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Showing 361 to 380 of 1764 Records
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2016 (11) TMI 1406
Interest on interest for the delay in refund of the tax paid by the assessee - Held that:- The assessee now claims that the part of the amount repaid by the Assessing Officer has to be first adjusted towards interest. We find merit in the claim of the assessee. When the Assessing Officer repaid part of the amount to be refunded to the assessee, first it has to be adjusted towards the interest and if anything remains, it has to be adjusted towards refund of excess tax paid by the assessee.
Therefore, the excess tax remains to be refunded by the Department is again subject to payment of interest under Section 244A of the Act. It is not known why the Department has not refunded the entire amount after quantification of the excess tax refundable by the Department together with interest thereon. Whatever the case may be, after the adjustment of interest from the refund made by the Department, if excess tax remains to be refunded, the Department has to pay interest under Section 244A of the Act. However, the matter needs to be re-examined by the Assessing Officer.
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2016 (11) TMI 1405
Disallowing the expenses relatable to exempted income by invoking the provisions of Section 14A read with Rule 8D - Held that:- No disallowance u/s Rule 8D can be made as the assessee is having non-interest bearing funds available in the shape of share capital and reserves and surpluses with him amounting to ₹ 285.27 crore which is more than the amount of investment made in interest earning instruments amounting to ₹ 18.19 crores and once availability of amount from interest free fund of the assessee is more than the investment, then a presumption arises that assessee might have invest out of interest free fund available with him. See HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT ).
As regards to direct expenditure under Rule 8D (1), there is no dispute.
As regards to working of disallowance under Rule 8D (3), the assessee has computed the disallowance and the Assessing Officer could not point out any discrepancy or unreasonableness or could not find any fault in the same. Accordingly, we delete the addition and allow the appeal of the assessee retaining the same to the extent of the assessee suo-moto disallowance of sum of ₹ 11,78,104/-.- Decided in favour of assessee.
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2016 (11) TMI 1404
CENVAT credit - maintenance of effluent treatment plant and sewage treatment plant - Held that: - It does not appeal to common sense how pollution control shall be met without maintenance of the above plants. Being indispensable of such services to the manufacturing requirement and also integration thereof, appellant is entitled to CENVAT credit of the service tax paid - credit allowed - appeal allowed - decided in favor of assessee.
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2016 (11) TMI 1403
Allocation of expenses on the basis of gross margin in the agency segment - Held that:- We direct the TPO to allocate the expenses on the basis of gross margin in the agency segment and not in the ratio of sales for the purpose of computing the ALP of the international transactions as the TPO/DRP/AO have erred in making adjustment by clubbing commission income with market support services in allocating expenses to the agency segment in the ratio of sales. So, ground is determined in favour of the assessee.
Selection of 10 comparables for benchmarking the international transactions having average OP/OC at 22.12% - Held that:- Assessee’s own case of AY 2002-03 that allocation of expenses to the agency segment in the ratio of sales cannot be made, as has been held by the Bench in the preceding paras, sought to exclude three comparables, namely, Aptico Ltd., Choksi Laboratories Ltd. and Wapcos Ltd. and also sought to include three comparables, namely, Educational Consultants India Limited, India Tourism Development Corporation Limited and In House Productions Limited for benchmarking the international transaction and considered its international transactions at arm’s length.
Since in view of the findings returned by the Tribunal on ground no.2.2 the basis for allocating the expenses to the agency segment is ordered to be changed, it would be futile to go into the validity of the comparables considered by the TPO for benchmarking international transactions as it would change the entire scenario and fresh TP study analysis is required to be done by the TPO. So, we hereby direct the TPO to make fresh TP study analysis after providing adequate opportunity of being heard to the assessee company to benchmark the international transactions undertaken by the assessee company. So, we decide grounds no.2.2 to 2.7 accordingly.
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2016 (11) TMI 1402
Transfer pricing adjustment - Held that:- Assessee is a captive service provider for its associated enterprises abroad, primarily USA-based entities. The assessee is a part of Ness Technology Inc. USA group, which is a leading global information technology services concern. The assessee company has four units in India, located at Bangalore, Hyderabad, Mumbai and Pune and is providing software development services to its group enterprises thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparable.
International Transactions on recovery of expenses - Recovery of mark-up or profit element in the hands of assessee - Held that:- All the material clearly brings out a pertinent feature that in the entire transaction involving payment of expenditure by the assessee, its recovery from the associated enterprises, which-in turn recovers it from the end clients, there is no involvement of any profit-element in the hands of the associated enterprises. Therefore, it would be wrong on the part of the income tax authorities to take a position and infer notionally about recovery of mark-up or profit element in the hands of assessee. It has also been brought out that it is a standard practice in the I.T. Industry to recover out of pocket expenses incurred during the course of providing services for the clients on a cost to cost basis. Under these circumstances, in our view, the Transfer Pricing Officer erred in proceeding to infer a non-existent understanding between assessee and its associated enterprises so as to impute income qua the instant transaction in terms of section 92(1) of the Act. Another pertinent fact which has not been rebutted by the Revenue before us is to the effect that in similar situation, from assessment year 2004-05 to 2010-11, no transfer pricing adjustment has been made by the Assessing Officer in relation to the International Transactions on recovery of expenses.
Determination of arm’s length price for the service charges at 10% of the expenses recovered - Held that:- Section 92C prescribes the manner of determination of the arm’s length price and sub-section (1) thereof specifically lays down various methods by which the determination of arm’s length price has to be made. It is quite clear that there is no adhocism permissible in the manner of computation of arm’s length price of an international transaction, whereas the action of the Transfer Pricing Officer in considering the arm’s length price @10% of the expenses recovered is not only adhoc but it also does not conform to any of the methods prescribed in section 92C(1) of the Act. On this count itself, the action of the TPO is suspect, even if, it is to be understood that the impugned transaction was an international transaction requiring computation of income having regard to its arm’s length price. Thus the action of the Transfer Pricing Officer/Assessing Officer in making an addition deserves to be set-aside.
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2016 (11) TMI 1401
Interest charged - department not responding to the assessee’s request for adjustment of cash seized against self assessment tax constituting the existing liability as per specific provisions u/s 132B - Held that:- The judgement of a Division Bench of this Court in Commissioner of Income Tax (Central), Ludhiana Vs Sh. Sandeep Jain and others [2014 (10) TMI 585 - PUNJAB & HARYANA HIGH COURT] covers the case in favour of the assessee. It was held that Explanation 2 to Section 132B of the Income Tax Act, 1961 is prospective in nature w.e.f. 01.06.2013. The present appeal is in respect of the assessment year 2008-2009. In view of the said judgement, Explanation 2 would not be applicable to the assessee’s case. - Decided in favour of assessee.
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2016 (11) TMI 1400
Bogus purchases - Held that:- Considering the law declared by the Supreme Court in the case of Vijay Proteins Ltd. Vs. Commissioner of Income Tax [2015 (4) TMI 1146 - SUPREME COURT] as held justification in disallowing 25% of the purchase price.
We remit back the case to the Assessing Officer for deciding afresh on the factual matrix. The authority will accept the law but the transaction whether it is genuine or not will be verified by the Assessing Officer on the basis of the aforesaid three judgments. The issues are answered accordingly. The appeal is accordingly disposed of.
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2016 (11) TMI 1399
TPA - selection of comparable - Held that:- If the turnover of the comparables is more than 10 times of the turnover of the tested party, the same has to be excluded from the list of comparables.
Companies functionally dissimilar with that of assessee need to be excluded from final list of comparable.
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2016 (11) TMI 1398
CENVAT credit - MS Angles, MS Channels, MS Beams etc - Held that: - the subject items are used for fabrication of tubes, pipes and fittings, storage tanks, accessories of boiler, accessories of paper machines, cable trays, pulp mill etc. The appellant has also used subject items for fabrication of supporting for equipment & machinery.
The appellant has reversed the credit of ₹ 1,75,793/- which was availed by them in respect of MS items used for civil construction and items used outside the factory. In view of the above discussions, we hold that the appellant is eligible to the tune of ₹ 1,69,92,269/- (Rs. 1,71,68,062/- less ₹ 1,75,793/-).
The imposition of penalty is also not sustainable and the same is set aside.
Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1397
Refund claim - duty paid under protest - It is the case of appellant both the lower authorities have totally overlooked the fact that the deposit of the amount was based upon Inter ministerial deliberation and subsequently there are various judgments on the very same issue which needs to be considered by the lower authorities - Held that: - Since the issue needs factual verification as to the amounts deposited by the appellant with reference to the advance licence issued to the contractors and also to consider the identical issue being decided in respect of very same appellant, and as the impugned order as well as the adjudication order did not specify the reasons for not accepting the submission of the appellant, the issue needs reconsideration by the adjudicating authority - appeal allowed by way of remand.
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2016 (11) TMI 1396
Correction of the typographical error - as contended that the date of listing of the appeal is 16.11.2016 and on account of the typographical error the same has been noted as 10.11.2016 also that counsel for the respondent had appeared not only for respondent no. 1 but also for respondent no. 3. - Held that:- The order dated 26.10.2016 is corrected.
The next date of the listing of the appeal is corrected to read as 16.11.2016 instead of 10.11.2016 and presence of Mr. Vikram Jetly, advocate in the said order shall be read for respondent no. 1 and 3.
Perusal of order sheet of the appeal shows that the final arguments in the appeal were concluded on 02.02.2016 and judgment was reserved. The judgment could not be delivered. Thereafter again arguments were heard on 26.07.2016 and the judgment was reserved.Thereafter the Chairman has since demitted office. The appeal is listed for hearing tomorrow i.e. 16.11.2016.
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2016 (11) TMI 1395
Validity of reopening of assessment - reasons to believe - Held that:- As per the reasons recorded, the notice has been issued and assessment is sought to be reopened for deep verification of the claims. Even in the order disposing of the objections, it has been specifically stated that to verify whether all the criteria are met by the said transaction of ₹ 50 lakhs routed through the group and also to verify the claim of having recorded these transactions in the regular books of account, notice under Section 148 has been issued. Even with respect to investment in shares of M/s. Rushil Decor, it has been submitted that whether the investment in shares of M/s. Rushil Decor were acquired from the capital of the assessee and the same is duly recorded in the books of account, needs to be verified and for that purpose, the assessment for A.Y 2009-2010 is sought to be reopened.
Under the guise of reopening of the assessment, the Assessing Officer wants to have a roving inquiry; as observed hereinabove. Even as per the Assessing Officer in the reasons recorded has specifically mentioned that for the purpose of verification/ deep verification of the claim, it is necessary to reopen the assessment. Under the circumstances, it cannot be said that the Assessing Officer had any tangible material to form an opinion that the income chargeable to tax has escaped the assessment. Under the circumstances, the impugned action of reopening of the assessment in exercise of power under Section 148 of the I.T Act for the reasons recorded hereinabove cannot be sustained. - Decided in favour of assessee
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2016 (11) TMI 1394
Challenge to detention order - can detention order be challenged at pre-execution stage? - Held that: - the fact that the petitioner is out of India, may itself be the reason for the delay in executing the detention order - the time from the date of the so-called prejudicial activity on 9.11.2013 and the detention order on 15.3.2014; or the still shorter period from the date of search on 13.11.2013, till the date of the detention order; cannot be treated as any cognizable delay to hold that the impugned detention order has diffused itself by passage of time or that the said order of detention has been rendered stale with passage of time - challenge levied against the impugned preventive detention order under COFEPOSA Act is unsustainable, though it is yet to be executed - petition dismissed - decided against petitioner.
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2016 (11) TMI 1393
Quantum of abatement - Section 4(d) of the CEA, 1944 - demand of differential duty on the ground that the appellants have not produced evidence to the effect that the sales tax claimed as abatement has actually been paid to the State Government authorities - Held that: - under Sl. No. E regarding total tax liability, it is clearly mentioned that tax deposited by the appellant includes cash payment as well as set of by credit of input tax. The total tax deposited as indicated in the VAT return ST-5A clearly shows that the amount deposited with the State authorities has been correctly availed as abatement by the appellant - There is no retention of any amount by the appellant as alleged in the SCN - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1392
Imposition of penalty - it was alleged that appellant had issued invoices to manufacturers without supply of materials and thus abetted in availing fraudulent credit - appellant case is that appellant is a co-noticee in the proceedings of which notice was issued against M/s Sri Laxmi Industries - Held that: - Taking note of the fact that the Tribunal after analyzing the evidence in the case of main appellant has set aside the impugned order, the demand and penalty imposed in the present appeal is also unsustainable - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1391
Validity of assessment under Section 153(A) - Held that:- A.O. has nowhere indicated if and to what extent any material was seized or found during the search proceedings, empowering him to revisit the concluded scrutiny assessment for the concerned years and arrive at a contrary conclusion. The reading in Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) and other decisions based on that judgement are decisive; unless the revenue seizes any fresh material or information or records a statement which leads to some information or material, revisiting a concluded assessment on aspects that were gone into, is impermissible.
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2016 (11) TMI 1390
Adjustment of provisions of the Income Tax Act against benefit availing under the scheme - Interpretation to Section 184 and 187 of the Income Declaration Scheme, 2016 - claim adjustment of the Tax Deduction at Source and amounts deposited and advance tax amounts deposited with the Income Tax Authorities for the period it has applied for under the Scheme - Held that:- An interim measure the petitioner should be permitted to deposit what according to it is the liability due working out to 25% net amounts payable under the Scheme. This determination, it goes without saying, would permit the petitioner to adjust the amounts deposited earlier towards TDS/ advance tax subject to the final outcome. In other words, in case the petitioner finally does not succeed and fails in its submissions that the TDS/ advance tax were adjustable, the application would automatically stand rejected.
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2016 (11) TMI 1389
Addition u/s 41(1) - urplus arising on prepayment of deferred sales tax loan at NPV - Held that:- There is also no dispute to the assertions made by the learned representative for the assessee that the sales tax deferred scheme under the Package Scheme of 1983 and the Package Scheme of incentive, 1985 notified by Government of Maharashtra, which was considered in the case of Sulzer India Ltd. & Others (2014 (12) TMI 267 - BOMBAY HIGH COURT) is pari materia to the scheme availed by the assessee herein, as notified by the Government of Karnataka. Having regard to the aforesaid, we find that the judgment of the Hon'ble Bombay High Court in the case of Sulzer India Ltd. (supra), squarely covers the controversy before us, and the CIT(A) made no mistake in holding that the surplus arising on prepayment of deferred sales tax loan at NPV is a Capital receipt, which cannot be termed as remission or cessation of a trading liability so as to invite Section 41(1) of the Act. - Decided against revenue.
Treating the interest received from Oil Coordination Committee - ‘business income’ OR ‘income from other sources’ - Held that:- It is clear that so far as the income relating to interest on bank deposits, interest from New Mangalore Port Trust, interest and discount charges received from customers, interest on contractors’ advances and interest on housing loans given to employees is concerned, it has been held to be taxable as ‘business incomes’. Our attention has also been drawn to the Statement of Facts filed before CIT(A), which also enumerates the detail of interest income which was considered by the Assessing Officer to be taxed as ‘income from other sources’. It is clear that neither in the details of such interest income and nor in the reliefs allowed by CIT(A) there is any reference to interest received from Oil Coordination Committee and, therefore, the plea of assessee that the aforesaid Ground of appeal raised by Revenue is misconceived is emerging from record.- Decided against revenue.
Disallowance of payment made to MRPL Education Trust and MRPL Janaseva Trust - Held that:- No doubt, the two trusts have been set-up by the assessee-company, but the impugned payments are not for ‘setting-up’ or for ‘formation’ of or as ‘contribution’ to the trusts so as to fall within the mischief of Sec. 40A(9) of the Act. The phraseology of Sec. 40A(9) of the Act itself clearly suggests that only sums paid by the assessee as employer towards ‘setting-up’ or ‘formation’ of or as ‘contribution’ to any trust, fund, society, etc. is to be disallowed whereas the expenses in question are not of the nature covered by Sec. 40A(9) of the Act and are instead incurred by assessee wholly and exclusively for the welfare of its employees and same is deductible u/s 37(1) of the Act. At the time of hearing, the learned representative for the assessee had also relied upon the judgment of Bharat Petroleum Corporation Ltd, (2001 (3) TMI 20 - BOMBAY High Court ), which also clearly supports the proposition that such like expenses which are incurred not for ‘setting-up’ or for ‘formation’ of or as ‘contribution’ to any trust, etc. are not covered within the scope of Sec. 40A(9) of the Act. Therefore, under these circumstances, we hereby affirm the ultimate conclusion of CIT(A) in deleting the addition - Decided against revenue.
Depreciation based on the opening WDV of assets, calculated without reducing the depreciation thrust upon the appellant in Assessment Year 2001-02 - Held that:- The order of Assessing Officer for Assessment Year 2001-02 wherein assessee was allowed depreciation inspite of the fact that it was not claimed in the return of income, has since been reversed by the CIT(A) and even the appeal of Revenue against such an order has been dismissed by the Tribunal for want of requisite permission from COD. It is sought to be emphasised that the order of the CIT(A) for Assessment Year 2001-02 on this point has since become final. The aforesaid factual matrix has not been disputed by the ld. DR and in this view of the matter, we find no reason to find fault with the directions of CIT(A) that the adjustment of WDV done by Assessing Officer in order to recalculate the depreciation is untenable. As a consequence, the order of CIT(A) on this aspect is upheld - Decided against revenue.
Charging of interest u/s 234B & 234C - Held that:- As we have seen in the present case, during the relevant assessment year under consideration, the position regarding payment of MAT in advance was governed by the judgment in the case of Kwality Biscuits Ltd. (1999 (11) TMI 48 - KARNATAKA High Court) which ruled non-payment of MAT in advance and, thus interest for such a default was not chargeable. Under these circumstances, we hereby affirm the ultimate decision of CIT(A) in deleting the levy of interest u/s 234B & 234C of the Act, albeit on a different ground.
Provision of Customs duty created by the assessee as on 31.3.2004 - whether is a liability which has arisen so as to fall within the expression “a deduction otherwise allowable under this Act” in Sec. 43B? - Held that:- It is reasonable to conclude that the liability represented by the Provision being Customs duty payable on import of raw material arises during the previous year relevant to the assessment year under consideration as assessee brought the requisite goods into India from a place outside India. Therefore, under these circumstances, CIT(A) erred in taking the view that Sec. 43B of the Act is not applicable in the case of assessee on an erroneous ground that the liability of Customs duty did not arise in the instant year.
Stand of Revenue is misconceived because fulfilment of export obligations by the assessee reduces the Customs duty liability of the assessee. In fact, if no export of finished goods was made by the assessee as required, then assessee would have to pay the Customs duty in monetary terms. Obviously, the payment of duty in monetary terms would have facilitated deduction u/s 43B of the Act in the year of payment. The moot question is could the legislature have intended that an assessee who does not comply with the mandated export obligations would be able to avail the provisions of Sec. 43B of the Act, but not a performing assessee who complies with and discharges his obligation to make the mandated export? Be that as it may, in our view, the fulfilment of export obligations has resulted in reduction of a liability which is otherwise allowable under this Act and, therefore, in terms of the first proviso to Sec. 43B of the Act the amount of ₹ 40,41,81,896/- is deductible in the instant assessment year, and the stand of the Assessing Officer in this context is legally misplaced. - Decided in favour of assessee
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2016 (11) TMI 1388
Income from share transactions - ‘Short Term Capital Gains’ OR ‘Business Income’ - Held that:- A perusal of details of transactions entered by assessee in Scrip ‘Jain Irrigation’ shows that the assessee earned income of ₹ 14.75 Lacs on turnover of ₹ 195.86 Lacs with high frequency of transactions in this particular scrip. The holding period ranges from 0 days to 30 days. The assessee has purchased the scrip in 37 days and sold the scrip in 27 days. The frequency and repetitive nature of transaction in one single scrip shows a clear profit motive on the part of the assessee and negates its contention that the assessee has indulged in investment activity. A substantial relief has already been provided by CIT(A) with respect to balance amount. Therefore, we find no infirmity in the order of CIT(A) and dismiss this ground of appeal of the assessee.
Section 14A disallowance - Held that:- No calculations have been provided by AO so as to arrive at the figures of ₹ 1,65,595/- in the assessment order. As per Ld. AR, the assessee agitated the matter before CIT(A) but the same was not considered. Further, the Ld. AR has contended that this disallowance, if any, has to be made then it should be restricted to amount of dividend earned by the assessee. Therefore, we deem it fit to restore the matter back to the file of AO for limited purpose to recompute 14A disallowance and restrict the same to the extent of tax free income earned by the assessee. The assessee is directed to cooperate with the AO to supply necessary information / documents forthwith to substantiate his claim in this regard failing which AO shall be at liberty to compute the same on the basis of material available on record. This ground of assessee is partly allowed.
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2016 (11) TMI 1387
Addition made under section 68 - assessments made under section 153A - Held that:- The Revenue could not bring on record any incriminating material suggesting for above addition. Therefore respectfully following the jurisdictional High Court decision in the case of All Cargo Global Logistics [2015 (5) TMI 656 - BOMBAY HIGH COURT] and CIT vs. Gurinder Singh Bawa [2015 (10) TMI 1761 - BOMBAY HIGH COURT ], we hold that the assessments made under section 153A for the assessment years 2006-07 and 2007-08 are bad in law as there is no incriminating material found in the course of search suggesting for making additions under section 68 of the Act in these two assessment years. - Decided in favour of assessee.
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