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Showing 161 to 180 of 1843 Records
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2017 (1) TMI 1688
Disallowance u/s 40(a)(ia) - recipient has paid due taxes on the income - HELD THAT:- This issue is now covered by the case of CIT Vs. Ansal Landmark Townships Pvt. Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] wherein it is held that as long as the recipient has paid due taxes on the income embedded in such payments, disallowance under section 40(a)(ia) cannot be invoked - the matter can be remitted to the file of the Assessing Officer for the limited verification of the fact that the recipient has included the receipt from the assessee in the computation of income on which taxes have been paid. The assessee may obtain from the recipient concerned a certificate to this effect and file the same before the Assessing Office
Disallowance under section 40A(2)(b) - HELD THAT:- Issue is now covered in favour of the assessee by the decision of PWS Engineers Limited vs. DCIT [2016 (6) TMI 596 - GUJARAT HIGH COURT] wherein held that as long as the amounts paid by the assessee to the specific persons are taxed in the hands of specific persons at the same rate, disallowance under section 40A(2)(b) will be meaningless inasmuch as “permitting the Revenue to tax the same income again at the same rate in the hands of the principal payer would amount to double taxation” - proper course of action will be to remit the matter to the file of Assessing Officer for verification of factual aspect as to whether or not the said amount is brought to tax in the hands of the recipient at the same rate. If that be so, the disallowance will stand deleted.
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2017 (1) TMI 1687
TP Adjustment - capacity utilization and working capital adjustment - HELD THAT:- Having carefully examined the orders of lower authorities in the light of rival submissions, we are of the view that since the Tribunal has taken a view in assessee’s own case in the succeeding year, we do not find any justification to take a contrary view in this appeal.
Tribunal has given a detailed guidelines as to how to make or grant capacity utilization adjustment. Hence, we feel it proper that this matter also should go back to the file of the AO/TPO for granting capacity utilization adjustment
Accordingly, following the order of the Tribunal, we restore the matter to the file of the AO to readjudicate the issue of lower capacity utilization and working capital adjustment in the light of the finding of the Tribunal in assessee’s own case for the AY 2006-07. Accordingly, the order of the CIT(Appeals) is set aside and the matter is restored to the AO/TPO in the terms indicated above.
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2017 (1) TMI 1686
Disallowance of agricultural expenses - HELD THAT:- Both the authorities below have disallowed the impugned agricultural expenses @35% of the gross agricultural income thereby enhancing assessee’s expenses declared @16.5% (supra). The assessee fails to pinpoint any specific cogent evidence in the case file so as to buttress its case to have derived the impugned agricultural income at a net figure of 85% of the gross amount. Even details of the crops sold or evidence of the agricultural lands in question is not forthcoming in the case file. We thus find no reason to interfere with the CIT(A)’s action upholding the impugned addition.
Disallowing business expenses - CIT(A) observed that the assessee has not been able to demonstrate in any manner as to how the above expenses shown in the computation of income are incurred for the purpose of business and earning of the business income in question - HELD THAT:- The assessee has not been able to file any evidence in the instant appeal so as to substantiate his claim of having incurred all heads of the above expenses by way of car loan interest, depreciation, bank commission, petrol expenses, car expenses, salary and telephone charges. There is not even a single piece of paper in the nature of a self-attested voucher to fortify any of the above claim of expenditure much less than the substantive evidence of ownership of the corresponding vehicles and their nexus with assessee’s business income. We thus find no reason to agree with assessee’s expenditure claim in question amounting to ₹ 6,44,023/-. We thus confirm the same. The assessee losses in its latter substantive ground as well.
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2017 (1) TMI 1685
Assessment u/s 153A - as argued assessment done by AO without any incriminating documents - HELD THAT:- The assessment proceedings were completed before the date of search. Besides, the time limit to issue notice u/s.143(2) was also expired. In order to initiate assessment proceedings u/s.153A, there should be a new or incriminating document. The assessment which is already completed u/s.143(3)/143(1)should not be reopened.
Therefore, considering the scheme of Section 132 and Section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of Section 153A. DR for the revenue had pointed out that there is a direct nexus among the companies, which has been established by the statement of Mr.Naresh Kumar Chhaparia, which cannot be relied on, as he was a double speaking person. Therefore, considering the factual position and the judgments cited by ld. AR, we are of the view that the additions made by the AO u/s.153A and confirmed by the ld. CIT(A) needs to be deleted. Therefore, we delete the addition.
Addition u/s.68 – (cash credit) on account of share application money/share capital - HELD THAT:- There is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the judgments of the ITAT and Hon’ble High Courts. AR pointed out that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person and later on he reiterated the statement by filing the affidavit. The share applicants have submitted the required document and evidences. The addition made by the AO u/s.68 is without any basis and without any incriminating material. The assessee has proved the identity, creditworthiness and genuineness of the transactions. Therefore, considering the factual position and the case law cited by ld. AR, we are of the view that the addition made by the AO u/s.68 and confirmed by the ld. CIT(A) needs to be deleted. - Assessee appeal allowed.
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2017 (1) TMI 1684
Condonation of delay - petitioner approached the Tribunal with a delay of 1964 days - ground raised in the affidavit accompanying delay condonation application was the lack of understanding of the assessee with respect to the relevant procedure and the provisions of the Act - HELD THAT:- Ignorance of law is not an excuse and lack of understanding would also be akin to ignorance; which cannot validly be taken up. The delay is also huge coming to 1964 days. This Court does not find any reason for condoning the delay and is unable to persuade itself to interfere with the order of the Tribunal
The writ petition would stand dismissed leaving open the remedy of the petitioner to agitate the third application filed before the appropriate authority, which shall be applicable only to the future years, if at all.
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2017 (1) TMI 1683
Jurisdiction - power of High Court to restraint the investigating agency not to arrest the accused persons during the course of investigation - Whether the High Court while refusing to exercise inherent powers Under Section 482 of the Code of Criminal Procedure (Code of Criminal Procedure) to interfere in an application for quashment of the investigation, can restrain the investigating agency not to arrest the accused persons during the course of investigation?
HELD THAT:- There can be no dispute over the proposition that inherent power in a matter of quashment of FIR has to be exercised sparingly and with caution and when and only when such exercise is justified by the test specifically laid down in the provision itself. There is no denial of the fact that the power Under Section 482 Code of Criminal Procedure is very wide but it needs no special emphasis to state that conferment of wide power requires the court to be more cautious. It casts an onerous and more diligent duty on the Court.
In the instant case, the High Court has not referred to allegations made in the FIR or what has come out in the investigation. It has noted and correctly that the investigation is in progress and it is not appropriate to stay the investigation of the case. It has disposed of the application Under Section 482 Code of Criminal Procedure and while doing that it has directed that the investigating agency shall not arrest the accused persons. This direction "amounts" to an order Under Section 438 Code of Criminal Procedure, albeit without satisfaction of the conditions of the said provision. This is legally unacceptable.
In RANJIT SINGH VERSUS STATE OF M.P. AND ORS. [2013 (9) TMI 1240 - SUPREME COURT] the High Court had directed that considering the nature of the allegation and the evidence collected in the case-diary, the Petitioner shall surrender before the competent court and shall apply for regular bail and the same shall be considered upon furnishing necessary bail bond. The said order was challenged before this Court.
In Hema Mishra v. State of Uttar Pradesh and Ors. HEMA MISHRA VERSUS STATE OF UP [2014 (1) TMI 1771 - SUPREME COURT], the Court was dealing with the power of the High Court of Allahabad pertaining to grant of pre-arrest bail in exercise of extraordinary or inherent jurisdiction and it is significant, for in the State of Uttar Pradesh Section 438 Code of Criminal Procedure has been deleted by the State Legislature - Be it noted that constitutional validity of the said deletion was challenged before the Constitution Bench in KARTAR SINGH VERSUS STATE OF PUNJAB [1994 (3) TMI 379 - SUPREME COURT] wherein it has been held that deletion of the application of Section 438 Code of Criminal Procedure in the State of Uttar Pradesh is constitutional.
Presently we can only say that the types of orders like the present one, are totally unsustainable, for it is contrary to the aforesaid settled principles and judicial precedents. It is intellectual truancy to avoid the precedents and issue directions which are not in consonance with law. It is the duty of a Judge to sustain the judicial balance and not to think of an order which can cause trauma to the process of adjudication. It should be borne in mind that the culture of adjudication is stabilized when intellectual discipline is maintained and further when such discipline constantly keeps guard on the mind.
Appeal allowed.
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2017 (1) TMI 1682
Addition u/s. 50C - AO adopted the stamp duty valuation in respect of one of the properties where an actual declared sale consideration is lower than the stamp duty valuation - HELD THAT:- The sale consideration of these two plots sold on the same day though be separated agreements, is more than the stamp duty valuation by ₹ 3,00,00,000/-. Even assuming for a moment that the sale consideration in respect of Plot in survey No. 22 and 42 is less than the stamp valuation it is ₹ 33,48,284/- which is less than 10% of the stamp duty valuation of the said plot. Therefore assessee should succeeded in its appeal.
Referring to Smt. Sita Bai Ketan [2016 (11) TMI 955 - ITAT JAIPUR] we direct to AO to adopt the valuation of sale consideration as declared by the assessee. The additions made by the AO u/s. 50C is deleted and as grounds raised by the assessee are allowed.
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2017 (1) TMI 1681
Liability of interest of Assessee u/s 201(1A) - Tribunal held that deductor is not liable for interest under Section 201(1A) if the deductee has returned losses for relevant years and it will not make any difference if the assessment of the deductee was completed at positive income - HELD THAT:- If it is established that the recipient had filed all its returns for these years declaring loss in all the impugned assessment years, interest under Section 201 (1A) of the Act cannot be charged against the assessee. It may be that against loss declared by the recipient in its return, ultimately the assessment was completed at a positive income but in that situation also, that demand is on account of different between the returned income and assessed income and not because of non deduction of TDS by the assessee and hence it will not alter the situation particularly if that assessee has challenged the addition in his hands in appeal.
Accordingly the order of the CIT(A) on this issue is set aside and the matter is restored to the file of the Assessing Officer for verification and adjudication of the issue in terms indicated above after affording an opportunity of being heard to the assessee. If it is found that in the return of income filed for these years by the deductee, it has included the impugned amount in its receipts and there is loss as per return, no demand can be raised u/s 201(1A) on the present assessee
Question about liability of interest under Section 201(1A) has also been considered by this Court in Ghaziabad Development Authority Vs. Union of India and others [2016 (8) TMI 1240 - ALLAHABAD HIGH COURT] wherein it has been held that it is compensatory and if recipientAssessee has already paid tax or not liable to pay any tax whatsoever, obviously no interest under Section 201(1A) of Act, 1961 could have been recovered from alleged Assessee in default for the reason that interest could have been charged for the period when TDS fell due and actual amount of tax is paid by recipient-Assessee. If there is no liability of payment of tax by recipient-Assessee, the question of deduction of tax by Assessee in default would not arise and the question of payment of tax by such recipient-Assessee also would not arise. In such case interest also could not have been charged. Hence, on the question of liability of interest, Tribunal has rightly observed that this aspect shall be examined by Assessing Officer and thereafter he shall pass a fresh order.
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2017 (1) TMI 1680
Condonation of delay of 367 days in moving the appeal - the reason for delay of almost one year has been explained in the supplementary affidavit as part of the process of taking legal opinion and gathering the papers - HELD THAT:- A year time for such exercise is too long for any State authorities, if they are vigilant to defend their rights. This Court will not give any indulgence to the State for bureaucratic delay in moving the appeal.
Limitation petition rejected so is the appeal since the Court is not satisfied with the rational and reasoning offered by way of explanation.
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2017 (1) TMI 1679
Validity of reopening of assessment - assessee was making sales in India with the involvement of its Permanent Establishment (PE) in India and, accordingly, the profits attributable to such PE were chargeable to tax - whether no name of the assessee, business transactions and the relevant year appear in the reasons ? - HELD THAT:- As decided in GE ENERGY PARTS INC. VERSUS ADIT, CIRCLE-1 (2) , INTERNATIONAL TAXATION, NEW DELHI. [2017 (2) TMI 780 - ITAT DELHI] -
i. Initiation of reassessment is valid.
ii. Fixed place as well Agency Permanent establishment of all the GE overseas is established in India.
iii. Attribution of income to the PE should be 2.6% of the sales made by GE overseaes entities in India.
iv. Interest u/s 234B is not chargeable.
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2017 (1) TMI 1678
Oppression and mismanagement - Contempt petition - non-compliance of order - allotment of further shares by holding a valid EOGM - HELD THAT:- Prima facie it appears that the Respondents are at fault in not obeying the directions of the respected coordinate Bench. While delivering the final verdict, the CLB Bench has held that 'the Petitioner has successfully established his allegations regarding the of oppression and mismanagement(reproduced from para 39 of the Order). The directions were unambiguous that a valid EOGM is to be convened to allot further shares. The Petitioner has, therefore, asked the Respondent No.l Company by several letters to furnish copy of 'Register of Members'.
Merely filing an Appeal ipso facto does not put any bar on the implementation of an Order. No cogent or convincing reason has been given by the Respondents in not implementing the directions of the CLB.
Alienation of immovable properties of Respondent No.l Company - HELD THAT:- In the said Order, it was directed that the Petitioner should be given an opportunity to match the offer if the Respondent No.l Company is alienating its assets. In one of the hearings held before the NCLT Bench, Ahmedabad on 29th September, 2016, it is very strange that the Ld. Representative of the Respondents has stated that a Resolution was passed by the Board of Directors to alienate the immovable properties of the Respondent No.l Company. The apprehension of the Applicant is, therefore, reasonable because no opportunity appears to have been granted to match the selling price of the property as directed.
The Applicant / the Original Petitioner has also pleaded to hold the Respondents for guilty of contempt - That instead of initiating contempt proceedings against the Respondents, as an alternate, it is hereby ordered that the Respondents shall pay a sum of (Rupees Ten thousand only) to the Applicant as cost of the litigation.
The main Petition shall now be listed for hearing on 6th March, 2017 - Application disposed off.
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2017 (1) TMI 1677
Revision u/s 263 - addition u/s 56(2)(vii)(c) - bonus shares were issued by way of capitalization of share premium account and reserve account thus benefit given to assessee was clearly chargeable as income from other sources as per CIT - HELD THAT:- Legislator intended to tax the transfer of shares at a value lesser than its fair market value under Provisions of Section 56(2)(vii), and 56(2)(viia).
On a careful reading of the provisions and the legislative intent, we agree with the submissions of Ld.AR that the provision would not be applicable to bonus/right shares as there is no increase or decrease in the wealth of shareholder assessee on account of bonus/right shares. Further, there is no element of “gift” in issuing of bonus/right shares to the assessee by the company.
We agree with submission advanced by Ld. AR that in case section 56(2)(vii)/56 (2) (viia) is made applicable on issue of bonus/right shares, various other sections of the Act would become contradictory. This is because if for the sake of discussion it is presumed that the provisions of section 56 (2) (vii) are made applicable to the allotment of bonus/Right shares, then for the purpose of calculating capital gains under section 48 and 49 on the sale of such shares, the cost of acquisition shall be taken as per section 49 (4) which means the value of bonus/right shares considered while applying the provisions of section 52 (2) (vii), which is clearly contradicting the provisions of section 55 (2) (aa) (iiiia). If the legislature really intended to bring allotment of bonus/right shares within the ambit of section 56 (2) (vii), it would have amended section 55 (2) (aa) (iiia) simultaneously.
As no property however is being passed on to the assessee in the instant case before us on allotment of bonus/right shares and the no addition could be made by applying provisions of section 56 (2) (vii) as the case may be. - Decided in favour of assessee
Initiation of proceedings u/s 263 - AR has raised and argument regarding the proceedings under section 263 being initiated wrongly as there was no material before Ld. CIT that was unearthed during the search - HELD THAT:- We reject this argument as the assessing officer has not dealt with share standing in the name of assessee at the time of assessment proceedings and that Assessing Officer has not investigated/inquired about the same by raising any query. It is a settled law that there need not be any incriminating material for making addition in assessment made u/s 153A when assessment has not abated. The Assessing Officer being an Investigating Officer should have conducted enquiry assessment proceedings. We, therefore, dismiss this ground of the assessee.
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2017 (1) TMI 1676
Deduction of write off of investments - profit on sale of investments was arrived at after providing for write off of investments and this was claimed as deduction in the computation of filed along with the return of income on account of diminution in the value consequent to write off of investments - AO disallowed the claim of business loss on the basis that the same can be allowed as instrument in the nature of investments but not as loan - HELD THAT:- CIT (A) confirmed the disallowance following earlier years’ decision of the Tribunal in assessee’s own case for assessment year 1981-82 and 1982-83. She admitted that write off of investment claimed as capital loss is covered against the assessee in earlier assessment year, but business loss as allowed by the CIT (A) on account of investment on conversion of loan arrears is allowable i.e. assessment year 1997-98 wherein Tribunal in assessee’s own case for A. Y. 1982-83 allowed it as business loss. No distinction has been brought in facts or legal position by Ld. CIT-DR. Therefore, respectfully following the orders of earlier years, the A O is directed to follow the orders of the earlier years and allow a sum as business loss and the balance amount on account of write-off of investment as capital loss should be disallowed, as held above also. Thus, assessee gets part relief. This ground is partly allowed. AO to partly allow relief as above. This common issue of assessee’s appeal is dismissed and that of the Revenue is also dismissed.
Deduction under section 10(23G) - interest expenses incurred for earning interest free income from bonds instead being only direct expenses thereby allowing only part expenses u/s 10(23G) - HELD THAT:- No interest expense was disallowed by the assessee by claiming that it was the gross income to be allowed as exempt u/s 10(23G). As in the earlier year, now, the assessee before us also filed alternative working of expenses, which was not before the lower authorities. Before us now, as per the working of the expenses, the same was not analyzed by the lower authorities. Hence, we remit the mater back to the file of the AO for fresh consideration. The only differential fact in the present case is that the assessee itself has disallowed direct expenses by way of interest expenses for earning of income u/s 10(23G) which has been offered for disallowance - only those expenses which are relatable to earning of exempt income can be claimed as deduction for computing net income u/s 10(23G). In term of the above and in term of the direction of the Coordinate Bench of the Tribunal in assessment year 1997-98 in assessee’s own case the AO will decide the issue. Accordingly, this issue of assessee’s appeal is allowed for statistical purposes and the issue of Revenue’s appeal is dismissed.
Disallowance of depreciation claimed on assets leased - HELD THAT:- Tribunal in assessee’s own case for assessment year 1995-96 i.e. in ICICI Bank Ltd. Vs JCIT, SR-28, Mumbai [2007 (2) TMI 238 - ITAT BOMBAY-I] has directed the AO to allow depreciation on all items claimed by the assessee. Respectfully following the said decision of the Tribunal in earlier year in assessee’s own case, we direct the AO to allow the claim of the assessee after verifying the facts and figures. This issue of the assessee’s appeal is thus allowed in both the years.
Disallowance of interest expenses and 1% of managerial and administrative expenses - HELD THAT:- AO while examining the assessee’s own funds vis-à-vis investments in shares will follow the decision of the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] and Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] . In case, the investment is made out of assessee’s funds, then, no interest expenses is to be allocated to the interest income. Accordingly, we set aside this issue to the file of the AO to verify the facts. This issue of the assessee is allowed for statistical purposes and the issue in Revenue’s appeal is dismissed.
Depreciation on fixed assets - HELD THAT:- Let the facts be examined by the AO because none of the authorities below have deliberated on these issues. Learned Counsel for the assessee has not objected to the proposal. In term of the above, we restore these two issues back to the file of the AO for deciding the issue in terms of decision of the Hon’ble Supreme Court in the case of Smiffs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] on the issue of depreciation and in term of Tata Chemicals [2002 (4) TMI 42 - BOMBAY HIGH COURT] on the issue of interest capitalization on building. Accordingly, these two issues are restored back to the file of the AO.
Disallowance of VRS expenses be deferred and amortized expenses over a period of time - HELD THAT:- Revenue could not point out how the expenses are capital in nature and could not find fault with the findings of CIT(A). Even otherwise, the expenses on VRS are incurred wholly and exclusively for the purpose of business and hence revenue in nature and allowable entirely in the year in which these are incurred. Admittedly, these expenses are incurred in this very year, which is not in dispute. Accordingly, we confirm the order of CIT(A) and this issue of revenue’s appeal is dismissed.
Discount on repurchase of foreign currency bonds - HELD THAT:- Claim of deduction represents discount on re-purchase of foreign currency borrowings, which is nothing but a capital receipt and it only represents an accounting entry. We find no infirmity in the order of CIT(A). Hence, this issue of revenue’s appeal is dismissed.
Exclusion of 234 B levy in regard to the deemed tax payable under section 143 (4) - HELD THAT:- assessed tax for the purposes of Section 234 B is clearly defined under the Act. This definition does not include the deemed tax payable as per Section 143(4). Thus find that such interest has been deleted in appeal for A.Y. 1996-97. Following the same, while the charging of interest under section 234 B is upheld and is subject to consequent relief in view of my findings above on various grounds, the AO is directed to exclude 234 B levy in regard to the deemed tax payable under section 143 (4) of the Act.
Addition on account special reserve withdrawal u/s 41 (4A) - HELD THAT:- Amendment introduced in the said section by the Finance Act 1997 is not clarificatory. It has been made effective from AY 1998-99 and therefore must be construed as prospective only. The condition of maintenance of special reserve was made applicable only from 1.4.1998 and did not affect a reserve created prior thereto and consequently withdrawal from special reserve created prior to AY 1998-99 would not attract the deeming provision of Section 41(4A) - in construing a fiscal statute and in determining the liability of a subject to tax, one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. The onus is on the Revenue to satisfy the court that the case falls strictly within the provisions of the law. If the case is not covered by the four corners of the provision of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intention of the Legislature and by considering what was the substance of the matter. If a section in a taxing statute is of doubtful and ambiguous meaning, it is not possible out of that ambiguity to extract a new and added obligation not formerly cast upon the taxpayer. The legal position is well settled that when a provision admits of two interpretations a view which is favourable to the assessee should be adopted. - Decided in favour of assessee.
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2017 (1) TMI 1675
Exemption u/s. 54F and 54EC - LTCG - relevant assessment year - transfer u/s. 2(47) and possession of capital asset in the previous year - Whether CIT(A) has erred in deleting the addition of income from Long Term Capital Gains on the basis of the unregistered sale agreement dated 23.07.2008, whereas, the sale deed registered on 27.04.2009 and relied on the provisions of section 53A of the Transfer of Property Act ? - HELD THAT:- CIT(A) has considered these workings and discussed elaborately in his orders emphazing on the provisions of section 50C and 2(47) of the Income Tax Act and sec. 53A of the Transfer of Property Act.
We are conscious that there has since been amendment to sec. 50C(1) incorporating the word "or assessable", so that the value that would stand to be assessed would substitute the stated consideration. The said amendment, as held in CIT Vs. R. Sugantha Ravindran [2013 (3) TMI 271 - MADRAS HIGH COURT] is effective only from 01.10.2009, i.e., subsequent to the transfer date in the present case. Hence, capital gains have to be assessed for the assessment year 2009-10 and there is no dispute on the compliance of requisite conditions for claiming exemption u/s. 54 and 54EC for the assessment year 2009-10.
Thus assessee has complied the provisions of law and CIT(A) has considered these aspects Vis-a-vis the explanations of the assessee and findings of the Assessing Officer and deleted the addition - Decided against revenue
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2017 (1) TMI 1674
Levy of Service tax - advance received from the contractee against bank guarantee - no provision of taxable service was made by the appellant to receive such money - HELD THAT:- Proposition of the appellant is correct when the scheme of Finance Act, 1994 is read. There should be incidence of levy that arises when there is provision of taxable service. That situation not having reached, there shall not be leviability of Service Tax on the Advance received - Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1673
TP Adjustment - comparable selection - turnover filter applied by the DRP - HELD THAT:- Assessee has no objection if no turnover filter is applied for the purpose of deciding the functional comparability of these companies however the issue of functional comparability has been raised by the assessee in its appeal. AR has submitted that the assessee has no objections if the directions of the DRP is reversed and no turnover filter is applied. Accordingly, in view of no objection of the assessee's counsel, we decide this ground in favour of the revenue and set aside the directions of the DRP so far as applying the turnover filter.
Deduction u/s 10A - exclusion of reduction of expenses on telecommunications, freight and insurance incurred in foreign currency from export turnover as well as total turnover - HELD THAT:- On perusal thereof we find that the issue before us for adjudication i.e. if expenditure incurred on telecommunication, insurance and freight charges and on travel in foreign currency attributable to the delivery of computer software abroad is reduced from export turnover an equal amount should also be reduced from total turnover while computing the deduction u/s 10A is covered in favour of the assessee by the decision in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT].
Exclusion of 7 companies from the set of 10 comparables selected by the TPO - HELD THAT:- Exclusion of Functionally dissimilar /indifferent companies not comparable with a captive service provider as that of assessee. Companies also excluded as not satisfying the tolerance range of 15% RPT filter.
E-clerx Services Limited - As discussed by the Special Bench in the case of Maersk Global Centres (India ) (P) Ltd [2015 (1) TMI 917 - ITAT MUMBAI] this company provides data analysis, operating management, audits, reconciliation, metrics management and operating services. It has two business verticals – financial services, retail and manufacturing. It was found to have being providing complete business solutions in the nature of high end services. The nature and different field of services provided by this company clearly show that it is not functionally comparable with the ITES. Accordingly, we direct the TPO/AO to exclude this company from the set of comparables.
Infosys BPO Ltd. - Annual Report of this company to submit that this company commands substantial brand value, owns intellectual property rights and is a market leader with brand value, whereas the assessee is merely an ITES operating its business in India and does not possess either any brand value or own any intangible or intellectual property rights (IPRs).
Disallowance of lease rentals - HELD THAT:- Tribunal has decided this issue by following the decision of Hon'ble Supreme Court in the case of ITDS Vs. CIT [2013 (1) TMI 344 - SUPREME COURT] as well as decision in the case of Rajshree Roadways Vs. Union of India [2003 (3) TMI 50 - RAJASTHAN HIGH COURT] . Following the decision of Hon'ble Gujarat High Court as well as Hon'ble Supreme Court (supra), we decide this issue in favour of the assessee and accordingly allow the claim of the assessee regarding lease rentals as an allowable revenue expenditure. It covers both the grounds of the assessee as well as revenue’s appeal. Consequently the Ground No.2 of the revenue’s appeal is dismissed and Ground II of the assessee's appeal is allowed.
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2017 (1) TMI 1672
Review petition - whether review lies in relation to an order passed under Section 260A of the Income Tax Act, 1961? - HELD THAT:- Review petition is maintainable.
As decided in MEGHALAYA STEELS LTD. [2015 (8) TMI 525 - SUPREME COURT] and AUTOMOBILE CORP. OF GOA LTD. [2016 (8) TMI 650 - SUPREME COURT] on a cursory reading of section 260A(7), the said section does not purport in any manner to curtail or restrict the application of the provisions of the Code of Civil Procedure. Section 260A(7) only states that all the provisions that would apply qua appeals in the Code of Civil Procedure would apply to appeals under section 260A. That does not in any manner suggest either that the other provisions of the Code of Civil Procedure are necessarily excluded or that the High Court’s inherent jurisdiction is in any manner affected
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2017 (1) TMI 1671
Exemption u/s 11 - cancellation of registration of the trust u/s 12AA(3) - charitable activity u/s 2(15) or not? - search proceedings - trustees are diverting trust funds for the benefit of persons specified, thereby infringing the provisions of section 13(1)(c) and violating provisions of section 11(5) - trust is not maintaining proper books of accounts and no returns of income were filed for the A.Y. 2006-07 onwards - HELD THAT:- onus for proving the existence of factors calling for cancellation of registration granted to an institution is on the Department rather than on the institution. In the present case, the CIT has miserably failed to discharge such onus. No material has been brought by the CIT that the assessee society exists for profit motive. The Department has not been able to discharge its onus of showing as to how the conditions for grant of registration have been breached by the assessee. The assessee remained enjoying the registration granted to it for the last number of years under the same unchanged facts and circumstances. It has also not been demonstrated by the Department as to how the approach of the assessee has turned to a commercial one. The predominant object of the assessee is and remains to carry out charitable purpose of advancement of education, and not to earn profit. In fact, no profit has been established to have been earned by the assessee. The CIT has failed to specify as to how profit earning is the predominant activity of the assessee instead of carrying out its said charitable purpose. On the other hand, the assessee has filed various details of income from property held under trust and application of income for charitable purpose as per which its application of income for its object is more than its income generated from property held under trust for all these years.
CIT’s observations are baseless as the administrative expenditure shown by the assessee in its financial statements predominantly consists of amount spent for objects of the trust which is evident from the fact that the assessee has filed a statement of expenditure showing details of administrative expenses which is enclosed in paper book page no. 159. Therefore, the allegation of the CIT that the trust is running education on profit motive in baseless and without any application of mind.
CIT is not justified in withdrawing the registration granted u/s.12AA of the Act by invoking the provisions of section 12AA(3) of the Act. Such act of the Revenue will only affect the poor students, who are studying in the institution by paying nominal / normal fees and also other students thereby defeating the very purpose of these provisions of the Act, which are enacted with the intention of promoting education in the country.
In the instant case, the material on record shows that the Trust has established educational institutions and was imparting medical education. Every year, students are admitted. Huge investment is made for construction of buildings for housing the college, hostel and for providing other facilities to the students who are studying in the College. The College is recognized by the Medical Council of India, State of Kerala and all other statutory authorities. Therefore, it cannot be said that the Trust is not genuine.
Admittedly, the students are being admitted every year. Students are studying in all courses. Thus, the object of the constitution of the Trust namely imparting of education is going on uninterruptedly. Therefore, it cannot be said that the activities of the Trust are not being carried out in accordance with the objects of the Trust. When the aforesaid two conditions are fully satisfied, the registration of the Trust cannot be cancelled for the reasons stated by the CIT in her order, i.e. non maintenance of books, non filing of returns of income or belated filing of returns of income, collection of additional fees and diversion of funds in violation of sections 11(5) and 13(1)(c) as these are passing remarks which are not relevant for the purpose of section 12AA(3) and also all observations of the CIT has been negated by the assessee with enough evidences which are discussed in detail in foregoing paragraphs.
Therefore, we are of the considered view that the CIT was erred in withdrawing registration granted u/s 12AA, by using her powers u/s 12AA(3). Hence, we set aside order passed by the CIT u/s 12AA(3) and restored registration granted u/s 12AA of the Act. - Decided in favour of assessee.
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2017 (1) TMI 1670
Demand of Customs Duty alongwith interest - import of Hot Rolled Plates under advance authorizations - HELD THAT:- The respondent No.1, under instructions, submits that NTPC is willing to replace the bank guarantee in the sum of ₹ 8,15,00,000/-, furnished by the petitioner to the Custom Authorities, with a bank guarantee of NTPC.
The writ petition is disposed of directing the respondent No.1 to approach the Custom Authorities for the replacement of the bank guarantee in the sum of ₹ 8,15,00,000/- furnished by the petitioner. The petitioner shall afford all assistance for the said purpose and both the parties shall execute such necessary documents, as may be required by the Customs Authorities, for replacement of the bank guarantee.
Petition disposed off.
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2017 (1) TMI 1669
Accrual of income - Demurrage/wharfage charges accrued to the assessee - assessee followed mercantile system of the accounting - existing right in favour of the assessee to receive the charges and the assessee accordingly billed for the same - HELD THAT:- The issue came up before this court in respect of the same assessee [2016 (10) TMI 1263 - RAJASTHAN HIGH COURT] wherein it has been held Tribunal while considering the issue has rightly appreciated and has rightly allowed the appeal preferred by the assessee. Assessee was a Government Corporation and has shown the liability in spite of stay order granted by the Court and in our view, the view taken by the Tribunal is just and proper. The issues are required to be answered in favour of the assessee and against the Department.
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