TPA - Comparable selection criteria - Held that:- The assessee is a captive service provider and has been set up as a captive off shore software development centre for catering to the needs of the Lifesize group. Lifesize India is responsible for the research, software development and support services for Lifesize Inc’s products and services thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Validity of addendum order - the penalty and other actions taken through the addendum order were set aside in so far as it was against the interest of the Appellant. This was also done on the premise that the original order was not under attack - Held that:- The Appeal before the CESTAT ought to have been considered also as against the original order issued by the Commissioner. We do not see that this is a case of abandonment of the appeal against the original order, by the BSNL.
The impugned final order of CESTAT issued on 04.11.2015 to the extent it refuses to adjudicate the Appeal filed by the Appellant challenging the original order issued by the Commissioner - the CESTAT will list that Appeal for consideration on merits in so far as it relates to challenge against the final order issued by the Commissioner.
Default passed u/s. 9 of I & B Code and for restoration of the same - Held that:- Once Company Petition is filed under any of the provisions namely Sections 7 to 10 of the I & B Code, the parties and the Advocates appearing on behalf of the parties must be diligent to appear on the dates given and it is not possible for any Court to inform the parties about the date of hearings. Since Cause-List has been timely uploaded, it is the duty of the parties filing cases to find out as to whether their matters are listed in the cause list or not.
This Bench, notwithstanding the cause shown in the Application for Restoration, holds that restoration of a petition dismissed for default is against the letter and spirit of the Code, hence this application is hereby dismissed. The Petitioner is always at liberty to opt for other remedies available in accordance with the law.
It is a restoration application filed in a Writ Petition, should I & B Petition dismissed for default be restored when law says I & B petition should be heard and pass orders within 14 days by admitting or dismissing it. I & B petition shall be brought to logical end in 14 days, unless and until it is extended by this Bench for the reasons mentioned therein. Once the proceeding is initiated under any of the three Sections of the Code mentioned above, it has to be completed within 14 days, since the life to the Petition u/s. 7, 9 & 10 remains for 14 days from the date of filing, this Bench cannot bring forth life to the said petition by restoration when its life itself is designed for fourteen days. If fresh life is given to it in the name of restoration after those 14 days, it will be in violation of the lifetime of 14 days given u/s. 7(4), 9(5) & 10(4) of the Code.
Corporate insolvency process - invoking the provisions of Section-9 Insolvency and Bankruptcy Code 2016 - Proof of dispute - Held that:- Under Section 8 (i) of the Code adequate room has been provided for the 'NCLT' to ascertain the existence of a dispute. A demand notice by an 'operational creditor' to an 'operational debtor' must be sent who has not paid operational dues and has committed default. Section 8 (2) further clarifies that the corporate debtor is obliged to bring to the notice of the 'operational creditor', within 10 days of the receipt of notice, the existence of a dispute and show the record of the pendency of the suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute. The other option is to pay the demanded amount. In the instant case, the applicant sent a demand notice which was duly received by the respondent. A reply has also been duly filed where serious dispute has been raised.
As such, on a perusal of documents submitted before us by the applicant, we are unable to fathom any material on record to dislodge the stand of the respondent as already discussed in the preceding paras. Hence, we are inclined to reject the above Petitions.
The remedy of the applicant above named lies elsewhere and not under the provisions of the IBC.
SSI Exemption - principles of natural justice - Held that:- The Tribunal is directed to consider only the status of the petitioner regarding their exemption under SSI Unit and if the contention of the petitioner is accepted, the corresponding effect will be given only to the extent of the SSI Unit. We are not interfering with the quantum and finding which has been decided by the Tribunal. Only if there is a SSI Unit, the corresponding effect will be given by the Tribunal - reference allowed.
Exigibility to tax in law of the ‘non-compete fees’ arising to the assessee - whether treated as profit in lieu of salary - Held that:- Given the huge outlay of capital and business risk involved in a new business, highly improbable for a person to, at an advanced stage of his life, start a new venture, risking both, the regular income that he could otherwise fetch by self-employment or by service, as he actually does by becoming a director (in CABL, i.e., the payer company), as well as his savings generated over the years.
Why, the very fact that all such persons, whose cases stand referred to in this order, were directors and majority shareholders in the old company, were paid a ‘non compete fee’ and later co-opted as directors, itself indicates the same to be a part of a plan, a pre-mediated transaction, and integral to the takeover of the business of Citadel Fine Pharmaceutical Company Ltd. The same could be a part of the business restructuring as well, though the claim cannot be lightly made, nor can, like-wise, the Revenue’s claim of the impugned sum being profit-in-lieu of salary, assessable u/s. 15 r/w s. 17(3), be brushed aside so (lightly), particularly in this context. The assessee shall have to bring material or evidence on record to substantiate/prove his claims, which can only be decided on the basis of the facts borne out thereby, i.e., on the basis of given/proven facts.
CIT(A) shall then, where relevant, determine whether the assessee’s method of accounting, which is only for income from business and from other sources, regularly followed, is, as contended by him, ‘cash’, in which case the un-received sum of ₹ 500 lacs could be considered for its assessibility as income only on its receipt. Two, where not so, so that the assessee’s method of accounting, which has to be either cash or accrual, is indeed accrual, can the said amount be considered as accrued under the given facts and circumstances.
The matter, accordingly, as afore-stated, is restored back to the file of the ld. CIT(A) – who was bound by the order by the tribunal in the first round, and whose directions shall continue to obtain, for a decision on merits, issuing definite finding of facts upon allowing the parties opportunity to represent their case before him.
Levy of penalty u/s.271(1)(c) - CIT-A treating the sale of investment in commodities as speculation income under the head “profits and gains from business/profession” and profit on sale of Mutual Fund as “business income” - Held that:- AO has stated that the purchase and sale of shares in commodity were made on the very same date without delivery. This finding of the Assessing Officer has not been controverted by the assessee by bringing any positive material on record. If the argument of the assessee is to be accepted that the assessee was an investor and not a trader, then no investor would sale the shares on the very same date of the purchase or within 2 to 3 days of the purchase. No good and justifiable reason to interfere with the order of the CIT(A), which is hereby confirmed and the ground of appeal of the assessee is dismissed.
Addition as agricultural income - Held that:- Assessee has brought no positive material on record to controvert the findings of the Assessing Officer as well as the CIT(A). No reason to interfere in the order of the CIT(A), which is hereby confirmed and ground of appeal of the assessee is dismissed.
Levy of penalty u/s.271(1)(c) - Held that:- The facts of the case before the Hon’ble Supreme Court in the case of SSA’s. Emarld Meadows [2016 (8) TMI 1145 - SUPREME COURT] and, therefore, the decision of Hon’ble Supreme Court squarely applies to the case of the assessee. Hence, respectfully following the same, cancel the levy of penalty u/s.271(1)(c) and allow the ground of appeal of the assessee.
Applications for stay of demand - not being treated as an assessee in default in terms of Section 220(6) - Held that:- As the CIT(A) had almost concluded the hearing of the appeals (as informed by the petitioner), the deposit of 15% could be kept in abeyance. However, as the same is now denied by the Revenue making it a disputed issue, we see no reason to exercise our writ jurisdiction. Moreover, the order sheets annexed to affidavit dated 2nd March, 2017 is evidence of the adjournments granted on various occasion at the request of the petitioner and also filing of an additional ground on 31st January, 2017 which would further delay the proceedings. We see no reason in these facts to interfere in the present petition.
CIT(A) need not await for the deposit of tax as directed by the impugned orders dated 28th October, 2016 to decide the pending appeals before him for the Assessment year 2007-08., 2008-09, 2009- 10, 2010-11 and 2012-13. This for the reason that it is not a condition precedent that the disputed amounts be deposited before the appeal can be heard and disposed of by the CIT(A). However, it is clarified that the pending appeals before the CIT(A) would not by itself in any manner fetter the rights of the Revenue to adopt such proceedings as are available to it in law, to recover its taxes in terms of the impugned orders dated 28th October, 2016.
Actuarial valuation - taxability u/s 44 - computation of income - transfer from Share Holders Account to Policy Holder’s Account - Tribunal holding that ‘surplus’ available both in Policy Holders Account and Share Holders Account is to be consolidated and only ‘net surplus’ is to be taxed as income from Insurance Business - taxing income of assessee arising from activity unconnected with insurance business (consequent set off loss) - Held that:- We find that the Hon'ble Bombay High Court in the case of ICICI Prudential Insurance Co. Ltd. [2015 (7) TMI 972 - BOMBAY HIGH COURT] has held that “where assessee was carrying on life insurance business and Tribunal following a decision of Supreme Court, while determining assessee’s income under section 44, had taken into consideration total surplus as arrived at by actuarial valuation and further held that income from shareholders account was also to be taxed as a part of life insurance business, there was no substantial question of law arising for consideration”. Reference was made to the decision in LIC of India vs. CIT [1963 (12) TMI 5 - SUPREME COURT] wherein held that the Assessing Officer has no power to modify the account after actuarial valuation is done.
Income of assessee arising from activity unconnected with insurance business - determining actuarial valuation surplus from insurance business u/s 44 - Held that:-(i) amount set apart by insurance company towards solvency margin as per the direction given by IRDA is to be excluded while computing actuarial valuation surplus, and (ii) pension fund like Jeevan Suraksha Fund would continue to be governed by provisions of section 44 irrespective of the fact that income from such fund is exempted, or not and, therefore, even after insertion of section 10(23AAB), loss incurred from pension fund like Jeevan Suraksha Fund has to be excluded while determining actuarial valuation surplus from insurance business u/s 44 of the Act. See case of LIFE INSURANCE CORPORATION OF INDIA LTD. [2011 (8) TMI 47 - BOMBAY HIGH COURT] - revenue appeal dismissed.
Classification of goods - Potato Chips - processed vegetables - Whether the Tax Board is justified in holding that ‘Potato Chips’ are not classifiable as ‘Processed Vegetable’ under entry 107 of Schedule IV, just because of the fact that branded namkeen (including dried potato chips), are kept outside the purview of entry 131 of the same Schedule, a general entry dealing with sweetmeats and unbranded namkeen?
Held that:- It cannot be disputed that Potato is a vegetable, and after going through the process of slicing, frying and spicing, “Potato Chips” does not cease to be a vegetable. It is irrelevant as to whether it becomes a snack item or not, but then it does not take a snack item outside the entry of 'Processed Vegetables'. The characteristics of Potato does not change and merely because by processing Potato, “Potato Chips” are produced/manufactured, it will certainly remain as Potato and would be a 'Processed Vegetable'.
Material is available on record that the Ministry of Food Processing Industry has understood processing of Potato Wafers or Chips as Vegetable Processing Industry and even the Govt. of India has understood “Potato Chips” to be a Vegetable Product for the purposes of classification under the Central Excise Tariff Act - “Potato Chips” can certainly be taken within the definition of entry 107 taking within its compass all other species including “Potato Chips” belonging to the common genus of the 'Processed Vegetables', and if any particular item is classifiable under a specific entry in a Schedule, such item or commodity must not be relegated to the Residuary entry. Even if common parlance test is applied, it can always be noticed that it would certainly fall within the category of 'Processed Vegetables'.
The claim of the petitioner is justified - “Potato Chips” would fall in the category of entry 107 to be charged with tax @ 4%, and once rate of 4% has been held to be well reasoned and justified, which was claimed by the petitioner, then question of levy of interest and penalty does not arise.
Condonation of delay of 104 days in filing the appeal - power of Commissioner to condone delay beyond 30 days - Held that:- It appears that the appellant has just intimated to the Department by its letter dated 23/9/2009 but no supporting document was enclosed. Actually, the supporting document was submitted after a delay of 104 days for which there was no satisfactory explanation except that Chartered Accountant was not available due to illness. No medical certificate has been submitted.
An identical issue before the Tribunal came in the case of Nalari Ferro Alloys Pvt. Ltd. Vs. Commr. of Central Excise, Shillong [2016 (4) TMI 57 - CESTAT KOLKATA] where it was observed that the delay beyond the statutory limit prescribed in the said Notification is not condonable.
The Supreme Court dismissed the appeal against the order of the Securities Appellate Tribunal, Mumbai. The application for permission to appear and argue in-person was allowed. The appeal was found to have no merit and was accordingly dismissed.
Jurisdiction of the Competition Commission of India - Section 3 of the Competition Act, 2002 - protection in the name of language - prohibition on telecasting dubbed serial ‘Mahabharat’.
Held that:- In the instant case, admittedly the Coordination Committee, which may be a ‘person’ as per the definition contained in Section 2(l) of the Act, is not undertaking any economic activity by itself. Therefore, the ‘agreement’ of such a ‘person’, i.e. Coordination Committee, it may not fall under Section 3(1) of the Act as it is not in respect of any production, supply, distribution, storage, acquisition or control of goods or provision of services. The Coordination Committee, which is a trade union acting by itself, and without conjunction with any other, would not be treated as an ‘enterprise’ or the kind of 'association of persons' described in Section 3. A trade union acts as on behalf of its members in collective bargaining and is not engaged in economic activity. In such circumstances, had the Coordination Committee acted only as trade unionists, things would have been different. Then, perhaps, the view taken by the Tribunal could be sustained.
The Coordination Committee (or for that matter even EIMPA) are, in fact, association of enterprises (constituent members) and these members are engaged in production, distribution and exhibition of films. EIMPA is an association of film producers, distributors and exhibitors, operating mainly in the State of West Bengal. Likewise, the Coordination Committee is the joint platform of Federation of Senior Technician and Workers of Eastern India and West Bengal Motion Pictures Artistes Forum. Both EIMPA as well as the Coordination Committee acted in a concerted and coordinated manner. They joined together in giving call of boycott of competing members i.e. the informant in the instant case and, therefore, matter cannot be viewed narrowly by treating Coordination Committee as a trade union, ignoring the fact that it is backing the cause of those which are ‘enterprises’ - When some of the members are found to be in the production, distribution or exhibition line, the matter could not have been brushed aside by merely giving it a cloak of trade unionism. For this reason, the argument predicated on the right of trade union under Article 19, as professed by the Coordination Committee, is also not available.
When the lenses of the reasoning process are duly adjusted with their focus on the picture, the picture gets sharpened and haziness disappears. One can clearly view that prohibition on the exhibition of dubbed serial on the television prevented the competing parties in pursuing their commercial activities - the CCI rightly observed that the protection in the name of the language goes against the interest of the competition, depriving the consumers of exercising their choice. Acts of Coordination Committee definitely caused harm to consumers by depriving them from watching the dubbed serial on TV channel; albeit for a brief period.
Converting, absorbing and regularising the petitioner’s services in an equivalent category post with all consequential benefits - The stand taken by the authorities that the petitioner could not be considered for such absorption and regularisation by virtue of G.O.Ms.No.212 dated 22.04.1994 was dealt with on merits and rejected by the Tribunal - Held that:- The manner in which the Commercial Tax Authorities and more particularly, the Commissioner, Commercial Taxes, State of Andhra Pradesh, dealt with the petitioner’s case pursuant to the order dated 19.06.2012 passed by the Tribunal in O.A.No.12567 of 2009 leaves this Court with no option but to set aside the proceedings dated 30.10.2012 of the Commissioner, Commercial Taxes, State of Andhra Pradesh, and remit the matter to him for consideration of the whole issue afresh - petition allowed by way of remand.
Doctrine of frustration - presence of disturbing element in the contract, preventing performance of the Contract - Payment of Compounding Tax - Whether the petitioner, carrying on a quarry and crusher unit, be permitted to withdraw from the compounding applied for in the year 2016-17, for reason of failure to obtain licenses from the local authority, to carry on the quarry and crusher operations?
Held that:- It was stated that the contract was not an ordinary contract for sale and purchase. It was an integral part of a development scheme and there was no time limit within which the roads and drains were to be made. The first requisition order was passed nearly 15 months after the contract and the work was not commenced even within that time. Even when the contract was entered into, the war had already commenced and requisition orders for military purposes were normal events. There was also scarcity of materials and various restrictions by the Government, due to the prevailing war situation - The ground on which frustration was claimed, did not amount to a supervening circumstance, which alone could be successfully alleged to claim frustration under Section 56.
To plead frustration under Section 56 of the Contract Act, there should be a supervening impossibility, which was never in the contemplation of the parties at the time when the contract was entered into - the petitioner did not have a D & O license at the time, when the petitioner approached the Appellate Authority for being permitted to pay tax under the compounding scheme. The petitioner also did not press for a D & O licence with respect to the quarry, since no such permit could have been issued to the petitioner without an Environmental Clearance. The petitioner's prayer for consideration of the D & O license for the crusher unit was also on the ground that even if he cannot quarry mineral, he could obtain minerals from other quarries and carry on the crusher operations - It cannot at all be said that the dismissal of the writ petition was a supervising impossibility, which stood against the petitioner's performance of the obligation under the compounding scheme. It is established that there was no supervening subsequent event, which was not in the contemplation of the petitioner, when the petitioner had applied for compounding.
The petitioner wanted the best of both worlds; the entitlement under the compounding scheme if the unit was permitted and a regular assessment if not permitted. The petitioner with eyes open, without any license or permit applied for compounding and on denial of the license seeks to turn around and plead frustration - The claim at best is that the obligation under the scheme, which the petitioner voluntarily opted, is onerous.
The petitioner hence cannot be permitted to wriggle out of the obligation to pay the compounding tax.
TPA - comparable selection - Held that:- The assessee company was engaged in providing data collection, web services, information research and related support services to its associated enterprises (AE), thus companies functionally dissimilar with that of assessee need to deselected from final list.
Working capital adjustment - Held that:- In the case of the assessee company, the working capital adjustment has been allowed in assessment year 2008-09 and 2012-13 and there has been no change in the functionality, risk and profile of the assessee company from assessment year 2008-09 to 2012- 13. We do not find any reason why the working capital adjustment should not be allowed to the assessee, when it has been allowed in immediately preceding year. The Object of the entire comparability process is to reduce the difference between the comparables and the assessee company. The Tribunal, in various judgments allowed working capital adjustment to companies of ITES industries. Respectfully following the decision of the Tribunal in the case of Demag Cranes and Component (India) Private Limited (2012 (1) TMI 60 - ITAT PUNE), we direct the TPO/AO to allow the working capital adjustments to the assessee. The ground of the appeal is accordingly allowed.
Disallowance of commission and brokerage - allowable business expense u/s 37 - Held that:- The contentions which are raised by the department is required to be considered and the same has been considered at length. The basic contention is that the Tribunal while discussing the matter has observed that in the previous year the department itself has accepted it and was not challenged. Apart from that, the commission which has been paid was paid by account payee and the same was verified. The commission which has been paid from accounts was also verified by the department. In that view of the matter, we are of the opinion that books of account are not rejected and the same is accepted. Thus the view taken by the Tribunal is just and proper and the first issue is required to be answered in favour of the assessee and against the department.
Regarding Section 43B of the Act, in our opinion, in view of para 9 of the judgment of Delhi High Court in Commissioner of Income Tax Vs. Ram Pistons & Rings Ltd. (2012 (2) TMI 349 - DELHI HIGH COURT), the view taken by the Tribunal is just and proper and this issue is also required to be answered in favour of the assessee and against the department.
As regards Section 80JJAA in our opinion, permanency is not there and increase is there. The Tribunal while considering the same has taken into consideration the provisions of that Section and rightly granted the benefit in favour of the assessee. Therefore that issue is also required to be answered in favour of the assessee and against the department.
Regarding Section 43B of the Act, establishment and research is always for the purpose of benefit of the business. In that view of the matter, the said issue is also required to be answered in favour of the assessee and against the department.
Delay in disposal of the application for review which was kept pending for a span of four years.
Held that:- An application for review, regard being had to its limited scope, has to be disposed of as expeditiously as possible - Though we do not intend to fix any time limit, it has to be the duty of the Registry of every High Court to place the matter before the concerned Judge/Bench so that the review application can be dealt with in quite promptitude. If a notice is required to be issued to the opposite party in the application for review, a specific date can be given on which day the matter can be dealt with in accordance with law. A reasonable period can be spent for disposal of the review, but definitely not four years.
We request the High Courts not to keep the applications for review pending as that is likely to delay the matter in every court and also embolden the likes of the Petitioner to take a stand intelligently depicting the same in the application for condonation of delay.
Grants receipt from the Govt. of NCT of Delhi for meeting revenue expenses, i.e. by way of ex-gratia payment upon voluntary retirement - Assessing Officer (AO) treated this receipt as income and sought to tax it - CIT(A)’s interpretation of the payable entry with respect to this was that it was an outstanding liability vis-a-vis Govt. of NCT of Delhi and the Pension Trust vis-a-vis the assessee - Held that:- We are in agreement with the conclusion as recorded by the first appellate authority that since the Government of Delhi, which is 100% owner of the assessee company, the employees who opted for VRS [Voluntary Retirement Scheme] were to be paid their dues for which approved provident fund did not have adequate/planned investment thus the government decided to provide long term capital loans of ₹ 35.90 crores to the assessee which was passed on to the Pension Fund Trust enabling the company to make payments to the employees. In view of the above noted factual matrix of the case on the issue we are unable to see any valid reason to interfere with the conclusion of the CIT(A) thus we uphold the same - no substantial question of law
Capital gain on transfer of converted shares - partnership firm - contention of Assessees that share were converted into stock in trade thus no capital gain - Held that:- Dismissed.
See order of date passed in THE COMMISSIONER OF INCOME TAX-I, LUCKNOW VERSUS BIJAI KUMAR JAIN, S.K. JAIN, RAVI PRAKASH SINGH, RAJENDER SINGH, D.K. KADKADE, RAVI PRAKASH SINGH [2017 (5) TMI 300 - ALLAHABAD HIGH COURT]
9911796707
