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Showing 101 to 120 of 2121 Records
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2019 (2) TMI 2030
Writ of habeas corpus - seeking quashing of detention order of detenue - it is contended that there is nothing on record to show that the detention order had some nexus with the objective sought to be achieved - the purpose of detention order in the present case is preventive or punitive in nature? - HELD THAT:- Learned counsel of Revenue have been heard, who however have not been able to show anything to the contrary to what has been stated by petitioner counsel. They have not been able to show anything contrary with regard to the law as cited, as has been placed before this Court by the counsel of petitioner.
In view of the aforesaid facts and circumstances, case for grant of indulgence is made out.
The petitioner who is detained in custody in pursuance of the detention order dated 08.07.2018 and subsequent orders by means of which the petitioner has been detained is hereby released from custody. He shall be released from custody forthwith until and unless wanted in some other case. The Detention Order dated 08.07.2018 and all subsequent orders are hereby quashed.
The habeas corpus writ petition is allowed.
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2019 (2) TMI 2029
Addition u/s 68 - assessee had filed fresh documentary evidence under Rule 46A of the Income Tax Rules, 1962 in lower appellate proceedings - CIT-A declined to admit assessee’s relevant additional evidence and affirmed the impugned addition - HELD THAT:- We see no reason to express my agreement with such a course of action. This tribunal’s decision in Shahrukh Khan’s case [2006 (7) TMI 532 - ITAT MUMBAI] holds that in case. The CIT(A) cannot refuse admission additional evidence after calling for Assessing Officer’s remand report, we therefore restore the instant lis back to the CIT(A) for afresh adjudication on merits as per law after admitting assessee’s additional evidence filed under Rule 46A of the Income Tax Rules. It is made clear that assessee shall be afforded three effective opportunities of hearing in consequential proceedings. Assessee’s appeal is allowed for statistical purposes
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2019 (2) TMI 2028
Validity of G.O.Ms.No.57 Social Welfare and Nutritious Meal Programme (SW 4-3) Department, dated 20.08.2018 - supply of eggs to all the noon meal centres - replacing the State level annual tender system to zone-wise tender system for six months - while some of the petitioners challenge the validity of G.O.Ms.No.57, a few of the petitioners also question the rejection of their technical bid to the tender notice dated 20.08.2018 floated pursuant to the said G.O. - main ground of attack made by the petitioners is that the impugned decision made in G.O.Ms.No.57 excluding the egg suppliers from participation in the tender called for the procurement of eggs to the beneficiaries in Tamil Nadu under Nutritious Meal Programme and Integrated Child Development Services Scheme, is violative of Articles 19(1)(g), 301, 303 and 304 of the Constitution.
HELD THAT:- The policy decision of the Government can always be subjected to judicial review on the grounds of unreasonableness, discrimination, arbitrariness, perversity and mala fides. The impugned G.O.Ms.No.57 modifying the State-wise tender to that of a zone-wise tender does not contain any valid and acceptable reason necessitating/warranting modification of the earlier policy decision of G.O.Ms.No.264, by which, directions were given to float State-wise tenders. The impugned G.O.Ms.No.57 does not also contain any reason to come to the conclusion that zone-wise tenders will be more beneficial to the Government than State-wise tenders, as compared to G.O.Ms.No.264 especially when G.O.Ms.No.264 was confirmed by the Division Bench of this Court, vide judgment dated 25.04.2014 in W.A.Nos.574 and 776 of 2013 accepting the stand and reasoning put forth by the Government and the same was also affirmed by the Supreme Court vide order dated 13.04.2015 in SLP No.6375 of 2015. Further, the impugned G.O.Ms.No.57 has been issued within a short span of time i.e., within six working days and there is no nexus corresponding to the object sought to be achieved and the decision to introduce Zonal level tender and the exclusion of egg suppliers from participation cannot be termed to be fair, just and legally valid. That apart, the qualifying conditions for deciding the eligible tenderers and other stipulations mentioned in the consequential tender notification dated 20.08.2018 issued pursuant to G.O.Ms.No.57, are neither supportive of the alleged reasoning i.e., benefiting poultry farmers, nor have any nexus to the object of the Nutritious Meal Scheme i.e., ensuring uninterrupted supply of quality eggs at a competitive same price for the whole year to the children. The terms and conditions framed in the tender notification dated 20.08.2018 are violative and contrary to the relevant Act and Rules.
Issuance of G.O.Ms.No.57, ie., zone-wise tender and the terms of the subsequent Notification excluding the egg traders and suppliers like that of the petitioners, are colourable exercise of power and are unreasonable, arbitrary, irrational and discriminatory and also violative of Article 19(1)(g) of the Constitution. It is nonetheless important to mention here that the public interest is paramount; there should not be any arbitrariness in the tender matters; all the participants in the tender process should be treated alike and there should not be any discrimination and unreasonableness.
The impugned G.O.Ms.No.57 and the consequential tender notice are quashed - Petition allowed.
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2019 (2) TMI 2027
Seeking a direction for appointment of a Sole Arbitrator in respect of disputes which have arisen between the respondent and itself - notified claims or not - whether the claims lodged if not settled or withdrawn by the contractor are included in the final bill - Section 11(6) read with Section 11 (8)(b) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The following conclusions have been reached:
I) Where there is contestation or the decision rendered by the General Manager leaves scope for argument as to whether the claims lodged by a Contractor can be categorized as Notified Claims is best left to the Arbitral Tribunal. In other words, except for the situation where there is no doubt that the claims were not lodged with the Engineer and the Site Engineer as required under Clause 6.6.1.0[67] read with 6.6.3.0[68], the matter would have to be left for resolution by Arbitral Tribunal.
II) Aspects with regard to accord and satisfaction of the claims or where there is a dispute will also have to be left to the Arbitral Tribunal. The position in law in this regard remains the same both pre and post amendment brought about in the 1996 Act after 23.10.2015.
III) After the insertion of Subsection (6A) in 11 of the 1996 Act the scope of inquiry by the Court in a Section 11 petition, (once it is satisfied that it has jurisdiction in the matter) is confined to ascertaining as to whether or not a binding arbitration agreement exists qua the parties before it which is relatable to the disputes at hand.
IV) The space for correlating the dispute at hand with the arbitration agreement is very narrow. Thus, except for an open and shut case which throws up a circumstance indicative of the fact that a particular dispute does it not fall within the four corners of the arbitration agreement obtaining between the parties the matter would have to be resolved by an Arbitral Tribunal. In other words, if there is contestation on this score, the Court will allow the Arbitral Tribunal to reach a conclusion on way or another. This approach would be in
keeping with the doctrine of Kompetenz Kompetenz; a doctrine which has statutory recognition under Section 16 of the 1996 Act.
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2019 (2) TMI 2026
Interest on Refund claim - HELD THAT:- It is pointed out by the petitioner that interest has not been processed. To this, the Revenue urges that the decision in VIZIEN ORGANICS, M/S MUNSHI RAM RAM PARKASH, MANGLA ENTERPRISES, DHANJAL ENGG. WORKS, M/S GOEL OIL COMPANY, M/S ARUN ELECTRONICS, POWER INDUSTRIES PROPRIETO SH. TARUN BANSAL, M/S. LUDHIANA AUTO SUPPLY CO., VERSUS COMMISSIONER, TRADE & TAXES & ANR. [2017 (1) TMI 1168 - DELHI HIGH COURT] covers the issue but that the department ’s Special Leave Petition is pending and that an interim order staying the judgment enures and binds the parties.
The processing of the petitioner’s claim for interest shall take place; however, the disbursement of interest shall await the final outcome of the proceedings. The writ petition is accordingly disposed of.
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2019 (2) TMI 2025
Unexplained income - huge deposits in bank account - Surplus money arising on sale of agricultural land - CIT-A deleted the addition as AO had not been able to point to any other source of income apart from sale of agricultural land and therefore, the deposits in the bank accounts were to be treated as proceed of sale of agricultural land and therefore, exempt from taxation - HELD THAT:- Assessee filed documents before the Assessing Officer. If the Assessing Officer chooses not to cause any enquiry from the parties concerned, he cannot simply reject the sale consideration shown in the sale agreement.
In this case the sale deed has been registered at a value which is below the amount actually received by the assessee and deposited in the Bank account. There was no material whatsoever or any circumstance, which could have suggested that the impugned amount was received by the assessee from any other source. The deposition of the purchaser by way of an affidavit filed with the authorities had shown a higher value which was sufficient to discharge the burden, which the AO had doubted the source of deposit.
There was a sale agreement which was entered into by the assessee with the purchaser for sale of 11 acres of rubber plantation in Kokkayar Village, Idukki District at the rate of Rs.55,750/- per cent. This was also brought on record by the assessee vide letter dated 29/02/2016. The Assessing Officer in disbelieving the evidence had not given any reasons whatsoever to discard the evidence placed by the assessee so as to explain the deposit of sale consideration into various Bank accounts It is also brought to our notice that there was no assessment in respect of the payment of the said on-money in the hands of the purchaser by the Department.
These evidences led by the assessee cannot be discarded without any reasons. In view of this, we are inclined to hold that the deposits made by the assessee in the Bank accounts were duly explained by the assessee and it is to be accepted as genuine source of deposits as there was no counter evidence brought on record by the Assessing Officer. - Decided against revenue.
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2019 (2) TMI 2024
Unexplained cash credits u/s.68 - As explained by the Ld.AR that the assessee had not actually introduced cash but the assessee’s accountant had wrongly passed such entries in the books of accounts. It was further explained that assessee had brought in to his books of accounts his family jewellery, property received out of family settlement, vacant land purchased in Sri Ram Nagar and the land & building in Sri Ram Nagar which were all assets not acquired during the relevant assessment year - HELD THAT:- Since the cash credit standing in the books of accounts of the assessee relates to all the assets discussed herein above, we are of the considered view that the addition made by theLd.AO is erroneous and warranted. From the facts of the case it also appears that the Ld.CIT(A) has also not considered the issue in the correct prospective. Therefore we hereby direct the Ld.AO to delete the addition made in the hands of the assessee by invoking the provision of Section 68 of the Act because the assessee has not actually introduced cash in his books of accounts during the relevant assessment year but it relates to all the assets owned by the assessee explained hereinabove. Appeal of assessee allowed.
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2019 (2) TMI 2023
TP adjustment made in respect of finished goods exported to the Associated Enterprises (AE) of the assessee - difference in the level of capacity utilization - assessee herein is a subsidiary of SKF Inc. US, which is a leading global supplier for products, sales and services for rolling bearing and seals business - Assessee had adopted TNMM method as most appropriate method and operating profit margin to sales ratio as PLI - HELD THAT:- We noticed that the Hon’ble Bombay High Court in the case of Petro Araldite (P.) Ltd. [2018 (6) TMI 452 - BOMBAY HIGH COURT] and the Delhi Bench of the Tribunal in the case of Claas India (P.) Ltd. [2015 (8) TMI 755 - ITAT DELHI] have held that the adjustment towards difference in capacity utilization is required to be made in terms of Rule 10B(1)(e)(iii) of the Income-tax Rules.
We find merit in the prayer of the assessee for the adjustment towards the difference in the level of capacity utilization. Since this issue has not been examined by the tax authorities and since the assessee has to furnish necessary details in order to support its claim, which in turn requires examination at the end of AO, we deem it proper to restore it to the file of the AO / TPO for examining the claim of the assessee.
Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the AO / TPO for examining the claim of the assessee, in accordance with law, by duly considering the decisions rendered by the High Court / Tribunal on capacity utilization adjustment. After affording adequate opportunity of being heard to the assessee, the A.O. may take appropriate decision in accordance with law. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2019 (2) TMI 2022
TP Adjustment - adjustment to the value of international transactions pertaining to provision of software development services by the Appellant under Section 92CA(3) - Comparable selection - PERSISTENT SYSTEMS LTD. (PERSISTENT) - HELD THAT:- As on non-availability of segmental data. So, we are of the considered view that Persistent is not a valid comparable, hence ordered to be excluded.
TATA ELXSI LTD. (TATA ELXSI) - The taxpayer is not the owner of IP which is a captive software development service provider whereas, on the other hand, Tata Elxsi is the owner of IP design of it. Moreover, business unit of taxpayer is very diverse having four business segments as discussed in the preceding paras, whereas only segmental of two of its unit are available. Moreover, there are un-allocable expenses (Net) of ₹ 937.66 lakhs, as is evident from Schedule to the Financial Statements from the year ending March 31, 2010, available at page 526 of the paper book. So far as segmental reporting given at page 526 of the paper book (Annual Report) is concerned, it shows that the company’s operations predominantly relate to providing systems integration and software development services in the information technology field. So, all these facts go to prove that Tata Elxsi is functionally dissimilar vis-à-vis the taxpayer being engaged in the development of specialized/niche product, hence ordered to be excluded being not a valid comparable.
E-INFOCHIPS BANGALORE LTD. (E-INFOCHIPS) - We are of the considered view that E-Infochips being a product and semiconductor engineering services having 500 products for key verticals like aerospace and defence, security and surveillance, etc., having huge intangibles which increases its brand value and its segmental financials are not available, is not a suitable comparable vis-à-vis the taxpayer, hence ordered to be excluded.
INFINITE DATA SYSTEMS PVT. LTD. (INFINITE) - We are of the considered view that Infinite is functionally dissimilar vis-à-vis taxpayer having been into providing solutions that encompass technical consulting, design and development of software maintenance, systems integration, implementation, testing and infrastructure management services. Furthermore, Infinite has entered into Build, Operate and Transfer (BOT) agreement with Fujitsu Services Limited to set up global delivery centers in India to provide offshore capabilities to Fujitsu and Fujitsu’s associated companies. It has also shown exceptional growth in business operation in the last four years i.e. 908% growth rate over the previous year. So, Infinite cannot be a valid comparable vis-à-vis the taxpayer, hence ordered to be excluded.
ZYLOG SYSTEMS LTD. (ZYLOG) - On account of diversified operation, substantial brand value and huge intangible assets having significant AMP spent and R & D expenses, Zylog cannot be a valid comparable vis-à-vis taxpayer which is a captive software development service provider to its AE only, so we order to exclude the same.
Addition on account of overdue receivables from its AE by applying the ad hoc interest rate of 14.88% - HELD THAT:- It is the case of the taxpayer that as per para 5.7 of the Agreement, interest, if any, is to be charged on receivables which has been followed in the earlier years and subsequent years. So, TPO/AO is directed to compute the interest, if any, following the rule of consistency, in view of para 5.7 of the Agreement by taking into account the findings returned in earlier years and subsequent years. So, this issue is remanded back to TPO/AO to decide afresh after providing an opportunity of being heard to the taxpayer.
Disallowance of severance cost incurred by the taxpayer - HELD THAT:- In view of the matter, this issue being of subsequent year is required to be decided by the AO along with AY 2009-10. Consequently, this issue is set aside to AO to decide afresh after providing an opportunity of being heard to the taxpayer.
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2019 (2) TMI 2021
Initiation of Corporate Insolvency Resolution Process against the Principal Borrower - admission of an application under Section 7 - it was held by NCLAT that Without initiating any Corporate Insolvency Resolution Process against the Principal Borrower, it is always open to the Financial Creditor to initiate Corporate Insolvency Resolution Process under Section 7 against the Corporate Guarantors, as the creditor is also the Financial Creditor qua Corporate Guarantor - HELD THAT:- There are no merit in the appeal. The civil appeal stands dismissed.
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2019 (2) TMI 2020
Revision u/s 263 by CIT - income generated out of the assessee's investment funds in fixed deposits - As per CIT AO had not undertaken proper inquiries and had not examined the issue whether the interest income was to be assessed under the head “Income from business income or of other source” - Tribunal by the impugned judgment allowed the assesssee's appeal and set aside the order of the Commissioner of Income Tax - HELD THAT:- Tribunal noted that the assessee was previously engaged in the business primary dealing of securities. The assessee was in the process of switching over to the new business of stock broking. The assessee had liquidated its investment from the past business and parked the surplus fund in fixed deposit awaiting commencement of activities in the new business. It was on account of such facts that the assessee had claimed the interest income as arising out of its business activity. The Tribunal was of the opinion that this was entirely plausible view.
We see no reason to interfere with the view of the Tribunal. The question whether the income should be taxed as business income or as arising from the other source was a debatable issue. The Assessing Officer has taken a plausible view. More importantly, if the Commissioner was of the opinion that on the available facts from record it could be conclusively held that income arose from other sources, he could and ought to have so held in the order of revision. There was simply no necessity to remand the proceedings to the Assessing Officer when no further inquiries were called for or directed. - Decided in favour of assessee.
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2019 (2) TMI 2019
Interest on the borrowed money - funds were utilized by the assessee to subscribe to the equity capital of the subsidiary company - subsidiary company used the said funds for the purpose of acquiring the Centaur Hotel, Juhu Beach, Mumbai, which is now functioning as "The Tulip Star, Mumbai" - tribunal has also held that this expenditure would be allowed even under section 57(iii) - As held by HC though there may be some controversy as to whether the aforesaid expenditure is allowable under section 57(iii) of the Act or not, we have no doubt, in our mind, that the expenditure incurred under the aforesaid circumstances would be treated as expenditure incurred for business purposes and was thus allowable under section 36 - HELD THAT:- Special Leave Petitions are dismissed for non-prosecution.
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2019 (2) TMI 2018
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As assessee submits that in the light of Special Bench decision in the case of ACIT Vs Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] the computation of 0.5% of investments must remain confined to only such investments which have yielded tax exempt income during the relevant previous year. DR, on the other hand, relies on the judgment of Hon’ble Supreme Court in the case of Maxopp Investments [2018 (3) TMI 805 - SUPREME COURT] in support of the proposition that a reasonable disallowance in relation to exempt income must be made. That does not however dilute the principle laid down by the Special Bench in the case of Vireet Investments (supra). To this extent, we uphold the plea of the assessee and modify the orders of the authorities below by directing the Assessing Officer to compute the 0.5% of the investments yielding tax exempt income during the relevant previous year.
Deduction of bad debts u/s 36(2) - HELD THAT:- As the claim of bad debt itself has been allowed in principle and the matter has been remitted to the file of the Assessing Officer only for a factual verification, the claim for business loss is infructuous at this stage and does not need to be adjudicated upon. Similarly, we are unable to see any merits in the grievance of the Assessing Officer for CIT(A)’s directing a factual verification which is so fundamental to the claim being denied as the claim for deduction was declined primarily on the ground that the assessee had not offered related income to tax. Grievances of both the parties, therefore, lack legally sustainable merits. We confirm the action of the CIT(A) on this issue as well and decline to interfere in the matter.
Disallowance of 'marking to market' foreign currency forward contracts outstanding as at the end of the year - HELD THAT:- The assessee is consistently following the mercantile method of accounting, the same accounting treatment for the foreign exchange losses and gains has been given by the assessee all along, the assessee is making entries in respect of such losses and gains, and the treatment is consistent with the Accounting Standards. As a matter of fact, the AO has not even raised any issues with respect to the above. His case is confined to the loss being notional in nature and contrary to the CBDT guidelines. As for the CBDT instructions, it is only elementary that any instructions issued by the CBDT cannot bind the assessee even though the assessee is entitled to, and can legitimately ask for, any benefits granted to the assessee by such instructions or circulars. Nothing, therefore, turns on the CBDT instruction even if it is actually contrary to the claim of the assessee.
As per the details filed by the assessee, the foreign exchange contracts have been entered into for genuinely restricting its bonafide risk exposure of the assessee in respect of its exports and imports transactions. These contracts cannot, therefore, be viewed on a standalone basis as speculative transactions. These transactions are integral part of the business transactions and any loss or gains arising from these transactions, for the detailed reasons set out above, are deductible in computation of profits and gains of business.
We uphold the action of the CIT (A) so far as this relief in respect of deleting the disallowance on account of loss, at the end of the year, on foreign exchange contracts. We confirm the same and decline to interfere in the matter. - Decided in favour of assessee.
TPA - upward adjustment on account of guarantee given by the assessee to its Associate Enterprise located at Singapore without any consideration - HELD THAT:- TPO made the addition on the ground that loans were taken from ICICI bank Limited, Singapore whereas RBI's permission refusing pledge of shares was In the case of IDBI trusteeship Ltd. TPO considered these two transactions separate and held that appellant provided guarantee to AE by pledging its Investment in shares. However after considering these letters referred earlier, it is clear that IDBI trusteeship Ltd is security trustee of ICICI bank limited, Singapore and RBI's letter refusing the permission for pledge of shares is in respect of same shares which were provided for guarantee to ICICI bank Limited, Singapore. Thus, it is clear that entire addition is based on the misconception that these two entities represented separate transactions. In view of this it is clear that appellant did not provide guarantee services by pledging shares of MPSEZ for which any adjustment of guarantee commission can be made. The addition made by the assessing officer is therefore not sustainable on facts. See ADANI ENTERPRISES LTD [2016 (8) TMI 163 - GUJARAT HIGH COURT]
Addition u/s 14A despite the fact that the company had claimed an expenditure on its Treasury department which mainly dealt with investments related to earning exempt income - CIT-A deleted the addition - HELD THAT:- As adhoc allocation of expenses of treasury department, in addition to the disallowance under rule 8D(iii) for such indirect expenses, computed @ .5% of related investments earning tax exempt income, will indeed amount to double deduction of expenses under rule 8D. What can be disallowed under rule 8D(i) is only direct expenses and clearly the expenses on treasury function are not direct expenses to earn the tax exempt income. Even going by the stand of the Assessing Officer, treasury function includes many functions including, to some extent, investment function. The understanding of the Assessing Officer is clearly incorrect. There is no basis for allocation of 50% of expenses, on purely adhoc basis, either. There is nothing on record to even show that the expenses disallowed under rule 8D(iii) are lower than a reasonable share of common expenses incurred on earning the tax exempt income. In these circumstances, and bearing in mind entirety of the case, we approve the stand of the CIT(A) and decline to interfere in the matter.
Disallowance of interest expense u/s 36(1)(iii) - comprehensible findings in the assessment order that the funds were diverted for non business purposes - CIT-A deleted the addition - HELD THAT:- As there was a trade relationship between the assessee and the entities to which the payments in question were made. The assessee had made huge purchases from these entities, and the fact that the amounts were not payable is not really relevant because the case of the assessee is that the payments were in the nature of business advances. What happens to these monies subsequently is not relevant so far as the treatment of advances in the hands of the assessee is concerned. That aspect is wholly irrelevant for our purposes. As long as the payments are made in the course of assessee’s business, it does not really matter, so far as interest disallowance in the hands of the assessee is concerned, as to where these monies ultimately find its way. That’s not in the control of the assessee anyway. Nothing really turns on these monies ultimately finding its way to another entity, admittedly unrelated to the assessee. The reason for making the interest disallowance is thus not sustainable in law. In any event, the availability of interest free funds is far more than interest free funds advanced to these entities. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter.
Disallowance of depreciation claimed on shares - As per AO shares are not depreciable assets - CIT-A deleted the addition - HELD THAT:-Learned representatives fairly agree that this issue is squarely covered, in favour of the assessee, by a decision in assessee’s own case for the assessment year 2007-08 [2016 (1) TMI 459 - ITAT AHMEDABAD]. A copy of the said decision was placed before us as well.. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, we confirm the relief granted by the CIT(A) and decline to interfere in the matter.
Disallowance of deduction u/s 80IA - receipts represents miscellaneous income which was not derived from the undertaking itself - CIT-A deleted the addition - HELD THAT:- We have noted that the eligible business activity of the assessee is operations and maintenance of the port, and that the miscellaneous receipts represents receipts on account of activities which pertain to operations and maintenance of port. The receipts for weighment charges and token charges, and the allied activities in question, cannot be considered in isolation with the operations and maintenance of port. In view of these discussions, and in the light of well reasoned findings of the CIT(A) with which we are in considered agreement, we uphold the relief granted by the CIT(A) and decline to interfere in the matter.
TP Adjustment - whether issuance of corporate guarantees does not constitute an international transaction with the meanings of section 92B? - HELD THAT:- As for the observations of the authorities below that the assessee has not produced any evidence of not incurring any costs, this observation is incorrect inasmuch as none can be expected to prove a negative. The onus of demonstrating that the costs have been incurred can only be on the revenue authorities, and that onus has not been discharged. Even during the course of hearing when it was asked as to what are the costs incurred by the assessee, learned Departmental Representative did not have anything to say. Respectfully following the views of the coordinate benches on the issue, in the case of Micro Ink [2015 (12) TMI 143 - ITAT AHMEDABAD] we hold that issuance of guarantees, without incurring any specific costs, does not constitute an international transaction, and, accordingly, no arm’s length price adjustment can be made in respect of issuance of corporate guarantees. Once we hold so, the ALP adjustment sustained by the CIT(A) must stand deleted.
Disallowance u/s 14A - HELD THAT:- One has to proceed on the basis that such interest free funds in making these investments, and no part of interest can thus be disallowed under section 14A read with rule 8D. We see no reasons to take any other view of the matter for this assessment year as well.
TDS u/s 195 - Disallowance of interest expenditure invoking the provisions of section 40(a)(i) - HELD THAT:- We find that the payment has indeed been made to a non-resident and no tax has been deducted at source. The payment being in the nature of interest income which is separately covered under the respective tax treaties and, beyond any dispute or controversy, these payments have an element of income taxable in India. As regards learned counsel’s contention that the payment having been made to a bank which are specifically excluded from the scope of tax withholding obligations under section 194A, this argument overlooks the fact that this exclusion relates only to a resident taxpayer and the recipients in this case are non residents. In our considered view, the authorities below were right in holding that the payments were made to the foreign companies, and, therefore, section 195 came into play, and that section 194A was applicable only with respect to payment to residents and will not accordingly come to the rescue of the assessee. We uphold the reasoning of the authorities below, and decline to interfere in the matter.
Disallowance on account of loss from foreign currency swaps - HELD THAT:- The issue is covered, in favour of the assessee, by decisions of the coordinate benches of this Tribunal, including in the case of Cadila Pharmaceuticals Ltd Vs ACIT [2017 (9) TMI 727 - ITAT AHMEDABAD] as hold inter alia that hedging contracts; in order to be out of speculative transactions, must be in respect of raw materials only in manufacturers' cases though they could be both with regard to sales and purchases, such hedging contracts need not succeed the contract for sale and actual delivery of goods manufactured, but the latter could be subsequently entered into within reasonable time not exceeding the relevant assessment year in normal circumstances and such transactions should not exceed the total stock of the raw material or merchandise on hand including existing stocks as well as that acquired under the firms contract of purchases in order to be genuine and valid hedging contract of sales; respectively.
Upward adjustment on the basis of the TPO's order passed u/s.92CA(3) determining the A.L.P. in respect of transaction of export of Maize - HELD THAT:- We are not inclined to interfere in the matter. We agree with the authorities below that such an independent third party quotation, on standalone basis and without any material to establish its bonafides and without anything to show that it’s contemporaneous nature and sufficient parity with actual transaction, cannot be accepted as a valid CUP input. The plea regarding back to back transaction was also not proved before us. In view of these discussions, and bearing in mind entirety of the case, we uphold the stand of the authorities below and decline to interfere in the matter.
Disallowance of business loss in respect of balances being advances for business purposes to suppliers, written off in the books of account as irrecoverable, in spite of the fact that such writing off was in the nature of legitimate business loss allowable u/s.28 - HELD THAT:- We find that as long as a loss is incurred in the course of a business, and in legitimate furtherance of its bonafide interests, the loss is deductible in computation of business income. What, therefore, needs to be examined is whether or not these advances were made in the course of the business and whether these advances have actually become bad. If the answer to both these questions are in positive, there cannot normally be a good reason to reject the claim. We, therefore, deem it fit and proper to remit the matter to the file of the Assessing Officer with a direction to decide the matter afresh by way of a speaking order in accordance, in the light of the above observations and after giving yet another opportunity of hearing to the assessee. We order accordingly.
Disallowance made of depreciation on office equipment after treating the same as furniture and fittings - HELD THAT:- We find that this issue is also covered, in favour of the assessee, by a decision of the coordinate bench in the case of Cera Sanitaryware Ltd [2015 (7) TMI 174 - ITAT AHMEDABAD] - Respectfully following the same, we confirm the conclusions arrived at by the CIT(A) and decline to interfere in the matter.
Disallowance of depreciation on UPS - HELD THAT:-This issue is also covered, in favour of the assessee, by Hon’ble Delhi High Court’s judgment in the case of CIT Vs BSES Yamuna Power Ltd [2010 (8) TMI 58 - DELHI HIGH COURT] even as learned Departmental Representative vehemently relied upon the stand of the Assessing Officer. There is non contrary judicial precedent pointed out to us. In this view of the matter, and respectfully following the esteemed views of Hon’ble Delhi High Court in the case of BSES Yamuna Power (supra), we confirm the order of the CIT(A) on this point as well, and decline to interfere in the matter.
Disallowance being 10% of aircraft hire charges - HELD THAT:- We find that, in view of Hon’ble jurisdictional High Court’s judgment in the case of Sayaji Engg [2001 (7) TMI 70 - GUJARAT HIGH COURT] no disallowance can be made in the hands of a corporate entity for personal use of cars, and, by the same logic, of the aircrafts as well, by the directors. The CIT(A) was thus indeed quite justified in deleting the impugned disallowance. We uphold the action of the CIT(A) and decline to interfere in the matter on this count as well.
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2019 (2) TMI 2017
Validity of SCN as being time barred having been issued after more than 14 years from the date of last export and realization of export proceeds - HELD THAT:- A perusal of the writ petition show that the petitioners have not even submitted any reply to the aforesaid show cause notice. After hearing learned counsel for the petitioners, without going into the merits of the controversy at this stage, we dispose of the present writ petition by relegating the petitioners to file a detailed and comprehensive representation raising all the pleas as raised in the present writ petition before respondent No.2 by way of reply to the show cause notice dated 15.06.2018 (C) within a period of one month.
As directed that in the event of a representation being filed by the petitioners within a period of one month from the date of receipt of the certified copy of the order, the same shall be decided by respondent No.2 in accordance with law, by passing a speaking order and after affording an opportunity of hearing to the petitioners within a period of next one month from the date of receipt of the representation.
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2019 (2) TMI 2016
Territorial Jurisdiction - permissibility of instituting suit in one Court, where properties, which are subject matter of the suit are situated in jurisdiction of different courts have been permitted with one rider - cause of action for filing the suit regarding property situated in different jurisdiction is one and the same - HELD THAT:- In a suit when the cause of action for filing the suit is different, the Courts have not upheld the jurisdiction of one Court to entertain suits pertaining to property situated in different courts.
In Sardar Nisar Ali Khan v. Mohammad Ali Khan [1932 (4) TMI 22 - PRIVY COUNCIL], Privy Council had occasion to consider the case where subject matter of the suit were several properties situated in jurisdiction of different courts. Suit was instituted in Oudh (which later became part of Uttar Pradesh). The Privy Council held that since there was different cause of actions, the same cannot be clubbed together. One of the properties, which was situated in Punjab was referred to in the suit as Khalikabad property. Although, suit with regard to the other three properties had similar cause of action but cause of action with regard to Khalikabad property being found to be different, the Court held that Section 17 Code of Civil Procedure was not applicable.
The scheme as delineated by Section 39 indicates that when a decree is passed by a Court with regard to sale or delivery of immovable property situated outside the local limits of the jurisdiction of that Court it may transfer the decree for execution to another Court. The provision clearly indicates that a decree of Court may include immovable property situate in local limits of that Court as well as property situated outside the local limits of the jurisdiction of the Court passing the decree. Section 39(1)(C) re-enforces the conclusion that as per Section 17 suit may be filed with regard to immovable property situated outside the local limit of the jurisdiction of the Court.
The partial partition of property is well accepted principle with regard to a joint family.
The cause of action relating to Indore property and Bombay property were entirely different with different set of Defendants. The suit filed by the Plaintiff for Indore property as well as Bombay property was based on different causes of action and could not have been clubbed together. The suit as framed with regard to Bombay property was clearly not maintainable in the Indore Courts. The trial court did not commit any error in striking out the pleadings and relief pertaining to Bombay property by its order dated 17.08.2011 - A perusal of Sub-clause (1) of Order II Rule 3 provides that Plaintiff may unite in the same suit several causes of action against the same Defendant, or the same Defendants jointly. What is permissible is to unite in the same suit several causes of action against the same Defendant, or the same Defendants jointly. In the present case suit is not against the same Defendant or the same Defendants jointly. As noticed above there are different set of Defendants who have different causes of actions.
The trial court has rightly allowed the application filed by the Defendant Nos. 7 and 8 - The High court did not commit any error in dismissing the writ petition filed by the Appellant challenging the order of the trial court.
Appeal dismissed.
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2019 (2) TMI 2015
Recall/revision of judgement - possession of suit property - suit was barred under the previsions of the Small Causes Court Act or not - mis-joinder of parties - HELD THAT:- Both the courts below have ruled against the defendant/petitioner and had held that the trial court had jurisdiction to entertain and decide the suit. The executing court does not sit in appeal over the findings recorded by the trial court or the appellate court as the case may be. The executing court cannot go behind the decree when the issue was specifically framed regarding the jurisdiction and it got decided against the defendant. The defendant cannot be permitted to take the very same ground in execution proceedings by filing an application under Section 47 C.P.C. to contend that the trial court did not have jurisdiction to entertain the suit and, therefore, the decree passed by the trial court was without jurisdiction and the same cannot be executed - there are no substance in the submission of learned counsel for the petitioner/judgment debtor that the decree passed by the trial court was without jurisdiction and, therefore, it cannot be executed.
The second ground that the judgement and decree was passed on the amended plaint which was amended without leave of the court, has no force. The petitioner has filed objection to the amendment application and there is no material on record on the basis of which it can be said that some fraud was played with the trial court and the judgement and decree was obtained as an act of fraud - there are no substance even in the second ground and it is held that the executing court and the revisional court have correctly decided the issue and rightly rejected the objection of the petitioner under Section 47 C.P.C.
Petition dismissed.
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2019 (2) TMI 2014
Possession of suit property - decree for permanent prohibitory injunction restraining the Defendant No. 1 from causing any interference on any portion of suit premises/Shop - Section 6 of the Specific Relief Act - HELD THAT:- A reading of proviso added by 1999 amendment to the Code of Civil Procedure, will show that, after 1999, revision petitions filed Under Section 115 Code of Civil Procedure are not maintainable against interlocutory orders - Even otherwise, it is well settled that the revisional jurisdiction Under Section 115 Code of Civil Procedure is to be exercised to correct jurisdictional errors only.
Since the suit filed is a Section 6 suit which is a summary proceeding in itself, the trial Court should endeavour to dispose of the Suit itself within a period of six months from today.
The appeal is allowed.
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2019 (2) TMI 2013
Validity of decision of the COC to initiate liquidation rather than consider their proposal put forth for reconsideration - HELD THAT:- It was resolved by e-voting that the assets of the Corporate Debtor be liquidated under Section 33(2) of IBC.
The said approval has been granted by 88.92 per cent of voting power of the COC. It is also submitted on behalf of the RP that the period of 270 days expired on 10.02.2019. Under such circumstances, no further proposal of the resolution applicant can be taken into consideration. Given the averments made in the said application, which is duly annexed with the resolution and the affidavit of the RP, this application merits consideration. The resolution of the COC to reject the RA's proposal and proceed with liquidation is hereby approved.
Application disposed off.
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2019 (2) TMI 2012
Validity of assessment order - sufficient opportunity was not granted to the petitioner in the assessment proceedings - violation of principles of natural justice - Section 51 of the TNVAT Act 2006 - HELD THAT:- Except making an averment in the affidavit that the petitioner had personally met the second respondent and requested him to furnish the details as well as the transportation documents pertaining to the alleged purchase made by the petitioner from M/s. Britto Saw Mill and Timbers to the tune of ₹ 37,05,000/-, there is no other written communication sent by the petitioner to the respondent duly acknowledged by them requesting for producing details as well as documents pertaining to the alleged purchase of the petitioner from M/s. Britto Saw Mill and Timbers.
Admittedly, there is a statutory appellate remedy under Section 51 of the TNVAT Act, 2006 available to the petitioner, which he has not exercised in the instant case. The reason given by the petitioner for not exercising the statutory appellate remedy cannot be accepted by this Court, since there is no acknowledgement made by the respondents that a request was made by the petitioner for production of details and documents pertaining to the alleged purchases made by the petitioner from M/s. Britto Saw Mill and Timbers, except an averment made by the petitioner in the affidavit in support of the writ petition that he made a personal request to the second respondent for production of the details and documents pertaining to the alleged transaction.
This Court is of the considered view that the principles of natural justices has not been violated by the respondents, while passing the impugned assessment order. However the statutory right of appeal available to the petitioner should not be deprived, just because the petitioner has chosen a wrong forum for ventilating his grievance - In the instant case, the petitioner has approached this Court under the Article 226 of the Constitution of India, instead of filing the statutory appeal under Section 51 of the TNVAT Act, 2006.
This Court grants liberty to the petitioner to prefer an appeal before the Appellate Authority under Section 51 of the TNVAT Act, 2006 against the impugned assessment order - Petition disposed off.
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2019 (2) TMI 2011
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of clear charge - HELD THAT:- Tribunal being the first appellate authority, the assessee in the present appeal has raised this issue, therefore, this Tribunal is expected to adjudicate the same. This Tribunal being the second appellate authority cannot ignore the fact that the Assessing Officer failed to struck down the relevant plea indicating whether he initiated penalty proceeding for concealing any part of income or furnishing inaccurate particulars of such income. In view of the above, by respectfully following the judgment of Kerala Jewellers [2019 (2) TMI 127 - MADRAS HIGH COURT] the orders of both the authorities below are set aside and the penalty levied by the Assessing Officer as confirmed by the CIT(Appeals) is deleted.- Decided in favour of assessee.
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