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Showing 241 to 260 of 1733 Records
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2019 (6) TMI 1495
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - clarificatory amendment - retrospective or prospective effect - Time Limitation - HELD THAT:- It is a matter of record as well as by own assertion of the petitioner that the date of default is reflected as 04.07.2014 for all the 33 invoices. Material available on the record shows that the invoices against which the claim is made by the applicant company are dated 12.12.2013 to 13.05.14. The demand notice issued by the applicant company is dated 31.05.2018 and received by the respondent on 02.06.2018 which clearly indicates that the demand notice is sent after three years. That itself shows that the amount was due much prior to three years i.e. 13.05.2017 whereas the present application is filed on 31st July, 2018. Therefore, the claim made by the applicant/operational creditor is barred by limitation as it is being made after expiry of a period of three years.
Implementation of Section 238A of Insolvency & Bankruptcy Code, 2016, which has come into force on 06.06.2018 - HELD THAT:- In view of the judgment of the Hon'ble Supreme Court, in STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [2018 (8) TMI 837 - SUPREME COURT], a clarificatory amendment has retrospective effect.
That apart, it is also a matter on record that there was pre-existing dispute on account of cancellation of work order by the respondent. That, letter dated 26.06.2014, addressed to the operational creditor by the corporate debtor goes on to show that due to delay in completion of the supply, installation and commissioning of Solar Photovoltaic Power Plant, the corporate debtor cancelled some orders and against such action the operational creditor had made a representation-cum-demand for justice petition on 05.08.2014.
The Adjudicating Authority is of the considered view that the petition is not maintainable - Petition dismissed.
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2019 (6) TMI 1494
100% EOU - Refund of unutilised CENVAT Credit - rejection of refund on the ground that appellant has not established the nexus of the input services with the output services provided - second ground for rejection of refund is that the ITSS services and Consulting Engineering Services were not taxable prior to 2008 - HELD THAT:- A perusal of Rule 5 contained in CCR 2004 would show that it does not say that the appellant has to establish the nexus of the input services with the output services. The refund is eligible of the credit of the input services which are used for output services. The appellant has provided details of various services that were used during the relevant period for providing output services. Major part of the refund is for the period prior 01.04.2011 and a small amount of refund is for period after 01.04.2011.
On perusal of the nature of the services, it is seen that in the case of M/S RELIANCE INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, LTU, MUMBAI [2016 (8) TMI 123 - CESTAT MUMBAI] the issue of nexus and the eligibility of credit of all services impugned herein were considered by the Tribunal and held in favour of the assessee - Similarly, in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [2011 (9) TMI 450 - KARNATAKA HIGH COURT] as well as KPIT CUMMINS INFOSYSTEMS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [2013 (7) TMI 124 - CESTAT MUMBAI], it was held that refund cannot be rejected on the ground that ITSS services were not taxable prior to 2008. It is also to be pointed out that though the refund claim was rejected that prior to 2008, the output services are not taxable and therefore credit is not eligible, no show cause notice is so far issued proposing to recover any wrongly availed credit.
The rejection of refund is unsustainable - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1493
Period of CIRP process - exclusion of period of 145 days when the erstwhile Resolution Professional did not function due to non-cooperation by the Suspended (Board of Directors) - HELD THAT:- The Appellant is allowed to implead Managing Director of the Board of Directors as party Respondent No. 2. Punjab National Bank, Lead Bank of the Committee of Creditors be also impleaded as party Respondent No.3. Necessary corrections be made in the cause title and other pages of the paper book.
Let notice be issued on newly impleaded Respondent No. 2 - Managing Director of the Board of Directors (by name) and Respondent No. 3 - Punjab National Bank, Lead Bank of the Committee of Creditors. Requisites alongwith process fee be filed by tomorrow - Post the case 'for orders' on 1st July, 2019. The appeal may be disposed of on the next date.
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2019 (6) TMI 1492
Withdrawal of admitted CIRP application - Appellant submitted that the Appellant wants to settle dispute and a draft for ₹ 33 lakhs payable to the 'Operational Creditors' is ready - HELD THAT:- Mr. Ajay Kumar Jain, 'Interim Resolution Professional' appears in person and submits that the parties have settled the matter and he has received the fees and cost. He further informs that the 'Committee of Creditors' have not been constituted and only one claim received from one of the 'Operational Creditor' - Taking into consideration the development that the parties have settled the matter and that the 'Committee of Creditors' have not been constituted, in exercise of powers conferred under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, we allow the settlement.
The application preferred by the Respondent under Section 9 of the I&B Code is disposed of as withdrawn.
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2019 (6) TMI 1491
CENVAT Credit - capital goods exclusively used for the manufacture of goods on job work basis availing the benefit of N/N. 214/86-CE - credit denied on the ground that the goods manufactured by the job workers are exempted under N/N. 214/86-CE. - HELD THAT:- Issue decided in the case of GARUDA COTEX SHADES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT [2013 (4) TMI 619 - CESTAT, AHMEDABAD] where it was held that If the job work is considered as non-exempted and the CENVAT credit is allowed on the inputs which are used on such job work items, there are no valid reason to deny the CENVAT credit of Central Excise duty paid on capital goods, which were received by the appellant during the relevant period and used in the manufacturing of very same job worked goods.
Penalties set aside - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1490
Disallowance u/s. 14A r.w.r. 8D - if exempt income had not been earned for the year under scrutiny - HELD THAT:- The question is self-explanatory and the issue involved is squarely covered by the decision of the Division Bench of this Court in HUNTSMAN INTERNATIONAL (INDIA) PVT. LTD. [2019 (2) TMI 1457 - BOMBAY HIGH COURT] ruled that when there is no exempt income earned by the assessee, no disallowance under Section 14A of the Act can be made. - Decided against revenue.
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2019 (6) TMI 1489
Disallowance of depreciation on assets leased (finance lease) - AO has disallowed depreciation claim merely on the ground that as per AS-19 issued ICAI, in finance lease the risk and rewards incidental to ownership of the asset transferred to the assessee - CIT-A deleted the disallowance - HELD THAT:- Assessee continued to have ownership of the asset even after leave and license agreement with Reliance Industries Ltd and the assessee has claimed depreciation for earlier two years. In fact, it has been accepted by the Department in assessment proceedings. The assessee further explained that the lessee did not claim depreciation on the leased asset. Considering over all facts of this case and also by following the ratio of ICDS [2013 (1) TMI 344 - SUPREME COURT] we are of the considered view that the assessee is entitled for depreciation on the leased asset as per provisions of section 32(1)(ii) - CIT(A) after considering relevant facts has rightly deleted additions made by the AO towards disallowance of depreciation, hence, we are inclined to uphold the findings of the ld CIT(A) and reject the ground taken by the Revenue.
TP Adjustment - inclusion of Allsec Technologies Ltd., as comparable - It is an admitted fact that the Allsec Techonlogy Ltd. has incurred losses for past three financial years - HELD THAT:- CIT(A) has recorded categorical finding to the effect that the PBIT margins for the aforesaid years have turned negative on account of charges towards depreciation and amortization which is a normal cost which arises during the course of business operations and not on account of some extraordinary factors. The Ld. CIT(A) further stated that for the previous year ended 31st March, 2007, the company had positive PBIT - once comparable is similar to the functions carried out by the assessee, then consistent loss of one or two years is not good ground for rejection of company for comparables. See JOY ALUKKAS INDIA PVT. LTD. [2014 (6) TMI 80 - KERALA HIGH COURT].
Exclusion of Eclerx Services Ltd. as comparable - As in Maersk Global Service Centres [2015 (1) TMI 917 - ITAT MUMBAI] had taken similar view and excluded Eclerx Services Ltd. from the list of comparable where the taxpayer is engaged in providing captive services to its AE in the area of ITeS service. The Id. CIT(A), after considering relevant facts has rightly rejected Eclerx Services Ltd. from the list of comparables and we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the Revenue.
Comparable for international transaction of provision of business support services to AEs - exclusion of TVS-E Services Ltd. - HELD THAT:- TVSE Services Ltd. is providing warranty management services for leading IT brands, break fix services for credit cards terminals and e-auction services which is mainly an electronic sector. Therefore, we are of the considered view that the ld. CIT(A) was rightly in rejection of TVS-E Services Ltd. from the final set of comparables, because the same cannot be compared with functions carried out by the assessee to its AE, hence, we reject the ground taken by the assessee.
Inclusion of Aptico Ltd. as comparable - This company cannot be comparable to the assessee which is mainly engaged in providing business support services to its AE in the area of evaluation and recommendation for finalization of contracts for procurement of goods and services and also back office support in matters relating to accounting, taxation, insurance, HR & Administration. Further, this company has been considered in the light of business support services related services to AE by various Tribunal including case of Rolls-Royce India (P.) Ltd. [2016 (4) TMI 1178 - ITAT DELHI] where it was held that Apitco Ltd. cannot be comparable on account of functional in comparability. Therefore, we are of the considered view that the ld. CIT(A) was incorrect in inclusion of Apitco Ltd. in the final set of comparables.
ICRA Management Consulting Services Ltd. as comparable - ICRA Management Consulting Services Ltd. is mainly involved in multi-line management and development in the field of risk management, process improvement, public policy and transaction advisory services. We further noted that the assessee is a captive service provider to its AE which cannot be considered to a company which is involved in various kind of services including several complex services in the area of policy advisory and PPP transaction. TPO as well as the Ld. CIT(A) was erred in considering ICRA Management Consulting Services Ltd. as comparable for the purpose of determination of ALP of international transaction.
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2019 (6) TMI 1488
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The statutory provisions of section 9(5)(ii)(d) of the Code mandates that the Adjudicating Authority shall reject the application if notice of dispute has been received by the operational creditor. Section 9(5)(ii)(d) refers to the notice of an existing dispute that has been received, as it has to be read with section 8(2)(a) of the Code. The moment there is existence of a pre-existing dispute, the operational debtor gets out of the rigours of the Code - Once there is "existence of dispute" prior to issuance of notice under section 8, the petition under section 9 preferred by the operational creditor shall not be maintainable.
In the present case the initial notice issued under section 8 was duly replied within the period prescribed by bringing to the notice of the operational creditor the existence of dispute. Besides the correspondences placed on record shows that the liability has been disputed from time-to-time and there is a plausible dispute pre-exists between the parties - The provisions of section 9(5)(ii)(d) of the Code clearly mandates that the Adjudicating Authority shall reject the application when notice of dispute has been received by the applicant operational creditor.
In the factual scenario it is reiterated that the claim of operational debt in question is not free from dispute. Records show that dispute was raised prior to issuance of notice under section 8 of the Code. The respondent has raised dispute with sufficient particulars to qualify as a dispute as defined under sub-section (6) of section 5 of the Code - thus, the application fails and therefore the same is rejected.
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2019 (6) TMI 1487
Oppression and Mismanagement - increase of authorized share capital - time limitation - Whether the petition is time barred? - HELD THAT:- The petitioners did not mention as to when they have made the inspection. The alleged increase in the authorised capital and the allotment was made on September 30, 2011 and the petition is filed on February 9, 2015 after the lapse of three years. However, it is settled proposition of law that if the alleged wrongful act is such that its effect is continuous course of oppression and there was no prospect of remedying the same then the Tribunal is entitled to interfere by passing an appropriate order. The alleged increase of authorised share capital and allotment of share without proper notice and offer to the petitioners is wrongful act which has the recurring effect on the rights of the petitioners, who are the shareholders - the act complained of is not an isolated act, therefore, the petition is not barred by the law of the limitation and maintainable.
Whether the increased authorised capital of the first respondent-company from 3,40,000 shares to 7,90,000 shares on December 30, 2011 is illegal and void? - HELD THAT:- o reasonable explanation is forth coming from the respondents for increasing the authorised share capital of the company, there cannot be any requirement of the bank on the basis of which the respondents have increased the authorised capital as is contended, that too without following the due process of law. The respondent/directors of the first respondent-company were obliged to do as part of their duty to act in good faith and make full disclosure to the shareholders regarding the affairs of the company - in the case on hand the directors/respondents failed in their duty to send proper notice of the sixth annual general meeting and offer to the petitioners for subscribing the shares.
Further, the share allotments made on December 30, 2011 in favour of the fifth respondent, his two sons and wife, i. e., tenth, eleventh and twelfth respondents respectively seem to have been made by the respondents for creating a new majority due to which the existing shareholders were reduced to minimal position. This is in breach of fiduciary duty and constitutes an act of gross oppression - Moreover, the claim of the respondents that the notices of subsequent annual general meetings were served to the petitioners do not justify the increase of the authorised capital of the company and allotment of the shares in favour of the fifth respondent, his two sons and wife, i. e., tenth, eleventh and twelfth respondents respectively. However, the acknowledgments placed on file as proof of sending notices cannot be relied upon without corroboration of services of notice, when there is no collateral evidence like dispatch register showing payment of postage stamps and account books. On this issue, the company courts did not even rely upon the "postal certificates" - Therefore, the contention of the respondents that notices of the subsequent annual general meetings were served on the petitioner is not substantiated with reliable documentary evidence, thus the same stands rejected.
The issues framed above are decided in favour of the petitioners and against the respondents - petition allowed.
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2019 (6) TMI 1486
TP Adjustment - Comparable selection - HELD THAT:- Proportionate adjustment is to be made only on the value of international transactions and not for the entire transactions at entity level. The total value of international transactions of Rasai unit in respect of import of raw materials was only ₹ 65 crores. TPO considered the entire total operating expenditure (and not restricting only the import transaction of ₹ 65 crores) of the AE segment of Rasal unit while computing the adjustment. This is now well settled by the decision in the case of PCIT vs Sandvik Asia Pvt. Ltd [2018 (5) TMI 262 - BOMBAY HIGH COURT] states the adjustment should be restricted only to the international transactions not all the other third party transactions.
Economic adjustments - Stock Write Down - This volatility in market conditions and steep increase in the cost of raw materials were duly accepted and allowed by the ld TPO for Non-AE segment but denied for AE segment. It is elementary that for the purpose of comparison, both the tested party and the comparable is to be evaluated under same conditions. We hold that the ld TPO having allowed the same in Non-AE segment to the tune of ₹ 363 lacs, ought not to have taken a divergent stand in respect of AE segment in the sum of ₹ 846 lacs. Accordingly, we direct the ld TPO to allow the same as an economic adjustment while computing the margins of the AE segment for the purpose of comparability.
Capacity Underutilization (Rasai Plant) and Shutdown Cost (Rasai Plant) - It is not in dispute that the Rasai plant was closed down for a period of 4 months from November 2008 to February 2009 due to lack of demand and pile up of excess inventories. This fact is evident from the Excise Register placed on record. This is evident from the manufacturing details provided by the assessee for the financial yea₹ 2007-08 and 2008-09 enclosed in page 253 of the paper book. This resulted in underutilization of capacity in Rasai plant to 42% during the year and consequent shutdown cost. This is part of operational cost and hence allowance should be granted to the assessee as an economic adjustment.
Professional charges for search of new MD - This is a non-recurring item and extra-ordinary in nature. It is not that a new MD is appointed in normal course of business every year. During the year, the assessee company had paid this fees to recruitment agency in search of MD and claimed the same as an extraordinary economic adjustment. Accordingly, we direct the ld TPO to consider the amount spent on professional charges for search of new MD to be allowed as an economic adjustment while computing the margins of AE segment for the purpose of comparability.
Addition on account of capital expenditure on scientific research centre - only grievance of the revenue is that since the assessee had not obtained renewed its approval from DSIR, the assessee is not entitled for deduction - HELD THAT:- The benefit of s. 35 (1)(iv) can be availed by the assessee in respect of expenditure of a capital nature on scientific research if that research is related to the business carried on by the assessee. The approval of the authority prescribed under s. 35(2B) is not an essential prerequisite for claiming the allowance unde₹ 35(1)(iv) if it is found that a part of the claim falls within the ambit of s. 35(1)(iv). The mere fact of a claim not having been found admissible under s. 35(2B) will not constitute a bar to allowing an expenditure under s. 35(1)(iv) if that expenditure is capital expenditure and falls squarely within the ambit of s. 35(1)(iv). Capital expenditure incurred on the acquisition of land or construction of building which is excluded by the very terms of s. 35(2B) can be claimed under s. 35(1)(iv) - we hold that the assessee is entitled for deduction u/s 35(1)(iv) of the Act. Accordingly, the Ground No. 2 raised by the revenue is dismissed.
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2019 (6) TMI 1485
Reopening of assessment u/s 147 - notice u/s.148 issued after expiry of 4 years - loan liability of the assessee has been ceased and this remission in the loan liability ought not to be treated a capital receipt rather it is taxable u/s. 41(1) - HELD THAT:- Proviso appended to section 147 creates an embargo on the powers of assessing officer to reopen an assessment where scrutiny assessment has been passed and four years have expired from the end of the relevant assessment year. AO cannot reopen assessment unless it is established that on account of failure of assessee to disclose all material facts fully and truly income has escaped assessment.
A perusal of the reasons would reveal that assessing officer has nowhere recorded that on account of failure of the assessee to disclose all material facts fully and truly, income has escaped assessment. Unable to lay his hands on any new information, he has only re-appreciated the information already possessed by him and considered in the scrutiny assessment. There is no allegation against the assessee for withholding of any information. In such situation, the reopening of assessment is not justifiable - Decided in favour of assessee.
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2019 (6) TMI 1484
Weighted deduction u/s 35(1)(ii) - whether the assessee /donar could be denied weighted deduction u/s 35(1)(ii) due to the subsequent withdrawal of recognition by CBDT with retrospective effect ? - HELD THAT:- Provisions of section 35(1)(ii) of the Act vide its Explanation reproduced here in above clearly proves that the donor (i.e assessee herein) cannot be affected due to subsequent withdrawal of recognition with retrospective effect. Therefore, respectfully following the provisions of the Act and the decisions of the Coordinate Benches of ITAT we apply the same findings which are applicable mutatis mutandis in the present case. Therefore, we direct the AO to grant deduction u/s 35(1)(ii) of the Act to the assessee as claimed by him for the year under consideration. - Decided in favour of assessee.
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2019 (6) TMI 1483
Governmental Authority or not - National Dairy Development Board - renting of immovable property service provided by NDDB to an educational institute, Anandalaya Educational Society - exempt under Sr. 4 of Notification No. 12/2017-Central Tax (Rate) or not - Challenge to AAR decision.
HELD THAT:- The said Sr. 4 of Notification No. 12/2017-Central Tax (Rate) provides exemption to services by governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the Constitution - The activity of ‘Renting of Immovable Property’ is not a function entrusted to a municipality under article 243W of the Constitution. Therefore, services by NDDB by way of ‘Renting of Immovable Property” cannot be said to be service in relation to any function entrusted to a municipality under article 243W of the Constitution. The phrase ‘in relation to any function’ refers not to what activities the recipient of the service is engaged in, but to what service the supplier is providing.
In order to be covered under Sr. 4 of Notification No. 12/2017-Central Tax (Rate), the service by a ‘governmental authority’ itself should relate to an activity listed under Article 243W read with Twelfth Schedule of the Constitution. ‘Renting of Immovable Property’ is not covered under Article 243W read with Twelfth Schedule of Constitution.
Thus, the exemption provided vide Sr. 4 of Notification No. 12/2017-Central Tax (Rate) is not admissible to appellant for providing service of ‘Renting of Immovable Property’ to ‘Anandalya Educational Society’ - decision of AAR upheld.
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2019 (6) TMI 1482
Interest liability u/s 201(1A) - interest on short deduction of TDS u/s 201(1A) - HELD THAT:- On a perusal of Sec.201(1A), it can safely be gathered that in case of short deduction of tax at source, the levy of interest under the said statutory provision is to be reckoned from the date on which such tax was deducted, till the date on which such tax is actually paid. Apart there from, we find that the aforesaid issue is no more res-integra in light of the judgment of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd. Vs. CIT [2007 (8) TMI 12 - SUPREME COURT] as observed that liability to charge interest under Sec.201(1A) continues till the date of payment of taxes by the deductee. Accordingly, on the basis of our aforesaid observations, we are of the considered view that the levy of interest under Sec.201(1A) by the A.O in the case before us is to be reckoned till the date of the payment of such tax by the deductee, and not up to the date of filing of the return of income by the latter. The matter is restored to the file of the A.O, with a direction to re-determine the interest liability of the assessee under Sec.201(1A) of the Act in terms of our aforesaid observations. The Ground of appeal No. 1 raised by the assessee is allowed.
Levy of fees under Sec.234E - case of the assessee before us, that as the TDS statement is for the period prior to 01.06.2015, hence no late fees could have been charged for the said period while furnishing the statement under Sec.200A - HELD THAT:- In the case of M/s GNA Udyog Ltd. Vs. ACIT [2019 (1) TMI 1757 - ITAT AMRITSAR] considering the judgment of Fatheraj Singhavi Vs. Union of India [2016 (9) TMI 964 - KARNATAKA HIGH COURT] had concluded, that levy of fees under Sec.234E could not be made in purported exercise of power under Sec.200A by the revenue, for the period of the assessment year prior to 01.06.2015. Apart there from, we find that a similar view had also been taken by the ITAT, Agra Bench, Agra in the case of M/s Yasoda Grah Nirman Sahkari Sanstha Maryadit [2018 (5) TMI 1643 - ITAT AGRA] Accordingly, in terms of our aforesaid observations, we are of the considered view that the CIT(A) had erred in upholding the levy of fees under Sec.234E in the case of the present assessee. The Ground of appeal No. 2 raised by the assessee is allowed.
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2019 (6) TMI 1481
Cessation of liability under section 41(1) - assessee company had failed to prove that the loan obtained from M/s Matrix Logistics Pvt Ltd was or the purpose of acquiring capital assets” - HELD THAT:- Whether the credit is routed through the profit and loss account or not is wholly irrelevant for determining the nature of receipt.
As held by Hon’ble Supreme Court’s landmark judgment in the case of Kedarnath Jute Mfg Co Ltd Vs CIT [1971 (8) TMI 10 - SUPREME COURT] the accounting entries cannot be determinative of the nature of receipt. In any case, what can be added to income under section 41(1) is something in respect of which deduction has been allowed in past. It is an essential prerequisite for invoking section 41(1) that “an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee” and it is only when the assessee derives any benefit in respect of waiver of such liability that the provisions of Section 41(1) can be invoked. Unless, therefore, it is shown that the assessee has been allowed any deduction in past, section 41(1) cannot be invoked. Similarly, as regards the taxability under section 28(iv) it can only come into play only in case of benefits other than the receipt of cash or money. On both the counts, the case of the Revenue fails
Respectfully following the esteemed views of Hon’ble Supreme Court in the case of Mahindra and Mahindra Ltd [2018 (5) TMI 358 - SUPREME COURT] we approve the line of reasoning adopted by the CIT(A). The Assessing Officer was clearly in error in invoking the provisions of Section 41(1) on the facts of this case, and the CIT(A) was perfectly justified in reversing the stand of the Assessing Officer.
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2019 (6) TMI 1480
Addition u/s 68 - investment received as Share Application Money and Share Premium thereto - CIT- A deleted the addition - HELD THAT:- For the year under consideration, we notice that the two companies named at serial no. (E) had not even filed their return of income and in respect of the companies, who have filed their return of income, then the investment in shares is not being reflected in the balance sheet and the total application of fund is below / equal to the investment made in the assessee company. It was categorically pointed that Mr. Pradeep Prajapati, the director of the companies listed at para –G had admitted that he knew nothing about the business activities of the said companies in which he was director.
All the above factual findings have not been rebutted or controverted by Ld. CIT(A) while deciding the appeal in favour of assessee and deleting the additions. Even Ld. CIT(A) had not adjudicated or given any findings with regard to credibility of the investing company and genuineness of transactions. Whereas in the case of PCIT Vrs. NRA Iron & Steel Pvt Ltd. [2019 (3) TMI 323 - SUPREME COURT] had dealt with somewhat similar situation and concluded against the assessee as the creditworthiness of the investors and genuineness of the transactions cannot be proved.
Hon’ble Apex Court in the case of Kapurchand Shrimal Vrs. CIT [1981 (8) TMI 2 - SUPREME COURT] has held that the duty of the Tribunal does not end with making a declaration that the assessments are illegal and it is duty bound to issue further directions. The appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute and the statute does not say that such a direction cannot be issued by the appellate authority in a case of this nature.
Keeping in view the interest of justice, we set aside the order of Ld. CIT(A) and remit the matter back to the file of Ld. CIT(A) with a direction to pass afresh order and to give clear cut findings on all the three important ingredients which are enumerate above - Decided in favour of revenue for statistical purposes,.
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2019 (6) TMI 1479
Disallowance of interest expenses - availability of huge interest free funds with the assessee - claim of the assessee that the expenditure was incurred in connection with buying and selling of the land and also for the purpose of the business for working capital for the business and according to the assessee no expenditure out of this amount was incurred for its construction project - HELD THAT:- From Audited accounts of the assessee assessee had not debited any capital expenditure to the profit and loss account. The Special Auditor also verified the cost of work in progress of the project and also approved signatory profit and loss account in which no interest expenditure was debited to construction activity, but interest expenses were debited to land business. It was also acknowledged by the Special Auditor with the major source of funds for the assessee company was the findings received from the sale of flats and the sale proceeds received from sale of plot of land. The AO had ignored the clear findings of the Special Auditor and interest relied upon the couple of general observations as contained in the report.
Even independent to the report of Special Auditor, it is significant to note that the AO has not disputed the basic facts and figures as placed on record by the assessee. The AO had not denied the availability of huge interest free funds with the assessee for its construction activity. At the same time, the revenue has not brought on record any cogent material to support its action. Thus, it appears that the disallowance made by the AO was passed purely on the basis of surmises. There was contradiction of inconsistency in the approach of the AO as much as he did not allege interest component to the work in progress either.
Nowhere in the past or even in subsequent years any such disallowance is made, although the principle of fast Res judicata will not apply to the assessment proceedings, however, the settled legal position is that the rule of consistency equally applies to the assessment proceedings. More particularly, when a position was accepted in the past years in subsequent years then the same cannot be altered by the AO for a particular year except if there are changes in facts of legal position but nothing of this kind has been demonstrated by the AO, therefore we are in agreement with the findings recorded by CIT(A) to the effect that the additions made by the AO on account of disallowance out of interest expenses is not justifiable. No new facts have been brought before us in order to controvert and lawful findings recorded by CIT(A). Therefore, we have no other option except to upheld the finding of the ld. CIT(A) and dismissed this ground raised by the revenue.
Unexplained cash receipts u/s 68 - HELD THAT:- No addition on account of on money was called for, because the amount mentioned against the names of Directors / shareholders and their relatives as well as other persons who had not made any booking were excluded. Similarly, the flats for which the agreements are cancelled were also righly excluded. Since the papers only related to the projects for construction of Gulmohar & Chinnair and as per record, no papers were found with respect to other projects. Thus CIT(A) had rightly conclude that if this is done, then the amount of such exclusion would be more than the amount of the addition made, which is clear from the figures and the calculations as already referred in the order of CIT(A). We have also gone through the decision in the case of Layers Exports P. Ltd. [2016 (10) TMI 1024 - ITAT MUMBAI]wherein it was held that no income in the form of alleged on-money can be taxed in the year in which the project is going on. Admittedly, assessee was following project completion method and thus while these principles in the present case, the claim of the assessee for deletion of such addition is sustainable on this ground also. Therefore, the ld. CIT(A) has rightly found the additions are unsustainable and deleted the same. No new facts have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, we find no reasons to interfere in to the findings so recorded by the ld. CIT(A), hence this ground raised by the revenue stands dismissed.
Disallowance u/s 14A - AO had made additions by holding that possibility of having incurred some expenses on such investments cannot be ruled out therefore had made additions - HELD THAT:- Assessee had taken a categorical stand that assessee had not earned any exempt income during the year under consideration, therefore question of application of section 14A simply does not apply. Keeping in view the submissions of the assessee and while drawing strength from the judgment of Hon‟ble Delhi High Court in the case of Cheminvest Limited vs Commissioner Of Income Tax [2015 (9) TMI 238 - DELHI HIGH COURT]We restore this ground back to the file of AO with a direction to verify as to whether the assessee has earned any exempt income during the year under consideration or not and incase, it is found that assessee has not earned any exempt income, then in that eventuality while following the judgment in the case of Cheminvest Ltd. (supra), no disallowance be made. It is needless here to mention that before passing afresh order of assessment, the AO shall provide sufficient opportunity of hearing to the assessee. With these directions, this ground of appeal raised by the revenue is partly allowed for statistical purposes.
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2019 (6) TMI 1478
Condonation of delay - delay of 668 days - Advice of CA cause delay - HELD THAT:- CA appeared on behalf of the assessee foundation before the Ld. Pr. CIT, Shillong and after opposing the impugned order, Shri Deepak Bhattarai, CA has advised the assessee prefer an appeal against the commissioner appeal and, therefore, the assessee foundation did not prefer an appeal before the Tribunal. When the assessee foundation received a second opinion from a Sr. counsel that appeal should be preferred and that too on a jurisdictional issue the assessee foundation promptly as filed this appeal and we note that the delay caused not because the assessee was negligent or did not intentionally filed the appeal. The mistake on the part of the AR cannot come in the way of substantial justice and, therefore, taking note of the affidavit of Shri Deepak Bhattarai, CA. We condoned the delay and proceed to hear the appeal on merits.
Revision u/s 263 - jurisdiction of the Commissioner of Income Tax (Exemption), Kolkata OR Shillong - exemption u/s 11 denied - HELD THAT:- Notification no. 2754 dated 02.10.2015 by the CBDT has come into force with effect from 15.09.2014, the cases of the assessee being in the category specified in column 5 (registered u/s 12A of the Act) functioning from the State of Meghalaya will come under the jurisdiction of the Commissioner of Income Tax (Exemption), Kolkata. We note that this fact has been acknowledged also later by the office of the Pr. Commissioner of Income Tax, Shillong vide letter dated 12.02.2019 wherein they have replied to the counsel of the assessee, Shri Inder Mohan Singh, Advocate that the jurisdiction of assessee i.e. M/s. CMJ Foundation lies with the CIT(Exemption), Kolkata and they have forwarded all the documents / folders of M/s. CMJ Foundation to the office of the CIT(Exemption), Kolkata.
Thus it is clear that the notice issued by the Pr. CIT, Shillong dated 26.02.2015 itself was without jurisdiction. Therefore, we find force in the appeal and additional grounds raised aforesaid. We note that w.e.f. 15.09.2014 the Pr. CIT, Shillong did not enjoy jurisdiction in the case of assessee foundation when he issued notice i.e. on 26.02.2015 and the impugned order passed u/s 263 is without jurisdiction. Since the usurpation of revisional jurisdiction u/s 263 by Pr. CIT Shillong against the assessee was without jurisdiction, the order is null in the eyes of law and the additional ground challenging the jurisdiction of the Pr. CIT, Shillong goes to the root of the impugned order and therefore, is null in the eyes of law. Therefore, the assessee succeeds on the legal issue raised before us.- Decided in favour of assessee.
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2019 (6) TMI 1477
TDS u/s 194H - discount given at the time of sale of SIM cards or recharge coupons to the distributors - Whether a payment received or receivable by the distributor for the services to be rendered to the assessee and the same fell within the definition of commission or brokerage under explanation (i) to Sec. 194H? - contention of the assessee that the relationship between the assessee and the distributors was on principal to principal basis - HELD THAT:- In identical issue was decided in favour of the assessee by ITAT Ahmedabad Bench in the case of Vodafone Essar Gujarat Ltd. vs. ACIT [2015 (7) TMI 474 - ITAT AHMEDABAD] is correct wherein as held there is no relationship between the assessee and the sub-distributor as well as the retailer.
Thus, it is a sale of right to service - The relationship between the assessee and the distributor is that of principal to principal and, therefore, when the assessee sells the SIM cards to the distributor, he is not paying any commission; by such sale no income accrues in the hands of the distributor and he is not under any obligation to pay any tax as no income is generated in his hands - The deduction of income tax at source being a vicarious responsibility, when there is no primary responsibility, the assessee has no obligation to deduct TDS - Decided in favour of assessee.
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2019 (6) TMI 1476
Exemption u/s 11 - assessee trust had received towards “Girls Chhatralaya Construction Fund” which the assessee had treated as corpus donation - intention of the donor while giving the donation was not a specific - AO took the view that there were no specific directions from the donor to apply the donation towards a particular cause and, therefore, the donation could not be treated as corpus donation - main object of the trust is to provide building for post funeral activity and also provide accommodation to persons coming to Ahmedabad for medical treatment - HELD THAT:- Although, the assessee could not furnish required evidences before the AO, evidences in the in the form of E-mails were filed before the Ld. CIT (A) and these E-mails are dated December 2011 onwards. Copies of these E-mails have been placed in the Paper Book filed by the assessee and it has been mentioned in these E-mails that the donor Mr. Natubhai Bhavsar and his wife Janet have, through the good offices of M/s Helena Kaushik Women’s College, transferred the amount for the purpose of furtherance of construction of Girls Hostel by the assessee trust that is Shri Gujarat Bhavsar Samaj.
Most of the E-mails have jointly been sent by Mr. Natubhai Bhavsar and his wife Janet. It is also undisputed that the amount of deduction had been transferred by M/s Helena Kaushik Women’s College to the assessee trust through banking channels. We have also perused the remand report of the AO which also states that no further verification was required in this regard. Therefore, in substance the requirement for a specific direction with regard to the corpus donation stands fulfilled by the various E-mails emanating from Mr. Natubhai Bhavsar and Mrs. Janet and, therefore, the assessee should be granted the benefit of the impugned amount being treated as corpus donation.
Accordingly, accepting the contentions of the Ld. AR, we allow the grounds raised by the assessee
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