Addition u/s 68 - Addition on account of income from undisclosed sources - charging interest u/s 234B and 234D - Held that:- Assessee-company produced sufficient documentary evidences before A.O. to prove ingredients of Section 68. The assessee also allotted shares to the investors. The A.O. did not make proper enquiry on the evidences filed by the assessee-company on record. Whatever enquiry was made under section 133(6) of the Act are ultimately remained in favour of assessee and was not discussed in the assessment order.
Assessee-company discharged initial onus to prove identity of the investor companies, their creditworthiness and genuineness of the transaction in the matter. The decisions relied upon by the Ld. D.R. are clearly distinguishable on facts. The decisions relied upon by the Learned Counsel for the Assessee are squarely applicable to the facts and circumstances of the case. In view of the above discussion, we set aside the orders of the authorities below and delete the addition of ₹ 2.44 crores under section 68. The other grounds i.e., charging of interest under sections 234B and 234D of the I.T. Act, are consequential in nature.
Deduction u/s 80P(2) - qualification of interest income earned on fixed deposits with nationalized bank for deduction - Held that:- Issue in dispute is squarely covered against the assessee by decision in the case of State Bank of India Vs. CIT [2016 (7) TMI 516 - GUJARAT HIGH COURT] wherein held that interest earned from investment made in any bank is not deductible under section 80P(2)(d). In this view of the matter, we dismiss the appeal of the assessee.
However, any expenditure incurred by the assessee for earning such income could be allowed to it. In other words, the ld.AO has to determine the net interest income earned by the assessee on such investment with bank, and only thereafter that income has to be excluded from the admissibility of deduction under section 80P(2) of the Act. - Decided partly in favour of assessee for statistical purpose.
Excisability - supply and apply contracts which involved both consumption of paints manufactured by the appellant and also application thereof - appellants took a view that excise duty is required to be paid only on that element of cost representing the value of paints and not on the value relating to application of paints.
Held that:- The Bench in appellant own case M/S COROMANDEL PAINTS LTD. VERSUS CCE & CC, VISAKHAPATNAM [2016 (6) TMI 1018 - CESTAT HYDERABAD] has held that since sale of paint is linked to the application part of the paint at the customer’s site, the application is in relation to the goods and therefore, except the value of the labour component for application no other component can be deductible from the sale value for arriving at assessable value.
Penalties u/s 11AC - Held that:- The matter involved interpretational dispute - There is also no allegation that appellant suppressed the methodology adopted by them - penalty not warranted.
The Supreme Court of India dismissed the appeals after hearing the appellant's counsel and reviewing the relevant material. Delay was condoned, and exemption from filing certified copy of the impugned order was granted. No representation from the respondent.
TPO - Comparability analysis - Held that:- This Court notices that as far as the exclusion of three comparables – M/s. TCS E-Serve Limited; M/s. TCS E-Serve International Limited and M/s. Infosys BPO Ltd. is concerned, the ITAT was cognizant of and took note of the circumstances that these entities had a high brand value and, therefore, were able to command greater profits; besides, they operated on economic upscale.
There was no segmented data and on that account, directed the exclusion of that entity from the list of comparables. Likewise, in the case of M/s. ICRA Techno Analysis Ltd., it was found that the said entity was engaged in business intelligence and analytics supplies, software development, consultancy services, engineering services, web development and hosting services. Besides functional dissimilarity, the ITAT also noted that there was no segmented data to compare its activity with the assessee. Likewise, in the M/s. eClarx Services, the ITAT noted that its activity was functionally dissimilar because it performed KPO function whereas the assessee was classifiable as BPO.
Addition of bogus purchases - AO disallowed 100% of said purchases which is reduced to 8% by the CIT(A) on the ground that the sales were accepted by the AO and therefore only percentage addition can be made depending upon the G.P. ratio declared by the assessee - Held that:- The practice normally followed in such type of cases where bills are taken from hawala dealers, the assessee purchases goods from grey market thereby making some savings in the form of VAT and other levies. The Coordinate Benches of the Tribunal have taken a view that some percentage addition can be made in order to bring to tax the savings that the assessee might have made by purchasing the goods from grey market. In the present case the CIT(A) has taken a very reasoned view of the matter by directing the AO to assess the income at 8% of the bogus purchases. No infirmity in the order of the CIT(A) which is speaking and reasoned one and therefore we uphold the same. - Appeal of assessee dismissed.
Jurisdiction - Proceedings u/s 124 of the Customs Act as initiated by the Directorate of Revenue Intelligence (DRI), Kolkata Zonal Unit - Smuggling of Red Sanders - Held that:- This Court is of the view that the submission of Mr. Dey that the petitioner is liable in his capacity as “any person” to face a penalty under section 124 of the Customs Act does not exclude him from the purview of a proceeding under Section 124 as initiated through the SCN as well as the Supplementary SCN.
This Court must further notice the point raised by Mr. Dey that on conclusion of the proceedings, if adverse to the noticees, the DRI is empowered to take steps in terms of Section 124 both against the importer/importers and the petitioner as well as other persons named in the SCN/ Supplementary SCN, who have all allegedly acted not in discharge of their official duties but, as members of a smuggling syndicate.
The ends of justice do not call for interdicting the proceedings and, the law, as normally understood, requires the petitioner, in the facts of this case, to participate/cooperate in/with the show cause - interim relief/reliefs stand refused.
Rectifications of mistake - Held that:- We have seen that the grounds of appeal raised by assessee in its appeal and the grounds of appeal raised by revenue are different. We have further noted that while dismissing the appeal of the assessee in sustaining the denial of exemption, the appeal of the revenue was treated as allowed. We have further noted that the appeal of the Revenue was allowed without discussing the grounds of appeal and the facts related therewith. Considering the fact that is no discussion about the facts related with grounds of appeal and the submission of respective parties, we find that non-consideration of grounds of appeal and the fact thereof are mistake apparent. - decided in favour of assessee.
Validity of reopening of assessment - photocopy of the notice was given to the Assessee during the re-assessment proceedings - Held that:- Two weeks’ time is granted to learned counsel for the petitioner to file fresh address of sole respondent and file fresh address and copy of special leave petition for issuance of fresh show cause notice to the sole respondent failing which the petitions shall stand dismissed for non-prosecution without further reference to the Court.
CENVAT Credit - input services - Garden Maintenance Service - interpretation of Statute - Rule 2(l) of the CENVAT Credit Rules - scope of inclusive definition of 'input services' - whether garden maintenance service is an "input service", falling under the "input service", an inclusive definition? - Held that:- All the input services used in relation to modernisation, renovation or repairs of a factory, advertisement or sales promotion, security, legal services, etc., are included in the inclusive definition of input services. Requirement of 25% of the green belt is mandatory, for the very purpose of existence and consequently, manufacture of the final product. It is not only the process of manufacture which results in the production of excisable goods, attracting duty, but the input services which are integrally connected with the manufacture of such final products, should also be considered, so as to give effect to the inclusive definition of input services. Such input services may not in all cases, be in or in relation to manufacture of the final product, but they may be integrally connected and that there should be nexus with manufacture.
The garden maintenance service would fall within the definition of "input service", in terms of Rule 2(1) of the Cenvat Credit Rules, 2004 - he Tribunal was not right in denying input service credit availed on garden maintenance service. - decided in favor of assessee.
Reversal of CENVAT Credit - benefit of N/N. 82/84 is availed - denial of benefit on the ground that the benefit of N/N. 82/84 is availed and exemption granted, appellant having availed CENVAT credit on common input services is required to reverse an amount equivalent to 6% of the value of the goods - Held that:- Identical issue decided in appellant own case INOX AIR PRODUCTS PVT. LTD. VERSUS CCE & ST VISAKHAPATNAM [2017 (9) TMI 500 - CESTAT HYDERABAD], where reliance was placed in the case of DHARAMSI MORARJI CHEMICAL CO. LTD. Versus COMMR. OF C. EX., RAIGAD [2010 (3) TMI 561 - CESTAT MUMBAI], where the very same rule 6 of Cenvat Credit Rules was invoked, where the Bench has held that the provisions of Rules are not attracted in case in hand where CT-3 certificate has been issued - reversal of CENVAT Credit not required - appeal allowed - decided in favor of appellant.
Assessment completed hurriedly without giving any opportunity to the assessee - entire assessment appears to be made only on the basis of the statement of Shri Ashok Kumar Kayan, who is considered to be a penny stock broker - Claim of exemption u/s.10(38) - Held that:- Admittedly, the statement said to be recorded from Shri Ashok Kumar Kayan was not furnished to the assessee. It is also not known whether the purchase price of the shares was paid by cheque or by cash. AO observed that the assessee did not disclose the mode of payment of purchase price. In those circumstances, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of both the authorities below are set aside and the entire issue raised by the assessee is remitted back to the file of the Assessing Officer. - Appeal filed by the assessee is allowed for statistical purposes.
Penalty u/s 271(1)(c) - additions were made on account of profits attributable to PE, Software (Taxable @ 15%) and IPLC Charges - Held that:- CIT(A) while deleting the penalty levied by the Assessing Officer u/s 271(1)(c) has observed that the Hon'ble High Court has admitted the substantial question of law. Therefore, it is clear that the issue is subject to different interpretation. We do not find any infirmity in the order of the CIT(A).
As mentioned earlier, the Hon'ble High Court has already admitted the substantial question of law which has already been reproduced in the preceding paragraphs. Therefore, in view of the decision of the Hon'ble High Court in the case of Liquid Investment and Trading Co. (2010 (10) TMI 1021 - DELHI HIGH COURT), according to which, penalty cannot be levied when substantial question of law has been framed and admitted, therefore, in absence of any contrary material brought to our notice, we do not find any infirmity in the order of the CIT(A). - Decided against revenue
Condonation of delay in filing appeal - sufficient cause present or not? - Held that:- The reasons given for the condonation of delay are vague and casual. The day to day reasons have also not been given by the petitioner to justify the condonation of delay of 126 days. The name of the counsel in Delhi and also the date on which he received the order and thereafter approached the counsel have not been mentioned - the appellant has failed to give sufficient cause by giving cogent reasons and justification to condone the inordinate delay of 126 days - the revision petition deserves to be dismissed on limitation alone.
Refund of advance payment made by petitioner - Failure of Registration of site - Held that:- The petitioner being a member of the Society and also a part of the General Body which meet every September had to be aware of the status of the farming the sites and the problem being faced by the Society with regard to the acquisition of land and difficulties being faced by the Society in the acquisition, consolidation and change in land use of the land from agricultural to non-agricultural. In case she was not willing to wait she could have sought for refund at any stage. Though she became a Member of the Society in 2007 and deposited various amounts soon thereafter she filed the complaint before the District Forum only on 08.01.2014. Hence, we are of the view that having failed to claim the refund earlier she cannot now claim additional compensation.
Permission to submit revised returns - inaction on the part of the first respondent in taking a decision on Ext.P3 application - Held that:- In terms of Circular No.14 of 2017, the Commissioner of the State Goods and Services Taxes Department has clarified the issues relating to the right of the assessees under the Act to submit revised returns - petition disposed off.
Initiation of Corporate Insolvency Resolution Process against the Corporate Debtor for its inability to pay its debt - Held that:- There is clear acknowledgment of having received the amount of ₹ 40 lakhs. As per the agreement, the financial creditor had the option of seeking its return after 1 year along with interest @ 27% per annum. This is further substantiated with the issuance of two cheques payable on expiry of a year, for ₹ 40 lakhs as the principal and ₹ 10.8 lakhs as the interest thereon. The Corporate Debtor never raised this feeble ground to repudiate the liability when demands were made on them time and again.
This Bench is satisfied that a Financial Debt is due and payable by the Corporate Debtor. Their inability to pay the same entitles the Financial Creditor to seek insolvency resolution process against the Corporate Debtor. The Petition is therefore Admitted.
Unexplained cash credit u/s. 68 - ITAT deleted the addition - Held that:- Tribunal has noted that AO had not conducted any inquiry with the shareholders, if at all any cash deposits were in their bank account - if at all unexplained cash deposits could be taxed in the hands of the shareholders - reliance was made on decision of the Supreme Court in the case of COMMR. OF INCOME TAX VERSUS M/S LOVELY EXPORTS (PVT) LTD [2008 (1) TMI 575 - SUPREME COURT OF INDIA].
Disallowance of interest u/s 36(1)(iii) - Held that:- The necessary break up of the fund flow statement and reconciliation of funds used in acquiring the capital assets was not available on record - thus Tribunal has remanded the issue before the Assessing Officer for fresh decision.
Adjustment in the value of closing stock u/s. 145A - Tribunal deleted the addition - Held that:- As observed by Tribunal assessee was paying Excise duty at a concessional rate and had therefore not claimed the benefit of CENVAT credit - increase of the valuation on account of CENVAT credit was unwarranted - hence there is no question of law arises - appeal of revenue is dismissed.
Maintainability of petition - appealable order or not? - seizure of the goods in transit or storage - Section 129(1) of the UPGST Act, 2017 - Held that:- On the conjoint reading of Sections 107 and 121 of the Act it is apparent that though all orders passed under the Act by the adjudicating authority are appealable but not the one's which have been specifically excluded from the purview of appeal under Section 121 of the Act such as orders pertaining to seizure - the order of seizure of the goods in transit or storage passed under Section 129(1) of the Act is not appealable and therefore, a writ petition is maintainable against it subject to the limitations of judicial review.
In the instant case, the goods in transit have been seized for the reason that the authorities are of the opinion that the goods have originated from New Delhi and as such amounted to interstate transaction - the finding has been returned, without hearing - Prima facie the recording of the aforesaid finding for the purposes of seizure is in the nature of adjudication which cannot be done without opportunity of hearing to the party concerned.
Matter requires consideration - List the petition for admission/final disposal immediately thereafter.
Corporate Insolvency Resolution Process - whether an application under Section 7 of the ‘I&B Code’ can be rejected on the ground of pendency of a winding-up? - Held that:- In the present case, as admittedly the High Court has already admitted the winding up proceedings and ordered for winding-up of the Respondent-‘Corporate Debtor’, we hold that the question of initiation of ‘Corporate Insolvency Resolution Process’ against same ‘Corporate Debtor’ does not arise. Appeal dismissed.
Charitable activities u/s 2(15) - exemption u/s 10(23C) - Whether the bar code licensing fee is commercial in nature? - proof of charitable activities - Held that:- As decided in case of GSI India Vs. Director General of Income Tax [2013 (10) TMI 19 - DELHI HIGH COURT] - it is held that bar code licensing fee received by the two cannot be characterized as commercial receipts and subject to tax treatment - appeal of revenue is dismissed - Decided in favor of assessee.
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