|
Advanced Search Options
Case Laws
Showing 341 to 360 of 2028 Records
-
2019 (5) TMI 1688
Approval of Resolution Plan - HELD THAT:- It is noticed that in some Applications pleadings are not complete, hence the parties are directed to serve/circulate the Applications and Replies and Rejoinder thereupon on or before 05.06.2019. Parties are also asked to give a list of their Applications to the Registry so that the Registry can arrange the pleadings to put up before the Bench.
Hearing on Applications shall take place on 12.06.2019.
-
2019 (5) TMI 1687
Admissibility of application - initiation of CIRP - existence of dispute or not - Section 7 of the 'Insolvency and Bankruptcy Code', 2016 - HELD THAT:- In M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT] the Hon'ble Supreme Court further held that "where the Adjudicating Authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact."
The property having mortgaged, it is also held that the claim is not barred by limitation as the period of limitation is 12 years with regard to mortgaged property and in terms of Section 5 (7) read with Section 5(8) as the property is mortgaged, Respondent No. 2 also comes within the meaning of 'Financial Creditor'.
The application under Section 7 is not barred by limitation nor the claim of Respondent No. 2 is barred by limitation - Appeal dismissed.
-
2019 (5) TMI 1686
Income accrued in India - treating the receipt as fees for included services as Article-12 of India-US DTAA - HELD THAT:- The service agreement executed between the assessee and the service provider. For services the assessee has not executed any contracted to make available any technical expertise so as to use those services independently by the licensee. All the services under taken by the assessee are either support services, IT enable services, coordination or tax services as referred above are not such which require transfer of technology, skill to the receipt company.
The Hon’ble Karnataka High Court in CIT Vs De Beers India Minerals (P) Ltd. [2012 (5) TMI 191 - KARNATAKA HIGH COURT] while considering the similar question of law while considering the provisions of India- Netherland Double Tax avoidance Agreement (India- Netherland DTAA), while considering the facts that where a Netherland Company rendered technical services to the assessee, without making available any technical expertise so as to enable assessee use those services independently in future, payment made for such services cannot be termed as ‘fee for technical services’
We hold that the assessing officer erred in taxing the service agreement receipt as ‘fee for included services’ as per Article 12(4) of India USA DTAA for such services as mentioned in para 4 (supra), in absence of clause in the service agreement dated 09.01.2009, that the recipient would be able to perform these services of its own without any further assistance of the assessee. - Decided in favour of assessee
Reimbursement of expenses as fee for included services - Revenue receipts - HELD THAT:- The agreement is basically to share the product without paying the royalty but by paying the consideration which occurs only on the use of the product and not otherwise. The assessing officer taxed the said receipt as consideration for the use of process or formula and fall under the definition of royalty. CIT(A) confirmed the action of the assessing officer holding the assessing officer has assigned valid reason while taxing the receipt. AO has not examined the facts as per the reply and the explanation furnished by the assessee. Considering the facts that we have already allowed the Ground No. 2 holding that assessing officer erred in taxing the service agreement receipt as ‘fee for included services’ as per Article 12(4) of India USA DTAA. Thus, on the same principles the receipt cannot be treated as royalty as there is no transfer of process or formula.
In CIT Vs Siemens Aktiongesellschaft [2008 (11) TMI 74 - BOMBAY HIGH COURT] while relying on the judgment of Industrial Engineering Projects (P.) Ltd.'s case [1992 (7) TMI 38 - DELHI HIGH COURT] held that reimbursement of expenses can, under no circumstances, be regarded as a revenue receipt.
Interest under section 234B and 234C - HELD THAT:- We direct the assessing officer to compute the interest by taking in consideration of decision of Bombay High Court in Ngc Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT] - In the result the Ground No. 5 of the appeal is allowed.
-
2019 (5) TMI 1685
Failure to close the trading window during Unpublished Price Sensitive Information (UPSI) and for 24 hours beyond the UPSI is made public - information shared only on a “need to know” basis - Violation of the Model Code - penalty imposed on the appellants under Section 15HB of the SEBI Act, 1992 for violating Clauses 3.2.1 and 3.2.3(f) of Model Code of Conduct for Prevention of Insider Trading for listed companies (“Model Code”) read with Regulation 12(3) of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 - Whether the imposition of penalty is the ultimate aim under Section 11 of the SEBI Act? - HELD THAT:- In the instant case, in January 2010, Abbott approached the Chairman of PEL with an offer to acquire the domestic healthcare business of PEL. We find that due diligence was carried out by PEL upto May 2010 in strictest confidence. Except for certain individuals, who were identified as being privy to the transaction and informed to SEBI in January 2011 itself, no one in PEL was aware of the information to sell the domestic healthcare business at any time prior to the Board meeting and subsequent positive announcement on 21.05.2010. We also find that the Chairman of the PEL informed the members of the Board of PEL on 10.05.2010 of the possibility of the pending deal that may take place, and none of the persons identified as being privy to the deal had sought any pre-clearance for trading in the scrip of PEL.
SEBI had made an investigation and found that only one designated employee had traded in the scrips. The AO found that the said employee was not associated in any manner with the process of domestic healthcare business and was not in possession of the Unpublished Price Sensitive Information (UPSI) relating to the deal. AO accordingly exonerated him of the charge of insider trading. Apart from the aforesaid instance, the AO has not found any other instance where the UPSI was misused by any employee of PEL, outsider, directors of the PEL, or the individuals who were identified to sell the domestic healthcare business.
The purpose of closing the trading window is for a salutary purpose. It is to ensure that trading is restricted during the period in question and pre-clearance requests can only be sanctioned as per the existing Model Code of PEL. Even though the trading window was not closed, there was no trading of the scrips by any of the designated employees of the PEL nor any pre-clearance requests were received by PEL. Thus, even though, no announcement was made for closure of the trading window, we find that PEL ensured compliance in pith and substance of the Model Code of PEL and the PIT Regulations including the Model Code. We further find that UPSI at all times was preserved and there was no misuse of UPSI.
We find that the violation of the Model Code in the given circumstances is technical in nature. We were informed that the PEL is a blue chip company and has its presence in many countries which has not been denied by the respondent. We were also told that till date there has not been any violation of SEBI Laws. The imposition of penalty, even though meager will leave an indelible mark and leave a blot on their spotless image. Such blot may not be in the interest of the securities market especially in the international market.
We are of the opinion that the object of the Act is not only to protect the investors but also the securities market. The appellant is part of the securities market and its existence is required for the healthy growth of the securities market. SEBI is the watchdog and not a bulldog. If there is an infraction of a rule, remedial measures should be taken in the first instance and not punitive measures. In the absence of any direct or clinching evidence of insider trading or misuse of UPSI, a reasonable benefit of doubt should be extended to the PEL instead of mechanically imposing a penalty. Other factors should be considered including those stated in Section 23J of the Act which apparently was not considered.
When fairness and transparency was shown by PEL in the execution of the deal and there is no evidence of lack of integrity on the part of PEL, it would be harsh to penalize PEL, howsoever small the penal amount it may be.
AO has imposed a penalty upon PEL for a technical violation of the Model Code. The compliance officer has already settled the matter with SEBI. We feel that in the given situation the imposition of penalty upon PEL and its directors was unwarranted and, in any case, disproportionate. This Tribunal, in appeal, apart from exercising the powers of the Board can also exercise powers to make such orders and give such directions as may be necessary or expedient to secure the ends of justice as specified under Rule 21 of the Securities Appellate Tribunal (Procedure) Rules, 2000. These powers have been conferred upon the Tribunal with a view to do complete justice between the parties which is equitable in nature to be exercised to ensure justice between the parties or to prevent injustice.
Imposition of penalty is converted into one of warning with a further direction that if any such incident occurs in future, it would be open to SEBI to proceed in accordance with law.
-
2019 (5) TMI 1684
Exclusion of period when ex-promoters / directors have not been co-operating with the Resolution Professional - HELD THAT:- As a matter of fact, application was filed on 25.10.2018 and the proceeding with regard co-operation by the ex-promoters/ directors are still pending as the necessary information / documents and record is yet to be furnished in its entirety.
Therefore, the COC has thought it fit to authorise the resolution professionals to move for such application. Moreover, the period of 270 days will come to an end on 1 1.05.2019 and possibility of getting a resolution plan resulting in reasonable settlement of the creditors dues is most probable. Accordingly, we find that the prayer for extension of time from 25.05.2018 to till date is meritorious and the same is accepted - the period from 25.05.2018 to till date shall be excluded from the period of 270 days and resolution may be expedited.
Application disposed off.
-
2019 (5) TMI 1683
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in payment - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The existence of debt and default is reasonably established by the Financial Creditor.
The Application under sub-section (2) of Section 9 of I&B Code, 2016 is complete. The existing financial debt of more than rupees one lakh against the corporate debtor and its default is also proved. Accordingly, the petition filed under section 9 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted.
Application admitted - moratorium declared.
-
2019 (5) TMI 1682
Rectification u/s 154 pursuant to order passed by Hon’ble Dispute Resolution Panel-I on certain grounds of appeal - HELD THAT:- Assessee, at the outset, placed a brief note on record to submit that the assessee wishes to withdraw the stated appeal in view of the fact that adequate relief has already been granted by the Tribunal in INDIA MEDTRONIC PVT. LTD.[2019 (5) TMI 1681 - ITAT MUMBAI] in an appeal filed by the assessee against final assessment order passed u/s 143(3) r.w.s. 144C(13). In view of the same, the issue under appeal becomes merely academic in nature. The Ld. CIT-DR raised no objection against withdrawal of the appeal. Appeal stands dismissed as withdrawn.
-
2019 (5) TMI 1681
TP Adjustment - Advertising, Marketing and Promotion (AMP) adjustment - HELD THAT:- As in assessee’s own case [2018 (1) TMI 1033 - ITAT MUMBAI] TPO had held that assessee should have been compensated by its AE for the AMP expenditure incurred by it. We have gone through the agreements entered in to by the AE.s with the assessee, that in the agreements there is no condition about sharing of AMP, that the agreements talks of using best efforts to market and distribute the product or promote the products in a commercially reasonable manner. In our opinion, these terms do not give any indication that the AE and the assessee had to share AMP expenses. Secondly, if the AE was benefitted indirectly by the AMP expenditure incurred by the assessee, it cannot be held that it had entered into agreement for sharing AMP expenses. We are also of the opinion that Bright Line Method should not have been applied by the TPO.
Disallowance of depreciation on building - HELD THAT:- We find that the above issue is covered in favour of the appellant by the decision of the ITAT in assessee’s own case for AY 2009-10 [2015 (12) TMI 1673 - ITAT MUMBAI] granted depreciation on plant and machinery and building.
Disallowance of payment to doctors - AO disallowed convention expenses incurred by the appellant u/s 37(1) on the ground that it was in violation of clause 6.8 of the MCI Regulations and consequently, was in violation of the CBDT Circular No.5/2012 dated 01.08.2012 - HELD THAT:- ITAT in assessee’s own case for the AY 2010-11, relying on the decision of Max Hospital [2014 (1) TMI 1829 - DELHI HIGH COURT] and PHL Pharma [2017 (1) TMI 771 - ITAT MUMBAI] held that (i) MCI guidelines are applicable to the professionals i.e. Doctors only and do not govern the other tax entities or individuals other than doctors and (ii) MCI, as a body can formulate policy for Doctors and the appellant is not a practicing professional and therefore, any guidelines issued by it cannot decide the allowability or otherwise of an expenditure under the Act. Facts being identical, we follow the above order of the Co-ordinate Bench.
Depreciation on non-compete fees - HELD THAT:- ITAT in assessee’s own case for AYs 2003-04, 2004-05, 2008-09, 2011-12 has admitted the similar additional grounds filed on consequential depreciation and directed the AO to grant consequential depreciation on non-compete fees.
-
2019 (5) TMI 1680
Maintainability of application - Section 7 of I&B Code - initiation of CIRP - debt and default by Corporate Debtor - HELD THAT:- The question whether the claim is barred by limitation to see that there is no debt payable in law, we hold that the claim of ARCIL is not barred by limitation, as the assignment deed was made in favour of ARCIL on 28.3.2014 which was declared invalid by DRT, Ahmedabad by an order dated 10.6.2016 and thereafter having revived pursuant to Hon’ble Gujarat High Court order.
The Corporate Debtor offered three settlement proposals for payment of debt on 24.2.2015, 29.4.2015 and 26.6.2015 to ARCIL.
Appeal dismissed.
-
2019 (5) TMI 1679
TDS u/s 195 - disallowance of commission paid to non residents U/s 40(a)(ia) - income accrued in India - HELD THAT:- Once the payment in question is commission then the provisions of Section 40 (a)(i) of the Act are applicable only if such sum is chargeable to tax under this Act. As per provisions of Section 5(2) of the Act the total income of non-resident includes all income from whatsoever sources derived which is received or deemed to be received in India accrues or arises or is deemed to accrue or arise to him in India during such year
Commission paid to non-resident outside India for the services rendered outside India will not fall in the category of the income received for deemed or received in India as well as accrues or arises or is deemed to accrue or arise in India. Thus, the said amount paid to non-resident does not fall in the scope of total income of non- resident and consequently it is not chargeable to tax in India under the provisions of the Act.
The said income in the hands of non-resident has to be considered in the light of the provisions of DTAA between India and the Country of the non-resident. In the absence of P.E. of the non-resident in India such business income is not chargeable to tax in India. Accordingly, in the facts and circumstances of the case when the amount paid by the assessee is not chargeable to tax in India then the assessee is not liable to deduct TDS and consequently the provisions of Section 40(a)(i) of the Act cannot be invoked for making the disallowance. In the facts and circumstances of the case the disallowance made by the AO U/s 40(a)(i) of the Act is deleted. - Decided in favour of assessee
-
2019 (5) TMI 1678
Grant of Regular Bail - Section 69 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Perusing the material placed on record and taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. This Court has also considered the aspects that; (i) the applicant is in jail since 18.3.2019; (ii) the applicant is arrested for the alleged offence under the provisions of the Central Goods and Service Tax Act, 2017.
The learned senior counsel, under the instructions, further submits that the applicant is also ready and willing to deposit further amount of ₹ 21 lacs within a period of six months from the date of release of the applicant - In view of the aforesaid, without going into the further merits of the case and looking to the over all facts and circumstances of the case, it is deemed fit to consider the case of the applicant.
The applicant is ordered to be released on regular bail - application allowed.
-
2019 (5) TMI 1677
Levy of penalty u/s. 271(1)(c) - reference to the income assessed u/s. 115-JB - bonafide belief - whether the explanation offered by the assessee in response to the show cause notice u/s. 271(1)(c) of the Act is a plausible explanation or not? - HELD THAT:- There is no material on record establishing as to how the appellant had entertained belief that the profits exempt from tax under the provisions of s. 10B of the Act are not liable to tax u/s. 115-JB of the Act. Thus, it is merely bald explanation, therefore, it cannot held to be a plausible explanation and the levy of penalty u/s. 271(1)(c) of the Act is justified having regard to the ratio of the decision of Mad Data Pvt. Ltd. v. CIT [2013 (11) TMI 14 - SUPREME COURT]
Hon’ble High Court of Delhi in the case of Nalwa Songs Investments Ltd. [2010 (8) TMI 40 - DELHI HIGH COURT] is not applicable in the present case, as the penalty is levied with reference to the income assessed u/s. 115-JB of the Act, we do not find any merit in the appeal filed by the assessee.
-
2019 (5) TMI 1676
Restoration of appeal which was dismissed on the ground of Monetary limits for filing of appeals by the Department - HELD THAT:- Although the tax effect was less, however, the matter under dispute was covered by exception provided in para 10(e) of the said circular read with clarification issued by CBDT on 20/08/2018. Case was reopened pursuant to receipt of information from Sales Tax Department Maharashtra that the assessee made alleged bogus purchases from certain entities and therefore, such cases fall within the exception provided under the circular. Liberty was already provided under the order to the revenue to seek recall upon pointing out any exceptions. AR could not controvert the same.
Upon perusal, we find force in the argument of Ld. DR since the scope of exception as given in circular No. 03/2018 dated 11/07/2018 has been widened vide clarification F. No 279/Misc. 142/2007-ITJ (Pt) dated 20/08/2018 amending para 10 of the said circular - we are inclined to recall the order with respect to the captioned assessee only without disturbing the order for rest. We order so. The revenue’s appeal stands restored to its original status.
-
2019 (5) TMI 1675
Revision u/s 263 - doctrine of the merger the assessment - taxability of rental income - business income or house property - HELD THAT:- Commissioner (Appeals) allowed the appeal of the assessee by accepting the lease rental income as ‘business income’. Therefore, before the ld Commissioner (Appeals) there was issue of taxability of rental income, which was duly considered and decided by him. Commissioner (Appeals) decided the issue after examining the memorandum of association of the assessee, nature of the income and facts that similar income was accepted as a business income.
In our view the order of assessing officer on point of taxability of lease rental income is merged with the order of Commissioner (Appeals). The revenue/ assessing officer accepted the finding of ld. Commissioner (Appeals) as no further appeal was filed before Tribunal. This fact was brought in the notice of ld. Pr Commissioner in the reply furnished by the assessee.
Pr Commissioner took the view that the taxability of rental income as “House Property Income” was not the subject matter before ld. Commissioner (Appeals). In our view the ld. Pr Commissioner is wrong in his approach and the taxability of lease income as was very much before ld. Commissioner (Appeals).
Explanation (c) to section 263 places an embargo on the Commissioner in case of subject-matter of any appeal which had been considered and decided in such appeal. Before the ld. Commissioner exercises his jurisdiction under section 263, he is required to ascertain whether the order referred to in subsection (1) of section 263 had been the subject-matter of any appeal, and if yes, the revisional powers should be available only with respect to subject-matter that had not been considered and decided in such appeal. Thus, in the present case, Commissioner was wrong in revising the assessment order on the taxability of rental income as income from house property. Therefore, the order passed by him is not valid. - Decided in favour of assessee
-
2019 (5) TMI 1674
Grant of regular bail - Section 135 of the Customs Act, 1962 - Smuggling - Gold - bailable offence or not - HELD THAT:- Petitioner contends that petitioner has falsely been implicated in the instant case and the main accused are still at large. The offence is bailable. Petitioner is in custody 26.03.2019. Conclusion of trial may take long time. No useful purpose would be served by detaining him in jail. Nothing has to be recovered from him.
The petitioner-Narayan Sharma, is ordered to be released on bail pending trial, on his furnishing adequate bail and surety bonds to the satisfaction of trial Court/Duty Magistrate, concerned - petition allowed.
-
2019 (5) TMI 1673
Higher rate of depreciation on Trucks and Trailers - Disallowance on account of alleged excess depreciation claimed at the rate of 30% instead of allowable depreciation of 15% on Trucks and Trailers - HELD THAT:- Appellant has been consistently claiming higher rate of depreciation of 30% in the preceding assessment years as well as in the succeeding assessment years, wherein the results have not been disturbed and the higher rate of depreciation in scrutiny assessments in these year's has been duly allowed by the department. Once the appellant is consistently claiming higher depreciation which has also been allowed by the department, hence in opinion to disturb it in a particular year, the claim of the appellant for higher depreciation would not be lawful and thus the higher claim of depreciation @ 30% claimed by the appellant during the assessment year under consideration is held to be a genuine claim. The Central Board of Direct Taxes in a circular number 652 dated 14-6-1993 wherein it has clarified that even if the assessee is using the motor lorries in its own business of transportation of goods, then also higher rate of depreciation would be allowed to them.
In view the CBDT circular as well as the consistent claim of the appellant for higher rate of depreciation in all the years throughout, we delete the disallowance so done by the Ld. A.O. and sustained by the Ld. CIT(A). Thus, the higher rate of depreciation at 30% is allowed to the appellant and accordingly, this ground of appeal is allowed.
Disallowance of Service Tax liability u/s 43B - tax liability unpaid before the due date of filling of return u/s 139(1) - HELD THAT:- Since the provisions of Service Tax rules, prior to its amendment which was applicable from 1-4-2011, stated that the service tax would be payable only on receipt of the same from the service receiver, hence how could the appellant pay the same when the service tax was not received from the service recipient, and therefore the same cannot be added u/s 43B, as it never became due to be paid to the service tax department as the same was not even realised from the appellants service recipients. The intention of the revenue in inserting the provisions of the section 43B was that the assessee should not take benefit from the indirect taxes which it receives and never pays to the government, and also claim a deduction of the same in arriving at the taxable income, hence a deduction of the same was to be allowed only on actual payment of those taxes, duties to the Government.
Disallowance done u/s 43B for service tax payable which never became due to be paid as per Service Tax Rules cannot be disallowed u/s 43B as was done by the Ld. A.O. and hence the disallowance is deleted. Accordingly, the 2nd ground of appeal is allowed.
Nature of expenses - office repair and maintenance - revenue or capital expenditure - HELD THAT:- . Since by incurring these expenditures on wooden panelling, electric wiring, fall ceiling, etc. no new asset which belong to the assessee came into existence, whereby it could claim depreciation u/s 32 of the Income Tax Act, of which it was an owner, hence we feel that the assessee has rightly claimed these expenditures as revenue expenditure and not capitalised in its fixed assets chart. If the assessee would have capitalised these expenditures, then the question would have arisen, since it was not an owner of these assets, then how depreciation would have been allowed to the assessee firm. Further the CIT(A) based on the findings of the Ld. A.O. confirmed the additions without point out any adverse opinion of his in doing so and without averting to the facts and case laws relied by the assessee. The amount claimed as revenue expenditure under the head ‘office repairs and maintenance’ allowed.
-
2019 (5) TMI 1672
Annulment of a “deal” - appellant is a clearing member empanelled with NSE Clearing Limited - HELD THAT:- Clearing Member can apply for annulment of a “deal”. In our opinion such deal mentioned in Clause V will also include trades done on the Exchange platform. The relevant authority to decide the annulment of the deal would be the Board of Directors of National Securities Clearing Corporation Limited (now, NCL) and SEBI.
The contention of SEBI in the impugned order that it is not within its purview to consider the request for annulment of trades is erroneous. SEBI in exercise of powers u/s 11, 11B of SEBI Act, 1992 read with 12A of the SCRA, 1956 has wide powers to consider a complaint with regard to annulment of the trades.
We find that since bye-laws have been framed by NCL in exercise of the powers conferred under Section 9 of SCRA, 1956 therefore, in our opinion, the appropriate measure is for the appellant to approach the relevant clearing house.
The appellant is required to file an application under Clause 5 of Chapter VII of the bye-laws of the National Securities Clearing Corporation Limited for annulment of the trades. A perusal of Clause 5 makes it clear that if there is a willful misrepresentation or material mistake or if there is fraud the relevant authority is empowered to annul the trades.
In so far as the freezing of the demat account is concerned, we are of the opinion that SEBI was justified in directing the appellant to approach the EOW. No error in this regard. We find that EOW has passed an order for freezing the demat account. The appellant is already pursuing the matter before the Delhi High Court. Thus, no order could be passed by SEBI in this regard.
Matter directing the appellant to move an appropriation application under Clause 5 of Chapter VII of the bye-laws of National Securities Clearing Corporation Limited (NCL). If such an application is filed, the said Clearing Corporation will decide the matter at the earliest after hearing all concerned parties.
Tribunal observes that the finding of SEBI that the appellant had no locus standi for modification of the ex-parte interim order is erroneous. We are of the opinion that even though the appellant may not be a party in those proceedings but if the appellant is affected either directly or indirectly the appellant has a right to apply for modification of the order. The ex-parte interim order observes that Allied has committed various violations of SEBI bye-laws by misappropriating clients securities which need to be returned. Such securities were given to the appellant as collateral to square off the trades of Allied. In our view, the appellant is an affected party. We thus, leave it as that and hold that in the event the appellant applies for being heard and for protection of its interests the WTM of SEBI cannot deny the opportunity of it being heard.
-
2019 (5) TMI 1671
Filing of supplementary affidavit - HELD THAT:- Learned counsel for petitioner has filed supplementary affidavit today and the same is taken on record.
On request of learned counsel for petitioner, list this case in first week of July, 2019.
-
2019 (5) TMI 1670
Bogus LTCG - denial of exemption u/s 10(38) - unexplained cash credit u/s 68 - as per assessee transaction was done through the Registered Stock Exchange Broker only and payment was made through proper banking channel - HELD THAT:- SEBI has given a clean chit to the company and has freed it from the allegation of market rigging. Therefore, the allegation of the AO itself becomes infructuous - assessee had also requested for an opportunity to cross examine Sri Sunil Dokania, whose statement has been relied on by the AO for making the addition. AO did not provide any opportunity for cross examine, the so-called operators. It is well established law that no adverse view can be taken against an assessee, on the basis of statement recorded by department of any person without providing copy of the statement to the assessee and also without providing opportunity for cross examination of the said person.
Assessee had never entered into any transaction with Sri Sunil Dokania, against whom investigation wing had allegedly made inquiry. We also note that in the extracts of the statement of Sri Sunil Dokania given in the Show Cause notice, it is nowhere mentioned that the alleged person has provided any entry to the assessee directly.
When the transactions were as per norms prescribed by SEBI and concerned stock exchange and suffered STT,brokerage, service tax, and cess. There is no iota of evidence over thetransactions as it were reflected in demat account. AO did not doubt the genuineness of the documents submitted by assessee. Theld AO failed to bring on record any evidence to suggestthat the sale of shares by the Assessee were not genuine. The assessee produced the contract notes, details of demataccounts and produced documents showing all payments were received bythe assessee through banks. In these circumstances, the long term capital gain (LTCG) earned by the assessee should not be treated as bogus - Decided in favour of assessee
Unexplained expenditure towards commission charges of sale of such shares by the operator - HELD THAT:- As already held that the transactions relating to LTCG were genuine and not the accommodation entries as alleged by the AO. Consequently, the addition is hereby directed to be deleted. We accordingly hold that the issue is allowed in favour of the assessee.
-
2019 (5) TMI 1669
Addition of direct expenses incurred on behalf of the client shown in the Contract Account - whether the addition on account of Labour Cess should not be made? - disallowance invoking the provisions of section 43B - HELD THAT:- Labour cess is part of the contract account. That being so, the assessee is correct in contending that the addition, if any, is maintainable only in the hands of the client of the assessee Corporation and not in the hands of the assessee. The provisions made for labour cess, do not stand debited to the profit & loss account and the profitability of the Corporation in the form of centage earned as gross profit, is not affected. The assessee Corporation is only a collecting agency for the purposes of the labour cess and deposit thereof with the Government account. Thus, the action of the ld. CIT(A) in confirming the addition for the provisions for labour cess, is reversed and the addition is deleted. The sole ground raised by the assessee in its appeal is allowed.
Addition u/s 40(a)(ia) - non-deduction and deposit of tax with the Central Government within due date on the provisions of labour charges made by the assessee’s various units in various districts of Uttar Pradesh - HELD THAT:- Section 40(a)(ia) is clearly not applicable to the facts of the present case, wherein, the claim of the assessee is that all the provisions made, represent labour charges, such provisions having been made by the assessee in its books of account, without debiting the profit & loss account. As settled in ‘Aahar Consumer Products Pvt. Limited’ [2011 (2) TMI 488 - ITAT, DELHI] , in order to enable invoking the provisions of section 40(a)(ia) the assessee should first be shown as contemplating deductions under sections 32 to 38, which provisions contained in the non obstante clause beginning section 40, attract disallowability to deductions in these provisions, on which tax is deductible and no TDS has been made by the assessee. Then, as settled in ‘M/s Teja Construction vs. ACIT’ (supra), all the expenditure, which represents direct costs and, hence, is adjustable against the revenue for the purpose of determining profit under section 28(i) of the Act, does not come within the provisions of section 40(a)(ia) of the Act.
CIT(A) has correctly deleted the addition wrongly made. The ‘labour charges’ were only provisions made by the assessee in its books. The Contract Account containing these provisions had necessarily to be prepared by the assessee Corporation, in keeping with the requirement of its Working Manual. This contract account did not affect the profitability of the assessee. In fact, the profit & loss account of the assessee was never debited with the labour charges in question.
The Contract Account merely reflected the resulting profit or loss accruing during a construction period, having a direct relation to the works dealt with by the assessee in its business and which ascertains the gross profit. This has duly been taken into consideration by the CIT(A) and the Department has not been able to successfully rebut the well reasoned finding of fact and law recorded by the ld. CIT(A).
Addition of long standing credits in the books of accounts of the appellant - HELD THAT:- No infirmity in the order of the ld. CIT(A) on this issue. As observed by the ld. CIT(A), the A.O has nowhere given any finding that the liability in respect of the aforesaid credit balances has ceased to exist. Moreover, once the books of account of the assessee are accepted and the contract account is not disturbed, there is no justification to sustain the addition for the reason that these balances were old and unconfirmed. We, therefore, confirm the order of the ld. CIT(A) on this issue and reject ground No.3 of the Revenue.
CIT(A) directing the A.O to accept the revised computation of income - HELD THAT:- CIT(A) has set aside the order of the ld. CIT(A) on this issue and restored the matter to the file of the A.O with a direction to accept the revised computation of income where the anomaly described by the AO has been corrected and the depreciation as per Income Tax Act has been claimed and depreciation as per the Companies Act has been added to the income. Since the issue relating to allowability of depreciation has been restored to the file of the A.O to decide the same afresh after accepting the revised computation, we do not find any infirmity in the order of the ld. CIT(A), therefore, we confirm the order of the ld. CIT(A) on this issue and reject ground No.4 of appeal of the Revenue.
Loss on sale of fixed asset - CIT(A) directing the A.O to accept the revised computation of income wherein the assessee added loss on sale of fixed asset - HELD THAT:- As observed by us in para 32 above, since the issue relating to allowability of depreciation has been restored to the file of the A.O to decide the same after accepting the revised computation, we do not find any infirmity in the order of the ld. CIT(A), therefore, we confirm the order of the ld. CIT(A) on this issue and reject ground No.5 of appeal of the Revenue.
Addition on account of prior period expenses - HELD THAT:- As claimed by the assessee, the amount pertains to the contract account and therefore, in case the addition is made, the equivalent amount is to be reduced from the work-in-progress. We, therefore, find no infirmity in the order of the ld. CIT(A) on this issue. Accordingly, we confirm his order on this issue and reject ground No.6 of the Revenue’s appeal.
Accrual of income - interest on client fund as income of the assessee - HELD THAT:- Amount shown in the balance sheet as interest accrued on deposits was the running balance of the accrued interest on the funds of the clients of the assessee. The assessee maintains its books of account on mercantile basis and it makes provision of interest on accrual basis. The assessee also credits such interest to the respective clients’ accounts as per Government Order dated 11/4/1076 (supra). CIT(A) has rightly observed that the interest earned by the assessee on unutilized fund is credited to the respective accounts and are the income of the concerned clients and not of the assessee. No infirmity in the well reasoned order of the ld. CIT(A) on this issue.
Addition on account of expenses relating to purchase of material - HELD THAT:- CIT(A) has deleted the addition placing reliance on the decisions of the Tribunal in the assessee’s own case for assessment yea₹ 1991-92 and 2000-01 wherein identical issue has come up for consideration before the Tribunal and the Tribunal held that if any disallowance was to be made in the cost debited to the contract account, then corresponding reduction is required to be made in the work done also being a case of contra entry. No justification to interfere with the order of the ld. CIT(A), who has rightly deleted the addition
Addition on account of ‘income wrongly credited in previous year written back’ - HELD THAT:- as observed by the ld. CIT(A), that centage on the work of ₹ 2,13,04,810/- and ₹ 6,37,17,415/- has already been assessed to tax in the assessment year 2008-2009; that the reversal entry has been passed, as the CAG opined that the cost of construction was wrongly recognized in the assessment year 2008-2009; and that the remaining amount of ₹ 93,18,832/- is the excess centage shown in the assessment year 2008-2009. Once the centage has been offered to tax, there is no reason to disturb the contract account for the year under consideration by making addition of ₹ 9,43,41,057/-, as the income was offered to tax in assessment year 2008-2009. Therefore, no interference is called for in the order of the ld. CIT(A) on this issue. - Decided against revenue
Addition on account of interest income earned on clients unutilized funds - HELD THAT:- Amount shown as ‘prior period adjustment’ by the assessee in its profit & loss account for assessment year 2011-12. A perusal of the Income Computation Statement of the assessee for assessment year 2011-12 shows the amount of ₹ 26,95,93,097/- in the profit & loss account. Since the amount received by the assessee as interest on FDRs on the funds received as advance from the clients, has duly been credited in the respective accounts of the clients, the ld. CIT(A) was justified in deleting the addition made by the A.O. We accordingly confirm the order of the ld. CIT(A) on this issue and reject grounds of the Revenue.
Addition on the basis of the comments of the statutory auditor - as commented that the said amounts were part of the work done during the year, whereas the submission of the assessee was that the same have already been accounted for in assessment year 2011-12 - HELD THAT:- We find no error in the order of the ld. CIT(A) in deleting the addition as the same has been shown by the assessee as income in the subsequent year. We, therefore, confirm the order of the ld. CIT(A) on this issue and reject ground of the Revenue.
............
|
9911796707
