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2013 (4) TMI 791
Issues involved: Appeal against order u/s 143(3)/254 for AY 2004-05 regarding adjustment of unabsorbed depreciation against income from Other Sources.
Summary:
Issue 1: Adjustment of unabsorbed depreciation against income from Other Sources
The Revenue appealed against the CIT(A)'s order allowing adjustment of unabsorbed depreciation against income from Other Sources u/s 32(2) of the Income Tax Act, 1961. The Tribunal set aside the assessment and directed the AO to reconsider the matter. The AO disallowed the set off of unabsorbed depreciation against income from Other Sources, stating it should only be set off against business income. The CIT(A) allowed the set off based on Section 32(2) and a Supreme Court decision. The Tribunal considered a Special Bench decision and held that unabsorbed depreciation from AY 1997-98 to 2001-02 can only be set off against business income, not against income from Other Sources. Unabsorbed depreciation from AY 2002-03 onwards can be set off against any income. The AO was directed to allow set off accordingly.
This judgment clarifies the scope of adjusting unabsorbed depreciation against different sources of income based on the provisions of Section 32(2) of the Income Tax Act, 1961 and relevant case law interpretations.
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2013 (4) TMI 790
Issues:
The issues involved in the judgment are the imposition of penalty under section 78(10A) of the Rajasthan Value Added Tax Act, 2003 and the subsequent appeal process.
Imposition of Penalty under Section 78(10A):
The respondent, a driver carrying goods, was penalized under section 78(10A) for not having the necessary documents and the check-post seal affixed. Despite having produced required documents, the penalty was imposed. The Deputy Commissioner (Appeals) later deleted the penalty based on a previous court judgment. The Tax Board upheld the decision of the DC (A), leading to the revision petition.
Appeal Process and Final Decision:
In the revision petition, the petitioner-Department argued that the penalty was rightly imposed due to the lack of necessary documents. However, the court found that the facts of the case aligned with a previous judgment, leading to the dismissal of the revision petition. The court concluded that no error, illegality, or perversity was present in the Tax Board's decision, thus upholding the deletion of the penalty.
This judgment highlights the application of legal principles and precedents in tax penalty cases, emphasizing the importance of consistency in decision-making based on established laws and judgments.
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2013 (4) TMI 789
Addition on account of unpaid liability of Service Tax u/s 43B - Held that:- Undisputedly the assessee has been following mercantile system of accounting and the liability of Service Tax is required to be paid only on the value of taxable service after its actual receipt in a particular month or quarter, as the case may be, and not on the amount billed by the assessee on the customers. It is also undisputed fact that Service Tax was not passed through profit & loss account nor was taken as part of income. The similar situation was examined by the Tribunal in the case of ACIT vs. Real Image Media Technologies (P) Ltd. (2007 (12) TMI 263 - ITAT MADRAS-C) and the Tribunal came to the conclusion that since the Service Tax was not payable by the assessee, the rigour of the provision of Section 43B could not be applied to the facts of the case. -Decided in favour of assessee.
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2013 (4) TMI 788
Disallowance of freight and transportation expense and building repair and maintenance - addition made by the Assessing Officer on account of sale incentives - Value of fringe benefit on account of sale incentive being 20% - applicability of 115WB(2)(D)
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2013 (4) TMI 787
Issues involved: The judgment deals with the disallowance of payment of employees' contribution in respect of GPF, GIS, and PF in sugar units and distillery units under section 2(24)(x) read with section 36(1)(va) of the Income Tax Act.
Details of the Judgment:
1. The appeal was filed by the Revenue against the order of CIT(A) on the grounds that the provisions of section 43B of the Act are not applicable to the amount deposited by employees as their contribution to PF. The appeal proceeded in the absence of the assessee, and the Revenue was heard.
2. The issue revolved around the disallowance of payment of employees' contribution amounting to &8377;23,65,450, which was paid beyond the prescribed time. The Assessing Officer added this amount to the income of the assessee. The CIT(A) re-examined the issue and concluded that due to the omission of the second proviso to section 43B of the Act, no disallowance was warranted for payments mentioned in section 36(1)(va). The CIT(A) also noted that the amount was deposited before the due date of filing the income tax return, precluding disallowance under section 43B.
3. The Revenue, aggrieved by the CIT(A)'s decision, appealed before the Tribunal, relying on the assessment order.
4. The Tribunal, after considering the relevant provisions of the Act and referring to a previous judgment, CIT vs. Manoj Kumar Singh, held that payments of employees' contribution to GPF, GIS, and PF, if made after the due date but before filing the return, are deductible under section 43B. As the CIT(A)'s order aligned with the jurisdictional High Court's judgment, the Tribunal found no fault in it and confirmed the decision.
5. Consequently, the Tribunal dismissed the Revenue's appeal.
(Order pronounced in the open court on 25/04/2013)
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2013 (4) TMI 786
Issues involved:
The issues involved in this case are:
1. Whether the Income Tax Tribunal was right in law in deleting the addition made on account of disallowance of deduction claimed under Section 80IB [10] of the Income Tax Act by the Assessing Officer?
2. Whether the assessee firm is entitled to claiming deduction under section 80IB (1) r/w. Section 80IB (1) and rule 18BBB as the assessee firm has not fulfilled the condition mentioned in the above-mentioned section?
Issue 1: Deduction under Section 80IB [10] of the Income Tax Act:
The short issue in this case pertains to the assessee's claim of deduction under Section 80IB [10] of the Income Tax Act, 1961. The Revenue's objection was that the assessee did not own the land on which the Housing Project was developed, hence the deduction was not allowable. The Court referred to a previous judgment and highlighted that the essence of sub-Section (10) of Section 80IB requires involvement in developing and building housing projects approved by the local authority. The provision aims to encourage providing housing units in areas with housing shortages. The Court noted the terms of the development agreements and sale agreements, emphasizing that the assessee had total and complete control over the land in question. The assessee took the full risk of executing the housing project, investing its own funds, and engaging various agencies. The Court concluded that the assessee was entitled to the deduction under Section 80IB [10] of the Act, and accordingly, the Tax Appeal was dismissed.
Issue 2: Entitlement for claiming deduction under Section 80IB (1):
The second issue raised was whether the assessee firm is entitled to claiming deduction under section 80IB (1) r/w. Section 80IB (1) and rule 18BBB as the assessee firm has not fulfilled the condition mentioned in the above-mentioned section. However, the judgment primarily focused on the first issue regarding the deduction under Section 80IB [10] and did not provide specific details or analysis related to the entitlement for claiming deduction under Section 80IB (1).
Therefore, the Court dismissed the Tax Appeal filed by the Revenue challenging the judgment of the Income Tax Appellate Tribunal regarding the deletion of the addition made on account of disallowance of deduction claimed under Section 80IB [10] of the Income Tax Act by the Assessing Officer.
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2013 (4) TMI 785
Issues Involved:1. Allowance of depreciation on aircrafts at the rate of 40% versus 15%. Summary:Issue: Allowance of Depreciation on Aircrafts at 40% vs. 15%The Revenue filed appeals against the order of CIT(A)-III, New Delhi, which allowed depreciation on aircrafts at 40% instead of 15% as determined by the Assessing Officer (AO). The AO contended that the higher depreciation rate was applicable only to aeroplanes, not aircrafts. The ITAT found that this issue was covered in favor of the assessee by the decision in the case of SRC Aviation Pvt. Ltd., affirmed by the Hon'ble Jurisdictional High Court. The CIT invoked powers u/s 263, arguing that the AO had not investigated the issue properly, leading to an erroneous order prejudicial to the revenue. The CIT differentiated between 'aircraft' and 'aeroplane,' suggesting that the former is lighter and less powerful, thus not eligible for higher depreciation. The CIT referred to the old Appendix-I of Income-tax Rules, which prescribed different rates for 'aeroplanes-aeroengines' and 'aeroplane-aircrafts.' The assessee argued that the AO had inquired into the issue during the original assessment and allowed depreciation at 40%. The assessee also presented evidence that similar aircrafts were granted depreciation at 40% by the department in other cases. The ITAT noted that the definitions of 'aircraft' and 'aeroplane' were not provided in the Income-tax Act or Rules, and general definitions should be considered. The ITAT concluded that the aircraft owned by the assessee, having fixed wings and powered by propellers or jets, qualifies as an 'aeroplane' eligible for 40% depreciation. The ITAT also observed that the department had consistently allowed 40% depreciation for similar aircrafts in other cases. The ITAT held that the AO's decision to grant 40% depreciation was in accordance with the law, and the CIT's invocation of powers u/s 263 was unjustified. The ITAT set aside the CIT's order and allowed the appeals filed by the assessee. The Hon'ble Jurisdictional High Court upheld the ITAT's decision, stating that the aircraft owned by the assessee falls within the description of 'aeroplane' and is eligible for 40% depreciation. The High Court noted that the rule-making authority confined the definition to 'aeroplane,' and the Tribunal's judgment was justified. Respectfully following the decisions of the Hon'ble Jurisdictional High Court and ITAT, the appeals of the Revenue were dismissed, and the order of the CIT(A) was sustained. Decision pronounced in the open Court on 26th April, 2013.
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2013 (4) TMI 784
Principle of Mutuality - No one can make profit out of himself - Deduction for Co-operative Societies u/s 80P - Assessee is a co-operative housing society and has derived income by way of interest from Co.op. Bank, S.B. Account and fixed deposit. Assessee claimed deduction from such income u/s 80P of the Act. Since he had not filed any details, the AO denied the claim and treated it the as income. - HELD THAT :- Interest received by the assessee on the surplus funds is to be assessed under the head “income from other sources”, the decision of CIT(A) upheld.
Decision of Hon’ble Supreme Court in the case of The Totgar's Co-operative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] and Madras Cricket Club Versus Income-tax Officer [2009 (11) TMI 586 - MADRAS HIGH COURT] followed.
Decided against the assessee.
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2013 (4) TMI 783
Disallowance of 20% cash payment u/s 40A(3) made in respect of its stock-in-trade - Held that:- No purpose will be served in deferring disallowance of such expenditure, which is made in cash during the year under consideration. As per our considered view, giving such direction for deferring the disallowance to subsequent years will frustrate the purpose of Section 40A(3), which is meant for discarding cash payment made during the year in respect of trading goods. Furthermore, there will always be uncertainty as to the year in which the assessee come forward and claim such expenditure in its profit and loss account.
In the instant case before us, even today, the assessee has not come forward to offer such expenditure in the profit and loss account, when more than 6 years have been passed. For the time being, even if it is presumed that the assessee will come forward in the subsequent year, but in that year, keeping in view the period of limitation, no disallowance could be agreed by the assessee in respect of cash payment made for expenditure incurred in the assessment year 2006-07. Furthermore, entries made in books of account is not so relevant for allowing or disallowing a claim of deduction which is necessarily to, be allowed as per provisions of Income-tax Act, 1961. Accordingly, we confirm the action of the CIT(A) for upholding the disallowance so made under Section 40A(3). - Decided against assessee.
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2013 (4) TMI 782
Issues involved:
The judgment deals with the issue of the Central Information Commission (CIC) directing the Ministry of Finance to appoint only one Central Public Information Officer (CPIO) for the entire ministry, despite having multiple departments within its fold.
Background and Facts:
The respondent had filed an application with the Ministry of Finance seeking information about a newspaper item. The application was returned as there was no appointed CPIO for the Ministry of Finance. The information sought was later provided to the respondent.
Contentions of the Parties:
The petitioner argued that the CIC had no jurisdiction to issue such a directive, while the respondent contended that the CIC had the power to administer the provisions of the Right to Information Act, 2005 (RTI Act) and issue necessary directions.
Decision and Directions:
After hearing both parties, the court directed the Ministry of Finance to publicize the name of the Nodal Officer who will receive RTI applications. The Nodal Officer will then process the applications and forward them to the respective CPIO of the concerned department. If the information pertains to multiple departments, copies will be supplied to all relevant CPIOs to avoid delays. The Nodal Officer will inform the applicant about the designated CPIO for their application and provide necessary contact details. Applications without a specified CPIO will be handled by the Nodal Officer initially.
Conclusion:
The court's directions replaced the CIC's order, and the respondent's concerns were deemed to be addressed. The writ petition was disposed of accordingly.
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2013 (4) TMI 781
Issues involved: Appeal by department against order of CIT(A) relating to AY 2008-09, revolving around allowing deduction u/s 80B.
Issue of Allowing Deduction u/s 10B:
The case involved the demerger of M/s Gebbs Technology Pvt Ltd (GTPL) and the subsequent claim for deduction u/s 10B by the assessee. The AO initially disallowed the deduction based on the grounds that the assessee had not employed its own manpower and had got its work done on job work. However, the assessee argued that GTPL had commenced manufacturing activities prior to the demerger and had claimed deduction u/s 10B in earlier years. The CIT(A) allowed the deduction, citing similar decisions in earlier years. The Tribunal also upheld the CIT(A)'s order for previous years. The Tribunal found no reason to interfere with the CIT(A)'s decision, as it was consistent with previous rulings. Therefore, the Tribunal confirmed the order of CIT(A) and rejected the department's appeal, ultimately dismissing the department's appeal.
Conclusion:
The Tribunal dismissed the department's appeal, confirming the order of CIT(A) to allow the deduction u/s 10B for the year under consideration, based on consistency with previous rulings.
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2013 (4) TMI 780
Issues Involved:1. Whether the CIT(A) is justified in confirming the disallowance of Rs. 2,47,98,030/- as pre-commencement expenses. Summary:Issue 1: Disallowance of Rs. 2,47,98,030/- as Pre-Commencement ExpensesThe solitary issue that arises for consideration is whether the CIT(A) is justified in confirming the disallowance of a sum of Rs. 2,47,98,030/- as pre-commencement expenses. The assessee, a Private Limited Company incorporated on 19th September 2001, engaged in engineering and construction work, filed its return of income for the assessment year 2002-03, declaring a total loss of Rs. 2,47,98,030/-. The Assessing Officer issued notice u/s 148 of the Act and subsequently u/s 143(2), directing the assessee to explain why the expenses debited during the assessment year should not be disallowed as preoperative expenses. The objections raised by the assessee were rejected, and re-assessment was completed, disallowing the expenditure of Rs. 2,47,98,030/- as pre-commencement expenses. The CIT(A) dismissed the appeal of the assessee and upheld the disallowance made by the Assessing Officer, stating that no work had been executed on the actual site before 19-02-2002, and income-earning business activities did not take place till well after the close of the financial year. The assessee contended that the Assessing Officer erred in disallowing the expenses without appreciating that all expenses incurred after the date of setting up of the business and before the commencement of business are allowable expenses. The assessee relied on various judicial pronouncements to support its claim. The learned DR argued that the assessee had not produced the agreement for the EPC contract and whether the expenses claimed were under the EPC contract or O&M contract was not clear. The matter needed to be restored to the file of the Assessing Officer for denovo consideration. The Tribunal noted that there is a clear distinction between the commencement and the setting up of a business. The Hon'ble jurisdictional High Court in the case of MFAR Construction Ltd. had drawn a distinction between setting up of business and commencement of business, stating that expenditure towards integral parts of the business should be allowed as a deduction. In the instant case, the various expenses accounted for (Rs. 2,47,98,030/-) are in the nature of interest, commission and banking charges, management fees, soil investigation charges, quarry lease fee, and survey expenses. The Tribunal observed that the facts relevant to the issue were not properly deliberated upon and restored the matter to the file of the Assessing Officer for denovo consideration. In the result, the appeal filed by the assessee is allowed for statistical purposes.
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2013 (4) TMI 779
Whether the advances given to the assessee has to be considered as a deemed dividend u/s 2(22)(e) - Held that:- advances to the assessee is for the import of specialized machinery from out of India and for meeting other incidental requirements required for doing job work - it was mutually agreed that assessee shall do the job work of M/s Nexo Industries exclusively and at lower rates than the market rate and the amount of job work will be adjusted against the advances - the advances were out of Business compulsion and business expediency/ necessity and not for the personal use/benefit of the assessee and therefore these do not fall under the purview of section 2(22) (e) - Hon'ble Calcutta High Court rendered in the case of Pradeep Kumar Malhotra V CIT reported [338 ITR 538] - The job work is being done by the assessee exclusively for M/s Nexo Industries (P) Ltd. ( sistercompany) of which the assessee is a Director - the assessee even charged 10% less than the market rate for job work, which resulted into a mutual benefit of both the parties - The assessee was not allowed to adjust advances against the job work done by it as per the terms of the agreement. As a result, the sister-concern took over the entire business of the assessee - there is no personal benefit to the assessee from this arrangement but the assessee has suffered therefrom - Hence the security deposit cannot be construed as a loan - Reliance is placed on the decision of Delhi High Court in (2000) [161 CTR (Del) 432 : (2000) 244 ITR 358] - Decided in favor of assessee
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2013 (4) TMI 778
Entitlement for deduction for the amount pertaining to employees contribution towards Provident Fund and ESI - Held that:- The assessee is entitled for relief if actual payment is made before due date of filing the return. Admittedly, even the consequential order dated 31.12.2009 contains a finding of fact that the amount had been deposited before filing of the ‘return’. Therefore we hold that CIT(A) has rightly interfered in the finding of the Assessing Officer. - Decided against revenue
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2013 (4) TMI 777
Issues involved: Challenge to the order of the Income Tax Appellate Tribunal regarding the evidentiary value of statements recorded u/s 133A of the Income Tax Act and deletion of addition made on undisclosed income during survey.
Issue 1: Evidentiary value of statements recorded u/s 133A:
The revenue challenged the ITAT's decision regarding the evidentiary value of statements recorded u/s 133A of the Act. The son of the assessee had his statement recorded during a survey conducted u/s 133A. The revenue contended that even though the son's statement was retracted after three years, it should still be considered as material evidence. However, the Tribunal found that there was no corroborative evidence to support the statement obtained from the son. The Tribunal emphasized the importance of independent evidence and the risks associated with relying solely on statements without corroboration. The Tribunal also referred to a circular by the CBDT which supports the requirement of independent evidence during surveys.
Issue 2: Deletion of addition on undisclosed income during survey:
The revenue had made an addition of Rs. 36 lacs based on the son's statement recorded during the survey. However, the Tribunal, after considering the lack of corroborative evidence and the circular emphasizing the need for independent evidence, decided in favor of the assessee and deleted the addition. The Tribunal highlighted that the statement alone, without any other supporting evidence, cannot be the basis for making additions. The Tribunal also referred to a decision by the Madras High Court which emphasized that statements recorded during surveys do not have conclusive evidentiary value by themselves.
Conclusion:
The High Court upheld the Tribunal's decision, stating that the reliance on the son's statement without independent corroboration was not justified. The Court agreed with the Tribunal's interpretation of the law and the emphasis on the need for independent evidence during surveys. As a result, the tax appeal by the revenue was dismissed, and the deletion of the addition on undisclosed income during the survey was upheld.
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2013 (4) TMI 776
Issues Involved:1. Treatment of Long Term Capital Gains (LTCG) as unexplained credit u/s 68. 2. Treatment of gifts received by the assessees as unexplained credit u/s 68. Summary:Issue 1: Treatment of LTCG as unexplained credit u/s 68At the outset, the counsel for the assessees argued that the appeals by the Revenue are covered in favor of the assessee by the Tribunal's order in the case of Shri Pinakin L. Shah, where similar additions were made and subsequently deleted by the Tribunal. The Tribunal's decision was confirmed by the Hon'ble High Court. However, the Revenue's counsel contended that the additions are based on findings of fact and that the High Court's dismissal of the Revenue's appeal was not on merits but only in limine. The Tribunal examined the issue independently, noting that the matter is factual and requires an appreciation of the facts and circumstances of the case. The Tribunal found that the CIT(A) relied on the decision in the case of Mukesh R. Marolia vs. Addl. CIT, but the ratio decidendi of that decision was not referred to during the hearing. The Tribunal concluded that the order in the case of Shri Pinakin L. Shah could not be compared with that of Mukesh R. Marolia due to differences in facts and circumstances. The Tribunal decided to restore the matter back to the file of the CIT(A) for fresh adjudication in accordance with law, issuing definite findings of fact after hearing both sides. Issue 2: Treatment of gifts received as unexplained credit u/s 68The Tribunal noted that the CIT(A) had relied on the Tribunal's decision in the case of Shri Pinakin L. Shah, where specific findings of fact were rendered. The CIT(A) clarified that the facts of the instant cases were identical to those in the case of Shri Pinakin L. Shah. However, the Tribunal found that the only common donor in both cases was Sh. Sitaram Bhat, covering one transaction out of the five impugned. The Tribunal emphasized that proving a credit under law requires establishing the identity, creditworthiness of the creditor, and the genuineness of the transaction. The Tribunal found that the CIT(A)'s finding of identity of facts was without basis and contrary to the facts on record. The Tribunal highlighted the necessity of proving the creditworthiness of the donor and the genuineness of the transaction. It noted that the AO had stated that the creditworthiness of the donors was not proved. The Tribunal decided to restore the matter back to the file of the CIT(A) for fresh adjudication in accordance with law, issuing definite findings of fact after hearing both sides. The CIT(A) was directed to issue findings regarding the capacity of the donors and the genuineness of the credits, with the admission of additional evidence governed by the terms of law. Conclusion:In the result, the appeals by the Revenue are allowed for statistical purposes.
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2013 (4) TMI 775
Issues involved: Determination of whether the expenditure towards cost sharing of advertisement expenses is includible in the value of imported goods u/s Rule 10(1)(e) of the Customs Valuation Rules, 2007.
Summary:
The appellant, M/s. Samsonite South Asia Pvt. Ltd., imported goods from their collaborator M/s. Samsonite Corporation, USA, for manufacturing travel goods in India. The appellant shared in global advertising expenses with Samsonite Hong Kong, based on turnover, not related to imports. The department contended that the shared advertising expenses should be included in the value of imported goods. The appellant appealed against this decision.
The appellant argued that the advertising expenses shared with Samsonite Hong Kong were not related to the import of goods. They shared expenses for a global advertising campaign, benefiting all group entities. The expenses were not a condition of sale for the imported goods. The Revenue reiterated the lower authorities' findings.
The Tribunal found no evidence linking the shared advertising expenses to the imports made by the appellant. The expenses were based on sales turnover, including both imported and indigenous materials. The Tribunal concluded that the advertising expenses had no nexus with the import of raw materials. As the cost sharing was not a condition of sale for the imported goods, Rule 10(1)(e) of the Customs Valuation Rules, 2007, was not applicable. The Tribunal allowed the appeal, setting aside the impugned order.
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2013 (4) TMI 774
Issues involved: Violation of principles of natural justice in passing the impugned order.
Summary:
The appeals were filed against Order-in-Original No. 15/MP/2012-13 confirming the demand, interest, and penalties. The Tribunal found that the impugned order was passed without following the principles of natural justice. The appellants had requested for documents which were not provided, and the adjudicating authority did not acknowledge important communications. The Tribunal directed the authority to provide the requested documents within 30 days, after which the appellants were to file a reply within 30 days. The impugned order was set aside, and the appeals were allowed by way of remand for a fair consideration following the principles of natural justice.
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2013 (4) TMI 773
Waiver and stay of demand - Penalty - Notification No. 196/94-Cus dated 08.12.1994 - Held that: - the assessee is not claiming prima facie case against the demand of Central Excise duty. For the reasons already stated, their claim of prima facie case against the demand of Customs duty remains unsubstantiated and their plea of financial hardships is also unacceptable. In the result, there will be a direction to the appellant to pre-deposit the entire demand of Customs duty plus Central Excise duty (less ₹ 1 lakh already deposited) within six weeks and report compliance to the Deputy Registrar on 15.7.2013.
In the event of due compliance, there will be waiver and stay in respect of the penalties imposed on the appellant and interest on duty.
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2013 (4) TMI 772
Issues Involved:
1. Upward adjustment in the Arm's Length Price (ALP) by Rs. 2,54,30,779.
2. Rejection of the approach adopted for transfer pricing analysis and contemporaneous documentation.
3. Non-consideration of expenses incurred in shifting office for determining operating expenses under TNMM method.
Summary:
Issue 1: Upward Adjustment in ALP
The primary issue in Grounds 1 to 4 is the upward adjustment in the ALP by Rs. 2,54,30,779. The assessee, engaged in providing services to its Associate Enterprises (AEs), filed a Transfer Pricing Study Report using the Cost Plus Method. The Transfer Pricing Officer (TPO) rejected this method, opting for the Transaction Net Margin Method (TNMM) instead. The TPO selected comparables from Prowess and Capitaline databases, specifically IOT Design and Engineering Ltd. and L&T Valdel Engineering Ltd., and calculated an arithmetic mean PLI of 17.30% against the assessee's 3.23%, leading to the adjustment. The Dispute Resolution Panel (DRP) upheld the TPO's findings, dismissing the assessee's comparables as randomly selected and biased. The Tribunal found that the DRP failed to address the functional comparability of the TPO's selected comparables and remanded the matter back to the DRP for a fresh adjudication, emphasizing the need for a detailed functional analysis.
Issue 2: Rejection of Transfer Pricing Approach
The DRP/TPO/AO rejected the approach adopted by the assessee for transfer pricing analysis, including the contemporaneous documentation. The Tribunal noted that the DRP dismissed the assessee's comparables without a proper functional analysis and remanded the issue back to the DRP for a detailed examination, ensuring a speaking order is passed.
Issue 3: Non-consideration of Office Shifting Expenses
In Ground No. 5, the assessee contended that the expenses of Rs. 77,56,037 incurred in shifting office should be considered in determining operating expenses under the TNMM method. However, no arguments were advanced by the assessee during the hearing, leading to the dismissal of this ground for want of prosecution.
Conclusion:
The appeal is partly allowed for statistical purposes, with the matter remanded to the DRP for a fresh adjudication on the functional comparability of the selected comparables and a detailed examination of the transfer pricing approach. The ground related to office shifting expenses is dismissed due to lack of prosecution.
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