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Showing 161 to 180 of 1653 Records
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2017 (4) TMI 1497
TP Adjustment - Transfer pricing provisions to the manufacturing division of the assessee - capacity under-utilization - assessee was manufacturing specialized high precision products - manufacturing unit was established in the assessment year 2008-09 and operated for three months - HELD THAT:- We find merit in the claim of assessee as this was the first complete year of operation. Accordingly, the assessee is entitled to the adjustment on account of capacity under-utilization. The Pune Bench of Tribunal in Tasty Bite Eatables Ltd. [2015 (8) TMI 981 - ITAT PUNE] has already allowed similar adjustment and accordingly, we hold that the same is to be allowed in the hands of assessee. Accordingly, we delete the proposed addition on account of non-allowable adjustment for capacity under-utilization at ₹ 1.44 crores. We also delete the TP adjustment made on account of non-receipt of support payments at ₹ 1.65 crores.
We may also mention that the TPO has limited power to exercise i.e. determination of arm's length price of such international transactions which are referred under section 92C of the Act by the Assessing Officer. The perusal of para 4 of the TPO’s order shows the international transactions which were referred by the Assessing Officer to the TPO under section 92C of the Act and the above said transactions of support payments is not part of reference. The ground of appeal No.2.1 is thus, allowed.
TP adjustment under market support services - assessee had provided marketing support services to its various groups in favour of OPW-FC division and corporate division - HELD THAT:- We agree with the contention of assessee that the approach of TPO should be consistent, in case, he wants to apply the margins of concerns selected in the preceding year as comparable, then such concerns should be picked up and their margins by applied. This selective approach of the TPO is not correct approach. Assessee has fairly made alternate plea before us that either the margins of all the concerns except Agrima International should be applied to benchmark the international transactions of the assessee or at best, the margins of three concerns which are showing profits should be applied and the concerns which are showing losses should be ignored. Three concerns should be selected as comparable to the assessee and the margins should be applied as all the three concerns have shown positive profits, the loss making concerns be ignored for the TP analysis.
Agrima International Consultancy Ltd. was also excluded from the final set of comparables in assessment year 2008-09 in assessee’s own case [2015 (5) TMI 1095 - ITAT PUNE]. Accordingly, Agrima International Consultancy Ltd. is to be excluded. After allowing working capital adjustment @ 10% BPLR, the Assessing Officer is directed to re-compute the mean margins of comparables. As per the learned Authorized Representative for the assessee, in case this plea of the assessee is allowed, no further TP adjustment is to be made in the hands of assessee.
TP adjustment was made in Design Engineering Services - TPA made in the design engineering services division, wherein the assessee had provided the said services in relation to designing of products manufactured by the respective associate enterprise companies - HELD THAT:- The Hon’ble Bombay High Court in CIT Vs. PTC Software (I) Pvt. Ltd. . [2016 (9) TMI 1282 - BOMBAY HIGH COURT] have held that where the concern has different accounting period, then the same cannot be compared as comparable. The Hon’ble Bombay High Court held that as per provisions of section 10B(4) of the Income Tax Rules, 1962 clearly mandates that the data to be used for comparability analysis should be of the same financial year in which the international transactions were entered into by the tested party. In view thereof, it held that where a concern has different accounting period, then the margins of said concerns are not comparable. Following the same parity of reasoning, we hold that Rolta India Ltd. having different year closing than the assessee before us cannot be selected as comparable and consequently, direct the Assessing Officer to exclude the margins of the said concern from the mean margins of comparables.
Design engineering services division is that while selecting the KLG Systel Ltd., the TPO has erred in not applying the segmental profits of the said concern while benchmarking the international transactions. We find merit in the plea of the assessee that the margins of the said concerns which are functionally comparable are to be selected and applied and in case any concern is engaged in various activities, then the segmental details of the activity, which is functionally comparable to the assessee are to be applied in order to work out the margins of the said concern. Accordingly, we hold so and direct the Assessing Officer to re-compute the margins of KLG Systel Ltd. The ground of appeal No.2.3 is thus, allowed.
Disallowance under section 10A on the portion of export proceeds received in Indian Rupees - HELD THAT:- Amount due against four of the bills raised by the assessee during the year was received in Indian rupees but from the foreign entity through a foreign bank establishes the case of assessee that it has received the said consideration in foreign exchange through the foreign bank against export of goods.
Where the assessee had fulfilled the first condition of exporting the goods to a concern outside India and had also received the money from the said concern from outside India, merely because the amount was received in Indian currency, does not establish the case of the Revenue that the amount has not been received in foreign exchange. We find no merit in the order of Assessing Officer in this regard. We hold that even though the amount is received in Indian currency but the same is in the nature of foreign exchange and hence, the assessee is entitled to the claim of deduction under section 10A of the Act. The old FERA Act defines foreign exchange to mean foreign currency and including various modes i.e. drafts, travellers’ cheques, etc. payable in any foreign currency and also payable in Indian currency. So, the word ‘foreign exchange’ cannot be restricted to only foreign currency but covers larger meaning of foreign exchange, wherein the money is received from foreign sources but in Indian rupees. Accordingly, we direct the Assessing Officer to re-compute the deduction allowable under section 10A.
Disallowance of provision of obsolesce stock - assessee had not written off stock but had made only provision - HELD THAT:- Assessee before us pointed out that the same stock were obsolete stock and non-living stock, which was claimed as expenditure. He further stated that the same may be sent back for verification. We restore this issue back to the file of Assessing Officer to decide the same after considering the facts of the case and allowing reasonable opportunity of hearing to the assessee. - Appeal of the assessee is allowed.
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2017 (4) TMI 1496
Estimation of income - bogus purchases - HELD THAT:- AO ought to have disallowed only the profit element instead of the entire purchases. We notice from the case file that the assessee had quoted umpteen number of judicial precedents in this regard. Hon’ble jurisdictional high court’s decision in Sanjay Oil Cake Industries [2008 (3) TMI 323 - GUJARAT HIGH COURT] supports this latter plea.
Larger interest of justice would be served in case only the profit element @15% in the above bogus purchases is disallowed/added rather than the entire amount. Whilst concluding so, it is made clear that we have duly taken into account the fact that the assessee is a trader than manufacturer so as to arrive at the above disallowance percentage. We accordingly direct the Assessing Officer to restrict the impugned disallowance @15%.
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2017 (4) TMI 1495
Disallowance u/s 35(1)(ii) - AO denied the claim of the assessee on the ground that the above approval of the Central Government has been withdrawn retrospectively vide S.O. 2882(E) dated 06.09.2016 and the ld. CIT(A) confirmed the same - HELD THAT:- The Institution was enjoying the approval of the prescribed authority at that time and the assessee made donation was also not under dispute, the disallowance made by the Assessing Officer cannot be sustained under law. Our observation is duly fortified by the decision in the case of Seksaria Biswan Sugar Factory [1990 (3) TMI 47 - BOMBAY HIGH COURT]. The purport of the decision of Hon’ble Bombay High Court was that when the institution was enjoying the approval within the meaning of section 35(1)(ii) of the Act as on the date of receipt of donation and retrospective cancellation of approval of the concerned institution, the deduction claimed in respect of donation cannot be denied. Under the above facts and circumstances, denial of exemption claimed in respect of donation cannot be sustained.
With regard to the donation, M/s. Herbicure confirmed the voluntary donation of ₹.1 lakhs from the assessee. A copy of the trust’s Corporation Bank statement in which the donation received was also sent by the trust. Based on the sworn statement of the Founder Director Shri Swapan Ranjan Das Gupta of M/s. Herbicure, wherein, he has admitted that his organization accept the donation and giving back of the same to the donor after deducting a commission @ 5% on the donation amount - Department has not made any effort to get any valid evidence that the organization has given back the donation to the donor after deducting a commission @ 5% on the donation amount. AO is directed to ascertain the means as well as actual amount repaid by the donee to the assessee and decide the issue afresh after giving sufficient opportunities of hearing to the assessee. Thus, the ground raised by the assessee is partly allowed for statistical purposes.
Disallowance made u/s 14A - AO has made the disallowance over and above the dividend income earned by the assessee - HELD THAT:- As relying on M/S. CHETTINAD LOGISTICS PVT. LTD. [2017 (4) TMI 298 - MADRAS HIGH COURT] appropriate to remit the issue to the file of Assessing Officer to consider the disallowance under section 14A r.w. Rules 8D to find out whether interest bearings borrowed funds were used for making investments in shares and mutual funds. With this observation, we restore the issue to the file of Assessing Officer for fresh consideration.
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2017 (4) TMI 1494
Service tax liability - Construction of academic complex of Indian Institute of Technology (IIT) - HELD THAT:- Ministry/Ministries of the Union of India to explain why in the cases, involving public revenue of high amount, there has been delay in filing the special leave petitions/appeal.
These cases are tagged together to consider the question(s) raised with regard to the delay and will be de-linked after consideration of the reply of the Union.
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2017 (4) TMI 1493
Rectification of mistake u/s 154 - total income for the purpose of deduction u/s.36(1)(viia)(c) - applicability of the provisions of Sec.72 of the Act in the context of allowing deduction u/s.36(1)(viia)( c) - HELD THAT:- It is not in dispute before us that the Assessee is an Industrial Investment Bank of India Ltd. In computing its total income it is entitled to deduction on account of provision for bad and doubtful debts at the rates specified in Sec.36(1)(viia)(c) of the Income Tax Act, 1961 (Act) i.e., an amount not exceeding 5% of the total income (computed before making any deduction under clause Sec.36(1)(viia)( c)
Firstly income is categorized under various heads of income. This is laid down in Section 14 of the Act, which lays down that save as otherwise provided by this Act, all income shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income – Salaries, income from house property, profits and gains of business or profession, capital gains, income from other sources. Chapter V then brings income of other persons, which are to be included in the total income of an Assessee and this is contained in section 60 to 65 of the Act. Chapter-VI (containing sec. 66 to 80) then lays down provisions regarding aggregation of income and set off or carry forward of loss. It is thus clear that carried forward loss has to be deducted to arrive at the total income.
Sec.36(1)(viia) ( c) of the Act uses the expression “total income” and therefore total income as understood and defined in the Act has to be adopted. We do not think that the issue is debatable as contended by the learned counsel for the Assessee. An issue to become debatable should have a possibility of another view on the plain language of the statutory provisions referred to above, we do not think there can be any dispute or debate on the proposition that effect to Sec.72 has to be given before allowing deduction u/s.36(1)(viia) ( c) of the Act.
Alternative contention raised by the Assessee is concerned, we are of the view that the claim for deduction under the provisio to Sec.36(1)(viia)( c) of the act, though made for the first time before the Tribunal, deserves examination. After all the purpose of tax proceedings is to determine the correct tax liability in accordance with law. If an option is available to an Assessee to claim deduction u/s.36(1)(viia)(c) proviso of the Act, then that option when exercised at any stage of the proceedings should be examined and if found correct allowed. The fact that the Assessee did not make a claim before the revenue authorities cannot stand in the way. The tax liability of a taxpayer has to be determined in accordance with law and cannot arise by reason of default. We therefore set aside the order of the CIT(A) and remand the issue to the AO. The Assessee will put forth its claim for deduction in the alternative under the proviso to Sec.36(1)(viia) (c) of the Act and the AO will consider the same in accordance with law. - Appeal filed by the assessee is allowed for statistical purposes.
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2017 (4) TMI 1492
Penalty u/s 272A - late filing of TDS returns - HELD THAT:- Assessee has deposited the TDS with interest as applicable from time to time. We find some strength in the arguments of the Ld. AR that assessee was an individual working in the unorganized sector and therefore, not fully conversant with the complex TDS provisions and had to depend upon some experts to comply with these provisions as TDS provisions certainly require certain higher degree of understanding of TDS provisions and manner of compliances thereof.
We also note the fact that the TDS compliances have undergone frequent changes over the last decade in terms of deduction, deposit, e-filing of TDS returns and generation of TDS certificates etc. Therefore, without delving much deeper into the issue on merit, we are inclined to delete the said penalty on the facts and circumstances of the case and accordingly, allow assessee’s appeal.
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2017 (4) TMI 1491
TP Adjustment - comparable selection - exclude Twenty Twenty Television Company from the final set of comparables noticing that it has made a loss in this year - HELD THAT:- Pune Bench of the Tribunal in the case of Bobst India (P.) Ltd. [2015 (12) TMI 684 - ITAT PUNE] decided this aspect by examining the financial position of the particular concern over the last three years. The Bench noted that in one of the last three years, the concern was in profits and, therefore, in this background it inferred that such a concern could not be considered as a persistent loss-maker.
At the time of hearing, assessee had drawn our attention to a tabulation prepared for three years ending 31.3.2006, 31.3.2007 and 31.3.2008, which shows that in the year ending 31.3.2006, the said concern had made a profit while there was loss in the other two years. In this background, therefore, it could not be said that as on the year ending 31.3.2008, which corresponds to the assessment year before us, such a concern was a persistent loss-maker so as to exclude it from the final set of comparables. Thus, following the ratio of the decision of the Pune Bench of the Tribunal in the case of Bobst India (P.) Ltd. (supra), we deem it fit and proper to direct the TPO/Assessing Officer to include the said concern in the final set of comparables.
Correction of margin of one of the concerns included in the final set of comparables, i.e., Creative Eye Ltd. - margin of the said concern has been adopted at 7.33%, whereas the stand of the appellant is that the correct margin of the said concern is 0.47% and that the lower authorities have erred in calculating the margin at 7.33%. - HELD THAT:- As per the tabulation furnished by the assessee as Annexure - B to the written submissions it is clear that in the case of other comparable concerns, the Total Operating Expenses have been calculated after taking into account the Depreciation and Provision of FBT; and, that it is only in the case of Creative Eye Ltd. the same have been excluded. Quite clearly, the determination of margin in the case of all the comparable concerns needs to be uniformly done, so as to impart rationality to the comparability analysis. Having regard to the material on record, we are satisfied that the correct margin of Creative Eye Ltd. is to be taken as 0.47% and that the DRP has unjustifiably rejected the plea of the assessee. As a consequence, we direct the TPO/Assessing Officer to consider the margin of Creative Eye Ltd. at 0.47%, and thereafter rework the determination of arm's length price.
Assessee submitted that if the plea for inclusion of Twenty Twenty Television Company Ltd. and the corrected margin of Creative Eye Ltd. is accepted, then, the margin of the resultant comparables would fall within the + 5% of the stated margin of the assessee and the necessity of making any adjustment would be obviated in terms of Sec. 92C(2) of the Act. Since we have accepted the aforesaid two pleas of the assessee, therefore, the other issues raised in the Grounds of appeal with regard to the Content and Support segment are rendered academic and are not being adjudicated for the present.
Insofar as the Content and Support segment is concerned, the TPO/Assessing Officer is directed to re-work the arm's length price of the international transactions in accordance with the aforesaid directions.
Benchmarking of international transactions in the General Management Support Services segment - HELD THAT:- Exclusion of Access India Advisors Ltd. on the ground that the profit margins of the said concern fluctuate widely and in the instant assessment year itself it is quite high at 45.97%, which goes down to 6.62% in the next year and thereafter there is a negative margin of 74.60%. Similarly, with regard to the earlier three years, the margin levels are quite in variance not only in comparison with the level of margin in the instant assessment year but also in relation to the subsequent two years. Be that as it may, the financial data of the succeeding years, which is essential to examine any abnormal profit trends, was not available to the assessee at the time of carrying out its Transfer Pricing Study and, therefore, once such an information is available in public domain, it is only thereafter that the assessee can feasibly raise such a ground based on the abnormal fluctuations in the margins. Notably, insofar as the instant case is concerned, there is ostensibly a justifiable reason for the assessee to raise such a plea before us, which was hitherto not raised before the lower authorities. Therefore, on this aspect, we admit for consideration the plea of assessee for exclusion of Access India Advisors Ltd. from the final set of comparables.
Having admitted the plea of assessee seeking exclusion of Access India Advisors Ltd. from the final set of comparables, and for the reason that such a plea was hitherto not before the lower authorities, we deem it fit and proper to remand the matter back to the file of Assessing Officer/TPO for an appropriate verification. AO/TPO shall verify the working of the Operating margins of Access India Advisors Ltd. furnished by the assessee for the various years and if it is found to be volatile without reflecting any normal business condition, then, the Assessing Officer/TPO shall exclude the same from the final set of comparables.
Segment of Provision of General management and support services is to seek inclusion of Educational Consultants (India) Ltd. - HELD THAT:- The said concern has been accepted as a comparable even in the assessments finalised u/s 143(3) of the Act. Be that as it may, it is also clearly emerging from the order of TPO that the said concern has been excluded by merely making a bald assertion about the dissimilarity of functions. Notably, such an observation of the TPO is devoid of any factual support and, in our view, it was imperative for the TPO to bring out the distinguishing features considering that the said concern was taken as a comparable in the past years. Such a burden has clearly not been discharged by the TPO as is evident from the discussion in the order and, therefore, we find no reason to uphold his stand for excluding the said concern from the final set of comparables. Therefore, on this aspect also, assessee succeeds.
Basis for working out the risk adjustment - Case of assessee for adjustment on account of difference in working capital and risks assumed has been shut out even before examining the same in some detail. HELD THAT:- Before us, the learned representative has furnished the workings of working capital adjustment and risk adjusted margin of the comparable concerns to point out that on facts also, such adjustments are justified. Even otherwise, we find that our coordinate benches in the case of Intellinet Technologies India (P.) Ltd. [2012 (6) TMI 237 - ITAT BANGALORE] and Schlumberger Global Support Centre Ltd [2015 (10) TMI 2625 - ITAT PUNE] have found that even in the course of comparability analysis carried out by applying the TNM method, suitable risk adjustments are permissible if the facts of the case so warrant. O
Workings referred by the assessee before us culling out justification for allowing working capital and risk adjustments have not been verified by the lower authorities. Therefore, while we uphold the stand of the assessee in-principle, so however, it would be imperative for the assessee to factually demonstrate the justifiability of the adjustments on account of difference in working capital and risks assumed vis-a-vis the comparables before the lower authorities. Therefore, the matter is set- aside to the file of TPO/Assessing Officer with directions to consider the plea of the assessee in accordance with law. Thus, on this aspect, assessee succeeds for statistical purposes.
Addition of non-reconciliation of ITS data - HELD THAT:- Onus is on the assessee to reconcile the details, so however, the reconciliation is to be based on availability of appropriate details. At the time of hearing, the assessee-company had referred to a communication dated 12.12.2011 addressed to the Assessing Officer which succinctly details the reasons for the difference and the reason for which proper reconciliation could not be made. In the said communication, assessee had explained that the ITS details was founded on the basis of name and address of the parties and the amount and date entered by the other party in its book of accounts. It has been pointed out that in the absence of PAN of other party, the relevant invoice number and date, it is difficult to exactly match the entries appearing in the assessee's book of accounts. The relevance of the aforesaid has also been brought out in some detail by the assessee in its communication to the Assessing Officer.
One pertinent point which stands out is the assertion of the assessee before the Assessing Officer that wherever in case of a party the amount of revenue recorded in the Profit & Loss Account of the assessee was found lower than the ITS details, assessee explained that same is merely on account of timing difference inasmuch as assessee would have credited such sum to the Profit & Loss Account of the other year. Assessee also asserted before the Assessing Officer in its communication dated 12.12.2011 that in respect of the parties mentioned in the ITS details, on an overall basis, the revenues reflected by the assessee in its financial statements was higher than the revenues noted in the ITS details. There is no repudiation to any of the aforesaid assertions and, therefore, we find that no addition is warranted on this count. Therefore, on this aspect, assessee succeeds.
Grant of credit for TDS - HELD THAT:- As assessee submitted that assessee had already moved an application to the Assessing Officer seeking credit for the TDS. Considering the aforesaid, we direct the Assessing Officer to consider the application of the assessee in accordance with law. Thus, on this aspect, assessee succeeds for statistical purposes
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2017 (4) TMI 1490
Production of additional evidence in Appellate Court - existence of old dispute amongst appellants and respondents pertaining to property in question - HELD THAT:- Neither it was pleaded in the written statement by appellants/defendants that any such proceedings ever took place before SEM in year 1987 nor afore elicited additional document sought to be placed on record was placed before the Trial Court during Trial at any stage of the matter nor the said document is with respect to the portion of the suit property bearing no. 310, Chuna Bhatti, Mathura Road, Badarpur, New Delhi. It is the version of appellants/defendants as elicited from para-9 of reply on merits in written statement that defendants were living in the suit property as owners in their own rights and their possession at the most can be termed as adverse or hostile and too that after the order passed by the Probate Court is upheld by the High Court.
The lapse and failure on the part of the applicant/appellant no-1/defendant no-1 to bring on record the document in question alongwith the written statement or any time later thereto, even during the course of evidence or later with permission of Court; brings into fore gross negligence on the part of applicant/appellant no-1 in production of the document in question at the opportune time before the Trial Court or even mentioning the same in the pleadings in the written statement before the Trial Court. This disentitles applicant/appellant no-1 for production in additional evidence, the document(s) sought to be placed on record.
The application under consideration being devoid of merits, being not maintainable is hereby dismissed.
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2017 (4) TMI 1489
Characterization of income - Notional Sales Tax - revenue or capital receipt - HELD THAT:- Respectfully following the order of the Tribunal in assessee’s own case vis-à-vis decision of the Special Bench in case of Reliance Industries Ltd., [2003 (10) TMI 255 - ITAT BOMBAY-J] , Shree Balaji Alloys Ltd., [2016 (4) TMI 1161 - SC ORDER] , Rasoi Ltd., [2011 (5) TMI 23 - CALCUTTA HIGH COURT] , Bougainvillea Multiples Entertainment Centre (P) Ltd. [2015 (2) TMI 21 - DELHI HIGH COURT] , Kirloskar Oil Engines Ltd. [2014 (5) TMI 586 - BOMBAY HIGH COURT]we do not find any infirmity in the order of CIT(A) for treating the same as capital receipt. Accordingly ground no.1 of revenue’s appeal stand dismissed.
Depreciation taking WDV of assets as on 01/04/2008 - claim computed on the basis of the WDV as per the appellant - WDV' of the year' after which depreciation had not been 'claimed by the appellant or on the basis of the reduced WDV arrived at by the' AO' after thrusting depreciation upon the appellant in the earlier years - HELD THAT:- No infirmity in the order of CIT(A) for directing the AO to allow depreciation by taking WDV of assets as on 01/04/2008, in so far as CIT(A) had followed the orders of Tribunal and Supreme Court in the case of Mahindra Mills [2000 (3) TMI 3 - SUPREME COURT]
Deduction u/s.80IA on power generation undertaking by adopting price which the industrial consumers paid during the year under consideration for electricity purchased from State Power Distribution Agency - AO has restricted the claim of deduction u/s.80IA by taking 16% return on capital base as per the parameters prescribed by the Regulatory Authorities i.e. State Electricity Board for procuring the electricity - HELD THAT:- We found that exactly similar issue has been considered by the Tribunal in assessee’s own case for the assessment year 2006-07 wherein issue has been decided in favour of the assessee. As the facts and circumstances during the year under consideration are same, respectfully following the order of the Tribunal in assessee’s own case, we do not find any infirmity in the order of CIT(A) for allowing assessee’s claim of deduction u/s. 80IA with reference to power generating undertaking and the power so generated being used mainly for captive consumption.
Several decision of the Tribunal listed below have taken a view consistent with a view taken by Tribunal in assessee's own case for A Y 2006-07. In the circumstances, except in the case of Calcutta High Court in M/s. ITC Ltd [2015 (7) TMI 450 - CALCUTTA HIGH COURT] there are four judgements of other High Court in assessee's favour and six judgements of Tribunal in assessee favour and no contrary decision of Tribunal. In the circumstance, the appropriate course of action to follow would be the decision of Supreme Court in the case of Thiru Aroovan Sugar Mills [1997 (7) TMI 12 - SUPREME COURT] and the decisions of Calcutta High Court which are earlier in point of time and decision of Chattisgarh and Madras High Court and various benches of Tribunals and assessee's own case for the earlier year. Furthermore the Supreme Court has endorsed the view that where there is a conflict between two High Courts the view in favour of the assessee must be adopted. Vegetable Products Ltd [1973 (1) TMI 1 - SUPREME COURT] .
Disallowance u/s 14A - HELD THAT:- As assessee’s own funds are far in excess of total investments (which includes investments of ₹ 1,602.11 crares giving rise to exempt income). Therefore, no interest expense can be attributable for making disallowance u/s 14A of the I.T. Act.
Disallowance under Rule 8D (2)(iii) - Rule 8D is not applicable in the A.Y. 2007-08. Tribunal in the A.Y. 2006-07 restricted the disallowance at 1% of exempt income after considering the dlsallowances made in the preceding assessment years. In view of earlier orders of ITAT for A.Y. 2006-07 on similar facts and circumstances when rule 8D was not applicable, we direct the AO to restrict the disallowance u/s. 14A of the Act out of administrative expenses to the extent of 1% of exempt Income for the purpose of computation of income under normal provisions of Act in so far as Rule 8D is not applicable to A.Y. 2007-08 under consideration. We direct accordingly.
Depreciation on the capitalised value of goods purchased from Durga Iron and Steel and Surajbhan Rajkumar Pvt. Ltd. - HELD THAT:- AR fairly conceded that the issue has been decided against assessee by Tribunal in the assessment year 2006-07. As the facts and circumstances during the year under consideration are same, we confirm the action of lower authorities for disallowance of depreciation in the A.Y. 2007-08, 2008-09 & 2009-10.
Disallowance of depreciation of jetties - HELD THAT:- We hold that the assessee is entitled for depreciation at the rate as applicable on the cost incurred for construction of jetty at Dahej.
Disallowance being Professional fees paid to various companies as being non-genuine - HELD THAT:- From the record we found that during the subjected year assessee has availed the services of Shri S. K. Gupta and paid the professional fees and also reimbursed expenses to his companies. The payments towards professional services charges and reimbursement of expenses were contended to be genuine and incurred for business purposes, hence, the same was claimed as deduction u/s 37 of the Act. We found that identical issue has been decided by Tribunal in favour of the assessee in preceding year i.e. A Y 2006-07 wherein the ITAT has deleted the disallowance.
International transaction as defined u/s. 92B - CIT(A) in confirming the order of the AO in treating the non funded guarantee given by the assessee to the Bank of America for giving loan to its associated concern Trivera Gmbh as international transaction - HELD THAT:- We are of the considered view that the ld. CIT(A) on the facts and circumstances of the case has rightly taken average rate on which the assessee has paid guarantee commission to third party, which comes to 0.38%. Hence, we uphold the order of ld. CIT(A) to charge guarantee commission at the rate of 0.38% being ALP for the guarantee given by the assessee to Bank of America on behalf of its AE Trevira GmbH.
Arm’s length price in respect of interest payment referable to interest free loans and advances given to its subsidiary companies - HELD THAT:- We found in the case of Taurian Iron & Steel Co. Pvt. Ltd. [2016 (11) TMI 1302 - ITAT MUMBAI] similar adjustment has been restricted at LIBOR + 1.50%. Respectfully following the verdicts laid down by Tribunal in these cases under similar facts and circumstances, we direct the AO to restrict adjustment at LIBOR + 1.50%. We direct accordingly.
TDS u/s 195 - assessee company had paid an amount being interest in FY 2006-07 without deduction of withholding tax - HELD THAT:- Appellant company not liable to deduct withholding tax @ 20% in respect of the interest payment of US $ 1,05,902 to M/s.Deutsche Bank – AG. With the result, we hereby quash the order passed u/s.195(2) of IT Act as well as reverse the findings of ld. CIT(A)
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- For the purposes of calculating the disallowance under Rule 8D(2)(ii) and 8D(2)(iii) of the I.T. Rules only those investment have to be considered on which the assessee has received the dividend.
In view of the above average of value of investment, income from which does not or shall not form part of the total income" has to be considered and not all the investments as done by the AO. We rely on the judgment of Hon'ble Delhi High Court in the case of ACB India Limited [2015 (4) TMI 224 - DELHI HIGH COURT] . If only investments on which dividend was received were to be considered, then the disallowance in respect of administrative expenses by applying the provisions of under rule 8D(2)(iii) of the IT. Act @ 0.5% of the value of investments would work out to ₹ 3.37 crore. Accordingly, we direct AO to restrict disallowance of other expenses to ₹ 3.37 crores.
We delete the disallowance made on account of interest and restrict the disallowance under Rule 8D (2)(iii) to the extent 0.5% of average value of investment which have yielded dividend during the year under consideration which works out to ₹ 3.37 crores. We direct accordingly.
Reduction of profits of the business of the undertaking while computing deduction under section 10B being recoveries of various expenses incurred and charged to Profit and Loss Account of the Undertaking - HELD THAT:- We found that a sum credited under the head miscellaneous recoveries are received for Purging, Degassing Charges for Railway wagons & tankers of IOCL, BPCL and HPCL and recovery of cost on account of infrastructures facilities provided to GAlL and others. Further a detailed working of per-unit cost incurred for purging and degassing and recoveries made from IOCL, BPCL and HPCL was also filed. The recoveries from the above oil companies were on account of cleaning expenses paid to contractors. The cost incurred has been debited to P&L account, which are recovered from IOCL, BPCL & HPCL and shown as other income in the P&L account of the undertaking. The other income though recovered from the above parties and shown as income in the P&L account of the undertaking goes to reduce expenses and increase export profits eligible for deduction u/s.10B of the IT Act,1961.
More recovery for cost incurred on Infrastructure facilities provided to GAlL (India) Limited and others, was towards reimbursement of expenses incurred for providing these facilities. The same was debited to P&L account. The reimbursement of the same by GAlL goes to reduce the cost incurred by the assessee.
We restore the matter back to the file of the AO for finding out the exact nature of income and for deciding the issue afresh as per law.
Disallowance of professional fees paid to various parties on the plea that these parties have not rendered services to the assessee - HELD THAT:- In view of the finding recorded by the Tribunal in the hands of the recipients Vijay Kumar Gupta and Anish Kumar Gupta, we restore the matter back to the file of AO for deciding afresh the allowability of professional fees paid by assessee.
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2017 (4) TMI 1488
Addition u/s 2(22)(e) - assessment u/s 153A - credit balance in the account of husband of the director - she was holding more than 10% voting rights - no incriminating material found during the search - assessee and husband both are director in the company - ledger account of the assessee in the books of the BBPL wherein the payment made by the BBPL on account of tax liability of the assessee was treated as deemed dividend under Section 2(22)(e) - HELD THAT:- Undisputedly the case of the assessee the assessments were already concluded and they were not pending as on 18.12.2012 and therefore, the proceedings under Section 153A would be in the nature of reassessment in which apart from the undisclosed income unearthed during the search and seizure proceedings, the Assessing Officer can reassess only income which was disclosed by the assessee in the original assessment. Thus it is clear that no addition could be made to the income already assessed by the Assessing Officer except the addition based on the seized material.
As regards the assessment for A.Y. 2012-13, since the assessment was not concluded as on the date of search and it was pending therefore the regular assessment proceedings stood abated on the date of search under Section 132 of the Act. Consequently, the assessment framed under Section 153A r.w.s. 143(3) of the Act will par take the character of regular assessment and hence the Assessing Officer while making the addition is not depending on the incriminating material found during the course of search. Therefore the issue has to be decided on merits.
The Assessing Officer has not disputed this fact of the huge credit balance in the account of the husband of the assessee. Further the Assessing Officer has not conducted any enquiry whether the assessee is having online payment facility in her bank and further the payment was made by BBPL as per the instruction of her husband. Therefore in view of the fact that the husband of the assessee was having more than ₹ 18 Crores in the beginning of the F.Y. and more than ₹ 26 Crores at the end of F.Y. with the BBPL. Hence, there is no actual outflow from the reserves and surplus of the BBPL due to the said payment of ₹ 5,30,000 towards service tax and income tax liability of the assessee. - Thus it is clear from the facts that the payment in question has not effected the reserves and surplus of the BBPL but it is a very miniscule in comparison to the credit balances in the account of assessee's husband. Therefore the said payment cannot be regarded as advance or loan to the assessee to avoid the DDT under Section 115 ‘O’ of the Act.
As regards the decision of Hon'ble Madras High Court in the case of CIT Vs. K. Srinivasan and Other [1962 (9) TMI 64 - MADRAS HIGH COURT] , there is no quarrel that payment in respect of personal expenses, Income Tax demand, LIC Premium, etc payable by the assessee were paid by the company will fall under the category of any payment on behalf of shareholder or any payment for individual benefit of the shareholder as per the provisions of Section 2(22)(e) of the Act but the fact of such payment is an outgo from the reserves and surplus of the company. In the case on hand as it is undisputed fact that the assessee and her husband, both are Directors and the husband of the assessee is having huge credit balance of 500 times of the payment in question. Therefore in view of the circumstances as explained by the assessee and the payment was made as per the instruction of the husband which has not been controverted by the Assessing Officer then the addition made under Section 2(22)(e) is not sustainable and the same is deleted. - Decided in favour of assessee.
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2017 (4) TMI 1487
TP Adjustment - international transaction - pass through income - selection of MAM - comparable selection - HELD THAT:- As argued that the assessee only exports software development services to AEs as well as non-AEs in USA and domestic clients. Thus KMG USA does extensive marketing and secure contracts with third parties and outsources the same to KMG India on Back to Back basis. The assessee-company serves as an execution centre for contracts won by KMG USA. KMG USA does not retain any margins from the amount billed to end customers. For the services performed by AE, assessee-company pays commission at 10% for offshare services and 25% on onsite revenue services. Thus, revenue earned by the assessee-company from its AE is only pass through income and they are not an international transaction. It is the contention of the assessee that TPO had not considered the submissions of the assessee-company. DRP rejected the assessee-company’s contentions without assigning reasons whatsoever. The assessee also contends that the TPO as well as DRP had not assigned any reason as to why CUP method is not most appropriate method in the nature of transactions assesseecompany had with its AE. It was also submitted that TPO has not considered the alternative submissions of the assesseecompany that in case TNMM is adopted as the most appropriate method, same should be applied based on internal comparables rather than external comparables. Now, law is quite settled that internal comparables are more preferable to external comparables. Finally, learned authorised representative of the assessee submitted that the TPO had not considered the submissions of the assessee-company for adjustment towards unutilized capacity. The AO also not followed directions of the DRP while passing final assessment order. In the circumstances, it was prayed that the matter may be restored back to the file of the AO for de novo consideration.
CIT(DR) had no serious objections for restoring the matter back to the file of the AO/TPO for fresh analysis of TP study. In the circumstances, we remit the matter back to the AO to consider the above submissions de novo after affording due opportunity of being heard to the assessee-company.
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2017 (4) TMI 1486
Valuation - goods supplied to the sister concern as per Rule 8 of the Central Excise Rules, 1944 - Department was of the view that the appellant who has not paid the excise duty in respect of the goods supplied to their sister concern M/s Nalwa Steel & Power Limited in accordance with the rules of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - HELD THAT:- It appears that it is not in dispute that during the relevant period, the appellant had supplied pig iron, rails etc. to its sister concern M/s Nalwa Steel Pvt. Ltd. as well as to independent buyers but for consideration. It is also not in dispute that the appellant raised invoices for the supplies made to the sister concern and charged consideration amount and also paid the excise duty on cost basis in accordance with Section 4 of the Central Excise Act, 1944, where the department plea is that since M/s Nalwa Steel Pvt. Ltd. falls within the definition of related party as defined under Section 4(3)(b)(i), the appellant ought to have assessed the excise duty payable as per Rule 8 of the Valuation Rules - Bare reading of rule 8 would show that rule 8 of Valuation Rules comes into play in cases of transfer of goods to a sister/ related concern without consideration.
Admittedly, this is not a case of no sale and it is also not the case of the Department that sale documents have been fabricated, therefore, prima-facie Rule 8 would not come into play. Thus, the excise duty paid by the appellant in respect of goods sold to the sister concern on the basis of sale consideration as per Section 4(3)(b)(i) of the Central Excise Act cannot be faulted.
Appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1485
Maintainability of appeal - the learned Chairperson has directed that since the petitioner appellant has not complied with the earlier order, to the effect that the amount as directed by the Tribunal, if not deposited within time stipulated by it, the Appeal itself cannot be entertained - HELD THAT:- Since the Petition is not being pressed, we direct that the sum of ₹ 34 crores should be deposited in installments and as stipulated by Mr. Chinoy. The 1st installment shall be deposited by 13th May, 2017 in the sum of ₹ 10 crores. Thereafter, every week, a sum of ₹ 2.4 crores should be deposited so as to make up the total of ₹ 34 crores.
In the event of default in depositing the sum of ₹ 10 crores as directed above, or any such installment of ₹ 2.4 crores, which is a weekly sum thereafter, would result in the protection granted by this Court coming to an end forthwith. Thereafter, the orders passed by the DRAT on 17th May, 2016 and 11th April, 2017 would both stand and uninterfered with. In the event the amount is deposited by 31st July, 2017, the DRAT shall restore the appeal to its file for hearing on merits and in accordance with law.
Petition disposed off.
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2017 (4) TMI 1484
Disallowance u/s 10A on the enhanced income - Mandation of recording the satisfaction for the compilation of Rule 8D - HELD THAT:- AO has merely mentioned that he is not satisfied with the explanation, therefore, in our view, the AO has recorded the satisfaction for the compilation of Rule 8D. No specific format is provided under the act for recording the satisfaction. Assessee has failed to discharge his primary onus of proving nexus of interest free funds available at the time of making the investment that has yielded the interest free income , in our view, in the absence of discharge of initial onus the burden is not shifted to AO to establish nexus between the interest bearing funds and the investment made by the assessee. As the AO has recorded his dissatisfaction regarding the correctness of the claim of the assessee in respect of expenditure (Nil) which the assessee claimed to have been incurred in relation to the income which does not form part of the total income. After recording dissatisfaction, the AO is left with no other option but to adopt the methodology provided in Rule 8D r.w.s 14A(2) of the Act. In the present case, the AO has only applied 0.5% of the total income as expenditure.
AO has rightly applied the Rule 8D and no error has been pointed out by the ld AR on working out of the expenditure by applying the Rule 8D. In our view, the AO has worked out the expenses after due application of the methodology, therefore, the ground raised by the assessee is required to be rejected.
Non granting the relief u/s 10A of the Act on the enhanced income - HELD THAT:- In Gem Plus Jewellery India Ltd., [2010 (6) TMI 65 - BOMBAY HIGH COURT] wherein it was held that the assessee was entitled to exemption u/s 10A with reference to addition or disallowance of various payments as the plain consequence of disallowance and add back made by the AO is increased in the business profit of the assessee.
We find force in the submissions of the learned AR of the assessee on this issue because if part of expenses claimed by the assessee against business income is considered as expenses incurred for earning tax free income and is disallowed u/s 14A, the business income stands increased by that amount and only such increased business income should be considered for computing the amount of deduction u/s 10A. A. O. is directed accordingly.
TP Adjustment - comparable selection - HELD THAT:- Assessee is providing specialized services and is not simply into BPO services provider as projected by the assessee. The work scope and the agreement of the assessee with its AE clearly provides that the assessee is providing high end technical services to its AE and for that purposes has engaged various technical staffs in the form of IT Team Leader, Program Manager, Project Manager, Enterprise Architect/Application Architect/Design Architect, Business Analyst/Project Leader, Product Developer/Senior Product Developer, Product Quality Engineer/Senior Product Quality Engineer, Technical Author/Senior Technical Author, Team Lead (Development), Team Lead (QA) and various functions of these persons are provided in detail in the agreements thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Exclusion of telecommunication expenses from the total turnover also while computing the deduction u/s 10A - HELD THAT:- Hon’ble Karnataka High Court rendered in the case of Tata Elxsi, [2011 (8) TMI 782 - KARNATAKA HIGH COURT] supports the case of the assessee because in this case, it was held by Hon’ble Karnataka High Court that the total turnover is sum total of export turnover and domestic turnover and, therefore, if an amount is excluded from export turnover, the total turnover is also reduced by the same amount as a consequences of deduction from export turnover. In this view of the matter, we find no infirmity in the order of the learned CIT(A) on this issue.
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2017 (4) TMI 1483
Deduction allowable u/s. 10A - CIT(Appeals) directing the AO to recompute the deduction allowable u/s. 10A after reducing the telecommunication expenses amounting to ₹ 8,59,000-00 both from the export turnover and the total turnover - HELD THAT:- In the present appeal of the revenue, the issues involved (1 to 3) pertains to the quantum of deduction allowable u/s. 10A which has been reduced by the AO by reducing the telecommunication expenses incurred in foreign currency by the Assessee on telecommunication charges. The CIT(A) has held that the action of the AO in re-computing the deduction u/s. 10A by reducing the telecommunication expenses has been in foreign currency only from export turnover and not from the total turnover is not sustainable.
We find this issue is no more res integra and is settled by the jurisdictional High Court in Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] thereby it is held “Even in the case of business of an undertaking, it may include export business and domestic business, in other words, export turnover and domestic turnover.
Therefore if the amount is reduced from the Export turnover it is bound to be reduced from the total turnover of the undertaking. As the order of the CIT(A) is in conformity with the order of jurisdictional High Court therefore this ground of the revenue is dismissed.
TP Adjustment - ALP computation - standard deduction of 5% from the arithmetical mean of the profit margin of the comparables under the proviso to section 92C(2) - HELD THAT:- After following the SAP Labs Ltd. judgment [2010 (8) TMI 676 - ITAT, BANGALORE] in our view these issues are required to be allowed as the amendment was brought into force in the Act with retrospective effect in section 92C(A)(2) of the Act. Further this issue is also covered by the judgment of coordinate bench in the matter of Acusis Software India (P.) Ltd. [2016 (11) TMI 1566 - ITAT BANGALORE] - Even the special bench in the case of IHG IT Services (India) (P.) Ltd. v. ITO [2013 (5) TMI 309 - ITAT DELHI] held that after the amendment by the Finance (No. 2) Act, 2009 with effect from 1.10.2009, such benefit of 5% tolerance margin was restricted to the cases where variation between the arm's length price and the price at which the international transaction has actually taken place does not exceed 5%. In other words the benefit under the proviso cannot be given as a standard deduction. In the results, the grounds of appeal raised by the revenue on this issue are allowed.
Comparable selection - HELD THAT:- Assessee as well as the TPO had applied the TNMM being the most appropriate method for the purposes of determining the ALP. The TPO for the purposes of determining the ALP had applied various filter namely functional comparability, related party transaction (RPT) etc . Further TPO had also compared the financials of the selected companies based on their profile. TPO had also examined the PLI of those companies on the basis of the operating profit / operating cost.
Assessee Company is into software development and therefore the TPO has used the functional similarity / comparable filter to find out the comparables. We found that the ld. CIT(A) has rejected the 7 companies selected by the TPO on the basis of margins being wider from the range determined by the TPO. In our view, the inclusion / exclusion of the comparables is required to be based on the basis of parameters laid down under rule 10B(2) of the Income-tax rules for the purposes of determining the functional comparability. If we examine the order passed by the CIT(A) , we will reach to the inescapable conclusion that the order of ld CIT is a cryptic / non-speaking order and the ld. CIT(A) has not examined profile of each company on the touch stone of functional similarity, relating party filters, turn over filter etc. In our view these aspects of the comparable companies are required to be considered in view of rule 10B(2) of the IT rules.
Remand the matter to the file of the ld. CIT(A) for the purposes of exercising his jurisdiction and to determine fresh about the inclusion and exclusion of the comparables based on the rules and regulations framed for that purposes and also on the basis of judgment of the Tribunal.
Whole purposes of undertaking the exercises of TP study is to determine the ALP of the assessee on the basis of the profit margin of unrelated party in an uncontrolled transaction, therefore ld. CIT(A) while re-examining the TP issue.
Interest income as income from other sources - HELD THAT:- We found that in the present case neither the temporarily availability of fund was proved nor temporarily non requirement of funds was proved nor it was set up by the assessee when the funds were temporarily available and when the FDRs were made on temporary basis. We deem it appropriate to remand the matter to the file of the CIT(A) to decide this issue fresh after giving opportunity to the assessee. The assessee shall be at liberty to file all relevant documents in support of its claim to prove that the funds were temporarily available and the FDRs were temporarily made with the view to optimize the profit of the business.
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2017 (4) TMI 1482
Addition u/s 68 - Unexplained cash deposited in the bank account - assessee explained the source of deposit as sale consideration of the agriculture land - HELD THAT:- Assessing Officer has not disputed the sale of agriculture land on 23.6.2008 for a consideration of ₹ 46,99,500. Therefore when this amount of sale consideration was not utilized by the assessee for any other purpose then merely because the assessee has not deposited this amount in the bank prior to this year cannot be a reason for denial of explanation. Accordingly, when the assessee was having sufficient cash with her as a sale consideration of agriculture land then the same cannot be ignored or denied as a source of deposit in the bank.
Further there is no dispute that this is a transaction of deposit in the bank therefore the issue of applicability of Section 68 arises in view of the various decisions of this Tribunal as well as the decision of Hon'ble Bombay High Court in the case of CIT Vs. Bhaichand N Gandhi [1982 (2) TMI 28 - BOMBAY HIGH COURT] - thus the addition made under Section 68 of the Act is deleted. - Decided in favour of assessee
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2017 (4) TMI 1481
Classification of goods - NESLAC Nutritious Milk Drink for growing kids - whether classified under tariff item 0404 90 00 of the Central Excise Tariff Act, 1985 or under tariff heading 1901? - the department was of the view that the addition of flavour in the product would take it out of CETH 0404.
HELD THAT:- The identical issue has come up in the appellant's own case NESTLE INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE (LTU) , DELHI [ 2006 (3) TMI 523 - CESTAT, NEW DELHI ] where it was held that there is no justification to shift the classification of the main product from 0404 to 1901, on account of addition of a minuscule quantity of flavouring substance.
Thus, the proper classification for the impugned goods will be under heading 0404 90 00 of the Central Excise Tariff Act, 1985 as claimed by the appellant - appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1480
TP Adjustment - exclusion of companies from the set of comparables by applying the turnover filter of more than ₹ 200 Crores - HELD THAT:- Turnover of the assessee from international transactions is ₹ 17.07 Crores. Since the Dispute Resolution Panel (‘DRP’) has excluded six companies by applying the turnover filter of more than ₹ 200 Crores, the revenue has challenged the directions of the DRP and consequent assessment order. Though the filter of ₹ 200 Crores may not be appropriate filter however even if we apply the turnover filter of 10 times of the assessee's turnover on both sides, the companies which are having more than ₹ 171 Crores of turnover are required to be excluded. In view of the fact that the DRP has excluded the companies which are having more than ₹ 200 Crores turnover which is more than the filter to be applied at 10 times of the assessee's turnover which comes to ₹ 171 Crores, we do not find any reason to interfere with the impugned order and directions of the DRP as by applying the filter of 10 multiples all these six companies are required to be excluded from the set of comparables.
Risk adjustment allowed by the DRP - HELD THAT:- When the assessee has not given any details and computation for risk adjustment then the claim of the assessee is purely hypothetical in nature. The co-ordinate bench of this Tribunal in the case of Zyme Solutions Pvt. Ltd. Vs. ITO [2016 (1) TMI 1436 - ITAT BANGALORE] has considered an identical issue. When the assessee has not made any attempt to quantify the risk or furnish the details for computation of risk adjustment then by following the decision of the co-ordinate bench, we decide this issue in favour of the revenue and set aside the directions of the DRP.
Deduction under section 10A - Exclusion of expenditure incurred towards telecommunications, insurance and travel in foreign currency both from export turnover and total turnover - HELD THAT:- Respectfully following the aforementioned decision of the Hon’ble High Court of Karnataka in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we uphold the directions of DRP in directing the Assessing Officer to reduce the expenditure incurred towards telecommunications, insurance and travel in foreign currency from both export turnover and total turnover for the purpose of computing the deduction under section 10A of the Act in the case on hand. Consequently this ground raised by revenue is dismissed.
Restricting the deduction under Section 10A by reducing the foreign exchange loss from the export turnover - HELD THAT:- Foreign exchange loss has to be considered only arising from the sale proceeds and pertaining to the period relevant to the assessment year under consideration. Since the assessee has contended that it was not given an appropriate opportunity to make submissions therefore, in the facts and circumstances of the case and in the interest of justice, we set aside this issue to the record of the Assessing Officer for proper verification and adjudication of this issue as per law. We make it clear that foreign exchange loss is reduced from the export turnover, the same has to be also reduced from the total turnover for the purpose of computing the deduction under Section 10A
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2017 (4) TMI 1479
Grant of registration u/s 12AA rejected - whether appellant is a profit making body and is not carrying out any charitable activities? - Greater Noida Industrial Development Authority - HELD THAT:- Tribunal has rightly directed for grant of Registration to petitioner. In that view of the matter, this petition is disposed of, directing respondent no.1 to comply with the Tribunal’s judgment in GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY, YAMUNA EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY VERSUS CIT (E) , LUCKNOW [2016 (5) TMI 1350 - ITAT DELHI]
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2017 (4) TMI 1478
Restoration of possession of the disputed land - unreasonable delay in applying for restoration of the land - HELD THAT:- There is inordinate, unexplained and unjustified delay on the part of the Appellants in firstly, making an application for restoration of land after a period of 24 years after such a right is said to have accrued to them and, then in making an application for restoration after a period of 16 years when the matter was dismissed in default.
Where no period of limitation is prescribed, the action must be taken, whether suo motu or on the application of the parties, within a reasonable time. Undoubtedly, what is reasonable time would depend on the circumstances of each case and the purpose of the Statute. In the case before us, we are clear that the action is grossly delayed and taken beyond reasonable time, particularly, in view of the fact that the land was transferred several times during this period, obviously, in the faith that it is not encumbered by any rights.
Merely because the legislation is beneficial and no limitation is prescribed, the rights acquired by persons cannot be ignored lightly and proceedings cannot be initiated after unreasonable delay - Appeal dismissed.
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