|
Advanced Search Options
Case Laws
Showing 501 to 520 of 18393 Records
-
2024 (12) TMI 1074
Legitimacy of the applicant's involvement in the alleged crime - Applicability of Sections 420, 467, 468, 471, and 120-B IPC - fictitious firms - nucleus of the entire issue is that there is a Press Reporter, who says that his PAN Card was misused and on the basis of his PAN Card two Firms were registered - offences under Sections 420, 467, 468, 471, 120-B IPC - HELD THAT:- Section 27 of the Indian Evidence Act, 1872 deals with the relevancy of information received from a person accused of any offence while in the custody of the police officer. The Section provides an exception to the general rule that confessions made to the police officers are inadmissible in evidence. From the aforesaid, the scope of Section 27 of the Act, 1872 is that it applies to any information given by the person accused of an offence, which leads to the discovery of a fact - The exception to rule of admissibility is that normally confessions made to a police officer or while in police custody are inadmissible under Sections 25 and 26 of the Indian Evidence Act, however, Section 27 allows for an exception where information received from the accused leads to discovery of a fact. The Section makes only that part of the statement relevant, which directly leads to the discovery of facts. It does not make the entire statement of the accused inadmissible.
The condition for applicability of the aforesaid Section is that the person giving the information must be an accused in police custody. The information provided must lead directly to the discovery of the material fact and only that portion of information which directly leads to the discovery is admissible. For example, if an accused, while in custody, reveals the location of a weapon used in the crime and upon searching that location, the weapon is indeed found, the part of statement where accused described the location of weapon is admissible in courts as evidence.
In the present case, after registration of the FIR when forgery had been done by using the Aadhaar Card and PAN Card of the informant, fake GST firms were registered, Investigating Officer proceeded on the information as provided by a secret informer and arrested two accused who disclosed about the office where work of the firm was being done. On the aforesaid information of the arrested accused persons, the Investigating Officer reached the office premises, wherein he found other persons working for the firm of the arrested accused persons. Laptops, mobiles, SIM Cards, fake invoices were recovered, thus, discovering such fact which connected them with the main accused who had got registered the fake firms and the consequential forgery or theft of GST was found. Thus, that part of the discovery of fact is admissible as per Section 27 of the Act.
The principal of "bail is the rule, jail is the exception" is a fundamental concept in criminal law, where the criminal justice system recognizes the importance of personal liberty and the presumption of innocence until proven guilty. This principal emphasizes that an accused should ordinarily be granted bail unless there are compelling reasons to detain him in custody - The present case relates to economic offences, such as large scale fraud, money laundering and corruption, are often viewed seriously because they affect the economic fabric of the society. The Courts may deny bail in such cases especially if the accused holds a position of influence or power. In the present case, money trail of crores, which affects the society at large scale, is involved which started from registration of fake firms by using Aadhaar and PAN Cards of the informant who had not applied for such registration.
Hon'ble Apex Court in the case of Directorate of Enforcement v. M. Gopal Reddy [2023 (2) TMI 1045 - SUPREME COURT] has held that in the economic offences which are having great impact on the society, the court must be slow in exercising discretion under Section 438 of Cr.P.C.
In the case of Tahir Hussain v. The Assistant Director Enforcement Directorate [2022 (11) TMI 1231 - DELHI HIGH COURT], the Court has observed that the accused Tahir Hussain was involved in the acts of cheating/ falsification/ forgery of documents which resulted in fraudulent removal of money from the accounts of the three companies (M/s SEAPL, ECPL and EGSPL) - Tahir Hussain was ultimate beneficiary of the laundered money which he used for fulfilment of ulterior motives. Fake and bogus invoices were created to cover the money trail.
The Apex Court in the case of Prahlad Singh Bhati v. NCT, Delhi and another [2001 (3) TMI 1053 - SUPREME COURT], has held that while granting bail, the court has to keep in mind nature of accusations, nature of evidence in support thereof, severity of punishment which conviction will entail, the character, behaviour, means and standing of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, larger interest of the public or State and similar other considerations.
Law on consideration of the Court to grant or refusal of bail has been settled by the Apex Court in a catena of decisions. In the case of Kalyan Chandra Sarkar v. Rajesh Ranjan [2004 (3) TMI 763 - SUPREME COURT], the Supreme Court has held that the court granting bail should exercise its discretion in a judicious manner and not as a matter of course.
The Apex Court has, in the case of P. Chidambaram v. Directorate of Enforcement [2019 (12) TMI 186 - SUPREME COURT], held that precedent of another case alone will not be the basis for either grant or refusal of bail though it may have bearing on principle and the consideration will have to be on caseto- case basis on facts involved therein and securing the presence of the accused to stand trial.
Having gone through the submissions of learned counsel for the parties, nature of accusation of offence, role of the applicants, it is opined that this is not a fit case for granting bail - The bail applications preferred by the applicant, is rejected.
-
2024 (12) TMI 1073
Extension of time limit to avail input tax credit under CGST Act retrospectively - implementation of the provisions of sub-Sections (5) and (6) of Section 16 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As per the special procedure laid down under Section 148 of the Act as notified vide notification No. 22/24 dated 08.10.2024, the taxpayers would be allowed to move application for rectification within six months from the date of issuance of notification i.e. 15.10.2024, thus, upto 15.04.2025 rectification application can be moved.
The petitioner is allowed to move an application accordingly - petition disposed off.
-
2024 (12) TMI 1072
Seeking relaxation of condition No. 1 imposed by the trial court whereby direction for release on bail was given - fraudulent availment of Input Tax Credit (ITC) - offences punishable under Sections 122 and 132 of the Central Good and Services Tax Act, 2017 - HELD THAT:- The plain reading of Section 437 of Cr.P.C. makes it evident that the condition which are required to be imposed are to make sure that the presence of accused be secured so that he should face the trial and also prevent him from committing any offences and also prevent him from threatening and tampering him with the witnesses.
Though these provision does not specifically prohibit directing the accused to deposit cash security, Section 445 of Cr.P.C. gives an indication to this effect. It provides that where any persons is required by any Court or officer to execute a bond with or without sureties, such Court or officer may (except in case of a bond for good behaviour) permit him to deposit a sum of money or Government promissory notes to such amount as the Court or officer may fix in lieu of executing such bond. There may be cases where the accused is not in a position to furnish sureties and offer to deposit a certain sum of money which convince the Court that he may not abscond or else, the amount in deposit would be forfeit to the State. Thus, the general rule is that the accused be released on bail on his executing personal bond as well as furnishing sureties. Only when he is unable to furnish surety and offers cash security the Court may accept the same and impose condition to that effect.
In RAMESH KUMAR VERSUS THE STATE OF NCT OF DELHI [2023 (7) TMI 1516 - SUPREME COURT], the Hon’ble supreme Court has held that the direction to deposit certain sums for granting bail should not be resorted to. It also clarified that when in cases of misappropriation, the accused makes an offer to deposit the whole or part of public money allegedly misappropriated by him, it would be open to the Court to impose such a condition - In the present case, despite the fact that the amount involved is nearly 8 crores, still the trial Court is not justified in directing the petitioner to deposit Rs. 1 crore. Therefore, this condition is required to be relaxed. However, having regard to the gravity of the offence committed by the petitioner, in order to ensure that he shall not leave the jurisdiction of the Court, it would be necessary to direct him to submit his passport before the trial Court and not to leave India without the permission of the trial Court.
This Court is of the considered opinion that the condition to deposit Rs. 1 crore is liable to be relaxed. Instead of the said condition, the petitioner is directed to produce his passport before the trial Court and he shall not leave India without permission of the trial Court - The condition imposed by the trial Court directing the petitioner to deposit a sum of Rs. 1 crore is set aside - Petition filed under Section 482 of Cr.P.C. is allowed.
-
2024 (12) TMI 1071
Challenge to impugned order passed by the second respondent relating to the assessment year 2018-2019 - excess claim of input tax credit under reverse charge mechanism - impugned order is challenged on the premise that neither the show cause notice nor the impugned order of assessment has been served by tendering to the petitioner or by registered post, instead it was uploaded in the common portal - violation of principles of natural justice - HELD THAT:- The impugned order dated 16.03.2024 is set aside and the petitioner shall deposit 25% of the disputed tax within a period of two (2) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the second respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner.
Petition disposed off.
-
2024 (12) TMI 1070
Liability of petitioner to pay GST - petitioner is effecting a composite supply of goods and services to the schools - supply for the purposes of Section 7 of the CGST/SGST Acts - HELD THAT:- The petitioner is entitled to relief. A reading of Ext.P1 order does not lend to conclude that there is a coherent and principled approach to the contentions taken by the petitioner before the adjudicating authority. The learned Senior Counsel for the petitioner is right in contending that there are contradictory findings in Ext.P1.
While the adjudicating authority accepts that the petitioner is the owner of the goods in paragraph 44, he proceeds to hold in paragraph 55 that the ownership of the goods vests in the General Education Department. These findings are clearly contradictory. There are no attempt to set out in detail the other contradictions in Ext.P1 as this is not necessary for the purposes of this case.
The adjudicating authority has not properly considered the effect of Ext.P10 notification. It is the specific case of the petitioner that the petitioner was a special purpose vehicle for the purposes of implementing a specific project of the Government of Kerala and it had procured the goods on the basis of the terms of the tripartite agreement entered into between the petitioner, the KIIFB and the General Education Department. The adjudicating authority has taken the view that since the goods were purchased by utilising the funds of KIIFB, the same cannot be treated as a grant for the purposes of Ext.P10 notification. This is a rather myopic view of the notification, in the facts and circumstances of this case.
There are no hesitation to quash Ext.P1 and direct that the adjudication of Ext.P22 show cause notice be restored to the file of the 3rd respondent who shall pass fresh orders after affording an opportunity of hearing to the petitioner and specifically considering the question as to whether in the absence of consideration, there could be any supply of goods or services as defined in Section 7 of the CGST Act and also specifically considering the question as to why the amounts obtained through the KIIFB for the implementation of the project which was entrusted to the petitioner should not be treated as grant from the Government (considering the fact that the KIIFB is a statutory body completely within the control of the Government of Kerala) for the purposes of Ext.P.10 Notification read with the terms of Notification No.2/2017- Central Tax (Rate) New Delhi, dated 28.6.2017.
Ext.P1 is quashed and the adjudication of Ext.P22 is restored to the file of the 3rd respondent who shall pass fresh orders as directed above and taking into consideration the above points and any other points that may be raised by the petitioner before the 3rd respondent - petition disposed off.
-
2024 (12) TMI 1069
Challenge to impugned order passed by the respondent relating to the assessment year 2021-2022 - neither the show cause notices nor the impugned order of assessment has been served by tendering to the petitioner or by registered post, instead it was uploaded in the common portal - violation of principles of natural justice - HELD THAT:- The impugned order dated 01.03.2024 is set aside and the petitioner shall deposit 25% of the disputed tax within a period of two (2) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material.
Petition disposed off.
-
2024 (12) TMI 1068
Proceedings u/s 153C - issuance of the notice was preceded by the drawl of a Satisfaction Note by the jurisdictional AO - Distinction between Section 153A and Section 153C - Period of limitation - Nature of the incriminating material that may be obtained and the years forming part of the block which would merit being thrown open
As decided by HC [2024 (4) TMI 461 - DELHI HIGH COURT] abatement of the six AYs’ or the “relevant assessment year” would follow the formation of that opinion and satisfaction in that respect being reached.
We come to the firm conclusion that the “incriminating material” which is spoken of would have to be identified with respect to the AY to which it relates or may be likely to impact before the initiation of proceedings under Section 153C of the Act. A material, document or asset recovered in the course of a search or on the basis of a requisition made would justify abatement of only those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs’ immediately preceding the AY corresponding to the year of search or the “relevant assessment year” would not justify a sweeping or indiscriminate invocation of Section 153C.
The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs’ and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments.
HELD THAT:- As there is a delay of 124 and 127 days in filing the Special Leave Petitions respectively, which has not been satisfactorily explained. Even otherwise, we have gone through the Special Leave Petition and do not find any merit in the same.
Special Leave Petitions are, therefore, dismissed on the ground of delay as well as on merits.
-
2024 (12) TMI 1067
Income deemed to accrue or arise in India - income earned from customers outside India is liable to tax in India under DTAA with USA - Fixed Place PE or not? - a non-resident company registered in USA and has been engaged in the business of rendering Money Transfer Services [MTS] - Whether the activities of the Liaison Office (LO) in India were preparatory or auxiliary in nature.? - HELD THAT:- Since the activities undertaken were far removed from the core business of the Western Union Financial Services enterprise, it is the tests of “preparatory” and “auxiliary” as embodied in Article 5 (3) (e) which stand met and satisfied. Thus we hold since it is by now well settled that activities such as market research, promotional activities, training or deployment of software would clearly not breach the threshold of auxiliary functions as are envisaged under the DTAA.
For the purposes of being held to be a dependant agent, it was incumbent for the appellants to establish that such an entity habitually exercised an authority to conclude contracts. It could have also been proved by the appellants that the LO habitually secured orders for Western Union Financial Services. However, none of these conditions are met in the facts of the present case. In the absence of these conditions being found to exist, it would be wholly incorrect in law for the LO to be classified as a DAPE.
Software only constituted a medium of communication and which enabled the Indian agents to talk and communicate with the servers of Western Union housed in USA. The ‘Voyager’ software merely enabled the Indian agents to verify details and correlate data relevant to the remittance. There was no installation of hardware in the premises of those agents or for that matter a placement of their premises or a part thereof at the disposal of Western Union. We are thus unconvinced that the deployment of the software is entitled to be viewed as having resulted in the creation of a PE. This issue in any case stands answered against the appellants by our Court in E-Funds.
On an overall conspectus of the various decisions handed down by this Court as well as the Supreme Court insofar as Fixed Place PE and DAPE are concerned as well as the language of Article 5, we have no hesitation in holding that the LO failed to meet the threshold requirements so as to constitute a PE.
In summation, we come to the firm conclusion that the LO did not meet the criteria established in sub-paras 1 and 2 of Article 5, so as to constitute a ‘fixed place’ of business or meet the tests of virtual projection, a takeover of the premises as well as the precepts of control and disposal in order to be a Fixed Place PE. The activities undertaken by the LO even otherwise were clearly auxiliary in character and would thus clearly fall within Article 5 (3) (e) of the DTAA. The LO also did not meet the requirements of a DAPE as per of clauses (a), (b) and (c) of para 4 of Article 5. Furthermore, the software utilised for the purpose of connecting the Indian agents to the mainframe, being intangible property, would invariably be excluded from the threshold of PE. The argument of the premises of the Indian agents constituting a PE is clearly misconceived since these were independent third parties having their own business portfolio. Their premises, in any case, would not satisfy the test of virtual projection.
Accordingly and for all the aforesaid reasons, we find ourselves unable to sustain the arguments of the appellants and who had commended us to upset the conclusions rendered by the Tribunal. In our considered opinion, the Tribunal rightly came to the conclusion that the LO of the respondent-assessee did not constitute a PE in India, there was no DAPE and that the software did not result in the creation of a permanent establishment. Decided in favour of assessee.
-
2024 (12) TMI 1066
Validity of re-assessment u/s 148A - short time of two days was given to the petitioner to submit its reply after receipt of the Investigation Report, petitioner - HELD THAT:- Having considered the rival submissions of learned counsels and on perusal of the record, we are of the opinion that order passed by 3rd Respondent initiating re-assessment proceeding against the petitioner is not only in utter violation of the principles of natural justice, but the same has been passed in undue haste which smacks of arbitrariness, as statutory provision of Section 148A has not been followed by 3rd Respondent.
It is well settled principles of law that anything done in undue haste can also be termed as ‘arbitrary’ and cannot be condoned in law.
From the facts of the case, it is clearly evident that, initially, show cause notice was issued on 24.02.2024, wherein there was mention about enclosure of an Investigation Report, but said Investigation Report was not supplied to the petitioner and, as per the petitioner, said Investigation Report was supplied on 17.03.2024. Respondents, in their Counter Affidavit, admit that, probably, on account of technical error, enclosures were not contained as attachment to the notice dated 24.02.2024, but it has been stated that subsequently Investigation Report was duly sent to the petitioner through ITBA system vide letter dated 12.03.2024 and through Departmental e-mail dated 13th March, 2024 at 1.06 P.M.
In the present case since new facts were introduced in the notice on 20th March, 2024, at least seven days’ time should have been granted to Petitioner for replying to the same, but in a hurried manner, entire proceedings were conducted and impugned order dated 29.03.2024 was passed by 3rd respondent in utter violation of the principles of natural justice and contrary to statutory provisions contained u/s 148A of the Act.
Impugned order and Notice initiating re-assessment proceeding u/s 148 both issued by the 3rd Respondent, are hereby, quashed and set aside.
-
2024 (12) TMI 1065
Rectification of mistake in impugned order u/s 147 r/w 144B - Department has solely relied on the information gathered from the DCIT (OSD)(Inv.) CBDT, New Delhi, however, particulars have not been furnished to the petitioner regarding the five transactions which is disputed by the petitioner - HELD THAT:- It is admitted that the petitioner sought information from the Department, however, the same was not furnished, yet the impugned order was passed on 23.03.2022. It is submitted that the petitioner also made some attempts to get the details of the documents under the Right to Information Act, 2005, from the Sub-Registrar Office, Neelankarai, however, no information has come from the SRO as well.
This Court is not convinced that the petitioner has made out a case for interference with the impugned Assessment Order dated 23.03.2022.
Petitioner has also filed an appeal before the Appellate Commissioner and has also secured an interim stay u/s 220(6) up to September, 2022. Considering the fact that the petitioner has furnished the bank statements before the Local Authority, vide Annexure VI to the application dated 22.06.2022, this Court is inclined to dispose of these writ petitions with the following directions:
(i) The appeal, that has been filed before the Appellate Authority under Section 246A of the Income Tax Act, 1961, is directed to be disposed of, as expeditiously as possible, preferably within a period of six months from the date of receipt of a copy of this order.
(ii) The stay, that was earlier granted on 28.06.2022, shall continue to operate till disposal of the appeal pending before the Appellate Commissioner against the impugned order dated 23.03.2022.
(iii) Since the petitioner has also filed the bank statement with the Local Authority, the Commissioner (Appeals) or the Appellate Authority under the new regime, may call for the remand report from the Assessing Officer and proceed to pass final orders.
-
2024 (12) TMI 1064
Disallowance of expenses u/s 14A r.w.r. 8D - AO applied Rule 8D of the Rules and quantified the disallowance - HELD THAT:- Though not the dominant purpose of acquiring the shares is a relevant for the purpose of invoking the provisions u/s 14 A of the Act, the shares held as stock in trade stand on a different pedestal in relation to the shares that were acquired with an intention to acquire and retain the controlling interest in the investee company.
Further, it is brought to our notice that in assessee’s own case in [2018 (12) TMI 50 - ITAT DELHI] for the assessment year 2012-13, a coordinate bench of this Tribunal considered the arguments on either side and reached the conclusion that, insofar as the assessee bank is concerned section 14A of the Act has no application in view of the above law laid down by the Hon’ble Apex Court in the case of Maxopp investments Ltd, [2018 (3) TMI 805 - SUPREME COURT]
We, therefore, while respectfully following the above decision, hold that no addition in case of the assessee under section 14-A is sustainable. Also see South Indian Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT]
Amortization of premium on securities held maturity (HTM) - HELD THAT:- The securities under HTM category are those that are held till its redemption /maturity. Clearly, if any premium is paid for acquiring the said securities over and above the face value or the redemption value of those securities, it would be apposite to amortize the same during the holding period. The market value of the fixed interest-bearing securities fluctuates on the basis of the market rate of interest. The differential amount between the coupon rate and the market rate is reflected by the premium or discount on which such securities are available.
Illustratively, the securities being a coupon rate which is lower than the market rate of interest would be available on discount while securities with a higher coupon rate would be available at a premium. We find no infirmity with the Assessee amortizing the premium paid on such securities over the holding period.
Loss claimed by the Assessee bank from shifting of securities from AFS (Available for Sale) / HFT (Held for Trading) to HTM (Held Till Maturity) portfolio - AO disallowed the loss holding that transfer of securities from one portfolio to another is not a financial transaction and the loss was notional - HELD THAT:- Concededly, the said question is covered by the earlier decision of this court in M/s Oriental Bank of Commerce [2016 (5) TMI 1514 - DELHI HIGH COURT] disagreed with revenue contention that where the Assessee invested in securities for the purpose of complying with RBI instructions, such investments could not be termed as investment in the form of security ready for sale.
Section 43B deduction qua contributions made by the Assessee to ‘PNB Employees’ Pension Fund’ - AO rejected the said claim as the same was made on the basis of actuarial valuation while the government notification permitted only annual contribution - HELD THAT:- There is no dispute that the contributions made by the Assessee were in respect of the Employees’ Pension Fund (EPF) and wholly and exclusively related to its business. Additionally, the quantum of contributions, does not in any manner, detract from the nature of the said payments. No substantial question of law arises in this regard as well.
Goodwill arising from amalgamation of the erstwhile Nedungadi bank with the Assessee bank and is stated to be a recurring issue from AY 2003-04 onwards - CIT(A) deleted the addition holding that the very same treatment was required to be given in the present year also - HELD THAT:- We find that the same question was projected by the Revenue before this court in [2024 (3) TMI 1386 - DELHI HIGH COURT] was dismissed and the question as projected was not entertained in [2024 (3) TMI 1386 - DELHI HIGH COURT]. The learned counsel for the Assessee points out that the said issue is also covered by the judgment of this court in PCIT v. Eltrek SGS (P) Ltd. [2023 (8) TMI 681 - DELHI HIGH COURT] and Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT]
No substantial question of law arises in the appeal
-
2024 (12) TMI 1063
Exemption u/s 11/12 denied - audit report was not filed alongwith Form No. 10B with the return of income - HELD THAT:- The undisputed fact is that the audit report alongwith Form 10B was signed prior to filing of return of income. It is true that while denying exemption u/s 11/12 of the Act, no intimation was given to the assessee.
As mentioned elsewhere, this issue is squarely covered by the Circular F. No. 173/193/2019 dated 23.04.2019. However, for the sake of verification, we direct the AO to verify the details and decide the issue accordingly after affording reasonable and adequate opportunity of being heard to the assessee.
-
2024 (12) TMI 1062
Penalty u/s 271D - violation of provisions of Section 269SS - assessee had made transactions for sale of immovable property and had accepted cash - HELD THAT:- Deed mentions that the assessee has received all the sale proceeds. Though the exact dates when sale consideration was paid to the owners/assessee, is not explicitly written in the sale document, it is highly improbable that sales consideration for a property, whose possession was given to the vendee in 2007, would remain pending till 2016.
We are therefore, of the considered view that the said sale deed was symbolic and for transfer of ownership rights in the property to the vendee. The deed was drawn only for the purpose of Registration of the property and the amount of Rs 33,80,000/- is only the market value of the assessee share in the said property for the purpose of payment of stamp duty. We do not find any evidence of receipt of cash by the assessee for invocation of penalty under the provisions of section 271D. Assessee appeal allowed.
-
2024 (12) TMI 1061
Taxability of income in India - Business receipts taxable as fees for technical services under Income Tax Act, 1961 as well as India – UK Double Taxation Avoidance Agreement (‘DTAA’) - taxability of income in hands of the assessee for providing license for right to use of the cloud based platform i.e. the E-Invoice Portal - Assessee a non-resident having income in India is liable for tax if the source is in India.
HELD THAT:- Section 5(2) read with section 9 of the Act deals with source rules for non-resident under the provisions of Income-tax Act.
In the event and income i.e. sourced in India is not characterized under the heads provided in the DTAA, the income would be taxable under the residual clause provided taxing right is allocated to source country in this case to India under the relevant DTAA.
The source Rule was further explained by the Apex Court in GVK Industries case [2011 (3) TMI 1 - SUPREME COURT] where in the Apex Court has held that the income of receipt to be charged or chargeable in the country where the source of payment is located, to clarify, where the payer is located.
Under the primary source rule under section 5(2), the income received by the assessee company accrues or arises in India. As a result, further reference to deeming provisions under section 9 of the Act is undesirable for ascertaining of chargeability of income of the assessee under the provisions of Income-tax Act. Alternatively, only when the primary sourcing rule under section 5(2) of Act fails to establish the chargeability, a reference to deeming rules under section 9 of the Act is necessary.
In view of above material facts i.e. the process of providing technical services by the assessee and receiving payments having source in India as per above principles deserves to be held liable to tax.
-
2024 (12) TMI 1060
Penalty order u/s 271(1)(c) - addition on undisclosed rental income - HELD THAT:- As quantum addition on undisclosed rental income has not been contested by the appellant and rather admitted, the consequent penalty cannot be challenged.
We do not find any force in the argument of the Ld. Counsel that the quantum order was not challenged because of smallness of tax involved. Quantum of tax is not material it is the conduct of the assessee which is at the top consideration. The impugned concealed or undisclosed rental income was detected on account of search proceedings and the same has been accepted by the assessee qua the assessment order. The penalty order which follows the quantum addition therefore is a natural corollary.
Penalty u/s 271(1)(c) for under statement of income - period of limitation - Penalty order has been hit by limitation prescribed in section 275(1)(a) and cannot survive. Accordingly, the penalty order u/s 271(1)(c) dated 25.10.2021 for AY-2013-14 and AY 2014-15 qua addition in respect of under statement of income is quashed. The order of lower authorities on the issue set aside and the Ld. AO is directed to recompute the quantum of penalty payable by the assessee after removing the penalty component qua addition of in respect of under statement of income.
-
2024 (12) TMI 1059
Addition u/s 56(2) (viib) - method adopted for determination of FMV of the equity share by the assessee is not as per the method prescribed under Rule 11UA of the IT Rules - rejection of the valuation report by AO based on comparison with one-year actual figure - CIT(A) deleted addition - HELD THAT:- Valuation was done by the assessee as per DCF method, which was backed by a report of the Chartered Accountant. If the AO was not satisfied with the correctness of the valuation report of the Chartered Accountant, he should have referred the matter to another Registered Valuer/Merchant Banker to work out the valuation on the basis of DCF method. The AO on his own was not correct in rejecting the valuation of the assessee as per DCF method, nor he was correct in adopting NAV method to determine the FMV of shares.
AO can certainly scrutinize the valuation report submitted by the assessee but for determination of a fresh valuation he has to obtain a report from an independent Registered Valuer / Merchant Banker. Further, the basis had to be DCF method and he cannot change the method of valuation which was opted by the assessee.
CIT(A) had, therefore, rightly held that the AO cannot adopt his own valuation unless there was an enabling provision in the Act giving powers to the AO to tinker the valuation report obtained from an independent valuer as per the prescribed method under Rule 11UA(2)(b) of the IT Rules.
Hon’ble Delhi High Court in the case of PCIT-2 Vs. Cinestaan Entertainment Private Limited [2021 (3) TMI 239 - DELHI HIGH COURT] has categorically held that “if law provides the assessee to get the valuation done from a prescribed expert as per prescribed method, then the same cannot be rejected because neither AO nor the assessee have been recognized as expert under the law”. Therefore, the suo moto rejection of the valuation report of the assessee by the AO was not correct and can’t be upheld.
Other contention of the assessee is that the provision of Section 56(2)(viib) of the Act was not applicable in the case of issue of shares to the holding company - In the case of BLP Vayu (Project-1) Pvt. Ltd. [2023 (6) TMI 209 - ITAT DELHI] has held that the provision of Section 56(2)(viib) of the Act is wholly inapplicable for transactions between the holding and its subsidiary company where no income can be said to accrue to ultimate beneficiary i.e. holding company.
We are of the considered opinion that the AO was not correct in rejecting the DCF method of valuation adopted by the assessee to determine the FMV of its shares on its own without obtaining report from any other Registered Valuer/Merchant Banker. Therefore, the order of the Ld. CIT(A) deleting the addition in respect of addition u/s. 56(2)(viib) of the Act is upheld. Appeal of the Revenue is dismissed.
-
2024 (12) TMI 1058
Taxability of payment made to company in USA[Tec] in India - Validity of order passed by CIT(A) holding that the assessee has a PE in India - Whether construction / installation permanent establishment can be said to exist looking into the facts of the instant case? - HELD THAT:- In terms of Article 5(2)(k) of the India-USA Treaty construction / installation permanent establishment would come into existence in case installation / assembly or supervisory activities in connection therewith would continue in India for a period of more than 120 days in any 12 month period. The issue for consideration is whether the period of stay of the employees exceeded this threshold provided under Article 5(2)(k) of the India-USA Tax Treaty.
TEC does not have a permanent establishment in India in terms of Article 5(2)(k) of the India-USA Tax Treaty. Further, in our considered view, the details of payment by the assessee to TEC would not have any bearing on the presumed date of commencement and conclusion of the installation activities, since the payment dates may have no relevance or bearing on the date of commencement and completion of the project.
Accordingly, since we have held that TEC does not have an installation PE in India in terms of Article 5(2)(k) of the India-USA Tax Treaty, the assessee did not have an obligation to withhold taxes at source of payments made to TEC. Accordingly, we hold that the assessee was not under an obligation deducted taxes at source with respect of contractual payments made to TEC, USA. Assessee appeal allowed.
-
2024 (12) TMI 1057
Exemption u/s. 11 - assessee organisation is doing all the infrastructure development/creation work on behalf of the government - HELD THAT:- As per the proviso to section 12(2) of the Act, it has been specifically written that the benefit of exemption can be granted for the preceding year, if on the date of grant of registration u/s. 12A to an institution, the assessment for a preceding year was pending before the AO and the objects and activities of such trust or organisation remained the same for such preceding year. The assessment year under consideration is AY 2012-13.
The assessee organisation for the first time applied for registration u/s. 12A of the Act in the year 2019, the assessment for the AY 2012-13, by then, stood completed and was not pending before the AO.
Secondly, the said provision stood omitted as on 01.04.2023. As on today, when we are adjudicating upon this appeal and claim of the assessee for grant of benefit of proviso to section 12(2) of the Act, the said proviso is no more on the statute. It is settled law that the effect of omission of a provision from the said statute is that it never existed on the statute. Nevertheless, the said proviso is not in existence in the statute as on today. Hence, in our view, the assessee organisation cannot be granted benefit of the said provision by us while adjudicating upon appeal of the assessee in the year 2024, when such proviso already stood omitted w.e.f. 01.04.2023.
Action of the AO in treading the expenditure incurred by the assessee organisation as capital in nature is concerned, we do not find any infirmity in the order of the Assessing Officer to the extent that expenditure incurred on creation of infrastructure would be capital in nature. However, expenditure incurred on maintenance of the infrastructure would be revenue in nature. Office Administration expenditure would also be revenue in nature. The assessee will be entitled to claim depreciation as per law on the infrastructure, which, has been, admittedly booked as ‘asset’ by the assessee in the balance sheet. So far as the flaws in accounting method applied by the assessee are concerned, it is to be noted that the assessee organisation is regularly booking notional interest expenditure payable to the government on the first/initial grant received by it by treating the same as a loan in its account.
As per assessee, it was not a loan but a grant only. He has submitted that due to some advise given at that time, the assessee has treated it as a loan in its account and has also booked the notional interest expenditure upon it. The same, however, has never been paid to the government. If this contention of the assessee is to be accepted then, certainly, any interest expenditure booked by the assessee is not an allowable expenditure. However, the fact on the file is that the said amount was wrongly treated by the assessee as loan in its account whereas the claim of the assessee organisation is that the said amount was a grant received from the government prior to 1992 and that has been incurred by the assessee organisation on infrastructure projects, and that the said projects are booked as ‘assets’ in the Balance sheet of the assessee.
Under this scenario, the said grant is required to be treated as income of the assessee and the assessee, of course, would be entitled to claim depreciation on such ‘assets’ as per law. However, in fairness to the assessee organisation, we give an opportunity to the assessee organisation to correct/rectify its account and show the clear picture of accounts to the Assessing Officer and the Assessing Officer to decide the issue accordingly after considering the submissions of the assessee in this respect.
Appeal of the revenue is treated as partly allowed.
-
2024 (12) TMI 1056
TP adjustment - interest on outstanding receivables from the Associated Enterprises (AEs) - HELD THAT:- We find that the decisions relied upon by the Learned AR squarely applies to the facts of the instant case before us. On perusal of financials of the assessee, it is seen that there is no interest expenditure expended by the assessee, which goes to prove that the assessee company is a debt free company. The reliance on the decision of Boeing India Pvt limited [2022 (10) TMI 498 - DELHI HIGH COURT] is well placed wherein it was held that where Assessing Officer had made adjustment in hands of assessee-company on account of interest on outstanding receivables, since assessee-company was a debt free company and no interest was paid to creditor/supplier nor any interest had been earned from unrelated party, question of receiving any interest on receivables did not arise.
DRP had directed the Learned TPO to grant working capital adjustment on the provision of services segment, which was not given by TPO, which results in violation of provisions of section 144C(10) of the Act. In any event, once the same is granted, there is no need to separately impute interest on outstanding receivables as it would get subsumed in the working capital adjustment itself. This proposition has been accepted in Kusum Health Care Private Limited [2017 (4) TMI 1254 - DELHI HIGH COURT]
Hence we hold that there is no need to impute any interest on outstanding receivables separately in the peculiar facts and circumstances of the case of the assessee company herein. Accordingly, the Ground Nos. 1 & 2 raised by the assessee are allowed.
Rejection of claim made towards deduction of expenditure u/s 35DD based on the assessment order for Assessment Year 2017-18 - assesee sought to claim one-fifth as eligible for deduction under section 35DD of the Act vide letter dated 2-8-2021 as time limit for filing revised return for Assessment Year 2018-19 had already expired - HELD THAT:- We find that the last paragraph of the said Supreme Court decision in Goetze India Limited [2006 (3) TMI 75 - SUPREME COURT] clearly specifies that the restriction does not apply to appellate authorities especially the Tribunal. Hence, we direct AO to grant deduction under section 35DD of the Act for 1/5th portion of amalgamation expenditure while giving effect to this order. Accordingly, the Ground No. 3 raised by the assessee is hereby allowed.
Levy of interest u/s 234B is consequential in nature.
Levy of interest u/s 234C should be charged only on the returned income and not on the assessed income.
-
2024 (12) TMI 1055
Addition of suppressed sales - estimation of income - direction of the CIT(A) to treat 20% of suppressed sales as undisclosed investment - whether only gross profit on suppressed sales can be treated as income - onus to prove that any expenses were incurred outside books of accounts against such suppressed sales - HELD THAT:- The assessee has before us filed a detailed list of parties to whom the sales were made during the year. The list includes names of parties for whom consignment sales are also made. We find that the parties to whom sales are made are also the same parties for whom consignment sales are made. There is, however, no details of any commission receipt from such parties for whom consignment sales are made.
Assessee has explained the non-charging of commission from such parties stating that such parties are small and petty agriculturalist belonging from unorganized trade and the assessee as a matter of routine had received material from such consignors at its premises to make sales on their behalf.
We find from the list of sales produced to parties to whom such kind of sales are being made without charging commission, can not be considered as small and petty agriculturalist.
AO and the CIT(A) that proper evidence of consignment sales were not produced before the AO or the CIT(A). We therefore are of the opinion that the assessee explanation is too specious and are devoid of any cogent or documentary evidence.
CIT(A) rightly rejected the explanation of the assessee and held the consignment sales as suppressed sales.
We also endorse the findings of the CIT(A) that the entire sales, claimed as consignment sales, cannot be treated as income of the assessee and only gross profits on the suppressed sales of Rs 3,71,75,141/- can be treated as income of the assessee. We also uphold the direction of the CIT(A) to treat 20% of suppressed sales as undisclosed investment made in the purchase for such sales. Accordingly, the ground 1 and 2 of the revenue is dismissed.
............
|
9911796707
