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2018 (1) TMI 1373
Application stating that IT has been wrongly deleted from the members of COC - Resolution Professional has stated that this application not being on board, he is not in a position to respond to it - Held that:- On having one of the Financial Creditors filed an application stating that IT has been wrongly deleted from the members of COC, since the Counsel appearing on behalf of the Resolution Professional has stated that this application not being on board, he is not in a position to respond to it.
For the Counsel appearing on behalf of the RP has reported that COC meeting is scheduled to be held on 30.1.2018, this Bench hereby directs the Resolution Professional to schedule this COC meeting to any date after 6.2.2018, so that this Bench will be in a position to pass orders in respect Of this contentious issue on next date of hearing.
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2018 (1) TMI 1372
Disallowance u/s 14A - disallowance of interest under Rule 8D(2)(ii) - Held that:- There cannot be any disallowance of interest under Rule 8D(2)(ii) of the Rules by applying the ratio laid down in the decision in the case of CIT vs Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein it was held that the presumption would go in favour of the assessee if the interest free funds are more than the loans taken by the assessee, then it would be presumed that the investments were made out of own funds of the assessee. The said ratio would squarely apply to the facts of the instant case. Hence we hold that the disallowance made under the second limb of Rule 8D(2)(ii) of the Rules is hereby directed to be deleted.
With regard to the third limb of Rule 8D(2)(iii) we hold that the assessee has got investments in foreign companies, the dividend earned from which would be taxable income and hence should be outside the ambit of disallowance u/s 14A read with Rule 8D of the Rules. Investments made in subsidiary companies would have to be reckoned as strategic investments and hence the same should be excluded while working out the disallowance under Rule 8D(2)(iii). The investments which had yielded dividend income alone, are to be considered while working out the disallowance under Rule 8D(2)(iii) of the Rules as has been held by the decision of this tribunal in the case of REI Agro Ltd. But we find that if the disallowance made under second limb of Rule 8D(2) of the Rules is deleted, then the disallowance made by the ld AO would remain at ₹ 23,77,882/- and whereas the assessee itself had voluntarily disallowed ₹ 42,48,850/-. Hence we direct the ld AO to adopt the disallowance figure of ₹ 42,48,850/- which had already been disallowed by the assessee and hence no further disallowance in that regard is to be made.
Disallowance u/s 14A while computing the book profits u/s 115JB - Held that:- In the case of ACIT vs Vireet Investment (P) Ltd [2017 (6) TMI 1124 - ITAT DELHI] had held that no disallowance u/s 14A of the Act could be made by resorting to computation mechanism provided in Rule 8D of the Rules. However, the ld AO would have to disallow u/s 14A of the Act having regard to the books of accounts on some rational basis as expenditure incurred for earning exempt income, in terms of clause (f) of section 115JB(2) of the Act. Hence the disallowance already made by the assessee having regard to the books of accounts of the assessee in the sum of ₹ 42,49,346/- does not require to be disturbed. Hence the addition made by the ld AO u/s 115JB of the Act had been rightly deleted by the ld CITA. Accordingly, the Ground raised by the revenue is dismissed.
Addition towards running, repairs & maintenance of aircrafts including depreciation thereon - Held that:- No addition need to be made on an estimated basis towards running and maintenance of aircrafts including depreciation thereon.
Set off of Long Term Capital Loss arising on sale of land, against the deemed short term capital gain arising out of sale of residential property (being a long term capital asset as the holding period of them exceeded 36 months) - Held that:- As reliance placed by the ld AR on the decision of Hon’ble Bombay High Court in the case of CIT vs Manali Investment reported in (2013) 219 Taxman 113 (Bom) wherein it was held that short term capital gain computed u/s 50 of the Act on long term depreciable assets can be set off against long term capital loss u/s 74 - Thus we hold that the assessee is indeed entitled to set off the brought forward long term capital loss of ₹ 9,77,54,843/- against the deemed short term capital gain of ₹ 7,18,74,000/- in the facts of the case. The ld AO is accordingly directed to give benefit of the same to the assessee based on the correctness of the claim of brought forward loss figure made by the assessee. Ground raised by the assessee are allowed for statistical purposes as directed above.
TDS u/s 195 - payments under various heads in foreign currency on which due deduction of tax at source was not made - Held that:- CIT-A had granted relief to the assessee by placing reliance on ‘make available’ clause prevailing in various tax treaties , but the same is not done by the ld AO and ld DRP in the instant case. We find that the assessee had filed various documents with detailed factual and legal submissions with supporting evidences before the ld AO , which had not been appreciated by the ld AO and ld DRP in the proper perspective. Hence we deem it fit and appropriate, to remand this entire issue to the file of the ld AO , for denovo adjudication of this issue afresh in accordance with law. The assessee is also directed to co-operate with the ld AO by producing the necessary evidences in support of its contentions.
Validity of levy of interest u/ 115P - delayed payment of dividend distribution tax - Held that:- The assessee stated that the dividend distribution tax had been duly paid within the time prescribed. However , he fairly agreed for this matter to be verified by the ld AO. The Ld DR also agreed for the same. Accordingly, we deem it fit and appropriate to remand this issue to the file of the ld AO with a direction to verify the date of remittance of dividend distribution tax with supporting evidence and then decide whether to levy interest u/s 115P of the Act in accordance with law. Accordingly, the Ground No. 8 raised by the assessee is allowed for statistical purposes.
TDS u/s 194J OR 194H - Held that:- The assessee company paid this commission to the directors as per their terms of employment for the work done in their capacity as whole –time directors, this commission should have been treated as an incentive in addition to salary, bonus and other perquisities. Therefore, in our considered opinion, CIT-A is justified in recording the same as not coming within the purview of commission or brokerage as defined in s.194H nor a fee for professional or technical services as defined in s.194J. Therefore, we find no infirmity in the orders of the learned CIT(A) on this issue. Therefore, this ground of the Revenue is dismissed.
Addition regarding Principal Repayment of Finance Fee - Held that:- AO proposed to disallow the same on the contention that under finance lease, the lessee is the owner of the leased assets and principal repayment component of lease rental represents payment for purchase of leased assets and thus should be treated as capital expenditure. The ld DRP after considering the facts in detail and applying the ratio laid down by the Hon’ble Supreme Court in the case of ICDS Ltd vs CIT [2013 (1) TMI 344 - SUPREME COURT] allowed the issue in favour of the assessee.
TPA - addition of corporate guarantee - Held that:- Provision of corporate guarantee is in the nature of shareholder activity and hence, no TP adjustment on account of corporate guarantee is required. In the said case, this tribunal had held that “the assessee’s expectation from provision of guarantee was not that of a guarantor i.e. to earn a guarantee fee, rather, the expectation was of a shareholder to protect its investment interest, to help it achieve the assessee’s business objective”. Thus, we agree with the contention of the assessee that the objective of the assessee for providing guarantee was not to earn guarantee fee but to earn returns in the form of appreciation in investment value and receive dividends and, therefore, no TP adjustment ought to have been made in the facts and circumstances of the case.
The price for corporate guarantee should be that which would have been paid and accepted by independent enterprises in comparable circumstances. In that case transfer pricing adjustments are required. In that case, it has to be determined what will be the ALP of corporate guarantee commission paid by associate enterprise to the parent company providing corporate guarantee.
Non charging of interest on loan to its AE - addition as international transaction - Held that:- LIBOR and basis points should be the criteria for meeting the cost of interest on the international transaction in respect of interest to be charged on the loan advanced to AE. For this purpose the credit rating of the assessee as well as the credit rating of the AE should be taken into account. Accordingly we deem it fit to remand the issue to the TPO to determine the basis points on the basis of the aforesaid parameters and such other relevant parameter in accordance to law. Therefore, we remand this issue for this limited purpose back to the TPO / AO and to determine the issue as directed by us.
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2018 (1) TMI 1371
Waiver of penalty u/s 112(a) of the Customs Act, 1962 - respondents states that he has received instructions by e-mail stating that the goods in question were not prohibited goods - Held that:- We take the statement made by the counsel for the respondents on record and the order-in-original dated 29th August, 2017 against the petitioner imposing penalty under Section 112(a) of the Customs Act, 1962 would be treated as null and void/cancelled. Fresh order would be passed by the adjudicating authority, namely, Commissioner (Exports) without being influenced by the earlier order. The entire issue of penalty and the section/provision applicable would be examined afresh.
Petition disposed off.
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2018 (1) TMI 1370
TPO - MAM - Comparable selection - Held that:- The taxpayer provided software development services, competency centre services and IT Support Services to its AE, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Determining the ALP foreign exchange loss / gain arising from the transaction of revenue nature are required to be considered as part of operating profit/cost of the assessee as well as that of the comparables. The ld.TPO while computing the OP/OC of the comparables treated the amount of foreign exchange gain/loss as non-operating item whereas in case of the taxpayer foreign exchange gain and loss has been treated as operating item. However, both the taxpayer as well as comparable companies is required to be on the same page for treating foreign exchange loss/gain arising from transactions of revenue nature as an operating item. So, the TPO is directed to compute the ALP accordingly. So, this ground is allowed for statistical purposes.
Denial of working capital with adjustment - Held that:- It is a settled principle of law that for reasonably accurate adjustments tested party as well as comparables should be on the same page. However, so far as issue of working capital adjustment is concerned that the ld. TPO disallowed the same for lack of sufficient data as the audited accounts of the taxpayer do not show that it has received any advance from its AE. So, we are of the considered view that in the absence of any reliable data, working capital adjustment cannot be granted. So, the assessee is directed to provide complete computation to avail of the facility of working capital adjustment and thereafter TPO is directed to decide this issue afresh.
Similarly, so far as question of denial of risk adjustment to the taxpayer by the ld. TPO/DRP is concerned, the same has also been denied on the ground that the taxpayer has failed to provide any back up calculation for claim of risk adjustment. So, in the given circumstances, we are of the considered view that ld. TPO is to re-examine the issue on providing back up calculation by the taxpayer for the claim of risk adjustment.
Addition on account of income from maintenance, enhancement and support services (advance billing / deferred revenue) - Held that:- Amount treated as deferred revenue is not brought to be taxed in the year under consideration but to be taxed in the year when such services are rendered or recognized a income of the taxpayer. Grounds as determined in favour of the taxpayer.
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2018 (1) TMI 1369
Disallowance u/s 14A r.w. Rule 8D - Held that:- Both the lower authorities follow their respective findings right from assessment year 2008-09 to 2011-12 in order to compute the impugned disallowance under the newly introduced computation provision i.e. Rule 8D of the Income Tax Rules. Case records reveal that the assessee’s appeals against the said corresponding disallowance stand accepted on 08.04.2016 and 14.09.2017. It has come on record that the said co-ordinate benches have deleted identical disallowances in earlier assessment years. We therefore follow consistency to delete the impugned disallowance for want of an appropriate satisfaction u/s.14A(2) of the Act. The assessee’s former substantive ground succeeds.
Addition u/s 40(A)(2)(b) - Held that:- There is hardly any denial of the fact that the CIT(A) has followed his predecessors’ orders for assessment years 2008-09 to 2011-12. We notice in this factual backdrop that the above co-ordinate bench’s order has reversed the CIT(A)’s findings under challenge therein in partly affirming Assessing Officer’s identical action; although involving different amounts paid as remuneration to assessee’s Directors and other specified parties. Learned Departmental Representative is fair enough in not drawing any distinction on facts as well as law. We thus accept assessee’s latter substantive ground as well as its main appeal.
Closing stock addition as made by the Assessing Officer u/s.145A - Held that:- There is no dispute that the CIT(A) has followed his preceding assessment year’s findings to delete the impugned addition. We find that the above latter co-ordinate bench in its order dated 14.09.2017 has upheld the same in preceding assessment year 2011-12. We therefore adopt judicial consistency qua the instant issue to uphold the CIT(A)’s findings under challenge deleting the impugned closing stock addition. - Decided against revenue
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2018 (1) TMI 1368
The Supreme Court condoned delay, admitted the appeal, and ordered it to be heard along with another case on a specified date. Service to be completed before the hearing date, with Dasti service permitted.
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2018 (1) TMI 1367
Addition on account of under-reported income - Held that:- AO has considered only receipt of ₹ 11,89,074/- in Profit & Loss Account whereas as per Profit & Loss Account filed by the assessee it shows that the assessee has shown receipt of ₹ 14,37,002/-. It is not understood as from where he brought the receipt of ₹ 11,89,074/-. Even the ld. DR could not explain from where the Assessing Officer has picked the figure. I find the ld. CIT(A) without applying his mind as mechanically upheld the order of the Assessing Officer.Thus restore the issue to the file of the Assessing Officer for fresh adjudication.
Disallowance of bad debts due to non-furnishing of any explanation or details in this regard - Held that:- CIT(A) has not adjudicated the issue. Since the assessee has debited an amount of ₹ 77,774/- in the Profit & Loss Account, he is entitled to such bad debt in view of the decision of the Hon’ble Supreme Court in the case of TRF Ltd.[2010 (2) TMI 211 - SUPREME COURT ]. Therefore, this ground by the assessee is allowed.
Disallowance of telephone expenses - Assessing Officer has made disallowance of ₹ 38,534/- being 1/5th of the telephone expenses being probable personal use which has been restricted by the ld. CIT(A) to 50% of such expenses - Held that:- Considering the facts that certain free calls are allowed by the Telephone Department, lump sum disallowance of ₹ 10,000/- under the facts and circumstances of the case will meet the ends of justice. I hold and direct accordingly. The issue relating to the telephone expenses is accordingly partly allowed.
Levy of interest u/s 234B and 234D is concerned, the same is mandatory and consequential in nature. However, direct the Assessing Officer to verify the computation and rectify the arithmetical in accuracy, if any. This ground raised by the assessee is dismissed.
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2018 (1) TMI 1366
TPA - computing the arm's length price in respect of international transaction - Working capital adjustment - Held that:- The facts of the case are identical to the facts of Assessment Year 2006-07. Since DRP has not given the benefit of working capital adjustment while computing the arm's length price in respect of international transaction, we set aside the matter to the file of the Assessing Officer with the direction to examine the case of the assessee and decide the issue afresh in accordance with the provisions of law. The A.O. will provide necessary opportunity to the assessee of being heard.
Risk adjustment - Held that:- There is no dispute regarding the risk factors that should be taken into account by granting certain adjustments to the main margin of comparables. TPO has observed that assessee is a contract research service provider to its parent group and are not dependent on market situations. It is also been observed by TPO that assessee is assured of a fixed return on cost and therefore they are risk insulated entity whereas the comparables chosen are independent companies and there’s full risk associated with the normal enterprise real venture. As robust data was not available before Ld. TPO, he did not grant any adjustment in regard to the risk undertaken by the comparables vis-a-vis no risk undertaken by assessee - this issue regarding granting of working capital and risk adjustment back to the file of Ld. TPO for re- computation, on the basis of data made available to him.
Disallowance of warranty expenses claimed - Held that:- As decided in assessee's own case in the preceding assessment years we allow the claim of provision for warranty as business expenditure. Accordingly this ground raised by assessee stand allowed.
Disallowance on marketing expenses incurred by assessee on account of providing handsets to its dealers and employees, treating the same as capital asset - Held that:- Undisputedly assessee is a company which is engaged in import and sale of mobile handsets. It has a wide team of dealers and sales personnel. Assessee has given free of cost Mobile to all these persons for communication amongst themselves for the business of assessee. Assessee has therefore debited the cost of these phones as marketing expenses and reduced it from its inventory - naturally the expenditure of giving phones to sales team is an expenditure incurred by assessee wholly and exclusively for the purpose of business of assessee. Assessee has also not capitalized these phones for the obvious reasons that phones are not owned by assessee and therefore there is no requirement of claim of depreciation thereon. Thus expenditure is revenue in nature, assessee is eligible for deduction under section 37 (1) - decided in favour of assessee
Enhancement of value of closing stock - handsets damaged during the transit and those provided to assessee’s employees and dealers etc are to be treated as capital assets - Held that:-In the foregoing paragraphs in respect of ground numbers 5 and 5.1 the cost of handsets given away to employees and sales team have been treated to be revenue in nature. Further admittedly assessee has not capitalised such handsets given away to the sales team and employees by reducing it from the inventory stock. As these handsets are held to be not owned by assessee value of such handsets cannot be added back to the closing stock. This would amount to double edition. Accordingly this ground raised by assessee stands allowed.
Disallowance of 25% of provision for stock obsolescence by treating the same as unexplained - Held that:- Assessee has created the provision for obsolescence with the view that in the event for any reason these handsets/accessories become saleable it would anyways form part of profits. We therefore set aside this issue to Ld. AO for valuing such obsolete stock at net realisable value. He should give due consideration to the information if any, provided by the assessee.
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2018 (1) TMI 1365
Corporate insolvency process - default in making payment of dues - Held that:- From the documents placed on file and the arguments submitted by the Counsel for the Operational Creditor and Ld. Sr. Counsel for the Corporate Debtor, this Authority is satisfied that the Corporate Debtor defaulted in making payment of the outstanding debt claimed by the Operational Creditors. The Operational Creditors have fulfilled all the requirements of law. Therefore, CP is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed.
The moratorium is hereby declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process, for the purposes referred to in Section 14 of the I&B Code, 2016.
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2018 (1) TMI 1364
Non adjudication of grounds by Tribunal - Authorised Representative stated that Grounds 13 to 21 remained unadjudicated inadvertently - Held that:- We find that the Tribunal had decided the Grounds of appeal 1 to 12. That remaining Grounds remained unadjudicated. Therefore, we direct the Registry to fix the case before regular Bench to decide the remaining Ground of appeal i.e.Gs.O.A.13 to 21. - Decided in favour of assessee.
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2018 (1) TMI 1363
Rectification application - Held that:- A mention has been made before this Bench through a Praecipe dated 27th December, 2017 seeking rectification in the title of the order dated wherein inadvertently number of Interim Application is mentioned as "MA 109/2017 in place of 27/2017".
Allowed. Henceforth, in the said order number of Interim Application is to be read as "IA 27/2017" in place of "MA 109/2017".
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2018 (1) TMI 1362
Business Auxiliary Services - threshing and re-drying operations of tobacco leaves - demand along with interest and penalties for the period April, 2013 to March, 2014 - Held that:- Identical issue was decided in the case of M.L. AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CUS., C. EX. & S.T., GUNTUR [2017 (2) TMI 1355 - CESTAT HYDERABAD], where it was held that the activity of the assessees is in relation to the agriculture and not subject to service tax as a Business Auxiliary Service even before or after the negative list was issued on 1-7-2012 - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1361
CENVAT Credit - inputs/capital goods - towers, tower materials, shelters and prefabricated building - Held that:- The Larger Bench of this Tribunal in the case of Tower Vision India Pvt. Limited vs. CCE (Adj.), Delhi [2016 (3) TMI 165 - CESTAT NEW DELHI (LB)] has held that the assessee is not entitled to avail Cenvat credit on towers, shelters, prefabricated structures or tower materials - Credit not allowed.
Penalty - Held that:- The issue whether the appellant is entitled to avail Cenvat credit or not was in dispute and there were divergent views, in that circumstance, no penalty is imposable on the appellant - penalty set aside.
Appeal allowed in part.
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2018 (1) TMI 1360
Revision u/s 263 - validity of reopening under section 147 by the assessee, on the ground that the proceedings should have been initiated under section 153C - no application of mind by AO while recording the reasons for initiating the proceedings u/s. 148 - addition u/s 68 - Held that:- We do not find any quarrel to the proposition that the validity of assessment or reassessment cannot be challenged in the revisionary proceedings u/s 263.
What has been found, is the regular entries in the books of account of the concerns of S.K. Jain group, in which name of the assessee is appearing. Such entries in the cash books depicting the details of cheques issued in favour of the assessee as well as cash deposit through intermediates on various dates cannot be reckoned as document or books of account of the assessee. This fact has been noted by the Pr. CIT in the impugned order, wherein the entries pertains to the assessee for a sum of ₹ 25 lacs. Thus, the contention raised by the ld. counsel on this point is out rightly rejected that the proceedings under section 153C of the Act should have been initiated instead of under section 147 of the Act.
As regards the contention that material or information found during the course of search in the case of S.K. Jain group cannot be held to be a tangible material pertaining to the assessee, we are unable to accept such a contention for the reason that, firstly, there was a categorical information and material coming on record, that assessee was one of the beneficiaries of accommodation entries provided by one of the group concern of S.K. Jain and not only that, a specific amount (of ₹ 25 lacs ) has been mentioned which prima-facie pertained to the assessee. This definitely constitutes a tangible and definite material having live-link nexus with the income chargeable to tax escaping assessment.
As seen from the records that the assessee had raised similar objections after the receipt of “reasons recorded” before the Assessing Officer during the course of re-assessment proceedings, which have been amply dealt with and discussed by the Assessing Officer inn detail vide his separate order, copy of which has been placed in the paper book. Against the said order, assessee has not sought for any remedy nor has it challenged this issue in appeal after the passing of the assessment order. In any case, we have already held Assessing Officer has rightly acquired jurisdiction under section 147 of the Act based on the information/material referred to in the “reasons recorded”. Accordingly, this contention raised by the ld. Counsel of the assessee is also rejected.
Lastly on merits, Pr. CIT has amply demonstrated in his impugned order that this issue was neither enquired into nor was verified by the Assessing Officer once the information and the material in hard copy and in form of CD was made available to him. AO should have verified the genuineness of the transaction and also should have carried out adequate enquiry to come to a logical conclusion that either there is no accommodation entry and the contents found qua the assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain group are false or bogus; or assessee had amply demonstrated and substantiated before the AO regarding the genuineness of the transaction of the accommodation entry. In absence of such a mandate which was cast upon the AO, we are of the opinion that the assessment order is not only erroneous but also prejudicial to the interest of revenue, as this matter definitely requires proper enquiry and verification by the AO. - decided against assessee
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2018 (1) TMI 1359
Passenger Service Fee(security component) treated by the Assessing Officer as taxable income of the assessee - Held that:- The amount in question cannot be taxed in the hands of the assessee merely because the same was offered to tax during the course of assessment proceedings under certain circumstances. Under these circumstances, we need to examine and determine whether the impugned amount of PSF-SC collected by the assessee company is actually taxable in the hands of the assessee as per the provisions of Income-tax Act, 1961.
In the instant case the assessee has not filed any income from the PSF-(SC) in the return of income filed and it has been filed during assessment proceeding by way of a revised computation of income that too, without prejudice to the claim that it was not taxable in the hands of the assessee. Thus, amount in question cannot be taxed in the hands of the assessee merely because the same was offered to tax during assessment proceedings under certain circumstances, we reject the contention of the Ld. CIT(DR) that once the assessee itself has offered the income from PSF(SC), it cannot be allowed to contest the issue in further appellate proceedings .
Opinion of the CBDT on the issue in dispute is not binding on the Tribunal and issue in dispute has to be decided by the Tribunal in accordance with law.
Whether the amount of PSF(SC) received was in ‘fiduciary capacity’ or ‘diversion of income by overriding title’ - Held that:- We feel appropriate to restore the matter of determining taxability of PSF(SC) income to the file of the assessing Officer , with the direction to the assessee to produce entire statement of the escrow account maintained for PSF(SC) along with narration of every entry so that utilization of the funds of PSF(SC) for any purposes by the assessee(including investment in mutual funds) other than designated purposes can be filtered out. The assessee shall be free to furnish any other documents to support its claim. The Assessing Officer is further directed to examine any other benefit of deduction like collection fee at the rate of 2.5 % charges by the airlines or benefit of depreciation on capital asset purchased for security purpose etc or benefit of tax credit against tax deducted at source on PSF(SC) or any other benefit taken out of the funds received against PSF(SC).
TDS u/s 194J - Addition u/s 40(a)(ia) in respect of provision made at the year end on estimate basis, director sitting fee etc. - Held that:- Assessee cannot be expected to take into account the subsequent amendment and comply the same for deduction of tax at source - Revenue has not filed any appeal against the order of the Ld. Commissioner of Income-tax(A)-XXX, New Delhi, who while deciding the appeal of the assessee against order under section 201(1) and 201(1A) of the Act ,held that no tax was deductible on sitting fee paid to director. The Ld. CIT(DR) has not controverted the above fact of not filing appeal against the order of Ld. Commissioner of Income-tax (Appeals) -XXX, New Delhi. In view of the facts and circumstances, we uphold the order of the Ld. CIT-(A) on the issue in dispute.
Recruitment expenses - the appellant submits that tax has been deducted at the time of booking the expenses in another general ledger account which was merely transferred to another general there is no case for disallowance u/s 40(a)(ia)- Held that:- The finding of the Ld. CIT-(A) on the issue in dispute is well reasoned as he has directed the Assessing Officer to verify the fact of deduction of tax at source already done by the assessee - AO is directed to verify the above contention of the appellant from the books of account and to delete the impugned addition of ₹ 8.31 lakhs if/the appellant’s contention is found to be correct.
TDS liability on year-end provisions - Held that:- As observed that expenses are of the nature where parties are identified, as those parties have already rendered services to the assessee. Thus the contention of the assessee that parties were not identifiable in the year-end provisions made and therefore tax was not deducted at source and, is not tenable.
In respect of the alternative plea of the Ld. counsel to allow the deduction in subsequent year, we find that Ld. CIT-(A) has already taken into consideration the alternative plea of the assessee to allow the deduction in subsequent year and accordingly directed the Assessing Officer. The Revenue has not filed any appeal on that issue. In our opinion, the finding of the Ld. CIT-(A) on the issue in dispute is well reasoned and no further interference is required. Accordingly we uphold the same.
Disallowance u/s 14A read with Rule 8D - Held that:- In view of above finding of the Tribunal special bench in Vireet Investment [2017 (6) TMI 1124 - ITAT DELHI] for considering investment yielding exempt income for computing average value of investment, we feel it appropriate to restore the issue of computation of disallowance in terms of rule 8D of the Income- tax Rules to the file of the Assessing Officer for deciding in accordance with law. The assessee shall be afforded adequate opportunity of being heard.
Claim of depreciation on upfront fee paid to Airport Authority of India(AAI) - Held that:- Since the upfront fee has already been held as revenue expenditure in nature, the claim of the assessee for allowing depreciation on said upfront fee, cannot be allowed. Accordingly, the ground of the appeal is dismissed and the Assessing Officer is directed to withdraw depreciation on the upfront fee already allowed if any, by the lower authorities.
Claim of depreciation on the amount of repair and maintenance - Held that:- The repair and maintenance expenses on building has already been held by the Tribunal as revenue in nature, the claim of the assessee for allowing depreciation on said expenditure cannot be allowed. Accordingly we dismiss the ground of the appeal of the assessee and direct the Assessing Officer to withdraw the depreciation if any allowed by the lower authorities on the said repair and maintenance expenses incurred in assessment year 2007-08.
Deduction u/s 80IA on profit enhanced after appellate orders - as per assessee this ground was not adjudicated by the Ld. CIT-(A) - Held that:- We find that the issue of claim of deduction under section 80IA of the Act in case the assessee has been adjudicated by the Tribunal for assessment year 2007-08 [2017 (12) TMI 1214 - ITAT DELHI]. Thus we direct the Assessing Officer to follow the direction of the Tribunal for allowing deduction under section 80IA of the Act in case income is assessed positive.
Nature of expenditure - repairs and maintenance expenses whether as capital or revenue - Held that:- Normally repair to an asset, is an allowable item of expenditure but if the asset is altered, improved or replaced the expenditure may become capital expenditure. Similarly the functional capacity of the asset is altered or improved, the expenditure incurred would be in the nature of capital. Since the lower authorities have not examined the various items of expenditure in view of the above principles laid down in various judicial pronouncements, we feel it appropriate to restore the issue to the file of the Assessing Officer for examining each item of expenditure and decide the issue in dispute afresh in accordance with law
Disallowance made on account of club expenditure - as per AO the facilities of club are generally availed by very few top-ranked person and very occasionally availed for the guest related to the business and therefore the expenses were not incurred wholly and exclusively for the purpose of business - Held that:- Assessing Officer cannot take two opposite stands. Once, he consider the club expenses for charging FBT, and then again disallow the same. He cannot be allowed to take opposite stand simultaneously that said expenditure was not incurred wholly and exclusively for the purpose of business. As decided in the case of Otis Elevator Company India Ltd. Vs. CIT [1991 (4) TMI 53 - BOMBAY HIGH COURT] that the admission fee paid toward corporate membership is an expenditure incurred wholly and exclusively for the purpose of business and not a capital expenditure . It has only facilitated smooth and efficient running of the business enterprises and did not add to profit earning apparatus of the business enterprise.
Disallowance u/s 14A computation - Held that:- Expenses pertaining to earning of exempt income comes to ₹ 2,33,10,128/-. Therefore, the disallowance u/s 14A of expenses pertaining to earning exempt income is restricted to ₹ 2,33,10,128/-as against the amount of ₹ 8,06,74,000/- worked out by the Assessing Officer. As a result, the appellant gets a relief of ₹ 5,73,63,872/-.
For amount of indirect interest expenditure to be apportioned towards the exempt income earned in the case of the assessee, the Ld. CIT-(A), has considered the interest expenses toward working capital loan of ₹ 1,07,98,051/- and segregated the interest expenses paid towards secured loans. In our opinion, the action of the Ld. CIT-(A), is justified and in accordance with law. We do not find any error in the said finding of the Ld. CIT-(A) on the issue in dispute
As computation of disallowance under section 14A of the Act read with rule 8D of Income- tax Rules has been restored to the file of the Assessing Officer, , we direct the Assessing Officer to take the amount of indirect interest expenditure amounting to ₹ 1,07,98,051/- only for the purpose of Rule 8D(2)(ii) as upheld by us above.
Allowing set-off of losses claimed in the revised computation of income filed before the Assessing Officer - whether the receipts in the PSF (SC) are taxable in the hand of the assessee - Held that:- In case same are found to be taxable , then only the question of allowing the loss will arise. But if same were found to be not taxable, then issue of loss will not arise . Since in assessment year 2008-09 and 2009-10 the issue of taxability of the receipt from the PSF(SC) has been restored by us to the file of the Assessing Officer, we feel it appropriate to restore this issue of taxability of receipts from PSF(SC) in the year under consideration also to the file of the Assessing Officer with directions similar to what have been issued in assessment year 2008-09. The issue of allowability of loss other than under return of income or revised return of income ,is therefore presently academic only and will arise only ,if the receipts of PSF (SC) are held taxable, thus we are not adjudicating upon that issue. The Assessing Officer may also verify the correctness of the quantum of the loss if so required.
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2018 (1) TMI 1358
Condonation of delay of 989 days in filing appeal - case of appellant is that the person in charge of the imports in the appellant company had left without handing over the documents relating to the appeal to the next person who had taken charge - also the change in address was not intimated to Department - Held that:- When the appellant had knowledge about the appeal pending before the Commissioner (Appeals), it is the duty of the appellant to follow up and track the status of the appeal. The impugned order was passed on 30.07.2014. The appeal is filed only on 03.08.2017 and there is inordinate delay in filing the appeal.
The address had not changed after 30.07.2014 and before dispatch of the order by the department.
Delay cannot be condoned there being no sufficient reason - COD application dismissed.
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2018 (1) TMI 1357
Supplementary affidavit - the date of entry of vehicle into State is 23.6.2017 which is misread as the date of exit of vehicle, whereas the date of exit as per TDF was 26.6.2017 - A supplementary affidavit has been filed before this Court, annexing therewith certain rates quoted by the traders in order to contend that the valuation in fact was much below the amount assessed by the authorities.
Held that:- Since by way of supplementary affidavit new facts have been introduced, it would be appropriate to permit learned Standing Counsel to obtain instructions in that regard - List on 23.1.2018.
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2018 (1) TMI 1356
Corporate insolvency resolution process - debt or disputed debt - Held that:- The Corporate Debtor has utterly failed to show any dispute and further failed to show that amount as claimed was not due. This is a petition filed by the Financial Creditor under Section 7 of I&B Code. Section 7 deals with initiation of Corporate Insolvency Resolution Process by Financial Creditor. The Financial Creditor has complied the provisions of Section 7 of I&B Code. Financial Creditors/Petitioners has produced evidence of default and also furnished the name of Resolution Professional. Therefore, there are grounds to admit the Petition.
Here, the Petitioners have given full details of Corporate Debtor in Form No.l in the relevant columns. The ID number of the Company/Corporate Debtor is given and details of Registered Office and Corporate Office and address details.
This Bench admits the petition under Section 7 of Insolvency and Bankruptcy Code, 2016 declaring moratorium for the purposes referred to in Section 14 .
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2018 (1) TMI 1355
Depreciation u/s 32 on leased assets - ownership of the assets - use of assets for the purpose of its business - Held that:- The definitions of “ownership” essentially make ownership a function of legal right or title against the rest of the world. However, it is “nomen generalis– simum”, and its meaning is to be gathered from the connection in which it is used, and from the subject– matter to which it is applied. As long as the assessee has a right to retain the legal title against the rest of the world, it would be the owner of the asset in the eyes of law.” - Claim of depreciation allowed.
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2018 (1) TMI 1354
Revision u/s 263 - adequacy of inquiries or verification done by the AO - Held that:- In our considered opinion, it is well settled legal proposition that while considering Section 263, twin conditions are to be fulfilled which in the present case has not been fulfilled. - Hence, we are in complete agreement with the view taken by the Tribunal. - Decided against the revenue.
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