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Showing 181 to 200 of 2075 Records
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2019 (3) TMI 1900
Revision u/s 263 - CIT observed that the assessee has made (i) provision for payment of interest on fixed deposit and (ii) provision for election/general body expenditure which was not examined - HELD THAT:- We found that in the revision proceedings the assessee has not produced any proof in support of its claim and the method of accounting. Further, in respect of second issue of provision for election/general body expenditure even before the Tribunal, the learned AR could not substantiate with evidence in respect of the claim. Therefore, we, considering the facts and circumstances and the financial statements, are of the substantive opinion that though the AO has called for information in assessment proceedings in respect of other issues and there is no finding/observation on the above two disputed issues in the assessment order. We find that the CIT’s action in revision proceedings that the AO has not made proper inquiry cannot be overlooked. Accordingly, we are not inclined to interfere with the order of the CIT on the disputed issues and affirm the same and dismiss the ground of appeal of the assessee.
Order passed by the CIT is ex-parte - HELD THAT:- Prima facie, the CIT(A) has passed the order considering the findings of the AO and there is no representation by the assessee or by the learned AR on the date of hearing. Further, the notice of hearing was sent on 11/08/2016 posting the case on 24/08/2016, being only one hearing provided to the assessee. Therefore, we, considering the principles of natural justice and the facts of the case and the assessee being a co-operative society, restore this disputed issue to the file of the AO to meet the ends of justice and AO shall call for the details and examine the claims.
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2019 (3) TMI 1899
Oppression and mismanagement - notice of the meeting not received by appellant - appellant submits that there is a continuous cause of action - Section 241 and 242 of the Companies Act - HELD THAT:- There is nothing on record to suggest that act of oppression and the meeting held on 30th September, 2009 has not been given effect or any action by the company or any of the decision was taken at the AGM held on 30th September, 2009 which was under challenge in the petition under Section 241 and 242 in the year 2018 i.e. after 9 years.
The application is barred by limitation and the Tribunal has rightly dismissed the appeal - Appeal dismissed.
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2019 (3) TMI 1898
Grant of Regular Bail - requirement to deposit money as a condition for releasing the accused on bail - permission to deposit money in lieu of executing bond and with one/two sureties in the like amount - HELD THAT:- In the present case, learned Additional Sessions Judge, Gurugram while granting regular bail to the petitioner has asked him to furnish bail/surety bonds to the satisfaction of the trial Court subject to deposit of an amount of ₹ 5 lacs. The petitioner is a woman, and is aggrieved by the condition to deposit an amount of ₹ 5 lacs being financially weak and is not in a condition to deposit huge amount as there is also a matrimonial dispute with her husband and divorce petition is also pending. The condition to deposit such amount appears to be unreasonable and arbitrary. Moreover, there is no provision under the Cr.P.C. to deposit the amount in cash as a condition precedent for grant of bail. However, the Court may permit the person to deposit money in lieu of executing bond and with one/two sureties in the like amount. Granting or declining the bail depends upon the facts and circumstances of each case, which is within the exclusive discretion of Court of law or authority. However, such direction is to be exercised by the Court by considering facts and circumstances of the case.
Once the Court comes to the conclusion on facts and circumstances of the case that a person is entitled to be released on bail, then no such condition other than as provided in Section 437 (3) or 438 (2) Cr.P.C. can be imposed. Imposition of such unreasonable condition is not only beyond the purview of the provisions of the Cr.P.C. but also beyond the powers of the Court.
The condition to deposit an amount of ₹ 5 lacs in cash, imposed by learned Additional Sessions Judge, Gurugram vide order dated 14.05.2018 while granting bail to the petitioner is unreasonable and arbitrary and the same is liable to be set aside - the present petition is partly allowed.
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2019 (3) TMI 1897
Addition on account of share application/share premium/unexplained cash credit u/s 68 - HELD THAT:- We observe that the assessee has filed all the necessary evidences to prove identification , genuineness of the transactions and creditworthiness of the investors in the assessment proceedings as well as appellate proceedings. The assessee has discharged the onus cast upon it whereas the AO has not done any further verification and investigation to disapprove the evidences filed by the assessee.
AO only harped on the statement of Shri Praveen Kumar Jain which has been retracted later on. Moreover out of five investor, two namely Javda India Impex Ltd and Kush Hindustan Entertainment Ltd were already considered by the coordinate bench of the tribunal Hyderabad in the case of M/S Komal Agrotech Pvt Ltd [2017 (7) TMI 605 - ITAT HYDERABAD] wherein the Tribunal held that addition made u/s 68 is bad in law. We also find merits in the arguments of the ld AR that the share capital and share premium can not be added u/s 68 in view of the proviso to section 68 as that is effective and applicable from 1.4.2013.We have perused the decisions relied upon by the assessee and are of the opinion that the case is squarely covered by them. Accordingly we do not find any infirmities in the order of CIT(A) who has passed a very reasoned order and accordingly appeal of the revenue is dismissed.
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2019 (3) TMI 1896
Alternative remedies - Withdrawal of Writ petition - HELD THAT:- After arguing for sometime, the petitioner, who appears in-person states that he may be allowed to withdraw the present writ petition with liberty to take recourse to the alternative remedies as are available to him, in accordance with law.
Dismissed as withdrawn. It shall, however, be open to the petitioner to take recourse to the remedies as may be available to him, in accordance with law.
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2019 (3) TMI 1895
Dishonor of Cheque - cheques were issued under agreement to sell - legally enforceable debt or not - HELD THAT:- Admittedly, the cheques were issued under and in pursuance of the agreement to sell. Though it is well settled that an agreement to sell does not create any interest in immoveable property, it nonetheless constitutes a legally enforceable contract between the parties to it. A payment which is made in pursuance of such an agreement is hence a payment made in pursuance of a duly enforceable debt or liability for the purposes of Section 138 - Moreover, acting on the General Power of Attorney, the Respondent entered into a subsequent transaction on 3 August 2013. Evidently that transaction was after the legal notice dated 21 June 2013 and hence could not have been adverted to in the legal notice. Recourse to the jurisdiction of the High Court Under Section 482 was a clear abuse of process.
The question as to whether there was a dispute as contemplated in Clause 4 of the Agreement to Sell which obviated the obligation of the purchaser to honor the cheque which was furnished in pursuance of the agreement to sell to the vendor, cannot be the subject matter of a proceeding Under Section 482 and is a matter to be determined on the basis of the evidence which may be adduced at the trial.
The order passed by the High Court in the petition Under Section 482 Code of Criminal Procedure was unsustainable - Appeal allowed.
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2019 (3) TMI 1894
Disallowance u/s. 36(1)(ii) bonus and commission paid to the directors as per agreements of appointment - CIT(A) made disallowances of bonus & commission to Directors by stating that these were not linked to any specific efforts and without going through the evidence filed before him - HELD THAT:- As payments in question was made to directors of the assessee company. These payments were made pursuant to agreements for payment of bonus and commission copies of which were furnished to the Revenue. The payments were made within the limit prescribed by law. CIT(A) upheld the disallowance on the ground that the agreements are generally worked. In our view, this is not a valid ground to make this disallowance. Agreements are to be understood in such a way in which both the parties to the agreement, desired and understood. Section 36(1)(ii) does not apply in this case. Hence, we allow the grounds of the assessee.
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2019 (3) TMI 1893
Taxability of receipts of 'standby maintenance charges' in India - 'Fee for technical services' under section 9(1)(vii) - Appellant submits that the receipt of Standby Maintenance Charges from TCL is not taxable in India as the whole activity have been carried out outside India during the year under consideration - HELD THAT:- As decided in own case [2018 (5) TMI 2070 - ITAT MUMBAI] we notice that in Assessment Years 2001-02 to 2008-09, the Tribunal vide order [2015 (6) TMI 806 - ITAT MUMBAI] has dealt with similar issue, of course qua the revenues earned from “Restoration Services”. On this aspect, the Tribunal held such receipts to be in the nature of “business income‟, and after holding so, the Tribunal went on to deduce the method in terms of which the revenue could be apportioned to India operations in order to determine the income taxable in India.
Tribunal deemed it fit to apportion the revenue on the basis of length of cable in the territorial waters of India. Though the decision has been rendered with respect to the restoration activity, so however, the methodology which has been found to be reasonable by the Tribunal is based on the fraction of length of entire cable system connected to India in its territorial waters. Drawing an analogy from the same, in the instant case too, we find that the standby maintenance charges recovered by the assessee from TCL only qua the length of cable in the territorial waters of India needs to be considered for computing the profits or income accruing to the assessee u/s 9(1)(i)
Reasoning advanced by the Revenue to the effect that the standby maintenance charges are linked to the cable capacity is of no consequence for the present inasmuch as what is required to be decided is the income attributable to the business connection in India, which possibly is the length of the cable in the territorial waters of India - it is only the revenue from TCL which is on account of standby maintenance charges proportionate to the cable length in India that deserves to be considered for computing the profit or loss from standby maintenance activity attributable to India in terms of Sec. 9(1)(i) of the Act. Therefore, on this aspect, we uphold the plea of the assessee and direct the Assessing Officer to verify the calculation made by the assessee in this regard in its computation of income and recompute the income accordingly.
Computation of the income from standby maintenance activities attributable in India - HELD THAT:- We find that the standby maintenance charges recovered by the assessee from TCL only qua the length of cable in the territorial waters of India needs to be considered for computing the profits or income accruing to the assessee u/s 9(1)(i) of the Act. The reasoning advanced by the Revenue to the effect that the standby maintenance charges are linked to the cable capacity is of no consequence for the present inasmuch as what is required to be decided is the income attributable to the business connection in India, which possibly is the length of the cable in the territorial waters of India. Therefore, in our view, it is only the revenue from TCL which is on account of standby maintenance charges proportionate to the cable length in India that deserves to be considered for computing the profit or loss from standby maintenance activity attributable to India in terms of Sec. 9(1)(i) of the Act. Therefore, on this aspect, we uphold the plea of the assessee and direct the Assessing Officer to verify the calculation made by the assessee in this regard in its computation of income and recompute the income accordingly. Thus, on this aspect, assessee succeeds as above.
Charging of interest u/s 234B - HELD THAT:- As a settled proposition in terms of the judgment of Hon'ble Bombay High Court in the case of NGC Network Asia LLC, [2009 (1) TMI 174 - BOMBAY HIGH COURT] that there would be no chargeability of interest u/s 234B of the Act as the receipts on account of standby maintenance charges from TCL are subjected to withholding tax u/s 195 of the Act. On this aspect, it was also a common point between the parties that the said proposition has also been affirmed by the Tribunal in assessee’s own case in the orders. Thus, on this aspect, assessee succeeds.
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2019 (3) TMI 1892
Income from house property - deemed income from unsold unit/flats which was the closing stock of the assessee under the year of consideration in view of the provisions u/s 22 & 23 - charging notional income considering Annual Letting Value of unsold flats which is closing stock of the appellant - HELD THAT:- We noticed that the factual position of the present case is quite similar to the factual position of decision of the Hon’ble ITAT in the case of Ferani Hotels Pvt. Ltd [2018 (12) TMI 1870 - ITAT MUMBAI] wherein held assessee is engaged in business of construction and development, which is main object of the assessee company. The three flats which could not be sold at the end of the year was shown as stockin- trade. Estimating rental income by the AO for these three flats as income from house property was not justified insofar as these flats were neither given on rent nor the assessee has intention to earn rent by letting out the flats. The flats not sold was its stock-in-trade and income arising on its sale is liable to be taxed as business income. Accordingly, we do not find any justification in the order of AO for estimating rental income from these vacant flats u/s.23 which is assessee‟s stock in trade as at the end of the year. Accordingly, the AO is directed to delete the addition made by estimating letting value of the flats u/s.23.
Since the case of the assessee has duly been covered by the decision of Ferani Hotels Pvt. Ltd, therefore, in the said circumstances by honoring the said decision, we deleted the addition raised by AO on account of notional income of the vacant flats. Accordingly, these issues are decided in favour of the assessee against the revenue.
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2019 (3) TMI 1891
Recovery proceedings - attachment orders of property with co-owners - HELD THAT:- No doubt, as per the provisions of Transfer of Property Act,1882, against the share of the property of the defaulter proceedings can be initiated since the respective sharers are entitled to transfer their shares without specifying that the transfer is to take effect on any particular share or shares of the transferer as guided by Section 47 of Act,1882. Therefore the contention advanced by learned counsel for the petitioner that a co-ownership property cannot be sold without effecting partition cannot be sustained under law. The share is also not specifically mentioned in Ext.P2 document, therefore it is clear that, the parties have got equal share over the property in question in accordance with the provisions of Section 45 of the Transfer of Property Act.
Petitioner is not entitled to succeed in the contention advanced with respect to the property held by the petitioner in co- ownership with her husband. After evaluating the situation and hearing respective counsel across the Bar, this writ petition is disposed of, directing the respondents not to proceed against the share of the property held by the petitioner in co-ownership with her husband if she has no liability against the proceedings initiated by the 4th respondent. The property in co-ownership held by the husband can be proceeded with by the respondents.
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2019 (3) TMI 1890
Disallowance of additional depreciation - HELD THAT:- The assessee being resident corporate entity was stated to be engaged in manufacturing of flexible packaging material, printing cylinders & metallized films.
During assessment proceedings, upon perusal of depreciation schedule, it transpired that the assessee claimed additional depreciation u/s 32(1)(iia) on the additions made in fixed assets used for the period of less than 180 days in AY 2012-13. Similar claim was made in the impugned AY and therefore, AO proceeded to disallow the same on the ground that the concerned plant & machinery was already used in various preceding years and it was no longer new plant & machinery. Although the assessee defended the same on the strength of certain judicial pronouncements, however, not convinced, the additional depreciation was disallowed and added to the income of the assessee.
We drew attention to the fact that the Tribunal has confirmed the stand of Ld. first appellate authority for immediately preceding AY 2012-13 [2019 (1) TMI 1899 - ITAT MUMBAI] and therefore, the matter stood covered in assessee’s favour.
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2019 (3) TMI 1889
Addition u/s 50C - sale consideration declared by the assessee is less than the value as per stamp duty valuation authority - fair market value as per AIR information - valuation of the property to DVO to ascertain the FMV - consideration declared by the assessee is less than the value as per stamp duty valuation authority - CIT(A) deleted the addition on the ground that difference between the fair market value as per DVO report and agreement value which is 5.8% approximately - HELD THAT:- CIT(A) deleted the addition on the ground that difference between the fair market value as per DVO report and agreement value comes to around 5.8% approximately and Ld. CIT(A) by relying on the decision of Hon’ble Supreme Court in the case of C.B. Gautam [1992 (11) TMI 1 - SUPREME COURT] and decision of Krishna Enterprises [2016 (12) TMI 52 - ITAT MUMBAI] decided the issue in favour of the assessee by holding that the difference between the fair market value as per DVO and the value as per agreement is around 5.8% which is not to be considered for making addition under section 50C and thus deleted the addition - We do not find any infirmity in the order of Ld. CIT(A) or any reason to deviate from the finding of the Ld. CIT(A). Accordingly, we uphold the order of Ld. CIT(A) by dismissing the appeal of the Revenue.
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2019 (3) TMI 1888
Exemption u/s 11 - application for registration under section 12A of the Act has been granted by the Commissioner on a later date - Assessee submits that it has been granted registration u/s 12AA of the Act vide order dated 18.08.2015 and therefore, the benefit of exemption u/s 11 should be granted to it for the year under consideration in view of the proviso inserted to sub-section (2) of section 12A - HELD THAT:- The assessee was granted registration on 18.08.2015 i.e. the date on which appellate proceedings were pending before the CIT(A). In number of judicial precedents, it has been held that the proceedings before the CIT(A) are continuation of assessment proceedings and once the assessee has been granted registration, then the conditions prescribed in the proviso to section 12A(2) of the Act need to be applied and the assessee in such circumstances, is entitled to the exemption under sections 11 and 12 of the Act. Accordingly, we hold so. In such facts and circumstances, we direct the Assessing Officer to allow the aforesaid benefit of exemption under sections 11 and 12 of the Act to the assessee in the present case and determine the tax liability accordingly.
In the facts of the case before us, the assessee has received 12A registration certificate, which is dated 18.08.2015. The CIT(A) has acknowledged the same and copy of the said certificate is also available before us. In such circumstances, the ratio laid down by the Delhi Bench of Tribunal in Bulandshahr Development Authority [2017 (12) TMI 915 - ITAT DELHI] is not applicable to the facts of the present case. Accordingly, we reverse the order of CIT(A) in this regard and direct the Assessing Officer to allow exemption under sections11 and 12 of the Act, in view of proviso to section 12A(2) - Decided in favour of assessee.
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2019 (3) TMI 1887
TP Adjustment - comparable selection - absence of segmental data - HELD THAT:- WIPRO Technology Limited disqualifies to become a comparable uncontrolled transaction for the purposes of inclusion in the final list of comparables under Rule 10B(1)(e)(ii).
Persistent Systems Limited - DR stated that more than 80% of the revenue is not from contribution of products and since the significant part of the revenue is from sale of software services, there is no need for any segmental accounts - Even if there is a miniscule element of some revenue from other segments, it would necessitate the segmental data because, in the absence of accuracy, result could be widely off the mark. In our understanding of the law, the transfer pricing exercise in the profit and loss filter to be adopted invariably is premised upon accuracy as opposed to approximation with respect to operating cost and operating profitsthe nature of the transaction and the appropriate filter determines the elements that are to be considered in TNMM. Therefore, the costs, sales and assets employed wherever relevant are to be applied. From this perspective, the revenue’s contention that segmental data was available, cannot be accepted. The mere availability of proportion of the turnover allocable for software product sales per se cannot lead to an assumption that segmental data for relevant facts was available to determine the profitability of the concerned comparable.
Persistent Systems and Solutions Ltd -For our detailed reasons given in the case of Persistent Systems and Solutions Ltd, this company is also directed to be excluded from the final list of comparables.
Zylog Systems Ltd.n the absence of segmental data, we direct for exclusion of this company from the list of comparables.
Addition towards Licence expenses - HELD THAT:- As the assessee raised invoices on certain customers in India including Idea Cellular Ltd. for upgradation of Aircom Tools. The invoice value has been shown as its income and the amount paid to its AE has been shown as Licence fee in its Annual accounts. We are at loss to appreciate as to how the assessee can be said to have created an `Intangible asset' by paying the Licence fee to its AE in respect of sales made. Such payment @ 45% of the invoice value was the obligation of the assessee ab initio without which it could not have procured the licnence of ENTERPRISE suite for sale in India. This amount can be loosely characterized as cost of goods transferred to the customers in India, which has necessarily to be allowed as a revenue expenditure. We, therefore, overturn the impugned order on this score and direct the deletion of addition made by the Assessing Officer.
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2019 (3) TMI 1886
Deduction u/s 80IB - income derived from the sale of reject coal and iron ore fine dust - HELD THAT:- Admit following question of law arises - “Did ITAT fall into error in holding that the income derived from the sale of reject coal and iron ore fine dust was entitled for deduction under Section 80-IB of the Income Tax Act having regard to the decision of the Supreme Court in Liberty India vs. Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] and Commissioner of Income Tax-II vs. Punjab Stainless Steel Industries [2001 (7) TMI 120 - SUPREME COURT]?
Write-off in respect of advances given - HELD THAT:- Additional question of law arises in this appeal:- Whether the ITAT erred in holding that the write-off in respect of advances given to M/s Bear Logistics LLC was justified having regard to the decision of the Supreme Court in Southern Technologies Ltd. [2010 (1) TMI 5 - SUPREME COURT]?
Inclusion of local taxes and duties in the turnover - Revenue urges on this aspect that the assessee produce powers for its captive unit and therefore the sale claimed by it was notional. Furthermore, it is stated that the local taxes collected were not in fact paid to the concerned State Governments - HELD THAT:- This Court is of the opinion that the orders of the lower appellate authorities including ITAT cannot be faulted. Although, the transaction involved a notional sales nevertheless they have commercial element in as much as they were deemed to be sales and consequently included in the return of the local tax turnovers, filed by the assessee. As a consequence, the decision of the lower appellate authorities and the ITAT are affirmed on this aspect.
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2019 (3) TMI 1885
Applicability of Additional Duty of Customs on the ATF - HELD THAT:- The Committee decided that as the Air India agrees as regards the applicability of Additional Duty of Customs on the ATF, as adjudged in the adjudication order dated 12.04.2017, the appropriate course of action, in the circumstances of the case, would be that the department would not press for recovery of the said amount around ₹ 1.5 crore for the period November 2010 to June 2012 and in due course would process it for write off as a special case, if Court approves the recommendations of the Committee.” Mr. Radhakrishnan, learned senior counsel submits that these Civil Appeals may be disposed of in terms of the aforesaid paragraphs 6 and 7 of the Minutes.
Appeal disposed off.
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2019 (3) TMI 1884
CENVAT Credit - input services - Management Consultancy Service - effect of amendment of the definition of input service w.e.f. 1-4-2011 - HELD THAT:- Under the unamended provisions (effective up to 31-3-2011), the phrase ‘activities relating to business’ was specifically finding place in the inclusive part of the definition of ‘input service’. The inclusive definition in a fiscal statute is a well recognized device to enlarge the meaning of the word defined and it expands the meaning of the basic definition. If the expenses incurred by the assessee for using the disputed services are meant for accomplishing the business activities and also the same form part of the cost of the ultimate services provided by it, then the same should be considered as ‘input service’ under such definition clause. The effect of amendment of the definition of input service w.e.f. 1-4-2011 is that certain services namely, Health Insurance, etc., were excluded from the purview of definition of input service, in the eventuality, when the said excluded category of service(s) are used primarily for personal use or consumption of any employee.
Cenvat credit of service tax paid on such service(s) should not be considered as input service, entitling an assessee to avail Cenvat credit thereon - the nature of use of the disputed services as explained by the appellant was not properly addressed by the original authority in the impugned order passed by him - the ratio of the judgments relied upon by both sides to conclude that the Cenvat benefit on the disputed services would not be available to the appellant, not considered.
The matter should be remanded to the original authority for a proper fact finding on issue of eligibility of Cenvat credit on the disputed services - other aspects involved in the case also require proper adjudication - Appeal allowed by way of remand.
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2019 (3) TMI 1883
TP Adjustment - comparable selection - comparability of ICRA Online Ltd. - HELD THAT:- The comparability of ICRA Online Ltd. was considered by the Tribunal in case of Temasek Holding Advisors India Pvt. Ltd.[2013 (9) TMI 48 - ITAT MUMBAI] . The Tribunal accepted this company as comparable. That being the case, we direct the Assessing Officer to include this company as a comparable.
IDC (India) Ltd. - Tribunal is in favour of including this company as a comparable in case of an investment advisory service provider. See M/S. GENERAL ATLANTIC PVT. LTD. VERSUS THE DCIT-3 (1) , AAYAKAR BHAVAN, MUMBAI [2015 (11) TMI 1506 - ITAT MUMBAI]
Informed Technologies India Ltd. - Hon'ble Jurisdictional High Court in CIT v/s Temasek Holdings Advisors India Pvt. Ltd [2013 (9) TMI 48 - ITAT MUMBAI] has upheld the decision of the Tribunal accepting this company as a comparable to an investment advisory service provider. There being no material difference in facts involved on the basis of which the Tribunal in Temasek Holdings Advisors India Pvt. Ltd. (supra), has accepted this company as a comparable, we hold that Informed Technologies India Ltd., should be treated as comparable.
Motilal Oswal Private Equity Advisors Pvt. Ltd.- As decided in BLACKSTONE ADVISORS INDIA PVT. LTD. AND VICE-VERSA [2018 (11) TMI 1732 - ITAT MUMBAI] upheld the decision of the learned Commissioner (Appeals) in rejecting this company as a comparable to an investment advisory service provider. Thus we direct the Assessing Officer to exclude this company from the list of comparables.
Ladderup Corporate Advisory Pvt. Ltd. - This company has been rejected as a comparable to an investment advisory service provider. Though, these decisions of the Tribunal pertain to different assessment years, however, the basic facts on which the company has been rejected as a comparable remain same. In view of the aforesaid, we direct the Assessing Officer to exclude Ladderup Corporate Advisory Pvt. Ltd. from the list of comparable. Assessee’s appeal is partly allowed.
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2019 (3) TMI 1882
Late payment of Employees's Contribution to PF / ESIC u/s 36(l)(va) beyond the grace period - Addition u/s 36(1)(va) r.w.s. 2(24)(x) of the I.T Act on account of late deposit of employees contribution to PF/ESI - HELD THAT:- We find that though said payments were not made within the stipulated time period as envisaged in the respective acts, however, the same were admittedly deposited before the “due date” of filing of the return of income of the assessee for the year under consideration viz. A.Y 2011-12.
As deliberated on the issue before us and are of the considered view that as held by the Hon'ble High Court of Bombay in the case of Commissioner of Incometax (Central), Pune Vs. Ghatge Patil Transports Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] and CIT Vs. Hindustan Organics Chemicals Ltd. [2014 (7) TMI 477 - BOMBAY HIGH COURT], both the employer and the employees contributions to the various employees welfare funds are covered under Section 43B of the I.T Act. In our considered view, as the employees contribution towards the Provident Fund and Employees State Insurance as is discernible from the assessment order, were deposited by the assessee prior to the 'due date' of filing of its return of income for the year under consideration, therefore, the same was not liable to be disallowed. We thus in terms of our aforesaid observations vacate the disallowance sustained by the CIT(A). The Ground of appeal No. 1 raised by the assessee is allowed.
TDS u/s 194C - disallowance u/s 40(a)(ia) - payments of advertisement and sales promotion expenses - HELD THAT:- We find that though the supplier party i.e. M/s. Iktek Communication had provided the designed art-work and printed leaflets as per the specifications and requirements of the assessee, however, there is nothing borne from the records or had been averred before us, which would prove that the aforementioned party had supplied the product by using any material that was purchased from the assessee. Admittedly, the assessee had not provided any material to the said supplier party. Rather, the “Invoices‟ against which the aforesaid designed art-work was supplied on CD‟s to the assessee clearly reveals that the supplier had charged VAT on the full value of the aforesaid transactions. In our considered view as per the CBDT Circular No. 681, dated 08.03.1994 r.w Circular No. 715, dated 08.08.1995 and Circular No. 13 of 2006, dated 13.12.2006, it can safely be concluded that the aforesaid designed art-work and printed leaflets were supplied to the assessee pursuant to a contract for sale.
Thus assessee was not obligated to deduct any tax at source in respect of the aforesaid transaction under consideration, therefore, the same could not have been disallowed under Sec. 40(a)(ia).
TDS u/s 195 - sustainability of the disallowances made by the A.O/CIT(A) u/s. 40(a)(i) of the payments made by the assessee to various foreign concerns - HELD THAT:- We find that the assessee had admittedly made the payment to the aforementioned foreign entity for the services rendered by the latter for designing of seminar related material for an exhibition at Shanghai. In our considered view, the said payment clearly falls within sweep of FTS u/s. 9(i)(vii) of the I.T Act and Article 13 of the India-China DTAA. We thus are of the considered view that as the assessee who was liable for deduction of tax at source u/s. 195 on the aforementioned payment made to the foreign entity, had failed to do so, therefore, the said amount was rightly disallowed by the lower authorities u/s. 40(a)(i) of the I.T Act. We thus not finding any infirmity in the order of the CIT(A) who had sustained the disallowance made by the A.O u/s. 40(a)(i) of the I.T Act, uphold his order to the said extent.
Addition on account of interest income not accounted in the financials of the assessee on the basis of Form 26AS - HELD THAT:- It is the claim of the assessee that in case the interest income from Bank of India is to be considered, then the credit for the corresponding TDS short claimed by the assessee in its return of income may also be allowed. The ld. A.R in order to fortify her aforesaid contention had taken us through the relevant extracts of Form 26AS and the TDS certificates (hard copies) issued by the bank. After giving a thoughtful consideration to the issue before us, we are of the considered view that the matter in all fairness requires to be restored to the file of the A.O. We thus set aside the matter to the file of the A.O, who shall during the course of the set aside proceeding afford an opportunity to the assessee to reconcile the income and TDS shown in the its return of income, as against that reflected in its Form 26AS.
MAT computation u/s 115JB - working of the “book profit” by the A.O/CIT(A) for computing its tax liability under the MAT provisions envisaged u/s. 115JB - HELD THAT:- As per Explanation 1(i) to section 115JB, the “amount or amounts set aside as provision for diminution in the value of the any asset” if debited in the profit and loss account has to be added to the “net profit‟ shown in the profit & loss account for the year for the purposes of computing the “book profit” u/s. 115JB of the Act. As the provision for bad and doubtful debts debited by the assessee in its profit & loss account is in the nature of a provision leading to diminution in the value of an asset, therefore, the same has to be added to the “net profit‟ while computing the “book profit‟ u/s 115JB of the I.T Act.
As pursuant to the amendment to Explanation 1(i) to Sec. 115JB by the Finance (no. 2) Act, 2009 with w.r.e.f. 01.04.2001 any provision leading to diminution in the value of any asset, has to be added to the “book profit‟. We thus finding no infirmity in the order of the CIT(A) who has rightly concluded that the provision for doubtful debts was liable to be added for computing the “book profit” u/s. 115JB of the I.T Act, uphold the same. The Ground of appeal no. 5 is partly allowed in terms of our aforesaid observations.
TDS u/s 195 - payments towards legal and professional fees to foreign entities - HELD THAT:- We are persuaded to subscribe to the view taken by the CIT(A) that as the payments made by the assessee for the services rendered by the foreign entities for facilitating registration of the assesses products in their respective countries were in the nature independent personal services and not in the nature of FTS as contemplated in the various DTAA‟s, therefore, in the absence of any PE in India of the said foreign entities, the said respective amounts could not be taxed in India. We thus uphold the view taken by the CIT(A) and conclude that as no obligation was cast upon the assessee to deduct tax at source u/s. 195 while making the payments towards legal and professional fees to the aforementioned concerns, therefore, no disallowance of the said amount was called for u/s. 40(a)(i) of the I.T Act.
Disallowance u/s. 40(a)(i) of the license and registration expenses - HELD THAT:- As perused the order of the CIT(A) and find ourselves to be in agreement with him that as the payments made to the services providers were not in lieu of any technical services provided by them, but were for the normal services rendered, therefore, the same did not cast any obligation on the assessee to deduct tax at source in respect of the said amounts under Sec. 195 of the I.T Act. As the payments in the hands of the respective foreign payees were in the nature of their normal business income, which as per Article 7 could not be taxed in India in the absence of their PE in India, therefore, the assessee remained under no obligation to deduct tax a source on the said amounts under Sec. 195 of the IT Act. In our considered view as no infirmity emerges from the order of the CIT(A), therefore, we uphold the same.
Payments made by the assessee for the other services viz (i) miscellaneous export expenses and; (ii) advertisement and sales promotion expenses are concerned - HELD THAT:- We find that the CIT(A) had deleted the disallowance made by the A.O u/s. 40(a)(i) in respect of the said amounts by observing that as the said amounts were in the nature of business incomes in the hands of the foreign payees or in the nature of reimbursement of the expenses, therefore, no liability was cast upon the assessee to deduct tax at source in respect of the said amount. We are persuaded to subscribe to the aforesaid view taken by the CIT(A). As nothing has been canvassed before us by the Ld. D.R which could persuade us to conclude that the observations arrived at by the CIT(A) in context of the issue under consideration was either perverse or suffered from any infirmity, therefore, we uphold the view taken by him that no obligation was cast upon the assessee to deduct at source in the respect of aforementioned payments made to the foreign payees.
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2019 (3) TMI 1881
Inclusion of surcharge and education cess while computing MAT credit under Section 115JAA - HELD THAT:- For assessment year 2012-13, an identical issue came before this Tribunal in the assessee's own case [2018 (11) TMI 1640 - ITAT CHENNAI] wherein by placing reliance on the judgment of Apex Court in CIT v. K. Srinivasan [1971 (11) TMI 2 - SUPREME COURT] found that the surcharge and education cess are part of income-tax. This Tribunal has also found that the CIT(Appeals) has directed the Assessing Officer to verify the MAT credit.
Since the CIT(Appeals) has no power to direct the Assessing Officer to verify the claim of the assessee, this Tribunal in exercise of its jurisdictional power conferred under Section 254(1) of the Act, directed the Assessing Officer to verify the claim of the assessee and thereafter allow the claim with regard to MAT credit. In view of the order of this Tribunal for assessment year 2009-10, the Assessing Officer shall verify the claim of the assessee and thereafter allow the claim with regard to MAT credit as in the case of assessment year 2012-13. Appeal of the Revenue stands dismissed.
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