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Showing 101 to 120 of 744 Records
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2020 (5) TMI 644 - DELHI HIGH COURT
Impleadment of Airport Authority of India [AAI], Air Operator, and Concessionaire - HELD THAT:- The respondents will be at liberty to file a combined counter-affidavit both qua the original writ petition as well as the additional-affidavit, if any, filed by the petitioners.
Renotify the matter on 14.05.2020.
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2020 (5) TMI 643 - CESTAT BANGALORE
Imposition of Redemption Fine and Penalty - non-submission of installation certificate within 6 months and further extension of time not sought from the Customs - violation of conditions of the N/N. 97/2004 - HELD THAT:- Admittedly, in the present case, the appellant has violated the conditions of the notification no.97/2004 dt. 17/09/2004. Further, the imported goods were not installed within 6 months and no application for extension of time was submitted to the Customs as per the condition of the notification. Further, the Commissioner (Appeals) after considering all the submissions of the appellant has come to the conclusion that the appellant has violated the condition of the Notification No.97/2004 and consequently has imposed redemption fine of ₹ 50,000/- and penalty of ₹ 5000/- on the appellant under Section 112(a) of the Customs Act, 1962.
Thus, there are no infirmity in the imposition of redemption fine and penalty in the facts and circumstances of the case since the appellant has not complied with the conditions of the notification No.97/2004 dt. 17/09/2004 - appeal dismissed - decided against appellant.
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2020 (5) TMI 642 - CESTAT NEW DELHI
Condonation of delay of 135 days in filing appeal - case of appellant is that delay caused due to applicant being busy in compliance of some Department’s direction and also that the Counsel did not received the notice in time - HELD THAT:- The ground that applicant being busy in compliance of some Department’s direction, is not opined sufficient explanation for the delay as big as of 135 days - There have been findings against the present importer in the decision of M/S. JAISWAL IMPORT CARGO SERVICES LIMITED VERSUS COMMISSIONER OF CUSTOMS [2019 (8) TMI 497 - CESTAT NEW DELHI] as was filed by the applicants, co-noticee. It becomes clear that before the said decision the applicant was not inclined to file the appeal and the present appeal is the outcome due to the said decision - thus the reason is not acceptable for not been the sufficient cause explaining as big delay as of 135 days.
Delay on the ground that the Counsel did not received the notice in time - HELD THAT:- There is no statutory mandate of any notice, summon, or copy of any order to be served upon the Counsel. The service has to be effected on the party concerned. The said service, in the present case of the order under challenge dated 22.03.2019 admittedly got affected on the appellant on 26th March, 2019 itself. Failure on his part to not to approach his Counsel and to not to seek the further advice, amounts to negligence, as well as non-pursuance on the part of the appellant. Same cannot be held a “sufficient cause” as is required under section 5 of Limitation Act to explain the impugned delay. In absence thereof, the delay cannot be condoned.
Application dismissed.
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2020 (5) TMI 641 - DELHI HIGH COURT
Charges demanded by CFSs/ICDs for release of containers - HELD THAT:- As far as the Container Freight Stations (CFSs) and Inland Container Depots (ICDs) in minor ports are concerned, the petitioner, without prejudice to its rights and contentions and subject to the outcome of the present petition, shall be at liberty to have its containers released on payment of such charges as may be demanded by such CFSs/ICDs,.
As far as the CFSs/ICDs in major ports are concerned, the learned counsel for the respondent no. 1 and 4 submits that the CFSs are bound by its direction dated 23.04.2020 and the respondent no. 1 and 4 are in the process of ensuring compliance of such CFSs with the said direction.
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2020 (5) TMI 640 - GUJARAT HIGH COURT
RTI - Scope of Public Authority - whether the petitioner institutions would be public authority under the provisions of section 2(h) of the Act? - HELD THAT:- Reliance placed in the case of CENTRAL PUBLIC INFORMATION OFFICER, SUPREME COURT OF INDIA VERSUS SUBHASH CHANDRA AGARWAL [2019 (11) TMI 895 - SUPREME COURT] it is not possible to hold that the petitioners who are substantially financed by the companies owned by the State Government cannot be said to be "public authority and as such, the petitioners would be covered by the definition of "public authority" under section 2(h)(d)(i) of the Act 2005.
Matters remanded back to the respondent no.1, as the matter is very old and in view of the facts on record, it would not be possible to take a different view than what is held by the respondent no. 2 to apply the provision of section 2(h) of the Act-2005 to consider the petitioners as public authority to apply the provisions of Act-2005 - petition allowed by way of remand.
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2020 (5) TMI 639 - SECURITIES APPELLATE TRIBUNAL MUMBAI
Liability of the Company and directors - repayment of the money collected through issuance of Secured Optionally Convertible Debentures - HELD THAT:- WTM relying on the provisions of sub section 2 of Section 73 of the Companies Act has observed that the liability of the Company and directors would remain until the whole of the subscription amount along with interest is refunded to the allottees.
This being the position the appellant cannot escape from the liability of the repayment. In the case of Sayanti Sen [2019 (8) TMI 1441 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] this Tribunal has observed that WTM in the impugned order therein had given a categorical finding that one Shri Shib Narayan Das was responsible for the affairs of the company. In the present case the appellant during the relevant period being a promoter director of GIIPL cannot escape from the liability.
In the case of Pritha Bag [2019 (2) TMI 1742 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] also finding that one Late Indranath Daw was the Managing Director of the defaulting company, the director Pritha Bag was exonerated by this Tribunal. Since facts are distinguishable the ratio of the same cannot be applied in the present case.
The circular of the Ministry of Corporate Affairs dated July 29, 2011 is also on the similar line indicating as to who can be held as an officer in default. Considering all the materials on record the appeal is dismissed.
Whether GIIPL did not issue SOCDs to the private entities but only to the two companies? - HELD THAT:- A new plea is raised before this Tribunal that GIIPL had a Managing Director. The appellant himself was promoter / director of GIIPL as well as of the group companies and therefore in the facts of the case he submitted that appeal be dismissed.
Appeal is liable to be dismissed. No plea was taken before the WTM that the GIIPL was run by a Managing Director. The appellant was admittedly promoter cum director of GIIPL as well as of the group companies.
Insofar as a case of Sanjeeb Kumar is concerned we find that in paragraph 25 of the impugned order the WTM clearly held that said Sanjeeb Kumar was responsible. However, in the final order his name was not merely included so far as direction no. 29(i). However, his name is included in other directions and thus it is a case of inadvertent mistake on the part of the WTM of which present appellant cannot take any benefit. The case of Madhavan Nambiar [2001 (11) TMI 955 - HIGH COURT OF MADRAS] would show that the facts of the same were different. The appeal is therefore liable to be dismissed.
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2020 (5) TMI 638 - CESTAT BANGALORE
Business Auxiliary Service - taxability of profit earned by the appellant on purchase and sale of used cars - incentives and discounts received by the appellants from M/s. Maruti Suzuki India Ltd. (M/s. MSIL) - HELD THAT:- The issue is squarely covered by the decision in the case of COMMISSIONER OF SERVICE TAX, MUMBAI-I VERSUS SAI SERVICE STATION LTD [2013 (10) TMI 1155 - CESTAT MUMBAI] where it was held that commission received from various bank/finances institution for arranging loan to their prospective buyers comes under the business auxiliary service.
Incentives and discounts received by the appellants from M/s. Maruti Suzuki India Ltd. (M/s. MSIL) - HELD THAT:- The issue is settled in favour of the appellant’s themselves by this Bench relying on M/S SAI SERVICE STATION LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX [2014 (4) TMI 640 - CESTAT BANGALORE] where it was held that through the circular issued by MUL which provides certain incentives in respect of cars sold by the assessee respondent. These incentives are in the form of trade discount.
Appeal allowed - decided in favor of appellant.
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2020 (5) TMI 637 - MADRAS HIGH COURT
Auction Sale of Attached property - Recovery of tax - petitioner had purchased the properties which were already attached by the Department for the legitimate Government dues - HELD THAT:- This Court is of the view that the petitioner ought to have taken necessary care and caution while purchasing the properties from the third respondent. No documents/ papers have been filed by the petitioner to show that he had approached and contacted the office regarding the requirement of any details as regards existence of any charge on the properties. Thus, it is clear that the petitioner had never approached the Department, to find out as to whether any dues are payable by the third respondent / existence of any charge on the properties, before purchase of the properties.
In the present case, the petitioner herein purchased the properties from the third respondent only subsequent to the attachment effected by the Department. Further, the petitioner had failed to ascertain the details of arrears payable by his vendor before execution of the sale deed - It is also seen from both the sale deeds executed between the petitioner's vendor and the petitioner, that the vendor has given an undertaking that there is no encumbrance on the properties in question and if any encumbrance arises at a later stage, he would made good the loss on his own.
Reliance can be placed in the case of MRS. MEENAKSHI. J. GANESH KUMAR VERSUS DEPUTY COMMERCIAL TAX OFFICER, SRIVILLIPUTHUR AND ANOTHER [2010 (12) TMI 1094 - MADRAS HIGH COURT]. The said judgment has been passed under similar circumstances. In that case, the petitioner therein contended that he was the bona fide purchaser, since he purchased the property only after getting encumbrance certificate from the Sub-Registrar, Srivilliputhur and that when the Department had not attached the property prior to purchase of the same by the petitioner therein, it was not open to the Department to issue the notice impugned therein.
Petition dismissed.
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2020 (5) TMI 636 - MADRAS HIGH COURT
Input tax credit - duty paying invoices - case of petitioner is that the petitioner had availed Input Tax Credit on the strength of invoices issued by dealers who had availed Input Tax Credit on the strength of invoices of dealers whose registrations were cancelled either and/or there was no proof of their sale of goods to the petitioner’s sellers - HELD THAT:- In this case, the petitioner claims to have availed Input Tax Credit on the strength of invoices raised by some of the dealers who had in turn purchased from other dealers who had not shown having sold the goods to the petitioner’s dealers from whom the petitioner had purchased the goods - Since there are disputed questions of fact and the dispute is not purely confined only law, the present Writ Petitions are liable to be dismissed with liberty to the petitioner to file an statutory appeal before the Appellate Deputy Commissioner.
The petitioner is permitted to file an appeal within a period of thirty days from date of receipt of a copy of this order subject to other requirements of pre-deposit under the provisions of the TNVAT Act, 2006 - petitioner dismissed.
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2020 (5) TMI 635 - MADRAS HIGH COURT
Recovery of amount alongwith penalty - N/N. 8911/DCE/T(P)/AUC/2012- 13 dated 30.05.2012 - It is the case of the petitioner that she had money transactions with the 3rd respondent and had borrowed a sum of ₹ 50,000/- and in this connection had offered her property as a security for repayment of the aforesaid loan - HELD THAT:- In this case the petitioners property was offered as a security for permitting the ex-license to run a arrack shop. The 3rd respondent was not only required to offer property by way of mortgage but was also required to register the same in favour of the respondents. However, same was not registered - Similarly the information furnished by the Public Information Officer of the office of the Deputy Collector (Excise) vide communication dated 24.04.2015 in response to an application filed by the petitioner on 26.03.2015 has confirmed that the petitioner has not produced Annexure I and II.
There is no clarity in the role of the petitioner i.e, whether her property was offered by her in her capacity as a surety for the arrack license issued to the 3rd respondent or as mortgage or as a bidder herself. Either way in absence of valid registration of the mortgage as is contemplated in the confirmation order dated 14.09.2012, the respondent cannot proceed against the petitioner or her property - there appears to be irregularity in permitting the 3rd respondent to run arrack shop contrary to the confirmation dated 14.09.2012.
Petition disposed off.
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2020 (5) TMI 634 - MADRAS HIGH COURT
Principles of Natural Justice - validity of assessment order - case of petitioner is that petitioner was not granted time to furnish objections to the show cause notice dated 12.12.2019 - HELD THAT:- A bare perusal of the said show cause notice dated 12.12.2019, made available in the typed set of papers, clearly indicates that the respondent issued the show cause notice on 12.12.2019 and confirmed the said proposal also on the same day, which goes against the very basic principles of natural justice, as the petitioner/assessee was not at all given an opportunity to give their objections. Needless to say that an assessment cannot be made without giving an opportunity of hearing to the assessee.
The very show cause notice dated 12.12.2019 in effect, confirming the proposal made therein without hearing the petitioner, cannot be sustained and consequently, the order impugned in this writ petition also cannot be sustained. However, as this Court is not inclined to go into the merits of the claim made by the respective parties arising out of the issue raised in the show cause notice, this court is inclined to remit the matter back to the respondent for redoing the assessment once again, after giving an opportunity to the petitioner to put forth their case by way of objections - Petition allowed by way of remand.
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2020 (5) TMI 633 - DELHI HIGH COURT
Notice issued to dead person - HELD THAT:- As petitioner submits AO could not have issued the impugned notice dated 31st March, 2019 upon a dead person - the orders passed in pursuance to the said notice are a nullity. Learned counsel for petitioner states that no notice was ever served upon the legal heirs within time and thus the proceedings are barred by limitation. In support of his submission, he relies upon Durlabhai Kanubhai Rajpara vs. Income Tax Officer Ward 1(3)(7), Surat, (2019) 4 TMI 784 (Gujarat High Court); Rajender Kumar Sehgal vs. Income Tax Officer Ward 56(1) New Delhi, (2018) 12 TMI 697 (Delhi High Court); and Sumit Balkrishna Gupta vs. Asstt. Commissioner of Income Tax, Circle 16(2), Mumbai & Ors., 2019 (2) TMI 1209 (Bombay High Court).
Issue notice. Mr. Zoheb Hossain, learned standing counsel accepts notice on behalf of the respondent. He prays for and is permitted to file a counter-affidavit/ reply-affidavit within a week.
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2020 (5) TMI 632 - PUNJAB AND HARYANA HIGH COURT
Revision u/s 263 - Computation of taxation of profits of the Industrial Undertaking u/s 80-I - amounts of duty draw back received for the manufactured goods exported by it - HELD THAT:- It is a matter of record that the Assessing Officer while restricting the deduction under Section 80-I allowed deduction on duty draw back in respect of the goods manufactured and exported. The 1st Appellate Authority noted the contention of the assessee that the dispute was that the assessee claimed deduction under Section 80-I on the goods bought from market and exported. The Appellate Authority held that the assessee is entitled to deduction under Section 80-I proportionately on the goods manufactured and exported. The dis-allowance of deduction under Section 80-I on the goods purchased from market and exported was upheld.
Tribunal rightly observed that the issue whether deduction under Section 80-I is available on duty draw back on manufactured goods was never specifically dealt in appeal. There was no occasion for raising the issue as the deduction was allowed by the AO.
There is no quibble that the Commissioner (Appeals) as per the explanation to Section 251 of the Act can consider the matter arising out of the proceedings in which the appeal is filed irrespective of the fact that the said matter has not been raised by the appellant. There is also no dispute/ that as per explanation 1(c) to Section 263(1), the revision cannot be done of the issue which has been considered and decided in appeal. In the present case, the issue whether the assessee was entitled to deduction under Section 80-I of the Act on duty draw back with regard to goods manufactured and exported was neither considered nor decided in appeal.
The reliance on certain part of the order by learned counsel for the appellant is not well founded. The said observations were vis-a-vis the proportionate deduction under Section 80-I qua the goods manufactured and exported. The reliance on the decision of Gujarat High Court in [2003 (4) TMI 77 - GUJARAT HIGH COURT]does not enhance the case of the assessee, as already discussed, the issue taken up in revision was not subject matter of appeal - Decided against assessee.
Disallowing the exemption in respect of duty draw back while computing the tax free profit u/s 80-I - HELD THAT:- As decided in M/s Nahar Spinning Mills Ltd. [2010 (11) TMI 1099 - PUNJAB AND HARYANA HIGH COURT] in the case of the assessee itself deciding the following question in favour of the revenue.
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2020 (5) TMI 631 - ITAT MUMBAI
TP Adjustment - Enhancement of adjustment/disallowance without show cause notice - Principles of natural justice violated - HELD THAT:- In the present case, the ALP adjustment has been made by the TPO and the DRP has “enhanced” the same. In the DRP order itself, it has been stated that “the TPO has suggested that the adjustment/ disallowance [Emphasis, by underlining, supplied by us now] of ……….. is justified”. That, however, is factually incorrect and legally unsustainable in law.
Neither the ALP adjustments can be equated with disallowances of expenses, even though effect may be same, nor the TPO has the authority to disallow the expenses. Clearly, the impugned ALP adjustments are vitiated in law for this short reason alone. In any case, the observations with respect to the lack of evidence in support of the benefits is based on sweeping generalizations and is incapable of sustaining legal scrutiny.
All the three ALP adjustments – namely Research & Development expenses, Management fees and Tender cost stand deleted.
Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- The extraordinary steps taken suo motu by Hon’ble jurisdictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.
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2020 (5) TMI 630 - ITAT MUMBAI
TP Adjustment - MAM - TNMM v/s CPM - TPO arriving ALP by using TNMM Method and rejecting the CPM Method used by the appellant company for the purpose of determining ALP - HELD THAT:-Geographical difference, by itself, does not render an independent transaction uncomparable with controlled transaction. Geographical location, by itself, is not an important factor for deciding comparability of an uncontrolled transaction, its importance lies in being one of the factors which could affect the market conditions in which respective parties operate. Unless market conditions, in which uncontrolled transactions have taken place, are materially different vis-à-vis conditions in which international transaction has taken place, and such a difference is on account of geographical location of the market, geographical location of the market is of no consequence in judging comparability of an uncontrolled transaction for the purpose of ascertaining the ALP.
In respect of consultancy services in such highly sophisticated area as oil and gas sector, the fact that the client is in jurisdiction A and B, by itself, does not make such factor on standalone basis. This objection of the TPO that merely because clients are located at different geographical location, the prevailing market conditions will be different proceeds on the unproven assumption that that the scope of such market as consultancy services with respect to oil and gas sector in India is based on location of the client and that, therefore, it has a bearing on the profit margin.
Unlike the market for a physical product, the market for consultancy services of such a nature is unlikely to be restricted to national boundaries, and, therefore, location of some of the clients at one location or the other would not really matter. In any case, the stand of the TPO was that some of the non-AEs are situated in India, and for this reason, these transactions should not have been treated as valid internal comparables is unsustainable in law, inasmuch as, all it can justify at best is exclusion of such transactions within Indian market, rather than rejecting the method, of ascertaining the ALP, itself. In our considered view, therefore, none of the reasons assigned by the TPO, for rejection of the CPM, was thus sustainable in law.
TPO does indeed have powers, under section 92C(3), where he is, inter alia, of the opinion that the most appropriate method for ascertaining the arm’s length price has not been used for determination of arm’s length price, to proceed with his determination of arm’s length price in accordance with section 92C(1) and 92C(2), and, by implication, adopt what he perceives to be the most appropriate method. However, this can only be done by following the course laid down in proviso to Section 92C(3), i.e. by issuing specific show cause notice to that effect by the TPO, and the reasons so assigned for rejection of the most appropriate method, adopted by the assessee, are subject to judicial scrutiny. For the detailed reasons set out above, we find that the reasoning adopted by the TPO was incorrect and thus unsustainable in law. Accordingly, the impugned ALP adjustment of ₹ 1,80,00,639 by rejecting the CPM method adopted by the assessee and by adopted the TNMM method, for ascertaining the arm’s length price, must be deleted for this short reason alone.
Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- Rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system.
The extraordinary steps taken suo motu by Hon’ble jurisdictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.
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2020 (5) TMI 629 - ITAT MUMBAI
Income accrued in India - PE in India - use or hire of the containers in international traffic - India UK DTAA - HELD THAT:- Payment of arm’s length remuneration to the agent, and taxability of income embedded in such payment in India, is not even in dispute before us, the stand of the authorities below cannot be approved. Given this finding, it is immaterial as to whether the DAPE existed or not, for the simple reason that, as the binding legal position is, the existence of DAPE is wholly tax neutral.
We are aware that on a conceptual note, a PE, whether a fixed base PE, DAPE or any other type of PE, provides for threshold limits to trigger taxation in the source state, but then if as a result of a DAPE, no additional profits, other than agent's remuneration in the source country - which is taxable in the source state anyway de hors the existence of PE, become taxable in the source state, the very approach to the DAPE profit attribution may indeed seems incompatible with the above legal position. It may sound incongruous from an academic point of view but then that’s what the law is.
We hold that once an agent has been paid arm’s length remuneration, and the income embedded in such remuneration has been taxed in India, no further profits can be taxed in the hands of the DAPE. Accordingly, the action of the authorities below, in bringing income of the DAPE- independent of the agency remuneration received by the agent of the assessee, is unsustainable in law. We, therefore, uphold the plea of the assessee and delete the impugned addition in the hands of the assessee.
Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- An unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus “should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure…”. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled’ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an “ordinary” period.
In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force.
Period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.
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2020 (5) TMI 628 - ITAT DELHI
Revision u/s 263 - applicability of the provisions of section 2 (15) - exemption u/s. 11 - Proof of charitable activities - Assessee providing virtual education - organizing innovative IT Education and training program - HELD THAT:- If the activities carried out by the assessee are visualized Assessee is not engaged in any other activity other than education. Therefore, for this reason, we are of the view and hold so that the learned CIT – E is not correct in holding that assessee is not engaged in educational activities covered under section 2 (15) of the Act.
No evidences have been put forth by the revenue except merely an allegation of violation of the provisions of section 13 (1) (C) - It has not been shown that how the assessee has conferred any benefit directly or indirectly on any person. It is also not shown that who are those persons who are fulfilling the criteria of section 13 (3) of the act. Thus, the order of the learned CIT exemptions so far as this issue is involved is not supported by any evidence.
It is apparent from the assessment order and the communication made by the assessee during the course of assessment proceedings before the assessing officer it is apparent that all and every aspect of the assessment of the income of the assessee have been examined by him.
AO has in detailed look into the activities, object, the functions, nature of receipts, nature of expenditure, applicability of service tax, applicability of tax deduction at source credit and above all the applicability of the provisions of section 2 (15) of the act. Thereafter, AO has granted assessee the benefit of being an educational Institute. It is not required for the assessing officer to examine how the payer of an income has dealt with receipt of an income in the hands of the assessee.
This cannot be a general law but in the specific facts of the case where the payment made by the parties are subjected to tax deduction at source under section 194J of the income tax act cannot go against the assessee. The learned CIT – exemption has not in substance held that any due enquiry which should have been made by the assessing officer has not been made by him. Perhaps at the level of enquiry and the manner of enquiry may be different because of change in perception. However, that does not make the order erroneous.
Assessee is carrying on educational activities which are covered by the provisions of section 2 (15) of the income tax act and it is neither business nor profession of the assessee. It definitely constitute a charitable activity as it does not charge the fees at the level of market rate and even otherwise the surplus generated is also used for charitable activities of education. This is the finding of the learned assessing officer for assessment year 14 – 15 and for earlier assessment years. In view of this, the order passed by the assessing officer is not at all erroneous.
Education is no exception. Naturally, classrooms have no bricks and mortar, no benches and blackboards. ‘Blackboard Collaborate’ and digital white boards have replaced blackboards. Teachers and students do not assemble at one place but they reach each other on cloud through Meets, Teams, WebEx and Zoom! Such cloud classes have wide representation of students across the globe blurring the geographies of traditional classrooms.
Attendances are also virtual instead of physical. Chat boxes are medium of group discussion. Strikingly, Timings are 24*7. Still it has all the essential of a “classroom”. It definitely covers ‘process of training, developing the knowledge, skill, mind and character of students’ like normal schooling. Thus, in true sense the activities performed by the assessee are no different from ‘classrooms.’
Therefore, we set aside and quash the order passed by the learned CIT – exemption under section 263 - Decided in favour of assessee.
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2020 (5) TMI 627 - ITAT MUMBAI
Disallowance u/s 14A r.w.r. 8D - CIT(A) upheld rejection of suo motu disallowance offered by the assessee but gave some partial relief on the computation part - as pointed out by the assessee that ‘at best’ entire expenses of project and investment department could be treated as ‘expenditure incurred by the assessee in relation to income which does not form part of the total income’ - HELD THAT:- AO cannot reject the suo motu disallowance offered by the assessee on the ground that such a disallowance under rule 8D will be more; that’s putting cart before the horse. Quite to the contrary, an AO can resort to rule 8D only when, as per the prescription of Section 14A(2) “the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act”. That satisfaction, as required, u/s14A(2), for invoking rule 8D, cannot be on the basis of mechanism of rule 8D itself; it has to be independent of rule 8D.
AO has noted the explanation of the assessee and proceeded to disregarded the same on the basis of working of rule 8D(2)(i) and 8D(2)(iii). There is no other, and in fact no, reason for rejection of the computation of disallowance by the assessee.
On the fact of this case, there is not even a whisper of the reason, barring reference to rule 8D(2)(i), for rejecting the suo motu disallowance offered by the assessee. On these facts, and for the detailed reasons set out above, the Assessing Officer was in error in invoking rule 8D(2). We, therefore, deem it fit and proper to direct the Assessing Officer to delete the impugned additional disallowance under section 14A read with rule 8D, and to thereby accept the suo motu disallowance offered by the assessee. Once we hold so, all other issues raised in these appeals become wholly academic and infructuous, and there is no need to adjudicate on the same.
Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted.
We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted.
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2020 (5) TMI 626 - ITAT DELHI
Exemption u/s 10(34) - assessee's status of an Association of Persons [ AOP] declaring income of Rs. Nil by claiming the dividend as exempt u/s 10(34) - whether the Trust was created in violation of the provisions of the Indian Trusts Act and was therefore not a separate legal entity guided by its deed of formation? - settlor was also the sole beneficiary of trust - HELD THAT:- Undoubtedly, the trust is belonging to Escorts Ltd , it is the settlor and it is the beneficiary - that does not mean that it is the trustee also. AO has not brought on record any evidence to show that Escorts Limited is the trustee of the assessee. Therefore, the allegation of ld AO that Escorts Limited is also the trustee is devoid of any merit and based on mere conjectures and surmises. Further the sole beneficiary is Escorts Limited and Settlor of the trustis Escorts Limited is the major reason why the ld AO is refusing to recognize the above trust. Honorable Gujarat High court has answered it in BHAVNA NALINKANT NANAVATI [2002 (1) TMI 48 - GUJARAT HIGH COURT] where the settlor was also the sole beneficiary was held to be a valid trust.
Revenue did not show us any bar in the trust act where the settlor cannot be beneficiary of that trust. Assessee also submitted identical structures in case of Mahartana Companies, which were not found be violating Trust Act. Therefore, we do not find any infirmity in the Escorts Limited being the settlor and sole beneficiary of the trust.
Assessment of the trustee in Representative capacity in terms of provision of section 160 and 161 of The Income tax Act - In the present case, the income on behalf of the beneficiary i.e. M/s Escorts Ltd. is received by the assessee. Therefore it is liable to be assessed as a representative assesse as the income earned by it for the benefit of Escorts Ltd. On appeal, the ld CIT (A) reversed the position. CIT(A) has misconstrued the issue. All that the appellant had contended was that the AO having accepted the status of a representative assessee, should have carried the matter to its logical conclusion by exempting the dividend income u/s 10(34) of the Act, in conformity with the provisions of Section 161(1) of the Act and which was the contention before us as well.
Coming to the issue of dividend which is interconnected, the same has been subjected to dividend distribution tax, being a dividend referred to in Section 115-O - Considering the taxability of the said dividend in the case of EL the beneficiary, the same would not be taxable since the dividend was exempt u/s 10(34) of the Act. There is no reason for the ld AO to treat it as any other receipt other than dividend and then to tax it as income from other sources. Admittedly, in this case the dividend is subject to dividend distribution tax. According to section 10 (34 ) of the act same is exempt.
As per the depository system of holding shares, the shares owned by a private trust are held in a demat account in the names of the trustee/trustees which in the present case was Shri S.A. Dave and the same depiction appeared in the audited accounts for the relevant period - requirements of a shareholder receiving the dividend also stood satisfied in the case of the appellant and benefit of the exemption u/s 10(34) would be available as it would be in the hands of the beneficiary i.e. EL.
Appellant’s alternative submission that irrespective of the treatment in the assessment, the benefit of the exemption u/s 10(34) of the Act cannot be denied and that the colour of the receipt would not change in the absence of any statutory provision has substantial merit - Revenue could not show us any provision in the act, which can change the characterization of dividend receipt as income from other sources. Such rights are probably available the ld AO, if at all, u/s 98 of the act only in case of impermissible avoidance arrangement. Such is not the case in the impugned appeal. Thus, In our opinion the AO was not justified in changing the nature of the receipt, which continued to remain a dividend irrespective of whatever view was expressed in the assessment. Hence, we hold that the appellant was required to be assessed in the status of a ‘representative assessee’ and consequently to the same tax treatment as would have been accorded to the beneficiary vis exemption u/s 10(34) in respect of the dividend.
Appellant contends that the AO cannot go behind the scheme of arrangement and amalgamation duly sanctioned by the High Court, more so when the tax authorities assessing the amalgamating companies have completed their assessment u/s 143(3) of the Act without demur -The income of the assessee is required to be assessed by the Assessing officer as defined u/s 2(7A) of The Income Tax Act according to the provisions and procedures enshrined there in. The schemes of merger, amalgamation and corporate restructuring may grant certain relief or concession to the parties, but it cannot be said that even if they are in violation of the tax lawsit should be accepted by revenue as it is. Thus merely because schemes of corporate restructuring sanctioned by the high court or any other authority does not prevent assessing office in assessing the Income of the assessee. Off course, necessary relief granted may be allowed by him. In conclusion, Ground No.3 is disposed-off in terms indicated.
Conclusions drawn from the statements of the trustees recorded u/s 131 and allegation of tax evasion thus creation of the trust being a “colorable device” - Adverting to the view expressed by the AO and the Ld. CIT(A) that the trustees have acted on a “notional basis” and that the real trustee is EL along with being the settlor and the sole beneficiary, at the outset , we hold that the appellant trust was formed with the sole object of holding the shares of EL on behalf of the sole beneficiary i.e. EL. The single pay out on account of dividend was directly credited to the bank account of the trust and by the same mode paid over to the sole beneficiary. In other words other than bank charges and audit fee, there was no likelihood of any other expenditure being incurred such as the one contemplated by the Ld. CIT(A) in Para 10.2.8 of his order. The same logic would apply to the non-existence of any other asset and in our opinion the allegation that the facilities of M/s EL have been utilized, is an assumption, there being no legal basis for an adverse view on the common address of the appellant trust and M/s EL.
Admittedly even as per the revenue the creation of an identical trust with similar clauses has been accepted and in our view there is no reason to draw adverse inferences in the case of the assessee about the appellant trust not being an irrevocable trust or the trustees, acting on a notional basis or EL acting in the capacity of a trustee also.In view of the discussion, aforesaid Ground No. 6 in the appeal is allowed.
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2020 (5) TMI 625 - ITAT AHMEDABAD
Disallowance u/s 14A r.w rule 8D(2)(iii) - disallowance suo motto by assessee - HELD THAT:- If something has been offered by an assessee patently under some misconstruction of law, then the revenue cannot be permitted to plead that since the assessee has offered as its income, therefore, it has to be taxed.
Therefore which is based on large number of decisions including that of Hon’ble jurisdictional High Court in the case of S.R. Koshti [2004 (12) TMI 62 - GUJARAT HIGH COURT] allow the additional ground of appeal as well as original ground raised by the assessee. In other words, since there is no tax free income, there could not be any disallowance under section 14A - direct the AO to re-compute the income of the assessee after excluding the suo motto amount disallowed by the assessee. Apart from the above disallowance made by the AO on account of administrative expenses is concerned, this also stands deleted. Both amounts be excluded from the computation of income, and thereafter income of the assessee be duly determined. - Appeal of the assessee is allowed.
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