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Showing 121 to 140 of 1904 Records
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2019 (8) TMI 1785 - NATIONAL COMPANY LAW TRIBUNAL, KOLKATA
Seeking approval of Resolution Plan - One member of CoC, Canara Bank, tendered dissenting vote for approval of the plan on the ground that distribution of resolution funds is discriminatory as against them - whether the decision of CoC can be questioned by Adjudicating Authority (NCLT)? - HELD THAT:- In case of K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK & OTHERS [2019 (2) TMI 1043 - SUPREME COURT] the Hon’‘ble Apex Court hold that, “the legislature has not endowed on the Adjudicating Authority (NCLT) with the jurisdiction or authority to analyse or evaluate commercial decision of CoC which lies to enquire into the justness of the rejection of resolution plan by descending financial creditors.”
This Authority cannot sit in appeal against the financial decisions that are taken by CoC, In our considered opinion, it is within commercial wisdom of the CoC as to what Financial Creditors will get what share of the resolution funds.
The objection of Canara Bank is rejected and it is proceeded to check whether the resolution plan submitted for our approval complies the approval under Section 30(2) of Insolvency and Bankrutpcy Code, 2016.
It is seen that there is no Operational Creditor, employees or the workmen and hence no provision made towards their payment - Para 6 of mandatory contents of the plan provides mechanism regarding management in control of affairs of the Corporate Debtor. It is also provided therein the mechanism for effective supervision and implementation of the plan. Provision is also made to pay resolution costs. The resolution fund appears to be equally distributed among all the Financial Creditors giving them equal share i.e. 23.43%. RP has certified the plan and compliance Certificate is produced as Annexure-F. The affidavit of resolution applicant is also produced stating that they are not disqualified under Section 25A of Insolvency and Bankruptcy Code, 2016 - Perusal of plan shows that it does not contravene any provision of law time being in force and it complies all requirement of Insolvency and Bankruptcy Board of India.
The Resolution plan is approved - application allowed.
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2019 (8) TMI 1784 - ITAT DELHI
Disallowance of depreciation u/s 32(1) r.w.s.43(l) - assets of the assessee company have been acquired by it in a scheme of demerger - As per AO assets of erstwhile entity were acquired out of the amount of the excise duty exemption, which was accounted as deferred government grants in the books of accounts and therefore in accordance with the provision of Explanation-10 to section 43(1) actual cost of such assets of the demerged company should be nil as the entire cost of the assets had been met out by the Central Government - HELD THAT:- As relying on own case M/S AVICHAL BUILDCON (P) LTD. AND (VICE-VERSA) [2019 (2) TMI 47 - ITAT DELHI] Excise duty refund, is not in the form of capital subsidy or grant, which can be reduced from the cost of assets. Therefore, we agree with the argument of the appellant and in facts and circumstances as discussed above, with due respect, we differ from the findings of Ld.CIT(A) in the earlier Assessment years on the same issue and also, in view of the ratio laid down by Hon'ble Supreme Court, in MEGHALAYA STEELS LTD [2016 (3) TMI 375 - SUPREME COURT] - Accordingly, findings of the A.O. are erroneous and therefore, disallowance is deleted.
Thus we restore the issue in dispute to the file of the Assessing Officer to decide in accordance with the direction of the Tribunal - The grounds of the appeal of the Revenue are accordingly allowed for statistical purposes.
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2019 (8) TMI 1783 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor or not - It is submitted that the amount was deposited as loan without interest and therefore it does not come within clause (a) of Section 5(8) of IBC - consideration of 'time value' for money - HELD THAT:- The Adjudicating Authority has noticed that the Legal Notice dated 24.06.2017 was issued by the 1st Respondent addressed to the 'Corporate Debtor' and others intimating the defaults such as non-issue of share, Balance Sheet, Account and confirmation of the share allotment & remuneration and non-informing board meeting and the AGM and suppressing the profit of the Company. The details of the Lawyer's notice have also been recorded by the Adjudicating Authority.
The 'Corporate Debtor' has accepted the loan liability and in terms of the provisions of law, has been noticed by the Adjudicating Authority - Respondent No. 1 who applied for refund of money was required to be paid interest @ 12% per annum from the expiry of 60 days thereby from 61st day should be treated as debt in default.
The record being complete and the Adjudicating Authority being satisfied, admitted the Application under Section 9 of the IBC - Appeal dismissed.
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2019 (8) TMI 1782 - BOMBAY HIGH COURT
Dishonor of Cheque - direction to petitioner to deposit 25% of the amount of compensation awarded by the Trial Court in accordance with the provisions of Section 148 of the Negotiable Instruments Act - case of petitioner is that the impugned order is illegal, arbitrary, unconstitutional and discriminatory as it has been passed without assigning any reasons or without appreciating the records and proceedings - principles of natural justice - HELD THAT:- Amendment Act No. 20/2018 amending Section 148 of the Act came into force with effect from 01/09/2018. Considering the object and purpose of amendment in Section 148 of the Act and while suspending the sentence in exercise of powers under Section 389 of the Criminal Procedure Code, when the first appellate Court directed the appellants to deposit 25% of the amount of fine/compensation as imposed by the learned Trial Court, the same can be said to be absolutely in consonance with the Statement of Objects and Reasons of amendment in Section 148 of the Act. It is specifically observed that because of the delay tactics of unscrupulous .drawers of dishonoured cheques due to easy filing of appeals and obtaining stay on proceedings, the object and purpose of the enactment of Section 138 of the Act was being frustrated, the Parliament has therefore suitably amended Section 148 of the Act conferring power upon the Appellate Court to direct the convict accused/appellant to deposit such sum which shall be a minimum of 20% of the compensation defined or awarded by the Trial Court.
It is difficult to accept the argument of the learned Counsel for the petitioner that he has been denied an opportunity to satisfy the learned Additional Sessions Court as to how the petitioner's case would come within the exceptions, for the reasons that the impugned order indicates not only an opportunity to hear the petitioner's Counsel was given, but the learned Appellate Court has also perused the appeal memo as well as the judgment and order of the Trial Court. Merely because the record and proceedings of the Trial Court were not before the Appellate Court at the time of passing the impugned order would not prohibit the Court from passing an order after giving a full hearing to the learned Counsel at the time of suspending the sentence.
The appellant is directed to deposit 25% of the compensation/fine amount awarded by the trial court - Application allowed.
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2019 (8) TMI 1781 - SUPREME COURT
Allegation of fraud, misappropriation, falsification of records and conspiracy - private complaint filed under Section 156(3) of Cr.P.C - HELD THAT:- The Special Leave Petition is dismissed.
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2019 (8) TMI 1780 - AUTHORITY OF ADVANCE RULING, JHARKHAND
Classification of services - applicable rate of GST - service provided by the State of Jharkhand to the petitioner for which Royalty is being paid as per N/N. 13/2017 - Central Tax (Rate) dated 28.06.2017 - Reverse charge mechanism - HELD THAT:- The services for the right to use minerals including its exploration and evaluation, as per Sr. No. 257 of the annexure appended to notification no. 11/2017-CT (Rate), dated 28.06.2017 is included in group 99733 under heading 9973. The royalty/dead rent paid/payable to the Government by the applicant is consideration against the transfer of right to use minerals including its exploration and evaluation as per the lease granted by the Government to the applicant.
The services for the right to use minerals including its exploration and evaluation, as per Sr. No. 257 of the annexure appended to notification no. 11/2017-CT (Rate), dated 28.06.2017 is included in group 99733 under heading 9973. Hence it attracts the same rate of tax as on supply of the like goods involving transfer of title in goods. As per notification no. 11/2017-CT (Rate), dated 28.06.2017 under the CGST Act, 2017 and the corresponding State Tax notification no.- 01/2017 dt. 29-06-2017 under JGST Act, 2017, Schedule -l the iron ore and manganese ore extracted by the applicant attract 5% GST (2.5 CGST+ 2.5% JGST) as covered under HSN 2601 and 2602 (At Sr. No. 139 and 140 of the notification).
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2019 (8) TMI 1779 - DELHI HIGH COURT
Execution of works contract - Section 34 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- It is stated on instructions that though the aforesaid plea was not specifically urged, it forms a part of the grounds taken in the Section 34 petition relating to non consideration of the written submissions filed by the appellant. We are afraid, such a plea cannot be permitted to be taken in appeal for the first time. The impugned order shows that no such ground was urged on behalf of the appellant before the learned Single Judge by pointing out the effect and scope of Clause 39 of the General Conditions, which is now sought to be raised to assail the impugned judgment. Besides the above mentioned plea, no other ground has been taken to assail the impugned judgment.
The impugned judgment does not warrant interference and is accordingly upheld - Appeal dismissed.
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2019 (8) TMI 1778 - COMPETITION COMMISSION OF INDIA
Right to give necessary permissions and rights for organisation of volleyball leagues - Agreement executed between VFI and Baseline, is anti-competitive or not - penalty for entering into anti-competitive agreement - HELD THAT:- In the present case, the allegations concern restrictions placed on organisation of volleyball league by any enterprise other than Baseline in India or abroad and on volleyball players who are part of the Volleyball League to participate in any other league or other national/international events for the next 10 years. In DHANRAJ PILLAY AND OTHERS VERSUS HOCKEY INDIA [2013 (5) TMI 962 - COMPETITION COMMISSION OF INDIA], the Commission noted that the sports sector comprises multitude of relationships. For example, a sports federation may be a seller of various rights such as media rights, sponsorship rights, and franchise rights associated with sports event(s) under its purview and there would be a separate set of consumers for each such right. However, the ultimate viewers of sport events are the end consumers, who influence the popularity of the sport. Also, a sports federation requires services of players, officials, etc. for staging an event which makes sports federations themselves as consumers. In this multitude of relationships, defining the relevant consumer would enable defining the relevant market.
The Commission notes that as per the decisional practice of Commission, there is an inherent conflict of interest when an entity is acting as a regulator as well as an organiser. The restraints imposed by the regulator would be justified if the restraint on competition is a necessary requirement to serve the development of sport or preserve its integrity. Furthermore, the proportionality of the regulations can only be decided by considering the manner in which regulations are applied - it requires to be analysed whether VFI, which is a regulator of volleyball as well as the organiser of volleyball tournaments, was justified to enter into agreement with Baseline giving it exclusive rights for a period of 10 years to conduct and organise Volleyball League in India to the exclusion of other enterprises and consequently affecting the free movement of players, who are part of the Volleyball League, by not letting them participate in other tournaments.
The Commission at this stage is of the prima facie opinion that certain clauses of the agreement dated 21.02.2018 as it existed prior to amendment between VFI and Baseline had placed a prohibition on the players who are participating in Baseline's Volleyball League from participation in other similar tournaments for a period of ten years. The restrictions may be extended by more than ten years in case the said Agreement is renewed or extended. Furthermore, the players who would participate in Baseline's Volleyball League are/were not allowed to participate in any national or international event if its dates clashed with Baseline's Volleyball League. Such restrictions appear to be prejudicial to the players participating in Baseline's volleyball league as these players may have to forgo international events like, Olympics, Asian Games, etc. Such restrictions also appear to have the effect of restricting free movement of participating volleyball players and would have put them at a disadvantage - The Commission cannot be oblivious to the fact that VFI has entered into an arrangement with Baseline, thereby granting some exclusive rights to the said company to hold a Volleyball League and simultaneously placing restrictions on the players participating in the Volleyball League. This conduct of VFI, in the prima-facie opinion of the Commission, needs to be examined through an investigation by the DG, to determine whether the same resulted in violation of provisions of the Act including that of Section 4.
The Director General (the DG) is directed to investigate into the matter and submit its report within a period of 150 days from receipt of this order - Application disposed off.
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2019 (8) TMI 1777 - BOMBAY HIGH COURT
Validity of Look-out-notice - offence under Section 420 r/w 120(B) of IPC and u/s 13(2) and 13(1)(d) of Prevention of Corruption Act, 1988 - HELD THAT:- The look-out-notice could not have been issued after the period of six years from the date of registration of subject crime, especially in absence of any material to support respondents apprehension. The look-out-notice, therefore, cannot be sustained and the same deserves to be quashed and set aside. At the same time, it is deemed appropriate to put the petitioner to terms to cooperate with the investigating agency in the investigation of the subject crime.
It is deemed appropriate to defer the quashment of look-out-notice by a reasonable period to facilitate effective investigation in the intervening period. At the same time, to address the immediate concern of the petitioner to travel abroad urgently, we find it appropriate to direct the suspension of operation of look-out-notice for a period of 10 days - The subject look-out-notice issued at the instance of respondent no.1, on 22nd June, 2018, shall remain suspended for the period of 10 days i.e. from 2nd September, 2019 till 11th September, 2019.
Petition disposed off.
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2019 (8) TMI 1776 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL — BENGALURU BENCH
Oppression and Mismanagement - seeking to supersede the board of directors and reconstitute it and an administrator be appointed to oversee the affairs of the company - seeking to grant perpetual injunction restraining the respondents whether acting by its servants, agents, etc., from altering the share capital of respondent No. 1-company - seeking to grant mandatory injunction restraining the respondents to transfer business, sales, contracts, company resources and funds to the newly incorporated respondent No. 4-company - HELD THAT:- The petitioner failed to establish even prima facie case in support of alleged acts of oppression and mismanagement in the affairs of respondent No. 1-company. And respondent No. 1-company is admittedly a profit making company having several employees and conducting its affairs strictly in accordance with law. Learned counsel for the respondent submitted that the petitioner is being paid salary of ₹ 75,000 (rupees seventy five thousand only) per month plus car and free 4 BHK residential accommodation and he has assured on behalf of the company that the same will be continued as long as she is director of respondent No. 1-company. Therefore, the petitioner is not put to any hardship by respondent No. 1-company.
The petitioner has failed to make out any case so as to exercise powers conferred on the Tribunal under section 242 of the Companies Act, 2013 - Petition dismissed.
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2019 (8) TMI 1775 - ITAT BANGALORE
TP Adjustment - allowing foreign exchange gain/loss as operating revenue for computing margins of comparables under both segments - HELD THAT:- It is undisputed fact that, income earned by assessee/comparable is from international transaction with its AE’s, and is received in foreign exchange currency. Further gain or loss due to foreign exchange fluctuation can be computed only on accrual of income by assessee/comparable.
We cannot accept contention of Ld.CIT DR that fluctuation must relate to income earned from international transaction under consideration earned during the year. The moment there is no dispute regarding nexes with income earned and foreign exchange fluctuation, it has to be considered as operating revenue. Thus respectfully following decisions of this Tribunal in case of SAP Labs India Pvt. Ltd. [2010 (8) TMI 676 - ITAT, BANGALORE] and Triology Ebusiness software India Pvt Ltd. [2011 (6) TMI 392 - ITAT BANGALORE] we direct Ld.AO/TPO to consider gain/loss earned by comparable due to foreign exchange fluctuation as operating revenue for computing its margin.We therefore do not find any infirmity in the view taken by Ld. CIT (A) and the same is upheld.
Computation of deduction under section 10 A - HELD THAT:- As relying on HCL TECHNOLOGIES LTD. [2018 (5) TMI 357 - SUPREME COURT] deduction of right, telecommunication and insurance attributable to the delivery of computer software under section 10 A of the act are allowed only into export turnover but not from the total turnover then, it would give rise to an inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the respondent which could have never been the intention of the legislature.
Even in common parlance, when the object of the formalised to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and apps erred. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well.
Comparable selection - functional dissimilarity - HELD THAT:- Companies functionally dissimilar with that of assessee as contract service provider for software development service need to be deselected from final list.
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2019 (8) TMI 1774 - MADRAS HIGH COURT
Money Laundering - proceeds of crime - allegation is that the respondents who were doing business in gold though received money through RTGS transaction did not part with the gold - HELD THAT:- The submission made with respect to the statement made by Mr.Sukash Chandra Shekar pertains to only a sum of ₹ 46,69,000/-. Similarly in respect of the other amount of ₹ 51,25,000/-, there is a RTGS transaction. Thus, the appellate tribunal's findings in this regard cannot be found fault with. The appellate tribunal has rendered the above decision by considering the materials available on record. However, we find that a specific averment has been raised by the appellate in the complaint that the total amount of ₹ 4,60,94,825.97 is also the proceeds of the crime. The final adjudication in this matter is to be done by the trial court which is ceased of the matter.
The order passed by the appellate tribunal stands modified. The respondents in both the appeals shall furnish either bank guarantee or immovable property security to the satisfaction of the adjudicating authority forthwith for a sum of ₹ 3,63,00,825.97. In other respects, the order passed by the appellate tribunal stand confirmed.
The Registry is directed to post this matter on 14.10.2019 for reporting compliance.
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2019 (8) TMI 1773 - GUJARAT HIGH COURT
CENVAT Credit - taxable as well as exempt goods - receipt of input service but reversed subsequently alongwith interest - verification of quantification of reversal without passing final order on the demand and penalty - HELD THAT:- The Tax Appeal is admitted on the substantial questions of law.
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2019 (8) TMI 1772 - ITAT SURAT
Estimation of income - unexplained purchases - HELD THAT:- The assessee produced complete details before the authorities below in which no deficiency have been pointed-out. The assessee need not to prove source of the source i.e., purchase made by the purchaser parties i.e., Damor concerns. The assessee also established common practice in Textile Sector in Surat for supply of goods at door step of consumer. Thus, the initial burden upon assessee to prove the genuine purchases have been discharged by assessee. The assessee has fully discharged its onus of proving the purchases by giving names, addresses, confirmation, PAN, bills and invoices, details of payment by account payee cheques, ITRs and Audit reports of its suppliers. Merely because further suppliers to Damor family did not respond to the notice of the assessing officer is no ground to reject the explanation of assessee. Since in the case of assessee no incriminating material was found to prove bogus purchases, therefore, the decision in the case of M/s. N.K. Proteins Limited [2017 (1) TMI 1090 - SC ORDER] would not apply.
We do not find it to be a fit case where even gross profit rate of 5% be applied against the assessee as per Judgment of Hon’ble Gujarat High Court in the case of Mayank Diamonds Pvt. Ltd., [2014 (11) TMI 812 - GUJARAT HIGH COURT] - In view of the above discussion, we set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee.
Disallowance u/s 14A - AO disallowed proportionate interest expenses under Rule 8D - assessee submitted before assessing officer that there is no exempted income earned during the year and, therefore, the disallowance made by the assessing officer is wholly erroneous - HELD THAT:- It is clear that since assessee has not earned any exempt income during assessment year under appeal, therefore, there is no question of applicability of provisions of Section 14A of the I.T. Act in the matter. Similarly, in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] held that “when no exempt income received or receivable in assessment year under appeal, no disallowance under section 14A is required.” In view of the above legal proposition, we set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee.
Disallowance on account of claims of bad debts - HELD THAT:- It is not in dispute that the amount in question claimed as bad debt is written-off as irrecoverable in the accounts of the assessee. Therefore, issue is covered by the Judgment of Hon’ble Supreme Court in the case of TRF Limited [2010 (2) TMI 211 - SUPREME COURT]. In view of the facts explained by Learned Counsel for the Assessee which are not controverted by Ld. D.R. in the light of Judgment of Hon’ble Supreme Court in the case of TRF Limited (supra), we set aside the Orders of the authorities below and delete the entire addition.
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2019 (8) TMI 1771 - ITAT BANGALORE
Nature of expenditure - Allowance of ESOP expenditure - Whether it is a revenue expenditure actually incurred by the company, as per the provisions of the IT Act? - AO disallowed ESOP expenditure by stating that there is no expenditure incurred and the expenditure crystallises only on the date on which the employee exercises option and any expenses claimed during vesting period is contingent in nature and that the expenditure on ESOP is a capital expenditure - CIT-A allowed the claim of assessee - HELD THAT:- CIT (A) very categorically analysed that the objections raised by Ld. AO in present case has been addressed by Special Bench of this Tribunal in Biocon [2013 (8) TMI 629 - ITAT BANGALORE] in favour of assessee
AR submitted that shares were allotted to employees during year under consideration, and therefore in our considered opinion, ratio of decision of Special Bench in Biocon (supra) squarely covers the issue - No infirmity in the view taken by Ld. CIT (A) and the same is upheld. - Decided against revenue.
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2019 (8) TMI 1770 - ITAT MUMBAI
Calculation of the long term capital gain - Cost of shares allotted to members of Bombay Stock Exchange (BSE) pursuant to its corporatisation/de-mutualisation - Cost of acquisition of shares of BSE Ltd. sold by the assessee in a situation wherein assessee had claimed depreciation on the cost of membership card. Is the cost of acquisition to be computed as per Section 50 of the Act or Section 55(2)(ab) - what should be the period of holding of shares of BSE Ltd.; will it be computed from date of acquisition of membership card or from date of allotment of shares in BSE Ltd? - Whether indexation benefit on sale of such share would be available from the date of corporatisation/de-mutualisation of BSE or from the date of acquisition of original membership of BSE ? - HELD THAT:- Section 55(2)(ab) of the Act and held that cost of trading rights will be NIL as per Section 55(2)(ab) of the Act, whereas for cost of shares, it applied Section 50 of the Act. We find that such a partial application of Section 55(2)(ab) of the Act is not correct application of Section 55(2)(ab) of the Act and, as such, the same is not a good precedent.
As regards the reliance placed by the learned DR on the decision of M/s Pavak Securities Pvt. Ltd. vs. ITO [2013 (9) TMI 608 - ITAT MUMBAI] the same is distinguishable on facts as in that case, assessee had not argued and claimed that it was eligible to claim entire cost of acquisition of membership card while computing Long Term Capital Gains - assessee itself chose to claim only the WDV as the cost of acquisition of membership card. Such an action on the part of the assessee in that case cannot be said to be a valid binding precedent and thus, the same cannot help the cause of Revenue in the present case.
As hold that the cost of acquisition of shares of BSE Ltd. shall be the original cost of acquisition of membership card in terms of Section 55(2)(ab) of the Act even though assessee has claimed depreciation on the cost of membership card in the earlier years.
As regards the period of holding of shares of BSE Ltd., we find that as per clause (ha) inserted in Explanation 1 to Section 2(42A) of the Act by the Finance Act, 2003, period for which the person was a member of the recognised stock exchange in India immediately prior to such demutualisation or corporatisation shall also be included in period of holding of shares. In terms of the clear and unambiguous language of the section, I hold that the period of holding of shares of BSE Ltd. shall be reckoned from the date of original membership of BSE and not from date of allotment of shares in BSE Ltd.
We agree with the view taken by the learned Judicial Member that the cost of shares will be original cost of the membership card in terms of Section 55(2)(ab) of the Act. The decision arrived at by learned Judicial Member is the appropriate view, and we concur with the view adopted by the learned Judicial Member on this issue. Decided in favour of the assessee.
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2019 (8) TMI 1769 - ITAT SURAT
Bogus purchases - AO rejected the books of account u/s 145(3) - AO relied upon the material collected during the course of search in the case of Shri Bhanwarlal Jain Group of cases for providing bogus entries to different persons/concerns including the assessee - HELD THAT:- Material found during the course of search in the entities of Shri Bhanwarlal Jain Group of cases cannot be used in evidence against the assessee. The reliance of the authorities below of such material is of no use and basis. The other material available on record are the documentary evidences filed by assessee which are copies of the purchase invoices, stock register reflecting purchase and sales, bank statements highlighting payments made by assessee to these parties through banking channel, copy of bank statements of both seller parties along with their balance-sheet confirmations and copy of acknowledgment of filing of the income tax returns.
A.O. did not make any inquiry on the documentary evidences filed by assessee and did not doubt the explanations. Since the documentary evidences filed on record have not been doubted by A.O. and no adverse finding have been given and no inquiry have been made into the claim of assessee, therefore, there was no basis to treat such purchases as bogus - Entire addition is wholly unjustified and even it is not a fit case where Gross Profit rate of 5% be applied for sustaining the part addition - Decided in favour of assessee.
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2019 (8) TMI 1768 - ITAT SURAT
Validity of reopening of assessment - borrowed satisfaction v/s independent application of mind - Accommodation entries pertaining to bogus transaction - Assessee argued for non independent application of mind by AO - HELD THAT:- We find that the AO has reopened the assessment merely on the basis of information received from Director of Investigation (Inv)-II, Mumbai without conducting any enquiry at his own. Thus, the reasons recorded was not based on his own satisfaction, but on the borrowed satisfaction, which is clearly discernible from the reasons recorded for reopening of assessment.
As reasons were based on borrowed satisfaction, as the above reasons did not indicate any enquiry or examination of assessment records by the AO. Thus, the basis of the reasons of the AO was merely framed his opinion on the information provided by the DIT (Inv.)-II, Mumbai. We further find that the assessment has been reopened on the basis of statement given by third party. It is also noticed that in the reassessment order the AO at various instances depicted his reliance on information received from Director of Investigation (Inv) Mumbai without making his own inquiry, thus, the re-opening is based on borrowed satisfaction.
Denial of natural justice - The third party statement cannot be relied without allowing cross-examination. The assessment records showed that the assessee has demanded cross-examination but same was not allowed. The assessee has filed affidavit from Shri Bhanwarlal M. Jain wherein he has retracted for his statement recorded under section 132(4) of the Act. His affidavit was not examined. Thus, non allowing opportunity of cross examination renders assessment proceeding as invalid as held by the Hon`ble Supreme Court in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] held that not allowing the assessee to cross examine witnesses by Adjudicating Authority though statements of those witnesses were made basis of impugned order, amounted to serious flaw which makes impugned order nullity as it amounted to violation of principle of natural justice. - Decided in favour of assessee.
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2019 (8) TMI 1767 - ITAT DELHI
Addition on account of project expenses - Allowable business expenses or not? - HELD THAT:- As relying on own case [2018 (12) TMI 762 - DELHI HIGH COURT] it would be incongruous for the Revenue to urge that the purpose and goal behind the activities undertaken by the assessee was not commercial but charity as the intent and motive behind them was not to earn profit. The expenditure incurred to carry out social and economic development would in this background constitute a 'business' or 'commercial' activity undertaken by the assessee.
It would be a contradiction in terms, if we hold that the expenditure would be non-deductible expenditure or expenditure without business expediency. Under section 37 it does not matter whether or not the expenditure was in the nature of donation or Section 80G of the Act was not attracted. The conditions stated in Section 37 matter and constitute the test. Expenditure incurred in furtherance of and connected with the business and commercial activities for which the respondent- assessee was established cannot be disallowed as expenditure not relatable and incurred for 'business' purposes.
On the question of capital expenditure, the assessing officer did not refer to or examine whether the capital assets created were for third party villagers - assessee was not the owner of the assets created and developed. The assets created were not capital assets in the hands of the respondent-assessee. The respondent-assessee had contributed, developed, financed aid created assets which belonged to third persons. The expenditure incurred therefore would not be ‘capital’ in nature in the hands of the respondent assessee - Decided against revenue.
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2019 (8) TMI 1766 - ITAT MUMBAI
TP Adjustment - selection of MAM - RPM v/s TNMM - assessee had selected “Resale Price Method” (RPM) as the most appropriate method for benchmarking its purchase transactions with the AEs - TPO rejected RPM and applied TNMM as the most appropriate method - HELD THAT:- For the purpose of application of RPM what is relevant is that as to whether there is any value addition or not to the goods purchased by the assessee for resale or not. In case, there is no significant value addition and the finished goods which are purchased from the AE are resold in the domestic market in the same form, then the gross profit margin earned on such transactions becomes the determinative factor for benchmarking the international transactions of the assessee with its AE by taking RPM as the most appropriate method. Our aforesaid view is supported by the order in the case of Fresenious Kabi India (P) Ltd. [2017 (6) TMI 1298 - ITAT PUNE] wherein it was held that in case of distribution activity the selling and marketing expenses which are borne by the assessee would not lead to any value addition to the product in question.
We find substantial force in the contention advanced by the ld. A.R that as per Rule 10B(1)(b) in the Income Tax Rules, 1962, the RPM can safely be taken as the best suited method for determining the ALP of the international transactions in the case of the assessee before us, which as observed by us hereinabove had imported formulations from its AE and resold the same without making any value addition to unrelated parties in the domestic market.
We are unable to subscribe to the view taken by the TPO/DRP that merely for the reason that complete information about the business profile and financial data in respect of companies selected by the assessee as comparables in its TP study report was not available in the public domain or furnished by the assessee, therefore, for the said reason the application of the said method for benchmarking the international transactions of the assessee was to be rejected.
Rejection of the comparables which were selected by the assessee in its TP study report - As regards the three companies which were rejected by the TPO as comparables viz. (i) Abbott India Ltd; (ii) Duchem Laboratories Ltd.; and (iii) Lyka Exports Ltd., we are in agreement with the view taken by the TPO/DRP that as the said companies had a different year ending, therefore, the results emerging therefrom was not contemporaneous, and hence as per Rule10B(4) they were not suitable for being considered for arriving at a feasible comparison. However, at the same time, we are unable to persuade ourselves to accept the rejection of one of the comparable selected by the assessee company viz. M/s Daga Global Chemicals Ltd.
It is the claim of the assessee that as the aforementioned company viz. Daga Global Chemicals Ltd. alike the assessee was engaged in the business of distribution, therefore, it was rightly selected as a comparable for benchmarking analysis. We have given a thoughtful consideration to the aforesaid contentions advanced by the ld. A.R and find substantial force in the same. In our considered view, as the DRP had declined to include the aforementioned company i.e Daga Global Chemicals Ltd. as a comparable, apparently on the basis of misconceived facts as had been canvassed by the ld. A.R before us, therefore, in all fairness the matter requires to be restored to the file of the TPO for fresh adjudication. The TPO after considering the aforesaid claim of the assessee in respect of the aforementioned company, viz. Daga Global Chemical ltd, is directed to readjudicate the issue as regards inclusion of the same in the final list of comparables for benchmarking the international transactions of the assessee as per RPM.
We set aside the view taken by the TPO/DRP as regards the rejection of RPM as the most appropriate method for benchmarking the international transactions of the assessee and substituting the same by applying TNMM. The matter is restored to the file of the TPO, who is directed to re-determine the ALP of the international transactions of the assessee after accepting RPM as the most appropriate method.
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