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Showing 21 to 40 of 2149 Records

2019 (4) TMI 2137 - SUPREME COURT

Constitutional validity of Rule 8(2)(i) of the Rajasthan Prisons (Shortening of Sentences) Rules, 2006 - Conviction under Section 302 and other provisions of the Indian Penal Code - petitioners contended that they had served more than 14 years in custody but their cases were not placed by the Jail Authorities before the State Advisory Boards for shortening of their sentences and premature release - HELD THAT:- The plain language of Section 59(2) makes it manifest that there is no requirement for laying of the Rules before the Legislature prior to promulgation. No time limit for laying has been provided. As rightly urged, the use of words “as soon as” coupled with the absence of any consequence for not laying makes the provision directory and not mandatory.

Part 3 of the Rajasthan Prison Rules, 1951, under the heading Remission System, in Rule 1(e) provides that the sentence for imprisonment for life or transportation of life shall be deemed to mean imprisonment for 20 years - Rule 2(e) of the Rules 2006, defines shortening of sentence to mean the reduction of that period of sentence of a prisoner which he has to serve in the prison upon a judicially pronounced sentence as a matter of grace on the part of the State and as a recognition of his good behaviour in the prison.

Manifestly remission not being a matter of right, much less upon completion of 14 years of custody, but subject to rules framed in that regard, including complete denial of the same in specified circumstances, as a matter of State policy, nothing prevents the State from imposing restrictions in the manner done by Rule 8(2)(i) to consider claims for remission.

It is, therefore, held that the High Court erred in striking down Rule 8(2)(i) of the Rules, 2006 on both counts. The Rule is held to be valid and consistent with the law. The impugned orders of the High Court are set aside - appeals are allowed.
2019 (4) TMI 2136 - TELANGANA HIGH COURT

Application for condonation of delay was dismissed for non-prosecution - petitioner filed an application for restoration and allowed the same to be dismissed for non-prosecution - HELD THAT:- In the affidavit filed in support of the writ petition, the petitioner has claimed that his advocate filed written submissions and requested the Tribunal to pass orders. It is represented by the Learned Counsel for the petitioner that the advocate of the petitioner is aged about 90 years and that he is residing in Guntur. Therefore, unable to be present before the Tribunal, he has filed written submissions - It is not known whether written submissions were filed or not. But the petitioner has given some semblance of reason.

The application filed by the petitioner seeking restoration of the condone delay application is allowed and the Tribunal is directed to take up the condone delay application and dispose of in accordance with law - Petition allowed.
2019 (4) TMI 2135 - SECURITIES AND EXCHANGE BOARD OF INDIA

Offence under SEBI Act - irregularities in respect of Co-location facility provided by National Stock Exchange of India Ltd. - unfair trade practices - Preferential Treatment of Stock Brokers by NSE - PFUTP Regulations, 2003 application - As alleged Way2Wealth Brokers Private Limited was permitted to avail of Point to Point (“P2P”) dark fiber connectivity from “Sampark”, a non-empanelled service provider and the P2P connectivity provided by Sampark conferred a latency advantage to W2W which resulted in substantial increase in its turnover during the period April-August, 2015 - HELD THAT:- After having examined the various acts, omissions, expressions through email correspondences and the overall conduct of NSE in the entire matter which helped an unauthorized service provider to access to their Colo facility to lay dark fibre connectivity on behalf of two trading members so was to provide them with higher speed and lower latency that would helped them in trading in securities in a more efficient and profitable manner, it leaves no doubt that the Noticee has actively supported and helped W2W and GKN to gain faster access to the market data feeds by means of a irregular connectivity which was certainly a major inducement for the two trading members to engage Sampark and to circumvent all policies and guidelines so as to achieve their goals. I am therefore of the view that the actions and conducts of NSE appropriately fall into the inclusive definition of fraud under Regulation 2 (1) (c) of PFUTP Regulations, 2003.

As a logical corollary to the aforesaid observation, I am of the opinion that NSE has conducted its business in a manner which involved unfair trade practice and also amounted to commission of deceit on its trading members who were discriminated against because of the fraudulent acts committed by it in allowing its own policy / circulars to be violated with the active connivance of its own officials, with Sampark, W2W and GKN.

Sampark had actively colluded with W2W, and NSE to provide P2P connectivity in an unauthorized and irregular manner so as to help and induce them in their dealing in securities market. Similarly, being the COO of Sampark at the relevant part of time who was driving the business of Sampark and was actively engaged with W2W and GKN throughout the transactions with them and also with NSE, Prashant D’Souza (Noticee No. 17) is equally culpable and liable for the actions and fraudulent conduct on the part of Sampark.

Also while discussing the submissions of GKN and holding GKN as liable for violation of the provisions of SEBI Act, 1992 and PFUTP Regulations, 2003, as mentioned in the SCNs, hold the Noticees, who were the partners of GKN at the relevant point of time are equally liable for the violation of the provisions of SEBI Act, 1992 and PFUTP Regulations, 2003 as per the SCNs served upon them.

Non executive directors - Since the company had a full time CEO to manage the day to day operations of the company, it can hardly be said that the non executive directors would be either aware of or having any role to play in the day-to-day decision making or operational activities of the company. There is nothing on record to suggest that these two Noticees were in any manner involved with the company's actions and decision with respect to engaging Sampark for P2P connectivity. Therefore, I am of the view that the allegations made against them in the SCN are not sustainable.

The technology surrounding Colo facility, P2P connectivity and dissemination of market data feeds is one area where NSE has been freely deploying technology and setting its own regulatory norms for observance and compliance by its own intermediaries. The only cardinal principle that they ought to respect is that no market participant is discriminated against and no market participant is allowed to take undue advantage of its Colo facility and the integrity and sanctity of its facility is ensured at all points of time.

As a Self Regulatory Organization (SRO), NSE issued its own circular and guidelines for accessing into its Colo facility by the trading members and therefore, it was its onerous duty to maintain the sanctity of its own regulatory norms without fail. However, the way Colo facility has been mis-managed and manipulated by certain trading members with the active connivance of an unauthorized service provider and the officials of NSE, as evident from the discussions and observations made by me in the earlier paragraphs of this order, shows NSE's apathy towards the principle of transparency, fairness and equity mandated by SEBI on them.

Under the circumstances, the irregular acts, absence of due diligence, misrepresentation and false statements that have come to notice in this entire narrative of P2P connectivity involving Sampark have put a question mark on the corporate ethos and credibility of the exchange trading system. Such collusive irregularities cannot be allowed to be passed off as mere technical irregularities as has been postulated by NSE, W2W, GKN and other individual Noticees in their submissions. The roles played by all the Noticees as highlighted above have cumulatively resulted into not only a fraud on the trading platform of a recognised leading stock exchange but also have upset the very foundation of a securities market institution that is built upon faith and confidence of the investing public at large.

With respect to the Noticees' objection to the invocation of provisions of PFUTP Regulations, 2003 against them on the ground that, "dealing in securities" is sine qua non to prove fraud under the PFUTP Regulations, 2003, have already observed in the beginning of this order that the definition of “dealing in securities” is inclusive definition and is not confined only to the acts of buying, selling or subscribing to securities.

In the present case, the allegations levelled against the Noticees are in respect of P2P connectivity between NSE and BSE Colo. Such connectivity is for the purpose of making available the data which helps in dealing in securities through Algo trading, Direct Market Access (DMA) or Smart Order Routing (SOR). The acts alleged against the Noticees fall in the definition of dealing in securities and accordingly they can be charged with the violations of PFUTP Regulations, 2003. Similarly, as already discussed and held in the beginning of this order that Sampark and its Director (Noticee no. 16 and 17) are persons associated with securities market for the acts committed by them in connection with providing P2P connectivity to some stock brokers at NSE Colo facility to enable them to have lower latency in the matter of their trading in securities.

It may be noted that the provisions of section 12A(c) of the SEBI Act, 1992 and regulation 3(d) of the PFUTP Regulations, 2003 prohibit engagement in any act, practice or course of business, in connection with issue or dealing in securities, in contravention of law. Similarly, Regulation 4(1) of the PFUTP Regulations, 2003 provides that no person shall indulge in a fraudulent or unfair trade practices in securities.

In the instant case, we find that the acts, omissions and conduct of all the Noticees, as alleged in the SCNs, except for the acts of Noticee no.2, Noticee no.10 and Noticee no.11, are covered in the prohibitions prescribed under section 12A(c) of the SEBI Act, 1992 and regulation 3(d) and 4(1) of the PFUTP Regulations, 2003. In view of the aforesaid observations, I find no flaw with the allegations of violations of provisions of Section 12A (c) of SEBI Act 1992 read with relevant regulations of PFUTP Regulations, 2003 against the above stated Noticees.

In addition to the violations as mentioned in para 69.11,

(i) Noticee no. 1, by committing the aforesaid acts, has failed to ensure equal, unrestricted, transparent and fair access to all stock brokers and has thus violated regulation 41 of the SECC Regulations, 2012.

(ii) Noticee no. 3, 4 5, by committing aforesaid acts, being key management personnel of a recognised stock exchange, have failed to abide by the Code of Ethics specified under Part– B of Schedule– II of SECC Regulations, 2012.

(iii) Noticee no. 3, by committing aforesaid acts, has also failed to abide by Code of Conduct specified under Part– A of Schedule– II of SECC Regulations, 2012.

(iv) Noticee no. 8 and 12, by indulging in the acts as narrated above, have violated the Code of Conduct for Stock Brokers, as provided under Schedule II of Stock Broker Regulations.

SECC Regulations, 2012 has been repealed by Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 (hereinafter referred to as "SECC Regulations, 2018"). In terms of regulation 52(2) of SECC Regulations, 2018, notwithstanding such repeal, anything done or any action taken or purported to have been taken or contemplated under the repealed regulations and circulars before the commencement of these regulations shall be deemed to have been done or taken or commenced or contemplated under the corresponding provisions of SECC Regulations, 2018. Therefore, present proceedings in so far as violations of SECC Regulations, 2012 are concerned may be continued unaffected by such repeal.

In this regard, to meet the ends of justice and in the fitness of things, deem it proper to direct NSE to deposit a reasonable portion of revenue earned by the Noticee through its Colo facility during the period from May 08, 2015 to September 10, 2015 (i.e. the period during which Sampark was permitted to provide P2P connectivity to Noticee no. 8 and Noticee no. 12) to the Investor Protection and Education Fund (hereinafter referred to “IPEF ”) of SEBI which would be utilised for the objectives of the IPEF.

NSE (Noticee No.1)

a) Noticee no. 1 is directed to deposit a sum of Rs. 62.58 Crores as determined at para 70.3 above along with interest calculated at the rate of 12% p.a. from September 11, 2015 till the actual date of payment, to IPEF of SEBI within 45 days from the date of this order.

b) The Noticee no.1, on completion of every six months (by June 30th and December 31st ) for the next three years, shall get its network architecture and infrastructure in its Colo facility and its linkages to the trading infrastructure audited by an independent CISA/CISM qualified and CERT-IN empanelled auditor. The deficiencies/shortcomings observed therein and the corrective steps taken thereon, with the comments of the MD and CEO of the Noticee No.1 shall be submitted to SEBI after obtaining approval of its Governing Board within 60 days from June 30th and December 31st of the year starting from June 30, 2019.

c) Noticee No.1 is directed to prepare a comprehensive documented policy which shall, inter alia, include Guidelines, Standard Operating Procedures and Protocols with respect to its Colo facility including the eligibility criteria for Telecom Service Providers, the norms to be observed by the Stock Brokers and other registered intermediaries. The said documented policy is directed to be issued to the market intermediaries under intimation to SEBI, within three months from the date of this order.

d) Noticee No.1, is directed to submit to SEBI, a report duly certified by its MD and CEO and with the comments of its Governing Board certifying that the network architecture and connectivity at its Colo facility and its linkages to the trading infrastructure are in conformity with SEBI’s regulatory norms to provide fair, equitable, transparent and non-discriminatory treatment to all the market intermediaries registered with the Noticee No. 1. Such report shall be submitted within 30 days after every six months (ending on June 30th and December 31st ) for the next three years. First such report shall be filed for the six months ending on June 30, 2019, by July 31, 2019 based on the existing system and practices, pending compliances to directions issued at b) and c) above.

e) The Noticee no. 1 is directed not to introduce any new derivative product for next six months from the date of this order.

Chitra Ramakrishna (Noticee No.3)

f) Noticee No. 3 is directed that she shall not hold any position either directly or indirectly in the management and/or the Board of or be associated, directly or indirectly, with any Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or any intermediary registered with SEBI or any of their related entities, for a period of 3 years. Further, Noticee No. 3 shall also not hold any position either directly or indirectly in or be associated, directly or indirectly, with a company listed in any of the stock exchanges recognized by SEBI for a period of 3 years.

Subramanian Anand (Noticee No.4)

g) Noticee No. 4 is directed that she shall not hold any position either directly or indirectly in the management and/or the Board of or be associated, directly or indirectly, with any Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or any intermediary registered with SEBI or any of their related entities, for a period of 3 years. Further, Noticee No. 4 shall also not hold any position either directly or indirectly in or be associated, directly or indirectly, with a company listed in any of the stock exchanges recognized by SEBI for a period of 3 years.

Ravi Varanasi (Noticee No.5)

h) Noticee No. 5 shall not hold any position, either directly or indirectly in or be associated, directly or indirectly, with any Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or in any intermediary registered with SEBI or any of their related entities, for a period of 2 years. Further, Noticee No. 5 shall also not hold any position either directly or indirectly in or be associated, directly or indirectly, with a company listed in any of the stock exchanges recognized by SEBI for a period of 3 years.

Nagendra Kumar SRVS (Noticee No.6)

i) Noticee No. 6 shall not hold any position, either directly or indirectly in or be associated, directly or indirectly, with any Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or in any intermediary registered with SEBI or any of their related entities,for a period of 2 years.

Deviprasad Singh (Noticee No.7)

j) Noticee No. 7 shall not hold any position, either directly or indirectly in or be associated, directly or indirectly, with any Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or in any intermediary registered with SEBI or any of their related entities, for a period of 2 years.

Way2Wealth Brokers Private Limited (Noticee No.8)

k) Noticee no. 8 is directed to deposit a sum of Rs. 15.34 Crores along with interest calculated at the rate of 12% p.a. from September 10, 2015 till the actual date of payment, to IPEF of SEBI within 45 days from the date of this order.

l) Notice No. 8 is hereby directed not to accept / induct / enroll any new client for a period of 1 year from the date of this order. Further, Noticee No.8 shall not undertake any trades on any stock exchange recognized by SEBI on proprietary account for a period of 2 years.

Shashibhusan, CEO of Way2Weath (Noticee No.9)

m) Noticee No. 9 shall not hold any position, either directly or indirectly, in or be associated, directly or indirectly, with any Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or in any intermediary registered with SEBI or any of their related entities, for a period of 2 years.

GKN Securities, (Noticee No.12)

n) Noticee no. 12 is directed to deposit a sum of Rs 4.9 Crores along with interest calculated at the rate of 12% p.a. from September 11, 2015 till the actual date of payment, to IPEF of SEBI within 45 days from the date of this order.

o) Notice No. 12 is hereby directed not to accept / induct / enroll any new client for a period of 1 year from the date of this order. Further, Noticee No.12 shall not undertake any trades on any stock exchange recognized by SEBI on proprietary account for a period of 2 year.

Sonali Gupta, Om Prakash Gupta and Rahul Gupta (Noticee No.13, Noticee No.14 and Noticee No. 15)

p) Noticee No. 13, Noticee No. 14 and Noticee No. 15 shall not hold any position, either directly or indirectly, in or be associated, directly or indirectly, with any Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or in any intermediary registered with SEBI for a period of 2 years. Sampark Infotainment Private Limited (Noticee No.16) and Prashant D’Souza (Noticee No.17)

q) Notice No. 16 and Noticee No. 17 are hereby directed not to offer, directly or indirectly, any new telecom services in any manner to any of the Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or any intermediary registered with SEBI or their related entities, for a period of 2 years.

r) Noticee No. 17 is hereby directed not to be associated with any telecom service provider, in any manner, providing services to any of the Stock Exchange, Clearing Corporation, Depository recognized or registered by SEBI and/or any intermediary registered with SEBI, or their related entities, for a period of 2 years.

s) Amounts directed to be deposited as mentioned at para no. a), k) & n) above, shall be deposited either by way of demand draft drawn in favour of “Securities and Exchange Board of India”, payable at Mumbai or by e-payment to SEBI account.
2019 (4) TMI 2134 - ITAT DELHI

TP Adjustment - comparable selection - Exclusion of Alphageo (India) Ltd. - HELD THAT:- As there is a stark difference between employee cost to total cost ratio in the case of Alphageo of 7.55% as against 60.35% in case of the taxpayer. Further when we examine the show cause notice issued by the TPO, he has himself applied the export filter that the company having export turnover less than 25% is not to be taken as comparable. So, when Alphageo fails the export filter which is less than 25% as against 100% export of the taxpayer company, the same cannot be a valid comparable. So, we are of the considered view that Alphageo is not a suitable comparable vis-à-vis the taxpayer and as such has been rightly excluded by the ld. CIT (A).

Allowable deduction u/s 10B - exclusion of misc. income from the net profit of the business of the undertaking on the ground that the taxpayer has not fulfilled three conditions laid down u/s 10B - HELD THAT:- Undisputedly, the taxpayer has duly shown the misc. income in profit & loss account under the head “other income”, which represents amount recovered from its employees towards the notice pay in relation to the period of notice not served. It is also not in dispute that the salary of the employees is claimed as expenses of the undertaking of the taxpayer and that subsequent recovery on termination of the employee should also be credited to the respective undertaking.

Thus by applying the decision rendered in Birla Soft (India) Ltd. vs. DCIPT [2011 (12) TMI 385 - ITAT DELHI] CIT (A) has rightly allowed the notice period pay received as income while computing the deduction u/s 10B of the Act because amount received towards notice period pay was to be treated as income derived from the eligible undertaking.

The decision rendered by the Hon’ble Supreme Court in Liberty India [2009 (8) TMI 63 - SUPREME COURT] applies to DEPP/Duty Drawback benefits which do not form part of net profit for the purpose of computation of profits and do not fall within the expression “profits derived from industrial undertaking” for the purpose of section 80IB. So, ld. CIT (A) has rightly held that Liberty India (supra) is not applicable to the facts and circumstances of the case. - Decided against the Revenue.

Suitability of Stup Consultants Pvt. Ltd. as a comparable for benchmarking the international transactions undertaken by the taxpayer with its AE - Coordinate Bench of the Tribunal in case cited as Emerson Process Management Power & Water Solutions India (P.) Ltd. vs. ACIT [2016 (4) TMI 1176 - ITAT DELHI] examined the suitability of Stup vis-à-vis Emerson Process Management Power & Water Solutions India (P.) Ltd. which is engaged in providing “Application Engineering” software development and related services to its group company and found the same as not a suitable comparable for AY 2008-09 as having different functional profile compared to the assessee company.

Thus Stup is not a suitable comparable vis-à-vis taxpayer on ground of functional dissimilarity, non-availability of segmental information and on ground of failing the export filter, hence we order to exclude it from the final set of comparables.
2019 (4) TMI 2133 - ITAT RANCHI

Re-opening of assessment u/s. 147/148 - overlooking of Leave Travel Assistance (LTA) by the DCIT in the past years - HELD THAT:- From the Schedule 18 of the Balance Sheet, we note that, the information about LTA Provision, was there in the audited books of accounts. Hence, it is not a new tangible material to re-open assessment u/s. 147/148 of the Act. Therefore, reopening of assessment u/s. 147/148 is not valid and hence we allow the grounds raised by assessee.

Write off of technical know how expenses - allowance u/s. 37(1) or not? - HELD THAT:- This amount was required to be paid to operationalize the contract. After initialization of contract HEC could fetch order for supply of seven numbers of CNC Under Floor Wheel Lathe Machine type U2000-400 and not the CNC Surface Wheel Lathe Machine, type SWL 2000. Therefore the balance amount of Technology transfer fee towards CNC Surface Wheel Lathe Machine, type SWL 2000 was not paid and as a result, complete Technology transfer for this machine was not accomplished.

As the complete technology was not acquired for Surface Wheel Lathe Machine, type SWL 2000 and its technology transfer lost its usefulness due to non-availability of orders in the market, the appellant company had to write off the balance amount of the technology transfer fee so paid. This was an admissible business expenditure u/s. 37(1) - Hence we allow the appeal of the assessee.

Provision for warranty expenses - obligation of providing after sale service - HELD THAT:- The appellant company manufactures and sells capital goods/heavy equipment for customers. In compliance with its contractual obligation . Warranty' for replacement of spare parts and maintenance for certain specified period at free of cost are provided. Based on its past experience and technical estimate for warranty, expenses are provided in accounts. This is done while crediting Profit & Loss Account for it Sales Revenue and along with this manufacturing & other expenses and Warranty Expenses are charged in the accounts as expenses.

We note that providing after sale service is an obligation under any contract of sale for the appellant company. Incurring of the liability therefore is certain. Therefore, the appellant company provides for its' After Sale Service/Warranty' obligation on accrual basis in its Profit & Loss Account. The Company provides for 0.5% on Sale for liabilities under contractual obligations/warranties. This was stated at Clause 6 of the Statement of Accounting Policies of the Company forming part of the Balance Sheet and Profit & Loss Account.

The company has worked out the percentage on Sale on the basis of past factor of actual expenses incurred by it towards warranty liability. This provision of 'After Sale Service' is then reversed back by the Company on the expiration of the Guarantee/Warranty Period and the amount of such expiration is then offered for taxation as income. As relying on Haden International Group India (P) Ltd [2007 (12) TMI 305 - ITAT MUMBAI], SIEMENS PUBLIC COMMUNICATION NETWORKS LIMITED. [2009 (1) TMI 359 - ITAT BANGALORE] and LG ELECTRONICS (I) LTD. [2009 (1) TMI 525 - ITAT DELHI] - we dismiss the appeals of Revenue relating to warranty expenses.

Disallowance u/s 40(a) - non deduction of TDS on sales promotion expenses & Liquidated damages, Misc. Provision and Provision for LTA - HELD THAT:- We note that the appellant during the course of appellate proceedings has argued that the company has deducted TDS wherever applicable. The company has also added back the entire expenses in cases where non deduction of TDS was reported. Therefore, disallowance under this head resulted in addition of the same amount twice.

Assessee company incurred expenditure under the head sales promotion .Assessee company deducted TDS and wherever TDS was not deducted the company has added back the entire expenses which is evident from Tax Audit report in Form 3CD (clause 27(a)).

The details were available in the schedules to the Audit Report. It is also not correct to say that any and every expense for sales promotion would be of such nature as to require deduction of tax at source. No such enquiry has been conducted by the Ld. Assessing Officer.

Sales promotion expenses include 'freight and incidental charges' and 'warranty period expenses'. Exhibition and publicity expenses were Rs. 1.47 lakhs and Rs. 0.67 lakhs respectively. The disallowance is completely against the pronouncement in the case of Dhakeshawari Cotton Mills Ltd. V CIT [1954 (10) TMI 12 - SUPREME COURT] wherein it has ruled that "although ITO is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear that in making the assessment under section 23 (3) he is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all and there must be something more than bare suspicion to support the assessment under section 23 (3)."

The order has also ignored the fact that the sales promotion expenses so purported to be added back already includes Rs.127.60 lakh on account of warranty period expenses which has also been added back in the order. Therefore, it tantamounts to addition of the same amount twice and hence, addition made by the Ld. AO cannot sustained in appeal. Liquidated damages, misc. Provisions and Provisions for LTA are made as per basis of accounting practice followed by company, hence addition on these heads should not sustain. Therefore, we dismiss the appeals of Revenue.

Expenditure on horticulture - Whether not related to business expenditure? - HELD THAT:- The word 'wholly' refers to the quantum of expenditure, while the word 'exclusively' refers to the motive, objective and purpose of the expenditure. An expenditure to which one cannot apply an empirical or subjective standard is to be judged from the point of view of a businessman and it is relevant to consider how the businessman himself treats a particular item of expenditure. It means everything that serves, to promote commerce and includes every means suitable to that end. In applying the test of commercial expediency, for determining whether the expenditure was wholly and exclusively laid out for the purpose of the business; reasonableness of the expenditure has to be judged from the point of view of the businessman and not of the revenue.

We note that in CIT V Malayam Plantations Ltd [1964 (4) TMI 9 - SUPREME COURT] has held that “The expression ‘for the purpose of the business’ is wider in scope than the expression ‘for the purpose of earning profits’. Its range is wide; it may take in not only the day to day running of a business but also the rationalization of its administration and modernization of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a precondition to commence or for carrying on of a business.”

In Madhav Prasad Jatia [1979 (4) TMI 2 - SUPREME COURT] as held that the expression ‘for the purpose of business’ occurring under the provision of section 36(1)(iii) is wider in scope than the expression’ for the purpose of earning income, ‘profits or gains’, and this has been the consistent view of the Supreme Court. - Decided against revenue.
2019 (4) TMI 2132 - CESTAT NEW DELHI

Enhancement of the assessable value for the purpose of levy of customs duty - ATF remaining with the aircraft coming from international run and being used for domestic flights - to be loaded with cost of transportation, loading and unloading and handling charges as well as cost of insurance or not - HELD THAT:- The issue is squarely covered by this Tribunal’s decision in the case of M/S. INTER GLOBE AVIATION LIMITED VERSUS CC, NEW DELHI [2017 (9) TMI 926 - CESTAT NEW DELHI] where it was held that There is no freight involved with reference to left over fuel in the tank of an operating aircraft. Hence, there is no question such freight being “not ascertainable” and hence addition of 20% notional freight.

Appeal allowed.
2019 (4) TMI 2131 - ORISSA HIGH COURT

Seeking permission to withdraw this IT Appeal with liberty to challenge the order of rejection of review by way of filing a writ petition - HELD THAT:- Permission is granted.

Accordingly, the Income Tax Appeal stands dismissed as withdrawn with liberty to the learned counsel for the appellant to challenge the order of rejection of review by way of filing a writ petition.
2019 (4) TMI 2130 - ITAT INDORE

Disallowance u/s 40A(3) - payment for expenditure in cash exceeding Rs. 20,000/- - As pleaded before us that the seller Smt. Anar Bai was not having a bank account on the date of receiving cash and subsequently when the account was opened the consideration was paid in various instalments by account payee cheques - HELD THAT:- This fact that Smt. Anar Bai was not having the bank account at the initial date of receiving the consideration in cash has not been disputed by the revenue authorities. The said cash payment was made by assessee for business expediency in order to confirm the purchase deal.

Therefore looking to the given facts and circumstances of the case the alleged cash payment of Rs. 5,40,000/- comes under the exceptions provided in Rule 6DD of the IT Rules and thus both the lower authorities were not justified in sustaining the disallowance u/s 40A(3) of the Act and the same deserves to be deleted. We accordingly order so and allow Ground No. 1 & 2 raised by the assessee.
2019 (4) TMI 2129 - ITAT BANGALORE

TP Adjustment - comparable selection - Revenue had submitted that the order passed by the DRP u/s.154 r.w.s.144C is cryptic as the DRP had excluded the Persistent Systems & Solutions Ltd without giving elaborate and detailed finding - HELD THAT:- As in the assessee’s appeal bearing [2019 (4) TMI 2128 - ITAT BENGALURU] we had already remanded back the entire TP issues to the file of the DRP for denovo examination of the entire case by passing a detailed and reasoned order. Therefore respectfully following the same ratio, we allow the grounds raised by the Revenue.

Foreign exchange loss and risk adjustment - HELD THAT:- As we had already remanded back TP grounds to the file of the DRP, further we feel that the various companies will be included / excluded based on our remanding back the entire TP issues to the file of DRP. In view of the above, and more particularly when the assessee had provided the details of working risk adjustment before the DRP as well as the AO, in view of the above, we also remand risk adjustment issue to the file of DRP for deciding afresh, after affording opportunity of hearing and provide time to explain the case of the assessee.

With respect to the ground no. 2 , we had taken consistent view that only forex gain / loss which have nexus with the transactions of the year shall alone be taken into account. Hence we also sent back this issue to the file of DRP to decide a fresh in the light of Mercedez Benz R & D India P. Ltd v. ACIT [2018 (2) TMI 1975 - ITAT BANGALORE]
2019 (4) TMI 2128 - ITAT BENGALURU

TP Adjustment - Validity of order of DRP in comparable selection - HELD THAT:- DRP had passed a cryptic order and had not specifically decided the ground raised by the assessee with respect to each of the comparables and had only decided the functional comparability of Infosys. We may also point out that the DRP in para 6.5 has mentioned that the assessee has objected to six comparables. However the DRP had only mentioned four comparables in the table below para 6.5, whereas the objection was raised in respect of six comparables. This also shows the total nonapplication of mind by the DRP.

Order passed by the DRP is cryptic, stereotyped and is without any reasoning. In fact the DRP has followed the reasoning given by the TPO without any discretions of the objections of the assessee in respect of both the segments. We expect the DRP to give a reasoned and cogent finding while dealing with the contention of the assessee with respect to exclusion / inclusion of the comparables.

As the order was silent on material aspects, therefore we remand the whole of the TP issue pertaining to inclusion / exclusion to the file of the DRP with a direction to pass a reasoned and speaking order. Appeals of the assessee is allowed for statistical purpose.
2019 (4) TMI 2127 - ITAT DELHI

TDS u/s 194J on payment of PSF[Passenger Service Fee] - HELD THAT:- As decided in assessee own case year 2012-13 [2019 (3) TMI 278 - ITAT DELHI] PSF cannot be considered to be a payment made by the assessee airline. PSF is a payment made by the passenger which is only routed through the assessee airline. It is undisputed that the amount handed over by the assessee airline to the Airport Operators has also not been claimed as expenditure by the asssesee in its books of account. See Jet Airways [2017 (1) TMI 899 - BOMBAY HIGH COURT]

PSF is a statutory levy and the assessee airline is only acting as a conduit between the embarking passengers and the Central Government Agency. Clearly therefore, even the provisions of section 194J of the Act would not apply. Assessee was not required to deduct TDS u/s 194J on payment of PSF account of PSF. Decided against revenue.

TDS u/s 194H - amounts retained by various banks for credit card commission - HELD THAT:- The issues involved in the present appeals are covered by the judgment of JDS Apparels (P.) Ltd [2014 (11) TMI 732 - DELHI HIGH COURT] wherein held that the assessee was not required to deduct TDS on charges retained by Bank / credit card agencies out of the sale consideration of tickets booked through credit / debit cards. It is held that provision of section 194H are not attracted. Decided against revenue.
2019 (4) TMI 2126 - MADRAS HIGH COURT

Valuation of shares held by the Assessee in a closely held Private limited Company - restriction of a lock in period - Tribunal holding that the shares owned by the assessee could not be valued as per the rate quoted in the stock exchange as the assessee was bound by a lock in period, and could not sell those shares at that time - HELD THAT:- Both the parties fairly submit that the controversy involved in the present Tax Case about the valuation of shares held by the Assessee in a closely held Private limited Company has to be made as per Rule 11 in Part C of Schedule III, which stood omitted by Finance Act, 1992, with effect from 1.4.1993, but, since the Assessment Year in the present case is 1992-93, Rule 11 in part C of Schedule III will be applicable, which provides for, valuation to be made for Unquoted Equity Shares in Companies other than Investment Companies.

As decided in Commissioner of Wealth Tax, Chennai v. Thirupathy Kumar Khemka [2012 (10) TMI 69 - MADRAS HIGH COURT] that the shares held in promoters' quota for a lock-in period could be allowed by adopting the methodology under Rule 11.

Thus the Assessing Authority shall adopt the valuation of the Shares in terms of Rule 11 as it stood applicable to Assessment Year 1992-93 in question.
2019 (4) TMI 2125 - ITAT BENGALURU

TP Adjustment - comparable selection - Exclusion of Infosys BPO, Hartron Communications Ltd and Capgemini Business Services India P. Ltd - HELD THAT:- From a perusal of the order reproduced here in above and the objection raised by the assessee, it is clear that the assessee has raised multiple objections. But the DRP while passing the order had restricted to adjudication of one or two objections only and has not bothered to consider and pass an elaborate and reasoned order accepting or rejecting these comparables.

We deem it appropriate to remand the matter back for examination of these comparables to the file of the TPO / AO by considering all the objections raised by the assessee. Needless to say while doing so, the TPO will also consider the binding precedent of the jurisdictional Tribunal in the matter of CGI Information Systems & Management Consultants P. Ltd [2018 (10) TMI 1797 - ITAT BANGALORE] and shall also consider the other decisions of the coordinate bench including the decision of Hyundai Motor Engineering P. Ltd [2018 (8) TMI 658 - ITAT HYDERABAD] - Ground is allowed for statistical purpose.

Exclusion of Harton Communication Ltd, Omega Healthcare Management and e4e Healthcare Business Services P. Ltd - as submitted that these companies not comparable as the assessee had submitted before us that RPT is 100%[more than 15%] and therefore this fact was required to be examined - DRP had passed a cryptic stereo type order and had not specifically dealt with all the objections raised by the assessee. In view of the above the order passed by the DRP is cryptic, stereotyped and is without any reasoning. As the order was silent on material aspects, therefore we remand the Ground to the file of to AO / TPO to decide a fresh .

Comparables R Systems International Limited (seg) and Caliber Point Business Solutions and Informed Technologies India Ltd excluded on the pretext that current year data is not available and the calendar year of these three companies are different from the calendar year of the assessee company - As in Mickinsey Knowledge Center case [2021 (10) TMI 751 - DELHI HIGH COURT] after elaborate discussion had recorded a finding that if the current year data can be derived / deduced by including the first and last quarter of the calendar year and the company is an otherwise functionally comparable with the assessee then the data so derived should be utilised for the purposes of carrying out the FAR analysis. In view of the above, we allow the ground no.8 raised by the assessee and remand the matter back to the TPO / AO for the purpose of recalculating the current year data in the manner laid down above.

Risk adjustment - Since we are remanding the matters in respect of nine comparables to the file of TPO therefore we deem it appropriate to remand this matter also back to the file of the AO / TPO with a direction that the assessee shall provide detailed working of the risk assumed by the assessee and also by comparables on the basis of the parameters laid down by various pronouncements including in the matter of Mercedes Benz Research & Development India (P.) Ltd[supra]

Computation of working capital adjustment - DRP had directed the TPO to work out the working capital adjustment as per its direction. However the TPO while giving effect to the directions of the DRP had repeated the working capital adjustment previously done by the TPO - HELD THAT:- As in terms of the submission made by the Ld. DR, we remand this issue to the file of the TPO for the calculating the working capital adjustment, if any, in accordance with law and the TPO shall consider all the binding decisions of the High Court / coordinate bench. These grounds are allowed for statistical purpose.

Working capital adjustment at interest rate applicable to US currency - TPO had considered average PLR of 14.58% while computing the working capital adjustment - AR had submitted that the assessee is only receiving in US currency therefore rate as applicable in US should be considered for working out working capital adjustment - HELD THAT:- In terms of the submission made by the Ld. DR, we remand this issue also to the file of the TPO for recalculating the working capital adjustment, if any, in accordance with Cotton Natural [2015 (3) TMI 1031 - DELHI HIGH COURT], Rampgreen Solutions [2015 (8) TMI 931 - DELHI HIGH COURT] etc and any other decisions as found applicable. TPO shall consider all the binding decisions of the High Court / coordinate bench. This additional ground no 5 is allowed for statistical purpose.

Computation of deduction u/s. 10A - HELD THAT:- We find that this issue is put to rest by the judgment of HCL Technologies Ltd [2018 (5) TMI 357 - SUPREME COURT] wherein as decided the issue in favour of the assessee holding that the expenses be reduced both from the export turnover as well as from the total turnover. Thus we direct that the expenses incurred shall be deducted both from the export turnover as well as the total turnover for arriving at the deduction u/s. 10A.
2019 (4) TMI 2124 - ITAT CHENNAI

TP Adjustment - restriction of adjustment to quantum of international transactions - HELD THAT:- We do not have any hesitation in holding that the transfer pricing adjustment should be restricted to the international transactions only and it cannot be applied to uncontrolled transactions. While determining ALP of international transactions, benchmarking has to be done only on AE transactions and not for entire turnover. Therefore, we direct the AO/TPO to restrict the adjustment on account of ALP to the extent of the transaction with AE only.

Disallowance u/s 40(a) (i) on the domestic transaction - Since the assessee has not claimed any deduction of this expense in its profit and loss account, in computing the disallowance u/s 40(a)(i), this amount was excluded by the assessee in its tax return - HELD THAT:- The assessee has clearly made out its case, supra, that section 40(a) (ia) is not applicable in its case, as it has not claimed a deduction in computing the profit & loss account to the extent of Rs.23.3 Crores, therefore, the disallowance made by AO is not justified. Therefore, we direct to delete the disallowance. We find from the orders of lower authorities that they have not appreciated the facts and circumstances on the other issues raised by the assessee. Therefore, we deem it fit to remit those issues back to the AO /TPO for reexamination / verification on the basis of materials to be furnished by the assessee. The assessee has also pleaded that there is a mistake apparent on record in computing the disallowance for the current year (FY 2011-12), submitting that it has disallowed pertaining to prior years. However, the AO had disallowed u/s 40(a)(ia) on account of non-deduction of TDS which included sum disallowed by the appellant in AY 2012-13. This has resulted in dual disallowance. We remit this issue also back to the file of the AO / TPO for re-examination/ verification

Disallowance of Service Tax, Sales Tax & VAT u/s. 43B - Since the disallowed sums were not claimed as an expenditure, the assessee pleaded that in accordance with the jurisdictional High Court decision, the AO cannot make the disallowance - HELD THAT:- Since the facts are not clear from the above portion, we deem it fit to remit this issue back to the AO/TPO for verification. In case, the amounts were not claimed as an expenditure in the profit & loss account, the AO/TPO shall apply the law laid down in EVEREST LITHO PRESS. [2006 (1) TMI 98 - MADRAS HIGH COURT].

Ad-hoc disallowance of travelling expenditure - AR submitted that during the assessment proceedings, the appellant has submitted the requested information to substantiate the claim - HELD THAT:- We have considered the rival submissions. Since the substantial issues are remitted back to the AO/TPO, supra, we deem it fit to remit this issue also to the file of the AO/TPO for a fresh examination and decision. The assessee shall place all relevant materials before the A.O./TPO and comply to the requirements of A.O./TPO in accordance with law. The A.O/TPO shall after affording effective opportunity to the assessee shall decide the issues in accordance with law.
2019 (4) TMI 2123 - CESTAT CHANDIGARH

Exemption under N/N. 89/95-C.E. - fatty acid, wax and gum arising in the course of manufacture of refined vegetable oil are to be treated as waste for the purpose of exemption or not - HELD THAT:- The issue has been examined by the larger Bench of this Tribunal in the case of M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD [2018 (2) TMI 1395 - CESTAT NEW DELHI] and held that the assessee are eligible for exemption under Notification No. 89/95-C.E.

The issue has already been settled by the larger bench of this Tribunal in the case of appellants themselves wherein this Tribunal has held that fatty acid, wax and gum arising in the course of manufacture of refined vegetable oil are to be treated as waste for the purpose of exemption under Notification No. 89/95-C.E. ibid. Therefore, the appellants are entitled for exemption under Notification No. 89/95-C.E. ibid.

The impugned orders are set aside - Appeal allowed.
2019 (4) TMI 2122 - DELHI HIGH COURT

Maintainability of petition - appeal to High Court - HELD THAT:- The issue is squarely covered against the petitioner by the decision of the Division Bench of this Court in AASMA MOHAMMED FAROOQ AND ANR. VERSUS UNION OF INDIA AND ORS. [2018 (12) TMI 443 - DELHI HIGH COURT] where it was held that in the case in hand, if an order is passed by the Appellate Authority it shall be the Bombay High Court, which shall have the jurisdiction for both, i.e. the person aggrieved and the Central Government against the order is passed by the Appellate Authority.

The present petition is disposed of by granting liberty to the petitioner to approach the appropriate court. However, the interim order passed in the present petition would continue to operate for a further period of six weeks from today, as this Court is informed that the concerned High Court is currently on vacation.
2019 (4) TMI 2121 - CESTAT CHANDIGARH

Recovery of refund on account of excess payment of duty through PLA - appellant have not claimed credit on certain inputs which resulted in excess payment of duty in cash - HELD THAT:- Admittedly, the duty paid through PLA was not required to be paid by the appellant, therefore, the same is refundable.

Similar issue has been examined by this Tribunal in the case of Shree Nath Industries [2018 (5) TMI 195 - CESTAT CHANDIGARH] wherein this Tribunal has observed In this case, it is the case of the Revenue itself that they were not required to pay duty, therefore, the excess amount paid by the appellant is merely a deposit not a duty. Hence, the provisions of Section 11A of the Act, is not applicable to the case. In that circumstances, the appellant is not required to pay the excess refund claimed by them.

The demand confirmed against the appellant is not sustainable. Accordingly, the impugned order is set aside and the appeal is allowed.
2019 (4) TMI 2120 - ITAT BANGALORE

Disallowance of deduction u/s 80JJAA - Interpretation of Sec. 80JJAA as it existed at the relevant point of time - definition of “regular workman”[Excluding workman employed for a period of less than 300 days] - AO noticed that only 24 workman has completed 300 days of employment during the year under consideration and accordingly restricted the deduction - HELD THAT:- Legislature has made its intention clear in sub.sec.(3) of substituted sec.80JJAA, which is made applicable from AY 2017-18. Hence the provisions of sec.80JJAA as it stood at the relevant point of time alone are applicable for determining the quantum of deduction. Hence the provisions of sec.80JJAA as applicable to AY 2013-14, which was extracted alone should be considered for examining the claim of the assessee.

We find force with the submission of the assessee. In our view, the AO should have confronted the workings made by him. Since the same was not furnished, it was also not clear as to whether the AO has allowed deduction on the wages paid to new regular workmen employed in the earlier two years. Since all these aspects require examination, we restore this issue to the file of the AO for determining the correct quantum of deduction in the light of discussions made supra. We also direct the AO to furnish the workings made by him and also allow opportunity to the assessee to present its case. The order passed by CIT(A), to the above said extent, would stand modified
2019 (4) TMI 2119 - CESTAT NEW DELHI

Recovery of CENVAT credit - sale of electricity which was generated from the waste heat produced during the manufacture of sponge iron - Rule 6(3) of the Cenvat Credit Rules, 2004 - time limitation - HELD THAT:- The findings of the Tribunal in the case of Tirupati Starch & Chemicals Ltd. Vs. CCE & ST Ujjain [2018 (9) TMI 1481 - CESTAT NEW DELHI], agreed upon - It is found that though number of amendments have taken place from time to time to define “exempted goods” under the Cenvat Credit Rules, 2004 to include non-excisable products/ exempted products in the definition but in Rule 6(2) of the Cenvat Credit Rules, 2004, the expression “final products” have remained unchanged during these years. Thus it is very clear that the legislation has intended to include only those inputs/ services which are used during the manufacture of “final products” and not unintended “by-products” which are a necessity of the manufacturing products.

It cannot be accepted that the heat entrapped in flue gases which emerge during the process as waste or by-product can be regarded as a “final product” which is beneficially used by the appellant for manufacture of electricity.

The ratio of the Hon’ble Supreme Court judgment in the case of UNION OF INDIA & OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. [2014 (5) TMI 253 - SUPREME COURT] is squarely applicable to the issue in hand, where it was held that the requirements of 57CC were fully met in the way in which the Respondent was maintaining records and inventory and the mischief of recovery of 8% under Rule 57 CC on exempted sulphuric acid is not attracted.

Time Limitation - HELD THAT:- Even on limitation as the issue is squarely based on interpretation of law, it is held that the charge of willful suppression does not sustain and extended period of limitation is not applicable.

The appeal is allowed.
2019 (4) TMI 2118 - ITAT MUMBAI

Validity of Order passed u/s 263 - assessee was given right to develop and maintain Toll Road and also right to collect the Toll for specific period - depreciation on intangible asset - PCIT directed AO to pass fresh assessment order in respect of depreciation claim of assessee with special emphasis on cost of project as claimed by the assessee in the light of CBDT Circular No.9/2014 dated 23.04.2014 and the order passed in North-Karnataka Expressway [2014 (11) TMI 351 - BOMBAY HIGH COURT] - HELD THAT:- Hon’ble Delhi High Court in PCIT vs. Delhi Airport Metro Express Pvt. Ltd. (2017 (9) TMI 529 - DELHI HIGH COURT) held if the PCIT is of the view that Assessing Officer did not undertake any enquiry, it became incumbent on the PCIT to conduct such enquiry. All that PCIT has done in the impugned order is to refer to the Circular of CBDT and conclude “in case of assessee-company, the AO was duty bound to calculate and allow depreciation on the BOT in conformity of the CBDT Circular 9/2014 but the AO failed to do so. Therefore, the order of the AO is erroneous insofar as prejudicial to the interest of revenue”. The Hon’ble High Court took the view that this can hardly constitute the reasons required to be given by the PCIT to justify the exercise of jurisdiction under section 263.

If the assessee has wrongly claimed depreciation on asset like land and building, it was incumbent upon the PCIT to undertake an enquiry as regards which of the assets were purchased and installed by assessee out of his own fund during the A.Y. in question and, which were those that were handed over to DMRC. That basic exercise of determining to what extent, the deprecation was claimed in excess has not been undertaken by ld. PCIT and the Hon’ble High Court upheld the decision of Tribunal in setting-aside the order passed under section 263 of the Act.

We are of the view that during the assessment, the Assessing Officer has taken a possible view in allowing depreciation on intangible asset. Therefore, in our view, the order passed by Assessing Officer is not erroneous. Thus, the twin condition as provided under section 263 of the Act was not fulfilled.

Even otherwise, we are of the view that the issues on which the assessment order was set-aside has already been decided in West Gujarat Expressway Ltd.[2015 (5) TMI 305 - ITAT MUMBAI], Rohan & Rajdeep Infrastructure [2018 (2) TMI 2073 - ITAT PUNE] and Progressive Construction Ltd. [2017 (3) TMI 1167 - ITAT HYDERABAD]. The Special Bench of Hyderabad Tribunal and coordinate benches of Pune and Mumbai after considering the decision of North Karnataka Expressway Ltd [2014 (11) TMI 351 - BOMBAY HIGH COURT]and CBDT Circular No. 9/2014 allowed depreciation on intangible asset. Therefore, we are of the considered view that the ld. PCIT was not justified in revising the assessment order - Decided in favour of assessee.