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2020 (6) TMI 479
Extension of period for seeking revocation of cancellation of registration - HELD THAT:- When the matter was taken up, there was neither deposit made nor even an offer from the appellant as to a specific amount being deposited within a specified period. In such circumstances, we are of the opinion that no interference can be made to the judgment of the learned Single Judge.
However, it is brought to our notice that, the Goods and Services Tax Council has made some recommendations for extension of period for seeking revocation of cancellation of registration.
Appeal dismissed.
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2020 (6) TMI 478
Vires of Rule 117(1A) of Central Goods and Service Tax Act, 2017 - time limitation - permission to petitioner to electronically upload form TRAN-I or avail input tax credit in monthly return GSTR-3B - HELD THAT:- The Petitioner has challenged vires of Rule 117 (1A) of Rules, however we do not think it appropriate to declare it invalid as we are of the considered opinion that Petitioner is entitled to carry forward VAT Credit/ITC accrued under Punjab Value Added Tax Act, 2005. The Respondents have repeatedly extended date to file TRAN-I where there was technical glitch as per their understanding. Repeated extensions of last date to file TRAN-I in case of technical glitches as understood by Respondent vindicate claim of the Petitioner that denial of unutilized credit to those dealers who are unable to furnish evidence of attempt to upload TRAN-I would amount to violation of Article 14 as well Article 300A of the Constitution of India.
Reliance can be placed in the case of ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT] where it was held that Respondents are directed to permit the Petitioners to file or revise where already filed incorrect TRAN-1 either electronically or manually statutory Form(s) TRAN-1 on or before 30th November 2019.
The Respondents are directed to permit Petitioner to upload TRAN-I on or before 30.06.2020 and in case Respondent fails to do so, the Petitioner would be at liberty to avail ITC in question in GSTR-3B of July 2020 - petition allowed.
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2020 (6) TMI 477
Delivery of vacant possession of the premises - Property sealed u/s 67(4) - Default in payment of GST - direction to respondents to handover possession of schedule premises to the petitioner forthwith, by issuing a writ of mandamus - HELD THAT:- Undisputed fact is, petitioner has leased her property in favour of Alfara. It is petitioner's claim that Alfara has defaulted in paying monthly rent. In view of the admitted position that Alfara is in possession of the premises in question as a tenant on the strength of lease deed dated 1st July 2017, the prayer to issue a writ of mandamus and handover the premises in question to the petitioner cannot be granted in writ proceedings, as parties shall be governed by terms of lease.
Petition dismissed.
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2020 (6) TMI 476
Restoration of GST registration - Reopening of portal for filing of form GST TRAN-1 - transitional credit - N/N. 35/2020 dated 03.04.2020 issued by Government of India, Ministry of Finance - HELD THAT:- This Court finds that in COVID times the respondents at least ought to have made efforts to consider revocation of cancellation of registration as per law but certainly as per relaxation granted vide notification Annex.19.
The present writ petition is disposed of with a direction to the petitioner to file a proper application with reasons and to take-up its issue of revocation of cancellation of registration with the respondents, who in turn shall take decision thereupon strictly in accordance with law within a period of 30 days from today.
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2020 (6) TMI 475
Filing of online application - GST Transition Credit - since the last date for filing such application has been fixed on June 30, 2020, the petitioner prays merely for being able to present the application prior to such cut-off date, if necessary manually - HELD THAT:- In view of the innocuous nature of the order proposed to be passed, no prejudice would be caused to the respondents, in any event.
Petition is disposed of by directing the respondents to accept manual filing of the GST Transition Credit applications as well as to reopen the concerned website, enabling all applicants, including the petitioner, to file such applications prior to June 30, 2020.
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2020 (6) TMI 474
Transfer Pricing adjustment in relation to payment of royalty -claim allowed for past years - HELD THAT:- We note that the assessee has been paying royalty to its Associate Enterprises (AEs) for a number of years which has been allowed in the assessment of earlier years. Therefore, the TPO cannot take a contrary view and disturb the settled facts unless there is a change in law or facts. Therefore, the arm`s length price adjustment made by TPO is not sustainable in law.
We note that TPO has allowed royalty in respect of all except two products viz. Mincream and Robinson Burley, the TPO has held that no benefit was derived by the assessee from its AE. It is not denied that the trade- marks for the two products viz. Mincream and Robinson Burley were registered and the said brands were owned by the AEs. The royalties are paid not only in respect of patent but for a basket of services. It is a common occurrence that a person using a brand name pays certain brand royalty to the owner of brand. It is not the case of the TPO, that the royalty paid in respect of these products was without any use of the said brand names. The assessee has in its TP study included payment of royalty and according to it the royalties are at arm’s length. Considering these facts the proposed disallowance of royalty in respect of Mincream and Robinson Burley does not appear to be justified and proper. See EKL APPLIANCES LTD [2012 (4) TMI 346 - DELHI HIGH COURT] and FRIGOGLAS INDIA PVT. LTD. VERSUS DCIT, CIRCLE-9 (2) , NEW DELHI [2016 (5) TMI 548 - ITAT DELHI]
We note that the trade- marks for the two products viz. Mincream and Robinson Burley were registered and the said brands were owned by the AEs. The royalties are paid not only in respect of patent but for a basket of services. It is a common occurrence that a person using a brand name pays certain brand royalty to the owner of brand. It is not the case of the TPO, that the royalty paid in respect of these products was without any use of the said brand names. The assessee has in its TP study included payment of royalty and according to it the royalties are at arm’s length.
Considering these facts the proposed disallowance of royalty in respect of Mincream and Robinson Burley does not appear to be justified and proper. The ld DRP was right in deleting the disallowance of royalty.- Decided in favour of assessee.
Transfer pricing adjustment in relation to advertisement, marketing and promotion expenses (AMP) - international tranaction or not? - HELD THAT:- We note that the AMP transaction does not represent the international transaction between the assessee and its AE’s as the revenue failed to bring on record any contract or arrangement between assessee and its AE for making AMP expenses for promotion of brand of its AE.In the assessee`s case, the assessee company was not under any obligation to incur AMP expenses and also its parent company had no control over such decisions of RBIL. These are routine advertisement expenses. Therefore, in assessee`s case the AMP cannot be regarded as international transaction as held in the case of Maruti Suzuki India Limited Vs. CIT [2015 (12) TMI 634 - DELHI HIGH COURT]. Therefore, we allow the appeal of the assessee and dismiss the appeal of the revenue and delete the ALP adjustment made - Decided in favour of assessee
Comparable companies arbitrarily chosen by the TPO for computation of mark up percentage of 22.34% over the alleged ‘Agency Cost’ incurred by the assessee - HELD THAT:- We have gone through the order of TPO/DRP and noticed that there is no adjudication by the TPO or DRP as to what serviceswere rendered. As per ld Counsel, the expenses in question were in respect of system upgrade of the Assessee which costs were reimbursed to the Assessee by the AE. Hence, there was no element of any service that the Assessee rendered to the AE. The assessee submitted, 3 volumes of documents before the TPO and DRP to establish that these were cost to cost reimbursements and therehas been no adjudication on the same. Therefore, in the interest of justice and fair play we think it fit and appropriate to remit this issue back to the file of the TPO to adjudicate the issue taking into account 3 volumes of documents already submitted by assessee. For statistical purposes, the ground raised by the assessee and revenue are allowed.
DRP not considering the specific objections raised by the appellant with respect to overall adjustment made to transaction of “Export of raw materials and finished products - HELD THAT:- DRP inadvertently did not give any directions vis-a-vis the said issue. However, vide rectified directions dated 18.02.2016 rejected the approach of the TPO of using external TNMM. The TPO is yet to give effect to the rectified DRP Directions. Therefore, Ld Counsel prayed the bench that ld TPO may be directed to give effect to the rectified DRP Directions. In the interest of justice and fair play, we direct the TPO to give effect to the rectified DRP Directions. For statistical purposes, the ground raised by the assessee are allowed.
Apportionment of expenses between fiscal units, non-fiscal units and head office - HELD THAT:- As decided in own case [2018 (4) TMI 1129 - ITAT KOLKATA] allocation done by the assessee on the basis of number of employees who are directly linked with the factory operation is more logical. The residual cost is incurred at the head office and is not capable of being identified with any of the units which are running by the assessee. It is only because of this difficulty that the Assessing Officer and the assessee resorted to allocation of residual cost. When it comes to allocation of residual cost, it cannot be done arbitrarily. The allocation should have due regard to the efforts put at the head office level to be eligible. That can be done only by allocation on the basis of number of employees linked to factory operation divided by total number of employees into corporate office into sales of the eligible units divided by total sales. This allocation of residual cost done by the assessee was logical and we find no infirmity in the action of the CIT(A) in accepting this basis of allocation.
Eligibility of income from sale of scraps whilst calculating deduction u/s 80IC - HELD THAT:- As decided in own case [2015 (2) TMI 506 - CALCUTTA HIGH COURT] profits and gains from the sale of scrap materials is eligible to deduction in an amount equal to twenty per cent under section 80IC, inasmuch as such gains or profits’ are derived from the industrial undertaking and includible in, the gross total income of the assessee and the question relatable to the profit on the sale of scrap is thus answered in favour of the assessee.
Excess disallowance of interest income allocated to eligible units - HELD THAT:- As decided in own case . [2019 (3) TMI 626 - ITAT KOLKATA] assessee has raised an additional ground regarding quantification on the impugned disallowance which requires verification of facts. We find force in Revenue’s contention therefore and restore the instant additional issue raised at assessee’s behest to the Assessing Officer for necessary factual verification of facts. This additional ground is taken as accepted for statistical purposes.
Refund of dividend distribution tax (DDT) paid in respect of non-residence share holders - HELD THAT:- We are of the view that this issue should be remitted back to the file of the ld AO for factual verification. The assessee is directed to file before AO, the amount of dividend paid, copy of agreement and other relevant documents, as required by AO.Therefore we direct the AO to examine relevant Double Taxation Avoidance Agreements between India – UK with reference to payment of dividend to the shareholders and adjudicate the issue in accordance to law. For statistical purposes, the additional ground raised by the assessee is allowed.
Deduction of education cess on income tax paid by the assessee as allowable expenditure - HELD THAT:- We accept the submissions of the assessee concurring with the decisions of CHAMBAL FERTILIZERS AND CHEMICALS LTD., GADEPAN, DISTT. KOTA. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and binding favourable decisions of Jurisdictional Tribunal and thus we allow the claim of the education cess. The AO is directed to allow the claim of education cess in computing total income of the assessee company. This additional ground raised by the assessee is allowed.
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2020 (6) TMI 473
Penalty levied u/s. 271B - Defective notice - vague and unspecific notice - failure to furnish the audit report u/s 44AB before the due date - HELD THAT:- We note that the AO by issuing penalty notice u/s. 271B has not spelt out what was the fault for which the assessee is being proceeded against for levy of penalty. Since the AO has not struck down the irrelevant portion/fault which is not applicable in the facts and circumstances of the case, the notice is vague and therefore, bad in law.
Notice proposing penalty should clearly spell out the fault/charge for which the assessee is put on notice, so that he can defend the charge properly. The issue of bad/vague penalty notice was adjudicated by the Hon’ble Karnataka High Court [though in a different context i.e notice issued u/s. 274 read with section 271(1)( c) of the Act] in the case of CIT vs. SSA’s Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] wherein the Hon’ble High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that if the penalty notice is vague, then the penalty order is also bad in the eyes of law.
Reasonable cause u/s 273B - Held that:- The assessee explained that delay happened due to the fact that for earlier year [i.e. AY 2014-15] the audit report could not be completed on time and could be completed only on 23-03-2016. This happened because the accountant of the assessee, who used to handle the accounts had suddenly left the office/service in earlier year without properly handing over the books maintained by the assessee. - Moreover, we also note that there has been several mistakes which has crept in the impugned penalty order of the AO, which shows total non- application of mind of necessary facts by the AO.
Appeal of assessee is allowed.
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2020 (6) TMI 472
Procedure of Appellate Tribunal - recovery proceedings - stay petition - HELD THAT:- All the stakeholders all over the country, and in our considered understanding, on such important pan India issues of far reaching consequence, it is desirable to have the benefit of arguments from stakeholders in different part of the country. We are also mindful of the fact, as learned Departmental Representative so thoughtfully suggests, the issues coming up for consideration in these stay applications involve larger questions on which well considered call is required to be taken by the bench.
Considering all these factors, we deem it fit and proper to refer the instant Stay Applications to the Hon’ble President of Income Tax Appellate Tribunal for consideration of constitution of a larger bench and to frame the questions for the consideration by such a larger bench, under section 255(3) of the Income Tax Act, 1961.
The matter is tentatively posted for hearing on 6th July 2020 or on such other date as may be directed by Hon’ble President and to be heard by this or such a larger bench as the Hon’ble President may be pleased to constitute under section 255(3) of the Income Tax Act, 1961.
We must take suitable steps to maintain the status quo, so far as collection of disputed impugned demands are concerned, and, at the same time, to protect legitimate interests of the revenue to recover the disputed impugned demands in the event of the assessee not being successful in the present stay applications, or, the assessee not being successful eventually in the appeals.
Given the overall situation- as also the fact that the stay petitions have been referred for consideration of constitution of a larger bench, we deem it fit and proper to grant an interim stay on collection/ recovery of the aggregate amounts of tax and interest etc, for the assessment yea₹ 2011-12 and 2012-13 respectively, impugned in these appeals,
This interim stay will remain in operation till the related stay applications are disposed of, till the appeals are disposed of or till further orders whichever is earlier.
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2020 (6) TMI 471
Addition u/s 40(a) (ia) - Short deduction of tax at source which was not reported at the time of filing return - HELD THAT:- As decided in own case [2019 (12) TMI 1031 - ITAT KOLKATA] if there is any short-fall due to any difference of opinion as to the taxability of any item or the nature of payment falling under various TDS provisions, the assessee could be declared to be an assessee in default under section 201, but no disallowance could be made by invoking the provisions of section 40 (a)(ia).
Addition u/s 14A r.w.r 8D of the Rules - HELD THAT:- As decided in own case [2019 (12) TMI 1031 - ITAT KOLKATA] uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer under section 14A read with Rule 8D.
MAT applicability - Book profit adjustment u/s 115JB - HELD THAT:- As decided in own case [2019 (12) TMI 1031 - ITAT KOLKATA] that provision of section 115JB is not applicable in the case of the assessee being a Banking company for the year under consideration. Therefore, grounds raised by the Revenue are dismissed.
Relief u/s 91 in respect of foreign taxes paid by the appellant - rental income earned from House property in Singapore which is not taxable in India as per Article 6 of DTAA applicable between the Government of the Republic of India and the Government of the Republic of Singapore - HELD THAT:- During the year the appellant had paid foreign taxes on the profits derived by the Hongkong Branch. Since there was no Double Taxation Avoidance Agreement between India and Hongkong, in terms of section 91, the appellant is entitled to claim credit of foreign taxes paid subject to the limits prescribed therein. The extent of relief u/s.91 is computed as a percentage of such’doubly taxed income'. The percentage to be applied is the lower of the’Indian rate of tax’and the’rate of tax of the said country'.
When credit for tax payments is to be given there, is no distinction in the tax liability which is credited through normal computation of income or through section 115 JB. Therefore, credit for tax paid in foreign country should be allowed even when the tax liability is raised u/s 115JB. Therefore, the AO is directed to allow this credit u/s 91 - CIT(A) allowed the claim of the assessee correctly. - Decided against revenue
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2020 (6) TMI 470
Disallowance u/s. 14A r.w.r 8D - Whether disallowance cannot be made in the absence of exempt income earned during a year? - disallowance on first appeal filed by assessee with learned CIT(A) stood deleted by learned CIT(A) on the ground that the assessee has not received any exempt income during the year under consideration - HELD THAT:- Hon’ble Delhi High Court in the case of M/s.Cheminvest Ltd., v. C.I.T [2015 (9) TMI 238 - DELHI HIGH COURT] had held that no disallowance of expenditure is warranted by invoking provisions of section 14A of the Act when no exempt income is received by the taxpayer during the year under consideration. Thus, on this short reasoning alone that no disallowance of expenditure incurred can be made by invoking provisions of Section 14A of the 1961 Act whence the tax-payer has not received any exempt income during the year under consideration, we dismiss the grounds raised by Revenue w.r.t. disallowances made u/s 14A of the 1961 Act and uphold decision of learned CIT(A) in deleting disallowance of expenditure. The Revenue fails on this issue.
Deduction u/s. 36(1)(viii) disallowed - AO observed that the assessee has claimed deduction to the tune of 20% of total business income instead of profits derived from providing long term finance for construction or purchase of houses in India for residential purposes - HELD THAT:- Some of the incomes such as notice period salary, other income, interest on car/personal loan, interest on conveyance loans, PEMI on personal loans, penal interest on personal loans have no direct and immediate nexus with profits derived from loans granted for construction or purchase of house in India for residential purposes, while for other components of income, we are remitting the matter back to AO to decide the above in light of Hon’ble Supreme Court decisions in the case of Pandian Chemicals [2003 (4) TMI 3 - SUPREME COURT], Sterling Foods [1999 (4) TMI 1 - SUPREME COURT], Cambay Electricity [1978 (4) TMI 1 - SUPREME COURT] and Bacha F Guzdar [1954 (10) TMI 2 - SUPREME COURT] and if it is found that there is direct and immediate nexus of the said income with grant of loans for construction or purchase of houses in India for residential purposes, the same shall be included for computing deduction u/s 36(1)(viii) of the 1961 Act. The onus is on the assessee to prove that it is eligible for deduction u/s 36(1)(viii) of the 1961 Act and claim of the assessee for grant of deduction u/s 36(1)(viii) is to be strictly construed. etc.
Delay in employee contribution to P.F. - Disallowance u/s 36(1)(va) read with section 2(24)(x) - HELD THAT:- Hon’ble Madras High Court in the case of Industrial Security and Intelligence India Private Limited [2015 (7) TMI 1063 - MADRAS HIGH COURT] after considering and interpreting the decision of Hon’ble Supreme Court in the case of Alom Extrusion [2009 (11) TMI 27 - SUPREME COURT] andAimil Limited [2009 (12) TMI 38 - DELHI HIGH COURT] held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulated under the relevant statutes governing PF/ESI, but the same stood deposited before the due date for filing of return of income as is prescribed u/s 139(1) of the 1961 Act - we allow the claim of the assessee for deduction towards employees contribution to PF which was deposited late beyond due date as prescribed under relevant statute governing PF, but the same stood deposited to the credit of employees with relevant fund before the due date for filing of return of income as prescribed u/s 139(1) - Decided against revenue.
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2020 (6) TMI 469
Reopening of assessment - reopening stating that four years have elapsed - reopening on the basis of a report / information made available by Income Tax Investigation Wing, Kolkata - addition u/s 68 as unexplained cash credit - HELD THAT:- The settled position of law is that if an assessment for any year has been completed u/s 143(3) or u/s 147, then no action shall be taken u/s 147 after the expiry of 4 years from the end of relevant assessment year unless income chargeable tax has escaped assessment by reason of the failure on the part of the assessee.
That is, there is no allegation that the assessee has failed to disclose fully and truly, all material facts necessary for assessment. As we noted that the re-opening is beyond a period of four years and the original assessment was completed u/s 143(3) of the Act and in the light of the decision of Amiya Sales and Industries [2004 (9) TMI 32 - CALCUTTA HIGH COURT] the reopening of assessment is bad in law. We note that there is change in opinion as the assessee has disclosed all the material facts in its return of income, wherein, balance sheet along with annexures, bills vouchers, invoices were filed and the Assessing Officer had considered the same while completing the original assessment u/s 143(3) of the Act dated 28.12.2011.
Merely having a reason to believe that income had escaped assessment, is not sufficient to reopen assessments beyond the four year period, as explained above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. - Decided in favour of assessee.
Set off of derivative loss against the addition made on account of unexplained cash credit - HELD THAT:- The entire amount has been credited in the books of the assessee. Therefore, it can be implied that these receipts are in the nature of business receipts. This view is supported by the decision of Hon’ble Supreme Court in the case of Lakhmichand Baijnath vs. CIT [1958 (11) TMI 3 - SUPREME COURT]where sums found credited in the books of the assessee were treated as business profits.
No infirmity in the order passed by the CIT(A).That being so, we decline to interfere with the order of Id. C.I T.(A) in directing the AO to allow set -off of derivative loss against the addition made u/s 68.The ld CIT(A)`s order on this issue is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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2020 (6) TMI 468
Unexplained investment u/s 69 - sending the matter to Valuation Officer to find the value in building - Difference in value of valuation officer who valued the building as per assessee had shown in her books of accounts - HELD THAT:- Variation or difference may arise because of various factors and therefore co- ordination bench in the case of Chandra Prakash Jhunjhunwala [2019 (8) TMI 1192 - ITAT KOLKATA] took the view that such minor difference should be ignored and no addition should be made on account of such minor variations. We note that the variation in valuation shown by DVO and the valuation made by the assessee does not exceed 10% hence relying on the judgment of Co-ordinate Bench(supra), on the identical issue, as noted above, we delete the addition - Decided in favour of assessee.
Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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2020 (6) TMI 467
Revision u/s 263 - speculative loss in view of Section 43(5) - Treatment to currency derivative transactions - HELD THAT:- MCX Stock exchange Ltd is a recognized stock exchange and M/s Godavari Exim Pvt Ltd was a member of MCX Stock exchange Ltd; therefore assessee`s currency derivative transactions are covered by exception clause (d) of section 43(5) of the Act, hence loss incurred by the assessee to the tune in respect of currency derivative is not speculation loss, therefore order passed by the AO u/s 143(3) dated 02.11.2016 is not erroneous.
PCIT, on perusal of contract notes, deputed an Inspector to verify the transactions with the broker i.e. M/s Godavari Exim Pvt Ltd. The Inspector found the office and stated that an employee of Om Transport Co. stated that Godavari Exim Pvt Ltd and Om Transport were running under the sign board on Om Transport Co. The said employee of Om Transport Co. affirmed that Godavari Exim Pvt Ltd is a Transport Company.
As submitted that after passing the order u/s 263 he had made enquiries with the stock exchange and found out that said M/sGodavari Exim Pvt Ltd had surrendered its membership of MCX Stock Exchange and after surrendering the same, it was engaged in Transport business.
We note that transactions were duly backed by contract notes, transactions were entered into by account payee cheque. The assessee proved that MCA Stock Exchange Ltd was notified for the purpose of section 43(5) of the Act, vide Notification No. 46/2009 dated 22.05.2009 issued by the CBDT and the currency derivative transaction was done by assessee through broker i.e M/s Godavari Exim Pvt Ltd; who was member of MCA Stock Exchange Ltd. The assessee`s transaction falls under clause (d) of sub-section 5 of section 43 of the Act and therefore currency derivative loss is not a speculation loss. Based on the factual position, as narrated above, the assessment order,u/s 143(3) of the Act dated 02.11.2016 which is subjected to impugned revision proceedings, thus could not be held to be erroneous and prejudicial to the interest of the revenue. Accordingly, we quash the impugned revision proceedings, and set aside learned Commissioner's order in challenge before us.- Appeal of the assessee is allowed.
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2020 (6) TMI 466
Delayed payments in employee’s contribution to welfare fund - HELD THAT:- This issue is squarely covered by the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd. [2009 (11) TMI 27 - SUPREME COURT]. Therefore, employee’s contribution deposited beyond the due dates specified under the relevant PF laws, but before the due date of filing income-tax return as specified in section 43B of the Act, cannot be treated as the deemed income of the appellant within the meaning of section 36(1)(va) read with section 2(24)(x) of the Act. Therefore, the addition of ₹ 19,85,240/- made by the AO has been rightly deleted by ld CIT(A).That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
Addition u/s 36(2) proviso (i) of the Act, pertaining to bad debts - HELD THAT:- We note that the assessee company has debited written off on account of bad debts in its audited Profit &Loss account.CIT(A) relied on the judgment of the Apex Court in the case of TRF Ltd vs CIT [2010 (2) TMI 211 - SUPREME COURT] wherein as held After 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee.
Addition u/s 194C(7) read with section 40a(ia) - HELD THAT:- Through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We have gone through the order of ld CIT(A) and noted that ld CIT(A) has reached on a logical conclusion, hence we note that there is no infirmity in the order of the ld. CIT(A). That being so, we decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is hereby upheld and the ground no. 3 raised by the revenue is dismissed.
Addition which pertains to reimbursement of expenses - HELD THAT:- A.O. has treated the reimbursement expenditure as income due to the facts that TDS was deducted. These reimbursements under no stretch of imagination can be considered to be income at the hands of the appellant. The deduction of TDS on expenditure reimbursed would not change the nature of these payments. There are number of judicial decisions which have held the reimbursement of expenditure does not constitute income assessable to tax.
Addition being Puja and subscription expenses - HELD THAT:- We note that Puja and subscription expenses are incidental to the assessee`s business therefore should be allowed We note that there is no infirmity in the order of the ld. CIT(A) . That being so, we decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is hereby upheld and the ground no. 5 raised by the revenue is dismissed.
Disallowance u/s 14A read with Rule 8D of the Rules - HELD THAT:- Since the assessee does not have any exempt income therefore no disallowance is warranted as held in the case of Chem Investment vs CIT [2015 (9) TMI 238 - DELHI HIGH COURT] wherein it was held that if there is no exempt income earned or received by the assessee, no disallowance is warranted u/s 14A read with Rule 8D of the Rules. Since this issue is squarely covered by the Hon’ble Delhi High Court in the case of Chem Investment (supra) therefore, we dismiss the ground no. 6 raised by the revenue and upheld the order of ld CIT(A). Appeal of the revenue is dismissed.
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2020 (6) TMI 465
Maintainability of appeal - low tax effect - HELD THAT:- Vide CBDT circular No.17/2019 in F.No.279/Misc.142/2007-ITJ(Pt) dated 8th August, 2019, the Income Tax department has further liberalized its policy for not filing appeals against the decisions of the appellate authorities in favour of the taxpayers, wherein tax involved is below certain threshold limits, and announced its policy decision not to file, or press, the appeals, before this Tribunal, against the appellate orders favourable to the assessee in the cases in which overall tax effect, excluding interest except when interest itself is in dispute, is ₹ 50,00,000 or less.
In view of the above factual background and the concession by this CBDT circular, this appeal must be dismissed as withdrawn.
This circular, only enhances the monetary limits and gives further relaxation. The old circular, beyond any dispute or controversy, categorically applied to the pending appeals as on the date of issuance of circular.The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular No. 3/2018 (and subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular.
Appellant shall be at liberty to point out the case so summarily dismissed, either owing to wrong computation of tax effect or owning to such case being covered by the permissible exceptions- or for any other reason, and we will take appropriate remedial steps in this regard.
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2020 (6) TMI 464
Penalty levied u/s. 271(1) ( c) r.w.s.274 - defective notice - AO had sent show cause notice for both the faults envisaged u/s 271(1) (c) of the Act i.e. for both (i) concealment of particulars of income (ii) and for furnishing of inaccurate particulars of income - HELD THAT:- AO has not stricken out the irrelevant portion of the fault/charge which would have spelt out the specific fault/charge against the assessee as per section 271(1) (c) of the Act. Since the proposed notice itself is defective, all subsequent proceedings are bad in law and the penalty imposed by the AO u/s. 271(1)(c) of the Act and confirmed by the Ld. CIT(A) should be cancelled.
Notice proposing penalty should clearly spell out the fault/charge for which the assessee is put on notice, so that he can defend the charge properly. The issue of bad/vague penalty notice was adjudicated by the Hon’ble Karnataka High Court [though in a different context i.e notice issued u/s. 274 read with section 271(1)( c) in the case of CIT vs. SSA’s Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] wherein the Hon’ble High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that if the penalty notice is vague, then the penalty order is also bad in the eyes of law. - Appeal of assessee is allowed.
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2020 (6) TMI 463
Rectification u/s 154 - Rate of tax u/s 115BBE on undisclosed investment - Applicability of provisions of section 69 - as per AO amount has been surrendered by way of undisclosed investment in stock from undisclosed income and the provisions of section 69 and section 115BBE are clearly attracted and there cannot be two views about it - undisclosed investment in stock from undisclosed income during the course of survey and in the return of income, the same has been offered to tax under the head “business income” and the return of income so filed has been accepted by the Assessing officer without making any adjustment/variation either in the quantum, nature or classification of income so offered by the assessee - HELD THAT:- Though the Assessing officer has issued a show-cause as to why penalty proceedings u/s 271(1)(c) may not be initiated in respect of such investment, however, he has not issued any show-cause for invoking provisions of section 69 of the Act or has called for any explanation of the assessee regarding the nature and source of such investment. In fact, the assessment order so passed by the Assessing officer is silent about invoking the provisions of section 69 of the Act. Where the provisions of section 69 have not been invoked by the Assessing officer while passing the assessment order u/s 143(3), going by the plain language of section 115BBE, the latter cannot be invoked in the instant case.
It is therefore not a case where provisions of section 69 have been invoked by the Assessing officer while passing the assessment order u/s 143(3) and at the same time, he has failed to apply the rate of tax as per section 115BBE
Had that been the case, it would clearly be a case of rectification and powers under section 154 can be invoked. However, in the instant case, the Assessing officer has not invoked the provisions of section 69 at first place while passing the assessment order u/s 143(3), therefore, the provisions of section 115BBE which are contingent on satisfaction of requirements of section 69 cannot be independently applied by invoking the provisions of section 154 of the Act. We therefore upheld the order of the ld CIT(A) and the matter is decided in favour of the assessee and against the Revenue.
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2020 (6) TMI 462
Assessment u/s 153A/153C - Whether document was incriminating in nature nor any addition has been made by the AO based on such seized documents? - basis for addition in this case is based on survey material - HELD THAT:- It is clear that the satisfaction note u/s.153C was based on certain seized documents found during the course of search and seizure action initiated in Kalra Group cases/Consortium Securities Pvt. Ltd.
From a bare perusal of the ‘satisfaction’ note, it can be seen that the seized documents are mainly MOUs between promoters of Realtech group, namely, Shri Yogesh Gupta, Shri Pankaj Dayal and Shri Rajeev Behl along with the some working of the Realtech Group. There is no reference in the assessment order or in the seized documents that these are in the nature of incriminating documents from where inference can be drawn that there is any undisclosed income or any other income which has escaped assessment.
Now it is well settled law to acquire jurisdiction u/s.153C, the seized documents must be incriminating and must relate to the assessment year whose assessment are sought to be reopened. If the documents seized have no relevance or bearing on any income of the assessee for the relevant Assessment Year which could not possibly reflect any undisclosed income, then provision of Section 153C cannot be resorted too. Here, in this case, the seized documents as noted above and also noted by the Ld. CIT(A) is not incriminating at all and has no co-relation with any undisclosed income of the assessee and accordingly based on such documents the jurisdiction u/s.153C could not have been initiated.
Onus was on the Revenue to show that incriminating material/ document recovered at the time of search belongs to the assessee and it is not enough for the Revenue to show that documents pertained to the assessee or contains information that relates to the assessee.
Also it is seen that the Ld. CIT (A) has noted that the assessee has disclosed a sum of ₹ 24.50 crores as additional income during survey owing to such real estate business of the assessee, and therefore, if at all there is any element of cash payment or cash income and the source of income of the business is the same and no further evidence has been found or investigated during the assessment proceedings, then no addition can be made again in this Assessment Year.- Decided against revenue.
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2020 (6) TMI 461
Benami transaction - real owners of the property - unity of title and unity of possession between the parties in respect of suit land and the structures - Some of the lands were encroached by the encroachers and some of the lands have gone into the widening of road, as such, the plaintiff has prayed before the trial court to partition the property into half -half share irrespective of the sale deeds, as the property has been purchased under the provisions of Benami Transaction (Prohibition) Act, 1988 - HELD THAT:- This second appeal is admitted on the following substantial question of law:
(i) Whether the Exhibit-10 and Exhibit-A & A/1 have been rightly considered by the learned appellate court?
(ii) Whether the property is hit by the provision of Benami Transaction (Prohibitory) Act, 1988?
(iii) Whether without any material showing the jointness of the parties, the appellate court can declare that defendant nos. 2 & 3, who are sons of defendant no.1, are not the real owner of the suit land, which was transferred to them by way of registered sale deed dated 28.07.1985 (Exhibit-A).
Call for Lower Court Records.
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2020 (6) TMI 460
Cancellation of summons - Jurisdiction - Import of jewellery in violation of Baggage Rules - High Profile case - Connivance of the Police officers - prohibition on customs authority for initiating enquiry under Section 108 of the Customs Act, 1962 - offence under Section 133 of Customs Act - HELD THAT:- The Commissioner of Customs on 26th March, 2019 prima facie formed his opinion to enquire and seek presence of the petitioners in connection to an incident that occurred on the night of 15/16th March, 2019 and sought aid in enquiry directing Joint/Additional Commissioner of Customs, AIU, NSCBI, Airport, Kolkata to issue summons to the petitioners and the petitioners were directed to appear before Additional Commissioner of Customs (Airport Administration) on 8th April, 2019 for giving evidence and/or produces documents or things in relation to the incident which occurred on 15th /16th March, 2019.
A separate issue that some unknown police officers entered the international arrival hall of NSCBI Airport, Kolkata and assisted the writ petitioners to exit the gate of customs and such incident was informed to the jurisdictional police station by the Assistant Commissioner of Customs by filing a complaint on 22nd March, 2019. The said complaint was not only against the writ petitioners but also against some unknown police officers who assisted the writ petitioners. The complaint was filed on 22nd March, 2019 is a undisputed fact - The customs authorities had filed the complaint on 22nd March, 2019 and after the complaint was filed, the police has acted upon the same by taking magisterial approval under section 155 of the Code of Criminal Procedure. Thus, the customs lost its jurisdiction to inquire any further in respect of the complaint and is restrained from making parallel inquiry.
Section 108 of the Customs Act clearly mandates that proceedings under section 108 is quasi judicial in nature. The person issuing summons has to satisfy qualitative ingredients as prescribed in Section 108 of the Customs Act. In this case, the Additional Commissioner, AIU NSCBI Airport, Kolkata who has issued the summons dated 26th March, 2019 to the petitioners is not the inquiry officer and he has not formed any opinion regarding attendance of the petitioners and he has only directed the petitioners to appear before another Additional Commissioner (Airport Administration) Customs, who is also not the inquiry officer. But when a statute provides that the power under Section 108 of the Customs Act must be exercised in a certain manner, then such power has to be wielded in the same manner and none other. For the above reasons the summons dated 26th March 2019 issued to the petitioners are quashed and set aside.
Petition disposed off.
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