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Showing 241 to 260 of 2041 Records
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2017 (9) TMI 1806
Accrual of income - Interest earned on the contracts advances by the assessee during the construction period - disallowance of capitalization of interest - Treated as Income from other sources - Held that:- In view of the assessee's own case [2016 (3) TMI 49 - ITAT DELHI ] since the work of construction of the power plant was under progress, interest incomes are also inextricably linked with the setting up of the power plant and such incomes have gone on to reduce the expenses for setting up of the plant and as there was no surplus funds available with the appellant company, therefore, such income is required to be capitalized to be set off against the pre operative expenses. As such the A.O. is not justified in adding the sum as income from other source u/s 56 - Decided in favour of assessee
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2017 (9) TMI 1805
Bogus purchases - G.P. estimation - non-appearance of the suppliers before the AO to verify the purchases - HELD THAT:- The issue in controversy is covered by the decision of Tribunal in the case of M/s. Geolife Organics & ors. [2017 (5) TMI 1101 - ITAT MUMBAI] and in the case of M/s. Allied Blenders and Distillers Pvt. Ltd. [2017 (2) TMI 1128 - ITAT MUMBAI] held that when purchases are supported by sufficient documentary evidences then merely because of non-appearance before the AO, one cannot conclude that the purchases were not made by the assessee. Thus estimate the GP @ 2%.
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2017 (9) TMI 1804
TP Adjustment - Addition on account of share application money advanced to Sun Pharma global Inc (SPGI) - TPO was of the opinion that the assessee should have charged interest at LIBOR plus basis - whethr assessee had sourced the application money to its AE out of the excess funds lying idle out of the issue of FCCB - contentions of the assessee did not find any favour with the AO/TPO who computed the arms length interest rate at average Libor plus 3.95% which included foreign exchange risk of 1% - HELD THAT:- The decision of the Tribunal in assessee’s own case and pointed out that the issue has been decided in favour of the assessee and against the revenue by the Bench the assessee has behaved in a commercially rational manner inasmuch as whether the new shares are allotted at x point of time or y point of time, it does not make a difference to the position of the shareholder so far as the subsidiary is wholly owned by a single shareholder- as is the factual position in this case. The nominal value of shares, as long as all the shares are held by the assessee is entirely benefit neutral from a commercial point of view. The very foundation of the adjustment made by the Assessing Officer is, therefore, wholly devoid of legally sustainable merits and factually correct assumptions.
Interest on fully convertible optional debentures subscribed to Sun Pharma Global Inc (SPGI) - addition being the amount of interest on 0% OFCD subscribed to in SPGI. The AO/TPO has made the upward adjustment on the basis of Average six month LIBOR of 2.69% + spread over LIBOR of 3.95% totaling to 6.64% - HELD THAT:- OFCD were on beneficial terms as per facts mentioned above. Consequently, no hesitation to follow earlier judgment in assessee’s own case as a result we delete the impugned additions. Ground of assessee is allowed
Addition on account of Corporate Guarantee Provided to associated enterprises Sun Pharmaceutical Bangladesh Ltd. - HELD THAT:- As decided in assessee's own case [2017 (4) TMI 1434 - ITAT] AHMEDABAD] treated as allowed for statistical purpose.
Addition on account of Sale of Pantoprazole to Sun Pharma Global BVI and Sun Pharma Global FZE - HELD THAT:- No merit in the findings of the First Appellate Authority in accepting the application of PSM as the MAM , in our understanding of the facts TNMM is the MAM on the given facts and the same is accepted as such. We set aside the findings of the ld. CIT(A) and direct to delete the addition.
Addition on account of sale of drugs to SPG BVI and SPG FZE - HELD THAT:- As mentioned elsewhere, the reasoning given for making the addition are underline with the reasoning given for making similar additions in A.Y. 2008-09 for the sale of pantoprazole. The only distinguishing fact relates to the sale of certain drugs which are outside the Para IV filing drugs. It is seen that in respect of sales made to SPG BVI, Amifostine & Venlafaxine are sold in US under Chapter IV filing. Similarly, in respect of sales made to SPG FZE, Gemicitabin is a Chapter IV drug. It is seen that the methodology followed in sale of these drugs is similar to the methodology followed in respect of pantoprazole which has been discussed elaborately by the Bench in A.Y. 2008-09 qua ground no. 5 of that appeal.
Claim of weighted deduction u/s. 35(2AB) of revenue expenditure - expenses incurred on clinical trials, patent, trade mark registration charges - HELD THAT:- There is no dispute that all the factual details were available before the lower authorities. The claim made by the assessee was purely legal claim as it is eligible for weighted deduction as per the provisions of Section 35(2AB) of the Act. Merely because the same was not claimed in the return of income nor through a revised return of income, the same cannot be denied. A perusal of the aforementioned section clearly establishes that expenditure on scientific research is also eligible for weighted deduction. Considering the facts in totality in the light of the provision, we set aside the findings of the ld. CIT(A) and direct the A.O. to allow weighted deduction. Ground Nos. 9 & 10 are accordingly allowed.
Disallowance of weighted deduction u/s. 35(2AB) on trade mark charges, Overseas Product Registration Charges - HELD THAT:- As relying on assessee's own case [2015 (2) TMI 322 - ITAT AHMEDABAD] we direct the A.O. to allow weighted deduction.
Disallowance on account of R&D expenses incurred by the assessee for products manufactured by Sun Pharmaceuticals Industries - HELD THAT:- Since the assessee is holding 97.5% of share in the partnership firm, SPI it becomes the duty of the assessee to promote the business of the partnership firm in the capacity of the majority stake holders. Incidentally, the revenue authorities have not brought anything on record which could suggest that the expenditures have not been incurred for the purposes of business. Be it assessee’s business or the business of the partnership firm where the assessee is a majority stake holder. In our understanding of the law an expenditure is allowable if it is incurred for the purposes of the business of the assessee. Finding that the assessee is having 97.5% share in the profits of the firm SPI, we do not find any merit in the disallowance made by the A.O. and confirmed by the First Appellate Authority. We, accordingly, direct the A.O. to delete the addition.
Deduction of remuneration received from partnership firm for determination of Book Profits u/s. 115JB - HELD THAT:- Section 115JB is a complete code in itself. Therefore, if the remuneration is credited by the appellant company in its Profit and Loss account then the same could be reduced it specifically provided under the Explanation to Section 115JB of the Act which we find missing from the relevant provisions. We, therefore, do not find any merit in this claim of the assessee and accordingly we confirm the findings of the First Appellate Authority.
Addition of selling and distribution expenses incurred on behalf of SPI disallowed u/s. 14A - HELD THAT:- Rule 8D is not applicable for the year under consideration but at the same time for the computation of disallowance for administrative expenditures, the formula given under Rule 8D is the most appropriate method for the computation of the disallowance. We accordingly direct the A.O. to compute the disallowance so far as administrative expenditures are concerned as per Rule 8D of the ITAT Rules r.w.s. 14A. We accordingly set aside the disallowance made by the First Appellate Authority and direct the A.O. to re-compute the disallowance as directed hereinabove.
Re-characterizing remuneration as alleged royalty income from SPI for use of Trade mark, Brand and Technology - HELD THAT:- As decided in assessee's own case [2015 (2) TMI 322 - ITAT AHMEDABAD]No doubt, the profits of the partnership firm are exempt u/s. 80IB(4) of the Act. Even, if the partnership firm had not charged ₹ 40.12 crores as remuneration to the appellant company, the profits of the firm would have increased by this amount. Since the assessee is holding 97.5% share in the profits of the partnership firm, this amount of 40.12 crores would have otherwise come to the assessee in the firm of share of profit which again is exempt from taxation u/s. 10(2A) of the Act. Therefore, the allegation that it is a case of tax evasion is ill-founded. The fact of the matter is that such payments were never re-characterized as royalty in earlier assessment years and the action of the First Appellate Authority in the year under consideration is nothing but based upon assumptions and presumptions. No addition can be sustained which are based upon assumptions, surmises or conjectures. We, therefore, set aside the findings of the ld. CIT(A) and direct the A.O. to delete the amount as re-characterized by the First Appellate Authority
Set off of business loss against profits of the eligible undertaking before allowing deduction u/s. 10B - whether the loss should be set off first before allowing the claim of deduction u/s. 10B? - HELD THAT:- We find force in the contention of the ld. counsel. Hon’ble Supreme Court in the case of Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] had the occasion to consider a similar dispute after the amendment of Section 10A by Finance Act 2000 with effect from 01.04.2001 and it is held that though section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV and not at the stage of computation of the total income under Chapter VI. Thus we direct the A.O. to allow the claim of deduction u/s. 10B of the Act. Before setting off of business loss of ₹ 56.59 crores. Ground is allowed.
Non consideration of un-realized export proceeds for computation of deduction u/s. 10B - HELD THAT:- As relying on assessee's own case [2015 (2) TMI 322 - ITAT AHMEDABAD] Tribunal had directed the A.O to apply the provisions of section 155(13) of the Act and decide the issue afresh.
Nature of expenses - expenditure on repairs - revenue or capital expenditure - HELD THAT:- Kiran Pumps purchase expenditure is treated as capital expenditure. Freeze Dryer Beta with accessories for the purposes of drying process of organic solvents. The assessee has also incurred labour charges on installation of this dryer. The factual matrix shows that new capital assets have come into existence and, therefore, the purchase cost and labour charges are treated as capital expenditure. Communica Aids appellant has purchased Tata Make IOX 160 EPBAX System with 16 trunk lines and 4 E &M Circuits. The configuration of this machine itself shows that it is capable of being used as independently and a new asset has come into existence the same has to be treated as capital expenditure. Copper Busbar 1 MTR for 3000 KVA Transformer and 2 panel boards for MCC (Motor Contrl Centre) items have been purchased to replace the electrical items damaged in fire. All these items form part of 3000 KVA Transformer and has no used independently. Therefore, the same have to be treated as revenue in nature.
Disallowance made u/s. 14A read with Rule 8D - HELD THAT:- Rule 8D is not applicable for the year under consideration but at the same time for the computation of disallowance for administrative expenditures, the formula given under Rule 8D is the most appropriate method for the computation of the disallowance. We accordingly direct the A.O. to compute the disallowance so far as administrative expenditures are concerned as per Rule 8D of the ITAT Rules r.w.s. 14A of the Act.We accordingly set aside the disallowance made by the First Appellate Authority and direct the A.O. to re-compute the disallowance as directed hereinabove.
MAT computation - addition of expenses disallowed u/s. 14A for computing book profit u/s. 115JB - HELD THAT:- We direct the A.O. to delete the addition of expenses disallowed u/s. 14A for computing book profit u/s. 115JB of the Act. Our view is also fortified by the decision of the Special Bench in the case of Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI]
Deletion of the provision of wealth tax for computation of book profit u/s. 115JB - HELD THAT:- The ld. CIT(A) followed the decision of his predecessor for A.Y. 2008- 09 and directed the A.O. to exclude the provision of wealth tax from the computation of book profit u/s. 115JB. We find that the order of the ld. CIT(A) was confirmed by the Tribunal in [2015 (2) TMI 322 - ITAT AHMEDABAD]
Disallowance with respect to section 80IA(4) - HELD THAT:- Since the grounds on which the A.O. denied the claim have been demolished by the factual and legal aspect relating to the facts in issue, we do not find any error or infirmity in the findings of the ld. CIT(A).
Addition on account of disallowance of expenditure incurred on behalf of its sister concern - HELD THAT:- As decided in own case - 2015 (2) TMI 322 - ITAT AHMEDABAD we agree with the contention of the ld. counsel that no specific section has been mentioned in the assessment order for making the impugned additions. A perusal of the assessment order show that the additions have been made by treating the transactions u/s. 40A(2) of the Act. In that case, we have to state that provisions of section 40A(2) are applicable only in respect of payments made to related parties mentioned therein. But the transaction before us is of credit in nature i.e. sales so provisions of section 40A(2) are not at all applicable.
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2017 (9) TMI 1803
Addition u/s 43B - Belated remittance of employees’ contribution of PF & ESI U/s 36(1)(va) r.w.s.2(24)(x) - HELD THAT:- As decided in own case [2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] as relying on ESSAE TERAOKA PVT LTD VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [2014 (3) TMI 386 - KARNATAKA HIGH COURT] and TETRA SOFT (INDIA) PVT. LTD. [2015 (10) TMI 1601 - ITAT HYDERABAD] there is no distinction between employees' and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees' contribution to provident fund. The CIT(A) after considering the relevant details rightly deleted the additions made by the A.O. - Decided in favour of assessee
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2017 (9) TMI 1802
Jurisdiction - power of Commissioner of Customs (Preventive) to issue SCN - Held that:- Similar issue has come up before this Tribunal on many earlier occasions also. The Tribunal remanded the cases to the original adjudicating authority - Reliance placed in the case of M/S SHRI MAHINDERA DUGAR, SHRI MAHENDER DUGAR AND PHOTOCOPING SERVICES VERSUS CC, NEW DELHI (IMPORT & GENERAL) [2017 (6) TMI 662 - CESTAT NEW DELHI].
Matter remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon’ble Supreme Court decision in the case of Mangli Impex [2016 (8) TMI 1181 - SUPREME COURT] and then on merits of the case but by providing an opportunity to the assessee of being heard. Till the final decision, the status quo will be maintained.
Appeal allowed by way of remand.
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2017 (9) TMI 1801
Levy of penalty u/s 271(1)(c) - A.O disallowed business loss treating the same as speculative loss u/s 43(5) - difference of opinion - establishment of mensrea - HELD THAT:- The perusal of the assessment order reveals that the AO has made disallowance of speculation loss on the basis of facts as disclosed by the assessee in the return of income and also during the assessment proceedings. We find that the assessee has furnished all relevant facts and merely because the AO has changed the head of loss from business loss to speculative loss and allowed to carry forward of the same the penalty u/s 271(1)(c) could not be levied.
Where the explanation is bonafide and all the facts relating to the same have been disclosed then there is no case of levy of penalty. The findings recorded in the assessment order is not conclusive for deciding the imposition of penalty as it has only a persuasive value and non filing of appeal against the said disallowance does not mean that the penalty has to be imposed automatically. It is trite law that penalty proceedings are distinct and separate proceedings from assessment proceedings. It is settled law that when the issue is debatable, then the provisions of penalty u/s 271(1)(c ) is not attracted, because mensrea is not established against the assessee. - Decided in favour of assessee.
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2017 (9) TMI 1800
TP Adjustment - comparable selection - HELD THAT:- Infosys BPO Ltd. - because of brand value and high turnover associated with Infosys BPO Ltd. and the extraordinary financial events during the year, Infosys BPO Ltd. is to be excluded from final list of comparables. Accordingly, we hold so and direct the Assessing Officer/TPO to exclude Infosys BPO Ltd.
Accentia Technologies Ltd. on the ground of extraordinary events during the year under consideration M/S. APTARA TECHNOLOGIES PVT. LTD. (FORMERLY KNOWN AS MAXIMIZE LEARNING PVT. LTD.) VERSUS THE ASST. COMMISSIONER OF INCOME TAX AND VICE-VERSA [2016 (5) TMI 1404 - ITAT PUNE] we hold that Accentia Technologies Ltd. cannot be compared as comparable because of extraordinary events of acquisition and amalgamation during the year. Accordingly, we direct the Assessing Officer/TPO to exclude Accential Technologies Ltd. from final list of comparables.
Jeevan Scientific Technology Ltd., which was earlier known as Jeevan Softech Ltd. - we direct the Assessing Officer/TPO to work out correct margins of said concern Jeevan Softech Ltd. and then determine average margins of comparables and apply the same.
E-clerx Services Ltd. being KPO company and not comparable from the final list of comparables.
Assessee in the written note has furnished PLI after working capital adjustment of said concerns at 19.22% and has pointed out that no adjustment is to be made on account of arm's length price of international transactions, in view of proviso to section 92C(2) of the Act, under which range of +/- 5% of operating revenue be applied. So, we direct the Assessing Officer to verify the computation in this regard and delete the addition in the hands of assessee.
Erroneous calculation of capital adjustment - HELD THAT:- DRP had directed to compute working capital adjustment in the hands of comparables. However, the Assessing Officer has not effectively complied with the said directions. Accordingly, we direct the Assessing Officer to re-compute the margins after working capital adjustment. The grounds of appeal Nos. 1 to 5 raised by the assessee are thus, allowed.
Deduction for contribution to Provident Fund - addition u/s 43B - HELD THAT:- Where the assessee during the course of assessment proceedings had made a claim before the Assessing Officer for allowing the benefit of deduction under section 43B. The assessee has made payment of PF dues during the year under consideration and consequently, the assessee is entitled to claim the said amount as deduction in the instant assessment year itself. Accordingly, we hold so and direct the Assessing Officer to allow the deduction
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2017 (9) TMI 1799
TDS u/s 195 - payment towards software licenses treated by the AO as royalty for want of TDS - Disallowance u/s 40(a)(ia) - HELD THAT:- There is no dispute that the transaction in question regarding payment of purchase of software was completed in the F.Y. 2008-09 whereas the decision in the case of CIT Vs. Samsung Electronics Co. Ltd. (2011 (10) TMI 195 - KARNATAKA HIGH COURT) was passed on 15.10.2011 much later than the time of transaction carried out by the assessee. It is also not in dispute that this issue of considering the payment for purchase of software as royalty is a highly debatable issue and various High Courts have taken divergent views on this issue.
Thus it is clear that the co-ordinate Bench of this Tribunal in M/S. AURIGENE DISCOVERY TECHNOLOGIES LTD. [2016 (11) TMI 1607 - ITAT BANGALORE] while deciding this issue has taken note of various decisions in favour of the assessee on the point that the payment for purchase of software does not fall in the definition of royalty. Respectfully following the decision of co-ordinate Bench of this Tribunal, we delete the disallowance made by the AO.
Transfer Pricing Adjustment - allocation of the cost by the assessee between the AE and non-AE transaction - software development services as well as IT Enabled Services transactions - HELD THAT:- Action of the TPO in allocating the direct as well as indirect cost as alleged by the assessee in the ratio of turnover of each segment and transaction is not justified. Further the TPO has accepted the allocation of the cost by the assessee between the AE and non-AE transaction for the Assessment Years 2010-11 to 2012-13. We have gone through the respective orders of the TPO/A.O. and noted that the TPO has not distributed the allocation of cost made by the assessee for the subsequent Assessment Years - so far as the direct cost is concerned the same has to be allocated on actual basis instead of turnover basis. Accordingly, we set aside this issue to the record of the TPO/A.O. for limited purpose of proper verification and allocation of the cost in the light of the above observations as well as in the light of the subsequent orders of the TPO for the Assessment Years 2010-11 to 2012-13.
Gain/loss arising due to Forex fluctuation on the receivable from the AE to be treated as operating revenue or cost as the case may be - HELD THAT:- This issue is no longer res integra as the Tribunal has been taking a consistent view that the gain or loss arising due to the foreign exchange fluctuation on the export receivables from AE, then the same is in the nature of operating revenue / operating cost and has to be part of the operating revenue/operating cost as the case may be. Further as a principle of consistency and parity, a similar treatment has to be given in the case of comparables. AR has relied upon the decision of the co-ordinate bench of this Tribunal in the case of M/s. Triology E-Business Software India Pvt. Ltd. Vs. DCIT [2013 (1) TMI 672 - ITAT BANGALORE]
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2017 (9) TMI 1798
Initiating the insolvency resolution process - formal order of appointment of Interim Resolution Professional. Mr.AniI Kohli. who has furnished communication in Form No. 2, which was found to be in order - Interim Insolvency Resolution Professional shall positively file a report of events before this Tribunal every seven days in relation to the Corporate Debtor'.
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2017 (9) TMI 1797
Stay of direction of High Court - Accrual of income - Compensation awarded by the Motor Accident Claims - whether sum payable to the claimants on the death of victim falls within the ambit of interest within the meaning of Sec. 2 (28A) and can be subjected to tax? - HELD THAT:- As the same issue continues to be pending before the High Court at Jaipur. We request the Jaipur High Court to take up the said appeal and decide the same at the earliest.
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2017 (9) TMI 1796
Extension of stay - Denial of deduction under section 80IC - HELD THAT:- At the time of hearing it has been brought out by the parties that the CIT(A) has since disposed of the appeal for assessment year 2008-09 and that the matter is now before the Tribunal. Considering the aforesaid factual matrix, it emerges that now the dispute in the assessment year 2011-12 is ripe for hearing since assessee’s appeal for assessment year 2008-09 is also due for hearing before the Tribunal. It would be in the fitness of things, as indicated by us at the time of hearing that the appeals for assessment year 2008-09 as well as the captioned year be taken up together to facilitate expeditious disposal. Therefore, the registry is directed to post the appeals of the assessee as well as of the Revenue for assessment year 2011-12 alongwith the appeal for assessment year 2008-09.
In the meanwhile, considering the fact that the reasons for the non-disposal of the appeal cannot be attributed to the assessee and the fact that the proceedings are now ripe for final hearing by the Tribunal, we deem it fit and proper to extend the stay on the recovery of outstanding demand for a period of six months or till the disposal of the appeal by the Tribunal, whichever is earlier. Stay application of the assessee is allowed
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2017 (9) TMI 1795
TP adjustment - international transaction of provision of Marketing Support Services - comparable selection - functinal similarity - HELD THAT:- Choksi Lab Ltd. is a commercial testing and analysis laboratory engaged in analysing food and agricultural products, cement and building material, chemicals, drugs and paints. The said services rendered by the company are calibration services, pollution control, research and consultancy services. Therefore, this company cannot be said to be functionally dissimilar to the assessee company and we accordingly direct the TPO/Assessing Officer to exclude this company from the final set of comparables
Indus Technical and Financial Consultants Limited - as per the website details, is a renowned manufacturer of TMT bars having diverse exposure in many fields. Thus, this company is a manufacturing company and cannot be said to be a comparable to the assessee company. This company was also excluded on the ground of being engaged in manufacturing activity and having a completely different FAR vide order in Intrepid Travels Pvt. Ltd. Vs ADIT[2015 (4) TMI 752 - ITAT DELHI]. Accordingly, we direct the Assessing Officer/TPO to exclude this company from the final list of comparables.
WAPCOS Limited (Segmental) company provides consultancy services relating to water, power and infrastructure sector. The services offered include market intelligence studies, planning/project formulation and geotechnical investigation, engineering, quality assurance and management and human resource development. This company also executes turn key projects on a regular basis. This company was excluded as a comparable by ITAT Delhi Bench in Nortel Networks India Ltd. vs ADIT [2014 (3) TMI 363 - ITAT DELHI] on the ground of being functionally dissimilar. Marketing support services cannot be compared with turnkey, engineering services and therefore, this company cannot be held to be functionally comparable to the assessee company. We direct the AO/TPO to exclude this company also from the final list of comparables. - Decided in favour of assessee.
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2017 (9) TMI 1794
TDS u/s 195 - withholding tax - non-deduction of tax on payments of commission to non-resident/foreign commission agents - commission paid to foreign commission agents is deemed to accrue or arise in India - PE in India - busniss connection of India - Applied section 9(1)(i) or 9(2) - AO's contention that the CBDT had withdrawn its Circulars Nos. 23 dt. 23.07.1969 was issued in the context of section 9 of the Act which deems certain incomes to accrue or arise in India for non-residents; and that in view of this, the assessee should have deducted tax at source u/s. 195 of the Act on payments of commission made to non-residents agents w.e.f. 22.10.2009
HELD THAT:- It is not disputed that that the withdrawal of the Circulars No. 23 and 786 has been made on 22.10.2009 vide CBDT Circular No. 7 of 2009 and mere withdrawal of the circular does not negate the principles of income deemed to accrue or arise in India or outside India. The CBDT has not stated that any part of the circulars is contrary to law or that the circulars were wrongly issued or that the law has undergone changes holding their withdrawal. Thus, in respect of cases, which directly follow with the situations covered by the circulars, the liability to tax should continue to be in accordance with section 9 of the Act and its intent. The relevant sections, namely section 5(2) and section 9 of the Income-tax Act, 1961 not having undergone any change in this regard, the clarification in Circular No. 23 still prevails even after the withdrawal. No tax is therefore deductible under section 195 and consequently, the expenditure on export commission payable to a non-resident for services rendered outside India is not liable for withholding tax.
In the case of the assessee, the applied section is Section 9(1)(i) of the Act. Therefore, the above Explanation to section 9(2) is not applicable, since it does not talk of clause (i) of sub-section (1) of section 9 of the Act.
Therefore, the decisions rendered in cases relevant to clauses other than clause (i) of Sub-section (1) of section 9 of the Act are not relevant to the present case. Otherwise too, as considered hereinabove, it has been held that the non-resident did not have any business connection in India and there was no liability to withhold tax u/s 195 of the Act. Moreover, AO has himself accepted that payments made prior to withdrawal of the Circular do not call for any disallowance u/s 40(a)(i).
The order of the ld. CIT(A) is found to be well reasoned. The department has not been able to dislodge the detailed well reasoned findings recorded therein. - Decided in favour of assessee.
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2017 (9) TMI 1793
Imposition of Penalty u/s 114AA of the Customs Act, 1962 - misdeclaration of imported goods - Aluminium Scrap - it was alleged that the goods contains contains Old Used Tyres - Held that:- In this case, it is a fact on record that respondent has purchased the impugned goods on high seas sale basis from M/s. Sage Global, New Delhi. As per the Packing List, Pre-Inspection Report, Bill of Lading, Invoice, Bill of Entry & Description of Goods are shown as “Aluminium Scrap”. In that circumstance, it cannot be alleged against the respondent that he had deliberately misdeclared the goods.
In the absence of any evidence on record by the Revenue that the respondent was having any knowledge of the goods contains in the container was “Old Used Tyres”, no penalty can be imposed on the respondent - appeal dismissed - decided against Revenue.
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2017 (9) TMI 1792
Availment as well as utilization of Cenvat credit - outdoor catering services - sponsorship services - Held that:- The definition of input service, as intended by the Legislature, is illustrative and not exhaustive - the appellants are eligible to avail credit on sponsorship service - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1791
Disposal of the dutiable goods on which duty liability was not discharged - It is the case of the appellant that the goods have been disposed of by the District Magistrate as per Court Order and proceeds were paid to the farmers. Since they have not disposed of the goods, they are not liable to pay the duty - Held that:- The issuance of SCN is immaterial in the circumstances as the duty not paid by the Appellants is to be treated as ‘recoverable arrears of revenue’ and action taken accordingly, because it is an outcome of self-assessment vide the ER-1 returns - In view of this, it is not necessary to go into the contentions of Appellants regarding disposal by District Administration - appeal dismissed - decided against appellant.
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2017 (9) TMI 1790
Rebate of duty - CVD paid on imported inputs which were used in the manufacturing of exported tractors - Held that:- There is no dispute in this case relating to the fact that the applicant has imported some of the inputs on payment of additional duty of Customs, i.e. countervailing duties (CVD), and the same were used in the manufacturing of exported tractors. There is also no doubt that N/N. 21/2004 provide for rebate of duty in respect of CVD also as the word ‘duty’ for the purpose of paying rebate claim is defined to include even the CVD. These facts are expressly accepted by Commissioner (Appeals) also in his order - However, still, the applicant is not allowed rebate of duty in respect of CVD for the reason that they have imported the inputs directly and did not obtain imported materials from the registered factory or from dealers under the excise invoices as is prescribed in para 3 of N/N. 21/2004.
For getting rebate of duty under N/N. 21/2004 procurement of materials from a registered manufacturer or a dealer is essential and this para does not provide for obtaining of material from any other source, including direct import of the goods. Thus under N/N. 21/2004 it is implicit that procurement of material by a manufacturer directly by importing goods is not authorized for the purpose of getting rebate of duty on the inputs used in the exported goods. The applicant has not come forward with any reasoning or a grounds to how the clear text of para 3 of the N/N. 21/2004 which is a sole basis for denial of rebate claim to them can be overlooked.
The Government considers that the Commissioner (Appeals) has not committed any error while passing Order-in-Appeal - revision application dismissed.
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2017 (9) TMI 1789
Rebate of duty - input sage - Duty Drawback - rejection of rebate claims of the appellant on the ground that the double benefit i.e. rebate of input stage and drawback of duty is not admissible - Held that:- Since the applicant has claimed drawback @ 5% which is common in both the A & B column of drawback schedule it is implicit that the applicant has claimed only Customs component of drawback on exported goods and not in respect of Central Excise and service tax. Apparently because of this fact alone Customs Authorities granted drawback @ 5% in respect of exported goods without verifying availment of Cenvat credit by the applicant in respect of inputs.
As the applicant has not availed drawback of duty of Central Excise paid on inputs, the rebate of duty in respect of the duty paid on inputs used in the exported goods cannot be denied to the applicant - Even otherwise there is no provision in Rule 18 and in Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004 which prohibits grant of rebate of duty in the event of availment of duty drawback.
Revision application allowed.
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2017 (9) TMI 1788
Disallowance of interest expenditure while computing income under normal provisions of the Act - assessee is also contesting the book profit computed u/s 115JB of the Act - HELD THAT:- The assessee is one of the notified entities coming under Harshad Mehta group against whom stock scam charges are pending. With regard to above said issue relating to rejection of interest claim these issues are being set aside by the Tribunal to the file of ld. CIT(A) for fresh adjudication in all other group cases belonging to Harshad Mehta. See FORTUNE HOLDINGS PVT. LTD. VERSUS DY. COMMISSIONER OF INCOME TAX, ASSTT. COMMISSIONER OF INCOME-TAX-CC-31, MUMBAI [2015 (8) TMI 1353 - ITAT MUMBAI].
Charging of interest u/s 234A, 234B and 234C - Held that:- Set aside the matter of computation of interest u/s 234A, 234B and 234C of the Act to the file of the assessing officer with similar directions
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2017 (9) TMI 1787
Violation of import conditions - import of Zip Fasteners - N/N. 21/2002-Cus., dated 1-3-2002 - misuse of benefits of the Notification - garment accessories imported vide 8 Bills of entry were neither brought to the factory premises of the applicant nor used in export production as mandated in the said Notification. Instead the imported garment accessories were sold in the domestic market - Section 123 of the Customs Act, 1962.
Held that:- The impugned goods were neither smuggled nor seized to make it illegal import under Section 123 of the Customs Act, 1962. It was imported against the import certificate issued by the AEPC. The only allegation in the impugned SCN is that the applicant has not fulfilled the conditions of Notification No. 21/2002-Cus., dated 1-3-2002, thereby making them ineligible for “Nil” rate of duty on the accessories imported. As the goods were neither seized by the DRI nor there is any allegation against the applicant that they smuggled clandestinely these goods, the Bench is of the considered view that under the facts and circumstances of the case, import under Bill of Entry 4572044 dated 7-9-2011 is not hit by the bar envisaged under Section 123 of the Customs Act, 1962.
Pendency of another SCN demanding Anti-Dumping Duty - Held that:- The Bench has considered this issue and is of the firm view that the SCN demanding Anti-Dumping Duty is not a proceeding pending before an adjudicating authority against which the applicant has filed settlement application and the applicant has approached the Settlement Commission in settling the issue arising out of SCN regarding the wrong availment of benefits of Notification No. 21/2002-Cus., dated 1-3-2002. Hence the Bench holds that the pendency of another SCN demanding Anti-Dumping Duty is not an impediment in settling this case.
The Bench is of the opinion that the applicant has made full and complete disclosure of the duty liability, co-operated with the investigation and discharged their duty liability along with interest immediately on commencement of investigation i.e., over one year before issuance of SCN dated 31-3-2015. Accordingly, the Bench considers it as a fit case to settle the differential duty liability at ₹ 23,19,372/- along with interest amounting to ₹ 6,35,309/-.
Redemption fine - Held that:- The Bench holds that the Commission/Omission on part of the applicant have rendered the goods liable for confiscation. However, as the goods had not been seized at any point of time in this case, the question of imposition of any fine on the goods in lieu of confiscation does not arise.
Penalty on applicant - Held that:- The applicant had deliberately misused the ICs of the exporters and availed unintended benefit of nil duty. However, once the investigation started, the applicant extended full co-operation, made no attempt to cover up the wrong doing and paid the entire amount of duty along with interest before the issue of Show Cause Notice. But for the painstaking investigations carried out by the Officers of DRI, Coimbatore Regional Unit, the fact of the matter would not have surfaced - The act of the applicant attracts penalty under Section 114A and also under Section 114AA of the Customs Act, 1962 separately for having rendered the goods liable for confiscation under Section 111(d) and 111(o) of the Customs Act, 1962 for not fulfilling the conditions prescribed under Notification No. 21/2002, dated 1-3-2002 and accordingly the applicant is liable for penalty under the provisions of the Customs Act invoked in the SCN.
Penalty on co-appellants - Held that:- It is inconceivable to believe that the Directors failed to monitor their import transactions and activities of their staff till it was detected by the DRI. The Directors of the applicant firm cannot wash their hands off saying that they were not aware of the said illegal arrangements. Shifting the blame on Shri Kannan will not absolve them of the act of evasion or duty. The applicant firm is equally responsible for actions of its employee and the Directors of the applicant firm equally responsible for the imports made in their name resulting in the revenue loss for the Government. The omissions and commissions of the three directors of the applicant company, viz., Shri K. Tamizharasan, Director - “the Co-applicant I”, Shri N. Sridhar, Managing Director -”the Co-applicant II” and Shri S. Ramachandran, Director -”the Co-applicant III” have rendered the impugned goods liable for confiscation - the Bench imposes a penalty of ₹ 10,000/- (Rupees Ten thousand only) each on Shri K. Tamizharasan Director - “the Co-applicant I”, Shri N. Sridhar, Managing Director - “the Co-applicant II”, Shri S. Ramachandran, Director - “the Co-applicant III” under the provisions invoked in the show cause notice and grants immunity to the applicant in excess of the above amount. The penalty should be paid within 30 days from the date of receipt of this Order and compliance reported to the jurisdictional Commissioner.
The Bench is inclined to consider grant of immunity from prosecution to the applicant and co-applicants.
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