Addition u/s 40A(2)(a) - HELD THAT:- Since the facts and circumstances of the instant ground are mutatis mutandis similar to those of the immediately preceding year, respectfully following the precedent, we uphold the action of the ld. CIT(A) in holding that the provisions of section 40A(2) were not attracted and it is further held that the gross profit rate of 0.63% (0.54% as declared by the assessee plus addition of 0.09%) be applied. Thus, the grounds raised by the Revenue are dismissed and those of the assessee are partly allowed.
Deemed dividend addition u/s 2(22)(e) - HELD THAT:- As similar issue came up for consideration before the Tribunal in assessee’s own case for the A.Y. 2010-11. A detailed discussion has been made in the order for such year and eventually the matter has been restored to the file of AO for a fresh a decision. Admittedly, the facts and circumstances of the ground for the instant year are similar to those of the preceding year. Respectfully following the precedent, we set-aside the impugned order on this score and remit the matter to the file of AO for deciding this issue in conformity with the directions given by the Tribunal in its order for the preceding year.
Disallowance of interest u/s.36(1)(iii) - HELD THAT:- As AR submitted that similar issue was raised in the preceding year as well and the Tribunal was pleased to decide it against the assessee. In view of the candid admission made by the ld. AR, we countenance the impugned order on this score. This ground is not allowed.
Disabling the DIN of the petitioners - HELD THAT:- There shall be interim stay of the proceedings disabling the DIN of the petitioners. There shall be a further direction to the 1st respondent to restore the DIN numbers of the petitioners, pending disposal of this Writ Petition, so as to enable them to submit annual returns and financial statements of the active companies in which they are Directors.
Liquidation Order - Section 33(1) of the Insolvency & Bankruptcy Code - HELD THAT:- The liquidator should act in terms of the directions of the Appellate Tribunal and take steps under Section 230 of the Companies Act. If the members of the ‘Corporate Debtor’ or the ‘creditors’ approach the company through the liquidator for compromise or arrangement by making proposal of payment to all the creditor(s), the Liquidator on behalf of the company will move an application under Section 230 of the Companies Act, 2013 before the National Company Law Tribunal.
The steps should be taken for outright sale of the ‘corporate debtor’ so as to enable the employees to continue in service on such outright sale.
Unaccounted sales -Addition based on loose sheets found in search - difference in purchase of milk as per daily milk procurement sheets and as recorded in the books - HELD THAT:- The entire unaccounted sales cannot be added because there has to be some purchases and expenses related therewith. Therefore, making addition on the basis of profit margin is more logical and rationale. Moreover, though the daily milk procurement sheets were found but no document was found wherein the revenue can say that the assessee was also making undisclosed purchases. The most important fact which needs to be highlighted is that the Assessing Officer, in his whims and surmises, has considered the extrapolation for only two A. Ys whereas, if he was so confident about the seized documents and income therein, he should have extrapolated for the entire block period of six years. AO did not give any reason for this.
Considering the facts of the case in totality, we are of the considered opinion that the CIT(A) rightly deleted the additions made by the Assessing Officer but erred in sustaining the addition which, In our considered opinion, on facts discussed hereinabove, needs to be deleted also.
TP Adjustment - adjustment of the Arms Length Price "ALP" by as per the proviso to section 92C(2) - comparability Kerala state industrial Corp Ltd. - HELD THAT:- As stated on its website its team includes a core group of skilled professionals from various fields like Engineering, Management, Finance and Law. It has also to its credit a track record of attracting a commendable volume of investment to the State. The corporation has so far promoted more than 750 projects in the State and has played a vital role in the setting up of pioneering organizations such as Cochin International Airport Limited and many other companies.
It is apparent that the functional profile of this company is not comparable with the assessee. Further more in the comparable companies profile there are substantial trading activities for which no segmental account has been provided for. For these reasons we are of the opinion that the function of operating an air cargo complex and the function of carrying on a support services for baggage and passenger handling at the airport are not comparable. We direct the transfer pricing officer/officer to exclude the above comparable from the comparability analysis for determining the arm's-length price of the international transactions entered into by the assessee. - Appeal of the assessee is partly allowed.
No notice under section 143(12) - HELD THAT:- As evident from the above notice, it was served not on the assessee, but on one Abdul Wahid. The Department has not been able to show this notice to have been served on either the assessee, or on his agent. Therefore, the assessee is correct in contending that no notice under section 143(2) of the Act was served on him.
Thus as relying HARSINGAR GUTKHA P. LTD. [2008 (5) TMI 443 - ALLAHABAD HIGH COURT] on the entire proceedings in the present case, culminating in the impugned order, are held to be null and void and are quashed.
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The order (s) passed by Ld. Adjudicating Authority appointing ‘Interim Resolution Professional’, declaring moratorium, freezing of account and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action taken by the ‘Resolution Professional’, including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by the 1st Respondent under Section 9 of the I&B Code is dismissed.
The ‘Corporate Debtor’ is diirected to pay the total sum of ₹ 14.5 Lakhs towards fee and cost incurred by Mr. Sandeep Chandna, (Resolution Professional) within two weeks. So far as the ‘Financial Creditors’ who wanted to intervene and other ‘Operational Creditors’ who applied pursuant to the advertisement, this order will not come in their way to take recourse in accordance with law.
PE in India - net global profits - Attribution of profits to the PE in India in respect of hardware components of the telecom equipments and the mobile handsets as business profits under article 7 of the Indo-China DTAA - Measurement of profit - HELD THAT:- As decided in own case [2016 (6) TMI 329 - ITAT DELHI] we find that the level of operations carried out by assessee through its PE in India are considerable enough to conclude that almost entire sales functions including marketing, banking and after sales were carried out by PE in India and, therefore, keeping in view th decision of Rolls Royce [2007 (10) TMI 321 - ITAT DELHI-C] and Nortel Networks India International Inc. [2014 (6) TMI 941 - ITAT DELHI] we are of the opinion that it would meet the ends of justice if 35% of net global profits as per published accounts out of transactions of assessee with India are attributed to PE in India in respect of both hardware and software supplied by assessee to Indian customers. At this juncture we may point out that while deciding the department's appeal in subsequent part of this order, we have upheld the findings of ld. CIT(A) to tax the income from sale of software as business income and not royalty. We may point out that in AY 2009-10 the AO estimated the operating profits at 7.5% as against the weighted average of net operating profit at 2.53% as per the global accounts.
Taxability of software as royalty - HELD THAT:- As decided in own case [2016 (6) TMI 329 - ITAT DELHI] Receipts on account of supply of software were integrally connected to the supply of hardware and, therefore, AO was not right in taxing such receipts as royalty. In view of the decision of Hon'ble Delhi High Court in the case of DIT v. Nokia India [2012 (9) TMI 409 - DELHI HIGH COURT] software supplies could not be taxed even under the amended law - as per the provisions of Article 12(5) of the DTAA the supply of software being integral to the supply of hardware and the finding of existence of a PE of assessee in India, Article 12(5) of the DTAA would cease to apply and the provision of Article 7 would be applicable and, therefore, the income from software is to be taxed as business income. - Decided in favour of assessee
Levy of interest u/s 234B - Held that:- We find that the facts are almost identical to the facts as obtaining in the case of GE Packaged Power Inc. [2015 (1) TMI 1168 - DELHI HIGH COURT] which is the latest decision of Hon'ble Jurisdictional High Court on this issue and, therefore, respectfully following it we hold that assessee was not liable to pay interest u/s 234B.- Decided in favour of assessee
Dishonor of Cheque - Suit for realization of money - rebuttal of presumption - It is the definite case of the plaintiffs that Ext. A1 cheque was issued by the defendant to Ramachandran in discharge of a liability - HELD THAT:- It has come out in evidence that the proceedings under Section 138 of the N.I. Act was initiated against the defendant at the instance of the plaintiffs as C.C. No. 1500 of 1996 before the Judicial First Class Magistrate Court, Koyilandy. At the time of examining the defendant (accused in that case) under Section 313 of Cr.P.C., he has practically admitted that the statement given by the Bank Manager that signature seen on Ext. A1 is that of the defendant's own signature. This admission in a judicial proceedings by the defendant is a relevant piece of evidence. The defendant has not tried to explain away the admission in a manner known to law. Therefore, appreciation of evidence by the court below cannot be said to be proper in this case.
The court below had wrongly dismissed the suit - Appeal allowed.
Bogus LTCG - Addition u/s 68 - rejection of claim of exemption made u/s 10(38) - HELD THAT:- As assessee has filed all necessary evidences in support of the transactions. Some of these evidences are (a) evidence of purchase of shares, (b) evidence of payment for purchase of shares made by way of account payee cheque, copy of bank statements, (c) copy of balance sheet disclosing investments, (d) copy of demat statement reflecting purchase, (e) evidence of sale of shares through the stock exchange, (f) copy of demat statement showing the sale of shares, (g) copy of bank statement reflecting sale receipts, (h) copy of brokers ledger, (i) copy of Contract Notes etc.
The proposition of law laid down in various cited case laws by the Jurisdictional High Court as well as by the ITAT Kolkata on these issues are in favour of the assessee.
Jurisdiction to hear the present case - Restraint from invoking/encashing the bank guarantee - Section 9 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- It is evident that on the date, the District Judge, Patna transferred the case to the court of 5th Additional District Judge, Patna - There are no substance in the submission of learned counsel for the respondent that once the District Judge transferred the case to the court of learned 5th Additional District Judge, Patna who has concurrent jurisdiction with the District Judge, the order cannot be faulted on this ground alone. Since the statutory court was already notified by the State Government in exercise of power under Section 3 of the Commercial Courts Act and it was the District Judge posted in the Civil Court at Divisional Headquarter alone and no other District Judge or Additional District Judge. Hence, the court below had no jurisdiction to pass the impugned order. Therefore, impugned order is fit to be set aside on this ground alone.
Misconduct of proceedings - material irregularity - HELD THAT:- The impugned order would not reveal that what was the submission of the appellant before the court below. The appellant had raised the issue of locus of the respondent herein to bring the case. Appellant had raised the issue of jurisdiction of the court below to pass the order but nothing has been discussed in the impugned order - There is no dispute that every judicial order should contain objective reasons supported by material on the record and should also depict that there is no violation of natural justice. The impugned order suffers from aforesaid infirmity, hence, the same is not sustainable on this ground also.
Whether the respondent had no locus to bring the case for arbitration or to file application under Section 9 of the Arbitration and Conciliation Act, 1996? - HELD THAT:- Submission of the appellant is that M/s. SPML Infra Limited was the real party and the respondent herein was a proforma party as per the agreement for the reason that only a successful bidder could have been appointed as distribution franchisee and successful bidder was M/s. SPML Infra Limited and M/s. SPML Infra Limited had undertaken its liability under the agreement. Therefore, in absence of M/s. SPML Infra Limited, no order could have been passed or should have been passed by the court below.
The matter is remitted back to the Commercial Court, Patna to hear and pass necessary order according to law - Appeal allowed by way of remand.
Rejection of renewal of consent to operate - Section 27 of the Water Act and Section 21 of the Air Act - HELD THAT:- An appeal is a creature of statute and an appellate tribunal has to act strictly within the domain prescribed by statute. It is obvious that an appeal would lie from an order or decision of the appellate authority Under Section 28 of the Water Act to the NGT only Under Section 33B(a) of the Water Act read with Section 16(a) of the NGT Act. Similarly, an appeal would lie from an order or decision of the appellate authority Under Section 31 of the Air Act to the NGT only Under Section 31B of the Air Act read with Section 16(f) of the NGT Act. Obviously, since no order or decision had been made by the appellate authority under either the Water Act or the Air Act, any direct appeal against an original order to the NGT would be incompetent. NGT's jurisdiction being strictly circumscribed by Section 33B of the Water Act, read with Section 31B of the Air Act, read with Section 16(a) and (f) of the NGT Act, would make it clear that it is only orders or decisions of the appellate authority that are appealable, and not original orders.
On the facts of the present case, it is clear that an appeal was pending before the appellate authority when the NGT set aside the original order dated 09.04.2018. This being the case, the NGT's order being clearly outside its statutory powers conferred by the Water Act, the Air Act, and the NGT Act, would be an order passed without jurisdiction.
In the present case, it is clear that Section 16 of the NGT Act is cast in terms that are similar to Section 14(b) of the Telecom Regulatory Authority of India Act, 1997, in that appeals are against the orders, decisions, directions, or determinations made under the various Acts mentioned in Section 16. It is clear, therefore, that under the NGT Act, the Tribunal exercising appellate jurisdiction cannot strike down Rules or Regulations made under this Act. Therefore, it would be fallacious to state that the Tribunal has powers of judicial review akin to that of a High Court exercising constitutional powers Under Article 226 of the Constitution of India - the State Government order made Under Section 18 of the Water Act, not being the subject matter of any appeal Under Section 16 of the NGT Act, cannot be "judicially reviewed" by the NGT.
We are cognizant of the fact that the Respondent's plant has been shut down since 09.04.2018. Since we have set aside the impugned judgments of the NGT on the ground of maintainability, the order dated 22.01.2019 passed by the TNPCB, being a consequential order, is also set aside - Appeal disposed off.
The Supreme Court of India dismissed the civil appeal, stating they are not inclined to interfere with the impugned order. The appellant can raise all contentions before the National Company Law Tribunal.
Hawala Transactions - complex economic offence of sending foreign exchange abroad to foreign companies in Dubai and Hongkong through "hawala" - Maintainability of revision petition against order of issue of process - necessity of recording reasons for its satisfaction of sufficient grounds for issuance of summons - cognizance of an offence Under Section 190(1) (b) Code of Criminal Procedure - HELD THAT:-It is well-settled that at the stage of issuing process, the Magistrate is mainly concerned with the allegations made in the complaint or the evidence led in support of the same and the Magistrate is only to be satisfied that there are sufficient grounds for proceeding against the Accused. It is fairly well-settled that when issuing summons, the Magistrate need not explicitly state the reasons for his satisfaction that there are sufficient grounds for proceeding against the Accused.
Under Section 190 (1)(b) Code of Criminal Procedure, where the Magistrate has taken cognizance of an offence upon a police report and the Magistrate is satisfied that there is sufficient ground for proceeding, the Magistrate directs issuance of process. In case of taking cognizance of an offence based upon the police report, the Magistrate is not required to record reasons for issuing the process - In a case based upon the police report, at the stage of issuing the summons to the Accused, the Magistrate is not required to record any reason. In case, if the charge sheet is barred by law or where there is lack of jurisdiction or when the charge sheet is rejected or not taken on file, then the Magistrate is required to record his reasons for rejection of the charge sheet and for not taking on file. In the present case, cognizance of the offence has been taken by taking into consideration the charge sheet filed by the police for the offence Under Sections 420, 465, 467, 468, 471, 477A and 120B Indian Penal Code, the order for issuance of process without explicitly recording reasons for its satisfaction for issue of process does not suffer from any illegality.
Whether revision Under Section 397(2) Code of Criminal Procedure against order of issue of process is maintainable? - HELD THAT:- While hearing revision Under Section 397 Code of Criminal Procedure, the High Court does not sit as an appellate court and will not reappreciate the evidence unless the judgment of the lower court suffers from perversity. Based on the charge sheet and the materials produced thereon when the Magistrate satisfied that there are sufficient grounds for proceeding, the learned Single Judge was not justified in examining the merits and demerits of the case and substitute its own view. When the satisfaction of the Magistrate was based on the charge sheet and the materials placed before him, the satisfaction cannot be said to be erroneous or perverse and the satisfaction ought not to have been interfered with - while taking cognizance of an offence based upon a police report, it is the satisfaction of the Magistrate that there is sufficient ground to proceed against the Accused.
When the prosecution relies upon the materials, strict standard of proof is not to be applied at the stage of issuance of summons nor to examine the probable defence which the Accused may take. All that the court is required to do is to satisfy itself as to whether there are sufficient grounds for proceeding. The learned Single Judge committed a serious error in going into the merits and demerits of the case and the impugned order is liable to be set aside.
Correction in GST registration certificate - permission to file returns as per provision of the Uttarakhand GST Act, 2017 - permission to submit form GST TRAN-01, through common portal and treat it, filed within time - HELD THAT:- It is settled proposition of law that no one should be left remediless. Since remedy is not available to the petitioner-company, the petitioner- company could not submit its monthly returns and GST TRAN-1 within time solely for the reason that after closure of portal uploading of information is not possible in any way. Besides this, the respondents themselves have allotted defective registration certificate to the petitioner-company and they cannot punish the petitioner-company for their own fault.
This court is of the view that as the petitioner- company could not file its monthly return in regard to payment of GST within time due to no fault of it and the portal got closed and cannot be operated offline, therefore, it is directed that the respondents shall open the portal forthwith so as to enable the petitioner-company to file its monthly returns and GST TRAN-1 within 10 days from today - Petition disposed off.
Depreciation on “license to collect toll" considering it as an intangible asset in terms of section 32(1)(ii) - AO disallowed assessee‟s claim holding that no intangible asset has been acquired by the assessee - HELD THAT:- The issue raised in present appeal was considered by the Co-ordinate Bench of the Tribunal in the case of M/s. Ashoka Infrastructure Limited Vs. ACIT[2013 (8) TMI 588 - ITAT PUNE].wherein held that “right to collect toll‟ is an intangible asset and the assessee is entitled to claim depreciation on same. We find that consistent view has been taken by the Tribunal in various other cases where depreciation has been claimed on “right to collect toll‟, considering it to be an intangible asset.
Tribunal in the case of ACIT Vs. M/s. Progressive Construction Limited [2017 (3) TMI 1167 - ITAT HYDERABAD] has held that National Highway constructed on BOT basis gives rise to an intangible asset in the form of right to collect toll charges u/s. 32(1)(ii) and the assessee is eligible to claim depreciation on such asset. Thus, in view of the above decisions of the Tribunal we find no infirmity in the impugned order. Accordingly, the same is upheld and the appeal of Revenue is dismissed being devoid of any merit.
Miscellaneous application by Revenue recalling order passed by the Tribunal - HELD THAT:- Perusing the material on record and the order passed by Tribunal we observe that ground No.4 & 5 were not adjudicated by the tribunal while passing the order and to that extent order of the Tribunal needs to be recalled. Accordingly, the order of the Tribunal is recalled to the extent of ground No.4 & 5 to be heard and decided afresh.
Addition u/s 40A(2)(b) - HELD THAT:- We find it is a case of addition both on account of ad-hocism and on account of lack of comparable cases. Neither the Assessing Officer nor the CIT(A) gathered any comparable cases from the open market with similar line of business activity before holding the payments are excessive or unreasonable. In our considered opinion, such ad-hocism is unacceptable and unsustainable. Therefore, in our opinion, grounds raised by the assessee should be allowed in full for want of Assessing Officer failures to discharge the onus. It is a settled legal proposition in matters of principles of provisions to section 40A(2)(b) Assessing Officer is under obligation to prove that the claims made by the assessee are unacceptable. This is a case where the assessee demonstrated the primary onus by furnishing the basic facts.
Disallowance u/s 14A read with Rule 8D(2)(ii) - AO noted that the assessee earned exempt income by way of dividend and PPF interest - CIT(A) directed the Assessing Officer to delete the disallowances and rework the same - HELD THAT:- We find the CIT(A) merely directed to the Assessing Officer to delete the addition and rework the disallowance. In our view, the said direction is fair and reasonable and it does not call for any interference. It is not brought to our notice on the outcome of such direction before the Assessing Officer. Therefore, the Assessing Officer is directed to take a view in this matter at the earliest after considering the existing law on this issue. We do not find any reason why the Assessing Officer should make any disallowance under clause (ii) of Rule 8D(2) of the Rules when the assessee is having adequate interest-free own funds like profits of the year and capital account balances etc. Accordingly, the ground no.4 raised by the assessee is allowed for statistical purposes.
Maintainability of appeal - non-compliance with the requirement of the pre-deposit - Section 129E of the Customs Act, 1962 - HELD THAT:- A bare perusal of Section 129E indicates that the Tribunal shall not entertain any Appeal unless the appellant has deposited 7½% of the duty, in case where duty or duty and penalty are in dispute, in pursuance of a decision or an Order appealed against. The second proviso stipulates that the provisions of this Section shall not apply to the stay Applications and Appeals pending before any Appellate Authority prior to the commencement of the Finance Act, 2014.
The amended provision of Section 129E of the Act came into force on 6 August, 2014. It provides that Tribunal shall not entertain any Appeal unless the appellant has deposited 7½% of the duty, in case where duty or duty and penalty are in dispute, in pursuance of the decision appealed against. The second proviso makes the position absolutely clear as it provides that the provisions of Section 129E shall not apply to Stay Application and Appeals pending before any Appellant Authority prior to the commencement of the Finance Act 2014. In other words, only those Appeals and stay Application which are pending before the Tribunal before 6 August, 2014 would continue to be governed by the old provisions.
The requirements set out in Section 129E of the Act as amended on 6 August 2014 have to be satisfied in regard to Appeals filed on or after 6 August, 2014. The contention of the learned consultant for the appellant that the provisions of the amended provisions of Section 129E of the Act would apply to Appeals in which show cause notices were issued on or after 6 August, 2014 cannot, therefore, be accepted - appellant has not made the requisite pre-deposit and has made a plea that the unamended provision of Section 129E under which there was a discretion with the Tribunal to waive the requirement of pre-deposit on certain conditions, should be made applicable.
Dishonor of cheque - petitioners herein were the nominee Directors - in-charge of the affairs of the company or not - HELD THAT:- Undisputedly, the cheques in question were issued by accused No. 1-Company in discharge of the debt alleged to have been due by the company and said cheques have been dishonoured, which has given rise to initiation of the action for the offence under Section 138 of the Act. In the complaint filed under Section 200 of Cr.P.C., the respondent/complainant has specifically averred that the cheques in question were issued by accused No. 1-Company and the same was signed by accused No. 5, who was Deputy General Manager and the authorized signatory of accused No. 1-Company.
The issue no more res-integra in view of the specific provisions contained in Section 141 of the Act and the law laid down in catena of judgments of the Apex Court including the decision referred to by the learned counsel for the petitioners. Section 141 of the Act provides that, when an offence is committed by the company, the officer in-charge, who was responsible to the company for conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
In the instant case, the petitioners herein are sought to be prosecuted solely in their capacity as the Directors of the Company. There is absolutely nothing in the entire complaint to indicate that the petitioners herein were in the management of the affairs of the company either at the time of issuance of cheques or at the time of its dishonour - the prosecution of the petitioners for the alleged offence is contrary to provisions of Section 141 of the Act and is liable to be quashed.
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