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Showing 241 to 260 of 1486 Records
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2020 (3) TMI 1246
Stay petition - petitioner is a charitable trust duly registered u/s.12A - HELD THAT:- We are of the considered opinion that it is not a fit case for grant of absolute stay since it requires detailed examination of materials placed before the AO to come to conclussion as to whether the provisions of Section 13 (1) (c) of the Act is applicable or not. However, keeping in view that it is charitable trust, running educational school, we are inclined to grant stay of demand subject to payment of monthly installment of 2,00,000/-. The first installment shall be paid on or before 31st March, 2020 and the subsequent installment shall be paid on or before the last day of each calendar month. This stay petition shall stand vacated, in case the assessee seeks any adjournment from hearing of appeal without any just and reasonable cause. The appeal is posted for hearing on 31.03.2020. The stay petition filed by the assessee is allowed on the above lines.
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2020 (3) TMI 1245
Writ of Habeas Corpus - elope of minor girl - Abduction and forceful and illegal marriage - fake mark sheet and id proofs - victim is a minor and is not willing to go with her parents - HELD THAT:- The Latin phrase habeas corpus means literally that "you", that is, the person with custody over the prisoner, must "have the body" of the prisoner produced in court at the place and time ordered by a judge. The writ of habeas corpus provides individuals with protection against arbitrary and wrongful imprisonment.
Habeas corpus writ is most commonly used in India as a remedy in case of preventive detention because in such cases, the validity of the order detaining the detenue is not subject to challenge in any other court and it is only the writ jurisdiction which is available to the aggrieved party. However, the scope of petition of habeas corpus has been expanded over a period of time. A writ of habeas corpus is also preferred for custody of child or in some cases for custody of wife. But, there are certain limitations to this writ. The most important limitation is that before issuing any writ of habeas corpus, the court must come to the conclusion that the detenue is under detention without any authority of law - By now, it is well settled that the earliest date with reference to which the legality of detention challenged in a habeas corpus procedure may be examined is the date on which the application for habeas corpus is made to the court.
It can be said convincingly that there is a common factor which justifies the detention of the accused and i.e. "the order has to be passed by a court of competent jurisdiction".
It is evident that a writ of habeas corpus would not be maintainable, if the detention in custody is pursuant to judicial orders passed by a Judicial Magistrate or a court of competent jurisdiction. It is further evident that an illegal or irregular exercise of jurisdiction by a Magistrate passing an order of remand cannot be treated as an illegal detention. Such an order can be cured by way of challenging the legality, validity and correctness of the order by filing appropriate proceedings before the competent revisional or appellate forum under the statutory provisions of law but cannot be reviewed in a petition seeking the writ of habeas corpus.
Whether under Section 483 Cr.P.C., a Division Bench of this Court, exercising constitutional powers of issuing prerogative writs, especially writ of habeas corpus, could issue general directions to all the Magistrates/Chief Judicial Magistrates of the State of Bihar for releasing such women and permitting them to go along with the people of their choice, who are minors and are brought before them (Magistrates) with the charge of their having married somebody of their own volition? - HELD THAT:- The power of continuous superintendence of the High Court under Section 483 of the CrPC over the courts of Judicial Magistrates subordinate to it is with a view to ensure that there is an expeditious and proper disposal of cases by such Magistrates. The power of superintendence conferred on the High Court under Article 227 of the Constitution of India or under Section 483 of the CrPC is both administrative and judicial, but such power should be exercised sparingly and only in appropriate cases. Such power cannot be exercised to influence the subordinate judiciary to pass any order or judgment in a particular manner. The power of superintendence exercised over the courts of judicial Magistrates does confer jurisdiction upon the High Court to intervene in functions of the subordinate judiciary, whose independence is of paramount importance in the discharge of its judicial functions.
Keeping in view the role of the Court as parens patriae, it is expected from the court that whatever decision it might take as to the assessment of the age of the victim, it needs to serve the best interests of the girl. Before reaching any conclusion, the court must consider the detrimental effects on a girl child, not only in terms of her physical or mental health but also in terms of her nutrition, education and her general well being.
The court cannot pass order against the well being of a child or against his/her interests. Being merely confined within the four walls of a Protection Home cannot be termed as detention for the purpose of writ of habeas corpus. No doubt, the court's order may be termed as improper in that particular case, but that does not invest the order with malafides or illegality. If such orders of the court are improper, it may be corrected by invoking statutory provisions, but by no means, a writ of habeas corpus can be justified in such cases.
Petition dismissed.
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2020 (3) TMI 1244
Maintainability of application - initiation of CIRP - Non-Performing Assets (NPA) Corporate Debtor failed to make repayment of its dues - time limitation - relevant date of default - HELD THAT:- The issue decided in the case of V HOTELS LIMITED, TULIP STAR HOTELS LTD. & ANR. VERSUS ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED [2019 (12) TMI 1273 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that for the purpose of computing the period of limitation of application under Section 7, the date of default is ‘NPA’ and hence a crucial date.
In JIGNESH SHAH & ANOTHER VERSUS UNION OF INDIA & ANOTHER [2019 (9) TMI 1121 - SUPREME COURT], the Hon’ble Supreme Court noticed the decision of the Hon’ble Patna High Court in FERRO ALLOYS CORPN. LTD. VERSUS RAJHANS STEEL LTD. [1999 (4) TMI 486 - HIGH COURT OF PATNA], wherein the Hon’ble Patna High Court held that simply because a suit for realisation of the debt of the petitioner Company against Opposite Party 1 was instituted in the Calcutta High Court on its original side, such institution of the suit and the pendency thereof in that Court cannot enure for the benefit of the present winding-up proceeding.
A suit for recovery of money can be filed only when there is a default of dues. Even if the decree is passed, the date of default cannot be shift forward to the date of decree or date of payment for execution as a decree can be executed within specified period i.e. 12 years. If it is executable within the period of limitation, one cannot allege that there is a default of decree or payment of dues - thus, a Judgment or a decree passed by a Court for recovery of money by Civil Court/ Debt Recovery Tribunal cannot shift forward the date of default for the purpose of computing the period for filing an application under Section 7 of the ‘I&B Code’.
In the present case, as the account of the ‘Corporate Debtor’ was declared NPA on 31st October, 2002 and decree was passed on 19th June, 2009/ 31st August, 2009, the application under Section 7 filed by ‘M/s. Stressed Assets Stabilization Fund (SASF)’ against ‘M/s. Uthara Fashion Knitwear Limited’- (Corporate Debtor) is barred by limitation and was not maintainable.
The impugned order dated 21st November, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Division Bench, Chennai, is set aside - appeal allowed.
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2020 (3) TMI 1243
Refund claim - justification for the respondents not granting the refund when the same is due - HELD THAT:- Direct the respondents to refund the amounts for both the assessment years along with interest as applicable, to the petitioners within four weeks from today. In case the respondents have any valid justification for withholding the refund, or any part thereof, they shall file their counter-affidavit positively within the same period clearly stating as to why the refund/ partial refund is not due. No further time shall be granted for the said purpose.
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2020 (3) TMI 1242
Income accrued in India - Taxability of interest income of foreign currency loans and securities - Indo-Mauritius Tax Treaty - ‘beneficial owner’ - HELD THAT:- We have considered the decisions of the Tribunal in assessee’s own case in the preceding assessment years. We observe that in the case of present assessee taxability of interest income of foreign currency loans and securities is a perennial issue. This issue had come up for consideration before the Tribunal for the first time in assessee’s case in assessment year 2011-12. The Tribunal after considering the facts of the case, CBDT Circular No.789 dated 13/04/2000 , Indo-Mauritius Tax Treaty and decision rendered in the case of Director of Income Tax vs. Universal International Music BV [2013 (4) TMI 641 - BOMBAY HIGH COURT].
Tribunal has considered the issue of assessee being beneficial ownership of the interest income. The Co-ordinate Bench in an unequivocal manner has held that the assessee is a ‘beneficial owner’ of the interest income. Undisputedly, the nature of interest income in assessment year under appeal is no different preceding assessment years. Ergo, we do not concur with the argument of ld. Departmental Representative that the Tribunal has not considered the fact in the past that the interest is not beneficially owned by the assessee. In the light of decision of the Co-ordinate Bench on the issue raised in the appeal by Revenue we find no infirmity in the impugned order. - Decided against revenue.
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2020 (3) TMI 1241
Maintainability of appeal - low tax effect - reference to monetary limits prescribed by CBDT Circular No. 03 of 2018 dated 20-03-2018 - Tax effect of Revenue’s appeal not exceeding the monetary limit - Bogus purchases addition - additions made on the basis of corroboration information received from the Investigating Wing, Mumbai which is a law enforcement agency under the Ministry of Finance - HELD THAT:- As decided in S M/S. GEHLOT TRACTORS PVT. LTD., [2019 (11) TMI 1413 - ITAT JAIPUR] as per the original Circular No. 3 of 2018 these matters do not fall in the exception, however, the said circular was amended by the CBDT vide Notification dated 20.08.2018 and the amended para 10 of Circular No. 3 of 2018
Even as per Circular No. 23 of 2019 dated 6th September, 2019 the exception is provided only in the cases where organized tax evasion is noticed through bogus long term capital/short term capital gain on penny stocks. Therefore, the said Circular cannot be applied in the cases when the addition is not in respect of capital gain on penny stocks. Accordingly, the said circular will not help the cases of the department.
In the case in hand, the addition was made by the AO based on the information received from DIT (Investigation) of the Department which is not an external source in the nature of law enforcement agencies such as CBI/ED/DRI/SFIO/Director General of GST Intelligence (DGGI) etc. Therefore, this case of the Revenue does not fall in the exception provided in clause (e) of para 10 of the Circular No. 3 of 2018. Accordingly, when the tax effect of Revenue’s appeal is not exceeding the monetary limit as prescribed in the Circular then the same is not maintainable. Hence, the appeal of the Revenue is dismissed.
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2020 (3) TMI 1240
Constitution of CoC - HELD THAT:- We are not inclined to interfere with the order passed by the Tribunal as the case is listed before the NCLAT on 12.03.2020. The NCLAT may decide the matter, if possible on 12.03.2020, or as expeditiously as possible. The CoC may hold the meeting, but the order not to be given effect to till 12.03.2020.
The NCLAT may consider whether it is appropriate to extend the aforesaid order or not, of not giving effect to CoC decisions.
Appeal disposed off.
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2020 (3) TMI 1239
Contempt proceedings - breach of order - HELD THAT:- It is directed to issue notice of contempt to Respondent No.2, returnable on the date already fixed i.e. 16.03.2020. However, in case, the amount due to the Petitioner is refunded along with interest, within next one week, the contempt notice shall stand automatically discharged. In case the amount is not refunded, Respondent No.2 shall remain personally present in Court on the next date.
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2020 (3) TMI 1238
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - HELD THAT:- A suit for recovery of money can be filed only when there is a default of dues. Even if the decree is passed, the date of default does not shift forward to the date of decree or date of payment for execution. Decree can be executed within specified period i.e. 12 years. If it is executable within the period of limitation, one cannot allege that there is a default of decree or payment of dues - a Judgment or a decree passed by a Court for recovery of money by Civil Court/ Debt Recovery Tribunal cannot shift forward the date of default for the purpose of computing the period for filing an application under Section 7 of the ‘I&B Code’.
Section 14(2) of the Limitation Act, 1963 makes it clear that in computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it - An action taken by the ‘Financial Creditor’ under Section 13(2) or Section 13(4) of the ‘SARFAESI Act, 2002’ cannot be termed to be a civil proceeding before a Court of first instance or appeal or revision before an Appellate Court and the other forum. Therefore, action taken under Section 13(2) of the ‘SARFAESI Act, 2002’ cannot be counted for the purpose of exclusion of the period of limitation under Section 14(2) of the Limitation Act, 1963.
The application under Section 7 filed by the ‘Cosmos Co Operative Bank Limited’ was barred by limitation - appeal allowed.
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2020 (3) TMI 1237
Deduction u/s.80IB(10) - assessee was not sole owner of the land on which the housing project was constructed - AO observed that, assessee is not entitled to deduction under section 80IB(10) in view of the common commencement certificate/raja-chhiththi because it includes 55 residential units of having more than 1500 sq.ft. built up area - HELD THAT:- It is discernible that as there is no provision of obtaining commencement certificate from the local authority for development and construction of the residential unit having more than 1500 sq.ft area. In the facts of the present case, when the assessee claimed the deduction with respect to the residential units, which are having built up area less than 1500 sq.ft, the condition laid down under section 80IB(10)(c) is fulfilled. Therefore, whether such development permission includes the area for the residential units, which are more than 1500 sq.ft. would not be relevant for deciding eligibility to deducting under section 80IB(10) of the Act.
In view of concurrent findings of fact arrived at by the CIT(A) and the Tribunal, there is no legal infirmity in the impugned orders of allowing deduction under section 80IB(10) of the Act. - Decided against revenue
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2020 (3) TMI 1236
Penalty u/s 271D - assessee accepted loan or deposit in cash - Default u/s 269SS - diary seized and inventorized as per Annexure A-1 during the course of search, which contains the sharafit transactions of the assessee with Shri Jivraj V.Desai & Group - ITAT deleted the penalty stating there is no material possessed by the Revenue showing acceptance of any loan or deposits by the assessee from Shri Jivraj V. Desai. Revenue has mis-constructed or misinterpreted the seized material as well as statement of Shri Arvindbhai A. Shah, alleged author of the diary - HELD THAT:- In view of the finding of fact given by the Tribunal that the Appellant-Revenue is not able to establish that assessee accepted any loan or deposit from Shri Jivraj V. Desai. In absence of any material showing acceptance of any loan or deposits by the respondent-assessee, we are of the opinion that the Tribunal has rightly deleted the penalty levied under Section 271D of the Act.
Revenue's this appeal fails and is hereby dismissed as no substantial question of law arises.
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2020 (3) TMI 1235
TP Adjustment - arm’s length price of the services provided to the Associated Enterprises (AE) - comparable selection - Assessee is intoproviding non–binding investment advisory services - HELD THAT:- MOTILAL OSWAL INVESTMENT ADVISORIES PVT. LTD. company is engaged in the business of investment banking, merchant banking, merger and acquisition, private equity, syndication, etc. Whereas, the assessee has only one segment of providing non–binding investment advisory services to the AE. Looking at the functional profile of this company, not only different benches of the Tribunal, but even different High Courts including Hon'ble Jurisdictional High Court have consistently held that this company cannot be a comparable to a non–binding investment advisory service provider.
ICRA ONLINE LIMITED - as relying on AGM INDIA ADVISORS PRIVATE LIMITED [2016 (5) TMI 1335 - ITAT MUMBAI] ICRA company cannot be a comparable to an investment advisory service provider. In fact, while considering the comparability of this company in assessee’s own case for the assessment year 2012–13, the Transfer Pricing Officer himself has categorically stated that none of the segments of ICRA Online Ltd. are comparable to investment advisory services rendered by the assessee and accordingly rejected it as a comparable. In our considered opinion, facts are not different in the impugned assessment year as well. That being the case, we hold that this company cannot be treated as comparable to the assessee. Hence, should be excluded.
As submitted exclusion of these two companies, arithmetic mean of the rest of the comparables would work out to 26.57% and assessee’s margin shown at 23.16% would be within the acceptable range, requiring no further adjustment. Keeping in view the aforesaid submission, we do not intend to deliberate further on any other comparable at this stage and leave the issues relating to the comparability of the other comparables open for adjudication if they arise in assessee’s case in any other assessment year in future.
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2020 (3) TMI 1234
Penalty u/s 271(1)(c) - Bogus purchases - AO restricting the profit element in the purchases @15% - HELD THAT:- It is a settled position of law that penalty cannot be levied when an adhoc estimation is made. In this case an adhoc estimation was made by the Assessing Officer restricting the profit element in the purchases @15%. On identical situations the Coordinate Bench in the case of Shri Deepak Gogri v. Income Tax Officer [2017 (11) TMI 1857 - ITAT MUMBAI] held that no penalty is leviable as
Assessing Officer had made only adhoc estimation of profit on certain purchases treated as unexplained expenditure.Assessing Officer did not doubt the sales made by the assessee from out of such purchases - there is no concealment of income or furnishing of inaccurate particulars as the profit element was determined by way of adhoc estimation.
Hon'ble Delhi High Court in the case of CIT v. Aero Traders Pvt. Ltd. [2010 (1) TMI 32 - DELHI HIGH COURT] wherein held that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars.- In the case on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. - Decided in favour of assessee.
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2020 (3) TMI 1233
Penalty u/s 271(1)(c) - Bogus purchases - CIT-A deleted penalty - HELD THAT:- No valid reason to disturb the findings of the Ld.CIT(A) in deleting the penalty levied u/s. 271(1)(c) of the Act on disallowance of purchases as mere disallowance will not attract penalty and when there is complete disclosure of expenses in the books by the assessee. Grounds raised by the revenue are rejected.
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2020 (3) TMI 1232
Penalty levied u/s. 271(1)(c) - Non specification of limb on which the penalty was proposed to be levied - non-striking off relevant clause in the notice shows - HELD THAT:- We hold that the notice was issued by the Assessing Officer U/s. 274 r.w.s 271(1)(c) of the Act is without specifying the charge for which the notice was issued as was non striking off of the inappropriate limb on account of non-application of mind and therefore the penalty proceedings initiated are bad in law. Thus, we direct the Assessing Officer to delete the penalty levied U/s. 271(1)(c) of the Act. - Decided in favour of assessee.
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2020 (3) TMI 1231
Penalty levied u/s 271(1)(c) - Bogus purchases - AO estimated the profit element from the non-genuine purchases at 12.5% - HELD THAT:- It is a settled position of law that penalty cannot be levied when an adhoc estimation is made. In this case an adhoc estimation was made by the Assessing Officer restricting the profit element in the purchases @12.5%. On identical situations the Coordinate Bench in the case of Shri Deepak Gogri v. Income Tax Officer [2017 (11) TMI 1857 - ITAT MUMBAI] held that no penalty is leviable as Assessing Officer had made only adhoc estimation of profit on certain purchases treated as unexplained expenditure. Assessing Officer did not doubt the sales made by the assessee from out of such purchases - there is no concealment of income or furnishing of inaccurate particulars as the profit element was determined by way of adhoc estimation.
Hon'ble Delhi High Court in the case of CIT v. Aero Traders Pvt. Ltd. [2010 (1) TMI 32 - DELHI HIGH COURT]wherein the Hon'ble High Court affirmed the order of the Tribunal in holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars.
In the case on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer - Decided in favour of assessee
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2020 (3) TMI 1230
Disallowance of expenditure incurred by the assessee towards project - non commencement of business - Methods of accounting - HELD THAT:- Upon perusal of clause-19, we find that General administration costs and selling costs are generally not considered a part of contract cost unless they are contract specific. Applying the same to the fact of the case, we find that the assessee has debited expenditure of such a nature only in the Profit & Loss Account. Theses expenditure was not project specific and allowable as period cost. Nothing on record establishes that there was any change in aforesaid method of accounting by the assessee during the year under consideration.
As held that AS-7 as an approved system of accounting and regular accounting methodology adopted by the assessee could not be disregarded by the department.
On the basis of above discussion, it could be observed that the assessee was consistently following a particular method of accounting which was in accordance with Accounting Standard issued by ICAI and which is well accepted by higher courts. Therefore, there being no change in fact, the said methodology could not be rejected by the revenue.
Most importantly, the Tribunal in assessee’s own case for AY 2012- 13 had held that it was not necessary that the business had actually commenced for claiming of expenses but the relevant fact was that the business was set up or not. It is quite evident from the financial statements, that the assessee had already set up its business and was undertaking various projects, the expenditure of which was being accumulated under the head Capital Work-in-progress. Therefore, the observation of Ld. CIT(A) that the business was not set up could not be sustained.
Keeping in view the entirety of facts and circumstances, the disallowance as confirmed by Ld. CIT(A) could not be sustained in the eyes of law. By deleting the same, we allow ground no.1
Disallowance u/s 14A r.w.r. Rule 8D(2)(iii) - HELD THAT:- We find that no adjudication has been rendered by Ld. first appellate authority, in this regard since the same was termed as academic in nature. However, going by the factual matrix, we find that the assessee has already offered suo-moto disallowance of ₹ 0.75 Lacs against the exempt income and Ld. AO without considering the basis of disallowance, has proceeded to apply Rule 8D. We find that the issue of disallowance u/s 14A for AY 2012-13 has already been sent back by the Tribunal to Ld.AO for fresh adjudication. Therefore, with a view of enable the revenue to take consistent stand in the matter, the matter of disallowance u/s 14A would stand remitted back to the file of Ld. AO on similar lines.
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2020 (3) TMI 1229
Business loss or not - Payment of additional Custom Duty after the department of Customs found that goods were under-valued - the duty was paid in the names of other parties but the same related to the assessee only. - CIT(Appeals) not allowing to the appellant the deduction of custom duty being the business loss - HELD THAT:- Assessee has paid certain duty pursuant to action carried out by DRI. The matter of duty was finalized by Hon’ble Settlement Commission and the assessee made the payment as determined. The payment so made amounted to ₹ 197.60 Lacs out of which deduction to the extent of ₹ 104.47 Lacs has already been allowed to the assessee. The basis of disallowance is the fact that the payment is not in assessee’s account. However, as rightly pointed out by Ld. AR, the said payment was made by the assessee himself out of his own funds and substantial payment challans were in the name of assessee’s proprietorship concern namely M/s M.B.Sales Corporation. The other entities denied their liability and despite legal action, the stated amount could not be recovered from them and the amount eventually became irrecoverable for the assessee.
Therefore, the said loss, in our considered opinion, was incurred in the course of business being carried out by the assessee and non-payment of the duty would have resulted into substantial losses for the assessee and damaged assessee’s reputation in the market. This being the case, the said loss would be allowable to the assessee as a business loss out of commercial expediency. The ratio laid down in the cited judicial pronouncements clearly support the case of the assessee. Therefore, we hold that the said expenditure would be an allowable expenditure.- Decided in favour of assessee.
Disallowing the set-off of carried forward of losses pertaining to AY 2005-06 - HELD THAT:- The said issue would stand remitted back to the file of Ld. AO for re-adjudication in view of our decision for AY 2006-07. The Ld. AO is directed to verify assessee’s claim and allow the set-off of losses as per law. The ground stand allowed for statistical purposes. The appeal stands partly allowed.
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2020 (3) TMI 1228
Disallowance of bad debts u/s 36(1) - assessee had written off inventory of land - Diversion of income by overriding title - as concluded by directing the AO to restrict the addition on account of amount received through e-auction of impugned land and property by HDFC to only 5% of the receipt and recomputed income after giving benefit for amount of inventory of land written off - HELD THAT:- By no stretch of imagination it can be said that entire sum was received only against land belonging to the assessee. It is further clear from sale certificate wherein in the description of the property it has been mentioned that the same consists of immovable property being sold by way of sale of residuary right including receivable of HPGPL with step-in obligation in respect to the immovable property. Hence, it is quite evident that the receipt of e-auction by the HDFC against its finance to HPGPL did not belong to the assessee in its entirety as the same was of project as it stood as on that date. It comprised of the constructions there on as well receivable by HPGPL. Learned CIT(A) is correct in his appreciation that the assessee can be entitled to 5% which was agreed upon in the facilitation agreement between the assessee and its developer holding company i.e. HPGPL.
We come to the assessee’s claim that since it has not received any amount and its land has also been e-auctioned, the assessee’s case should be treated as business loss. That it should be treated that land being trading asset of the assessee has been lost so assessee has claimed business loss.
Further limb of the assessee’s submission is that since land was mortgaged to the bank for loan to HPGPL and the bank has adjusted the sale proceeds against loan to HPGPL, there is diversion of income by overriding title. The income has been diverted to HDFC by HPGPL and the assessee has not received any amount. So nothing can be attributed to the assessee’s income.
We find that this limb of the assessee’s submission is also not sustainable. It is undoubted that the assessee had facilitation agreement with its holding company for development of the project on its land. As per the said agreement the assessee was entitled to 5% of the sale proceeds of the constructed property. Since in the present case holding company’s loss was adjusted upon by e-auctioned of the property for an amount of ₹ 296 crores, the assessee-company’s share out of the same as per the facilitation agreement clearly accrued to the assessee-company. If the assessee-company did not press for or forwent its claim it cannot be diversion of income by overriding title.
But it will be treated as application of income. Hence, firstly assessee’s share has to be considered as income of the assessee for which necessary consequences of taxation has to follow. In this view of the matter in our considered opinion assessee’s contention that it had lost everything. That its land which was its stock-in-trade has been lost and hence assessee should be allowed loss to that extent is not acceptable as assessee’s share will be deemed to have been applied by the assessee after accrual and hence, contention of the assessee is not accepted.
Sale of land by e-auction and consequent realisation of moneys are income of the assessee, as the land was a trading asset. Hence the income, which accrues to the assessee upon sale of trading asset is to be considered debt. Even Assessing Officer has recognised that the sale proceeds of land are sale receivable in the hand of the assessee. The non-realisation of debt can result in bad debt written off if the same is written off in the books. Since it is not the case that any bad debt has been written in the books the assessee’s plea fails. As per section 36(1)(vii) the allowance of bad debt is depending upon its being written off as irrecoverable in the accounts of the assessee in the previous year. Hence, in absence of this prerequisite the assessee’s claim of bad debt fails.
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2020 (3) TMI 1227
Deemed dividend addition u/s 2(22)(e) - assessee has beneficial share holding in 2 companies namely M/s Jasubhai Business Services Pvt Ltd and M/s. ABM Steels Pvt M/s.- as per AO ABM Steels Pvt. Ltd is not a company in which public is substantially interested and assessee is holding beneficial interest and voting right and M/s ABM Steels Pvt. Ltd. is having accumulated reserves - HELD THAT:- Any credit or advantage taken by the persons having substantial interest will attract the provision of section 2(22)(e) - Even though, assessee has repaid the deposit within the same year, it does not mean that the loan or benefit is not taken. We can call any name but ultimately assessee has taken a credit/ benefit, the assessee should have known that it is surpassing the deeming provisions particularly when it has holding beneficial interest. It is settled law that deemed dividend provisions get attracted as soon as it takes benefit and it does not matter whether it is repaid within the same year. It is similar to the case of Miss P. Sarda vrs. CIT [1997 (12) TMI 1 - SUPREME COURT] the Hon’ble Apex court held that even though the loan is repaid at the end of the year, will attract the provision of section 2(22)(e) of the act.
Even though assessee claims it as inter corporate deposit, the literal meaning will remain same as the short term loan enjoyed by the assessee, hence in our considered view, the provision of section 2(22)(e) is attracted in the present case.
With regard to payment by M/s ABM Steels Pvt. Ltd. on behalf of the assessee for the purchase of machinery, it is brought on record that M/s ABM Steels Pvt. Ltd. has purchased the similar machinery from the assessee in the subsequent assessment year and it is a back to back purchase of machinery. Therefore, in our considered view, it is a business transaction and we are inclined to agree with the findings of Ld. CIT(A).
With regard to issue of debentures, since assessee has issued redeemable debentures and M/s Jasubhai Business Services Pvt. Ltd has subscribed for the debentures and during this year, they have also exercised the options and assessee has redeemed the debentures and current outstanding amount is of ₹ 2,02,25,000/.This transaction involving issue of securities, even though it is a private placement but it cannot be considered as a loan transaction.
The provisions of section 2(22)(e) of the Act are not attracted, it attracts only when loan and advances taken in place of direct issue of dividends. In order to avoid dividend tax, some of the assessee are resorting to taking loan instead of dividend being issued to the respective shareholders. The securities are a separate scripts and having stand alone capital liability, which cannot be equated with loan, which is current liability. Therefore, we are in agreement with the findings of led CIT(A). Accordingly, grounds raised by revenue are dismissed.
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9911796707
