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2019 (9) TMI 1686
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee's software development services need to be deselected.
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2019 (9) TMI 1685
Deduction u/s 35(1)(ii) - expenditure incurred towards donation - assessee is the beneficiary of such bogus donation - rejection of claim of benefit of donation was made on the ground that by and under a notification being No. 79/2016 dated 06.09.2016 issued by CBDT the approval granted to such foundation has been withdrawn - HELD THAT:- The issue is squarely covered by and under several judgments passed by the Co-ordinate Bench including one of Thakkar Govindbhai Ganpatlal (HUF).2019 (7) TMI 1559 - ITAT AHMEDABAD] The said appeal preferred by the Revenue was rejected on the basis of the judgment passed in the matter of S. G. Vat Care Pvt. Ltd. [2019 (1) TMI 1694 - ITAT AHMEDABAD] passed by the Co-ordinate Bench in the identical issue.
Since the donation has not been doubted by the Revenue in the case of the assessee, in the absence of any changed circumstances, respectfully relying upon the judgment passed by the Co-ordinate Bench we allow the appeal preferred by the assessee. Consequentially, the addition made by the authorities below is deleted. - Decided in favour of assessee.
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2019 (9) TMI 1684
TP adjustment - adjustment on account of the interest on loan - bench marking of the interest on loan at US LIBOR - DRP held the interest at US LIBOR Plus 500 basis points - assessee arguing that the mark up of 500 basis points added to the LIBOR is not justified, since entities are under the same management and control, which reduced the risk factors - HELD THAT:- There is no dispute that the assessee advanced the interest free loan to its wholly owned subsidiary. In the first round of litigation, TPO reckoned the notional interest as per PLR and was confirmed by the Ld. DRP. In the second round of litigation TPO bench marked the interest on loan at SBI PLR plus 300 basis points, whereas, Ld. DRP, while following their own finding for the AY 2002-03 made it US LIBOR plus 500 basis points. It is not the case of the assessee that the facts involved in the matter are different from those involved for the AY 2002-03. It is not the case of the assessee that the findings of the Ld. DRP for the AY 2002-03 are in any way disturbed in any subsequent proceedings.
Thus LIBOR with mark up cannot be found fault with, having regard to the facts of the case of the assessee. However, we find that the mark up of 500 basis points to the US LIBOR appears to be unjustifiable. We consequently, accept the alternate plea of the assessee and find that the bench marking of the interest on loan at US LIBOR plus 170 basis points would meet the ends of justice, and, accordingly, direct the Ld. TPO to recompute the notional interest at US LIBOR plus 170 basis points. Appeal of the assessee Allowed in part.
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2019 (9) TMI 1683
Disallowance u/s 40(a)(i) - re-characterizing the reimbursement of expenses paid by assessee to its associated enterprise as royalty - disallowing the said claim u/s 40(a)(i) of the Act for non deduction of tax at source - HELD THAT:- First of all, the said payment has been made by assessee to the entities in earlier years also and no disallowance whatsoever has been made either by AO or TPO in this regard. Assessee before us has produced assessment orders / TPO’s orders for the earlier years. Further, as far as the nature of payment is concerned, wherein the assessee has filed necessary documentation before the authorities below and even before us, it cannot be said that reimbursement of expenses for leaseline are in the realm of royalty and section 9 of the Act or Article 12 of DTAA is attracted. First of all, we observe that since there is no amendment to the provisions of DTAA and same being beneficial, would be applicable and the payment made by assessee cannot be held to be royalty.
Payment of leaseline charges is not equipment royalty. Vide para 101, it was further held that where it is case of reimbursement of expenses, there is no requirement to deduct tax at source.
Hon'ble Supreme Court also in DIT (IT) Vs. A.P. Moller Maersk A S [2017 (2) TMI 993 - SUPREME COURT] and BNP Paribas SA [2018 (3) TMI 1987 - BOMBAY HIGH COURT] have held that when it is case of reimbursement of expenses, then there is no requirement of deduction of tax from such payments. Accordingly, we hold that there is no merit in the orders of authorities below in holding the assessee liable for such non deduction of tax at source. Reversing the same, we allow the claim of assessee and disallowance made under section 40(a)(i) of the Act is thus, deleted. The ground of appeal No.2 raised by assessee is thus, allowed.
Unabsorbed depreciation in the hands of assessee - HELD THAT:- As assessee pointed out that the same was consequential to the decision in earlier years. So, we direct the Assessing Officer to verify the plea of assessee in this regard and re-work the unabsorbed depreciation to be adjusted against current year’s income.
Assessee pointed out that there is double disallowance made by AO, that there are no brought forward losses of earlier years and credit for the same cannot be allowed merely because the assessee had contested the additions in appeal before the Tribunal. We direct the Assessing Officer that in case there is some relief given by the Tribunal in earlier years, effect of the same may be allowed to re-compute the unabsorbed depreciation in the hands of assessee. The ground of appeal No.3 is thus, allowed.
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2019 (9) TMI 1682
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time value of money - HELD THAT:- In the present case, it is not in dispute that first transaction has been of loan carrying interest at a specified rate payable by the borrower. Subsequently, Financial Creditor has given money to the Corporate Debtor which has been used and utilized by the Corporate Debtor for its business purposes, but Corporate Debtor has disputed that interest was payable thereon. Further, the Corporate Debtor has not adduced any material on record to show that the invoices for interest were raised just to prevent the Corporate Debtor from filing of petition under section 241/242 of the Companies Act, 2013 or to remain in control of the management and ownership of Financial Creditor. Be that as it may, the transactions remain of the nature of debt - the disbursement of money by the Financial Creditor to the Corporate Debtor can safely be concluded as a transaction of financial debt involving time value of money.
There are merits in the claim of the Financial Creditor that IBC, 2016 is not a recovery mechanism and, therefore, the provisions of The Bengal Money Lenders Act, 1940 being part of that legislation which operates in different field i.e. recovery of dues, could not be applied to proceedings under IBC, 2016. In any case, such provisions being contrary to the provisions of IBC, 2016 are not applicable in view of specific provisions of section 238 of IBC, 2016.
The Corporate Debtor be admitted under CIRP as per the provisions of Section 7 of IBC, 2016. The Financial Creditor has suggested the name of Interim Resolution Professional which we approve. The petition is complete in all other aspects and complies with the requirements of IBC, 2016 and Regulations, hence, petition is admitted.
The petition filed by the Financial Creditor under section 7 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, Manthan Broadband Services Private Limited, is hereby admitted - moratorium declared.
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2019 (9) TMI 1681
Fabricated gift deed - suit properties are ancestral properties or not - right to execute the gift deed - right, title or interest over the property - right to file the present suit - whether the Appellants have proved that the property in the hands of Donor was ancestral property? - HELD THAT:- This Court further held that on reading of the Will as a whole, the conclusion becomes clear that the testator intended the legatees to take the properties in absolute rights as their own self-acquired property without being fettered in any way by the rights of their sons and grandsons. In other words, he did not intend that the property should be taken by the sons as ancestral property. Consequently, the appeal was allowed and the suit for partition by the son against his father was dismissed.
In view of the undisputed fact, that Ashabhai Patel purchased the property, therefore, he was competent to execute the Will in favour of any person. Since the beneficiary of the Will was his son and in the absence of any intention in the Will, beneficiary would acquire the property as self-acquired property in terms of C.N. Arunachala Mudaliar case. The burden of proof that the property was ancestral was on the Plaintiffs alone - Once the property in the hands of Donor is held to be self-acquired property, he was competent to deal with his property in such a manner he considers as proper including by executing a gift deed in favour of a stranger to the family.
Whether the Appellants have specifically denied the execution of the gift deed in terms of proviso to Section 68 of the Evidence Act, to make it mandatory for the Defendant to examine one of the attesting witnesses to prove the Gift deed in his favour? - HELD THAT:- A gift deed is required to be compulsorily attested in terms of Section 123 of the Transfer of Property Act, 1882. Similar is the provision in respect of execution of a Will which is required to be attested in terms of Section 63 of the Indian Succession Act, 1925. Section 68 of the Evidence Act makes it mandatory to examine one of the attesting witnesses for the purpose of proving of the execution of Will but such limitation is not applicable in respect of proof of execution of any document which has been registered in accordance with provisions of the Indian Registration Act, 1908, unless the execution is specifically denied.
The High Court held that the Appellants have not led any evidence that signature of their father on the gift deed was forged as neither the specimen signature nor writings of their father for the purpose of comparing the disputed signature on the gift deed have been attempted. There is no report of an expert in respect of signatures of the Donor on the gift deed nor any request was made for sending the document to the Forensic Science Laboratory.
There are no error in the judgment of the High Court which may warrant interference in the present appeal and accordingly, the appeal is dismissed.
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2019 (9) TMI 1680
Condonation of delay in filing SLP - HELD THAT:- There is an inordinate delay of 1083 days in filing the Special Leave Petition and delay of 185 days in re-filing the Special Leave Petition which has not been satisfactorily explained.
The Special Leave Petition is dismissed both on the grounds of delay as well as on merits.
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2019 (9) TMI 1679
TP Adjustment - Selection of MAM - rejection of the Cost Plus Method (CPM) adopted by the assessee as the Most Appropriate Method for determination of the Arm’s Length Price (ALP) and applying TNMM as the Most Appropriate Method with OP/TC as PLI - HELD THAT:- In the absence of any change in the facts and circumstances of the case, we are of the considered opinion that the rule of consistency demands that the consistent view has to be taken. We, therefore, while respectfully following the decision of the Hon’ble Apex Court in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] accept the consistent view taken in assessee’s own case for the earlier as well as the subsequent year and hold that CPM is the most appropriate method for the determination of ALP in this case. In view of this conclusion reached by us, it is not necessary to consider the suitability of M/s Kerala Travels Interserve Ltd. Grounds of appeal of the assessee are allowed accordingly. Appeal of the assessee is allowed.
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2019 (9) TMI 1678
Rejection of the Samadhan applications followed by an order dated 14.11.2017 - HELD THAT:- Today the learned Government Advocate, on instructions from the officials who are present in the Court, undertakes that the order dated 14.11.2017 will be withdrawn forthwith, since it has been passed even during the subsistence of order of stay passed by this Court.
In response to notice dated 08.09.2011, a copy of which has been supplied to the learned counsel on record for the petitioner, the petitioner will appear before the Joint Commissioner (Sales Tax) North (R1) on (Monday) 30.09.2019 at 10.30 a.m. and an order shall be passed either rejecting/accepting the Samadhan application in accordance with the provision of the Scheme within a period of four weeks thereafter. No further hearing notice need be issued to the parties in this regard.
Petition disposed off.
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2019 (9) TMI 1677
TP Adjustment - comparable selection - HELD THAT:- Exclusion of companies as functionally not comparable with captive service provider.
Non treating provision for doubtful debts, provision for warranty is, provision for doubtful deposits as operating expenses - AR contends that Ld. AO while computing margins of the comparables has not included certain provisions - HELD THAT:- Wedirect Ld. AO to compute the provisions claimed in case of comparables by considering those which pertains to the year under consideration.
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2019 (9) TMI 1676
Rectification of mistake - order giving effect to the order of third member u/s 254(1) - HELD THAT:- As question no. 1 is decided in terms of the view taken by the Third Member concurring with the Judicial Member. Therefore, the majority view is confirmed. The Miscellaneous Application of the assessee on this issue is allowed.
Second question referred to the Third Member, the Third Member has again concurred with the view taken by the Judicial Member as held not following the amended order, particularly when such amended order has been duly brought to the notice of the adjudicating authority/court during the relevant proceedings, definitely constitutes a mistake apparent from record. The factum of the amended order having been brought on the record before the adjudicating authority renders the record of that authority to include the amended order. The amended order thus becomes a part of the record of the adjudicating authority and not following that amended order is none other than a mistake apparent from record.
Since the Third Member concurred with the view taken by the Judicial Member, the majority view is confirmed. On this issue also, the Miscellaneous Application of the assessee is allowed.
Miscellaneous Application filed by the assessee is allowed.
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2019 (9) TMI 1675
Seeking restoration of the name of the Respondent No. 2 company in the Register of Companies maintained by the RoC - Section 252 of the Companies Act, 2013 - HELD THAT:- Upon notice being issued, respondents 3 and 4 appeared and filed their reply impugning the demand stating that the assessment order was against a dead company and therefore the appellant is merely seeking to legalise its act which is contrary to the provisions of law. The assessments made against a struck off company are nonest.
Keeping in view the submission made, the appellant has justified the grounds on which it seeks restoration of the name of the company so as to proceed further. li. is equally expedient for ihe respondent company to seek its restoration as they wish to contest the claim made by the appellant before any judicial forum.
The RoC is therefore directed to restore the name of the Respondent Company in their Register and also proceed to take such other and further penal action against the respondents in accordance with the statutory provisions - Petition allowed.
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2019 (9) TMI 1674
Reduction of the share capital of the Applicant Company - allegation is that the affidavit dated 18.09.2017 filed by the Respondent Number 3. (Regional Director) has not been taken into consideration before the pronouncement of the order on 04.10.2017 - HELD THAT:- Since the company viz., M/S. Reed Relays & Electronics India Limited did not choose to get its shares listed with any one of the recognised exchanges, it ceases to be a listed company vide SEBI circular dated 30.05.2012. Hence, the reference in the RD's Affidavit that the guidelines prescribed by the SEBI should have been followed in the conduct of voting by the shareholders is not sustainable. The same is also applicable with respect to the observation made by the RD vide Para No.6 regarding the application of the company's finance to provide an exit opportunity for non-promoter shareholders - this Bench observes that the shareholders' meeting is as per the provisions of the Companies Act, 2013 and the relevant rules provided there under. Hence, for a company which is not a listed company, it cannot be expected to follow the SEBI guidelines regarding the conduct of the meeting.
This Tribunal confirms the reduction of share capital of Applicant Company by approving the minutes of Special Resolution dated 12.12.2016 passed by the shareholders for reduction of share capital - the necessary alteration shall be made in the Memorandum of Association by reducing the amount of share capital and of its shares accordingly by the Applicant Company.
Application allowed.
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2019 (9) TMI 1673
Unexplained advertisement expenses - Addition u/s 69C - Addition made as certain parties did not respond to inquiries made by the AO u/s 133(6) - HELD THAT:- The mere fact that certain parties did not respond to inquiries made by the Assessing Officer under Section 133(6) of I.T. Act; is not, by itself, sufficient to warrant addition of expenses in connection with which the inquiries were made U/s 133(6) of I.T. Act. For our aforesaid view, we take additional support from orders of CIT vs. Continental Carbon India Ltd. [2012 (6) TMI 712 - DELHI HIGH COURT] and CIT vs. GP International Ltd. [2009 (12) TMI 33 - PUNJAB AND HARYANA HIGH COURT] as held by Hon’ble High Court that merely because some of the persons did not respond to the notice issued by the Assessing officer U/s 133(6) of the I.T. Act, it cannot be taken that the said transaction was ingenuine - Decided in favour of assessee.
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2019 (9) TMI 1672
Oppression & Mismanagement - legality to declare the undated notice for calling EGM - legality to declare calling of EGM dated 16.06.2018 - grievance of the petitioner is that his proposed removal as a Director was contrary to the steps required to be taken under the statute - HELD THAT:- This Bench is of the opinion that the EGM, having been requisitioned at the instance of a shareholder, does not require a prior resolution of the Board of Directors to convene one. The petitioner acknowledges being served through email dated 25.02.2018, granting him the opportunity to file his representation on or before 13.06.2018. The said special notice was accompanied by the explanatory note. Since an FIR had already been instituted against him for criminal misappropriation of funds, it cannot be said that the petitioner was totally unaware of the allegations against him. The petitioner was granted opportunity to repudiate the allegations and explain the discrepancies in the accounts of the respondent company which were clearly pointed out and brought to his notice upon the Forensic Audit Report being received and is a subject matter of criminal prosecution under the FIR lodged against him.
No cogent explanation was offered to the allegation of siphoning off the funds. It is further submitted that the petitioner has guilty of forging signatures of the other Directors on the cheques for withdrawing amounts from the bank to which he was one of the joint signatories, which is primarily the subject matter of criminal investigation.
This Bench does not find any irregularity in convening an EGM for removal of a Director. The same can be requisitioned by a shareholder and a Board meeting is not a prerequisite. The removal of a Director is best left to the respondent company and its shareholders. Directorial complaints should not be entertained by courts and therefore interference of the tribunal in such like matters is totally unwarranted.
There are no case of Oppression & Mismanagement has been made out as alleged by the petitioner - petition is dismissed with the notional costs of Rs. 25,000/-.
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2019 (9) TMI 1671
Utilization of CENVAT Credit for payment of Excise Duty - goods procured duty free under Notification No. 43/2001-CE(NT) and cleared without use for intended purpose - HELD THAT:- The identical issue has been considered by this Tribunal in the case of M/S. SHREE RAJASTHAN SYNTEX LTD., SHRI S.K. BHANDARI AND SHRI V.K. LADIA VERSUS CCE, JAIPUR-II [2016 (3) TMI 200 - CESTAT NEW DELHI] and the payment of duty on the goods procured under Notification 43/2001-CE(NT), by utilization from cenvat credit for payment has been allowed.
The submission of Ld. AR that the facts are different in both the cases, it is found that fact will not have any implication for the reason that the issue involved is payment of duty on the goods procured under Notification 43/2001-CE(NT) by utilizing cenvat credit.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1670
CENVAT Credit - ineligible documents - cargo sales report’ purportedly summarising ‘airway bills - in conformity with rule 9(1) of CENVAT Credit Rules, 2004 or not - HELD THAT:- The present appeal of Revenue has sought to challenge the finding of the adjudicating authority, on the acceptability of ‘cargo sales report’ for availing credit, with the proposition that the activity of the assessee was not ‘output service’, within the meaning of rule 2 of CENVAT Credit Rules, 2004, and, hence, the question of acceptability of documentation does not arise.
It is found from perusal of the show cause notices, that the only ground raised therein for disallowance of credit is the validity of the documents against which it had been availed.
Appeal dismissed.
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2019 (9) TMI 1669
Seeking Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Since no Resolution Plan is received by this Authority under Sub-section (6) of Section 30 of the I&B Code, 2016, before the expiry of the Corporate Insolvency Resolution Process period of 180 days, the Corporate Debtor has to be ordered for Liquidation.
Application allowed.
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2019 (9) TMI 1668
Nature of receipt - sales tax incentives received - allowability of capital receipt - whether incentive was received after commencement of production, not utilised for acquisition of plant and machinery? - additional depreciation i.e. 50% is allowable in subsequent assessment year - HELD THAT:- Appeal admitted on the substantial questions of law:
1. Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal, “A” Bench, Kolkata erred in law in holding that sales tax incentives of Rs. 12.38 lakhs received during the period was capital in nature without considering the fact that the incentive was received after commencement of production, not utilised for acquisition of plant and machinery?
2. Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal, “A” Bench, Kolkata erred in law in holding that balance additional depreciation i.e. 50% is allowable in subsequent assessment year?
As the respondent is represented by learned counsel, issuance and service of notice of appeal are dispensed with Let informal paper books be filed by learned advocate-on-record for the appellant by 22nd November 2019 2019, serving a copy thereof upon the advocate-onrecord for the respondent at least seven days before the date of hearing of the appeal.
List the appeal for hearing on 4th December 2019.
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2019 (9) TMI 1667
Recovery of amount of Corporate Debtor by Resolution Professional - Appellant has not deposited the amount in a separate Escrow Account - HELD THAT:- Having found that the Appellant has sold the goods supplied by Corporate Debtor, the ground taken by the Appellant that the goods were sub-standard, cannot be accepted.
In absence of any merit and as the Appellant has not complied with the interim direction of this Appellate Tribunal, no relief can be granted - Appeal dismissed.
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