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Showing 1 to 20 of 1292 Records

• 2024 (1) TMI 1292 - BOMBAY HIGH COURT
  

  Dishonour of Cheque - rejection of application for oral evidence - permission to adduce oral evidence in support of his defence - HELD THAT:- The question whether the accused, in proceedings under Section 138 of the NI Act, is entitled to file an affidavit in lieu of the examination-in-chief is no more res integra. In the decision of the Supreme Court in the case of MANDVI CO-OP. BANK LTD. VERSUS NIMESH B. THAKORE [2010 (1) TMI 570 - SUPREME COURT], it is held that 'What would be the extent and nature of examination in each case is a different matter and that has to be reasonably construed in light of the provision of Section 145(1) and having regard to the object and purpose of the entire scheme of Sections 143 to 146. The scheme of Sections 143 to 146 does not in any way affect the Judge's powers under section 165 of the Evidence Act.'

  In a recent decision of this Court in the case of SBI GLOBAL FACTORS LIMITED VERSUS THE STATE OF MAHARASHTRA, M/S. DHANSHREE TEXTILE INDUSTRIES [2021 (3) TMI 490 - BOMBAY HIGH COURT], this Court has held that an accused could not be permitted to file an affidavit of evidence in lieu of the examination-in-chief.

  The order of learned Magistrate of not permitting the petitioner to adduce oral evidence, does not stand. Since, earlier the petitioner himself submitted affidavit of evidence in lieu of his oral evidence, he was cross-examined. This consumed a lot of time of the Trial Court. Therefore, the petition needs to be allowed.

  Petition allowed.

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• 2024 (1) TMI 1291 - ITAT MUMBAI
  

  TP Adjustment - Interest on delayed realization of export proceeds from AEs - assessee submitted that the assessee is not charging interest on delayed realization either from the Associated Enterprises (AEs) or Non-AEs - DR submitted that average realization period from AEs is far greater than average realization period from Non-AEs. There are stray incidence of delay in recovery from Non-AEs - HELD THAT:- Except from one AE i.e. Stride Inc. where there is substantial delay of 311 days in respect of transactions on single day i.e. 29/06/2011, realization of the receivable is within the period. Apart from above, there is nominal delay of 58 days in recovery from Co Pharma Ltd., another AE of the assessee. A perusal of the details from Non-AE at page 85 to 125 shows that there is a delay of 398 days and 219 days in respect of the transactions with Non-AEs on different dates.

  As evident from documents on record that in some of the transactions with AEs and Non-AE, there is delay in recovery of receivables. The assessee has been following uniform policy of not charging interest on delayed realization from AEs and Non-AEs. The Hon'ble Jurisdictional High Court in the case of Indo American Jewellery [2013 (1) TMI 804 - BOMBAY HIGH COURT] has held that where there is complete uniformity in not charging interest from AEs and Non-AEs for delay in realization of export proceeds, the Assessing Officer was not justified in making addition of notional interest in respect of transactions with AEs in the course of transfer pricing proceedings.

  DRP while disposing of objections of the assessee in Assessment Year 2011-12 deleted the adjustment made by TPO for similar reasons by following the decision of Indo-American Jewellery [2013 (1) TMI 804 - BOMBAY HIGH COURT] TPO in Assessment Year 2010-11 had made adjustment in respect of delayed receivables. The Co-ordinate Bench in assessee’s appeal [2023 (5) TMI 1101 - ITAT MUMBAI] held that there is no requirement to charge any interest towards receivable, albeit in the said Assessment Year there was only two instances of marginal delay of 60 days and 26 days. Thus we hold that imputing of interest on delayed payment of receivables from AEs is unwarranted. The ground No. 2 of the appeal is thus, allowed.

  Interest on share application money pending allotment - HELD THAT:- In immediate preceding Assessment Year the Co-ordinate Bench in turn following the order in assessee’s appeal in [2023 (5) TMI 1101 - ITAT MUMBAI] for Assessment Year 2010-11 deleted the addition as held AO or the TPO are not empowered to convert and re-characterize a transaction of share application into a loan transaction. This aspect of the matter has been overlooked by the DRP in its order for earlier year. As such, it could not be followed. Secondly, the remittance of the said share application money was approved and supervised by the RBI and the purpose of remittance as approved was investment in share capital. As such, there is no dispute to the fact that the amounts paid were on account of investment in share capital of the associates or subsidiaries. We further note that even otherwise the transaction of issue of shares is a capital account transaction and not a revenue account transaction and therefore could not be said to result in any income per se. We further notice that the co-ordinate benches of the Tribunal have also taken a view that no imputation of interest could be made on a transaction of share application money paid to subsidiaries. Decided in favour of assessee.

  Disallowance of FCCB issue expenses - HELD THAT:- We find that the expenditure incurred on issuance of FCCBs has been amortized by the assessee over a period of five years. The assessee had claimed 1/5th expenditure each year in the past, starting from Assessment Year 2008-09. The Co-ordinate Bench in appeal by the assessee [2023 (6) TMI 1388 - ITAT MUMBAI] directed the AO to allow 1/5th expenditure. Since, there is no change in facts in the impugned assessment year and no contrary material is brought on record by the Revenue, we see no reason to take a different view on this issue. The assessee succeeds on this ground of appeal.

  Disallowance u/s. 14A - HELD THAT:- It is no more res-integra that no disallowance u/s. 14A of the Act is warranted where the assessee has not earned any exempt income during the relevant period.[ Re. PCIT vs. State Bank of Patiala [2018 (11) TMI 1565 - SC ORDER] & PCIT vs. Ballarpur Industries Ltd [2016 (10) TMI 1039 - BOMBAY HIGH COURT]. In light of undisputed facts and the settled legal position, ground of appeal is allowed.

  Adjustment made to book profits u/s. 115JB of the Act with respect to disallowance u/s.14A - HELD THAT:- The Special Bench of Tribunal in the case of Vireet Investment Pvt. Ltd [2017 (6) TMI 1124 - ITAT DELHI] has held that computation u/s. 115JB of the Act is to be made without considering disallowance made u/s.14A of the Act r.w. Rule 8D. The Hon'ble Gujarat High Court in the case of PCIT vs. Gujarat Flouro Chemicals Ltd [2020 (10) TMI 252 - GUJARAT HIGH COURT] has reiterated the position that no addition in Book Profit is to be made on the basis of calculation worked out u/s.14A of the Act. In light of settled legal position we find merit in ground No. 8 of appeal, hence, the same is allowed.

  Disallowance made u/s. 14A suo-moto while computing the total income - Directions to reduce suo-motu disallowance while determining the taxable income as no exempt income has been earned by the assessee during the relevant period.

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• 2024 (1) TMI 1290 - SC ORDER
  

  Approval of Resolution Plan - extent and the limitation of the judicial review by the Adjudicating Authority and the Appellate Tribunal in context of a Resolution Plan approved by the CoC with requisite majority - it was held by NCLAT that 'in the facts of the present case, all other parts of the Resolution Plan have not been found to infirm in any manner, there are no case for interfering with the order approving the Resolution Plan.'

  HELD THAT:- There are no reason to interfere with the order of the NCLAT since no substantial question of law is involved in the appeal.

  Appeal dismissed.

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• 2024 (1) TMI 1289 - DELHI HIGH COURT
  

  Seeking release of attached land - also seeking to accept an alternate security, which according to the Petitioner is the value of the attachment attributable to the said land - HELD THAT:- It is pertinent to mention herein that the land in question has been attached by a Provisional Attachment Order dated 03.12.2022. The Petitioner herein gave a representation on 13.03.2023 offering security in the nature of a Fixed Deposit - Today, it is stated by the learned Counsel for the Respondent that he has instructions to state that the Enforcement Directorate is prepared to accept fixed deposit for the equivalent value of attachment of Rs. 91,40,104/, in the name of the Director of Enforcement.

  The Writ Petition is disposed of.

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• 2024 (1) TMI 1288 - ITAT BANGALORE
  

  Unexplained cash deposit - assessee claimed that the deposits were from earlier cash withdrawals - HELD THAT:- We are of the opinion that the assessee has to get due credit towards opening cash balance of Rs. 18,96,800/- and cash withdrawal from the account of Rs. 89,42,200/-, which works out to Rs. 1,08,39,000/-, that is more than the amount deposited into bank account of Rs. 107,95,803/-, as such addition of Rs. 107,95,803/- cannot be sustained. Accordingly, we delete the addition made towards unexplained cash deposit made into assessee’s bank account on various dates. This ground of the appeal of the assessee is allowed.

  Addition towards unexplained credit card expenses - A.R. submitted that assessee has been making regular withdrawals from the bank account and the same has been used for payment of credit card expenses - HELD THAT:- We have heard the rival submissions and perused the materials available on record. In our opinion, the assessee has spent an amount of Rs. 4,37,047/-, as we discussed in earlier para, this has been made by the assessee by the withdrawals made the total of Rs. 1,36,86,000/- from the assessee’s bank account - Accordingly, this addition is also deleted.

  TDS u/s 194C - disallowance made u/s 40(a)(ia) - HELD THAT:- It is an admitted fact that payment was made to individual labourers and not to the labour contractors. These facts have not been disputed by the ld. AO. Now whether we could treat these labourers as employees of the assessee and the present assessee is an employer of those employees? The employer is a person who controls and directs a servant or worker under an express or implied contract of employment. The employer accordingly is under obligation to pay him the salary or wages in compensation. Accordingly, an individual who works part-time or full-time under a contract of employment whether oral or written expressed or implied and he is liable to perform the duties as assigned. That person is called as employee. In the instant case we find that the labourers are working under the direct supervision of the assessee. They have no other separate business organization. They are representing the organization of the assessee. Thus, in our considered view there exists an employer and employee relationship between the assessee and labourers. The payment to the employees can be in the form of fixed salary as mutually agreed.

  We hold that the assessee is not liable for TDS deduction u/s194C of the Act. The assessee gets the relief accordingly.

  Adhoc disallowance towards payment of labour charges - HELD THAT:- AO has disallowed the same in a surmises and conjectures manner by not specifying the discrepancies found in the vouchers produced by the assessee. It is a common business practice followed by the assessees to prepare a self-made vouchers while making the payment to parties for various expenditure and get signatures of it. Because the assessee is following this practice consistently while making the payment. The said payment cannot be doubted without bringing anything on record to suggest that payment has been inflated by the assessee on the reason that these are self-made vouchers - such practice is followed by the assessee consistently. However, there may be certain lapses on the part of assessee in preparing the same or getting signatures from the parties. Thus, to meet the ends of justice, in our opinion, it is appropriate to remit this adhoc disallowance only to 10% of such self-made vouchers instead of 25% made by ld. AO. Directed accordingly. This ground of appeal of the assessee is partly allowed.

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• 2024 (1) TMI 1287 - KARNATAKA HIGH COURT
  

  Dishonour of cheque for want of sufficient funds - Challenging the conviction and sentence for the offence u/s 138 of the N.I Act - Onus to prove financial capacity - HELD THAT:- Complainant has not chosen to produce his account extract to show that immediately prior to the lending of Rs.3.5 lakhs to the accused he was in receipt of Rs.4,80,000/- towards sale consideration of the tempo. He has also not chosen to examine the purchaser Prabhakar. When questioned whether he is ready to examine the said Prabhakar, the complainant has replied that Prabhakar is not ready to come and give evidence.

  Though the complainant has claimed that the amount of Rs.3.5 lakhs paid to the accused was withdrawn from his account, standing in Corporation Bank and there is no difficulty for him to produce the same. However, the complainant has not produced his account extract to evidence the said fact. It would have been sufficient for the complainant to produce the said account extract to establish Rs.3.5 lakhs paid to the accused was withdrawn by him from his account. Thus, the complainant has failed to prove his financial capacity, despite making a vain attempt to prove that a vehicle was sold for Rs.4,80,000/- and out of the said amount, he lent Rs.3.5 lakhs to the complainant.

  In the complaint, the complainant has specifically pleaded that the sale of tempo was made on 18.05.2015 and the loan was advanced during January 2016 and the accused has issued the cheque on 14.07.2016. However, during his cross-examination, the complainant has stated that accused gave him cheque during January 2016. This also creates doubt as to the veracity of complainant’s case. Anyhow, having failed to prove his financial capacity, the complainant has failed to discharge the burden placed on him beyond reasonable doubt.

  The trial Court as well as the Session Court have failed to examine the oral and document evidence placed on record in proper perspective. They have swayed away by the fact that presumption under Sections 118 and 139 of N.I. Act is operating in favour of the complainant. But both Courts have failed to examine whether the complainant has proved his financial capacity or not, and thereby fell into error. Consequently, the impugned order has caused gross miscarriage of justice, manifest illegality and suffers from perversity calling for interference by this Court under exercise of revision jurisdiction.

  In the result, the impugned judgments and orders of trial Court as well as the Sessions Court are liable to be set aside and the accused is entitled for acquittal. Petition filed by the petitioner u/s 397 r/w 401 CrPC is allowed.

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• 2024 (1) TMI 1286 - SC ORDER
  

  Rejection of bail - covert or overt Act of terrorism - proviso to Section 43D(5) of the Unlawful Activities (Prevention) Act, 1967 - HELD THAT:- This Court had the occasion to examine the provisions of Section 43D(5) proviso inserted by Act 35 of 2008, in the case of NATIONAL INVESTIGATION AGENCY VERSUS ZAHOOR AHMAD SHAH WATALI [2019 (4) TMI 2023 - SUPREME COURT]. The ratio indicates that the Court must be satisfied that there are reasonable grounds for believing the accusation against the accused are prima facie, not true.

  Proceeding with the understanding of the law enunciated by this Court in Watali and the discussion of the same ratio in the case of Vernon Vs. The State of Maharashtra & Anr. [2023 (7) TMI 1384 - SUPREME COURT], together with the materials in the shape of the chargesheet made available before this Court and looking into the criminal antecedent of the accused in a case of similar nature, the bail is not merited in the present matter.

  The SLP is dismissed.

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• 2024 (1) TMI 1285 - CALCUTTA HIGH COURT
  

  Validity of assessment order u/s 147 r.w.s. 144B - appellant had not been granted an opportunity to cross-examine person [Mukesh Banka], whose statement was recorded u/s 131 - Mukesh Banka refused to co-operate with the department by not responding to the summons - HELD THAT:- There are two ways by which the department can resolve the issue. Firstly, by issuing fresh summons to Mukesh Banka and fixing a fresh date for cross-examination or the second methodology that can be adopted is to ignore the statements recorded by Mukesh Banka by affording a fresh opportunity to the assessee by way of personal hearing through video conferencing or in person and thereafter, consider the materials placed by the assessee and proceed to take a decision in accordance with law. Therefore, by not providing an opportunity to cross-examine Mukesh Banka, the authority is precluded from relying upon the statement recorded from the said person.

  The appeal is allowed and the application is disposed of. The order passed in the writ petition is set aside and consequently, the assessment order is set aside and the matter stands remanded back to the assessing officer for fresh consideration. The assessing officer is directed to issue fresh summons to Mukesh Banka and ensure his presence and permit the appellant to cross-examine the said person.

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• 2024 (1) TMI 1284 - MADRAS HIGH COURT
  

  Constitutional Validity of Chapter III of the Insolvency and Bankruptcy Code, 2016, more particularly, Section 204 (a) (b) (c) (d) and (e) of the Act - ultra vires the provisions of Article 14, 19 (1) (g) and 21 of the Constitution or not - Whether Regulation 23 A is liable to be struck down as manifestly arbitrary, conferring unbridled, excessive power on IPAs and for violation of principles of natural justice? - Whether Section 204 of IBC is violative of Article 20(2) of the Constitution of India, in as much as it provides for disciplinary proceedings by two agencies, is manifestly arbitrary and prevents access to justice and is illegal for confirming unbridled and excessive powers to the agencies? - Challenge to Regulation 23A - principles of constructive res judicata.

  Whether Regulation 23 A is liable to be struck down asmanifestly arbitrary, conferring unbridled, excessive power on IPAs and for violation of principles of natural justice? - HELD THAT:- There is no discretion vested with the IPAs and the suspension is automatic, once the disciplinary proceedings are initiated. Therefore, it can neither be termed as manifestly arbitrary nor be challenged on the ground of any confirmation of unguided/unbridled power - The power of suspension is not a punishment and is an adinterim measure and if one has to be issued with show cause notice, then the very purpose of ad-interim suspension is lost. In as much as ultimate punishment is imposed only on the conclusion of the disciplinary proceedings it cannot be said that any substantial or vested right of the Resolution Professional is violated.

  Of course, any suspension, if prolonged, without any inquiry being proceeded with, would cause stigma. But the larger public interest and the laudable purpose behind the rule of suspension and the relative hardship had to be balanced. Only to avoid hardships, normally swift and prompt completion of the process of disciplinary proceedings is insisted upon. Therefore, the petitioner or any other aggrieved professional can only insist upon prompt completion of the proceedings and the hardship cannot be a ground for challenging the very regulation itself.

  The constitutional validity of the Regulation 23A of the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 upheld.

  Whether Section 204 of IBC is violative of Article 20(2) of the Constitution of India, in as much as it provides for disciplinary proceedings by two agencies, is manifestly arbitrary and prevents access to justice and is illegal for confirming unbridled and excessive powers to the agencies? - HELD THAT:- It is a result of due consideration of an expert report and cannot be termed arbitrary, much less manifestly arbitrary. When a new legislation such as the IBC carrying out major reforms in the field is brought up, as held by the Hon'ble Supreme Court in Pioneer Urban Land and Infrastructure Limited [2019 (8) TMI 532 - SUPREME COURT], the legislature must be given a free play in the joints and there must be room for experimentation and correction also. Therefore, when with the proper application of mind, provision has been incorporated in the IBC for subjecting the Resolution Professionals to be under monitoring and control of two tier system, the same by itself cannot be termed as arbitrary. Even if there is a likelihood of hardship to an individual Resolution Professional, the provision itself cannot be held to be blocking free access to justice.

  Moreover mere conferment of authority on IBBI and IPAs for supervision control and disciplinary proceedings by itself cannot be held to be conferring of unbridled power. The Regulations and Bye-laws which are framed under Section 204 of the IBC clearly provide checks and balances. The procedure for taking disciplinary action and the appellate remedies are provided. Therefore, it cannot be said to be confirmation of excessive or unbridled power. Section 204 of IBC is only an enabling provision and therefore, we see no constitutional infirmity in any of the provisions under Section 204 (a) (b) (c) (d) and (e) of IBC.

  Challenge to Regulation 23A - principles of constructive res judicata - HELD THAT:- When it comes to the constitutional validity of the self same regulations, the petitioner cannot pick and choose the particular regulation, one after the other on the same grounds or different grounds and repeatedly file Writ Petitions. If aggrieved, the petitioner ought to have challenged the vires of the Regulation 23 A also when he filed the earlier W.P.No.13229 of 2020, challenging the other provisions of the self same regulations and filing of the repeated Writ Petitions would be barred by the principles of constructive res judicata. More specifically, the issue of twin control has been specifically decided by this Court qua the same parties. The entire provisions of IBC were upheld by the Hon’ble Supreme Court of India in Swiss Ribbons (P) Ltd. v. Union of India [2019 (1) TMI 1508 - SUPREME COURT].

  The petition is barred by the principles of res judicata and the same is also without any merits as it is declared the Regulation 23 A to be intra vires and without any merit and another unsuccessful successive challenge to the Constitutional vires of IBC.

  The Writ Petitions are dismissed.

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• 2024 (1) TMI 1283 - DELHI HIGH COURT
  

  Money Laundering - predicate offence - Continuation of prosecution - if in case an accused is acquitted/discharged in a predicate offence, in that eventuality, whether the prosecution initiated by the respondent/ED can be allowed to be continued or is liable to be quashed? - HELD THAT:- The issue was considered by the Supreme Court in case of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] and it was observed that The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum.

  A Coordinate Bench of this Court in case of Nayati Healthcare [2023 (10) TMI 822 - DELHI HIGH COURT] has also considered the issue whether the prosecution initiated by the respondent/ED can be continued in a case where the accused has already been acquitted/discharged for the predicate offence and it was held that the present complaint filed by the ED and the proceedings arising therefrom cannot survive. Considering that the FIR has been quashed by this court and that it has not been challenged till date, there can be no offence of money laundering under section 3 of the PMLA against the petitioners.

  The complaint filed by the respondent/ED and the consequential proceedings cannot survive. Considering that the co-accused Dr. Jeevan Kumar has been acquitted by the trial court vide judgment dated 22.03.2013 and that the said judgment has not been challenged till date, there can be no offence of money laundering under section 3 of PMLA against the petitioner. Accordingly, the ECIR bearing no. ECIR/7/DZ/2008 is quashed along with all consequential proceedings arising therefrom stated to be pending before the concerned court.

  Petition disposed off.

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• 2024 (1) TMI 1282 - ITAT DELHI
  

  Validity of order passed u/s 144C - non-implementation of directions of DRP in the final assessment - Taxability of receipts as FTS/FIS - assessees have received fees towards rendering certain services to RIL for its plants situated in Jamnagar SEZ - HELD THAT:- In the facts of the present appeal, undisputedly, the AO has not implemented the directions of DRP as mandated u/s 144C(10) r.w.s. 144C(13) - Surprisingly, even though, the AO has reproduced the directions of DRP in the body of the assessment orders, however, he failed to implement the specific direction of DRP and has merely done a cut paste job of the draft assessment order by repeating the additions made therein treating the receipts as FTS/FIS. This can be due to a conscious disregard to the directions of DRP or final assessment orders have been passed mechanically without application of mind.

  Non-implementation of directions of DRP in terms of section 144C renders the final assessment order wholly without jurisdiction and void-abinitio. The plethora of decisions cited by learned counsel appearing for the assessee express similar view. Therefore, we do not intend to deal in detail with them. Thus, keeping in view the ratio laid down by Hon’ble Jurisdiction High Court in M/s. ESPN Star Sports Mauritius S.N.C. ET Compagnie [2016 (4) TMI 45 - DELHI HIGH COURT] we hold that the impugned assessment orders are wholly without jurisdiction or in excess of jurisdiction, hence, void-ab-initio. Therefore, assessment orders under challenge in these appeals deserve to be quashed. Accordingly, we do so.

  Before parting, we must observe, this is not a stray instance coming to our notice, wherein, the Assessing Officer has not implemented the directions of DRP. We have come across several cases of such non-implementation of directions of learned DRP by the AO while passing final assessment orders. There is no gainsaying that in the hierarchy of tax administration, the DRP holds higher position than the AO.

  Therefore, for that reason and as per statutory mandate, the AO are bound to follow the directions of DRP. Non-implementation of the directions issued by DRP, either consciously or due to non- application of mind by the Assessing Officers often put the department in an embarrassing situation as the learned counsels appearing for the Revenue find it difficult to defend the action of the AO. Such repeated instances of non-implementation of directions of learned DRP by the AO expose lack of proper orientation and training. We hope and expect that the authorities concerned would look into this aspect and address the issue with the seriousness it deserves.

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• 2024 (1) TMI 1281 - ORISSA HIGH COURT
  

  Interim application - Prayer for modification of prayer imposed, while directing to release of the Appellant on bail - it was directed that Appellant shall not create any untoward situation in public and shall not be involved in any political activities, directly or indirectly - HELD THAT:- It needs to be mentioned here that according to the allegations made against the Appellant he was involved in 57 cases earlier. Upon hearing both parties and considering present situation as it remains a fact that he was not only involved in other cases but also murderous attempt was made upon him, it would be unjustified to modify the condition of the bail permitting the Appellant to take part in political activities which would be in further deterrence of law and order situation in the locality involving the Appellant.

  As such, this Court is not inclined to modify the condition as prayed for and accordingly the interim applications are rejected.

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• 2024 (1) TMI 1280 - CESTAT AHMEDABAD - LB
  

  Ascertainment” by resorting to best judgment - clearances made prior to issue of notification 13/2008-CE(NT) dated 1-3-2008 - absence of rules for ascertainment of Retail Sales Price (RSP) having been notified by the Central Government as required under sub-section (4) of section 4A of the Central Excise Act, 1944 or not - evasion of duty - mis-declaration of RSP - RSP of tiles cleared by the appellant during the period 01.08.2004 to 29.02.2008 is to be ascertained by applying the weighted RSP of such tiles cleared during the period 01.04.2008 to 31.03.2009 or not - divergent opinions expressed by two Division Benches of the Tribunal.

  Whether it is permissible to ascertain RSP under section 4A in respect of clearances made between 14.05.2003 and 01.03.2008 i.e. between the substitution of sub-section (4) of section 4A and the coming into force of the 2008 Rules? - HELD THAT:- Section 4A was first introduced in 1997. At that time it only provided that the Central Government may, by notification in the official gazette, specify any goods, in relation to which it is required, under the provisions of the 1976 Act, to declare on the package thereof the RSP of such goods, to which the provisions of sub-section (2) shall apply. Section 4A, as it then stood, did not provide for the effect of non-declaration of RSP on the package or wrongful declaration of the RSP or alteration or obliteration of the RSP on the package. The legislature did add sub-section (4) to section 4A in 1999, but this was restricted to confiscation of goods where RSP was not declared on the package or RSP did not constitute the sole consideration for such sale or it was tampered with or altered after removal. The amendment, therefore, did not provide for raising of any demand or ascertainment of the actual RSP in such cases - use of the word “shall” for ascertaining the RSP in the prescribed manner in sub-section (4) of section 4 leaves no manner of doubt that this can only be done in the manner prescribed. The word “shall” also conclusively establishes that it cannot be done in any other manner. Secondly, it also provides that “such price shall be deemed to be the retail sale price for the purpose of this section”. The sub-section hence, contemplates a “deemed retail sale price”, which when ascertained in the manner prescribed, shall constitute the RSP “for the purposes of this section”. When the intent is to create a “deemed value”, then the same can only be done in the manner provided by law i.e. “in the prescribed manner”.

  It, therefore, follows that it would be impermissible for any adjudicating authority to ascertain the RSP by any other methodology, for such an ascertainment would not only be contrary to the statutory prescription contained in sub-section (4) of section 4A, but would also amount to substituting the words “in the prescribed manner” and would have the effect of empowering an adjudicating authority to determine for itself the manner of ascertaining the RSP.

  The judgment of the Supreme Court in MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS. VERSUS PROPERTY OWNERS’ ASSOCIATION & ORS. [2022 (11) TMI 1477 - SUPREME COURT] needs to be referred to in support of the aforesaid view. The Mumbai Municipal Corporation Act 1888 was amended in 2009. The amended section 140A permitted the Corporation to levy property tax on the basis of “capital value” of the building. Section 154 (1-A) specifically provided that the “capital value” of the building shall be fixed by the Commissioner in the manner provided therein. However, clause (e) of section 154 (1-A) provided that such other factors as may be specified under sub-section (1-B) should also be considered. Sub-section (1-B) of section 154 (1-A) enabled the Commissioner, with the approval of Standing Committee, to frame rules. The rules were framed late, as in the present case, and a similar argument was raised that since the section enables assessment of property tax on the basis of capital value, it did not matter whether the rules existed or not, more particularly in view of the provisions of section 154(1-A). The Supreme Court rejected this submission and held that as the rules came into force on 20.03.2012, the levy and computation of property tax on capital value will be available on 20.03.2012 and not with any retrospective operation.

  The decision of the Constitution Bench of the Supreme Court in Mohammad Hussain Gulam Mohammad [1961 (5) TMI 59 - SUPREME COURT], therefore, needs to be considered. Section 11 of the Bombay Agriculture Produce Markets Act 1939 gives power to the Market Committee, subject to the provisions of the rules and subject to such maxima as may be prescribed, to levy fees on the agriculture produce bought and sold by licensee in the market area. The Supreme Court, after noticing that the State Government had not fixed any maxima, held that it would not be permissible for the Market Committee to fix any fees under section 11.

  In the present case, sub-section (4) of section 4A of the Central Excise Act, as substituted on 14.05.2003, specifically provides that the RSP shall be ascertained in the prescribed manner, which means that rules have to be framed under section 37 of the Central Excise Act. The RSP, therefore, can be determined only in the prescribed manner i.e. in accordance with the procedure prescribed in the rules and by no other manner. As noticed above, the rules were ultimately framed on 01.03.2008. Thus, w.e.f. 01.03.2008 RSP could be ascertained in accordance with the 2008 Rules. The issue that has been referred to the Larger Bench is whether the 2008 Rules could made applicable prior to the coming into force of the 2008 Rules on 01.03.2008.

  The contention of the learned special counsel for the department is that rules are merely procedural in nature and, therefore, can be applied retrospectively with effect from the date sub-section (4) of section 4A was substituted on 14.05.2003. This aspect, therefore, needs to be examined.

  Whether the 2008 Rules are procedural in nature or not assumes importance for the reason that it is only if they are procedural in nature that it can it be contended by the department that the 2008 Rules would apply retrospectively to all proceedings even before the 2008 Rules came into force w.e.f. 01.03.2008? - HELD THAT:- The 2008 Rules are not procedural in nature. In this view of the matter it is not necessary to examine the contention of the learned special counsel appearing for the department that statutes dealing with merely matters of procedure are presumed to be retrospective, unless such a construction is textually inadmissible, as noted by Justice G.P. Singh in “Principles of Statutory Interpretation”. Thus, the 2008 Rules are not procedural in nature and cannot, therefore, be given any retrospective effect.

  Whether the 2008 Rules would apply retrospectively can also be examined from another aspect, namely as to whether sub-section (4) of section 4A, which was substituted on 14.05.2003, enables the Central Government to prescribe the 2008 Rules retrospectively? - HELD THAT:- This issue was examined by the Supreme Court in G.S. Chatha Rice Mills [2020 (9) TMI 903 - SUPREME COURT]. Section 8-A of the Customs Tariff Act enables the Central Government to increase the rate of duty on an article in the First Schedule in emergent situations. The Supreme Court noticed that the entrustment of this power is not accompanied by a power to exercise it with retrospective effect and so any enhancement of the rate of duty pursuant to the exercise of power under section 8-A can only be prospective.

  Thus, in the absence of any power conferred by sub-section (4) of section 4A to frame rules with retrospective effect, the 2008 Rules cannot be given retrospective effect, more particularly when the rules also do not provide that they will apply retrospectively.

  Contrary Views - HELD THAT:- In M/S ACME CERAMICS AND OTHERS VERSUS CCE RAJKOT [2014 (3) TMI 164 - CESTAT AHMEDABAD], the Division Bench held that for the period prior to 01.03.2008, the entire exercise undertaken by the Revenue in determining the RSP, even if RSP is not in accordance with the law, is faulty as the prescribed manner of determination of RSP was brought into statute only from 01.03.2008. The Division Bench further observed that since the Central Government had not framed the rules for determining the RSP in a case where the RSP declared on the package was sought to be rejected, the authorities had no power to determine the RSP - However, in Schneider Electrical the two learned members of the Division Bench hearing the appeal expressed contrary views as a result of which the issue was referred to a learned third member. The learned member (judicial) constituting the Division Bench held that the demands for the period prior to 01.03.2008 would not be sustainable as there was no provision to determine the RSP. The learned member (technical), however, observed that during the period from 14.05.2003 to 01.03.2008 there was no bar in adopting a reasonable/best judgment method to make section 4A operational and that the 2008 Rules merely provided guidelines to the assessing officers.

  In the present case, the words used in sub-section (4) of section 4A are “as may be prescribed” and not “subject” to the rules. The decision of the Supreme Court in Sharvan Kumar [1994 (9) TMI 2 - SUPREME COURT] would not be applicable and what would be relevant in the present case in the decision of the Supreme Court in Consumer Online Foundation [2011 (4) TMI 1275 - SUPREME COURT].

  It is also not possible to accept the contention advanced by the learned special counsel for the department that sub-section (4) of section 4A would become redundant or otiose if what is contended by the department is not accepted. Even for the period prior to 01.03.2008, sub-section (4) of section 4A would not become redundant in connection with an assessee who either failed to declare the RSP or mis-declared the RSP. The department could absolutely confiscate the offending goods - It is, therefore, not possible to accept the contention of the learned special counsel nor is it possible to accept the view taken by the learned third member in Schneider Electrical that absurd consequences would flow if the 2008 Rules are not applied retrospectively or that the executive would be left powerless.

  The distinction sought to be drawn by the learned special counsel between the two expressions, namely, “ascertainment” and “determination”, while advancing the contention that mere “ascertainment” does not confer any vested right upon a manufacturer who violates sub-section (4) of section 4A, is purely artificial and cannot be accepted. The two expressions, namely, “ascertainment” and “determination” have been used interchangeably in and, therefore, there is no real distinction contemplated while using these two expressions in section 4A. While sub-section (4) states “ascertainment”, the title of the 2008 Rules itself states “determination”. Similarly, while rule 4 uses the term “ascertainment”, rule 3 uses the term “determination”.

  The reference made by the Division Bench to the Larger Bench of the Tribunal is, accordingly, answered in the following manner :

  (i) It is not permissible to ascertain the retail sale price of goods removed from the place of manufacture, without declaring the retail sale price of such goods on the packages or declaring a retail sale price which is not the retail sale price or tampering with, obliterating or altering the retail sale price declared on the package of such goods after their removal from the place of manufacture, in respect of clearances made prior to 01.03.2008, on which date the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 came into force;

  (ii) In view of the answer to the first question, there is no necessity of answering the second question; and

  (iii) It is not necessary to answer the third question as both learned counsel for the appellant and the learned special counsel appearing for the department have stated that this question may not be answered by the Larger Bench.

  The papers may now be placed before the Division Bench of the Tribunal for deciding the appeal.

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• 2024 (1) TMI 1279 - ITAT CHENNAI
  

  Disallowance of proportionate Interest Expenditure - Allowable business expenditure or not? - HELD THAT:- In the above order, detailed findings have been rendered by us with respect to each of the parties under consideration. We have concurred with the plea of business nexus as well as sufficiency of own funds. The facts are quite similar in this year. Therefore, taking the same stand, the impugned disallowance stands deleted. The grounds raised in the appeal stand allowed accordingly.

  Disallowance of bad-debts written-off - HELD THAT:- After careful consideration of material facts, it could be noted that assessee was handling imported fertilizers in earlier years and Government of India was reimbursing the handling charges to the assessee. Out of such claims made by the assessee, the amount of Rs. 3579.61 Lacs was not sanctioned even after persistent efforts made by the assessee. As per the submissions, this income was booked during the period from September, 1992 to 1993 and the same has been written-off after a considerable period of time in this year. Since considerable time has elapsed and the claim has not been received by the assessee till date, the write-off of the same has to be allowed as bad debts.

  Disallowance of Agri India claim - write-off of interest on fertilizer subsidy - HELD THAT:- It could be noted that assessee was handling imported fertilizers in earlier years and Government of India was reimbursing the handling charges to the assessee. Out of such claims made by the assessee, the amount of Rs. 3579.61 Lacs was not sanctioned even after persistent efforts made by the assessee. As per the submissions, this income was booked during the period from September, 1992 to 1993 and the same has been written-off after a considerable period of time in this year. Since considerable time has elapsed and the claim has not been received by the assessee till date, the write-off of the same has to be allowed as bad debts. The directions given by Ld. CIT(A) with respect to interest on fertilizer subsidy is quite apt and no further directions are required in the matter.

  Regarding equity advance, the undisputed fact that emerges is that the same has been offered to tax in earlier years. AO denied the deduction of the same on the ground that it was capital in nature whereas Ld. CIT(A) confirmed the same on the ground that this was not written-off in this year. However, this being reversal of interest offered to tax in earlier years, the same could not be held to be capital in nature. The observation of Ld. CIT(A) that this amount was not written-off in this year is also not correct - We find that this amount has been written-off in this year only. This being so, the impugned claimed made by the assessee would be an allowable deduction.

  For remaining debt pertain to pharma and Agri business divisions - The amounts due from various parties towards sale of goods during the course of income could not be recovered and the same has been written-off in the books of accounts. The Hon’ble Supreme Court in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] held that to make aforesaid claim, it was sufficient that the amount was written-off in the books of accounts. Since the assessee has written-off these amounts, applying the ratio of this decision, this claim would be allowable to the assessee. The corresponding grounds raised by the assessee stand allowed accordingly.

  Disallowance of 50% expenditure towards R&D facility u/s 35(2AB) - assessee filed letter for renewal of recognition of in-house R&D facility as granted by DSIR recognizing the R&D facility up-to 31.03.2009, but the assessee did not furnish any evidence to show that it had entered into an agreement with DSIR for cooperation in R&D facility - HELD THAT:- We find that this issue stood covered in assessee’s favor by the decision of this Tribunal in M/s Caplin Point Laboratories Ltd. [2022 (8) TMI 450 - ITAT CHENNAI] wherein as held de hors any specific dates specified in the certificate of the prescribed authority, namely DSIR, once the prescribed authority approved the existence of research and development facility and the expenditure incurred on such scientific research, the assessee would be entitled for the expenditure incurred for the whole of the assessment year and cannot be granted in a truncated manner.

  Disallowance of Electricity Tax u/s 43B as well as u/s 115JB - assessee debited contingent liability towards power generation and electricity tax - HELD THAT:- We find that this issue has been decided by us against the assessee in assessee’s appeal [2024 (1) TMI 1278 - ITAT CHENNAI] wherein as held this liability has not yet crystallized and the same is merely in the nature of contingent and an unascertained liability only which may or may not arise. Undoubtedly, the same is covered under the provisions of Sec.43B. Therefore, the same has to be disallowed in normal computations as well as while computing Book Profits u/s 115JB also.

  Assessment of interest income - assessee underwent Corporate Debt Restructuring (CDR) and got relief of Rs. 507.16 Lacs as reported by statutory auditor - assessee submitted that they have accounted interest expenditure at the reduced rates instead of normal rates. Therefore, the question of adding the same would not arise - HELD THAT:- From the facts, it emerges that the assessee has accounted interest expenditure at reduced rates only and the separate reporting made by Auditor is part of statutory disclosure only. The Ld. CIT(A) has well appreciated the plea of the assessee and observed that the assessee did not provide the requisite documents and computations to support its stand. AO has been directed to verify the claim of the assessee. Therefore, no further directions are required in the matter. The directions given in the impugned order are quite apt. The corresponding grounds stand dismissed.

  Disallowance of business expenditure in connection with hire charges - AO rejected the same on the ground that the same was merely a deposit and therefore, could not be allowed as business expenditure, thus the same was added back while computing income under normal provisions as well as while computing book profits u/s 115JB - HELD THAT:- We concur with the adjudication of Ld. CIT(A) that the impugned amount was in the nature of deposit only. The said liability has neither crystalized not quantified in this year. The same is dependent on a future event and the same may not even accrue against the assessee. The same is merely in the nature of contingent and an unascertained liability only which may or may not arise. Undoubtedly, the same is covered under the provisions of Sec.43B. Therefore, the same has to be disallowed in normal computations as well as while computing Book Profits u/s 115JB. Therefore, we confirm the stand of lower authorities and dismiss the grounds raised by the assessee. The assessee is free to claim the deduction thereof in case the liability crystalizes in subsequent years.

  Disallowance of overdue interest payable to subsidiary company - HELD THAT:- Assessee has purchased Phosphoric Acid from this entity during financial years 1999-2000 to 2001-02. The copies of invoices and bill of lading has also been placed on record. The same run contrary to the observations made by Ld. CIT(A) that there was no business transactions. Therefore, this issue is restored back to Ld. AO for verification and re-adjudication with a direction to the assessee to substantiate its claim. The ground, to that extent, stands allowed for statistical purposes.

  Disallowance of business loss on equity investment - CIT(A) confirmed the disallowance on the ground that business nexus was not established - AO held that it was a long-term capital loss which was upheld - HELD THAT:- Before us, the assessee has not established any business nexus with the impugned investment. Therefore, the investments so written-off could not be allowed as business loss. The Ld. CIT(A) has erred in noting that the said loss has been allowed as long-term capital loss by Ld. AO. In fact, no such computation has been made by Ld. AO in the assessment order. Therefore, the aforesaid claim would be assessable as capital loss and be allowed to be carried forward. The Ld. AO is directed to compute the same in accordance with law. The alternative claim made by the assessee stand allowed.

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• 2024 (1) TMI 1278 - ITAT CHENNAI
  

  Disallowance u/s 43B of interest converted into loans by financial institutions - actual payment of interest or not? - HELD THAT:- The amendment brought in by Finance Act 2006 was squarely applicable to the facts of the case. The newly inserted explanations (3C) and (3D) provide that mere conversion of interest into loan would not be deemed to be actual payment of interest. Therefore, the same has rightly been disallowed and confirmed by lower authorities considering the provisions of Sec.43B. The assessee is free to make the claim of the same whenever it is eligible to claim the deduction in accordance with law. The corresponding grounds stand disposed-off accordingly.

  Addition of Contract receipts not recognized - AO held that the companies / projects figuring in the list, from whom contracts receipts were received by the assessee, did not tally with the break-up of contractee as per TDS certificates - HELD THAT:- The assessee is executing composite contracts of varied nature which would involve supply of material as well as services. The assessee is following definite accounting policy to recognize the revenue in the books of accounts. No defect in the books has been pointed out by lower authorities. The revenue shown by the assessee is way above than the revenue shown in the TDS certificates. The assessee is a corporate entity and would receive contract payments through banking channels only. The assessee has already provided copies of bills, TDS certificates and relevant ledgers from books of accounts. No discrepancy is noted in the same. Therefore, the impugned addition is merely on suspicion and nothing more. By deleting the addition, we allow the corresponding grounds raised by the assessee.

  Disallowance of Electricity Tax under normal provisions and u/s 115JB - HELD THAT:- The constitutional validity of the state levy is sub-judice before Hon’ble High Court of Madras [2001 (9) TMI 45 - MADRAS HIGH COURT] The Hon’ble Court has stayed the recovery of demand subject to deposit of Rs. 200 Lacs by the assessee. The same has been deposited by the assessee. The assessee has also computed additional liability of Rs. 98.67 Lacs as per applicable computations. Both these items have been debited in the Profit & Loss Account. However, it remains a fact that this liability has not yet crystallized and the same is merely in the nature of contingent and an unascertained liability only which may or may not arise. Undoubtedly, the same is covered under the provisions of Sec.43B. Therefore, the same has to be disallowed in normal computations u/s 43B as well as while computing Book Profits u/s 115JB. Therefore, we confirm the stand of lower authorities and dismiss the grounds raised by the assessee in both the appeals.

  Interest disallowance - assessee claimed interest expenditure against loan liabilities - as noted by Ld. AO that the assessee advanced various sums to group entities against which no interest was received during the year - HELD THAT:- From the facts, it emerges that impugned advances have been given by the assessee in the ordinary course of business to all these entities. The investments have been made in joint venture entities though the projects may not have fructified for the assessee.

  SFCL, FZE is 100% subsidiary of SFCL Mauritius in which the assessee owns stake of 83.54%. The investment made by the assessee was for expansion of assessee’s business. This business of this entity is stated to be having direct nexus with the assessee’s main business of manufacturing of Urea and fertilizers etc. The assessee has undertaken to buy back the entire production of Urea from this entity. The ministry of chemicals and fertilizers, vide its letter dated 03.12.1998, informed the assessee that import of urea by assessee from this entity will be given preference. The aforesaid facts substantiate the arguments that investments made by the assessee had direct business nexus and therefore, the test of commercial expediency, in our opinion, was duly satisfied by the assessee. It could be said that the investments were made in furtherance of business interest and the ratio of decision of Hon’ble Supreme Court in the case of CIT V/s S.A. Builders [2006 (12) TMI 82 - SUPREME COURT] would favor the case of the assessee, wherein as held that once nexus was established between the expenditure and the purpose of the business, which need not necessarily be the business of the assessee itself, revenue could not disallow the claim assuming what was reasonable. To allow the expenditure, it would not be necessary that the project should fructify. Considering all these facts, we would hold that impugned disallowance against this entity could not be sustained.

  Investments made in IJCL were made as a joint venture investment. This entity was to manufacture phosphoric acid and the entire production was to be sold to the assessee. The assessee made 60% contribution in this entity. The venture was to ensure supply of critical raw material for the assessee. Simply because the project could not fructify would not disentitle the claim of the assessee that it had business connection with this entity. The investment made by the assessee has RBI approval. This being so, disallowance of interest either u/s 37(1) or u/s 36(1)(iii) could not be said to be justified.

  The advances given to SPEL have been given by the assessee as a promoter entity to meet its debt obligations and capital expenditure. The advances were given by the assessee to this entity only up-to financial year 2000-01. During impugned year, the advances made by the assessee have been converted into equity shares. In earlier years, when the advances were given, the assessee is having sufficient own interest free funds to make these investments - the assessee’s ground would succeed to that extent both on commercial expediency as well as on the ground of having sufficient own funds.

  M/s NAPCL is a joint venture entity of the assessee to produce Benzene, orthoxylene, paraxylene and PTA. However, the project has failed to commence production which has led to impugned disallowance. Nevertheless, there is direct business nexus of making the investment. The reason for delay in execution of the project is the fact that there was delay in getting regulatory approvals which is beyond the control of the assessee. The assessee has entered into MOU with Chennai Petroleum Corporation Limited to establish a large petrochemical plant near Chennai. The plant was to produce raw material for the assessee. The same has resulted into formation of this entity. As per the terms of MOU, the expenses of the joint venture are to be shared equally by the joint venture entities. Considering the same, the assessee has advances sum to this entity towards it share of the expenditure of the project. The investment would ultimately convert into equity shares. All these facts would establish the claim of the assessee that the investment had direct business nexus and therefore, no disallowance could have been made for this investment.

  Regarding investment in SPC, it could be noted that the assessee has, in fact, charged interest from this entity. The outstanding loan amount including interest has been converted into equity and bonds which is evident from assessee’s financial statements. Therefore, there is no question of disallowing interest against this investment.

  The interest disallowance on inter-corporate deposits has been deleted by us in assessee’s own case [2024 (1) TMI 495 - ITAT CHENNAI] for AY 2003-04 on the ground that in the year when these deposits were placed, the assessee had sufficient own funds to make the investments. Taking consistent view, no disallowance is called for against these ICDs.

  Assessment of interest income offered in earlier years - HELD THAT:- The submissions of Ld. AR are that during AY 2003-04, the assessee provided for interest receivable for Rs. 20036.32 Lacs and Rs. 10573.31 Lacs from SPIC petro in the earlier years but did not claim the deduction of the same in the return of income. The same was settled in AY 2004-05. Hence, the provisions made in the earlier (but not allowed in those years) was reversed and credited to Profit & Loss Account. The same is, therefore, reduced from the income since it is only a reversal provisions disallowed in earlier years. We are of the considered opinion that the income, if already taxed, could not be taxed twice. The Ld. AO is directed to verify the aforesaid facts as stated by Ld. AR and re-adjudicate this issue keeping in mind the fact that there would be no double taxation of the same income notwithstanding the accounting methodology being followed by the assessee. The corresponding grounds stand allowed for statistical purposes.

  MAT computation - Adjustment of provision of bad and doubtful debts u/s 115JB - AO to disallow the provision for bad and doubtful debts while computing the Book Profits u/s 115JB on the ground that the same was unascertained liability - HELD THAT:- The provision made by the assessee towards bad and doubtful debt was towards unascertained liability only. The same is also evident from the fact that provision made against SSIL was reversed in subsequent years and full amount due against that entity was claimed as deduction. The amendment brought in by Finance Act, 2009 with retrospective effect was clearly applicable to the facts of the case. The remaining provisions were against marketing debts which were mostly due from government departments. As rightly held, the dues from government departments could not be considered to be doubtful. The aforesaid provision could also not be considered as any diminution in value of assets since these are mere provisions which may or may not crystallize for the assessee in future and therefore, these are nothing but mere provisions for unascertained liabilities. The Bad Debts claimed by the assessee is clearly a double claim. Therefore, on both the issues, the impugned order does not require any interference on our part. This appeal stands dismissed.

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• 2024 (1) TMI 1277 - SC ORDER
  

  Review Petition - Leviability of interest and penalty in relation to amounts payable as duty other than basic customs duty - mis-declaration of goods - intent to evade customs duty or not - it was held by High Court that In the present case, it is not disputed that petitioner has paid a sum of Rs.11.84 Crores much prior to the issuance of show cause notice. There is no determination of duty under Section 28(2) of the Customs Act, 1962 and, therefore, Section 28AB of the Customs Act, 1962 is also not applicable -

  HELD THAT:- We are satisfied that there is no error apparent on the face of the record or any merit in the Review Petition warranting reconsideration of the order impugned.

  The Review Petition is, accordingly, dismissed.

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• 2024 (1) TMI 1276 - ITAT MUMBAI
  

  Addition u/s 69A - unaccounted cash loan and interest thereon - addition based on statement recorded of entry provider but was later retracted - in the course of search, a diary has been seized wherein few entries have been recorded and the Assessee’s name is also appearing in the same diary in coded word -

  HELD THAT:- It is an admitted fact that the AO has not entertained the Assessee’s request for cross examination of Entry provider [Shri Nilesh Bharani / M/s Evergreen Enterprises] and also it is a fact that Shri Nilesh Bharani subsequently retracted his statement. Therefore, his statement made earlier become doubtful as claimed by the Assessee and cannot be relied as substantive evidence.

  Even otherwise, we have failed to understand that how the name as mentioned in the said diary, as “NENSIBHI ELLA” can be attributed to the Assessee’s name. Further, how the coded amount of Rs. 32,500 can be construed as Rs. 3,25,000,00/-. How the Assessee is connected with the said narration of entries written in diary. As per Assessee’s claim, the mobile number noted in said diary is even otherwise do not belong to the Assessee and the AO also failed to verify the owner of the said number to connect with the Assessee.

  Thus retracted statement of Shri Nilesh Bharani/ M/s Evergreen Enterprises who otherwise neither named nor specified the role and also not connected the Assessee specifically and the aforesaid facts/entries made in the diary as noted above by us, in fact, is not at all substantive material to make and sustain the addition as done by the authorities below in this case and, therefore, we are inclined to delete the addition. Consequently, the addition under consideration stands deleted. Decided in favour of assessee.

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• 2024 (1) TMI 1275 - ITAT RAIPUR
  

  Delayed deposit of employees share of contribution towards ESI/PF - Intimation u/s.143(1) - whether prior to the judgment of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] aforesaid claim for deduction could not have been summarily disallowed u/s. 143(1)? - HELD THAT:- As prior to the judgment of Checkmate Services Pvt. Ltd. Vs. CIT-1 (supra), the aforesaid claim for deduction could not have been summarily disallowed u/s. 143(1) of the Act.

  As decided in GURMEET SINGH HORA [2023 (8) TMI 1383 - ITAT RAIPUR] as held no such disallowance of the delayed deposit of the employee’s share of contribution towards labour welfare fund could have been made in the hands pf the assessee company while processing of its return of income u/s. 143(1)(a)

  As the facts and issue involved in the present appeal on the first principle, i.e., as to whether or not prior to the judgment of the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] CPC, Bengaluru was well within its right in disallowing the assessee’s claim for deduction of delayed deposit of employees share of contributions towards ESI/PF vide an intimation issued u/s. 143(1) of the Act, remains the same, therefore, we follow the same.

  We, thus, in terms of our aforesaid observations, set-aside the order passed by the CIT(Appeals) wherein he had upheld the order passed by the CPC/A.O u/s. 154 of the Act, and thus, declined the assessee’s claim for deduction of delayed deposit of employees share of contribution towards ESI/PF and vacate the addition made by the A.O. Appeal of the assessee company is allowed.

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• 2024 (1) TMI 1274 - DELHI HIGH COURT
  

  TP Adjustment - MAM - selection of comparables - HELD THAT:- We find that the appeal raises the following substantial questions of law:-

  a) Whether the Income Tax Appellate Tribunal [‘ITAT’] has erred in holding that the CIT(A) erred in making 5% adjustment?

  b) Whether the ITAT has erred in holding that the CIT(A) was precluded from applying internal CUP as the most appropriate method applicable to 8K Cards and could have only applied the Re-Sale Price Method?

  c) Whether the ITAT has erred in upholding the method of benchmarking of each product segment of the Appellant against the comparable companies at entity level?

  d) Whether the ITAT has erred in entirely ignoring the alternative submissions made vide letter dt. 18.9.2021 under Rule 27 of the ITAT Rules, 1962 regarding the incorrect selection of comparables?

  The respondents are accorded liberty to file their Written Submissions on the record within a period of three weeks from today. Those submissions shall refer to the pdf page numbers of the digital record of the Court wherever so required.

  Let the appeal be called again on 01.05.2024.

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• 2024 (1) TMI 1273 - ITAT COCHIN
  

  Deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) - assessee’s, a society registered as a primary agricultural credit society (PACS) (under the Kerala Co-operative Societies Act, 1969 – Kerala Act) - claim denied in view of section 80P(4), i.e., as it stands after its amendment by Finance Act, 2006, w.e.f. 01.04.2007 - HELD THAT:- The assessee, in view of it’s lending profile, does not, sure, qualify to be PACS in terms of section 80P of the Act. So, however, nothing turns thereon as, even as explained in Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] reliance on which by the assessee was repelled by the Revenue authorities, the nature of credit, i.e., agricultural or non-agricultural, is not a condition of section 80P(2)(a)(i) of the Act. As long as, therefore, income flows from the provision of credit to it’s members, the same would be liable for deduction u/s. 80P(1) of the Act. The question that nevertheless would be relevant in this context is if the assessee is indeed a cooperative society u/s. 2(19) of the Act, an aspect we advert to later.

  Assessee is in the business of banking - Any member of the public can, as explained therein, become a ‘member’ on paying a nominal sum, which in fact is insisted upon as a practice, making co-operative societies, as the assessee, essentially public institutions. The legal basis for the same is found in sections 58 to 60 of the Kerala Act. Further, by providing membership to all on payment of a nominal fee, without extending them the rights and privileges of a member, there is thus, clearly, acceptance of deposits from and, equally, lending to, the members of the public, i.e., for all practical purposes, even as explained in The Karannur Service Co-op. Bank Ltd. [2023 (12) TMI 1254 - ITAT COCHIN] - So, however, again, nothing turns thereon inasmuch as the same is not an inhibiting factor; the income there-from being equally eligible, i.e., as on provision of credit to it’s members, for deduction u/s. 80P(1) inasmuch as s. 80P(2)(a)(i) treats the two activities at par, being, rather, more beneficial to the assessee as it extends deduction to income from non-members also.

  If the assessee, ostensibly a co-operative society u/s. 2(19) of the Act inasmuch as it is a society registered under the Kerala Act, is a ‘co-operative bank’, a term which again stands defined u/s. 80-P with reference to BRA - We refer only to the definition of a ‘primary cooperative bank’, and not of ‘state cooperative bank’ and ‘central co-operative bank’ inasmuch as the same, defined u/s. 5(ccvii) with reference to NABARD Act, are defined in the latter as principal societies for financing other co-operative societies in the respective state and district respectively, qua which there is no claim, so that the assessee could be a cooperative bank only by virtue of being a primary cooperative bank, i.e., by definition.

  The assessee’s bye-laws, which are, therefore, relevant for ascertaining it’s status as a primary cooperative bank, are not on record. The same – in their relevant part, have neither been reproduced by the AO – claiming the assessee to be a primary co-operative bank and, thus, a co-operative bank in his order, nor by the ld. CIT(A) per the impugned order confirming his order, nor indeed placed on record by the assessee, disputing their findings. The matter, therefore, would require travelling back to the file of the AO for the purpose.If the assessee is a primary co-operative bank, it is a co-operative bank by definition, excluded u/s. 80P(4) w.e.f. AY 2007-08.

  The matter, accordingly, for proper determination of the issue arising, in terms of this order, is restored to the file of the AO, who shall decide the issue/s arising in accordance with law per a speaking order upon hearing the assessee, duly considering each of it’s arguments/contentions. Assessee’s appeal is allowed for statistical purposes.

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