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Showing 241 to 260 of 2170 Records
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2019 (4) TMI 1936
Unexplained cash credits u/s. 68 - AO adopted the rate of commission of 2% on the total turnover, which order the CIT (A) confirmed - Tribunal reduced the rate of commission to 0.15% - HELD THAT:- The entire issue is based on facts. The estimation of the rate of commission of the Assessee would always be subject matter of some guesswork. No precise formula could be applied. Tribunal having taken into consideration the relevant factors, has arrived at a certain percentage of commission that any such kind of activities could be expected to be derived from. This does not give rise to any substantial question of law.
Revenue also disputes the expenditure allowed by the Tribunal on such activities. Here also, for the same reasons cited above, in our opinion, no question of law arises.
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2019 (4) TMI 1935
Addition u/s 68 and addition u/s 80C - assessee filed details of debtor Shri Abhay Kumar Pandey such as PAN and confirmation and the assessee also filed evidences towards payment of LIC which were not admitted by the CIT(A) on the ground that they were fresh evidences which were not filed before the AO and therefore could not be entertained by him - HELD THAT:- We set aside the order of the CIT(A) and remand the matter back to his file for adjudicating the issues involved in the appeal after taking into consideration the fresh evidence which were not filed by the assessee before the AO. Thus, the grounds of appeal of the assessee is allowed for the statistical purposes.
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2019 (4) TMI 1934
TP Adjustment - upward Arms Length Price adjustments made on its Associated Enterprise sales to Associated Enterprise, corporate guarantee and overdue receivables as also adoption of TNMM as most appropriate method as against CUP - HELD THAT:- Adoption of TNM Method as MAM against CUP - We are of the opinion that assessee having not maintained segmental results in its books of accounts, nor prepared segmental results, ld. TPO was justified in rejecting CUP as the most appropriate method. As pointed out by the ld. DRP adopting CUP means there should be exact comparables and a comparability done with rates of minerals put out in a publication, in our opinion would not suffice the requirement of a CUP analysis.
The above work out has not been disputed by the Revenue. It may be true that assessee had not maintained segmental accounts and the above working can have therein some allocation of common expenses. Nevertheless, ld. TPO considered assessee to have maintained no segmental data. When the trading was mainly in minerals, in our opinion there was no reason why an aggregated result could not have been considered for the Arms Length Price analysis when TNM was considered as MAM. Even if we presume that average PLI worked out by the ld. TPO was correct, and even if we substituted the negative PLI of 6.54% worked out by the ld. TPO with the negative PLI 3.39% of considered by the assessee for its iron ore/ millscale segment, still its aggregate PLI was much more than the average PLI of 4.89% of the selected comparables. In our opinion, in such circumstances, there was no scope for making any Arms Length Price adjustment based on TNMM method on the trading results of the assessee. We have thus no hesitation in deleting the upward adjustment of B12,66,82,138/- made by the ld. Assessing Officer on assessee’s trading with its Associated Enterprises.
Upward adjustment for corporate guarantee fees - whether corporate guarantee would be amenable to a Arms Length Price adjustment, when no fee is charged by assessee on an Associated Enterprise which was its wholly owned subsidiary, stands answered by Kolkata Bench of the Tribunal in the case of EIH Ltd [2018 (1) TMI 1372 - ITAT KOLKATA] - Following the decision of Kolkata Bench of the Tribunal in the case of EIH Ltd (supra), we are of the opinion that there was no scope for making any adjustment for corporate guarantee fees on the corporate guarantee given by the assessee to its Associated Enterprise. Upward addition on corporate guarantee fees stands deleted.
Arms Length Price adjustment imputing interest on overdue receivables - Once there is complete uniformity followed by assessee in not charging any interest from any party, whether Associated Enterprise or Non Associated Enterprises, in our opinion there could not be any selective imputing of notional interest. Submission of the assessee that out of total sales of about of B261 Crores to its Associated Enterprise, B100 Crores was received well within the due date and small delays were only in the balance of B161 Crores has not been disputed by the ld. Departmental Representative. Assessee had not offered any discount to any party for payment of bills before the expiry of the credit period. Hence, it is only a natural corollary that it did not charge any interest for delays also.
Where a good part of the dues were collected earlier to the due date, in our opinion the instances where there were delays could not be selectively elected for a levy of charge of notional interest. Such an approach if accepted will completely overlook commercial realties. That apart, once TNMM method is considered as the most appropriate method, as held by Ahmedabad Bench of the Tribunal in the cases of Bisazza India (P) Ltd [2018 (8) TMI 1834 - ITAT AHMEDABAD] the net margin worked out there under could take care of all such notional interest cost, wherever it could be imputed and there could be no Arms Length Price adjustment for any overdue receivables. We therefore delete Arms Length Price adjustment made on overdue receivables.
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2019 (4) TMI 1933
Disallowance of deduction u/s 80P(2)(d) - interest received on deposit kept with co-operative bank - AO disallowed the claim of deduction by stating that the co-operative bank is different than a co-operative society, as per provisions of section 80P(2) - HELD THAT:- We respectfully follow the view taken by Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank Of India Vs. CIT [2016 (7) TMI 516 - GUJARAT HIGH COURT] wherein it was observed that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.
We are unable to persuade ourselves to be in agreement with the view taken by the lower authorities that the assessee would not be entitled for claim of deduction under Sec. 80P(2)(d), in respect of the interest income on the investments made with the co-operative bank. - Appeal of Revenue is dismissed.
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2019 (4) TMI 1932
Entitlement for deduction u/s. 80P(2)(d) - interest earned from investments in cooperative banks/cooperative societies - HELD THAT:- Provisions of section 80P(2)(d) of the Act are very clear and assessee is entitled for deduction u/s.80P(2)(d) of the Act in respect of interest or dividends received from investments made with any other cooperative societies.
At this stage it is relevant to note that in the case of Pr.CIT v. Totgar Cooperative Sales Society Limited [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] considered the meaning of the word “cooperative society” within the provisions of section 80P(2)(d) and held that cooperative society includes cooperative bank for the purpose of deduction u/s.80P(2)(d) of the Act. Therefore, it has been held that interest received by the cooperative society from the cooperative bank is eligible for deduction u/s. 80P(2)(d) of the Act. While holding so, the Hon'ble High Court also considered the decision of the Hon'ble Supreme Court in the case of the very same assessee reported in The Totgar Cooperative Sales Society Limited v. ITO [2010 (2) TMI 3 - SUPREME COURT]
Assessee is a cooperative society engaged in the business of providing credit facilities to its members is eligible for deduction u/s.80P(2)(d) of the Act in respect of interest income earned by the assessee from either any other cooperative society or from a cooperative bank. Grounds raised by the assessee on this issue are allowed.
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2019 (4) TMI 1931
Principles of natural justice - Levy of toll tax and fine - misuse of Toll Tax exemption on fake documents - no reasons have been assigned in any of the orders for taking action against the petitioners and raising huge demand of toll and fine against them - Vires of Rule 58 of Jammu and Kashmir Levy of Toll Rules, 1995 Rules - Jurisdiction of the Deputy Excise Commissioner, Lakhanpur - demand of excise duty - alternative remedy - HELD THAT:- The petitioners had got certain export permits issued on the basis of import permits issued by the authorities in the State of Goa. These were for export of IMFL manufactured in the State of Jammu and Kashmir. Levy of tolls tax was exempted in case IMFL manufactured in the State is exported outside the State.
Vires of Rule 58 of Jammu and Kashmir Levy of Toll Rules, 1995 Rules - HELD THAT:- A person, who is charged with evasion of tax, cannot be allowed under any normal circumstances to raise issue that checking of evasion for tax should be in the manner which suits him and not in the manner which achieves the object for which the provisions have been enacted. It is not somebody's fundamental right to evade taxes as everyone is duty bound to pay taxes due under the Statute and the State is entitled to collect the same but in the process the State is not allowed to harass the honest tax payers. Due process of law is required to be followed - in the case in hand the manner provided in Rule 58, to check evasion of tax in the form of misuse of exemption, cannot be said to be ultra vires to the provisions of the Act.
Jurisdiction of the Deputy Excise Commissioner, Lakhanpur - HELD THAT:- Section 8 talks about the offences for which fine can be levied. The same is permissible in case any person adopts any devise to evade payment of toll tax. Section 13 deals with the Officers who can exercise the powers under Section 8 of the Act. It provides that the Officer in-charge of the Toll Gate may impose fine on any person guilty of an offence under Section 8. Hence, to claim that the Officer at the Toll Post was not competent to levy fine as the same could be done only by the Officers in the office, is totally misconceived, hence, is rejected.
Violation of Principles of natural Justice - HELD THAT:- In the cases in hand, the petitioners were not confronted with the material which was collected by the respondents, on the basis of which it was found that export of IMFL/Beer from the State was on the basis of fake documents. The stand taken by the petitioners was that, in case opportunity was afforded to the petitioners, they could have proved that the documents, on the basis of which export permits were issued, were not fake - While invoking Rule 43 of the Marine Products Export Development Authority Rules, 1972, show cause notice was issued, after a series of meetings with the buyer, but still when notice for cancellation of certificate of registration was issued, the language used therein to the extent that ‘it has been proved beyond doubt' was held to be bad, amounting to pre-judging the issue. It was opined to be in violation of principles of natural justice.
Grant of opportunity of hearing to any party against whom action is sought to be taken is sine-qua-non. The action of an authority deserve to be deprecated and any order passed in violation of principles of natural justice can be set aside only on that ground as the same entails civil consequences. In the case in hand, it is not demand of toll only which has been raised against the petitioners alleging that they had wrongly availed of the exemption, rather fine to the tune of ten times of the toll has also been levied.
Impugned order also deserves to be set aside on the ground of its being totally non-speaking. No reasons have been assigned in any of the orders for taking action against the petitioners and raising huge demand of toll and fine against them - In the case in hand a perusal of the impugned order shows that the same is totally non-speaking and lacking in reasons, hence, the same deserves to be set aside on this score as well.
Excise Duty - HELD THAT:- With reference to the raising the demand for excise duty, a perusal of the notice dated 29.07.2010 shows that reference has been made to certain enquiry conducted regarding genuineness of the Import and Export permits, on the basis of which the petitioner claimed exemption from payment of excise duty under the Jammu and Kashmir Excise Act, Svt. 1958. There is no dispute about the fact that the material, which was produced before the Enquiry officer and the report of enquiry, on the basis of which show cause notices were issued to the petitioners, were not served on the petitioners. They were not associated during the process of enquiry - Regarding the contents of the reply, only what was mentioned in the impugned demand notices was that ‘the reply was considered and found lacking merit'. None of the issues raised by the petitioners in their replies were dealt with. Hence, orders were totally non-speaking, besides being in violation of principles of natural justice.
Alternative Remedy - HELD THAT:- As far argument of learned counsel for the respondents regarding alternative remedy of appeal available to the petitioners is concerned, the name needs to be noticed and rejected as vires of the provisions of the Rules is under challenge in the bunch of petitions and the appellate authority will not be competent to examine the same. Even otherwise the writ petitions were entertained by this Court against the demand notices issued more than 8 years back. The ground raised by the petitioners is that they were condemned unheard and there has been violation of principles of natural justice.
Impugned demand notices are set aside with liberty to the competent authority to issue action oriented show cause notices to the petitioners and thereafter proceed further in the matter in accordance with law, after affording due opportunity of hearing to the petitioners - petition allowed - decided in favor of petitioner.
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2019 (4) TMI 1930
Vehicular accident compensation claims - quantum of compensation so awarded - offender claims that while making assessment of pecuniary loss, the ex gratia amount received by the claimants from the employer of the deceased deserves to be deducted while, on the other hand, the claimants have questioned the reduction of the rate of interest by the High Court - whether the amount of compensation as awarded by the High Court is that of just compensation or the same calls for any modification?
HELD THAT:- The award made by the Tribunal suffered from a few fundamental errors and shortcomings as regards the assessment of multiplicand. The Tribunal, instead of taking the last drawn emoluments of the deceased, chose to proceed on his enhanced projected emoluments after the expected promotion and pay revision. However, thereafter, the Tribunal did not provide for any further future prospects. The Tribunal also did not make any deduction towards the tax component. Moreover, the Tribunal deducted one-third towards personal expenses of the deceased though he had had five dependents. Then, the Tribunal applied the multiplier of 16. Apparently, the assessment made by the Tribunal could not have been countenanced, for being not in conformity with the principles in Pranay Sethi [2017 (10) TMI 1276 - SUPREME COURT].
Ex gratia payment received by the claimants from the employer of the deceased - HELD THAT:- An amount of ₹ 3,21,801/- was paid by the employer to the claimants, being one year's gross salary of the deceased - it has not been shown if the ex gratia amount received by the claimants had been under any Rules of service and would be of continuous assistance - no deduction in the amount awarded by the High Court appears necessary.
Enhancement towards future prospects - HELD THAT:- The High Court has even otherwise provided for enhancement towards future prospects only at 40% though the deceased was in a settled job and was not self-employed or on fixed salary. If at all an assertion is made that the assistance received by the claimants or a part of allowances received by the deceased need to be taken into consideration for making certain deductions, the enhancement by way of future prospects at 50% would be effectively setting off any such proposed deduction. In other words, in the ultimate analysis, the amount of pecuniary loss as assessed by the High Court remains reasonable and cannot be said to be either exorbitant or too low so as to call for any interference.
Rate of interest - HELD THAT:- The Tribunal had awarded interest at the rate of 12% p.a. but the same had been too high a rate in comparison to what is ordinarily envisaged in these matters. The High Court, after making a substantial enhancement in the award amount, modified the interest component at a reasonable rate of 7.5% p.a. and there are no reason to allow the interest in this matter at any rate higher than that allowed by High Court.
The amount ultimately receivable by the claimants in terms of the judgment of the High Court remains that of just compensation and no case for interference is made out - Appeal dismissed.
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2019 (4) TMI 1929
TP Adjustment - characterization of services rendered by the assessee to its AEs. - comparable selection - function/ services performed by assessee - HELD THAT:- We find that the assessee had characterized the services rendered by it as “Design and Engineering Services” which fact has been recorded in the TPO’s order. The TPO, however, characterized the services rendered as “ITES” and benchmarked the same in his TP study /analysis carried out by him. The Co-ordinate Bench of this Tribunal, in the assessee’s own case for Assessment Year 2009-10 had remanded the issue of characterization of services rendered by the assessee back to the file of the TPO for fresh examination.
Thus we deem it appropriate to remand the issue of characterization of services rendered by the assessee, to the file of the AO for de-novo examination and decision on the characterization of the services rendered by the assessee for this Assessment Year also.
Provision for Warranty - AO has disallowed the provisions for warranty by holding that the assessee had failed to furnish the scientific basis on which the provision for warranty has been created - DRP upheld the disallowance made by the AO - HELD THAT:- We deem it appropriate to respectfully follow the aforesaid decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case for Assessment Year 2009- 10 and remand the issue of provision for warranty to the file of the AO for de-novo examination and adjudication with the same directions that the assessee should bring on record all the details evidences to establish that the provisions made by the assessee is on scientific basis and the AO should pass a speaking and reasoned order after providing the assessee adequate opportunity of being heard and to file details / submissions which shall be duly considered by the AO. We hold and direct accordingly.
Annual Licence Fees / R & D Expenses - AO observed that the assessee had not furnished any evidence of the nature of expenses and therefore held them to be capital in nature and disallowed the assessee’s claim - in its objections before the DRP, the assessee claimed that these expenses are towards annual licence fee for the R & D work carried out by the group company, which was used by the assessee and claim, though not put forth before the AO has been made before the DRP - HELD THAT:- In view of the above order of the Co-ordinate Bench of this Tribunal in the assessee’s own case for Assessment year 2009-10 and considering that the claim of the assessee regarding the expenses being for annual licence fees has not been examined at all and that the details / evidences submitted by the assessee before the DRP has not been admitted for consideration, we deem it appropriate to follow the order of the Co-ordinate Bench of this Tribunal in the assessee’s own case for Assessment Year 2009-10 - admit the details filed by assessee before DRP and remand this issue back to the file of the AO with the same directions as contained in the Tribunal order for Assessment Year 2009-10 - The assessee is directed to provide complete details and evidence of its claim which may be required by the AO to examine and decide the matter
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2019 (4) TMI 1928
Bogus contribution to Navjeevan Charitable Trust u/s 35AC - HELD THAT:- As decided in Maco Corporation (India) Pvt. Ltd. [2018 (3) TMI 811 - ITAT KOLKATA] donation given by the assessee to the trust is valid and assessee is entitled to deduction as on the date of making donation the said trust was having a valid exemption certificate to accept the donations. The facts of the case before us are substantially similar to the one as decided by the Coordinate bench and therefore following we hold the same view that assessee is entitled to deduction of ₹ 10,00,000/- under section 35AC of the Act. Since we have decided the issue on merits in favour of the assessee,
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2019 (4) TMI 1927
Validity of Arbitral Award - applicability of the clauses 9.1 to 9.3 of the Supply Agreement - whether the Respondent had issued any guarantee on generation of energy during the contractual period or not? - HELD THAT:- The Arbitral Tribunal rendered findings that the Respondent had withheld or suppressed the material records and information, and thereby kept the Claimant in dark on these aspects which were very material for the Claimant to decide upon about the viability of the project. The Arbitral Tribunal considered the Cash Flow Statement and the evidence of RW.1 on that aspect and rendered findings that the said witness had admitted that the Claimant was not informed that the Cash Flow Statement was only a sample cash flow and thus, it was clear that the Respondent was fully aware that the Cash Flow contained several assumptions which were not communicated to the Claimant.
The Arbitral Tribunal, rendered a finding that the Cash Flow Statement and the Revenue Calculations could not be taken as representing true and correct situation/facts or representing a probability of generation, if not actual generation. Such misrepresentation was purposely made by the Respondent knowing that such representation was not true, only with a view to induce the Claimant to enter into the Supply Agreement. It is also held by the Arbitral Tribunal that such misrepresentation, concealment and suppression of facts were made by the Respondent knowing that they were not true, with an intention to induce the Claimant to enter into the Supply Agreement - Arbitral Tribunal summarised the reasons for arriving at the conclusions that the Respondent had not made negligent misrepresentations, but also committed fraud on the Claimant. It is proved that the misrepresentation made by the Respondent was fraudulent. The Arbitral Tribunal also rendered findings in 39.11(xii) that various necessary information and documents required for the purpose of wind energy generation were purposely not made available by the Respondent to the Claimant.
The Arbitral Tribunal also considered the submissions made by the parties based on Explanation to Section 17 of the Indian Contract Act and rejected the contention of the Respondent that the Respondent was not duty bound to disclose every thing to the Claimant and held that the present case was one of active representations by the Respondent and thus would clearly fall under Section 17 i.e. “Fraud” as defined under the said provision. The Arbitral Tribunal interpreted Clause 9.2 also, which provided that the generation estimate had been carried out using Wasp and Windpro Software and the calculations were based on the wind data for the period September 2005 to August 2006 within the applicable reference mast installed by the Supplier in close proximity to the site and the site specific power curve of the wind turbine. It is held that the Respondent was bound to disclose necessary facts as stated by it in the “Estimated Generation” contained in the Supply Agreement.
The Arbitral Tribunal held that the contract is a commercial contract. The Respondent was an experienced expert and claimed to be the world leader in the field of wind energy and had full knowledge of the wind data of Gude Panchgani; whereas the Claimant was entering the wind energy business and had no knowledge about the wind data pertaining to the Gude Panchgani site which was very very necessary. Both the parties were not equals in the field of wind energy. It was the duty of the Respondent to bring to the notice of the Claimant all the facts that went in determining the proposed estimation of energy. The Claimant was vocal and was demanding the necessary information; whereas the Respondent declined to furnish the same deliberately.
The Arbitral Tribunal, after considering the evidence of both the parties, also held that the transactions as evidenced by the Supply Agreement was not something which could be understood on inspection of the site as it was based upon wind data of the past period as represented by the Respondent. The Arbitral Tribunal, accordingly, held that Illustration (a) to Explanation to Section 17 of the Indian Contract Act had no application to the instant case, as the Respondent was bound to explain all the facts relevant to the subject matter of the contract - In paragraph 42 of the majority Award, the ArbitralTribunal held that the Supply Agreement was vitiated by fraud and misrepresentation committed by the Respondent on the Claimant with an intent to induce the Claimant to enter into the Supply Agreement. The case of the Claimant thus falls under Sections 17, 18 and 19 of the Indian Contract Act. The effect of fraud was not absolutely to avoid a contract induced by it, but to render it voidable at the option of the party defrauded and had selected to avoid it.
Admittedly, in this case, the Respondent had not furnished all the requisite information to the Claimant when the Supply Agreement was executed. The Claimant had repeatedly called upon the Respondent to furnish copy of the said missing page, however, the Respondent refused to supply the said missing page. The learned Senior Counsel for the Respondent categorically urged before this Court during the course of argument that though the said page was missing in the Supply Agreement entered into between the parties, the Respondent had rightly refused to comply with the request of the Claimant for furnishing copy of the page No.9 of the Supply Agreement - the Arbitral Tribunal has rightly rendered a finding that the said page 9 of the Supply Agreement, which was admittedly missing from the said Agreement on the date of execution of the said Agreement was very crucial for the purpose of taking a decision by the Claimant whether to go ahead with the execution of the agreement or not. Obviously, when such page No.9 was missing in the Supply Agreement, the Claimant could have asked for a copy thereof only after execution of the agreement. The Arbitral Tribunal has already rendered a finding in great detail that it was the duty of the Respondent to furnish the relevant data and material available with it to the Claimant before execution of the agreement and, more particularly, in view of the fact that the Claimant was fully dependent on the expertise of the Respondent, the Claimant being new in the field and the Respondent being renowned and expert in the field as already represented by the Respondent to the Claimant.
There is no substance in the submission of the learned Senior Counsel for the Respondent that the Claimant was well informed about the surrounding circumstances and pros and cons of the terms of the contract. The Respondent not having given the material data and the information to the Claimant deliberately, though called upon, which were crucial and material for the purpose of taking decision by the Claimant to enter into the contract or not, cannot be allowed to urge that it was for the Claimant to have found out such data itself or that the Claimant having entered into the Supply Agreement with open eyes, cannot be allowed to seek the data after execution of the Agreement.
The Arbitral Tribunal has rightly held that the material information and the data which ought to have been furnished by the Respondent to the Claimant, were suppressed and fraud was committed by the Respondent upon the Claimant - the Respondent having committed a fraud upon the Claimant, which has been established before the Arbitral Tribunal, the Respondent cannot be allowed to urge that Clause 9.3 of the Supply Agreement, was in any manner repugnant to Clause 9.1 in support of the submission that Respondent had not issued any guarantee in favour of the Claimant in respect of the energy generation.
It is an admitted position that and even according to the Respondent, the agreement entered into between the Claimant and the Respondent is in force, at least for the maintenance purposes, even today. In my view, for a rescission to operate, has to be express and unequivocal, which is missing in this case. Merely because it was urged by the Claimant in the Statement of Claim that it was entitled to the rescission of the contract, that would not mean that there was rescission of the contract, as sought to be canvassed by the learned Counsel for the Respondent - The Claimant had clearly exercised the option to press for Claim B on the basis of the ongoing contract, which election was clear, categorical and was conveyed to the Respondent during the course of arbitration proceedings. It is not the case of the Respondent that the Respondent had rescinded or terminated the contract with the Claimant.
Since the Respondent had committed fraud upon the Claimant, the Respondent could not have even otherwise placed reliance on Clause 9.3 or other provisions of the contract in support of the submission that the claim made by the Claimant was contrary to the said provisions. A party who commits a fraud on another party to the contract, cannot seek reliance on a provision so as to take legal undue advantage of such provision.
The parties before the Arbitral Tribunal sometimes may not be in a position to bargain with the Arbitral Tribunal about the fees demanded by the Arbitral Tribunal, may be under an apprehension that the mind of the Arbitral Tribunal may be prejudiced if suggestion to reduce the fees under different heads is made by such party. It is for a party to select a suitable arbitrator in the facts of each case, considering the stakes involved, subject to the conditions in the arbitration agreement.
Arbitration petition dismissed.
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2019 (4) TMI 1926
Impleadment of the applicants in the pending application filed under 7 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The directors who have filed the impleadment application cannot be regarded as a third party as they are part and parcel of the financial creditor. Once, the resolution dated 18.12.2018 itself is under challenge and which constituted the basis of filing petition under Section 7 of the Code namely (IB)-377(PB)/2019 then the issue has to be decided with regard to the competence of filing of the instant petition. It is needless to emphasise that in the corporate sector the whole affair of a company are run on the basis of resolution passed.
The applicant are permitted to intervene in the matter and address arguments at the time of admission without permitting them to join as a party - application disposed off.
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2019 (4) TMI 1925
Assessment u/s 153A - Income from undisclosed sources - HELD THAT:- As decided in SUBHASH KHATTAR case [2016 (8) TMI 460 - ITAT DELHI] assessment u/s 153A of the act in absence of incriminating material found during the course of search at the premises of the assessee and in absence o abatement of assessment on the date of search, cannot be made in the present case as per the above cited decisions including the decision of Hon’ble Jurisdictional Delhi High Court in the case of CIT vs Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]
Under the circumstances, we are of the view that the Assessing Officer was not justified in assuming jurisdiction u/s 153A and authorities below ere also not justified in making and sustaining the addition in question merely on the basis of a hard disc found during the course of search - without any corroborative evidence in support we thus hold that the assessee/appellant succeeds on both the above issues, i.e. on validity of assumption of jurisdiction u/s 153A and the addition in question - Decided in favour of assessee.
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2019 (4) TMI 1924
Permission for withdrawal of application - application was filed on 13.02.2019 pursuant to a full and final settlement of the claim admitted in Section 7 petition - HELD THAT:- The present application is filed prior to Constitution of Committee of Creditors, hence, the requirement of S. 12A of the Code with regard to approval of ninety percent voting by the CoC can be dispensed with.
Moreover, on 26.02.2019, the Petitioner was also present & made a request for withdrawal of the petition on receiving the settled amount. Further, in this situation, when the Petitioner & the Corporate Debtor both have expressed to withdraw the petition on account of settlement of debt. Hence, under the circumstances, the petition does not survive, especially when the IRP has also been paid his dues.
Application allowed.
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2019 (4) TMI 1923
Deduction u/s 80IA - DRP held that the rate at which power was supplied by appellant to State Electricity Board (‘SEB’), i.e. ₹ 2.3336 per unit, was the market rate of power for purposes of computation of deduction under section 80IA of the Act - HELD THAT:- Issue decided in favour of assessee in own case [2007 (6) TMI 308 - ITAT DELHI] assessee as an industrial consumer is also buying power from the Board and the Board supplies such power at the rate of ₹ 3.72 per unit to its consumers. This is the price at which the consumers are able to procure the power. We may consider hypothetical situation as well. Had the assessee not been saddled with restrictions of supplying surplus power to the State Electricity Board, it would have supplied power to the ultimate consumers at rates similar to those of the Board or such other competitive rates, meaning thereby that price received by the assessee would be in the vicinity of ₹ 3.72 per unit i.e. charged by the Board from its industrial consumers/users. Thus, under the given circumstances, it would be in the fitness of things to hold that the consideration recorded by the assessee’s undertaking generating electric power for transfer of power for captive consumption at the rate of ₹ 3.72 per unit corresponds to the market value of power. Also see M/S RELIANCE INDUSTRIES LTD. [2019 (2) TMI 178 - BOMBAY HIGH COURT] - Decided in favour of assessee.
Deduction allowable under section 80IB being profit derived from Rail Universal Beam Mill - HELD THAT:- AO has not examined the quantum of deduction allowable under section 80IB being profit derived from Rail Universal Beam Mill we direct the AO to allow deduction under section 80IB in respect of income derived from that unit after verification of the eligible amount as per law. Needless to mention that the AO before determining the eligible amount of deduction shall allow reasonable opportunity of hearing to the assessee. Thus, the ground no.3 of the appeal of the assessee is treated as allowed.
Nature of receipt - incentive/ subsidy in the form of exemption from sales tax, entry tax and electricity duty - revenue or capital receipt - HELD THAT:- This is a repetitive year issue and in all fairness, it may be pointed out that this issue of treatment of subsidy as capital or revenue receipt has been decided against the Appellant by the Hon’ble Delhi Bench of the Tribunal in appellant’s own case for assessment year 2004-05 [2013 (2) TMI 748 - ITAT DELHI]and also in the decision of the Assessee for AY 2008-09 wherein the aforementioned additional evidence has been admitted and thereafter this issue has been decided against the Assessee.
Deduction in respect of write back deferment of employee compensation expenditure incurred on account of provision of Employee Stock Option Scheme (‘ESOS’) to employees - HELD THAT:- 'Special Bench' of the Tribunal in the case of Biocon Ltd. [2013 (8) TMI 629 - ITAT BANGALORE] after deliberating at length on the issue as to whether the assessee was entitled to claim the discount on ESOS as an expenditure under section 37(1), or not, had therein answered the said issue in affirmative and concluded that the same was allowable as an expenditure under section 37(1) in the hands of the assessee.
The claim of the assessee is it has credited ₹ 3,92,93,000/- in the profit and loss account as write back on account of employee stock option scheme (ESOS). The assessee further claimed that when provision was made on account of ESOS in earlier years by way of debit to its profit and loss account the said amount was not allowed as deduction to the assessee in the assessment of earlier years - when an amount is not allowed as deduction when its provision was made in the year of provision then write back of the very same amount in the subsequent year cannot be included in the total income of the subsequent year. We therefore set aside the orders of the lower authorities on this issue and restore the matter back to the file of the AO for adjudication afresh in light of the above observation. The AO shall verify whether the amount written back this year was allowed as deduction or not in the year in which provision for the same was made by the assessee.
Disallowance u/s 14A r.w.r. 8D - Assessee made suo moto disallowance - HELD THAT:- We find that the condition precedent for invoking provisions of rule 8D is that the AO must record a satisfaction that the amount of disallowance claimed in the return of income is not correct. Without recording such a satisfaction the AO cannot invoke provisions of Rule 8D. Above view finds support from the decision of ABHISHEK INDUSTRIES LTD. [2015 (2) TMI 672 - PUNJAB AND HARYANA HIGH COURT] and KAPSONS ASSOCIATES [2015 (8) TMI 1277 - PUNJAB AND HARYANA HIGH COURT]. In the instant case on perusal of the impugned order of assessment we notice that no such satisfaction was arrived at by the AO. In the circumstances disallowance under section 14A of the Act of ₹ 21.54 crores in place of ₹ 2,65,715/- claimed by the assessee in the Return Income is bad in law and unsustainable - Decided in favour of assessee.
Depreciation on alleged non-functional units - AO disallowed depreciation in respect of 2 generator sets on the ground that those generator sets were not used during the relevant previous year - HELD THAT:- The assessee explained before the AO that the 2 generator sets were kept standby for use in the business of generation of electricity so that the continuity of the business is not affected. We find that no material has been brought on record to controvert the plausible explanation of the assessee. It is an established position of law that the asset which have been kept ready for use in business but could not be used for any reason the same is treated as used for the purpose of business. Support for the above view is drawn from the decision in the case of CIT vs. Nahar Exports . [2007 (5) TMI 171 - PUNJAB AND HARYANA HIGH COURT]. We therefore delete the disallowance of depreciation of ₹ 42 lacs and allow this ground of appeal of the assessee.
Addition of employee welfare expenses under section 40A(9) - Assessee did not submit any further details or supporting evidence - HELD THAT:- The opinion of the AO is also supported by the opinion of the Tax Auditor of the assessee. The ld. AR of the assesse has brought no material before us to show that the amount in question was not hit by the provisions of section 40A(9) of the Act. In the circumstances we do not find any good reason to interfere with the order of the AO. Thus the ground no. 8 of the appeal of the assessee is dismissed.
Nature of expenses - lease rent expenditure - revenue or capital expenditure - whether DRP failed to appreciate that similar lease rents had been allowed as deduction in earlier assessment years and therefore, there was no reason to deviate from the accepted position during the year under consideration? - HELD THAT:- AO observed from the agreement that in clause 21 thereof the assessee was granted right to purchase the said Aircraft at the end of the lease period subject to certain conditions mentioned therein. From the said agreement the AO observed that the lease in question was a Financial Lease and the payment made by the assessee was comprised of two elements i.e. a part towards the Capital cost of the asset and the other part for interest.
AO worked out the interest component at ₹ 32,97,554/- and allowed the same . The balance payment was considered as Capital Expenditure . AO further stated that depreciation in respect of the Cost of Capital Asset shall be allowed to the assessee if the assessee moves 154 Petition.
AR could not bring any material before us to controvert the finding of the AO. In the circumstances we find no good reason to interfere with the order of the AO. However, we find force in the contention of the Ld. AR that depreciation ought to have been allowed to the assessee in respect of cost of the Asset. We therefore direct the AO to allow depreciation as per law in respect of cost of Asset. Thus this ground of appeal of the assessee is treated as partly allowed.
Disallowance of aviation expenses - Whether aircraft expenses were incurred by the appellant wholly and exclusively for business purposes? - HELD THAT:- Tribunal in the case of the assessee company itself in the AY 2001-02 has held that travelling expenses incurred to meet customers and prospective customers is allowable as business deduction. In respect of expense of ₹ 4,10,606/- it was explained that the expenditure was incurred in connection with the above journey and all are supported by bills and vouchers. These are incidental expenses like airport duty and taxes and hotel charges for stay of pilot etc. DR could not controvert the submission of the assessee. Thus, we find that the expenses were incurred by the company out of commercial expediency. We therefore delete the disallowance.
Disallowance of foreign travel expenses holding the same to be non-business expenditure - addition on the ground that the purpose of the related travel was not furnished and therefore the commercial expedi - hncy of the said expenditure was not established - HELD THAT:- As assessee has filed copies of invoices and details of expenses and contended that these documents were filed before the AO to show business connection of the expenditure in question. However, the AO has not considered the same - DR could not controvert the above submission of the assessee. In the circumstances in our considered opinion it shall be in the interest of the justice to restore this issue back to the file of the AO for adjudication afresh after taking into consideration the said documents by passing a speaking order.
Disallowance of business promotion expenses - HELD THAT:- Expenses was incurred for making gift to bankers customers ,etc. on the occasion of festival of diwali. Such expenditure were incurred to build relationship with business associate for promotion of business. Similarly customary gifts to press reporters attending the business press conference of the assessee was incurred out of commercial expediency. Keeping in view the volume of business of the assessee diwali gift and gift to the press reporters can be held to have incurred out of commercial expediency.
In respect of expense incurred for civil construction of shooting range and shooting equipment it is observed that they were incurred for a shooting range at Sonipat where neither the factory or office of the assessee is situated. The assessee could not establish the business connection of the said expenditure. Similarly in respect of balance expenditure in absence of details of beneficiary the commercial expediency of the same could not be established. We therefore delete the disallowance partly.
TP Adjustment - arm's length price of the 'international transactions' of interest received from loan advanced to associated enterprise - HELD THAT:- We find that the rate which should be adopted by the TPO/AO for benchmarking the loan transactions with the assessee’s Associated Enterprises should be the LIBOR rate and not the PLR rate as adopted in the instant case in view of the decision of Hon’ble Delhi High Court in CIT Vs Cotton Naturals I. P. Ltd.[2015 (3) TMI 1031 - DELHI HIGH COURT]. The assessee has also submitted that it has made external commercial borrowings at interest rate ranging from 1.63% to 3.72% per annum. The assessee has not provided us the details of external commercial borrowings and that the loans advanced by the assessee to its Associated Enterprises was from these borrowings.
The details of LIBOR rate prevailing at the relevant time has also not been provided by the assessee. Therefore, we are unable to adjudicate the issue completely. Hence, we have no other alternative but to remand the matter back to the file of the AO to adjudicate the issue afresh.
Transfer Pricing Adjustment on guarantee issued on behalf of the AE - Addition on the ground that no commission has been charged by the appellant for providing corporate guarantee to the lenders on behalf of its Associated Enterprises - HELD THAT:- The amendment made to Section 92B by the Finance Act 2012 is prospective in operation and accordingly applicable in the Assessment Year 2013-14 and subsequent years, and not applicable in the impugned assessment year which is the Assessment Year 2009-10. We, therefore, hold that the issuance of corporate guarantee cannot be considered as an international transaction for the year under consideration. Therefore, the addition made is deleted. Thus, this ground of appeal of the assessee is allowed.
Not allowing MAT credit under Section 115JAA - HELD THAT:- As assessee claimed that MAT Credit as eligible under section 115JAA of the Act has not been allowed to the assessee company. We therefore direct the AO to verify the claim of the assessee as per record and allow credit under section 115JAA of the Act as allowable as per law.
Charging interest under section 234B is consequential and mandatory. The AO is directed to provide consequential relief as per law.
Admission of additional ground - Additional coal levy relatable to year under consideration paid on account of extraction of coal pursuant to the order(s) of the Hon’ble Supreme Court, be directed to be allowed as business deduction - MAT Computation - sum set aside on account of Debenture Redemption Reserve should be excluded from book profits under section 115J - HELD THAT:- As in the light of the law laid down by Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1996 (12) TMI 7 - SUPREME COURT], there cannot indeed be any objection to an Assessee raising a new legal plea at this stage. This is a pure legal issue and all facts for adjudication of this ground are already on record.
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2019 (4) TMI 1922
Refund of Customs Duty - duty paid under protest - levy of wharfage charges on the chartered cable vessel, belonging to petitioner - HELD THAT:- This Court is of the view that once the Port Trust has declared the vessel itself as a cargo, in view of its activity of laying under sea cable, it is well within the power of the Port Trust authorities to levy wharfage against the vessel itself. When the vessel itself is involved in the type of activity as admitted by the petitioner themselves, which carry the fiber-optic cable and other submerged equipment to be laid on the sea bed, there is no escape from the demand of wharfage against the activity of the vessel belonging to the petitioner at the time when it was berthed in the second respondent Port.
Admittedly, the vessel itself was manifested as cargo and this Court does not find the description of the vessel as cargo is invalid or not warranted for the simple reason that from the description of the activity of the vessel itself, there cannot be two opinions about the vessel being manifested as cargo by the Port authority. Once the vessel was manifested as cargo, the consequence of that was to levy wharfage as per the rates applicable for such import of cargo. In these circumstances, the Port authorities had calculated the wharfage under Chennai Port Trust Scale of Rates issued vide Gazatte No. 251, dated 27-8-2014. The rate was calculated under Item No. 36(A) “Items not otherwise specified - other than bulk” of the schedule of wharfage under Scale 1 of Chapter-III of the scale of rates.
The contention of the petitioner is not about the rate of scale applied towards them. But, the very levy of wharfage itself is being questioned in the writ petition. Therefore, once this Court holds the view that the vessel was rightly manifested as cargo, in view of its admitted activity of laying under sea cable by way of importing its services for their client in India, the charge towards wharfage as demanded by the Port Trust authorities, cannot be the subject-matter of controversy or dispute at the hands of the petitioner. In any event, the rates as applied is not the subject-matter of contention on behalf of the petitioner.
This Court is of the considered view that the manifesting of the vessel as cargo did not suffer from any infirmity with reference to the activity of the vessel which was berthed in the second respondent Port vis-a-vis the definition of wharfage and other provisions of Major Port Trust Act. The petitioner is unable to point out any apparent error in the order passed by the second respondent Port Trust towards manifesting the vessel as cargo except stating that wharfage can be levied only on cargo. Such contention cannot be accepted by this Court, in view of the activity of the vessel for which the vessel services were utilized by way of import by the local client in the Country.
On the whole, this Court does not find anything wrong with the wharfage levied on the petitioner’s vessel and the demand as such made by the Port authority towards wharfage, does not suffer from any legal lapses or infirmity - Petition dismissed.
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2019 (4) TMI 1921
Power to investigate/inquire - Smuggling - Gold - Baggage Rules - issuance of summons under section 108 of Customs Act - whether the Customs authorities have been at all empowered to investigate or inquire into this offence by the Customs Act, 1962 or by any other law?
HELD THAT:- In the complaint made by the Customs authorities to the police only obstruction caused to them by the appellant was complained of. There was no allegation as is being made today, about illegal importation of gold or any other items in that particular complaint, made some seven days after the incident - the purported Section 108 summons dated 26th March, 2019 could not have covered the contravention now alleged by them. Even if it is said that this summons covered the alleged illegal, importation or other contravention in that case there ought to have been a recital in the summons as to the new allegation the Customs sought to level against the appellant.
Whether this Section 108 summons could have been issued in aid of investigation by the Customs into an offence under Section 133 of the Customs Act, 1962? - HELD THAT:- Considering the fact that this incident occurred more than three weeks ago, the appellant for whatsoever reason could leave the airport and the summons issued belatedly, we find that there is no urgency requiring the appellant to answer the summons today or at any date in the near future - the Joint Commissioner of Customs is directed to extend the returnable date of this summons to a date after 31st July, 2019 to enable the Learned Single to decide the matter.
Application disposed off.
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2019 (4) TMI 1920
Validity of Summons issued - appellant submits that the summons is void ab initio as no independent formation of opinion was made by the Joint Commissioner of Customs himself before issuance of such summons - HELD THAT:- This issue can be decided upon exchange of affidavits.
Matter will appear in the combined monthly list of May, 2019 - However, the petitioner shall respond to the summons dated 26th March, 2019 but the respondent authorities will not take any coercive action against the petitioner without the leave of this Court.
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2019 (4) TMI 1919
Recovery of the irregularly availed Cenvat credit - Appellant had shown availment of Cenvat credit particulars at higher side, than the amount shown in the Cenvat register maintained for the said period - period 2010-11 to 2014-15 - HELD THAT:- In the grounds of appeal annexed to the appeal memorandum, the appellant has specifically urged that the accounts/records submitted by the appellant during the course of adjudication proceedings were not properly considered by the authorities below. The issue involved in the present case relates to ascertainment of arithmetical accuracy in respect of availment of Cenvat credit, which in my considered opinion, had not been properly addressed by the authorities below.
The matter should be examined afresh by the original authority - Appeal allowed by way of remand.
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2019 (4) TMI 1918
Refund of CENVAT Credit - rejection on the ground that the claimant had not filed mandatory declaration electronically in the Form GST TRAN-1 as stipulated under Rule 117 of Central Goods and Services Tax Rules, 2017 - Rule 5 of Cenvat Credit Rules, 2004 - HELD THAT:- Refund of Cenvat Credit not carried forwarded under GST is claimed by the appellant under Rule 5 of Cenvat Credit Rules, 2004 on 28-6-2018 i.e., after appointed day, it needs to be determined whether refund under erstwhile Rule 5 of Cenvat Credit Rules, 2004 is admissible under GST regime to the claimant who has not filed GST TRAN-1 required under Rule 117 of Central Goods and Services Tax Rules, 2017.
The claim filed by the appellant even after introduction of GST was a routine and valid step for which no one can prevent them. On receipt of refund application, it becomes the function of the competent authority to scrutinize its legality and either sanction or reject the same applying the provisions under which it is claimed. In the instant case, when the appellant himself has preferred the claim under Rule 5 of Cenvat Credit Rules, 2004, deciding of the claim under CGST Act/Rules was not permissible, more particularly when transitional provisions i.e. Section 42(3) makes if mandatory on the authority to dispose such claim in accordance with the provisions of existing law. Thus, Rule 117 of CGST Rules, 2017 applied in processing/deciding the claim by the impugned authority is faulty.
The grounds of denial of the refund claim is rejected and the matter is remitted back to the adjudicating authority to scrutinize the claim in accordance with the provisions of Central Excise law read with Cenvat Credit Rules, 2004 i.e. Rule 5 and Notification No. 27/2012-C.E. (N.T.), dated 18-6-2012 and to order a fresh on eligibility of the refund to the appellant ensuring principle of natural justice - Appeal allowed by way of remand.
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2019 (4) TMI 1917
Classification of services - Manpower Recruitment and Supply Agency Service or not - appellant is engaged as a contractor for carrying out the manufacturing activities of PP/HDFE fabrics on rate contract basis - HELD THAT:- M/s. Dhoot Compack Ltd. has entered into agreement with the appellant for manufacture of fabrics on job work basis. The appellant was paid for carrying out such activities on per meter basis. The workmen deployed by the appellant for carrying out such activities were under the supervision and control of the appellant. The ultimate manufacturer, who entrusted the job to the appellant was no way concerned with the workmen deployed by the appellant. It is also noticed that over and above paying the amount for manufacturing activities undertaken by the appellant on job work basis, the said service receiver had not paid any specific price to the workmen deployed by the appellant. Thus, under such circumstances, it cannot be said that the appellant had provided the Manpower Recruitment and Supply Agency Service.
The adjudged demands confirmed on the appellant cannot be sustained - Appeal allowed - decided in favor of appellant.
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