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Showing 261 to 280 of 1466 Records
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2023 (1) TMI 1206
Income from other sources - netting method - assessee had earned interest on fixed deposits with IDBI Bank and assessee had set off the same against the interest expenditure incurred for construction etc. and the net amount was capitalized - as argued interest by the assessee was earned during the course of its business and as such the same has been correctly been capitalized after netting off - HELD THAT:- As in assessee’s own case for assessment years 2012-2013 and 2013-2014 [2021 (2) TMI 1328 - ITAT HYDERABAD]Tribunal in the above case, by following the judgment of ACG Associates Capsules Pvt. Ltd. v. CIT [2012 (2) TMI 101 - SUPREME COURT] had directed the A.O. to adopt the netting method.
Thus we direct the A.O. to allow the netting off of interest.
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2023 (1) TMI 1205
Reopening of assessment u/s 147 - unexplained money u/s 69A - Validity of notice issued - HELD THAT:- It is pertinent to note that to meet the emergency situation of additional expenses by the assessee the assessee has obtained cash not only from assessee’s father and mother but also the close relative i.e. the maternal uncle, maternal aunt as well as paternal uncle and paternal aunt and the said relation cannot be doubted by the Assessing Officer. The gift offered by this relatives are appears to be genuine and therefore, the CIT(A) was not right in confirming the addition of the extent of Rs. 4,00,000/-.
Validity of notice - date of approval and date of issuance of notice was identical - As regards, the legal ground of the assessee merely that date of approval is identical to the issuance of notice cannot be treated as the time barring or non-valid notice under Section 148 of the Act. Therefore, the submission to that extent of the assessee is rejected. The appeal of the assessee is partly allowed.
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2023 (1) TMI 1204
Revision u/s 263 by CIT - Addition u/s 68 on account of bogus share capital - HELD THAT:- We are satisfied that the assessee has nothing to say in support of its alleged bogus share capital claim. Apart from the above, we also notice that impugned order was passed in 2016 by the ld. 1st Appellate Authority, whereas appeal has been filed in 2021. The only explanation taken by the assessee is that Certified Copy was obtained by the assessee on 03.12.2020. There is a huge gap of roughly four years, which has not been explained by the assessee, or no one has responded to the notices issued by the Tribunal. Accordingly we do not find any merit in this appeal, it is dismissed. Appeal of the assessee is dismissed.
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2023 (1) TMI 1203
Levy of interest u/s 234C and 234B - Estimation of income for advance tax - assessee has submitted that it is engaged in the business Portfolio Management Services and excess interest was charged by the CPC, Banglore because of performance fees which was reported by the assessee from its client on 31.03.2019 - HELD THAT:- As in the case of Prime Securities Ltd. [2010 (12) TMI 475 - BOMBAY HIGH COURT] and decision of Kotak Securities Ltd [2011 (7) TMI 1395 - ITAT MUMBAI] and Kumari Kumar Advani [2016 (7) TMI 1600 - ITAT MUMBAI] held that in the case of the assessee it had estimated its income and liability for payment of advance tax in accordance with law that was in force, therefore, there was no failure on the part of the assessee to pay advance tax in accordance with provision of Sec. 208 and 209.
In the case of Prime Securities [2010 (12) TMI 475 - BOMBAY HIGH COURT] it is held that it was not possible for the assessee to anticipate the events that were to take place in next financial year and pay advance tax on the basis of those anticipated events.
After considering all we observe that lower authorities had not controverted the facts reported by the assessee that because of uncertainty about the equity market it cannot estimate before hand amount of performance fees as discussed supra for the purpose of calculation of advance tax. No material has been brought by the revenue to controvert the aforesaid factual submission made by the assessee, therefore, following the finding of judicial pronouncements in the cases as referred above we consider that decision of ld. CIT(A) is not justified, therefore, we allow the ground of appeal of the assessee.
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2023 (1) TMI 1202
Exemption u/s 10(38) - AO has classified the gains from transfer of long term capital asset being as part of the business activities of the assessee and accordingly denied exemption u/s 10(38) - sale of investment does not qualify to be income from general insurance business therefore, section 40 of the Act is not applicable and the general section 28 of the Act will come into action - HELD THAT:- The words “ business of insurance” here includes all the activities, which enable the insurance company to run the said business of insurance to not just earn profits and for gains but to indemnify the policy holders. Investment of funds in most secured modes has been ensured by IRDA guidelines and the Insurance Act, so that in an attempt of Insurance business company, trying to earn out of risk bearing investments, the insured persons is not left at loss.
So, these investments cannot be termed as stock in trade of the to earn income and make gain, independently of the business of insurance run by the assessee and ld Tax authorities below have completely failed to take note of it and Ld. AO reached a erroneous conclusion that the assessee was doing two different business, one of general insurance business and second “other business‟.
In the present assessment year the ld AO has himself allowed exemption u/s 10(15)(iv)(h) of the Act in regard to investment of tax free in public sector bonds. But still the Ld. AO, without citing reasons as to how u/s 10(15)(iv)(h) of the Act is applicable and Section 10(38) of the Act is not applicable, made the distinction and made the addition avoiding Section 10 of the Act.
As observed that “Profits and gains of business‟ is one of the classified heads of the income as per Section 14 of the Act. To arrive at the income by way of “Profits and gains of business‟ for the purpose of Section 14 of the Act, the scope of total income provided under Section 5 of the Act has to be read with Section 10 of the Act, which as part of Chapter III of the Act, falls under the heading “incomes which do not form part of Total Income”. So, in any case the income by way of ““Profits and gains of business‟ which here in case of assessee means ““Profits and gains of insurance business”, has to be arrived after giving benefit of exclusion of the incomes falling under Section 10 of the Act. That would include disputed exemption of section 10(38) of the Act.
Even otherwise, the issue about applicability of provisions of section 10 of the Act in case of general insurance company stands decided in favor of insurance business companies
In any way we look, the assessee is entitled exemption u/s 10(38) like any other assessee for computation of Income and ld tax authorities below have fallen in error in not extending the benefit. In fact the ld CIT(A) has decided the issue against the assessee following his finding in Assessment Year 2007-08 wherein, the Tribunal‟s order dated 22.07.2011 for Assessment Year 2004-05 was followed. However, as a matter of fact in assessee‟s own case for Assessment Year 2005-06, reproduced above, issue were decided in favour of the assessee by the Hon’ble Delhi High Court. Consequently, ground are decided in favour of the assessee by holding that assessee/appellant is entitled to benefit of Section 10(38) of the Act. However, the matter needs to be restored to the files of the Ld. AO to enquire that claim of assessee u/s 10(38), fulfills the desired conditions about payment of Securities Transaction Tax (STT).
Applicability of section 115JB - HELD THAT:- Issue decided in assessee own case [2017 (9) TMI 172 - DELHI HIGH COURT] in favour of the Assessee and against the Revenue by holding that Section 115JB of the Act does not apply to insurance companies.
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2023 (1) TMI 1201
TP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- Assessee does Software development as per the basic design provided by its AEs. It is also mentioned in the TPSR that assessee also undertakes the design and other services in the entire Software development life cycle. Assessee also undertakes software coding, thus companies functionally dissimilar will be excluded.
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2023 (1) TMI 1200
TP Adjustment - comparable selection - HELD THAT:- Assessee reported international transactions in respect of Software Development Service (SWD), IT Enabled Services (ITeS). The arm's length price of the international transactions in SWD/ITeS segments provided to the associated enterprises (AE) has been determined by applying Transactional Net Margin Method (TNMM), stating to be the most appropriate method in the facts and circumstances of the case. The operating profit to operating cost ratio has been taken as the profit level indicator (PLI) in TNMM analysis. Companies functionally dissimilar with that of assessee need to be deselected.
All comparable companies sought for inclusion by the assessee in SWD and ITES segment are remanded to the Ld.AO/TPO for reconsideration based on the details filed by the assessee. The Ld.AO is directed to verify the same in accordance with Law, by granting proper opportunity of being heard to the assessee.
Direction to the Ld.AO/TPO to adopt correct margin in respect of the comparables that would be finally retained - We direct the Ld.AO/TPO to compute the margine as per rules while passing the OGE.
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2023 (1) TMI 1199
Nature of expenditure - Vehicle registration expenses - revenue expenditure - AO disallowed the same by holding it to be capital in nature - Disallowance of comprises of two components being as paid by the assessee as earnest money deposit with regards to Government tender applied during the period AND balance is in respect of registration of new vehicles and or vehicles that was transferred from Andhra Pradesh to Karnataka - HELD THAT:- In respect being the earnest money deposit there is a categorical observation by the Ld.CIT(A) that these are refundable deposits and therefore has been rightly treated as not revenue in nature which is disallowed by the Ld.CIT(A) u/s. 37(1). It is not in dispute that the said amount has not been expended for the purposes of business. Under such circumstances, the disallowance is not warranted. We therefore direct the Ld.AO to allow as an expenditure incurred by the assessee for the purposes of its business.
Coming to the registration expenses incurred by assessee we note that the Ld.CIT(A) has rightly considered the vehicles to be capital asset as these vehicles are admittedly put to use for the purposes of business. Under such circumstances, granting of depreciation is rightly been directed by Ld.CIT(A), which is in accordance with law. We do not find any infirmity in the view taken by Ld.CIT(A) and the same is upheld.
Loss as declared in the revised return - AO did not consider the claim disallowance if interest as per the revised return - HELD THAT:- As decided in case of Goetze India Ltd. [2006 (3) TMI 75 - SUPREME COURT] this issue needs to be remanded to the Ld.AO to consider the loss as declared by the assessee in the revised return.
Nature of expenditure - product development expenses - revenue or capital expenditure - HELD THAT:- As decided in own case [2022 (2) TMI 1338 - ITAT BANGALORE] it is necessary to find out as to whether the assessee has incurred all these expenses on its own account or on behalf of its AE. If the assessee has incurred expenses on behalf of the AE and the benefits of these expenses go the AE, then the Ld DRP was justified in disallowing this claim. If it is not so, then the assessee is required to prove that these expenses are not capital in nature. The facts available on record are not clear as to whether these expenses are routine expenses incurred for expansion of existing business or not. If it is so, then the relevant expenses are allowable as revenue expenditure. In the absence of relevant details, we feel it proper to restore this issue to the file of AO for examining it afresh in the light of discussions made supra and also in accordance with law. - Based on the above, we remand this issue to the Ld.AO for considering it afresh in light of the above observation by the coordinate bench.
TP Adjustment - comparable selection - HELD THAT:- Inclusion of Bharat Insecticides Ltd. as this comparable is engaged in Pesticides Formulation and therefore is comparable to the assessee.
Bharat Rasayan Ltd - This comparable has only segmental head from which, the revenue is generated being gross sales and assessee also has not bifurcated its revenue from the sales in local market and export sales. As far as the products manufactured and sold are concerned, this comparable is also manufacturing similar products(pesticides) like that of assessee. We therefore do not find any reason to exclude this comparable from the final list. The Ld.AR pointed out that in Ground no. 12, assessee seeks to rectify the errors while computing the margins of this comparable. We therefore direct the Ld.AO to compute the margins of this comparable correctly and in accordance with law.
Rallis India Ltd - This company is into manufacturing non-pesticide kinds of products which are farmer friendly and in accordance with the changing agricultural needs. The basic raw materials for manufacturing such products are organic compost delivered out of the waste from sugarcane factories and has revealed itself to be a go green branded company. We note that from the functions performed by the assessee, before us, the assessee is into manufacturing of pesticides based on chemicals and formulations imported as raw materials from its AE. The basic ingredients forming part of raw materials are lithium metals etc which are chemical in nature and therefore cannot be compared with that of the present comparable sought for exclusion. We therefore direct the Ld.AO to exclude this comparable from the final list.
Non granting of Working Capital Adjustment in respect of the comparables to iron out differences if any - DRP denied the claim as no details regarding the same were not furnished by the assessee - HELD THAT:- We direct the assessee to furnish all details to assist the Ld.AO/TPO to compute Working Capital Adjustment on actuals. We also draw support from the observation of Coordinate Bench of this Tribunal in case of Huawei Technologies India (P.) Ltd. [2018 (10) TMI 1796 - ITAT BANGALORE] - We thus remand this issue to the Ld.AO/TPO for considering the claim of the assessee of Working Capital Adjustment in accordance with the principles laid down supra.
Adopting the foreign exchange revenue filter for excluding comparables having earnings in foreign currency exceeding 40 % as against 25% - HELD THAT:- Both sides submitted that Ground No.3-4 in revenue’s appeal are also on the issue of arbitrary adoption of foreign exchange currency filter at 40%. It is submitted that this is the only issue raised by the revenue in its appeal. We have perused the submission advanced by both sides in light of records placed before us.
As noted that, such filter has not been applied by the Ld.TPO. And there is no basis for adopting 40% filter, applied by the Ld.CIT(A). In the interest of justice, we remand this issue to the Ld.AO/TPO to consider a consistent approach in respect of selecting the range of this filter. In the interest of justice we remand this issue back to the Ld.AO/TPO to consider this claim in accordance with law.
Not treating Foreign exchange loss as extra ordinary and therefore to be excluded for computing operating margin - HELD THAT:- The reliability and accuracy of adjustments would largely depend on availability of reliable and accurate data. For certain types of adjustment relevant data for comparables may either not be available in public domain or may not be readily determinable based on information available in public domain. Whereas it may be possible to make equally reliable and accurate adjustment of the tested party whose data is easily accessible. The purpose and intent of comparability analysis, is to examine as to whether, or not, the values stated for the international transactions are at arms length. It means, it is an exercise to ascertain, whether the price charged in case of a controlled transaction is comparable to the price charged under the uncontrolled transaction of similar nature. In our view the regulations do not cast any restriction to provide adjustment to be made on the tested party. Therefore if the data in respect of uncontrolled transactions are not sufficiently available in order to iron out the differences, the adjustment is to be made in the hands of the tested party.
Accordingly we remand these issues back to the Ld.AO, with the direction to consider the claim of assessee based on the above discussions in respect of the forex loss earned by assessee on ECB loans for year under consideration, as non operative in the hands of assessee.
TP adjustment to international transaction - HELD THAT:- As we direct the AO/TPO to restrict the transfer pricing adjustment to the international transactions relating to import of raw materials and finished goods entered with its A.Es.
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2023 (1) TMI 1198
Claim of interest u/s. 244A(1A) - Interest on refunds - days of delay for granting of additional interest as claimed by the assessee u/s. 244A(1A) - approval from the Pr. Commissioner or Commissioner for additional period of six months to give effect to the order - HELD THAT:- We find it proper to remit the matter on this issue to the file of Ld. AO for the limited purpose of verification of records to take note of the date on which the office of the Pr. Commissioner/Commissioner received the order of the Tribunal and if any approvals as required under the proviso to section 153(5) of the Act were obtained by the Ld. AO for the additional period of six months for giving effect to the order.
AO is directed to grant additional interest as envisaged u/s. 244A(1A) of the Act by ascertaining the delay beyond three months from the end of the month in which the order of ITAT was received in the office of Pr. Commissioner/Commissioner. Further, in case, an extension was obtained by the Ld. AO for giving effect to the order of ITAT, then the delay, if any, in granting the refund will be calculated from the end of the month in which the cumulative time available to the Ld. AO for giving appeal effect expired i.e. the initial time of three months as well as the additional extended time granted by the Pr. Commissioner/Commissioner, to the date on which the actual refund was granted to the assessee. We also direct the assessee to provide all of its cooperation to the Ld. AO as and when called for in this respect. This ground of appeal for all the five years before us is allowed for statistical purposes.
TDS done by the Ld. AO on the interest granted u/s. 244A(1) - taxability of interest in terms of Article 12(3)(a) of the India- Italy DTAA - Hon’ble High Court of Madras in the case of Ansaldo Energio SPA [2016 (5) TMI 945 - MADRAS HIGH COURT] has held that the interest on income tax refund is a ‘debt claim’ payable by the Revenue in terms of Article 12(3)(a) of the India-Italy Treaty and thus such interest is not taxable and no TDS ought to be done by the AO. We note that Ld. CIT(A) has wrongly interpreted this finding of the Hon’ble Madras High Court as application of ‘deeming provisions’ and, therefore, we set aside the finding of the Ld. CIT(A) on this aspect. Accordingly, we direct the Ld. AO to refund the TDS done on the interest paid to the assessee on the Income Tax refund under section 244A(1) of the Act.
Thus we hold that in the present case of the assessee, the beneficial provision restricting the scope of taxability of interest in terms of Article 12(3)(a) of the India- Italy DTAA namely, non-taxability of interest on income tax refund by virtue of it being a ‘debt claim’ from the Government of India as held by the Hon’ble Madras High Court (supra) would be applicable in view of the Protocol to the India-Netherlands DTAA and, therefore, the interest in question received by the assessee u/s. 244A(1) from the Government of India will not be taxable. Consequently, no tax was required to be deducted thereon by the Ld. AO while remitting the said interest to the assessee and thus AO is directed to grant the refund of the TDS so done. This ground of appeal for all the five years is allowed.
Short granting of interest u/s. 244A(1) - As contented AO has not granted interest in 244A(1) from the date of order giving effect i.e. 13.11.2019 up to the date on which actual refund was received by the assessee i.e. 02.03.2000 - As date from which the grant of interest on refund starts is not in dispute. The only dispute is in respect of whether the interest should be granted up to the date of preparation of order giving effect or it should be granted up to the date on which actual refund was received by the assessee - as per case of Small Industries Development Bank of India [2017 (9) TMI 1971 - ITAT MUMBAI] wherein it was held that assessee was justified in seeking interest u/s. 244A up to the date of receipt of the refund voucher.
In our view the ground raised by the assessee for claiming interest u/s. 244A(1) up to the date on which actual refund was received i.e. 02.03.2020 is justified. Accordingly, we direct the Ld. AO to recompute the interest due to the assessee in compliance with our aforesaid decision. Accordingly, this ground of appeal for all the four years is allowed.
Erroneous levy of interest u/s. 234C - erroneous adjustment of other payments against the refund determined by the Ld. AO - assessee has contended that no interest u/s. 234C of the Act is leviable in view of the fact that entire income of the assessee, who being a non-resident, was subjected to TDS - HELD THAT:- As per the provisions of section 234C of the Act, we find it proper to direct the AO to verify and ascertain that the return of income filed by the assessee was entirely subject to TDS and its tax liability on the returned income was in entirety covered by the TDS done. If found so, the interest charged u/s. 234C of the Act be deleted and the refund recomputed accordingly. Thus, this ground of appeal is allowed for statistical purposes.
Ground taken for erroneous adjustment of other payments against the refund determined by Ld. AO, we direct the Ld. AO to provide the necessary details to the assessee in respect of adjustment made, for its verification and rebuttal. Based on the clarifications submitted by the assessee in respect of the other adjustments, the Ld. AO is directed to re-consider the adjustment in accordance with the provisions of law. Accordingly, this ground of appeal is allowed for statistical purposes.
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2023 (1) TMI 1197
TP Adjustment - International transaction involving AMP expenses - difference in the arms length price (ALP) of advertisement, marketing and promotion (AMP) expenses allegedly incurred on behalf of AE - HELD THAT:- After hearing the parties at length, the Hon'ble Delhi High Court including the decision in case of Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] and held that the Revenue was unable to make out a case that there is an international transaction involving AMP expenses between the assessee and its AE.
As observed, following the aforesaid decision of the Hon'ble Delhi High Court, the Tribunal held that AMP expenses incurred by the assessee cannot be treated as international transaction. Considering the fact that the issue is pending before the Hon'ble Supreme Court by way of an SLP filed by the Revenue, the Tribunal restored the issue back to the AO to decide afresh after considering the decision of the Hon'ble Supreme Court. In the context of the aforesaid decision of the Tribunal, learned Departmental Representative has submitted before us to remit the issue to the Assessing Officer. However, we have observed, while deciding identical issue in assessee’s own case in assessment year 2015-16 [2020 (1) TMI 861 - ITAT DELHI] the Tribunal has decided the issue in favour of the assessee.
Disallowance Being expenditure incurred on credit card - HELD THAT:- It is evident, in compliance with the directions of learned DRP, the AO has accepted major part of the expenditure incurred by the assessee. However, he disallowed an amount alleging a difference between the payment actually made as per the assessee and payment as per AIR information, which the assessee failed to reconcile. Before us, it is the contention of the learned counsel for the assessee that the actual difference would work out to an amount. Keeping the assessee, we restore the issue back to the AO for verifying the factual details filed by the assessee and thereafter restrict the disallowance to the actual difference which the assessee will be unable to reconcile. This ground is allowed for statistical purposes.
Disallowance being expenditure on account of daughter’s marriage fund - HELD THAT:- It is a common point between the parties that the Tribunal has decided identical issue in favour of the assessee in assessment year 2015-16. As could be seen from the facts on record, the assessee incurs certain expenditure, being payment made to employees to meet some part of the marriage expenditure of their daughter. It is observed while deciding identical issue in assessee’s own case in assessment year 2015-16, the Tribunal has restored the issue back to the Assessing Officer.
Disallowance of loss claimed - AO noticed that the assessee has claimed expenditure under the head “extraordinary item” in the statement of profit and loss account - Being of the view that such claim is not allowable, the Assessing Officer disallowed it and the disallowance was also upheld by the learned DRP - HELD THAT:- The facts on record clearly reveal that the loss claimed by the assessee is only in the nature of a provision and is a projected figure. No material has been placed on record before us to demonstrate that the insurer has settled the claim in the financial year relevant to assessment year under dispute. On a specific query from the bench, learned counsel for the assessee has submitted that the insurance claim was settled in the next financial year relevant to assessment year 2017-18. Learned counsel was not able to furnish any documentary evidence, being any communication received from the insurer to demonstrate that the claim was settled at a particular amount in the impugned assessment year. This being the factual position emerging on record, it cannot be said that loss, if any, has crystallized in the impugned assessment year. In view of the aforesaid, we do not find any reason to interfere with the decision of the departmental authorities. Ground raised is dismissed.
Disallowance being credit balance written back and treated as income under Section 41(1) - HELD THAT:- we restore the issue to the assessing officer for factually verifying assessee’s claim that amount in dispute has already been offered to tax as part of other income. In case, assessee’s claim is found to be correct, addition should be deleted. This ground is allowed for statistical purposes.
Disallowance of the expenditure claimed towards travelling and conveyance - HELD THAT:- It is evident, the assessing officer has rejected a part of the expenditure incurred on conveyance and traveling purely on ad hoc basis. He has not pointed out any deficiency either in the accounts maintained by the assessee or the evidence furnished. When assessee’s books of account are under statutory audit, such ad hoc disallowance in absence of any valid reasoning is unsustainable. Accordingly, we delete the disallowance. This ground is allowed.
Disallowance being expenses on account of presents/gifts and personnel compensation cost and personnel relocation expenses - HELD THAT:- The relocation expenses are incurred by the assessee at the time of relocation/transfer of the employees from one state to another. The expenditure on account of gifts and presents are incurred by assessee towards gifts given to employees, trade partners, distributors etc. at the time of festivals or office celebrations or at the time of marriage of the employees. Thus, considering the nature of expenditure incurred by assessee, it cannot be said that they are not wholly and exclusively for the purpose of business. After all, from the nature of expenditure incurred, it is very much clear that they are for the benefit of employees. That being the factual position emerging from record, disallowance made is unsustainable. Accordingly, we delete them. This ground is allowed.
Double taxation under Section 90/91 - HELD THAT:- Considering the submissions of the parties and also the fact that similar nature of dispute arising in assessment year 2015-16 [2020 (1) TMI 861 - ITAT DELHI] was restored back to the Assessing Officer by the Tribunal, we are inclined to restore the issue back to Assessing Officer for fresh adjudication after factual verification. Needless to mention, assessee must be provided reasonable opportunity of being heard before deciding the issue.
Deduction of education cess as business expenditure - HELD THAT:- After insertion of Explanation 3 to Section 40(a)(ii) of the Act, as noted above, education cess, being part of income-tax, cannot be allowed as expenditure. Admittedly, the decisions relied upon by learned counsel for the assessee are prior to the amendment made to section 40(a)(ii) of the Act by insertion of Explanation 3 - Thus assessee’s claim of deduction of education cess has to be disallowed. Accordingly, we do so. This ground is dismissed.
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2023 (1) TMI 1196
Reopening of assessment u/s 147 - assessee has failed to submit truly and fully the entire process of fixing final sugarcane price during the original assessment proceedings - HELD THAT:- In case of sugarcane growers that the co-operative sugar factories of south Gujarat are following a practice of deciding the purchase price of sugarcane after finalisation of its accounts and its profits in the financial year subsequent to procurement of sugarcane. It was also recorded that till the time of finalization of the purchase price, ad hoc payments are distributed among the sugarcane farmers.
The final price is declared after arriving at the profit earned by the cooperative sugar factories during the year of procurement of sugarcane. Thus, the ad hoc payments and final payments contain an element of profit of co-operative sugar factories, which are distributed amongst the sugar cane growers in the guise of ‘cane price’, without payment of income tax on the profit so earned. We find that exact reason of reopening was recorded for A.Y. 2007-08 - Copy of which is filed on record by Ld. CIT-DR for the revenue.
Considering the fact that on similar set of fact, the re-assessment order has been quashed by Hon'ble High Court in [2015 (7) TMI 297 - GUJARAT HIGH COURT] therefore respectfully following the same, we affirm the order of Ld. CIT(A). Appeal of the Revenue is dismissed.
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2023 (1) TMI 1195
Liability of nominee directors for offence / non compliance committed prior to their appointment - EPCG Scheme - non-fulfilment of export obligation - nominee director and their contiguous liabilities - Section 140 of the Customs Act, 1962 - HELD THAT:- In the present case all directors have been appointed as nominees from among the consortium of banks to oversee the adherence of the company to its financial obligations. Their role and responsibility is thus specific and this is the context against which the liability cast in terms of Section 140 of the Companies Act, has to be tested - While there may be some justification in implicating a nominee director for statutory violations that are current, the violation in question touches upon alleged non-compliance with the terms EPCG licence issued in 2010, long prior to their appointment.
No doubt, the terms of the EPCG licence required the assessee to comply with export obligations for a period of eight years after date of licence. However, at the time when such nominee directors were appointed such obligations would not have been at the forefront and there is no justification in expecting the newly appointed directors to apply their minds to the obligations that had crystallized long prior to their appointment and previously in time.
It would be improper, unjustified and unwarranted to expect them to have had any participation or involvement in compliance with the continuing export obligation.
Petition allowed.
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2023 (1) TMI 1194
Refund of the Customs Duty paid in respect of the imported goods - permission to re-export the imported goods - rejection of refund only on the ground that the refund claim of the appellant was hit by the provisions of Section 26A (3) ibid - HELD THAT:- The provisions of Section 26A and 27 of the Customs Act operate in different situations: Section 26A (1) specifically covers the refund of import duty in certain cases where the imported goods are found to be defective or not in conformity with the specifications, are identified to the satisfaction of the Assistant Commissioner, there is no claim of drawback and such goods are exported or the importer abandons the goods or they are destroyed or rendered commercially valueless. Thus, all the conditions at (a), (b), (c) and (d) provided under Section 26A (1) are to be satisfied cumulatively - Sub-section (3) to Section 26A prescribes that “no refund under sub-section (1) shall be allowed in respect of perishable goods and goods which have exceeded their shelf life..”. Thus, in my view, the scope of sub-section (3) is limited to the cumulative conditions under (a) to (d) of Section 26A (1) ibid. and the refund claim of any duty that has been paid could be entertained provided the said goods are cleared for home consumption. By ordering destruction, the imported goods in question could never be cleared for home consumption and consequently, the provisions of Section 26A ibid. would not apply.
The only provision, therefore, that applies is Section 27 and hence, the rejection of refund by taking recourse to Section 26A (3) by the authorities below is incorrect - Section 27 also prescribes a time-limit of one year, but the same is subject to the saving proviso provided under sub-section (1B). There is no dispute that the appellant paid the duty provisionally and the same is reflected in the orders of lower authorities, including the order of destruction dated 27.05.2015 and thus, in terms of clause (c) to sub-section (1B) of Section 27 ibid., the limitation (of one year), if at all, would apply from the date of adjustment of duty after the final assessment thereof.
It is found that even there is no dispute that the Revenue authorities have not passed the final assessment order as yet, as could be gathered from the grounds-of-appeal - the authorities below have erred in rejecting the refund claim, in a haste, even before a final assessment could be made as required under law.
Appeal allowed.
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2023 (1) TMI 1193
Winding up petition - Sections 271 and 272 of the Companies Act, 2013 - HELD THAT:- The facts of the instant Appeal are same and identical to the case which was dismissed by this Appellate Tribunal in REGISTRAR OF COMPANIES NCT DELHI AND HARYANA VERSUS APOORVA LEASING FINANCE & INVESTMENT CO LTD, UNION OF INDIA, THROUGH THE SECRETARY, MINISTRY OF CORPORATE AFFAIRS, NEW DELHI. [2019 (12) TMI 1634 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], where it was held that It is apparent that without giving reasonable opportunity of representation to Respondent No.1 the sanction has been granted that too without applying the mind thus we find no ground to interfere in the order passed by the NCLT.
Therefore, there is no merit in the Appeal, the instant Appeal is hereby dismissed.
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2023 (1) TMI 1192
Winding up petition under Section 271-272 of Companies Act, 2013 - reasonable opportunity of making representation - Whether the Central Government has accorded the sanction as per law? - HELD THAT:- The facts of the instant Appeal are same and identical to the case which was dismissed by this Appellate Tribunal in REGISTRAR OF COMPANIES NCT DELHI AND HARYANA VERSUS APOORVA LEASING FINANCE & INVESTMENT CO LTD, UNION OF INDIA, THROUGH THE SECRETARY, MINISTRY OF CORPORATE AFFAIRS, NEW DELHI. [2019 (12) TMI 1634 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], where it was held that It is apparent that without giving reasonable opportunity of representation to Respondent No.1 the sanction has been granted that too without applying the mind thus we find no ground to interfere in the order passed by the NCLT.
Therefore, there is no merit in the Appeal, the instant Appeal is hereby dismissed.
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2023 (1) TMI 1191
Seeking restraint order against respondent no. 2 to 5 except seeking direction to deposit their passport - whether the Appellant has locus to file application or not - whether the objection filed in application were valid? - HELD THAT:- It is clear that the Adjudicating Authority has observed that Application filed by the Applicant i.e. I.A. No. 287 of 2018 is not maintainable he being the Operational Creditor. I.A. No. 287 of 2018 was not listed for consideration and which Application is still pending and was not disposed of. In I.A. No. 287 of 2018, the Appellant has raised various issues and has prayed for several reliefs and without adverting to the said application and without giving opportunity to the Appellant on the said application it was not open for the Adjudicating Authority to make observations as noted above. When an Application is not listed before the Court nor the Adjudicating Authority heard the parties on the said application, any observations made in reference to the said application is bound to prejudice the rights of the Applicant.
The Order impugned dated 05.05.2022 thus proceeded on misconception that I.A. No. 287 of 2018 was dismissed vide Order dated 14.02.2019 whereas on 14.02.2019 neither the I.A. No. 287 of 2018 was listed nor heard and nor decided.
The Adjudicating Authority committed error in rejecting application - appeal allowed.
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2023 (1) TMI 1190
Maintainability of application filed under sections 33 and 34 of the IBC in relation to a previously sanctioned scheme for rehabilitation of the sick company JKSL under SICA - Whether the Adjudicating Authority was correct in giving liberty to the operational creditors to file application under section 33(3) of IBC? - HELD THAT:- The judgment in Pramod Kumar Pathak [2022 (12) TMI 613 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] has clearly noticed the judgment of Hon’ble Supreme Court in the matter of Spartek Ceramics India Ltd. [2018 (10) TMI 1660 - SUPREME COURT] where it was held that Judgment of NCLAT holding that the appeal filed by the Central Government in that case not maintainable in view of the fact that the Notification dated 24.05.2017 travels beyond the scope of the removal of difficulties provision is correct - Thus, it is amply clear that the notification dated 24.5.2017 issued by Central Government goes beyond the remit of removal of difficulties provision of IBC.
Thus, liberty given by the Adjudicating authority in the Impugned Order to the operational creditor to file an application under section 33(3) of IBC is erroneous. While holding such a view we also note that the Adjudicating Authority in passing the Impugned Order has not noticed the law laid down by the Hon’ble Supreme Court in the matter of Spartek Ceramics India Ltd.
Whether the operational debt claimed by the appellants Surendra Singh Hada and Ors.is an ‘operational debt’ as defined in IBC and whether it is in default and due for payment by the corporate debtor? - HELD THAT:- Whether the operational debt claimed by the appellants Surendra Singh Hada and Ors.is an ‘operational debt’ as defined in IBC and whether it is in default and due for payment by the corporate debtor - the claims of workers were being paid under the monitoring and supervision of retired Hon’ble Justice Mr. N.N. Mathur appointed by the State Government of Rajasthan.
The substance of these public notices is that those workers/employees who have not received their past payment as admissible under the Tripartite Labour Settlement Agreements dated 9.10.2002 and 22.10.2002 should contact the Personnel Department of APPL, Kota, Acrylit Plant to receive the cheques of their due payments on any day between 1.6.2008 and 31.5.2009. Obviously, the issue of payment of past dues of former workers/employees of JKSL was being honoured by APPL and also overseen by the State Government of Rajasthan through Hon’ble Justice Mr. N.N. Mathur.
When we take a holistic view of the matter of payment of past dues to ex-employees, it is clear that there is no clarity about the past dues as to what was paid and what remained unpaid and also the default on the part of the corporate debtor APPL is not established, since right from 2007 onwards the corporate debtor and earlier JKSL has continued to make sincere efforts to pay such past dues. We are, therefore, quite clear that the default in payment of past dues as claimed by the Appellants Surendra Singh Hada and Others is not established in the present case.
The Impugned Order insofar as it gives liberty to the purported operational creditor Surendra Singh Hada and 125 other employees to file application under section 33(3) of the IBC is not in accordance with law - It is thus concluded that in their application under section 9 the appellants Surendra Singh Hada & Ors. have not been able to establish that the corporate debtor APPL committed a default which is ascribable to APPL in payment of any past dues of the ex-workers.
Appeal disposed off.
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2023 (1) TMI 1189
Money Laundering - proceeds of crime - twin conditions as mandated under Section 45 of PML Act satisfied or not - corroborative evidences or not - tampering with the evidences or not - HELD THAT:- From the account of the A1 and A3, the money has been layered and operated the account where the proceeds of crime parked at Hong Kong. Hence, the petitioner parked a sum of Rs.59.47 crores outside the country with the support of money parked outside the country may go underground and as such it is impossible to make him to participate in the trial. Further, there is possibility of tampering with the evidence and influencing the co-accused.
That apart, the twin conditions as mandated under Section 45 of PML Act shall apply in this case and the petitioner failed to adduce anything contrary to establish that he is not involved in the offence. Therefore, there is no change of circumstances to consider the present bail petition.
This Court is not inclined to grant bail to the petitioner - Petition dismissed.
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2023 (1) TMI 1188
Rejection of declaration in Form-SVLDRS-1 - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - It is the Petitioner’s case that Petitioner never received the said communication of rejection of the declaration on 20 March 2020 either from Respondent No.4 or from the Designated Committed, prior to the 4th Respondent’s letter dated 17 February 2022, by which the letter dated Nil March, 2020 rejecting the declaration was enclosed - HELD THAT:- For being eligible under the SVLDR Scheme, a written communication of the amount of duty liability admitted by the person concerned during enquiry, investigation or audit would be a quantification on or before 30 June 2019, which need not be determined upon completion of investigation by issuance of Show Cause Notice or upon adjudication.
It is not in dispute that on 15 February 2018, the Superintendent of the Director General of GSTI and his team visited its office and Petitioner vide its letter dated 15 February 2018 informed the Superintendent that it had handed over the PPL to MCGM. From the definition of enquiry and investigation as set out above, it is clear that search of premises as in the case of Petitioner on 15 February 2018 falls under enquiry or investigation as defined in Section 121(m).
By the said communication it was submitted that the Petitioner is entitled to the cenvat & input tax credits since ultimate sale of flats was liable to tax as they had paid the same there would be no reason to issue Show Cause Notice nor impose any penalty and the proceedings be closed as they had complied with provisions of the Service Tax, MVAT and GST law. There has been no reply to this communication.
The Designated Committee instead of issuing Form 3 and followed with Form 4 to Petitioner, issued a Show Cause Notice dated 21 June 2021. It is only pursuant to communication dated 14 February 2022 when request was made by Petitioner to issue Form SVLDRS-4 that vide communication dated 17 February 2022, the Respondent No.4- Additional Commissioner of CGST and Central Excise informed Petitioner that Form SVLDRS-1 filed by Petitioner had been rejected on 20 March 2020 and enclosed a copy of the said letter dated nil March 2020. Admittedly, the communication was handed over to the Petitioner on 17 February 2022. Even the SVLDRS portal still indicates the status of the applicant as “Agreed by Taxpayer” - It is not explained as to why if information was furnished to the Designated Committee vide letter dated 27 February 2020, a clarification was sought from the Petitioner on 22 January 2020, a date prior to the communication by the investigating agency.
The SVLDR Scheme is a legislation introduced for liquidation of legacy disputes on the one hand and recovery of unpaid taxes to the government on the other. The Respondent cannot contend that the portal was not updated. Once SVLDRS-2 has been issued and there has also been a follow up from the Respondents with respect to the said Form as well as the hearing that was fixed at the appointed date and time, the Respondent-Authorities cannot renege on the same. Particularly so in the peculiar facts and circumstances of this case, where admittedly, the rejection of SVLDRS-1 was not communicated to Petitioner on 20 March 2020, but only communicated to them on 17 February 2022 i.e. after a request came from Petitioner to issue Form SVLDRS-4.
Having held that the amount of Rs. 4,60,96,697/-, is the amount quantified pursuant to communication dated 23 March 2018 to the DGGSTI and the Designated Committee having issued Form SVLDRS-2 to Petitioner on 16 January 2020 and the communication of rejection having been communicated to Petitioner only on 17 February 2022, the action of the Respondent Authorities ought to be quashed and set aside - the communication dated nil March, 2020 as well as the Show Cause Notice dated 21 June 2021 cannot be sustained and are hereby quashed and set aside.
Petition allowed.
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2023 (1) TMI 1187
Maintainability of petition - availability of alternative remedy of appeal - Respondents had contended that the Petitioner has an alternate remedy under the statute of filing an appeal - Demand of differential service tax - HELD THAT:- The learned Counsel for the Respondent No.2 states that instructions have been taken and the Commissioner who had passed the impugned order has expressed that there was an error in taking view and the decision in the case of M/S GO BINDAS ENTERTAINMENT PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, (NOIDA) [2019 (5) TMI 1487 - CESTAT ALLAHABAD] will have to be kept in mind and dealt with, and cannot be ignored.
In light of the stand taken by the Respondents, the impugned order will have to be quashed and set aside - Accordingly, the writ petition is disposed of by quashing and setting aside the impugned order dated 29 January 2021 passed by Respondent No.2. The proceeding stands restored to file of Respondent No.2, and it will be decided as per law.
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