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Showing 221 to 240 of 1687 Records
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2023 (9) TMI 1467
Challenge to Look Out Circular (LOC) issued at the instance of Respondent No. 2/Bank of Baroda against the Petitioners - recovery of outstanding dues - Petitioners states that the Petitioners were only guarantors and were not involved in the management of affairs of the borrowing company for the last several years - HELD THAT:- It is well settled that the right to travel abroad is guaranteed under Article 21 of the Constitution of India which cannot be taken away in an arbitrary and illegal manner. This Court is now coming across a large number of cases where banks are now insisting on opening of Look Out Circulars only as a measure for recovery of money without initiating any criminal proceedings.
The Look Out Circulars cannot be opened merely on the request of the banks. There has to be some application of mind by the authority concerned opening the Look Out Circular since the opening of Look Out Circular results in restraining a person's right to travel abroad. The authority opening the Look Out Circular must satisfy itself that the departure of a person against whom Look Out Circular has been opened would be detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relationship with any country or to the economic interests of India or departure of such a person ought not be permitted in the larger public interest at any given point in time.
There has to be a proper application of mind by the authorities on the facts of each case before opening of a Look Out Circular which not only impedes the right to travel but also cast an aspersion/stigma on the person in the society against whom the Look Out Circular has been opened.
In the present case, there is no criminal case against the Petitioners till now and on the date of opening of the Look Out Circular, there was no suspicion or allegation against the Petitioners that the Petitioners have siphoned off funds. Proceedings are pending before various forums and a One-Time Settlement (OTS) has been arrived at between the Respondent No. 2/Bank of Baroda and the company. Time to make payment has been extended till 30.09.2023 by the Respondent No. 2/Bank of Baroda. The Petitioners are only guarantors and were not involved in the day-to-day affairs of the company for the last several years. Therefore, the opening of Look Out Circular is not justified against the Petitioners.
The Impugned Look Out Circular opened against the Petitioners is, therefore, wholly unsustainable and deserves to be quashed and is hereby quashed - petition allowed.
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2023 (9) TMI 1466
TP addition on account of corporate guarantee - HELD THAT:- As per the same issue in the earlier Assessment Years in [2023 (5) TMI 1324 - ITAT MUMBAI] we are inclined to sustain the corporate guarantee of 0.60% proposed to be charged by the bank of the assessee as the ALP rate for all the corporate guarantees given by the assessee including the corporate guarantee given to SAE Tower Holding LLC, considering the fact that the corporate guarantee given in A.Y. 2011-12 may not be proper since the assessee has not brought on record any material on the subsequent corporate guarantee awarded to SAE Tower Holding LLC , in our considered view the same rate of 0.60% may be sustained for all the corporate guarantee given by the assessee under consideration. Accordingly, ground raised by the assessee is partly allowed.
Addition to income based on service Tax Return - AO observed that assessee has reported higher turnover in service tax return as compared to ITR and AO has considered the turnover reported as per service tax return - HELD THAT:- As per the prudent method of accounting, assessee has to declare the revenue in its Books of Accounts only to the extent of services provided not the total amount received by the assessee for which there may be certain services to be provided. In this case assessee has recorded as revenue for the value of actual services provided and as per the information submitted before us from the Form ST-3 the assessee has received an amount of ₹.36,72,24,482/- as advances. Similarly, Form ST-3 an amount of ₹.6,70,38,441/-.
From the above two service tax return, it clearly shows that these payments were received by the assessee only as advances. Therefore, the above said amount cannot be treated as revenue for the current Assessment Year. We observe that Ld.CIT(A) has considered the issue in a different dimension wherein he has gone with the notion of Percentage of completion of the project, without considering the fact that assessee has to declare the revenue to the extent of services provided by it but not for the services which is pending to be performed. Therefore, we are not inclined to accept the findings of the Ld.CIT(A). Accordingly, ground raised by the assessee is accordingly, allowed.
Power with appellate authorities to entertain the fresh claim for deduction - HELD THAT:- As held in the case of Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] appellate authorities can entertain the fresh claim for deduction otherwise than by revised return of income - we are inclined to remit these issues back to the file of Assessing Officer with a direction to verify the records submitted by the assessee on merit and as per law. It is needless to say that assessee may be given a proper opportunity of being heard. Accordingly, the issues under consideration are remitted back to the file of Assessing Officer for statistical purpose.
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2023 (9) TMI 1465
Validity of reopening assessment - notice u/s 148 has been issued by the jurisdictional assessing officer and not by National Faceless Assessment Center as required u/s 151A - distinguish between JAO or NFAC with respect to jurisdiction over a case - respondents submits that first of all the ground taken by the petitioner is hypertechnical since mode of service does not affect the contents and merit of the notice and secondly that the issuance of the aforesaid impugned notice u/s 148 is justifiable and sustainable in law in view of the office memorandum dated 20th February, 2023 being F No. 370153/7/2023-TPL issued by the CBDT
HELD THAT:- As per paragraph 4 of the said office memorandum as stated above by DR that under the provisions of the Act both the JAO as well as units under NFAC have concurrent jurisdiction. The Act does not distinguish between JAO or NFAC with respect to jurisdiction over a case. This is further corroborated by the fact that under section 144B of the Act the records in a case are transferred back to the JAO as soon as the assessment proceedings are completed. So, section 144B of the Act lays down the role of NFAC and the units under it for the specific purpose of conduct of assessment proceedings in a specific case in a particular Assessment Year. This cannot be construed to be meaning that the JAO is bereft of the jurisdiction over a particular assessee or with respect to procedures not falling under the ambit of section 144B of the Act. Since, section 144B of the Act does not provide for issuance of notice under section 148 of the Act, there can be no ambiguity in the fact that the JAO still has the jurisdiction to issue notice under section 148 of the Act.
Thus no merit in the writ petition being WPO and accordingly the same is dismissed.
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2023 (9) TMI 1464
Seeking admission of claim which application came to be rejected by the impugned order - claim rejected without considering the reasons given for condonation of delay in filing the claim - HELD THAT:- In the present case, the claim has been filed by the Appellant after 511 days of the approval of the Resolution Professional.
Respondent has relied on recent judgment of Hon’ble Supreme Court in RPS Infrastructure Ltd. vs. Mukul Kumar and Another, [2023 (9) TMI 516 - SUPREME COURT], where the Hon’ble Supreme Court with regard to belated claim, which was filed after 287 days, has approved the order of the Appellate Tribunal affirming the rejection of the claim.
The present case is fully covered by the above judgment of Hon’ble Supreme Court. In the facts of the present case, no error has been committed by the Adjudicating Authority in rejecting application filed by the Appellant, which was for accepting claim which was filed after 511 days after approval of the plan by the CoC.
Appeal dismissed.
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2023 (9) TMI 1463
Request made by the Appellant for submission of claim - request rejected by the Adjudicating Authority on the ground of delay - HELD THAT:- Once the Hon’ble Supreme Court in the case of M/s. RPS Infrastructure Ltd [2023 (9) TMI 516 - SUPREME COURT] has held that even in a case where the Adjudicating Authority has not approved the plan would not imply that the plan can go back and forth making the CIRP an endless process because in that matter it would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon.
There are no merit in the present appeal and the same is hereby dismissed.
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2023 (9) TMI 1462
Money Laundering - seeking quashing of ECIR - Continuance of investigation for the offence under the PML Act - pending adjudication of the petitioner’s prayer for discharge from the scheduled offence by the Supreme Court - invocation of inherent jurisdiction - Section 482 of Cr.P.C. - HELD THAT:- Section 482 envisages three circumstances under which the inherent jurisdiction may be exercised (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of Court, and (iii) to otherwise secure the ends of justice. Obviously, such power is to be exercised in relation to a proceeding which is criminal in nature. It would now be proper to examine whether the proceeding ‘purportedly emanating from the ECIR’ registered against the petitioner can be treated as criminal proceedings so as to come within the sweep of the power under Section 482 of Cr.P.C. Be it noted that under the scheme of Cr.P.C., the criminal law is set into motion after registration of the FIR under Section 154 of Cr.P.C. and/or filing of a complaint under Section 200 of Cr.P.C. The PML Act, 2002 also prescribes for filing of complaint before the Special Court under Section 44 thereof.
Scope of ECIR - HELD THAT:- The ECIR is an internal document created by the Department before initiating penal action or prosecution against the person involved with process or activity connected with the proceeds of crime. In other words, registration of ECIR is not akin to launching of prosecution, which can only be done by way of lodging a complaint under Section 44 of the PML Act. Thus, a document or an act, which is administrative in nature, cannot partake the nature of criminal prosecution so as to attract judicial review.
In the case of STATE OF WEST BENGAL AND ORS. VERSUS SUJIT KUMAR RANA [2004 (1) TMI 684 - SUPREME COURT], the Supreme Court held Once it is held that the criminal court had no power to deal with the property seized under the Act, the question of the High Court exercising its jurisdiction under Section 482 of the Code of Criminal Procedure would not arise.
In so far as the case laws cited at the bar, particularly by learned Senior Counsel appearing for the petitioner, this Court finds that in the case of Sukesh Gupta [2023 (4) TMI 263 - TELANGANA HIGH COURT], the Telengana High Court held on the facts of the case before it that since there is no evidence of criminal activity nor any property being derived as a consequence of such criminal activity, the proceedings in the concerned ECIR cannot be permitted to continue. In arriving at such finding, learned Single Judge of Telengana High Court relied upon the observations of the Supreme Court in the case of State of Harayana v. Bhajanlal [1992 (12) TMI 234 - SUPREME COURT], State of Karnataka v. M. Devendrappa [2002 (1) TMI 1340 - SUPREME COURT] and Anil Khadkiwala v. State (NCT of Delhi), [2019 (7) TMI 1455 - SUPREME COURT] were relied upon. This Court is however, unable to agree with the reasoning of the learned Single Judge for the reason that the nature of the proceedings emanating from registration of ECIR short of filing of the complaint under Section 44 of the PML Act was not specifically taken into account vis-à-vis the distinction made between the ECIR and FIR by the Supreme Court in Vijay Madanlal Choudhury [2022 (7) TMI 1316 - SUPREME COURT].
The act of registration of ECIR is an administrative act in contradistinction with a penal act and therefore, the ratio of Sujit Kumar Rana would be squarely applicable.
This Court is of the considered view that the act of registration of ECIR against the petitioner and the investigation/enquiry said to be in progress on such basis are not amenable to judicial review by this Court in exercise of its inherent power under Section 482 of Cr.P.C. - Further, the present motion, which is at a stage when the investigation/enquiry initiated on the basis of the ECIR registered against the petitioner has not culminated in lodging of a complaint under Section 44 of the PML Act, is premature. In view of such finding, the contentions raised by the parties touching upon the merits of the case are not required to be gone into.
The CRLMC is dismissed being not maintainable in the eye of law.
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2023 (9) TMI 1461
Validity of the notifications issued under the Karnataka Industrial Area Development Board Act, 1966 - Seeking relief that provisions of 1966 Act have been impliedly repealed on commencement of Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013.
It was concluded by High Court as follows: (1) The provisions of 1966 Act are neither repugnant to 2013 Act nor have been impliedly repealed on commencement of 2013 Act. (2) The 1966 Act is a special Act whereas, 2013 Act is a general law. (3) The provisions of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Karnataka Amendment) Act, 2019 are neither arbitrary nor voilative of Article 21 of the Constitution of India. (4) Section 24 (2) of the 2013 Act does not apply to proceeding under 1966 Act, in the light of findings recorded in this order. (5) The Karnataka Amendment Act No.16/2019 to the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 is constitutionally valid.
HELD THAT:- List the matter along with Special Leave Petition (C) No. 20912 of 2021 and Special Leave Petition (C) No. 961 of 2022 on 10.10.2023.
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2023 (9) TMI 1460
Validity of Faceless assessment u/s 144B - non issue of draft assessment order - challenge to the impugned Assessment Order on the ground that there is a violation of principles of natural justice and failure to pass a Draft Assessment Order as is contemplated under Section 144B(1)(xvi) - DR stated not only the Draft Assessment Order was passed but also the Show Cause Notice was issued, to which, the petitioner has failed to reply - HELD THAT:- The procedure u/s 144B of the IT Act is structured. It contemplates different stages of assessment and eventualities where, returns are filed or where returns are not filed and replies filed or not filed. At each stage, the matter has to go to the Assessment Unit and the Draft Assessment Order has to be passed.
In this case, the Department has combined the Show Cause Notice as is contemplated under Section 144B(11) with the procedure under Section 144(1)(xiv) of the IT Act - The proceedings cannot be short circuited particularly when the provisions are categorical notwithstanding the fact that the petitioner may have failed to reply to some of the notices that were issued u/s 142(1) of the IT Act or there was a failure on the part of the petitioner to file the returns immediately after a notice under Section 148 of the IT Act issued on 23.03.2020.
The matter is that the impugned Assessment Order has been passed directly without issuance of a Draft Assessment Order. Combining of the Draft Assessment Order and the Show Cause Notice is not permissible under the provisions of the IT Act.
The impugned Assessment Order is set aside and the case is remitted back to the respondents to refer the matter to the Assessment Unit to pass a Draft Assessment Order within a period of three months from the date of receipt of a copy of this order.The petitioner shall upload all the informations which have not been uploaded so far within a period of thirty days from the date of receipt of a copy of this order.
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2023 (9) TMI 1459
The High Court of Rajasthan issued notices to the respondents. The reply must be filed within two weeks, with an advance copy to the petitioners' counsel. Rejoinder, if any, should be filed within one week. The case is listed for consideration on 03.10.2023, with Mr. Hemant Dutt representing the respondents.
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2023 (9) TMI 1458
Addition u/s 69A - addition based on entries of cash amount in the loose sheets - AO held that the cash amount received through hawala for the relevant year is treated as unexplained money - HELD THAT:- According to ld. AO, the entire cash sales reflected in the loose sheets pertain to the assessee when there are corresponding sales which has been accounted in the books of M/s. Samaira Enterprises. If that premise of the AO is to be accepted then sale of M/s. Samaira Enterprises would be nil which cannot be the case, because this entity has shown sales and is assessed to tax since past.
Thus, based on these documents and the ld. CIT (A) has given his elaborate finding for his conclusion and given direction to the ld. AO wherein, he has directed the ld. AO to verify and cross check, whether the sales adopted by him from the loose sheets appears in the cash book / bank book / sales of M/s. Samaira Enterprises or not and similar exercise to be undertaken with respect to expenses of the outgoing in the loose sheets seized and impounded from the search proceedings. We do not find any reason to tinker with such a direction which is based on the facts and material on record. Accordingly, order of the ld. CIT(A) is confirmed on the grounds raised by the Revenue is dismissed.
Unaccounted purchase - unexplained expenditure u/s.69C - CIT(A) deleted addition - HELD THAT:- Appellant has brought on record sufficient documentary evidences to justify its claim of genuineness of purchase of Spice Compound, which have not been controverted by the AO during assessment proceedings. No adverse view has been taken by the AO with respect to veracity of various documentary evidences or the claim made. AO has solely relied on the statements of two employees, which have later been clarified by the deponents Considering these facts, the addition as unexplained expenditure u/s.69C is correctly deleted.
Addition u/s.68 - statement recorded during the search and survey - HELD THAT:- Once ld. AO is being directed to verify the assessee records and ascertain the correct figure of sales made to M/s. Samaira Enterprises and if there is any discrepancy, then remedial action has to be taken in the case of M/s. Samaira Enterprises as the same would constitute corresponding purchases in its hand. It is only with the direction ld. CIT(A) has directed to delete in the hands of the assessee. We do not find any infirmity in such direction because all these transactions have been stated to be recorded in the books of accounts of M/s. Samaira Enterprises.
Addition u/s.69C - Purchase invoices demonstrating that the two invoices represent purchase of Nirmali Seeds of export quantity and balance invoices showing purchase of Tukda Nirmali Seeds at a lower price - CIT(A) deleted addition - HELD THAT:- Once it has been found that there is no evidence of cash payments against the purchase of nirmali seeds from the said party, then addition made by the ld. AO itself does not have any basis, accordingly, the ld. CIT(A) has rightly deleted the said addition.
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2023 (9) TMI 1457
Retention of certain goods as security - claiming release of goods - HELD THAT:- The fact of a dispute between the parties existing relatable to the arbitration agreement is clear from the material placed before the Court. The parties hence fall within Section 11(6) of the 1996 Act and an arbitrator must be appointed in terms of the arbitration agreement.
Application is accordingly allowed and disposed of by appointing Mr. S. Muralidhar, former Chief Justice of the Orissa High Court to act as the Arbitrator subject to the learned Arbitrator communicating his consent in the prescribed format to the Registrar, Original Side of this Court within three weeks from date.
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2023 (9) TMI 1456
Grant of anticipatory bail - Money Laundering - proceeds of crime - siphoning off of funds - Section 45(1)(ii) of the PMLA - HELD THAT:- Considering the fact that petitioner is knowingly involved in acquisition, concealment and transfer of proceeds of crime and projection of the same as untainted, as referred to hereinabove. Further, Section 45(1)(ii) of the P.M.L.Act provides that notwithstanding anything contained in the Cr.P.C., no person accused of an offence under the P.M.L.Act shall be released on bail unless the Court is satisfied that there are reasonable grounds for believing that he/she is not guilty of such offence and that he/she is not likely to commit any offence while on bail.
Taking into consideration the rival submissions of learned counsel for the parties and materials available on record as also in view of section 45 of the P.M.L. Act and the fact that prayer for anticipatory bail of other two co-accused has been rejected by a coordinate Bench of this Court in RANJEET KUMAR MANDAL AND SAUDAGAR MANDAL VERSUS UNION OF INDIA THROUGH ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT (PMLA) , PATNA [2023 (7) TMI 1392 - PATNA HIGH COURT], this Court does not find any ground to grant anticipatory bail to the petitioner and as such, the application for grant of anticipatory bail to the petitioner is rejected.
Petition dismissed.
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2023 (9) TMI 1455
Bogus LTCG/STCG - denial of exemption u/s 10(38) - Scrip was identified as a listed penny stock on BSE used for generating bogus LTCG/STCG as per the data received from the Investigation Wing - stock prices of the companies are manipulated to provide the exempted long term capital gain - CIT(A) deleted addition - HELD THAT:- AO made addition solely on the basis of information available with him. Neither the source of such information is recorded in his assessment order nor such information was shared with the assessee. Assessee in his reply, specifically mentioned that AO considered the sale entry twice including one which is reversed on the same date. Even such fact was not examined by assessing officer. AO made addition of credit without application of mind.
Assessee explained that he made transaction of sale of shares in the legitimate manner and paid STT. Assessee further explained that the holding period of the shares was more than seven years and all the evidences with regard to purchase and sale of scrips was furnished. No comment on such evidence was made by AO on such evidences. AO has not discussed the basic fact, whether the name of assessee was mentioned in the alleged information or the broker of the assessee was involved in price manipulation with stock exchange.
CIT(A) granted relief to the assessee buy taking view that complete details of transaction in the form of contract note from broker's ledger, D-mat account and bank statement was furnished by the assessee. The assessee proved the bona fide of nature and source of sum credit in his books. Such explanation provided by assessee has not been considered by Assessing Officer. AO has not confronted with any statement or relevant part of material to the assessee, which was violated the principle of natural justice.
It was also held that the AO has not brought any material on record regarding turnover or profit or net worth of Global Capital Markets Ltd, which is still continuing be traded on BSE and has not been backlisted or barred by Security Exchange Board of India. The shares were purchased through Calcutta Stock Exchange on 27.03.2003 and at that time STT Regulation has not come in force. Thus CIT(A) while granting relief to the assessee considered entire facts and the evidence filed before him, which does not require any interference, which is affirmed.
Also the tax effect is also less than the monetary limit fixed by CBDT and the present case is not covered by clause 10(c) of the Circular No. 3/2018 Clause -c of para 10 of said circular deals with audit objection. There is no material on record to show the acceptance of such audit abjection. Mere mentioning of such facts in the grounds of appeal, without showing any material is not sufficient. Thus, the revenue failed on both the counts. In the result, the grounds of appeal raised by the revenue are dismissed.
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2023 (9) TMI 1454
Bogus LTCG - Addition u/s 68 - unexplained cash credit - denying exemption u/s 10(38) - sale of equity shares from the listed companies, which were found to be the penny stock companies by both the lower authorities - HELD THAT:- We find that recently this Tribunal has adjudicated the similar issue under identical in the case of Shyam Sunder Bajaj [2022 (10) TMI 728 - ITAT KOLKATA] and after placing reliance on case of Swati Bajaj & Others [2022 (6) TMI 670 - CALCUTTA HIGH COURT] wherein AO as well as the Commissioner (Appeals) have adopted an inferential process which is found to be a process which would be followed by a reasonable and prudent person. AO and the Commissioner (Appeals) have culled out proximate facts in each of the cases, took into consideration the surrounding circumstances which came to light after the investigation, assessed the conduct of the assessee, took note of the proximity of the time between the buy and sale operations and also the sudden and steep rise of the price of the shares of the companies when the general market trend was admittedly recessive and thereafter arrived at a conclusion which is a proper conclusion.
The issue involved in these appeals is squarely covered against the assessee.
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2023 (9) TMI 1453
Capitalizing the interest expenditure on Capital Work in Progress (CWIP) - AO observed that the assessee did not furnish any details pertaining to funds flow movement to prove that only surplus funds available with the assessee were utilized for the purpose of purchase of various items grouped under the head CWIP - as assessee was not able prove that there was no diversion of interest bearing funds and that the interest free funds available with the assessee which were utilized for making investment in Capital Work in Progress, AO added back a sum u/s 36(1)(iii) of the Act - CIT(A) decided the issue in favour of the assessee by observing that during the year under consideration, the assessee had sufficient interest free funds in the form of share capital, reserve and surplus - HELD THAT:- A perusal of the observations made by Ld. CIT(A) clearly shows that substantial interest free funds were available with the assessee far in excess of the investment made in Capital Work in Progress.
In the case of Amod Stamping (P.) Ltd [2014 (7) TMI 753 - GUJARAT HIGH COURT] held that where assessee had sufficient interest free fund available with it to be invested in mutual funds, deduction of interest expenditure on borrowed fund could not be disallowed under section 36(1)(iii) of the Act. In the case of Gujarat State Fertilizers & Chemicals Ltd. [2013 (7) TMI 701 - GUJARAT HIGH COURT] held that where assessee's own funds exceeded investment made to earn exempted income, and borrowed funds had not been used for investments, disallowance of 10 per cent of dividend income was impermissible. In the case of Beekons Industries Ltd. [2023 (3) TMI 323 - PUNJAB AND HARYANA HIGH COURT] it is held that where assessee-company had given loan to a directors' relative without charging interest and it also claimed deduction under section 36(1)(iii) of interest paid on loan taken from bank, since loan to director's relative was financed by assessee from self sources without any cost, disallowance of interest paid on loan taken on pro rata basis was not justified.
Thus we observe that on identical set of facts, the Assessing Officer did not make any disallowance in the hands of the assessee under Section 36(1)(iii) of the Act in the previous assessment. Therefore we find no infirmity in the order of Ld. CIT(A) in deleting the additions made under Section 36(1)(iii) of the Act. Decided against revenue.
Disallowance of Foreign Commission Expenses u/s 40(a)(i) of the Act - CIT(A) has primarily given relief to the assessee on the ground that names and address of the brokers / agents, copies of bank debit advice issued for outward remittance, debit notes and export invoices etc. were furnished by the assessee and accordingly, the Ld. CIT(A) directed to delete the addition - HELD THAT:- We observe that the commission expenses has risen substantially from Rs. 46,903/- to 60,64,640/- during the impugned year under consideration. Assessee has placed on reliance on certain documents which have been placed before us for our consideration in order to substantiate the nature of expenses which have been incurred in support of the fact that services were rendered outside of India.
What we notice that there has been a substantial increase in foreign commission expenses during the year under consideration and the Department i.e. both the AO and Ld. CIT(A) did not have opportunity to examine the foreign commission expenses in absence of copies of Agreements which have not been furnished at any stage of the proceedings. In our considered view, in order to decide on the nature / genuineness of services which have been rendered by the broker / agents and whether TDS is required to be deducted on such payments, it is important that the Department should analyze the details including copies of Agreements, which have been furnished before us on sample basis for the first time. Accordingly, in the interest of justice this issue is being restored to the file of AO for denovo consideration - Ground of the Department's appeal is allowed for statistical purposes.
Disallowance of warranty liability - CIT(A) deleted addition - HELD THAT:- Certain facts are noteworthy. Firstly, on identical set of facts, the Department has allowed the appeal of the assessee for the past years as well. The Department has not pointed out to any specific circumstances which would necessitate a change in the position taken by the Department. Second, it is observed that in some cases, the goods supplied by the assessee carry a warranty period of upto eight years. It is for this specific reason, as observed that CIT(A) that the assessee has made a provision for warranty for a period of five years from the date of sale. Thirdly, after the period the warranty period is over i.e. after five years, the assessee has suo moto offered the unutilized portion of the provision for warranty expenses and offered the same to tax in the return of income. Therefore, the provision for warranty is a Revenue neutral exercise and after the period when the warranty is over, the assessee suo moto offers the same to tax in its return of income.
This fact has also been specifically taken note of by Ld. CIT(A) while allowing the appeal of the assessee on this issue. Fourthly, the assessee has given a reasonable basis as to why a provision of warranty @ 5% of net sales has been booked, which is for the reason that the assessee has provided a bank guarantee of Rs. 10.42 cores to its clients which can be forfeited in the event of default in providing any after sales application.
CIT(A) has observed that the assessee is clearly incurred substantial risk on account of bank guarantees which have been given to its customers and therefore, looking into the instant facts, a provision of warranty @ 5% of the net sales is quite reasonable, looking into the instant facts. CIT(A) also observed that on perusal of various instances of warranty provided to customers, it was seen that in several cases the period of warranty ranged to eight years as well. Accordingly, a provision of warranty for a period of five years was justified in the instant set of facts.
It is a well settled principle that provision of warranty, if done on a scientific and rational basis is allowable to the assessee. However, what qualifies as scientific / rational would depend on assessee's line of business, the nature of warranty that it provides and a period of warranty provided by the assessee. Thus we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. Decided in favour of assessee.
Disallowance of interest expenses claimed on business advances u/s 36(1)(iii) - CIT(A) deleted addition - HELD THAT:-We observe that the assessee has substantial share holder funds including reserves and surplus at its disposal. Further, the assessee has profit after tax of Rs. 2,80,11,727/-, which is in excess as compared to the advance of Rs. 2,66,40,000/- given to M/s. Shivalik Reality Pvt. Ltd. The Ld. CIT(A) on consideration of the above facts had arrived at the factual finding that the advances have been made by the assessee from own interest free funds and further in the immediately preceding Assessment Year 2011-12, no disallowances was made by the Assessing Officer in respect of such advances - no infirmity in the order of Ld. CIT(A) so as to call for any interference. Decided in favour of assessee.
Addition u/s 14A - CIT(A) restricted the disallowance which was the dividend income claimed to be exempt by the assessee - HELD THAT:- It is a well settled principle of law that the amount of disallowance under Section 14A of the Act cannot exceed the amount of income claimed to be exempt by the assessee. Accordingly, and the observations made by Ld. CIT(A) in the appellate order, we find no infirmity in the order passed by Ld. CIT(A) so as to call for any interference.
Disallowance on account of commission to foreign agents - CIT(A) deleted addition - HELD THAT:- In light of our observations made on A.Y. 2012-13 the matter is being restored to the file of the Assessing Officer for carrying out necessary verification, since the Department did not have the opportunity of analyzing the necessary agreements etc. which have been placed on record before us for the first time. Ground of the Department's appeal is allowed for statistical purposes.
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2023 (9) TMI 1452
Money Laundering - seeking grant of bail - bail sought on medical grounds - right to medical treatment - HELD THAT:- The petitioner like any other citizen has a right to get effective and proper medical treatment, this court also cannot lose sight of the fact that a person is presumed to be innocent till he is proven guilty. The petitioner is yet to be announced guilty and therefore proper medical treatment cannot be denied to him. However, this court is also conscious of the serious allegations against him and the gravity with which the legislation has viewed such offences.
In the totality of the facts and circumstances and in view of the advice of the BLK-Max Super Speciality Hospital, the court disposes of the present application with the following directions:-
a) The Superintendent Jail shall take custody of the petitioner from VNA Hospital, situated at 1, Navjeevan Vihar, Geetanjali Enclave, Malviya Nagar today before 8 p.m. in a proper ambulance taking care of his medical condition. The ambulance should be accompanied by a doctor and proper medical facilities.
b) The petitioner, if required, shall be taken to VNA Hospital, situated at 1, Navjeevan Vihar, Geetanjali Enclave, Malviya Nagar as an OPD patient for removal of stitches, as advised by Dr. Abhishek Kumar Mishra.
c) The petitioner shall be taken in custody for follow-up with Operating Spine Surgeon for post-operative spine review, as and when required.
d) The Superintendent Jail shall strictly follow up the medical advice as given in the discharge summary of BLK-Max Super Specialty Hospital; and
e) The petitioner be also taken for rehabilitation sessions twice a week at Centre for Sports Rehabilitation, VNA Hospital, situated at 1, Navjeevan Vihar, Geetanjali Enclave, Malviya Nagar for gait training on an anti-gravity treadmill and strengthening on isokinetic machine.
f) The petitioner be provided appropriate medical treatment as per rules.
Application disposed off.
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2023 (9) TMI 1451
Bogus LTCG - Denial of exemption of capital gains u/s 10(38) - Reliance on investigation report by the Investigation Wing of the Department and the Securities & Exchange Board of India (SEBI) - principle of fraud v/s principles of natural justice application - HELD THAT:- We are inclined to confirm the addition made by AO, in view of the well settled principle of law that fraud vitiate everything and even principle of natural justice have no application and such transaction is void ab initio.
The Hon'ble Supreme Court in the case of Friends Trading Co. vs. Union of India [2022 (9) TMI 1076 - SUPREME COURT] held in the context of availment of alleged forged DEPB under the Customs Act, wherein, it was found DEPB licenses were forged and it was held that the exemption benefit availed on such forged DEPB are void ab initio on the principle that fraud vitiate everything and the period of limitation was held to have no application and the Department was held to be justified in invoking the extended period of limitation and the fact that whether the beneficiary had no knowledge of about the fraud/forged and fake DEPB licenses have no bearing the imposition of custom duty. The ratio of judgement is squarely applicable to the transaction under consideration before us.
Appellant deliberately withheld the information from the AO as well as the ld. CIT(A) which is within exclusive knowledge of appellant to establish the genuineness of transactions of purchase of shares of that company. It is nothing but a fraud played by the appellant against the AO as well as the ld. CIT(A) who are quasi judicial authorities employed for execution of the provisions of the Income Tax Act. Therefore, the principle of fraud can be squarely applied to the facts of the present case and principles of natural justice have no application. Decided against assessee.
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2023 (9) TMI 1450
Money Laundering - Seeking grant of Interim Bail - bail sought on medical grounds - HELD THAT:- There is no doubt in the mind of the Court that every individual has a right to get proper and effective medical treatment. There is also no doubt that an accused has a similar right to proper and effective treatment. However in the present case, the petitioner has been given concession of interim bail on the medical grounds on several occasions. This Court cannot raise a suspicion at the ground of the petitioner’s health condition but at the same time, this extension of interim bail from time to time sets a very bad precedent and is prone to be misused. Thus, this Court does not find any ground to further extend the interim bail.
The petitioner shall be remained hospitalized in the custody of the Superintendent Jail till the petitioner is discharged from the hospital, which should not exceed two weeks except in case of some medical advice. During this period, the wife, children and parents of the petitioner may meet the petitioner in the hospital as per the rules and the permission of the Superintendent Jail. However, during these meetings, the members of the family of the petitioner shall not be allowed to take phone with them. The petitioner shall also not be allowed to use a phone during this period. The petitioner may be allowed to take home cook meal during the period of hospitalization.
Let the medical documents on record be verified from the AIIMS. Medical Superintendent, AIIMS is requested to constitute a medical board and give a definite opinion about the medical condition of the petitioner and also to suggest whether the present disease and all the medical problems taken together or singly, require hospitalization in a particular hospital or can the petitioner be treated in the jail or the referral hospital.
Application disposed off.
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2023 (9) TMI 1449
Validity of summons for appearance of the petitioner for arrest for violation of Section 69 (1) of the CGST Act, 2017 - non-compliance with the mandatory provisions of Section 41A of the Cr.P.C. - HELD THAT:- The High Court for the State of Telangana in P. P. Ramana Reddy v. Union of India [2019 (4) TMI 1320 - TELANGANA AND ANDHRA PRADESH HIGH COURT] has held that there is vast difference between the phrase “reasons to believe” when placing reliance under Section 69 (1) of the CGST Act, 2017 and the phrase “reasons are to be recorded” under Section 41A(3) of Cr.P.C. The said Judgment does not laid down that Section 41A notice has to be issued to an offender who has allegedly committed an offence under Section 69(1) of the CGST Act, 2017.
There are no substance in the submission made by the Learned Counsel for the petitioner that the provisions of Section 41A of the Cr.P.C. are to be complied with in case of an offender for violation of Section 69(1) of the CGST Act, 2017. However, considering the facts and circumstances of the case, this Court finds that one opportunity to the petitioner to appear before the authorities for the purpose of recording his statement is to be given and, therefore, the petitioner is directed to appear before the authority concerned on 13.09.2023 (Wednesday).
Petition disposed off.
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2023 (9) TMI 1448
Accrual of income in India - payments received by the assessee from its Indian customers on account of Centralized Services - whether would constitute Fee for Technical Services as defined u/s 9(1)(vii) of the Income Tax Act, 1961 or “Fee for included services as defined under Article 12(4)(a) of the Indo-US DTAA.” - assessee is a non-resident corporate entity incorporated in United States of America (‘USA’) engaged in the business of providing various services to hotels in different countries across the world, including India - HELD THAT:- We find, while deciding identical issue in assessee’s own case in [2022 (9) TMI 1572 - ITAT DELHI] for assessment years 2016-17 and 2017- 18, the Tribunal, in order after analyzing in detail the nature and character of receipts has held that they cannot be treated as FTS/FIS, either under the provisions of the Act or under the treaty provisions.
Notably, the aforesaid decision of the Coordinate Bench has been affirmed by the Hon’ble Jurisdictional High Court while deciding Revenue’s appeal in judgment [2023 (5) TMI 1313 - DELHI HIGH COURT]
Since, the issue in dispute is squarely covered in favour of the assessee by the decision of the Tribunal and Hon’ble Jurisdictional High Court, we find no reason to interfere with the decision of learned first appellate authority in declaring the receipts from centralized services to be not in the nature of FTS/FIS. Ground is dismissed.
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