|
Advanced Search Options
Case Laws
Showing 1 to 20 of 18386 Records
-
2024 (12) TMI 1574
Scope of review under Order 47 Rule 1 of C.P.C - HELD THAT:- There are no reason whatsoever to review the order passed by this Court on 22.11.2024. The ground of review provided by the petitioner, does not fall within the four corners of review under Order 47 Rule 1 of C.P.C. It is to be noted that review jurisdiction is a limited jurisdiction and is governed by certain principles that have been elaborated by a catena of Supreme Court judgments and have been summarized in the judgment of Calcutta High Court in State of West Bengal vs. Confederation of State Government Employees [2019 (3) TMI 2082 - CALCUTTA HIGH COURT] wherein it was held that 'A review petition has a limited purpose and cannot be allowed to be "an appeal in disguise". There is a sharp distinction between an erroneous decision that can be only appealed against and an error apparent on the face of the record that is subject to review.'
Upon perusal of the review petition and the submissions made, the review application is liable to be rejected as it does not come within the ambit of principles as laid down above. Hence, the review application is dismissed.
-
2024 (12) TMI 1573
Penalty levied u/s 271(1)(c) - Sales Tax Department has proved beyond doubt that parties declared as hawala traders were involved in providing accommodation entry of purchases and the assessee was one of the beneficiary of accepting accommodation entry - CITA(A) deleted penalty Levy - Tribunal had, for the Assessment Year 2009-2010, restricted the addition made in the hands of the Assessee to 2% of alleged bogus purchases
HELD THAT:- We note that the CIT(A) deleted the penalty, inter alia, on the ground that penalty levied on ad-hoc estimated income cannot be sustained. During the course of hearing the Learned Authorised Representative for the Appellant has placed on record the order passed by the Co-ordinate Bench of the Tribunal in the case of the Assessee for the Assessment Year 2012-13 and 2011-12 [2024 (10) TMI 1656 - ITAT MUMBAI] wherein it was held by the Tribunal that penalty levied on gross profit estimated on ad-hoc basis was not justified and could not be sustained. Decided in favour of assessee.
-
2024 (12) TMI 1572
Default in not depositing the TDS amount, as deducted, with the government - Default in not making TDS deductions with consequent denial of TDS credit - deductions from the running account bills raised against the supply of materials by respondents and and retained on the pretext of “Income Tax Contingency”- as pleaded that the “kept back” amount shall be released or the TDS certificate will be issued depending on the outcome of the appeal preferred by the JBVNL against the demand notice - as decided By HC [2024 (5) TMI 540 - JHARKHAND HIGH COURT] imposition of cost on the party which started litigation without any just cause or took false and frivolous defences is necessary to discourage the dishonest litigant. To this end, the Court is required to impose such cost that would make the litigant think twice before putting up any speculative claim or defence.
The petitioner-Firm was unnecessarily dragged to the Court and, that too, knowingly and for no fault on its part. We are of the definite opinion that the JBVNL must be saddled with cost of Rs. 5 Lacs which shall be recovered from the Managing Director.
HELD THAT:- We are not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petitions are dismissed.
-
2024 (12) TMI 1571
Waiver of penalty imposed under Rule 26 of CER on co-noticee - main case has been settled - HELD THAT:- It is found that in the judgment cited by the Learned Counsel, particularly, a Division Bench judgment in the case of M/S. SIEMENS LTD [2023 (5) TMI 377 - CESTAT MUMBAI], issue is settled that in case the main party’s case, where the demand has been confirmed, is settled under SVLDRS,2019, penalty on the co-noticee will not sustain. As regard the judgment relied by the Learned AR, since it is Single Member judgment and thereafter, the Division Bench has given the judgment which prevails over the Single Member Bench. Therefore, the same is distinguished.
The penalty is set aside, appeal is allowed.
-
2024 (12) TMI 1570
Dishonour of cheque - vicarious liability of director of the company - appellant resigned as director of the company prior to the issuance of the cheques - Section 141 of the Negotiable Instruments Act - HELD THAT:- Tn the present case on the date of issuance of the cheques, the appellant had already resigned. The fact regarding resignation is not in dispute. It is also not in dispute that the cheques issued by the Company were signed by another competent person on behalf of the Company. Once the facts are plain and clear that when the cheques were issued by the Company, the appellant had already resigned and was not a director in the Company and was not connected with the company, he cannot be held responsible for the affairs of the Company in view of the provisions as contained in Section 141 of the NI Act.
The judgment of Malwa Cotton and Spinning Mills [2008 (8) TMI 877 - SUPREME COURT] is factually distinguishable from the present case. The resignation of the director accused therein, was submitted with the Registrar of Companies on 05.07.2001, after the issuance of the cheques therein, which were issued on various dates in December 2000 and February 2001, while the accused director maintained that he had intimated his resignation to the Company on 02.04.1999, i.e., before the issuance of cheques. In the light of such disputed facts, quashing of complaint was not allowed. On the contrary, as discussed, in the present case, the appellant’s resignation dated 21.06.2019 was submitted before the Registrar of Companies on 26.06.2019. Whereas the cheques in question, were issued on 12.07.2019, i.e., after his resignation.
The impugned order passed by the High Court is set aside - Appeal allowed.
-
2024 (12) TMI 1569
Estimation of income - bogus purchases - HELD THAT:- Commissioner has affirmed the addition @ 12.5% of the bogus purchases and the Assessee is engaged in the business of ferrous articles and there are various judgments by the Jurisdictional Tribunal, wherein the addition @5% in the identical trade has been upheld, therefore, in the considered opinion of this Court, it would be appropriate to restrict the addition being the gross profit @ 5% of the alleged bogus purchases instead of 12.5% as made by AO and affirmed by Commissioner.
Thus, the AO is directed to verify “whether the purchases made by the Assessee as alleged bogus purchases, have already been subjected to profit & loss account” and on finding answer “Yes” then to re-compute the income of the Assessee by considering the GP @ 5% in lieu of 12.5%, over and above the GP already shown by the Assessee. Otherwise, the addition as affirmed by the Ld. Commissioner would sustain.
Appeal filed by the Assessee is partly allowed.
-
2024 (12) TMI 1568
Estimation of income - bogus purchases - HELD THAT:- Admittedly, the Assessee before the AO as well as before the Ld. Commissioner except filing the reply has not produced proper documents to establish genuineness of the purchases made, and therefore the same has been considered as bogus by the authorities below and thus on this aspect no interference is warranted.
However, coming to the second/alternate claim raised by the Ld. Counsel on behalf of the Assessee, this Court is in concurrence with the alternate claim of the AR and not refuted by the DR that profit element only can be subjected to addition and hence, the AO is directed to verify whether the bogus purchases have already been shown by the Assessee in its profit & loss account and on finding answer “affirmative” then to apply GP rate @5% of the bogus purchases over and above the GP/profit already shown on the same, if any by the Assessee, and recompute the income accordingly.
Appeal filed by the Assessee stands partly allowed.
-
2024 (12) TMI 1567
Bogus Long Term Capital Gain - rejecting the exemption u/s 10(38) - AO has taken the figure from the report given by the Investigation Wing - details furnished by the assessee would show that the assessee has claimed exemption of Long Term Capital Gain u/s. 10(38) - HELD THAT:- We notice that the assessee had held the shares of M/s Nyssa Corporation Ltd for quiet long period, which is not the modus Operandi adopted in generation of alleged bogus long term capital gains. The Ld.AR further submitted that the purchase and sale of shares is supported by proper evidences and bank transactions. We notice that the AO has simply placed reliance on the information received from the Investigation wing for rejecting the exemption claimed by the assessee. He has not conducted any independent enquiry with regard to the transactions carried out by the assessee.
AO also did not mention as to how the search conducted in the hands of Naresh Jain Group would implicate the assessee.
We find no reason for the AO/CIT(A) to disbelieve the exemption of Long Term Capital Gain claimed by the assessee. Accordingly, we set aside the order passed by the CIT(A) on this issue and direct the AO to delete the impugned addition of made by the him rejecting the exemption claimed u/s.10(38) of the Act. Appeal filed by the assessee is allowed.
-
2024 (12) TMI 1566
TP adjustment - administrative support services (intra group services ) availed by the assessee from its Associated Enterprises (AEs) - selection of MAM - HELD THAT:- Assessee had indeed requested for rendition of services, the AEs have indeed rendered the various services to the assessee, the manner in which those services were rendered are also elaborated in the aforesaid chart, the cost benefit analysis made by the assessee for deriving the said services and benefits derived by the assessee out of rendition of services.
Payments made to AEs were duly subjected to withholding tax by the assessee in India. This also goes to prove that the AE had indeed rendered services to the assessee and this tax withheld by the assessee on the rendition of services had been duly accepted by the income tax department in the TDS assessments of the assessee company and no doubts or any adverse inference were drawn or entertained thereon.
In the income tax assessment, the income tax department cannot challenge or cannot doubt the very rendition of services by the AE to the assessee.
TPO had accepted the rendition of services rendered by US AE to the assessee and accepted the same to be at arm's length price. Only the services rendered by Asia Pacific AEs were subjected to dispute in the instant case which had been elaborately dealt by the assessee in the aforesaid chart by proving all the essential elements such as need for services, rendition of services, manner in which services were rendered, cost benefit analysis and benefits derived by the assessee out of such rendition of services.
Hence the assessee was duly justified in making payment of administrative support services charges to its AEs. Accordingly, the entire payment deserves to be allowed. TPO having applied CUP method for benchmarking the international transaction of administrative support service charges segment had not brought any comparables to justify the ALP of these services to be at Rs Nil.
That itself goes to prove that the entire TP adjustment made by the TPO deserves to be deleted on that count itself. Hence assessee is indeed entitled for making payment of administrative support service charges to its AEs and the same is hereby accepted to be at ALP in the facts and circumstances of the instant case.
As decided in AT Kearney Ltd (India Branch Office) [2024 (3) TMI 1443 - DELHI HIGH COURT] wherein it was held that where assessee had incurred expenses in respect of intra group services (IGS) to its AE and had submitted detailed break-up of such costs and rendering of services was an aspect which was neither questioned nor doubted, Tribunal was right in deleting adjustment on account of payment of IGS.
Thus, the entire TP adjustment made by the revenue on account of administrative support services segment deserves to be deleted.
TP Adjustment - provision of research and engineering support services segment - TPO had arrived at the comparables margin of 36.78 % and accordingly proceeded to make an adjustment - HELD THAT:- Preliminary objection made by the assessee before the Learned TPO that M/s Mahindra Consulting Engineers Limited is functionally not comparable with that of functions performed by the assessee herein is proved correct.
-
2024 (12) TMI 1565
Disallowance u/s 14A r.w.r.8D - expenditure incurred towards earning exempt income - rejection of suo moto disallowance made by the assessee - Mandation to record satisfaction - HELD THAT:- AO has not taken into consideration the elaborate details and scientific basis adopted while arriving at the suo-moto disallowance but has proceeded merely on his own presumptions to invoke section 14A r.w.r. 8D.
As similar issue has been dealt in assessee’s own case for Assessment Year 2007-08 to 2013-14 [2020 (11) TMI 809 - ITAT MUMBAI] wherein under same computation mechanism, the Coordinate Bench accepted the computation mechanism adopted by the assessee as fair and reasonable and directed the AO to restrict the disallowance under section 14A of the Act to the amount which the assessee has suo-moto disallowed in its return of income and delete the disallowance worked out as per Rule 8D.
We also find that in CIT v. M/s Asian Paints Ltd.[2019 (2) TMI 819 - BOMBAY HIGH COURT] while dismissing the appeal filed by the Revenue on a similar issue held that in the absence of recording of satisfaction in terms of section 14A(2) of the Act, invocation of Rule BD is not permissible
Adjustment made in computing the book profit for the purpose of Section 115JB - As in the case of Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] and held that disallowance under section 14A of the Act as computed in accordance with rule 8D of the Rules cannot be made while computing book profits under section 115JB and the same should be restricted to actual expenditure incurred. In view of the above, assessee submitted that the addition made by the ld. Assessing Officer on the basis of disallowance computed u/s.14A of the Act r.w.r. 8D should be deleted and the addition to book profits u/s. 115JB of the Act should be restricted to Rs 904,943/-, being the amount suo motto disallowed which was based on scientific method, consistent with previous years. Accordingly, the ground taken by the assessee in this respect is allowed.
Levy of interest u/s. 234C - We note that the provisions contained in section 234C requires the returned income to be taken into account for the levy of interest. Accordingly, we direct the ld. AO to delete the interest so levied computed on assessed income. Accordingly, ground taken by the assessee, in this respect is allowed.
-
2024 (12) TMI 1564
Allowability of Mines Closure Plan as admissible expenditure in the year under consideration - as submitted the said amount set apart by the assessee was in the nature of a provision and thus not allowable as expenditure - HELD THAT:- The minerals extracted by the assessee is to be used in their captive power plant for generation of power means the lignite extracted will contribute as raw material for production of power. The assessee earned revenue from the sale of power which is duly refracted in the financial of the assessee and not under challenge by the revenue in that case how the cost of procuring raw material can be disallowed.
Here we are applying the concept of matching revenues with relevant costs to earn the revenue. If the same is being disallowed it will be detrimental to the interest of the assessee, as he has to pay undue taxes on notional income. With this action of revenue will distort the picture of revenue earned by the assessee alongwith losing the character of being true and fair.
In contradistinction to this fact even if it is a assumed for the time being, that instead of extracting the raw material from the mines under consideration the assessee has to by the goods being raw material from the market in that case also cost of purchase has to be allowed to match the revenue with the cost hence we are not in agreement with the orders of the AO and CIT (A) that amortization of mining lease charges are not allowable.
The payment made by the assessee to land owners via its joint venture partner, i.e. M/s. Rajasthan State Mines and Mineral Ltd., RSMML, (Govt. of Rajasthan under taking) for facilitating routine operations and smooth functioning of the business of the assessee. It was held in the case of CIT v. Excel Industries Ltd. [1979 (10) TMI 68 - BOMBAY HIGH COURT] “That the power line remained the property of the District Board and the assessee had not acquired any capital asset or any enduring benefit or advantage. The payment was made for commercial expediency. Therefore, the Commissioner (Appeals) had rightly held the expenditure as revenue expenditure.
Levying interest u/s. 234A - delay in filing the return by one month - HELD THAT:- As the observation of CIT (A) that it has not submitted the evidence of statutory compliance is factually incorrect. Thus the return filed by assessee on 29.11.2016 is within the specified time and therefore no interest u/s. 234A of the Act can be levied. In view of above, AO is directed not to charge interest u/s. 234A of the Act. Ground taken by the assessee is allowed.
Corporate Environment Responsibility (CER) allowable u/s. 37(1) - HELD THAT:- The provision for CER which is made in compliance to the statutory provisions is wholly and exclusively for carrying out the mining activities. The provision so made is a crystallized liability in as much as if the assessee fails to carry out the CER activities in accordance with the direction of MOEF, the same may result in withdrawal of the environment clearance and attract the provisions of Environment (Protection) Act, 1986 as stipulated in the aforesaid letter.
Provision so created cannot be equated with the CSR expenditure incurred as per section 135 of the Companies Act, 2013 for the reason that as per this section only companies having net profit are required to incur CSR whereas the CER expenditure are as per the guidelines of Ministry for Environment Protection is mandatorily required to incur irrespective of profit or loss of the company and levied on a lump sum basis or per tonne of extraction done by the assessee.
Hon'ble Rajasthan High Court in assessee's own case. or A.Y. 2012-13 [2018 (7) TMI 2369 - RAJASTHAN HIGH COURT], A.Y. 2013-14 [2019 (10) TMI 1612 - RAJASTHAN HIGH COURT] and A.Y. 2014-15 [2019 (10) TMI 1613 - RAJASTHAN HIGH COURT] after considering the various decisions has allowed the provision made for CER expenditure in compliance to the guidelines of Environment Ministry.
Hence, only because revenue has filed appeal before Hon’ble Supreme Court cannot be a reason to disallow the claim of assessee. It is further bring to the notice of the bench that the appeal of the Revenue before the Hon’ble Supreme Court has also been dismissed and this fact is on record and accepted by both the parties concerned.
Addition on account of interest on income tax refund - same was withdrawn while completing the assessment u/s. 143(3) - HELD THAT:- As observed through the paper book filed by the assessee that in the year under consideration assessee has not received any refund in as much as this refund was adjusted against the demand for A.Y. 2012-13. Thereafter the assessment for A.Y. 2016-17 was framed u/s. 143(3) in which additions were made. As a result the refund was withdrawn and the demand was raised. Thus the interest which was granted on 07.09.2017 has been withdrawn on 13.11.2018. These facts required verification of the assessment records and orders passed time to time, in view of the above; we restore the matter back to the file of the AO with a direction that an opportunity be given to the assessee for substantiating its contentions and verification of the facts involved. This ground of the assessee is allowed for statistical purposes.
Rejecting the claim of assessee for interest u/s. 244A - HELD THAT:- The refund has been granted by way of adjustment against the demand in A.Y. 2012-13 on 18.12.2019. Therefore, interest u/s. 244A of the Act is to be calculated from 01.04.2018 to 18.12.2019 i.e. for 21 months. All these facts were explained before the Ld. CIT (A) but the same were ignored by him. In view of above, matter is restored back to the AO.
Mine closure plan as admissible expenditure - The said amount set apart by the assessee was in the nature of a provision and thus not allowable as expenditure? - HELD THAT:- It is observed that the mine closure cost is claimed as expenditure for fixation of the transfer price of lignite by Rajasthan Electricity Regulatory Commission (RERC). This is evident from the fact that the assessee has filed an application before RERC for determination of transfer price of lignite for Kapurdi Mine for F.Y. 2015-16.
Mine closure cost has been taken into consideration for price fixation of lignite. Considering the same the RERC vide order dt. 01.04.2015 has determined the Interim Transfer Price for F.Y. 2015-16 (PB 136-141), at which rate the assessee is raising invoices to the customer. Thus it is a fact on record that the mine closure cost is recovered by way of price for lignite. Hence the AO has incorrectly observed that by simply filing the petition with RERC for determination of Transfer price which includes component of mine closure charges, is not enough to hold that by disallowing the mine closure cost there is no double taxation here.
We are agreed with the contentions of the assessee that the liability discussed and mentioned are statutory liabilities and are unavoidable in nature, secondly the same has already been recovered in the revenue of the assessee and duly offered for tax. Hence, disallowing the same will tantamount to double taxation and otherwise also the same is not liable for disallowance. In view of the above discussion, Ground No. 1 raised by the revenue is dismissed.
Addition made by treating the interest earned during pre-operative period as income chargeable to tax under other sources - HELD THAT:- The interest receipt cannot be charged to tax as income from other sources but is to be reduced from the cost to be capitalized in respect of Jalipa mines.
-
2024 (12) TMI 1563
Validity of reassessment proceedings as barred by limitation - period of six years from the end of the relevant assessment year determination - HELD THAT:- In the present case, the period of six years from the end of the relevant (AY) 2015-16 expired on 31.03.2022. The impugned notice has been issued thereafter, and the same is thus barred by limitation. The impugned notice is set aside. Assessee appeal allowed.
-
2024 (12) TMI 1562
Validity of reassessment proceedings as barred by limitation - period of six years from the end of the relevant assessment year determination - HELD THAT:- In the present case, the period of six years from the end of the relevant (AY) 2015-16 expired on 31.03.2022. The impugned notice has been issued thereafter, and the same is thus barred by limitation. Thus the impugned notice is set aside. Decided in favour of assessee.
-
2024 (12) TMI 1561
Deduction u/s 80JJAA - qualification as an industrial undertaking engaged in the manufacture or production of an article or thing - requirement of employing new regular workmen for 300 days or more - assessee argued that the condition precedent is that new workmen should be employed for 300 days or more, not that the workmen should complete 300 days of work within the relevant previous year - CIT(A) held that the appellant assessee, engaged in software development and IT enabled services, did not meet this requirement.
Whether the assessee qualifies as an industrial undertaking, and whether the development of computer software and IT-enabled services amounts to the manufacture or production of an article or thing u/s 80JJAA? - HELD THAT:- The term industrial undertaking has not been defined for the purposes of section 80JJAA of the Act. However, the same has been defined for the purpose of provision of section 10(15) includes the manufacture of computer software as an industrial undertaking. Since the term "industrial undertaking" is not specifically defined for the purposes of Section 80JJAA of the Act or any other relevant provisions of the Act, we are inclined to rely on the definition provided u/s 10(15) of the Act. The appellant assessee is engaged in the development of computer software, IT-enabled services, and the development of embedded software for automobile components and accessories, which, in our considered opinion, falls within the definition of an industrial undertaking.
Whether the activity of the assessee can be described as manufacture or production of article or thing? - It is important to note that the provisions of Section 80JJAA of the Act use the term "manufacture or production." This distinction implies that "production" is broader than "manufacture," and an industrial undertaking may qualify for the deduction if it engages in either manufacturing or production activities.
The term "production" refers to the process of creating goods and services by combining various resources such as labor, capital, raw materials, and technology. It encompasses a wide range of activities. The Oxford English Dictionary defines "production" as “that which is produced; a thing that results from any action, process, or effort; a product of human activity or effort.”
The development of computer software involves intellectual and technical efforts to create a product or service with economic value, thereby fulfilling the criteria for production. Inputs such as human expertise, technology, and tools (e.g., coding platforms) are combined to produce software, aligning with the general definition of production. The output, typically intangible (a software application or code), is a hallmark of production in knowledge-based or service-oriented industries. Therefore, in our considered opinion, the activity of the assessee amounts to the production of an article or thing.
Thus the finding of the CIT(A) that the assessee company is not an industrial undertaking engaged in manufacture or production does not hold merit. Accordingly, we set aside the finding of the learned CIT(A) on this matter. Hence, the first question is answered in favor of the assessee.
Whether the appellant assessee is claiming double benefits by first availing exemptions u/s 10A and 10AA of the Act and subsequently u/s 80JJAA? - We note that the learned AR for the assessee submitted before us that no deduction under Section 80JJAA was claimed in respect of wages paid to the employee of Coimbatore CHIL unit and the Coimbatore TIDEL Park unit. However, we find that this claim has not been verified by the lower authorities.
For the sake of justice and fair play, we are inclined to set aside this issue to the file of the AO for verification. AO is directed to examine the claim of the AR and decide the issue accordingly. The assessee is also directed to provide all necessary details to substantiate that no deduction was claimed u/s 80JJAA of the Act for wages paid to employees of the two units eligible for exemptions u/s 10A and 10AA of the Act.
Whether the condition that an employee should be employed for 300 days or more during the previous year must be met in the particular assessment year or cumulatively over two assessment years? - The order of the Tribunal in the assessee’s own case for A.Y. 2011-12, was passed without considering the judgment of the Hon'ble High Court in the case of Aquarelle India Ltd [2023 (9) TMI 258 - KARNATAKA HIGH COURT] as the same was not available on record at that time. Therefore, in light of the recent judgment of the Hon'ble High Court, we are inclined to depart from the earlier stand taken by the Tribunal in the assessee's own case and hold that the requirement of 300 days of employment should be considered cumulatively across both the previous year and the succeeding year. Hence, the third question is hereby decided in favour of the assessee.
Based on the detailed examination of the facts and the relevant legal provisions, we set aside the findings of the CIT(A) and direct the AO to consider the matter in line with the above observations. Hence the ground of appeal of the assessee is hereby partly allowed for statistical purposes.
Additional depreciation u/s 32(1)(iia) on computers used for the production of software - assessee explained that it was in the business of software development, which amounts to the production of an article or thing, and that the computers used for software production qualify as plant and machinery, thus making them eligible for additional depreciation - HELD THAT:- The assessee's business activities fall under the broader definition of "production" under the Act, and thus, the development of software constitutes a form of production in a knowledge-based industry.
The argument that computers used in the development of software are part of plant and machinery is substantiated by the fact that the Income Tax Rules categorize computers and computer software within the block of plant and machinery, eligible for depreciation at a higher rate. This indicates that computers software, despite being intangible in terms of output, play a crucial role as plant and machinery in the production process.
Given that the assessee is engaged in the production of an article or thing (software), the computers used in the production of such software can be treated as plant and machinery under the provisions of Section 32(1)(iia) of the Act. Therefore, the claim for additional depreciation on the computers used in the production of software is in line with the provisions of the Act.
We hereby reverse the findings of the CIT(A) and allow the assessee's claim for additional depreciation under Section 32(1)(iia) of the Act.
Disallowances of maintenance charges by treating prior period item - HELD THAT:- Prior period expenses are those expenses that relate to an earlier accounting period but are recognized or incurred in the current financial year. These expenses could be related to the previous year’s business, and are often found when errors are discovered or when payments are made after the relevant accounting period. The provisions of Section 37(1) of the Income Tax Act allow the deductions for any expenditure (not being capital expenditure or personal expenditure) that is incurred wholly and exclusively for the purposes of business or profession.
When a prior period expense is allowed as a deduction under Section 37(1), it directly reduces the taxable income for the current period. The expense is typically deducted in the year in which it is crystalized, even though it pertains to a previous period. In holding so we draw support and guidance from the judgment of Balmer Lawrie and Company Ltd [2023 (4) TMI 581 - CALCUTTA HIGH COURT]
Now turning to the facts of the present case, we note that the debit note was raised by the party dated 12 September 2011 for the impugned expenses pertaining to the period from 1st April 2010 to 31 March 2011 which is placed on page 587 of the paper book. Thus, it is transpired that the liability to expenses in dispute were crystalised in the year under consideration and therefore the same was claimed as deduction in the current year.
Whether such expenses were incurred for the purpose of the business and the same were not capital in nature? - We note that the maintenance charges were paid for the maintenance of the property. There is no information available on record whether such property was purchased by the assessee as investment or for the purpose of the business. In the absence of such information, we are inclined to remit the issue to the file of the AO for fresh adjudication as per the provisions of law after considering the discussion stated above. Hence the ground of appeal of the assessee is hereby partly allowed for statistical purposes.
Disallowance made u/s 14A - HELD THAT:- We note that that issue of disallowance u/s 14A of the Act is covered in favour of the assessee by the order of this Tribunal in own case of the assessee for A.Y. 2010-11 [2022 (2) TMI 1503 - ITAT BANGALORE] as observing the fact that the Ld.AO has not expressly mentioned any dissatisfaction in the suomoto disallowance computed by assessee we hold that the disallowance computed by the assessee is appropriate.
TP Adjustment - comparables selection while calculating the ALP of the international transaction carried out by the assessee with its associated enterprise - whether companies with a turnover exceeding ₹ 200 crores should be excluded when calculating the ALP for the assessee, given the fact that the assessee's turnover under the ITES Segment is only ₹ 132.28 crores? - HELD THAT:- We are inclined to exclude companies with a turnover exceeding ₹ 200 crores as comparables while calculating the ALP for the international transactions carried out by the assessee with its Associated Enterprise (AE).
According to the assessee, the list of companies with a turnover exceeding ₹ 200 crores is as Infosys BPO Limited and TCS E-Services Ltd
Hence, we direct the TPO/AO to exclude the companies listed above from the set of comparables while calculating the ALP for the international transactions carried out by the assessee, provided they have a turnover exceeding ₹ 200 crores. This exclusion shall be made after conducting the necessary verification.
Excel Infoways Ltd. - AO/TPO is directed to re-examine the compliance of Excel Infoways Ltd. with the filters applied, and if the company is found to fail the thresholds, it shall be excluded from the list of comparables for the purpose of determining the ALP.
Cameo Corporate Services Ltd. - We find merit in the argument of the learned AR that exclusion on account of non-availability of data is no longer valid if the requisite data is now accessible. However, since the functional similarity and other comparability criteria require verification, we remand the matter to the AO/TPO for necessary verification. If, upon examination, the functions of Cameo Corporate Services Ltd. are found to be similar to those of the assessee, and the company satisfies the required filters, it shall be included in the list of comparables for determining the ALP.
E4e Healthcare Services Ltd. - We find merit in the argument of the learned AR, as bank charges are generally considered an operating expense in the context of transfer pricing analysis. However, this issue requires factual verification to determine whether the treatment of bank charges as non-operating cost was indeed an error.Accordingly, we remand this issue to the file of the AO/TPO for necessary verification.
Exclusion of comparable companies namely Universal Print System Ltd and BNR Udhyog Limited - We note that the ld. CIT-A has given categorical finding that these 2 companies do not meet the criteria adopted by the AO /TPO for selecting the comparables. As such these 2 companies do not meet the criteria of 75% for revenue from the operations of ITeS services. This finding of the ld. CIT-A has not been disputed by the learned DR appearing on behalf of the revenue. Accordingly, we do not find any reason to interfere in the finding of the learned CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed.
Corporate dividend tax at a rate higher than the rate specified under DTAA - AR submitted that in this regard, a direction can be issued to the AO for necessary adjudication as per the provisions of law. DR did not raise any serious objection if the issue is set aside to the file of the AO for necessary verification and fresh adjudication as per the provisions of law - HELD THAT:- After hearing both the parties, in the interest of justice and fair play, we direct the AO to charge the tax on the dividend declared by the assessee in pursuance to the provisions of the Act. Accordingly, we set aside the issue to the file of the AO for fresh adjudication as per the provisions of law. Hence the additional ground raised by the assessee is allowed for statistical purposes.
Deduction for the education cess, and higher and secondary education cess while computing the income under normal computation - As we note that there is an amendment under the provisions of section 40(a)(ii) of the Act by the Finance Act 2022 wherein an explanation has been inserted with retrospective effect i.e. assessment year 2005-06. As per the amendment, there remains no ambiguity to the fact that the assessee cannot claim the deduction of the cess by treating the same as revenue expenditure. Thus, we do not find any merit in the additional ground of appeal raised by the assessee. Hence, the ground of appeal raised by the assessee is hereby dismissed.
Claim for the provision of doubtful debts - HELD THAT:- CIT(A) has categorically held that the issue under consideration is identical to the decisions of Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT] and Sadvik Asia [2013 (2) TMI 900 - KARNATAKA HIGH COURT] DR for the Revenue has not brought any contrary facts or judicial precedents on record to dispute the applicability of these decisions to the facts of the case. We find no reason to interfere with the findings of the learned CIT(A). Hence the ground of appeal of the revenue is hereby dismissed.
-
2024 (12) TMI 1560
Reopening of assessment u/s 147 as barred by limitation -Applicability of new and amended provisions of sec 148A - HELD THAT:- As per the judgment of Vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] it was held that if any notice u/s. 148 of the Act under the unamended law has been issued after 01.04.2021 then it will be deemed to have been issued u/s. 148A. In the instant case, even though the AO was having the period of four years from the end of relevant assessment year for reopening the assessment proceedings but since the notice u/s 148 of the Act was issued after 01.04.2021, the new and amended provisions effective from 01.04.2021 were applicable and in a case where the income escaped is less than Rs. 50.00 lakhs the time limit for issuing notice u/s. 148 of the Act was three years.
A perusal of section 148A(d) provides that once the assessee has replied to the letter issued u/s. 148A(b) of the Act, then the ld. AO has to decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice u/s. 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) of section 148A of the Act is received by him or whether no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply, as per clause (b) expires.
So considering the date of reply filed by the assessee on 15.06.2022, one month from the end of the month June 2022 is 31.07.2022, and this is the last date before which the AO could issue notice u/s.148. Perusal of record indicates that the AO passed the order u/s. 148A(d) of the Act on 29.07.2022 and has also issued notice u/s. 148 on 29.07.2022, i.e. well within the prescribed time limit. These facts indicate that a valid notice u/s. 148 of the Act has been issued for carrying out the reassessment proceedings
Thus, a valid notice u/s. 148 of the Act has been issued for carrying out the reassessment proceedings. To conclude, find that as per the ratio laid down in the case of Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] AO has issued a valid notice u/s. 148 of the Act and therefore the legal ground raised by the assessee in challenging the validity of Notice issued u/s. 148 of the Act is hereby dismissed.
Addition u/s 69A - assessee filed a declaration under the Income Declaration Scheme, 2017 - mistake committed by the assessee was on account of payment of tax partly in the old PAN Number and partly in the New PAN Number - The Income-tax department did not accept the assessee’s application under IDS for shortfall in payment. The assessee has placed copies of both the PAN Numbers and prima-facie it remains an undisputed fact that total tax liability of Rs. 5,22,629/- as mentioned in the IDS declaration has been deposited and the assessee is eligible to get the benefit of the IDS. However, since the ld. AO had not examined this fact of tax payment under the old PAN number, restore the issue to the AO for necessary verification and if it is found in order that the assessee has duly deposited total tax liability for becoming eligible to avail the benefit of IDS, then the assessee be given necessary relief and authorities concerned shall issue the certificate to assessee under the IDS. Ground raised by the assessee are allowed for statistical purposes.
-
2024 (12) TMI 1559
Recovery of service tax on "other charges" collected by the appellant from vehicle buyers, under the head “business auxiliary services” up to 30.6.2012 and thereafter for the service rendered, with interest and penalty - ecovery of an amount under Rule 6(3)(1) of the CENVAT Credit Rules, 2004 (CCR) on account of exempted services (trading activity) - extended period of limitation.
Demand of an amount under Rule 6(3)(1) of CCR - HELD THAT:- Rule 6 (3A) was introduced in the CCR specifically providing for such proportionate reversal. The mere fact that the appellant had not given an intimation to the Range Superintendent does not, in any way, negate the effect of the reversal. The reversal cannot be ignored to demand an amount of 5%/ 6% under Rule 6(3) of CCR - The obligations under Rule 6 of CCR can be fulfilled opting for any of the methods given in the Rule. It is not open to the department to choose an option and foist it upon the assessee. In no circumstances can the Department impose a particular choice upon the appellant and demand an amount under Rule 6 (3) of CCR as has been done in the impugned order.
Rule 6 of CCR provides for recovery of an amount under Rule 6(3) under Rule 14. However, this can only mean such cases where the assessee opted for reversal under Rule 6(3) of CCR but did not pay the whole or part of the amount. This provision for recovery cannot be read to imply that even if the assessee wants to opt for some other method under Rule 6 of CCR, the provision of Rule 6(3) of CCR can be imposed upon the assessee by the department and the amount recovered - the demand of an amount under Rule 6(3) of CCR from the appellant cannot be sustained and it needs to be set aside.
Demand of service tax under the head of Business Auxiliary Services - time limitation - HELD THAT:- According to the appellant, it had no such motives and it was and is still of the view that these charges were not exigible to service tax. Therefore, it had not assessed service tax including these amounts in the taxable value of goods. It was registered with the Service Tax department and had been filing ST-3 Returns - The submissions of the appellant deserve to be accepted on this question. ST-3 returns only require aggregate value of the taxable services to be indicated and the service tax to be self-assessed. The assessee is under no obligation to indicate individual transactions. In the process, the appellant may wrongly self-assess service tax. If the assessee either does not file the return at all, or having filed it, does not self-assess the service tax correctly, Section 72 requires the Central Excise officer to do “Best Judgment assessment” and for this purpose, he is empowered to call of any records or accounts from the assessee.
The remedy against wrong self-assessment of service tax is “best judgment assessment” by the Central Excise officer and for this purpose he can call for any accounts. In this case, the fact that the amounts were being collected as “handling charges” was not a secret and it was available in all the invoices. If the Central Excise officer had scrutinized the returns, as he was bound to, and called for records as he was empowered to, he would have discovered what was discovered much later by the audit. Therefore, if at all there was any service tax that escaped assessment but was discovered later by the audit, the fault for that lies squarely at the doorstep of the officer and not at the door step of the appellant. Once the assessee self-assessed service tax as per his understanding, he cannot be alleged to have suppressed any facts, especially when all the facts were in its records and were discovered from them by the audit - Extended period of limitation was wrongly invoked in the case.
Demand within the normal period of limitation, i.e., from 01.01.2013 to 31.03.2015 - post-negative list regime - HELD THAT:- The invoices are issued by the appellant as authorised dealer of Maruti Suzuki. The invoices indicate that the sale was on ex-showroom basis and the price is indicated on this basis. In addition, that the appellant collected “other charges” from the customers. The ex-show room price included the price of the vehicle and the applicable VAT. In addition, the appellant collected an amount towards extended warranty and towards “other charges” - Evidently, to the extent these recoveries are towards the cost of some goods supplied such as accessories, decoratives and body cover or cost of petrol filled in the car, they cannot be called as payments for rendering any service. Other recoveries such as handling charges are clearly charges for rendering a service in the form of handling. All services other than those in negative list are exigible to service tax in the post negative list regime and therefore, service tax has to be paid on such amounts. If no service tax was collected by the appellant from its customers on such amounts, the amounts so collected need to be treated as cum-tax values and the amount of service tax needs to be calculated backwards.
Conclusion - i) The order to recover an amount of Rs. 3,25,80,796/- calculated @5%/ 6% of the value of the exempted service, viz., trading activity under rule 6(3)(1) of CCR is set aside. ii) The demand of service tax on the “other income” of the appellant is set aside for the extended period of limitation i.e., up to 30.9.2013. iii) The demand of service tax on the “other income” of the appellant for the period 01.10.2013 to 31.03.2015 is set aside to the extent this income represents the value of the goods or petrol sold. It is upheld to the extent it is on account of the “handling charges” or any other amounts collected for rendering any other service. Since the appellant had not collected service tax on these amounts from its buyers, the amounts collected by the appellant should be taken as cum-tax values. iv) All penalties are set aside.
The matter is remanded to the Commissioner for the limited purpose of calculation of service tax as above after giving the appellant an opportunity to present its figures.
-
2024 (12) TMI 1558
Recovery of possession of the Petitioner's premises - superstructure constructed on the leased plot stood yielded to the Respondent No. 1-Society - whether the lease-deed executed by the Respondent No. 1 in favour of Respondent Nos. 2 and 3 was in respect of land i.e. Plot No. 57 or was a lease of plot along with the proposed construction on the said land? - HELD THAT:- The settled legal position is that under Section 108(h) of the TP Act, a right is given to the lessee to remove the structures erected by him on the leased land subject to a contract to the contrary. The ownership in the superstructure continues in the lessee during the subsistence of the lease under the well recognised concept of dual ownership and in event the contract restricts the lessee from exercising the right granted by Section 108(h) of TOPA, the ownership will pass to the lessors.
Clause 2(20) sets out that the agreement between the parties was to deliver the demised plot and premises to the Lessors with all improvements at the determination of the term. The above term constitute an agreement which restricts the lessee from exercising the right granted under Section 108(h) of TP Act - Despite the term of the contract providing for the superstructure to be yielded and delivered to the lessor upon termination, the obstacle in the way of the Respondent No. 1 to obtain recovery of possession of the Petitioner's premises are the findings of the Trial Court and Appellate Court which hold that the Respondent No. 1 is not entitled to terminate the lease on account of violation by the Petitioner.
Plain reading of Section 91 of the MCS Act would indicate that Sub-Section (1) of Section 91 is prefaced with non obstante clause and provides that a specified class of disputes arising between specified class of parties can only be referred by any of the parties to the dispute to Co-operative Court. What is therefore necessary is that the subject matter of lis and the parties to the lis must fall within the enumerated class under Section 91 of the MCS Act. As far as the parties to the lis is concerned, the bye-laws of Respondent No. 1 makes it clear that for lease to be executed in respect of the plot owned by the Society, the person is required to be member of the Society and the Petitioner claims through the member. The parties to the lis are therefore of the class enumerated in Section 91 of MCS Act.
It is well settled that the Co-operative Court established under the MCS Act is a substitute for Civil Court and the jurisdiction of the Co- operative Court will not go beyond the jurisdiction vested in the Civil Court. The Respondent No. 1 has come with a case of violation by a member of the bye-laws adopted by the Society by virtue of which lease was granted to the member. The scheme of bye laws does not set out relationship of landlord and tenant. The entire agreement is between a Society and its member. It is the business of the Society to ensure compliance with the regulations and bye-laws framed by it. A claim by the Society for recovering possession of the premises from its member upon determination of lease by reason of violation of its bye- laws is a dispute falling within the purview of Section 91 of MCS Act and the Co-operative Court would have the jurisdiction to decide the dispute.
Conclusion - The grant of mandatory injunction qua the Petitioner's premises would be the consequence of the termination of lease in view of Clause 2(20) of the Lease Deed dated 25th February, 1958. In view of the specific finding of the Trial Court that the violation of condition by the Petitioner would not give right to the Respondent No. 1 to terminate the lease and the resultant decline of relief of recovery of Plot No. 57, the well recognised doctrine of dual ownership would prohibit the grant of mandatory injunction qua the Petitioner's premises. The Respondent No. 1 was thus not entitled to recovery of possession of the Petitioner's premises.
The impugned Judgment and Orders passed by the Co-operative Court and judgment and order passed by the Maharashtra State Co-operative Appellate Court are hereby quashed and set aside - petiton allowed.
-
2024 (12) TMI 1557
Money Laundering - predicate/scheduled offence - maintainability of proceedings under the PMLA, when he is not named as an accused in the predicate offence - Petitioner's role as a witness in the predicate offence - HELD THAT:- From the definition of Section 3 of the PMLA, it is clear that any person who knowingly assists or indulges in any activity or is involved in any of the processes connected with the proceeds of crime is guilty of the offence of money laundering. The essential ingredient for the offence of money laundering, therefore, is the existence of proceeds of crime.
The ‘proceeds of crime’ means any property which is derived or obtained as a result of a criminal activity. Such criminal activity relates to the offences included in the Schedule to the PMLA. In other words, any property derived or obtained as a result of commission of any of the offences mentioned in the Schedule to the PMLA will be treated as ‘proceeds of crime’.
While the offence of money laundering is dependent on the existence of the predicate offence, it is also an independent offence which seeks to prosecute the persons dealing with proceeds of crime. In other words, the offence of money laundering is not concerned with the ingredients of the alleged predicate offence. It is only concerned with the generation of proceeds of crime and whether the accused has dealt with such proceeds of crime.
The status of the Petitioner as a witness in the predicate offence is also not a ground to quash the proceedings under the PMLA. The Allahabad High Court in Mohan Lal Rathi v. Union of India [2023 (9) TMI 1069 - ALLAHABAD HIGH COURT] dealt with a case where the Petitioner therein had turned an approver and was granted pardon in the predicate offence. In the said case, the Petitioner therein contended that as he was granted pardon and he was an approver/witness, the proceedings against him under the PMLA cannot be continued. The Allahabad High Court rejected the said contention and held that proceedings under the PMLA were maintainable despite grant of pardon.
The next ground raised by the Petitioner was that no scheduled offence as alleged existed when the FIR in relation to the predicate offence was registered. In support of the said ground, the Petitioner advanced two arguments. Firstly, that when the ECIR was registered only Section 120B of the IPC was stated to be the alleged predicate offence - there can be no dispute that Section 120B of the IPC alone cannot be treated as a scheduled offence to invoke the proceedings under the PMLA. However, the contention that only Section 120B of the IPC was invoked as the predicate offence in the present case is misconceived. The FIR and Charge Sheets in relation to the predicate offence clearly mention that Section 12 of the PCA was also invoked. The said FIR and the Charge Sheets have been referred to in the ECIR.
In the present case, the question is whether as on the date of registration of the ECIR, there was material with the Respondent to show that the Petitioner or the other accused were dealing with any part of the proceeds of crime. As per the ECIR dated 26.11.2018, the alleged proceeds of crime is the alleged bribe amount of Rs. 5 crore. As on the date of registration of the ECIR, only Rs. 50 lakhs were seized. It is reasonable to draw an inference that the remaining part of the alleged proceeds of crime worth Rs. 4.5 crore were either being concealed or used or being projected as untainted money or were in possession of any or all of the accused. Therefore, there is enough prima facie material to hold that as on the date of the registration of the ECIR, i.e., 26.11.2018, the offence of money laundering was continuing - Both of the said offences were part of the Schedule to the PMLA as on the date of registration of the ECIR. Therefore, this Court cannot accept the argument of the Petitioner that no scheduled offence existed when the alleged act of bribery took place and when the proceeds of crime were seized.
In Y. Balaji [2023 (6) TMI 594 - SUPREME COURT], the Supreme Court held that an offence of corruption constitutes and the generation of proceedings are like ‘Siamese twins’. Therefore, there is sufficient material to justify the filing of the impugned prosecution complaint and to continue the proceedings under the PMLA.
Conclusion - i) The PMLA proceedings are maintainable against the Petitioner despite him not being named as an accused in the predicate offence, as the offence of money laundering is independent and focuses on the handling of proceeds of crime. ii) The timing of the inclusion of Section 12 of the PCA in the Schedule to the PMLA does not affect the proceedings, as money laundering is a continuing offence. iii) The stay on the trial of the predicate offence does not affect the PMLA proceedings, as there is no final absolution of the accused in the scheduled offence. iv) The Petitioner's status as a witness in the predicate offence does not preclude prosecution under the PMLA.
Petition dismissed.
-
2024 (12) TMI 1556
Addition u/s 68 cash deposits during the demonetization period and assessee failed to explain genuineness of the agricultural income claimed - AO invoked provisions of section 115BBE - HELD THAT:- Assessee has deposited cash of Rs. 19,60,000/- during Demonetization, however, Assessing Officer has made an addition of Rs. 12,07,960/- only. As per Cash Book opening cash in hand on 10.11.2016 is more than the addition made by the Assessing Officer. The Assessing Officer has not challenged the cash book. Assessing Officer in para 7.8(V) has merely alleged that “Assessee during demonetization period accepted cash either from known or unknown person and deposited in banks”. Assessing Officer has made a bald statement without any basis.
Therefore, based on all facts and circumstances of the case, the Assessee has apparently explained the source of cash deposits. We direct the AO to delete the addition.
Assessee has received Agricultural Income - There is discrepancy between the crop appearing in the Revenue Records i.e. 7/12 Extract and crop claimed to have been grown by assessee. We specifically asked ld.AR to explain the difference. Ld.AR submitted that sometimes land revenue officers do not update their records, therefore, there is difference. However, ld.AR has not filed any document to substantiate his claim. There was only oral averments. In this scenario, we cannot doubt the land revenue records i.e. 7/12 Extract, copy of which has been submitted by assessee himself, during assessment proceedings, during appeal before the ld.CIT(A). Hence, we are of the opinion that in the absence of any contradictory documentary evidence, findings recorded in the 7/12 Extract has to be taken as True. Therefore, the assessee’s claim that assessee has sold GINGER on 11.06.2016 for Rs. 5,52,310/- claimed to have been grown in his own land is factually incorrect and hence cannot be accepted.
Assessee has not shown any agricultural income for earlier year. It is also to be noted that Assessee has shown Rs. 5,52,310/- as Agricultural Income which is the exact amount appearing in the copy of sale bill it means assessee has not incurred any Expenditure for earing the so-called agricultural income, which is impossible - Decided against assessee.
Addition made u/sec. 68 at 60% under section 115BBE - The applicability of Section 115BBE has been decided in the case of Maruthi Babu Rao Jadhav [2021 (1) TMI 481 - KERALA HIGH COURT] held that provisions of Section 115BBE of the Act as amended by second amendment Act by the Taxation Laws (second amendment) Act, 2016 will apply w.e.f 1-4-2017 on enhanced rate of tax @60% instead of @30%. The enhanced rates applies from the commencement of the assessment year relevant to previous financial year. In this case, this applies to Financial Year 2016-17 relevant to Assessment Year 2017-18. Thus we hold that Assessing Officer has rightly invoked section 115BBE to tax the addition made for A.Y. 2017-18.
-
2024 (12) TMI 1555
Disallowance u/s. 14A read with Rule 8D - applicability of Section 14A read with Rule 8D post the 2016 amendment - assessee's grievance is that the Ld. AO applied the provisions as they existed prior to the 2016 amendment - HELD THAT:- When calculating disallowance under Section 14A, only those investments that yield exempt income are to be considered. Specifically, investments in “Air India SATS” and “CIAL” were found to yield dividend income. Based on this, 1% of the average annual investment amounting to Rs. 66,11,81,530/- has been computed as Rs. 66,11,815/-. Both parties have agreed to this addition u/s 14A read with Rule 8D.
CIT(A) erred in accepting calculations based on the preamended provisions. Post-amendment, only investments that yield dividend income are to be considered for disallowance. Relying on the decision of Bharatiya International Limited [2024 (1) TMI 157 - ITAT DELHI] the addition is now restricted to Rs. 66,11,815/- under Section 14A of the Act. Assessee appeal partly allowed.
........
|
9911796707
