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Showing 121 to 140 of 18008 Records
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2023 (12) TMI 1317
Seeking grant of bail - Money Laundering - proceeds of crime - extortion of crores of Rupees from different rich people by blackmailing them to get their video footage containing objectionable and inappropriate photographs viral - conditions u/s 45 of PMLA satisfied or not - HELD THAT:- Taking into consideration the vital aspect of the case which is the pre trial detention of the Petitioner for near about 1 year with uncertainty prevailing about execution of NBWA against co-accused adversely affecting the commencement of the trial and, thereby, conclusion of trial being not possible in near future and regard being had to the status of the Petitioner as a woman, which puts her in the bracket of persons specified in the proviso to Sec. 45 of PMLA allowing her some relaxation in complying the rigor of provision of Section 45 of the PMLA, this Court considers that the Petitioner has made out a case for grant of bail.
The bail application of the petitioner stands allowed and the petitioner may be released on bail subject to fulfilment of conditions imposed - bail application allowed.
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2023 (12) TMI 1316
Money Laundering - Seeking grant of Regular bail - cheating the complainant by dishonestly inducing him in getting admission for his daughter in Post Graduation Course at Himalayan Institute and Hospital Trust, Jolly Grant, Dehradun - HELD THAT:- The expression “reasonable grounds” means something more than prima facie grounds. It is the mandate of the Legislature which is required to be followed. The non-obstante clause with which Section 45 of the Act, 2002 starts should be given its due meaning and clearly it is intended to restrict the powers to grant bail.
Allegations against the present applicant are not without substance. The allegations are categorical and specific. A definite role has been assigned to the applicant. On perusal of the record, it reveals that serious and grave allegations have been levelled against the applicant. The mandate of the Parliament is that the person accused of the offence under the Act should not be released on bail unless the mandatory conditions provided under Section 45 of the Act, 2002 are satisfied.
In the facts and circumstances of the case, it cannot be said that mandatory conditions, have been satisfied. It is, therefore, not possible for this Court to record satisfaction that there are reasonable grounds for believing that the applicant is not guilty of such offence. The bail application is liable to be rejected.
The bail application of the applicant is rejected.
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2023 (12) TMI 1315
Deduction u/s 80P(2)(a)(i) - interest earned by the co-operative society - Assessee is a cooperative society engaged in the business of extending credit facility and accepting deposits from its members, registered under Karnataka Cooperative Societies Act and has been assessed to Income-tax from year to year - HELD THAT:- We have considered the judgment passed by the coordinate bench in the case of M/s Kammavari Credit Cooperative Society Ltd [2023 (9) TMI 1468 - ITAT BANGALORE] fixed deposits were made out of the money not required by the society immediately for lending. Further that this was also not out of the money due to the members. In that view of the matter, the interest earned from such investment was attributable to the carrying out of the business of the appellant society and the judgment mentioned hereinabove in case of M/s. Guttigedarara Credit Co-operative Ltd. [2015 (7) TMI 874 - KARNATAKA HIGH COURT] squarely applies to the facts of the present case. The ultimate prayer was to allow the income earned by the assessee.
Thus, it appears that this issue is squarely covered in favour of the assessee and assessee is rightly allowed the deduction u/s 80P(2)(a)(i) of the Act by the ld.CIT(A). No reason to interfere with the orders passed by the ld.CIT(A) in granting relief to the assessee. Appeal of the Revenue is dismissed.
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2023 (12) TMI 1314
Unexplained money u/s 69 r.w.s. 115BBE - Deposits in bank account by using demonetized currency notes - According to the ld. AO, the assessee has not explained the nature and source of above deposit to assessee’s bank account - HELD THAT:- Similar issue came for consideration before this Tribunal in the case of Bhoopalam Marketing Services Pvt. Ltd. [2022 (11) TMI 331 - ITAT BANGALORE] instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not.
Thus we inclined to remit the issue in dispute to the file of ld. AO for fresh consideration to examine in the light of above order of the Tribunal. Appeal of the assessee is partly allowed for statistical purposes.
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2023 (12) TMI 1313
Deduction u/s. 80P(2)(d) - interest on investment derived by the appellant from scheduled bank and co-operative bank - HELD THAT:- As relying on The Totgars’ Cooperative Sale Society Ltd [2023 (9) TMI 150 - ITAT BANGALORE] we hold that the investment held with the co-operative bank would be eligible for claim of deduction u/s. 80P(2)(d) of the Act and we direct the Ld.AO to pass orders in respect of the interest earned by the assessee from commercial banks considering under the head “Income from other sources” and to grant relief to the assessee in accordance with law u/s. 57 of the Act. Assessee appeal allowed.
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2023 (12) TMI 1312
TP Adjustment - interest on advances given to associated enterprises - HELD THAT:- The assessee being one of the JV partner advanced a sum which is outstanding without charging any interest. The claim of the assessee is that the amount was given in earlier years and the joint-venture is now facing a huge cash crunch due to operational losses and therefore it is not appropriate to charge any interest. The assessee also claimed that the advance has been made to the joint-venture to meet the deficit in cash flow while executing project in South Africa. It is the advance out of matter of commercial prudence to protect the business interest of the assessee in the project of the joint-venture. Assessee has also stated that there is a difference between providing advance and loan to its associated enterprises and providing advances as a business partner. It is also claimed by the assessee that the entire advances are not recoverable and therefore substantial part of those advances are written off in the financial year 2016 – 17. Therefore, no interest could be charged. The learned transfer pricing officer held that no independent party would have given such advance to any third-party and therefore the interest is required to be charged.
We find that in KEC International Ltd. Versus DCIT-5 (1) (1) , Mumbai And (Vice-Versa) [2020 (9) TMI 1101 - ITAT MUMBAI] wherein as per ground number 1 transfer pricing adjustment were made on account of interest on business advances, the coordinate bench has deleted the adjustment as held that advances were more in the nature of capital contribution and by advancing the same, the assessee had protected its own business interest which is evident from the financial statements of JV. The advances were towards fulfilment of the assessee’s obligation of being a JV partner as any financial incapacitation of JV would adversely affect the continuation of the project and ultimately jeopardize the interest of the assessee. Therefore, the said advances could not be put in the category of loans as done by the lower authorities.
It could not be said that JV entity derived / gained certain benefits out of such advances but rather it was the assessee who would ultimately gain by continuing with the projects and taste the fruits of the success of project. Hence, not convinced with impugned adjustments as confirmed by first appellate authority, we direct Ld. AO to delete the same. Decided in favour of assessee.
Addition of corporate guarantee - HELD THAT:- As all financial guarantee and performance guarantee issued by the assessee are covered by the decision of the coordinate bench in assessee’s own case wherein the guarantee fees with respect to various guarantees where the assessee has recovered the guarantee commission at the rate of 0.6% was upheld, therefore all these guarantees are continuing guarantee from the earlier years and there is no change pointed out before us in the functions, assets and risk of the parties or any change in the economic conditions, respectfully following the decision of the coordinate bench we confirm the order of the learned CIT – A.
With respect to the financial guarantee given to ICICI bank United Kingdom on behalf of keys the transmission LLC and KC US LLC (whole owned subsidiary of the assessee), no guarantee fee was charged, the learned CIT – A following the decision of the coordinate bench in assessee’s own case has upheld the arm’s-length guarantee fees of 0.20%. As the learned departmental representative could not point out any change in the facts and circumstances of the case as well as any variation in the functions, assets and risk of the parties or change in economic conditions and further as it is a continuing guarantee from earlier years, respectfully following the decision of the coordinate bench we uphold the order of the learned CIT – A in benchmarking the guarantee fee income at the rate of 0.20%.
Addition on account of foreign exchange loss mark to market provided by the assessee - CIT(A) deleted addition - HELD THAT:- The issue is covered in assessee’s favor by the decision of this Tribunal for AY 2009-10 - In fact, the decision of learned first appellate authority for AY 2010-11 [2019 (9) TMI 437 - ITAT MUMBAI] was under challenge before this Tribunal by the revenue [2019 (9) TMI 437 - ITAT MUMBAI] wherein the co-ordinate bench followed the order for AY 2009-10 and held that MTM losses on hedging contracts would be accrued losses and hence, an allowable expenditure.
Addition u/s 14 A r.w.r. 8D in computing the book profit under section 115JB - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of special bench in case of ACIT versus Vireet investments private limited [2017 (6) TMI 1124 - ITAT DELHI] Even otherwise it is stated that assessee has not received any exempt income during the year and therefore there is no question of making any disallowance under section 14 A of the income tax act even in the normal computation of total income and therefore the same also cannot be imputed while computing the book profit u/s 115JB of the act.
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2023 (12) TMI 1311
Validity of assessment order - no stay has been granted by the Appellate Authority in the appeal preferred by the petitioner - HELD THAT:- Upon consideration of the submissions made by the learned counsel appearing for the petitioner as well as learned Senior Standing Counsel appearing for the respondents and on perusing the documents, it appears that the original assessment order has been challenged before the Lower Appellate Authority (LAA) and the said LAA has passed the order on 06.06.2023 remanding the matter back to the assessing officer and the assessing officer thereafter passed the impugned order dated 17.10.2023. In the meantime, the petitioner filed appeal before the CESTAT however no interim order has been passed. Since no interim order has been obtained by the petitioner, the assessing officer proceeded to pass the impugned order.
There are no illegality or irregularity in the order passed by the Assessing Officer, taking into consideration the decision making process on his part in passing the impugned order.
The petition is dismissed.
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2023 (12) TMI 1310
Levy of penalty u/s 129 (3) of the West Bengal Goods and Services Tax Act, 2017 on goods detained - e-way bill did not contain the registration number of the vehicle transporting the goods - due to technical snag in the first vehicle (for which e-way bill was generated), the goods were transferred to second vehicle - case of appellant is that the driver of the first vehicle was ignorant of the legal requirements and therefore, did not initiate the process of generating a further e-way bill.
HELD THAT:- In the facts of the present case, e-way bill in respect of the goods transported was yet to expire when, the new vehicle had been detained. The explanation given by the appellant that, the driver of the old vehicle did not know the law and therefore did not comply with the same and did not inform the appellant about the same, should have been evaluated, in the facts and circumstances of the present case, by the Adjudicating Authority in light of the e-way bill being valid till then in respect of the first vehicle. He has to deal with the defence raised by the defaulter by a reasoned order. That is the mandate of Section 129 (3) and (4) of the Act of 2017 read together. The Adjudicating Authority has not done so. The Appellate Authority has also overlooked such fact.
Respondent has not contended that, the defence canvassed in the show cause notice and the grounds pressed in the appeal were not canvassed or pressed by the appellant at the time of hearing before the Adjudicating or the Appellate Authority.
It is found that the impugned order of the Adjudicating Authority as upheld by the Appellate Authority to have violated the principles of natural justice, inasmuch as it has not spoken on the defence taken. Consequently, both the orders passed by them are set aside - Adjudicating Authority under the Act of 2017 is directed to decide on the show cause notice, in light of the reply to the show cause notice dated June 22, 2022, afresh after giving an opportunity of hearing to the appellant through its authorized representative - application disposed off.
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2023 (12) TMI 1309
Taking possession of the demise premises in view of Section 14(1)(d) of I&B Code - it was held by NCLAT that 'Since the demised premises ceased to be the property of the Corporate Debtor much prior to the initiation of CIRP, therefore, it cannot be covered under Section 14 much less 14(1)(d) of the Code' - HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal since no substantial question of law is involved in the appeal.
Appeal dismissed.
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2023 (12) TMI 1308
Rectification u/s 154 - contribution towards the EPF and ESIC disallowed - Tribunal instead of deciding the case on merits has simply adjudicated the issue on the ground that the rectification application was not maintainable - HELD THAT:- After going through the order it appears that though the application was filed under the nomenclature of rectification but if certain amount on which the tax is imposed is not legally recoverable then it also touches upon the merit. Consequently, in order to advance the cause on merits about the issue, we set aside the order of the ITAT and remit back the same to the Income Tax Appellate Tribunal to adjudicate the same on merits.
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2023 (12) TMI 1307
Foreign tax credit u/s 90 - belated filling of Form No. 67, i.e. within the due date of filing of return of income prescribed under section 139(1) - claim made with revised return of income - HELD THAT:- As decided in Sonkashi Sinha [2022 (10) TMI 107 - ITAT MUMBAI] here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income-tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income.
Thus Appellant would be eligible to foreign tax credit where Form No. 67 is filed before the completion of assessment for the relevant assessment year.
Thus we remand the issue raised in present appeal relating to claim of foreign tax credit back to the file of Assessing Officer with the direction to grant foreign tax credit to the Appellant - Ground No. 1 raised by the Appellant is allowed for statistical purposes.
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2023 (12) TMI 1306
Conspiracy with the consignee and other persons - Smuggling - cigarettes - alloy wheels - metal scrap - initiation of proceedings under Sections 112 and 117 of Customs Act - notice was issued in compliance of provisions of Section 155(2) of the Act - HELD THAT:- The factual aspect has to be gone into by the authorities as to whether the petitioner was responsible for clearing the container along with his co-employee. Apparently, the fact remains that he was placed under suspension immediately, which is also conceded as such by the Counsel for the petitioner, on the detection of the container having been cleared without following the procedure prescribed and the fact that the said container contained the goods which had not been declared.
The larger issue thus, remains whether there was a conspiracy with the consignee and other persons. These are factual aspects which the writ Court will not go into. Since the reply has already been filed, it is opined that it is for the authorities to take a decision on the above said show cause notices and it is not for the writ Court to entertain the petition of an employee who prima facie is guilty of eating the fence.
The present petition is dismissed at this stage without commenting upon the merits of the case leaving it open to the petitioner to take all his pleas before the authorities concerned.
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2023 (12) TMI 1305
Liability of appellant (sub-contractor) to pay service tax - service tax has been paid by the main contractor on the whole contract value - difference of opinion - HELD THAT:- Section 65(7) of the Finance Act 1994 defines “assessee” as a person liable to pay the service tax and includes his agent. Rule 2(1)(d) of Service Tax Rules 1994 defines “person liable for paying service tax”. As per the said Rule, in respect of services other than in Rule (2)(1)(d)(i), it is the provider of service who is the person liable to pay service tax. When the law fixes the liability to pay tax on a particular person, the parties cannot mutually agree to absolve from liability or shift the liability to another. The activity of providing a taxable service being the taxable event, the subcontractor cannot escape the liability even though the main contractor has paid his part of the liability on the gross amount charged. As already stated as the main contractor being eligible to avail Cenvat Credit there is no situation of double taxation.
The Tribunal in very recent decisions as pointed by the Department has followed the decision in the case of Melange Developers Ltd. [2019 (6) TMI 518 - CESTAT NEW DELHI-LB], to hold that the sub-contractor is liable to pay service tax even if the main contractor has discharged service tax on the contract value. Judicial propriety makes it binding to follow the Larger Bench decision in order to reduce conflict of decisions - the decision of Larger Bench in the case of Melange Developers & Co. would apply.
The view taken by brother Member (Technical) is agreed upon and it is held that the Appellant is liable to pay service tax on the value of sub-contract/work done inspite of the fact that the main contractor has discharged the service tax on the whole contract value.
The reference is answered and the difference of opinion stands resolved - papers may be placed before the Division Bench for deciding the appeal.
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2023 (12) TMI 1304
Validity of assessment proceedings u/s 153C - absence of a valid satisfaction note prior to initiation - HELD THAT:- There is no dispute the satisfaction note u/s 153C has been recorded by the AO. It is well settled law that the Assessing Officer need to make only one satisfaction note, if the AO is same for the 'person searched' and 'other person' u/s 153C of the Act. Thus, we find no merit in ground of the assessee, accordingly, dismissed.
Addition u/s 69 - documents were found from the premises of the searched person in search and seizure operation - validity of Dumb documents seized - assessee submitted that the addition has been made based on the dumb document and the said document does not bear date or signature - HELD THAT:- Papers found during the search are neither dated nor signed/stamped, there is no head note on the paper which could suggest the purpose for which it was created, the loose paper contained list of many other property transaction which were related neither to the assessee nor to Sh. Buti Singh (seller) which demonstrates that neither the assessee nor the seller was the author of the document. The loose paper did not belong to the assessee or to the seller, there is no description or comment explaining the hand written jottings-whether it represented a proposal for purchase or construction by the builder or payment between assessee and right seller, there is no date of receipt or payment mentioned against any figure, the content of the paper was incorrect as the total sales consideration did not match to the sales consideration as per the agreement. Further, the sales consideration as per the loose paper did not even match to the handwritten jottings which raise serious doubts on its validity and accuracy.
Thus, the above said loose paper was not speaking document and it is a dumb document which can be used as a basis for making the addition u/s 69 of the Act in the absence of any substantive enquiry to validate the content of the paper with any supportive and corroborative material and evidence.
The evidentiary value of loose paper which is unsigned, undated and unverified has been held to be highly questionable and has not been accepted by the Hon'ble Supreme Court and various High Courts. Thus in absence of any supportive and corroborative material and evidence, a loose paper found during search containing rough notings of proposals/offers could not be a basis for making addition u/s 69 of the Act. See SHRI SHARAD CHAUDHARY [2014 (8) TMI 309 - ITAT DELHI]
AO did not consider the need to summon the seller or the person searched, or to record the statement of the author/searched person/seller by giving an opportunity to assessee to cross examine the said person. The AO has not even made any enquiry about the value of the property purchased by the assessee. Thus we delete the addition made u/s 69.
Addition on account of audit objection and passing the order u/s 154 before the proceedings u/s 153C of the Act were completed - assessee submitted that the Ld. AO was wrong to make addition on account of audit objection and passing order u/s 154 of the Act, before the proceedings u/s 153C were completed and the rectification proceedings are limited to correction of mistake apparent from record only - HELD THAT:- The issue raised by the assessee in this Ground is not emanating from the impugned order of the Ld. CIT(A) which is under challenge before us, therefore, the Ground No. 3 is dismissed as devoid of merit.
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2023 (12) TMI 1303
CENVAT Credit - Inputs used for repairing and maintenance of the plant and machinery, as capital goods. - eligible inputs for availing credit under the relevant Modified Valued Added Tax (Modvat) and Central Value Added Tax (Cenvat) Credit Rules, as amended from time to time or not - HELD THAT:- In view of the settled legal position, the interpretation of the expression “used in or in relation to manufacture” is of a very wide import and takes within its scope and ambit all items used in the process of manufacture whether directly or indirectly and whether contained in the final product or not. The items used for maintenance of plant and machinery are also items used in the manufacture of finished goods. Hence, credit on the items used for maintenance, repair, upkeep or fabrication of plant and machinery are admissible to the assessees.
The credit on welding electrodes and other items such as jointing sheets, SS plates etc. used for maintenance, repair, up-keep or fabrication of plant and machinery are admissible to the assessees.
Appeal allowed.
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2023 (12) TMI 1302
Addition u/s 56(2)(viib) - FMV determination of the shares issued to the assessee - AO rejecting the DCF method adopted by the assessee - As per AO assessee could not substantiate the FMV adopted as per DCM method to the satisfaction of the AO - HELD THAT:- Once the assessee applied particular method of valuation, (in the present case DCF method), then it is the duty of the AO / CIT(A) to scrutinize the valuation report within the four corners or parameters laid down while making the valuation report under DCF method only. It is not permissible for the AO to reject the method opted by the assessee and apply a different method of valuation and the AO can definitely reject the valuation report but not the method. In case, the AO rejected the valuation report, then the AO has to carry out a fresh valuation report by applying the same valuation method and determine the fair market value of the unquoted shares.
Therefore, in our view, the AO was incorrect in concluding that the DCF method is “quite unrealistic and inapplicable” to the terms of the Income Tax Act. On the contrary, the DCF method is quite applicable and was required to be applied by the Assessing Officer to determine the FMV of the unquoted shares. Our above conclusion is based on the bare reading of the provisions reproduced hereinabove and also on account of the decision referred by the Tribunal in the case of Innoviti Payment Solutions Pvt. Ltd. [2019 (1) TMI 688 - ITAT BANGALORE] as held that AO can scrutinize the valuation report and the if the AO is not satisfied with the explanation of the assessee, he has to record the reasons and basis for not accepting the valuation report submitted by the assessee and only thereafter, he can go for own valuation or to obtain the fresh valuation report from an independent valuer and confront the same to the assessee. But the basis has to be DCF method and he cannot change the method of valuation which has been opted by the assessee.For scrutinizing the valuation report, the facts and data available on the date of valuation only has to be considered and actual result of future cannot be a basis to decide about reliability of the projections.The primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method.
Thus AO was incorrect in rejecting the DCF method adopted by the assessee.
Whether the valuation report based on which the valuation was arrived by the assessee was in accordance with law or not? - CIT(A) instead of examining the valuation report and the fair market value of the shares by applying the DCF method, had resorted to examining the functionality and working of the NAV method and thereafter, came to the conclusion that FMV has to be determined by the NAV method based on the CBDT Circular dt.12.07.2017 whereby it was envisaged that the value of the shares shall be determined by the Assessing Officer by taking into account the value of the intangible asset for the purpose of working of the net value.
This approach of the ld.CIT(A) was not in accordance with law. As we have held hereinabove that the option is not available to the Assessing Officer, then the exercise carried out by ld.CIT(A) became futile and of no consequence. Further, the determination of FMV on the basis of NAV by the Ld. CIT(A) was otherwise not sustainable and is bad in law as per Rule 11U(j), which defined valuation date and Rule 11U(b), which defined Balance Sheet. The conjoint reading of the above-mentioned Rules make it clear that the valuation of the asset as per the NAV method is required to be determined while making a valuation of the assets mentioned in the balance sheet.
In any case, the CBDT Circular dt.12.07.2016 cannot be made available and applied retrospectively to the facts of the case as the valuation report in the present case was prepared on 01.07.2016, i.e., one year prior to the issuance of the CBDT Circular. The valuation report is dated 01.07.2016. In that view, the NAV method adopted by the ld.CIT(A) is of no help to the assessee. In light of the above, the approach of the Assessing Officer as well as the ld.CIT(A) cannot be sustained.
Having held that both the approach of the AO as well as the ld.CIT(A) were incorrect, hence, we deem it appropriate to remand back the matter to the file of the Assessing Officer with a direction to determine the FMV after exercising the power conferred under the Act and after applying DCF method on the valuation date dt.01.07.2016 based on the balance sheet or any other material as available on that day, after granting due opportunity of hearing to the assessee. Accordingly, appeal of the Revenue is allowed for statistical purposes.
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2023 (12) TMI 1301
Refund of service tax paid on input services in terms of Notification No 40/2012-ST dated 20.06.2012 - impugned services are found in the approved list of services for the authorized operations of the unit located in SEZ or not - HELD THAT:- The issue in respect of applicability of the said condition for considering the application of refund made under the said notification is no longer res-integra and has been adjudged in a series of decisions of CESTAT.
Relevant paragraphs from the recent decision of the Allahabad Bench in the case of EXL Services SEZ BPO Solutions Pvt. Ltd. [2023 (9) TMI 196 - CESTAT ALLAHABAD] produced where it was held that In the present case revenue has not disputed the receipt of these services by the SEZ Unit, hence denial of the refund claim in respect of these three services for the reason that they did not find mention in the list of specified services approved by the SEZ authority cannot be upheld.
On the ground for rejection that certain invoices were addressed to some other premises of the Appellant which are outside the SEZ. There are no merits in the said ground. If it can be shown that the services covered by the said invoices were received and consumed by the appellant unit located in SEZ, then the CENVAT Credit/ Refund could not have been denied.
There are no merits in the impugned orders denying the CENVAT Credit/ Refund claims filed by the party in terms of the Notification No 40/2012-ST and 12/2013-ST on the grounds stated therein. However for determination of the refund claims in light of the above observations matter is to be reconsidered by the original authority.
Appeals are allowed and the matter remanded to the original authority for reconsideration of the refund claims.
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2023 (12) TMI 1300
Accrual of income in India - Addition of receipts from sale of software & support services as Royalty income - HELD THAT:- Similar issue came for consideration before this Tribunal in assessee’s own case for the assessment year 2006-07 [2021 (11) TMI 1023 - ITAT BANGALORE] by virtue of Article 12(3) of the DTAA, royalties are payments of any kind received as a consideration for "the use of, or the right to use, any copyright "of a literary work includes a computer program or software. It was held that the regarding the expression "use of or the right to use", the position would be the same under explanation 2(v) of section 9(1)(vi) because there must be, under the licence granted or sales made, a transfer of any rights contained in sections 14(a) or 14(b) of the Copyright Act. Since the end-user only gets the right to use computer software under a non-exclusive licence, ensuring the owner continues to retain ownership under section 14(b) of the Copyright Act read with sub-section 14(a) (i)-(vii), payments for computer software sold/licenced on a CD/other physical media cannot be classed as a royalty.
The terms of the licence in the present case does not grant any proprietory interest on the licencee and there is no parting of any copy right in favour of the licencee. It is non-exclusive non-tranferrable licence merely enabling the use of the copy righted product and does not create any interest in copy right and therefore the payment for such licence would not be in the nature of royalty as defined in DTAA. We therefore hold that the sum in question cannot be brought to tax as royalty.
Recharacterizing the maintenance & support services income as fee for technical services - HELD THAT:- As discussed earlier, similar issue came for consideration before this Tribunal in assessee’s own case in assessment year 2006-07[2021 (11) TMI 1023 - ITAT BANGALORE] on the question whether the sums in question can be taxed as FTS, we agree with the submissions made by the learned counsel for the Assessee set out in paragraph-18 & 19 of this order and hold that the sums in question cannot be brought to tax as FTS.
Assessee appeal allowed.
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2023 (12) TMI 1299
TP Adjustment - Corporate guarantee fee - HELD THAT:- Corporate guarantee given by the assessee on behalf of its AE for availing loan facility is for the purpose of reducing the interest rate charged by the banks and while determining the ALP of the said transaction the same has to be considered on the perspective of the benefit received by the AE as per the interest saving approach by reason of the corporate guarantee given by the assessee and to compare the same as to what would be the interest rate charged by the bank for the loan availed by the AEs if the corporate guarantee is not given by the assessee for availing the said loan
Reliance placed on the decision of Everest Kento Cylinders [2015 (5) TMI 395 - BOMBAY HIGH COURT] cannot be the basis for holding the corporate guarantee commission to be 0.5% which was held to be an appropriate rate by the Hon'ble High Court in case of that assessee and for that particular year under consideration. It is evident that 0.5% cannot be a standard rate for charging corporate guarantee commission and the same has to be determined in each case and for each year based on the credit rating of AE, comparable loan transactions where guarantees are issued and non guaranteed loans by working out interest saving and then sharing it between transacting parties.
We, therefore, direct the ld. A.O./TPO to determine the ALP on corporate guarantee commission on the basis of the interest saving approach of the said transaction. The assessee is also directed to bench mark the said transaction where it has already been held to be an international transaction and on the basis of which the ld. A.O./TPO has to determine the ALP of the corporate guarantee commission as per the provisions of section 92CA of the Act which makes it compulsory to benchmark the international transactions every year - We, therefore, remand this issue back to the ld. A.O. Assesee ground allowed for statistical purpose.
Disallowance u/s. 14A r.w.r. 8D - assessee contended that the investments made in the subsidiary companies are strategic investments which should not be considered for computing the disallowance under Rule 8D(2)(iii) - HELD THAT:- We deem it fit to direct the ld. A.O. to restrict the disallowance to the extent of investment which has yielded in earning of the exempt income and not those investments where the assessee has not earned any exempt income for the purpose of computing the disallowance u/s. 14A read with Rule 8D. See Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] - We, therefore, remand this issue back to the file of the ld. A.O. for recomputing the disallowance u/s. 14A read with Rule 8D to the extent of the investments made by the assessee which has resulted in earning of the exempt income.
Nature of income - Interest income on temporary deposits - A.O. observed that the assessee has availed external commercial borrowings (ECB) and temporary surplus of such borrowings were deposited in bank fixed deposit out of which the assessee has earned an interest was netted of against the interest expenses which was capitalized - AO taxing the said interest income as income from other source u/s. 56 - HELD THAT:- We do not find any observation by the lower authorities as to how the borrowed fund and the surplus amount parked in the fixed deposits are not ‘inextricably linked’ to the setting up of the new unit by the assessee. In the absence of such observation and by placing reliance on the decision cited by the assessee we hold that the interest income out of the fixed deposits which is made from the ECB has to be capitalized as capital receipt and not revenue receipt.
As decided in Indian Oil Panipat Power Consortium [2009 (2) TMI 32 - DELHI HIGH COURT] funds infused in the assessee by the joint venture partner were inextricably linked with the setting up of the plant, the interest earned by the assessee could not be treated as income from other sources. In the result we answer the question as framed in favour of the assessee.
Additional depreciation u/s. 32(1)(ii) - additional depreciation for plant and machinery which was purchased and put to use for less than 180 days during the financial year - AO held additional depreciation is to be restricted as per the second proviso to section 32(1)(ii) which restricts the claim of additional depreciation to ½ the amount otherwise allowable and in the absence of the explicit provision, the balance 50% of the additional deprecation would lapse - explicit provision applies 50% of the said claim was introduced by Finance Act, 2015 which is w.e.f. 01.01.2016 vide third proviso to sub section (1) of section 32 and since the said provision is applicable prospectively, the assessee’s claim of additional deprecation was disallowed by the ld. A.O - HELD THAT:- As this issue has been squarely covered by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Rashtriya Chemicals and Fertilizers Ltd. (2021 (10) TMI 1269 - BOMBAY HIGH COURT] wherein it was held that the 3rd proviso to clause (ii) of sub section (1) of section 32 of the Act being clarificatory in nature would apply to previous years also.
As seen that the Karnataka High Court in Rittal India Pvt., Ltd.,(2015 (1) TMI 1248 - KARNATAKA HIGH COURT] even without the aid of the statutory amendment held that remaining 50% unclaimed depreciation would be available to the Assessee in the succeeding Assessment Year. Now the legislation has amended the provision by adding a proviso which, specifically recognizes the said right. The Madras High Court in Shri T. P. Textiles Pvt. Ltd., (2017 (3) TMI 739 - MADRAS HIGH COURT] ruled that such proviso being clarificatory in nature, would apply to pending cases, covering past period also.
Thus we hold that the assessee is entitled to the additional depreciation claimed u/s. 32(1)(ii) of the Act and, therefore, find no infirmity in the order of the ld. CIT(A). Ground no. 1 raised by the Revenue is dismissed.
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2023 (12) TMI 1298
Registration u/s 80G - Application rejected as mistake in mentioning the proper Clause - Assessment of trust - HELD THAT:- All the facts were before ld. CIT (Exemption) when the assessee for the first time applied for the final approval u/s 80G of the Act. Merely, because the assessee out of inadvertence had mentioned another Clause, the same was not an illegality but rather the same was a rectifiable mistake. The facts were on the record that the assessee before the amendment was already approved as a charitable institution u/s 12A as well as 80G of the Act. The assessee duly applied for provisional registration in view of the amended provisions. The same was also granted to the assessee.
The next course for the assessee was to apply for the final registration u/s 80G of the Act which was also duly complied by the assessee within the time limit prescribed for the same. However, due to the mistake in mentioning the proper Clause, the assessee was told to withdraw the application and file a fresh application. The assessee filed the fresh application without any delay. However, ld. CIT (Exemption) completely ignored the events which occurred from the date of filing of the application for final approval and leading to the filing of the fresh application because of the technical mistakes. In fact, instead of getting the application withdrawn, ld. CIT (Exemption) was supposed to give opportunity to the assessee to rectify the mistake i.e. the mentioning of the appropriate Clause. Ld. CIT (Exemption) even could have suo-moto passed an order treating the said application under the relevant ‘Clause-iii’ of Section 80G(5) of the Act.
Thus delay in filing the fresh application is, hereby, condoned. It is directed that the application of the assessee for final registration may be treated as filed within the time limit prescribed and the time consumed by the assessee in filing the revised application will not be taken into consideration. The matter is accordingly restored to the file of ld. CIT (Exemption) with a direction that ld. CIT (Exemption) will pass an order on merits irrespective of the delay occurred in filing the fresh application for final approval u/s 80G(5)
Application for final registration was to be filed within six months from the commencement of its activities and therefore, the application of the assessee for final registration was time barred - We note that the issue has already been discussed and adjudicated by the Coordinate Bench of the Tribunal in the case of West Bengal Welfare Society vs. CIT(Exemption), Kolkata [2023 (9) TMI 1422 - ITAT KOLKATA] wherein, it has been held that the assessee, who has been granted provisional registration, is eligible to apply for final registration irrespective of the fact that the assessee had already commenced its activity even prior to the date of grant of provisional approval.
Thus matter is restored the file of the CIT(E) for decision afresh - Appeal filed by the assessee is treated as allowed for statistical purposes.
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