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Showing 121 to 140 of 1415 Records
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2023 (4) TMI 1296
TP adjustment - resultant effect of omitted clause (i) of section 92BA with effect form 01/04/2017 - DR relied on the decision of Maari Multi Trading Pvt Ltd [2023 (2) TMI 1256 - ITAT MUMBAI] wherein Tribunal has, though deleted the TP adjustment made, has remitted the issue back to AO with a direction to re-adjudicate the issue claim of expenditure incurred in respect of the transactions with AE and the clause (b) of sub section (2) to section 40A - HELD THAT:- We notice that the Delhi Bench of the Tribunal in the case of Yorkn Tech Pvt Ltd [2021 (8) TMI 1374 - ITAT DELHI] as held Clause (i) of Section 92BA did not come into operation whenever any action has been taken especially after such omission. Accordingly, we hold that no Transfer Pricing Adjustment can be made on a domestic transaction which has been referred to by the Assessing Officer after the omission of the said clause by the Finance Act, 2017 even though transaction has undertaken in the Assessment Year 2016-17.
We also notice that the co-ordinate bench in the case of Maari Multi Trading Pvt Ltd vs ACIT [2023 (2) TMI 1256 - ITAT MUMBAI] has also deleted the TP adjustment by relying on the decision of Texport Overseas (P.) Ltd [2019 (12) TMI 1312 - KARNATAKA HIGH COURT] With respect to the contention that the issue should be remitted back to the AO to examine the impugned addition from the perspective of section 40A(2)(b), we notice that the AO, considering the volume of SDT has made the reference to the TPO and has not recorded any adverse finding with regard to the impugned transactions. We, therefore, see no reason to remit the issue for reexamining the impugned transactions from the perspective of section 40A(2)(b) and accordingly we see no merit in the claim of Revenue. Appeal of the assessee is allowed.
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2023 (4) TMI 1295
Direct Tax Vivad Se Vishwas benefit - ground on which the petitioner’s declarations as rejected was that on the specified date i.e., 31.01.2020, its appeal was not pending - distinction as to the mode in which appeal is preferred - whether or not the appeal was pending either before the Tribunal or CIT(A)? - Commissioner (Appeals) passed two separate orders as the first order concerned the appeal filed by the assessee in physical mode which was dismissed on the ground that an appeal filed in physical form was not viable, i. e., could not be entertained. The second order the appeal preferred in digital mode. This order considered the assessee’s case on the merits. The Commissioner (Appeals), however, thereby sustained the reassessment order passed by the Assessing Officer.
The assessee preferred an appeal before the Tribunal who set aside the order passed in the appeal preferred by the assessee in physical form, and remanded the matter to the Commissioner (Appeals) and assessee thus filled miscellaneous application u/s 254(2) what it thought was an error apparent on record which was dismissed by Tribunal. A fresh appeal was filed by the assessee before the Tribunal with an application for condonation of delay which was admitted by tribunal. While the appeal was pending, the Finance Act, 2020 received the assent of the President of India on March 17, 2020.
HELD THAT:- There are two ways of looking at the matter. Firstly, the appeal preferred in physical form was pending.
The provisions of the 2020 Act do not make any distinction as to the mode in which appeal is preferred as long as it is pending. Therefore, if we were to take this view, according to us, respondent no.1 could not have passed the orders of rejection, as the appeal lodged by the petitioner in physical form had, in a sense, resurfaced with the Tribunal passing an order of remand on 01.04.2019. The order passed by respondent no.3 on merits was rendered otiose, in view of the order of remand passed by the appellate authority i.e., the Tribunal.
Appeal was pending since petitioner had attempted a course correction and filed a fresh appeal against the order on merits dated 06.07.2018 - Given the circumstances obtaining in the matter, there is weight in submission that once the Tribunal condoned the delay on 18.12.2020, the appeal would be construed as having been instituted on the date it ought to have been lodged.
Fresh appeal was filed before the 2020 Act had received the assent of the President i.e., on 17.03.2020. Therefore, the bona fides of the petitioner, clearly, cannot be doubted. But, as indicated hereinabove, this line of discussion need not be taken further in view of what we have stated hereinabove, which is that the order passed by the Tribunal, on 01.04.2019, gave a fresh lease of life to the appeal which had been preferred by the petitioner in physical mode.
Purpose of this direction was that respondent no.3 should have passed an order on merits and ought not to have dismissed the appeal only on the ground that it had not been filed in the digital mode. Tribunal’s order only complicated the matter by refusing to correct the inadvertent error which was committed by the petitioner.
Should the petitioner suffer on account of an obvious and inadvertent mistake made by the counsel for the petitioner?- It is often said that ignorance of the law is no excuse. To our minds, it is also equally well-settled, that not everyone knows the law. [See Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1978 (12) TMI 45 - SUPREME COURT].
The petitioner would not have known that a viable appeal was one which was instituted in digital mode. Undoubtedly, the petitioner suffered on account of its lawyer’s failing. Therefore, for the aforesaid reasons, we are inclined to hold that the petitioner’s appeal was pending on the specified date i.e., 31.01.2020.
Accordingly, the impugned orders passed by respondent no.1 are set aside. As the assessee’s appeal was pending on the specified date, i. e., January 31, 2020. The rejection of the declaration was not valid.
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2023 (4) TMI 1294
TP Adjustment - price paid by the assessee to its AE for purchase of power was higher than the rate paid by the State Electricity Board for purchase of power from Captive Power plants - as observed by the TPO that there was a basic difference between purchase of power by the assessee directly from its AE as against that made from a non-AE, thus adopted the average rate of Rs.3.07 per unit at which Chhattisgarh State Power Distribution Company Ltd, i.e a non-AE had purchased power from Captive Power plant as a comparable to benchmark the ALP of per unit rate of 32208103 units of electricity purchased by the assessee company from its AE -
as observed by the CIT(A) that the price at which Chhattisgarh State Power Distribution Company Ltd. had purchased power from Captive Power plants, i.e. at the rate of Rs.3.07 per unit could not have been adopted as a comparable transaction for benchmarking the ALP of per unit rate of electricity purchased by the assessee company from its AEs - HELD THAT:- We find that on an earlier occasion the Tribunal in the case of Mahendra Sponge and Power Ltd [2022 (8) TMI 1445 - ITAT RAIPUR], had observed, that the issue presently under consideration before us was squarely covered by its earlier decision passed in the case of ACIT vs. Godavari Power and Ispat Ltd. [2011 (11) TMI 107 - ITAT, BILASPUR]. As further observed by the Tribunal that the Hon’ble High Court of Chhattisgarh in the case of CIT vs. Godavari Power and Ispat Ltd [2016 (2) TMI 1375 - CHHATTISGARH HIGH COURT] had observed, that the lower appellate authorities had rightly computed the market value of the power after comparing the same with the rate at which power was available in the open market, namely the price charged by the Chhattisgarh State Electricity Board. Decided against revenue.
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2023 (4) TMI 1293
Maintainability of writ petition against reassessment orders - denial of natural justice - opportunity of cross-examination/cross-verify the evidences not given - fundamental principles laid down for reopening an assessment by incorporating Section 148A ignored - HELD THAT:- On going through the reassessment order, we find that the assessing officer was fully aware of the writ petition, which was pending before the Court and yet to be taken up for hearing and the assessing officer would observe that there is no order passed by this Court restraining him or directing him to keep abeyance from the proceeding and by referring to Section 153 of the Act the assessment has been completed.
Various dates have been stated in the preceding paragraphs to show how the assessee has been dealt with by the assessing officer in the matter - we are confined to the aspect that there has been violation of principles of natural justice. The manner in which the reassessment proceeding has been taken through by the assessing officer is thoroughly flawed.
The fundamental error committed by the AO in not providing the third party information, which was the basis for issuance of the show cause notice apart from making available those third parties for cross-examination by the assessee when statements recorded by them have been relied upon for issuance of the show cause notice, more particularly, in spite of specific request made by the assessee in this regard. That apart, after passing the order under Section 148 of the Act the assessing officer could not have stated that if the assessee wishes to cross-verify/cross-examine the evidences they may do so after taking prior appointment from him. In fact, such opportunity should have been provided prior to passing of the order u/s 148A of the Act.
Thus, we are fully convinced that the procedure adopted by the assessing officer is wholly incorrect and there has been serious violation of principles of natural justice committed by the assessing officer in the entire process - order passed u/s 148A(d) and the consequential reassessment order have to be necessarily quashed and the matter should be restored to the position of show cause notice issued u/s 148A(b) with consequential directions. Assessee appeal allowed.
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2023 (4) TMI 1292
Reopening of assessment u/s 147 - validity of order u/s 148A(d) - HELD THAT:- This is not a case where the impugned order has been passed in violation of principle of natural justice or the impugned order is without jurisdiction or there is any procedural irregularity in passing the order though it may be that the petitioner is not satisfied with the reasoning given in the aforesaid order but that can’t be a ground for involving constitutional jurisdiction of this court under Article 226 of the constitution of India. Furthermore in this case, final assessment order u/s 147 of the Act has already been passed according to the petitioner which is an appellable order under the statute and which is not the subject matter of challenge in this writ petition.
In view of the discussion made above, this writ petition is dismissed.
This Court has not gone into the merits of the final assessment order passed u/s 147 of the Act since it is not the subject matter of this writ petition.
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2023 (4) TMI 1291
Assessment u/s 153A - incriminating materials found in search or not? - additions made towards bogus purchases and u/s 40A(2)(a) - as argued these assessment years fall under the category of “unabated assessment years” and hence the AO could have made the addition in these two years only on the basis of incriminating materials, if any, found during the course of search - contention of the assessee is that assessments of AY 2012-13 and 2014-15 under consideration shall not abate, since no assessment was pending as on the date of search - HELD THAT:- As relying on ABHISAR BUILDWELL P. LTD. [2023 (4) TMI 1056 - SUPREME COURT] and KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT]we hold that the additions made towards allege bogus purchases and u/s 40A(2)(a), which are not based on any incriminating materials found during the course of search, are liable to be deleted. Assessee appeal allowed.
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2023 (4) TMI 1290
Issues involved: Application for clarification of judgment dated 27th March, 2023 regarding default bail under Section 167(2) CrPC.
Judgment Summary:
The Supreme Court addressed an application seeking clarification of a judgment passed on 27th March, 2023. The applicant/appellant requested clarification on 'Para 51' of the judgment, emphasizing that the judgment is limited to the issue referred to the larger bench. The Court, after hearing the arguments from both sides, clarified that the impugned order of the High Court granting default bail under Section 167(2) CrPC was found to be in order based on the reference made before the Court. The Court upheld the judgment of the High Court granting default bail and stated that any other pending issues from the appeals should be addressed by an appropriate Bench of the Court. Consequently, the Interlocutory Application No. 74084 of 2023 was allowed, and any pending applications were disposed of.
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2023 (4) TMI 1289
Bribe/gratification - omission to frame a proper charge regarding demand allegedly made - offences punishable under Section 7 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 - HELD THAT:- It is well settled that for establishing the commission of an offence punishable under Section 7 of the PC Act, proof of demand of gratification and acceptance of the gratification is a sine qua non. Moreover, the Constitution Bench in the case of Neeraj Dutta [2022 (12) TMI 1490 - SUPREME COURT] has reiterated that the presumption under Section 20 of the PC Act can be invoked only on proof of facts in issue, namely, the demand of gratification by the accused and the acceptance thereof.
To attract Section 7 of the PC Act, the demand for gratification has to be proved by the prosecution beyond a reasonable doubt. The word used in Section 7, as it existed before 26th July 2018, is 'gratification'. There has to be a demand for gratification. It is not a simple demand for money, but it has to be a demand for gratification. If the factum of demand of gratification and acceptance thereof is proved, then the presumption under Section 20 can be invoked, and the Court can presume that the demand must be as a motive or reward for doing any official act. This presumption can be rebutted by the accused.
There is no circumstantial evidence of demand for gratification in this case. In the circumstances, the offences punishable under Section 7 and Section 13(2) read with Section 13(1)(d) have not been established. Unless both demand and acceptance are established, offence of obtaining pecuniary advantage by corrupt means covered by clauses (i) and (ii) of Section 13(1)(d) cannot be proved.
The Trial Courts ought to be very meticulous when it comes to the framing of charges. In a given case, any such error or omission may lead to acquittal and/or a long delay in trial due to an order of remand which can be passed under subsection (2) of Section 464 of CrPC. Apart from the duty of the Trial Court, even the public prosecutor has a duty to be vigilant, and if a proper charge is not framed, it is his duty to apply to the Court to frame an appropriate charge.
The impugned judgments are quashed and set aside, and the appellant is acquitted of the offences alleged against him. The bail bonds of the appellant stand cancelled - Appeal allowed.
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2023 (4) TMI 1288
Nature of expenses - expenditure on dies & moulds - revenue or capital expenditure - HELD THAT:- We observe from the record that identical issue is decided in favour of the assessee in the A.Y. 1995-96 as allowing the revenue expenditure in respect of replacement of jigs and fixtures and dies and moulds - Decided in favour of assessee.
Addition of penalty charges received from machinery suppliers - HELD THAT:- Identical issue is decided in favour of the assessee in the A.Y. 1995-96 wherein held CIT(A) has deleted the addition following his order for Assessment Years 1989-90 to 1991-92 as well as the decision of Hon’ble Andhra Pradesh High Court in the case of Barium and Chemicals Ltd. [1987 (2) TMI 18 - ANDHRA PRADESH HIGH COURT]
Deduction towards expenditure relating to purchase of jigs and fixtures - HELD THAT:- As in assessee’s own case for the A.Y. 1996-97 CIT(A) reversed the findings of Assessing Officer and held the expenditure to be on revenue account.
Deduction u/s.80HH and 80-IA without deducting notional depreciation of individual units - HELD THAT:- As decided in A.Y. 1996-97 Co-ordinate Bench in the appeal by Revenue for assessment year 1995-96 had accepted identical ground raised by the Revenue following the decision rendered by the Tribunal in assessee's own case - No contrary material has been placed before us by assessee. We find no reason to take a different view. Consequently, the fining of the CIT(A) on this issue are reversed and Ground No.4 raised in the appeal by Revenue is allowed.
Deduction u/s.80HH and 80-IA by including duty drawback and interest - whether the income earned by the assessee relating to interest earned from the suppliers and duty drawback from the customs are relating to the business carried on by the assessee or income from other sources? - HELD THAT:- The issue under consideration is already considered by various courts particularly the Hon’ble Supreme Court in the case of Meghalaya Steels Ltd [2016 (3) TMI 375 - SUPREME COURT] as it is clear that the source of income earned by the assessee which has direct link to the business carried on by the assessee has to be considered to assess the same under the head income from Business and earned from the eligible unit. Therefore, it is eligible to get the benefit under section 80HH and 80IA. Accordingly, the ground raised by the revenue is dismissed.
Deduction u/s.80HHC pertaining to exclusion of excise duty and exclusion of Sales-tax - HELD THAT:- Identical issue is decided in favour of the assessee for the A.Y. 1996-97 While deciding the issue, the Coordinate Bench of the Tribunal in following the decision in assessee’s own case for the A.Ys. 1995-96 and held that the sale of aforesaid items should be excluded from total turnover for the purpose of calculating deduction u/s 80HHC of the Act, as in Assessment Year 1995-96 these very items were excluded from total turnover while computing deduction u/s 80HHC of the Act.
Allowability of “Technical knowhow” charges - HELD THAT:- As the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee’s own case and decided the issue in favour of the assessee and against the department as held that rendering of technical know-how in the peculiar line of industry in which the assessee is engaged in, is undoubtedly an activity related to the business carried on by the assessee. Therefore, the technical know-how income earned by the assessee company cannot be dissociated with its business income. For the same reason, it cannot be brought under the items qualified in sub-clause (i) of clause (baa). Therefore, the finding of the CIT that the technical know-how need to be excluded to the extent of 90 per cent is again not sustainable in law.
Disallowance of entertainment expenditure confirmed.
Expenditure on lease land for 99 years allowed as revenue expenditure.
Addition towards wealth tax liability by holding that the same is wealth tax paid by the assessee - HELD THAT:- Identical issue is decided in favour of the assessee for the A.Y. 1995-96 and held that the wealth-tax chargeable with reference to the value of any particular asset of the business or profession will not be covered by the prohibition clause of Section 40(a)(iia) of the IT Act, 1961, and as such wealthtax could be admissible for deduction. Admittedly, the wealth-tax paid in pursuance to Section 40 of the Finance Act, 1983, was with reference to the value of particular asset of the business of the assessee. Under Section 40 of the Finance Act, 1983, total wealth of the company was not chargeable to wealth-tax. It was only the assets specified under Sub-section (3) of Section 40 of the Finance Act, 1983, which was chargeable to wealth-tax. 'Therefore, the exception part of Explanation to Section 40(a)(iia) of the Act referred to above became applicable in the present case and the wealth-tax paid by the assessee in pursuance to Section 40 of the Finance Act, 1983, was admissible for deduction. Decided in favour of assessee.
Allowing expenses on GDR issue as covered in section 35D - HELD THAT:- We observe that the assessee has incurred expenses in connection with the issue of GDR and these expenses are allowable only when new or expansion of industrial undertaking. During the current Assessment Year, the assessee has completed the expansion of the Industrial undertaking, the expenses are allowable deduction u/s 35D of the Act, since the expenses are incurred during previous AY and expansion was completed only this AY, the relevant expenses are allowable in this Assessment Year. In the similar facts, the ITAT Ahmedabad Bench has decided the issue in favour of the assessee, in the case of Gujarat Narmada Valley Fertilizers Co. Ltd. [2011 (12) TMI 519 - ITAT AHMEDABAD] - Thus we direct assessing officer to allow the claim made by the assessee relating to deduction u/s. 35D of the Act.
Allowability of depreciation in respect of sale and lease back transaction - HELD THAT:- We observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1996-97. However, the Ld AR has brought to our notice that the assessee has not entered in any such transaction with Tata Chemical Ltd. Therefore, this ground raised by the revenue is not maintainable considering the fact that no such transactions are carried on by the assessee with the above company. Accordingly, ground raised by the revenue is dismissed.
Lease agreement with JCT Ltd - HELD THAT:- As following the principle of consistency, the view taken by the Tribunal in A.Y. 1996-97 is respectfully followed and the issue involved in relation to transaction with JCT Ltd are similar to the above findings in relation to transaction with PSEB, accordingly, ground raised by the revenue is dismissed.
Nature of receipts - taxability of surplus on account of redemption of preference shares, debentures, bonds, certificate of deposits - revenue receipts or Capital Gains - HELD THAT:- As it is brought to our notice that the Assessing Officer himself treated the surplus of redemption of preference shares and preference shares as income chargeable to tax under the head “capital gain”. Therefore, even Ld. CIT(A) has decided the issue as per the findings of the Assessing Officer. Therefore, it is not the case of the Assessing Officer that the above surplus should be considered for taxation under the head “under the term revenue receipt”. Therefore, in our considered view the ground raised by the revenue is not maintainable as the fact suggest that the ground raised by the revenue is not connected with the findings of the Assessing Officer. The Ld.CIT(A) has sustained the findings of the Assessing Officer, therefore, there is no grievance to the revenue. Accordingly, ground raised by the revenue is dismissed.
Redemption of treasury bills - above said surplus has to be treated as “interest income” substantiating the views of the AO and not under the head “capital gain” - HELD THAT:- After considering submissions of both the parties, we are not inclined to accept the submissions raised by the revenue that the surplus earned by the assessee cannot be treated as interest income and it is fact on record that assessee has held the treasury bills for certain period of time as investment and the surplus has to be taxed under the head “capital gain” and the same was sustained by the Ld.CIT(A). Therefore, the contention of the Assessing Officer is accordingly rejected and we observe that CIT(A) has rejected claim made by the assessee that the redemption of such treasury bills is not a transfer - Grounds raised by the revenue is allowed.
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2023 (4) TMI 1287
Income taxable in India - Addition of recharacterization of receipts from sale of software licenses to Indian customers/distributors as royalty - whether taxing the same receipts in hands of Respondent would result in double taxation? - As decided by HC [2022 (7) TMI 1496 - DELHI HIGH COURT] issue of taxability of software receipts in the present cases is no longer res integra as the Supreme Court in Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT] amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, thus not liable to deduct any TDS u/s 195
HELD THAT:- The issue raised by the Revenue in the present special leave petition is covered against them vide judgment “Engineering Analysis Centre of Excellence Private Limited [Supra] and a Review Petition has been filed against this judgment, which is currently pending and the right of the Revenue to revive the present special leave petition may be reserved, in case the Review Petition is allowed.
Recording the aforesaid, the special leave petition is dismissed, as the same is covered by the said decision of this Court. In case the review petition on the issue raised in the present special leave petition is allowed, it will be open to the petitioner(s) to get the present special leave petition revived.
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2023 (4) TMI 1286
Deemed income from house property - Rental Income for the properties held as Stock in Trade - as per AO Assessee has received possession of certain property/bungalow plot and had neither used nor offered to earn any income under the head “income from other sources”- AO said that property was treated as deemed to be let out and he determined the actual value of the property for the purpose of section 23(1) and determined the rent at 10% of the value in respect of the property and accordingly additions made - HELD THAT:- As relying on M/S. PEGASUS PROPERTIES PVT. LTD. [2021 (12) TMI 1210 - ITAT MUMBAI] assessee had kept various flats as stock in trade and they were not sold. No addition on account of deemed rental income can be made in respect of unsold stock of flats held as stock in trade up to A.Y.2017-18. In the present case the assessment involved in A.Y.2014-15, therefore the addition proposed by the Assessing Officer is directed to be deleted. Assessee appeal allowed.
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2023 (4) TMI 1285
Seeking grant of Regular bail - Fictitious sale - offences punishable under Sections 409, 419, 465, 467, 468, 471, 120(B) and 34 of the Indian Penal Code - HELD THAT:- No past antecedent is attributed to the present applicant - as per the charge-sheet papers, the role attributed to the present applicant is that present applicant has shown fictitious sale of Rs.50,000/- to one S.G. Enterprises.
This Court, prima facie, is of the opinion that, this is a fit case to exercise the discretion and enlarge the applicant on regular bail. Hence, present application is allowed and the applicant is ordered to be released on regular bail in connection with the FIR No. 11210015220162 of 2022 registered with DCB Police Station, Surat City on executing personal bond of Rs.10,000/- with one surety of the like amount to the satisfaction of the learned Trial Court and subject to the conditions imposed.
Bail application allowed.
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2023 (4) TMI 1284
Disallowance of interest expenses u/s. 14A - CIT(A) in the impugned order has given finding of fact that the assessee has surplus interest free funds in the form of capital and reserves to cover the investment made. Purportedly, no fresh investments were made in the impugned assessment year - HELD THAT:- The assessee had made investments in NABARD tax free bonds in assessment year 1996-97 and 1997-98. Similar disallowance u/s. 14A of the Act was made by the Assessing Officer in assessment year 1998-99 for earning tax free interest income.
The Co-ordinate Bench deleted the disallowance. The Hon’ble Apex Court in the case of South Indian Bank Ltd [2021 (9) TMI 566 - SUPREME COURT] has reiterated the legal position, “that the proportionate disallowance of interest is not warranted u/s.14A of the Income Tax Act for investment made in tax free bonds/ securities which yielded tax free dividend and interest to assessee bank in those situation where, the interest free own funds available with the assessee, exceeded their investment.”
Revenue has not disputed the fund position as highlighted by the CIT(A) in the impugned order. Decided in favour of assessee.
Allocation of interest towards earning of income on foreign exchange loans - AO held that net interest income is taxable at concessional rate of 20% u/s. 115A - HELD THAT:- As decided in assessee own case the legislature has intended to tax the interest only on gross basis. Further in support of his arguments ld. A.R has also cited Article 10& 11 of DTAA with Canada - Notification No.10503(F No.505/2/87-FTD) - Further it has also been mentioned that section 90(2) of IT Act also provides that the provisions of this Act shall apply to the extent they are more beneficial to that assessee. The order of the first appellate authority is quite elaborate on this subject and needs no interference - Decided in favour of assessee.
TDS u/s 195 - Disallowance u/s. 40(a)(ia) - not deducting TDS on interest paid to Head Office - branch office of the assessee in India paid interest to the Head Office/ overseas branches - HELD THAT:- As decided in Sumitomo Mitsui Banking Corporation [2012 (4) TMI 80 - ITAT MUMBAI] there is no express provision contained in the relevant tax treaty which is contrary to the domestic law in India on this issue. This position applicable in the case of interest paid by Indian branch of a foreign bank to its Head Office equally holds good for the payment of interest made by the Indian branch of a foreign bank to its branch offices abroad as the same stands on the same footing as the payment of interest made to the Head Office.
At the time of hearing before us, the learned representatives of both the sides have also not made any separate submissions on this aspect of the matter specifically. Having held that the interest paid by the Indian branch of the assessee Bank to its head office and other branches outside India is not chargeable to tax in India, it follows that the provisions of section 195 would not be attracted and there being no failure to deduct tax at source from the said payment of interest made by the PE, the question of disallowance of the said interest by invoking the provisions of section 40(a)(i) does not arise - Decided in favour of assessee.
Disallowance of Broken Period Interest - assessee has paid broken period interest on securities held as stock in trade on 31/03/2002 - AO disallowed the same - CIT(A) deleted the addition - HELD THAT:- It is no more resintegra that broken period interest is an allowable deduction. The CIT(A) has granted relief to the assessee by placing reliance on the decision of Hon'ble Jurisdictional High Court. There are catena of judgements allowing deduction in respect of broken period interest. The Hon'ble Supreme Court of India has dismissed the SLP of the Department in the case of State Bank of India upholding the order of Hon’ble Karnataka High Court [2020 (9) TMI 493 - KARNATAKA HIGH COURT] allowing broken period interest as deduction. Thus, we find no infirmity in the impugned order on this issue. Ergo, ground No.4 of the appeal is dismissed.
Restricting the claim of bad debts u/s 36(1)(vii) - Hon’ble Gujarat High Court in the case of CIT vs. UTI Bank Ltd. [2013 (1) TMI 209 - GUJARAT HIGH COURT] has observed that the CBDT Circular No.17 of 2008 dated 26/11/2008 had clarified the position beyond any doubt. Thus, the Hon’ble High Court refused to admit the appeal of Revenue observing that the Circular, issued by the Board in exercise of its statutory powers u/s. 119(2) of the Act may have the effect of relaxing the rigors of statutory provision. Thus, in the light of aforesaid decisions and CBDT Instructions we find no merit in ground No.5 of the appeal, hence, the same is dismissed.
Salary paid to expatriate employees - HELD THAT:- Undisputedly, the salary expenditure of expatriate employees was for rendering services wholly and exclusively for assessee in India. The quantum of expenditure and payment of salary to employees expatriated to India by head office has not been doubted by the AO. The solitary objection of Assessing Officer for disallowing expenditure is that no debit note was raised by head office.
CIT(A) has negated the objection raised by the AO by placing reliance on the decision in the case of Kedarnath Jute Manufacturing Co [1971 (8) TMI 10 - SUPREME COURT] Regarding applicability of section 44C of the Act, the CIT(A) placed reliance on the decision of Hon'ble Jurisdictional High Court in the case of Emirates Commercial Bank [2003 (4) TMI 2 - BOMBAY HIGH COURT] to conclude that payment of salary to expatriate employees paid by the head office is an allowable expenditure in view of Article 7(3) of the DTAA and section 37 of the Act and such expenditure does fall within the ambit of section 44C.
TP Adjustment in respect of Correspondent Banking Services rendered by the assessee to its AEs - Comparable selection - CIT(A) rejected all the four comparable on the ground of functional disparity. The CIT(A) further rejected Kinetic Trust Ltd. and PNR capital Services Ltd. proposed by the assessee on the ground of difference in functions. The CIT(A) made estimated T.P addition by applying 20% markup - HELD THAT:- Though there is no concept of estimated T.P addition, the ld. Authorized Representative for the assessee stated at Bar that the assessee had accepted the adjustment made by the CIT(A). The Revenue has assailed the findings of CIT(A) in rejecting T.P adjustment made by the TPO. TP concept was in nascent stage in assessment year 2002-03. The jurisprudence on Transfer Pricing was in infancy stage. Having rejected comparables the CIT(A) ought to have selected fresh set of comparables to benchmark the transaction. CIT(A) rightly rejected the comparables selected by the TPO as none of the comparables selected by the TPO were functionally comparable to the activities carried out by the assessee. We are of the considered view that transfer pricing adjustment made by the TPO has been rightly rejected by the CIT(A). Thus, the ground No.7 raised in appeal by Revenue fails.
Comparability analysis - TPO has selected comparable that is engaged in merchant banking activities - assessee is engaged in banking services - HELD THAT:- We find that while adjudicating Transfer Pricing issue, the CIT(A) has rejected all the comparable selected by the TPO. One of the comparable ( Pioneer Investcorp Ltd.) selected by the TPO was a registered category one merchant banker with SEBI. The CIT(A) has rejected the said comparable on the ground of functional disparity. The Revenue has failed to substantiate that the a functions carried out by the assessee are similar to those of a merchant banker. The assessee in ground No.2 has assailed rejection of comparables suggested by the assessee. No submissions were made by the ld. Authorized Representative for the assessee in this regard. Ergo, ground No.2 of the appeal is dismissed.
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2023 (4) TMI 1283
Maintainability of appeal - appeal filed by the petitioner was dismissed solely on the ground that the appeal was filed manually and not on portal - HELD THAT:- Since the issue involved is only procedural and keeping in view the order passed by the by the High Court of Andhra Pradesh in Ali Cotton Mill vs. Appellate Joint Commissioner (ST) [2021 (2) TMI 1165 - ANDHRA PRADESH HIGH COURT], this writ petition is allowed and order dated 13.12.2022 (Annexure P-1) is set aside and matter is remanded back to the appellate authority-respondent No.2 to pass a fresh order on merits, after giving opportunity of hearing to both the parties.
Petition allowed by way of remand.
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2023 (4) TMI 1282
Addition u/s 68 - identity of the creditor, the genuineness of the loan transaction and the creditworthiness of the creditor by furnishing documentary evidences not proved - HELD THAT:- Undisputedly, the assessee has failed to furnish PAN details, address proof, loan confirmation, ITR copy of the lender. It is also a fact that the name of the concerned lender has been struck off in the records of ROC. Therefore, there is serious doubt regarding the existence of the lender company. The assessee has also failed to prove the creditworthiness of the lender coupled with genuineness of the transaction. That being the case, the unsecured loan availed of Rs. 14,00,000 remains unexplained. Therefore, the addition made under Section 68 of the Act, in my view, is justified.
As regards, the alternative contention of the assessee that nonrepayment of loan will amount to cessation of liability, find the said submission preposterous. Once, there is serious doubt regarding the genuineness of the loan transaction and creditworthiness of the creditor, it is not understood how it can be treated as cessation of liability when the liability itself is non-genuine. Assessee appeal dismissed.
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2023 (4) TMI 1281
Late payment of PF and ESIC contribution but deposited before the due date of filing of the Income Tax Return - intimation passed u/s. 143(1) - HELD THAT:- We note that identical issue is recently decided against assessee by the Co-ordinate Bench in M/s Prashanti Engineering Works (P) Ltd. [2023 (3) TMI 729 - ITAT INDORE] after taking into account the latest decision of Hon’ble Supreme Court in Checkmate Services (P.) Ltd. [2022 (10) TMI 617 - SUPREME COURT] employees’ contributions to PF / ESI paid after due date under PF / ESI laws is not an allowable deduction in computing taxable income of business and the revenue-authorities have rightly disallowed the same. Therefore, we uphold the action of lower-authorities in making/confirming the impugned disallowance. Decided against assessee.
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2023 (4) TMI 1280
Admission of claim after Resolution Plan approved - HELD THAT:- From the facts which has been brought on record it does appear that there was inordinate delay in filing the claim by the Appellant. The Application which was filed by the Appellant came to be rejected by the Adjudicating Authority observing that Resolution Plan having been approved, no claim can survive.
Learned Counsel for the Appellant has relied on Judgement of Hon’ble Supreme Court in STATE TAX OFFICER (1) VERSUS RAINBOW PAPERS LIMITED [2022 (9) TMI 317 - SUPREME COURT] - there is no necessity to consider the judgement since the claim of the Appellant was not admitted by the RP or by the Adjudicating Authority.
There are no error in the order, the Appeal is dismissed.
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2023 (4) TMI 1279
Principles of res-sub-judice - HELD THAT:- The matter is pending for judgment in M/S FLIPKART INTERNET PVT. LTD. VERSUS THE STATE OF BIHAR [2023 (12) TMI 419 - PATNA HIGH COURT].
Post immediately after the judgment is delivered.
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2023 (4) TMI 1278
Stay of demand - legality and validity of the order as passed u/s 220(6) questioned directing the petitioner to pay an amount of Rs. 5 crores with the respondents by 30.03.2023 - HELD THAT:- While the main issue as to entitlement of the petitioner to exemption from income tax under Section 11 of the Act is the subject matter of the appeals pending before the first appellate authority, we are of the view that considering the status of the petitioner, which has been taken note of by respondent No. 1 himself, it would meet the ends of justice if petitioner pays an amount of Rs. 3 crores within a period of fifteen days from today. On such deposit being made, the demand raised by the respondents for the assessment years 2016-17 to 2021-22 shall remain stayed till disposal of the appeals stated to be pending before the first appellate authority. WP disposed.
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2023 (4) TMI 1277
Estimation of income on undisclosed sales - declaration made by the assessee during the course of survey - Income estimated on undisclosed turnover against the undisclosed excess stock of gold jewellery and bars found during the course of survey - HELD THAT:- As application of income earned is found in excess stock found and also in cash deposited in the bank account. The source of earning is from profit earned on undisclosed turnover and application is in stock and cash deposited in Bank.
As cash deposited in bank is being adjudicated separated, the assessing officer is directed to telescope the gross profit estimated on turnover outside the books of accounts against the excess stock found.
CIT(A) directed the assessing officer to give the telescoping effect of income estimated on undisclosed turnover against the undisclosed excess stock of gold jewellery and bars found during the course of survey. Hence separate addition made by the assessing officer was deleted by CIT(A). We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the order passed by CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the ground nos. 1 and 2 raised by the Revenue.
Addition on account of cash deposited during the demonetization period - assessee did not explain the source of cash deposited - HELD THAT:- It is not a case where turnover outside the books of accounts was detected. The plea of the assessee could have been accepted in the later case and not in the former case as the assessee has deposited the entire cash in the bank account. Therefore, the alternative plea of the assessee was rejected.
In view of the above facts, the ld CIT(A) observed that the addition on cash deposit sustained is Rs. 61,80,827/- by the cash in hand of Rs. 26,47,736/-. The net addition sustained was at Rs. 35,33,091/-. The assessee got relief of Rs. 6,76,66,909/- (6,23,35,144 + 26,29,991+26,47,736).
CIT(A) directed the assessing officer to tax the said amount of Rs. 35,33,091/- (7,12,00,000- Rs. 6,76,66,909) u/s 68 of the Act as same was generated not from actual sale of jewellery or bullion, therefore, ld CIT(A) held the claim of sale as bogus as evidenced from entries in computer. Accordingly, the ld CIT(A) directed the assessing officer to tax the amount of Rs. 35,33,091/- as per the provisions of section 115BBE of the Act. We do not find any infirmity in the order of Ld. CIT(A), hence ground No. 3 of Revenue is dismissed.
Investment in undisclosed stock - business income OR undisclosed investment - HELD THAT:- The source of income was explained and is apparently established and hence section 115BBE of the Act, is not applicable for such business receipts. The provisions of Sections 68 and 69 are not applicable for trading transactions like deposit of cash out of cash sales and excess closing stock. For that reliance can be placed on the judgment of case of Shilpa Dyeing & Printing Mills Ltd [2015 (7) TMI 691 - GUJARAT HIGH COURT] Therefore, we direct the AO to tax the excess stock/sale, if any, under the head business income, (not u/s 115BBE) and amount of Rs. 35,33,091/- should be taxed at the rate of 2.5% (normal profit rate of assessee).
Quantification of excess stock - credit of disclosures during the course of survey and subsequently in the return filed - In assessment year 2017-18, when the survey was conducted, then assessing officer reopened the previous assessment years namely, assessment years viz: 2013-14, 2014-15, 2015-16 and 2016-17 and re-estimated the profit on turnover at the rate of 5%. On appeal, ld CIT(A) reduced profit to 2.5%. We note that assessee has declared cash sales/PMGKY Scheme (sales bill reversed-So Stock increased) at Rs. 5,00,00,000/-, hence the assessee is entitled for telescoping of these previous assessment years which were completed after assessment year 2017-18. Therefore, we direct the assessing officer to grant the telescoping of these previous assessment years viz: 2013-14, 2014-15, 2015-16 and 2016-17.
Estimation of NP - Suppressed sale of jewellery and suppressed sale of bullion - HELD THAT:- CIT(A) noted that compared to the average net profit disclosed for these preceeding assessment years, the 5% net profit estimated by the AO is on a higher side. Hence, if the net profit is taken at 2.5% of the unrecorded/suppressed turnover of jewellery which is about 0.87% above the average net profit of 1.63% would meet the ends of justice. Similarly, for bullion the assessee has the separate record of only A.Y 2014-15 and 2015-16 where the average net profit is a loss. In absence of the separate details for bullion for all the proceeding assessment years, the prevalent market rate of 0.2% on sale on bullion would be the appropriate net profit rate. Accordingly, ld CIT(A) directed the assessing officer to estimate the net profit at the rate of 2.5% on the suppressed sale of jewellery and 0.2% on suppressed sale of bullion.
This way, ld CIT(A) allowed the appeal of the assessee for all these 3 assessment years partly. We do not find any infirmity in the above conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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