Unexplained cash credit u/s 68 - onus upon the assessee to discharge the burden so cast upon - HELD THAT:- Commissioner of Income Tax (Appeal) found that the assessee discharged the primary onus cast upon it by offering complete explanation of the transaction of the share application money and proved the identity, genuineness and creditworthiness of investing companies, which are the essential conditions provided under section 68 - Assessing Officer made independent enquiry by issuing notices under section 133(6) of the Act to the share applicant and they have complied with the same by submitting necessary details, meaning thereby, the assessee also explained the source of funds. Thus, we are in agreement with the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal) and find no infirmity in the same.
In the present appeal, the necessary documents were duly filed by the investors and responded to the notices issued under section 133(6) of the Act.The copy of the share application form, copy of confirmation of share holders, copy of bank statement, copy of PAN card and annual report of the company with respect to M/s Alka Securities Ltd. are available - Identical documents are available with respect to M/s Alpha Graphics India Ltd. and Alka Broking Ltd.. Similarly, identical documents are available in the paper book, filed by the assessee with respect to remaining investing companies/entities. It is not the case that new document has been filed before the Tribunal for the first time. The material facts available on record clearly established that the requirement of section 68 has been duly fulfilled by the assessee. - Decided against revenue.
Exemption u/s.11 - Denying registration u/s.12AA - HELD THAT:- DR did not dispute that the procedure laid down in the Act has been complied with by the assessee for filing application for registration u/s.12AA of the Act. Hence, in our considered view, in totality of facts and circumstances and judicial principles laid down by the Courts and also for the fact that it is registered with the Commissioner of Charity at Pune, registration u/s.12AA of the Act should be granted.
It is also open to the Revenue Authority at the time of assessment to verify the activities of the Trust to examine whether they will get exemption u/s.11 of the Act or not and do the needful as per law.
We take guidance from the decision of Yogiraj Charity Trust [1976 (3) TMI 5 - SUPREME COURT] that if the predominant objects of a trust is charitable in nature then other objects cannot be judged individually whether they are charitable or not meaning thereby if the totality of objects is charitable the requirements of the law are complied with.
We set aside the order of Ld. CIT and direct to grant registration u/s.12AA - Appeal of the assessee is allowed.
LTCG addition - capital asset u/s 2(14) - measurement of distance - whether the assessee’s land sold was a capital asset or not falling within 8 Kms. of the “GHMC” u/s 2(14)(III)(B) of the Act as applicable in the impugned Assessment Year? - taxpayer stand throughout is that its land is not a capital asset since it is situated beyond 8 Kms. distance of any municipality whereas the Revenue’s case is that Mamidipally gram panchayat is adjacent to the GHMC limits - HELD THAT:- There is no evidence on record put forth at the Revenue’s behest specifically quoting any road or surface connectivity of the assessee’s lands to be within 8Kms. distance from any municipality including “GMCH”.
Lower authorities have strongly relied upon the some aviation sector “SEZ” which cannot be taken as the relevant factor is 8 Kms distance not fulfilled u/s 2(14)(III)(B) of the Act. They have further relied upon “Google” assistant in coming to the conclusion that the assessee’s lands are within 6 Kms. of the GHMC limits. Such a method has nowhere been prescribed in the Act.
The legislature; in Finance Act, 2013 w.e.f. 01/04/2013, has made it clear whilst substituting the earlier provision with the distance of the land in question has to be measured as per aerial distance. This is not the Revenue’s case that the said amendment carries any retrospective operation. Meaning thereby that 8 Kms distance condition has to be measured in terms of the road only as held in the case of CIT vs. Vijay Singh Kadan [2015 (9) TMI 755 - DELHI HIGH COURT].
Revenue fails to dispute that neither of the lower authorities has quoted any surface link between the assessee’s land and the nearest municipality namely GHMC so as to treat its lands as capital asset giving rise to long term capital gains on transfer. We direct the Assessing Officer to delete the impugned long term capital gains addition - Decided in favour of assessee.
Approval of the Scheme of Arrangement - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of the Petitioner Company to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, Income Tax Department and the Department of Telecommunication, there appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the Scheme under Section 230 & 232 of the Companies Act, 2013. The Petitioners shall however remain bound by the undertakings filed and also to comply with the statutory requirements in accordance with law.
Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this court to the scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners - While approving the Scheme It is further clarified that this order should not be construed as an order granting exemption from payment of stamp duty, taxes including income tax, GST etc or any other charges, if any, and payment in accordance with law or in respect of any permission/compliance with any other requirement which may be specifically required under any law.
Carry forward of unabsorbed depreciation - limitation of six years - HC concluded issue against the Appellant-Revenue and in favour of Respondent-Assessee - HELD THAT:- Special Leave Petitions are dismissed. Signature Not Verified Pending applications, if any, stand disposed of.
Enlargement on Bail - HELD THAT:- Having regard to the entire circumstances of the case including the fact that the co-accused has already been enlarged on bail and the entire money of the State shall stand secured the petitioner shall also be released on bail on such terms and conditions which can be imposed by the Trial Court.
TP Adjustment - computation of Arm Length Price [ALP] of certain Corporate Guarantee given by assessee for its Associates Enterprises [AE] - only point urged during hearing by Ld. Authorized Representative for assessee [AR], Shri Hiro Rai, is that the ALP of the same should be computed @0.5% in terms of ratio of decision of this Tribunal rendered in Everest Kanto Cylinders Ltd. [2012 (11) TMI 1099 - ITAT MUMBAI]. HELD THAT:- TPO, adopting a rate of 2% pa., arrived at ALP of the same, based on number of days for which the CG remained in force. The adjustment thus worked out to ₹ 66.37 Lacs which was incorporated in the assessment order dated 24/04/2015. Upon further appeal, Ld. CIT, in terms of judgment of this Tribunal rendered in Glenmark Pharmaceuticals Ltd. [2013 (11) TMI 1583 - ITAT MUMBAI], reduced the same to 0.98%. Still aggrieved, the assessee is in further appeal before us.
Upon due consideration of factual matrix, we find that since the decision of this Tribunal rendered in Everest Kanto Cylinders Ltd. Vs. DCIT [2012 (11) TMI 1099 - ITAT MUMBAI] in estimating the CG @0.5% has already been affirmed by Hon’ble Bombay High Court, we reduce the same to 0.5% per annum. The Ld. AO is directed to recompute the impugned addition in terms of this order. The appeal stands partly allowed.
Reopening of assessment u/s 147 - share application received (the intrinsic value of the share in comparison to the excess premium received) - HELD THAT:- We find from the reasons recorded reproduced above that the AO failed to appreciate that the law does not permit him to reopen assessment unless he has tangible material on the basis of which he forms reason to belief that income has escaped assessment. The mere fact that the assessee has issued shares at a certain premium itself cannot be a reason to belief that income has escaped assessment. AO has neither mentioned by how much the shares are overvalued i.e. by what amount the premium exceeds the instinct value of the shares nor the amount, which according to him, has escaped assessment.
AO stated that income in the grab of share application money received in this case has escaped assessment but he could not point out on what basis / material does he belief that the share capital is not genuine. In the similar circumstances in the case of Khubchandani Healthparks Pvt. Ltd [2016 (2) TMI 710 - BOMBAY HIGH COURT] held that regular Return of income was assessed by Intimation under Section 143(1) of the Act and no scrutiny assessment was done. In the above view, to ascertain the nature and the justification for charging share premium, the Assessing Officer has reason to believe that charging of share premium over and above the intrinsic value of the share is income which has escaped assessment.
Notice itself does not indicate the approximate amount of income, which the Assessing Officer has reason to believe has escaped assessment nor does it quantify the extent to which the share premium received was in excess of intrinsic value, which has escaped assessment. It gives no reasons to indicate the basis of coming to the conclusion that share premium is excessive and, therefore, income.
Moreover, the Notice also does not dispute that this is a share premium but seek justification for charging the share premium over and above intrinsic value of the share premium.
AO has absolutely no material to even suspect, forget believe that income has escaped assessment. Hence, we quash the reopening and accordingly, the issue of assessee’s appeal on jurisdiction is allowed.
The Supreme Court of India allowed the application seeking exemption from filing a certified copy of the impugned judgment. Notice was issued, and no coercive steps were to be taken against the petitioner in the meanwhile. (2019 (1) TMI 1839 - Supreme Court)
TP Adjustment - upward adjustment on account of reimbursement of marketing, advertisement and brand promotion - HELD THAT:- We find identical issue had come up before the Tribunal in assessee’s own case in the immediately preceding assessment year, after considering the rival arguments made by both the sides had restored the issue to the file of the AO/TPO for fresh determination of the issue as held TPO did not have the benefit of the Special Bench order in the case of LG Electronics [2013 (6) TMI 217 - ITAT DELHI] and the DRP failed to apply it correctly to the facts of the case, by making sweeping observations generally without considering the effect of relevant factors laid down by the special bench. In such circumstances, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this issue is set aside and the matter is restored to the file of the AO/TPO for a fresh determination of disallowance, if any, on account of Transfer pricing adjustment for AMP expenses.
Addition of the ‘Provision of support services in area countries’ - Comparable election - submission of the assessee that certain companies which were included by the assessee should not have been rejected by the TPO/DRP since the Tribunal in assessee’s own case in the preceding years has accepted those companies as comparables - HELD THAT:- We find the order of the DRP is not a speaking order especially when in assessee’s own case, certain comparables were held to be accepted as comparables. Although the decision of the Tribunal was available for the assessment year 2006-07 and 2009-10 when the order of the DRP was passed, however, it appears that no cognizance has been taken by the DRP of the order of the Tribunal. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the ld. DRP to pass a speaking order relating to the various comparables which the assessee is challenging in its application under Rule 27 of the ITAT Rules and which have been reproduced in the preceding paragraphs. DRP should also pass a speaking order on the issue relating to foreign exchange fluctuation/loss to be considered as operating item while computing the ALP of the international transaction. The ground raised by the Revenue is accordingly allowed for statistical purposes.
Serving of food/beverages in the Canteen of the Factory - benefit of N/N. 25/2012-ST as amended by N/N. 14/2013-ST dated 22/10/2013 - Interpretation of Statute - scope to those canteens “maintained by and run by the factory themselves” - intent in the Entry No.19A of the mega exemption Notification - it was held by the Tribunal that services provided by the appellant is covered by Entry No.19A of the Negative List and exempted from payment of Service Tax - HELD THAT:- There are no ground to interfere with the impugned judgment and order passed by the Customs, Excise & Service Tax Appellate Tribunal.
Addition on account of deposits in the bank account stated to be sourced from sale of agricultural land stood confirmed in appeal - HELD THAT:- Tax authorities have proceeded to take action qua the transactions against the most vulnerable person. There is nothing on record to show that the assessee having sold his land continued to have any hold over the purchasers. AO having full authority to call for their production in the peculiar facts instead of disbelieving the assessee ideally should have cross-checked the facts from the purchasers who consciously chose not to appear before the Department and may have reason to not address the correct facts.
In the facts of the present case, admittedly 30 Kanal 12 Marla have been sold in village Ferozepur Bangar, Distt. Mohali on 28.01.2011 as per the Sale Deed which has been taken note of by the Department. The fact that it reflected an amount of ₹ 47,81,250/- is a matter of fact. The short issue for consideration was the value of the land sold at the relevant point of time. The AO in the facts of the present case should have carried out necessary enquiries as he had the PAN details of the purchaser.
Accordingly, we find that in the peculiar facts and circumstances of the present case, the Tax Authorities have failed to exercise their powers which they are vested with and in the face of the inability of the assessee to produce the concerned purchasers, the Department who has the PAN numbers and has traced the parties in Amritsar should have no hesitation in calling forth and examining the issues as the purchasers may be front-men of some builders etc. having deep pockets. The relevant facts in the form of the value of the specific property at the relevant point of time may also be a relevant aspect to be taken into consideration. Accordingly, in the interest of justice, the issue is restored back to the file of the AO with a direction to pass a speaking order - Decided in favour of assessee for statistical purposes.
Method of Valuation - cement manufactured by the appellant and cleared for their internal use, that is for repair and maintenance of plant and residential colony, within the factory premises for captive consumption in 50 kg pack to contractor (service provider) bearing the mark “Not for the sale" - to be valued under Section 4 (1)(b) read with Rule 8 of the Valuation Rules, or under Section 4 A on MRP basis?
HELD THAT:- The issue is squarely settled in favour of the appellant assessee by the precedent judgment of this Tribunal in GRASIM INDUSTRIES LTD. (UNIT-I) VERSUS COMMISSIONER OF C. EX., TRICHY [2008 (10) TMI 462 - CESTAT, CHENNAI] where it has been held that We have found favour with the assessee‟s case in view of the clarification issued by the C.B.E. C, which is to the effect that no RSP is required to be printed on the goods sold to industrial/institutional consumers, as defined under the rules framed under the Standards of weights and Measures Act and that such goods would be covered under Sl. No. 1B or 1C of Notification No. 4/2006-CE, by virtue of the Second Proviso to the Explanation to Sl. No. 1C of the Notification, as amended.
Approval of Scheme of Merger by Absorption - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law including but not limited to Companies Act, 2013; Income Tax Act; Accounting Standards and various other applicable statutory acts and is not contrary to public policy.
Since all the requisite statutory compliances have been fulfilled, the scheme is approved.
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- There is no dispute in the case that the petitioner is the financial creditor. More so when the corporate debtor has admitted the debt by way of an affidavit in reply. The application is also filed in the prescribed form - I of the Rules and the prescribed fee has also been paid - On perusal of record, it is held that there is existence of default and the said default accrued on 20.05.2018. The application under Section 7(2) of the Code is also complete in all respect.
The petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted - Petition admitted - moratorium declared.
Exemption u/s. 11 & 12 - as recorded by AO that the donations received from parents/students being provided with professional seats was not voluntary contributions - whether the assessee was running a charitable trust or not? - As per AO donations received from parents/students being provided with professional seats was not voluntary contributions envisaged u/s.11 & 12 - AO said donations collected from ‘Mediation Centre Fund’ was contrary to sections 11(1)(a) and 11(1)(d) - HELD THAT:- By the order dated [2019 (1) TMI 1829 - KARNATAKA HIGH COURT] was disposed off by answering the aforesaid questions of law. Since the very same questions of law arise for consideration in this appeal, the instant appeal is disposed off in terms of the aforesaid order, by answering the substantial questions of law in favour of the assessee and against the Revenue.
TDS u/s 195 - Data Processing Cost paid by the assessee–branch to its Head Office [HO] - whether such payment is based and determined on the usage of space/capacity and other keys towards usage of ICT infrastructure and further holding that the payment of Data Processing Cost is reimbursement of expenses and the provisions of Tax Deducted at Source (TDS) are not applicable - HELD THAT:- Since the facts in the instant year are identical to ones as in the earlier years and accordingly we respectfully following the decision of the Co-ordinate Benches hold that assessee is entitled for deduction of data processing cost as the same is not royalty but reimbursement of Data Processing Charges and therefore there is no requirement of deduction of tax at source from the said reimbursement. This ground of Revenue is dismissed.
Assessee-branch in India paid interest to its HO - HELD THAT:- We find that the issue has been decided by the Co-ordinate Benches in the earlier years [2005 (8) TMI 294 - ITAT CALCUTTA-E]wherein the Co-ordinate Benches have allowed the claim for deduction of interest paid by the branch office to its HO considering the fact that the assessee a banking company. The Calcutta High Court has held in the case of ABN Amro Bank [2010 (12) TMI 340 - CALCUTTA HIGH COURT]] where an assessee is an branch (PE) of non resident entity i.e its Head Office(G.E.) and the interest paid by the P.E. to G.E. allowable since branch (P.E.) is separate and distinct from head office(G.E.)for the purpose of assessment under the I.T.Act and also held that interest earned by the head office (G.E.) from branch office(P.E.) is not chargeable to tax in view of the specific provisions of Article 11 of DTAA between India and Netherland. Therefore, respectfully following the decisions of the Co-ordinate Benches, we dismiss the ground raised by Revenue.
Disallowance u/s. 14A - CIT(A) deleted the disallowance on the ground that if there is any exempt income earned by the branch which is exempt under the Income Tax Act, only then the provisions of Section 14A could be applied - HELD THAT:- As relying on own case we found substantial merit in the contention of learned AR, however, in the interest of justice, we restore the matter back to the file of the AO to find out if assessee was in receipt of any exempt income vis-a-vis interest paid to head office. If the AO found that assessee was not in receipt of any exempt income, no disallowance is to be made. Accordingly AO is directed to decide afresh after verification.
Interest income on Income Tax refund - to be charged only under Article 11(2) and not under Article 11(4) of Indo Belgium DTAA, despite the interest income being effectively connected with Permanent Establishment (PE) - CIT(A) held issue in favour of assessee by holding that under Article 11(2) of DTAA, gross amount of interest in all other cases may be taxed @ 15% and hence the rate of 15% is more beneficial than rate of 40% prescribed in the Finance Act, 2011 for Assessment Year. 2012-13 - HELD THAT:- After perusing the facts of the case of assessee and Article 11 of DTAA, we are of the considered view that interest income on income tax refund has to be taxed at the rate which is beneficial to assessee as the assessee is tax agent of Belgium. Apparently the beneficial rate is 15% under Article 11(2) of DTAA, which is lower than the 40% prescribed in the Finance Act, 2011 from AY. 2012-13 and therefore, in view of the provisions of Section 90, the rate applicable would be 15% + surcharge. The case of assessee is squarely covered by the decisions as cited above, wherein the Co-ordinate Benches have held that the interest on IT refund received u/s. 244A has to be taxed at the rate which is beneficial to assessee
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - demand notice sent by Operational Creditor was returned as "refused by recipient" - existence of debt and dispute or not - HELD THAT:- A reply has been given by the corporate debtor to the operational creditor wherein it has been stated that the corporate debtor is sorry for taking more time to pay and given the troubles, it has been assured that the corporate debtor will pay the amount definitely, which is a clear confirmation of the outstanding debt. Therefore, the operational creditor has established that his claim is genuine, and there is default on the part of the corporate debtor.
The operational creditor has fulfilled all the requirements of law for admission of the application. This Bench is satisfied that the corporate debtor has committed default in making payment of the outstanding debt claimed by the operational creditor.
Exemption u/s. 11 & 12 - as recorded by AO that the donations received from parents/students being provided with professional seats was not voluntary contributions - Whether the Appellate Authorities were correct in not taking into consideration the finding recorded by the AO that the donations collected from 'Mediation Centre Fund' was contrary to sections 11(1)(a) and 11(1)(d) of the act and consequently recorded a perverse finding? - HELD THAT:- Questions No.2 and 3 are covered by the judgment of this Court in case of SRI. BELIMATHA MAHASAMSTHANA SOCIO CULTURAL & EDUCATIONAL TRUST [2010 (3) TMI 854 - KARNATAKA HIGH COURT]- Decided in favour of the Assessee
Approval of Scheme of Merger by Absorption - Sections 230 to 232 read with Section 66 of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violation of any provisions of law and is not contrary to public policy. None of the parties concerned have come forwarded to oppose the Scheme of Merger - Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition filed by the Transferor Company are made absolute in terms of prayer clause (a) to (c) of Company Scheme Petition.
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