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Showing 241 to 260 of 1976 Records
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2018 (4) TMI 1740 - MADRAS HIGH COURT
Maintainability of appeal - low tax effect - cascading effect of circulars - Deduction u/s 80-O entitlement - HELD THAT:- As per the Circular/Instruction issued by CBDT, the present Appeal should be not pressed by the Revenue. If, at the time of filing of the Appeal, decision has to be taken whether to file an Appeal or not and the Authority by due application of mind and bearing the two caveats laid down by the Hon'ble Supreme Court, in Surya Herbal Ltd. [2011 (8) TMI 137 - SC ORDER] should take a decision. In cases, where, the Appeals are pending before the Court, appropriate Officer has to take a decision. In the instant case, it appears that, no such specific instruction is issued to Mr.M.Swaminathan, the learned Senior Standing Counsel to withdraw the Appeal, nor, can we compel the learned counsel to withdraw the Appeal.
Having held that the Circular issued by CBDT is applicable to the case on hand and the tax effect being less than the threshold limit prescribed in the Circular. Therefore, we dismiss the present Appeal by applying the law laid down by the Hon'ble Supreme Court, in Surya Herbal Ltd., case (supra), as the two caveats mentioned thereunder does not arise in the instant case.
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2018 (4) TMI 1739 - DELHI HIGH COURT
Computation of deduction u/s 10A - HELD THAT:- The assessee had deducted certain expenditure from its export turnover. AO held that it ought to have been deducted from the total turnover and not from the export turnover. ITAT reversed the AO’s determination based upon a decision in the case of ‘CIT vs. Genpact India’ [2011 (11) TMI 119 - DELHI HIGH COURT] . In these circumstances, we are of the opinion that no question of law arises on this aspect
Quantum of the risk adjustment - Dispute Resolution Panel (DRP) had modified from the initial 1% determined by the Transfer Pricing Officer (TPO) - HELD THAT:- ITAT upheld the DRP’s determination holding that the AO had to amend the draft assessment order after the DRP’s adjustment. This Court is of the opinion that there is no infirmity in the order of the ITAT. The DRP’s mechanism is an administrative and corrective process entitling the assessee to insist upon a second look in regard to the issues decided in the TPO’s report. Therefore, its decisions are binding and a part of the decision making process of the AO. Prior to the amendment in 2012, no appeal was made against the determinations of the TRP. In these circumstances, the impugned order cannot be faulted with.
Exclusion of one comparable i.e. Infosys BPO - HELD THAT:- The Court is of the opinion that there is some merits in the Revenue’s submissions.
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2018 (4) TMI 1738 - ITAT MUMBAI
Interest expenditure allowable either u/s 37(1) or u/s 57(iii) - HELD THAT:- In the impugned assessment year, no business has been carried out by the assessee, however, the assessee has not totally closed down its business, therefore, had to incur certain regular expenditure by way of staff salary, maintenance of factory premises, interest of loan, etc. He also found that the genuineness of expenditure incurred was never doubted by the AO. Commissioner (Appeals) concluded that, since, the expenditure incurred was for maintaining the existence of the firm as well as earning of the interest income, it is to be allowed. DR has failed to controvert the aforesaid finding of the Commissioner (Appeals) by bringing material on record. Therefore, we uphold the decision of the learned Commissioner (Appeals) on this issue. Ground no.1 is dismissed.
Addition made on account of long term capital gain - fair market value as on 1st April 198 - AO power u/s 55A to ascertain the fair market value by making a reference to the DVO - HELD THAT:- AO was not authorized under the Act to make a reference to the DVO for ascertaining the fair market value of the property as on 1st April 1981. That being the case, the only alternative left with the AO is to grant the benefit of indexation on account of cost of acquisition as per section 55(2). In the present case, the assessee in exercise of option granted under section 55(2) having adopted the fair market value as on 1st April 1981, the same has to be accepted in the absence of any other value available with the Assessing Officer. To a pertinent question from the Bench the learned Departmental Representative fairly submitted that in case the fair market value of the property as on 1st April 1981 as declared by the assessee is adopted for indexation purpose, resultant long term capital gain will be a negative figure as per the working submitted by the assessee. No infirmity in the order of the Commissioner (Appeals) as it is in conformity with the ratio laid down by the Hon'ble Jurisdictional High Court in Puja Prints [2014 (1) TMI 764 - BOMBAY HIGH COURT] . Thus, we uphold the decision of the learned Commissioner (Appeals) on this issue by dismissing the ground raised by the Revenue.
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2018 (4) TMI 1737 - CESTAT NEW DELHI
Clandestine removal - steel ingots and rolled products - alleged issuance of invoices for MS Ingots and scrap in the name of various other parties - HELD THAT:- The evidences relied upon by the Revenue are not sufficient to uphold the allegations of clandestine removal - Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 1736 - GUJARAT HIGH COURT
Refund claim - mode of export - case of the petitioner is that some of the exports are made by the petitioner directly and in some cases, such exports are made through recognized courier services - validity of Circular dated 17.02.2007.
Rejection of refund on the ground of export of goods - HELD THAT:- Insofar as the petitioner's provisional refund claim in connection with the exports directly made is concern, clearly the authorities committed an error in rejecting such claim. This issue does not require any elaborate discussion.
Refund claim - exports made through couriers - HELD THAT:- Though we share anxiety of the department that the refund of taxes can be granted only after proper proof of the export of the goods, we cannot appreciate the insistence of the department to stick to procedure laid down way back in the year 2007. More than a decade has passed since then. In a fast moving world with new modes of communication, transportation, technology coming up every other day, it is expected that the department finds proper solutions to the new emerging situation.
Even if we do not expect the department to clear the provisional refund in cases where the documents referred to in said circular dated 17.02.2007 are not produced since the export is made through courier service, such claim cannot be rejected while finally assessing the refund payable to the exporter only on this ground. In other words, as long as there is alternative proof of documentary nature available, the department must consider it, process it and pass suitable order in terms of law in such refund applications.
As per rule 15(7) of the VAT Rules, the refund applications have to be finally processed in three months.
The petitioner's refund claim in cases where the exports were made directly, may be decided without any further delay - impugned order dated 11.12.2017 is set aside - petition allowed.
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2018 (4) TMI 1735 - ITAT DELHI
TP Adjustment - AMP expenses addition - HELD THAT:- The issue is covered in favour of the assessee as per the Hon’ble Delhi High Court decision in the assessee’s own case [2015 (12) TMI 1333 - DELHI HIGH COURT] held it did not give rise to a dispute that there is no international transaction involving the Assessee therein and its AEs. In fact each of the Assessees were receiving subsidies/subventions from their respective AEs. The second factor taken note of by the Court is that as BLT was invalidated as a means of determining the existence of an international transaction, the onus was on the Revenue to show the existence of an international transaction. In the present case, the existence of such a transaction was ascertained only by applying the BLT. For the above reasons, the Court is satisfied that the case of the present Appellant would not stand covered by the decision in Sony Ericsson [2015 (3) TMI 580 - DELHI HIGH COURT] Question (i) is accordingly answered in favour of the Assessee and against the Revenue.
Transfer pricing adjustment on account of royalty paid on sales to associated enterprises - HELD THAT:- As decided own case [2017 (5) TMI 469 - DELHI HIGH COURT] Referring to comparative clauses based on the agreement in the case of the assessee and its' sister concern were pari materia and-consequently the payments were revenue in nature.
Disallowance of royalty and technical guidance fee, alternatively made under section 37(1) - HELD THAT:- Respectfully following the decision of the Hon'ble high court in assessee’s own case the disallowance under section 37 (1) on account of royalty and technical guidance fees cannot be upheld. Therefore ground of the appeal of the assessee is allowed accordingly.
Double disallowance of Royalty - payment made by the assessee on account of royalty has already been disallowed by the TPO - HELD THAT:- As per the submissions of the Ld. AR, since the payment of royalty, to the extent of ₹ 76,96,000 has already been disallowed in the transfer pricing order, further disallowance to that extent has resulted in double disallowance of the same amount, which is impermissible under the provisions of the Act. Since the Royalty issue is already decided in ealier Ground this contention of the assessee is accepted.
Disallowance of provision for service coupons - HELD THAT:- In the case of the appellant the provision of after sales services has also been made based on the past business history of the appellant and therefore, it cannot be said that it is made on arbitrary basis. Further the contention of the Id. AO is not correct stating that assessee claims excess expenditure in one year because in the year of sales itself assessee claims the expenditure related to sales and when the liability ceases on completion of time, same is reversed in the profit and loss account and offered as income. Therefore , we are of the view that claim of the assessee for deduction of after sales service expenditure is in accordance with Accounting standard 29 issued by the Ministry of corporate affairs which is mandatorily to be followed by the assessee, further quantification of such expenditure has been made on the basis of the past history.
Disallowance of provision or warranty - HELD THAT:- The warranty provisons were disallowed in subsequent years for 1997- 98, 1998-99 & 2001-02 which was deleted by the Tribunal vide order dated 31/7/2006 since no disallowance of provisions for warranty was made in any of the preceding year and the said provision was consistently allowed by the Revenue due to the decision of the Tribunal. This issue is also covered in favour of the assessee. Ground Nos. 6 to 6.2 is allowed.
Short credit of advance tax - HELD THAT:- It can be seen that short credit of advance tax was not at all verified by the Assessing Officer. Therefore, it will be appropriate to remand this issue to the file of the Assessing Officer for further verification. Needless to say, the assessee be given full opportunity of hearing by following principals of natural justice. Ground is partly allowed for statistical purpose.
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2018 (4) TMI 1734 - MADHYA PRADESH HIGH COURT
Validity of assessment u/s 143 (3) read with Section 153 (D) - non-issue of notice u/s 143 (2) - Unexplained cash u/s 69 was added on account of unexplained jewellery and on account of unexplained hundies - HELD THAT:- We find that there was no notice issued u/s 143 (2) prior to the completion of assessment under section 143 (3) of the Act by the AO; that the year under consideration was beyond the scope of the provisions of section 153 A of the Act, it being the search year and not covered in the six year to the year of search as as per the assessment scheme/procedure defined u/s section 153A; that the AO has passed regular assessment u/s 143 (3) of the Act; although the ld CIT has mentioned the section as 143 r.w.s. 153A and that the department had not controverted these facts at the stage of hearing.
It is noted that issue of notice u/s 143 (2) for completion of regular assessment in the case of the assessee was a statutory requirement as per the provisions of the Act and non-issuance thereof is not a curable defect. Even in case of block assessment u/s 158 BC, it has been so held by the Apex court in the case of 'ACIT Vs. Hotel Blue Moon' [2010 (2) TMI 1 - SUPREME COURT]
Assessment order is passes without issue of notice u/s 143 (3) of the Act and this defect can not be cured by taking recourse to the provisions of section 292 BB of the Act.
AO had no valid jurisdiction to pass the assessment order and the very foundation of the assessment proceedings is bad in law.
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2018 (4) TMI 1733 - PATNA HIGH COURT
Principles of natural justice - order passed ex-parte - assessment under the Bihar Value Added Tax Act, 2005 - HELD THAT:- Even though the order-sheet indicates that the notice has been served and in spite of telephonic communication being made, the assess is not present, the order further indicates that the assessment order is being passed on the same date i.e. 8.9.2016,but, surprisingly, for a period of 9 months nothing is done and the order of assessment is passed on 12.6.2017. It is a case where the proceedings were to be held on 8.9.2016. The order-sheet indicates that the order has been passed, but the order seems to have been passed on 12.6.2017. If the matter could be kept pending for 9 months before the Assessing Officer, the Officer should have well issued a fresh notice to the assessee to give his say.
It is a fit case where the matter be remanded back to the Assessing Officer for conducting the assessment proceedings afresh in accordance with law - Appeal allowed by way of remand.
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2018 (4) TMI 1731 - DELHI HIGH COURT
Direction to Objection Hearing Authority to pass an order within six weeks from the date of filing of objections - HELD THAT:- Learned counsel for the respondent states that he has no objection in case the time period for passing of speaking order is extended by a further period of six weeks. Mr. Rajesh Jain, Advocate states that this is required and necessary for objective and fair decision.
Recording the aforesaid concession given by the counsel for the parties, time is extended by six weeks and the writ petition is disposed of. As already stated in order dated 21st February, 2018, the Objection Hearing Authority would pass a speaking order dealing with the objections and contentions of the petitioner.
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2018 (4) TMI 1730 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Whether impugned interim order is in consonance with sub-section (4) of Section 242 of the Companies Act, 2013?
HELD THAT:- If the impugned order is stayed if will amount to grant of final relief, while we are not inclined to stay of the impugned order for the present, give liberty to State Bank of India/ Convenors of Joint Lenders to reach agreement to sale/ sale deed with regard to the mortgaged properties of the Company with any reliable purchaser and will keep the amount in a separate Escrow Account, which shall be subject to the decision of the appeal. If the State Bank of India intends to execute sale deed(s), the parties will co-operate with it.
Post the matter on 18th April, 2018 before the 1 st Court.
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2018 (4) TMI 1729 - ITAT DELHI
Stay of demand - HELD THAT:- Earlier stay against the outstanding demand was granted, subject to certain terms, which, according to the Learned Counsel for the Assessee have already been complied with. Lastly, the stay against the outstanding demand was granted vide order dated 09th October, 2017. There is no delay on the part of the assessee for disposal of the appeal.
The demand is further stayed for a period of six months or disposal of the appeal whichever expires earlier, subject to the same terms.
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2018 (4) TMI 1728 - ITAT BANGALORE
Deduction u/s 54F - assessee owned more than one residential house other than the new asset on the date of transfer of the original asset - whether the assessee was having more than one residential house other than new asset on the date of the original transfer of asset? - HELD THAT:- As per the assessee in the present case, this property is being used for storing construction material. About this claim of the assessee that this property is being used for the purpose of storing construction material, the AO has stated the assessment order as reproduced above that the assessee has not produced any evidence to prove this claim. AO has also noted that this property is demolished by the assessee and a multi storied complex is coming up on the land of this property and hence, it is not possible to verify the use of this property at the relevant point of time. We feel it proper to restore this aspect of the matter also to CIT (A) for fresh decision with the direction that the assessee should produce evidence in support of this claim that this property is being used for storing construction material during relevant period and if the assessee is able to do so than this property should not be considered as a residential house property owned by the assessee on the relevant date for deciding the eligibility of the assessee for deduction u/s 54F.
Claim of the assessee about Apartment at Bangalore as per the AO, actual user is not relevant and we have held in Para 10 above that a house property can be considered as a residential house property only if it is being used for residential purpose by the assessee or the tenant and this decision of us is supported by the tribunal order rendered in the case of Sanjeev Puri vs. DCIT [2016 (8) TMI 907 - ITAT DELHI].
CIT (A) has noted the claim of the assessee that this property is being used as assessee's office at Bangalore and learned DR of the revenue could not bring any material before us to even create some doubt about this claim of the assessee that this property is used as office and is disclosed in balance sheet as stock in trade. Hence we hold that this property cannot be considered as a residential house property owned by the assessee on the relevant date.
Regarding the Property at Katipalla village out of remaining two properties as find that about this Property, the AO says of the assessment order that this property has 10.2 acres of land with building with a number and he has noted the explanation of the assessee that this is an agricultural property but the AO concluded that since the agricultural land has a building inside and this building is fit to be used for residential purposes, it is a residential house but there is no finding of the AO that it is actually used for residential purposes. In the absence of this finding of the AO that this property was actually used for residential purposes and the failure of the learned DR of the revenue to bring any evidence before us in this regard to dislodge the claim of the assessee and finding of CIT (A) that this property is not a residential property, we hold that this property also cannot be considered as a residential house property owned by the assessee on the relevant date.
Remaining property i.e. Flat at Ashoka Majestic there is no finding of the AO that this was actually used as a residential house and in spite of this finding of CIT (A) that this property is not used for residential purposes, DR of the revenue did not bring any evidence before us in this regard to dislodge the claim of the assessee and finding of CIT (A) that this property is not a residential property and it is a business asset shown in the balance sheet as stock in trade. Hence, we hold that this property also cannot be considered as a residential house property owned by the assessee on the relevant date.
Five properties in dispute, except for first and third properties, we have held that none of these three properties can be considered as a residential house property owned by the assessee on the relevant date. But for two properties i.e. first and third properties, we have restored the matter back to CIT (A) for fresh decision. Hence, this issue is partly decided in favour of the revenue for statistical purposes.
Properties are residential house properties while deciding the issue about allowability of the assessee's claim for deduction u/s 54F - CIT (A) heId that since it is held by him that none of these five properties is a residential house property owned by the assessee in the relevant year, this addition is deleted. We also find that the assessment order, the AO has noted the contentions of the assessee that these five properties are used for business purposes and therefore, no addition u/s 22/23 is called for.
Taxability u/s 22/23 - AO concluded that since these properties are not let out, addition of notional rent of these properties is to be made but he has not given any finding about the claim of the assessee that these properties are used for business purposes. As per section 22 of I. T. Act, for any property occupied by the assessee for the purpose of any business carried on by him, Annual value is not to be computed for taxing under the head Income from house Property. Since, we have upheld the order of CIT (A) on this aspect in respect of three properties out of five properties, we uphold the order of CIT (A) on this issue also in respect of those three properties but for remaining two properties, we have restored the matter back to CIT (A) for a fresh decision in respect of allowability of assessee's claim under section 54F. Hence on this aspect i.e. taxability u/s 22/23 also, in relation to these two properties, the matter is restored to CIT (A) for fresh decision with the direction that if it is found that these two properties are actually used for business or agricultural purposes than no addition can be made u/s 22/23. Ground No. 14 & 15 are partly allowed for statistical purposes.
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2018 (4) TMI 1727 - ITAT MUMBAI
Penalty u/s. 271(1)(c) - AO brought to tax income to tax as income under the head “income from other sources" as against income declared by the assessee as income under the head “income from house property" - no benefit of expenses were allowed which was claimed to be incurred in relation to the earning of said income as the assessee could not show that these expenses were incurred in connection with the services for which service charges were received - HELD THAT:- It is the claim of the assessee that the expenses were incurred exclusively for earning the said income and if the opportunity is provided , the assessee will be able prove its case that these expenses were genuinely , bonafdily, exclusively and wholly incurred for providing services to Tata Teleservices Maharashtra Limited .
The matter need to be restored back to the file of the AO for fresh adjudication on merits in accordance with law . Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in accordance with the principal of natural justice. The onus is on assessee to prove that these expenses which were debited to Income and Expenditure Account against service charges received from Tata Teleservices Maharashtra Limited credited to Income and Expenditure Account , were genuinely, wholly, exclsuively and bonafidely incurred in relation to services rendered as per contract to Tata Teleservices Maharashtra Limited. The AO shall allow assessee to file necessary evidences / explanation in support of its contentions. - Appeal of the assessee is allowed for statistical purposes
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2018 (4) TMI 1726 - GUJARAT HIGH COURT
ADD - initiation of Sunset Review - continuation of existing Anti-Dumping Duty so as to continue protection available to domestic industry against the alleged dumping of products – Soda-Ash, from Turkey and Russia - section 9(A) of Customs Tariff Act, 1975 - HELD THAT:- We have no doubt in our mind qua availability of judicial review of such a decision and hence when judicial review is warranted, it is also required to be seen to it that the same exercise may not result into empty formality or futility and create an irretrievable situation. The Court is also mindful of the fact that court by granting relief would be directing the authorities to continue Anti-Dumping Duty and to initiate Sunset Review proceeding without there being any opportunity of being heard to the otherside, but at the sametime, looking to the dearth of time and when the petitioners cannot be held to be in any way contributory in passage of time, as they have approached the Court within time, it becomes Court’s duty to see to it that balance of convenience is struck so as to avert any irreparable injury to eitherside.
For safeguarding the interest of those who are likely tobe affected by this order, we direct the concerned respondents to make it explicitly clear to all the concerned that, the Notification/s that may be issued pursuant to our this order would be subject to result of these petitions and will entail the refund of duty that may be levied in case of failure of the petitioners in these petitions.
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2018 (4) TMI 1725 - ITAT DELHI
Assessment u/s 153C - search and seizure operation under section 132 - disallowance of payments made to Sino Credits Leasing Ltd. (SCLL) - statement of Shri S.K Gupta, Director SCLL recorded in which Shri Gupta and reportedly stated that SCLL was involved in giving bogus entries - HELD THAT:- Departmental appeal in the instant appeal are similar as have been considered in the case of M/s. Puri Constructions Ltd., [2017 (12) TMI 1708 - ITAT DELHI] wherein held the addition so made solely on the basis of statement of Sh. S.K. Gupta’s statement and without rebutting the documentary evidences so relied on by the assessee company is hereby deleted
The findings of the CIT(A) are similarly worded. It is agreed position that facts are identical in the case of Assessee as well as M/s. Puri Constructions Ltd., (supra). Therefore, all the issues are covered in favour of the assessee. It may also be noted here that search was conducted in the case of M/s. Taneja-Puri Group of cases in which some alleged documents pertaining to assessee were found. On that basis, proceedings were initiated under section 153C against the assessee. Further, in the case of M/s. Puri Constructions Ltd., (supra), the entire additions have been deleted by the Tribunal and no evidence was found admissible against the assessee. Therefore, nothing survive against the assessee so as to proceed under section 153C - no admissible evidence have been brought on record against the assessee so as to make any addition.
The additions were made merely on presumptions without bringing any concrete material against the assessee on record. All the evidences found during the course of search and found in post-search enquiry have been considered in the case of M/s. Puri Constructions Ltd., (supra) and entire additions have been deleted by the Tribunal. Therefore, on the basis of the same evidence and material, no additions could be made against the assessee. the Ld. CIT(A) on proper appreciation of evidence and material record, correctly deleted the additions. - Decided in favour of assessee.
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2018 (4) TMI 1724 - ITAT MUMBAI
Addition being provision of inventory written off - CIT(A) held that the assessee duly followed AS-2 on valuation inventory and valued the stores on the basis of cost or net realisable value, whichever is lower - HELD THAT:- It is found that the assessee had taken three ATP Air Crafts in FY 2005-06 and it grounded the Air Craft Operation in the FY 2007-08. However, some spares remained unused and kept in the stock. The opening value of the stock as on 01.04.2010 was ₹ 1,13,33,793/- and during the year the assessee had made efforts to dispose off the stocks and in response received quotation from third party of USD 100,000 (₹ 49,50,000/-). Based on AS-2, the assessee has valued the stores on the basis of cost or net realisable value, whichever is lower. Therefore, the assessee has written down the value of stocks to ₹ 49,50,000/-. We find that the assessee has to value inventory as per AS-2 and on that basis it has valued the cost of spare parts which has become obsolete and non-moving.
Addition as employee’s contribution to PF and ESIC - amount as paid after due date of payment and was not allowable as per section 36(1)(va) r.w.s. 2 (24)(x) - HELD THAT:- CIT(A) in assessee’s own case for AY 2010-11 had allowed the deduction of delay in payment of Employees’ contribution to ESIC and PF. The Revenue filed appeal before the ITAT against the said order of the Ld. CIT(A). The Tribunal upheld the order of the Ld. CIT(A), following the decision in CIT v. M/s Alom Etrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] and CIT v. M/s Hindustan Organics Chemicals Ltd [2014 (7) TMI 477 - BOMBAY HIGH COURT] - Facts being identical, we follow the said order of the Co-ordinate Bench in assessee’s own case for the AY 2011-12 and uphold the order of the Ld. CIT(A).
Unrealized foreign exchange loss disallowed being loss due to foreign exchange fluctuation - Treating provision for earlier termination of lease in the same ground along the line of unrealized Foreign Loss - HELD THAT:- As decided in own case [2016 (8) TMI 1443 - ITAT MUMBAI] entire amount has already been paid by the assessee to the Lessor and in this respect a compromise was entered into between the parties before the Indian Court and the entire decree passed by the UK Court was satisfied. It is important to mention here that it was the decree of the Queen’s Bench Division of the High Court of Justice, UK which was fully satisfied from which it can be gathered that the liability of the assessee was crystallized in view of the order dated 14-05-2010 of the High Court of Justice, UK which was ultimately satisfied by the assessee by making payment to the lessor. Therefore, once the liability for making payment was crystallized by the High Court Order, then question of contingent liability does not arise. Therefore, both the AO and the learned CIT (A) was wrong in treating the liability as contingent liability of the assessee
MAT Computation - adjustment made u/s 115JB - HELD THAT:- Adjustments were made by the AO without any discussion in the assessment order. In Apollo Tyres Ltd. [2002 (5) TMI 5 - SUPREME COURT] it has been held that where the profit and loss account has been prepared in accordance with Part II and III of Schedule VI to the Companies Act and which has been scrutinized and certified by the statutory auditor and relevant authorities, the Assessing Officer has no power to scrutinize net profit in profit and loss account except to the extent provided in Explanation to 115J. Revenue appeal dismissed.
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2018 (4) TMI 1723 - ITAT MUMBAI
Income accrued in India - Taxability in India - Exclusion of income of Foreign branches - AO while relying upon the Notification No. S 2123(e) dated 28.08.2008 treated the income of foreign branches as taxable in India. - assessee submits that the assessee excluded the income from foreign branches on the basis of Double Taxation Avoidance Agreement (DTAA) with respective countries and the income arising from those branches situated in contracting state cannot be taxed in India - HELD THAT:- As decided in own case [2017 (2) TMI 1422 - ITAT MUMBAI] income of the foreign branches of the assessee shall also be taxable in India, that is, it would be included in the return income filed by the assessee in India and whatever taxes have been paid by the branches in the other countries credit of such taxes shall be given.
We find that the Tribunal as above has not held that it is only that income of the foreign branches which was taxed in that foreign country which is to be included in the return of income filed by the assessee. Hence, we are in agreement with the revenue plea that Ld. CIT-A has not properly followed the Tribunal decision as referred by him . A reading of the notification canvassed by the assessee also does not help the case of assessee. The notification also does not support the direction of CIT-A. The doctrine of stare decisis mandates that we follow the coordinate bench decision as above and hold that the income of the branches of assessee situated abroad shall also be taxable in India and whatever tax have been paid by the branches in the foreign country, credit of such taxed shall be given. Accordingly, we allow the ground raised by the revenue.
Disallowance of broken period interest expenses - HELD THAT:- As decided in own case [2018 (3) TMI 1777 - ITAT MUMBAI] Hon’ble Bombay High Court in CIT Vs. HDFC Bank Ltd [2014 (8) TMI 119 - BOMBAY HIGH COURT] while relying on the ratio laid down in its earlier decision in American Express International Banking Corporation Vs. CIT [2002 (9) TMI 96 - BOMBAY HIGH COURT] which in turn, had distinguished the ratio laid down by the Hon’ble Supreme Court in Vijaya Bank Vs. CIT [1990 (9) TMI 5 - SUPREME COURT] and CIT Vs. Bank of Rajasthan Ltd [2008 (3) TMI 325 - RAJASTHAN HIGH COURT] and had held that broken period interest is allowable as deduction. Following the same parity of reasoning, we hold that the assessee is entitled to the claim of broken period interest.
Disallowance u/s 14A computed as per rule 8D - HELD THAT:- As decided in own case [2017 (2) TMI 1422 - ITAT MUMBAI] assessee has submitted that several more decisions have come which have upheld the view that disallowance under section 14A is not required when the investment is held as stock in trade. In our considered opinion we should follow the doctrine of stare decisis. Accordingly following the same directions as above we remit this issue to the file of the assessing officer.
Recently in Maxopp Investment Ltd. Vs Commissioner of Income-tax [2018 (3) TMI 805 - SUPREME COURT] has held that in cases, where shares are held as stock-in-trade, main purpose is to trade in those shares and earn profits therefrom, in the process, certain dividend is also earned, though incidentally, which is also an income. This triggers applicability of section 14A which is based on theory of apportionment of expenditure between taxable and non-taxable income. Therefore, to that extent, expenditure incurred in acquiring those shares will have to be apportioned - this ground of appeal is restored to the file of Assessing Officer for deciding the issue afresh
Methods of accounting for Provision for bad and doubtful debts - Provision for bad and doubtful debts u/s 36(1) (viia) to the extent of provision made in books during the previous year instead of the eligible amount as per the said section - Assessee relied upon the decision of Prathma Bank [2017 (9) TMI 106 - ITAT DELHI] and submitted that the Provision for bad and doubtful held by the assessee as at the year end should be considered for allowing deduction u/s36(1)(viia) - HELD THAT:- There are two methods of accounting for Provision for bad and doubtful debts. The first method is to reverse the Opening balance standing under the head “Provision for bad and doubtful debts” by crediting to the Profit and Loss account and then create fresh “Provision for Bad and Doubtful debts” by debiting the Profit and loss account. If this method had been followed, then the revenue might not have objected to allow the amount debited to Profit and loss account u/s 36(1)(viia) of the Act. The second method is to retain the Opening balance of “Provision for bad and doubtful debts” in the Balance sheet and create provision for incremental amount alone by debiting Profit and Loss account. The incremental amount is added to the opening balance of “Provision for bad and doubtful debts”. If second method is followed, then the closing balance of “Provision for bad and doubtful debts” has to be considered for the purposes of sec. 36(1)(viia) of the Act. Hence, if the assessee has followed the second method, then there is merit in the claim of the assessee. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine the method followed by the assessee
MAT applicability of section 115JB - HELD THAT:- AO applied the provision of section 115JB on his observation that every assessee which is company, has to prepare its account as per part II and III of schedule VI of Companies Act. However, the ld CIT(A) allowed the relief to the assessee on the basis of decision of Mumbai Tribunal in case of Bank of India Vs ACIT [2014 (5) TMI 929 - ITAT MUMBAI] and in case of Union Bank of India Vs ACIT [2013 (1) TMI 785 - ITAT MUMBAI] wherein the Tribunal held that provisions of section 115JB are not applicable in case of assessee bank. No contrary decision is brought to our notice. Thus, we do not find any reason to interfere to the finding of the ld. CIT (A).
Taxability of notional credit on account of unrecorded entries in NOSTRO account - assessee submits that NOSTRO account represents dealings with foreign banks. The long pending unreconciled entries (about more than 10 years) were advised to be closed by RBI by transferring the credit entries to Profit and Loss account - as submitted that those credits were not claimed as expenditure in the earlier years and hence the provisions of sec. 41(1) shall not apply and the impugned amount is not taxable - HELD THAT:- CIT(A) concluded that such credit balance is not a capital receipt. He further held that the assessee being a financial institution, the transactions relating to money/instruments and unreconciled credit balances is having element of profit and hence the same is taxable in the hands of the assessee. Accordingly he confirmed the action of Assessing Officer. Before us, the ld. AR of the assessee reiterated the contentions raised before the tax authorities. He has not shown any favourable law or decision of Court about non-taxability of unreconciled credit entries lying in Nostro account. On the contrary, we find merits in the view expressed by Ld CIT(A). We also notice that the unreconciled credit entries in NOSTRO account has arisen during the course of carrying on of the business of banking and hence the same has to be construed as profit from banking business only. Thus, we do not find any reason to interfere with the finding of ld. CIT(A). - Decided against assessee.
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2018 (4) TMI 1722 - ITAT DELHI
Deduction u/s. 10A - adjustment of amount on account of Transfer Pricing - HELD THAT:- Assessee has clarified that (i) it does not have any business other than the unit which is eligible for exemption u/s. 10A, (ii) the voluntary TP adjustment has been made in respect of international transaction involving export of engineering design services and (iii) the voluntary TP adjustment has been made through a disclosure in Form 3CEB and is not an ad-hoc addition in the income tax return.
The assessee has excluded voluntary TP adjustment from 'export turnover' in line with the computation mechanism prescribed in section 10A. The TPO has not made any adjustment in his order dated 10/09/20012 passed u/s. 92CA(3). The assessee has explained that the proviso to section 92C(4) is not applicable in its case as the assessee has on its own determined its total income in the return of income having regard to the arm's length price.
In the instant case, the assessee himself has computed the arm's length prices and has disclosed the income on the basis of arm's length prices. It is not a case, where there is an enhancement of income due to determination of arm's length price. Hence, it was rightly held that assessee was entitled to deduction under section 10A in respect of income declared in the return of income on the basis of computation of arm's length price. We are of the considered view that the facts in the present case are exactly similar to the facts as in the case of iGate Global Solutions Ltd [2007 (11) TMI 444 - ITAT BANGALORE]. Therefore, the Ld. CIT (A) held that the assessee is eligible for deduction u/s. 10A in respect of income declared in the return of income on the basis of computation of arm's length price. Accordingly, he directed the A.O. to allow the claim for deduction u/s. 10A in the instant case, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT (A) and reject the grounds raised by the Revenue.
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2018 (4) TMI 1721 - GUJARAT HIGH COURT
Revision u/s 263 - AO had failed to carry out proper inquiries with respect to assessee’s on-money receipts - Tribunal, by the impugned judgment, reversed the order of Commissioner - HELD THAT:- In such judgment, the Tribunal observed that in the order of assessment, the Assessing Officer had raised multiple queries calling upon the assessee’s response. The Tribunal was of the opinion that the Assessing Officer had carried out detailed inquiries. The Commissioner was incorrect in holding that no inquiries were carried out. The revisional powers, therefore, could not have been exercised.
Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee’s on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. Appeal dismissed.
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2018 (4) TMI 1720 - KERALA HIGH COURT
Stay petition - direction to pay 10% of the demand - contention of the petitioner is that the returns filed by them have been taken for scrutiny maliciously with a view to fasten liability on them for having lodged a complaint against an officer of the department - HELD THAT:- It is brought to the notice of this Court in several cases that the files are selected for scrutiny with the aid of computers. Further, in terms of the impugned order, the petitioner is asked to pay a meagre portion of the demand. In the circumstances, no justification to entertain the writ petition challenging Ext.P11 order, in exercise of my discretionary jurisdiction under Article 226 of the Constitution of India.
As Senior Counsel prayed for indulgence of this Court to extend the time prescribed for payment of 10% of the demand made in terms of Ext.P11 order. In so far as the petitioner challenged Ext.P11 order in the writ petition and since the writ petition is not being entertained, we deem it appropriate to extend the time granted to the petitioner for payment of 10% of the demand in terms of the impugned order till 12.4.2018. Ordered accordingly.
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