Undisclosed income - bogus liability - HELD THAT:- Factum of advance of ₹ 1,00,00,000/- given to M/s Gulmohar Landcons (P) Ltd. and also the receipt of the amounts back by the assessee have not been examined clearly either by the Assessing Officer or by the Ld. CIT(A). AO has made an addition of ₹ 78,00,000/- on account of asset and liabilities statement filed by the assessee and based on the statement of the Shri. Darshan Singh whereas the amount advanced was ₹ 1,00,00,000/-as per the statement of Shri. Darshan Singh. Hence this issue is being sent back to the file of Assessing Officer with a direction to examine the issue afresh. Appeal of the assessee is allowed for statistical purposes.
Admission of additional evidences under Rule 46A - CIT-A deleting the addition on account of bogus liability - HELD THAT:- CIT(A) has given justification in para 3.2 of the order the reasons for accepting the additional evidences. The additional evidences were accepted as the assessee could not contact Shri. Yashpal Aggarwal during the assessment proceedings and a remand report was also called from the Assessing Officer who in turn examined the details submitted before the Ld. CIT(A) and found no adverse material contrary to the submissions made and hence the Ld. CIT(A) deleted the addition. Since the Assessing Officer has duly examined the copy of the ledger account and the confirmations and not brought any material rebutting the contention of the assessee, the decision of the Ld. CIT(A) deleting the addition is hereby confirmed.
Unexplained cash credit - Advances in cash - CIT(A) held that if the Department had any doubt, it could have enquired into the source of payment made of ₹ 31,00,000/- by the assessee, which has not been done - HELD THAT:- After going through the material available on the record since the amount of ₹ 31,00,000/- has been received back by the assessee and the sources have been fully explained and confirmed by the payee, supported by the agreements we decline to interfere with the order of the Ld. CIT(A).
Transaction between the M/s. Hash Builders Pvt. Ltd. and the assessee - HELD THAT:- There was no dispute regarding the advances received, the sources were never in question. At the most the Assessing Officer could have estimated commission income on account of transactions done through the assessee for the acquisition of properties for the companies for which he is working. Instead, the Assessing Officer has treated the entire advances as income of the assessee which cannot be accepted and without any legal or factual basis. Hence we refrain from interfering with the order of the Ld. CIT(A) in deleting the addition.
Disallowance u/s 14A - assessee has made the suo moto disallowance - HELD THAT:- In Godrej and Boyce Mfg. Company Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] the Hon’ble Bombay High Court has held that the provisions of rule 8D are not retrospective in nature and shall apply w.e.f. A.Y. 2008-09. Hence, in the light of the aforesaid decisions and in view of the fact that the suo moto disallowance made by the assessee was allowed by the department in the year 2004-05, we are of the considered view that the suo moto disallowance made by the AO in the assessment year under consideration, which is 10% of the exempt dividend income is reasonable. We therefore, set aside the order of the Ld. CIT (A) and direct the AO to delete the disallowance confirmed by the Ld. CIT (A) and accept the suo moto disallowance made by the assessee u/s 14A of the Act. We accordingly allow the sole ground of appeal of the assessee.
Disallowance of interest on advances to subsidiary and group company - AO pointed out that the advance given to the subsidiary companies as sister concern cannot be treated as incurred for the purpose of the business of the assessee - HELD THAT:- During the assessment year under consideration, the assessee advanced ₹ 4,79,630/- to Taida Trading and Industries Ltd. and ₹ 18,42,036/- to KTC Hotels Ltd. Since, this issue has been dealt with by the coordinate Bench in assessee’s own case for the A.Ys. 2003-04 and 2004-05, we respectfully following the decision of the coordinate Bench partly allow this ground of appeal and set aside the impugned order passed by the Ld. CIT (A) in respect of advance given to M/s Taida Trading and Industries Ltd. and uphold the order deleting the disallowance made by AO in respect of advance given to M/s KTC Hotels Ltd. AO is directed to compute the disallowance of interest in terms of the said order.
Disallowance of interest on share application money pending allotment - HELD THAT:- As decided in own case[2014 (4) TMI 1097 - ITAT MUMBAI] there being no diversion of interest bearing funds for non-business purpose as alleged by the A.O., there was no justification in making any disallowance on account of interest paid on the borrowed funds. It was noted by the Tribunal that the share application money was finally returned to the assessee with interest @ 19% and the interest so received was duly offered by the assessee in the relevant year. A similar view has been taken by the Tribunal in the subsequent years. i.e. assessment years 1996-97 to 2002-03. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to the earlier years, we respectfully follow the orders of the Tribunal for the said years and uphold the impugned order of the ld. CIT (A) giving relief to the assessee on this .
Expenditure on replacement of carpets - HELD THAT:- This issue in favour of the assessee in the assessee’s own case for the A.Y. 1992-93 - Apart from the decision of the coordinate Bench the Ld. counsel for the assessee relied upon the decision of the Hon’ble Rajasthan High Court rendered in CIT vs. Lake Place Hotels and Motel Pvt. Ltd. [2002 (4) TMI 29 - RAJASTHAN HIGH COURT] . Since, this issue has already been decided in favour of the assessee, we respectfully following the decision of the coordinate Bench uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.
Expenditure incurred on replacement of linen as revenue expenditure and the expenditure not giving enduring benefits to the assessee.
Adjustment on account of difference on rates of foreign exchange on deposit placed with Wholly Owned Subsidiary (WOS) i.e. Taj International Hongkong Ltd. (TIHK) - HELD THAT:- As decided in own case as per the classification made in AS-11, monetary items mainly include amounts held on current account, such as, cash receivables, payables etc. while non-monetary items include amounts held on capital account, such as, fixed assets, investment in shares etc.
In the present case, the shareholders deposit represented the amount held by the assessee on capital account inasmuch as it was convertible into equity shares within a period of 10 years and if not so converted, it was liable to be refunded to the assessee company only after a period of 10 years. In our opinion, the said amount thus was in the nature of non-monetary item which was required to be reported/recognized at the exchange rate prevailing on the date of relevant transaction even as per AS-11 as rightly held by the learned CIT (Appeals). We, therefore, find no infirmity in the impugned orders of the learned CIT (Appeals) deleting the additions made by the AO on this issue.
Addition being adjustment on account of interest charged on loan given by the assessee to its associate enterprise M/s Taj International Hongkong Ltd - HELD THAT:- This issue has already been decided in favour of the assessee in the assessee’s own case for the A.Y. 2003-04 and 2004-05 aforesaid by the ITAT holding that the LIBOR is acceptable arm’s length interest rate, we respectfully following the decision of the coordinate Bench decide this issue in favour of the assessee and dismiss this ground of appeal of the revenue.
Non charging guarantee fees from AEs by providing letter of comfort to the Bank for the loan granted to the AE - HELD THAT:- Since the assessee has not bond itself for repaying the loans in the event of default by the AEs, the issue is covered by the law laid down by the Hon’ble Karnataka High Court in the case of United Braveries Holdings Ltd. [2011 (8) TMI 1331 - KARNATAKA HIGH COURT] . Moreover, the Chennai Bench of the ITAT in TVS Logistics Services Ltd [2016 (6) TMI 558 - ITAT CHENNAI] has held that the letter of comfort is outside the ambit of international transaction. Hence, following the decisions of the Hon’ble Karnataka High Court and the Chennai Tribunal, we hold that the letter of comfort issued by the assessee in this case is outside the ambit of international transaction. We, therefore, dismiss this ground of appeal of the revenue.
Disallowance of deduction u/s.54(2) - not depositing the residue sale proceeds in capital gain scheme account within the stipulated period u/s.139(1) - whether the unutilised amount of capital gains which was not appropriated towards construction of new house property before the due date for filing of the return of income as envisaged u/s 139(1) or which was not deposited in the notified Capital Gains Account Scheme before the due date for filing of the return of income as envisaged u/s 139 (1) ? - HELD THAT:- We find this issue squarely covered by the decision of the Chennai Bench of the Tribunal in [2016 (9) TMI 1563 - ITAT CHENNAI] wherein on the identical situation it was held that such small technical breach will not disentitle the assessee the benefit of Section 54.
Further the Ld.CIT(A) has also followed the decisions of various higher Judiciary wherein the issued is held in favour of the assessee in similar circumstances. Therefore we do not find it necessary to interfere with the order of the Ld.CIT(A) on this issue. - Decided against revenue
Reopening of the assessment u/s. 147 - making the claim u/s. 80IA - HELD THAT:- It is not the case where the assessee had misled the AO in any manner while making the claim u/s. 80IA of the Act. All the statutory requirements as per law for claiming deduction like tax audit report, etc. were filed before the AO and the AO had applied his mind and then had granted the deduction u/s. 80IA of the Act. The action of the AO to reopen an assessment completed earlier u/s. 143(3) of the Act without any tangible material ought not to have been done. We note that the AO has done the reopening and consequent reassessment on the basis of the very same material which was before the earlier AO. So, the AO on the same material on which the predecessor of AO has taken a plausible view during the original assessment, has ventured in the reassessment to take a different view, which action is akin to review of his own order which power AO does not enjoy.
We note that the AO had the knowledge of the assessee taking over the proprietary concern on 01.04.2002 i.e. running business of M/s. Anupam Bricks and Concrete Industries a proprietorship firm of Shri Budhmal Baid, Managing Director of the company in lieu of which the company had issued shares at a premium and the fact that by this process, the assessee acquired the assets including a Hot Mix plant. This fact was in the knowledge of the AO as well as he has considered this fact elaborately as reproduced above in his original assessment order, therefore, right or wrong, the decision taken by him cannot be revisited or reviewed by the AO invoking Sec. 147 of the Act because the AO does not have the power to review his own order. Relying upon the decision in the case of Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] we do not find any legal infirmity in the order passed by the Ld. CIT(A) and hence, the same is hereby upheld. Appeal of revenue is dismissed.
Exemption u/s 11 - assessee runs a pharmacy store in the hospital for profit and earned profit from pharmacy store and not covered in the charitable activity - HELD THAT:- As decided in assessee’s favor by first appellate authority for AY 2010-11 & 2011-12. This Tribunal for AY 2010-11 [2016 (8) TMI 1490 - ITAT MUMBAI ] after considering the judgment of Baun Foundation Trust Vs CCIT [2012 (4) TMI 172 - BOMBAY HIGH COURT] & Hiranandani Foundation Vs. ADIT [2016 (7) TMI 260 - ITAT MUMBAI] upheld the stand of Ld. CIT(A). The revenue is unable to bring any contrary facts on record and distinguish the facts of earlier years with that of impugned AY. Therefore, in view of the binding judicial precedent in the shape of the order of co-ordinate bench of the Tribunal, taking same stand, we dismiss revenue’s appeal.
SSI Exemption - benefit denied on the ground that the goods were not manufactured in “rural area” - HELD THAT:- The respondent has produced the certificate issued by the local land revenue officer i.e., Tehsildar on the basis of land revenue records. The appropriate authority in the land revenue matters is Tehsildar who is gazetted rank officer of the State Government and is competent to certify the status of the area. In terms of notification the certificate must be issued by the authority of the State Government. The revenue has not brought any evidence that the Notified Area Committee is controlling the area in question and that the Tehsildar is not competent to issue such certificate.
There are no infirmity in the order passed by the Commissioner (Appeals) - the respondent is eligible for the benefit of exemption notification in question. Hence the appeal filed by the revenue does not survive on merits - appeal dismissed - decided against Revenue.
Relevant date for levy of anti-dumping duty imposed after filing of the bill of entry but before clearance of the goods - interpretation of statute - recovery of differential duty under Rule 21(1) of Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 - HELD THAT:- There is no doubt that, as on the date of filing of entry, the provisional anti-dumping duty was no longer in force. The final anti-dumping duty came into force only a few days after the presentation of bill of entry. Under Section 15 of Customs Act, 1962, the relevant date for determining duty liability is the date of filing of bill of entry. It is, thus, borne out by the facts that the proper officer was not empowered to levy anti-dumping duty on the impugned goods.
Assessment u/s 153C - information collected by the A.O. without any basis of incriminating material - HELD THAT:- During the appeal hearing, the D.R. did not place any evidence with regard to the incriminating material found in the premises of the searched person relating to the assessee. Now it is settled issue that for initiating the proceedings u/s 153C it is incumbent upon the A.O. to have the incriminating material evidencing the undisclosed income. In the assessee’s case no such evidence was found during the course of search in the group cases.
As per the provisions of section 153C it is mandatory to have the satisfaction of the A.O. that money, bullion, jewellery or other valuable article or thing or any books of accounts, documents seized or requisitioned pertains to or relates to the assessee, which means that unless there is an incriminating material belonging to the assessee is found, the action u/s 153C of the Act is not permissible. In the assessee’s case there was no incriminating material found and seized from the premises of the group cases. We hold that the notice issued u/s 153C is not sustainable and accordingly quashed. This view is upheld by the Hon’ble Supreme Court in the case of CIT Vs. Sinhagad Technical Education Society (2017 (8) TMI 1298 - SUPREME COURT). Respectfully following the judgement of the Hon’ble Supreme Court, we hold that the notice issued u/s 153C is unsustainable and accordingly quashed. Appeal filed by the assessee is allowed
TP Adjustment - Selection of comparable - whether Government companies can be taken as comparables or not ? - HELD THAT:- As decided in own case [2017 (5) TMI 971 - ITAT MUMBAI] Government companies cannot be taken as comparables.
No addition since adjustment would fall within tolerance range of 5% - From the submissions made by learned AR, we noticed that the adjudication of other grounds would be academic in nature, since according to learned AR even if those grounds are decided in favour of the Revenue, the same would not result in any addition. In view of the same, without deliberating on those grounds, we decide them in favour of the Revenue.
Interest on delayed refund of excise duty - Section 11B of the Central Excise Act - HELD THAT:- Admittedly, the question of payment of interest on the delayed refund of Excise duty has already been settled by a Division Bench of this Court in AMALGAMATED PLANTATIONS (P) LTD. VERSUS UNION OF INDIA [2013 (11) TMI 589 - GAUHATI HIGH COURT] - The Division Bench has held that Section 11B of the Central Excise Act does not exclude claim of refund made in terms of the Notification dated 8-7-1999 and therefore the assessee is entitled to interest under Section 11BB of the Central Excise Act on the excise duty refunded to them.
The Excise Officer are directed to determine the interest amount payable to the petitioner for the relevant period within 3 months from today - petition is allowed with cost of ₹ 1000/- payable to the petitioner.
TP adjustment in respect of “interest on loans to AEs” and on account of “corporate guarantee” - CIT-A deleted the addition - HELD THAT:- As decided in own case [2017 (12) TMI 1745 - ITAT AHMEDABAD] impugned CIT(A)’s order, he has merely followed his order for the assessment year 2008-09 which has not been challenged, on this point, by the Revenue authorities. Learned Departmental Representative does not dispute this fact.
In the light of the above factual position, it is clear that once the Revenue authorities accept the stand of the CIT(A) on an issue and allow it to reach finality in one assessment year, it cannot be open to them to challenge the same in the subsequent assessment year. As noted by Hon’ble Supreme Court, in the case of CIT vs. Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT], while “strictly speaking, res judicata does not apply to income tax proceedings”, “where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not at all be appropriate to allow the position to be changed in a subsequent year - Thus the deletion of the TP adjustment on account of interest on loan is upheld.
TP adjustment on account of corporate guarantee for working capital and Corporate guarantee for financing and other arrangements - HELD THAT:- Assessee extending corporate guarantees to its AEs, particularly on the facts and in the circumstances of this case and when the assessee has done so in the course of its stewardship activities for its subsidiaries, does not constitute an international transaction, and, as such, no ALP adjustment can be made in respect of the same. Accordingly, entire ALP adjustment stands deleted. As for the quantum of this adjustment, which is mainly the subject matter of grievance raised in revenue’s appeal, once the entire ALP adjustment stands deleted, that aspect of the matter is wholly academic and does not call for any adjudication by us.
Deletion of the positive adjustment u/s. 14A while determining book profit u/s. 115JB confirmed. See ALEMBIC LIMITED [2017 (1) TMI 513 - GUJARAT HIGH COURT]
Late payment of employees’ contribution to Provident Fund and ESI - HELD THAT:- This issue is no more res integra as it has been decided by the Hon’ble Jurisdictional High Court of Gujarat in favour of the Revenue and against the assessee in the case of GSRTC [2014 (1) TMI 502 - GUJARAT HIGH COURT]
The Supreme Court of India dismissed the Special Leave Petition in the case. The delay was condoned, and pending applications were disposed of accordingly.
Dishonor of Cheque - acts of financial impropriety - HELD THAT:- This is not a case of any payment being made after an admission was made by the appellant. The appellant acknowledged a sum in excess of ₹ 2.32 crore to be apparently due to the plaintiff as at March 31, 2016, but the plaintiff's document of April 4, 2016 shows that the plaintiff claimed that the dues were to the extent of ₹ 1.67 crore. Thus, the admission contained in the document of April 1, 2016 pertaining to the accounts till March 31, 2016 was destroyed.
Whatever may be the other rights of the plaintiff, on the basis of the documents and the case that it carried to the interlocutory Court, no judgment on admission could have been passed. Accordingly, the judgment and decree dated September 20, 2017 impugned herein is set aside and the plaintiff is left free to pursue the plaintiff's remedies in accordance with law.
Capital gain computation - Value of sale consideration by the value adopted by Stamp Valuation Authority - entitlement for indexation cost - HELD THAT:- The assessee was asked to produce the sale-deed for land shown in fixed asset for the purpose of computing capital gain. The assessee not provided copy of sale-deed for sale of land and factory building at Taloja or any other evidence, the AO made the addition of ₹ 5 Crore in the income of assessee on estimate basis. CIT(A) after considering the contention of assessee observed that the profit of sale of land shall be taken as LTCG and the assessee shall be entitled for indexation cost and directed the AO to adopt the value adopted by Stamp Valuation Authority and verified the fact regarding the period of lease. Before us, the assessee has neither filed any documentary evidence nor explained the fact. Thus, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Hence, ground no.1 of the appeal is dismissed.
Disallowance of bad-debt - HELD THAT:- No details of debts were provided by the assessee, thus claimed was disallowed. The ld. CIT(A) also observed while confirming the action of the AO, that no details of bad-debt was made available nor any prima facie justification was given. Even before us, the assessee has neither given any explanation nor filed any detailed about the bad-debts. None come forward on behalf of assessee to explain the fact about the bad-debt and the treatment given in the books of account. Thus, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Thus, ground no.2 of the appeal is also dismissed.
Demand of interest on differential duty - differential duty paid on the supplementary invoices issued - price escalation received from the customers - period April, 2006 to March, 2008 - HELD THAT:- From the perusal of the SCN, it is found that no calculation of interest has been made by Revenue, nor such calculation giving the period for which interest is demanded, had been annexed to the show cause notice. We further notice that in Para 9(b) of the show cause notice it is mentioned that the show cause notice is based on the data submitted by the assessee vide letter(s) dated 16-4-2008 and 24-11-2008 furnishing details of differential duty paid on supplementary invoices issued by them and interest payable thereon. However, such data has not been made part of the show cause notice by annexing the same.
The SCN is vague as it does not disclose the basis or period of default for calculation of interest being demanded from the appellant - it is an admitted fact that the appellant had paid the duty on their own, on clearance by them on the main invoice as well as the differential duty on the supplementary invoices and there is no allegation that by virtue of differential duty on the subsequent supplementary invoices there was delay in payment of duty. Thus the show cause notice is deficient and held not maintainable.
Deduction u/s 80IA - Tribunal held that the Head Office expenses cannot be allocated to profits derived from 100% export oriented units falling under Section 80IA - HELD THAT:- For the reasons as indicated in our order in [2018 (1) TMI 900 - BOMBAY HIGH COURT] and [2018 (1) TMI 1557 - BOMBAY HIGH COURT ] in respect of the same Respondent-Assessee for the assessment year 2002-03 and 2003-04, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
Claim of depreciation on 'goodwill' - HELD THAT:- Issue herein was also raised by the Revenue in [2018 (1) TMI 900 - BOMBAY HIGH COURT] in respect of the same Respondent-Assessee relating assessment year 2002-03. We have by an order passed today not entertained the Income Tax Appeal on this issue / question. Accordingly, for the reasons mentioned in our order passed today this question does not give rise to any substantial question of law. Thus, not entertained.
Disallowance u/s 14A being 0.5% of the average nonstrategic investments -TDS provisions applicability for the provisions made at the year end - amount claimed as provision for leave encashment in view of Section 43B(f) of the Act? - Appeal is admitted on the substantial questions of law at Nos. 1, 2 and 3 hereinabove.
Deduction u/s 10B -Tribunal held that Head Office expenses cannot be allocated to profits derived from 100% export oriented units falling u/s 10B - HELD THAT:- Issue stands concluded in favour of the Respondent Assessee and against the Appellant Revenue. This in view of the decision of this Court passed today on an identical question in Income Tax Appeal [2018 (1) TMI 900 - BOMBAY HIGH COURT] in respect of the same Respondent Assessee relating to assessment year 2002-03.
Head Office expenses allocation to deduction claimed un/S 80IA and 80IB when these units are managed/controlled by the Head Office - HELD THAT:- Tribunal has allowed the Appeal of the Respondent – Assessee by following the order of its coordinate bench in respect for assessment year 2002-03 by applying its rationale to disallow the allocation of head office expenses to profits derived from 100 percent export oriented units falling under Section 10B of the Act. The same reasoning was extended to hold that the head office expenses cannot be allocated out of profits derived from units claiming deduction under Section 80IA and 80IB of the Act.
Revenue is unable to show why the adoption of the reasoning to disallow allocation of profits of Section 10 B units to head office expenses cannot be extended to profits of Section 80 IA and 80 IB units.
Appeal of the Revenue from the order of the Tribunal for assessment year 2002-03 to this Court [2018 (1) TMI 900 - BOMBAY HIGH COURT] against the same Respondent Assessee on the issue of allowing head office expenses to profits derived under Section 10B of the Act was disallowed today by a separate order in Income Tax Appeal No.311 of 2005. In the absence of the Revenue's not being allowed to show why the same logic would not extend to units claiming deduction under Section 80IA and 80IB of the Act, we are following the same.
Claim of depreciation on 'goodwill', when the assessee had not claimed it in the return of income - HELD THAT:- Issue herein was also raised by the Revenue in [2018 (1) TMI 900 - BOMBAY HIGH COURT] in respect of the same RespondentAssessee relating assessment year 2002-03. We have by an order passed today not entertained the Income Tax Appeal on this issue / question. Accordingly, for the reasons mentioned in our order passed today this question does not give rise to any substantial question of law. Thus, not entertained.
Appeal admitted on question 1 - Whether on the facts and circumstances of the case and in law, the Tribunal was right in allowing the provision for leave salary when the Hon'ble Supreme Court decisions relied on by Tribunal were delivered before the introduction of Section 43B(f) and the judgment of the Calcutta High Court has been stayed by the Apex Court?
Dishonor of Cheque - repayment of loan not made - legally enforceable debt or not - offence punishable under Section 138 of NI Act - Acquittal of accused - HELD THAT:- It is manifest that the accused has failed to rebut the statutory presumptions under Sections 118 and 139 of the Act. The learned Magistrate was pleased to hold, and the finding is unexceptionable, that the defence of the accused that he issued the four cheques as donation, is not believable - It is true that the defence need not be conclusively established. However, the Court must be satisfied on the basis of the evidence adduced that the defence is reasonably probable.
Ii is satisfying that even if the test of preponderance of probabilities is applied, the accused failed to raise a defence which creates doubt about the existence of legally enforceable debt.
The nature of the initial burden of proof on the accused to rebut the statutory presumption under Section 139 is explained by the Hon'ble Apex Court in MS NARAYANA MENON @ MANI VERSUS STATE OF KERALA & ANR. [2006 (7) TMI 576 - SUPREME COURT] - The learned Magistrate has committed a serious error of law in not correctly appreciating the import and implication of statutory presumptions on the anvil of the position of law settled by the Hon'ble Apex Court.
The accused is convicted for offence punishable under Section 138 of the Act and is sentenced to payment of fine of ₹ 1,59,000/- and in default to undergo simple imprisonment for period of six months.
TPA - Loss on cancellation/roll over of Forward Foreign Exchange Contract (FFEC) - HELD THAT:- We find that the FAA had rejected the additional evidences produced by the assessee before him, that the assessee had submitted the Bloomberg data for five years, that the TPO in the AY.2009-10 accepted the five years data of Bloomberg and made no adjustment. In these circumstances, we are of the opinion that matter should be restored back to the file of TPO/AO for fresh adjudication to consider additional evidences filed by assessee before the FAA. He is directed to afford a reasonable opportunity to the assessee. Effective Ground of the appeal raised by the assessee is allowed in part.
Income arising from forward exchange contract is assessable as capital gain - See CITIBANK OVERSEAS INVESTMENT CORPN., MUMBAI [2013 (1) TMI 997 - ITAT MUMBAI]
TCS @ 1% on sale of alleged scrap - assessee in default within the meaning of Section 206C - A.O. found that the assessee has not submitted proof of filing of Form 27C nor it has obtained the same from the buyers of scrap - HELD THAT:- There is no dispute that the assessee is engaged in the business of trading of scraps obtained from Ship Breaking Yard. In our considered opinion, provisions of Section 206C do not apply in case of scrap generated in the course of ship breaking activity. Items generated out of ship breaking activity might be commercially known as “scrap” since such items are not waste and scrap. Since such items are re-useable. Once such items sold cannot be termed as “scrap” would make the provisions of Section 206C of the Act in applicable.
The items sold by the assessee do not fit into the category of scrap as explained in the case of Priya Blue Industries (P.) Ltd. [2015 (11) TMI 1216 - GUJARAT HIGH COURT]. Therefore, in our considered opinion, the assessee cannot be treated as an assessee in default and on the impugned sales cannot be treated as sale of scrap thereby making the assessee out of the purview of Section 206C of the Act.
Insofar as the submissions of Form 27C is concerned, the Hon’ble High Court of Gujarat in the case of Siyaram Metal Udyog (P.) Ltd. [2016 (7) TMI 68 - GUJARAT HIGH COURT] has held that “No time limit is provided in section 206C(1A) to make a declaration in Form 27C collected from buyers; mere minor delay in furnishing Form 27C would not make assessee liable for non-collection of TCS”.
We do not find any merit in the impugned demand raised by the A.O. - Decided in favour of assessee.
9911796707
