Export of Basmati Rice - permission to export rice as per Col. No. 5 Entry No. 45A Chapter 10 (Cereals) of Export Licensing Schedule inserted by DGFT Notification No. 39 (Re-2008)2004-2009, dated 16-9-2009, under the Export Policy 2004-09 as amended - Held that: - basmati rice has been allowed freely for export in terms of DGFT Notification No. 39 (RE-2008)/2004-09, dated 16-9-2008 in Sr. No. 45AA - There is no dispute that the export goods have satisfied the condition specified for export as above - both the samples were tested in the Regional Agmark Laboratory. The percentage of other rice grain was found to be over 23% in both the samples, which were considered to be beyond the permissible limit for export by the authority below.
After considering the N/N. 39 (RE-2008)/2004-09, dated 16-9-2008, the Agmark Specification for basmati rice for export has not been specified as a restriction in the said notification. The question whether the Customs Authority allowing the export consignment of basmati rice was required to examine the same with reference to DGFT Notification only or they also need to look at Agmark Specifications, was examined in detail by the Tribunal in the case of Shree Jagdamba Agrico Export Pvt. Ltd. v. C.C., Kandla [2014 (6) TMI 301 - CESTAT AHMEDABAD]. The Tribunal held that the Customs Authority cannot import the conditions from Agmark standards but has to allow export on the basis of the notification issued by DGFT.
Inasmuch as the DGFT restrictions prescribed in Notification No. 39 (RE-2008)/2004-09, dated 16-9-2008 have been satisfied, there is no justification to order confiscation of the export goods under Section 113 of the Customs Act and also to impose the penalty under Section 114.
Benefit of N/N. 14/2002-C.E., dated 1st March, 2002 - The condition that ‘appropriate duties’ were to be discharged was interpreted to deny exemption to such final products in which the intermediate/inputs were not considered as having paid duty - interpretation of statute - Held that: - reliance placed in the case of M/s. SPORTS & LEISURE APPAREL LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NOIDA [2016 (8) TMI 128 - SUPREME COURT], where it was held that Explanation II to the said exemption N/N. 14/2002 and 15/2002 create legal fiction and that was the precise purpose for which this explanation was added. It is trite law that a fiction created by a provision of law is to be given its due play and it must be taken to its logical conclusion.
The contention of Revenue that assessees are not entitled to the exemption in Notification No. 14/2002-C.E. does not find sustenance - appeal allowed - decided in favor of appellant.
Computation of deduction u/s 10A - Exclude telecommunication expenses from the total turnover as well as export turnover - Held that:- There should be uniformity in the ingredients of both the numerator and the denominator of the formula, Section 10-A is a beneficial section. It is intended to provide incentives to promote exports. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. SEE ACIT vs. Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT ]
TPA - comparable selection criteria - Held that:- Companies functionally dissimilar and not comparable with that of the software development company as that of assessee need to be deselected from final list.
Disallowance invoking the provisions of section 40(a)(ia) - retrospectively amended provisions of second proviso to S. 40(a)(ia) - assessee contended that the cooperative societies from whom the loan was taken, was engaged in the banking business and since the loan was taken for carrying on business purpose, the provisions of section 40(a)(ia) were not applicable - Held that:- There is merit in the claim of assessee in this regard. In case, the amount is payable to a credit cooperative society, who in turn, has included the same as part of its receipts, then irrespective of the fact whether any tax has been paid by the payee and applying the ratio laid down in Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA) as per the amended provisions of the Act, no tax is to be deducted out of such payments, where the payee has included the said receipts as part of its income. Merely because the net income in the hands of such an entity is exempt from tax does not mean that since no tax has eventually been paid by the payee, the said second proviso to section 40(a)(ia) of the Act is not attracted. - Decided in favour of assessee.
Revision of assessment - Section 27 of the TNVAT Act - penultimate order - case of the petitioner is that they were not put on notice that documents viz., purchase bills have to be produced to be entitled for relief. Therefore, the petitioner takes leave of this Court to grant them one more opportunity to place all the materials before the Assessing Officer.
Held that: - this Court is inclined to grant one more opportunity to the petitioner subject to certain conditions - the petitioner is directed to pay 15% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order. If the petitioner complies with the condition, then, along with the payment, the petitioner is entitled to submit his objections by treating the impugned proceedings as a SCN - On receipt of the objections, the respondent shall afford an opportunity of personal hearing to the petitioner and redo the assessment in accordance with law, after considering all issues pointed out by the petitioner - petition disposed off.
Computation of deduction u/s. 10A - Exclude the reimbursement of expenses incurred in foreign currency both from the export turnover as well as from total turnover - Held that:- We find that it was held in the Tata Elxsi Ltd. case [2011 (8) TMI 782 - KARNATAKA HIGH COURT ] that if an amount is reduced from the export turnover, the same amount has to be reduced from the total turnover also because the total turnover is nothing but sum total of export turnover and domestic turnover. Respectfully following this judgment, we decline to interfere with the order of the ld. CIT(A) on this issue. Accordingly, ground No. 2 of the revenue is rejected.
Comparability selection criteria - Held that:- Certain companies should be excluded from the list of comparables merely on the basis of abnormal profits and losses is not sustainable. Although, the same company may be excluded if such exclusion is proper because of other reasons such a functional dissimilarities etc. but we find that as per the order of the ld. CIT(A), the is no discussion about some of the comparable companies on the basis of other aspects such as functional dissimilarity etc., and in the absence of any finding of the ld. CIT(A) on these aspects, we do not consider it proper to examine and decide these aspects in the absence of any finding on these aspects. In our considered opinion, the matter should go back to the file of the ld. CIT(A) for his decision on these aspects. We hold accordingly and set aside the order of the ld. CIT(A) and restore back this issue to his file for fresh decision for exclusion of these companies which are objected to by the revenue in ground No. 3 in the light of various arguments of the assessee on the basis of functional dissimilarities etc.
Cogent reasoning by CIT-A for rejecting the diminishing revenue filter used by the TPO and therefore, on this issue, we find no reason to interfere with the order of the ld. CIT(A).
Even if the accounting year of the comparable is not financial year, but the accounting year of the comparable company is closing within six months’ time frame then such company can be considered as comparable - Held that:- If the assessee or TPO wants that such company should be considered as a comparable then the assessee/TPO should be able to provide the data of the same company for the same financial year by adding the data of two years and then making exclusion of preceding period data and subsequent period data and hence, we feel it proper to set aside this matter back to the file of ld. CIT(A) for a fresh decision and if the assessee can furnish data of such comparable for the relevant financial year then such company may be considered as a comparable and not without that. Ld. CIT(A) should pass necessary order as per law after providing reasonable opportunity of being heard to both sides. Ground is allowed for statistical purposes.
Companies functionally dissimilar with that of assessee need to be deselected from final list of comparability.
Eligibility deduction u/s 80P(2) - interest from treasury and banks - Held that:- In the instant case, the assessee is a cooperative Bank. The investment in treasury/banks and earning interest on the same is part of the banking activity of the assessee’s cooperative bank. Therefore, the said income is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, the Income Tax Authorities were not justified in treating interest income received by the assessee as ‘income from other source’ and denying the benefit of section 80P(2) of the Act. - Decided in favour of assessee.
Reopening of assessment - Held that:- As explained above and respectfully follow the law as laid down by the Hon'ble Supreme Court of India in the case of CIT vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA) as aforesaid, we are of the view that both the authorities below have gone wrong in deciding the reopening as valid. Therefore, we quash the orders of the authorities below on this legal issue and decide the same in favor of the assessee.
Denial of Cenvat Credit - Duty paid through PLA - Rule 8(3A) - the decision in the case of M/s Space Telelink Ltd, Shri Ankit Goel, Managing Director Versus Commissioner of Central Excise, Delhi-I [2015 (10) TMI 2197 - CESTAT NEW DELHI] contested - Held that: - the questions framed for the issue of penalty and CENVAT credit - List in due course.
Notional interest due to delayed recovery of trade debts from AE - Charging interest from both AE and Non-AE debtors for delayed realization of export proceeds - Held that:- In a case like this the proper method is to take a simple average. If we take a simple average then there has been a delay of 132 days in the case of AE and 130 days in the case of Non-AEs in realization of the export proceeds. Thus there is uniformity in the act of the assessee in not charging interest from both AE and Non-AE debtors for delayed realization of export proceeds.
Respectfully following the judgment of Hon’ble Bombay High Court in the case of Indo American Jewellery Ltd. [2013 (1) TMI 804 - BOMBAY HIGH COURT] the appeal filed by the Revenue is dismissed.
Valuation - includibility - value of the free supply diesel by the recipient of the service - Held that: - similar issue decided in the case of CCE, Bhopal Versus M/s SB. Earth Movers Pvt. Ltd. [2014 (11) TMI 872 - CESTAT NEW DELHI], where it was held that the value of free supplies by the service receiver to the service provider is not includible in the ‘gross amount charged’ by the service provider from the service receiver - appeal allowed - decided in favor of appellant.
Disallowance u/s 14A - Held that:- We find that assessee had not claimed any deduction in respect of exempt income nor has it claimed any expenditure against the income which does not form part of the total income.Thus, both the basic ingredients for making a disallowance u/s.14A are missing.Secondly,the fund flow statement made available to the FAA,during the appellate proceedings,clearly show that it had sufficient own funds to make investments(Pg-1 of the PB).The FAA has admitted that funds available to the assessee were more than the investments made during the year under consideration.Therefore, in our opinion there was no justification for making disallowance as per the provisions of section 14A r.w.r 8D of the Rules. Considering all these factors we are of the opinion that the FAA was not justified in upholding the order of the AO. Hence, reversing his order we decide the effective ground of appeal in favour of the assessee .
Challenge to the order of Settlement Commission - decision in the case of M/s Chandra Kamal Corporation And Another Versus Union of India And Others [2015 (10) TMI 374 - ALLAHABAD HIGH COURT] contested - Held that: - delay condoned - SLP dismissed.
The Supreme Court condoned delay, issued notice, and tagged the case with Civil Appeal No. 6149 of 2013. Mr. M.P. Devanath accepted notice on behalf of the respondent.
TPA - computation of ALP - transactions of intra-group services - Held that:- Obligation under the Indian law is to compute the income from an international transaction between two AEs having regard to its ALP and the same is required to be strictly determined as stipulated. The contention, that the foreign AE be considered as a tested party and then foreign companies be considered as comparable for determining the ALP of the international transaction, having no statutory sanction, is sans merit and hence jettisoned.
To sum up, we hold that the methodology adopted by the assessee for computation of ALP in respect of its international transactions of intra-group services by choosing foreign AE as a tested party is completely unfounded and deserves to be and is hereby rejected in entirety.
We hold that the argument of the ld. AR for selection of foreign AE as a tested party is neither legally sustainable nor acceptable on the yardstick of his own contention. We, therefore, direct that the assessee itself should be considered as a tested party.
In doing the exercise of determination of the ALP, the TPO/AO, having due regard to the discussion made above, will first adopt the assessee as tested party and then decide about the most appropriate method after considering the availability of the relevant data. Needless to say, the assessee will be allowed a reasonable opportunity of being heard.
Disallowance by denying depreciation in respect of vehicles given on lease - Held that:- Issue of depreciation of leased vehicles requires restoration to the file of AO. See M/s ICDS. LTD. Versus CIT-A [2013 (1) TMI 344 - SUPREME COURT]
Interest on sticky loans and advances could not be charged to tax. See Hon’ble Supreme Court in the case of UCO Bank vs. CIT (1999 (5) TMI 3 - SUPREME Court)
Non interested in prosecuting the matter - Held that:- The law aids those who are vigilant, not those who sleep upon their rights. This principle is embodied in well known dictum, "VIGILANTIBUS ET NON DORMIENTIBUS JURA SUB VENIUNT'. Considering the facts and keeping in view the provisions of rule 19(2) of the Income-tax Appellate Tribunal Rules as were considered in the case of CIT vs. Multiplan India Ltd. [1991 (5) TMI 120 - ITAT DELHI-D] we treat this appeal as unadmitted
Short deduction of tax - addition u/s Sec. 40(a)(ia) - Held that:- As decided in assessee' own case for AY 2008-09 and 2009-10 [2016 (2) TMI 1147 - ITAT MUMBAI] provisions of Sec. 40(a)(ia) have no application when there is short deduction of tax - Decided against revenue
Applicability of Section 50C - It is the case of the revenue that Section 50C would apply also to transfer of leasehold interest in land and is not limited to only to transfer of land and building or both - Held that:- The impugned order of the Tribunal allowed the respondent – assessee's appeal by following its own decision in Atul G. Puranik V. ITO [2011 (5) TMI 576 - ITAT, Mumbai] as held that Section 50C of the Act would apply only to a capital asset being land or building or both and it cannot apply to transfer of lease rights in a land. No substantial question of law.
UPSIDC treated as a "local authority" under Section 10(20) of Act, 1961 - Held that:- The word "development" under Section 10(20A) of Act, 1961 should be understood in its wide sense. There is no warrant to exclude all development programmes relating to an industry from purview of the word "development" in the said sub-section. There is no indication in Act, 1961 that development envisaged should confine to non-industrial activities. Development of a place can be accelerated through varieties of schemes and establishment of an industry is one of the modes for developing an area. Court also observed that the purpose of granting exemption from income-tax to certain authorities under Section 10(20A) of Act, 1961 is to protect public bodies, created under law, for achieving the purpose of developing urban or rural areas, for public good. When object is such, an interpretation which would preserve it should be accepted even if the provision is capable of more than one interpretation.
We answer all the questions against appellant- assessee and in favour of Revenue by holding that since UPSIDC is a company incorporated under Act, 1956 and not an authority constituted by or under any enactment in India, therefore, is not entitled for claiming exemption under Section 10(20A) of Act, 1961.
Resale of the used motor vehicle - Claim of Exemption on sale of motor cars or other capital assets u/s 6(3) of the Delhi Value Added Tax Act, 2004 (DVAT) - motor cars to be treated as plant or not - the decision in the case of Anand Decors, Print-N-Wrap, Diwan Saheb Fashins Pvt. Ltd. Al-Pack Industries, Afflatus International, , Meenabazar, Agarwal Agencies Pvt. Ltd., B And M Corporation, East West Linkers Versus Commissioner of Trade And Taxes, New Delhi [2014 (12) TMI 1024 - DELHI HIGH COURT] contested - Held that: - leave granted.
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