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2016 (10) TMI 1278 - ITAT JAIPUR
Disallowance u/s 14A - AO non recording satisfaction with regard to the incorrectness of claim of the assessee having regard to the accounts of the assessee - HELD THAT:- As decided in own case even though the AO has made the disallowance by relying on the provisions of section 14A but he did not comply with the conditions as stipulated in section 14A(2). He has not recorded any satisfaction with regard to the incorrectness of claim of the assessee having regard to the accounts of the assessee having no such evidence or material brought to my notice by the D/R which may show that the AO has given a finding on the basis of accounts maintained by the assessee that he is not satisfied with the claim of the assessee.
Even the AO has not recorded the satisfaction as regards to the claim of the assessee. He is bound to compute the disallowance in accordance with such method as may be prescribed. It is the rule 8D which has been notified with effect from 24.03.2008. The assessment year involved is the assessment year 2009-10. No whisper whatsoever by the AO or by the ld. D/R that the AO has computed the disallowance by applying Rule 8D. It is a case where no disallowance can be made. - Decided in favour of assessee.
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2016 (10) TMI 1277 - ITAT HYDERABAD
Transfer Pricing adjustment - Comparable selection - HELD THAT:- Assessee company is engaged in developing software i.e. it is engaged in rendering designing, development and modification services relating to semi conductors for semi-conductor based products and also providing marketing support and financial and administrative support services to its AEs, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Infosys Ltd, Kals Info Systems,Tata Elxsi Ltd,Thirdware Solutions Ltd, Bodhtree Consulting Ltd, Persistent Systems Ltd ,Thinksoft Global Services Ltd, Comp U-Learn Tech India Ltd to be rejected accordingly.
Computation of deduction u/s 10A - HELD THAT:- Exclude telecommunication charges both from export turnover as well as the total turnover for computation of deduction u/s 10A of the Act. We find that this issue is covered in favour of the assessee by the decision Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT].
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2016 (10) TMI 1276 - ITAT INDORE
Unexplained investment u/s 69 - HELD THAT:- The assessee has filed confirmation only on 08.12.2009, which are stereo type letters without PAN thereon. None of creditors is assessed to tax. Details of date money advanced and returned back is not filed nor any interest is charged thereon. It is pertinent to note that these advances were not returned back even after lapse of 4 years. The amount claimed to have been received from 14 creditors is below ₹ 20,000/- which has been intentionally done to escape from receiving the amount by cheques. Even the mode of receiving of amount from Shri Kailash Chand Jain (father) and Smt. Pushpa Jain (mother) ₹ 50,000/- each is also in cash. The onus cast upon the assessee to prove identity, credit worthiness and genuineness of transactions has not been discharged.
Thus, these three ingredients of section 68 of the Act are remained unsatisfied. Further the decision in the case of CIT vs. P. Mohanakala [2007 (5) TMI 192 - SUPREME COURT] and Sumati Dayal vs. CIT [1995 (3) TMI 3 - SUPREME COURT] relied on by the CIT (A) also support the view of lower authorities. In view of these circumstances, the finding of lower authorities are upheld for the addition of and the balance addition is deleted. This grounds of appeal of allowed is therefore, partly allowed.
Unexplained investment u/s. 69 in purchase agreement - HELD THAT:- Shri Santosh Kumar Lalwani had agreed to purchased 1/3rd of land for ₹ 43,27,400/- and paid ₹ 8 lakhs as advance for the same which means that the total value of the said land must be three times of ₹ 43 lakh meaning there by around ₹ 120-130 lakhs. Therefore, in the same way , Shri Vijay Jain, is very likely might have paid 1/5th of as advance as Bayana at ₹ 120/5=24 lakhs or ₹ 20 lakhs ). Since the assessee has failed to produce the agreement for purchase of land with Shri Devidas & others, therefore, we are of the considered view that the lower authorities have justified in making addition of ₹ 20 lakhs on this account. AO has not only made addition based on the statement but also having regards to entire circumstances of the case.
The circumstantial evidence and surrounding circumstances make the view of the AO as correct. We also find mentioned that the purchaser (executors) of said agreement have a written agreement of purchase of said land or executor. We find that in the said agreement, it has been clearly mentioned that the assessee has an agreement by which they have authorised to sell the land and get registered the same in name of prospective buyers. In view of these circumstances, we uphold the finding of lower authorities.
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2016 (10) TMI 1275 - PUNJAB AND HARYANA HIGH COURT
Appointment of an Arbitrator - existence of binding agreement/contract between the parties or not - HELD THAT;- In the instant case, no jurisdiction of the Court was invoked for seeking reference to the arbitrator. There was no participation in the proceedings by respondent No.1, therefore the same would not amount to acceptance of jurisdiction of the arbitrator in any manner. There was no agreement, neither any writing, nor there was any signing of documents between the parties, therefore, there was no concluded agreement/contract between the parties. It is equally true that the new act defined the extent of judicial intervention in the arbitration proceedings. No judicial authority can interfere except where so provided. The object of new act is to encourage resolution of disputes expeditiously and less expensively. When there is an arbitration agreement, the intervention of the Court should be minimal.
The entire controversy hinges upon a fact whether there was a lawful arbitration agreement between the parties or not. In the light of different precedents as discussed above, I am of the view that there was no arbitration agreement between the parties as provided under Section 7 of Arbitration and Conciliation Act, 1996, nor the arbitration agreement was in writing executed between the parties, therefore, a contract with regard to arbitration cannot be presumed. An Agreement which is enforceable in law is a contract. The alleged agreement between the parties is not enforceable in law being not a concluded agreement between the parties.
Section 16 of the Arbitration and Conciliation Act would operate only in the event where there was a concluded agreement between the parties in terms of Section 7 of the Arbitration and Conciliation Act. There was no consensus ad idem between the parties with reference to any terms and conditions of the offer and acceptance.
Revision petition dismissed.
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2016 (10) TMI 1274 - ITAT MUMBAI
Unexplained cash credit u/s. 68 - genuineness of the loan transaction as well could creditworthiness of the lender - HELD THAT:- Once tax-payer files the basic details such as name and address of creditor, PAN, income tax return, confirmation and bank statement, the initial onus gets discharged and if the Revenue doubts the identity and/or creditworthiness of the lender and/or genuineness of the transaction, the onus shifts back to the tax-payer to offer an explanation to the satisfaction of the AO as contemplated u/s 68 so that truth behind the smokescreen could have been unraveled by the AO. In the absence of the same, the AO has the powers to make additions to the income as unexplained cash credit u/s. 68 of the Act because the AO is both an investigator and adjudicator. Thus merely submission of the name and address of the lender, income tax returns, Balance Sheet/statement of affairs, bank statement of the lender is not sufficient as the AO is to be satisfied as to the identity and creditworthiness of creditor as well as to the genuineness of the transaction entered into with the creditor.
As confessed / admitted by the partners of M/s Moxdiam in the statement recorded on oath u/s 131 of the Act that they are persons of meager financial means/resources and several bank accounts were opened by Moxdiam to provide accommodation bills and accommodation entries to various parties in lieu of commission income.
Assessee had stated before us that the admission of the partners of the firm M/s Moxdiam is restricted to providing of accommodation bills for purchase and sale invoices of diamonds and it cannot be extended towards accommodation entries of the nature of loans’ as are extended by Moxdiam to the assessee.
We are afraid that this contention of the assessee cannot be accepted as it is admitted by partners of Moxdiam that the firm is engaged in providing accommodation entries and accommodation bills in lieu of commission income and we cannot give a hyper technical restricted meaning to the words of the partners recorded in the statement as the partners clearly stated and meant that the firm M/s Moxdiam is engaged in activities of providing accommodation entries and accommodation bills to various parties and hair splitting by giving hyper technical restrictive meanings to the words recorded in the statement cannot be allowed as is referred to by the learned counsel for the assessee rather it is to be seen from the perspective of the admission of partners of Moxdiam wherein they have admitted/confessed that the firm Moxdiam is not doing any regular and genuine commercial and business dealings but is engaged in providing accommodation entries and accommodation bills in lieu of commission income, which also stood corroborated by the financial statements of Moxdiam which on perusal clearly reveals that there are no own funds invested by partners in Moxdiam as the capital invested by partners in Moxdiam seen along with their current account will reveal a deficit / debit figure.
Additions made by the AO and sustained by learned CIT(A) are to be affirmed as we do not find any infirmity in the order of learned CIT(A) which we with due respect affirm with respect of raising of loan of ₹ 1.0 crore by the assessee from Moxdiam which is held to be income of the assessee as an unexplained cash credit u/s. 68 of the Act. Consequentially, interest of ₹ 93,000/- provided by the assessee on the said loan also cannot be held to be genuine interest and is ordered to be disallowed as deduction claimed by the assessee. - Decided against assessee.
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2016 (10) TMI 1273 - ITAT PUNE
Valuation of land on conversion into stock u/s 45(2) - reliance on Registered Valuer’s Report - reference under section 55A - HELD THAT:- Reference was made to the valuation officer in order to determine the fair market value as on date of conversion on the pretext that the fair market value as declared by the assessee which was backed by Registered Valuer Report, was higher, which is not correct.
The issue arising in the present appeal is squarely covered by the ratio laid down by CIT Vs. Puja Prints [2014 (1) TMI 764 - BOMBAY HIGH COURT] which in turn has been followed by the Tribunal in Mrs. Anjali Bharat Kabra Vs. ITO [2016 (11) TMI 744 - ITAT PUNE] relating to assessment year 2009-10, order dated 26.08.2016. Accordingly, there is no merit in substitution of fair market value submitted by the DVO since in the pre-amended provisions of section 55A the value lesser than the value declared by the assessee cannot be adopted by way of reference under section 55A of the Act. Reversing the order of CIT(A), the additional ground of appeal raised by the assessee is allowed.
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2016 (10) TMI 1272 - DELHI HIGH COURT
Grant of regular bail - siphoning of funds - investments of projects - It is the grievance of the complainants/investors that more than 60 months have lapsed since their investment, and the accused have not completed the construction at the project sites, let alone delivered possession - allegation of cheating, forgery and criminal breach of trust.
HELD THAT:- The nature of accusations in the present case is very serious and grave. The status report filed by the State on 13.07.2016 discloses that a total of 870 complaints in the subject three FIRS have been filed, and total cheated amount has been calculated to the tune of 380 Cr. which is likely to increase - Evidently, the present case appears to be a multi-victim scam. The applicant accused, as it prima facie appears, has duped more than 1500 investors to invest in his alleged project at Manesar and Gurgaon. This has been solely achieved by painting a rosy picture before the investors of them getting lucrative returns on the investments made. The applicant while presenting various schemes, have depicted association with, and sponsorship from nationalized banks, the veracity of which remains questionable. It further raises suspicion on the conduct of the accused/ applicant, as to why they reduced the sale price consideration in the sale agreements executed between the accused company and the investors. The accused deducted TDS on the assured returns promised, but apparently the same has not been deposited with the Income Tax Department, thus, prima facie, raising a possibility of misappropriation.
Prima facie, there appears to be force in the case of the prosecution that the accused, right from the beginning, had the intention to cheat and defraud the investors and to misappropriate their investments. Moreover, the applicant is accused of cheating in not just the subject FIRs but around 13 other FIRs have been registered against him arising from similar transactions. In light of the above, there can be no doubt that the nature of accusations is serious and weighty in nature.
The Court is conscious of the law that a detailed examination of evidence and elaborate discussion of merits cannot be undertaken, but the Court while exercising its discretion is duty bound to indicate the reasons to conclude why bail is being granted, or refused on prima facie look at the possible evidence and circumstances. The charge-sheet, statements of investors duped, documents seized by the Police, photographs of the projects sites, winding up petitions, prima facie, establish the fraudulent character and dishonest intentions of the accused/ applicant.
The nature and gravity of accusations against the accused is serious. The grant of regular bail in a case involving cheating, criminal breach of trust by an agent, of such a large magnitude of money, affecting a very large number of people would also have an adverse impact not only in the progress of the case, but also on the trust of the criminal justice system that people repose.
Bail application dismissed.
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2016 (10) TMI 1271 - ITAT MUMBAI
Disallowance u/s 14 r.w. Rule 8D - HELD THAT:- It is settled position of law that the provisions of Rule 8D of the I.T. Rules, 1962 are applicable prospectively for and from A.Y. 2008-09 and would not operate for the assessment years prior thereto. In this view of the matter, the learned CIT(A)’s directions to the AO to work out/compute the disallowance under section 14A of the Act by applying Rule 8D of the Rules is erroneous and we therefore delete the same and in the fitness of things, we direct the AO to recompute the disallowance under section 14A of the Act afresh, in accordance with the law prevalent for the year under consideration, after affording the assessee adequate opportunity of being heard and to file details/submissions required in this regard. Grounds I and II of the assessee’s appeal are treated as allowed for statistical purposes.
Disallowance of non-compete fee paid to ex- Directors - HELD THAT:- We find that this issue has been held in favour of Revenue and against the assessee in the decisions of the Coordinate Bench of the Tribunal in the assessee’s own case for A.Y. 2003-04 [2016 (8) TMI 1450 - ITAT MUMBAI] - we uphold the orders of the authorities below and against the assessee. Consequently, ground III of assessee’s appeal is disallowed.
Setting off of losses while computing deduction under section 80HHC - HELD THAT:- We hold this issue against the assessee, and uphold the orders of the authorities below following, inter alia, the decisions of the Hon'ble Apex Court in the case of CIT vs. Shirke Construction Equipment Ltd.[2007 (5) TMI 194 - SUPREME COURT] and J.K. Industries vs. ACIT [2013 (5) TMI 152 - KARNATAKA HIGH COURT].
Deduction of Miscellaneous income while computing deduction under section 80HHC - HELD THAT:- CIT(A) has rejected the assessee’s claim and confirmed the AO’s action holding that there was no direct nexus between the nature of income clubbed under the head ‘miscellaneous income’ and the export business of the assessee, without considering the breakup of the aforesaid income brought on record by the assessee. Following the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2003-04 [2016 (8) TMI 1450 - ITAT MUMBAI] , to which both of us are party, we set aside the finding of the authorities below on this issue and restore this issue to the file of the AO with respect to examination of assessee’s claim of inclusion of ‘miscellaneous income’ and other items while computing the eligible deduction under section 80HHC of the Act. Needless to add, the assessee is to be afforded adequate opportunity of being heard and to file submissions/details in this regard by the AO before adjudicating this issue.
Not allowing set off of incentives against the profits (‘DEPB’/ ‘DDB’) - HELD THAT:- Respectfully following the decision of the Hon'ble Apex Court in the case Avani Exports ( 2015 (4) TMI 193 - SUPREME COURT ) and the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2003-04 (supra), to which both of us are party, we hold that the impugned order of the learned CIT(A) on this issue is unsustainable and reverse the same. Accordingly, we hold this issue in favour of the assessee and consequently allow ground No. VII of assessee’s appeal.
Addition of unutilized Modvat Credit to closing stock - HELD THAT:- We find that, as submitted by the learned counsel for the assessee, the very same issue was considered and held in favour of the assessee and against Revenue by a Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2001-02 held that this amount as added by the assessing officer is not of unutilised Modvat but it was the amount of deposit made by the appellant with the excise authorities. Therefore, there was no reason for making this disallowance by the assessing officer hence this addition is deleted
Deduction under section 80HHC and net interest - HELD THAT:- This issue is well settled by the judicial pronouncements cited as in the case of ACG Associated Capsules (P) Ltd. vs. CIT (2012 (2) TMI 101 - SUPREME COURT ), Shri Ram Honda Power Equipments (2007 (1) TMI 86 - HIGH COURT, DELHI ) and Lalsons Enterprises (2004 (2) TMI 294 - ITAT DELHI-E ) Respectfully following these decisions (supra), we confirm the decision of the learned CIT(A) in holding and directing the AO, that for the purpose of computing the deduction under section 80HHC if the Act, the net interest is to be considered.
‘Book Profits’ under section 115JB - Adjustment for provisions - HELD THAT:- We find, as submitted by the learned D.R., that this issue was considered and adjudicated in favour of the Revenue, by Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2003-04 [2016 (8) TMI 1450 - ITAT MUMBAI] in view of the amendments to the provisions of section 115JB of the Act being operational retrospectively, we are unable to sustain the impugned order of the learned CIT(A) on this issue and therefore set aside/reverse his finding in the matter and restore that of the AO. Consequently, Revenue’s ground No. 4 is allowed.
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2016 (10) TMI 1270 - ITAT KOLKATA
Addition u/s 14A read with Rule 8D for earning exempted income - HELD THAT:- As brought to our notice that the Hon’ble Delhi High Court in the case of Joint investments Pvt. Ltd. Vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT] has taken the view that the disallowance u/s 14A of the Act cannot exceed the exempt dividend income. In view of the aforesaid judicial pronouncement, we are of the view that there is no merit in ground nos.1 and 2 raised by the Revenue.
Disallowance of interest on loan which was not utilized for business purpose - HELD THAT:- AO has accepted that the investments made out of borrowed funds in quoted shares as use of borrowed funds for the purpose of business of the company. However to the extent borrowed funds were used in making investments in unlisted/unquoted companies, the AO has treated the same as not for the purpose of business of the Assessee. Such a distinction was rightly held by the CIT(A) to be not proper. We therefore do not find any merit in Gr.No.3 raised by the Revenue. The same is accordingly dismissed.
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2016 (10) TMI 1269 - ITAT CHENNAI
Addition u/s.41(1) r.w.s 28(iv) - assessee had availed deferred scheme for sales tax liability called interest free sales tax deferral scheme introduced by Tamil Nadu Government in May, 1990 - CIT- A deleted addition - Option to persons taking the benefit of deferral scheme, to pay the deferred tax in one lumpsum at the discounted rate of 8% as availed by assessee - HELD THAT:- As decided in M/S MCDOWELL & CO LTD NOW KNOWN AS UNITED SPIRITS LTD [2014 (11) TMI 272 - KARNATAKA HIGH COURT] the tax collected was deemed to have been paid and, therefore, the tax so collected cannot be construed as income in the hands of the assessee. The tax so retained by the assessee is in the nature of a loan given by the Government as an incentive for setting up the industrial unit in a rural area. The said loan had to be repaid after 15 years. Again, it is an incentive.
By a subsequent scheme, a provision was made for premature payment. When the assessee had the benefit of making the payment after 15 years, if he is making a premature payment, the said amount equal to the net present value of the deferred tax was determined and on such payment the entire liability to pay tax/loan stood discharged. Again, it is not a benefit conferred on an assessee. Therefore, section 41(1) of the Act is not attracted to the facts of this case. Hence, the Tribunal was justified in holding that there is no liability to pay tax. - Decided against revenue.
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2016 (10) TMI 1268 - SC ORDER
Constitutional and fundamental right - right to consume alcohol - violation of the right to privacy - HELD THAT:- As some of the respondents have entered appearance, a copy of the special leave petitions be served on them and no further notice need be issued on the said respondents. The other respondents be served in the usual course.
Let the matter be listed after ten weeks.
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2016 (10) TMI 1267 - ITAT MUMBAI
TP Adjustment - selection of comparable - functionally dissimilarity - HELD THAT:- A company engaged in investment banking activity cannot be compared to a company providing investment advisory services.
We have further noted that the Tribunal, Delhi Bench, in Mckinsey Knowledge Centre India Pvt. Ltd. [2015 (3) TMI 1226 - DELHI HIGH COURT] has held that if a company is functionally similar, only because of its low turnover, it cannot be rejected if such turnover filter was not applied either by the assessee or by the Transfer Pricing Officer.
Companies functionally dissimilar with that of assessee need to be deselected from final list.
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2016 (10) TMI 1266 - ITAT HYDERABAD
TPA - comparable selection - functional similarity - HELD THAT:- Most of the comparables adopted by TPO does not have segmental information. Without the segmental information on record, it is difficult to adopt the filter of 75% of revenue from services. We are not sure, how the TPO has adopted this filter without this basic information. Accordingly, we direct the TPO to collect information from the respective comparables and adopt this filter with the segmental information. TPO can determine the comparables by adopting the above filter. Hence, we find it appropriate to remit this matter back to the file of AO/TPO to determine the comparables afresh by adopting the above filter. The assessee may be given proper opportunity of being heard. Accordingly, grounds raised by the assessee in this regard are allowed for statistical purposes.
Reimbursement of income and expenditure - HELD THAT:- This issue is squarely covered by the decision of the coordinate bench of this Tribunal in assessee’s own case for AY 2007-08 [2014 (4) TMI 285 - ITAT HYDERABAD] as per segmental financials the margin in respect of transactions with AEs is 39.26% as against margin of 6.30% in respect of non AE transactions. Therefore, when segmental details have been furnished by the assessee the TPO should have considered them properly instead of rejecting them with broad and sweeping allegations. It seems, the TPO has not properly allocated the segmental expenditures. If the bad debts etc. are not related to AE transactions they cannot be considered as part of operating cost for determining ALP of the transactions with AE. Similarly, reimbursement on cost to cost basis also cannot be included in the operating cost. Since the issue in the current AY is identical to that of AY 2007-08, respectfully following the decision of the coordinate bench in that year, we remit the issue to the file of the TPO/AO to decide the issue following the directions given by the Tribunal in AY 2007-08.
Addition of corporate guarantee - HELD THAT:- As decided in assessee own case since the issue in the present case is identical to the issue decided in case of Infotech Enterprises [2014 (1) TMI 1363 - ITAT HYDERABAD] following the same, we also remit this issue to the file of the TPO to decide the quantum of corporate guarantee rates accordingly. If the assessee is able to bring on record any comparables with regard to corporate guarantee, the TPO may also consider the same while determining ALP of corporate guarantee. The TPO must provide a reasonable opportunity of being heard to the assessee before deciding the issue. This ground is allowed for statistical purposes.
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2016 (10) TMI 1265 - ITAT AHMEDABAD
Written off in the books of account of the assessee u/s 36(1)(vii) - HELD THAT:- In the light of Hon’ble Supreme Court in the case of TRF Limited vs. CIT [2010 (2) TMI 211 - SUPREME COURT] which holds that a mere write off of the bad debts in the books of account, as irrecoverable, is sufficient to claim deductions as bad debts.
CIT(A) was, therefore, quite justified in granting relief to the assessee on this issue. As far provision of ₹ 88,38,79,657/- is concerned, undoubtedly there is nothing on record to show, or even indicate, that these amounts have actually been written off by squaring up individual accounts of the debtors, but what is not in dispute that the provision in question has been debited to the profit and loss account, and the amount of provision is reduced from the loans and advances appearing in the balance sheet. With these facts having been verified by us with respect to material on record, we find that the issue is squarely covered in favour of the assessee in the case of CIT vs. Nawanagar Co-operative Bank Limited [2014 (7) TMI 911 - GUJARAT HIGH COURT]. - Decided in favour of assessee.
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2016 (10) TMI 1264 - ITAT CHENNAI
Disallowance u/s.14A - main contention of the ld.A.R before the DRP is that the assessee company has made strategic equity investment in Tata Tele Services Ltd.,(TTSL), an unregistered telecom company of the Tata Group and that TTSL is a huge loss making company and hence, no dividend was received from it during the year - HELD THAT:- In this case the undisputed facts are that the assessee not able to show that sources of funds were diverted into investment in shares, which has not yielded any interest or dividend income, even if assessee earned dividend income, it is exempted u/s.10(33) of the Act from the tax liability and the same cannot be computed under the head “income from other sources”. The expenditure relating to exempted income is not liable for deduction in view of Sec.14A of the Act. In view of this, the claim of assessee is only untenable and decision relied upon by the ld.A.R before the Ld.CIT(A) have no application to the facts of the case.
The jurisdictional High Court in the case of CIT Vs. Seshasayee Paper And Boards Ltd. r [1984 (4) TMI 17 - MADRAS HIGH COURT] wherein held that the borrowing has not been made exclusively and wholly for the purpose of earning interest, in which case alone it should be taken as income, which should be deducted from the interest receipts. Also in the case of Pradeep Kar Vs. ACIT [2009 (6) TMI 331 - KARNATAKA HIGH COURT] wherein held that dividend income being exempt u/s.10(33) and not assessable to tax, assessee was not entitled to deduction for interest in view of Sec.14A of the Act. Accordingly, this ground of the assessee stands dismissed.
TP Adjustment - interest received at 6% p.a. from his wholly owned subsidiary India Telecom Holdings Ltd, Mauritius - HELD THAT:- The similar issue came up for consideration before the Mumbai Bench of Tribunal in the case of DCIT (International Taxation) Vs. Development Bank Of Singapore [2013 (8) TMI 175 - ITAT MUMBAI] considering the LIBOR as one comparable uncontrolled interest rate, in our considered opinion is a restricted and narrow approach incapable of acceptance. Since the LIBOR is not a rate in itself at which some bank is willing to borrow or lend, but an average of rates at which various panel banks offer to borrow or lend inter bank offers, the same cannot be characterized as one price determined under the comparable uncontrolled price method. It is required to be considered as arithmetical mean of such prices, thereby making available the option of plus minus 5 percent variation to the assessee. As the present addition made by the AO was the outcome of not allowing plus minus 5 percent cushion, which in our considered opinion is richly due to the assessee, we hold that the learned CIT(A) was justified in deleting this addition - Decided in favour of assessee.
Transfer Pricing adjustment in respect of guarantee fee - HELD THAT:- This issue came up for consideration before this Tribunal in the Case of Redington India Ltd. Vs. JCIT [2014 (10) TMI 669 - ITAT CHENNAI] relying on BHARTI AIRTEL LIMITED (BHARTI CRESCENT) VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX RANGE 2, NEW DELHI [2014 (3) TMI 495 - ITAT DELHI] that providing corporate guarantee does not involve any cost to the assessee and it is not an “international transaction”, even under the definition of the said term as amended by the Finance Act, 2012, as it does not have any bearing on profits, income, losses or assets of the assessee company. - Decided in favour of assessee.
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2016 (10) TMI 1263 - RAJASTHAN HIGH COURT
Accrual of income - demurrage/wharfage charges accrued to the assessee particularly when the assessee followed mercantile system of accounting - HELD THAT:- Taking into consideration the evidence on record, we are of the opinion that the Tribunal while considering the issue has rightly appreciated and has rightly allowed the appeal preferred by the assessee. Assessee was a Government Corporation and has shown the liability in spite of stay order granted by the Court and in our view, the view taken by the Tribunal is just and proper. The issues are required to be answered in favour of the assessee and against the Department.
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2016 (10) TMI 1262 - KERALA HIGH COURT
Deduction u/s 80P - HELD THAT:- Questions under Section 80P can also be considered only in the light of the question whether interest derived by the society is income from other sources, we are of the view that it is necessary that the Tribunal re-considers all the issues arising for decision in these appeals, in particular, the applicability of circular No.18/2015 dated 02.11.2015 and the question of applicability of the ratio of the decision in Chirakkal Service Co-operative Bank Limited [2016 (4) TMI 826 - KERALA HIGH COURT] as to the effect of Section 80P of the Income Tax Act on the appellants. To enable a comprehensive consideration by the Income Tax Appellate Tribunal of all the issues arising for decision in these appeals, in the appeals before the Tribunal, in the light of what we have stated above, the impugned orders of the Tribunal are vacated and the cases are remitted to the Tribunal for re-consideration.
Parties are directed to mark appearance before the Tribunal on 15.11.2016
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2016 (10) TMI 1261 - ITAT COCHIN
Disallowance of benefit of deduction u/s. 80P(2) - assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969 - HELD THAT:- Admittedly, the assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate issued by the Registrar of Cooperative Societies to the above said effect is placed on record. The Hon’ble High Court of Kerala in the case of Chirakkla Service Coop Bank Ltd. [2016 (4) TMI 826 - KERALA HIGH COURT] had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2). - decided in favour of assessee.
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2016 (10) TMI 1260 - ITAT MUMBAI
Levy of penalty u/s 271(1)(b) - alleged failure to comply with the notice issues under section 142(1) - delay on the part of the assessee in complying with the information called for finalizing the assessment - HELD THAT:- The assessments for all the captioned assessment years have been completed under section 143(3) r.w.s.153A of the Act and, therefore, the initial non-compliance with the notice issued under section 142(1) of the Act can be understood to be made-up subsequently and, therefore, the levy of penalty under section 271(1)(b) of the Act is not justified. See AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST. VERSUS ASSISTANT DIRECTOR OF INCOME-TAX. [2007 (8) TMI 386 - ITAT DELHI-G] - Decided in favour of assessee.
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2016 (10) TMI 1259 - ITAT DELHI
Addition u/s 69 - unexplained investment - reference of matter to the District Valuation Officer (DVO) for estimation of investment made in land at fair market value - investment made by the assessee in purchase of 11 plots in the course of its business - HELD THAT:- A careful perusal of the provision divulges that in order to invoke this provision, it is sine qua non that the assessee must have made investments which are not recorded in the books of account. The factum of the assessee having made investment should be first proved by the AO, only then the burden shifts on the assessee to prove the source of investment.
Such investment outside the books of account must be positively proved by the AO and not only inferred from the attending facts. If such an investment outside the books is not proved, the assessee cannot be called upon to prove the source of such a hypothetical investment. Apart from relying on the DVO’s report, the AO has not brought on record any other material to indicate that the assessee did make investment in purchase of plots over and above that declared in the books of account.
The legislature is also not oblivious of the practice of understatement of consideration in the transactions of immovable properties in certain cases. That is why, apart from inserting section 50C, which is applicable in the hands of a seller, section 56(2)(vii) was introduced w.e.f. 1.10.2009 for charging to tax the difference between stamp value and the declared consideration in the hands of the buyer, if such difference is more than ₹ 50,000/-. As this is a substantive provision inserted w.e.f. 1.10.2009, the same cannot be applied to the assessment year 2006-07 under consideration. Ex consequenti, the entire addition made by the AO is deleted. The ground taken by the assessee is allowed and that by the Revenue is dismissed.
Addition on account of stamp duty and registration charges - AO applied 8% rate on the alleged excess investment made by the assessee, the CIT(A) proportionately reduced the same. In view of the fact that the substantive addition u/s 69 on account of the alleged investment made by the assessee has been deleted in an earlier para, this consequential addition is also liable to be deleted. - Decided against revenue.
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