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2014 (8) TMI 1165
Eligibility to claim of deduction u/s 80IB(10) - assessee has not filed return of income within the time limit u/s 139(1) and when section 80AC - mandation of filing of return under section 139(1) within the due date - Held that:- Issue raised in the present appeal is squarely covered against the assessee by the decision of the Special Bench of the Tribunal in the case of Saffire Garments Vs. ITO (2012 (12) TMI 193 - ITAT RAJKOT) wherein it has been held that the restriction provided by way of the proviso to section 10A(1A) is mandatory as the matter governs filing of the return of income within the due date provided under section 139(1). Therefore, we find that the said decision of the Special Bench applies not only to section 10A, but also to sections 10B and 80AC.
Thus filing of return under section 139(1) within the due date prescribed under law is a mandatory provision. If the assessees wants to claim deduction under section 80IB(10), it is necessary that the assessees must file the returns of income before the due date prescribed under section 139(1) of the Income-tax Act, 1961. - Decided in favour of revenue.
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2014 (8) TMI 1164
Disallowance of claim of exemption u/s 54F - capital gains arising out of sale of long term capital asset - Held that:- We find that the assessee has placed the electricity as well as Internet bill before the CIT(A) and the copies of the property tax receipt were not filed before either of the authorities below. In our opinion, these documents go to prove that the assessee had, in fact, completed the construction within the period of three years from the date of sale of the property. However, in our opinion, these documents have not been verified by the authorities below and therefore, the issue needs to be remitted to the file of the AO for verification of these details filed by the assessee. We remit the issue back to the file of the AO only to examine the veracity and authenticity of the documents filed by the assessee and if the documents are found to be genuine, then the AO is directed to allow exemption u/s 54F of the Act. In the result, the assessee’s appeal is allowed for statistical purposes.
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2014 (8) TMI 1163
Concession of pre-arrest bail - offence under PMLA - Held that:- There is no absolute par in granting the concession of pre-arrest bail in proceedings under the Prevention of Money Laundering Act, 2002.
Petitioner in this case is entitled for pre-arrest bail - the interim order dated 2.7.2014 is hereby confirmed. The petitioner will remain on bail against the bail bond/surety bond already furnished by him subject to the condition that he will not tamper with the evidence in any manner and will not cause obstruction in the proceedings of the complaint case and will not absent himself without any sufficient cause and that he will not commit the similar offence of which he is accused of during the course of trial.
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2014 (8) TMI 1162
Issues of applicability of Net Profit Rate arising out in Revenue’s appeal and with regard to inclusion of Bank Interest as income from other sources by the AO have been dealt in assessee’s appeal in therefore, our order in assessee’s appeal's identically applicable in the present appeal. Accordingly, all the grounds of the Revenue i.e. grounds No. 1 to 5 are dismissed.
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2014 (8) TMI 1161
Allowable busniss expenditure - research and development expenditure - Held that:- Since no evidence has been filed regarding expenditure on research and development, therefore we decide this issue against the assessee.
Addition u/s 40(a)(ia) - Held that:- Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirements of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] does not lay down correct law.
Previous year Expenses allowable in current year - Held that:- Previous year expenses could be allowed only if it is proved that such expenditure crystallized during the year. This fact has not been proved and therefore there is nothing wrong with the order of the CIT(A) and accordingly we confirm the same.
Deduction u/s. 80IB on its Parwanoo Unit No. 2 - interest and other items cannot be said to have been derived from industrial undertaking
Profits eligible for deduction u/s. 80IB - R & D expenses should be allocated on the basis of actual expenditure incurred. We therefore set aside the order of Ld. CIT(A) and direct the Assessing Officer to allocate the expenses actually incurred by the assessee on R & D in the eligible unit.
Proportionate interest has to be disallowed because the assessee had admittedly diverted interest bearing funds to the sister concern
Variations for deduction to be allowed u/s. 80IB - Held that:- after per using the order of the income tax authorities, we do not find that such burden has been discharged by the Assessing Officer so as to reject the profits declared by the assessee in the respective units. Therefore we are not inclined to uphold the order of assessment as made by the Assessing Officer. Quite clearly, the assessee brought out before the Assessing Officer as well as before the Ld. CIT(A) that the manner of maintenance of the records and the system of apportionment of impugned expenditure on the basis of the proportionate turnover of various units was accepted in the past and there no cogent reasons have been brought out by the revenue which would require departure from the same.
Addition u/r 8D - Held that:- Rule 8D is not applicable in this year. Reasonable disallowance in this year is held to be ₹ 3 lakh and therefore we set aside the order of the CIT(A) and direct the Assessing Officer to disallow a sum of ₹ 3 lakhs.
Disallowance u/s 14A - Held that:- We find that Hon'ble Bombay High Court in case of Godrej & Boycee [2010 (8) TMI 77 - BOMBAY HIGH COURT] has clearly held that rule 8D would be applicable from assessment year 2008-09, Therefore in this year rule 8D has to be applied and disallowance has to be made as per calculation of Rule 8D. Therefore we find nothing wrong with the order of Ld. CIT(A) and confirm his order.
Addition invoking the provisions of section 145A - Held that:- Similar issue has been decided in favour of the assessee by the Hon'ble High Court of Punjab & Haryana in case of Nahar Spinning Mills Ltd. [2008 (2) TMI 316 - PUNJAB AND HARYANA HIGH COURT]. The Ld. CIT(A) following that decision decided the issue in favour of the assessee.
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2014 (8) TMI 1160
Penalty u/s 271(1)(c) - addition in respect of interest on fixed deposits with bank - Held that:- We are unable to approve the stand of the Revenue that the said income has been detected by the Assessing Officer before its declaration by the assessee. No doubt, it was not declared in the return of income but was declared by way of a revised computation of income filed during the assessment proceedings. Every mistake or omission does not ipso facto lead to levy of penalty u/s 271(1)(c) of the Act. In so far as the present issue is concerned, the overall circumstances explained by the learned counsel before us, in our view, mitigate the rigors of section 271(1)(c) of the Act qua the impugned sum of ₹ 4,60,091/-. Therefore, we set-aside the order of the CIT(A) on this aspect and direct the Assessing Officer to delete the penalty levied with respect to the addition at ₹ 4,60,091/- on account of interest on FDRs with Dena bank.
Addition on account of land as short term capital gain - Held that:- The ingredients necessary to impose penalty u/s 271(1)(c) of the Act qua the impugned transaction are fulfilled. In the present case, it is quite evident that the transaction resulting in short term capital gain on sale of Pirangut property was not declared in the return of income filed. It is also clear 7 that the purchase as well as sale of the property is by way of duly executed conveyance deeds and therefore it is not a case where assessee was not aware of the income accruing to her on account of the impugned transactions. Considering the totality of facts and in the absence of any plausible and bonafide explanation coming-forth from the assessee, we find that the said income has been rightly subjected to levy of penalty u/s 271(1)(c) of the Act. We hereby affirm the orders of the authorities below on this aspect.
Income by way of TDR sale receipts - Held that:- For addition on account of sale of TDR it is not in dispute that the same reflects a transaction undertaken by assessee’s late husband Satish D. Misal prior to his death in the year 2003. It is quite evident that assessee was not a party to the transaction and that she is in receipt of money as legal heir of her deceased husband -merely because an assessee has agreed to an addition, cannot be conclusive for the purpose of penalty u/s 271(1)(c) of the Act. Quite clearly, it is a trite law that assessment proceedings and the penalty proceedings are independent proceedings and that the findings in the assessment proceedings are not conclusive for the purposes of adjudicating the levy of penalty although such findings may be relevant for the purposes of 10 penalty proceedings. In-fact, as per case of Anantharam Veerasingaiah & Co. vs. CIT [1980 (4) TMI 2 - SUPREME COURT] penalty proceedings are independent of the assessment proceedings and penalty cannot be levied merely on the basis of the findings in the assessment proceedings. Penalty u/s 271(1)(c) of the Act is not attracted - Decided in favour of assessee.
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2014 (8) TMI 1159
Disallowance of deduction in respect of writing off of the irrecoverable advances and other debit balances - Held that:- We are of the view that the amounts towards EMDs, was having nexus with the business of the assessee, and therefore, the same needs to be allowed. With respect to the “Employees’ Welfare Trust”, amounting to ₹ 7,31,425/-, in the absence of any details, we are of the view that the same has rightly been disallowed by the AO. With respect to the balance written amount of ₹ 30,48,835/-, from the list placed it is seen that it contained various amounts which are shown to be not recoverable from the parties. However, it also includes certain amounts like provision for gratuity, salary payable, PF payable, staff loan etc. from which the full details thereof not placed before us Considering totality of the facts, we are of the view that disallowance in the present be restricted to ₹ 1,00,000/- (Rupees One Lakh) to cover such amounts. We direct accordingly, and the ground no.2 of the appeal are partly allowed.
Disallowance of deduction as business expenditure - amount given as donation to the Red Cross society - Held that:- From the details of the donation given at page no.14 of the paper book, it is seen that the major amount of ₹ 42,320/- is donation to the Red Cross society, and therefore, claimed as business expenditure. The aforesaid submission of the assessee has not been controverted by the Revenue by bringing any material on record. We, therefore, are of the view that same needs to be allowed. With respect to other donations, considering meagerness/smallness of the amounts, aggregating to ₹ 3900/-, and considering the peculiar facts of the case we consider that the same be allowed. Thus, we allow this ground of the appeal of the assessee.
Adjustment in respect of international transaction of royalty payment - Held that:- As only stated rate is not decisive and effective rate has to be considered, and when the amount of royalty paid by the assessee is considered with ex-factory sale value, without deducting various expenses, such as dealer commission, special commission, warranty etc., as has been noted by the learned CIT(A) at page no.4 of his order, then the effective rate worked out is only 2.3% on sale, as against 3% paid by other group entities. This finding of the fact given by learned CIT(A) could not be controverted by the learned DR of the Revenue, and hence, on this aspect, we hold that no interference is called for in the order of the learned CIT(A), and accordingly, the ground no.5 of the Revenue is rejected.
Disallowance on account of provision of obsolescence of inventory - Held that:- CIT(A) has directed the AO to allow the claim of the assessee subject to the assessee furnishing the complete particulars in this regard, if necessary, with adequate proof. Hence, in our considered opinion, no interference is called for in the order of the CIT(A) on this issue, because he has taken proper care to ensure that all the details and evidences are obtained and are examined by the AO and only thereafter, deduction is to be allowed, if the assessee is able to establish before the AO that such write off in respect of provision for obsolescence of inventory claimed by the assessee is in line with the accepted method of valuation of stock, i.e. at cost or market price, whichever is lower.
Disallowance on account of warranty expenses - Held that:- Since it is admitted by both the parties that the facts of the case in the year under appeal are identical to that of earlier years, we respectfully following the decision for A.Y.2004-5 and with similar directions restore the issue of warranty expenses for A.Y.2005-06 to the file of the CIT(A) for decision afresh. Needless to state that CIT(A) shall grant adequate opportunity of hearing to both the parties. Thus, this ground of Revenue is allowed for statistical purposes.
Claim for deduction for the debit balances written off for the sums which were due from different parties for and on connection with the assessee’s business in spite of the fact that the claim was allowable u/s.28 or 37 - Held that:- There is no dispute to the fact that the loss of ₹ 1,58,529/- incurred during the course of business and that the assessee has written off the said amount from its accounts, as the same became irrecoverable. The Hon’ble Apex Court in the case of T.R.F. Ltd. Vs. CIT [2010 (2) TMI 211 - SUPREME COURT] held that in order to obtain a deduction in relation to bad debts, 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. This being so in the case of assessee, we are not inclined to take a different view on this issue, and accordingly, this ground of the CO of the assessee is allowed.
Addition u/s 40(a)(ia) - Pursuance of the provisio to section 40(a)(ia) as amended retrospective with effect from 1.4.2005 by the Finance Act, 2008 - Held that:- We find that this claim of the assessee for further deduction was not before the CIT(A) or the AO, before passing their respective orders. Therefore, we deem it fit to send this issue to the file of the AO for considering admissibility or otherwise of the claim of the assessee as per the law. The assessee shall furnish all the details, as required by the AO for determination of the claim of the assessee, and accordingly, this ground of the CO of the assessee is allowed for statistical purpose.
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2014 (8) TMI 1158
Addition on account of prior period expenses - Held that:- Normally prior period expenses cannot be allowed because the income has to be determined on yearly basis. However, in this case certain income relating to prior period was also offered to tax and even after adjusting the expenses of ₹ 238344/- net amount resulted in income because prior period income was ₹ 618088/-. In such situation we are of the opinion that expenditure has been rightly allowed by the LD. CIT(A). Accordingly we confirm the order of the CIT(A)
Addition on account of notional interest on land purchases - CIT-A deleted the addition - Held that:- CIT(A) rightly decided the issue because the Assessing Officer has not shown that any amount was borrowed for purchase of land. Further in case of land there is always gap between the payment and registration of the sale deed and such gap can not lead to the conclusion that the land has not been capitalized. In view of this we confirm the action of the CIT(A).
Treating employees contribution towards EPF as income as per provisions of section 2(24)(x) - not allowing deduction of the same as per section 36(1)(va) - CIT-A deleted the addition - Held that:- This issue is squarely covered against the Revenue and in favour of the assessee by the decision in case of CIT V Nuchem Ltd.[2010 (2) TMI 959 - PUNJAB AND HARYANA HIGH COURT] wherein following decision of CIT V. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] it was held that if the payments have been made before the due date of filing of return then such payments have to be allowed. Perusal of the assessment order clearly show that provident fund dues were paid before the due date of filing of return
Addition on account of depreciation on electric installation - assessee had claimed depreciation @ 25% in respect of electrical equipments which was reduced to 10% by following earlier assessment year - CIT-A deleted the addition - Held that:- Even on electrical installations depreciation is to be allowed @ 25%. In view of this order which have been followed by the CIT(A), we confirm her order.
Addition u/s 40(a)(ia) - Held that:- We are of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirements of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM), does not lay down correct law.
Addition excessive expenses on repair and maintenance by restricting the disallowance of repair and maintenance to 1% of the value of the building as directed by the Tribunal in some earlier year - Held that:- We are not sure under what circumstances 1% repair and maintenance expenses was held to be reasonable by the Tribunal. Normally allowance on account of repair and maintenance is to be examined with reference to each item and the items which are not capital in nature have to be allowed. However, no detail is available in the assessment order with reference to repair and maintenance. There is some force in the submissions the assessee that 1% criteria cannot be followed in the latter year, therefore in the interest of the justice, we set aside the order of the Ld. CIT(A) and restrict he disallowance of repair and maintenance at ₹ 1,50,000/ We have already observed that since the details are not available and this is a small matter and therefore there is no purpose for remitting the same to the file of Assessing Officer and we have preferred to make reasonable disallowance.
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2014 (8) TMI 1157
Addition u/s 68 - discharge of onus with regard to share application money received from 5 different parties - Held that:- Identity of the 5 parties investing in the share capital is not in doubt - They are body corporates and their complete addressees are on record. This is the very first assessment in the life of the assessee company. The amounts were deposited by these 5 corporates per account payee cheques.
These parties were not shareholders of the assessee company at the time when the case was reopened u/s 147 or when the summons were issued to them. The assessee has filed before the A.O. copies of share application forms duly signed along with the complete addresses of the investors along with their I.T. file numbers, account payee cheque numbers and the assessee’s bank statements disclosing the deposits of these amounts. The assessee has discharged its initial onus to prove the identity of the investors as well as their creditworthiness. It is not the case of the Revenue that the investor parties did not exist or that the money was not invested by them through banking channels.
Having found such, the Tribunal had relied on the judgement in Hindusthan Tea Trading Co.Ltd. v. CIT (2003 (3) TMI 53 - CALCUTTA HIGH COURT) to uphold the order of the CIT. No substantial question of law arises
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2014 (8) TMI 1156
Disallowance of interest being estimated interest @ 15 percent on the advances made to various companies/other concerns - Held that:- Tribunal, for the A.Y. 1997-98, on a similar issue, by following the Tribunal’s order for the A.Y. 1992- 93, remitted the matter back to the file of the AO for fresh adjudication in the light of earlier decisions of the Tribunal as well as the judgments of the Hon’ble Apex Court in the case of S.A. Builders Vs. CIT [2006 (12) TMI 82 - SUPREME COURT]. In view of the fact that the orders of the then CIT(A) relied on by the Ld.CIT(A) for the impugned decision has been set aside by the Tribunal, we are of the considered view that it is just and proper that this issue is also set aside to the file of the AO for fresh adjudication.
Disallowance of deduction of expenses on account of deferred revenue expenditure - Held that:- It is pertinent to mention that before the introduction of section 35DDA, the legal dictum is very clear that the assessee can claim the expenditure incurred on account payment made for the VRS which are in the nature of business expenditure and are deductible u/s.37. Therefore, till the introduction of new provisions under section 35 DDA, the assessee can claim such expenditure as revenue expenditure. This proposition is supported by various decisions of the Tribunal and High Courts. We direct the AO to allow the expenditure as revenue expenditure, eligible for deduction u/s 37(1) of the Act, after verification of the details of expenditure claimed by the assessee.
Addition of estimated amount on account of valuation of closing stock of finished goods - Held that:- Tribunal in the assessee’s own case for the A.Y. 1994-95, 1995- 96, 1997-98 & 2003-04 has decided an identical and similar ground against the assessee. However, alternate claim for addition to the opening stock has been allowed by the Tribunal. Following the said orders of the Tribunal, we direct the AO to re-compute the value of closing stock in line with the principles laid down by the Tribunal in the said orders. Thus, we set aside this matter to the file of the AO for the limited purpose of following the guidelines given in the earlier years.
Bringing to tax a sum as interest on Government Securities - Held that:- It is observed that similar additions have been confirmed by the Tribunal in the assessee’s own case for the A.Ys. 1991-92, 1993-94, 1994-95, 1995-96 & 1997-98. In the absence of any distinguishing facts brought by the parties, following the said orders of the Tribunal, the impugned addition confirmed by the Ld.CIT(A) is upheld.
Inclusion in the income of the estimated import duty benefit - Held that:- For the A.Y. 1997-98 has decided a similar issue in favour of the assessee by following the decision of the Tribunal in the case of Jamshri Ranjitsinghji Spinning and Weaving Mills v. Inspecting Assistant Commissioner [ [1991 (12) TMI 83 - ITAT BOMBAY-A] wherein it has been held that the import entitlement receivable by the assessee do not constitute the income of the assessee in the year under appeal as neither the income accrued nor arisen during the year of accounting. Following the said order of the Tribunal dated 16.04.2008 for the A.Y. 1997-98 in the assessee’s own case, we direct the AO to exclude the import duty entitlement from the total income of the assessee for the year under appeal.
Disallowance of a sum in computing the income from capital gains being professional fees paid in connection with the sale of shares - Held that:- It is pertinent to mention that the perusal of the records suggests that J.M. Financial and Investment Consultancy Services Ltd. helped the assessee company to identify British Gas Asia Pacific Holding Pvt. Ltd and the assessee has been in a position to bargain for the best price for the sale of the shares. It is further relevant to state that the payment has been legitimate and also the same has been incurred in connection with the sale of the shares which are not disputed. When the facts are being so, the authorities below are not justified in disallowing the claim of deduction. Therefore, we direct the AO to allow a sum as deduction in computing the income under the head ‘Capital Gains’ as claimed by the assessee.
Deduction on account of repairs and maintenance in computing the income under the head ‘house property’ - Held that:- as per the provisions of sections 23 & 24 of the Act, income chargeable under the head ‘income from house property’ shall be computed after making the deductions of municipal taxes paid by the owner, a sum equal to thirty per cent of annual value and the amount of interest payable on borrowed capital where the property has been constructed, repaired, renewed or reconstructed with borrowed capital. Accordingly, an assessee is entitled only to the deductions in respect of the said expenditure in the computation of the income under the head of income. Therefore, it is not legally permissible to allow the deduction on account of maintenance charges incurred on lifts, liftman, sweeper, security etc under the head ‘income from house property’.
Deduction as foreign exchange loss on the basis of foreign exchange rate at the end of the accounting year - Held that:- The assessee in all other earlier years kept on claiming the foreign exchange loss on goods traded as expenditure and the same has also been allowed in those years and thereby upheld the action of the AO in including the foreign exchange gain as taxable income. In view of the fact that the loss claimed in the earlier years has been allowed in those years, subsequently in the A.Y. 1999-2000 the gain also has been added to the total taxable income of the assessee as held by the CIT(A). Therefore, it is appropriate that the trading loss is to be allowed as a deduction while computing the income.
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2014 (8) TMI 1155
Vires of Section 19 of the Prevention of Corruption Act, (“PC Act”), 1988 - prosecution of all cases registered and investigated under the provisions of PC Act against the politicians, M.L.As, M.Ps and Government officials, without sanction as required under Section 19 of the PC Act.
Whether Section 19 of the PC Act is unconstitutional and whether any further direction is called for in public interest and for enforcement or fundamental rights?
Held that:- The issue raised in this petition is no longer res integra. Requirement of sanction has salutary object of protecting an innocent public servant against unwarranted and mala fide prosecution. Undoubtedly, there can be no tolerance to corruption which undermines core constitutional values of justice, equality, liberty and fraternity. At the same time, need to prosecute and punish the corrupt is no ground to deny protection to the honest. Mere possibility of abuse cannot be a ground to declare a provision, otherwise valid, to be unconstitutional. The exercise of power has to be regulated to effectuate the purpose of law.
The appellant has the right to file a complaint for prosecution of Respondent 2 in respect of the offences allegedly committed by him under the 1988 Act.
While it is not possible to hold that the requirement of sanction is unconstitutional, the competent authority has to take a decision on the issue of sanction expeditiously as already observed. A fine balance has to be maintained between need to protect a public servant against mala fide prosecution on the one hand and the object of upholding the probity in public life in prosecuting the public servant against whom prima facie material in support of allegation of corruption exists, on the other hand.
Petition disposed off.
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2014 (8) TMI 1154
Disallowance of exemption u/s. 11 - Held that:- CIT(A) while dismissing the revenue’s appeal has held Since the Hon’ble Tribunal has restored the registration u/s. 12A granted to the appellant-Trust, exemption u/s. 11 cannot be denied to the appellant trust. Hence, the A. O. is directed to grant exemption u/s. 11 of the Income Tax Act, given that the appellant’s registration is restored.
Since CIT(A) has restored the registration of assessee by following the decision of Tribunal in assessee’s own case passed [2012 (2) TMI 659 - ITAT KOLKATA] and Ld. Sr. DR is unable to point out any mistake in the said order, we find no infirmity in his order and the same is hereby upheld. This appeal of revenue is dismissed.
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2014 (8) TMI 1153
Transfer pricing - royalty payments - For justifying the values of the international transaction entered into by it, assessee had adopted TNMM method and the TP documents submitted by the assessee were at an entity level. Learned TPO was of the opinion that activities of the assessee had to be segmented and TP analysis was required to be done for each segment separately. - As per the TPO Rule 10C(1) mandated adoption of most appropriate method. TPO rejected the entity level and analysis of international transaction done by the assessee.
Held that:- The Tribunal had clearly held in assessee’s appeal for AY: 2007- 08 that TPO could not consider the ALP of royalty transactions as nil. No doubt, for assessment year 2007-08, wherein the Tribunal had held as above, learned TPO had not made any adjustment on royalty payments for a reason that the adjustment required on royalty stood merged with the TP adjustments made to the manufacturing segment. It is for this reason that the Tribunal held the exercise to be academic at para 48 of its order.
However, on the other hand, for the impugned assessment year the TPO has not made any adjustment in the PLI of manufacturing segment nor trading segment, though he found that an adjustment of ₹ 97.82 Crores was required for royalty payments. Since the Co-ordinate Bench in its order for AY: 2007-08 has made a specific observation that analysis based on combined transactions alone could be adopted, it is necessary for us to have a look at the position for the impugned assessment year where segmental results in trading and manufacturing was considered by the TPO to be well within Arms Length.
Going by the methodology adopted by the learned TPO, the combined results as mentioned by us above, gave the assessee a PLI of 4.878% for international transactions. In such a scenario, considering the argument of learned DR, that ALP of the royalty payments though not ‘nil’ had a value which required to be properly fixed, a fresh look by the TPO/AO is required. AO/TPO has to see whether in a case where there is no ALP adjustment required for manufacturing/trading segment or combining both of them, a separate consideration of ‘Royalty’ for ALP adjustments is required and if so what could be the ALP assigned for it and the result thereof.
Order set aside - Matter remanded back for fresh consideration.
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2014 (8) TMI 1152
Waiver interest under Sections 234A, 234B and 234C - Settlement Commission directed that interest under Sections 234A and 234C, wherever applicable was to be charged as per law and interest chargeable under Section 234B would be charged upto the date of order passed under Section 245D(1) and that interest under Section 220(2), applicable on the sustained demand outstanding as on various dates would be charged upto the date of the order passed by the Settlement Commission - notice of demand under Section 156 - rectification application as an error apparent in calculating the interest or that no detail of interest was indicated with regard to the period or the rate stands automatically disposed of as the same
Held that:- Settlement Commission having considered the request for waiver of the interest and having rejected it requires no interference by this Court. We further find that the object of notice under Section 245C under the Act was to ensure that no protracted proceedings takes place before the authorities or in courts and in order to avoid lengthy proceedings, a provision was made for settlement of cases to ensure that a finality is arrived at.
In Smt. Neeru Agarwal Vs. Union of India (2009 (12) TMI 12 - HIGH COURT OF ALLAHABAD ) a Division Bench of this Court held that the provision of Section 245D read with Section 245 indicates that the order passed by the Settlement Commission has to be treated as conclusive unless it was obtained by fraud or misrepresentation. Similar view was reiterated in Commissioner of Income-tax-I, Lucknow Vs. Smt. Diksha Singh, (2011 (8) TMI 467 - ALLAHABAD HIGH COURT)
In the light of the aforesaid, we do not find any justification to interfere in the notice of demand that was issued pursuant to the order of Settlement Commission.
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2014 (8) TMI 1151
Penalty u/s 271(l)(c) - incorrect capital gain claim - Assessee had revised the calculation of capital gains on account of wrong consideration of the date of purchase - Held that:- The assessee had during the course of assessment proceedings revised the return of income and the same was accepted by the A.O. Before us, no material has been brought on record to demonstrate that the submissions of the Assessee were false. When the assessee has furnished all the material facts relevant thereto, the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccurate particulars thereof. What is to be seen is whether the said claim made by the assessee was bona fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty under s. 271(1) (c) of the Act. - Decided in favour of assessee.
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2014 (8) TMI 1150
Permission for Withdrawal of SLP - Held that:- The special leave petitions are dismissed as withdrawn with Signature Not Verified the aforesaid liberty.
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2014 (8) TMI 1149
Loss on account of trading in shares - Speculation loss - Held that:- A perusal of the assessment order clearly shows that the assessee has income from share trading, which is a loss, the assessee has income from other sources under the head “interest income” to the extent of ₹ 2,77,243/- so also under the head “service charge to the extent of ₹ 1,50,000/- , total of which far exceeded the share trading loss. As the assessee’s income from other sources is far exceeding the share trading loss, the said loss on account of the purchases and sales of shares is not hit by the provisions of Explanation to Sect ion 73 of the Act and consequently the same cannot be treated as speculation loss.
Losses incurred on the share trading transactions - Held that:- As it is not iced that the assessee is having only share trading business and the assessee is a Company which is dealing in shares of other Companies in view of the decision of the Hon’ble jurisdictional High Court in the case of Arvind Investments Ltd. (1990 (3) TMI 5 - CALCUTTA HIGH COURT), the assessee’s business is liable to be treated as speculation business. In these circumstances, the Assessing Officer is directed to treat the assessee’s business from share trading as speculation business and al low the assessee benefit of set off of speculation income of ₹ 50.28 crores against the speculation loss of ₹ 66.40 crores.
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2014 (8) TMI 1148
Recovery proceedings - Kerala General Sales Tax Act - tax at compounded rates in terms of Section 7 of the Act - principles of natural justice - Held that: - a final order accepting and allowing the application for payment of tax at compounded rate in terms of Section 7 of the Act can come only at the end of the accounting year concerned. This is why in sub-rule 3 of Rule 30 of the Rules, it is stated that on the application being allowed, the assessing authority shall serve the dealer a notice of demand under Form - 13.
The argument on behalf of the petitioner that the impugned proceedings are without jurisdiction is only to be rejected - petition dismissed.
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2014 (8) TMI 1147
TDS u/s 192 - Levy of tax u/s 201(1) and 201(1A) - assessee in default - Assessee while deducting tax at source from salaries, had not considered the perquisite value of the residential accommodation provided by it to its employees - Held that:- In the light of the law on Rule 3 of the IT Rules, 1962 as understood by the Hon’ble Supreme Court in the case of Arun Kumar (2006 (9) TMI 115 - SUPREME Court) the background in which Rule 3 was enacted w.e.f. 1-4-2001 as explained in the CBDT circular referred to earlier, we are of the view that the applicable rule in the case of the Assessee for the purpose of computing perquisite value would be Sl.No.2 of Table-1 of Rule 3 of the IT Rules, 1962. We uphold the order of the CIT(A) and dismiss the appeals by the Assessee.
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2014 (8) TMI 1146
Seeking Copies of 8 files pertaining to the licences, which had been obtained from the Department of Telecom - petitioner contends that atleast copies of those documents should be made available to the petitioner in order that he is in a position to fairly defend the Show Cause Notices - Held that: - It is noticed that the 8 files pertain to the application that had been filed by the petitioner itself and not by any third party. The said files would, indisputably, be relevant for the purposes of defending the allegations that had been made against the petitioner - it would only be fair, if copies of the said documents are also made available to the petitioner.
The respondents are directed to furnish copies of the relevant files obtained from the Department of Telecom to the petitioner, on the petitioner depositing the costs for the photocopies and other attendant charges - petition allowed.
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