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Showing 21 to 40 of 1903 Records
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2015 (11) TMI 1886
Reopening of assessment u/s 147 - Reason to believe - necessity of independent application of mind by AO - HELD THAT:- A plain reading of the reasons recorded demonstrate that the A.O. has not applied his mind to the material/information received from the Director (Investigations). Without such independent application of mind, it is not possible for the A.O. to come to a conclusion that he has reason to believe that income assessable to tax has escaped assessment. Thus, respectfully following the propositions of law laid down by the Hon’ble Delhi High Court in the case of Pr.CIT vs. G & G Pharma India Ltd. (2015 (10) TMI 754 - DELHI HIGH COURT] hold that the reopening is bad in law. Assessee’s appeal is allowed.
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2015 (11) TMI 1885
Suit for possession by way of specific performance of the agreement to sell on payment of balance sale consideration - HELD THAT:- It is held that the execution of agreement to sell to be duly proved. Plea of fiduciary relationship as pleaded by the defendants was rejected by the trial Court as well as by the Appellate Court. Execution of agreement to sell Ex.P1 was duly proved. The agreement to sell has been proved with reference to statement of scribe as well as of attesting witnesses. Passing of consideration to the tune of Rs.4,00,000/- has been proved with reference to the statement of attesting witnesses.
PW-1 Ajit Singh who is one of the attesting witness to agreement to sell Ex.P1 has specifically deposed about due execution of agreement to sell at the instance of defendants No.1 and 2. He has also endorsed the factum of passing of consideration worth Rs.4,00,000/- in the presence of witnesses Bikram Singh son of Sher Singh and the agreement to sell was duly scribed by Rana Partap Singh deed writer and defendants No.1 and 2 appended their thumb impressions admitting the contents of the agreement to sell to be correct - Bald statement of Gurmail Singh as DW-1 has not been taken to be sufficient evidence as against convincing overwhelming evidence led by the plaintiff. Gurmail Singh DW-1 took a plea that thumb impressions of the defendants No.1 and 2 were taken upon the paper already prepared by the plaintiff in collusion with Ajit Singh. In cross examination the witness even did not admit his signature upon which the alleged agreement to sell Ex.P-1 was scribed. The stand advanced by DW-1 Gurmail Singh was held to be contradictory with the stand taken in the cross examination. Either the alleged agreement to sell Ex.P-1 was not the said document stated by the defendant in his cross examination or the earlier account submitted by the defendant was not correct.
Bare perusal of Ex.P1 reveals that the stamp papers were purchased by DW-1 Gurmail Singh himself on 07.06.2003 from the stamp vendor but he miserably failed to examine the stamp vendor to prove the factum of his not visiting the stamp vendor for the purpose of purchasing the stamp papers in question.
Once the agreement to sell is proved, grant of decree is a natural consequence of the same, unless and until a case of hardship is pleaded by the defendants in terms of Section 20 of the Special Relief Act. Since no such hardship has been pleaded by the defendants in the defence, therefore, question No.2 has to be answered against the appellant. Question No.3 in the context of fiduciary relationship of the defendants with Ajit Singh has not been proved to the extent of discarding the case of the plaintiff which is based on lawful evidence on record. Particulars of fiduciary relationship have not been proved on record with reference to evidence, therefore, question No.3 does not arise at all.
Appeal dismissed.
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2015 (11) TMI 1884
TP adjustment u/s 92CA(3) - Pass-through costs/operating costs inclusion computing the ALP of the international transaction - HELD THAT:- All the costs in providing the services are to be borne by the assessee alone and the AE has no relation with that. The assessee has made out a case that the expenses incurred in providing such services to the tourists amounting to Rs.13.93 crore are pass through costs and hence the same be ignored in computing the ALP of the international transaction. We find this contention to ill-founded and devoid of any merit. Pass-through costs, in the context of transfer pricing provisions, are ordinarily the costs for which payment is made by an Indian entity to third party on behalf of its foreign AE and the amount so paid to third party is recovered from the foreign AE and in this process there is no assumption of risk of nonpayment by the foreign AE. These are non value-adding costs, which are incidental to the primary business activity of the assessee for which it neither performs any significant functions nor assumes any risks. That is the reason for which such costs are not considered as operating costs.
We fail to appreciate as to how the sum incurred by the assessee can at all be construed as `Pass through costs’ inasmuch as these are not the costs incurred by the assessee for and on behalf of FAB to be recovered as such, but are the costs to be borne by it alone. Such costs are direct charge against its revenue.
Pass-through costs do not involve any type of risk on the entity incurring them, as these are recoverable as such from its AE. At the cost of repetition, we reiterate that the assessee is liable to certain risks as discussed above, which has been noted from its own Transfer pricing study report. Under such circumstances, the argument of the ld. AR that a sum of Rs.13.93 crore represents pass-through costs is incapable of acceptance and ergo jettisoned.
Whether the ld. CIT(A) was justified in comparing the assessee’s net profit rate to total costs at 25.87% based on its service fees of Rs.71.54 lac minus indirect expenses of Rs.56.84 lac with the similar rate of two other comparable companies in determining the ALP of the international transaction of `Tours and Travel Related and Customer Handling Services’? - The international transaction as per the assessee’s audit report in Form No. 3CEB is `Tours and Travel Related and Customer Handling Services’ with transacted value of Rs.14.65 crore. This amount is a sum total of direct costs incurred in providing services amounting to Rs.13.93 crore and service fee of Rs.71.54 lac. This is the total amount received by the assessee from its AE. It is this international transaction of Rs.14.65 crore whose ALP is required to be computed. The action of the ld. CIT(A) has resulted in restricting the international transaction to a sum of Rs.71.54 lac, being the amount of service fee alone, which is again contrary to the statutory provisions. We, therefore, hold that both the direct and indirect cost are required to be considered in determining the ALP under the `Cost plus method’.
Action of the ld. CIT(A) in accepting the ratio of `Net profit to total costs’ as a profit level indicator has led to the devising of a new method in its own, which has no sanction of law. As the most appropriate method in this case is undisputedly the `Cost plus method’, we fail to appreciate as to how the decision of the ld. first appellate authority in accepting such a ratio as a Profit level indicator under this method can be sustained. The comparison of this ratio is alien to the Cost plus method.
Selection of only two companies is in sharp contrast to the assessee earlier choosing 14 companies as comparable in its Transfer pricing study report. By directing to do an analysis of `some’ and not `all’ the comparable companies, CIT(A) allowed the assessee to do cherry-picking by choosing only such companies which suit its purpose. Neither, there is an indication in the impugned order that the CIT(A) himself ensured that no comparable company was left out, nor did he ask the AO to find out other comparable companies. This has put the exercise done by the assessee during the course of first appellate proceedings, open to question.
AO has worked out addition by way of transfer pricing adjustment amounting to Rs.91.80 lac by applying the arithmetic mean of the ratio of `Net profit to Total costs’ of the comparables at 11.72% to the direct and indirect costs incurred by the assessee. As against this, the Cost plus method contemplates applying the ratio of `Gross Profit to Total costs’ and not `Net profit to Total costs’. Again to this extent also, the action of the AO is unsustainable.
In the given circumstances, we are of the considered opinion that the ends of justice would meet adequately if the impugned order is set aside and the matter is restored to the file of the AO. We order accordingly and direct him to compute the ALP of the international transaction afresh under the Cost plus method in conformity with our above discussion. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such fresh proceedings.
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2015 (11) TMI 1883
CENVAT Credit - capital goods or inputs - H.R.Coil, plates - G.P. Sheet Plain Plates - Steel Flats - Aluminum Coils - Shape & section etc. - HELD THAT:- These goods were used in repair/fabrication of machines or as accessories which are required for the purpose of manufacture of sugar. Further the Central Excise Tariff Act, 1985 has specifically indicated, the machines which are used for manufacture of sugar would fall under Chapter heading 84.30. This would indicate that all the machineries that are used in the sugar factory for the manufacture of sugar would fall under heading 8438.20 and eligible for Cenvat credit as capital goods. It that be so, any accessories spares or components used in the repair of manufacture or fabrication of machinery, which is further used for manufacture of sugar and molasses would be eligible for the benefit of Cenvat credit.
In M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX & THE COMMISSIONER OF CENTRAL EXCISE [2015 (3) TMI 661 - MADRAS HIGH COURT], the Hon’ble Madras High Court have held that M.S. Rod, Sheet, M.S. Channel/Plate/flat, etc, used for erection/fabrication of structural support for various machines like Crusher, Kiln, Hooper, etc, without which such structural, machinery could not be erected and would not function, held are eligible for Cenvat credit under Rule 2(a)(A) of CCR, 2004.
Appeal allowed - decided in favor of appellant.
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2015 (11) TMI 1882
Nature of receipt - Addition towards Sales Tax Incentive Scheme - Whether as per the Scheme, the assessee need not collect and pay any Sales Tax during the specified period, and allowing deduction towards notional tax liability tantamount to wrong deduction? - HELD THAT:- An investment in the initial fixed capital was made at Rs.283.01 lacs. An application was made to the District Industries Centre for issue of eligibility certificate for exemption from payment of sales tax under 1990 Scheme. The appellant was granted the eligibility certificate on 09-06-2000. As per the said eligibility certificate; the assessee was entitled for exemption from payment of sales tax up to Rs.254.70 lacs for a period of ten years from 15th July, 2000 to 14th July, 2010. Later on, further investment was enhanced and accordingly renewed eligibility certificate was granted.
We have also considered the object of 1993 Scheme and the main feature was to grant incentive to the industries established in the backward areas for development of under-developed region of Maharastra State. We have also examined the legal aspect whether the subsidy in question is capital in nature or revenue in nature.
After going through the decisions cited before us and few of them already discussed by the learned CIT (A), we are of the considered opinion that the issue is squarely covered by those decisions especially by the decision of Reliance Industries Ltd. [2003 (10) TMI 255 - ITAT BOMBAY-J] - We are not discussing all the decision delivered on this issue although discussed during the course of hearing.
Assessee company was justified in claiming the sales tax incentives as exempt and not to be taken into account in computing the taxable income. The view taken by the CIT (A) is accordingly confirmed. The ground of appeal raised by the Revenue is dismissed.
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2015 (11) TMI 1881
Validity of Revision u/s 263 by CIT - Addition u/s 68 - Limitation period for passing order HELD THAT:- As decided in Subhlakshmi Vanijya Pvt. Ltd. [2015 (8) TMI 174 - ITAT KOLKATA] contention of the assessee that since the AO of the assesseecompany was not empowered to examine or make any addition on account of receipt of share capital with or without premium before amendment to section 68 by the Finance Act, 2012 w.e.f. A.Y. 2013-14 and hence the CIT by means of impugned order u/s 263 could not have directed the AO to do so, is unsustainable.
Failure of the AO to give a logical conclusion to the enquiry conducted by him gives power to the CIT to revise such assessment order - notices u/s 263 were properly served through affixture or otherwise. Further the law does not require the service of notice u/s 263 strictly as per the terms of section 282 of the Act. The only requirement enshrined in the provision is to give an opportunity of hearing to the assessee, which has been complied with in all such cases
Limitation period for passing order is to be counted from the date of passing the order u/s 147 read with sec. 143(3) and not the date of Intimation issued u/s 143(1) of the Act, which is not an order for the purposes of section 263. In all the cases, the orders have been passed within the time limit.
CIT having jurisdiction over the AO who passed order u/s 147 read with section 143(3), has the territorial jurisdiction to pass the order u/s 263 and not other CIT. Addition in the hands of a company can be made u/s 68 in its first year of incorporation.
After amalgamation, no order can be passed u/s 263 in the name of the amalgamating company. But, where the intention of the assessee is to defraud the Revenue by either filing returns, after amalgamation, in the old name or otherwise, then the order passed in the old name is valid.Order passed u/s 263 on a non-working day does not become invalid, when the proceedings involving the participation of the assessee were completed on an earlier working day. Order u/s 263 cannot be declared as a nullity for the notice having not been signed by the CIT, when opportunity of hearing was otherwise given by the CIT.
Refusal by the Revenue to accept the written submissions of the assessee sent after the conclusion of hearing cannot render the order void ab initio. At any rate, it is an irregularity. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act.
All the appeals are dismissed.
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2015 (11) TMI 1880
Nature of expenditure - claim of expenditure for covering storm water drain - Revenue oe capital expenditure - HELD THAT:- There is no dispute that the drain was running on the side of hotel building of the assessee and the other side of the drain was used by the assessee for parking of vehicles. Revenue had also not disputed the finding of the CIT (A) that Asst. Engineer of BBMP while permitting the assessee to lay slabs over the drain restrained the assessee from using it for any business purpose.
Drain was owned by BBMP. By virtue of slabs laid by the assessee what assessee gained was improved functioning of its hotel. Assessee, if it had not covered the drain with the slabs would have been consistently pestered by its guests complaining of bad smell and mosquito menace. In our opinion, though it was a one-time outgo, it did not bring into existence any new profit making apparatus. It simply improved the functioning efficiency of the assessee. When the facts are considered in totality we cannot but agree with the view taken by the CIT (A). Ground 2 of the Revenue stands dismissed
TDS u/s 194H - credit card commission - assessee had paid to the bank for credit / debit card payment realisation - AO was of the opinion that such payments fell within the ambit of commission and therefore Section 194H of the Act stood attracted - HELD THAT:- Grounds raised by the Revenue relies on CBDT notification No.56/2012, dt.31.12.2012 which exempts certain types of payment from deduction of tax at source. Said notification has been issued under powers vested on the central government vide Section 197A(1D) - No doubt one of the type of payments mentioned in the above circular is credit card/ debit card commission on transactions between merchant establishment and acquirer bank. Notification was effective from 01.01.2013. But in our opinion this notification cannot be construed in a manner to say that prior to 01.01.2013 charges deducted by the bank from credit card payments received from customers of the assessee fell within the purview of Section 194H for warranting a deduction of tax at source.
As mentioned by CIT (A), coordinate bench in the case of Tata Teleservices [2013 (1) TMI 480 - ITAT BANGALORE] had clearly held that such payments were more in the nature of bank charges than in the nature of commission and Section 194H of the Act would not be attracted. In such circumstances, we do not find any reason to interfere with the order of CIT (A). Ground 3 stands dismissed.
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2015 (11) TMI 1879
Disallowance u/s. 40(a)(ia) - non deduction of tds on commission payment - payment of commission is not fully established by the assessee as meant for business purposes - HELD THAT:- We find that the issue of paid/payable as decided by the ITAT Special Bench, Vishakapatnam [2012 (3) TMI 402 - ITAT VISAKHAPATNAM] in the context of applicability of section 40(a)(ia) has been reversed by the decision of the Hon’ble Jurisdictional Calcutta High Court in the case of CIT Vs. Crescent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] wherein their Lordships of Calcutta High Court held that the provisions of section 40(a)(ia) could be invoked even in respect of amounts paid before the end of the financial year.
We also find that there is an amendment in section 40(a)(ia) by insertion of second proviso w.e.f 1-4-2013, wherein if the payee had considered the subject mentioned receipts including the sum in his return, then the payer ( the asssessee herein) should not be invited with the disallowance of section 40(a)(ia) of the Act. This amendment has been held to be retrospective in operation by recent decision of the Hon’ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT]
Thus we set aside this issue to the file of the ld.AO to decide the same in the light of the aforesaid judgment( as stated supra). Accordingly, we direct the ld.AO to verify whether the payee(s) has included the subject mentioned receipts in his respective return and paid taxes thereon or not. If that is so, then disallowance u/s. 40(a)(ia) of the Act shall not be made in the hands of the assessee. Accordingly, the ground nos. 1 & 2 raised by the revenue are allowed for statistical purposes.
Addition towards carriage outward - AO found that no details were filed by the assessee before him regarding the same and also found that the assessee has not charged any expenditure relating to vehicle except fuel charge - CIT(A) restricted the disallowance to 50% and granted relief - HELD THAT:- We find that in the facts and circumstances of the case, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the ld.AO for deciding the same afresh, in accordance with law, after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to co-operate with the ld.AO in furnishing necessary evidences in support of his claim. Accordingly, ground no.3 raised by the revenue is allowed for statistical purpose.
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2015 (11) TMI 1878
Validity of assessment u/s. 153A - requirement of issue and service of notice u/s 143(2) - HELD THAT:- We find that the judgment of Hon'ble Allahabad High Court in the case of Rajeev Sharma [2010 (5) TMI 600 - ALLAHABAD HIGH COURT] is in the context of assessment u/s 147 whereas the judgment of Hon’ble Delhi High Court in the case of Ashok Chaddha [2011 (7) TMI 252 - DELHI HIGH COURT] is in the context of assessment u/s 153A and in this judgment, it was held that the requirement of issue and service of notice u/s 143(2) is not applicable in the assessment made in compliance to notice u/s 153A.
We also find that in the case of Rajeev Sharma [2010 (5) TMI 600 - ALLAHABAD HIGH COURT] the decision of Hon'ble Allahabad High Court is in favour of the assessee but the same is in the context of section 147 of the Act - Thus in the present case also, we follow the judgment of Hon'ble Delhi High Court and decide the issue against the assessee. Accordingly, ground No. 3 & 4 of the assessee are also rejected.
Whether no incriminating material having been found during the course of search & seizure action under section 132(1)? - We find that it was held by Hon'ble Allahabad High Court in the case of Raj Kumar Arora [2014 (10) TMI 255 - ALLAHABAD HIGH COURT] that the reasons given by the Tribunal that no material was found during search cannot be sustained and it is also held by Hon'ble Allahabad High Court that the Assessing Officer has the power to reassess the income of the assessee not only for the undisclosed income which was found during search but also with regard to the material that was available at the time of original assessment. Respectfully following this judgment of Hon'ble Allahabad High Court, we hold that there is no merit in ground and the same is also rejected.
Addition of sums as had been borrowed from various persons - HELD THAT:- This is undisputed fact that as per the assessment order, it is held by the A.O. that deduction being interest on this very loan is allowable and he made addition of only ₹ 83,058/- after reducing this amount from the amount of ₹ 2.40 Lacs brought to tax by him as notional interest on loan given by the assessee of ₹ 20 Lacs. We are aware that it is held by learned CIT (A) that this notional interest of ₹ 2.40 Lacs cannot be brought to tax but this is immaterial because if the assessee actually received interest on this loan given by the assessee at any point of time, the same can be taxed only after reducing deduction allowed by the A.O. himself on account of interest paid by the assessee on this very loan. Having allowed deduction on account of interest on this very loan of ₹ 20 Lacs, the A.O. cannot say that the loan is unexplained and add the same u/s 68 because the A.O. cannot blow hot and cold together. We, therefore, delete this addition.
Addition on alleged ''low withdrawals" for meeting household expenses - HELD THAT:- Neither the Assessing Officer nor the CIT(A) has given any basis for holding that the house hold withdrawal shown by the assessee is not sufficient. Hence, we delete this addition - This ground is allowed.
Addition of cash payment - as per a hand written signed agreement between the assessee and Shri Ashok Dayal (partner Sunder Talkies) and Shri Shailendra Kumar Singh regarding deal the assessee has made cash payment - HELD THAT:- The cash in hand available on 24/07/2004 in the cash book of the assessee was ₹ 5,34,145/-. But on subsequent dates, the cash balance as per cash book has fallen and the minimum balance was ₹ 3,95,885/- on 03/03/2005 as can be seen on page No. 43 of the paper book. In the cash of HUF also, the balance has gone down. Under these facts, the assessee does not deserve any benefit on this account because, the cash balance has fallen down on later dates and therefore, if the same cash was used for paying ₹ 6.25 Lacs, then from where the subsequent payments were made as noted in the cash books. Moreover, even for the lowest balance in cash books after search date, the assessee says that this much cash was available with him on that date after the search date. Then how it can be accepted that the same cash was used to pay ₹ 6.25 lacs before search date. Hence, this ground is rejected.
Addition on account of receipts from guest house - HELD THAT:- A clear finding has been given by CIT(A) that this addition was made by the Assessing Officer on the basis of suspicion, conjectures and surmises and this categorical finding of CIT(A) could not be controverted by Learned D. R. of the Revenue. We also find that this finding is also given by learned CIT(A) that even as per the seized material, receipt of ₹ 1.50 lac is seen. This receipt of ₹ 1.50 lac has been duly shown by the assessee in its income but the Assessing Officer has stated that the receipts from Gopalaya has to be considered at ₹ 6 lac without giving any basis for such estimation. Considering these facts, we find no reason to interfere in the order of CIT(A). Ground No. 1 is rejected.
Addition on account of interest accrued from ICICI Bond - HELD THAT:- We find that this addition has been deleted by learned CIT(A) on the basis that as per Notification No.F.4(9)-W & M of 2003 dated 13/03/2003 reported interest on 6.5% savings bonds 2003 is tax exempt. In view of this factual and legal position, no interference is called for in the order of CIT(A) on this issue. Accordingly, ground No. 2 is rejected.
Unexplained cash payment - CIT-A deleted the addition admitting the additional evidence produced before him during the course of appellate proceedings - whether it is violation of Rule 46A of the IT Rule 1962 and without affording any opportunity to the AO or calling for a remand report? - HELD THAT:- We find force in the submissions of Learned D. R. of the Revenue that CIT(A) should not have given such direction to Assessing Officer for making verification and deleting the addition and instead of this, he should have obtained remand report and should have decided the issue. But considering this fact that already more than 2½ years have passed after the date of order of CIT(A) being 05/03/2013, no useful purpose will be served by obtaining remand report from the Assessing Officer by Tribunal or restoring the matter back to CIT(A) for fresh decision after obtaining remand report from the Assessing Officer and therefore, under these facts, we hold that the Assessing Officer should verify this contention of the assessee that this payment has apparently been made by cheque by Smt. Laxmi Agarwal vide cheque dated 14/07/2005 and if this contention is found correct then this addition should be deleted. Accordingly, ground No. 3 stands disposed of.
Income from house property - because of encroachment, the property is not even identifiable at the site and no income has been realized nor realizable in relation to the said property and therefore, no income is assessable u/s 22 - CIT(A) has accepted these claims of the assessee and deleted the addition made by the Assessing Officer - HELD THAT:- Revenue could not show that these contentions of the assessee accepted by CIT(A) are not correct. Under these facts, we find no reason to interfere in the order of CIT(A). Accordingly, ground No. 4 is also rejected.
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2015 (11) TMI 1877
Assessment u/s 153A - requirement of issue and service of notice u/s 143(2) - HELD THAT:- We find that the judgment of Hon'ble Allahabad High Court in the case of Rajeev Sharma [2010 (5) TMI 600 - ALLAHABAD HIGH COURT] is in the context of assessment u/s 147 whereas the judgment of Hon’ble Delhi High Court in the case of Ashok Chaddha [2011 (7) TMI 252 - DELHI HIGH COURT] is in the context of assessment u/s 153A and in this judgment, it was held that the requirement of issue and service of notice u/s 143(2) is not applicable in the assessment made in compliance to notice u/s 153A.
We also find that in the case of Rajeev Sharma [2010 (5) TMI 600 - ALLAHABAD HIGH COURT] the decision of Hon'ble Allahabad High Court is in favour of the assessee but the same is in the context of section 147 of the Act - Thus in the present case also, we follow the judgment of Hon'ble Delhi High Court and decide the issue against the assessee. Accordingly, ground of the assessee are also rejected.
Whether no incriminating material having been found during the course of search & seizure action under section 132(1)? - We find that it was held by Hon'ble Allahabad High Court in the case of Raj Kumar Arora [2014 (10) TMI 255 - ALLAHABAD HIGH COURT] that the reasons given by the Tribunal that no material was found during search cannot be sustained and it is also held by Hon'ble Allahabad High Court that the Assessing Officer has the power to reassess the income of the assessee not only for the undisclosed income which was found during search but also with regard to the material that was available at the time of original assessment. Respectfully following this judgment of Hon'ble Allahabad High Court, we hold that there is no merit in ground and the same is also rejected.
Undisclosed expenditure of 7% in respect of India Millennium Bond of 50,000 US$ - As seen that this issue is covered in favour of the assessee by the judgment of Hon'ble Allahabad High Court rendered in the case of Kanchan Singh[2008 (5) TMI 641 - ALLAHABAD HIGH COURT] held there is no reason to doubt the genuineness of gift by Shri K. C. Kapadia to the assessee and therefore, the assessee was able to establish the nature and source of the money because the same were the maturity proceeds of four bonds purchased by Shri K. C. Kapadia on 1st October 1998 and therefore, no addition can be made in assessment year 2004-05.
In the present case also, India Millennium Bond of US$ 50,000 were gifted by Jayesh Arvind Bhai Patel of Dubai to the assessee as gift letter dated 18/06/2001. This IMD Bond Certificate was issued by SBI on 05/01/2001 in US$. This date falls in previous year 2000-2001 relevant to assessment year 2001-02 and therefore, as per this judgment of Hon'ble Allahabad High Court cited by Learned A. R. of the assessee, no addition can be made in the present assessment year being assessment year 2002- 03. Hence, respectfully following this judgment of Hon'ble Allahabad High Court, this addition regarding India Millennium Bond is deleted and as a result the second addition of ₹ 17,564/- being alleged undisclosed expenditure of 7% in respect of India Millennium Bond of 50,000 US$ equal to ₹ 24,50,918/- is also deleted. Accordingly ground of assessee are allowed.
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2015 (11) TMI 1876
TDS u/s 192 to 195 - re-insurer remittance made in three financial year to non-resident reinsurer (NRRs) @ 41.82% - AO charged interest u/s.201(1)/201(1A) on these remittance - whether non-resident insurers from the non treaty countries have no business connection in India without appreciating that the source of income is in India and the property in the form of reinsured assets are in India? - as pleaded that the assessee is not liable to make any deduction on the reinsurance remittance to NRRs - HELD THAT:- As carefully gone through the orders of the authorities below and found that detailed finding has been recorded by the CIT(A) to the effect that assessee is an independent broker and not an agent. The assessee does not carry out any activity on behalf of anyone in India and has no authority to enter into any contract in India. In these circumstances, the provisions of Section 192 to 195 relating to tax deduction at source are not applicable to the assessee. The provisions of Section 9(1)(i) specifically excludes an independent broker, neither the non-resident reinsurer nor any independent insurance company have any control over the assessee.
AO has also accepted in order u/s.201/201(1)(A) of the Act that the countries with which India do not have a DTAA, the income of NRRs could be taxed in India only if the NRRs has permanent establishment in India. Since the assessee has no business activity on behalf of the NRRs, the provision of Section 192 to 195 are not applicable, hence, the question of tax deduction at source does not arise at all. It is pertinent to mention that none of the earlier/subsequent years, the assessee was found to be liable for deduction of tax u/s.192 to 195 of the IT Act. - Decided against revenue.
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2015 (11) TMI 1875
Addition u/s 14A r.w.r. 8D - Expenditure incurred on earning exempt - HELD THAT:- In the instant case, the income from dividend has been shown at Rs. 9,23,660/-, disallowance u/s 14 A read with Rule 8 D worked out by the AO comes to Rs. 24,53,928/-. Thus it is clear that the AO has disallowed the entire ‘tax exempt income’ which is not permissible in view of the judgment of JOINT INVESTMENTS PVT LTD VERSUS COMMISSIONER OF INCOME TAX [2015 (3) TMI 155 - DELHI HIGH COURT]. The Hon’ble Delhi High Court held that the window for disallowance is indicated in section14 A, and is only to the extent of disallowing expenditure “ incurred by he assessee in relation to the tax exempt income”. The disallowance under section 14 A read with Rule 8 D as worked out by the AO is not in accordance with law and as such working is not sustainable.
In view of the above we uphold the order of the Ld. CIT(A) restricting the disallowance u/s 14A to Rs. 9,23,660/-.
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2015 (11) TMI 1874
Addition u/s 68 - Assessee purchased tapioca from various farmers - as per CIT-A there is no reference about the middlemen for purchasing tapioca - As per AO transaction was not genuine, the assessee has failed to establish identity of the creditors, creditworthiness of creditors and genuineness of the transaction - HELD THAT:- This Tribunal is of the considered opinion that the CIT(Appeals) has to examine the material facts available on record and record his own reasons for arriving at his conclusion. In this case, the CIT(Appeals) has not recorded any of his reasoning for the conclusion reached in his order. The order of the CIT(Appeals) being a quasi-judicial order, the application of mind shall reflect in the order itself.
Reproducing the remand report and reply and thereafter simply rejecting the claim of the assessee on one line cannot be appreciated by the Appellate Authority. Therefore, the order of the CIT(Appeals) is set aside and the matter is remitted back to his file who shall re-examine the issue afresh and pass a speaking order and the order shall reflect the application of mind on material facts available on record - Appeal of the assessee is allowed for statistical purposes.
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2015 (11) TMI 1873
Dishonor of Cheque - acquittal of the accused - main contention of revision petitioner is that part payment of the debt amount under the cheque was paid to the payee and he has not made any endorsement of that part payment in the cheque - if the debt amount is less than the cheque amount whether any offence under Section 138 will be attracted against the revision petitioner?
HELD THAT:- According to Section 138 of the N.I. Act, where any cheque drawn by a person on an account maintained by him with a bank for payment of any money to another person from, out of that account, for the discharge of any debt or liability, in whole or in part is returned by the bank, on the ground that the amount in that account is insufficient to honour the cheque or it exceeds the amount arranged to be paid from that account by an agreement made with a bank, such person shall be deemed to have committed an offence under Section 138 of the N.I. Act. This deemed provision is subject to the statutory condition that the cheque has to be presented within the statutory period in which it is drawn or within the period of its validity - The facts of the case show that the amount covered by the cheque is bigger than the cheque amount. A reading of the wordings of the Section shows that the cheque should be given in discharge of a debt either in whole or in part or any liability and if the cheque amount is higher than the debt or liability, Section 138 of the N.I. Act would not get attracted.
The presumption of law is that a person is innocent until proved guilty. This means that there is always a presumption of innocence in favour of an accused and the burden to prove the case is on the prosecution. That presumption is available to an accused who is prosecuted under Section 138 of the Negotiable Instruments Act, simply because a cheque happened to be dishonoured itself is not a ground to say that the accused has committed an offence. There may be exceptional cases out side the purview of the Section 138. A debt is a liquidated amount of money owed and payable to another in present or in future which is a pecuniary liability recoverable by action in respect of money or demand. Therefore, Section 138 of the N.I. Act shows not only the debt, but also the liability. A cheque have been issued in discharge of a debt wholly or in part or of any liability.
The indorsement for part payment of the cheque was explained under Section 56 of the N.I. Act. According to Section 56 of the Negotiable Instruments Act, "no writing on a negotiable instrument is valid for the purpose of negotiation, if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid a note to that effect may be indorsed on the instrument, which may then be negotiated for the balance". The sections prohibit the transfer of an instrument for a portion of the amount due under it - When Court considers part payment due under a cheque and if drawee makes an endorsement regarding the part payment on the instrument and he claims the balance amount by presenting the cheque for encashment through a Bank and if it is dishonoured, then an offence under Section 138 of the N.I. Act will be made out. Both the Courts below failed to appreciate the admission made by PW 1 and the documentary evidences which resulted in miscarriage of justice.
Here the portion of the cheque was repaid and such payment is admitted by PW1 and no endorsement was made on the back of the cheque or face thereof and on prosecution complainant claimed cheque amount, no offence under Section 138 of the N.I. Act is made out. The evidence adduced in this case is not sufficient to convict the accused under Section 138 of the N.I. Act.
The conviction and sentence passed by the Court below under Section 138 of the N.I. Act are set aside and revision petitioner is acquitted - Application disposed off.
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2015 (11) TMI 1872
Eligibility of Deduction u/s 80IB - HELD THAT:- We find that this Tribunal in assessee’s own case for assessment year 2004-05 had held that the assessee was entitled to deduction u/s 80IB. The AO has not followed the ITAT’s order on the ground that the Department has filed the appeal against the decision before the Hon’ble High Court.
CIT(Appeals) has not accepted the ITAT’s decision on the ground that the Tribunal was not properly apprised of the facts. We find that since the facts are identical and in assessee’s own case the Tribunal has decided the issue, judicial discipline mandates that we follow the order of the Tribunal. We further note that the Revenue has already filed appeal before the Hon’ble High Court [2010 (4) TMI 1232 - BOMBAY HIGH COURT]. In this view of the matter since the Hon’ble jurisdictional High Court has not reversed the decision of ITAT, we follow the above said order of ITAT in assessee’s own case. Hence we set aside the order of learned CIT(Appeals) and hold that the assessee is eligible for deduction u/s 80IB. - Assessee appeal allowed.
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2015 (11) TMI 1871
Disallowance made on account of BMC Charges and Custom charges - HELD THAT:- In the present case, the assessee has paid the charges on account of regularization charges to the BMC and DR has not brought in our notice that any deviation is an offence under the statutory provision or by-laws of BMC.
We have also seen the order passed by Commissioner of Custom (import) dated wherein, the goods of the assessee were permitted to be clear on the payment as levied under various provision of Custom Act. Considering all the disallowance made on account of BMC Charges and Custom charges are deleted. - Decided in favour of assessee.
Disallowance made u/s 14A r.w.r. 8D - As per CIT disallowance out of administrative expenses worked out on the basis of formula in Rule 8D, made u/s.14A by the AO, is upheld - HELD THAT:- The assessee has not satisfied the AO as to why the disallowance U/s 14 A read with Rule 8D, be not made, however before the CIT(A) the assessee had admitted that and indirect expenditure of Rs. 93,12,971/- has been charged to the P/L account an estimated amount of Rs. 10,000/- could have been incurred in earning the exempt income. Thus both the condition for invoking Rule D was satisfied. The ld AR for the assessee has not brought any material before us as to why the disallowance made u/s 14 A read with Rule D is wrong, thus the addition u/s 14A, made by AO , which was sustained by CIT(A) does not require any interference. - Decided against assessee.
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2015 (11) TMI 1870
Revision u/s 263 - TDS u/s 194C - Non deduction of TDS on contract work undertaken - penalty proceedings under section 271C initiated by AO - HELD THAT:- On perusal of the replies, we find that all these payees have confirmed that the payment to them have been made for supply of earth, mitti and stones etc. Since payment for supply of material is not exigible to TDS, there was no need for the assessee to deduct such tax at source and resultantly the provisions of section 40(a)(ia) do not come into play. In this way, there was no need for the Assessing Officer to make disallowance of these expenses.
Since these letters are a part of assessment records, we are of the view that the Assessing Officer did not invoke the provisions of section 40(a)(ia) and did not make disallowance, getting convinced by the fact that the payments were made for supply of material. The fact that the AO in his order did not mention these investigations made by him does not itself make his action illegal. He may not have referred to these documents may be because he was convinced that no disallowance is called for. Therefore, in such a scenario, on the facts and circumstances of the case, we do not find any error in the order of the Assessing Officer.
In this case, Commissioner of Income Tax had tried to read too much from the mind of the Assessing Officer. Once, we reach to a conclusion that provisions of section 40(a)(ia) of the Act are not applicable on the facts and circumstances of this case, whatever was going through in the mind of the Assessing Officer at that time, it is a fact that he has reached to a correct conclusion.
The order of the Assessing Officer cannot be said to contain any error on this count. The fact that the payments were made for supply of material also got strengthen by the fact that the assessee was engaged in such kind of project from Sahara India Commercial Corporation Ltd. during the year. The issue of nomenclature ‘commission’ given to the said payments also got clarified during the assessment proceedings. Therefore, there is no question of invoking the provisions of section 194H of the Act. Further, there being no contract or son-contract, the provisions of section 194C are also not applicable. The nature of payments is quite clear from the replies sent by the supplier to the Assessing Officer directly.
The fact that the Assessing Officer has initiated proceedings under section 271C, may have weighed too much in the mind of the Commissioner of Income Tax, while holding the order to be erroneous. But in our view, initiating penalty proceedings under section 271C of the Act by the Assessing Officer is not a relevant factor to decide whether the disallowance under section 40(a)(ia) was called for or not. Since as already held by us, the payments were not prone to invoking the provisions under section 40(a)(ia) of the Act, the disallowance, in any case, was not called for.
Thus there being no error in the order of the Assessing Officer, the jurisdiction assumed by the Commissioner of Income Tax under section 263 of the Act is not as per law. - Decided in favour of assessee.
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2015 (11) TMI 1869
Maintainability of application - HELD THAT:- Issue notice. Notice is accepted by the learned counsel for the respondent Nos.1 & 4. Notice is also accepted by Mr Aggarwal on behalf of the respondent Nos.2 & 3.
Renotify on 14.12.2015.
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2015 (11) TMI 1868
Application for sanctioning of the Scheme of Amalgamation - Clause 7 of Part II of the Scheme - HELD THAT:- In reply, the petitioners are agreeable to modify the clause by adding the words “subject to compliance of the requirements of the provisions of Sections 13, 14, 61 and 117 of the Companies Act, 2013” at the end of paragraph 7 of Part II of the said scheme as desired by the Central Government.
Scrutiny proceedings under Section 143(2) of the Income Tax Act, 1961 were pending in respect of the assessment of the petitioner nos. 5 and 7 - HELD THAT:- The Income Tax Department had raised an objection against any scheme of amalgamation of these two companies. Learned Counsel appearing on behalf of the petitioners submits that after the issue of the letter dated 6th February 2015, an assessment order has been passed by the Income Tax Department in respect of both the petitioner nos.5 and 7 on 20th March 2015 and copies of such orders have been annexed to the affidavit in reply filed by the petitioners. In the circumstances, there is no embargo on the scheme being sanctioned.
It is observed from the Balance Sheets as at 31st March, 2013 of the transferor companies that the share application money was pending for allotment - HELD THAT:- A revised share valuation report was also prepared by the valuer after taking into consideration the allotment of shares made during 2013-14 and such revised valuation report dated 13th April 2015 is also on record. Moreover, it would be evident from the valuation report dated 13th April 2015 that there is no difference in the share exchange ratio. Further paragraph 12.8 of Part III of the scheme takes into consideration and makes provision in respect of the shares allotted by the transferor companies between the appointed date and the effective date.
There are, therefore, emergent circumstances and for the benefit of all concerned, it was necessary that the scheme be sanctioned.
Application allowed.
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2015 (11) TMI 1867
Maintainability of petition - availability of alternative remedy of appeal - validity of assessment orders passed by the respondent - HELD THAT:- This Court is not inclined to go into the merits of the matter and decide the same as this Court is of the considered view that the writ petition itself is not maintainable in view of the availability of alternative remedy.
Even otherwise, the decision relied on by the learned Senior Counsel in KALYANI OIL MILLS VERSUS THE STATE OF MADRAS [1973 (1) TMI 82 - MADRAS HIGH COURT] cannot be pressed into service at this stage, as a perusal of the said decision would also show that the assessee therein after suffering an order of assessment went on appeal before the appellate authority and further before the Tribunal and thereafter only came before this Court where the above said order came to be passed.
These writ petitions are dismissed only on the ground of availability of alternative remedy, without expressing any view on the merits and contentions raised by the writ petitioner.
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