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Showing 141 to 160 of 914 Records
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2020 (4) TMI 774 - SUPREME COURT
Valuation of certain items imported under two contracts - inclusion of the price of drawings, design etc. - imports were made in connection with modernisation, expansion and modification for their plant at Durgapur in West Bengal - main case of the appellant is that these two cases involved importation of turnkey projects and the entire contract value have to be treated as the transaction value for the purpose of charging customs duty - appellant’s case in substance is that on a composite reading of Section 14 of the Act, Rules 4 and 9(1)(e) of the 1988 Rules, the price of drawings, design etc., should be added to the invoice value of the imported equipments, as those intangible items formed an integral part of the arrangement agreed upon between the two consortia and SAIL - Stand of the respondent, on the other hand is that those items related to post importation activities of SAIL in India for implementation of their project.
HELD THAT:- The provisions of Rule 9 (1) (e) cannot be automatically applied to every import which has surface features of a turnkey contract. Just because different components of a contract or multiple contracts give the shape of turnkey project to the imported items, without specific finding on existence of “condition” as contemplated in clause 9 (1) (e), value of all these components could not be added to arrive at the assessable value. Such an exercise would go against the provisions of Interpretative Note to Rule 4, which is part of the Valuation Rules in view of the provisions of Rule 12 thereof.
In the present appeal, involving two import consignments, the authorities of First Instance and the Appellate Authority proceeded on the basis that since all the scheduled items formed part of the same contract and were linked with activities at post-import stage with the imported equipments, the provisions of Section 9 (1) (e) could be invoked. Such reasoning infers subsistence of conditions for awarding post-importation work to the overseas consortia or makes import of both sets of items otherwise interdependent - the stand of SAIL was consistent that the subject drawings and specifications did not relate to the equipments imported and was meant for post importation activities and there was no condition laid down that the import of the equipments were to be supplemented by post-importation work.
Appeal dismissed - decided against appellant.
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2020 (4) TMI 773 - NATIONAL COMPANY LAW TRIBUNAL, JAIPUR BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - scope of the term NBFC - existence of debt and dispute or not - time limitation - HELD THAT:- The RBI, i.e. financial service regulator has granted the certificate of registration to carry on the business of Non-Banking Financial Institution in 1998 - the respondent has intentionally deceived the applicant while executing the KYC Form. Now he cannot escape from his liability by raising an objection of NBFC. It can be said that though the respondent is an NBFC, however, without ignoring the fact that the respondent himself entered into the transaction with the Applicant in the capacity of a Private Limited Company. Thus, in regard to the transaction under consideration the respondent falls under the definition of Corporate Debtor and cannot fall under the shell of the term 'NBFC.
Pre-existing dipsute or not - HELD THAT:- It is seen in the delivery report filed by the Applicant that the Demand notice under section 8 of IBC, 2016 was delivered on 16-3-2018 and the respondent has replied on 5-4-2018. Giving a notice of pendency of application under section 9 of the Arbitration and Conciliation Act, 1996 by the respondent after 10 days from receipt of demand notice, does not hit section 8(2) of IBC, 2016. Thus, the dispute raised by the respondent is patently feeble legal argument unsupported by evidence on the basis of pending application under section 9 of the Arbitration and Conciliation Act, 1996, for an interim measure without establishing that an amount of ₹ 63,31,706.09/- is due to the respondent.
Time limitation - HELD THAT:- In accordance with section 238 of the IBC, 2016, the provisions of the Code have overriding effect on the Arbitration and Conciliation Act, 1996. The Registered Office of the Corporate Debtor is situated in Jaipur and therefore this Tribunal has jurisdiction to entertain and try this Application. The matter is within the purview of Law of Limitation.
Application admitted - moratorium declared.
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2020 (4) TMI 772 - NATIONAL COMPANY LAW TRIBUNAL, BENGALURU BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- In the instant case, there was no final, clear or crystallised debt or demand till the time of the notice and the same was disputed and subject to reconciliation/adjustment, as per the Agreement itself - In the instant case the Respondent has not only opposed the Demand Notice but raised a bona fide dispute which arises from the Agreement between the two parties and which requires to be adjudicated, which is in progress in an Italian Court, and for which this Tribunal is not the forum, apart from the fact that the amounts in question themselves remain to be reconciled.
Hence, since an undisputed clear debt at the time of sending the Demand Notice under the Code or alleging a default by the Petitioner is a sine qua non for initiating proceedings under section 9 of the Code, and whereas there was also a pre-existing dispute over the final amount payable, and also with part payment being made, which makes this a mere recovery proceeding, the Petition is liable to be dismissed on all these scores as well.
Petition dismissed.
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2020 (4) TMI 771 - MEGHALAYA HIGH COURT
Territorial Jurisdiction - transfer of subordinate officers from Shillong to Itanagar - power of judicial review - case of respondent is that the impugned order of transfer has been issued in clear breach of the declared Transfer Policy and is mala fide - HELD THAT:- Transfer or posting of an employee is an incident of service. He cannot insist on his transfer at a place of his choice by raising the argument of discrimination by citing the example of others. Moreover, in the present case, the respondent has throughout his service career of 30 years remained in Shillong or nearby areas. Therefore, such argument of discrimination, even otherwise has no force. The Tribunal has quashed the order of transfer singularly on consideration of the fact that the petitioner was due to retire after a period of about 2 years. However, as per record, date of birth of the petitioner being 30.05.1962, he was due to retire on 30.05.2022. Counting from the date of the order of transfer dated 14.08.2019, the respondent was left with over 2 years and 9 months before retirement. The stipulation of the policy that employees who were left with 2 years or less service should normally be considered for being given a choice posting, would therefore not be attracted to the case of the respondent.
In view of the law enunciated by the Supreme Court by catena of judicial pronouncements, the power of judicial review even in the matter of transfer, can be exercised by the High Court or the Tribunal within the defined parameters. We may in this connection cite the decided case law of the Supreme Court as to what are the limitations on the scope of interference of the Supreme Court in the matters of transfer of a Government employee.
The Central Administrative Tribunal, while interfering with the order of transfer in the present case, has exceeded its jurisdiction, and erred in law in quashing the order of transfer - Petition allowed.
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2020 (4) TMI 770 - CESTAT
Condonation of delay for more than seven years - HELD THAT:- As the impugned order has been passed by the learned Commissioner (Appeals) in 2011 and received by the appellant in 2011 itself and the same has not been brought in the knowledge of the Hon’ble High Court - As no appeal was pending against the impugned order, therefore, we are unable to entertain the applications for condonation of delay filed by the appellant which are highly time barred, therefore, the applications for condonation of delay are dismissed.
Application for condonation of delay is dismissed - appeal dismissed.
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2020 (4) TMI 769 - SUPREME COURT
Time limitation for delivery of goods in case of inter-state sale - benefit of Section 6(2) of CST Act, 1956 - delivery of the respective goods from a carrier when the goods are delivered to a carrier for transmission in course of inter-state sale - validity of two circulars bearing S.No.115B dated 16th September, 1997 and S.No.1132A dated 15th April, 1998, which sought to impose a time limit on retention of goods in the carrier’s godown, beyond which time the revenue was to treat obtaining of constructive delivery of the goods involved - High Court quashed these Circulars.
HELD THAT:- The respondent in this case had taken benefit of sub-section (2) on the ground that this was a case involving inter-state sale and the sale took place by way of transfer of documents of title of such goods during their movement from one State to another. It is also the respondents’ case that the requisite forms and certificates were duly furnished pertaining to such sales. On the part of the State, barring retention of the goods in the transporters’ godown at the destination point for a long period of time, default on no other count by the assesses has been asserted - In the two appeals in which the respondent is Bombay Machinery Stores, sales pertained to financial years before the circulars came into subsistence. In these instances of sales, the Commercial Tax officer in the respective orders treated retention of goods beyond 30 days in the transporters’ godown as the cut-off period. After that date, the assessee was deemed to have had taken constructive delivery of goods and sale beyond that period within the State of Rajasthan was held to be local sales and subjected to sales tax under the State Law.
As per the aforesaid circulars, retention of goods by the transporter beyond the time stipulated therein (being 30 days as per the later circular) would imply that constructive delivery of the goods has been made by the transporter to the consignee. In such a situation, the transit status of the goods would stand terminated and the deeming provision in first explanation to Section 3 of the 1956 Act conceiving the time-point of delivery as termination of movement shall cease to operate.
Sub-clause (1) of the said provision specifies when the goods shall be deemed to be in course of transit and sub-clause (3) thereof lays down the conditions for termination of transit. That condition is an acknowledgment to the buyer or his agent by the carrier that he holds the goods on his behalf. There is no material to suggest such an acknowledgment was made by the independent transporter in these appeals. In such circumstances we do not think the decision of the High Court requires any interference.
In the case of Arjan Dass Gupta [1979 (8) TMI 194 - DELHI HIGH COURT] principle akin to constructive delivery was expounded and we have quoted the relevant passage from that decision earlier in this judgment. In our opinion, however, such construction would not be proper to interpret the provisions of Section 3 of the 1956 Act. A legal fiction is created in first explanation to that Section. That fiction is that the movement of goods, from one State to another shall terminate, where the good have been delivered to a carrier for transmission, at the time of when delivery is taken from such carrier. There is no concept of constructive delivery either express or implied in the said provision - the interpretation of the Division Bench of the Delhi High Court given in the case of Arjan Dass Gupta does not lays down correct position of law.
In the event, the authorities felt any assessee or dealer was taking unintended benefit under the aforesaid provisions of the 1956 Act, then the proper course would be legislative amendment. The Tax Administration Authorities cannot give their own interpretation to legislative provisions on the basis of their own perception of trade practise. This administrative exercise, in effect, would result in supplying words to legislative provisions, as if to cure omissions of the legislature.
The judgements of High Court upheld - appeals dismissed.
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2020 (4) TMI 768 - KARNATAKA HIGH COURT
Maintainability of petition - efficacious remedy of filing an appeal - Validity of reassessment order - validity of rectification order passed by the prescribed authority - KVAT Act - HELD THAT:- When an alternative and efficacious remedy is provided under the Act, such a remedy requires to be exercised by the party first. However, that does not mean that the jurisdiction of the Writ Court is unavailable but while exercising the jurisdiction, the Writ Court would necessarily have to indicate as to why it is entertaining a writ petition, not withstanding, the availability of an alternative or efficacious remedy to a party. Unfortunately, even after having noticed the preliminary objection regarding maintainability of the writ petition, the court has proceeded to frame the question on merits. This aspect of the matter in the impugned order passed by the learned Single Judge, we find as being erroneous.
In order to enable the writ Court to exercise its jurisdiction, it would first have to answer the availability of an alternative and efficacious remedy and as to why it intends to exercise the writ jurisdiction - In the absence of the same, consideration of the matter on any other ground, would not be sustainable, since the preliminary objection of the State has not been answered. There are no hesitation to hold that the writ Court could not have entertained the matter in view of an alternative remedy available under Section 62 of the Karnataka Value Added Tax Act, 2003.
There are no good ground to interfere - appeal dismissed.
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2020 (4) TMI 767 - KARNATAKA HIGH COURT
Validity of proceedings - duplication of entire proceedings - KVAT Act, 2003 - HELD THAT:- The re-assessments have already been concluded for the period April to July 2009, it is only with respect to that time period, the proceedings are required to be quashed and not the remaining period also.
The order of the learned Single Judge is partly set aside. The proceedings are set aside only for the period between April to July 2009. The proceedings shall go on so far as the remaining period is concerned - appeal allowed.
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2020 (4) TMI 766 - KARNATAKA HIGH COURT
Breach of trust - accusations against petitioners are that petitioners have floated a Company and have acted in violation of the terms of the employment - HELD THAT:- There is no dispute with regard to the fact that petitioners were employed by respondent No.2 and as on the date of tendering their resignation, accused No.1 was holding the position of Director – Solution and accused No.2 was holding the position of Director – Sales and Marketing. There is also no dispute that petitioners were bound by the undertaking given by them to respondent No.2 - The accusation against petitioners is that in violation of the aforesaid terms and conditions, they floated a Company by name M/s. Sun Telematics Private Limited and thereby committed breach of trust. The records produced along with charge-sheet indicate that the said Company was incorporated on 28.5.2013. But there is no material to show that during their service under respondent No.2, petitioners had commenced any operations in the name of the Company floated by them. The documents produced before this Court indicate that Form ‘C’ – Registration Certificate of Establishment was obtained on 26.2.2014 and Value Added Tax Registration Certificate was issued on 19.9.2013 indicating that the actual operations had commenced only after the resignation of petitioners from respondent No.2–Company.
It is only when a property entrusted to accused has been dishonestly misappropriated or converted to his own use, the accused can be held culpable for the offence under Section 405 of IPC. In the instant case, there are no allegations whatsoever that either at the time of employment or at the time of resignation, any property was entrusted to petitioners. Though in the complaint it was alleged that the software belonging to respondent No.2 was stolen and the same was made use of to procure rival business, but the material referred above clearly indicates that even the title or right to the said software vested with the Smart comm and not with respondent No.2. That apart, there is no allegation whatsoever in the charge-sheet that petitioners herein have committed any theft of such a software - in the absence of any material to show that either during the employment or any time subsequent thereto, any properties which has been entrusted to petitioners have been converted to their own use, provisions of Section 405 of IPC do not get attracted to the facts of this case.
Since the facts of the case do not make out the ingredients of the offences under Sections 406 and 408 of IPC, the prosecution of petitioners for the alleged offence is illegal and cannot be sustained. For the said reasons, the petition is allowed.
Petition allowed - decided in favor of petitioner.
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2020 (4) TMI 765 - ALLAHABAD HIGH COURT
Addition u/s 68 - unexplained cash credit - onus to prove - HELD THAT:- Under Section 68, the onus is on the assessee to offer explanation where any sum is found credited in the books of account and where the assessee fails to prove to the satisfaction of the Assessing Officer, the source and nature of the amount of cash credits an inference may be drawn that the credit entries represent income taxable in the hands of the assessee. This does not however absolve the responsibility of the Assessing Officer to prove that the cash credits constitute the income of the assessee. The onus on the assessee has to be understood with reference to the facts of each case and if the prima facie inference on the basis of facts is that the assessee's explanation is probable, the onus shifts to the Revenue.
Once the assessee has proved the identity of its creditors, the genuineness of the transactions and the creditworthiness of the creditors vis-a-vis the transactions which it had with the creditors, the burden stands discharged and the burden then shifts to the Revenue to show that the amount in question actually belong to, or was owned by the assessee himself.
In a case where the integrity of the creditors is established and the entries are shown to be not fictitious, the burden would shift on the Revenue.
In the case at hand, the partners have shown the agricultural income in their personal returns of the past years which had been accepted by the department as such.
The partners are all identifiable and separately assessed to tax. The source of investment having been explained, in the event the Assessing Officer was not satisfied the addition could have been considered in the hands of the partners and not in the hands of the firm. The burden of proving the source of the credits having been sufficiently explained the addition could not have been made in the hands of the firm in the facts of the present case. - Decided in favour of assessee.
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2020 (4) TMI 764 - CALCUTTA HIGH COURT
Stay petition - given the present COVID-19 pandemic in the country, the Hon’ble Supreme Court directed that, no recovery measures to be taken by revenue authorities including Income Tax authorities - petitioner submits that, the petitioner should be allowed to operate bank accounts as, the recovery notice issued by the Income Tax authorities directs blanket stay operation of such bank accounts - HELD THAT:- The petitioners suffered an order of assessment in the year 2019. The petitioners preferred an appeal against such order of assessment. There is a stay petition pending also. The revenue authorities issued recovery notice on March 5, 2020 - revenue authorities received the recovery amount from the concerned banks. All these measures took place prior to the order dated March 20, 2020 passed by the Hon’ble Supreme Court. Therefore, the order of attachment on the bank account of the petitioners therein are lifted as the revenue received the demanded amount.
It is clarified that this order is an interim measure given the COVID-19 pandemic situation in the country. The appellate authority is at liberty to dispose of the appeal of the petitioner in accordance with law, as expeditiously as possible. None of the observations made herein will prejudice any of the parties in the pending appeal.
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2020 (4) TMI 763 - CALCUTTA HIGH COURT
Stay petition - recovery proceedings - petitioners submits that, since the petitioners are retired, they are facing undue hardship by reason of the notice of recovery issued by the revenue authorities - revenue authorities have received a sum in excess of ₹ 2 lakhs already from the bank account of the petitioner while the amount of demand is ₹ 10 lakhs - HELD THAT:- The amount of demand of the revenue authorities therein is a sum in excess of ₹ 12 lakhs.
There subsists an order dated March 20, 2020 passed by the Hon’ble Supreme Court directing the revenue authorities not to initiate any recovery proceedings during the subsistence of the COVID-19 pandemic - interest of justice would be subserved by directing the banks of the petitioners to allow the petitioners to operate the bank accounts subject to the bankers’ of the petitioner setting apart a sum of ₹ 5 lakhs.
Such sum of ₹ 5 lakhs, the Court is informed, is lying in one of the bank accounts of such petitioner. Such banker will keep a sum of ₹ 5 lakhs in a separate interest bearing fixed deposit account with it. Such deposit will abide by the result of the appeal of such petitioner. The bankers of the petitioner of such petition thereafter will permit the petitioner to operate his bank accounts in accordance with law. There will be stay of the order of attachment of the bank accounts subject to compliance of the aforementioned conditions.
So far as the other writ petitioner a sum of ₹ 2 lakhs has already been paid by the banker of such petitioner to the revenue authorities, it would be appropriate to permit such petitioner to operate his bank account. The order of attachment issued by the revenue authorities against such bank account of the petitioner is stayed.
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2020 (4) TMI 762 - DELHI HIGH COURT
Recovery proceedings - stay applications - Addition u/s 68 - genuineness of the transaction and creditworthiness of the investors/loan depositors - HELD THAT:- The present matter is not a case of mechanical reliance on circulars/office memorandums. It is a case where proof of identity of the loan depositors, capacity of the creditors to advance loans and genuineness of transaction is in serious dispute. Further, this Court finds that the stay application has been decided on merits and all the submissions made hereinabove by the petitioner have been considered by the statutory authorities below.
Undoubtedly, as held by the Supreme Court in LG Electronics (India) Pvt. Ltd. [2018 (7) TMI 1905 - SC ORDER] it is open to the statutory authorities to grant relief to deposit an amount lesser than twenty per cent if the facts of the case so warrant. However, on the facts of the present case, as determined by the Assessing Officer, a prima facie case is not made out and such a relief is not warranted.
Consequently, the present writ petition and application being bereft of merits are dismissed. However, respondent No. 3 is directed to decide the appeal filed by the petitioner within thirty days from the date the Lockdown ends.
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2020 (4) TMI 761 - KARNATAKA HIGH COURT
Correct head of income - gain on sale of building - ‘long term capital gains’ or ‘business income’ - HELD THAT:- Except last nine years, the property which comprises land and building was let out by the assessee for a long period. The assessee had earned income by way of rent and rental income so received by the assessee was offered for taxation as income from the house property. The assessee has shown the property in question as capital asset in its balance sheet - there is no material on record to hold that the aforesaid property was converted by the assessee as an item of stock in trade. On the other hand, the said property was treated as capital asset. It has further been held that merely because the assessee is engaged in the construction business is not a ground that land and building should be treated as part of stock in trade.
It is also pertinent to note that the assessee has not claimed any depreciation in any of the Assessment Years while offering rental income as house property income.
Thus, the income from the sale of property has been treated as long term capital gain. The aforesaid finding of fact is based on meticulous appreciation of evidence on record and in substance is a finding of fact. - Decided in favour of assessee.
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2020 (4) TMI 760 - KARNATAKA HIGH COURT
Failure to furnish returns of income - offences punishable under Section 276C - non-filing of Income Tax returns in terms of Sections 139(1), 142(1) or 153 of Act - sanction order being passed with prior approval for the Chief Commissioner of Income Tax - HELD THAT:- The satisfaction would be dependent on the approval of the Chief Commissioner of Income Tax is that only if the Chief Commissioner of Income Tax accorded approval for prosecution than the satisfaction of the Commissioner of Income Tax could be considered and acted upon by sanctioning prosecution. However, if the Chief Commissioner of Income Tax were to refuse permission then the Commissioner of Income Tax though satisfied could not initiate any proceedings due to the non approval by the Chief Commissioner of Income Tax.
Contention of Sri Kiran Javali, that the prosecution has been initiated and sanction order came to be passed on 12.03.2014 being influenced by the Chief Commissioner of Income Tax, though may not be entirely correct but however does merit consideration since no sanction could be given and prosecution initiated if the Chief Commissioner of Income Tax refused permission, the order dated 12.03.2014, can therefore be said to be an order of the Chief Commissioner of Income Tax, rather than the Commissioner of Income Tax. The Chief Commissioner of Income Tax is not the sanctioning authority.
Even the approval dated 10.02.2014 does not indicate any application of mind by the Chief Commissioner of Income Tax nor is it signed by the Chief Commissioner of Income Tax. Hence, even if it were to be assumed that Chief Commissioner of Income Tax was the sanctioning authority there is no subjective satisfaction by the Chief Commissioner of Income Tax for granting such sanction.
Process and procedure and methodology followed by the Commissioner of Income Tax being not that as contemplated under Section 279 - The sanction order being passed with prior approval for the Chief Commissioner of Income Tax, the same is not tenable in law and the entire proceedings initiated thereafter including those in C.C.No.219/2014 cannot be countenanced in law. Therefore, the sanction letter dated 12.03.2014 and the proceedings in C.C.No.219/2014 pending on the file of the JMFC III Belagavi are hereby quashed.
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2020 (4) TMI 759 - ITAT MUMBAI
Stay petition- recovery proceedings - lockdown due to COVID -19 - All the bank accounts of the assessee have also been subjected to attached by garnishee proceedings under section 226(3) - AO has also attached all the debtor - Out of total demand assessee applicant has already paid little more than the tax component and the balance outstanding demand represent interest and penalty only. The assessee applicant seeks vacation of garnishee proceedings initiated against the assessee - HELD THAT:- We find that in view of the attachment of asessee’s bank accounts and assessee’s debtors, the assessee is stated to be not in a position to perform these obligations.
Given this situation, we are satisfied that this situation calls for our interference. In any case, even though we refrain from commenting upon merits of the case at this stage, we find that prima facie the assessee has an arguable case in appeal.
Assessee has already paid his entire tax liability, and in case the assessee is to opt for Vivad se Vishwas Scheme, he will have nothing further to pay. In these circumstances, the legitimate interests of the revenue cannot be prejudiced by our grant of stay on the remaining outstanding dues which are primarily on account of levy of interest, and consequential levies. In view of the above discussions, as also bearing in mind entirety of the case, we deem it fit and proper to grant a stay on collection/ recovery of the outstanding demands of ₹ 2,91,05,660 till the disposal of appeal or till the end of six months from the date of this order- whichever is earlier, subject to the following conditions:
(a) Any amount available to the assessee, as a result of this stay order and as a result of garnishee proceedings being lifted, will be first used for making payments of overdue and current wages payable to the labourer working with the assessee, and for making payment of overdue and current salaries to its employees. The amount available, after this exercise, will be used for the purpose of carrying out construction activity as necessary for providing quarantine facilities, as directed by the Collector. Any surplus amount thereafter will be used for construction activities of the business. The assessee will give an undertaking to this effect in writing.
(b) The assessee will file a statement showing utilization of funds, so available to the assessee on account of the garnishee proceedings being lifted, within 15 days from the date of this order.
(c) The assessee will fully cooperate in expeditious disposal of this appeal on out of turn basis, on 8th June 2020, and will not seek any adjournment. All the requisite paper books etc will be filed sufficiently in advance.
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2020 (4) TMI 758 - ITAT COCHIN
Deduction u/s 80P - CIT(A) rejected the objections raised by the assessee and passed orders u/s 154 disallowing the claim of the assessee u/s 80P(2) - HELD THAT:- CIT(A) had initially allowed the appeals of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed orders u/s 154 wherein the claim of deduction u/s 80P was denied, by relying on the judgment of The Mavilayi Service Co-operative Bank Ltd. v. CIT [2019 (3) TMI 1580 - KERALA HIGH COURT] CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety.
The Full Bench of the Hon’ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act.
Interest on the investments with Co-operative Banks and other Banks - Tribunal in the case of Kizhathadiyoor Service Co-operative Bank Limited [2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business’ instead of `income from other sources’. However, as regards the grant of deduction u/s 80P of the I.T.Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon’ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. Appeals filed by the assessee are partly.
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2020 (4) TMI 757 - ITAT MUMBAI
Disallowance of service expenditure - service charges were incurred by the assessee in order to attract the customers in India who are transacting in overseas capital market - HELD THAT:- Assessee has stopped utilizing the services of group entities and started employing its own staff and relevant services extended to its customers by utilizing its own staff. There is considerable increase in the employees cost shows that there is shift in the management decision. Even otherwise assessee has submitted the analysis of making payments to its sister concern and submitted the relevant documents treating this as international transaction. Since the transaction involved is only to the extent of ₹ 2.89 crores, therefore AO may not have referred this case to TPO, just because it is not coming under TP study and there is abnormal increase in the cost, does not mean that assessee has not incurred this expenditure for its business. Therefore, in our considered view, these transactions are revenue in nature and having direct relevance to its business and incurred to extend the services to its customers in the overseas market with the help of its group concerns are only a revenue expenditure and eligible to be claimed as deductible expenditure under section 37 of the Income Tax Act.
Payment of membership and subscription charges disallowed - HELD THAT:- These expenses are renewable and recurring in nature and only in this assessment year, assessee has borne the above said expenditure for its business purposes. As per the submission of the assessee, for the subsequent assessment years, these costs were diverted to its clients. Since these expenditure was incurred in order to facilitate the clients in India and it has direct relevance to the business carried on by the assessee, but however there is no assets installed by the assessee except facilitating the installation to the clients.
It may look capital in nature, but it is the cost incurred by the assessee to facilitate the transactions between the clients and group concerns. There is no direct enduring benefit to the assessee, it can be termed as incurred for the purpose of business and to set up a transaction meant for overseas capital market - this expenditure can be treated preliminary expenditure for the purpose of business and therefore this transaction may increase the business/ trade for the assessee in the subsequent year. Accordingly, we direct AO to allow one fifth (1/5th) of the expenditure in this assessment year and balance in the next 4 assessment years treating this similar to the treatment as preliminary expenditure. Accordingly, Ground no. 2 raised by the assessee is partly allowed.
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2020 (4) TMI 756 - ITAT BANGALORE
TDS u/s 194C - disallowance u/s 40(a)(ia) - Payments to contractors - HELD THAT:- Settled position in law is that if the deductee/payee has paid the tax, no recovery can be made from the person responsible for paying of income from which he failed to deduct tax at source. In a case where the deductee/payee has paid the tax on such income, the person responsible for paying the income is no longer required to deduct or deposit any tax at source. In the similar circumstances, we find that the first proviso to section 40(a)(ia) inserted by the Finance Act, 2010, which has been held to be curative and therefore, retrospective in its operation by CIT v Virgin Creations [2011 (11) TMI 348 - CALCUTTA HIGH COURT] provides for allowance of the expenditure in any subsequent year in which tax has been deducted and deposited. The intention of the legislature clearly is not to disallow legitimate business expenditure. The allowance of such expenditure is sought to be made subject to deduction and payment of tax at source.
In a case where the deductee/payee has paid tax and as such the person responsible for paying is no longer required to deduct or pay any tax, legitimate business expenditure would stand disallowed since the situation contemplated by the first proviso viz. deduction and payment of tax in a subsequent year would never come about. Such unintended consequence has been sought to be taken care of by the second proviso inserted in section 40(a)(ia) by the Finance Act, 2012. There can be no doubt that the second proviso was inserted to supply an obvious omission and make the section workable.
No contrary decision was brought to our knowledge by the ld. D.R. We restore this issue to the file of the Assessing officer with the direction that the assessee shall provide all the details to the Assessing Officer with regard to the recipients of the income and tax es paid by them. AO shall carry out necessary verification in respect of the payments and taxes of such income and al so filing the return by the recipient. AO finds that the recipient has duly paid the tax es on the income, the addition made by the AO shall stand deleted. Thus this ground is allowed for statistical purposes.
Having said so, we will be failing in our duty if we do not discuss the amendment brought in by the Finance (No.2) Act, 2014 with effect from 01.04.2015 by virtue of which proviso to section 40(a)(ia) has been inserted, which provides that if any such sum taxed has been deducted in any subsequent year or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such shall be allowed as a deduction in computing the income of previous year, such sum shall be allowed as a deduction in computing the income of previous year, and further, section 40(a)(ia) has been substituted wherein the 30% of any sum payable to a resident has been substituted. In the present case, the authorities below has added the entire sum of ₹ 6,18,73,785 by disallowing the whole amount.
Though the substitution in section 40 has been made effective with effect from 01.04.2015, in our view, the benefit of the amendment should be given to the assessee either by directing the Assessing Officer to confirm from the cab owners, as to whether the said parties have deposited the tax or not and further or restrict the addition to 30% of the disallowance. In our view, it will be tied of justice if the disallowance is only restricted to 30% of the amount liable for TDS u/s 194C of the Act. Accordingly, this issue is partly allowed.
Addition u/s 40(a)(ia) - reimbursement of petrol and diesel charges to the drivers - HELD THAT:- As observed that as agreed by and between the assessee and the cab owners, a vehicle was to be provided by the assessee to the parties and thus, the assessee was to bear the vehicle expenses actually incurred by the said cab owners and which will be reimbursed by the parties concerned. If bills for such expenses incurred by the said cab owners were separately raised by them on the assessee in addition to bills for hire charges and since the amount of bills so raised was towards the actual expenses incurred by them, there was no element of any profit involved in the said bills. It was thus a clear case of reimbursement of actual expenses incurred by the assessee and the same, therefore, was not of the nature of payment covered by section 194C of the Act requiring the assessee to deduct tax at source therefrom, where bills were raised separately by the cab owners for reimbursement of actual expenses incurred by them. As such, considering all the facts of the case, we are of the view that the provisions of section 194C of the Act were not applicable to the reimbursement of actual expenses and the assessee was not liable to deduct tax at source from such reimbursement. Accordingly, we set aside the orders of the Income tax authorities and direct the A.O. to verify the claim of the assessee.
Addition incurred for the deficiency of services - HELD THAT:- The facts of this issue are that the Assessing Officer noted from the profit and loss account furnished by the assessee that the assessee has debited an amount of ₹ 5,22,346 for penalty paid, which according to the A.O. is not an allowable expenses. Since the assessee has not made any submission before the CIT(A), he confirmed the same. - Since assessee failed to substatiate the claim, additions confirmed.
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2020 (4) TMI 755 - ITAT AHMEDABAD
Exemption u/s 11 - Charitable activities u/s 2(15) - assessee is a regulatory body created by State Government u/s 22 of Gujarat Town Planning and Urban Development Act (GTPUDA), 1976 for proper development of specified area in the state as ensured by the State Government - HELD THAT:- As relying on GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION [2017 (7) TMI 811 - GUJARAT HIGH COURT] and GANDHINAGAR URBAN DEVELOPMENT AUTHORITY VERSUS THE DCIT, GANDHINAGAR CIRCLE, GANDHINAGAR [2019 (7) TMI 1608 - ITAT AHMEDABAD] we find merit in the plea raised on behalf of the assessee for holding the activities of assessee to be for charitable purposes under s.2(15) of the Act and consequence eligibility of benefits under s.11 & section 12 of the Act. The order of the CIT(A) is thus set aside and the AO is directed to grant relief claimed under ss.11(2) and 11(1)(a) of the Act to the assessee in accordance with law. - Decided in favour of assessee.
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