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Case Laws
Showing 141 to 160 of 1843 Records
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2017 (1) TMI 1708
Maintainability of Election Petition - allegation that election petition lacked in material facts as required under Section 83(1)(a) of the 1951 Act and as such, did not disclose any cause of action - Section 100(1)(d)(iii) of The Representation of the People Act, 1951 - HELD THAT:- In the present case, the issue relates to an enquiry under Order VII Rule 11(a) of the Code, and hence, there is no question of a preliminary issue being tried under Order XIV Rule 2(2) of the Code. The court exercised its jurisdiction only under Section 83(1)(a) of the Act read with Order VII Rule 11(a) of the Code. Since the scope of the enquiry at that stage has to be limited only to the pleadings of the plaintiff, neither the written statement nor the averments, if any, filed by the opposite party for rejection under Order VII Rule 11(a) of the Code or any other pleadings of the respondents can be considered for that purpose.
The election petition is remitted to the High Court to try it on merits expeditiously, and being one filed in the year 2013, preferably within a period of four months - Appeal allowed.
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2017 (1) TMI 1707
Disallowance u/s 14A r.w.r 8D - Whether there are definite findings by the AO that the assessee has incurred expenditures which have bearing to the earning of exempt income after examining books of account of the assessee? - sustaining the addition u/s. 8D(2)(iii) - HELD THAT:- CIT (A) directed to compute the disallowance at the rate of 0.5% of the average investments excluding fixed deposits which in our opinion is correct findings as the addition made under rule 8D)(2)(ii) was deleted in total. So the only remaining issue of sustaining the addition u/s. 8D(2)(iii) is before us and the assessee has relied on a couple of decisions as discussed hereinafter praying for the additions as sustained under rule 8D(2)(iii). We find that the facts of the case in hand are totally distinguishable from the facts of decisions of Hon'ble High Courts relied upon by the assessee. In the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] and Max India Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] the decision was rendered in respect of applicability of rule 8D(ii) and not in the context of disallowance under rule 8D(2)(iii). In our opinion the findings given by the ld. CIT (A) are correct so far as the disallowance under section 14A read with rule 8D(2) is concerned and accordingly we uphold the same by dismissing the appeal of the assessee on this ground.
Disallowance of deduction under section 57(iii) - assessee in order to claim credit facilities from the bank borrowed money from his HUF and put the same into FDRs which were pledged with the bank as security as the assessee was having FDRs in his HUF - HELD THAT:- Assessee transferred funds from HUF account to his individual account in order to make FDR which was pledged with the bank for obtaining credit facilities' at concessional rate. During the year the assessee received interest on FDR which were made out of the funds borrowed from HUF account. We also find that the assessee after showing the same as income under the head "other sources" also claimed deduction of the equal amount under section 57(iii) as interest paid to HUF and shown in the return of income filed by the HUF which was proved from the return of income and computation of income, balance sheet and other annexure filed by the ld.AR during the course of hearing.
It is trite law that same income cannot be subject to tax twice and therefore this be taxed only once either in the hands of the HUF or individual, but in the present case the income of the HUF has been assessed and accepted by the AO resulting into double taxation of the same income. In our considered opinion it would be fair, just and as per the provisions of the Act to allow the deduction u/s. 57(iii) as there is a direct nexus between money borrowed and put into FDR by the assessee which was pledged with the bank for obtaining the credit faculties In view of the above discussion, we are inclined to reverse the findings of the ld CIT (A) on this issue and direct the AO to delete the addition.
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2017 (1) TMI 1706
Allowable revenue expenditure u/s 37 - Interest paid on the borrowings utilized for setting up a new unit of cement plant - interest was paid on borrowed capital to set up a new unit and also capitalized in the books of account - HELD THAT:- Questions in this appeal are covered by the decision of this court in the case Manglam Cement Ltd MANGALAM CEMENT LTD. [2002 (10) TMI 11 - RAJASTHAN HIGH COURT]
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2017 (1) TMI 1705
TP Adjustment - Selection of comparables - forex gain/loss form part of the operating margin of the assessee - HELD THAT:- The undisputed facts are that TNMM method has been used to benchmark the TP transactions by using data of impugned assessment year. After applying the various filters, TPO arrived at two comparables, the average PLI of which stood at 36.02% which resulted into impugned additions. Rule 10B(1)(e) deals with TNMM method which calls for suitable adjustment to net profit margins to make the two data comparable. We are unable to accept the contention of the Ld. DR that suitable adjustments could be made only in the margins of comparables and not in the margins of the Tested Party. Without making suitable adjustments in the margin, proper comparison could not be drawn. We find that the in case law relied upon by Ld. DR, the Tribunal had many alternative reason not to tinker with the PLI of the tested party.
Issue of treatment of forex gain / loss is now well settled by various judicial pronouncements and more specifically in judgments relied upon by assessee, wherein it has been held that forex gain/loss form part of the operating margin of the assessee as well as comparables. Further, we find that the assessee suffered net forex loss in AY 2010-11 and reflected the same as part of operating expenses under Schedule-12 which gives strengths to the arguments of Ld. AR. Since TPO has excluded forex gain / loss from operating margin, the same is not in line with these judicial pronouncements. Therefore, we find that matter is pure legal issue and do not raise any fresh issue and do not require investigation of additional facts and hence admit the same for adjudication by following apex court judgment in ‘National Thermal Power Co. Ltd.’ [1996 (12) TMI 7 - SUPREME COURT]
Sole comparable left out was selected by the TPO himself and not by the assessee and this comparable was never disputed before DRP and DRP also did not find the same as non-comparable. Hence, at this stage it would be very difficult to accept this plea of Ld. DR to undo the comparable selected by the revenue and never challenged at any stage. However, we are of the considered opinion that proper benchmarking of the margin is not possible with this single comparable and therefore, on the peculiar facts and circumstances, we are inclined to restore the matter back to the file of AO/TPO to undertake TP study afresh by taking robust comparables after providing adequate opportunity of being heard to the assessee. As already held by us in preceding paragraphs, forex gain/loss shall for part of operating operations and suitable adjustments, as statutorily admissible, shall be made in TP study.
We restore the matter back to the file of AO/TPO to undertake TP study afresh after providing adequate opportunity of being heard to the assessee. It is again reiterated that forex gain/loss shall for part of operating operations and suitable adjustments, as statutorily admissible, shall be made in TP study. The appeal is allowed for statistical purposes
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2017 (1) TMI 1704
TP Adjustment - determination of Arm’s-Length Price(ALP) of Loan Syndication Transaction (LST) and its allocation between the assessee and its AE - HELD THAT:- As decided in own case [2016 (6) TMI 1386 - ITAT MUMBAI] protocol between India and France does not apply as assessee has rendered the key services for taking decision of granting loan by the syndicate of Banks to the Indian borrowers, however as it was found that the TPO made the adjustment without considering any comparable. By following earlier orders of this Tribunal, we direct the AO/TPO to make adjustment in respect of the services performed by the assessee for foreign currency loan arranged for its existing clients by taking into account only the fee and other charges excluding interest received by the foreign branches from the borrowers in question by applying the rate of 20% as accepted in the earlier order. Accordingly, this ground is partly allowed.
Respectfully following the above, we restore this issue to the file of the Assessing Officer to follow the decisions and decide the issue in line with the above decisions for allocation of loan syndication fee between the assessee and its AE after giving opportunity of being heard to the assessee - Appeal filed by the assessee is allowed for statistical purposes.
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2017 (1) TMI 1703
Recovery of Excise duty - Whether the incentives granted to the appellant permit them to collect excise duty, more than they had themselves paid, from their customers, if they collected by way of excise duty more than what they had paid, then by virtue of Section 11D of Central Excise Act, 1944, were they bound to deposit that amount with the Government?
HELD THAT:- While filing the monthly returns for the period September, 1991 to January, 1993, the assessee had collected central excise duty @ ₹ 85 per quintal on 84890 quintals of VP Sugar amounting to ₹ 72,15,650/- from the buyers but had deposited the Central Excise duty @ ₹ 52/- per quintal on the said quantity. It thus, becomes clear that the assessee had retained certain sums with them, which they had collected in excess. Therefore, a notice under Section 11D of the Central Excise Act, 1944 was issued for the recovery of the said amount.
This very issue has been finally settled by Hon’ble Apex Court in KISAN SAHKARI CHINI MILLS LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, ALLAHABAD [2005 (3) TMI 124 - SUPREME COURT] where the Hon’ble Apex Court has held that under the incentive scheme, exemption of excise duty at the concessional rate has been granted to the assessee, but the Government order does not permit the assessee to collect more than what they have to pay to the Government under the scheme. If the assessee has collected excess excise duty, then it is bound to deposit such excess amount with the Government in view of the provisions of Section 11D of the Central Excise Act.
The questions of law are, therefore, answered in favour of the department and against the assessee.
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2017 (1) TMI 1702
Dishonor of Cheque - insufficient funds - legally enforceable debt or not - offence under Sections 138 to 142 of the Negotiable Instruments Act, 1881 - HELD THAT:- It is to be remembered that a mere admission of signing a blank cheque would not amount to admission of due execution of cheque. By means of the Complainant's material admissions, contradictions, an Accused in a given case can probablise his defence. No wonder, it is for the Drawer to establish that a cheque was not drawn for consideration. Besides these, an existence of Legally Recoverable Debt is not a matter of presumption under Section 139 of the Negotiable Instruments Act. It merely raises a presumption in favour of a Holder of a Cheque that the same was issued for discharge of any debt or other liability.
It is to be noted that a cheque must be issued either in respect of past or existing debt or other subsisting liability. A salient feature in respect of an offence under Section 138 of the Negotiable Instruments Act is that the cheque in question was drawn for discharge for entirety or part of liability. If this aspect is not mentioned in the complaint, then, it is a fatal one - In fact, as per definition Section2(n) of the Criminal Procedure Code, the term 'offence' includes not only the doing of possible act, but by omitting to do something as well. Undoubtedly, the burden is on the Appellant/Complainant's side to prove that the cheque was signed by 'Drawee' in discharge of Legally Enforceable Debt. Also that, the 'cause of action' under the Negotiable Instruments Act, 1881 will arise not on mere presentation of a cheque nor just dishonour of cheque alone. The real cause of action is the non payment of sum cheque or non compliance of demand through notice by a 'Drawer' within the statutory period.
The entire subject matter in issue is remanded back to the trial Court for fresh disposal in the manner known to Law and in accordance with Law. Liberty is granted to the respective parties to raise all factual and legal pleas as per Law. The trial Court is to provide adequate opportunities to the Appellant/Complainant to examine further witnesses on its side and to file necessary documents - Appeal allowed by way of remand.
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2017 (1) TMI 1701
Sales promotion for the purposes of FBT - Initiating proceeding u/s 115WG / 115WH - value of free samples of medical formulation distributed to doctors and others has escaped assessment in the FBT - HELD THAT:- Order to justify the levy of FBT, establishing of employer-employee relationship is a pre-requisite. In the present case, no case has been made out by the income-tax authorities that the expenditure incurred by assessee on distribution of free samples to Doctors and others involved any employer-employee relationship between the assessee and the recipients of such samples. Therefore, at the very threshold, following the ratio of judgment of the Hon'ble Bombay High Court in the case of Tata Consultancy Services Ltd. [2015 (5) TMI 518 - BOMBAY HIGH COURT] action of Assessing Officer is untenable and is hereby set-aside. Thus, assessee succeeds on its plea.
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2017 (1) TMI 1700
Deduction u/s 54F - capital gain arising on transfer of Long Term Capital Gain Asset - AO found that the conditions specified in section 54F of the Act was not satisfied in the case of the assessee - delay in completion of construction activity of the residential house - HELD THAT:- We find ourselves in agreement with the proposition canvassed on behalf of the assessee that section 54F is a beneficial provision for promoting the construction of residential house and therefore requires to be construed liberally for achieving that purpose. The intention of literature is to encourage investments in the acquisition of residential house and completion of construction or occupation is not the strict requirement of the law so long as the consideration has been appropriated for construction of a residential house. The condition of construction of residential house within a period of 3 years has been somewhat read down and relaxed by the judicial precedents as relied upon by the assessee. Merely because the construction could not be completed within a stipulated period of three years after the date of transfer of original asset as contemplated under section 54F of the Act, this by itself would not act as an handicap for availing benefit of 54F.
Several objections on facts have been recorded by the CIT(A) while denying section 54F of the Act. The objections ranges from purchase of only plot of land and no evidence of construction cost tagged thereon to objection in the form of purchase of plot prior to transfer of original asset in derogation of condition stipulated u/s 54F whereby deployment of funds in construction activity only after the transfer of original asset is eligible for relief. These objections recorded by CIT(A) as extracted supra are essentially factual in nature. The money stated to be utilized and appropriated towards purchase of plot of land and construction of residential house thereon after the transfer of original asset in terms of S. 54F is required to be ascertained to determine the eligibility of claim. In the absence of factual details before us, we are unable to address the factual controversies involved. It was asserted on behalf of the assessee that the construction of a residential house has been eventually completed. Copies of some electricity bills were produced to lend support to such assertions. Bare reading of S. 54F would suggest that construction of house beyond stipulated time limit of 3 years is not the only condition precedent for eligibility of deduction claimed. The other conditions would thus continue to apply.
Matter is to examined afresh after granting proper opportunity of being heard to the assessee. It will be open to the AO to verify the entire issue de novo and satisfy himself that the conditions of section 54F have been duly complied with. However, in the same vain, we clarify that mere delay in completion of construction activity of the residential house will not act as a fetter for eligibility of deduction under section 54F of the Act. The issue is thus set aside and remitted back to the file of the AO in terms of directions noted above. Appeal of the assessee is allowed for statistical purposes.
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2017 (1) TMI 1699
Charge of rental income - business income or income from house property - Tribunal directing the Assessing Officer to tax the rental income as 'income from house property' and to allow deduction u/s 24 - ITAT allowed the claim of expenses of ₹ 45 lakhs on account of provision for incomplete work - interest paid as capital brought in by partners - Expenses claimed on account of incomplete work - Deduction under section 24(b) of the IT Act as interest on borrowed capital - HELD THAT:- Leave granted.
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2017 (1) TMI 1698
Penalty u/s 271(1)(c) - bogus purchases - assessee did not challenge the assessment order and accepted additions so made thereby accepting the concealment of income - HELD THAT:- Additions as made by the AO was a pure estimate and nothing concrete as to bogus purchases were brought on records by the AO by making any further enquiries or investigation. In our view the penalty can not be imposed where the additions are made on estimate basis.
AO was not justified in making the addition on the basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation. In the instant case also, the assessing officer has made the impugned addition on the basis of statements given by the parties before the Sales tax department.
We are of the considered opinion that in view of the ratio in the various decisions as above penalty cannot be sustained. It is also a settled legal position of law that penalty cannot be levied wherein the assessment is made on estimation basis. Accordingly, we are inclined to uphold the order passed by the ld.CIT(A) by dismissing the appeal of the revenue.
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2017 (1) TMI 1697
Rectification of mistake - assessee submitted that the Tribunal has restored the matters relating to both the issues contested by the assessee to the file of the AO/DRP - HELD THAT:- We have heard learned Departmental Representative and we find merit in the submissions made by learned AR. We noticed that the Tribunal has considered the issues in paragraph 5 & 9 of the order and restored them to the file of the AO/DRP. As stated by learned AR this would create confusion.
During the course of hearing both the parties agreed that the matters may be set aside to the file of the Assessing Officer. Accordingly, we rectify the impugned order by deleting the word “DRP” and symbol “/”,wherever they occur, in paragraph 5 & 9 of the order.
AR further submitted that in paragraph 9 of the impugned order, the Tribunal has observed that the order of Ld CIT(A) has been set aside. Learned AR submitted that there is no order of learned CIT(A) and accordingly prayed for rectification of the mistake. We find merit in the said submission also. Accordingly, we direct that the words“ set aside the order of Ld CIT(A)”occurring in the 12thline in paragraph 9 of the order be deleted. Miscellaneous Application filed by the assessee is allowed
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2017 (1) TMI 1696
Refund of service tax - input services used for such export of goods in terms of Rule 5 of CCR - refund rejected by the authorities below on the ground that the appellant is not a manufacturer of excisable goods, and thus, is not permitted to avail or utilize the Cenvat credit - rejection also on the ground that that as per the requirement of Central Excise Statute, requisite bond and letter of undertaking were not executed by the appellant before exportation of the goods - HELD THAT:- Sandstone is not classified as an excisable commodity in the Central Excise Tariff Act, 1985. Thus, the requirement of taking registration, and availment of Cenvat credit by the appellant on the inputs and input services does not arise. Hence, in absence of any statutory provisions, entitling the appellant herein to avail the Cenvat credit, the question of refund under Rule 5 ibid does not arise.
Since, for claiming refund, one of the requisite conditions in Rule 5 ibid is for execution of bond/undertaking, which admittedly in this case, has not been complied with by the appellant, the refund claim on such ground is also not maintainable.
Refund cannot be allowed - appeal dismissed - decided against appellant.
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2017 (1) TMI 1695
Disallowance u/s 80-IC in respect of its new unit - as per AO since the value of the aforesaid machinery, which cannot be held as new and previously used for any purpose, is more than 20% of the value of the plant and machinery used in the new unit, the assessee has failed to satisfy the conditions laid down u/s 80-IC (4)(ii) - whether the assessee has started manufacturing activities during the year under assessment at Selaqui unit to be eligible for claiming exemption ? - HELD THAT:- Bare perusal of Schedule D to the balance sheet for the period 31.03.2008 shows that the total addition of ₹ 32,67,070/- has been made under head ‘land’ and no addition is attributed to the building. Likewise, there is no addition under the head ‘building’ as per Annexure-3 to the Form No.3CD and the entire amount of ₹ 32,67,070/- is attributed to the land.
The assessee has purchased land/built up property in the light of the Schedule D to the balance sheet as on 31.03.2008 wherein capital WIP building is shown at ₹ 35,23,345/-, the argument addressed by the ld. AR that there was no occasion for repair and maintenance lost its ground. The contention of the ld. AR that the revenue is not entitled to set up a new case by raising argument that, “when the building of the new unit was not in existence the question of carrying manufacturing activities therein does not arises”, is not tenable for the reason that when illegality of the order is under challenge before the Tribunal it being a fact finding forum is empowered to go into any argument addressed by the parties, though not addressed before the CIT (A), to achieve the ends of justice. So, we are of the considered view that there was no building with assessee at Selaqui unit during the period under assessment to carry out the manufacturing activities.
Whether the assessee has transferred its used machinery in excess of 20% from Kala Amb unit to Selaqui unit against which the exemption u/s 80-IC has been claimed, thus failed to satisfy the provisions contained u/s 80-IC (4)(i)? - HELD THAT:- Assessee stated to have purchased the machinery from M/s. Grip Engineers Pvt. Ltd., Ballabhgarh and ABB, Faridabad on 23.04.2007 and 28.04.2007 respectively but stated to have stored the same at Kala Amb unit for want of non-availability of the transit form to be issued by Uttarakhand Government. When assessee alleged to have started manufacturing at Selaqui unit in the month of June 2007, it is difficult to believe as to why the order was placed 5 months in advance without getting the necessary transit form issued, which to our mind, does not require any extensive exercise, particularly when the Government is providing exemption to the new unit u/s 80-IC, it cannot take five months to issue transit form.
When this fact is examined in the light of the fact that no travelling allowance has been debited by the assessee to the P&L account during the year under assessment, it is difficult to believe that any manufacturing activities have been carried out at the Selaqui unit. Because earning the turnover of ₹ 11.11 crores with profit of ₹ 3.13 crores from the assembling / manufacturing unit is humanly not feasible without supervision of senior / junior functionaries of the assessee either from Kala Amb unit or from Head Office, Delhi nor any skilled worker has ever visited the Selaqui unit or proved to be engaged. So, all these facts strengthen the findings returned by the AO which have been overturned by the CIT (A) on the basis of whims and fancies. Since the assessee has transferred tools and machinery more than 20% of the total machinery employed at Selaqui unit from Kala Amb unit it is violation of section 80-IC(4)(ii)
When we examine the factum of nonavailability of the machinery at Selaqui unit in the light of the fact that no manpower was engaged by the assessee to carry out the manufacturing activities at Selaqui unit, the entire assessee’s case to claim exemption u/s 80-IC goes flat.
For argument’s sake, even if it is assumed that the new plant and machinery has been made available by the assessee at its Selaqui unit by transporting the same from its Kala Amb unit, as contended by ld. AR for the assessee, it is not humanly possible that massive manufacturing activities earning gross turnover of ₹ 11.11 crores with profit of ₹ 3.13 crores in a period of 10 months, has been carried out by just a one man army.
Whether Selaqui unit has been established by splitting up the existing unit? - As discussed in the preceding para no.22, when no plant and machinery was available in the Selaqui unit nor work force was there to carry out the manufacturing activities, the question of expansion or augment the production in a different and separate location does not arise. Even otherwise, assessee has transferred the used plant and machinery from its Kala Amb unit to Selaqui unit exceeding 20% which bars the assessee from taking benefit of section 80-IC. Plethora of documents brought on record by the assessee even otherwise goes to prove that assessee’s case falls u/s 80-IC(2)(b) under which the assessee has not claimed any deduction as the assessee is not manufacturing any article listed under Schedule – 14. Rather it is a case of splitting up/ reconstruction of a business already in existence for which the assessee is not eligible due to violation of section 80-IC (4)(ii) of the Act i.e. the use of previously used plant and machinery beyond 20%.
Undisputedly the assessee was not having facility of gas filling and testing of RMPU air-conditioners at Selaqui unit for which the assessee stated to have sent the assembly unit to Kala Amb unit but prior to that the assessee has to bring on record the substantial evidence to prove the fact that the RMPU airconditioners against which the assessee has earned turnover of ₹ 11.11 crores were assembled at Selaqui unit, which the assessee has miserably failed as discussed in the preceding para.
We are unable to agree with the contentions raised by the ld. AR for the assessee for two reasons : (i) that for the completeness of record and books of account each and every facts has to be brought on record by the assessee, which would have strengthened the case of the assessee to prove the huge purported turnover of ₹ 11.11 crores from its Selaqui unit to achieve the cause of justice; (ii) that any issue can be raised before a fact finding authority particularly to prove the perversity of facts on record.
We are of the considered view that CIT (A) has erred in deleting the addition made by the AO on account of disallowance made u/s 80-IC - Decided in favour of revenue
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2017 (1) TMI 1694
Valuation - clearance of petroleum products to its own retail outlet - inclusion of dealer commission in the assessable value - HELD THAT:- It is a clear fact on record as stated by the respondent and also verifiable to the extent that the retail outlets belongs to the respondents, which had made sale of the petroleum products cleared by M/s. Indian Oil Corporation. There being no presumption in tax, the presumptive taxation by Revenue on the ground that there was charge commission from the dealer is unwarranted.
M/s. Indian Oil Corporation has its own retail outlet without being such outlet given to any dealer for retail sale. The elementary jurisprudence being no one trades with himself, there is no question arise of any commission when the respondent cleared its goods to its own outlets.
Appeal dismissed- decided against Revenue.
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2017 (1) TMI 1693
Constitutional validity of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Permission to secured creditor to bid for the secured assets - vires of Section 13(5A) is under challenge in this writ proceedings on the ground that it is violative of Articles 300A and 21 of the Constitution of India - whether the power given to the secured creditor under Section 13(5A) of the Act is arbitrary, irrational and without any nexus to the object?
HELD THAT:- In terms of Rule 8(5) of the Rules, the authorised officer of the secured creditor is to get the secured assets valued by an approved valuer and accordingly fix the reserve price of the property. The secured assets could be brought for sale only after fixing the reserve price as above. Rule 8(6) of the Rules provides that sufficient public notice be given regarding the sale of the secured assets, in the manner as stated therein. Therefore, the interest of the debtor is adequately guarded and protected. In terms of Section 13(5A) of the Act, the secured creditor is entitled to participate in the bid, only in the absence of any bidders for a value equal to or above the reserve price and the sale is postponed due to that contingency - It is further to be noted that the sale of the property as above is amenable to an appeal under Section 17 of the Act before the Debt Recovery Tribunal.
The only conclusion that could be arrived at is that the rights of the mortgagor/defaulter has been adequately safeguarded and protected under the Act. Right is given to the secured creditor to bid for the secured assets only on the arising of a particular contingency, viz., adjournment of sale for want of a bid at or above the reserve price; in which event also, the secured creditor could bid the property only at the reserve price and not below. There is no reason to conclude that the provision is arbitrary, irrational or in any manner violative of the fundamental rights of the appellant/petitioner.
The challenge on the vires of Section 13(5A) fails and is turned down. Apart from the challenge on the constitutional validity of the Section, no other contentions are urged.
Appeal dismissed.
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2017 (1) TMI 1692
Depreciation in respect of intangibles - assessee had purchased A&R business from its sister concern and had merged the assets and liabilities of the erstwhile business with the newly acquired assets and liabilities, that it had shown an addition to the block of intangible assets - HELD THAT:- The Tribunal has observed that the assessee had argued in the case of Merck Ltd. that the transferor company had obtained valuation reports from two valuers. We are not aware as to what is the details bifurcation of the intangibles is given in those reports. In case there is difference in the values appearing in the valuation reports of the assessee and Merck, the provisions of section 43(6) may be applicable in deciding the issue. All these developments have taken place after the first appellate authority decided the appeal. In our opinion, these facts will be some bearing on the final outcome of the appeal.
We further find that the alternate ground raised by the assessee about allowing the entire expenditure as revenue expenditure has not been adjudicated upon by the first appellate authority, though a specific ground was raised before him.
Considering the above, we are of the opinion that in the interest of justice the matter should be restored back to the file of the first appellate authority for fresh adjudication. He is directed to decide the issue afresh after affording a reasonable opportunity of hearing to the assessee. The first ground of appeal is decided in favour of the assessee, in part.
Disallowance u/s 145A - AO found that the assessee was following an exclusive method of accounting with regard to relation of stock, that it was not including cenvat credit - HELD THAT:- Before us, the learned authorised representative and the Departmental representative stated that the issue needs further verification at the level of the Assessing Officer and the matter should be restored back to his file for fresh adjudication. Accordingly, we are remitting back the matter to the file of the Assessing Officer who will decide the issue after affording a reasonable opportunity of hearing to the assessee. Ground No. 2 is allowed in favour of the assessee, in part.
Directing AO to grant credit - HELD THAT:- As stated that the first appellate authority had not directed the Assessing Officer to grant the credit for the said amount though the tax was deducted at source. The Assessing Officer is directed to give the credit for the tax deducted after verification. Ground No. 3 is allowed in favour of the assessee, in part.
Addition u/s 14A read with rule 8D - HELD THAT:- AO had applied the provisions of rule 8D of the Rules. In our opinion he was not justified to invoke the said section. The assessee had not claimed any expenditure in relation to the exempt income and therefore no disallowance should have been made. Considering the offer made by the assessee, we hold that, to meet the ends of justice, disallowance should be restricted to ₹ 25,000. First ground of appeal (GOA) is partly allowed.
Actuarial salary provided during the year as allowable as deduction notwithstanding section 43B(f) - HELD THAT:- We find that the assessee had claimed the deduction relying upon the case of Exide Industries Ltd. [2007 (6) TMI 175 - CALCUTTA HIGH COURT] , that the first appellate authority has directed the Assessing Officer to take necessary consequential action in pursuance of final outcome of the special leave petition filed before the hon'ble Supreme Court. Thus, the interest of the assessee have been taken into consideration by the first appellate authority. We do not want to interfere with his order. The Assessing Officer would take necessary action after pronouncement of judgment by the hon'ble Supreme Court. The fourth ground of appeal is decided in favour of the assessee in part.
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2017 (1) TMI 1691
Reverse charge mechanism - erection, commissioning and installation service - customs duty has been discharged on the full gross value contracted and shown in the invoice during the course of import of the said machinery - demand of service tax and penalties - HELD THAT:- There is a certificate issued by the jurisdictional Superintendent of Central Excise on 07.07.2006 in connection with the appellant’s obligation under the ECCG Scheme indicating the installation of 2 of the machines prior to 18.04.2006. Similarly, there are certain indications, based on the correspondence entered into by the appellant with the supplier of machines, that the supplier appears to have had an establishment in India during the material time.
Further, the contract for importation of this machinery is, admittedly, a composite one for lump-sum payment which included installation and erection of the machine at the appellant’s premises - The customs duty on the whole value is claimed to have been discharged by the appellant. In such situation we find that the question of subjecting a portion of the invoice value for service tax purpose is not sustainable.
Prima-facie, the split up of value for service tax purpose, when the whole value has been subjected to customs duty towards import of goods, is not sustainable. However, the basic facts like contract and the invoices alongwith the other issues raised by the appellant is to be examined afresh by the original authority - Appeal allowed by way of remand.
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2017 (1) TMI 1690
TP Adjustment - custom duty adjustment - HELD THAT:- Company was incorporated in the year 2006 and in the second year of operation. The raw material component include import cost which constitute a major cost and claim adjustment of custom duty (non-cenvatable) before TPO. We rely on coordinate bench decision of Motonic India Automotive Pvt. Ltd Vs. ACIT [2016 (8) TMI 1423 - ITAT CHENNAI] wherein direct the A.O. to give suitable adjustment against the custom duty component while determining the ALP. Considering the custom duty adjustment and co-ordinate bench decision, we remit the disputed issue to the file of AO for custom duty adjustment.
Adjustment of warranty cost - DRP and AO has confirmed action of the TPO in not excluding the extraordinary cost incurred by the assessee relating to warranty because of initial period of operations and we find that the warranty issue is not discussed by the TPO in his order. Accordingly, we are of the opinion that warranty cost has to be dealt by the TPO and we remit the disputed issue to the file of the AO for fresh consideration.
Working capital adjustment while determining net profit margin of the assessee - Considering the facts and material on record the financial statements and the paper book, there is necessity for working capital adjustment and accordingly we remit the issue to the file of AO to consider the material for fresh consideration.
Disallowance of fee for technical services incurred during the previous year under provisions of section 40(a)(i) - Interest paid on delayed payment of TDS - HELD THAT:- We found the assessee company has incurred this expenditure towards the fee for technical services and we are of the opinion that the Assessing Officer should verify and grant the deduction in the year in which assessee company makes the TDS payment and Accordingly, we remit this issue to the file of the Assessing Officer.
Disallowance being interest paid on delay payment of TDS - AR argued that the same cannot be disallowed u/s. 40(a)(ii) - HELD THAT:- We perused the Assessment Order and found that there are no proper clarifications available. The Assessing Officer observed that the interest paid for delay in filing Return and payment of advance tax is not allowed as Business expenditure while applying the same analogy, we are of the opinion that the interest paid on delayed payment of TDS cannot be allowed Accordingly we upheld the action of the Assessing Officer in disallowing the interest on delay payment of TDS
Claim of fees for technical service on payment of TDS - Non appreciating that the entire amount was disallowed in the previous assessment year 2010-11 for non-deduction of TDS - HELD THAT:- Claim has to be allowed based on the evidence and the assessee company should produce and support the payment with the payment details and also produce copy of 26AS being necessary for the Assessing Officer to allow the claim. Accordingly, we remit the issue to the file of the Ld. AO for verification and decide the issue a fresh in the light of first provision to section 40(a)(i) of the Act.
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2017 (1) TMI 1689
Reopening of assessment - Reason to believe that income chargeable to tax has escaped Assessment on the basis of the Assessment Order relating to Assessment Year 2005-06, when he issued the re-opening notice dated 9th March, 2009 - HELD THAT:- In this case, the reasons as recorded for reasonable belief, is only the Assessment Order for Assessment Year 2005-06 and this order had on the issues of re-opening of notice been set aside by the CIT (A) on the date of the issue of the re-opening notice. This order of the CIT (A) not having been stayed by the Tribunal, the Assessing Officer could not rely upon an Assessment Order for Assessment Year 2005-06 which on the issues involved is admittedly set aside.
We find that the issue arising for our consideration as raised by the Revenue stands concluded against the Revenue by the decision of this Court in German Remedies Ltd. v. Dy. CIT [2005 (10) TMI 65 - BOMBAY HIGH COURT] wherein AO had issued a notice dated 18th February, 2005, seeking to re-open the Assessment for Assessment Year 1999-2000. This re-opening notice was based upon the Assessment Order for Assessment Year 1996-97 with regard to processing charges. Tribunal had by order dated 1st September, 2004 had set aside the issue of processing charges as reflected in the order for Assessment Year 1996-97.
This order of the Tribunal was brought to the notice of the Assessing Officer on 31st January, 2005. Nevertheless, the Assessing Officer on 18th February, 2005 issued the re-opening notice on the basis of the Assessment Order passed for Assessment Year 1996-97. This Court held that Assessing Officer was bound to follow binding decision of the Appellate Authority and if not doing so, the re-opening notice becomes unsustainable.
In the present facts also as pointed out above, the Assessing Officer was aware of the order dated 13th January, 2009 of the CIT (A) as he gave effect for Assessment Year 2005-06 to the same by his order dated 5th March, 2009. Therefore, the Assessing Officer could not have reason to believe that income chargeable to tax has escaped Assessment on the basis of the Assessment Order relating to Assessment Year 2005-06, when he issued the re-opening notice dated 9th March, 2009.
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