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Showing 21 to 40 of 20941 Records
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2017 (12) TMI 1860
TP Adjustment - TPO/AO adopting the ALP in respect of management and marketing support services fees paid by the appellant to its AE at Rs.Nil - payment for said services was made in terms of master agreement entered by the appellant with Volvo Truck Corporation, Sweden, i.e., its AE, which is a holding company.
HELD THAT:- Only valid reasons assigned by the TPO which remain uncontroverted for determining the ALP of the transaction of payment of management and marketing support services fees at Rs.Nil is that there was no evidence in support of rendering of services by the AE and the failure to substantiate real nature of services actually rendered by the AE .
We hold that the TPO was justified in determining the ALP of transaction of marketing and management support fees at ‘nil’.
When the case is covered against the assessee in its own case for the earlier assessment year, we find no reason for assessee to seek adjournment of the case, especially in the matters of very old matters i.e., 2010. It is for the assessee to arrange for its own affairs. The court cannot come to the rescue of an assessee who keeps changing counsel from time to time in order to gain time. We do not approve of this kind of practice of frequent change of counsel.
When the application for admission of additional evidence was rejected, the assessee again started pleading adjournment of the case. In any case, once the issue is duly covered against assessee, there was no occasion for the bench to adjourn the matter and further it is not befitting the stature of the counsel, to seek for adjournment in a covered matter.
It is a classic example of shifting of profit base outside the country. The appellant has also not controverted the findings of the TPO that it adopted a colourable device to shift the tax base of this country.
When the other transactions are accepted to be at arm’s length under the TNMM method, the TPO is not justified in adopting the CUP method for the purpose of benchmarking the transaction of payment of management and marketing support services fee, is not correct in asmuchas the TPO had not examined the other transactions under the TNMM method.
Deduction u/s 10A - AO in reducing the tele-communication expenses incurred in India from 'export turnover' while computing deduction under section 10A as 'expenditure attributable to delivery of software outside India' under Explanation 2(iv) to Section 10A - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of Tata Elxsi (2011 (8) TMI 782 - KARNATAKA HIGH COURT). We direct the AO to reduce telecommunication expenses both from export turnover as well as total turnover.
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2017 (12) TMI 1859
Reopening of assessment u/s 147 - deductions u/s. 80IA - Notice after expiry of four years - HELD THAT:- In this case, along with the return of income filed originally by the assessee the assessee had filed the audited accounts, tax audit report and auditor’s certificates certifying the amounts eligible for deductions u/s. 80IA - Later on, the assessment was completed u/s.143(3) after thorough examination of the details, documents and evidences furnished in the course of scrutiny assessment proceedings and the total income was determined after allowing deductions u/s 80IA and 80IC of the Act respectively
When all the facts have been disclosed which were necessary for the assessment at the original stage itself, after four years after scrutiny assessment has been done in this case, cannot be revisited by the AO without pointing out specifically as to which primary evidence was non-disclosed by the assessee during original 143(3) proceedings. Since the AO has failed to even point out remotely as to the failure of the assessee in not disclosing of primary facts during original assessment which was completed u/s. 143(3) of the Act, which is sine qua non and essential jurisdictional fact, for the AO to reopen after four years the scrutiny assessment, thereby in this case, the A.O lacks jurisdiction to reopen and so is fragile in the eyes of law - Appeal of revenue is dismissed.
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2017 (12) TMI 1858
Revision u/s 263 - difference between lack of enquiries and inadequate enquiries - HELD THAT:- Deeming fiction has been created in section 263 of the Act by the amendment made by Finance Act, 2015 w.e.f. 01.06.15 wherein it has been mentioned that where the Commissioner is of the opinion that the AO had passed the order without making enquiries or verifications which should have been made or a relief has been allowed without enquiring into the claim or that the same is not in accordance with any order or direction or instruction issued by CBDT, that shall be deemed to be erroneous in so far as its prejudicial to the interest of Revenue. The said deeming provisions, in our view, are not applicable for the assessment year under consideration.
We find that the Hon’ble Supreme court and various other High Courts including our Jurisdictional High Court have been almost unanimous in holding that before enhancing or annulling or modifying or cancelling the assessment while exercising his powers under section 263 of the Act, the Commissioner must record a finding of fact or of law that the order of the AO is erroneous and is also prejudicial to the interest of Revenue as discussed above.
In the case in hand, this prerequisite condition has not been satisfied as the Commissioner after calling for the explanation from the assessee has failed to make necessary exercise in examining or cause to examine the explanation/details submitted by the assessee for the justification of its claim and even without any further enquiry, directed the AO to make additions of the entire deposits into the income of the assessee. Hence, in the light of the various case laws as analyzed above, the order of the Commissioner exercising jurisdiction u/s 263 of the Act cannot be held to be sustainable in law. Appeal of the assessee is hereby allowed.
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2017 (12) TMI 1857
Disallowance of provision for obsolescence of spares - reliance on audit objection - addition made as not actual expenditure incurred by the assessee company; and two that this liability was unascertainable in the hands of the assessee company - CIT-A deleted the addition - HELD THAT:- The coordinate Bench of the Tribunal in M/s. Jet Airways (I) Ltd. [2010 (10) TMI 1243 - ITAT MUMBAI] while dealing with identical issue has held that the provision for obsolescence of spares is not an ad hoc claim for deduction rather it is a claim in respect of normal wear and tear acceptable in the aeronautic industry and as such, claim is based on provision of Schedule XIV of the Companies Act, 1956 which deals with the rate of depreciation.
CIT (A) vide impugned order has thrashed the issue at length to reach at the conclusion that the provision for obsolescence of spares is not an ad hoc provision but on the basis of actual uses of aircraft on hourly basis and maintenance is due after the prescribed hours of uses. It is ascertained liability which is charged as per airline industry practice and standard norms.
CIT (A) has rightly deleted an addition made by the AO on account of the provision for obsolescence of spares, being genuine expenditure to run the airline business. So, finding no illegality or perversity in the impugned order, present appeal filed by the Revenue is hereby dismissed.
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2017 (12) TMI 1856
Validity of Arbitral Award - Termination of contract - levy of penalty - HELD THAT:- The arbitrator has taken note of the peculiar features of the contract inter se the parties that while the work of excavation of the earth, its loading into the trucks, unloading and transportation to site of the work was awarded to the Appellant as contractor, the spreading of the earth brought to the site of the work by the contractor and its compaction was to be done by the Respondent Department itself. It is, thus, that the Appellant claimed that even though they had taken up the work with right earnest to complete it within the scheduled period, the breaches of the Respondent has caused the delay.
The dispute in question had resulted in a reasoned award. It is not as if the arbitrator has not appreciated the evidence. The arbitrator has taken a plausible view that the very nature of job to be performed would imply that there has to be an area for unloading and that too in the vicinity of 5 kilometres as that is all that the Appellant was to be paid for. The route was also determined. In such a situation to say that the Respondent owed no obligation to make available the site cannot be accepted by any stretch of imagination. The unpreparedness of the Respondent is also apparent from the fact that even post termination it took couple of years for the work to be carried out, which was meant to be completed within 45 days. The ability of the Appellant to comply with its obligations were inter dependent on the Respondent meeting its obligations in time to facilitate appropriate areas for unloading of the earth and for its compacting. At least it is certainly a plausible view.
It has been opined by this Court that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the court and would not include what the court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice."
The learned single Judge ought to have restrained himself from getting into the meanderings of evidence appreciation and acting like a second appellate court. In fact, even in second appeals, only questions of law are to be determined while the first appellate court is the final court on facts. In the present case the learned single Judge has, thus, acted in the first appeal against objections dismissed as if it was the first appellate court against a decree passed by the trial court.
Appeal allowed.
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2017 (12) TMI 1855
Rectification of the mistake - DR has submitted that the ground no.7 of the Revenue appeal has not been adjudicated by the Tribunal - Whether DRP erred in directing to exclude E-Infochips Ltd., from the list of comparables holding that no segmental information is available and that it fails 75% service revenue filter? - HELD THAT:- AR has not rebutted the submissions of DR regarding non-adjudication of this ground and has fairly conceded that the Tribunal may recall the order for the limited purpose of adjudicating ground no.7 of the Revenue’s appeal.
Tribunal has committed mistake apparent from the record as the Tribunal has not adjudicated the ground number 7, therefore we deem it appropriate to recall the decision for the limited purpose of adjudicating ground 7 of the Revenue’s appeal. Miscellaneous petition filed by the Revenue is allowed.
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2017 (12) TMI 1854
Validity and legality of dues diligence certificate based on which the housing loan was extended by bank - whether the aim of these papers were to cheat the bank or not - role of an Auditor in case of verifying credential of the proposed borrower - HELD THAT:- The perusal of the Due Diligence certificate given by the petitioner indicates at the bottom, that Bank Statement of the applicant not been submitted. Which means that, the Indian Bank which has sought the professional assistance of the petitioner had not furnished adequate document of its borrower but for sake of record had requested the petitioner to provide due diligence certificate - This observation of this Court emanates from the verification of the documents relied by the prosecution which is found in the file of the document 16. The petitioner herein has received the request from the Indian Bank for due diligence certificate on 29.08.2013. The petitioner has handed over the certificate on 22.09.2013 with information that on his verification, he has found that the applicant is a proprietor of MMM enterprise located at No.44, Alapakkam main road, Maduravoyal and dealing with old scarp materials.
While the bank officials have not been prosecuted for extending the loan, despite the receipt of CIBIL report, indicating the loans availed by the borrower Murugan and his actual bank balance on date of sanctioning loan, the petitioner herein who has discharged his professional duty based on the documents given by the Bank Official cannot be suspected for being party to the crime and put to the ordeal of prosecution.
In this case, the records relied by the prosecution as against the petitioner herein is the statement of LW.16 Malliga Rani, Branch Manager that she sanctioned loan to Murugan based on the due diligence certificate given by the Audit/petitioner herein. When the record indicates that they have obtained CIBIL report rating of the borrower before advancing the loan and despite adverse information they have extended loan, her statement does not appears to be correct or true. Therefore it is very clear from the statement of LW.16 that they have over looked the relevant materials which were available with them before granting loan. To make proper assessment and appraisal or to seek expert opinion the Bank should have furnished the CIBIL report to the Auditor. Without furnishing relevant documents but expecting the auditor to do the job of deductive, does not fall within the scope and ambit of Auditors profession.
The material relied by the prosecution does not indicates any primafacie evidence against the petitioner to suspect that he had knowledge about the fabricated Statement of account or he had been privy to the alleged conspiracy with the builder, borrower and the Bank officials. The Due Diligence Certificate issued by the petitioner herein based on the documents given by the Bank for his perusal, does not reveal any suppression of facts or dereliction of duty or culpable state of mind to cheat the Bank.
Petition allowed.
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2017 (12) TMI 1853
Exemption from CVD - Benefit of Notification No. 12/2012-C.E., dated 17-3-2012 - imported goods described as "solar inverter" - whether the description "solar generating system" covers the goods under import i.e. solar inverter? - Revenue has filed the appeal on the main ground that the goods under import cannot be included in the heading "solar power generating system" for the reason that there can be multiple users for such imported goods.
HELD THAT:- Sl. No. 332 of the Notification grants the benefit to non-conventional energy devices or system specified in the list. From the list A, we find that SI. No. 10 of the list covers "solar power generating system". The goods under import which are described as "solar inverter" performs the function of generating electricity when the same is exposed to sunlight, which, falls within the description of "solar power generating system" - there are no reason to interfere with the impugned order which is sustained.
Appeal filed by the Revenue is dismissed.
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2017 (12) TMI 1852
Exemption u/s 54B - whether land transferred was agricultural land? - D.R said that the Adangal extract and other documents said to be obtained from the Village Administrative Officer cannot conclude that the land in question is agricultural land - HELD THAT:- From material available on record it appears that the assessee planted some coconut trees in the land in question. The assessee has also produced copies of Adangal extract to establish that the land was used for cultivation. Adangal extract otherwise known as Village Account No.2 was maintained by the Village Administrative Officer in the regular course of performing his official function. The Village Administrative Officer being the field level officer, has a duty to record the cultivation in Village Account No.2 / Adangal extract.
To establish the cultivation, the only document available is the Adangal extract. Therefore, the Adangal extract cannot be brushed aside so lightly when the assessee produced the same to establish his case that the land in question was used for agricultural activities.
Assessing Officer has not examined whether the assessee invested the money and actually purchased the property as claimed. A reference about the advance given by the assessee was found in the assessment order. However, there was no reference about the purchase of property. The assessee now claims that he is ready and willing to produce the copy of sale deed before the AO. Therefore, this Tribunal is of the considered opinion that the Assessing Officer shall re-examine the issue afresh.Appeal filed by the Revenue is allowed for statistical purposes.
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2017 (12) TMI 1851
Seeking processing of the refund claim - refund claim is based upon the exemption orders passed by the Government, in G.O.Ms.No.103 of Commercial Taxes and Registration (B2) Department, dated 01.08.2012 and G.O.Ms. No.6 of CT and RE Department, dated 06.02.2013, which granted exemption with retrospective effect - HELD THAT:- Considering the fact that, there appears to be no dispute with regard to the refund claim, the first respondent should definitely consider the petitioners' request and pass appropriate orders, for which purpose, the first respondent shall call for appropriate report from the respondent/Deputy Commissioner (CT), Large Tax Payers Units –I and IV respectively.
These Writ Petitions are disposed of, by directing the first respondent to consider the petitioners' individual representations dated 20.05.2016 and 23.05.2016, call for appropriate reports from the Deputy Commissioner (CT), Large Tax Payers Units –I and IV, Chennai, and pass orders on the said representations within a period of twelve weeks from the date of receipt of a copy of this order.
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2017 (12) TMI 1850
Depreciation on hoardings - whether the hoardings were temporary or permanent structure - Depreciation @ 100% treated as temporary structures as against the treatment given by the AO as plant and machinery allowing depreciation @ 15% - depreciation on hoardings claimed by the Assessee and disallowed by the AO depreciation on Hoarding Structures (Bus Shelters) on additions for more than 180 days - HELD THAT:- As in the Assessment Order for the AY. 2009-10, AO disallowed Rs. 57,73,114 out of total depreciation claimed of Rs. 1,94,65,631 @ 100% on the additions of more than 180 days to the Hoarding Structures ( Bus Shelters). He further disallowed 50% depreciation amounting to Rs.7,74,495/- on additions of Rs.15,48,990/- Hoarding structures (Bus Shelters) for less than 180 days in Paragraph 3 on page 2 of the order. He allowed the balance 50% of the claim for depreciation of Rs.18,77,500/- on Hoarding Structures that was disallowed in A.Y. 2008-09 in paragraph 3 on page 3 of the order.
It is thus clear from the order of CIT(A) that the depreciation disallowed by the AO of Rs.57,73,114 was depreciation on hoardings and structures which were used for more than 180 days. Therefore there is no merit in ground No.2 raised by the revenue before us.
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2017 (12) TMI 1849
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- A perusal of the petition show that it is complete in all respects. The documents show that financial debt is due from the Corporate Debtor and there is occurrence of default. In fact, even in the reply filed by the corporate debtor it has not denied the liability or the occurence of default. Moreover, Financial Creditor issued notice under section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, recalling the entire loan facilities. There is no tenable objection filed by the Corporate Debtor in the reply. Pendency of proceedings before the Debt Recovery Tribunal, Ahmedabad is not a ground for not commencing Insolvency Resolution Process in view of the fact that the provisions of the Code is having overriding effect over any other Law.
This petition deserves to be admitted and it is accordingly admitted under section 7 (5) of the Code.
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2017 (12) TMI 1848
Recovery of property tax - arrears of rent by the landlord/owner can be considered to be forming part of the rent for the purpose of seeking eviction or ejectment of such tenant who defaults in payment of such recoverable tax as rent - rent including recoverable tax in respect of the tenanted premises exceeds Rs. 3500/- per month, thereby losing protection of the Delhi Rent Control Act, 1958 - interplay of Section 67(3) of the NDMC Act vis-à-vis Section 7(2) of the Rent Act - HELD THAT:- Under Section 67(3) the landlord has been given the right to recover the house tax from the tenant as if the same were rent whereas Under Section 7(2) of the Rent Act, there is a specific bar to recover any tax as rent from the tenant.
In Ganga Ram [1977 (11) TMI 147 - DELHI HIGH COURT] the tenant had sub-let a portion of the property and was receiving rents from the sub-tenant. After taking into consideration the rents received by the tenant from the sub-tenant and the rent payable by him to the landlord, the corporation determined the rateable value on the basis that the premises was fetching higher rent than that of the rent paid by the tenant to the landlord. It was the case of the landlord that he was entitled, Under Section 121(1) of the Corporation Act, to recover from the tenant the difference between the amount of property tax levied on the property and the amount of tax which would be leviable upon the premises if the tax was calculated only on the amount of rent paid by the tenant to the landlord without taking into consideration the rent received by the tenant from the sub-tenant.
Whether non-payment of property tax recoverable from the tenant as rent can be a ground for his eviction/ejectment from the premises? - HELD THAT:- This Court has held that an earlier enactment will prevail over a latter enactment even if, there is a non-obstante Clause in the latter enactment, if it were to be held that the earlier enactment is a special enactment on the particular subject being in issue - Assuming that the latter enactment prevailing over the earlier enactment were to apply to this case, the two enactments have to be harmoniously construed so as to ensure that the latter enactment does not cause violence to the intent of the earlier enactment.
The object of the Rent Act is to provide protection to tenants who under common law, including Transfer of Property Act could be evicted from the premises let out to them at any time by the landlord on the termination of their tenancy. It restricts the right of the landlord to evict the tenant at their will. It is a special law in relation to landlord and tenant issue. Therefore, the Rent Act has to prevail insofar as landlord and tenant issue is concerned.
Though the Rent Act is an earlier Act when compared to the NDMC Act, it is a special enactment with regard to the matter in issue and has a non-obstante clause. The NDMC Act is not a special enactment insofar as landlord-tenant issue is concerned and it contains Section 411 which provides that other laws not to be disregarded. Section 67(3) of the NDMC Act merely gives a right to recover the tax in respect of the premises as rent. It does not override the Rent Act insofar as obviating the effect of Section 7(2) of the Rent Act. In our opinion, the tax recoverable from the tenant Under Section 67(3) of the NDMC Act as arrears of rent by the Appellant cannot be considered to be forming part of the rent for the purpose of seeking eviction/ejectment of the Respondent who defaults in payment of such recoverable tax as rent.
Appeal dismissed.
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2017 (12) TMI 1847
Levy of VAT - lease charges paid by the Railway department to the petitioner - It is the contention of the counsel for the petitioner that since the agreement was executed in West Bengal and that no transaction whatsoever transpired within the jurisdiction of Chhattisgarh, the State of Chhattisgarh could not have levied tax - HELD THAT:- VAT Act is an enactment by the State Legislature under entry 54 of list 2 schedule 7 of the Constitution of India.
Undisputedly, in the instant case the petitioner company is receiving the lease charges from the Railway department against the wagons purchased by the petitioner and which have been handed over to the Railway department. Admittedly, the agreement was made prior to the present South East Central Railway came into existence and the agreement was with the erstwhile South East Railway. It is also not in dispute that the wagons were manufactured by two different companies one locating in the State of West Bengal and other locating in the State of Rajasthan and the wagons have also been delivered by the manufacturers at the place of manufacture i.e. in West Bengal and Rajasthan. Since the time of transfer of the wagons to the Railway department by the manufacturers, the Railway department has been paying charges to the petitioner company.
In the instant case an agreement was entered into by the petitioner with the erstwhile and undivided South Eastern Railway and the contract was executed at Calcutta. The supplies of wagons were made at Calcutta, West Bengal and Bharatpur, Rajasthan. The further undisputed fact is that by virtue of the said sale or purchase, the benefits from the said is being reaped by the petitioner company in the State of Chhattisgarh and for the services so provided, the Railway department is paying lease charges to the petitioner again in the State of Chhattisgarh - there is a transfer of rights to use goods which in the instant case is in the form of wagons used for the transportation of materials belonging to the petitioner.
The transfer of right to use the goods and that for the wagons so purchased at the behest of the petitioner’s establishment are availing the benefits within the territories of the State of Chhattisgarh as has been discussed in the preceding paragraphs, this Court has no hesitation in reaching to the conclusion that the imposition of tax on the lease charges by the Assessing officer and the rejection of the revision by the Revisional authority vide its order dated 30.05.2015 is just and proper and does not warrant interference.
Petition dismissed.
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2017 (12) TMI 1846
Award of interest on various claims for different periods to the claimant (Respondent No. 1) - interest for a pre-reference period, i.e., 04.03.1996 to 05.05.1999 @ 15% p.a - pendent lite, i.e., for the period from 06.05.1999 to 09.09.2002 @ 12% p.a. - post reference period, i.e., 09.09.2002 till payment @ 18% p.a., total (first and second) Rs. 12,89,033/- on the awarded sum - HELD THAT:- In Section 11(5) proceedings, the Appellant did not raise this objection in their reply and instead gave their express consent to refer the issue of award of interest payable on various claims (1 to 17) to Arbitral Tribunal considering the said claim to be arbitrable under the contract - the Appellant could have registered their objection before the Single Judge at the time of making a reference to the Arbitral Tribunal by pointing out Clause 13(3) of GCC or could have reserved their right to raise such objection before the Arbitral Tribunal. It was, however, not done.
If a plea is available-whether on facts or law, it has to be raised by the party at appropriate stage in accordance with law. If not raised or/and given up with consent, the party would be precluded from raising such plea at a later stage of the proceedings on the principle of waiver. If permitted to raise, it causes prejudice to other party. In our opinion, this principle applies to this case - the Appellant is otherwise not entitled to raise the plea on yet another ground. It is not in dispute that the Appellant's application filed Under Section 34 of the Act was partly allowed by the Single Judge only to the extent of two claims regarding award of interest. In other words, the application suffered dismissal substantially on all other claims except two claims mentioned above. However, despite suffering substantial dismissal, the Appellant did not file any appeal to challenge the part dismissal of their application.
The grant of award of interest on arbitrable claims by the Arbitral Tribunal is not inherently illegal or against any public policy or per se bad in law or beyond the powers of the Arbitral Tribunal. In other words, it is permissible to award interest in arbitrable claims by the Arbitral Tribunal - Section 31(7) (a) and (b) of the Act empowers the Arbitral Tribunal to award interest on the awarded sum and secondly, it is always subject to the agreement between the parties.
Appeal dismissed.
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2017 (12) TMI 1845
Disallowance of provision for contractual obligations - HELD THAT:- As it is apodictic that actual payments against the provisions made by the assessee for earlier year were negligible upto assessment year 2013-14. Assessee was unable to furnish any details regarding the projects so far completed by the assessee with delay and the actual amount of liquidated damages paid for such overrun.
While there can be no quarrel on the claim of the assessee that actual liquidated damages payable on account of delay attributable to it, is a crystallized liability, in our opinion requisite details for supporting the claim made by the assessee is not on record. Not only the assessee has to show that there was indeed a delay, it is also required to show what part of such delay was attributable to its own fault and what claim was made by the client as per contractual provision, for such damages. In the facts and circumstances of the case, we are of the opinion that the issue requires a fresh look by AO. We therefore set aside the orders of the lower authorities and remit the issue back to the file of the ld. Assessing Officer for consideration afresh in accordance with law.
Disallowance being provision for warranty - HELD THAT:- What we find is that for assessment year 2009-10 though the claim was allowed by the ld. Commissioner of Income Tax (Appeals), the Tribunal had reversed such finding of the ld. Commissioner of Income Tax (Appeals) and upheld the disallowance for warranty provisions. Nothing was shown before us to take a different view for the impugned assessment year. Ground of the assessee stands dismissed.
Disallowance u/s.14A - HELD THAT:- Hon’ble Delhi High Court in the case of Joint Investment P. Ltd [2015 (3) TMI 155 - DELHI HIGH COURT] disallowance u/s.14A of the Act cannot exceed the exempt income claimed by the assessee. We restrict the disallowance accordingly.
Addition of retention money - Accrual of income in which year ? - HELD THAT:- We find that the question whether retention money could be considered as part of income had come up before the Hyderabad Bench of the Tribunal in assessee’s own case for assessment year 2007-08 [2013 (9) TMI 372 - ITAT HYDERABAD] Tribunal had set aside the issue to the file of the ld. Assessing Officer for verifying the correctness of the claim of the assessee that retention money was offered as income in the years in which these were received. Accordingly, for the impugned assessment year also, we give similar directions as given by the Tribunal - Ground of the Revenue is partly allowed for statistical purpose.
Allowance of depreciation on technical know-how - HELD THAT:- No doubt, Revenue has claimed that assessee had not become absolute owner of the technical know-how and the supplier company continued to enjoy the ownership of such technical know-how.
However, in our opinion, once assessee had paid the money and acquired the technical know-how, it become an intangible asset, eligible for claiming depreciation u/s.32(ii) of the Act. The question whether the same vendor had given the same technical know-how for other persons, is in our opinion, irrelevant in deciding the question of eligibility of the assessee for claiming depreciation. We therefore do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals) in this regard. Ground stands dismissed.
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2017 (12) TMI 1844
Application for initiation of CIRP - financial creditor or operational creditor - application was preferred by the Appellant under Section 7 of the I & B Code - whether the application has been treated to be an application under Section 9 of the I & B Code or not? - HELD THAT:- The Appellant-M/s. PEC Ltd. has disbursed the amount to 'M/s. Sree Ramakrishna Alloys Limited' against the consideration for the time value of money. It is also clear that M/s. Sree Ramakrishna Alloys Limited by the agreement dated 24th February, 2014 has borrowed money from the Appellant-M/s. PEC Limited against the payment of interest. Thus, the Appellant-M/s. PEC Ltd. come within the meaning of 'Financial Creditor' and is eligible to file an application under Section 7 of the 'I & B Code' there being a debt and default on the part of the Respondent.
The Adjudicating Authority failed to appreciate that the application(s) preferred by Appellant under Section 7 of the 'I & B Code' cannot be treated as an application under Section 9 of the 'I & B Code' and the Appellant who is a 'Financial Creditor' cannot be treated as 'Operational Creditor'.
If an application is filed by a person under Section 7 of the 'I & B Code' and in case the Adjudicating Authority comes to the conclusion that the Applicant is not a 'Financial Creditor' in such case the Adjudicating Authority has jurisdiction to reject the application under Section 7 of the 'I & B Code', but the said Authority cannot treat the format of the application under Section 7 of the 'I & B Code' (Form-1) as an application under Section 9 of the 'I & B Code' (Form-5), nor can treat such person an 'Operational creditor', in absence of any claim made under Section 9 of the 'I & B Code'. Further, as the informations required to be given in Form-1 varies from the informations as required to be given in Form-5 (As per Section 9), including instructions made below the requisite form(s), no application filed under Section 7 can be treated as an application under Section 9 of the 'I & B Code - in absence of a notice under sub-section (1) of Section 8 of the 'I & B Code', an application under Section 7 cannot be treated to be an application under Section 9.
In the present case, as the application preferred by the Appellant under Section 7 in both the appeals are maintainable and have been admitted, order of moratorium has been passed and 'Interim Resolution Professionals' have been appointed, no interference is called for against the impugned order - Appeal allowed.
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2017 (12) TMI 1843
Seeking declaration and permanent injunction in relation to the land described in detail in the plaint - HELD THAT:- The need to remand the case to the High Court has occasioned for the reason that the Single Judge dismissed the appeals very cursorily and without undertaking any appreciation of evidence, dealing with various issues arising in the case and discussing the arguments raised by the parties in support of their case. In other words, the disposal of the two first appeals could not be said to be in conformity with the requirements of Section 96 read with Order 41 Rule 31 of the Code.
It is a settled principle of law that a right to file first appeal against the decree under Section 96 of the Code is a valuable legal right of the litigant. The jurisdiction of the first Appellate Court while hearing the first appeal is very wide like that of the Trial Court and it is open to the appellant to attack all findings of fact or/and of law in first appeal. It is the duty of the first Appellate Court to appreciate the entire evidence and arrive at its own independent conclusion, for reasons assigned, either of affirmance or difference - Similarly, the powers of the first Appellate Court while deciding the first appeal are indeed well defined by various judicial pronouncements of this Court and are, therefore, no more res integra. It is apposite to take note of the law on this issue.
Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1842
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- A financial creditor falls under section 5(7) can file an application for initiating corporate insolvency resolution process against a corporate debtor before this Adjudicating Authority when the default has occurred. No doubt the debt claimed is a financial debt as defined under section 5(8) of I&B Code. Herein this case Annexure T is found a legally executed assignment agreement. It is a registered document, stipulating all the terms and conditions. Being found Annexure T, a document admissible in evidence, this Adjudicating Authority cannot go behind the purpose of execution of the deed. Ld. Counsel for the respondent submits that it is a fraudulent document and that respondent has no knowledge about the execution of the deed. The said contentions are unsustainable in the peculiar circumstances of the case in hand.
Annexure T proves that petitioner is an assignee comes under the purview of section 5(7) of I&B code. Pursuant to Annexure T, the assignee herein has got right to enforce such security interest, pledges, and/or guarantees and appropriate the amount realized their form towards repayment of loan and to exercise all the rights of Assignor Bank in relation to such security interest, pledges and guarantees. The assignment of debt not at all affect the right of the debtor and therefore, respondent being evident that is a borrower does not have any right to object to the assignment of the debt by the lender.
In a recent National Company Law Appellate Tribunal (NCLAT) ruling of Neelkanth Township and Construction Pvt. Ltd. v. Urban Infrastructure Trustees Ltd. [2017 (9) TMI 1130 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI], one among the issues under consideration was the question of application of Law of Limitation about the Insolvency and Bankruptcy Code, 2016. The issues for consideration before the NCLAT was whether the application under Section 7 of the IBC is time barred, as the debt claim related to the years 2011, 2012 and 2013 and it was held that "the Limitation Act, (Limitation Act) does not apply to IBC”. So, no doubt the contention of the Ld. Counsel that the application is barred by limitation is also not sustainable under law.
In an application of this nature, this Adjudicating Authority is bound firstly to consider as to whether there is existence of default from the records and information utility or based on other evidence furnished by the financial creditor. If the petitioner succeeds in proving default of which the claim put forward by the petitioner and satisfy Sec.7 (5)(a) of the I& B Code, this Adjudicating Authority is bound to admit the application. The procedure adopted for the disposal of this application is summery in nature - The petitioner succeeded in establishing that the application is complete in all respects.
Petition admitted - moratorium declared.
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2017 (12) TMI 1841
Disallowance u/s 14A r.w.r. 8D - assessee did not make any disallowance of the expenses incurred in relation to such exempted income - HELD THAT:- AO can make the disallowances of the expenses incurred in relation to exempt income in pursuance to the provisions as specified u/s 14A - On perusal of the facts of the present case, we note that the assessee has claimed indirect/administrative expenses during the year to the tune of Rs.51,669/- only. Thus, it is undoubtedly clear that actual expenses claimed by the assessee are much less then the expenses disallowed under Rule 8D(2)(iii) of the I.T. Rules by the AO - we are of the view that the expenses to be disallowed under Rule 8D(2)(iii) cannot exceed the actual expenses incurred by the assessee. However, the AO has made the disallowance of the expenses under rule 8D(iii) exceeding the actual expenses.
The act of making the disallowance by the AO under rule 8D(iii) shows that no reference has been made to the books of accounts of the assessee. In such a situation we are of the view that the disallowance u/s 14A viz a viz Rule 8D of the I.T Rules has been made without complying the provisions of law. Thus the addition cannot be sustained in the instant case. Thus, we direct the Assessing Officer to delete the impugned addition. Thus, first issue in grounds of appeal filed by the assessee is allowed.
Addition u/s 115JB for disallowance u/s 14A r.w.r 8D - HELD THAT:- As in recent judgment of Special Bench of Hon’ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB - Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 of section 115JB - However it is also clear that the disallowance needs to be made in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so we draw our support from the judgment of Hon’ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd [2014 (11) TMI 1169 - CALCUTTA HIGH COURT]
We hold that the disallowances made under the provisions of Sec. 14A r.w.s 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB - AO shall work out the disallowances in terms of the clause (f) to Explanation-1 of Sec. 115JB of the Act independently after considering the expenses debited in the profit & loss account as mandated under the provisions of law.
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