The Appellate Tribunal CESTAT NEW DELHI heard an appeal against the suspension of a CHA license by the Commissioner of Customs. The tribunal directed the authority to conclude the inquiry promptly and make a final decision. The appeal was disposed of with this direction.
SSI Exemption - use of brand of the principal manufacturer - N/N. 8/2003-CE, dt. 01-03-2003 - period April 2004 to March 2006 - Held that:- It is undisputed that during the period in question, appellants were manufacturing pumps and various parts of the pumps and were affixing the brand of the principal manufacturer. Provisions, clauses alongwith notification at page No. 239 are very clear and since it is not available to the appellants - appeal dismissed - decided against appellant.
Utilization of CENVAT Credit - eligible service or not - taxable services provided from outside India and received in India - Rule 3(4) of the Cenvat Credit Rules, 2004 - Held that:- An identical issue has come up for consideration before the Tribunal in the case of M/s Indian Acrylic Ltd. vs CCE, Chandigarh-II [2013 (1) TMI 460 - CESTAT, NEW DELHI], where it was held that appellant is entitled to utilise the Cenvat credit for discharge of Service Tax for the commission paid to the overseas agents - appeal dismissed - decided against Revenue.
Interpretation of Total Turnover & Export Turnover under 10A - Held that:- Learned counsel appearing for the appellants fairly submits that the question raised in this appeal is answered against the appellants by this Court in CIT v. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT]. The appeal is accordingly dismissed.
Refund of Service tax wrongly paid - rejection of refund claim on the ground that the appellant was not registered with the Service Tax Department - revenue also placed reliance in the case of Collector of Central Excise, Kanpur Versus Flock (India) Pvt. Ltd. [2000 (8) TMI 88 - SUPREME COURT OF INDIA], wherein it had been held that the assessment cannot be challenged by way of subsequent claim of refund.
Held that:- There was no appealable order in the facts of the present case and as such the ratio of the ruling of the Apex Court in the case of Flock (India) Pvt. Ltd. [2000 (8) TMI 88 - SUPREME COURT OF INDIA] is not applicable and have been wrongly relied upon by the ld. Commissioner (Appeals).
The appellant is entitled to refund of Service Tax, wrongly paid through, M/s R. K. Agencies, Lucknow - appeal allowed - decided in favor of appellant.
Renting of Immovable Property Service - service tax became effective since 01/06/2007 - in year 2009, it was struck down but again in 2010, taxation was restored with retrospective effect - appellant was registered with the Department since 08/01/2008, but did not pay any service tax - extended period of limitation - penalty.
Held that:- There is no case of concealment made out by the Revenue, in the show cause notice, as the appellant had recorded the transaction in the books of accounts ordinarily maintained and had also disclosed such turnover in their income tax returns. Thus the non-compliance was due to the striking down of the levy duty by the High Court under the said head.
The extended period of limitation is not available to Revenue - the penalties imposed are not sustainable and accordingly the penalties under Section 78 and 77 are set aside - appeal allowed in part.
Bogus purchases - Non considering the statement of Shri Mukesh M Chokshi taken on oath u/s. 132(4) - Held that:- As decided in Principal Commissioner of Income Tax5 v. Dhwani Mahendra Shah [2018 (3) TMI 1208 - GUJARAT HIGH COURT] Tribunal observed that the entire assessment was based on the statement of one Mukesh M Chokshi, a copy of which was not supplied to the assessee nor opportunity of cross-examining him was granted. Tribunal also gave independent reasons for overturning the orders of the Revenue authorities. It was noticed that the consideration for purchase of shares was paid by cheque. The shares were transferred in the names of the assessee and thereafter to the demat account of the assessee. It was from such demat account the shares were sold.
The issue is primarily based on appreciation of evidence on record. No question of law arises.
Disallowance u/s 14A - Held that:- The assessee for AY 2010-11 had filed its return and thereafter revised it. AO was of the opinion that the assessee had shown dividend income to the tune of ₹ 142.5 crores which was exempt from taxation. Upon his determination, a sum of ₹ 4,90,88,000/- was added under Section 14A as the expenditure involved exempt income although the CIT(A) and the ITAT found that as a matter of fact, the exempt income of ₹ 142.5 crores had not been obtained and that it was only a proposed dividend.
Having regard to these findings, the question of application of Section 14A of the 1961 Act could not have arisen. There is no substantial question of law.
Addition u/s 14A - calculation of disallowance figures - Tribunal did not accept the figure of disallowance worked out by the assessee - Held that:- This issue stands concluded against the Revenue and in favour of the Appellant-Assessee by decision of this Court in Principal Commissioner of Income Tax v/s. Reliance Capital Asset Management Ltd., (2017 (10) TMI 177 - BOMBAY HIGH COURT).
Decision of this Court, the question as proposed stands concluded against the Revenue. Therefore, no substantial question of law arises for our consideration.
Penalty u/s 271(1)(c) - payment made under the VRS scheme could have been deducted only to the extent of 20% under Section 35DDA - Held that:- This Court notices that ITAT in its impugned order has relied upon a decision of this Court in ‘Commissioner of Income Tax Vs. Dalmia (Pvt.) Ltd.’[2009 (7) TMI 74 - DELHI HIGH COURT] wherein as concerned with a somewhat similar situation i.e. the claim made in respect of VRS benefits, and, whether claim of whole amount as a deduction, is contrary to Section 35DDA of the Act and, could result in a justifiable penalty under Section 271(1)(c) of the Act. It was ruled that such could not be the consequence and the penalty was set aside. No substantial question of law. - decided against revenue.
Transfer pricing adjustment - non reference to TPO - grievance of assessee is that in cases where the value of international transactions exceeded ₹ 5 crores, Instruction No.3 of 2003 issued by the CBDT mandates reference by AO to the Transfer Pricing Officer but in the present case AO had transgressed his jurisdiction by undertaking transfer pricing adjustment himself - Held that:- In view of the revised limits prescribed under the Action Plan for financial year 2006-07, which is drawn by CBDT itself and in view of the approach of Assessing Officer in assessment year 2009-10, we find no merit in the plea of assessee in this regard.
AO under the revised Instruction of CBDT had exercised his jurisdiction in computing arm's length price of international transactions and we find no merit in the stand of assessee in this regard. No doubt, as per Instruction No.3 of 2003, dated 20.05.2003, the limit for making reference to the TPO was where aggregate value of international transactions exceeded ₹ 5 crores. In view of revised Action Plan, the action of AO in the present case, where the value of international transactions was to the tune of ₹ 10.42 crores, in not making any reference to the TPO is correct and no fault can be found with the exercise of jurisdiction by AO, under the said facts and circumstances. It may also be put on record that revised Instructions were later issued dated 16.10.2015 being Instruction No.15 of 2015. Thus, the additional ground of appeal raised by the assessee is dismissed.
Selection of comparable - functinal profile - deselection of loss making company - Held that:- The accepted principle for benchmarking international transactions is to select the companies which are functionally comparable to the assessee and benchmark the international transactions undertaken by the assessee by comparing the margins shown by the assessee with the margins of selected external comparables.
The concern CG-VAK Software and Exports Ltd. no change in the functionality of said concern, hence the said concern passes the first threshold limit of being functionally comparable. The second aspect which had weighed with the Assessing Officer in rejecting the said concern is losses shown by the said concern. The margin shown by the said concern in the preceding year was 3.84% and during the year is 0.29% i.e. it has shown positive margin and had not shown any losses. However, while allowing economic adjustment by way of working capital adjustment, the margins of said concern became negative but the said adjustment which has been allowed, does not determine the profitability of the said concern in the open market. Accordingly, we find no merit in the approach of Assessing Officer in this regard and hold that CG-VAK Software and Exports Ltd., is not persistent loss maker and is to be included in the final list of comparables.
Coral Hub Ltd. not be considered as a comparable, as admittedly, its business model was completely different. Admittedly, its expenditure on employment cost during the relevant period was a small fraction of the proportionate cost incurred by the assessee, apparently, for the reason that most of its work was outsourced to other vendors/service providers.
Cosmic Global Ltd. is to be excluded from the final list of comparables on the ground of its outsourcing model as in different business model than the assessee in the year under consideration.
Assessee is only engaged in providing technical support services to its associated enterprises and hence, the concern Accentia Technologies Ltd. is not functionally comparable to the assessee.
Exclusion is E4e Healthcare Business Services Pvt. Ltd. on the ground that the same is not functionally comparable being engaged in providing healthcare outsourcing services.
Undertaking to pay ₹ 3 lacs more to the Bank within two months - List on 04.04.2018.
The status quo re: possession of the mortgaged property is in respect of half share of the land which is in possession of the petitioner and that there shall be no interim stay qua the remaining half of the land.
Belated payment of Central Excise Duty - Held that:- In Rule 8(3A) there is a word “for each month or part thereof” part thereof has been defined by the Madras High Court in the case of State of Tamil Nadu vs. P.T.C. Sanghvi & Co. [1985 (2) TMI 246 - MADRAS HIGH COURT] where it was mentioned that part thereto means “the actual number of days of delay” - appellant is liable to pay the penalty amount for belated payment of duty on the basis of the month and the number of the days of delay - appeal allowed - decided in favor of appellant.
Valuation of stock - advertisement Expenditure, Legal & Professional fees and Site Administrative Expenditure to be capitalized to Inventory as per AS – 2 on Inventory read with section 145A - Held that:- As find that as per Para 13 of AS – 2, administrative overheads that do not contribute to bringing the inventories to their present location and condition and selling and distribution costs are to be excluded from the cost of inventories.
As per the assessee, the amount in dispute of ₹ 15.65 Lacs & ₹ 14.80 lacs are hit by the clause (d) of Para 13 of AS – 2 and the remaining amount of ₹ 11,84,600/- is hit by the clause (c) of Para 13 of AS – 2. These contentions were raised before CIT (A) also and were noted by CIT (A) on page 5 of his order but while deciding the issue as per Para 9.3 of his order, learned CIT (A) has decided the issue without examining and deciding the applicability of clauses (c) and (d) of Para 13 of AS – 2. Hence, set aside the order of CIT (A) on this issue and restore the matter back to his file for a fresh decision. - Decided in favour of assessee for statistical purposes.
100% EOU - Valuation - cotton waste cleared to DTA sales - view of the Department is that sale value of cotton waste should be included in arriving at the eligible quantum of sale in DTA - Held that:- Learned Tribunal has rightly held that obtaining soft cotton waste in the course of carding and combing, ginning cotton does not amount to manufacture and no new product with distinct name, usage and character emerges - The cotton waste is exempted under Notification No.23/2003-CE without any condition. The Assistant Development Commissioner unconditionally exempted from duty.
There is no merit in the present appeals and no substantial question of law arise in these appeals - appeal dismissed - decided against Revenue.
Business expenditure u/s 37(1) - Punitive charge for overloading a wagon - AO treated the overloading charges is nothing but a penalty as per provision of section 73 of the Indian Railway Act, 1989 - CIT(A) deleted the additions - Held that:- In the present case there is no offence whatsoever and there is no compounding fee paid and claimed as deduction. As far as the decision of the Hon’ble Supreme Court in the case of Haji Aziz and Abdul Brothers [1960 (11) TMI 15 - SUPREME COURT] is concerned it was again the case of breach of penal provisions of Customs Act for which fine was paid. Under these circumstances, the expenses were not allowed as deduction. We are of the view that in the facts and circumstances of the present case the claim of the assessee for deduction was rightly allowed by CIT(A). - Decided against the revenue.
Additions u/s 43B - contribution payable by its employees from their salaries payable, as their share of contribution to Provident Fund (PF) and Employees State Insurance (ESI) - Held that:- employees’ contribution to PF paid on or before the due date of filing the return of income u/s 139(1) of the Act should be allowed as deduction - Decided against the revenue.
SSI Exemption - the appellants goods are specified goods bearing the brand name of M/s. Advantech Co. Ltd., Taiwan - N/N. 8/2003 dated 1.3.2003 - time limitation - Held that:- The appellant is registered with the department and availing the SSI exemption, so, the appellant is entitled to SSI exemption and cum duty subject to the satisfaction of the lower authorities - matter remanded to the original authority for the limited purpose to verify the genuineness of the cenvat credit and cum duty and decide the issue denovo - matter on remand.
Time Limitation - Held that:- The finding of the Additional Commissioner mentioned in the Order-in-Original at para 10.3, is sustained without repeating the same.
Calculation of deduction u/s.80IA - steel division has procured the electricity at higher rate than charged by power division to steel division - Held that:- In the present case, the appellant has charged ₹ 2.97 for each unit of electricity supplied to its Ferro Division calculated at the rate on the basis of CSEB tariff applicable to such industries. The Ferro Division had purchased power from CSEB and according to the CSEB tariff, the average purchase price of power was ₹ 20.77 per unit. On the contrary, CSEB purchased power (a: ₹ 2.80 per unit. In the given facts and circumstances - what should be the market price, is a matter for adjudication. It of the considered opinion that the value of power agreed in PPA is on the basis of certain statutory provisions enacted in the Electricity Act and not based on demand and supply factors prevailing in the market.Thus price charged by Electricity Board to its consumer is the market price. In the present case the steel division has procured the electricity at higher rate than charged by power division to steel division, it is therefore, the AO is directed to allow relief to the appellant u/s. 80-IA as claimed.
Proportionate disallowance of advertisement, traveling, director's remuneration, printing and stationery etc. for the purpose of disallowance from Ferro Division - Held that:- The assessee has substantiated that the expenses proportionately disallowed by the A.O were attributable to Ferro Alloys Division only and not to the Power Division. The assessee further produced the copy of Ledger Account of such expenses which were already examined by the A.O. Therefore, the CIT(A) was in agreement with the assessee has been maintaining the books of accounts separately for both the divisions and thus, there was no question of making any proportionate disallowance.
Addition u/s 14A in respect of investment in shares - Held that:- Investment was not for making any profit for future benefit of the assessee company. The Assessing Officer noticed that the assessee has incurred certain expenditure towards interest and also these investments were made out of borrowed funds. Whereas, the CIT(A) found that the investment in shares is not out of its ainterest bearing funds, which is not disputed by ld D.R. and also the investments have been made with profit motive. CIT(A) found that the disallowance is not in order. We find that the CIT(A) while deleting the disallowance has relied various judicial pronouncements, which support the assessee's case.
Proportionate disallowance of interest expenses on account of interest free advance given to sister concern - Held that:- We find that the finding recorded by the CIT(A) that " the assessee had substantial interest free funds and cash profits and also the assessee has substantiated that the loan so advanced was out of commercial expediency/exigency" " has not specifically challenged by the Revenue.
Disallowance u/s.40A(3) - Held that:- CIT(A) found from the verification of list furnished by the assessee that several amounts paid were below the prescribed limit and aggregate of such payments works out to ₹ 4,61,041/-. No plausible explanation was furnished by the assessee for rest of the amount. Therefore, the CIT(A) restricted the disallowance to ₹ 4,61,041/-. On careful consideration of the findings of the CIT(A), we find no good reason to interfere. Hence, we uphold the same. This ground of appeal of the revenue is dismissed.
Disallowance u/s.37(1) - Held that:- D.R. could not controvert the above findings of ld CIT(A). Hence, we see no good reason to interfere with the order of the CIT(A), which is hereby confirmed and ground of appeal of the revenue is dismissed.
Calculating the deduction u/s. 80IA - the loss of an eligible industrial unit is required to be set off against profit of other eligible industrial unit - Held that:- The facts for the year under consideration being no different from those before the Hon'ble High Court in the case of Godawari Power & Ispat Ltd (2013 (10) TMI 5 - CHHATTISGARH HIGH COURT) we find no reason to differ therefrom. We find that Hon'ble High Court in its judgment, inter alia, held that the CIT(A) and Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders. No contrary view has been taken by any superior authority on this issue. Accordingly, the findings of the learned Commissioner of Income- tax (Appeals) stand confirmed. Ground raised by the revenue is dismissed.
Disallowance on account of CSR expenses - Held that:- In the instant case, it is submitted that CSR expenses are incurred for the welfare of local community and thereby improve corporate image of the companies incurring such expenditure. We are of the considered opinion that the CIT(A) has rightly considered the decision and deleted the addition made by the Assessing Officer.
Disallowance made by the AO on account of Pooja and festival expenses and charity & donation expenses - Held that:- As relied on the CBDTG Circular No.17(F.No.27(2)-IT/43) dated 6.5.1983 & circular No.13A/20/68-IT-II dated 3.10.1968, wherein, it was emphasized that expenses incurred on the occasion of Diwali and Muhurat are in the nature of business expenditure. Based on these circulars, the CIT(A) allowed ₹ 71,779/- and disallowed balance of ₹ 1,01,277/-.
Addition on ESI made by the AO on account of delayed payment of employees contribution to PF/ESI - deposits beyond the period prescribed in the relevant statute but before the due date of filing the return u/s.139(1) - Held that:- We find that the CIT(A) relying on the decision of the Delhi High Court in CIT Vs. AIMIL Limited [2009 (12) TMI 38 - DELHI HIGH COURT] wherein, it has been that the employees' contribution towards EPF and ESI etc. deposited after the due date but before the time allowed for filing the return u/s.139(1) will not call for any disallowance u/s.36(1)(va), has deleted the disallowance. We find that the assessee has deposited the amount before the due date u/s 139(1). Therefore, we confirm the order of the CIT(A) and dismiss the ground of appeal of the revenue.
Disallowance u/s 14A - Held that:- CIT(A) correctly relying on case of JCIT vs. Beckay Engineering Corporation [2010 (4) TMI 387 - CHHATTISGARH HIGH COURT] held that the AO failed to prove nexus of transfer of borrowed funds without charging interest, except saying that same is given from the cash credit account maintained by the assessee. The assessee has substantial interest free funds and cash profits and also the assessee has substantiated that the loan so advanced was out of commercial expediency/exigency and deleted the addition made by the Assessing Officer.
Disallowance u/s.14A - Held that:- Neither the shares were allotted during the year under consideration, nor any dividend income had accrued to the assessee against proposed allotment. In our view, there is a finding by the Kolkata Tribunal to the effect that the share application money invested by the assessee was merely in the nature of offer to buy the shares by the assessee and it cannot be aid be concluded contract entered by the assessee and the company. Therefore we find no merit in the appeal of the Revenue.
Expenditure on issuance of bonds - Held that:- In the present case, the bonds issued by the assessee were in the nature of a debt instrument and the stamp duty paid to Government of Karnataka by the assessee would be eligible as revenue expenditure as it will not enhance the capital base of the assessee. There is a distinction between the expenditure incurred for raising the loan and the instrument which had an effect of increasing the share capital. - Decided against revenue
Corporate insolvency process - Duties of Resolution professional - no possibility of approving any resolution plan - stated that all financial creditors have consented for liquidation process under Section 33(2) of the Code as no resolution plan was acceptable to the Committee of Creditors - Held that:- Resolution Professional was under a sacred duty to put forward before the Committee of Creditors that the Code' by virtue of Section 25 (2) (h) binds them to permit floating of expression of interest. Alas that was not done! Why we shudder to think about any extraneous consideration. We are further of the view that the basic Object Of the 'Code' is resolution and liquidation has to be a measure of last resort,
The aforesaid duty could only be performed by inviting the expression of interest from the whole world and the process has to be started by inserting public notices in the two widely circulated newspapers (one in vernacular and the other one in English). The Resolution Professional completely failed in intimating the Committee of Creditors that the resolution plan has to be invited by floating expression of interest. The terms of such prospective applicants were required to be finalized by the Committee of
Creditors with the assistance of the Resolution Professional which include the minimum deposits for a prospective Resolution Plan Applicant and the base price, if so advised, by the Committee of Creditors. The final date for the receipt of the resolution plan and other modalities were also required to be finalized. We do not understand how the Committee Of Creditors can take upon itself the idea of saying that no resolution plan was acceptable to them when there was no resolution plan presented to them. This leads us to infer some suspicions.
In view of the above, we are unable to accept the continuation of the present Resolution Professional namely Mr. Prabhjit Singh Soni and in his place we appoint Mr. Dinesh Sood to act as Resolution Professional to carry on the further process of Corporate Insolvency Resolution Process.
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