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Showing 181 to 200 of 1733 Records
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2019 (6) TMI 1555
Unabsorbed loss of 10A/10B Units set off against other incomes - Whether CIT(A) erred in holding that deduction u/s.10A to be allowed without considering the carry forward of loss - HELD THAT:- As decided by CIT-A relying on M/S YOKOGAWA INDIA LTD. [2016 (12) TMI 881 - SUPREME COURT] The provisions of Sub-section 6 of Section 10A, as amended by the Finance Act of 2003, granting the benefit of adjustment of losses and unabsorbed depreciation etc. commencing from the year 2001-02 on completion of the period of tax holiday also virtually works as a deduction which has to be worked out at a future point of time, namely, after the expiry of period of tax holiday.
The absence of any reference to deduction under Section 10A in Chapter VI of the Act can be understand by acknowledging that any such reference or mention would have been a repetition of what has already been provided in Section 10A. The provisions of Sections 80HHC and 80HHE of the Act providing for somewhat similar deductions would be wholly irrelevant and redundant if deductions under Section 10A were to be made at the stage of operation of Chapter VI of the Act. The retention of the said provisions of the Act i.e. Section 80HHC and 80HHE, despite the amendment of Section 10A, in our view, indicates that some additional benefits to eligible Section 10A units, not contemplated by Sections 80HHC and 80HHE, was intended by the legislature. Such a benefit can only be understood by a legislative mandate to understand that the stages for working out the deductions under Section 10A and 80HHC and 80HHE are substantially different. This is the next aspect of the case which we would now like to turn to - Appeals filed by the Revenue are dismissed.
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2019 (6) TMI 1554
Maintenance of status quo in relation to shareholding and directorship of Respondent No. 1 Company - HELD THAT:- We are not persuaded to accept the submissions made by Mr. Virendra Ganda, learned Senior Counsel for the applicant-respondents that the prevailing arrangements be permitted to continue i.e. to allow the applicant-respondents to run the hotel and to permit the non applicant-petitioners to run the restaurant in the basement. There is nothing on the record brought to our notice to that effect either in form of a resolution of the Respondent No. 1 Company or any such statutory arrangements. The other submission based on the Settlement Agreement dated 18.12.2014 has also failed to impress us because firstly, the Settlement Agreement dated 18.12.2014 has not been signed by non applicant-petitioner No. 1 and more importantly it is a transaction between two individuals which does not involve the body corporate- Respondent No. 1 Company. There are detailed provisions made under Sections 56 to 59 of the Act for transfer of share before alteration in the shareholding in a body corporate could be accepted. It requires a resolution of the Board of Directors, Transfer deed and due intimation to Registrar of Companies by uploading of MCA Website. There is nothing on the record to show that any steps were taken to enter the names of transferee shareholder in the place of non applicant-petitioners.
EOGM may be convened as per the requisition and it may proceed according to the agenda. Any decision taken in the EOGM shall not be given effect as the main matter is posted for hearing on 03.09.2019. In the meanwhile, the decision taken in the EOGM be also placed on record.
Application disposed off.
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2019 (6) TMI 1553
Approval of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- The shareholders of the applicant companies are the best Judges of their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by Tribunal for the reason that it is not a part of judicial function to examine entrepreneurial activities and their commercial decisions. It is well settled that the Tribunal evaluating the Scheme of which sanction is sought under Section 230-232 of the Companies Act of 2013 will not ordinarily interfere with the corporate decisions of companies as approved by shareholders and creditors - Right to apply for the sanction of the Scheme has been statutorily provided under Section 230-234 of the Companies Act, 2013 and therefore, it is open to the applicant companies to avail the benefits extended by statutory provisions and the Rules.
It has also been affirmed in the petition that the Scheme is in the interest of the transferor companies and the transferee company including their shareholders, creditors, employees and all concerned - upon considering the approval accorded by the members and creditors of all the Petitioner companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs including the report of official liquidator, and also as no objection from any quarter against the Scheme has been received; there appears to be no impediment in sanctioning the present Scheme.
Sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013 - Application allowed.
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2019 (6) TMI 1552
Approval of Resolution Plan - direction against the RP to place its revised Resolution Plan - HELD THAT:- The CoC has approved the Resolution Plan because the successful Resolution Applicant has assured payment to the stakeholders within fifteen days, to clear statutory dues within 96 hours after the approval of the Plan by simultaneously showing proof of source of funds. The Resolution Applicant tendered documents showing Fixed Deposit of ₹ 6 Crores at the time of the approval of resolution plan by CoC, now it has stepped up its Fixed Deposits to ₹ 8 Crores. Apart from this, the successful Resolution Applicant has also filed sanction letter from HDFC Bank to finance ₹ 10 Crores for infusing funds into the Corporate Debtor towards working capital. The total money that this Resolution Applicant proposed to invest in this company is around ₹ 18 Crores, out of which, ₹ 9.52 Crores to pay to various stake holders within 15 days and remaining money to be invested as working capital.
In respect to this unsuccessful bidder Plan is concerned, it's a plan not supported by any material reflecting it has cash or security supported to make payments to the stake holders or to invest working capital into the company, whereby this Bench hereby partly allowed the MA filed by the RP by approving the resolution plan approved by the CoC without passing any relief to waive off various dues that are payable by the Corporate Debtor in accordance with law, however we make it clear that it is left open to the Corporate Debtor to pursue its remedies in accordance with law
Application dismissed.
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2019 (6) TMI 1551
TP adjustment u/s. 92CA(4) - international transactions entered with the Associated Enterprise (AE) - Comparable selection - HELD THAT:- TPO has done fresh search process in applying his own filter and came up with twenty one comparables. Out of these nine comparables were rejected without giving any reason whatsoever. We agree with assessee that this act of the TPO is classical act of cherry picking. There is no justification whatsoever as to why nine of the comparables selected by the TPO himself by applying filters selected by him only should be rejected. Hence, we uphold the order of learned CIT(A), wherein nine comparables were directed to be included in comparable search.
As regards direction of learned CIT(A) that company namely ‘Nittany Outsourcing Limited’ came out of the same re-run of the search process is also acceptable.
CIT(A) has directed that the TPO did not expressly reject the company ‘Crisil Marketwire Limited’ which appeared as comparable company in set of comparables in assessee’s transfer pricing study and hence he also directed this should be included in comparables. This direction of learned CIT(A) in our considered opinion is not sustainable. When learned CIT(A) is accepting that search process of twenty one comparables selected by the TPO should be adopted, then learned CIT(A) again cannot blow hot and cold and insist that one of the comparable appearing in the assessee’s original transfer pricing study should be included. This act in fact, is cherry picking by learned CIT(A) himself and the same is not sustainable.
CIT(A) to disregard five of the comparables coming out of TPO’s fresh search process - We note that learned Counsel of the assessee has not made any argument in support. Learned Counsel of the assessee only confined his argument about the rejection of nine comparables and cherry picking done by the TPO. Accordingly, we direct that comparable analysis should be done on the basis of twenty one companies selected by the TPO and one more added by learned CIT(A) namely ‘Nittany Outsourcing Limited’. Marketing support adjustment of 2.30% may also be granted.
Addition on account of advance received by the assessee from its holding company treated as ‘income’ - HELD THAT:- As relying on case [2012 (4) TMI 120 - ITAT MUMBAI] we find during the course of assessment proceedings the assessee has given a statement that it has received advance towards market research analysis services rendered during the year. Therefore, the details given in the balance sheet and the submissions made during the course of assessment proceedings are contradictory to each other. Neither the AO nor the Ld. CIT(A) has gone into this aspect. Therefore, when it was proposed that the issue needs verification at the level of the AO, both the parties fairly agreed that they have no objection if the matter is restored to the file of the AO - restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate its claim with evidence to the satisfaction of the AO regarding the nature of advance received, its purpose and utilization and how the same has subsequently been adjusted from the bills raised by the assessee. Ground raised by the Revenue is accordingly allowed for statistical purpose.
TP adjustment being notional interest on export receivable by the assessee from its AE - HELD THAT:- t this issue is covered in favour of the assessee in as much as no interest is charged in respect of outstanding receivable from AE as well as non-AE. Hence, there cannot be any occasion to make arm’s length price adjustment for notional interest in this regard - in the case of CIT Vs. Indo American Jewellery Ltd. [2013 (1) TMI 804 - BOMBAY HIGH COURT] as held in this decision that where there was complete uniformity in the act of the assessee in not charging interest from both AE and non-AE debtors for delay in realisation of export proceeds, the Tribunal was right in deleting the addition of notional interest on outstanding amount of export proceeds. Citing above said decision, learned counsel stated that this decision is squarely applicable in this case as the assessee has not charged interest from non-AEs also, adjustment made by the TPO is not sustainable. DR not make any rebuttal in this regard. - Decided against revenue.
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2019 (6) TMI 1550
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- There is no default as on date, as the Respondent has discharged its liabilities by paying the Applicant in various instalments as stated supra. It is a settled position of law that the provisions of Code can be invoked only in the case of existence of a 'default' and non-payment of such default by the Corporate Debtor. Moreover, the Corporate Debtor has also replied denying the liability, by inter alia, contending that they have discharged their liabilities and there is no such debt due. Therefore, it is'not a fit case to admit the case, and thus it is liable to be rejected.
Application dismissed.
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2019 (6) TMI 1549
Maintainability of Settlement Application - Rectification of certain error - applicant has finally submitted that the O-I-O had been issued on 22-2-2019 and that they had filed the settlement application prior to that and therefore the application is maintainable and not hit by provisions of Section 32(1) read with Section 31(c) of the Act - HELD THAT:- A plain perusal of Section 32E of CEA reveals that for the purposes of settlement, the case must be pending before an adjudicating authority as on the date of Application under Section 32E(1) of the Act and no application under Section 32E(1) can be made unless the conditions of the Proviso clauses (a) to (d) thereof, are complied with. Further, while the statute gives some discretion to the Bench in respect of condition (a), there is no discretion in respect of other conditions.
The initial applications being violative of condition (d) was statutorily defective and could not have been treated as an application in strict legal sense, as the language used in the statute is that - ‘no such application shall be made unless’. The applicants resubmitted the applications after rectifying the defects and was received by the Commission Registry on 11-6-2019. Thus, on the face of it, the date of application has to be reckoned as the date of receipt of the valid application duly complying with the requirement of the law stipulated in Section 32E(1) of the Act. Otherwise, there will be a clear violation of the language of the law as stipulated in Section 32E(1) ibid. If the applicants’ argument that the date of the earlier defective application be treated as the date of filing of applications in the instant case is accepted then clearly it would be contrary to the mandate of the law that ‘no such application shall be made unless’ . Thus, the earlier invalid/defective application cannot be legally accepted as the application having been made under Section 32E(1) of the Act.
The Bench holds that in the instant case the date of receipt of application is that date on which valid applications complying with the law were received, i.e., 11-6-2019. However, on the said date, the impugned SCN stood adjudicated vide O-in-O, dated 20-2-2019; hence, it was no more a ‘case’ that could be settled. The definition of ‘case’ under Section 31 of the Act, clearly stipulates that the proceeding has to be pending before an adjudicating authority on the date on which an application under Section 32E(1) of the Act is made.
Applications under Section 32F(1) of the Central Excise Act, 1944 is rejected, as not maintainable and cannot be allowed to be proceeded with.
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2019 (6) TMI 1548
Non deduction of TDS u/s.194C - payments made by assessee joint venture to its members - assessee is an AOP engaged in the activity of civil contractors - HELD THAT:- Structures of section 40(a)(ia) are diluted in the facts of the case since the payee has admittedly filed its return of income disclosing the impugned receipts and income earned by it embedded in the receipt has been duly offered for taxation. Assessee Joint Venture cannot be treated as assessee in default in view of the decision in the case of CIT Vs. Ansal Land Mark Township (P.) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] and the decision of the Co-ordinate Bench of the Tribunal in the case of ITO vs. Shri Chandrakant J. Mandale[2015 (4) TMI 1140 - ITAT PUNE] for the assessment year 2008-09 decided on 10.04.2015, the assesee joint venture cannot be treated as assessee “in default".
Reverting to the arguments put forth by the Ld. DR regarding distinguishable aspects of the case so far as the facts are concerned, we have perused the orders carefully in the earlier assessment years in assessee‟s own case and the facts are similar in its entirety. We, however, appreciate that on principle; the Ld. DR had fairly conceded that the issue is covered by the decision in assessee‟s own case. - Decided against revenue.
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2019 (6) TMI 1547
Smuggling - truck loaded with large Cardamom - foreign origin goods or not - Confiscation - penalties - HELD THAT:- Admittedly, large Cardamom is not a notified item in terms of Section 123 of the Customs Act. As such, the onus to prove that the same have been smuggled lies upon the Revenue and is required to be discharged by production of sufficient and positive evidence. Merely based upon the trade opinion indicating the goods to be a foreign origin is not sufficient especially when the appellants have produced the purchase ledger showing the purchase of the same from local person located in India. Even if the trade opinion is accepted, which in any case cannot be considered to be an expert opinion, the fact that the Cardamom may be of foreign origin by itself is not sufficient to hold the same as of smuggled nature.
For holding the goods as smuggled, Revenue is expected to produce the evidence to that effect. Revenue in their present appeal has not advanced any evidence to show that the Cardamom in question was smuggled - there are no justification to interfere in the impugned order of Commissioner (Appeals).
Appeal dismissed - decided against Revenue.
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2019 (6) TMI 1546
Levy of Customs Duty - electricity removed from SEZ to DTA or non-processing areas of SEZ - Validity of Notification No. 25/2010-Cus., dated 27-2-2010 as well as Notification No. 21/2002-Cus., dated 1-3-2002 - HELD THAT:- The Division Bench did not deem it fit to correct the judgment in the manner suggested, and to grant the wider relief that had been prayed for in the petition but restricted the period to 26-6-2009 to 15-9-2010. The petitioners have thereafter thought it fit to accept the decision as it is, and did not file any review application, nor did they challenge the decision to the extent the relief prayed for has not been granted. Therefore, though the Court had discussed various issues and given findings thereon in the body of the judgment, it did not think it fit to grant any consequential relief, which appears to be a conscious decision as the Court has not entertained the Note for Speaking to the Minutes filed by the petitioners pointing out this fact.
The Division Bench, in the earlier decision has consciously restricted the relief granted to the petitioners to the period from 26-6-2009 to 15-9-2010 for the reason that while holding in favour of the petitioners the Division Bench (in paragraph 23 of the judgment) was of the view that the provisions of Rule 47(3) of the SEZ Rules are designed to align the power plants located within SEZ to be at par with power plants located outside SEZ, both being located within India. Just as MPP imports or procures capital goods without payment of duty, but pays customs duty or excise duty, on the raw material and consumables used to generate electricity so also MPP located within SEZ imports or procures capital goods without payment of duty on raw materials and consumables to the extent the electricity generated by it is removed/supplied/sold outside SEZ.
With effect from 6-9-2010, the petitioners were no longer liable to pay duty on raw materials and inputs. Therefore, if the petitioners do not pay the duty to the extent specified in the Notification No. 91/2010, dated 6-9-2010 and subsequent notifications, the petitioners would be enjoying double benefits of not paying duty on raw materials and inputs and also not paying any customs duty on removal of electricity from the SEZ to DTA. It appears that therefore, the Division Bench has restricted the relief to the period up till 6-9-2010, as granting relief beyond that period would amount to entitling the petitioners to double benefit of exemption from payment of duty on raw materials and inputs and exemption from payment of customs duty.
Notification No. 9/2016-Cus., dated 16-2-2016 - HELD THAT:- The said notification stands on a different footing than the other notifications. In this notification, there is no general exemption in respect of goods falling under Tariff Item 2716 00 00 of the First Schedule to the Customs Tariff Act, 1975 when imported into India from the whole of the duty of customs leviable thereon which is specified in the said First Schedule. Under this notification, different rates are provided for goods falling under Tariff Item 2716 00 00 and it is only in respect of electrical energy originating from Nepal and Bhutan that the standard rate (paisa per KWh) is nil. Thus, it is not as if import of electrical energy per se has been exempted from the whole of the customs duty leviable thereon. This notification is country specific and the petitioners cannot claim the benefit of exemption granted to import from those countries.
The question of directing the appropriate authority to refund the amount collected on account of duty on electricity removed from SEZ to DTA does not arise - Petition dismissed.
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2019 (6) TMI 1545
Issuance of witness summons - applicant submitted that the said documents were furnished to the Applicant on 01.11.2018 and on the same day the argument was commenced without giving time to scrutinize the documents by the Applicant - HELD THAT:- A discretion is conferred on the Tribunal to regulate its own procedure and be guided by the principles of natural justice.
It is considered just and necessary that evidence should be led to ascertain the authenticity of the documents produced vide IA No. 390/2018. Establishing the authenticity of these documents is vital to the determination of the issues raised in the two company petitions.
Since the NCLT empowered under section 424(2) of the Companies Act, 2013 and Rule (39)(1) of the NCLT Rules, 2016 to deal with the matter of taking evidences, This Tribunal has not dealt with the case laws quoted by the parties - Put up the matter on 30.08.2019.
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2019 (6) TMI 1544
Valuation of imported goods - Pig Iron - rejection of declared value - enhancement of value based on the data available with the NIDB - whether the invoice value can be rejected and the duty can be charged as per NIDB data without any specific evidence that the invoice values do not reflect actual transaction value? - HELD THAT:- Relying on the decisions in the cases of Topsia Estates Pvt Ltd v. CC (Import-Seaport) Chennai [2015 (1) TMI 750 - CESTAT CHENNAI], CC New Delhi v. Nath International [2013 (12) TMI 1042 - CESTAT NEW DELHI], Impex Steel & Bearing Co. v. CC Delhi-IV [2014 (2) TMI 627 - CESTAT NEW DELHI] and Eicher Tractors Ltd v. CC Mumbai [2000 (11) TMI 139 - SUPREME COURT] it has been decided that the department cannot reject the declared value and assess the goods as per the NIDB data.
Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1543
Valuation - cement supplied by the Appellant to Institutional/ Industrial consumers - cement supplied to the customer without affixing any MRP and was supplied under Serial No. 1C of exemption Notification No. 4/2006-C.E., dated 1-3-2006 and subsequent analogous Notification - HELD THAT:- Reliance placed in the case of COMMISSIONER OF C. EX., BANGALORE-II VERSUS MYSORE CEMENTS LTD. [2010 (8) TMI 246 - KARNATAKA HIGH COURT] where it was held that general construction work for building, general construction work for civil engineering installation and assembly work building, completion and finishing work and assessee is treated as a service industry and is entitled to the benefit under the Notification.
Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1542
Refund of SAD - N/N. 102/2007-Cus., dated 14-9-2007 - Denial on the ground of principles of unjust enrichment - HELD THAT:- The appellant had mentioned the SAD amount as (0). Thus, it is evident that no SAD benefit has been passed on by the appellant and the incidence of such amount has been borne by the appellant. Further, due to typographical error, the appellant failed to indicate that no credit shall be admissible. Such non-endorsement as per the requirement of the notification is procedural in nature, for which the benefit of refund cannot be denied to the appellant.
In this case, since the appellant had not passed on the SAD element to its buyers, which is manifest from the available records, denial of refund benefit on the ground of unjust [enrichment] cannot stand for judicial scrutiny.
Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1541
Exclusion of certain days from CIRP period - direction to exclude the period from January 22, 2019 till August 03, 2019,totally for 194 days from the computation of statutory period of the CIRP etc. - HELD THAT:- The object of the Code is to revive the Company rather than to send it for Liquidation. Since the Govt of Karnataka is also showing interest for revival of the Company for the interest of several employees depending on the Company. It is also relevant to point out here, IA No. 48 of 2019 is filed by M/s.Mapletree Leather Goods Private Limited, U/s 60(5) of the IBC, 2016, by inter seeking the direction to the Respondent to accept their resolution Plan and to restrain the Respondent No. 1 to initiate liquidation proceeding etc, which is also pending disposal. Therefore, it is just and proper to exclude the time as sought for in the interest of justice.
Petition hereby disposed of by granting exclusion of time for a period of 194 days from 22.01.2019 till 03.08.2019, from the statutory period of 180+90 days which was expired on 22.01.2019.
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2019 (6) TMI 1540
Erection, Commissioning and Installation service - Construction Services other than residential complex (including commercial/industrial building or civil structure and “Management Maintenance or Repair Services - VCES Declaration - demand for the period 2008-09 to 2012-13 on the basis of Income Tax returns and Form AS 26 - benefit of abatement in terms of Notification No. 1/2006-S.T., dated 1-3-2006 - HELD THAT:- All the services have duly been explained with the respective amount received qua the same. Hence, it cannot be presumed that sufficient evidence would not have been provided by the Appellant. Adjudicating authority has talked about going through the contract which again corroborates absence of relevant evidence as has been taken a ground for confirming the demand irrespective to a lesser extent than it was proposed.
The Learned Commissioner has failed to appreciate the honesty of the appellant that wherever the value of services were not inclusive of material used or consumed, appellant declared the tax payable at full applicable rate (without abatement) and where the value charged was inclusive of material used and consumed in rendering the services, abatement was claimed. There is no doubt that the work orders were for up-keeping of lawns & parks with material, i.e. supply of manures (goat difng/compost khad), pesticides, insecticides, flower pots in different sizes, grass cutting machine, plastic pipes, plants etc. These are the items on which no sales tax is payable, however, the Thermal Power Station deducted TDS under Works Contract Tax (WCT) as per Sales Tax/VAT Rules, thus, the abatement was claimed only on the value of services on which TDS under WCT Rules was deducted. Copies of work orders etc. in relation to maintenance and up-keeping of lawns & parks.
The demand of ₹ 22,36,44/ has been confirmed without appreciating the relevant documents and rather in self despite the adjudicating as is discussed above. The adjudicating authority has also observed that the difference in Tax liability is mostly on account of calculation by availing abatement, whereas it was not admissible to them. The mistake of the Appellant for short declaration of tax liability is rather held to be a bona fide mistake on the part of the Appellant. The declaration is denied to be a false declaration. The confirmation of penalty still, under Section 78 of Finance Act, 1994, therefore, is held to be contradictory to the said observations.
Matter remanded back to the adjudicating authority for de novo adjudication of the entire demand, however, keeping in view impugned adjudication, after due consideration of the documents on record, specifically, the certificate and other documents for the abatements as well w.r.t. as the threshold limit of the preceding year - Appeal allowed by way of remand.
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2019 (6) TMI 1539
Levy of service tax - advertising services - expenses on behalf of its customers in the nature of travel, lodging, etc. which were later reimbursed to the Appellant on cost to cost basis without adding any mark-up - period from 2004 to 2006 - HELD THAT:- The contract executed by the Appellant with its customers specifically state that all out-of-pocket and other commercial expenses shall be reimbursed to the Appellant on actuals. Further, the Revenue has not disputed the fact that such amounts were being received by the Appellant without any mark-up.
Reliance placed in the case of the Hon’ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT], wherein it has been held that service tax on expenditures incurred by the service provider in the course of providing taxable service is ultra vires Section 67 of the Finance Act and that such expenditure cannot be considered for charging service tax.
The Trade Notice relied upon by the Revenue was never incorporated in the Finance Act by way of an amendment. Therefore, in the absence of any statutory backing, the Revenue cannot demand tax relying solely upon a Trade Notice or Circular issued by the Department itself - Demand set aside - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1538
100% EOU - import of capital goods without payment of duty - non-fulfilment of export obligation due to recession in the international market - demand on the ground that the appellant had failed to achieve positive NFE and duty forgone proportionate to the ratio of unachieved NFE is required to be paid along with interest and penalty - paragraph (3) (d) (ii) of notification dated 31.03.2003 - HELD THAT:- Paragraph 4 in the said notification provides that removal of the capital goods from the place of installation in the EOU can be done subject to fulfilment of the conditions/limitations imposed in the Export and Import Policy. It has also been provided that capital goods can be taken to any other unit in a Special Economic Zone or to other Export Oriented Undertaking etc., without payment of duty for the purpose of manufacture and export of the final product.
It is not the case of Revenue that the appellant had not complied with the above provisions laid down in the FTP and the HBP. Since, the capital goods were supplied by the appellant to the SEZ unit, duly approved by the Development Commissioner; the requirements of the Export and Import Policy have been duly complied with. Thus, the adjudged demands cannot be fastened on the appellant.
Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1537
Expenditure u/s 36(1)(iii) - lower interest paid on the borrowings made by the assessee company from the sister concerns or the group companies - whether no evidence produced by the assessee to prove that these expenditures were not in the nature of personal or capital expenditure and were wholly expended for the purposes of business? - HELD THAT:- It is essentially a finding of fact as to whether the lower interest paid on the borrowings made by the assessee company from the sister concerns or the group companies is for the purpose of its business or not. Whether it is commercially expedient or not for the Assessee cannot be decided by the Revenue authorities and unless a decision taken in the usual course of business by the Assessee can be held to be arbitrary or motivated, deliberately taken to defeat the purpose of the Revenue, it cannot be held that the lower interest rate paid to the borrowers on the borrowings made by the assessee company is disallowable under Section 36 (1) (iii) of the Act. No such finding of fact has been recorded by the Tribunal in [2018 (7) TMI 1476 - ITAT CHENNAI]
When the cash system of accounting was adopted by the Assessee, an Investment Company, whose business is only to borrow and lend or invest, the same cannot be said to be not in the business interest or commercially expedient for the purpose of business and the concept of ;Matching Principles;, which has been applied by the Assessing Authority and the CIT (A) in the present case, was not really applicable. It is not for the Revenue authorities to substitute their own wisdom or notion about the rate of interest agreed to between the parties, including the group companies and, as such, the finding of fact about commercial expediency or absence thereof is a finding of fact, out of which, no substantial question of law can be said to be arising, requiring our consideration under Section 260A - Decided in favour of assessee.
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2019 (6) TMI 1536
TP adjustment - arm’s-length price of the interest paid by the assessee - argument of the ld AR that interest on FCCD issued in only industry similar to the assessee must be taken for benchmarking - HELD THAT:- We set aside the whole issue back to the file of the learned transfer pricing officer with a direction to re-determine the arm’s-length price of interest payment on fully compulsorily convertible debentures issued by the assessee with a comparable product such as credit rating, size, timing etc. - assessee is also directed to advance all the arguments, which it would like, to place before him along with any additional evidences. TPO will also examine the whole issue with respect to whether fully compulsorily convertible debentures are comparable with simple debentures or are required to be benchmarked differently. According to us FCCD (Fully compulsorily convertible debenture ) is not a traditional debt, but a complex financial instrument wherein the final repayment is through the issuance of common equity to investors ( which has a high value than the amount of loan also and vice versa) , based on fixed conversion rate, (or in a band). It is a mix of debt and equity features.
There is a dominance of the equity feature in FCCDs with some entirely classifying it as an equity instrument. However, true characterization and quantification of Debt/Equity feature in FCCDs would depend on the deeper analysis of its substance over form. Therefore comparing the interest payment on FCCD with bond interest rates is fallacious.
AR relied upon the safe of the rules issued by the Ministry of Finance central board of direct taxes by notification number 07/06/2017 that applies only to the transaction of loan. In the present case, it is the mixed transaction of loan as well as of equity and therefore the safe harbour rule does not apply, as they do not deal with such instrument. Assessee as well as the ld TPO should look in to this aspect. Ground number 1 – 4 allowed for statistical purposes.
Notional interest income - Accrual of interest income - Addition to the total income of the assessee on account of inter corporate loan given by the appellant to its related party - HELD THAT:- In the present case it is evident that assessee has written off the principal itself subsequently. Resolution is also produced to the effect that assessee has not recorded interest income. Generally , Income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability, the income is not hypothetical and it has really accrued to the assessee.
Accrual of income is based on the facts of the case. Therefore, merely relying on judicial precedents it cannot be held that whether a particular income has accrued to the assessee or not. Even otherwise in the present case it cannot be said there is no liability on the other party to pay the interest because, it is for the loan accepted by that party and bound by the agreement to pay the interest. Naturally Income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability that the Income is not hypothetical and it has really accrued to the assessee.
We set aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to show before the learned assessing officer that how the interest has not accrued to the assessee for assessment year 2014 – 15 and also to show the various correspondence between the lender and the borrower to substantiate the case that interest income was waived before it accrued to the assessee. - Ground 5 allowed for statistical purposes.
Credit of minimum alternate tax under section 115JAA - HELD THAT:- AO is directed to examine the claim of the assessee and if it is found in accordance with the law to grant credit of MAT of the above sum after proper verification. Accordingly, ground number 6 of the appeal is allowed.
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