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2022 (9) TMI 1575 - CESTAT NEW DELHI
Condonation for delay of four years and nineteen days in filing the appeal - Department failed to provide Proper and satisfactory explanation for the delay - HELD THAT:- In the present case, it has been seen as a fact that as far back as on May 18, 2018, the department was aware that the appeal filed by the department had been returned because of defects and even the letter dated December 07, 2020 sent by the Department to the Tribunal also takes note of the fact that the Department had also been verbally informed that the appeal papers had been returned. Yet the Department sent letters dated November 23, 2020 and September 14, 2021 to the Tribunal seeking status of the appeal which had already been returned back to the Department. This only reflects the casual attitude adopted by the Department, more particularly when the time limit of filing an appeal is three months. A proper and satisfactory explanation was required to be given for explaining the delay of four years and nineteen days in filing the appeal but despite having been granted an opportunity to file a better application to explain the delay, the Department has not been able to explain the enormous delay to the satisfaction of the Bench.
The inevitable conclusion that flows from the aforesaid facts is that the Department was highly negligent in filing the appeal on February 10, 2022 to assail the order dated October 06, 2017 when the Department had, for the first time acquired knowledge on May 18, 2018 that the appeal had been returned to the Department by the Tribunal because despite three notices sent by the Tribunal, the defects had not been removed. Subsequently, even the letter dated December 17, 2020 sent by the Department to the Registry of the Tribunal admits that on verbal enquiry, the Department had been informed that the appeal papers had been returned. No cogent or plausible reason has been given by the Department for explaining this enormous delay except stating that it had written two letters to the Tribunal on November 23, 2020 and September 14, 2021 seeking status of the appeals filed by them before the Tribunal on January 18, 2018 when in fact, they were aware that the appeal had been returned by the Tribunal by letter dated May 08, 2018, which letter they had received on May 18, 2018.
The application filed for condonation for delay, therefore, deserves to be rejected and is rejected. This would result in the dismissal of the appeal also as it was not filed in the statutory period provided under the Act.
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2022 (9) TMI 1574 - ALLAHABAD HIGH COURT
Maintainability of petition - availability of alternative statutory remedy by filing appeal - respondent nos. 2 and 3 submitted that he has not been provided the copy of writ petition but he has been told that by means of this petition the order of Tribunal has been assailed, therefore, this petition is not maintainable - HELD THAT:- There are substance in the submission of respondent nos. 2 and 3, therefore, assailing the order of Tribunal may not be maintainable.
This petition is dismissed being not maintainable - However, the liberty is given to the petitioner to file an appeal u/s 35 G of Central Excise Act, 1944.
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2022 (9) TMI 1573 - DELHI HIGH COURT
Reopening of assessment u/s 148A - Assessee-Company had taken entries from twenty-eight bogus entities maintained by one accommodation entry provider - Petitioner contends that there has been violation of principles of natural justice as the Petitioner has been denied an effective opportunity to rebut the information available with the Asseesing Offcer - HELD THAT:- This Court has consistently observed that to give effect to the objective of the scheme of Section 148A, AO must provide specific material and information to the Assessee in the notice issued u/s 148A(b) so that the Assessee can provide a meaningful response at the stage of inquiry u/s 148A proceedings.
Consequently, as the show cause notice issued u/s 148A(b) of the Act as well as the subsequent notice are bereft of any details, this Court is of the view that the Revenue by asking the Petitioner-Assessee to respond to the aforesaid vague show cause notice was virtually asking the Petitioner to search for ‘a needle in a haystack’.
As Revenue now states that the Respondent shall supply all the relevant material documents and information in its possession, the impugned order passed u/s 149A(d) as well as the notice issued u/s 148 are set aside with a direction to Revenue to issue a supplementary notice in pursuance to the initial notice issued u/s 148A(b) within three weeks enclosing all the relevant/incriminating information/material/documents. AO is directed to pass a fresh order under Section 148A(d) in accordance with law within six weeks thereafter.
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2022 (9) TMI 1572 - ITAT DELHI
Accrual of income in India or not - Fee received by the assessee under the Centralized Services Agreement - whether FIS either under Article 12(4)(a) or 12(4)(b) of the India–US Tax Treaty - HELD THAT:- We find force in the contention of the Counsel because identical grievance have been heard and decided by this Tribunal [2022 (7) TMI 781 - ITAT DELHI] in favour of the assessee and against the revenue wherein as held Centralized Service fee received by the assessee cannot be treated as FIS u/article 12(4)(a) OR 12(4)(b) of India- us DTAA due to failure of 'make available' condition, has made an unsuccessful attempt to bring it within the ambit of Article 12(4)(a) of the treaty - Decided in favour of assessee.
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2022 (9) TMI 1571 - ITAT RAIPUR
Addition u/s 68 - unexplained cash credit - genuineness of the transaction not proved - source of source unexplained - HELD THAT:- When the assessee had discharged the primary onus that was cast upon it by placing on record supporting documentary evidence to substantiate the genuineness and veracity of the transaction of having received share capital and premium from the aforesaid share subscriber i.e. M/s. Lovely Suppliers Pvt. Ltd., therefore, the onus was shifted upon the A.O to prove otherwise. It was further noticed that as the share subscriber company was duly registered with ROC and was having registered offices a/w. registration number, and the fact that the payment towards share capital and share premium was received through banking channels, therefore, the genuineness of the transaction could not be doubted in absence of any material placed on record which would prove to the contrary.
Source of source - Source out of which the share subscriber company i.e. M/s. Lovely Suppliers Pvt. Ltd. (supra) had made the payment towards share capital and share premium to the assesee company, it was observed by the CIT(Appeals) that the aforesaid share subscriber had during the year under consideration sold its investments and in lieu thereof was in receipt of money from various other companies.
As rightly concluded by the CIT(Appeals) that as the assessee by placing on record substantial documentary evidence had proved to the hilt the genuineness of the transaction, therefore, the A.O without carrying out any enquiry could not have justifiably drawn adverse inferences as regards the authenticity of the transaction in question. Accordingly, drawing support from the judgement of CIT Vs. Lovely Exports (P) Ltd. [2008 (1) TMI 575 - SC ORDER] and Venkateshwar Ispat (P) Ltd. [2009 (5) TMI 290 - CHHATTISGARH HIGH COURT], it was observed by the CIT(Appeals) that now when the investment made by the share subscriber company, viz. M/s. Lovely Suppliers Pvt. Ltd. was duly reflected in the latter’s audited financial statement for the year under consideration, therefore, there was no justification on the part of the A.O in dislodging the claim of the assessee of having raised genuine amount of share capital and share premium from the aforesaid party without placing on record any material which would prove otherwise -CIT(Appeals) had rightly vacated the addition made by the A.O u/s.68 - Decided in favour of assessee.
Disallowance u/s.14A r.w.r. 8D(2)(iii) - no exempt income earned - HELD THAT:- When the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act was warranted in its case. We, thus, finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the addition - Decided in favour of assessee.
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2022 (9) TMI 1570 - ITAT MUMBAI
Exemption u/s 10(23C) (iv) - Charitable activity u/s 2(15) or not? - Assessment of trust - as per AO receipts from the issuance of certificate of origin be treated as trade, commerce or business - CIT(E) held that assessee is not involved in charitable activities as required by the provisions of section 10(23C)(iv), hence the application filed by the assessee is not fit case of grant of approval - HELD THAT:- Assessee collects fees from members/non-members within the limit prescribed by the DGFT i.e., not more than ₹.100/-.
Whether the assessee charges fees for issuing certification is for making profit? - whether the fees collected by the assessee are more than other trade bodies, can this be treated as motive for making profit? - In our considered view assessee has liberty to charge fees for issuing certification within the limit fixed by the DGFT, just because other trade bodies are charging less than the fees collected by the assessee, it does not lead to presumption that assessee might have earned excess profit, it depends upon the setup and their broad objects.
We observe that in similar fact on record the Hon'ble Supreme Court reviewed the similar issue in ACIT v. Surat Art Silk Cloth Manufacturers Association [1979 (11) TMI 1 - SUPREME COURT] decided the issue on applicability of the section 2(15) of the Act in favour of the assessee and against the revenue.
Thus what is relevant is it is not important how the assessee has charged the fees to the members or non-members, it is relevant to analyse whether these activities are carried with the sole object of making profit or mere these activities are carried to support its objects of charity. Further, it is also relevant that whether these surplus funds earned from these activities are applied for the object of the trust. In the given case there is no finding from the tax authorities that the assessee has not applied for the object of the trust nor it has reported any misuse of the funds of the trust. we further observed that the CIT(E) equated the formal education and the indirect education.
The assessee conducts seminars, training courses and commercial examinations for the benefit of its members, it need not be a formal education to be considered as the charitable activity. The courts have held that offering education through formal or informal are part of charitable activities.
CIT(E) rejected the application with the observation that in the assessment proceedings in the A.Y. 2010-11 the Ld. AR of the assessee prayed before the AO to exclude the receipts received from non-members as part of profit which should be excluded for the purpose of applying concept of mutuality. In our considered view this is only a proposition submitted during the assessment proceedings only in order to address the proposal to assess the income under concept of mutuality. It does not mean that the assessee is carrying this activity to earn profit or it does not propose the fact that the activities are carried only with the object of making profit.
Therefore in our considered view the assessee is eligible for registration u/s. 10(23C)(iv) of the Act since at the time of registration, the CIT(E) is expected to verify the objects for granting registration we observe that the revenue has already granted registration u/s. 12A of the Act. The evaluation process for registration u/s. 12A and u/s. 10(23C)(iv) of the Act are exactly similar, once the 12A registration is granted after due process of verification, we do not see any reason not to grant registration u/s. 10(23C)(iv) of the Act. Grounds raised by the assessee are allowed.
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2022 (9) TMI 1569 - ITAT KOLKATA
Correct head of income - income earned by the assessee on share/mutual funds transactions - volume of transaction - HELD THAT:- We note that assessee has purchased the shares on delivery basis. Though the volume of transactions is high and certain borrowed funds have also been deployed but considering the judicial precedents referred above including that of Hon’ble jurisdictional High Court carrying force of binding nature, we have no hesitation in holding that mere volume of transactions and utilization of borrowed funds are not the criterion to alter the treatment given by the assessee about her investment in the books.
Therefore, along with the CBDT circulars, we allow the appeal of the assessee and direct the AO to treat the income earned by the assessee on share/mutual funds transactions under the head capital gains by considering the assessee as an investor, whether short-term or long-term capital gains, depending upon the period of holdings of the relevant shares/mutual fund units. In the result, grounds taken on this issue by the assessee are allowed and those by the revenue are dismissed.
Disallowance u/s 14A - assessee submitted that it should be restricted to the extent of considering only those investments which yielded exempt income for which a detailed working is placed on record - HELD THAT:- We find it proper to remit the matter back to the file of AO for the limited purpose of verification of the calculations made by the assessee reproduced and accordingly consider the disallowance u/s 14A of the Act.
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2022 (9) TMI 1568 - ITAT RAIPUR
Grant of approval u/s.80G - Rejection of application observing that the activities of the assessee company are commercial in nature and the company has also not specified or explained for requirement of 80G approval for the company - Assessee granted registration u/s 12AA and the same is continuing - HELD THAT:- Admittedly, the company was granted registration u/s 12AA and is still enjoying the same, in such a situation, finding of the authorities below that the activities of the trust are not charitable, holds no ground and are liable to be held erroneous.
Another ground for rejection of the approval u/s 80G was that the company is involved in commercial activities selling of books/college bags/ etc apart from generating income from tuition fee/hostel fee/bus fee.
On this aspect we are of the view that these are the activities incidental to the main and predominant object of the assessee company, which are for survival and fulfilment of the main objects, thus approval u/s 80G cannot be denied on this argument. This view of ours is find support from the finding of the coordinate bench of ITAT Mumbai in the case of Green Education Trust [2016 (6) TMI 979 - ITAT MUMBAI] - CIT(E) has took a wrong stand in rejecting the application of the assessee in granting approval u/s 80G. We therefore of the view that the order of the Ld CIT(E) deserves to be set aside with a direction to grant approval u/s 80G to the assessee, as sought vide its application in form 10G. Consequently, the sole ground of the appeal of the assessee is allowed.
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2022 (9) TMI 1567 - DELHI HIGH COURT
TP Adjustment - characterization of infra group services transaction - ITAT deleted the addition made holding that the payment made for intra group services was for commercial expediency - HELD THAT:- Admittedly, the issue pertaining to infra group services is covered by the judgement of this Court [2016 (9) TMI 244 - DELHI HIGH COURT] in assessee’s own case ITAT as agreeing with assessee contention that agreement between the Assessee and its AE was a composite one and could not be split up for the purposes of holding that some services are at arm’s length and some are not as on viewing the agreement as a whole. It was not within the purview of the TPO to determine if some of the services resulted in any actual benefit to the Assessee or not.
Not considering interest on outstanding receivables as an international transaction as per Section 92 (B) read with Section 92F(v) - Appellate Authorities below have accepted the contention of the assessee that the assessee was justified in not charging interest on the delayed payments by the AEs and in not levying any interest on delayed payments made by the non-AEs, as the debtor days given to the non-AEs were more than the debtor days given to the AEs. ITAT also recorded that at times 120 days are given to the non-AE entity for payment from billing date. Furthermore, the Authorities below accepted the contention of the assessee that during the Financial Year 2008-09, the assessee had net monthly balance payable to the AEs as opposed to monthly balance receivable from the AEs as alleged by the Assessing Officer.
Consequently, given the concurrent findings of facts by the Appellate Authorities below that the debtor days given to the AEs are less than the debtor days given to non-AEs, no substantial question of law arises.
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2022 (9) TMI 1566 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Seeking stay of Extra Ordinary General (EOGM) meeting - Sections 241 and 242 of the Companies Act - HELD THAT:- The Appellant has filed two Company Petitions bearing CP 38 of 2022 and CP 41 of 2022 under Sections 241 and 242 of the Companies Act, 2013 which are still pending before the Tribunal and the next date of hearing is fixed on 06th October, 2022 in the matter before the Tribunal.
The instant Appeal is disposed off with a request to the National Company Law Tribunal (New Delhi Court V) to expedite the matter without giving unnecessary adjournment and consider all these issues raised by the Appellant and Respondents and pass appropriate orders at an early date, not later than three months from the date of this order.
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2022 (9) TMI 1565 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Declining to stay holding of EGM - It is the case of the Appellant that the Respondents had resorted to this Act by force as they could not do so by way of any judicial proceedings and hence fall within the provisions of section 242 (4) of Companies Act - HELD THAT:- The EGM was convened by majority shareholders of the Company and the requisition of the meeting per se cannot be said to be at fault. We have also taken into consideration the reliefs sought for in I.A. No. 3084 of 2022 whereunder, the Applicant/Appellant sought for stay of the operation of the effect of the resolution passed during the EGM dated 20.07.2022 and also stayed of the removal of the independent Directors. A perusal of the impugned order shows that the matter is posted on 07.09.2022.
The instant Appeal disposed off with a request to the National Company Law Tribunal (Kolkata Bench, Kolkata) to take up the matter on the fixed date i.e. 07th September, 2022 and decide the matter at the earliest and consider all these points raised by the parties.
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2022 (9) TMI 1564 - SUPREME COURT
Suit for the specific performance of contract - seeking to enhance the amount towards the alternative claim for damages - High Court committed any material irregularity or jurisdictional error going to the root of the matter in passing the impugned order or not - applicability of provisions of Order II Rule 2 CPC to an amendment application - amendment of plaint for the purpose of enhancing the amount towards damages could be said to be hit by the doctrine of constructive res judicata or not - judgment and order passed by a coordinate Bench of this Court in the case of LIFE INSURANCE CORPORATION OF INDIA VERSUS SANJEEV BUILDERS PVT. LTD. AND ORS. [2017 (10) TMI 1650 - SUPREME COURT] between the same parties has any bearing on the present appeal or not - present appeal is covered by the proviso to Section 21(5) and Section 22(2) resply of the Specific Relief Act, 1963 or not.
HELD THAT:- One of the cardinal principles of law in allowing or rejecting an application for amendment of the pleading is that the courts generally, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of filing of the application. But that would be a factor to be taken into account in the exercise of the discretion as to whether the amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interest of justice.
In RAGU THILAK D. JOHN VERSUS S. RAYAPPAN & OTHERS [2001 (1) TMI 992 - SUPREME COURT], this Court also observed that where the amendment was barred by time or not, was a disputed question of fact and, therefore, that prayer for amendment could not be rejected and in that circumstances the issue of limitation can be made an issue in the suit itself like the one made by the High Court in the case on hand.
Again, in VINEET KUMAR VERSUS MANGAL SAIN WADHERA [1984 (1) TMI 348 - SUPREME COURT], this Court held that if a prayer for amendment merely adds to the facts already on record, the amendment would be allowed even after the statutory period of limitation.
Applicability of decision in Life Insurance Corporation of India - HELD THAT:- A coordinate Bench of this Court took the view that impleading the respondent No. 3 therein as the plaintiff No. 3 would cause a serious prejudice to the appellant. This Court took the view that no explanation was offered for an inordinate delay of twenty-seven years, which was overlooked by the High Court. Even while allowing the appeal filed by the appellant herein, the coordinate Bench of this Court observed that mere delay would not be a ground for rejecting the amendment. However, in the facts of the case, since the parties not being rustic litigants and all the respondents therein being companies and the dispute being a commercial litigation, the amendment could not have been permitted after twenty-seven years of the suit, as it would take away the substantial rights of defence accrued in favour of the appellant (LIC).
The judgment and order passed by the coordinate Bench of this Court in the Life Insurance Corporation of India has no application so far as the present appeal is concerned. The appellant herein cannot succeed in the present appeal merely on the strength of the judgment and order passed by this Court in the Life Insurance Corporation of India.
Order II Rule 2 of the CPC - HELD THAT:- The expressions "omits to sue" and "intentionally relinquish any portion of his claim" give an indication as to the intention of the legislature in framing the said rule. The term 'sue' can mean both the filing of the suit and prosecuting the suit to its culmination, depending on the context of the provision. In the present case, the legislature thought it fit to debar a plaintiff from suing afterwards for any relief which he/she has omitted without the leave of the court or from suing in respect of any portion of his claim which he intentionally relinquishes. Order II Rule 2(1) provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action - if the two suits and the relief claimed therein are based on the same cause of action then the subsequent suit will become barred under Order II Rule 2 of the CPC. However, we do not find any merit in the contention raised on behalf of the appellant herein that the amendment application is liable to be rejected by applying the bar under Order II Rule 2 of the CPC. Order II Rule 2 of the CPC cannot apply to an amendment which is sought on an existing suit.
Applicability of principle of constructive res judicata - HELD THAT:- The principle of constructive res judicata has no application in the instant case, since there was no formal adjudication between the parties after full hearing. The litigation before this Court has come up at the stage when the courts below allowed the amendment of plaint for the purpose of enhancing the amount towards damages in the alternative to the main relief of specific performance of the contract.
Specific Relief Act, 1963 - HELD THAT:- Section 22 has a non-obstante provision which overrides the CPC. A plaintiff who claims specific performance of a contract for the transfer of immovable property, may in an appropriate case ask for possession, partition and separate possession of the property, in addition to specific performance. The plaintiff may also claim any other relief including the refund of earnest money or deposit paid, in case the claim for specific performance is refused. Corresponding to the provisions of sub-section (5) of Section 21, sub-section (2) of Section 22 stipulates that such relief cannot be granted by the court unless it has been specifically claimed. However, the proviso requires that the court shall at any stage of the proceedings allow the plaintiff to amend the plaint to claim such relief where it has not been originally claimed on such terms which may appear just.
The Specific Relief (Amendment) Act, 2018 - HELD THAT:- It cannot be successfully urged that a suit for specific performance falling under the provisions of the Act, 1963 would not be governed by the provisions of the CPC. It is, therefore, clear that to such a suit the provisions contained in Order VI Rule 17 of the CPC would apply and a plaintiff who has earlier failed to incorporate the reliefs for compensation or who has incorporated the reliefs for compensation but seeks amendment in the same, could seek the permission of the court to introduce these reliefs by way of amendment.
It is important to note that sub-section (5) of Section 21 of the Act 1963 was originally introduced to resolve the confusion over whether the court had the power to grant compensation in a claim for specific performance in absence of any pleading to that effect under the provisions of the Act 1963. Prior to the enactment of the Act 1963 the Law Commission in its 9th Law Commission Report while referring to the diverse opinions expressed by the High Courts recommended that in no case should compensation be decreed unless it is claimed by a proper pleading.
In Somasundaram Chettiar [1950 (3) TMI 36 - MADRAS HIGH COURT], the Madras High Court held that the rationale for not allowing a claim for damages in a suit for specific performance without a specific pleading is based on the principle that the plaintiff must establish its claim for damages and the defendant must be put on notice and correspondingly have an opportunity to adduce evidence that the damages claimed are excessive or that the plaintiff has not suffered any damages.
The impugned order passed by the Division Bench of the High Court should not be disturbed - appeal dismissed.
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2022 (9) TMI 1563 - DELHI HIGH COURT
Taxable income deemed to accrue in India - income from supply of CAS and middleware products to Indian customers - whether fall under the 'royalty' as defined under Section 9(1)(vi) of the Income Tax Act, 1961 (‘the Act’) and Article 12(3) of the India-Swiss DTAA.
HELD THAT:- Admittedly, the questions of law urged in the present appeal are covered by the decision of the Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein held amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195.
Though the review petition in Engineering Analysis (supra) is pending before the Supreme Court, yet there is no stay of the said judgment till date.
Consequently, in view of the judgments of the Supreme Court in Kunhayammed and Others Vs. State of Kerala And Another, (2000 (7) TMI 67 - SUPREME COURT) and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras (1992 (4) TMI 183 - SUPREME COURT) the present appeal is covered by the judgment of the Supreme Court in Engineering Analysis (supra). No substantial question of law.
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2022 (9) TMI 1562 - ITAT PUNE
TP Adjustment - determining the ALP of international transaction related to Business Support Services - correctness of the CIT(A)’s action reversing assessment findings making TP adjustment(s) in assessee’s back office support services segment - CIT(A)’s admittedly appears to have gone by the assessee’s “advance pricing arrangement (APA)” with the CBDT adopting cost + 15% mark up to reverse the TPO’s arm’s length price computation coming to 20.75% - Revenue’s case is that the said agreed mark up is applicable from FYs 2011-12 to 2014-15 whereas we are in AY 2010-11 only - HELD THAT:- We make it clear that Chapter X in the Act is in the nature of a “SPECIAL PROVISION RELATING TO AVOIDANCE OF TAX” i.e. an anti avoidance measure introduced by the legislature.
Hon’ble apex court’s recent landmark decisions PCIT V/s Wipro Ltd [2022 (7) TMI 560 - SUPREME COURT], Commissioner V/s Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT] & CIT V/s. GM Knitting Industries (P) Ltd.[2015 (11) TMI 397 - SC ORDER] have settled the law that the relevant provisions in the Act ought to be put to stricter interpretation only.
Faced with this situation, we reverse the CIT(A)’s findings in issue going against sec. 92CC(4) r.w.s.(9A) of the Act (supra) and direct him to re-decide all of the assessee’s grounds in the lower appeal afresh as per law. This Revenue’s appea is allowed for statistical purposes.
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2022 (9) TMI 1561 - CESTAT MUMBAI
Bill of entry for clearance of import of goods declared as "PVC Compound TZ'' - Whether co-polymers of vinyl chloride/vinyl acetate would fall under the broad category of polymers of vinyl chloride under heading 3904 and eligible for benefit of Notification No. 21/2002 in Sr. No. 480 - HELD THAT:- In the present case there is no dispute to the classification of the goods and classification as claimed by the appellants under heading no 39042290 has not been amended/ modified by the lower authorities. Further during the argument both the sides have relied upon HSN explanatory notes and technical literature to establish that the impugned goods are/ are not “poly vinyl chloride”. We do not find any merits in the submissions made because the classification of the goods have been made under 3904
Thus, it is quite evident that by classifying the goods under CTH 3904 22 90, revenue admits that the impugned goods are Poly vinyl chloride as that is the single dash entry preceding the CTH in which the classification has been held. Having held, so revenue cannot for deciding the claim to exemption, hold a contrary view. The exemption at Sl 480, is admissible to all poly vinyl chlorides classifiable under heading 3904.
Impugned order is set aside and the appeal allowed.
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2022 (9) TMI 1560 - ITAT AHMEDABAD
TP Adjustment - Addition on account of Corporate Guarantee Charges - HELD THAT:- In our view, since the issue is directly covered in favour of the assessee in its own case for assessment year 2012-13 and 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] wherein held no sound basis for disturbing the arm's length computation of these corporate guarantees, issued by the assessee in favour of its AEs abroad, taken at 1% which has been approved for earlier assessment years as well - we hereby allowing this ground of appeal filed by the assessee.
Addition on account of Interest Imputation on Optionally Convertible Loans advanced - HELD THAT:- As decided in own case A.Y. 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] whenever the assessee's right to exercise the option of converting the loan into equity comes to an end, the assessee is entitled to interest on the commercial rates. It is not even the case of the authorities below that the interest so charged by the assessee, in a situation in which the right to exercise the option has come to an end, is not an arm's length price. Keeping in mind all these factors, as also entirety of the case, we deem it fit and proper to delete the arms length price adjustment in respect of interest which, according to the revenue authorities, should have charged on the optionally convertible loan granted to the AEs.
Addition on account of Reimbursement of Expenses - HELD THAT:- Respectfully following the observations of the ITAT in assessee’s own case for assessment year 2012-13 and assessment year 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] we are of the considered view that the TPO has erred in fact and law in holding that the arm’s-length price in respect of these cost to cost reimbursements should be determined at “Nil”. High Courts in various cases have held that the TPO cannot determine the arm’s-length price of transaction as “Nil” on ad- hoc basis without employing any of the prescribed methods as the same is against the scheme of the Act.High Court’s have also held on various occasions that the TPO’s jurisdiction is limited to determine the arm’s-length price of a transaction and does not have the jurisdiction to examine the allowability of expenses as provided in section 37 of the Act. Decided in favour of assessee.
Product registration expenses/reimbursement of expenses for product registration support services - HELD THAT:- As decided in own case 2006-07 to 2010-11 and assessment years 2012-13 and 2013-14 assesses does indeed deserve to succeed on this point for the short reason that even the Assessing Officer has admitted that the issue is covered by the binding judicial precedents in assesaee's own case and the additions have been made, so to say, keep the issue alive. AR fairly agree that this issue is settled in favour of the assessee. The relief granted to the on this point in past has achieved finality, we uphold the plea of the assessee, and direct the Assessing Officer to treat the product registration expenses and product support service expenses as revenue expenditure.
Addition on account of trademark registration fees and patent fees - HELD THAT:- As decided in assessee own case for assessment year 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] we uphold the plea of the assessee and direct the Assessing Officer to delete the impugned disallowance.
Addition as non-eligible expenditure u/s 35(2AB) - addition on the ground that the amount allowed by the DSIR was less as compared to deduction claimed by the assessee - HELD THAT:- ITAT Pune Tribunal in the case of DCIT v. Force Motors [2021 (9) TMI 244 - ITAT PUNE] while dealing with identical issue held that prior to amendment in 2016, section 35(2AB) does not provide any methodology of approval to be granted by prescribed authority vis-a-vis expenditure from year to year and therefore, order of Assessing Officer in curtailing expenditure and consequent weighted deduction claimed under section 35(2AB) on ground that deduction cannot exceed claims approved by prescribed authority, had rightly been set aside.
Bangalore Tribunal in the case of Provimi Animal Nutrition India Pvt. Ltd [2020 (12) TMI 177 - ITAT BANGALORE] held that prior to 1-7-2016, Form 3CL granting approval by prescribed authority in relation to quantification of weighted deduction under section 35 (2AB) had no legal sanctity and it was only with effect from 1-7-2016 with amendment to rule 6(7A)(b) that quantification of weighted deduction under section 35(2AB) has significance.
Thus the position is clear that prior to amendment introduced w.e.f. 01/07/2016, the deduction u/s 35(2AB) of the Act would be available to an assessee having an approved in-house R&D facility by the prescribed Authority Act and there is no mention of approval of the ‘quantum’ of expenditure in the law as it stood prior to that date. The mandate of quantification of expenditure has been put in place only w.e.f. 01.07.2016. In view of the above observations, we allow this ground of appeal of the assessee.
Eligibility for weighted deduction u/s 35(2AB) - R&D expenses in respect of clinical trial and bio-equivalence study - HELD THAT:- As per ruling for assessment year 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] held that this issue is settled in favour of the assessee by decisions of the coordinate benches in assessee's own case, These decisions hold good as on now, and we are respectfully bound by those decisions as on now, Of course,, whatever we hold does, and shall always, remain, subject to what Hon'ble Courts above decide as and when that happens, In this view of the matter, we uphold the plea of the assessee, and, direct the Assessing Officer to delete the impugned disallowance - Decided in favour of assessee.
Disallowance of depreciation on Hummer car - vehicle is owned by the director of the company and the above asset is not owned by the assessee company - HELD THAT:- Since the issue is directly covered in favour of the assessee in his own case for assessment years 2009-10 and 2010-11 [2017 (4) TMI 462 - ITAT AHMEDABAD] and assessment years 2012-13 and 2013-14 [2021 (12) TMI 200 - ITAT AHMEDABAD] held car was used for the purpose of business and the Assessing Officer has himself allowed the running and maintenance expenses of this car and the registration of car in the name of driver was a matter of convenience as it gave advantage to the assessee in terms of road tax - once it is not in dispute that the vehicle was owned in substance, by the assessee and the vehicle was used for the purposes of its business, there cannot be any legally sustainable reasons for declining the depreciation respectfully following the orders passed on the assessee’s own case, we hereby allowing this ground of appeal filed by the assessee.
Adjustment of disallowance u/s 14A for computation of book profits u/s 115JB - HELD THAT:- This issue is settled in favour of the assessee by decisions of the coordinate benches in assessee's own cases.
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2022 (9) TMI 1559 - ITAT DELHI
Disallowance u/s 14A r.w.r. 8D - exempt income earned or not? - Assessee submitted assessee did not receive any exempt income and the CIT (Appeals) deleted the disallowance following the decision of Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COURT] for the reason that the assessee did not receive any exempt income during the assessment year under consideration
HELD THAT:- We observe that recently in the case of PCIT Vs. Era Infrastructure (India) Ltd.[2022 (7) TMI 1093 - DELHI HIGH COURT] following the decision of Sedco Forex International Drill. [2005 (11) TMI 25 - SUPREME COURT] and the decision of M.M. Aqua Technologies Ltd. [2021 (8) TMI 520 - SUPREME COURT] held that the Amendment to section 14A of the Act which is for removal of doubts cannot be presumed to be retrospective.
Similar view has been taken in the recent decision in Telecommunications Consultants India Ltd. [2022 (8) TMI 1486 - DELHI HIGH COURT]. Thus, no infirmity in the order passed by the ld. CIT (Appeals) in deleting the disallowance made under section 14A read with Rule 8D of the Act. Ground raised by the Revenue is rejected
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2022 (9) TMI 1558 - ITAT JAIPUR
Assessment of trust - Addition on the basis of valuation report received from the DVO - CIT(A) directed AO to reduce the valuation made by the DVO by 20% - HELD THAT:- Assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 1 of the assessee is dismissed.
Corpus donation - assessee has not produced any evidence to show that 50% of development was the donation received with the specific direction for corpus fund, therefore, the addition is hereby confirmed - HELD THAT:- As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 3 of the assessee is dismissed.
Addition for surplus for both funds of students - HELD THAT:- As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 4 of the assessee is dismissed.
Addition confirmed as non furnishing complete address of the person from whom corpus donation was claimed to have been received by the appellant - HELD THAT:- As assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A).Thus Ground No. 5 of the assessee is dismissed.
Disallowance of capital expenditure on account of Inverter - addition made by the AO in respect of the inverter claimed as application in form of purchase of inverter is also confirmed because the appellant has failed to furnish any documentary evidence to substantiate the claim - HELD THAT:- As assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). Thus Ground No. 6 of the assessee is dismissed.
Exemption u/s 11 and 10(23C) denied - appellant had not submitted Form No. 10 as required u/s 11(2)(a) of the Act before the due date of filing of return of income - HELD THAT:- As appellant was required to apply Rs.1,15,60,989/- whereas the appellant had applied only Rs.1,08,63,975/-. The appellant had not submitted Form No. 10 as required u/s 11(2)(a) of the Act before the due date of filing of return of income. Thus, the accumulation of income was more than 15% of the gross receipts.
As the appellant had failed to fulfill the condition laid down u/s 11 (2)(a), hence the action of the AO denying the benefit of Section 11(2) of the appellant is held to be fully justified and in accordance with the provisions of law. Further, the AO has also discussed the objects of the Trust - we agree with the view of the AO that the Trust was not existing solely for education purposes. Therefore, the exemption denied by the AO u/s 10(23c)(iiiad) is also held to be valid and in accordance with the provisions of law. As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). Thus Ground Nos. 7,8 &9 of the assessee are dismissed.
Assessee appeal dismissed.
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2022 (9) TMI 1557 - DELHI HIGH COURT
TDS u/s 195 - withholding tax deducted at source (TDS) - Present writ petition filed challenging the certificate issued u/s 195(2) directing the Google Cloud India Pvt. Ltd. (GCI) to deduct tax at source at the rate of 10% at the time of making payment to the Petitioner - Petitioner further seeks a direction to permit GCI to make payments to the Petitioner without deduction of tax at source during financial year 2022-23 relevant to assessment year 2023-24 under the Google Cloud Services Reseller Agreement - HELD THAT:- Issue notice. Learned senior standing counsel accepts notice on behalf of Respondent Nos.1 and 2. He prays for and is permitted to file a counter affidavit within six weeks. Rejoinder affidavit, if any, be filed before the next date of hearing.
Registry is directed to tag the present writ petition along with WP(C) No.8720/2021 and list for final hearing on 13th January, 2023.
Appropriate directions in regard towards the interim arrangement - although the impugned order directs 10% withholding, the deposit of 8% by GCI plus 2% Equalisation Levy admittedly being paid by GCI on remittances to the Petitioner should not be construed as any non-compliance of the impugned order so as to attract the provisions of Section 201 of the Act on GCI - HELD THAT:- As Respondent No. 2 has made the payments under consideration liable for a withholding at the rate of 10% in accordance with section 115A of the Act read with the DTAA. We direct that purely as an interim measure, the Petitioner would be entitled to receive its payment from GCI subject to a deduction of 8% to be paid progressively for financial year 2022-23 relevant to assessment year 2023-24 as well. This interim arrangement is being made under the orders of this Court. The deposit of 8% should not be treated as any non-compliance of the impugned order.
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2022 (9) TMI 1556 - CALCUTTA HIGH COURT
Revision u/s 263 quashed by ITAT - netting off of interest expense with interest income - distinction between “lack of enquiry” and “inadequate enquiry” - Whether ITAT was correct in holding that the view taken by AO was not unsustainable in law, when, in fact, excess relief in contravention to Section 80IA involving the meaning of “Profit derived from business” was erroneously allowed by the Assessing Officer, causing prejudice to the Revenue? - HELD THAT:- After having appraised itself about the legal position, more particularly the decision of Malabar Industries Ltd. v[2000 (2) TMI 10 - SUPREME COURT] the tribunal took note of the contention of the assessee that the overdraft facility has been granted on the security of the fixed deposit and, therefore, the interest on the overdraft and the interest on the fixed deposits are inter-linked.
Assessee has used its fixed deposits for taking overdraft facilities without encashing the fixed deposits and the interest on the overdraft has a direct nexus with interest accruing in the fixed deposit and, therefore, the interest on the overdraft has been adjusted with the fixed deposit interest and the net interest income has been shown as other income.
Tribunal has noted that the assessing officer had enquired into this aspect and had taken one of the plausible view of netting off of interest expense with interest income, in the light of the decision of ACG Associated Capsules (P) ltd. [2012 (2) TMI 101 - SUPREME COURT].
Tribunal after going through the entire records placed before it has recorded a finding that the assessing officer, after making proper enquiry and proper application of mind has framed the assessment under Section 143(3) of the Act and, therefore, the assessment order cannot be termed to be ‘erroneous’ and ‘prejudicial to the interest of revenue.’ The tribunal also noted the settled distinction between “lack of enquiry” and “inadequate enquiry” and if it is a case of an inadequate enquiry, the law is settled that an order u/s 263 cannot be passed.
Tribunal on analysing the factual position has granted relief to the assessee. Thus, no substantial question of law arises.
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