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Showing 141 to 160 of 1466 Records
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2023 (1) TMI 1326
Exercise of jurisdiction under Section 482 Cr.P.C. - seeking quashment of FIR - HELD THAT:- The materials on record pertaining to the pleadings instituted in the Civil Suit, produced in this proceeding would reveal that the respondent was in fact ousted from the membership of the trust. In the counter affidavit filed in this proceeding, the respondent has virtually admitted the pendency of the suit filed against his removal from the post of Secretary and the trusteeship and its pendency. The factum of passing of adverse orders in the interlocutory applications in the said Civil Suit as also the prima facie finding and conclusion arrived at by the Civil Court that the respondent stands removed from the post of Secretary and also from the trusteeship are also not disputed therein. Then, the question is why would the respondent conceal those relevant aspects? The indisputable and undisputed facts (admitted in the counter-affidavit by the respondent) would reveal the existence of the civil dispute on removal of the respondent from the post of Secretary of the school as also from the trusteeship.
By non-disclosure the respondent has, in troth, concealed the existence of a pending civil suit between him and the appellants herein before a competent civil court which obviously is the causative incident for the respondent’s allegation of perpetration of the aforesaid offences against the appellants.
There cannot be any doubt with respect to the position that in order to cause registration of an F.I.R. and consequential investigation based on the same the petition filed under Section 156(3), Cr.P.C., must satisfy the essential ingredients to attract the alleged offences. In other words, if such allegations in the petition are vague and are not specific with respect to the alleged offences it cannot lead to an order for registration of an F.I.R. and investigation on the accusation of commission of the offences alleged. As noticed hereinbefore, the respondent alleged commission of offences under Sections 323, 384, 406, 423, 467, 468, 420 and 120B, IPC against the appellants. A bare perusal of the said allegation and the ingredients to attract them, as adverted to hereinbefore would reveal that the allegations are vague and they did not carry the essential ingredients to constitute the alleged offences. There is absolutely no allegation in the complaint that the appellants herein had caused hurt on the respondent so also, they did not reveal a case that the appellants had intentionally put the respondent in fear of injury either to himself or another or by putting him under such fear or injury, dishonestly induced him to deliver any property or valuable security.
In respect of the issue involved, which is of civil nature, the respondent had already approached the jurisdictional civil court by instituting a civil suit and it is pending, there can be no doubt with respect to the fact that the attempt on the part of the respondent is to use the criminal proceedings as weapon of harassment against the appellants. The indisputable facts that the respondent has filed the pending title suit in the year 2015, he got no case that he obtained an interim relief against his removal from the office of Secretary of the School Managing Committee as also the trusteeship, that he filed the stated application for an order for investigation only in April, 2017 together with absence of a case that despite such removal he got a right to get informed of the affairs of the school and also the trust, would only support the said conclusion.
This case invites invocation of the power under Section 482 Cr.P.C. to quash the FIR registered based on the direction of the Magistrate Court in the afore-stated application and all further proceeding in pursuance thereof - there are no hesitation to hold that permitting continuance of the criminal proceedings against the appellants in the aforesaid circumstances would result in abuse of the process of Court and also in miscarriage of justice.
Appeal allowed.
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2023 (1) TMI 1325
Income taxable in India - Taxing of reimbursements treated as royalties and fees for technical services - Taxed at rate of 15 per cent., instead of 10.455 per cent. being the beneficial rate u/s 115A - whether the reimbursement of expenses by the assessee to its UK-associated enterprise is "fees for technical services" or not, has held that the payment made by the assessee falls within the ambit of "royalty" under section 9(1)(vii) and article 13(3)? - second round of proceedings - HELD THAT:- As the mandate of the AO was to follow the directions of the Tribunal whereby the matter was set aside to the AO for specific adjudication. The scope of set aside was circumscribed to see, whether the payment made for reimbursement falls within the ambit and scope of fees for technical services under article 13(4)(c) which stipulates that fees for technical services means payment of any kind to any person in consultation of rendering of any technical consultancy certificates which make available technical knowledge, experience, skill, know-how or process or development and transfer of a technical plan or design.
Now the AO instead of following the direction of the Tribunal has proceeded to treat the payment in the nature of royalty which cannot be sustained at the threshold. CIT (A) though has accepted this fact, but having a co-terminus power with the AO, he has chosen not to decide the issue albeit has set aside the issue to the file of the AO - On this fact alone, the entire assessment order as well as the order of the CIT(A) is unsustainable and deserves to be quashed. In any case as explained, the lotus note which was a kind of facility given to the group of companies with a view to smoothen the day-to-day work increase the overall efficiency level. It has been sated that a Foseco group companies have taken lotus note which is a software purchase from IBM for the use of entire establishment for co-ordinated activity/administration for the benefit of all the facilities too subsidiaries of the assessee-company.
The cost of services have been recovered and raised by Foseco group without any markup. Nowhere can it be said there is any kind of "make available" of any kind of technology or a terms mentioned in article 13(3)(c). Thus, it cannot be treated in the nature or fees for technical services under the Indo-UK Double Taxation Avoidance Agreement. Accordingly, on merits also, the reimbursement of lotus note for fees for technical services is allowed.
In so far as other expenses, the same are purely marketing expenses and professional which cannot be again treated as fees for technical services under clause of article 13(3)(c). Accordingly, the additions made by the AO and sustained by CIT (Appeals) is deleted. Appeals filed by the assessee stands allowed.
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2023 (1) TMI 1324
Disallowance of interest expenditure - Assessee during the year the assessee has incurred capital work-in-progress - Why proportionate interest expenditure should not be attributed to work-in-progress till the time assets was put to use? - HELD THAT:- Working capital and cash credit loans are tied up in the current assets of the company. Anyway, the alleged amount of investment in capital work-in-progress is far less than the interest free funds available with the assessee.
Therefore, in absence of any nexus, it cannot be stated that interest bearing funds have been used by the assessee for acquiring the capital work-in-progress. In view of this, we do not find any reason to confirm the disallowance - presumption would always be available in favour of the assessee that non-interest bearing funds have been used for the purpose of acquisition of capital work-in-progress. The above view is also supported by the decision of the Hon'ble Bombay High Court in case of Reliance Utilities and Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT] as well as the decision of Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] Accordingly, ground no.1 of the appeal is allowed.
Disallowance u/s 14A read with Rule 8D - assessee has earned exempt income and has also offered SUO Moto disallowance - AO Found that disallowance offered by the assessee is on ad hoc basis and without any mathematical working - CIT (A) after considering the explanation of the assessee rejected that no interest of disallowance can be made under Section 14A - HELD THAT:- We find that when non-interest bearing funds are much higher than the amount invested which yielded exempt income, there is no question of making any disallowance under Rule 8D2 (1) and 8D (2)(iii) of the Act. Such claim of the assessee before us is only with respect to the interest disallowance under Rule 8D of the Rules, Assessee succeeds on this issue.
Disallowance u/s 14A imputed under the computation of book profit, we find that issue is squarely covered in favour of the assessee by the decision of Sobha Developers vs. Dy. Commissioner of Income Tax [2021 (1) TMI 378 - KARNATAKA HIGH COURT] Even otherwise, we find that assessee has already complied with Provision of Section 115JB of the Act, explanation 1 clause (f) of the Act in form no 29B. There is no finding of the learned Assessing Officer that provision of Explanation 1(f) of Section 115JB of the Act is not properly applied by the assessee. Unless that fact is recorded along with the fact that disallowance under Section 14A of the Act is identical to the disallowance under that clause, the order of the learned lower authorities cannot be sustained. Accordingly, ground no.8 of the appeal is allowed.
Write back of the provisions for doubtful debts - CIT (A) confirmed the addition to the normal computation and further, for computation of book profit under Section 115JB - HELD THAT:- At the time when the provision was created, the assessee has disallowed the same in all the assessment year which is substantiated by filing the computation of total income for all these years. The learned Assessing Officer in the remand report also agreed with the above finding of the fact. The above provision for doubtful debts has been written back during this year. Naturally, this amount has not been claimed as deduction in the year in which the provision has been made. Therefore, naturally, same would be not taxable in the present assessment year when such provisions were written back. Accordingly, we find that learned lower authorities are not correct in making the addition of the above amount. Accordingly, the learned Assessing Officer is directed to delete the addition in the computation of normal taxable income. Ground no.9 of the appeal is allowed.
Addition being MAT credit added to the book profit - claim of the assessee is that the amount of income tax paid or payable required to be added to the book profit is always under a MAT credit - HELD THAT:- We find that identical view has been taken by the coordinate Bench in case of ACIT vs. JK paper Ltd. [2016 (10) TMI 1393 - ITAT AHMEDABAD] order covers the issue in favour of the assessee. We also find that whenever a provision of current tax is required to be made in the profit and loss account it has to be net of MAT credit available to the assessee. Accordingly, the separate adjustment of MAT credit cannot be made and added to the book profit. Accordingly, the adjustment made by the learned Assessing Officer and confirmed by the learned CIT (A) is not correct. Ground of the appeal is allowed.
Addition of provision for wealth tax to the book profit u/s 115JB - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of Reliance Industries Ltd. 2019 (1) TMI 887 - BOMBAY HIGH COURT] as held that in plain terms, the clause (a) reference to amount of income tax paid or payable or the provision made thereof. The legislator is advisably included wealth tax in the clause 40 (a) (iia) but not u/s 115 JB of the Act. Therefore, by no interpretation process the wealth tax can be included in clause (a) of explanation 1 to section 115JB of the Act. We find that the addition deserves to be deleted. Ground of the appeal is allowed.
Disallowance of excise duty debited to the profit and loss account - AO held that above sum is the double deduction of excise duty expenses. According to him, the assessee claim deduction firstly, from sales in credit side of profit and loss account by showing net sales and consequently, by debiting the excise duty expenses in the profit and loss account - HELD THAT:- On careful consideration of note no.18 to the annual accounts which shows that excise duty on sales amounting to ₹1,322 lac has been reduced from sales in profit and loss account and excise duty on increased and decreased in stock amounting to ₹29.32 lacs has been considered as in the profit and loss account. Assessee has also shown that difference of excise duty was arising out of duty included in opening stock as well as closing stock and has also demonstrated that whatever is not paid before due date of filing of return of income, it is offered for disallowance. We find that addition is not correctly made for the reason that it is not double deduction as stated by the learned Assessing Officer. Accordingly, ground of the appeal is allowed.
Disallowance of interest expenditure on account of interest attributable to the loans to subsidiary companies - HELD THAT:- We find that in the case of the assessee in earlier the about disallowance has been deleted for the reason that assessee has higher interest free advances available then the amount of loan advanced to the sister concern. Therefore, the presumption would be available in favour of the assessee that the amount of loan advance to subsidiary companies without charging interest is out of interest-free funds available with the assessee . Above fact also remains prevalent in this year. It was not shown by the learned departmental authorities that assessee has diverted its interest-bearing funds for giving advance to its subsidiaries free of interest. Thus direct the learned law authorities to delete the disallowance.
Disallowance of prior period expenditure - AO held that assessee following mercantile system of accounting cannot book the expenses in the like manner therefore he held that only those expenses which approved for the current year is allowable - HELD THAT:- The ld.AR merely relied upon the order of co-ordinate bench which is on different facts. In view of this, we are of the view that ld.CIT(A) has exceeded his jurisdiction in directing the AO to verify and allow the claim of the expenses in the preceding assessment year. Therefore, Ground No. 1 & 2 of the appeal of the AO are allowed.
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2023 (1) TMI 1323
Prohibition of manipulative, fraudulent and unfair trade practices - charge that NSE and its employees have colluded with TMs, especially OPG Securities Pvt. Ltd. - profit made by ISB in its report is on the basis of early login by OPG - show cause notice alleged that OPG gained materially by being the first logger as well as by connecting to the secondary server -WTM directed OPG debarring accessing the securities market for a period of five years and restraining OPG from taking any new clients for a period of one year and its Directors to disgorge jointly and severally a sum of Rs.15.57 crores alongwith interest at the rate of 12% p.a - HELD THAT:- The show cause notice alleged that OPG gained materially by being the first logger as well as by connecting to the secondary server. In this regard, NSE had appointed ISB to calculate the profits earned by TMs including OPG especially on days when they logged in first to the PDC either from the primary server or from the secondary server. The ISB in its report took 30 days on sample basis and analysed the same for the period 2012 and 2013 which were the days when OPG had consistently logged in first. ISB in its report submitted that OPG made higher profits close to Rs.25 crores when they logged in early. Based on this ISB report, the show cause notice directed OPG to show cause as to why the profit of Rs.25 crores should not be disgorged.
The ISB report used First-In-First-Out (FIFO) methodology to calculate both intraday and overnight profits. Intraday profits are profits generated through positions that are opened and closed on the same day. Overnight profits are profits generated through positions opened on a prior day and closed on that particular day
A perusal of the terminology “First Prop” indicates that the profits made by the TM is on the basis of its trades made on days when he logged in first into a Port.
WTM has calculated the unlawful gain on the basis of table A11 and A15 of the ISB report. A perusal of the aforesaid tables indicates that the calculation has been made on the basis of “First Prop” and “Non-First Prop”. The “First Prop” analysis is based on when OPG logged in first. When the WTM has given a finding that early logging in does not give any advantage and could only be given a probabilistic advantage the question of calculating profits on the basis of early login becomes wholly erroneous. The WTM could only consider probabilistic advantage, if any, which the OPG may have gained by being the first logger.
Thus, on this aforesaid short point, the calculation of unlawful gain made by the WTM cannot be accepted.
To conclude, we find that all the charges leveled in the show cause notice has not been proved. Many of the charges were dropped by the WTM himself while passing the impugned order. The WTM held that the charge of fraud and unfair trade practice by NSE under PFUTP Regulation is not made out. The charge that NSE and its employees have colluded with TMs, especially OPG has not been made out. The allegation of suppression of material facts and non-cooperation by NSE with the investigating authorities has not been made by the WTM.
We also find that early log in by TM did not create any advantage with regard to dissemination of data. May be a probabilistic advantage is obtained by a TM on account of early login, but in the absence of any further evidence on this aspect, no adverse orders can be passed. We also hold that there was randomness in the dissemination of data in the TBT architecture and, therefore, there was no requirement to add a randomiser to the existing TBT architecture.
NSE failed to monitor the secondary server which led many TMs especially OPG to misuse it to their advantage. NSE failed to follow its own norms and guidelines framed for such purpose. NSE should have placed a mechanism to check unauthorized access to the secondary server by the TMs. NSE should have placed a defined policy for use of secondary server and a mechanism ought to have been placed for monitoring connection by TM on the secondary server since it was an active server.
WTM further held that failure to place the randomizer or load balancer in the TCP IP dissemination protocol, cannot be categorised as breach of the principles of “fairness and equity” attracting the provisions of PFUTP Regulations. The WTM held that the dissemination of information which is in breach of the stipulation contained in SECC Regulations cannot automatically attract the rigors of PFUTP Regulations, without there being any proof to indicate fraud. The WTM held that in the absence of any fraud or collusion or connivance the possibility of fraud was non-existent.
Charge that NSE has violated Regulation 41(2) and 42(2) of SECC Regulations is not proved. NSE provided a level playing field for TM subscribing to the TBT data feed of NSE and provided equal, unrestricted and fair access from the TBT architecture. We, however, found that the circular of 30th March, 2012 was not followed by NSE.
WTM exonerated OPG and its Directors on issue of first login and crowding out other TMs. We, however, affirm the findings of the WTM that OPG gained an unfair access and advantage by consistently log in to the secondary server and made unlawful gains.
We, however, find that for violation of the circular, there can be no disgorgement by NSE or by Mr. Ravi Narain and Ms. Chitra Ramkrishna. Insofar as Mr. Ravi Narain and Ms. Chitra Ramkrishna are concerned, the order of disgorgement cannot be sustained. We also find that order of disgorgement against NSE also cannot be sustained.
We have already held that NSE did not commit any violation of Regulation 41(2) of the SECC Regulations. We have also found that TBT architecture provided unrestricted, transparent and fair access to data dissemination from its TBT architecture to the TMs. We have also found that there was lack of due diligence while allocating IPs on various Ports and that there was inequitable distribution of IPs. We also found that a load balancer should have been placed for equitable distribution of the IPs. We also found that there was failure to monitor frequent connections to the secondary server by certain TMs.
Even though NSE has not indulged in any unethical act or has unjustly enriched itself the direction to disgorge, in our opinion, cannot be sustained. However, NSE has not adhered to its own norms and guidelines and has not followed the circular. The SCRA Act confers a large responsibility upon the exchange to ensure that undesirable transactions do not take place. Being a first level regulator it has a front line responsibility for regulation of the market and has a mandate to ensure compliance by the TMs of its own norms, guidelines and circulars. NSE has a duty to ensure transparency and fair access to all the TMs. For lapses committed by NSE directions under Sections 11 and 11B could be passed and some of the directions of the WTM were rightly passed. However, the direction for disgorgement was unwarranted but the appellant NSE cannot be allowed go scot free and is required to pay a price for the lack of due diligence on account of human failure to comply with the circular in letter and spirit. Though there are no parameters to quantify the lapse committed by NSE but taking into consideration all facts and circumstances of the case and the factors contemplated under Section 15J of the SEBI Act read with 23J of the SCRA Act and in exercise of the powers confirmed upon this Tribunal under Rules 21 of the Securities Appellate Tribunal (Procedure) Rules, 2000, we are of the opinion that NSE should pay a sum of Rs.100 crores for this lapse which is not expected from a first level regulator and which would act as a deterrent.
In view of the reasons given in the preceding paragraph:
a. We set aside the order of the WTM directing disgorgement of an amount of Rs.624.89 cores alongwith interest at the rate of 12% p.a. against NSE.
b. Directions given by the WTM prohibiting NSE from accessing the securities market, directly or indirectly, for a period of six months and, further, directing NSE to carry out system audit at frequent interval after thorough appraisal of the technological changes introduced from time to time is affirmed.
c. We direct NSE to deposit a sum of Rs.100 crores to the Investor Protection and Education Fund created by SEBI. This amount will be adjusted by SEBI pursuant to the deposit already made by NSE vide our interim orders dated 22nd May, 2019 and 17th May, 2021. The excess amount alongwith interest accrued shall be refunded by SEBI within six weeks. The appeal of NSE is partly allowed.
d. The direction to disgorge 25% of the salary from Mr. Ravi Narain and Ms. Chitra Ramkrishna is set aside.
e. The direction prohibiting Mr. Ravi Narain and Ms. Chitra Ramkrishna from associating with any listed Company or a market infrastructure institution or any other market intermediary for a period of five years is set aside and substituted for the period undergone by them. The appeals for Mr. Ravi Narain and Ms. Chitra Ramkrishna are allowed.
f. The direction of the WTM directing NSE to initiate enquiry against its employees is affirmed.
g. The violations committed by OPG as found by WTM is affirmed. However, the direction of the WTM directing OPG and its Directors to disgorge Rs.15.57 crores alongwith interest at the rate of 12% p.a. from 7th April, 2014 onwards is set aside. The matter is remitted to the WTM to decide the quantum of disgorgement afresh in the light of the observation made above within four months from today.
h. In addition to the above, we direct the WTM to consider the charge of connivance and collusion of OPG and its Directors with any employee/officials of NSE. Further, the WTM will decide the issuance of direction/penalty concealment/destruction of vital information and will further reconsider Issue No. 2 relating to crowding out other market participants.
i. All other directions issued against OPG and its Directors are affirmed. The appeal is partly allowed.
j. The intervention applications as well as the appeal of Mr. A. Kumar are rejected.
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2023 (1) TMI 1322
Deduction u/s 80P(2)(d) - claim denied on interest earned from investment made in any bank not being Cooperative society - HELD THAT:- As perused the order of Division Bench of this Tribunal [2021 (8) TMI 1087 - ITAT SURAT] wherein the order of ld. Pr.CIT passed under Section 263 dated 10/10/2018 was set aside. Considering the fact that once the revision order is quashed/set aside, consequent assessment order passed, while giving effect to revision order is thereafter void ab initio. Hence, do not find any merit in the grounds of appeal raised by the revenue and same is dismiss.
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2023 (1) TMI 1321
Validity of reopening of assessment - Estimation of income - bogus purchases - HELD THAT:- We note that assessee has neither filed cross-objection nor filed any request under the Income Tax Appellate Rules (vide Rule 27) to argue the issue on the validity of reopening of assessment. Since the assessee has not filed the cross-appeal nor any application filed before the Tribunal under the Income Tax Appellate Tribunal Rules to argue the issue on reopening of assessment. That is, the assessee has not filed an application under Rule 27 of the Income Tax Appellate Tribunal Rules, therefore argument of the assessee on the technical issue of validity of reassessment under section 147 of the Act cannot be entertained and it is hereby rejected.
Estimation of income - Since, the issue is squarely covered by the judgment of the Co-ordinate Bench in the case of Pankaj K. Chaudhary ([2021 (10) TMI 653 - ITAT SURAT] we direct the Assessing Officer to make the addition at the rate of 6% of bogus purchases / unverifiable purchases. Hence, we allow the appeal of Revenue partly.
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2023 (1) TMI 1320
Disallowance of service charges and other reimbursement(s) - Addition restricted to that @ 30% in the CIT(A)'s order - Disallowance of reimbursement of travelling expenses and depreciation on coolers - HELD THAT:- We find in this factual backdrop that all these issues are no more res integra as the tribunal’s coordinate bench’s common order in assessment years 2000-2001 to 2004-2005 involving assessee’s and Revenue’s cross-appeals decided [2022 (4) TMI 1571 - ITAT PUNE] inter alia, has accepted the former’s claim of various expenses restricted to 30% in entirety by following its earlier orders, partly uphold the learned lower authorities action disallowing travelling expenses @ 10% only on estimation basis and rejected the department’s stand on depreciation on coolers provided to bottlers/vendors vis-à-vis their WDV in full, respectively.
Both the parties are fair enough in not pinpointing any distinction on facts or law in the impugned assessment year as well so far as these three issues are concerned. We thus adopt judicial consistency to decide the first and foremost issue of reimbursement [restricted to 30% in the CIT(A)'s order] to full extent assessee’s favour, uphold only 10% of travelling expenses and accept it’s stand relating to depreciation on coolers in very terms.
TP Adjustment - We advert to assessee’s pleadings raised during the course of hearing that the department, and more particularly, the TPO took a diametrically opposite view in case of the assessee and its AE regarding the very issue. Faced with the situation and more particularly in light of the fact that the learned “Panel” has not discussed even the most appropriate method [in short “MAM”] before rejecting the assessee’s contentions, we deem it appropriate to restore these remaining grounds back to the learned “DRP” for its fresh adjudication on merits, preferably within three effective opportunities of hearing as much water has flown down the stream since the impugned assessment year 2006-07. Ordered accordingly. The assessee’s 2nd substantive ground herein is accepted for statistical purposes to the above extent.
Disallowance of marketing support services - We note that the Assessing Officer has refused to follow the “DRP’s” directions regarding the matter in light of Sec. 144C(13) r.w.s. 144C(5) of the Act. He has not carried-out any verification as per his detailed discussion in page-5 para-2 of the assessment order. Faced with this peculiar situation and in view of the clinching fact that the assessee may not be able to completely verify its detailed evidence of assessment year 2007-08 in the year 2023, we deem it appropriate to restrict the impugned disallowance to that @ 5% only. Ordered accordingly.
TP Adjustment on AMP expenses - international transaction or not? - HELD THAT:- CIT-DR could hardly dispute that case law Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] has already held that such “AMP” transactions do not amount to an international transaction u/s. 92B of the Act. Faced with the situation, we reverse learned lower authorities action to this limited extent.
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2023 (1) TMI 1319
Addition u/s 2(22)(e) - accumulative profits as on 31.03.2011 was minus/loss - HELD THAT:- Ahmedabad bench of Tribunal in the case of M/s M.B. Stock Holdings (P) Ltd Vs ACIT [2001 (12) TMI 190 - ITAT AHMEDABAD-B] took note of the Hon’ble Supreme Court decision in the case of CIT Vs. Asokbhai Chimanbhai [1964 (10) TMI 11 - SUPREME COURT] wherein it was held that the profits do not accrue from day to day or even from month to month and have to be ascertained by a comparison of assets at two stated points. Also unless the right to profits comes into existence there is no accrual of profits and the destination of profits must be determined by the title thereto on the day on which they arise.
AO not to include the current year profit to be part of accumulated profit while determining the amount of deemed dividend u/s 2(22)(e) after considering Explanation-2 to Section (2(22)(e) (which defines the accumulated profit). And the Hon’ble High Court specifically observed that while determining the amount of deemed dividend under Explanation 2 to Section 2(22)(e) of the Act, the current profit was not required to be included to be part of accumulated profit.
And their Lordship also took note that the issue was already settled by the Hon’ble Supreme Court against the revenue in the case of Associated Banking Corporation of India Ltd. [1964 (10) TMI 7 - SUPREME COURT] wherein the view was taken that the profit accrues when the books of account are closed. In the light of the judicial precedent laid by Hon’ble Gujarat High Court in CIT Vs. M. B. Stockholding (P) Ltd [2015 (5) TMI 232 - GUJARAT HIGH COURT] and since no decision of jurisdictional High Court was cited in support of impugned action of Ld CIT(A), we are of the considered opinion that in the present case, while determining the deemed dividend, the AO/Ld. CIT(A) ought to have taken into consideration the accumulated profit as on 31.03.2011 i.e loss/(-) of Rs. 74,80,633/- and not accumulated profit adopted as on 31.03.2012 ( Rs. 3.46 crores). Therefore, no addition was possible u/s 2(22)(e) of the Act in the facts of the case and thus the assessee succeeds. And consequently, we direct the deletion of Rs. 3,41,96,270/.
It is noted that the Revenue’s reliance on the judgment of P.K. Badiani Vs. CIT [1976 (9) TMI 3 - SUPREME COURT] was misplaced because the Hon’ble Apex Court was answering the question as to whether the development rebate reserve created by the company by duly charging the amount in profit & loss account, although liable as a deduction under the Income Tax Act, 1922, constituted accumulated profit of the company within the meaning of Section 2(6A)(e) of the Act, 1922.
In this judgment, we couldn’t even find an obiter-dicta which could support the contention of the revenue. So the same cannot be of any help to the revenue. Therefore, by applying the ratio in CIT Vs. Damodran as well as CIT Vs. Ashokbhai Chamanbhai [1964 (10) TMI 11 - SUPREME COURT] and Associated Banking Corporation [1964 (10) TMI 7 - SUPREME COURT] and as held by the Hon’ble Gujarat High Court in CIT Vs. M. B. Stockholding [2015 (5) TMI 232 - GUJARAT HIGH COURT] we uphold the contention of the Ld AR of the assessee as discussed supra and allow the appeal.
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2023 (1) TMI 1318
Exemption from Customs Duty - import of Boron Ore - exemption under serial No. 113 of Customs Notification No. 12/2012-Cus dated 17.03.2012 for the period 01.04.2015 to 30.06.2017 and under serial No. 130 of Customs Notification No. 50/2017 dated 30.06.2017 - period after 01.07.2017 - test reports available on record but not perused - violation of principles of natural justice.
Denial of exemption on the ground that the Boron Ore imported by the appellant is not naturally mined Boron Ore but the impurities have been removed from the product therefore, the same is concentrated Boron Ore which is not eligible for exemption notification.
HELD THAT:- The exemption under the aforesaid notification is provided to goods viz. ‘Boron Ore’. From the perusal of the finding of the adjudicating authority, the test report of the product shows that the goods is ‘Boron Ore’ however, the same obtained after removal of impurities. The adjudicating authority has relied upon Wikipedia and Website for the meaning of ‘Ore’.
When the test reports are available on record, there is no need to go to the website and Wikipedia. Whether the goods will remain as Ore after removal of impurities has been considered in various judgments cited by the appellants. However, the adjudicating authority has not properly considered various defence submission made by the appellants and the judgments relied upon by the appellants.
The matter needs to be reconsidered in the light of the test reports and judgments relied upon by the appellant - appeal allowed by way of remand.
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2023 (1) TMI 1317
Stay of demand - petitioner has been directed to pay 20% of the outstanding demand - HELD THAT:- From a perusal of the impugned order it is seen that 1st respondent had followed instructions of the Central Board of Direct Taxes (‘CBDT’) to the effect that where outstanding demand is disputed before the appellate authority, the assessee has to pay 20% of the disputed demand. Accordingly, petitioner has been directed to pay 20% of the outstanding demand.
We are afraid 1st respondent did not apply his mind while passing the order dated 16.01.2023. It appears to be a mechanical exercise of power. When the Income Tax authority exercises jurisdiction u/s 220(6) he exercises quasi-judicial powers. While exercising quasi-judicial powers, the authority is not bound or confined by departmental instructions.
This position has been well settled in Principal Commissioner of Income Tax v. LG Electronics India Pvt. Ltd [2018 (7) TMI 1905 - SC ORDER]
That being the position, we set aside the order and remand the matter back to the 1st respondent for passing a fresh order in accordance with law after giving due opportunity of hearing to the petitioner. This shall be done within a period of six (06) weeks from the date of receipt of a copy of this order. Till the aforesaid period of six (06) weeks, respondents are directed not to take coercive steps for realizing the outstanding demand for the assessment year 2017-18.
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2023 (1) TMI 1316
Applicability of time period to claim refund of Special Additional Duty of Customs (SAD) on goods imported in terms of the Notification No. 102/2007-CUS. - HELD THAT:- This Court has, in a number of matters, dismissed the appeals filed by the Customs Authorities in view of the decision in Sony India Pvt. Ltd. v. Commissioner of Customs [2014 (4) TMI 870 - DELHI HIGH COURT].
In Commissioner of Customs v. S.R. Traders [2022 (4) TMI 1167 - DELHI HIGH COURT] , a Coordinate Bench of this Court has observed that decision in Sony India Pvt. Ltd. v. Commissioner of Customs would be binding on other benches of this Court. In COMMISSIONER OF CUSTOMS VERSUS PANVI TRADING CO. [2022 (12) TMI 1473 - DELHI HIGH COURT], this Court had taken note of the aforementioned decision and found no reason to differ with the aforesaid view.
The present appeal is required to meet a similar fate - Appeal dismissed.
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2023 (1) TMI 1315
Applicability of time period to claim refund of Special Additional Duty of Customs (SAD) on goods imported in terms of the Notification No. 102/2007-CUS. - HELD THAT:- This Court has, in a number of matters, dismissed the appeals filed by the Customs Authorities in view of the decision in Sony India Pvt. Ltd. v. Commissioner of Customs [2014 (4) TMI 870 - DELHI HIGH COURT].
In Commissioner of Customs v. S.R. Traders [2022 (4) TMI 1167 - DELHI HIGH COURT], a Coordinate Bench of this Court has observed that decision in Sony India Pvt. Ltd. v. Commissioner of Customs would be binding on other benches of this Court - In COMMISSIONER OF CUSTOMS VERSUS PANVI TRADING CO. [2022 (12) TMI 1473 - DELHI HIGH COURT], this Court had taken note of the aforementioned decision and found no reason to differ with the aforesaid view.
The present appeal is required to meet a similar fate - Appeal dismissed.
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2023 (1) TMI 1314
Condonation of delay of 1563 days - Sufficient cause of delay - lapse on the part of his regular counsel, CA who had failed to provide the requisite details and properly guide him as regards filing of the appeal before the Tribunal - HELD THAT:- In the present case, the delay of 1563 days cannot be simply condoned on the basis of the unsubstantiated claim of the assessee that the same had occasioned on account of failure on the part of his regular chartered accountant in properly guiding him as regards filing of the appeals before the Tribunal. In fact, the conduct of the assessee before the lower appellate authority and the AO clearly evidences his disregard for the process of law, which, as find, he had carried forward before me by preferring the appeal beyond a period of 1563 days after the lapse of the stipulated time period.
Also, as observed in the case of Ramlal, Motilal and Chotelal Vs. Rewa Coalfields Ltd. [1961 (5) TMI 54 - SUPREME COURT] that seeker of justice must come with clean hands, therefore, now when in the present appeals the assessee appellant had failed to come forth with any good and sufficient reason that would justify condonation of the substantial delay involved in preferring of the captioned appeals, therefore, we decline to condone the delay of 1563 days and, thus, without adverting to the merits of the case dismiss all the captioned appeals of the assessee as barred by limitation.
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2023 (1) TMI 1313
Revision u/s 263 - Inadequate v/s lack of enquiry - CIT held that the assessment framed u/s 143(3)/147 is erroneous insofar prejudicial to the interest of Revenue - Unexplained cash deposits in bank account as joint holder with his son - HELD THAT:- An inquiry made by the AO, considered inadequate by the CIT, cannot make the order of the AO erroneous. In our view, the order can be erroneous if the Assessing Officer fails to apply the law rightly on the facts of the case.
As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the AO. It is AO’s prerogative to make inquiry to the extent he feels proper. CIT by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various Hon’ble High Courts in this regard.
Delhi High Court in the case of CIT Vs. Sunbeam Auto [2009 (9) TMI 633 - DELHI HIGH COURT] made a distinction between lack of inquiry and inadequate inquiry. The Hon’ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry.
As decided in Shree Gayatri Associates [2019 (6) TMI 888 - SC ORDER] Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No question of law arises.
Principle which emerges is that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue.
In the present case it is not the case that the AO has not made any enquiry. Indeed, the ld. Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of cash deposited during the year under consideration. It is not the case of the ld. Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of materials placed on record accepted the genuineness of the claim of the assessee. Thus, we hold that there is no error in the assessment framed by the AO under section 143(3)/147 of the Act causing prejudice to the interest of revenue. Decided in favour of assessee.
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2023 (1) TMI 1312
Chargeability of redemption premium on FCCBs borrowed from outside India and utilized for the purpose of making investments or loans to overseas subsidiaries in the hands of the recipient of such premium - TDS u/s 196C r.w.s. 115 AC on the interest payable on FCCBs - assessee had remitted ‘FCCBs’ without deduction of tax at source, thus should be treated as “an assessee in default” u/s 201(1) - as per CIT(A) no interest income had accrued to the non-recipient in terms of provisions of section 5(2) r.w.s. 9(1)(v) - whether both sections 5(2) and 9(1)(v) of the Act, are applicable to determine the situs of interest income in case of non-resident? - HELD THAT:- As per scope of the provisions of section 9(1)(v) explained by the CBDT Circular dated 05.07.1976 it would be cleared that the interest paid by the resident in respect of loan that was incurred or money borrowed utilized for the purpose of making or earning any income from outside India is not taxable in India.
In the present case, it is not disputed that FCCBs were utilized for the purpose of making investments in share of overseas subsidiaries or on the loans given to overseas subsidiaries.
No doubt, the redemption premium partakes interest as defined u/s 2(28A) of the Act, however, by virtue of exclusive clause of the provisions of section 9(1)(v), the interest income in the hands of recipient cannot be said to have accrued or arisen in India.
When the income has not arisen in India in the hands of recipient/non-resident, there is no obligation on the part of the respondent-assessee to deduct tax at source on payment of interest as held by GE India Technology Cen. (P.) Ltd [2010 (9) TMI 7 - SUPREME COURT] followed by Karnataka Power Transmission Corporation Ltd [2016 (2) TMI 412 - KARNATAKA HIGH COURT] We find that the order of the ld. CIT(A) is in consonance with the legal position discussed above. Therefore, the order of the ld. CIT(A) is just, proper and reasoned order. Thus, we do not find any reason to interfere with order of the ld. CIT(A).
Penalty u/s 271C - failure on the part of the assessee to deduct tax at source on the redemption premium - HELD THAT:- As Tribunal sustained the findings of the ld. CIT(A) in quashing of the order u/s 201(1) of the Act. Since the basis on which the penalty was levied, no longer survive, therefore, the penalty order cannot be sustained in the eyes of law. Therefore, the ld. CIT(A) rightly deleted the penalty levied u/s 271C.
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2023 (1) TMI 1311
Penalty imposed under clause (a) of Section 129(1) of the Central Goods and Services Tax Act, 2017 - E-way bill not generated at the time of dispatch - huge difference in the value of goods declared in the Delivery Challans issued by the appellant - Stock transfer or goods removed to another person - HELD THAT:- The penalty imposed under clause (a) of Section 129(1) of the Central Goods and Services Tax Act, 2017 for violation of provisions made under the Central Goods and Services Tax Act, 2017, and rules made thereunder. The appellant is a registered company and has a good reputation in the market of windmill. Further, events made for not following the provisions of GST Law are inadvertently and there is no mala fide intention of the appellant to evade payment of GST. Therefore, the various plea made by the appellant in respect of imposing a minor penalty for this bona fide mistake is genuine and proper.
The penalty imposed under clause (a) of Section 129(1) of the Central Goods and Services Tax Act, 2017 by the adjudicating authority and calculating 200% of tax amount. The transaction in question is not attracting any tax liability as the same is stock transfer and goods removed under Delivery Challans. This action of the appellant is not attracting any tax liability under GST Law only procedures are prescribed for such transactions such as the issuance of a Delivery Challan for the movement of such goods and the issue of an e-way bill. As per the definition provided under section 2(47) of the said act prescribed such type of non-taxable supply also considered as 'exempt supply'. Therefore, the stock transfer of goods by the appellant is considered as exempted goods.
Any contravention of provisions made under the Central Goods and Service Tax Act, 2017, and rules made thereunder during the transit of goods, the same should be penalized under section 129 ibid. In present case it is undisputed facts that the E-way is not tendered by the transporter. The contention of the appellant in this regard is that there was glitch in GST E-way Portal hence E-way was not generated - the goods in question is non-taxable and as per Section 2(47) ibid, the goods which are non-taxable also considered as exempted supply hence penalty provision provided under section 129(1) ibid related to exempted goods, is applicable in the present case. Therefore, the Order for penalty under section 129(1)(a) of the Central Goods and Services Tax Act, 2017 is amended and the penalty Rs. 25,000/- under the Central Goods and Services Tax Act, 2017 and Rs. 25,000/- under of the Gujarat Goods and Services Tax Act, 2017 is imposed instead of Penalty of Rs. 42,22,604/- each under imposed under the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017.
Appeal allowed in part.
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2023 (1) TMI 1310
TP Adjustment of management fee paid by the assessee to its AE - unilateral estimation - prescribed method - HELD THAT:- The Co-ordinate Bench in assessee’s appeal [2022 (11) TMI 1417 - ITAT MUMBAI] decided the issue in favour of assessee by placing reliance on the decision of the Tribunal in assessee’s own case in [2019 (12) TMI 1238 - ITAT MUMBAI] and on the decision rendered in the case of CLSA vs. DCIT [2019 (1) TMI 1351 - ITAT MUMBAI] held that TPO made an adhoc unilateral estimation by assuming that around 750 hours would have been spent for providing the aforesaid services for which remuneration of INR 3,000/- per hour was appropriate. The Tribunal deleted the addition holding that the TPO had resorted to an adhoc unilateral pricing of the Management Fee without applying any of the prescribed methods and disregarding the facts of the case by placing reliance upon the decision of the co-ordinate Bench of the Tribunal in the case of Kellogg India Pvt. Ltd. v. DCIT [2019 (8) TMI 698 - ITAT MUMBAI] TPO has determined the ALP of the transaction without following any of the prescribed methods - Appeal of assessee allowed
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2023 (1) TMI 1309
Grant of Interim Bail - Money Laundering - proceeds of crime - violation of Sections 41, 41-A and 60-A Cr.P.C. - whether the arrest of the petitioners was illegal i.e. contrary to the constitutional mandate and statutory provisions and consequently, whether the petitioners are entitled to be released on interim bail? - HELD THAT:- The Apex Court in the case of SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION & ANR. [2022 (8) TMI 152 - SUPREME COURT], has issued certain directions to investigating agencies and the courts; has discussed arrest in cognizable offences, the mandate of Section 41, effect of its non-compliance while considering the bail application; has issued directions to ensure that police officers do not arrest the accused unnecessarily and magistrates do not authorise detention casually and mechanically; has held that Sections 41 and 41-A are facets of Article 21 of the Constitution; and has issued certain guidelines for avoiding unwarranted arrest, amongst other directions/observations.
From various judgments, it is evident that arrest is not mandatory; that the notice issued under Section 41-A is to ensure that the persons upon whom notice is served, is required to attend for 'answering certain queries' relating to the case; that if an officer is satisfied that a person has committed a cognizable offence punishable with imprisonment for a term, which may be less than 7 years or which may extend to the said period, with or without fine, an arrest can follow only when there is a reason to believe or suspect that the said person has committed an offence, and there is a necessity for an arrest.
Section 41 Cr.P.C. mandates the concerned officer to record his reasons in writing while making the arrest. Thus, a statutory duty is cast on the officer not only to record the reasons for arrest in writing, but also, if the officer chooses not to arrest - The Apex Court in its judgments in ARNESH KUMAR VERSUS STATE OF BIHAR & ANR [2014 (7) TMI 1143 - SUPREME COURT] and SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION & ANR. [2022 (8) TMI 152 - SUPREME COURT], has clearly interpreted Sections 41(1)(b)(i) and (ii) Cr.P.C. It is evident from the said judgments that both the elements, "reason to believe" and "satisfaction for an arrest" as mandated in Section 41(1)(b)(i) and Section 41(1)(b) (ii) have to be read together and as such recorded by the concerned officer whilst arresting an accused. The object being to ensure that officers do not arrest the accused unnecessarily and the Magistrates do not authorise detention casually and mechanically.
Thus, it is clearly evident from the mandate of Section 41 Cr.P.C., that for a cognizable offence, an arrest is not mandatory and the onus lies with the officer who seeks to arrest. For effecting arrest, the officer must be satisfied that a person has committed a cognizable offence, punishable with imprisonment for a term which may be less than seven years or which may extend to the said period with or without fine, and that there is a necessity for an arrest - In the facts, it is evident that the officer, in the arrest memo, in the column, 'Grounds of arrest' has merely stated that 'The accused is an FIR named. She has been not cooperating and disclosing true and full facts of the Case.', which prima-facie appears to be contrary to the facts on record. Nothing specific has been noted/set-out therein, as mandated by Section 41(1)(b) (ii) (a) to (e). The only reason mentioned is that the petitioners have not co-operated and not given true and correct disclosure. The same cannot be a ground for arrest.
Courts have time and again re-iterated the role of courts in protecting personal liberty and ensuring that investigations are not used as a tool of harassment.
In the present case, the reasons recorded by the Officer in the ground of arrest, does not satisfy the tests laid down in Section 41(1)(b)(ii) (a) to (e) of Cr.P.C. It does not disclose as to whether the arrest was necessary for one or more purpose(s) as envisaged in the said provision - the petitioners' arrest is not in accordance with law. Thus, non-compliance of the mandate of Section 41(1)(b)(ii), Section 41-A and Section 60-A of Cr.P.C. will enure to the benefit of the petitioners, warranting their release on bail.
The petitioners are entitled to be released on bail, pending the hearing and final disposal of the aforesaid petitions on the conditions imposed - petition allowed.
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2023 (1) TMI 1308
CENVAT Credit - common inputs used of providing both taxable and exempted service - failure to maintain separate account as required under Rule 6(2) of the Cenvat Credit Rules - HELD THAT:- Application for exemption from filing certified copy of the impugned judgment is allowed.
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2023 (1) TMI 1307
Classification of goods proposed to be imported - Optoma Creative Touch 3-series Interactive Flat Panel (IFP) - to be classified under sub-heading 84714190 or not - HELD THAT:- In order to merit classification under heading 8471, it is clear that subject goods need to satisfy the requirements of note 6(A) to chapter 84. Therefore, there is a need to examine whether the features and specifications of the subject goods under consideration meet the criteria as laid down in the relevant chapter note.
From the product details submitted, it appears that these goods come configurable with off-the-shelf, end-user applications allowing the programming of the various functions in accordance with the needs of the user. As per the product details available on the website, these devices have pre-installed apps including Office Suite, which allows users to open and edit all Microsoft Office documents. Applications available include GoToMeeting, Firefox, Evernote, and many more. Therefore, the goods satisfy condition as per 6(A)(2). Creative Touch 3-Series Interactive Flat Panels, perform the arithmetical computations specified by the user which satisfy condition 6(A)(3) of the chapter notes.
As the machines under consideration do not have a keyboard, they appear to be classifiable as other ADP machines under 2nd one-dash sub-heading. Sub-heading 847141 covers other ADP machines; comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined. For the machines under consideration, the LED screen satisfies the requirement for output and the touchscreen satisfies the requirement for input apart from the CPU inbuilt into the device. Therefore, the subject goods appear to be classifiable under sub-heading 847141 and more specifically under sub-heading 84714190 as "Other automatic data processing machines: Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined: Other".
Optoma Creative Touch 3-series Interactive Flat Panel (IFP) (Model - 3652RK, 3752RK, 3862RK) merit classification under Heading 8471 and more specifically under sub-heading 8471 41 90 of the first schedule to the Customs Tariff Act, 1975.
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