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Showing 1 to 20 of 1847 Records
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2018 (6) TMI 1849
Disallowance u/s 40(a)(ia) - ITAT deleted addition - HELD THAT:- Tribunal allowed Assessee's appeal by following the order of its coordinate bench for the Assessment Year 2009-10 in respect of the same respondent - Assessee
Revenue very fairly points out that being aggrieved by the above order of Tribunal the Revenue filed an appeal to this Court. The appeal [2017 (7) TMI 1235 - BOMBAY HIGH COURT] This by following an earlier order of Division Bench of this Court in the matter of Commissioner of Income Tax -2 Vs. Health Indian TPA Services Pvt. Ltd [2015 (12) TMI 568 - BOMBAY HIGH COURT]
Revenue is not able to point out any distinguishing features in this case which would warrant taking a different view from that taken in Income Tax Appeal (supra). No substantial question of law arises.
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2018 (6) TMI 1848
Penalty levied u/s 271D - assessee has received cash exceeding ₹20,000/- from the Trust - assessee contended before AO that there was no loan or deposit - HELD THAT:- We have carefully gone through the judgment of Madras High Court in Idhayam Publications Ltd. [2006 (1) TMI 97 - MADRAS HIGH COURT] assessee contended before the Assessing Officer that there was no loan or deposit. AO rejected the claim of the assessee and levied penalty. The Tribunal, however, found that the proprietor of the sister concern, which deposited the funds, was one of the directors of the company and there was a running current account in his name. Therefore, there is no violation of Section 271D of the Act. In this case also, Shri A.N. Radhakrishnan is one of the directors in the assessee-company and he is also a trustee in other two Trusts. Therefore, this Tribunal is of the considered opinion that it is not a fit case for levying penalty under Section 271D of the Act.
Period of limitation - Moreover, for the assessment years 2008-09 and 2009-10, the penalty proceeding was initiated almost after six years. In view of the judgment of Madras High Court in M. Srinivasa Rao [2007 (9) TMI 32 - HIGH COURT , MADRAS] penalty proceeding should have been initiated within reasonable time even though no limitation was provided in the Income-tax Act. The threat of initiating penalty proceeding cannot be allowed to hang over the head of the assessee for an unreasonable period of time. There should be an end to the proceeding, that also within a reasonable period. Hence, in view of the judgment of Madras High Court in M. Srinivasa Rao (supra), the penalty proceeding initiated by the Assessing Officer for assessment years 2008-09 and 2009- 10, after the expiry of almost six years, is barred by limitation. Appeals filed by the assessee are allowed.
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2018 (6) TMI 1847
TDS u/s 194C and 194A - External Development Charges (herein referred to as ‘EDC’) and interest on late payment of EDC to Greater Mohali Area Development Authority (‘GMADA’) - AO held that tax was required to be deducted u/s 194C and u/s 194A on interest payment made to GMADA - As the assessee had not deducted tax at source, he treated the assessee/person responsible as ‘assessee in default’ and created demand u/s 201(1) / 201(1A)
HELD THAT:- A perusal of the notifications and policies of the Govt. also clearly reveal that though, in lieu of the benefits, concessions, incentives given by the government to the promoter for the purpose of development of infrastructure, the proportionate cost at fixed rates is got deposited by the government from the promoter for external development work, yet, the development is carried out by the local authority out of its own obligations/duties. The entire discussion can be summed up in the manner that though the promoter contributes towards the proportionate cost of infrastructure development, however, the works are not carried out by the local authority in consequence of specific performance of the agreement/contract but out of its own obligations and duties towards the public. Since the agreement cannot be said to be a work / service contract, hence, the provisions of section 194C will not be attracted in this case.
Interest paid on account of delayed payment of EDC charges - The perusal of the above statutory provisions of section 29 of the Punjab Regional and Town Planning and Development Act, 1995, read with notification dated August 14,2006 reveals that the GMADA has been established by the State Act. As per the sub section (4)(1) of section 29, ‘GMADA’ is a body corporate as well as local body.
In the case of ‘CIT (TDS) Vs. Canara Bank’ [2016 (5) TMI 570 - ALLAHABAD HIGH COURT] has elaborately discussed the distinction between a corporation established under an Act and body incorporated under an Act.
Hon'ble High Court while replying upon the decision in the case of Dalco Engineering (P.) Ltd. v. Satish Prabhakar Padhye [2010 (3) TMI 912 - SUPREME COURT] has observed that a company incorporated under the Companies Act is not created by the Company Act but comes into existence in accordance with the provisions of the said Act and that there was a well-marked distinction between body created by a statute and a body which after coming into existence is governed in accordance with the provisions of a statute.
The Hon'ble High Court while discussing about the status of ‘New Okhla Industrial Development Authority, Noida’ which was established under the Uttar Pradesh Industrial Area Development Act, 1976 has held that the said corporation (Noida) was established by the State Act and, therefore, was entitled to exemption payment of tax u/s 194A of the Act. The above decision of the Hon'ble Allahabad High Court is squarely applicable to the facts and circumstances of the case as the GMADA has been constituted by the State Government Act and it has been specifically provided that it is a body corporate and in view of the notification dated October 22, 1977 of the Central Government, the GMADA falls under the definition of any Corporation established by the Central, State or Provincial Act and thus the provisions of section 194A are not applicable. In view of this, the assessee was not liable to deduct TDS while remitting interest on delayed EDC charges to the GMADA.
We uphold the order of the CIT(A) in setting aside the impugned demand but on different grounds as discussed above. It is clarified that any observation made in this order will not be construed to or subscribing to or approving of the view in any manner of the CIT(A) that the EDC charges or interest thereupon by GMADA was not the taxable income of the GMADA. The above question is left open to be decided in an appropriate case. This appeal of the revenue is dismissed
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2018 (6) TMI 1846
TDS u/s 194C - assessee AOP worked as sub-contractor - AO was of the view that the capacity of the AOP was a sub-contractor, therefore, the Joint Venture was under obligation to deduct the TDS - CIT(A) held that provision u/s 194C of the Act is not applicable and allowed the claim of the assessee - HELD THAT:- Joint Venture has received the contract work by way of agreement. The parties have only the relationship inter-see in respect of Joint responsibility that existed in relation to the principal i.e. National Highway Authority of India. In fact, both the parties have decided to execute the contract on their own part. There is nothing on record to which it can be assumed that each member was interfering with the work of another. The Joint Venture is the main contractor and the members are not sub-contractor when the members are nowhere falls within the category of sub-contractor then there is no question of deduction u/s 194C of the Act and the question of disallowance u/s 40(a)(ia) of the Act nowhere arise.
Under the Joint Venture each party was under obligation to execute its own work according to its technical skill and capability for specified consideration and to bear its own losses and to retain its own profit separately. Each party is liable to be assessed as separate and independent entity. The contract awarded by the NHAI was a divisible contract. The Joint Venture was having specific constitution with regard to execution of work of independent entity.
As relying UAN RAJU CONSTRUCTIONS [2011 (5) TMI 636 - ITAT VISAKHAPATNAM] wherein held no merit in the presumption made by the AO that the Joint Venture is the "Main Contractor" and the members are the "Sub-contractors", thus we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Decided against revenue.
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2018 (6) TMI 1845
Tax free allowances - entitlement of judicial official of salary and allowances - scope of Shetty Commission recommendations - Disallowance of house rent allowance, medical allowance, sumptuary allowance and residence office allowance claimed by the assessee as exempt - assessee is a judicial Officer of Rajasthan judicial services and at present working as Additional District Judge - AO disallowed the claim of the assessee by holding that as per the provisions of Income Tax Act these allowances are not exempt from tax but are part of the salary income of the assessee - AO contended that as per the recommendation of the Shetty Commission these allowances are tax free and not to be included in the salary income of the assessee for the purpose of income tax.
HELD THAT:- HRA - Hon'ble Supreme Court in case of All India judges Association & Ors. v. Union of India & Ors [2001 (2) TMI 1023 - SUPREME COURT] has declined to accept the recommendation of the Shetty Commission for payment of house rent allowance over and above the official accommodation provided to the Judicial Officer. Therefore, the Hon'ble Supreme Court has held that the Judicial Officers are entitled for house rent allowance only when the Government, for any reason, is not able to make allotment or make available official accommodation. Thus as per the judgment of Hon'ble Supreme Court the Judicial officers are entitled for the house rent allowance at par with the other government officials and even equal to the judges of Hon'ble High Courts subject to the quantum of allowance varies from case to case depending upon the percentage of salary. Though the house rent allowance is exempt from tax as per provisions of High Courts judges (salaries and conditions of service) Act, 1954 as well as Supreme Court judges (Salaries and conditions of service) Act, 1958 however, the payment of HRA to the Judicial Officer is not governed by the provisions of these Acts. Section 22D of High Court judges (Salaries and conditions of service) Act 1954 and Section 23D of Supreme Court judges (Salaries and conditions of service) Act 1958 are pari material.
Thus it is clear that the value of rent free official residence provided to a judge or the allowance paid to him under sub-section (1A) of Section 23 is excluded is exempt from liability to pay income tax.
The provisions of High Court judges (Salaries and conditions of service) Act 1954 and as well as the Hon'ble Supreme Court judges (Salaries and conditions of service) Act 1958 are applicable only in respect of the judges of Hon'ble High Courts and Hon'ble Supreme court. The Judicial Officers government by the service conditions of the state higher judiciary cannot claim the benefit of High Courts judges (Salaries and conditions of service) Act 1954 as well as the Supreme Court Judges (Salaries and conditions of service) Act 1958. Therefore, the HRA drawn by the judicial officer of state higher judiciary is exempt only to the extent of the provisions of section 10(13A) r.w.r. 2A of the Income Tax Rules.Thus, in view of the above discussion, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue.
Medical allowance - In case of Smt. Shilpa Sameer the Judicial Officer the Assessing officer while passing the assessment U/s. 143(3) of the Act dated 30.09.2013 has allowed the medical allowance as exempt to the extent of Rs. 15,000/-. Thus, we direct the AO to reconsider this issue of allowing the claim of exemption of medical allowance to the extent of Rs. 15,000/-. If the Assessment order in case of Smt. Shilpa Sameer is not disturbed till date then the claim of the assessee shall also be allowed to the extent of Rs. 15,000/-.
Sumptuary allowance - CIT(A) has rejected the claim of the assessee on the ground that the assessee has not brought on record any section, notification, circular etc. as issued by the CBDT - We find that the CBDT vide letter No. 35/32/66-IT(B), dated 24-9-1966 has made it clear that sumptuary allowance has to be treated as an entertainment allowance and accordingly, the said allowance received by a person who is in receipt of salary from the Government, to the extent of such allowance are required to be deducted in computing the income chargeable under head salaries U/s. 16(ii)(a) - Thus, the CBDT circular has clarified that this allowance may be regarded as entertainment allowance and exempt from payment of income tax. We hold that the Sumptuary allowance is exempt from payment of income tax and accordingly to be excluded as a deduction while computing income under the head salary.
Residence Office Allowance - We note that residence office allowance of Rs. 3,000/- received by the assessee is on account of minimum day to day expenses incurred by the assessee for keeping the residence office functional. Therefore, the expenses incurred on account of official work which is reimbursed by the Government in the shape of allowance cannot be treated as income of the assessee. In our view the allowance is paid to the Judicial Officer to avoid the furnishing accounts of petty expenses by the Judicial Officer for reimbursement. Thus, to avoid the production or furnishing of account of petty expenses in respect of residence office, the allowance is paid in lieu of reimbursement of such petty expenses. Accordingly, the residence office allowance cannot be treated as income of the assessee and the same has to be excluded from the salary income.
Leave Encashment - Though there is no provisions under the Income Tax Act to exempt the leave encashment from tax during the service of Government employee except the provisions of Section 10(10AA)(i) of the Act applicable at the time of superannuation.
Notification of Government of Odisha Gazette dated 25.06.2013 after consulting the Ministry of Law and Justice Government of India has decided that encashment of leave admissible to Judicial Officer in state shall continue to subject to applicable taxes. The language of the said gazette notification shows that the earlier resolution dated 17.08.2010 was modified vide this gazette notification dated 25.06.2013. Therefore, the said notification cannot be applied to the assessee before us with retrospective effect.
Vide judgment in case of All India Judges Association & Ors. v. Union of India and Ors [2001 (2) TMI 1023 - SUPREME COURT] subject to the modification all the recommendations of the Shetty Commission were accepted. The recommendation for leave encashment and leave salary was not modified by the Hon'ble Supreme Court but was accepted as recommended by the Shetty Commission. Therefore, in view of the fact that the leave encashment was recommended as tax free and accepted by the Hon'ble Supreme Court prior to the notification dated 25.06.2013 the leave encashment would be tax free. In the result, the appeal of the assessee is partly allowed.
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2018 (6) TMI 1844
TP Adjustment - addition on account of Arm's Length Price - comparable selection - assessee is engaged in the business of providing IT-enabled Services(ITES) and business support services, such as financial reports/related documents, technical service for development of software and other similar services to its AE on a ‘cost plus mark up’ basis - HELD THAT:- It is pertinent to note that the Tribunal in assessee’s own case for A.Y. 2007-08 [2017 (12) TMI 1731 - ITAT DELHI] rejected the three comparables i.e. Vishal Information Technologies Ltd., Wipro Ltd., Mold-tek Technological Ltd. as functionally different from the assessee company.
Genesys International Corporation Ltd.comparable provides Geospatial Services, viz., photogrammetric services, preparation of cadastral maps from aerial photographs etc. using niche software tolls which requires a different skill set, e.g., services of draftsman, cartographers and civil engineers etc. and need highly skilled manpower. Therefore, this comparable is rightly rejected by the CIT(A) as given a categorical finding as to the function of the comparable and the requirement of the highly skilled manpower.
Excess depreciation on computer accessories - Whether eligible items for depreciation at 60%? - HELD THAT:- CIT(A) has given the finding that the assessee had purchased computer peripherals like wireless access point, G-Tran, Carry cass, Pan Cards, spike buster, pen drive, ETI enhancements, switches, keylock, battery, tae, extension card, tv tune, convertor, charger etc. Rs. 1,62,975/- as computer peripherals. The Hon’ble Jurisdictional High Court in BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] classified these items as eligible items for depreciation at 60%. Therefore, the decision of the Hon’ble Jurisdictional High Court is squarely applicable in assessee’s case. Therefore, Ground No. 2 of the Revenue’s appeal is dismissed.
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2018 (6) TMI 1843
TP Adjustment - royalty payment made to associate enterprise - Nil ALP determined - HELD THAT:- It is clear first of all that the lower authorities have been very fair in not holding the assessee’s royalty transactions to be a sham ones. They have applied benefit and commercial expediency test in the instant case whilst computing nil ALP. We see no reason to approve the same these two tests of benefits and commercial expediency are not to be invoked as per the above legal position. The impugned action of the lower authorities under challenge is therefore held to be not sustainable.
Quantification of the impugned ALP - TPO admittedly applied ‘CUP' method in his order (supra). He appears to have treated the tax payer itself as a valid comparable as it had not paid any royalty to the very payee in earlier assessment years. This made him to adopt nil price of the impugned royalty so as to make the adjustment in question.
No reason to concur with such a course of action since the assessee itself having paid Nil amount in the past to the AE, cannot be taken as a valid comparable. This tribunal in the case of Technimont ICB India (P) Ltd.[2013 (9) TMI 595 - ITAT MUMBAI] has concluded long back that a transaction between payee and its AE is not an uncontrolled one so as to be taken as a comparable. We accept the assessee’s instant first substantive ground both on legality as well as on quantification therefore. The impugned ALP adjustment stands deleted accordingly.
Disallowing provision for leave encashment u/s 43B(f) - HELD THAT:- This issue deserves to be remitted back to the Assessing Officer for taking a fresh call after the hon’ble apex court’s decision in the Revenue’s special leave petition converted to appeal staying operation of hon’ble jurisdictional high court’s judgment in Exide Industries Ltd.. [2007 (6) TMI 175 - CALCUTTA HIGH COURT] deleting identical disallowance as well as holding the statutory provision itself to be unconstitutional. We accept this fair stand and direct the AO to keep the instant issue in abeyance to be decided after the hon’ble apex court’s final verdict in the department’s appeal hereinabove.
Accrual of expenditure - Addition of commission charges - year of allowability - disallowance on the ground that the same is raised on accrual basis without any details being submitted - HELD THAT:- Departmental Representative, fails to dispute that the assessee’s stand throughout is of having filed all the relevant details before the AO. We therefore conclude that in absence of any material doubting accrual of the impugned expenditure in the relevant previous year, the same has to be held allowable in the assessment year in question only as per decision in the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT The assessee succeeds in its instant substantive ground.
Computing book profit u/s 115JB when Section 14A r.w.r 8D disallowance pertaining to its exempt income - HELD THAT:- Learned counsel’s only plea during the course of hearing is that the assessee has already offered the very sum in its return at the first instance. We therefore leave it open for the Assessing Officer to carry out necessary verification in order to avoid double disallowance. This substantive ground is taken as accepted for statistical purposes.
TP Adjustment - goods exported to Associate Enterprises outside India forming subject matter of international transactions - MAM selection - whether such domestic sales in case of independent parties vis-à-vis export sales to AEs could be taken as comparables or not? - HELD THAT:- A co-ordinate bench in M/s. Wrigley India Private Limited[2015 (1) TMI 193 - ITAT DELHI] declined the Revenue’s similar arguments applying CUP Method in identical circumstances -Undoubtedly, direct methods of determining ALP, including cost plus method, have an inherent edge over the indirect methods, such as TNMM, but such a preference can come into play only when appropriate comparable uncontrolled transactions can be identified and analysed accordingly. That has not been done in the present case. There is, therefore, no good reason to disturb the TNMM method adopted by the assessee.
Addition of club expenditure invoking Section 40(9) - HELD THAT:- No dispute about genuineness of the impugned expenditure to have incurred in a club set up at IEL, Gomia for entertainment and seminars. We observe in this backdrop that the lower authorities have wrongly invoked Section 40(9) as the same is attracted in case of specified purpose only and not qua a claim raised u/s 37 - DRP has deleted the very disallowance in the preceding assessment year. The same has attained finality. We thus adopt judicial consistency to delete the impugned disallowance as well.
Assessee appeal partly allowed.
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2018 (6) TMI 1842
Receipts chargeable to tax u/s 44BB - Whether revenues of the Assessee as Fees for technical Services (‘FTS’) ? - as argued services rendered by the Assessee were ‘in connection’ with installation/handling tools to facilitate wellhead/ X-mas tree installation relating to prospecting etc. of mineral oil.- HELD THAT:- In view of the above decision of Co-ordinate Bench rendered in the case of assessee itself for A.Y. 2010-11 as relying on ONGC [2015 (7) TMI 91 - SUPREME COURT] we have no reason to take a contrary view. Accordingly, we also hold that the receipts of the assessee are chargeable to tax as per provisions of section 44BB of the Act.
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2018 (6) TMI 1841
Manufacturing and sale of finished goods outside the books of account - HELD THAT:- We find that no justification whatsoever has been given by the AO as to why the value of semi finished goods sold to its sister concern should not be considered in the total production of the yr for the purpose of determining the percentage of scrap generated.
There is no material on record on the basis of which the suspicion of the AO can be supported that over and above the semi finished goods, the assessee produced finished goods, we note that the CIT(A) has given a categoric finding that the AO has neither rejected books of account nor brought out any evidences to support the suspicion that there was unaccounted manufacturing and sale of finished goods nor has AO made out any case that there were unaccounted sales. Addition having been made on suspicion in peculiar facts, we find, has correctly been deleted by the CIT(A). In the absence of any infirmity, the departmental ground is dismissed
Disallowance of Expenses - HELD THAT:- On a careful consideration of the same, we find that admittedly the disallowances have been made and been sustained by the AO and the CIT(A) respectively without any cogent reason. The books of account have been produced. Evidences supporting the claim are available on record. In the absence of any rebuttal on the same, the AO or for that matter, the tax authorities are not justified to enter into the terrain for determining the reasonableness of the expenditure. The legal position on the said aspect is well settled. Respectfully following the precedent, ground No. 2 of the assessee is allowed.
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2018 (6) TMI 1840
Validity of possession notice - grievance of the petitioners as set out in the writ affidavit is that the bank did not obtain proper valuation of the secured assets which it proposed to sell - HELD THAT:- In the case on hand, it is an admitted fact that a clear thirty day notice period was not maintained, as the notice under Rule 8(6) of the Rules of 2002 was issued on 01.03.2018 and publication of the auction sale notice in newspapers, under Rule 9(1) of the Rules of 2002, was on 03.03.2018. There is, thus, a clear violation of the statutory mandate which vitiates the exercise undertaken by the bank in the context of the Rules - In the case on hand, the demand notice under Section 13(2) of the SARFAESI Act was issued by the bank on 11.07.2017 and the possession notice was issued on 11.09.2017. Therefore, even if the date of the notice, i.e., 11.07.2017, is excluded, more than sixty days gap was maintained before issuance of the possession notice on 11.09.2017. The contention of the petitioners in this regard is therefore without merit and is accordingly rejected.
As regards the alleged failure on the part of the bank to consider the representation dated 01.09.2017 made by the petitioner firm, it appears that the only plea advanced thereunder was to extend time till 31.10.2017 to regularize the accounts. Even though the symbolic possession notice, under Section 13(4) of the SARFAESI Act read with Rule 8(1) of the Rules of 2002, was issued shortly thereafter on 11.09.2017, the bank did not take any concrete measures till 01.03.2018, when it issued the notice under Rule 8(6) of 2002. The petitioners did not establish before this Court that any substantial payment was made by them before the end of October 2017 as promised by them. The bank specifically stated in its counter that the petitioners made no such payment to establish their bonafides and the said averment remains unrebutted.
However, given the clear violation of the statutory mandate of Rules 8(6) and 9(1) of the Rules of 2002 in the context of the amended Section 13(8) of the SARFAESI Act, the action of the bank in bringing the secured assets of the petitioners to sale under the notice dated 01.03.2018 issued under Rule 8(6) of the Rules of 2002 and the auction sale notice dated 01.03.2018 issued under Rule 9(1) thereof, published in the newspapers on 03.03.2018, cannot be sustained.
The impugned notice dated 01.03.2018 issued under Rule 8(6) of the Rules of 2002 and the consequential auction notice dated 01.03.2018 issued under Rule 9(1) thereof, published in the newspapers on 03.03.2018, is set aside - petition allowed.
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2018 (6) TMI 1839
Common intent of committing murder - sustaining grievous injury as a result of assault by the Appellant - acquittal of the accused - HELD THAT:- It is by now well settled that the Appellate Court hearing the appeal filed against the judgment and order of acquittal will not overrule or otherwise disturb the Trial Court's acquittal if the Appellate Court does not find substantial and compelling reasons for doing so. If the Trial Court's conclusion with regard to the facts is palpably wrong; if the Trial Court's decision was based on erroneous view of law; if the Trial Court's judgment is likely to result in grave miscarriage of justice; if the entire approach of the Trial Court in dealing with the evidence was patently illegal; if the Trial Court judgment was manifestly unjust and unreasonable; and if the Trial Court has ignored the evidence or misread the material evidence or has ignored material documents like dying declaration/report of the ballistic expert etc. the same may be construed as substantial and compelling reasons and the first appellate court may interfere in the order of acquittal.
The High Court, while convicting the Appellant has confirmed the judgment of acquittal passed in favour of the Accused Nos. 2 to 5. Their acquittal as confirmed by the High Court is not questioned by the State before this Court. Thus, the judgment of the High Court acquitting Accused Nos. 2 to 5 has attained finality. Therefore, it is clear that the Trial Court and the High Court have, on facts, not believed the case of the prosecution in respect of the assault by the Accused Nos. 2 and 3 - Absolutely no material is found against the Appellant herein to convict him for the offences Under Section 302 Indian Penal Code inasmuch as he had not played any role in the death of the two deceased. In addition to the same, both the Courts have, on facts concluded that there was no common intention on the part of the accused, in commission of crime.
The Appellant is acquitted of the offence punishable Under Section 302, Indian Penal Code. Consequently, the judgment of the High Court convicting him for the said offence stands set aside - judgment passed by the High Court convicting the Appellant for the offence Under Section 326 Indian Penal Code and sentencing him for imprisonment of 7 years stands confirmed and is imposed a fine of Rs. 10,000/-. In default of deposit/payment of fine (if not already deposited) within eight weeks from today, the Appellant shall undergo imprisonment for two years additionally. The fine, if recovered, shall be paid to PW. 23 (informant-Honnamma) as compensation - Appeal allowed in part.
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2018 (6) TMI 1838
TDS u/s 194A - interest payable to the claimants on compensation awarded under Employees' Compensation Act - HELD THAT:- Section 194A of Income Tax Act, 1961, clearly provides that any person, not being an individual or a Hindu undivided family, responsible for paying to a ‘resident’ any income by way of interest, other than income by way of interest on securities, shall deduct income tax on such income at the time of payment thereof in cash or by issue of cheque or by any other mode. Compensation awarded under Motor Vehicles Act or Employees' Compensation Act in lieu of death of a person or bodily injury suffered in a vehicular accident, is a damage and not an income and cannot be treated as taxable income.
As well settled that interest awarded by the Motor Accident Claims Tribunal on a compensation is also a part of compensation upon which income tax is not chargeable as also held by the Division Bench of this Court in Court on its own motion vs. The H.P. State Cooperative Bank Ltd. And others[2014 (10) TMI 972 - HIMACHAL PRADESH HIGH COURT]. The same principle will be applicable in the present case also.
Deduction of income tax by petitioner/Insurance Company on the interest accrued/awarded on the compensation deposited by the petitioner/Insurance Company is illegal and is contrary to the law of land.
This petition is disposed of directing Income Tax Officer, Nahan to refund the TDS to the petitioner/Insurance Company within ten weeks from date of receiving information thereof, failing which petitioner company shall also be liable to pay interest @ 9% per annum on the said amount with effect from 1st February, 2018, till payment/deposit.
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2018 (6) TMI 1837
Violation of SAST Regulations - takeover exercise couched as a loan agreement - secured loan advanced by VCPL to RRPR - scope of conversion option and the purchase option (outlined in the loan agreement) and call option - No public announcement to acquire shares of the target company made - whether execution of the set of agreements (i.e the Loan Agreement between VCPL and RRPR along with the Call Option agreements through VCPL’s affiliates binding the Promoters of NDTV) partakes of the structure of a loan transaction or an arrangement entered into by the parties to acquire “control” over NDTV under Regulation 12 read with regulation 14(3) of SEBI (SAST) Regulations, 1997? -
HELD THAT:- All the concerns attached to the manner in which the loan agreements and call option agreements were entered into and the subsequent conduct of the noticee do not substantiate its argument that the transaction was only in the nature of a loan. Instead, it appears that the loan agreement and call option agreements were used to shroud the true nature of the transaction which was acquisition of beneficial interest in NDTV Ltd. The elaborate mechanism adopted by the noticee and its associates appear to be solely to deflect attention from this acquisition and thus covetously overcome the obligations imposed by the Takeover Regulations.
In effect, the transaction is not to secure the loan but to acquire control over all the affairs of the Target Company leaving only the right to control the “editorial policies of NDTV” to the Promoters and Borrowers, right from the day of execution of the loan agreement.
Thus in our view, the takeover exercise has been conveniently couched as a loan agreement with the predominant intention of the Noticee being to acquire control over NDTV without contemplating any repayment of the loan, whatsoever, from the Promoters or Borrowers. The transaction documents admittedly confer Conversion Option, Purchase Option and the Call option, and if the voting rights is to give full effect to the Transaction Documents, it would straightaway mean that the 52% of the voting rights of NDTV have to be exercised by the Promoters as per the dictates of the Lender and the same may traverse the specified Veto rights under Schedule 3. What is certain is the idea of the Noticee to start exercising control through the Promoters by keeping a tight hold on 52% of the shares of NDTV, through the threefold 'Options' conveyed by the Promoters, by helping them to meet the loan repayment that was pending to ICICI Bank.
The related issue as to whether veto rights confer any rights of control in favour of the noticee is not relevant for consideration in the instant case as the veto rights in Schedule 3 are eclipsed by the operative provision in Clause 20 of the Loan Agreement and are not significant enough for an independent consideration from the 'control' angle.
A close look at the structure of the transaction revolving around the conversion option and the purchase option (outlined in the loan agreement) on the one hand and a call option on the other clearly reveals that the transaction structure is unusual and peculiar to say the least.
The absence of an explicit clause in the Loan Agreement rendering the conversion option void on repayment of loan is strikingly abnormal and it clearly lays out an unfettered path for the noticee to stake its access to NDTV, albeit through the medium of RRPR. The call option construct is also strangely devoid of any time limitations and it endows the noticee (and its affiliates) the right to acquire 26% of NDTV shares from RRPR, at any time with no linkage to the loan. The strike price of the call option has been set so high (at a premium of 51% to the then average market price by noticee's own admission in its reply dated May 21, 2018) that it renders the whole exercise of collateralization of the loan a non-starter. Given the price history of NDTV shares, the argument of the noticee about the call option serving as a collateral seems very hollow.
Thus the noticee i.e. VCPL did indirectly acquire control in NDTV Ltd., by entering into the Loan agreement and the Call Option agreements on 21st July, 2009, thereby obligating it to make a public announcement of an open offer under Regulation 12 read with regulation 14(3) of SEBI (SAST) Regulations, 1997, as alleged in the SCN.
Order:
a) The noticee shall make a public announcement to acquire shares of the target company in accordance with the provisions of the SAST Regulations, 1997, within a period of 45 days from the date of this order;
b) The noticee shall along with the offer price, pay interest at the rate of 10% per annum from the date when they incurred the liability to make the public announcement till the date of payment of consideration, to the share-holders who were holding shares in the target company on the date of violation and whose shares are accepted in the open offer, after adjustment of dividend paid, if any.
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2018 (6) TMI 1836
Reopening of assessment u/s 147 - Necessity of recording satisfaction by the AO as required prior issuing the notice u/s 147 - unexplained investment in share capital - HELD THAT:- AO himself was of the view that the amount so invested in share application money needs verification, despite that he has the reason to believe that the investment in share application money and extent of availability during the year 2006-07 (wrongly mentioned in the reasons recorded as “2006-06”) is from (wrongly mentioned in the reasons recorded as “form”) undisclosed sources which is escaped to tax, which is not sustainable in the eyes of law as laid down in the case of Sampatraj Dharmichand Jain [2016 (7) TMI 67 - GUJARAT HIGH COURT] wherein it has been observed that “reopening may not be permitted for mere verification purpose.” Appeal of the assessee is allowed.
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2018 (6) TMI 1835
Authority to consider and decide the issue on prayers made by the Chartered Accountants' Firm - HELD THAT:- As petitioner states, no order conveying the decision as directed by this Court [2018 (2) TMI 2096 - DELHI HIGH COURT] has been received by the petitioner
Notice, for the respondent accepted. Let compliance affidavit be filed within six weeks. Response thereto be filed within two weeks thereafter.List on November 27, 2018.
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2018 (6) TMI 1834
Levy of Anti-Dumping Duty - import of melamine - whether any legal right has accrued to the applicant from the Notification dated 28.01.2018? - HELD THAT:- In the instant case, the interest of the applicant is that in the event the writ petition is dismissed, the applicants would continue to enjoy the benefit of the anti-dumping duty being imposed at the rate of 331.10 USD per metric ton in respect of import of melamine from Peoples’ Republic of China. As such, the eventual interest of the applicant is in the fruit of the present litigation, as to whether they would continue to get the eventual benefit that may be derived from the decision in the writ petition. From the said point of view also, by applying the proposition of law laid down by the Supreme Court in Deputy Commr., Hardoi [1953 (10) TMI 37 - SUPREME COURT] in paragraph-14, where the eventual interest of the applicant is the outcome of the writ petition, so as to whether they will continue to have the eventual benefit of the rate of anti dumping duty be at Rs.331.10 USD per metric ton, the applicant is found not to be a necessary party in the present proceeding.
As the initiation of the investigation under Rule 5 of the Rules of 1995 was initiated as per the written application of the applicant, the applicant may have some interest in the present writ proceeding and also the applicant would be in a good position to provide the Court, the appropriate material which may ultimately help in the appropriate adjudication of the matter.
This court is of the view that it would be appropriate to allow the petitioner to be an intervenor in the connected writ proceeding - the law has been made clear by the Supreme Court in SARASWATI INDUSTRIAL SYNDICATE LTD. VERSUS COMMISSIONER OF INCOME-TAX [1999 (3) TMI 3 - SUPREME COURT], wherein, it has been held that the only purpose of granting an intervention application is to entitle the intervenor to address arguments in support of one or the other side.
Application allowed.
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2018 (6) TMI 1833
Exemption u/s 11 - computing benefit of accumulation - inclusion/exclusion of deemed income - HELD THAT:- A careful perusal of the language employed in section 11 makes it crystal clear that exemption is available only on the ‘income (within the meaning of section 11 and not on the ‘deemed income’). Consequently, the assessee cannot accumulate deemed income either u/s 11(1)(a) or 11(2).
As following the esteemed views of Natwarlal Chowdhury Trust case [1989 (8) TMI 19 - CALCUTTA HIGH COURT] we uphold the plea of the assessee that, for the purpose of computing benefit of accumulation, deemed income is to be taken into account. The addition as confirmed by the CIT(A), must, therefore, stand deleted. We order so.
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2018 (6) TMI 1832
Eligibility for benefit of N/N. 21/2002-Cus., Sl. No. 244 (List 26), item No. 13 - Import of Extra High Tension cable exceeding the voltage of 33,000 volt (about 132k volt current) - Department has solely relied upon the definition as contained in McGraw Hill dictionary - HELD THAT:- After going through the definition as contained in McGraw Hill dictionary it appears that the same confined only to Cathode Ray Tube (CRT) which are generally used to manufacture of computer monitor and picture tube of T.V. etc. The imported cable does not belong to that category. Therefore, the Ld. Commissioner (Appeals) has rightly set aside the order of the Lower Adjudicating Authority and by extending the benefit under the notification - there are no infirmity in the order of the impugned order, so the same is hereby sustained.
The appeal filed by the Revenue is dismissed.
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2018 (6) TMI 1831
Deduction u/s 80IE - Tax Audit Report alongwith Form No. 10CCB were filed before the AO manually whereas it is mandated by Income Tax Act rules to file relevant tax audit report and Form 10CCB electronically - HELD THAT:-As not disputed that the assessee filed the requisite tax audit report in Form No. 10CCB during the course of assessment proceedings and before the assessment order was passed by the AO. The Hon’ble Madras High Court in case of CIT vs. AKS Alloy Pvt. Ltd. [2011 (12) TMI 39 - MADRAS HIGH COURT] while considering an identical issue of not filing of audit report in Form 10CCB along with return of income but filed the same before the assessment was completed held that filing of audit report along with the return was not mandatory but directory and that if the audit report was filed at any time before the framing of the assessment, the requirement of the provisions of the Act should be held to have been met.
The order of Hon’ble Madras High Court has been affirmed by the Hon’ble Supreme Court in case of CIT vs. G.M. Knitting Industries (P.) Ltd.[2015 (11) TMI 397 - SC ORDER] - Decided against revenue.
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2018 (6) TMI 1830
Valuation - registration Charges, insurance Charges, handling charges received and paid on behalf of the customer of a motor vehicle, form part of the sale price, of such motor vehicle or not - Incentive and discount, received from the automotive manufacturers form part of the "sale price" or needs to be treated as a "sale price" of the motor vehicle sold to the customer or whether it results in reduction of set off? - claiming set off, on purchased motor vehicle and used it as "Demo Vehicles", irrespective of the fact that such vehicle continuing to be "stock-in-trade" or not being treated as "capital asset" in the books of accounts of the Applicant - Whether the prayer of prospective effect, considering the fact that the decision of the Hon. High Court of Judicature at Bombay in the case of Sehgal Auto riders Private Limited [[2011 (7) TMI 55 - BOMBAY HIGH COURT]] was rendered on 11th July, 2011 and whereas the decision of the Hon'ble Supreme Court of India in the case of K.T.C. Automobiles [[2016 (1) TMI 1046 - SUPREME COURT]] was rendered only on 29th January, 2016?
Registration charges and hand selling charges - HELD THAT:- On going through the factual position, proforma invoice, and sale contract and seen that the property, particularly possession of a motor vehicle passes or can pass legally to the purchaser only after obtaining valid registration under the Motor Vehicles Act and the purchaser gets entitled to use the vehicle in public places. It is also seen that after complying the stipulated condition to make vehicle road worthy, only the property in goods passes legally to customer. Moreover, the registration charges are recovered for making the road worthy to comply the stipulated condition and statutory compulsion before ascertainment of goods or delivery of the Motor Vehicles and therefore would be included in the meaning of 'sale price' under Section 2(25) of the MVAT ACT, 2002 - all charges related, charged and paid by customer before the legally passing of property in goods would be considered in the sale price.
Discount offered and reimbursed to the applicant from his vendor amount to sale price or otherwise - HELD THAT:- The applicant had received the payment of the price for the discount offered to customers. The applicant has received above credit notes to reimburse the amount of discount offered to customer, therefore, the amount of Rs. 22,026 is liable to be included in the sale price would be liable to sales tax.
Claim of ITC which is not paid into government treasury - HELD THAT:- While passing the credit of Rs. 22,026, the automotive manufacturer company has reduced tax load of Rs. 2974/- on said amount. Thus they have reduced their tax liability to that extent and not paid tax into government treasury. Therefore, the claim of ITC in this respect is not found sustainable and thus required to be rejected.
ITC on Demo car - Whether the Applicant is entitled to claim set off, on purchased motor vehicle and used it as "Demo Vehicles", irrespective of the fact that such vehicle continuing to be " stock-in-trade" or not being treated as "capital asset" in the books of accounts of the Applicants? - HELD THAT:- The ITC is allowable provided that the vehicle are not capitalized. The matter is related to finding of fact. The assessing officer/investigating officer should verify the books as to whether vehicle is capitalized or otherwise.
Prospective Effect - HELD THAT:- It is settled principle that the issue of prospective effect is to be considered on fact and circumstances of each case separately. There is no straight jacket formula to say that prospective effect is to be given in typical circumstances - The tax liability of the applicant on the receipt of handling charges or service charges related to reqistration only is protected from period 11th July, 2011 to 29th January, 2016 only.
Application disposed off.
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