Disallowance u/s 14A r.w.r. 8D - suo moto addition made by assessee - sufficiency of own funds - HELD THAT:- DR could not substantiate argument as to why inspite of a suo moto disallowance being made by the Assessee without justifying anything to differ, the AO made a disallowance while the interest expenditure was incurred to earn taxable income only.
At the same time the Assessee’s own fund as on 31.03.2015 were Rs. 145173.31 and investment of Rs. 1957.39 lacs. No intervention required in the findings of the ld CIT(A) which based on correct interpretation and reliance of law. The ground is No. 1 decided against the revenue.
Disallowance of prior period expenses - CIT-A deleted the addition - HELD THAT:-DR could not submit anything to show that how there is any difference of facts or law in regard to the issue when the same has been decided in Assessee’s own case by the order of Tribunal in preceding years. AO made addition relying on the orders for preceding years and the ld CIT(A) had deleted the addition relying on the decision of the tribunal in Assessee’s own case for Assessment Year 2009-10. Thus, there is no substance in the ground. The same is decided against the revenue.
Vacation of interim order - Appellant contends that the assets of the Corporate Debtor were the only property and in view of the vacation of the Interim Order, prejudice will be caused to the Appellant - HELD THAT:- The Interim Order dated 01st April, 2022 was passed on an I.A. filed by the Yes Bank being I.A. No. 779/2022 which having been dismissed by the Impugned Order, Appellant can not be said to be aggrieved by the dismissal of the Application since it was not the Applicant’s application which got dismissed. Appellant in no manner was party to the said application hence we see no reason to entertain the Appeal at the instance of the Appellant.
Addition u/s 56(2)(vii)(b) - letter of allotment is merely a letter of intent and not an agreement for sale of flat - difference between the consideration and the stamp duty value - HELD THAT:- The chronology of the events confirms that the finding of the A.O treating the agreement of the assessee as letter of intent is not correct. In this matter treating the said agreement as letter of intent shows an over thinking and hyper technical interpretation at the end of the A.O. assessees case clearly falls in the proviso to Section 56(2)(vii)(b).
Similar property in the case of assessee’s wife with similar transactions has been accepted by the same A.O without any addition for the same A.Y. See Gulabrai Hanumanbox. vs. Commissioner of Wealth –tax [1991 (8) TMI 21 - GAUHATI HIGH COURT] as held two different Assessees having similar/ identical facts w.r.t valuation of property cannot be assessed with different rates for the same property. Thereby, the order passed by the Assessing officer for co-sharer of property is arbitrary and unjustified in law.
We delete the addition made by A.O and confirms that assessee is entitled to the benefits of proviso to Section 56(2)(vii)(b).
TP Adjustment - Comparable selection - HELD THAT:- KPL International Limited - There need not be any confusion between the dissimilarity of functions and dissimilarity of products. Function of both the assessee and the KPL is similar, namely, distribution of products. Even to the extent of 97.5% such products are also similar. Then, unless and until it is established by the assessee that a grave prejudice would be caused by comparing this company with the assessee or that the 2.5% revenue derived by KPL by the sale of other products, it is not fair for the assessee to seek the view taken in Intoto Software (supra), to be extended to the case of the assessee and KPL where both the companies are broadly in the sale of similar products and the additional product only secures 2.5% of the revenue. According to us, the view taken in Intoto Software (supra) has no application to the facts of this case. We accordingly uphold the findings of AO/ TPO and learned DRP in this regard and confirm the KPL as a comparable with the assessee.
Hitech Specialities Solutions Limited is deriving income not only from the sale of traded/finished goods but also derives about 10% of revenue from the services like management fee and commission. The segmental information of the annual report reads that the entire revenue is from only one segment, without any detailed figures as to the profitability of the sale of product and sale of service. In these circumstances, we are of the considered opinion that it is unsafe to consider this entity as a comparable to the assessee. We, therefore, direct the AO/TPO to exclude this entity from the final list of comparables.
Hindage Oilfield Services Limited - Both the entities [Assessee and Hindage] are engaged in the sale of traded products. There is slight variation in the description of the products. TNMM will take care of the variations. For this reason, we decline to interfere with the findings of both the authorities in respect of inclusion of Hindage Oilfield Services Limited as a comparable.
Adjustment towards Interest on receivable - HELD THAT:- We are of the considered opinion that the ends of justice would be met by accepting the interest rate on similar foreign currency receivables/advances as LIBOR+200 points. We direct the learned Assessing Officer / learned TPO to adopt the same
Reopening of assessment u/s 147 - reasons to believe that income had escaped tax - fictitious loan obtained - whether the notice issued u/s 148 deserves to be quashed or set aside for any reason whatsoever? - HELD THAT:- Search was conducted in the case of M/s Dishman group of Ahmedabad and it was found that said group had indulged in huge transactions of bogus loans and advances and the ADIT's note concluded that loans and advances are received by the assessee, present writ applicant from the said M/s Dishman company as such it implies the assessee had given equal cash to M/s Dishman and was of the view that such transactions are to be construed from the angle of applicability of Section 69A apart from being treated as unexplained credits, wherever applicable.
It is this fact which persuaded the AO to issue the notice stating thereunder that accommodation entry in the form of fictitious loan was reflected from M/s Dishman Pharmaceuticals to the assessee.
The assessee not only in its objections statement filed to the reopening of the assessment has stated that there was no such transaction and even the books of accounts which formed part and parcel of the assessment order passed u/s 143(3) did not disclose any such loan transaction for the assessment year 2013 - 2014 insofar as the assessee is concerned.
In the absence of any foundational facts, the reasons recorded for reopening of the assessment on the premises that AO had reason to believe that income had escaped to assessment and thereby there is tax evasion has to be necessarily held as a myth and it cannot be countenanced and without any foundation. Thus, without due application of mind, the AO could not have issued the impugned notice. On this short ground itself, the impugned notice is liable to be quashed.
There is no foundation in the notice which formed the basis on which the AO proposed to reopen the assessment for the assessment year 2013 - 2014. Hence, point formulated hereinabove deserves to be answered in favour of the petitioner - assessee.
Penalty u/s 271D - contravention of Sec. 269SS - loan is received from the Executive Directors to the Company, who are controlling the financial affairs of the Company - Was there there was reasonable cause u/s 273B? - HELD THAT:- As in this present case, the transaction between assessee company and its Executive Directors is on account to meet the urgent financial requirements of the company. Accordingly, it cannot be considered and there exist reasonable causes for accepting the money in cash from the Executive Directors of the company who are responsible for day-to-day affairs of the company. In our opinion, in this case, levy of penalty u/s 271D of the is unwarranted. Accordingly, we inclined to delete the penalty levied by the AO confirmed by Ld. CIT(A). Appeal filed by the assessee is allowed.
Recovery of the differential duty - clearance of intermediate goods to their own units under the provisions of proviso to Section 11A(1) of the Central Excise, Act, 1944 - demand of interest and penalty - extended period of limitation - HELD THAT:- The Appellants have appropriately taken cost figures of the previous month's CAS-4 certificates as a basis to arrive at the cost of production of each month. There was no objection whatsoever by the department at any point of time. For the first time in February 2008, during the course of audit for the period April 2006 to March 2007, this practice was objected and the Appellants were asked to redetermine cost of production on the basis of final annual CAS-4 of April 2006 to March 2007.
If the Appellants are to value their clearance on the basis of annual CAS-4 figures, they have paid excess duty in some instances as is admitted in the show cause notice, order in original and the impugned order. Further the both the authorities have concluded in the order against adjustment of the excess payment of duty against short payment on the ground of unjust enrichment. Both authorities also hold that the assessments were provisional.
Appellants have while filing the ER-1 return disclosed all the facts and have also submitted the CAS-4 certificate also. The department was aware of the valuation practices adopted by the Appellants. All the material facts relating to the manufacture, clearance and valuation of the cables used in the captive consumption were always within the knowledge of the department. The ER-1 returns also show that there was interplant transfer - appellants have not violated any provisions of the Central Excise Act or the rules made thereunder. Thus even if there was any short payment of duty the same was on the basis of the CAS-4 certificate issue by the independent Cost Accountant, was due to bonafide belief of the Appellants regarding determination of assessable value, cannot be on account of suppression, fraud misstatement or contravention of the rule with the intention to evade payment of duty leading to invocation of extended period of limitation as per the proviso to Section 11A (1) of the Central Excise Act,1944.
Demand do not sustain - demand for interest and penalties imposed cannot be upheld - appeal allowed.
Rejection of fourth bail application - Out of 12 witnesses, only 7 witnesses have been examined till date - offence under Section 132(1)(b) & (c) read with Section 132(1)(i) and Sub-Section (5) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Admittedly, the matter is at pre charge evidence and out of 12 witnesses, only 7 witnesses have been examined in pre charge evidence. It is true that after rejection of the fourth bail application wherein also the direction was given to the Trial Court to expedite the disposal of the case, the Trial Court has recorded the statement of the witnesses and six witnesses have been examined in the last four months.
The Apex Court in Lalit Goyal vs. Union of India & Anr. [2022 (8) TMI 1319 - SC ORDER], which was a matter where the allegations against the accused was with regard of claim of input tax credit to the tune of Rs. 18.91 crores and accused had remained in custody for a period of one year and six months, directed the Trial Court to conclude the trial within six months - In the present case, the allegation pertains to an amount of about Rs. 47 crores and the custody period is one year and eight months, it is therefore not deemed proper to enlarge the accused-applicant on bail.
Levy of Service tax - charges collected by the respondent towards penalty/late delivery charges - section 66E (e) of the Finance Act, 1994 the Finance Act - Central Government Public Sector Undertaking - HELD THAT:- This issue as to whether the amount collected towards liquidated charges can be subjected to service tax under section 66E (e) of the Finance Act has been decided by a Division Bench of the Tribunal in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [2020 (12) TMI 912 - CESTAT NEW DELHI] which was subsequently followed by the Tribunal in M.P. POORVA KSHETRA VIDYUT VITRAN CO. LTD. VERSUS PRINCIPAL COMMISSIONER CGST AND CENTRAL EXCISE BHOPAL [2021 (2) TMI 821 - CESTAT NEW DELHI] where it was held that it is not possible to sustain the order passed by the Principal Commissioner confirming the demand of service tax on the amount collected towards liquidated damages and theft of electricity.
It, therefore, follows that the liquidated damages collected by the respondent as penalty/late delivery charges cannot be subjected to service tax under section 66E (e) of the Finance Act - appeal of Revenue dismissed.
MODVAT Credit - parts, components and accessories of Diesel Generating Power Plant [DGPP] sets - HELD THAT:- On appreciation of evidence and considering the material on record, the High Court has specifically observed and found that DGPP sets on which Modvat credit is allowed is part and parcel of the factory of the respondent which is ultimately used in the manufacture of end product – cement. Therefore, Sl. No.5 of the Table appended to Rule 57Q shall be attracted and therefore the assessee shall be entitled to the Modvat credit on such DGPP sets being parts/components of the cement plant/final manufacture product.
TP Adjustment - ALP of corporate guarantee provided to the Overseas Associated Enterprises - Whether or not the ITAT was legally correct in holding that the corporate guarantee provided by the appellant to banks for providing loan to its AE without charging any fee or commission, is an international transaction under Section 92B when the transaction is of such a nature as to have no bearing on profits, income, losses or assets of enterprise?
HELD THAT:- While TPO, treating the corporate guarantee as an international transaction, charged guarantee commission at 4.86%. Commissioner(Appeals) accepted the assessee's submission and held that the provision of corporate guarantee in the assessee's own case for the assessment year 2009-10 and 2010-11 came up for consideration before the Tribunal and while deciding the assessment, the matter has been remitted to the Assessing Officer for de-novo adjudication after due and reasonable opportunity of hearing to the assessee. The issue referred for reconsideration has been made in the light of the observation of the Commissioner(Appeals) and it was noticed that the Commissioner(Appeals) did not deal with them, as he held that the provision of corporate guarantee is not an international transaction.
The Tribunal, in the current case of 2011-12 of the assessee, having noted the above fact, decided to remit the issue to the Assessing Officer for deciding afresh with similar direction. As the substantial questions of law framed herein relates to the same issue, the Assessing Officer would decide the fate. No substantial questions of law.
Computation of income - as per Tribunal Deduction computed at the rate of 7.5% of the total income ought to be computed after setting off of brought forward losses - HELD THAT:-It is now well settled that the deduction towards bad and doubtful debts at 7.5% shall be made after setting off the brought forward loss, to arrive at the total income. Therefore, the finding recorded by this Court on substantial question of law No.2 is an error apparent on the face of the record and therefore, deserves to be reviewed.
Hence, the substantial question of law No.2 is answered as follows:-
"The Tribunal was justified in holding that the deduction at the rate of 7.5% of the total income should be computed after setting off the brought forward loss."
TP Adjustment - payment of shared IT service cost to its AEs - international transaction involving payment made by the assessee to its associate enterprise under a cost contribution arrangement made by virtue of an agreement, namely, ‘I.T. Cost Pooling Agreement’ entered into by all the group companies - sole allegation of the TPO was that the intra-group activities under the ‘IT Cost Pooling Agreement’ were in the nature of stewardship services and hence, he determined the arm’s length price of the international transaction under consideration at Nil value.
HELD THAT:- In the instant case, the AO, while examining the evidences of receipt of IT services, did not make any adverse comment under section 37 but he only adopted the ALP adjustment directed by the TPO because the order of the TPO was binding on him.
TPO, in the instant case, determined the arm’s length price of the international transaction at Nil value without applying any of the methods prescribed under subsections (1) and (2) of section 92C - AO, in the instant case, had not disallowed the expenditure under section 37 of the I.T. Act but only adopted the ALP determined by the TPO in his order. We find that the principle enunciated by the Hon’ble High Court of Bombay [2017 (2) TMI 120 - BOMBAY HIGH COURT] is squarely applicable on the facts of the present case. Hence, we find that the aforesaid action of the TPO (that is, the determination of the ALP of the international transaction under consideration at nil value) is without jurisdiction and it goes against the basic tenet of the Indian Transfer Pricing Regulation.
We have noted that the term ‘stewardship activity’ has not been defined by the I.T. Act.
As respectfully following the above binding precedent, uphold the order of the CIT(A) for the assessment year 2014-15 [2022 (10) TMI 836 - ITAT KOLKATA] and the contention of the assessee and we delete the ALP adjustment made by the AO/TPO.
ALP adjustment in respect of the international transaction involving sale of finished goods by the assessee to associated enterprise - assessee applied the CUP Method in order to substantiate the arm’s length nature of the international transaction involving sale of PCBs by the assessee to AT&S AG in Europe - HELD THAT:- As in assessee’s own case for the assessment year 2013-14 [2018 (10) TMI 1994 - ITAT KOLKATA] wherein this Tribunal, on the same facts and circumstances of the case, accepted the arm’s length nature of the international transaction involving sale of finished goods by the assessee to AT&S AG under the CUP Method and accordingly, directed to delete the ALP adjustment made by the AO/DRP in respect of the aforesaid international transaction.
Foreign benchmarking analysis under the TNMM - We have noted that this Tribunal, on the same facts, for the immediately preceding assessment years 2011-12, 2012-13 and 2013-14, accepted that the international transaction under consideration was at arm’s length under the CUP Method. We have further noted that there is no change in facts and law for the assessment year under consideration. We therefore see no reason to take any view of the matter other than the view taken by the Division Bench of this Tribunal in assessee’s own case for the assessment years 2011-12, 2012-13 and 2013-14. Therefore, in our considered view, Ground which deals with an alternative method (that is, foreign benchmarking analysis under the TNMM) in relation to the international transaction under consideration, does not require separate adjudication and it will be merely an academic exercise.
Proceedings against company in liquidation - HELD THAT:- A perusal of this judgment [2022 (3) TMI 1287 - DELHI HIGH COURT] would show, that the appeal of the appellant/revenue was disposed of, primarily on the ground that the respondent company was in liquidation.
Given the judgment passed by the coordinate Bench, Mr Chandra says that he cannot argue to the contrary, at least before this Court.
These appeals stand closed, in line with the judgment rendered by the coordinate Bench.
Constitutional Validity of Section 50(a) of the Delhi Land Reforms Act, 1954 - ultra vires of Articles 14, 15, 254 and 21 of the Constitution of India - rights of inheritance denied.
Repugnancy - Article 254 of the Constitution - HELD THAT:- The question of repugnancy arises only if both the Parliament and the State legislature have made law with respect to any one of the matters enumerated in the Concurrent list (List III). In the present case two enactments of 1956 and 1954 are relatable to Entries in List III and List II respectively. The relevant Entries in List III is Entry Nos.5 and 7 whereas relevant Entry of List II is Entry No.18 - Apart from the fact that a bare reading of Article 254 reflects that it refers to repugnancy in law made with respect to matters enumerated in the Concurrent list (List III), this Court has also laid down that question of repugnancy would not come into existence unless it is first established that both enactments are under the Concurrent list (List III). In this respect it would be appropriate to refer to the law laid down by this Hon’ble Court in the case of M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT] - It is held therein that the question of examining repugnancy would not apply at all unless it is first established that both enactments under the Central and the State are with respect to matters enumerated under the Concurrent list (List III).
In the present case, 1954 Act is not referable to any matter enumerated in List III but it is referable to Entry 18 of List II. Thus, no question of repugnancy would arise in view of Article 254 of the Constitution.
Deletion of Section 4(2) of the 1956 Act - HELD THAT:- Till 2005, to be specific 09.09.2005, when the Hindu Succession (Amendment) Act of 2005 was enacted, the aforesaid provision remained on the statute. It is not in dispute that the property in question is agricultural property, and therefore, in 1997 at the time when Mukhtiyar Singh died, the devolution of interest (inheritance) would be determinable on the said date, in accordance with the law existing at that time. In 1997 Section 4(2) of the 1956 Act, was very much on the statute, its subsequent deletion would not have any impact on the rights of inheritance, which had already accrued and crystallised, prior to the amendment. Therefore, on facts deletion of Section 4(2) of the 1956 Act would not help the appellants - It is well settled that all amendments are deemed to apply prospectively unless expressly specified to apply retrospectively or intended to have been done so by the legislature.
The deletion of Section 4(2) took place w.e.f 09.09.2005. Therefore, the effect of the deletion can only be in respect of successions which opened on or after 09.09.2005. This is because under Section 6(b) and 6(c) of the General Clauses Act repeal cannot affect the previous operation of any enactment so repealed and cannot affect the previous operation of any enactment so repealed and cannot affect any right which may have been acquired or accrued - In the present case, it is to be held that succession has opened prior to 09.09.2005, the rights of the descendants in terms of Section 50 became crystallized on account of the said Section read with Section 4(2) of the 1956 Act. Therefore, the deletion of Section 4(2) cannot have retrospective effect.
Gender bias/ women empowerment - HELD THAT:- Once it is upheld that there can be no challenge to the 1954 Act as the said legislation is included in the Ninth Schedule of the Constitution of India, this argument also has no legs to stand.
Effect of the judgment in the case of Babu Ram [2019 (5) TMI 1975 - SUPREME COURT] - HELD THAT:- Reliance placed upon the judgment in the case of Babu Ram is of no help to the appellant. The case of Babu Ram related to State of Himachal Pradesh where there is no State enactment legislated covering the matters mentioned in Entry 18 of List II that is to say that the State of Himachal Pradesh has no local enactment covering agricultural land tenures. It was in such circumstances that this Court held that succession of agricultural land would be governed by the 1956 Act. It would be worthwhile to mention that in the judgment of Babu Ram itself this Court clarified that had there been a state enactment covering the field of Entry 18 List II of Seventh Schedule, the rights over agricultural land would have been governed by the same.
Penalty levied u/s 271C - non deduction of TDS on the payments made for External Development Charges (EDC) to HUDA - HELD THAT:- Tribunal in the case of TDI Infrastructure Ltd. [2022 (7) TMI 388 - ITAT DELHI] held that the assessee was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, penalty under section 271C of the Act was not leviable. Decided in favour of assessee.
Money Laundering - Criminal Conspiracy - applied for a loan with fake documents - siphoning off of funds - cheating - predicate offence - statutory presumption - HELD THAT:- In Rajendra Singh v. State of U.P. & others [2007 (8) TMI 752 - SUPREME COURT], the Supreme Court has held that the the statements of the witnesses under Section 161 Cr.P.C. being wholly inadmissible in evidence could not at all be taken into consideration. - It was also held that mere fact that trial of co-accused Daya Singh has concluded cannot have the effect of nullifying or making the order passed by the learned Sessions Judge on 26.5.2005 as infructuous.
Rajendran [A6] had voluntarily lent his name for the purchase of the property under the sale deed dated 09.09.2009 with the tainted money that was generated by G.Srinivasan [A1] and R.Manoharan [A2] by committing a scheduled offence. Under Section 24 of the PMLA, there is a statutory presumption which can be discharged only during trial.
The trial Court shall proceed with the trial of the case without in any manner influenced by what is stated are only for the limited purpose of disposing of this quash petition - Petition dismissed.
Money Laundering - scheduled offence - proceeds of crime - Seeking a correction in the appropriate procedure to be followed while conducting enquiry and trial of offences classified as “scheduled offences” under the Prevention of Money Laundering Act, 2002 - HELD THAT:- In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in Nikesh Tarachand Shah v. Union of India [2017 (11) TMI 1336 - SUPREME COURT], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA.
Supreme Court has expressed the view that expression proceeds of crime which is the very essence of the offence of money laundering needs to be construed strictly. Only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. On the above basis, Supreme Court has held that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction either on account of discharge or acquittal or quashing of the criminal case (scheduled offence), there can be no action for money laundering against such a person or a person claiming through him in relation to the property linked to the stated scheduled offence. No other view is possible - Supreme Court expressed the view that it is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of acquittal or discharge of the person in connection with the scheduled offence. The above decision of the Supreme Court has now cleared the legal position. It succinctly sums up that offence under Section 3 is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. In the event of acquittal of the person concerned or being absolved from the allegation of criminal activity relating to scheduled offence and if it is established that crime property in the concerned case is rightly owned and possessed by the concerned person, such a property by no stretch of imagination can be termed as crime property.
Thus, Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him.
Section 44 of PMLA clarifies that notwithstanding anything in CrPC, any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering, the authority authorized under the PMLA to file complaint shall file an application before the Special Court trying the scheduled offence and on such application being filed, the Special Court shall commit the case relating to the scheduled offence to the Special Court, which shall thereafter proceed with the case from the stage at which it is committed. The purpose behind this provision is to ensure that the scheduled offence and the offence of money laundering under PMLA are not tried by two different Courts which may lead to contrary/conflicting verdicts - Section 235 of CrPC says that after hearing arguments and point of law, the judge shall give a judgment in the case, which may either be of acquittal or of conviction. It is on this basis, Supreme Court has observed that conviction under Section 4 of PMLA for committing offence under Section 3 is dependent upon conviction for a scheduled offence; if there is no crime there cannot be any proceeds of crime. And if there are no proceeds of crime, the offence of money laundering cannot be sustained.
The position which emerges is that existence of scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA, but also for continuation thereof. In the absence of these two conditions, the Special Court dealing with the offence under PMLA would not be competent to pronounce on the guilt or otherwise of the person concerned accused of money laundering.
Income taxable in India - fees for technical services (FTS) - services in the nature of support services - importing of “make available” test from the India UK tax treaty read with the protocol - whether support services rendered by the assessee are excluded from the ambit of FTS since the “make available” clause under the India- France DTAA even after amendment notification So No. 650 (E). dated 10.07.2000? - as per CIT-A support services rendered by the assessee are excluded from the ambit of FTS - HELD THAT:- In our understanding of the law the protocol to a tax treaty is an indispensable part of a tax treaty with the same binding force as the main clauses of the tax treaty. In our considered opinion the provisions of the tax treaty are, therefore, required to be read with the protocol and are subject to the provisions contained in such protocol without there being a need of a separate notification for enforcing the provisions of the protocol, this has been settled by the decision of Steria (India) Ltd [2016 (8) TMI 166 - DELHI HIGH COURT]
The term FTS has a more restrictive scope in so far as the absence of the term “managerial” and further existence of the “make available” condition are embedded therein.
In our understanding under the India UK tax treaty for a payment to quality as FTS both the following conditions need to be cumulative satisfied :
(i) The services need to be “technical” or “consultancy” in nature.
(ii) The services need to make available technical knowledge, experience, skill, know-how or processes, which enables the persons acquiring the services to apply the technology contained therein.
No infirmity in the findings of the CIT(A) which need interference. Decided against revneue.
CIT(A) has admitted additional evidences in violation of rule 46 A of the Income Tax Rules 1962 - We do not find any merit in this contention of the revenue because the CIT(A) invoking the powers conferred upon him u/s. 250 (4) called for certain information/ documents and based his findings on such information / documents. In the light of section 254 (4) of the Act the CIT(A) is free to conduct the enquiry to dispose of the appeal as he deems fit. We, therefore, decline to interfere with the findings of the CIT(A). The appeal filed by the revenue is dismissed.
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