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2017 (6) TMI 1294 - MADRAS HIGH COURT
Grant of interim stay - Right of appeal - National Company Law Appellate Tribunal is currently in the midst of its summer vacation and it re-opens only on 03.07.2017 - appellant submitted that if the order of the Adjudicating Authority is implemented, the petitioner would be put to prejudice and hardship, since they will lose the right of appeal under Section 61 of the Code in the absence of the Tribunal functioning during the summer vacation - HELD THAT:- There shall be an order of interim stay till 05.07.2017. It is also made clear that the petitioner shall file an appeal under Section 61 of the Code before the Tribunal in accordance with law.
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2017 (6) TMI 1293 - ITAT MUMBAI
Bogus purchases - AO has received the information from the office of DIT(E), Mumbai and from the Sales Tax Department, Mumbai regarding suspicious parties who are only providing accommodation entries without doing actual business - profit estimation - HELD THAT:- In this case substantial investigation has been carried out and the appellant should have come forward with a more convincing and controverting argument supporting with evidence. In a long line of judgements, which are contrary to the assessee It has been held that in such cases, the profit element embedded in the bogus purchases should be brought to tax. One such case, in line is that of Simit P. Seth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) in which 12.5% of profit rate application on such like bogus purchases has been deemed to be correct.
Following the same line of reasoning, It is held that in this instant case the addition has been correctly made by the appellant for failure on part of the appellant to duly produce The relevant third-party evidence and verification which was desired by the assessing officer. Accordingly the addition made is confirmed and the ground of assessee dismissed.
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2017 (6) TMI 1292 - ITAT MUMBAI
Assessment u/s 153C - on money receipt - proof of incriminating material fond in search - HELD THAT:- The figures written on the right side of the page were not disputed as unaccounted in the books. We found that the first figure on the left hand side of the page was proved to be a cheque noting. Further, it was also stated in the statement on oath by Mr. Bhawan Patel in reply to Q.no. 22 as may be seen at page no 3 of the assessment order that no cash has been received on sale of shops. Further, it was also explained to the CIT (A), that the remaining figures at left side of the page 5 were transactions intended to be done through cheque as stated for A.Y. 2007-08. From the record we also found that Summons u/s. 131 were also issued to few customers who had attended before the Assessing Officer and given their statement and ITR details stating that they have not paid any cash in respect of these shops purchased. However, the Assessing Officer presumed that the assessee had accepted on money and applied the rate of on money on transaction for A.Y. 2006-07.
We do not find infirmity in the order of CIT(A) for deleting the said addition, since the findings recorded by CIT(A) are as per material on record and the same has not been controverted by revenue by bringing any positive material on record. The CIT(A) has also correctly applied the judicial pronouncements laid down in the case of Royal Marwar [2007 (12) TMI 321 - ITAT AHMEDABAD] to the facts of the instant case. Accordingly addition made by AO on account of on-money has been correctly deleted by CIT(A) after recording detailed finding which is as per materials on record.
Since no addition has been made based on these documents but the addition is solely based on page no 5 of the Annexure A - 1 impounded during the course of survey at the assessee’s premises, thus, the documents i.e. page no 1 to 27 of Annexure A - 1 found in course of search cannot be termed as “incriminating material” as envisaged u/s. 153C. Moreover there was no year specific incriminating material available with the learned Assessing Officer. In this regard, we rely on the decision of Hon’ble Bombay High Court in the case of CIT v. Sinhgad Technical Education Society [2015 (4) TMI 190 - BOMBAY HIGH COURT] wherein it is observed that where loose papers found and seized from residence of president of assessee, an educational institution, indicating some 'on money receipt during admission process did not establish co-relation document-wise with assessment years in question, notice issued under section 153C to assessee was invalid.
Long term capital gains on account of surrender of tenancy rights - HELD THAT:- As the pressure from the landlord mounted, the assessee company had to surrender the tenancy to the landlords. Thus, no transaction ever took place between the Assessee Company and said Shri Ravindra G. Jain, who have obtained the said tenancy right directly from the landlords and the assessee was never a party to that agreement. The assessee is given to understand that said Shri Ravindra G. Jain has admitted to have acquired the tenancy rights in the said premises from the landlord directly and there was no transaction between the present tenant and the assessee. In fact, the tenancy rights cannot be directly sold by a monthly tenant and have to be surrendered to the landlord. Thus, we do not find any merit in the AO’s action holding that assessee had a capital asset in the form of tenancy right and for surrender of which assessee has got the money. There is no basis for such assumption. Furthermore there is no evidence that the assessee has received any sum for surrender of tenancy rights and accordingly no addition is called for in the case of the assessee. Moreover, the provisions of Section 50C are not applicable in case of surrender of tenancy right as observed in the case of Smt. Kishori Sharad Gaitonde v. ITO [2009 (11) TMI 905 - ITAT MUMBAI] and Dy. CIT vs. Tejinder Singh [2012 (3) TMI 47 - ITAT, KOLKATA] . Accordingly, addition made by AO by taking stamp duty valuation of the tenancy a sum of ₹ 7,71,000/- is directed to be deleted. We direct accordingly.
Addition on account of on-money - CIT(A) restricted the addition to the extent of 17% and deleted the balance 83% of estimate basis. - HELD THAT:- With regard to the allegation of department that the Assessee-Company has received on-money, it is important to note that the director of the assessee company had been searched and the assessee’s premises surveyed. However, no undisclosed cash, investments, expenditure, etc. had been found either in the course of search and survey proceedings in relation to the assessee. It may be appreciated that if infact there was such a huge receipt of on- money as alleged by the revenue, then the revenue should have been able to corroborate it with evidences in the form of undisclosed cash, investment or expenditure. The fact that no such evidences were available as regard to undisclosed cash, expenses or investment infact also substantiates the claim of the assessee that no on-money was received by it.
Notwithstanding the above observation, since the survey party has found that the assessee was not able to substantiate fully with corroborative evidences that the amount of ₹ 8,90,000/- was not received in cash addition of ₹ 8,90,000 is warranted. However, since the assessee had already offered a sum of ₹ 1 crore to cover any discrepancies whatsoever no separate addition is warranted.
The onus of the assessee stands discharged and shifts to the learned Assessing Officer. Provisions of section 132(4A) or 292C of the Act speaks about the presumption of the content in the seized material only (not extrapolation) and that too it is a rebuttable presumption. The assessee has already rebutted the presumption with evidences and to buy peace of mind has offered a sum of ₹ 1 crore which is much over and above ₹ 8.90 lakhs.
Direct the AO to delete the addition made on account of extrapolation in respect of advances received during the year. Such an exaggerated / wild extrapolation in the matter is unjust and unwarranted especially when enquires were done and nothing adverse was found against the assessee and thus, as the offer of ₹ 1 crore made covers all the discrepancies, no further additions made by the Id. AO / CIT(A) is sustainable.
Notice u/s.143(2) was not issued to the assessee within a period of 12 months from the date of filing of return - HELD THAT:- Even though the additional ground taken by assessee with regard to issue of notice u/s.143(2) is a purely legal issue but the facts are not clear from the record, therefore, in the interest of justice, we restore this ground back to the file of the AO for deciding afresh as per law after verifying the records. We direct accordingly.
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2017 (6) TMI 1291 - ITAT PUNE
Addition on account of release of rights - reason why the same amount should be disallowed without appreciating the fact that the payments was made to M/s. Global Properties [ sister concern of the assessee] for business purposes. There is no intention of diversion of profits for saving of the taxes - without deducting TDS u/s 194J - HELD THAT:- Allowing of ₹ 60 lakhs paid by the assessee to M/s. Global Properties. We find that there is no dispute on the fact of payment of the said amount involving the banking channels. Nothing is brought on record to suggest that the money is repaid in cash form or otherwise to the assessee by M/s. Global Properties. It is also undisputed that both assessee as well as M/s. Global Properties are the taxpayers paying taxes at maximum marginal rate of taxes. The letter is undated, which is undisputed.
There is no evidence brought on records by the AO to suggest that the said page is not genuine. In our view, the said payment of ₹ 60 lakhs to M/s. Global Properties constitutes a business transaction which was executed by the assessee in his wisdom as a businessman.
Therefore, the decision given by the CIT(A), in our view is required to be reversed and in favour of the assessee. Considering the same, in our view, the adjudication of the other issue of invoking the provisions of section 194J/40(a)(ia) of the Act becomes an academic exercise. As such, there is no specific ground raised in this regard as seen from the grounds of appeal. Thus, the solitary ground raised by the assessee is allowed and in favour of the assessee.
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2017 (6) TMI 1290 - ITAT PUNE
Disallowance u/s.l4A - interest expenditure - application of Rule 8D in assessment year prior to its introduction - HELD THAT:- The CIT (A) himself though in the paras thereafter have admitted that the provisions of Rule 8D of the Rules are not applicable and in view of the provisions of section 14A of the Act, disallowance of ₹ 1 lakh was made. We uphold the said disallowance of ₹ 1 lakh under section 14A
Disallowance of Excise duty on obsolete stock - HELD THAT:- We find that similar issue of provision of Excise duty on obsolete stock arose before the Tribunal in SANDVIK ASIA PVT. LTD. VERSUS THE JT. COMMISSIONER OF INCOME TAX, RANGE – 10, PUNE [2015 (12) TMI 1742 - ITAT PUNE]. Tribunal held the assessee to be entitled to claim the deduction.Following the same parity of reasoning, we allow the claim of assessee and ground of appeal
Adhoc addition of valuing the stock of scrap - HELD THAT:- The assessee is consistently following the method of accounting, wherein whenever scrap was sold by the assessee, the receipts from the sale of such scrap were accounted for in the books of account. However, scrap which was available at the end of year had not been shown as part of the closing stock. The estimated value of the stock which has been upheld by the CIT (A) is also ₹ 75,000/- as against the same, the assessee during the year under consideration had sold scrap for about ₹ 18 crores, which has been included as receipts of the business for the year under consideration by the assessee. In view thereof, where a consistent approach has been followed by the assessee, we find no merit in the inclusion of value of scrap as on the close of the year at ₹ 75,000/- as part of income of assessee. The ground of appeal No.4 raised by the assessee is thus, allowed.
Transfer Pricing adjustment of manufacturing wire segment - assessee applied TNMM method with net profit margin as the Profit Level Indicator (PLI) in order to benchmark the arm's length price of its aforesaid four divisions - TPO proposed to adopt Cost Plus Method - CPM method could not be applied to compare the results shown in the domestic market with the results shown of export to associated enterprises - export activity of assessee was only to the extent of 2% of the overall wire manufacturing activity - HELD THAT:- We find merit in the plea of assessee that where transactions under the same segment are inter-linked, then they are to be aggregated in the hands of assessee. This plea of aggregation has been accepted and adopted in the hands of assessee in the earlier years and even in the later years. Accordingly, the same merits to be applied in the year under consideration also.
Applying the ratio of decision in JOHN DEERE INDIA PVT. LTD., (JOHN DEERE EQUIPMENT PVT. LTD.) , (FORMERLY KNOWN AS L&T JOHN DEERE PVT. LTD VERSUS DY. CIT, ITO, [2015 (3) TMI 318 - ITAT PUNE] to the present facts, we hold that TNNM method is the most appropriate method to be applied to benchmark the international transactions of exports to associated enterprises. The assessee aggregated all the international transactions under this division and applied TNNM method and found the transaction of exports to associated enterprises at arm's length. However, the Assessing Officer is directed to verify the said claim of assessee by applying single year's data and compute the adjustment, if any, in the hands of assessee after affording reasonable opportunity of hearing to the assessee.
Addition regarding Export of Seamless tubes - engaged in the manufacture of sophisticated pipes of different categories numbering about 30 - aggregated all the international transactions - application of CUP method - HELD THAT:- Where the transactions are inter- linked, then aggregation approach is to be applied as held by us in the paras hereinabove in respect of division of manufacturing of wires. The said aggregation approach has been applied by the TPO himself in assessee's own case in both the preceding and succeeding years except the year under consideration. Since there is no difference in the factual aspects, we find no merit in the approach adopted by the TPO. Once the aggregation approach is to be applied, then thereafter, CUP method cannot be applied because both the activities having controlled transactions of import of service charges, management fees, etc. and hence, are tainted. In this regard, we find support from the ratio laid down by the Pune Bench of Tribunal in John Deere India (P.) Ltd.'s case (supra) and RACOLD THERMO LIMITED VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE [2015 (10) TMI 1747 - ITAT PUNE] which has been referred in paras above. Accordingly, we allow the claim of assessee in this regard. The TPO is directed to apply the TNNM method on single year's data and compute the adjustment, if any, in the hands of assessee.
Adjustment of management service fees payment - expenses were on arm's length - Revenue authorities could not question the business needs of assessee and their commercial decisions so long as the assessee's claim is prudent and acceptable - TPO in reject the claim was that the assessee had not derived any tangible benefits from the services received - HELD THAT:- assessee has established the factum of receipt of management services from Sandvik group entities, in accordance with the terms of agreement entered into by the assessee with Sandvik AB, Sweden and where the additional evidence in this regard was filed before the CIT (A), who in turn, has considered the same and has held that services provided by Sandvik group entities were in accordance with the agreement and were actually rendered by the associated enterprises. He also referred to the order of TPO in remand report, who had not doubted that the management services were not rendered at all but had stated that the same were rendered by group entities and not by Sandvik AB, Sweden and no adverse inference could be drawn for the same.
In the totality of the above said facts and circumstances, we find merit in the claim of assessee and in view of gamut of evidences filed by the assessee establishing its claim of receipt of management support services from Sandvik entities, which in turn, was as per terms of agreement, then there is no merit in making any adjustment on account of payment of management fees. Upholding the order of CIT (A), we reverse the findings of the TPO in this regard as the same are without any basis.
The second point which has been considered by the CIT (A) is that the said management service fees have been taxed in the hands of recipient Sandvik AB, Sweden. Where the Assessing Officer Incharge of assessment of Sandvik AB, Sweden has accepted income arising on rendering of management services and the same being taxed in the hands of provider of services, then the claim of assessee that it had paid management services fees to Sandvik AB, Sweden, is to be allowed in the hands of assessee.
Another aspect to be seen is that where the management services have actually been rendered, may be, by Sandvik entities, then the arm's length price of such a transaction cannot be taken at Nil. The assessee has applied TNNM method to determine the arm's length price of payment of management fees by aggregating the transactions at Nil. Accordingly, we hold that no addition is merited in the hands of assessee on account of transfer pricing adjustment on the transaction of payment of management services to Sandvik AB, Sweden.
Taxability of anagement service fees in the hands of recipient Sandvik AB, Sweden as dividend - HELD THAT:- Another aspect on which the Assessing Officer had disallowed the claim was that the payment was in the nature of dividend. Once the amount has been taxed in the hands of recipient i.e. Sandvik AB, Sweden, as income on account of rendering of management services, there is no merit in the said stand of Assessing Officer in treating the said payment to be dividend and accordingly, the same is dismissed.
Allowability of software application as revenue expenditure - HELD THAT:- n view of the ratio laid down in assessee's own case in earlier years in SANDVIK ASIA PVT. LTD. VERSUS THE JT. COMMISSIONER OF INCOME TAX, RANGE – 10, PUNE [2015 (12) TMI 1742 - ITAT PUNE] and the facts being similar, we uphold the order of CIT (A) in allowing the expenditure incurred on software application.
Addition on account of closing stock of obsolete inventory - HELD THAT:- The issue arising before us is identical to the issue before the Tribunal in assessment year 2004-05 in SANDVIK ASIA PVT. LTD. VERSUS THE JT. COMMISSIONER OF INCOME TAX, RANGE – 10, PUNE [2015 (12) TMI 1742 - ITAT PUNE] and the said issue raised by the Revenue has been dismissed. Following the same parity of reasoning, we uphold the order of CIT (A) in deleting addition of ₹ 19,52,000/- made on account of value of obsolete inventory as part of closing stock. The grounds of appeal No.4a and 4b raised by the Revenue are thus, dismissed.
Set off of losses of newly set up EOU unit against its other business income - HELD THAT:- The issue arising in the present appeal is squarely covered by the order of Tribunal in assessee's own case (supra) in assessment year 2004-05 and following the same parity of reasoning, we dismiss the ground of appeal No.6 raised by the Revenue
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2017 (6) TMI 1289 - ATPMLA
Prevention of Money Laundering - attachment orders -"proceeds of crime” - bank balance available in the bank a/c‟s of M/s PPL as liable for attachment as “value thereof of proceeds of crime” - HELD THAT:- In the absence of the vital missing links between the alleged crime and the amount in possession of the Respondents, the Complainant proceeded to issue the Provisional Attachment Order contrary to the statutory mandate. The said order suffered from many infirmities as the money sought to be attached have been generated through legal commercial transactions entered into by the Respondent. The same were not generated through the commission of any scheduled offence. The assets, as thus, are not liable for attachment under the terms of the PMLA itself.
There is no nexus whatsoever between the alleged crime and the Respondents herein, and thus no case of money laundering is made out at all.
The Complainant seeks to attach property which has not been generated through proceeds of crime. Merely retaining money legally obtained is not the same as deriving or obtaining the same through a criminal activity. Any other interpretation would render the ED liable to mandatorily prosecute every case of cheating where one party fails to pay another like in recovery of money cases and the lakhs of cases pending under section -138 of Negotiable Instrument Act where the cheques issued by the borrowers are dishonored.
Balances of the credit of PPL in the provisionally attached bank accounts are other proceeds from its legitimate licensing activities, and represent licence fees to be distributed to PPL‟s owner-members, after recouping PPL‟s operating and administrative costs. This has been upheld by the finding of the AA in para 10 of its Order dated 27.11.2016. 38. No allegation of criminal activity against the Respondents at any stage can be considered appropriate as the respondents have been ready to pay the royalty after due compliance of law in view of amendment of Copyright Act. The complainant was reminded several times to receive the royalty subject to execution of relevant documents as per law.
The proceedings before the Adjudicating Authority are for confirmation of the provisional attachment order. If in a particular case, as is the situation in the present matter, the very basis of the respondent‟s case that the property attached is proceeds of crime or that involved in money laundering is found to be unsustainable, no fault can be found with the subject decision of the adjudicating authority not to confirm the adjudication order
We may add that it is settled law that the allegations in the FIR and the Charge-Sheet have to be specific, clearly stating the role of the accused persons. However, in the present case, there has been no allegation whatsoever against the Respondents in the FIR or the Charge-Sheet.
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2017 (6) TMI 1288 - CESTAT NEW DELHI
Demand of service tax - outdoor catering service - penalty - Held that:- Appreciating the difficulties faced by the appellant, levy of service tax is confirmed following judicial discipline and penalty imposed under Section 76 and 78 of the Finance Act, 1994 is waived - there shall be penalty of ₹ 5000/- each under Section 77 of the Finance Act, 1994 for non-compliance to the law - appeal allowed in part.
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2017 (6) TMI 1287 - MADRAS HIGH COURT
Revision of assessment - whether the manner in which the Assessing Officer proposed to revise the assessment is proper? - principles of natural justice - Held that:- Admittedly, the proposal to revise the assessment was based upon an inconsistency between Annexure I, return filed by the petitioner dealer and that of the other end dealers in Annexure II.
This very issue was considered by one of us (T.S.S,J.) in the case of JKM Graphics Solutions Private Limited Vs. Commercial Tax Officer, Vepery Assessment Circle, Chennai [2017 (3) TMI 536 - MADRAS HIGH COURT]. In the said batch of cases, the question arose as to how such revision of assessment could be made when there is inconsistency or discrepancy between Annexure I and II, when the Assessing Officer gathers information from the official website of the Commercial Tax Department, and it was held that
Admittedly, the Assessing Officer did not follow the procedure which was directed to be adhered to in the said decision. This would be sufficient to hold that the petitioner had no effective opportunity to put forth his objection as the Pre-Assessment Notice was bereft of particulars. Consequently, the impugned Assessment Orders are flawed - The second mistake committed by the Assessing Officer is, not affording an opportunity of personal hearing.
The petitioner dealer did not have adequate opportunity to put forth his objections and the impugned Assessment Orders are vitiated on the ground of violation of Principles of Natural Justice - petition allowed.
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2017 (6) TMI 1286 - ITAT MUMBAI
Addition u/s 41(1) - remission/secession of liability - HELD THAT:- In absence of any material to establish that the assessee has obtained any benefit in respect of the liability on account of sundry creditors in the impugned assessment year merely on surmises and assumptions it cannot be said that there is remission/cessation of liability in the impugned assessment year. More so, when there is no unilateral act by the assessee in writing off of liability in its books of accounts.
As evident from the material on record that in course of assessment proceedings the assessee had furnished the necessary details and submitted that part of the liability has already been written off or paid back in the subsequent years. AO without any valid reasons has failed to recognise such facts. In fact, as pointed out by the AR, such repayment or writing off of the liability in subsequent years was prior to the query raised by the AO on 07.12.2011 for invoking the provisions of section 41(1) of the Act. Thus, the Act of the assessee in repaying a part of the sundry creditors of writing off the liability in its books of account cannot be held to be an afterthought but has to be considered to have been done in good faith.
We are of the view that there is no remission or cessation of liability of the sundry creditors appearing in the books of assessee in the impugned assessment year. In view of the aforesaid factual position, we do not consider it necessary to dwell much upon the decisions relied upon by the DR. Thus, in the ultimate analysis, we do not find any infirmity in the order of ld.CIT(A) which is accordingly confirmed. - Decided against revenue.
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2017 (6) TMI 1285 - CESTAT KOLKATA
Liability of appropriate late fee - non-submission of each return - it is alleged that after amalgamation, M/s. Pecon Infotech Ltd., had not surrendered the Registration Certificate till November, 2013 and for the intervening period, it has to be considered as a separate business entity - Held that:- From the letter dated 26-3-2012 of M/s. Pecon Infotech Ltd. (now amalgamated with Pecon Software Ltd.), where it has been stated that they had filed the half-yearly returns and paid the tax - after amalgamation of the two companies, by order of the Hon'ble High Court, the said company cannot be considered as a separate business unit. Therefore, the findings of the Commissioner (Appeals) cannot be sustained - appeal allowed.
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2017 (6) TMI 1284 - ITAT KOLKATA
Addition u/s 68 - unexplained cash credit - assessee has not proved the genuineness and creditworthiness of the cash credits - scandalous transaction - circuitous route of round tripping - HELD THAT:- The transactions undertaken by these groups of companies are scandalous. A number of companies have been floated and none of them have any business nor any asset worth mentioning. The first company issues a cheque to the second company for allotment of shares at a huge premium and the second company allots shares to the first company. The second company instead of encashing the cheque endorses this cheque to the third company as consideration of allotment of shares at a heavy premium in that company. The third company does not encash the cheque but in turn endorses this cheque to the fourth company towards consideration of allotment of shares at a huge premium by the fourth company. The fourth company in turn endorses this cheque to the first company as consideration for the allotment of shares at a huge premium by the first company to the fourth company. By this process the circuitous route of round tripping is completed.
We come to understand the modus operandi is to sell these companies having huge share capital and investments, to persons who have unaccounted money, by transfer of the shares at a nominal amount. The shares in these companies are sold at a ridiculously low value and consequently the management and control of this company is transferred. The purchasers of shares of the companies thereafter, show bogus sale of the investments held by such company to third parties through a chain of transactions, by way of layering and bring in their unaccounted money into that company.
Such practices have to be depreciated. In such cases the assessees cannot claim that the entire transactions are bogus transactions and hence the provisions of law will not apply and no addition can be made u/s 68. We dismiss this argument as devoid of merit.
CIT(A) was wrong in concluding that Section 68 does not apply as the transaction is a fraudulent transaction and as it is a sham transaction. He was also in error in holding that the assessee has discharged the onus that lay on it. The genuineness of the transactions has not been proved by the assessee. We reverse these findings of the CIT(A). - Decided against assessee
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2017 (6) TMI 1283 - ITAT MUMBAI
Addition of suppressed sale consideration - 4 flats sold by the assessee at a lower rate than the other flats in the same building - assessee failed to justify before the AO as to why the aforesaid flats were sold at a lower price - HELD THAT:- CIT(A) observed that sales price declined by the assessee was not below price declared by the State Government of Maharashtra or below the market price.
AO has simply applied deferential in the rates of booking of flat No.701 and other flats for arriving at the actual booking rate for all the flats other than falt No.701. Decision of the Tribunal in case of Diamond Investment and Properties [2010 (7) TMI 1037 - ITAT MUMBAI] relied on by the AO was on different facts in so far as in the case of Diamond Investment Flats were sold by the assessee to the related parties, however, in the case of above all the flats were sold by the assessee to the parties not related to the assessee.
After giving detailed justification, the CIT(A) has applied the proposition laid down in case of Neelkamal Realtors & Erectors India (P) Ltd [2013 (8) TMI 557 - ITAT MUMBAI]. The facts of the case were very much similar to the assessee's case. The issues before the Tribunal in the above case was whether since assessee tendered explanation in support of charging lower price in respect of some of the flats sold by it, which AO failed to controvert, addition is sustainable. ITAT held that addition in entirety is liable to be deleted - No reason to interfere in the order of CIT(A) for deleting the addition made on account of estimated sales price by disregarding the actual sale price shown by the assessee. - Decided against revenue
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2017 (6) TMI 1282 - MADRAS HIGH COURT
Validity of assessment order - the petitioner failed to file Audit Report in Form WW within the stipulated time - Held that:- The impugned order of assessment is set aside and the matter is remitted back to the Assessing Authority for considering the Form WW submitted by the petitioner and pass a fresh order of assessment, after giving due opportunity of hearing to the petitioner - petition allowed by way of remand.
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2017 (6) TMI 1281 - CESTAT NEW DELHI
Benefit of reduced penalty - settlement of the case - whether the benefit of reduced penalty of 15% under the amended Section 28(5) of Customs Act, 1962 read with Explanation 3 appended thereto should be available to the appellants for settlement of their case under Section 28(6) of the Act? - Held that:- The provisions of Section 28(5) of the Customs Act, 1962 was amended vide Finance Act, 2015 and received the assent of the President of India on 14-5-2015. Explanation 3 appended to the amended provisions of Section 28(5) has extended the benefit of reduced amount of penalty of 15% to those cases, which were pending for closure with the adjudicating authority.
In these cases, though the show cause notice was issued on 8-10-2014, but the same was adjudicated vide order dated 30-10-2015. Since such order was passed after the amendment of Section 28(5) ibid, the benefit of reduced penalty of 15% should be available to the appellant - the impugned order to the extent, it confirmed the penalty of 25% on the appellants are set aside and the appeals are allowed in favour of the appellants with the benefit of payment of reduced amount of penalty of 15% on the amount of non-payment of duty.
Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1280 - ITAT PUNE
TPA - Comparable selection criteria - Held that:- Companies functionally dissimilar with that of assessee need to be deselected from final list. A company is said to be not good comparable and should be excluded from the list of comparables only if it is a consistent loss making company. The company is said to have consistent losses, if the company has suffered loss in the last three consecutive assessment years including the assessment year selected for comparison. Where the assessee is providing off-site services it cannot be compared with a company providing services on-site
Risk adjustments - Held that:- A perusal of documents furnished by the assessee giving the background of the case reveal that the assessee has admitted that it is a captive service provider with limited functions and negligible risk. Subsequently, the assessee in proceedings before the TPO asked for risk adjustment. The TPO rejected the same. The assessee has also raised objection before the DRP against rejection of risk adjustment, wherein the assessee was unsuccessful in seeking the desired relief. Before Tribunal the ld. AR of the assessee has reiterated the submissions made before the authorities below. The ld. AR of the assessee has not been able to show as to how the findings of authorities below on this issue are bad. We find no merit in the ground raised by the assessee, accordingly, the same is dismissed.
Benefit of ± 5% as per the provisions of section 92C(2) - Held that:- The assessee has prayed for granting the benefit of ± 5% as per the provisions of section 92C(2) of the Act. The ld. AR has submitted that if Ancent Software International Limited and Quintegra Solutions Limited are included in the list of comparables; and Acropetal Technologies Ltd. and Thirdware Solutions Limited are excluded from the list of comparables, the average margins of the assessee will fit within ± 5% range. However, before us no working has been furnished by the ld. AR to substantiate his point. Accordingly, we remit this issue back to the file of TPO to consider the contentions of the assessee and decide this issue, in accordance with law. Thus, ground raised by assessee allowed for statistical purpose.
TPA - Comparable selection - Held that:- DRP was right in applying turnover filter while selecting comparable companies.
After having applied turnover filter, both the companies have been included in the list of comparables. We find merit in the ground raised by the Department. Once, having applied turnover filter there cannot be arbitrary selection of the companies ignoring the turnover. The DRP has drawn our attention to the financial results of both the aforesaid companies. A perusal of profit and loss accounts of the said companies for the financial year ending 31- 03-2010 reveal that both these companies have turnover much more than ₹ 200 crores. Accordingly, both these companies have to be excluded from the list of comparables. Accordingly, ground No. 2 raised by the Department in appeal is allowed.
Rejecting “On-site revenue filter‟ applied by the TPO - Held that:- This issue we have already dealt in detail deciding the appeal of the assessee. We have reversed the findings of DRP in rejecting "On-site revenue filter".
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2017 (6) TMI 1279 - TELANGANA AND ANDHRA PRADESH HIGH COURT
CENVAT credit - inputs - MS items/steel items used for repair and maintenance of storage tanks - HR Sheet Plates, HR Sheet and Plates used for repair and maintenance activity of the storage tanks - nexus with the final product - Held that:- The decision rendered turned entirely on facts and no question of law, much less a substantial one, arises for consideration in this appeal. All the more so, when the Tribunal, being the final fact finding authority, opined that repair and maintenance of storage tanks formed an integral part of the manufacturing process of the respondent company.
Appeal dismissed - decided against appellant.
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2017 (6) TMI 1278 - ITAT MUMBAI
Disallowance of interest paid on delayed payment of TDS by invoking provision of Section 40(a)(ii) - as submitted that interest on TDS is allowable u/s 37 of the Act and is not hit by provision of S. 40(a)(ii) - Held that:- In this case, AO has disallowed interest paid on delayed payment of TDS by invoking provision of Section 40(a)(ii). So far as nature of payment is concerned, we are in agreement with learned AR that this interest is not on the personal tax but is attributable to the tax which, the assessee has deducted in respect of payment made to others. Disallowance u/s.40(a)(ii) is in respect of any rate or tax levied on profit or gains of any business or profession. However, said payment of interest on the delayed deposit of TDS does not fall under the category of payment enumerated u/s. 40(a)(ii). Accordingly, we do not find any justification for disallowance of such interest u/s.40(a)(ii).
Disallowance of interest on another corporate deposit - Held that:- Interest on inter corporate deposit has been taxed by the AO on accrual basis which is correct as per the method of account followed by the assessee. In so far as assessee has offered this interest income in the A.Y.2011-12 on the plea that it was actually received in the A.Y. 2011-12, we direct the AO to reduce the same in the A.Y.2011-12, otherwise it will amount to double taxation of the same income. We direct accordingly.
Disallowance of interest u/s. 36(i)(iii) - investment in the shares of subsidiary companies - Held that:- As per the audited balance sheet placed on record the assessee was having own funds of ₹ 600.02 crores as on 31.3.2009, whereas the investments were to the tune of ₹ 44.95 crores. There was also increase in capital reserve and surplus from ₹ 496.30 crores to ₹ 600 crores as on 31.3.2009. Thus, it is clear that the assessee was having sufficient own funds for investment in subsidiary which was also for the purpose of business. In view of the decision of SA Builders [2006 (12) TMI 82 - SUPREME COURT] since there was business expediency, investment in subsidiary is to be treated for the purpose of business. Accordingly, we do not find any justification for the disallowance of interest u/s. 36(1)(iii) of the Act.
Disallowance u/s.14A read with Rule 8D - Held that:- We have considered rival contentions and found that no exempt income has been received by assessee during the year, hence no disallowance can be made u/s.14A in view of the decision of Bombay High Court in case of Ballarpur Industries Ltd. [2016 (10) TMI 1039 - BOMBAY HIGH COURT].
Addition made on the basis of mismatch of AIR information with the assessee’s books of accounts - Held that:- Nothing was placed before us by learned AR so as to persuade as to deviate from the findings and conclusion of the lower authorities, except the sum of ₹ 43,61,859/-. It appears that AO has inadvertently again added the same in assessee’s income. Since the amount has been deleted by DRP, we direct the AO to delete the sum of ₹ 43,61,859/-. Also contention of AR that balance amount has been offered to income in the A.Y.2010-11. In the interest of justice, we direct the AO to verify the income offered by the assessee in the A.Y.2010-11 and if the AO found that same income has been offered by the assessee in the A.Y.2010-11, the same should be excluded from the income of A.Y.2010-11. We direct accordingly.
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2017 (6) TMI 1277 - ITAT DELHI
Income from other sources u/s 56 - treating the net interest being the amount of interest u/s 28 of the Land Acquisition Act, 1894 as chargeable to tax - Held that:- The amount of interest received by the assessee is chargeable to tax in the year of receipt in view of insertion of clause (viii) to section 56(2) by the Finance No. (2) Act 2009 w.e.f 01.04.2010. This provision read with section 145A(b) makes it clear that interest received by assessee on compensation or an enhanced compensation shall be deemed to the income of the year in which it is received. CIT(A) has rightly set out and relied on in the case of Manjeet Singh (HUF) vs. UOI (2015 (12) TMI 1123 - PUNJAB & HARYANA HIGH COURT) being the jurisdictional High Court. CIT(A) was right in treating the amount as chargeable to tax. - Appeal filed by the assessee is dismissed.
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2017 (6) TMI 1276 - ITAT DELHI
Income from other sources - treating the net interest being the amount of interest u/s 28 of the Land Acquisition Act, 1894 as chargeable to tax - Held that:- The amount of interest received by the assessee is chargeable to tax in the year of receipt in view of insertion of clause (viii) to section 56(2) by the Finance No. (2) Act 2009 w.e.f 01.04.2010. This provision read with section 145A(b) makes it clear that interest received by assessee on compensation or an enhanced compensation shall be deemed to the income of the year in which it is received. CIT(A) has rightly set out and relied on in the case of Manjeet Singh (HUF) vs. UOI (2015 (12) TMI 1123 - PUNJAB & HARYANA HIGH COURT) being the jurisdictional High Court. In view of foregoing discussion, CIT(A) was right in treating the amount as chargeable to tax. - Appeal filed by the assessee is dismissed.
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2017 (6) TMI 1275 - ITAT DELHI
Income from other sources u/s 56 - treating the net interest being the amount of interest u/s 28 of the Land Acquisition Act, 1894 as chargeable to tax - Held that:- The amount of interest received by the assessee is chargeable to tax in the year of receipt in view of insertion of clause (viii) to section 56(2) by the Finance No. (2) Act 2009 w.e.f 01.04.2010.
This provision read with section 145A(b) makes it clear that interest received by assessee on compensation or an enhanced compensation shall be deemed to the income of the year in which it is received. CIT(A) has rightly set out and relied on in the case of Manjeet Singh (HUF) vs. UOI (2015 (12) TMI 1123 - PUNJAB & HARYANA HIGH COURT) being the jurisdictional High Court. In view of foregoing discussion, CIT(A) was right in treating the amount as chargeable to tax. - Appeal filed by the assessee is dismissed.
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