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Showing 121 to 140 of 1564 Records
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2024 (8) TMI 1444
Seeking grant of bail - clandestine supply of branded TMT bars - evasion of GST - whole prosecution case is based upon the statement of Rippan Kansal and no incriminating article or evidence was discovered by the department from the search and inspection of the premises and office of the present applicant - reliability of statement - HELD THAT:- In Sanjay Chandra v. CBI [2011 (11) TMI 537 - SUPREME COURT], the Hon'ble Apex Court noticed that it was a case of fraud wherein by cheating and dishonestly inducing delivery of property by using as genuine a forged document was involved but the punishment for the offence was imprisonment for a term which may extend to seven years. The Hon'ble Apex Court held that it is, no doubt, true that the nature of the charge may be relevant but at the same time the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration.
Considering the entire facts and circumstances of the case and keeping in view the fact that in the instant matter trial has not started even yet and the complicity of the accused applicant is yet to be determined in trial and everything relevant to the matter is under control of the department itself and there is probably nothing on record to demonstrate that the applicant, if enlarged on bail, would in any way adversely affect the trial; further no final verdict of any Court / Authority for any criminal liability to the credit of the applicant has been brought to the notice of this Court and noticing that the alleged offence is punishable with the maximum period of imprisonment of five years, the applicant is in jail since 20.6.2024, without commenting upon the merits of the case, it is opined that the applicant has made out a case for bail.
Let the applicant be released on bail subject to fulfilment of conditions imposed - the bail application of the accused-applicant is allowed.
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2024 (8) TMI 1443
Failure on the part of the respondent to process its application for cancellation of GST registration - reason for seeking cancellation of GST registration was that it had discontinued its business - requirement to submit details as to the tax paid along with stock register and bank statements etc.
HELD THAT:- The first ground, “Cancellation Details – Others (Please specify) – Please pay due tax and penalties”, is untenable. The petitioner stated that its reason for seeking cancellation of GST registration was that it had discontinued its business. The cancellation of GST registration would not impinge upon the liability of the petitioner to pay the outstanding tax and penalties, if any.
The second reason for proposing to reject the petitioner’s application dated 13.06.2024 appears to be a requirement to submit details as to the tax paid along with stock register and bank statements etc. This is also untenable in view of the settled law that the cancellation of the GST registration would not affect the petitioner’s liability to pay the taxes due or to be answerable for any statutory violation prior to the date of cancellation.
The scrutiny as to the petitioner’s tax liability for a prior period cannot be a ground for refusing cancellation of GST registration - the respondent is directed to process the petitioner’s application for cancellation of GST registration.
Petition disposed off.
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2024 (8) TMI 1442
Grant of bail - wrongful availment ITC by generating fake invoices causing wrongful gain to the three companies and wrongful loss to the Government - evidence available against the petitioner regarding committing a crime under the CGST Act or not - HELD THAT:- The analysis of the Court below suffers from perversity as it is not the condition precedent for prosecuting a person under section 132 of the CGST Act. The provisions explicitly state that whoever commits or causes to commit and retain the benefits arising from any supplies, goods, or both without the issue of any invoice or without supplying the goods avails input tax credit is liable to prosecution. Thus, the absence of material indicating the accused petitioner as the manager of the three firms is not essential. The Court below did not assess the consequence and spirit of the provision under section 132 of the CGST Act. The Court completely ignored the incriminating material collected against the petitioner.
The Court below while considering the bail application of respondent, did not consider the gravity of the offences and enlarged the respondent on bail misconstruing the facts and the legal position. It is also pertinent to mention here that while considering the bail application, it is not desirable for the Court to enter into the question of legality of the arrest, the legality of the arrest can be questioned only if there is a gross violation of any provision of the Act. In the present case, before arresting the respondent, the respondent was duly informed regarding grounds of arrest.
The application for cancellation of bail is allowed and the order granting bail dated 03.11.2023 passed by learned Additional Sessions Judge No.2, Jaipur Metropolitan-II is cancelled accordingly.
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2024 (8) TMI 1441
Violation of principles of natural justice - petitioner’s right of opportunity of personal hearing in the manner as provided under the law has been violated - HELD THAT:- Section 75 of the RGST Act of 2017/the CGST Act of 2017 contains general provisions relating to determination of tax. Sub-section (2) thereof explicitly provides that where any Appellate Authority or Appellate Tribunal or Court concludes that the notice issued under sub-section (1) of Section 74 of that Act is not sustainable for the reason that the charges of fraud or any willful-misstatement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person, deeming as if the notice was issued under sub-section (1) of Section 73 of that Act.
The respondents have admitted the fact that even though the respondents intended to grant opportunity of personal hearing to the petitioner and notices to that effect were also uploaded on the portal of the Department, the petitioner’s case is that the same were though uploaded on the portal of the Department, but were not reflected on the GSTIN Portal of the petitioner, which also goes as an undisputed factual position. This is clear from the additional affidavit filed by the petitioner and the response received pursuant to that query which is also annexed along with the additional affidavit filed by the petitioner. It is, therefore, apparent that the statutory mandate was not complied with and impugned orders were passed against the petitioner in respect of different assessment years.
The matters are remanded back to the competent authority for affording opportunity of personal hearing to the petitioner and passing appropriate orders in accordance with law - Petition allowed by way of remand.
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2024 (8) TMI 1440
Classification of goods - case of the petitioner is that the products of the petitioner are classifiable under the heading 7615 of Customs Tariff Act, 1975, wherein, a contention of the Department so that the some products are liable to be classified under the heading of 7607 - HELD THAT:- Earlier, the petitioner had suffered similar orders in the hands of the second respondent herein vide order No.13/2020, dated 28.10.2020, in respect of which, the second respondent had passed a Common Order No.13-19/2020 on 28.10.2020. The petitioner filed W.P.(MD)Nos.6485 to 6492 of 2023 against the said Order dated 28.10.2020. The Court disposed of these Writ Petitions filed by the petitioner in W.P.(MD)Nos.6485 to 6492 of 2023, vide Order dated 13.09.2023, following order of the Hon'ble Supreme Court in Commissioner of Central Excise vs. Hindalco Industries Limited in Civil Appeal No.7561 of 2009, dated 08.02.2022 [2023 (6) TMI 844 - SC ORDER]. The Writ Petition was allowed holding that 'this Court is of the considered opinion that the product Aluminium Foil Container is classifiable under 7615 with GST 12%. Hence the impugned order is liable to be quashed and accordingly quashed.'
These Writ Petitions have to be allowed as the order of this Court has been accepted by the Commissioner GST Central Excise, Madurai. Consequently, the amount, that was pre-deposited by the petitioner, was directed to be refunded in accordance with law within 30 days from the date of receipt of a copy of this order.
Petition allowed.
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2024 (8) TMI 1439
Seeking revocation of cancelled GST registration - no business for twelve months on account of resurgence of the COVID 19 pandemic - non-filing of returns - HELD THAT:- The reason set out in the order of cancellation is non filing of returns for a continuous period of more than twelve months.
In Suguna Cutpiece [2022 (2) TMI 933 - MADRAS HIGH COURT], this Court directed restoration of GST registration subject to several terms and conditions. The said judgment was followed thereafter in many cases.
In the present case also, the restoration of the GST registration is directed subject to and conditional upon fulfilling the conditions imposed - petition disposed off.
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2024 (8) TMI 1438
Supply of ‘specified actionable claims’ under section 2(102A) of the GST Act, 2017 or not - contributions/participation money paid/ stakes bought by the players for playing physical/offline game of bridge (when played for money) or winning thereof or organizing games/tournaments of bridge (when played for money) - HELD THAT:- The actionable claim is a claim to unsecured debt or a claim to beneficial interest in movable property not in possession of the claimant. The applicant has submitted that contract bridge or simply bridge is a trick taking card game using a standard 52 card deck. In its basic format, it is played by four players in two competing partnerships with partners sitting opposite to each other around a table. The game consists of a number of deals each progressing through four phases. The cards are dealt with the players then the players call or bid in an auction seeking to take the contract specifying how many tricks the partnership receiving the contract needs to take to receive points for the deal. During the auction, partners use their bids to exchange information about their hands including overall strength and distribution of the suits. No other means of conveying or implying any information is permitted.
In the case of State of Andhra Pradesh v. K. Satyanarayana & Ors. [1967 (11) TMI 109 - SUPREME COURT], the Hon’ble Supreme Court tested the game of Rummy on the principle of skill versus chance and held that “The game of Rummy is not a game entirely of chance like the 'three-card' game mentioned in the Madras case to which we were referred. The 'three card' game which goes under different names such as 'flush', 'brag' etc. is a game of pure chance. Rummy, on the other hand, requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards - it cannot be said that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill. The chance in Rummy is of the same character as the chance in a deal at a game of bridge.”
In Gameskraft Technologies (P.) Ltd vs Directorate General of Goods Services Tax Intelligence [2023 (5) TMI 926 - KARNATAKA HIGH COURT] the issue before the Hon’ble High Court of Karnataka was whether offline/online games such as Rummy which are mainly/preponderantly/ substantially based on skill and not on chance, whether played with/without stakes tantamount to ‘gambling or betting’ as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017.
It is found that the issue whether offline/online games such as Rummy which are played with/without stakes tantamount to ‘gambling or betting’ as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017 is pending before the Hon’ble Supreme Court.
It appears that the proviso to section 2 (105) specifically deals with the supplier who organizes or arranges, directly or indirectly, supply of specified actionable claims. The issue in the present case is also to determine whether organizing games/tournaments of bridge (when played for money) qualifies as supply of ‘specified actionable claims’. However, the aforesaid proviso specifically mentions that consideration in money or money’s worth has to be paid or conveyed to the supplier or through the supplier or placed at the disposal of the supplier - in the instant case, the applicant neither provides any online platform for participating in the game of bridge nor retains any amount of money as ‘platform fee’ from the deposit amount made by each player. Further, the applicant being the organizer of the bridge tournament does not lien over the money or money’s worth contributed by players. The applicant has submitted that the contribution of money is deposited in a common pool and an independent person sponsors prize money.
Undisputedly organizing a tournament and allow the players to take part in the tournament against participation fee would qualify to be a supply of services by the organizer to the participants. However, even it is held that playing of bridge against money qualifies to be ‘specified actionable claim’, the applicant cannot be held to be engaged in supply of specified actionable claim by organizing the tournament of bridge where contribution of money deposited in a common pool and the applicant does not lien over this money or money’s worth contributed by players.
The applicant cannot be held to be a supplier of ‘specified actionable claim’ and therefore shall not be liable to pay tax by way of organizing a tournament of physical /offline games of contract bridge when played for money.
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2024 (8) TMI 1437
Delay in filing the revision application u/s 264 - Nature of receipt - subsidies received by the petitioner - capital receipts or revenue receipts - According to the petitioner the aforesaid subsidies were erroneously treated as revenue receipts instead of capital receipts and return of the income was processed under Section 143(1) without framing any assessment u/s 143(3) - HELD THAT:- It is not in dispute that as per the decision of the Hon’ble Supreme Court in case of Chaphalkar Brothers [2017 (12) TMI 816 - SUPREME COURT] the subsidies received by the petitioner would be capital receipt and not revenue receipt. This aspect is also considered by the Tribunal in the case of the petitioner while allowing the additional ground raised by the petitioner for Assessment Year 2012-13.
The order of the Tribunal was pronounced on 20th February, 2019 and the petitioner has field the Revision Application on 01.07.2019 i.e. within five months from the date of receipt of the order of the Tribunal.
In such circumstances, as held in case of Hindalco Industries Ltd. [2024 (1) TMI 1039 - BOMBAY HIGH COURT]the Commissioner should not have taken a pedantic approach but the approach ought to have been liberal and as per the provisio to Section 264(3) of the Act, he ought to have considered the sufficient cause for delay in preferring the application as there was no negligence on the part of the petitioner nor there was any bona-fide which can be imputable to the petitioner and revisional power ought to have been exercised to advance the substantial justice.
Adopting the above reasoning and considering the facts of the case, the impugned order passed by dated 20th March, 2020 passed by the respondent under Section 264 of the Act is hereby quashed and set aside and the delay in preferring the revision application is ordered to be condoned and the matter is remanded back to the respondent to decide the same on merits.
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2024 (8) TMI 1436
Validity of the assessment order u/s 143(3) - Non issuing of Show cause notice - case of the petitioner was transferred by order from faceless Assessing Officer to the respondent Jurisdictional Assessing Officer u/s 144(B)(8) - HELD THAT:- Since 2015 as per the desire of the Board, AO is mandatorily required to issue an appropriate show cause notice duly indicating the reasons for the proposed additions/ disallowance along with necessary evidence/reasons forming basis of the same before passing the final order.
As the matter of fact, such position will continue even when the case is transferred to the respondent AO u/s 144B(8) as per Circular No. 27/2019 which was issued by the CBDT applicable to the cases where the assessment were framed not covered under the E-assessment notified by the Board.
As per clause 4 of the Circular No. 27/2019 it is specifically provided that in case where assessment proceedings are being carried out through E-proceedings includes all the cases other than cases covered under the E-Assessment Scheme ,2019, personal hearing/attendance may take place where a show-cause notice contemplating any adverse view is issued by the AO and the assessee requests through the E-filing account for personal hearing to explain the matter.
Thus, when the case of the petitioner is transferred to AO u/s 144 (B)(8), the Circular dated 06.09.2021 would be applicable which also provides for that the request for personal hearing shall be allowed after the assessee has filed written submissions to the show-cause notice meaning thereby that the show cause notice is a prerequisite for granting personal hearing to the petitioner assessee and in absence of the show-cause notice, no opportunity of personal hearing would be made available to the assessee in cases which are transferred from faceless Assessment Unit to the JAO.
Reliance placed by the learned advocate for the respondent on the notices issued under section 142(1) of the Act would not be of any help as section 142(1) is with regard to the inquiry before the assessment where the Assessing Officer for the purpose of making the assessment under the Act may serve any person who has made a return for furnishing the return, a notice requiring to provide various details for the purpose of framing the assessment.
As the petitioner assessee has furnished all the details it would be incumbent upon respondent Assessing Officer to issue show cause notice for the proposed addition duly indicating the reasons for the proposed addition/disallowance along with necessary evidence/reasons forming the basis of the same as per the Instruction No. 20/2021 read with Circular No. 27/2019 to enable the petitioner to avail the opportunity of hearing in compliance of the principle of natural justice.
AO has committed fragrant breach of the principle of natural justice by not issuing show-cause notice indicating reasons for proposed addition/disallowance along with necessary evidence forming basis of the same and therefore, impugned assessment order is hereby quashed and set aside and the matter is remanded back to the stage of issuance of show-cause notice by the Assessing Officer to the petitioner duly indicating the reasons for proposed addition/disallowance along with necessary evidence reasons.
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2024 (8) TMI 1435
Applicability of provisions of section 92(3) to prohibit the determination of the arm's length price of intra-group services - whether ITAT is legally justified in holding that adjustment on account of determination of arm's length price of intra-group services has to be reduced from the cost base of the assessee - ITAT justification in holding that in case of deternunation of arm's length price of several categories of international transactions separately the transfer pricing adjustment in respect of one transaction will require adjustment to second category of transaction resulting in reduced profit
HELD THAT:- The fact that if the challenge as raised by the appellant were to be accepted, it would result in a reduction of the income chargeable to tax is not questioned or disputed before us.
In view of the aforesaid, we find that no exception can possibly be taken to the view as expressed by the ITAT. No substantial question of law arises. The appeal is thoroughly misconceived and shall consequently stand dismissed.
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2024 (8) TMI 1434
Denial of Tax Withholding Certificate u/s 197 - supply of computer software to associated entities - whether constitute "royalty" under the Income Tax Act and the India-US Double Tax Avoidance Agreement (DTAA)? - as argued reimbursement payments made by it did not constitute income liable to tax under the Act - HELD THAT:- As is apparent from a reading of Rule 28AA(2), the competent authority stands placed under a statutory duty to determine the estimated liability taking into consideration aspects such as tax payable on estimated income, tax payable on the assessed or returned income in the previous years, existing liabilities, advance tax payments as well as tax deducted at source or tax collected at source in the previous years. Rule 28AA of the 1962 Rules thus clearly required the authority to confer and accord due consideration on aspects pertaining to chargeability when raised by the assessee.
What needs to be emphasised is that merely because the grant of a certificate under Section 197 of the Act is not accorded finality or may not amount to a definitive determination on the question of taxability, the same would not absolve the authority from considering all aspects in light of the statutory mandate referred to above.
We are constrained to observe that while passing the impugned order, the respondent has clearly failed to bear the aforesaid aspects in consideration. Not only was the decision in Engineering Analysis cited for its consideration, it also appears to have been vehemently urged that the supply or licensing of software cannot possibly be viewed as being “royalty” either under the Act or the DTAA. The aforesaid submissions could not have possibly been negated merely on the basis of a Draft Assessment Order.
In the scheme of Section 144C of the Act, a draft order of assessment is clearly inchoate and does not represent a final or conclusive verdict on the question of chargeability to tax. This, since on receipt of the draft order, the assessee is entitled in law to file objections before the DRP, and if the said objections are not accepted, the same can always be assailed before the ITAT. In any case, the final Assessment Order would have to await the completion of determination by the DRP. Till such time, the Draft Assessment Order clearly does not constitute a determination under the Act of which cognizance could have possibly been taken.
As decided in EY Global Services Ltd. [2021 (12) TMI 571 - DELHI HIGH COURT] for the payment received by EYGSL (UK) from EYGBS (India) to be taxed as "royalty", it is essential to show a transfer of copyright in the software to do any of the acts mentioned in section 14 of the Copyright Act, 1957. A licence conferring no proprietary interest on the licensee, does not entail parting with the copyright. Where the core of a transaction is to authorise the end- user to have access to and make use of the licenced software over which the licensee has no exclusive rights, no copyright is parted with and therefore, the payment received cannot be termed as "royalty".
EYGBS (India), in terms of the service agreement and the memorandum of understanding, merely receives the right to use the software procured by the EYGSL (UK) from third-party vendors. The consideration paid for the use of the same therefore, cannot be termed as "royalty" as held by the Supreme Court in Engineering Analysis Centre [2021 (3) TMI 138 - SUPREME COURT]. In determining the same, the rights acquired by the EYGSL (UK) from the third-party software vendors are not relevant. What is relevant is the agreement between the EYGSL (UK) and the EYGBS (India). As the same does not create any right to transfer the copyright in the software, the same would not fall within the ambit of the term "royalty".
We, accordingly, allow the instant writ petitions and quash the impugned orders - The application of the petitioner for grant of Nil Withholding Tax Certificates shall consequently be examined afresh.
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2024 (8) TMI 1433
Withdrawal of immunity as granted by the Settlement Commission - immunity as extended on the applicants paying up the amounts as directed therein i.e., 25% of the demand by 15.03.2016 and the balance 75% in equal monthly installments to be paid in Financial Year 2016-17 but petitioner did not pay up the amounts within the period provided in the order - present writ petition was filed challenging the withdrawal of immunity on the ground that the petitioner was not heard
HELD THAT:- We find that the communication of the Government of India only permitted further proceedings and it cannot be considered to be an order of withdrawal of immunity. The immunity was granted by the Settlement Commission and was subject to the condition of payment being satisfied. The Central Government cannot withdraw the immunity granted by the Settlement Commission, if the conditions are satisfied. But, on the other hand if the conditions are not satisfied within the time period, the immunity would automatically cease to operate. The order of the Central government hence only directs proceedings on the cessation of immunity. The hearing of the petitioner is an empty formality because the petitioner does not have a case that he even paid one pie as per the settlement order.
The immunity granted was on condition of the petitioner satisfying the Settlement Commission’s order which also prescribed specific time frame for payment. The Settlement Commission’s order works itself out if the payment is not made in accordance with the directions therein and automatically, the immunity stands withdrawn. We find absolutely no reason to interfere with the order.
Now, the learned counsel specifically takes us to an order passed by this Court at the time of admission by a different Division Bench, on 25.08.2021. After referring to the submission made by the learned counsel for the Department that there was default in compliance of the Settlement Commission’s order based on which the immunity ceased; the learned Judges opined that still the revenue is at fault for not having taken appropriate proceedings.
We agree with respondent that the interim order passed by another Division Bench, was only on the petitioner’s submission that the amounts to be paid are Rs. 2,72,40,648/-. It is also pertinent that even the undertaking as seen from the interim order has not been complied with. We also have our own reservation as to whether by a judicial order, the necessary consequences of an order of the Settlement Commission, on non-compliance, can be set at naught by this Court. However, we need not look into that aspect since even according to the petitioner he has not complied with the interim order.
The order of the Settlement Commission and the interim order of this Court has worked itself out; both, on noncompliance of the conditions of payment, by the petitioner. The consequences with respect to immunity having been set at naught, would be visited on the petitioner. The Settlement Commission’s order would not be enforceable, but we made it clear that the delayed payments made would be set-off against the demands raised against the petitioner either interest or principle due, as the statute mandates.
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2024 (8) TMI 1432
Penalty u/s 271B - petitioner failed to submit the audit report in time - AO concluded that the filing of the tax audit report belatedly shows the mala fide intention of the assessee to evade tax on his income - HELD THAT:- In view of the fact that the gross income disclosed by the assessee was accepted subsequently by the Assessing Officer and the total tax liability shown in such return was also accepted, the conclusion that the assessee filed the tax audit report belatedly with the mala fide intention to evade tax cannot be sustained. In clause (iii) of paragraph 5, the Assessing Officer concluded that the plea that the return of income and audit report could not be filed in time due to severe low back pain of the assessee appears to be a fabrication to mislead the penalty proceedings. In support of the submission that the assessee suffered lower back pain, the impugned order discloses that photocopies of the doctor's prescription was provided. Once again, in view thereof and in view of the factual position with regard to the return of income, this conclusion cannot be sustained.
Thus, the order impugned calls for interference because speculative findings contrary to the facts on record were recorded therein. Therefore, the writ petition is disposed of and the order impugned herein is quashed. As a corollary, the matter is remanded for reconsideration. The Assessing Officer is directed to provide a reasonable opportunity to the petitioner, take into account all material facts and applicable provisions, including Section 273B and issue a reasoned order.
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2024 (8) TMI 1431
Tax payable u/s 115A or 20% under India-Italy DTAA - Royalty agreement as a new agreement or extension of the License and Technical Assistance agreement - whether the second agreement was a continuation of the first agreement or it was a separate agreement and that would decide whether the tax payable was at 10.56% or 20% u/s 115A of the Act.
HELD THAT:- Tribunal has analysed both the agreements and came to a factual finding that agreement dated 1st April 2008 was an independent agreement. ITAT has spelt out the difference between two agreements and also the law as prevailing.
One of the factors which has influenced the ITAT to arrive at the conclusion that the old agreement provided the trademarks to be used by assessee were only restricted to Ape 501 and Ape 601, whereas, as per the new agreement assessee has provided the license to manufacture and sell the vehicles under the name of Ape, which encompasses all kinds of vehicles.
ITAT also has considered the fact that assessee in view of the extended license provided also launched Ape city diesel of three wheelers under Ape brand which was different from Ape 501 and Ape 601 brands, which it could not have done under the old agreement. The ITAT also observed that the territory which was covered under the old agreement was different from the territory that was covered under the new agreement and so on.
In view of these differences, the ITAT came to the conclusion that the agreement dated 1st April 2008 was an independent agreement and distinct from the earlier agreement dated 26th March 1998 and not an extension of the first agreement.
Since these are factual findings and in our view possible findings and by no stretch of imagination can be termed perverse, no substantial questions of law arise.
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2024 (8) TMI 1430
Denial of exemption claim u/s. 80P(2)(d) - interest income has not been earned from the investment in another cooperative society - HELD THAT:- The assessee has claimed a sum as exempt income u/s. 80P(2)(d) stating that the said income has been earned as interest from the deposit with cooperative banks.
Since the facts in the case of the Coordinate bench in [2024 (6) TMI 1390 - ITAT MUMBAI] were same and similar, therefore, is squarely applicable to the facts and circumstances of the present case also.
Thus, we hold that the assessee is entitled for deduction u/s. 80P(2)(d) of the Act towards income received from deposit with cooperative bank for the A.Y. 2015-16 and 2018-19. Accordingly, the Ld. AO is directed to allow the deduction claimed by the assessee for the A.Y. 2015-16 and 2018-19. Appeal by assessee allowed.
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2024 (8) TMI 1429
Admission of additional evidences by CIT(A) - Whether CIT(A) did not insist on the comments of the AO through the remand report under Rule 46A of the Income Tax Rules? - AO disallowed the sampling/designing expenses and foreign travel expenses primarily on the basis that the assessee did not submit any explanation as to how the same were for the business of the assessee - HELD THAT:- As discernible from the perusal of the impugned order that the CIT(A) requested the AO to offer his comments/report on the submissions of the assessee, in conformity with the provisions of Rule 46A of the Rules.
AO did not respond to such a request and did not file any remand report in response to the submissions filed by the assessee. Thus, it is evident from the record that a reasonable opportunity was allowed to the AO to respond to the written submissions of the assessee and since the AO chose not to file any remand report, CIT(A) proceeded to adjudicate the appeal based on documents/evidence on record. From the plain reading of Rule 46A of the Rules, we find that there is no provision which requires the learned CIT(A) to insist on the comments of the AO. Therefore, we find no merits in the contention of the Revenue raised in grounds no. A and B of the present appeal, and accordingly the said grounds are dismissed.
Addition on account of sampling/design expenses - CIT(A) deleted addition - It is the submission of the assessee that these expenses were incurred for the purpose of the business of the assessee and form an integral part of its operations as a marketing support service provider. In support of its claim, the assessee has also furnished various evidence of sampling/designing expenditure, such as bank statements, payment vouchers, sample reimbursement statements, purchase bills of fabrics, etc., which forms part of the paper book.
Revenue apart from harping that opportunity was not granted to the AO to comment on the evidence produced by the assessee before the learned CIT(A), did not bring any material on record to controvert the detailed submissions of the assessee supported by documentary evidence. Accordingly, we are of the view that considering the business model of the assessee the expenditure incurred on sampling/designing is pivotal for the conduct of its business efficiently and profitably, and therefore has rightly been allowed by CIT(A). Accordingly, ground no. C raised in Revenue’s appeal is dismissed.
Addition on account of foreign travel expenses - CIT(A) deleted addition - As per the assessee, the entire expenditure incurred by the said employee on its boarding, lodging, and local travel was authorised by the management of the assessee company and was fully incurred for the advancement/expansion of the assessee’s business. In support of the aforesaid claim, the assessee has placed on record documentary evidence containing ledger account, chart of expenses furnished by the employee, and invoices of boarding, lodging and currency purchase. No material has an brought on record by the Revenue to doubt the genuineness of the claim of the assessee that the said expenditure was incurred for the purpose of the business. Accordingly, we find no infirmity in the impugned order in allowing the foreign travel expenses incurred by the assessee. As a result, ground no. D raised in Revenue’s appeal is dismissed.
Addition on account of website design expenses - CIT(A) deleted addition - It cannot be disputed that in today’s corporate world having a website and digital presence has become essential for increasing the digital footprint of the company. Considering the business profile of the assessee, wherein it acts as an intermediary between foreign customers and Indian manufacturers, having a fully functional and updated website is a necessity not only for having a digital presence but also for the efficient working of its business - any expenditure for keeping the website operational and updated with the latest product catalogues cannot be said to be providing enduring benefit to the assessee, and therefore, is not capital in nature. Apart from merely doubting the genuineness of the expenditure, the Revenue did not examine the fact that the website is still functional and provides information regarding various brands, partners, etc. with whom the assessee is having business transactions. Accordingly, we find no infirmity in the impugned order in allowing the website designing expenses.
Addition on account of excess salary paid to directors and their relatives - CIT(A) deleted addition - The assessee submitted that the salary paid to the directors is commensurate with their services. It is evident from the record that the AO has merely compared the salary of the directors, without examining the services rendered by them to the assessee company. Therefore, considering the experience and magnitude of operations handled by the aforenoted directors, we are of the considered view that the learned CIT(A) has rightly deleted the disallowance of salary made by the AO.
Appeal by the Revenue is dismissed.
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2024 (8) TMI 1428
TP Adjustment on bank guarantee - HELD THAT:- As decided in own case [2023 (12) TMI 273 - ITAT MUMBAI] for AY 2009-10 it can be seen that the impugned transactions were considered as international transactions and yet the Bench came to the conclusion that no TP adjustment can be made and the addition was deleted.
Similar was the fact in AY 2010-11 [2024 (6) TMI 1391 - ITAT MUMBAI] where the Co-ordinate Bench, has decided the quarrel in favour of the assessee and against the revenue.
Allowance of depreciation on the written down value (WDV) of plant & machinery - HELD THAT:- As decided in own case AY 2010-11 [2024 (6) TMI 1391 - ITAT MUMBAI] machinery was purchased by the principal but the assessee had been vested with the possession of them and utilized them for its business.It is not disputed that the principal has debited the cost of machinery to the assessee's account and the assessee has capitalized it in its books of account.Ground raised by the Revenue is dismissed.
Addition out of professional fees paid for arbitration awarded - HELD THAT:- The reason for disallowance during the year under consideration is simply to follow the earlier year disallowance and to keep the issue alive. AO for the year under consideration also has not disputed the fact that the professional fee is incurred for the purposes of business. Therefore, respectfully following the decision of the Co-ordinate Bench AY 2010-11 [2024 (6) TMI 1391 - ITAT MUMBAI] we hold that the CIT(A) has rightly deleted the disallowance made by the AO.
Exclusion of tax on ESOP in computing the book profit u/s 115JB - HELD THAT:- Any any tax payment made by the employer on behalf of the employee is not covered under the definition of income tax. In fact, Section 40(a)(v) of the Act disallows such payments by the employer on behalf of the employee. Considering the definition of Income tax in Clause (a) of Explanation 1 to Section 115JB of the Act, we do not find any reason to interfere with the findings of the ld. CIT(A). This Ground is accordingly dismissed.
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2024 (8) TMI 1427
Deduction u/s 80P(2)(a) - interest on fixed deposit receipt and savings bank account received by the assessee from the cooperative banks for - HELD THAT:- According to section 2(10) of the Maharashtra State cooperative societies act 1860 provides “Co-operative bank” means a Co-operative society which is doing the business of banking as defined in clause (b) of sub-sections (1) of section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function as an Agricultural and Rural Development Bank under Chapter XI.
The cooperative banks are also the cooperative societies which are doing the banking business. In view of this it cannot be said that the interest income earned by the assessee on account of fixed deposit receipt is in savings bank account is not received from a co-operative society.
It may be an altogether another thing that such cooperative societies are carrying on the banking business. Therefore, these banks are accepting fixed deposit receipts from the assessee. In view of the above analysis, it is clear-cut that cooperative banks are also co-operative society and interest income earned by the assessee on fixed deposit as well as savings bank account is an investment income of the assessee and therefore it qualifies for deduction u/s 80P(2)(d) of the act.
Number of decisions of the coordinate benches are cited wherein it has been held that a co-operative society is eligible for deduction of investment income if it is placed with other co-operative banks which is also a co-operative society.
DR has failed to show that the cooperative banks are not registered under the cooperative societies.
AO is directed to grant deduction to the assessee u/s 80P(2)(d) of the act on interest on fixed deposit receipt and savings bank account received by the assessee from the cooperative banks for both the years. Assessee appeal allowed.
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2024 (8) TMI 1426
Penalty u/s 271(1) - alleged willful furnishing of inaccurate particulars of sales tax concession - HELD THAT:- There appears to have been no intent of the assessee to submit inaccurate particulars as alleged and the CIT(A) has sustained the penalty only on presumption that since the assessee is a big organization, the mistake could not have crept.
We are of the considered view humans in all organizations are fallible to mistake and only because assessee happens to be an organization, a malice cannot be attributed. In fact, assessee reported correct facts at two places in the return at one place it left unreported. Thus, the findings of the CIT(A) to that extent deserves not to be sustained. Decided in favour of assessee.
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2024 (8) TMI 1425
Accrual of income in India - receipt as FIS/FTS - scope of India - Canada Tax Treaty - assessee, incorporated under the laws of Canada, engaged in rendering pre-clinical laboratory services to enable the determination of a safe dose and assess the potential toxicity of new drugs prior to human clinical trials by way of conducting in vitro and in vivo tests and trials. These services are largely catered towards Indian customers in the pharmaceutical, medical device and biotechnology industries. The Indian customers provide samples prior to undertaking human clinical trials which is tested by the Assessee.
HELD THAT:- As pre-clinical laboratory services rendered by the assessee to its customers in India were quite limited items of the benefit which the client would derive from any intellectual property, hardware, software or knowledge of its employees.
As decided in case of sister concern of assessee [2023 (6) TMI 176 - ITAT BANGALORE] Charles River Laboratories Inc. utility of the services available in the form of a report, though highly technical in nature, comes to an end, little thereafter, if not immediately, after its rendition. The Support that the Indian entity seeks after the report is delivered is to understand the report from the assessee. The elements necessary for "make available" is absent in the services rendered by the assessee to its Indian customers/clients, inasmuch as even for the said reports, the customers have to continuously refer to the assessee and the same is not freely r made available to the Indian customers. Thus, technical services rendered by the affiliates do not "make available" technical knowledge, experience, skill, know-how or process while preparing these reports for their, Indian customers/clients. In light of the aforementioned judicial decisions, we are of the considered view that the service recipient of the assessee is unable to make use of the said technology only by itself in its business or for its own benefit without recourse to the assessee year after year
The clients of the assessee, on receiving the report may use it for commercial or technical knowledge to evaluate the product and material, but that report is not of the nature by which, independently, any technological knowledge was transferred to the customers. This report does not contain any information that would enable the client to carry on the clinical test on new products in future on its own accord. It is not disputed that this study/testing of samples was conducted by the assessee outside India based laboratories and merely the samples were provided by the clients and the assessee was supposed to conduct the study only according to the protocol provided by the assessee.
Thus, we are convinced that the ld. tax authorities below have fallen in error to consider the receipt as FIS/FTS and, consequently, we sustain the grounds and allow the appeal of the assessee.
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