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2020 (11) TMI 885
Dishonor of Cheque - privity of contract - main contention urged by the accused Company is that there was no transaction between the complainant and the accused - Whether the appellate Court has committed error in reversing the finding of the trial Court in coming to the conclusion that the accused ppersons-DWs.1 and 2 are not liable to pay the amount to the complainant?
HELD THAT:- It is clear that the Court has to see the wisdom of the legislature in bringing the enactment and while interpreting the law, the Court has to take note of the object and statement in bringing the enactment and the courts are meant to interpret the law with the object of special enactment.
This Court has to draw the presumption in favour of the complainant under Section 139 of the Act. Accused Nos.1 and 2 have stepped into the witness box and adduced the evidence. The answers elicited from the mouth of D.Ws.1 and 2 is clear that they have issued the subject matter of cheque Ex.P.1 in discharge of the liability in respect of M/s. IGSL, wherein they were the Directors. The accused persons though set up the specific defence that the cheque was misused by collecting the same from the former employee of M/s. IGSL, the same has not been substantiated by placing any cogent evidence before the Court. The accused failed to place any plausible evidence before the Court to rebut the evidence of the complainant and hence the accused persons have failed in discharging their liability and discharging their burden rebutting evidence of the complainant. The Appellate Court has committed an error in coming to the occlusion that there was no legally recoverable debt and there was no transaction between the complainant and the accused and the admitted document is in respect of ₹ 86,00,000/- and the cheque is for an amount of ₹ 2,30,00,000/-. It is emerged in the evidence that they agreed to pay interest at the rate of 9% and in terms of memorandum to pay an amount of ₹ 36,00,000/- and also to issue the shares in respect of ₹ 50,00,000/-.
It is the burden on the accused to show as to under what circumstances he has issued the cheque to the tune of ₹ 2,30,00,000/-, if there was no liability and the same is also not discharged and the accused has not explained in his evidence what made them to issue the cheque to the tune of ₹ 2,30,00,000/-. When such being the case, the Appellate Court ought not to have proceeded to make such an observation and acquit the accused. The Appellate Court failed to draw the presumption and nothing has been discussed with regard to the presumption available in favour of the complainant and whether the accused has rebutted the presumption has also not been discussed in the judgment. Hence, the impugned judgment of the Appellate Court requires to be interfered with and liable to be set aside.
Having taken note of the fact that the cheque was issued in 2006 and now we are in 2020, it is not appropriate to interfere with the judgment of the Trial Court. Hence, there are no reasons to interfere with regard to the quantum of amount to be paid, as directed by the Trial Court.
Appeal allowed.
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2020 (11) TMI 884
Dishonor of Cheque - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - Power of Court to try cases summarily - Whether in a case for offence punishable under Section 138 of the Negotiable Instruments Act, 1881, the Court of Magistrate exercising its power under the second proviso to Section 143 (1) of the Negotiable Instruments Act, if it appears to the said Court that it is undesirable to try the case summarily, after recording reasons, can proceed to try/hear the said case as a warrant case?
HELD THAT:- Only in limited cases where the second proviso to sub-section (1) of Section 143 of the said Act 1881 is applicable, the learned Magistrate can convert the case into a summons case. In view of overriding effect of sub-section (1) of Section 143 of the said Act 1881, a case under Section 138 is not a summons case. It must be tried summarily unless it can be tried as summons case by exercising the power under second proviso to sub-Section (1) of Section 143. The power under Section 259 of Cr.P.C can be exercised only in a case which is triable as a summons case. A case under Section 138 of the said Act of 1881 is not a summons case in view of the fact that sub-section (1) of Section 143 overrides the provisions of Cr.P.C. Therefore, Section 259 of Cr.P.C, cannot be allowed to be invoked by the learned Magistrate after passing an order under second proviso to sub-section (1) of Section 143 of the said Act of 1881. The object of introducing Chapter XVII into the said Act of 1881 containing Sections 138 to 142 by the Act of 66 of 1988 with effect from 1st April 1989 was to enhance the acceptability of the cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing/dishonor of cheques.
If the learned Magistrates are allowed to invoke power under Section 249 of Cr.P.C by adopting the procedure for a warrant case, it will completely defeat the very object of introducing Chapter XVII, as there will not be an expeditious disposal of trial in a complaint filed alleging an offence punishable under Section 138 of the said Act of 1881. Therefore, the power of the learned Magistrate under the second proviso to sub-section (1) of Section 143 of the said Act of 1881 is confined only to converting a complaint under Section 138 of the said Act of 1881 into a summons triable case. The power conferred on the Magistrate under the second proviso to sub-section (1) of Section 143 does not enable the learned Magistrate to exercise power under Section 259 of Cr.P.C and to convert a complaint filed alleging an offence under Section 138 of the said Act of 1881 into a warrant triable case.
If the learned Magistrates are allowed to convert the complaints filed alleging an offence punishable under Section 138 of the said Act of 1881 into a warrant triable case, the consequence will be disastrous as the trial will be prolonged. Lot of time will have to be devoted for hearing of discharge application and for framing of charge. It will amount to defeating the very object of introducing Chapter XVII containing Sections 138 to 142 in the said Act of 1881 with effect from 1st April 1989.
The power of the learned Magistrate to convert the trial of a complaint under Section 138 of the said Act of 1881 under the second proviso to sub-section (1) of Section 143 is confined only to converting the case into a summons triable case - Application disposed off.
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2020 (11) TMI 883
Dishonor of Cheque - Section 138 of the Negotiable Instruments Act, 1981 - existence of debt or not - indemnification of debts - receipt of demand notice - rebuttal of presumption - whether explanation offered by the petitioner is enough to disprove the statutory presumptions under Sections 138 and 139, NI Act? - HELD THAT:- In the case of Hiten P. Dalal [2001 (7) TMI 1172 - SUPREME COURT] it has been held by the Apex Court that the presumptions to be drawn by the court under Sections 138 and 139, NI Act are presumptions of law which cast evidential burden on the accused to disprove the presumptions.
In the instant case, apparently the accused petitioner did not lead any evidence in rebuttal of such statutory presumptions. He has also failed to bring on record such facts and circumstances which would lead the courts below to believe that the liability, attributed to the accused petitioner was improbable or doubtful.
Apparently there is no reason to disbelieve the case of the complainant. The explanation offered by the accused petitioner on the other hand is not founded on proof and it does not stand to reason. The object of statutory notice is to protect an honest drawer of the cheque by providing him a chance to make the fund sufficient in his bank account and correct his mistake. The accused petitioner could have availed this opportunity by accepting the demand notice instead of repeatedly avoiding its service. He could have accepted the notice and projected his case that he already made the repayment of the loan, had this case of him been true. Therefore, it can be safely held that the prosecution successfully discharged its burden in proving the case against the petitioner with the help of the statutory presumptions under the NI Act, and the accused has failed to rebut those presumptions and prove the contrary by offering provable explanation founded on proof.
Service of notice - HELD THAT:- The complainant has led convincing evidence to prove that the postman visited the house of the accused at the known address on 4 dates. Every time the postman was told by the house inmates that he was out of station. The fact is proved by the report [Exbt.4 series] given by the postman. From the overall conduct of the accused, it is clear that he wanted to avoid the service of the notice - it cannot be said that the demand notice was not served on him.
This court is of the considered view that the impugned judgment dated 02.11.2017 passed by the learned Sessions Judge of Gomati Judicial District at Udaipur in Criminal Appeal No.47(3) of 2015 whereby he affirmed the conviction of the accused petitioner and modified the sentence passed by the learned trial court does not call for any interference - conviction and sentence of the accused petitioner is upheld. He is directed to deposit the fine of ₹ 4,00,000/- only in the court of the learned Sessions Judge in Gomati Judicial District at Udaipur in terms of the modified sentence within a period of 02 months for disbursement to the complainant respondent namely Shri Tanmoy Krishna Das, failing which the accused petitioner will suffer the default sentence in terms of the said judgment and order of the learned Sessions Judge.
Criminal Revision Petition stands dismissed.
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2020 (11) TMI 882
Recovery of Loan - petitioner was extended facility of loan on finance of a vehicle by the informant, who is a Collection Manager - It is submitted that if there are any dues against the loan extended in favour of petitioner, then the finance company is having cheques in their possession, which if are dishonored, then the informant has a remedy under Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- FIR has been lodged for cheating and criminal misappropriation of the hypothecated property. Prima facie it cannot be said that no cognizable offence is made out. Hence, no ground exists for quashing of the F.I.R or staying the arrest of the petitioner.
The Full Bench of this Court in Ajit Singh @ Muraha v. State of U.P. [2006 (7) TMI 723 - ALLAHABAD HIGH COURT] reiterated the view taken by the earlier Full Bench in Satya Pal v. State of U.P. [1999 (9) TMI 997 - ALLAHABAD HIGH COURT] after considering the various decisions including State of Haryana v. Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT] that there can be no interference with the investigation or order staying arrest unless cognizable offence is not ex-facie discernible from the allegations contained in the F.I.R. or there is any statutory restriction operating on the power of the Police to investigate a case - From the perusal of the FIR, prima facie it cannot be said that no cognizable offence is made out. Hence, no ground exists for quashing of the F.I.R or staying the arrest of the petitioner.
Petition dismissed.
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2020 (11) TMI 881
Deduction under sections 80I/ 80IA - whether “Lean gas” is manufactured/ produced only at the two LPG Plants at Vaghodia (Gujarat) and Vijaipur (MP) for the purpose of allowing deduction - HELD THAT:- As decided in own case [2020 (11) TMI 871 - ITAT DELHI]appellant is eligible to the deductions/tax holding u/s 80HH/80I and 80IA of the Act on lean gas at the stage of customer terminals.
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2020 (11) TMI 880
Profiteering - Proceedings before the National Anti-profiteering Authority - section 171 of the Goods and Services Tax Act - main contention of the Petitioner is of violation of the principles of natural justice - It was held by High Court that The term profiteering, under the Act and Rules, is used in a pejorative sense. Such a finding can severely dent the business reputation. The Authority is newly established. Therefore, as a guidance to this Authority, highlighting the importance of fair decision-making is necessary.
HELD THAT:- Considering the fact that after the impugned order, the matter has already proceeded before the authority - There is no need to interfere with the present SLP.
SLP disposed off.
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2020 (11) TMI 879
Detention of goods alongwith vehicle - expired E-Way bill - HELD THAT:- The learned counsel for the petitioner submits, however, that there is an issue regarding the legality of inclusion of the cess component in the quantification of the amount liable to be paid under Section 129 of the GST Act, the respondents are directed to release the goods and vehicle on the petitioner furnishing a Bank guarantee for the amount demanded in Ext.P10 order.
Petition disposed off.
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2020 (11) TMI 878
Decision to be made on petitioner's representation - HELD THAT:- This Court directs the Central Board of Indirect Taxes (CBIC) to decide the petitioner’s representation dated 30th June, 2020 along with the additional representation to be made within two weeks, within eight weeks from the date of filing of the additional representation. All the rights and contentions of the parties are left open.
Petition disposed off.
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2020 (11) TMI 877
Grant of Anticipatory Bail - allegation of illegal input tax credit taken by the M/s Milk Food Ltd. - fake form created for passing fake credit by issuing Bogus invoices - It is contended by Ld. Defence counsel that despite the fact that adjudication in this case is yet to be carried out despite that accused persons are ready to deposit 10% of the total tentative liability which has been allegedby the department by way of its reply. In support of his averment Ld. Counsel has also relied on the judgment of Hon'ble Supreme Court in C. Pradeeep Petitioners(s) v. The Commissioner of GST and central Excise, Selam and Anr. [2019 (11) TMI 659 - SUPREME COURT]
HELD THAT:- Admittedly the total amount as liability of the of the applicants is yet to be adjudicated and assessed. Liability which has been raised by the department is the tentative where show cause notice is yet to be issued and adjudication is still due. Such proceeding will take considerable period of time. The firm involved in this case is stated to be a 50 years old firm and applicants are responsible for the running the firm being it’s employees at senior positions. Lability is yet to be ascertained, only a tentative availment of ITC of GST has been averred, even as on today it is not sure that the entire amount of ICT has been availed by the accused firm alone as involvement of other firms also been averred. Apart from this, there is nothing on record to show that applicant has been a habitual offender. It has also not been contended that there is any likelihood of their absconding from the country, investigation in this case still at the initial stage and the evidence which is required to be collected during the course of investigation is primarily documentary in nature. The presence of accused can be secured by imposing stringent condition upon the applicant, so that, they may not flee from the investigation and cooperate in the same as and when directed by the department.
A sum of Rs ₹ 4.5 crores already deposited out of total sum of Rs ₹ 85.4 crores. Moreover, the purpose of investigation and fixing the liability of the petitioner is to secure the payment of GST, and also to deprecate the false claim of ITC and the object of statute can be secured by directing the applicant to deposit the amount in terms of the liability - The applicants shall deposit a total sum of ₹ 10 crores, out of the total liability, within 10 days from today to the commissioner CGST/ competent Authority
In these circumstances, it is directed that in the event of arrest of the applicants namely Naval Kumar, Sanjeev Kothiala, Harmesh Mohan Sood and Sudhir Awasthi, they be released on bail on furnishing personal bond in the sum of ₹ 2 lacs each with surety of like amount to the satisfaction of IO/Commissioner, GST subject to the conditions imposed.
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2020 (11) TMI 876
Validity of Section 40(a)(iib) - vires of Section 40(a)(iib) - HELD THAT:- The stage at which the appellant approached the High Court and challenged the vires of Section 40(a)(iib) of the Income Tax Act can be said to be an appropriate moment. Therefore, the High Court ought to have decided the issue with respect to the challenge to the vires of Section 40(a)(iib) of the Income Tax Act on merits. The High Court has failed to exercise the powers vested in it under Article 226 of the Constitution of India by not deciding the writ petition on merits and not deciding the challenge to the vires of Section 40(a)(iib) of the Income Tax Act on merits.
As the High Court has not decided the issue with respect to vires of Section 40(a)(iib) of the Income Tax Act on merits, the matter is required to be remanded to the High Court to decide the writ petition on merits and decide the question with respect to challenge to the vires of Section 40(a)(iib) of the Income Tax Act on merits.
The present appeal succeeds. The impugned judgment and order passed by the High Court is hereby quashed and set aside and the matter is remitted to the High Court to decide the writ petition on merits with respect to challenge to the vires of Section 40(a)(iib) - However, it is made clear that we have not expressed any opinion on merits with respect to legality and validity of Section 40(a)(iib) of the Income Tax Act and we have remanded the matter on the aforesaid ground alone.
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2020 (11) TMI 875
Criminal complaint u/s 276-D - separate criminal complaints u/s 276-C (1) and Section 277 - Seeking clubbing of the three complaints and joint trial - information was received from the Government of France that petitioner is having an account in HSBC Bank, Zurich, Switzerland with the mala fide intention to evade tax and to hide money transactions - HELD THAT:- The petitioner is facing three separate trials in all the three complaints before the same Magistrate for allegedly not declaring the fact of having a foreign account to the Income Tax authorities, though the material and evidence relied upon by the respondent/department is similar in all the three complaints.
Whether the petitioner is holding a foreign account or not is a matter of trial in the first complaint and the assumption that he holds an undisclosed foreign account, which forms basis of other two complaints, is also subject matter of trial.
The respondent has preferred these complaints on the very same material, evidence and documents and allegations in all the three complaints are to a large extent quite same. The petitioner is, thus, facing three separate trials in all the three complaints before the same Magistrate for not declaring the fact of having a foreign account to the Income Tax Authorities.
The ingredients of Section 220 of Cr.P.C. have been defined in Chandni Srivastava Vs. CBI & Ors. [2016 (2) TMI 1289 - DELHI HIGH COURT] in which it was held that Sec. 220 of the Cr.P.C. permits of one trial even if many offences are committed, if such offences form part of the same transaction, the rationale for such an exception being that in such circumstances, separate trials may lead to conflicting judgments.
The three complaints in fact are a part of the same transaction. The first complaint has been filed on the assumption that petitioner is holding an undisclosed foreign account and two subsequent complaints are nothing but to arrive at a figure to meet the ingredients of the first offence. The chart given above reveals that the allegations, documents and nature of evidence are same in all the three complaints. In these circumstances, it will be in the interest of justice to have a common trial for all the three complaints.
This petition is allowed. The order dated 30th June, 2018 passed by the Ld. Trial Court rejecting the application of the petitioner for clubbing of the three complaints and joint trial is set aside
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2020 (11) TMI 874
Expenditure incurred toward payment of voluntary retirement compensation of the employees taken over - As per revenue Expenditure not incurred solely and exclusively for the purpose of business - assessee formulated the scheme wherrein sum was paid as retirement benefit to the employees who availed benefit of the scheme not only for past services but also for remaining years of service with the company - HELD THAT:-Scheme was admittedly sanctioned by the Chief Commissioner for the exemption under Section 10(10C) of the Act and it was a contractual obligation and was an ascertained liability. It is also pertinent to mention here that the genuineness of the scheme was not doubted by any of the authorities, rather the same was approved by Chief CIT.
CIT(Appeals) as well as the tribunal held that payment of compensation under the scheme was to induce workmen to retire prematurely and the decision of the assessee was purely on the ground of commercial expediency to curtail the expenditure in future and to facilitate for carrying on the business. Thus, the expenditure incurred under the scheme has been treated as revenue expenditure.
It is pertinent to mention that Supreme Court in 'EMPLOYERS IN RELATION TO THE MANAGEMENT OF INDIAN CABLE CO[1972 (4) TMI 100 - SUPREME COURT] has also held that expenditure incurred by the company under the scheme has to be treated as an item of expenditure incurred by the company on the ground of commercial expediency and the same is allowable under Section 37(1) of the Act. In view of aforesaid enunciation of law by the Supreme Court, the expenses incurred by the assessee under the scheme have been incurred solely and exclusively for the purposes of business and are entitled for deduction under Section 37(1) of the Act. - Decided in favour of assessee.
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2020 (11) TMI 873
Treatment of sales as income from unexplained source - Allegation that, Assessee had created a false business with the objective of laundering its unaccounted income is based on the enquiries conducted by the AO under Section 133B - Assessee had failed to appear in person even after being summoned under Section 131(1) of the Act to clarify the position - HELD THAT:- Quantum figure and the opening stock which stood accepted in the earlier years had to be taken as actual stock available with the Respondent-Assessee - the sales made by the Respondent-Assessee out of its opening stock were not treated as unexplained income, to be taxed as income from other sources. It thus manifests that the learned ITAT has taken into consideration the entire material placed on record including the report of the AO. ITAT has applied the rule of consistency and rejected the enquiry made by the AO in the relevant assessment year.
Rule of consistency is a well-established and recognised principle applicable to the Income-Tax proceedings. Pertinently, the Respondent-Assessee had closed his business in July, 2015 after selling all the stocks and the survey carried out at a later stage would not have strong evidentiary value. Besides, all these aspects are completely factual in nature and we are unable to find any perversity in the impugned order. The factual findings recorded by the Income-Tax authorities, have been examined by the last fact-finding authority i.e. the learned ITAT. In absence of any perversity in the impugned order, we are not inclined to entertain the present appeal, which urges questions of law that are entirely resting on findings of fact.
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2020 (11) TMI 872
Capital gain computation - amenities charges claimed by the assessee as part of cost of acquisition of the flat - Stamp duty paid towards cost of acquisition and also the transfer charges paid to the society inclusion - HELD THAT:- This issue had already travelled to the ITAT before. The ITAT had principally agreed with the assessee’s claim but had directed the authorities below to examine whether the similar agreement had been entered for amenities by other flat owners. The objection of the authorities below towards the veracity of agreement for the amenities had already been rejected by the ITAT.
Upon subsequent enquiry the AO got information that 33 of the flat owners have also entered into such amenities agreements. Despite this information the authorities below disallowed the assessee’s claim by holding that the veracity of the same was not established. We note that the veracity of the claim was already established by the agreement already submitted by the assessee earlier which the ITAT has accepted.
The matter was only remanded to find out the position of other flat owners. From the enquiry of the authorities below it came to light that 33 other flatters had entered into similar amenity agreement. In such circumstances in our considered opinion the authorities below should have followed the ITAT order and allowed the assessee’s claim of amenities charges as part of cost of the position. This position is further fortified that the amenity charges had already been paid and the same was appearing in the balance sheet of the assessee. Accordingly, in our considered opinion the denial of the assessee’s claim towards amenities charges paid as part of cost of acquisition is not sustainable. Accordingly set aside the orders of authorities below on this issue and decide the issue in favour of assessee.
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2020 (11) TMI 871
Deduction u/s 80IA - second round of proceedings - AO once again denied the claim of deduction in respect of profits from production of lean gas/processed natural gas at various customer terminals - Whether lean gas was manufactured/produced at the two LPG plants at Vijaipur and Vaghodia and not at customer terminals as claimed by the assessee? - activities undertaken by the appellant at its customer terminals did not constitute “manufacture or production of any article or thing”, so as to be eligible for deduction under sections 801, 80IA and 80HH or not? - HELD THAT:- As decided in own case [2020 (10) TMI 1125 - ITAT DELHI] we are of the considered view the appellant is eligible to the deductions/tax holding u/s 80HH/80I and 80IA of the Act on lean gas at the stage of customer terminals.
Claim of deduction in respect of interest on fixed deposits, bonds etc. Interest on employees, loans and advances, interest on customer outstanding and miscellaneous income - HELD THAT:- As decided in own case [2020 (10) TMI 1125 - ITAT DELHI] Assessee has produced all the relevant evidence as regards to how the scrap sale is derived from the industrial undertaking. As regards to interest on fixed deposits, various decisions of the Hon’ble High Court categorically held that the deduction in respect of interest on fixed deposits under Section 80IA is allowable. The revenue has not pointed out as to why the same should be denied to the assessee. The case laws given by the Revenue in fact reiterate the stand of the assessee. Hence, it is pertinent to remand back the matter to the file of the AO and we direct the Assessing Officer to allow deduction in respect of interest on fixed deposits under Section 80IA - interest on employees’ loans and advances is concerned, the interest on loan provided to employees in our opinion is inextricably linked to the business of the assessee and constitutes business income eligible for deduction - interest on customer outstanding is profit derived from eligible undertakings and entitled for deduction under Section 80IA/80I, in department’s appeal, the issue is covered in favour of the assessee by various decisions of High Court. As regards to miscellaneous income, the said income is inextricably linked to and have first degree nexus with the profits and gains of the eligible undertaking and the same were eligible for deduction.
Asset Transfer Agreement - Payment received towards the reimbursement of expenses - first appellate authority set aside the matter to the file of the AO for deciding afresh - HELD THAT:- The Asset Transfer Agreement the total value of assets to be transferred is mentioned which is ₹ 18,13,13,311/-. We further find that on this total value appellant was issued shares of ₹ 10/- each at 18131331. We have carefully considered the computation of additional reimbursement computed by the AO at ₹ 3,01,17,428/-. We find that the AO has simply proceeded by erroneous figures without applying his mind. The actual reimbursement of cost of ₹ 2,68,16,119/- has already been offered therefore in our considered opinion nothing further remained to be added more particularly on erroneous figures and computation. We accordingly direct the AO to delete the impugned addition. Ground No. 5 is accordingly allowed.
Provision for guarantee fee payable - Central Government has given guarantee on behalf of the assessee in lieu thereof instructed for levy of guarantee fee @ 1.2% per annum on the outstanding amount of loan - HELD THAT:- C&AG made adverse remark and pursuance to which the assessee created the liability. In our considered opinion the assessee has rightly created the liability as such liability was properly ascertainable. We are of the considered view that merely because the assessee was pursuing the matter with the Ministry of Petroleum and Natural Gas the same can not make the liability a contingent liability. Moreover this is not an estimated liability but the same is in line with the office Memorandum F-12 (1)-B/SB/92 dated 4.6.1993 by which the Central Government has instructed for levy of guarantee fee @ 1.2% per annum on the outstanding amount of loan. As per the said OM the guarantee fee was to be levied on the date of guarantee and thereafter on first day of April every year. Considering the facts of the case in totality we are of the considered view that such liability has to be allowed in the year under consideration - direct the AO to delete the impugned addition on account of guarantee fee.
Investment allowance u/s 32A - assessee had awarded a contract for laying of HBJ pipeline to consortium led by M/s. Spice Capag. The plant and machinery was put to use before 31.3.1990 and was capitalized during the assessment year 1989-90 - HELD THAT:- The fact is that in the first order of litigation the Tribunal has categorically allowed the claim of deduction u/s 32A of the Act. Though certain verifications were to be done by the AO. However without following the directions of the Tribunal the AO simply repeated the addition. However the first appellate authority after considering the findings of the Tribunal in the first order of litigation allowed the claim of deduction.
AO is directed to verify only the aggregate amounts of investment allowance and investment allowance reserve, respectively, claimed by the reliant during this period. If the aggregate amount of reserves created are more than 75% of the aggregate amount of investment allowance claimed by the appellant, the claim of deduction u/s 32A is to be allowed. Accordingly, this ground is allowed in favour of the appellant -No error or infirmity in the directions of the CIT(A) and hence we do not find any reason to interfere with the same
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2020 (11) TMI 870
Addition u/s 68 - Unexplained cash credit - assessee argued that he has repaid the loan taken - HELD THAT:- CIT(A) has analysed entire facts relating to the case, considered the arguments of the assessee and has estimated the agricultural income in a meticulous way. We notice that no material was placed before us to show that the estimate made by Ld CIT(A) is not correct. Instead, the assessee is placing reliance on the returns of income filed by Shri Prabhulingappa subsequent to passing of assessment order, which has been held to be an afterthought by Ld CIT(A). We are of the view that the Ld CIT(A) was justified in taking the above said view in the facts and circumstances of the case.
A.R submitted that the assessee has repaid the loan taken from Shri Prabhulingappa subsequently. It is well settled principle that the repayment of cash credit would not prove the genuineness of cash credit. It is the responsibility of the assessee to prove three main ingredients, viz., identity of the creditor, credit worthiness of creditor and genuineness of the transaction. In the instant case, the assessee has failed to prove the credit worthiness fully and also the genuineness of the transactions. Accordingly, in the facts and circumstances of the case, we are of the view that the Ld CIT(A) has taken a reasonable view of the matter - Decided against assessee.
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2020 (11) TMI 869
TP Adjustment - comparable selection - software development services segment of assessee - HELD THAT:- Infosys technologies Ltd directed to exclude from comparability analysis based on the reason of comparable company is having huge brand value.The honourable Bombay High Court in case of CIT versus Pentair water India private limited [2016 (5) TMI 137 - BOMBAY HIGH COURT] has held that where comparable has multiple times of turnover over the size of the assessee, same is not comparable.
Wipro Ltd’s turnover is ₹ 9668 crores against the assessee’s total sales and turnover is of ₹ 17 crores. The turnover of the comparable is more than 500 times the size of the assessee - Following case of M/S. PENTAIR WATER INDIA PVT. LTD. [2016 (5) TMI 137 - BOMBAY HIGH COURT] we direct the learned transfer pricing officer/assessing officer to exclude Wipro Ltd as a comparable company from the comparability analysis.
Persistent Systems Ltd need to be rejected as relying on EQUANT SOLUTIONS INDIA PVT. LTD. VERSUS DCIT, CIRCLE 3, GURGAON [2016 (1) TMI 1260 - ITAT DELHI]
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2020 (11) TMI 868
Addition at the rate 20% of expenses incurred by the assessee for services rendered to M/s Cigna TTK during the year - Whether CIT(A) was justified in accepting the claim of the assessee that there was no profit element involved in a transaction wherein the assessee had provided a highly technical and professional services to the other party, that too by utilizing its own funds? - HELD THAT:- Giving that the assessee received development cost for developing and transferring the initial infrastructure to Cigna TTK, the transaction is not expenditure in the hands of the assessee. For the assessee (the recipient of the amount) the provisions of specified domestic transaction would not be applicable.
We find that (i) the vendor agreement between the assessee and Cigna TTK has been entered at cost and no income has been earned by the assessee, (ii) there is neither any evidence nor allegation that assessee has received any consideration over and above to what is mentioned in the aforesaid agreement.
In the absence of any evidence to show either that the sales were sham transactions or that the market prices were in fact paid by the purchasers, the mere fact that the goods were sold at a concessional rate to benefit the purchasers at the expense of the company would not entitle the income-tax department to assess the difference between the market price and the price paid by the purchasers, as profit of the company. We affirm the order of the Ld. CIT(A) deleting the addition - Decided against revenue.
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2020 (11) TMI 867
Income accrued in India - Taxability of certain receipts by the assessee as “Fees for technical services" within the meaning of Article 12 of India-Sweden DDTAA read with India-Portugal DTAA (via Protocol) - HELD THAT:- Assessee rendered IT support services but could not furnish proof of correct nature of services with the help of any Agreement etc. The assessee only furnished copies of cf services. This iertain invoices before the authorities below which did not facilitate the correct determination of the nature ossue anent to Walter Tools India Pvt. Ltd. and Dormer Tools India Pvt. Ltd. came up for consideration before the Tribunal for the A.Y. 2013-14 wherein the matter stood remitted to the file of the AO for fresh determination of nature of services. Similar view has been reiterated by the Tribunal in its order for A.Ys. 2014-15 and 2015-16. A copy of this order is available at page 19 onwards of paper book.
Since the facts and circumstances of the nature of receipt from three Indian entities in this year are admittedly similar to those of two entities in preceding years, respectfully following the precedent, we set aside the impugned order and remit the matter to the file of the AO for a fresh determination of the issue in accordance with the directions given by the Tribunal for the preceding years.
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2020 (11) TMI 866
No notice u/s 143(2) issued - Assessment in the remand proceedings - Tribunal has remanded the matter back (the same issues which were there during the original assessment proceedings before the assessing officer) to the file of Assessing Officer, with direction to the Assessing Officer and Assessee - whether notice under section 143(2) of the Act is required be issued to the assessee? - HELD THAT:- Tribunal had given specific direction while setting aside and restoring the matter back to the file of the Assessing Officer and the assessee was also asked to furnish documents and explanation on those issues in view of the directions of the Tribunal. The assessment order is to be passed after discussing the details/documents furnished by the assessee therefore, the assessing officer and assessee both were aware about the details/documents and directions of the Tribunal. Hence, there is no need to issue notice under section 143(2) of the Act, as the necessary instructions were given by the Tribunal in its order. Therefore, the requirement to issue the notice under section 143(2) of the Act does not arise.
We note that notice under section 143(2) is required when assessee has furnished his return of income under section 139 or in response to a notice under section 142(1) of the Act. Therefore, notice under section 143(2) is not required when the Tribunal has remanded the matter back to the file of Assessing Officer, with certain direction to assessee and Assessing Officer.
It is abundantly clear that assessee had himself taken the responsibility to produce creditors to establish identity and creditworthiness, hence the question to issue notice under section 143(2) does not arise.
During the assessment proceedings (second round) under section 143(3) r.w.s. 254 of the Act, the Assessing Officer has issued letter on 13.02.2012 to the assessee to furnish books of accounts, bank statements etc. In response to the said letter the assessee has filed documents and submissions, therefore, the principle of natural justice has been observed during the assessment stage. Therefore, the requirement to issue notice under section 143(2) does not arise. Hence, we dismiss the ground no.1 raised by the assessee.
Rejection of books of accounts - CIT(A) deleted gross profit addition and upheld the rejection of books of accounts - HELD THAT:- When the books of accounts are rejected then only option available before the Income Tax Officer is to make addition based on estimation, that is, gross profit addition/net profit addition etc, and item-wise addition are not made. We note that ld CIT(A) deleted the addition based on gross profit (GP). Thus, we note that ld CIT(A) has not rejected the books of accounts. We note that it is only a passing reference and contradictory statement made by ld. CIT(A) in his order, as the item-wise additions were upheld by the ld. CIT(A), therefore, books of accounts were not rejected. Based on this factual position, ground no.2 raised by the assessee is dismissed.
Addition u/s 68 - HELD THAT:- Assessee has discharged his burden by establishing identity, genuineness as well a creditworthiness. In fact, it was up to the department to make further inquiries in the matter based on the documents and evidences submitted by the assessee, as noted above, but no such exercise has been done by the department. Hence, we delete the addition.
Undervaluation of the stock of Cement sheets and Angles - HELD THAT:- The assessee has maintained quantity wise and quality wise day-to-day register which is not disputed by the assessing officer. The assessee has adopted LIFO mode of valuation because these sheets when typically are piled over each other say 50-60 sheets, it results in only the last sheet inwarded as first to be taken out. These sheets were valued at ₹ 180 per sheet considering the fact that they result in unavoidable damage due to fragile nature of the sheets, sheets damaged in transit and it loses some merchandise value.
Undervaluation of M.S. angle channels - The valuation adopted by the assessing officer has been based on the last bill of purchases without specifying to which quality it applied. Hence there is no any undervaluation of the stock therefore we delete both the addition in respect of Cement sheets and Angles The instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year.
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