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Showing 361 to 380 of 1464 Records
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2021 (10) TMI 1105
Deduction u/s 80IB(11A) - AO disallowing the deduction claimed as the predominant activity of the assessee is milling/de-husking of paddy, which does not constitutes a ‘manufacturing activity’, and is beyond the scope of Section 80IB(11A) and that the activity of storage and transportation undertaken by the assessee are only incidental to the main manufacturing activity off the assessee - HELD THAT:- The aforesaid issue is squarely covered in favour of the assessee by the order of the Co-ordinate Bench of Tribunal in assesse’s own case for the A.Y. 2009-10 [2021 (6) TMI 258 - ITAT DELHI] Following the order of the co-ordinate Bench in the case of a group company, LT Foods Ltd. [2020 (10) TMI 88 - ITAT DELHI] allowed deduction claimed u/s 80 IB(11 A) - activities involving cleaning, steaming, soaking, drying, polishing, grinding etc. clearly fall within the expression “ handling” as contemplated under section 80 IB(11 A) - de- husking of the paddy to convert it into rice is an integral part of reducing the post- harvest food grain loss as it enhances life of food grain and reduces the loss of food grain and contributes to the preservation of food grains - CIT(A) has righty allowed the claim of deduction under section 80IB(11A) of the Act and we decline to interfere with the order of the ld. CIT(A).
Disallowance u/s 14A - HELD THAT:- The assessee is not liable for any disallowance on interest as no interest bearing funds have been utilized for the purpose of making investment. Since, the share of profit from the partnership is mere distribution of income which is already been taxed, hence the provisions u/s 14A are not attracted in such case. Further, we also affirm the principle of no disallowance is called for where there is no exempt income earned. The AO is directed to re- compute the disallowance, keeping in view the guidelines mentioned above.
Prior period Expenses - amount comprised of excess input tax receivable and bank processing charges - AO disallowed prior period expenses on the grounds that they do not relate to the relevant previous year - HELD THAT:- The relevant facts are that the aforesaid expenditure was duly claimed as deduction in the computation of income as the same were business expenditure incurred in the ordinary course of running the business and allowable revenue deduction u/s 37(1) of the Act. Further, in so far as bank processing chargesis concerned, the processing charges was accounted and charged by the bank during the relevant assessment year only, but the assessee inadvertently debited the same into prior period expenses. In view of the above, the disallowance of prior period expenses is being deleted in toto.
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2021 (10) TMI 1104
Validity of selection of case for scrutiny under compulsory scrutiny criteria - the assessee has challenged the scrutiny assessment as the Assessing Officer has not obtained necessary sanction from the competent authority as per the instruction of CBDT - Whether there was no information nor satisfaction of the department for conducting survey and thus the entire survey proceedings is nothing but a biased action on the part of the department which is illegal and unjustified? - HELD THAT:- There is no much gap between the survey and the post survey enquiry conducted by the AO therefore the post survey enquiry are part and partial of the survey proceedings and would deem to be concluded on the conclusion of the post survey enquiry on 27.01.2012. Thus, when the fact of the conducting the survey as well as the post survey enquiry is not in dispute then the case of the assessee would certainly fall under the category of selection under compulsory scrutiny. No substance or merit in the additional ground raised by the assessee. The same is dismissed. Ground no. 1 of the original grounds is general in nature and does not require any specific adjudication.
Addition u/s 68 - unexplained cash credit - HELD THAT:- The assessee has shown the unsecured loan of ₹ 2,60,000/- which means the remaining unsecured loans was repaid by the assessee. Assessee has failed to explain the source of cash credit of ₹ 8,50,000/- and repayment of the unsecured loan of ₹ 8,30,000/-. The consolidated balance-sheet as referred by the learned AR has been re-casted and filed at this stage but was not produced before the authorities below. Even the capital account balance of the assessee shown in the consolidated balance-sheet as on 31st March, 2011 is contrary to the balance-sheet of M/s Rastogi Mobile Zone wherein there is a negative capital balance. AR has submitted that the loan amount is mistakenly shown as capital balance in the consolidated balance-sheet but the same is the unsecured loan amount of ₹ 10,29,797/-. This figure alongwith the current liabilities of M/s OM Jewellers is again not matching with the unsecured loan shown by the assessee in the return of income for the assessment year 2012-13 -Therefore, the assessee has grossly failed to explained the source of the cash credits - Decided against assessee.
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2021 (10) TMI 1103
Penalty levied u/s 221 r.w.s. 140A(3) - Claim of the assessee that post amendment of Sec. 140A(3) w.e.f 01.04.1989 without there being any amendment in Sec. 221(1) of the Act no penalty could be levied for non-payment of self-assessment tax - Whether no penalty under sub-section (3) to Sec. 140A could have validly been imposed on the assessee for its failure to discharge its admitted self-assessment tax liability? - HELD THAT:- Admittedly, it is a matter of fact borne from the record that the assessee company except for the aforesaid interest income on the ICD”s with NBFC”s had no other source of income. Insofar the availability of the aforesaid funds invested with the NBFC”s are concerned, we find that as the same were sourced from the parent company, viz. Mercantile Ports and Logistics Ltd. [formerly known as SKIL Ports & Logistics ltd) Guernesey (SPLL-G)] for a specific purpose i.e for Karanja port development project, and were invested by it with the NBFC”s, therefore, the same were not freely available to the assessee for discharging its admitted tax liability.
We are in agreement with the view taken by the CIT(A) that as the assessee was in no financial position to pay the self-assessment tax at the time of filing of return of income, therefore, no penalty u/s 221(1) r.w.s 140A(3) could have been imposed on it. We, thus, in terms of our aforesaid observations concur with the view taken by the CIT(A) that considering the serious financial constraints of the assessee due to which it had failed to discharge its admitted self-assessment tax liability at the time of filing its return of income, and for a period thereafter, no penalty under Sec. 221(1) r.w.s 140A(3) could have even otherwise be imposed on it.
Finding no infirmity in the view taken by the CIT(A) we uphold his order. Accordingly, the appeal filed by the revenue being devoid and bereft of any merit is dismissed.
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2021 (10) TMI 1102
Income accrued in India - Fixed place PE - business connection in India - Attribution of profits - Whether the appellant has a permanent establishment (PE) under Article 5(2) & 5(4)/5(5) of the India-Mauritius DTAA? - AO Proceeded by attribution of profit to PE and attributed 30% of the gross advertising revenue and made attribution - HELD THAT:- Considering the past history of the assessee in light of the decision of this Tribunal [2020 (10) TMI 1019 - ITAT DELHI] read with the decision of the Hon'ble Supreme Court in the case of E-funds IT Solutions Inc. [2017 (10) TMI 1011 - SUPREME COURT]. we hold that the assessee has no business connection in India in terms of section 9(1) of the Act and has no PE under Article 5(2), 5(4) and 5(5) of India Mauritius DTAA.
Since we have held that there is no PE, we are of the considered view that there cannot be any attribution of profit as held by this Tribunal in assessee's own case in A.Ys. 2009-10 and 2011-12. TPO has accepted the international transactions at Arm's length and no adverse inference was drawn. We have also gone through the TP assessment order and find no adjustment.
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2021 (10) TMI 1101
Assessment of trust - special fund received through donation treated as revenue receipt - Rectification of mistake u/s 154 - to consider expenditure for running of the trust but the Assessing Officer has left out the same and proceeded to consider the donations partly for specific purpose and others not for the specific purpose - HELD THAT:- As the amount of donation has been given for the specific purpose. Assessing Officer has bifurcated three donations as specific purpose and left out other donations not being specific purpose without giving any reason. The donations are being specific purpose and being capital receipts are not coming within the ambit of definition of income as defined under section 2(24)(ii).
It being a capital receipts, there is no necessity of routing through income and expenditure account, as claimed by the AO - some donations have been received for the special project undertaken by the trust and, therefore, same cannot be treated as revenue receipt. It is not the case that the assessee trust has not disclosed the donation and have not accounted for.
The amount received clearly demonstrates for the purpose of various project development and building construction. In view of above, I am of the considered view that the amount received by the assessee trust for specific direction to use the same for different project undertaken by the assessee and is entitled for deduction u/s. 11 - decisions relied by assessee, support the case of the assessee, wherein, the corpus funds received by the trust are considered as capital receipts, not includible in income of the trust. - Decided in favour of the assessee.
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2021 (10) TMI 1100
Assessment u/s 153A - Addition u/s 68 - whether unsupported entries appearing in the books of account can also fall under the term ‘incriminating documents’ ? - HELD THAT:- In completed assessments, the additions u/s 153A can only be made on the basis of some incriminating material. The argument of learned CIT, D.R. that unsupported entries, recorded in the books of account, also comes under the definition of incriminating material, is of no force as these entries cannot be called incriminating as the assessee had recorded such transactions in the books of account. They are also not ‘unsupported’, but are duly and properly supported by documentary evidences, such as bank statements, Demat statements and real time transactions through screen based trading on recognized stock exchanges. Simply because certain persons have admitted to have provided these entries as accommodation entries, cannot make these entries incriminating unless such persons are subjected to cross examination by the assessee.
As in case of completed assessments, the additions can only be made on the basis of incriminating material respectfully following the judgment of Hon'ble Supreme Court in the case of Meeta Gutgutia [2018 (7) TMI 569 - SC ORDER] and Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] we do not find any infirmity in the order of learned CIT(A). Therefore, the appeals filed by the Revenue are dismissed.
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2021 (10) TMI 1099
Correct head of income - assessment of income earned from investment made in mutual funds under the head "business income" or "Short Term Capital Gain" - second round of litigation - whether the assessee acted as an investor or a trader while dealing with sale and purchase of shares and mutual funds? - HELD THAT:- In the second round of litigation, we found that the basic issue i.e. the business income or investment income was confined to the gain from the mutual funds only whereas on the contrary, the entire matter was restored back for a fresh decision which comprises of the income from sale of shares and also redemption of mutual funds.
The lower authorities completely ignored the specific ground taken by the assessee before the ITAT and had confined its findings only to the redemption of mutual funds and that too was decided against the assessee on the ground that no evidence of investment in the mutual fund was furnished by the assessee. Whereas on the contrary, the ld. AR strongly relied upon his submissions made before the lower authorities and drawn our attention to the fact that the assessee had already placed on record the various evidences which were sufficient to reach to a conclusion by the revenue authorities but as per the ld. AR, all the evidences filed by the assessee were ignored by the lower authorities by giving a finding that no evidence to corroborate the investment in mutual funds was furnished by the assessee.
We restore the matter back to the file of the A.O. with direction to decide the same afresh by taking into consideration the transactions in the mutual funds as well as shares carried out by the assessee. Appeal of the assessee is allowed for statistical purposes only.
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2021 (10) TMI 1098
TP Adjustment - comparable selection - turnover of the companies sought for exclusion is more than 200 crores - HELD THAT:- As considering 10 times to 1/10 of the turnover the alleged comparable is much more than the turnover of assessee.
We note that, assessee in Acusis Software India Pvt.Ltd [2018 (8) TMI 1885 - KARNATAKA HIGH COURT] AND Autodesk India Pvt.Ltd [2018 (7) TMI 1862 - ITAT BANGALORE] were captive service provider like assessee before us.
Respectfully following the same we direct the Ld.TPO to exclude the comparable’s alleged hereinabove for exclusion.
Computing deduction under section 10AA - As reduced communication expenses and travelling and conveyance expenses incurred from the export turnover - HELD THAT: - We respectfully following the view taken by Hon’ble Supreme Court direct the Ld.AO to recompute deduction under section 10AA of the Act in accordance with the principles laid down in case of CIT vs HCL Technologies [2018 (5) TMI 357 - SUPREME COURT]
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2021 (10) TMI 1097
Disallowance u/s 14A read with Rule 8D - As submitted assessee had sufficient money of its own for making all the investments - HELD THAT:- We are in agitation with the contention of the ld. AR. However, assessee should prove the availability of interest free funds to make such investments by filing necessary cash flow statements on the date of investment in view of decision by the Hon’ble Supreme Court in the case of Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] - Respectfully following the same, we direct the Ld.AO to carry out necessary verification based on the documents filed by assessee in accordance with law.
For disallowance under section Rule 8D(iii) needs to be computed as assessee has not even disallowed suo moto expenditure that could be attributable to earning of such income. In our view it would be fair enough to restrict the disallowance at 0.5% of investment that yielded dividend income. Ld.AO is directed to compute the disallowance under Rule 8D (iii) as directed here in above.
Disallowance of proportionate interest u/s 36 (1) (iii) - AO disallowed interest expenditure incurred on bank overdraft and interest payable to financial institutions - as submitted advances were given to the sister concern due to commercial expediency who also engaged in the same business as that of assessee - HELD THAT:- The audited accounts filed by assessee revealed that there were sufficient funds with assessee as on 31/03/2013. The argument that assessee had sufficient own funds cannot be the only reason to allow the claim of assessee. And we also note that, when assessee had sufficient funds, why should it depend on borrowed funds. In any case, if at a given point of time assessee has own funds and they have advanced it as interest-free loans to sister concerns for meeting their business needs, in which assessee also has an interest, then such advances should not lead to disallowance of interest paid on borrowings. In other words, unless the assesses establishes with cash flow statements about availability of its own funds at the time of making the interest-free advances.
For this reason a cash flow statement needs to be verified for the period under consideration. We therefore remit this issue back to Ld.AO for due verification. Assessee is directed to file the cash flow statement during the period under consideration which shall be verified by the Ld.AO in accordance with law.
Disallowance u/s 35D - expenses claimed by assessee is 1/5 of total expenses which has been amortised over a period of time -HELD THAT:- These expenses were incurred by assessee during financial year 2008-09 towards converting Brigade Enterprises Pvt.Ltd., to Brigade Enterprises Ltd., that is conversion of private limited company into public limited company.
Authorities below have rejected the claim of assessee by following the decision of Hon’ble Supreme Court in case of Brooke Bond India Ltd. [1997 (2) TMI 11 - SUPREME COURT] We note that in the said case it was also held that the expenditure incurred on public issue for the purpose of expansion of the companies are to be treated as capital expenditure. However by virtue of the provision of section 35D of the Act, amortisation of such capital expenditure is allowable.
As in the preceding four assessment years, the Ld.AO did not disallow the expenses under section 35D. As the nature of expenditure is not disputed by the Ld.AO, and that the section allows amortisation of such expenses that have been incurred towards expansion/extension of the undertaking, it could not be denied in the subsequent period also.
Disallowance of deduction claimed u/s 80 IB - Whether loss of one eligible undertaking is to be set off against the profits of another eligible undertaking? - Whether when the gross total income is positive, the deduction u/s. 80IA can be worked out independently without setting off of losses of other eligible units? - HELD THAT:- This question stands already answered by the Hon’ble Madras High Court in the case of Chamundi Textiles (Silk Mills) Ltd.[2012 (6) TMI 317 - MADRAS HIGH COURT] held that only an assessee having positive profits from eligible undertaking could claim such deduction. Their Lordships also held that, for arriving at such profit, income from various units had to be calculated, and if one of the unit was running at loss, gross total income had to be arrived at considering such loss also. In the present case, the table extracted at page 14 of this order shows that there were loss in certain eligible units. However, the gross total income computed after setting off losses from eligible units was positive - In our view, the computation of gross total income in respect of the eligible units u/s. 80IB in the present facts of the case is to be consonance with the above principles approved by the Hon’ble Supreme Court in the case of IPCA Laboratories Ltd. [2004 (3) TMI 9 - SUPREME COURT]
We direct the Ld.AO to compute the profits under the head ‘business income’ from eligible undertaking by netting of the losses earned by assessee from other eligible undertaking for determining the deduction to be computed under section 80IB(10) of the act.
Whether the deduction claimed can be only against the business profits or can it be against the other heads of income? - If the gross total income was loss, deduction u/s. 80IA/IB was to be rejected. Section 80IA/IB for that matter, are controlled by 80AB of the Act. Gross total income means gross total income computed as per the provisions of the Act. This was clearly interpreted by the Hon’ble Supreme Court in the case of Synco Industries Ltd [2008 (3) TMI 13 - SUPREME COURT] and it was held that gross total income had to be arrived at after making deduction as per appropriate computation provisions including income u/s. 60 to 64, adjustment of interest losses and after setting off of brought forward losses and unabsorbed depreciation. Only if resultant gross total income is positive the assessee was entitled for deduction under chapter VIA of the Act. Same proposition is upheld by the Hon’ble Supreme Court in the case of Reliance Energy Ltd. [2021 (4) TMI 1237 - SUPREME COURT]
Respectfully following the ratio laid down by Hon’ble Supreme Court, we remand this issue back to the Ld.AO to recompute the deduction under section 80IB(10) of the Act, on the principles laid down in case of Reliance Energy Ltd. (supra), as explained hereinabove.
Appeal of assessee stands partly allowed.
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2021 (10) TMI 1096
Disallowance u/s 14A - Sufficiency of own funds - validity of the jurisdiction assumed by the A.O as regards the satisfaction recorded by him - simpliciter rejection by the AO - as submitted by the assessee that as it had sufficient non-interest bearing funds available with it throughout the year which were far much higher than the investments made in the exempt income yielding securities, therefore, no part of the interest expenditure claimed as deduction was liable to be disallowed - HELD THAT:- A.O on the basis of his general observations had dislodged the claim of the assessee that no expenditure was incurred for earning of the exempt dividend income and had worked out the disallowance u/s 14A r.w. Rule 8D.
As per observation made in case GODREJ & BOYCE MANUFACTURING COMPANY LIMITED VERSUS DY. COMMISSIONER OF INCOME-TAX & ANR. [2017 (5) TMI 403 - SUPREME COURT] we are of the considered view, that the issue that an A.O before taking recourse to the provisions of Sec. 14A(2) and (3) r.w Rule 8D of the Income Tax Rules 1963, is statutorily obligated to give a clear finding with reference to the assessee”s accounts as to how the expenditure claimed by the assessee in respect of its non-exempt income were related to the exempt income; is no more res-integra pursuant to the aforesaid judgments of the Hon”ble Apex Court.
The failure on the part of the A.O to strictly comply with the aforesaid statutory obligation that was cast upon him, can safely be gathered from the fact that there is no clear finding by him with reference to the assessee”s accounts, as to how to the other expenditure claimed by the assessee in respect of its non-exempt income were related to the exempt income - a simpliciter rejection by the A.O of the aforesaid claim of the assessee which is only backed by his general observations, surmises and conjectures can by no means justify the validity of the jurisdiction assumed by him for computing the disallowance u/s 14A r.w. Rule 8D(2)(iii) in the hands of the assessee. We, thus, not finding favor with the view taken by the CIT(A) who had upheld the validity of the jurisdiction assumed by the A.O for computing the disallowance u/s 14A r.w Rule 8D(2)(iii) set-aside the same - Decided in favour of assessee.
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2021 (10) TMI 1095
Capital gain computation - AO in adopting stamp duty value as per Section 50C of the Act as full value of consideration - Scope of amendment to Section 50C - HELD THAT:- Difference in consideration adopted by the stamp valuation authority and the assessee is less than 5% and we find that there is an amendment which has been brought in Section 50C of the Act by way of third proviso w.e.f. 01/04/2019 wherein tolerance band of 10% has been specified. This amendment in third proviso has been held to be retrospective in operation by the Co-ordinate Bench of this Tribunal in the case of Maria Fernandes Cheryl [2021 (1) TMI 620 - ITAT MUMBAI] stating that the said proviso even though not stated to be prospective must be construed as curative in nature and hence to be given retrospective aspect - Thus we direct the ld. AO to consider only ₹ 58,50,000/- as sale consideration while computing the capital gains as against ₹ 61,16,000/-.
Exemption u/s 54EC - investment made by her in NHAI capital gain bonds within a period of six months - The primary fact of date of handing over of cheque together with the application form is duly supported by an affidavit filed by the sub-broker Shri Gobind M Vaswani who had categorically affirmed that he has collected the application form together with the cheque from the assessee on 24/10/2013 and had indeed handed over the same to authorised agent i.e. M/s. Karvy Stock Broking Ltd., on 24/10/2013 itself. The contents of this affidavit has not been controverted by the revenue by bringing in contrary evidences thereon. The law is very well settled that in the event of an affidavit not tested by the department in the manner known to law, then the contents of the said affidavit is to be construed as true and correct. Reliance in this regard is placed on the celebrated decision of the Hon’ble Supreme Court in the case of Mehta Parikh & Co. vs CIT[1956 (5) TMI 4 - SUPREME COURT]
We have no hesitation in holding that assessee is entitled for claim of exemption u/s.54EC of the Act in respect of investment made by her in NHAI capital gain bonds within a period of six months from the date of transfer. Accordingly, the grounds raised by the assessee are allowed.
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2021 (10) TMI 1094
Loss incidental to business - non-recovery of certain business advances made to certain parties in the normal course of its business - Whether such loss incidental to business, upon being written off in the Books of the Appellant is a claimable deduction allowable u/s 28 r.w.s. 37 of the Income Tax Act, 1961? - AO and the CIT(A) held that the deduction claimed on account of advances written off was a claimable deduction only u/s 36(l)(vii) r.w.s.36(2) - HELD THAT:- Even though assessee might have claimed as a bad debt in the profit and loss, but before the AO as well as ld. CIT(A) the assessee claimed that it was actually a business loss in the normal course of carrying on business, as the advances were given to aforementioned parties during the course of business in the earlier years for the reasons mentioned above as business advance and then it was duly explained the circumstances in which these advances could not be recovered either due to dispute or for different various reasons as discussed above, and therefore, it was claimed as business loss while computing the profit and loss account for the year under consideration.
Firstly in the case of Govinda Infraproperty Pvt. Ltd. (Govinda) in whose account the assessee has written off the advance of ₹ 3,92,00,000/-, there was an agreement between the assessee and the said party for the purpose of developing the assessee’s security business across the India wherein the assessee was required to pay service fee of 10% of the business value that service provider would generate for the assessee - it cannot be held that there was no business advance or there can be any iota of doubt that such advance had become irrecoverable which assessee has written off. Once, during the course of carrying out business any advance has been given for the business purpose and the same was not being recovered or it had become irrecoverable due to dispute, then if it has been written off by the assessee, then such a loss has to be allowed in the computation of profit and loss account. It is a decision of the company or the businessman to write off such an advance. There are cogent reasons for non recovery and consequently any loss arising from such writing off cannot be questioned nor the prudence of the businessman and can be questioned - All the submission and explanation by the ld. counsel incorporated above are not only plausible explanation but also fully supported by documentary evidences filed before the authorities below. We are thus in tandem with the submission of the Ld. Counsel and accordingly, the loss claimed on such an advance given to Govinda Infraproperty is accepted and same is directed to be allowed.
Advance written off in the case of Linton Distributors Pvt. Ltd.loss claimed in this year cannot be held to be non genuine. Even the inquiry and observations made by the AO u/s.133(6) had already been explained by the assessee in detail as incorporated above and also each and every observation of the AO in the remand report which has no adverse inference. Neither the AO nor ld. CIT (A) can question the credibility of assessee whether the said party was capable of complying with the said order or did not had any experience or there is any inquiry leading to any finding that said party was itself bogus. Again the wisdom and the business prudence of the assessee cannot be questioned to test the said transaction on preponderance of probability when there is no adverse material against the assessee with regard to business dealing of the assessee with the said party. The reasoning given by the ld. CIT(A) for disallowing the said claim of loss cannot be accepted and the explanation and the submission given by the assessee with the documentary evidence as discussed above are accepted and hence the loss claimed with regard to advance paid to this party is allowed as business loss.
In the case of Om Sai Assotech Pvt. Ltd., again it was on account of works contract awarded by the appellant executed by M/s. Environ Energy Pvt. Ltd. for comprehensive operations and maintenance of sites in Rest of West Bengal (ROWB) circle maintained by VIOM Networks discovered that due to certain defaults and short comings of Om Sai in the execution of the work Environ Energy had made certain deduction for which the assessee after making repeated request and series of discussion managed to get the said deduction/penalty reduced. The assessee also realized that certain excess payments were made by the appellant on behalf of Om Sai as discussed above. The assessee requested and duly informed Om Sai about the proposed deduction and liability towards the sub-contractor which were discharged by the assessee on its behalf, however, Om Sai failed to settled the accounts and there arose a dispute between the assessee and Om Sai. There is a letter written by the assessee raising a final demand notice on 01.04.2014 calling upon it to make a payment of ₹ 1,56,64,000/- towards the excess amount towards deductions proposed by Environ Energy - said party did not make the payment. The assessee has also filed the suit against the High Court claiming the amount along with interest and OM Sai has filed a counter claim before the High Court against the assessee for recovery of sum of ₹ 9.30 crores against the appellant. Thereafter, the assessee finally considered that there is no point going through for protracted litigation and took a business decision to write off the amount in its books. Such write off of loss is incidental to the business operation; therefore, we do not find any reason as to why such loss can be disallowed.
With regard to Metro Railways Kolkata entire detail and discussion about the manner in which the dispute had arisen and why the assessee was forced to write off the said deposit paid to the KMR has been discussed in detail in the foregoing paragraphs. The matter had also reached to stage of an arbitration as per the Hon’ble Kolkata High Court order and the consequence of written off had already been stated above. In a nutshell, there is no dispute that either the assessee’s explanation is not correct or the transaction entered with KMR was not genuine.
Once assessee had any business transaction with any party during the course of which if assessee had incurred any loss and for which detailed justification and explanation has been given with documentary evidences, we failed to understand as to why such a loss can be disallowed once there is no controversial material or inquiry denied by the said party. Simply rejecting the explanation on flimsy grounds without any inquiry cannot be sustained. Accordingly, we do not find any reason to uphold such findings. Accordingly, the entire claim of advance written off is allowed.
Disallowance u/s 14A - HELD THAT:- It is an undisputed fact that assessee has earned exempt income against which assessee had made suo moto disallowance of ₹ 1,418 u/s.14A whereas the Assessing Officer has proceeded to make disallowance of ₹ 1,87,024/- once since exempt income itself is ₹ 6,525/-, the disallowance u/s.14A cannot exceed more than exempt income as held in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] which has also been followed in the case of GVK Project Ltd. [2018 (5) TMI 1786 - DELHI HIGH COURT]. Thus, the disallowance made by the Assessing Officer is restricted to ₹ 6,525/- and balance is deleted.
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2021 (10) TMI 1093
Disallowance of certain expenses specifically incurred for the project and also interest disallowance - assessee submitted as alleged disallowance of interest and administration expenditure pertains to projects under construction and the disallowance is rightly made and also made a request that suitable direction should be given to the AO that the year in which these projects can be completed, the assessee should be entitled to claim the alleged disallowance of expenses - HELD THAT:- Since the assessee is following percentage completion method, the alleged expenses and interest expenditure which were having direct nexus with the projects undergoing during the year cannot be claimed as revenue expenditure for the year under appeal and, therefore, should form part of the work-in-progress and the assessee shall be eligible to claim the amount as an expenditure when the projects with which they are connected are completed and assessee starts selling the units of the project.- Decided against assessee.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- It is a settled judicial precedence that disallowance of interest expenditure u/s 14A of the Act is not called for if the assessee has sufficient capital and reserve and surplus that interest free funds available are in excess of the investments held during the year.
Since the interest free funds available with the assessee are in excess of the investment in equity shares at the close of the year and there being no specific finding by the AO about the nexus of the interest bearing funds having been applied for investment in equity shares, we find no justification in the finding of the ld. CIT(A) confirming the interest disallowance u/s 14A of the Act made by the AO. We accordingly set aside the finding of the ld. CIT(A) and allow the ground no. 3 raised by the assessee.
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2021 (10) TMI 1092
Undisclosed capital gain - during the course of search and seizure operation u/s 132 carried out on the residential premises of assessee’s brother, certain documents relating to the assessee were found - Capital gain returned by the assessee on sale of property jointly owned with his brother - HELD THAT:- Only documentary evidence available in the present case is the registered sale deed which records and confirms the sale consideration declared by the assessee of ₹ 68 lacs. No other evidence whatsoever contradicting the sale consideration mentioned in the registered sale deed has been found.
Also not denied that no investigation, with regard to the difference in the sale consideration as stated by Shri Surinder Singh Bindra and as recorded in the registered sale deed, was done by the AO. On the contrary, we find, he merely jumped on the oral statement of Shri Surinder Singh Bindra taking it to be a solemn truth merely because it was a statement recorded on oath, totally disregarding the registered documentary evidence being the sale deed.
A registered sale deed cannot be summarily dismissed as evidence when juxtaposed with the oral statement alone that too only of one of the parties to the transaction even when made on oath. The statement, to carry weight as evidence needs to be supported with other evidences. The statement at best raises a suspicion about the consideration exchanged in the transaction which should prompt further inquiries, but oral statement even if recorded on oath alone is not sufficient to contradict/displace a duly registered documentary evidence. We agree with the Ld.Counsel for the assessee that the conclusion of the AO that the excess consideration was received, was based on mere surmises and lacked being backed by any evidence documentary or otherwise of any sort.
Thus approach of the revenue authorities in treating the oral statement of the searched person as sacrosanct in total disregard to the registered documentary evidence available, is not in accordance with law and the addition made, therefore, by holding that the surplus consideration was received in the impugned transaction in the hands of the assessee is, therefore, directed to be deleted. Ground of appeal raised by the assessee allowed.
Addition applying GP rate to contract receipts of the assessee - HELD THAT:- In the present case it is not denied that the husband of the assessee, who was the person searched wherein documents relating to his wife, the assessee before us, were found, had himself stated to the authorities of having earned 8% to 9% profits on the receipts. Moreover, as rightly pointed out by the Ld.CIT(A), even Legislature has considered a net profit rate of 8% to be appropriate for contract receipts in the presumptive scheme of taxation. Therefore, we see no reason to interfere in the order of the Ld.CIT(A) restricting the net profit rate of 8% of the contract receipts.
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2021 (10) TMI 1091
Revision u/s 263 by CIT - AO did not properly examine the bills/vouchers/receipts relating to the investments made by the assessee in a new flat to claim deduction u/s 54F - HELD THAT:- As perusal of the impugned order of the CIT reveals that after thoroughly examining the details and evidences furnished by the assessee during the revision proceedings u/s 263 CIT could not point out much discrepancy except about some small payments on account of small improvements such as bath room door, balcony grill, geysers, painter etc. as against the total allowance claimed - in respect of the items mentioned by the CIT, the assessee himself had mentioned before the Assessing Officer that the receipts about the said items were not available.
The nature of the items and the small investments made in that respect, in our view, cannot be doubted as the assessee has duly furnished the details and evidences relating to the investments made and the same were duly examined by the Ld. CIT himself, however, the Ld. CIT could not point out any major discrepancy. In our view, CIT has wrongly exercised this revision jurisdiction u/s 263 in this case. In our view, no useful purposes will be served for re-assessment on this issue when the details etc. have already been examined by the the Ld. CIT and no error has been found in the order of the Assessing Officer. In view of this, the impugned order of the Ld. CIT is set aside and the order of the Assessing Officer is restored. The appeal of the assessee stands allowed.
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2021 (10) TMI 1090
Entitlement to O&M benefits (fiscal benefits covered under Section 26 of the SEZ Act in respect of maintenance and duty free import to raw materials and consumables for generation of power) - period 01.04.2015 to 15.02.2016 - whether the condition that no duty free benefits for transfers to EOU is contrary to the SEZ Act and the Rules made thereunder? - HELD THAT:- It is apparent from Sub-section (8) of Section 15 of the SEZ Act that the Central Government has ample powers to impose certain terms and conditions subject to which a unit can carry out its operations - it is clear that the Central Government can introduce terms and conditions by notifying Rules or issuing guidelines in terms of which an approval may be granted.
The letter of approval as contemplated under Section 15(9) of the SEZ Act is required to be issued by the Development Commissioner pursuant to the proposal submitted under Section 15(1) of the SEZ Act. The person who is granted the letter of approval falls within the definition of an “entrepreneur” within the meaning of Section 2(j) of the SEZ Act. Section 15(9) of the SEZ Act makes it specifically clear that the letter of approval shall mention the operations that the concerned person is authorised to undertake. Thus, the scope of the expression “authorised operations” is well defined and the same has to be stated in the letter of approval - In the present case, the letter of approval dated 08.10.2009 expressly indicates the operations/activities that the petitioner is authorised to undertake. In the aforesaid circumstances, the contention that the operations of generating electricity were rendered unauthorised by the Central Government by the letter dated 06.04.2015 whereby the 2009 Guidelines were reinstated, is unpersuasive. There is nothing to indicate either in the three Guidelines (2009 Guidelines, 2012 Guidelines and the 2016 Guidelines) that the effect and the import of the said guidelines was to render the operations being carried out by the concerned unit as unauthorised operations.
This Court is of the view that this is an apparent error as the Second Letter was addressed to all Development Commissioners forwarding the First Letter. As noticed above, the opening words of the second paragraph of the Second Letter indicates that it is in pursuance to the decision to withdraw the 2012 Guidelines and restore the 2009 Guidelines as contained in the communication enclosed – the First Letter dated 06.04.2015. The First Letter does not contain any decision that the processing areas of the SEZ would be re-demarcated to place those units which are operating in the processing area of the SEZ to be placed in a non-processing area - the exercise of demarcation is required to precede the issuance of the letter of approval.
It is essential to note that one of the principal difference between the 2009 Guidelines and the 2012 Guidelines is that, whereas under the 2009 Guidelines, a power plant set up by a developer/co-developer as a part of infrastructure facility was required to be placed only in a non-processing Area of the SEZ and would not be entitled to any O&M benefits - the direction in the second paragraph of the Second Letter must be read as applicable only to those power plants which are set up by developers/co-developers as a part of the facility or utility for the SEZ and, not as a separate unit set up within the SEZ to generate power as a product or as a captive power plant in terms of Clause (ii) of the 2009 Guidelines.
Even assuming that the Central Government had the power to re-demarcate areas post-issuance of the letter of approvals, the Second Letter on the basis of which the petitioner has been denied the O&M benefits with effect from 01.04.2015 to 16.02.2016, cannot be construed in the manner so as to be applicable to the petitioner’s unit which was granted the LoA under the 2009 Guidelines.
The dispute in the present case relates to the direction to re-demarcate the petitioner’s power plant as a non-processing unit for the purposes of the 2009 Guidelines. The direction to re-demarcate is clearly not traceable to Section 26(2) of the SEZ Act.
The present petition is allowed to the limited extent that the condition imposed by Unit Approval Committee of refunding the O&M benefits obtained by the petitioner during the period 01.04.2015 to 15.02.2016 by its letter dated 18.04.2016, is set aside - Petition disposed off.
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2021 (10) TMI 1089
Effective date of Resignation from the post of Managing Director - Compiling Proceedings against the Director / Petitioner for Non-appointment of Woman Director in the company - case of petitioner is that he had resigned from the Directorship in the company with effect from 05.09.2013 and he had no control over the affairs relating to the company thereafter - Section 149 of the Companies Act, 2013 - HELD THAT:- The Assistant Director, Government of India, Ministry of Corporate Affairs, Chennai had issued summons to the petitioner and others to attend the said office to give evidence and to produce the books of accounts or any other paper in pursuant to the notice dated 17.03.2015. However, the petitioner failed to comply with the same. Thereafter, the respondent, filed a complaint under Section 207(4) of the Companies Act, 2013 against the petitioner and others before the learned Additional Chief Metropolitan Magistrate, chennai to summon and punish them according to law for the default.
Two directors in the case of a private company and one director in case of one person company (b) a maximum of fifteen directors, provided that a company may appoint more than 15 directors after passing a sepcial resolution, further as per Sub-Section (2) of the above said section, every company existing on or before the date of commencement of the act shall within one year from such commencement shall comply with the requirement of Sub Section (1), that as per Rule 3 of the companies (Appointment and qualification of Directors) Rule, 2014, every unlisted public company having (a) paid up share capital of one hundred crore rupees or more or(b) turnover of three hundred crore rupees or more, shall appoint atleast one woman director within one year from the commencement of companies Act, 2013 (i.e.) 01.04.2014.
As per provisions of Section 172 of the Companies Act, 2013 “If a company contravene any of the provisions in this Chapter and for which no specific punishment is provided therein, the company and every officer of the company, who is in default shall be punishable with fine, which shall not be less than fifty thousand but may extend to five lakh rupees. Further, a letter dated 06.04.2016 was addressed by the petitioner to the Registrar of Companies seeking apologize for the delay in response and stated that he was ceased to be a Director of the Company on 05.09.2013 and that he was not in touch with the said company - an examination of the record would show that there is a receipt of G.A.R.7 from the Ministry of Corporate Affairs from one Tanmoy Dey, for a sum of ₹ 7,800/- towards fee for Form DIR-11 and the same would show that the petitioner had resigned from the company on 05.09.2013 and the same was declared by the petitioner by signing the same digitally only on 05.03.2016, which is only after initiation of the present proceedings, however, Form No.DIR-12 is not found in the material produced and that Form 32 has not been filed by the company.
In the present case on hand, the petitioner, who had worked as Director in the company had submitted his resignation to the Company on 20.12.2012 and thereafter, the petitioner had submitted his resignation to the Board of Directors of the company on 05.09.2013 with a copy marked to the Regional Office of the Registrar of Companies, Chennai - Even assuming that the petitioner had submitted his resignation to the Registrar of Companies on 05.09.2013, however, the petitioner had filed FORM DIR-11 only belatedly after initiation of the present proceedings and Form DIR-12 has not been filed subsequently by the company.
This Court is of the view that the grounds and the submissions raised by the petitioner are purely a matter of evidence and the same cannot be gone into by this Court in the quash petition. It is well settled legal position that only when the allegation made in the complaint do not constitute an offence, for which, the accused is subjected to trial, the complaint could be quashed.
In the instant case, the petitioner has not made out any case within the purview of Section 482 Cr.P.C., warranting to quash E.O.C.C.No.299 of 2015 pending on the file of learned Additional Chief Metropolitan Magistrate E.O.-I, Allikulam Moore Market, Chennai - the present Criminal Original petition is hereby dismissed.
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2021 (10) TMI 1088
Transfer of shares - Oppression and mismanagement - restraint on Respondents from transfering /investment/assets - creation of further third-party rights on the shares held by the Petitioner in R11 and R12 - HELD THAT:- In view of the narration of facts by the Petitioner and grounds of oppression and mismanagement namely systematic assets stripping of Respondent No.1, Petitioners being kept away affairs of Respondent No.1, affairs of Respondent No.1 being conducted as sole proprietorship, unjustified transfer of Respondent No.12 to Respondent No.2 and breach of doctrine of legitimate expectation, it can be said that no prima facie case has been made out by the Petitioner to grant any interim directions to restrain the transfer of assets already made or creating any third party rights. The proposed EGM which is being challenged was held on 15.01.2020, the entire issue of dispute between the parties is founded in the Share Purchase Agreement and are purely contractual nature.
Upon perusal of the clauses of shareholder agreement it is clear that Anand Rathi Shareholders shall be in sole control of the company and committee formed thereunder shall be responsible for management, supervision, direction and control of the company including day to day management of the company - The Petitioner is a party to the said Agreement and has acquiesced to the rights conferred to both the parties under the SHA and now is estopped from claiming that the Anand Rathi group are conducting the affairs of Respondent No.1 which are oppressive and amounts to mismanagement of Respondent No. Company.
This Bench therefore is of the considered opinion that no prejudice is caused to the rights of the Petitioner under said alleged transfer of shares of Respondent No.1 to Respondent No.11 or transfer of assets to Respondent No.2 from Respondent No.1, and is governed by the interse agreement namely the shareholder agreement/share purchase agreement both dated 10.08.2016.
The rights of the shareholders qua the company in the Petition alleging the Oppression and mismanagement are squarely covered under the SHA/SPA dated 10.08.2016 and hence are bound by the terms and conditions thereof. The Anand Rathi Group being the majority shareholders and in control of the management of the company have acted in the best interest of the Company due to the notification of MCA and the Petitioners have waived their rights to object to the transfers being made by acquiescence - the prayer for interim relief is rejected.
The prayer is rejected.
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2021 (10) TMI 1087
Approval of scheme of amalgamation and arrangement - sections 230-232 of the Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of notices also issued.
The scheme is approved - application allowed.
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2021 (10) TMI 1086
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Personal Guarantor of the Principal Borrower - existence of debt and dispute or not - service of demand notice - Whether the ‘EECPL’ is the Corporate Guarantor and therefore ‘Corporate Debtor’ of the ‘Eastern Overseas, in terms of Sub-section (7) and (8) of Sec 3 of I&B Code and the applicable Rules will be ‘Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016’?
HELD THAT:- The Adjudicating Authority has held that the Insolvency and Bankruptcy (Application to Adjudicating Authorities for Bankruptcy Process for Personal Guarantors to Corporate Debtors” Rules, 2019 will be applicable instead of “the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016. Under both the Rules, the conditions for the applicability of the Rules are provided.
The learned Adjudicating Authority had failed to notice that the Financial Creditor had taken Personal Guarantee of Mr Mahendra Singh Narang and Mrs Manjit Kaur in addition to the Corporate Guarantee given by the Corporate Debtor - on the occurrence of default, it was the sole prerogative of the Financial Creditor to initiate action against the Principal Borrower or the Personal Guarantor of the Corporate Guarantor.
Since the Appellant Financial Creditor had initiated action under the Insolvency and Bankruptcy Code against the Corporate Guarantor, the Application could not have been dismissed on the erroneous assumption that the Application should have been filed against the Personal Guarantor under Section 95 of the Code.
It is clear that Respondent ‘Eastern Embroidery Collections Private Limited’ was the Corporate Guarantor of the Principal Borrower ‘Eastern Overseas’, and not a Personal Guarantor. Therefore, in terms of Sub-section (7) and (8) of Sec 3 of I&B Code, 2016 is a Corporate Debtor. Further, the applicable Rules would be ‘Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016’.
The Adjudicating Authority committed an error in holding that action should have been initiated against the Personal Guarantor of the Corporate Debtor under Section 95 of the Code instead of proceeding against the Corporate Debtor - Appeal allowed.
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