] we remand this issue back to Ld.AO for verifying if there is any double deduction claimed by assessee. The Ld.AO is directed to carry out necessary verification and consider the claim in accordance with law. Needless to say that proper opportunity of being heard be granted to assessee.
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2022 (2) TMI 1349 - ITAT MUMBAI
Revision u/s 263 - difference between administrative and quasi-judicial orders - four orders u/s 263 passed - As per CIT AO did not examine the increased share capital including share premium - merely making an addition to the share capital and premium under section 68 of the act without examination/enquiry is never a pro revenue and judicious approach and therefore the order needs revisions holding that prejudice caused to the revenue administration - HELD THAT:- PCIT order has given a clear-cut direction to AO that the assessment proceedings must be initiated at the earliest and to be completed without waiting time barring date. AO must provide sufficient opportunity of being heard to the assessee in order to meet natural justice, equity and fairness - assessment where the addition of ₹ 47 crores was made was passed on 2/3/2015. This order has not been challenged by the assessee before CIT – A. Despite this addition, the learned principal Commissioner of income tax revised the order passed by the AO holding that it is erroneous and prejudicial to the interest of the revenue. Reasons provided for invoking the provisions of section 263 of the act are self-evident.
Order u/s 263 of the act was passed on 19/10/2016; the AO completed the assessment order in pursuance to that order on 21/12/2016. He issues notices u/s 142 (1) on 15/11/2016. In between this that is almost within a period of one month, the summons were issued u/s 131 of the act of all the parties, notices u/s 133 (6) were also issued to the investor companies. Summons were responded to by the investors and notices u/s 133 (6) were also responded to favourably.
AO takes a view that there is no addition u/s 68 could be made in the hence of the assessee with respect to the share capital and premium - Thereafter the AO held by the order passed under section 143 (3) read with section 263 read with section 144 read with section 263 read with section 147 and read with section 143 (3) of the act that the addition of ₹ 47 crores made by the learned assessing officer in the earlier order is not correct.
Therefore, in this order he deleted the addition completely. With alarming speed, the assessment was completed at the direction of the learned principal Commissioner of income tax deleting the addition of ₹ 47 crores. It is also rarest of rare case, where PCIT, invoked the provisions of section 263 of the act where the learned assessing officer has made the addition and still it is held by that order that order passed by the AO is erroneous as far as prejudicial to the interest of revenue.
This order is subject to 3rd revision holding that the assessment order where the addition is deleted of ₹ 47 crores is erroneous and prejudicial to the interest of revenue, which also came back from ITAT and finally passed on 26/3/2022 as 4th revision order holding that assessment order passed on 21/12/2016 is erroneous and prejudicial to the interest of revenue.
On all these orders of revision, all the inquiries were made by the learned assessing officer when assessment order pursuant to the first revision was made on//3/2015 wherein the addition of ₹ 47 crores was made. Therefore, none of the revisionary order states that what is the further enquiry that AO should have made after making the addition. Therefore, the invocation of explanation (2) to section 263 of the act is not proper. It can only be invoked where the order is passed without making enquiries and verification, which should have been made by the learned assessing officer.
Whether where there are to views, the provisions of section 263 cannot be invoked. In this case there are four orders under section 263 of the act, three order is completely say that the addition should have been made, one order under section 263 completely direct the learned assessing officer despite making the usual addition of ₹ 47 crores to make further verification and after further verification the AO deleted it. Therefore, it is not the case where there are two judicial views available; it is the case wherein two administrative and quasi-judicial orders under section 263 are available which are taking exactly opposite view. In such circumstances, the order under section 263 challenge before us is not sustainable.
In the present case, the AO has taken a view once a making an addition and second time deleting the addition on the same set of facts. Thus, it cannot be said that the view taken by the AO is not sustainable. Thus, the revision is barred in such cases. Decided in favour of assessee.
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2022 (2) TMI 1348 - SUPREME COURT
Validity of notifications attaching the property of the respondent under Section 4 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act 1999 (MPID Act) - forward contacts of one-day duration for sale and purchase of commodities traded on NSEL - respondent holds 99.99% of the shareholding of National Spot Exchange Ltd (NSEL) - NSEL is a 'financial establishment' or not?
Whether NSEL is a 'financial establishment' within the meaning of Section 2(d)? - HELD THAT:- Financial Establishment is defined as any person accepting a 'deposit'. The definition excludes from its purview (a) a corporation or cooperative society controlled or owned either by the State or the Central Government; and (b) a Banking Company as defined under Section 5(c) of the Banking Regulation Act 1949. Since NSEL does not fall within any of the exceptions, it would be a 'financial establishment' for the purposes of the Act if it is a 'person accepting deposit'.
Having referred to the relevant bye-laws, we shall determine if NSEL receives 'deposits' as defined by Section 2(c) of the MPID Act. The bye-laws elucidate that NSEL receives both money and commodities from trading members. In order to decide if these receipts by NSEL could be regarded as 'deposits', the test of 'return' will have to be satisfied. The test is that the return be in cash, kind or service. It is not necessary that the return should be with the benefit of interest, bonus or profit. Therefore, if the financial establishment is obligated to return the deposit without any increments, it shall still fall within the purview of Section 2(c) of the MPID Act, provided that the deposit does not fall within any of the exceptions. The exception of relevance to our case is clause (v) which states that amounts received in the ordinary course of business by way of (a) security deposit; (b) dealership deposit; (c) earnest money; and (d) advance against order for goods or services shall be excluded from the purview of the term 'deposit'.
The validity of the MPID Act was specifically dealt with in two decisions of this Court in State of Maharashtra v. Vijay C. Puljal [2005 (9) TMI 303 - HIGH COURT OF BOMBAY] and SONAL HEMANT JOSHI AND ORS. VERSUS STATE OF MAHARASHTRA AND ORS. [2011 (5) TMI 1099 - SUPREME COURT]. In both the decisions, this Court upheld the constitutional validity of the MPID Act in view of the earlier decision in Bhaskaran [2012 (11) TMI 205 - SUPREME COURT] - In Soma Suresh Kumar v. Government of Andhra Pradesh [2013 (9) TMI 1292 - SUPREME COURT], a two judge Bench of this Court upheld the provisions of the Andhra Pradesh Protection of Depositors of Financial Establishments Act 1999 following the earlier decisions in Bhaskaran [2012 (11) TMI 205 - SUPREME COURT] and New Horizons Sugar Mills Limited [2012 (11) TMI 206 - SUPREME COURT].
Having discussed the judgments of this Court on the constitutional validity of the state legislations governing financial establishments offering deposit schemes, including the MPID Act, there is no reason for us to reopen the question. This Court has held that the MPID Act is constitutionally valid on the grounds of legislative competence and when tested against the provisions of Part III of the Constitution.
The High Court observed that the decision of this Court in 63 Moons [2019 (5) TMI 522 - SUPREME COURT] does not have any serious effect on the present proceeding, though this Court has discussed at length the modus operandi of NSEL in duping the trading members by throwing light on the structure of the exchange. Though it was observed that the question of constitutional validity was settled in Bhaskaran [2012 (11) TMI 205 - SUPREME COURT], New Horizons [2012 (11) TMI 206 - SUPREME COURT], Sonal Hemant Joshi [2011 (5) TMI 1099 - SUPREME COURT] and Vijay Kulijal [2005 (9) TMI 303 - HIGH COURT OF BOMBAY], the challenge of the respondent to the constitutional validity of the MPID Act was still kept open by the High Court.
Further, while referring to the earlier order of the Division Bench dated 1 October 2015, where it was prima facie recorded that NSEL is a ‗financial establishment‘ for the purpose of the MPID Act, the High Court observed that it was not bound by the prima facie view. The primary ground for the Division Bench for arriving at a prima facie view was the representations made assuring a 14% to 16% yield. However, the High Court in its impugned judgment dispelled the argument on the ground that only a 'faint reference' was made to assured returns. Such an observation misrepresents the factual instances which are backed by documentary material.
The appellant also contended that the writ petition filed by the respondent is not maintainable since there was an alternative remedy of raising an objection before the Designated Court under Section 7 of the MPID Act. Though there is merit in the argument of the appellant, since the High Court decided on the validity of the impugned attachment notifications on merits, and arguments have been addressed in the present proceedings, we have proceeded to decide the matter on merits.
The impugned notifications issued under Section 4 of the MPID Act attaching the properties of the respondent are valid - Appeal allowed.
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2022 (2) TMI 1347 - CALCUTTA HIGH COURT
Condonation of delay in filing petition - petition has been filed after four years from the date of issuance of the impugned show cause notice without any cogent explanation for the inordinate delay in filing this writ petition - HELD THAT:- Had the impugned show cause notice bad in law or without jurisdiction at the time of issuance of the impugned show cause notice and if at all petitioner was aggrieved by such notice he could have come before the Writ Court immediately after issuance of the impugned show cause notice. The conduct of the petitioner shows that immediately after issuance of the impugned show cause notice he sat over it and did not approach the Writ Court by taking the point of jurisdictional error or point of law if any against the impugned show cause notice which was issued in the year 2017 and instead the petitioner himself has chosen to give reply to the said show cause notice and has submitted to the jurisdiction of the respondent authority concerned. So it cannot be contended by the petitioner that the impugned show cause notice at the time of issuance in 2017 was without jurisdiction or bad in law in 2022.
Petitioner relies on an unreported decision of Delhi High Court in GOPAL GUPTA VERSUS PRINCIPAL ADDITIONAL DIRECTOR GENERAL, DIRECTORATE OF REVENUE INTELLIGENCE NEW DELHI [2021 (4) TMI 788 - DELHI HIGH COURT] - On perusal of order of Delhi High Court, which is an interim order and not a final order apart from the fact that it is not binding on this Court. It also appears from the said interim order of Delhi High Court that the impugned show cause notice was issued on 26th September, 2019 and the writ petition was filed in that case in early 2021. So, factually point of delay is different in that case from this case and in that case it could not be called an inordinate delay.
The petition cannot be entertained and is dismissed.
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2022 (2) TMI 1346 - SC ORDER
Validity of notification dated 13th December 2018 issued by the Commissioner of Value Added Tax (CVAT) under Rule 5 (13) of the Central Sales Tax (Delhi) Rules, 2005 - Whether there was any justification for the CVAT in New Delhi to retrospectively declare the “C‟ Form which had already been acted upon by the authority in Jammu and Kashmir as “obsolete”?
HELD THAT:- List this Special Leave Petition along with SLP(C) No.27177/2018 after four weeks.
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2022 (2) TMI 1345 - ITAT PUNE
Rectification u/s 154 - assessee had not filed copy of the impugned Rectification application before this Tribunal - HELD THAT:- In the absence of copy of Rectification Application and complete order u/s 154, it is not possible for us to understand the exact plea taken by the assessee. The assessee has raised one ground that the AO had not served notice u/s.154. This ground was also raised by the assessee before the ld.CIT(A). CIT(A) had not adjudicated the impugned ground regarding notice. CIT(A) has not given any finding regarding the notice u/s.154. On perusal of the Form 35 filed by the assessee before the Commissioner of Income tax (appeals) , the assessee in the coloumn number 12 has mentioned that Additional Evidence has been filed by the assessee. However, in the Order, the ld.CIT(A) has not discussed anything about the additional evidence.
We are of the opinion that in the interest of justice, it is required that all facts need to be on record, which assessee has failed to submit. Therefore, we set aside the order to the Ld.CIT(A) for denovo-adjudication. The Ld.CIT(A) shall give opportunity to the assessee. Appeal of the assessee is allowed for statistical purpose.
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2022 (2) TMI 1344 - ITAT DELHI
Revision u/s 263 - interest received on enhanced compensation - interest earned u/s 28 of the Land Acquisition Act - as per CIT AO had not conducted enquiry to examine whether the conditions necessary for exemption u/s 10(37) were fulfilled - controversy, which Ld AR, claims is a debatable point with divergent views - HELD THAT:- Interest received on compensation or enhanced compensation under the Land Acquisition Act, 1894 is to be treated as income from other sources and not under the head capital gains the ld CIT(A) while exercising revisionary powers has primarily relied on the judgment of various judgments of Hon’ble Punjab and Haryana High Court in Karta Manjeet Singh (HUF) Vs. Union of India [2015 (12) TMI 1123 - PUNJAB & HARYANA HIGH COURT] , Sant Ram Vs. Union of India [2009 (10) TMI 494 - PUNJAB AND HARYANA HIGH COURT] AND Tuhi Ram Vs. Land Acquisition Collector [1991 (12) TMI 22 - PUNJAB AND HARYANA HIGH COURT]
Thus it can be reasonably concluded that even before the judgment of Mahender Pal Narang Vs. CBDT [2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] the consistent view of Hon’ble Punjab and Haryana High Court has been that interest received on delayed payment of compensation under either Section 28 or u/s 34 is taxable as income from other sources in the year of the receipt under the act.
Certainly judicial decision subsequent to the assessment order may not be the valid basis for exercising the revisionary powers. However, in the case in hand the assessment order is infact silent as to the fact that if the Ld. AO had made any enquiry into the issue and if Ld. AO had taken into consideration the judicial pronouncements, relied on behalf of the assessee, then for what substantial reasons the judgments of jurisdictional High Court, i.e Hon’ble Punjab and Haryana High Court in favour of Revenue have not been relied.
The Hon’ble Bombay High Court in the case of Subramaniam vs. Siemens India Ltd. [1983 (4) TMI 3 - BOMBAY HIGH COURT] has held that the AO is supposed to follow a decision of the Supreme Court and of the High Court of the State within whose jurisdiction he is functioning and in the case where there is conflict of views between different High Courts, AO must follow the decision of the High Court within whose jurisdiction he is functioning. The Hon’ble Rajasthan High Court in the case of CIT vs. Sunil Kumar [1994 (7) TMI 42 - RAJASTHAN HIGH COURT] has further held held that the decision of the Jurisdictional High Court is binding on the Income tax Authorities and the Tribunal within the jurisdiction of the Court and the contrary decision of another High Court is not relevant, and that a point decided by the Jurisdictional High Court can no longer be considered to be a debatable issue.
The questions of fact may not require much reasoning and can be collated and correlated by reading the notice and replies, but how a legal controversy is dealt with by Ld. AO, needs to be exhibited and reflected in the form of reasons recorded in the assessment order. That not being done, the Ld. Revisional Authority was right to conclude that Ld. AO has not taken into consideration the relevant and prevalent principles of law as laid by Jurisdictional High Court in favour of Revenue. Assessment in the absence of such reasoning is certainly erroneous and prejudicial to the interest of the Revenue.
Without any doubt the matter in dispute was one which had divergent views. Certainly in one of the connected cases one of the CIT(A) has also given benefit to brother of the assessee but the matter of fact is that as far as the Hon’ble jurisdictional Punjab and Haryana High court’s view is concerned the consistent view was that it is an income to be treated under the head “income from other sources”. The co-ordinate benches at Delhi have also recognized the same. So the ld AO, while exercising powers in regard to compensation for the land falling in the State of Haryana, was supposed to follow the same. If he intended to distinguish it should have been reflected in the order. A case of lack of enquiry by the Ld. AO, as held by the Ld. Revisional Authority, needs to be sustained. Grounds raised by the assessee have no substance.
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2022 (2) TMI 1343 - ITAT MUMBAI
Penalty proceedings u/s 271(1)(c) - Estimation of income - bogus purchases - HELD THAT:- We are of the opinion that when the addition is on estimated basis, penalty u/s 271(1)(c) of the Act cannot be levied on such adhoc estimated income. Disallowance of purchases on ad-hoc basis does not tantamount to furnishing inaccurate particulars of income under the provisions of Section 271(1) (c) of the Act.
AO has not doubted the sales and made disallowance of bogus purchases and we rely on the ratio of the Honorable Jurisdictional High Court in the case of M/s Nikunj Eximp Enterprises [2014 (7) TMI 559 - BOMBAY HIGH COURT] Further the assessing officer made an addition based on the information received from Sales tax department Maharashtra since the said information could not conclusively be proved. DR could not controvert the findings of the CIT(A) with any new cogent evidences or information to take different view - we are not inclined to interfere with the order of the CIT(A) and upheld the same and dismiss the grounds of appeal of the revenue.
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2022 (2) TMI 1342 - ITAT AHMEDABAD
Unexplained credits u/s. 68 - bogus long term capital gain - disallowance of claim of exempted long term capital gain on sale of shares - HELD THAT:- Issue on hand is squarely covered by the order of this ITAT in the group case of the assessee i.e. Smt. Meera Alpesh Kanugo [2022 (9) TMI 809 - ITAT AHMEDABAD] held that the claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker's contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account.
There is nothing on record which could suggest that the shares were never transferred in the name of the assessee. There is also nothing on record to suggest that the shares were never with the assessee. On the contrary, the shares were thereafter transferred to demat account. The demat account was in the name of the assessee, from where the shares were sold. In our understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could never have been transferred to demat account. Shri Akash Agarwal may have been providing accommodation entries to various persons but so far as the facts of the case in hand suggest that the transactions were genuine and therefore, no adverse inference should be drawn.Further, the alleged operators have not named the assessee as a beneficiary in their statements. - Decided in favour of assessee.
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