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Showing 381 to 400 of 754 Records
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2020 (5) TMI 374
Condonation of delay - delay of 368 (Three Six Eight) days - HELD THAT:- Decisions of the Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. Mst.Katiji & Ors [1987 (2) TMI 61 - SUPREME COURT] and the decision in the case of CIT Vs. K.S.P.Shanmugavel Nadar [1984 (4) TMI 24 - MADRAS HIGH COURT] we find that the assessee is not benefitting in any way by not filing the appeal in time before the Tribunal. The assessee has explained the reasons as misplacement of papers by one of the office staff. This is one of the possible reasons for not being able to file the appeal within the time. Further, after hearing the assessee on merits also, we find that the assessee has an arguable case on merits. Hence, we are inclined to condone the delay of 368 (Three Six Eight) days and proceed to dispose-of the appeal on merits.
Value of assets for the purpose of calculation of depreciation - total value of the assets, namely 'Plant and Machinery' sold during the year was only and the Appellant itself deleted this value from block of assets, for the purpose of calculation of depreciation - HELD THAT:- We find that the Hon'ble High Court of Bombay in the case of CIT Vs. Parle Soft Drinks (Bangalore (P) Ltd) [2017 (11) TMI 1311 - BOMBAY HIGH COURT] has held that the sale proceeds of soft drink bottles being capital assets, could not be held to be a revenue receipt and after sale of old bottles, block of assets had to be reduced by amount of whole proceeds and accordingly, whatever was there in block of assets, depreciation had to be allowed in accordance with the provisions of law.
It is clear that u/s.43(6) of the Act, the WDV of the block of assets is to be reduced by the sale proceeds received on sale of one or more of the assets from the block and not the entire WDV of the said asset. Therefore, we direct the AO to reduce only the sale proceeds only from the WDV of the block of the assets and allow the depreciation on the balance of the WDV. Appeal of assessee is allowed.
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2020 (5) TMI 373
Deduction u/s 54F on account of construction of house - assessee has already purchased the residential flat at Rajendra Nagar out of the sale proceeds - HELD THAT:- Revenue authorities have mislead themselves on holding that the purchase of the Rajendra Nagar flat out of the sale proceeds of the original asset was on the basis of wrong facts. Keeping in view the facts of the case that the capital gains have been utilized for construction of house at D-279, Defence Colony, New Delhi and as per the provisions of the Act, the assessee doesn’ t have more than one house which is chargeable to tax under the head “ income from house property” other than the one residential house owned on the date of sale of original asset, we hereby hold that the addition made by the revenue authorities is unwarranted. - Decided in favour of assessee.
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2020 (5) TMI 372
Disallowance of certain expenses - HELD THAT:- As seen as an admitted position that all the expenses were not properly vouched. Some of the expenses were recorded even on the basis of information provided orally by the drivers, for which there was no material to back the same.
It cannot be said that all the expenses were properly vouched and there was no infirmity in the claim. Taking into consideration the peculiarity of the facts and circumstances obtaining in the instant case, disallowance at 10% as sustained in the first appeal is in order, which does not call for any further interference. This ground is not allowed.
Disallowance u/s. 40A(2) - excess freight of ₹ 25/- per ton was paid to related parties - HELD THAT:- Vehicles were dedicated specifically to the assessee in contrast to the outsiders, who were providing vehicles only on request and sometimes such a request was not acceded to as well. Since the vehicles of the related parties remained available round the clock and were dedicated specifically to the assessee, the rate charged by the third party transporters cannot constitute a good base for comparison with the rate of freight paid to the related parties. It is further a matter of fact that all the recipients furnished their returns by including the amount of freight received from the assessee and offered the same to tax - disallowance u/s.40A(2) has been wrongly made and sustained.Therefore, order to delete the addition.
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2020 (5) TMI 371
Exemption u/s.11 - registration u/s.12A cancelled - allegatin that, assessee charges fees to students as per its prospectus but no charitable work is carried out as students are enrolled with full fees and other expenses which they have to incur. - assessee has set apart 15% of the amount to be carried forward to subsequent years - HELD THAT:- In the case of the assessee, students who get admission pay the development fee and without the same, there would be no admission for them.
There is an element of quid pro quo for them and therefore, the students are exactly aware for what purpose their fee is going to be used for. For a moment, even if it is held that development fee is revenue receipts, the same are still eligible for deduction u/s.11 of the Act in the light of the fact that there is no violation of either 11(5) or 13 of the Act in the case of the assessee as has been held by the Pune Bench of the Tribunal in assessee’s own case [2013 (9) TMI 1120 - ITAT PUNE] in the 12A matter. Therefore, addition made was deleted by the Ld. CIT(Appeals). - Decided against revenue.
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2020 (5) TMI 370
Calculation of interest on delayed refund - relevant date - correction of calculation of interest from 27.01.2010 namely from the date on which the interest claimed is to be paid - Section 27(1)(a) of the Customs Act, 1962 - HELD THAT:- Tribunal after considering rival contentions raised has rightly held that claims were returned due to deficiency and deficiency memos having been addressed itself would evidence that there cannot be a claim for interest as no show cause notice was issued, is erroneous conclusion as provisions of Section 11B of the Central Excise Act, 1944, do not contemplate for returning of any refund claims - As rightly held by the Tribunal cause of action for claiming interest would arise after 3 months from the date of filing of said refund claim. If at all the application is defective, it would only be an irregularity not illegality.
The application for refund would not be contrary to Section 11B of the Central Excise Act, 1944 and as such we are not inclined to admit this appeal, since there is no substantial question of law involved in this appeal for being adjudicated - appeal dismissed.
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2020 (5) TMI 369
Smuggling - Contraband Gold - Confiscation - imposition of penalty u/s 112(a) of the Customs Act, 1962 - HELD THAT:- Reading of Section 122 of the Customs Act, 1962 indicates that in every case under the said Chapter i.e., Chapter XIV under which anything is liable to be confiscated or any person is liable to be imposed with the penalty has to be adjudicated under Clause (a) of Section 122 of the Act by the Principal Commissioner of Customs or Commissioner of Customs or a Joint Commissioner of Customs without limit. Under Clause (b) the penalty has to be adjudicated by the Assistant Commissioner of Customs or Deputy Commissioner of Customs where the value of goods came to be confiscated does not exceed ₹ 5 Lakhs and under Clause (c) same shall be adjudicated by a Gazetted Officer of Customs lower in rank than an Assistant Commissioner of Customs where the value of the goods confiscated would not exceed ₹ 50,000/-.
Undisputedly, in the instant case, value of goods was more than ₹ 5 lakhs and as per the appraisal value, who had appraised the gold bar so confiscated and had certified the weight at 2566.05 grams of 24 carot gold of foreign origin he had valued at ₹ 77,87,962/-. Before levy of penalty show cause notice came to be issued by Additional Commissioner of Customs proposing to levy penalty on appellant.
It would clearly emerge from the orders of the original authority as affirmed by the appellate authority the statement of appellant recorded under Section 108 of the Customs Act penalty under Section 112(a) came to be imposed. In fact, whatsapp messages exchanged between the noticees including the appellant herein, which formed part and parcel of the show cause notice and adjudication order, it came to be held that appellant herein has admitted in his statement furnished under Section 108 of the Customs Act and his role in the act of smuggling of gold - In fact, appellant has not retracted his retrospective statement and it has never been contended by the appellant that statement has been obtained from him under threat or duress or coercion. It is only after show cause notice was issued proposing to levy penalty, appellant has tried to retrace his steps and not before the said date.
Appeal dismissed.
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2020 (5) TMI 368
DFIA (duty free import authorisation) License - requirement of disclosure of technical characteristics, quality and specifications of the essential oil said to have been used in manufacture of Paan Masala/Gutka - contention of the exporter that the declaration requirement of the exception notification is applicable only if the exported goods are included in the list of items enumerated in paragraph 4.55.3 was not accepted by the Hon’ble High court - HELD THAT:- No doubt the show cause notice in the present case has been issued after a period of expiry of two years as mentioned in the said section. But the show cause notice itself has alleged the suppression of facts on part of the exporter. The same has even been confirmed by the original adjudicating authority as in Para-21 of the order dated 04.06.2015 it is appreciated that the non-disclosure of the technical characteristics as a consciously done at of the exporter.
When this order was challenged before the Hon'ble High court in para-6 of the order by high court, the commissioner's view that DFI licences were obtained by suppression and distortion of facts has been observed with no contrary finding to the said observations. From the record, no other reason found to differ from the said observations of suppression and distortion of facts and the act being a consciously done act of the exporter - the Department has committed no error by invoking the extended period of limitation.
Appeal dismissed.
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2020 (5) TMI 367
Striking off of the name of M/s. Mandakini Vacations Pvt. Ltd. (the Company), from the Register of Companies - Appellant contends that in order to recover the taxes on the undisclosed income of the Company & statutory dues and recover the revenue from the transactions of the company, there is a need of restoration of M/s. Mandakini Vacations Pvt. Ltd. in the Register of Companies.
HELD THAT:- The Respondent No. 2 Company has also filed an Appeal bearing 340/252/ND/2019 for restoring its name in the Register of ROC. The Respondent No. 1 i.e. ROC has not filed its reply despite several opportunities. However, the representative of RoC present during the proceedings, did not rais any objection.
The Income-tax Department is an aggrieved party within the meaning of section 252(1) read with 252(3), as it has to recover taxes payable by Respondent Company and great prejudice will be caused to its revenues, if the name of the Company is not restored back. Accordingly, in sequel to the above, the Appeal is allowed. The Registrar of Companies, is directed to restore the name of M/s. Mandakini Vacations Pvt. Ltd, in its Register, as if the name of the Company had not been struck off in accordance with section 248(1) of the Companies Act, 2013.
Petition allowed.
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2020 (5) TMI 366
Money mobilization - Public issue - Whether the Company came out with the Offer of RPS [Redeemable Preference Share] as stated in the Interim Order? - whether the Offer of RPS is in violation of Section 56, Section 60 and Section 73 of Companies Act, 1956? - HELD THAT:- As neither the company nor the directors have disputed the same.
Also perused the documents/information obtained from the 'MCA 21 Portal' and other documents available on records. It is noted, that OIL has issued and allotted RPS to 4,191 investors during the financial years 2011-12 and 2012-13 and raised a total amount of ₹ 5,46,48,000/- - number of allottees and funds mobilized has been collated from the information from Ministry of Corporate Affairs (MCA) Portal and the documents submitted with the complaint received by SEBI. Therefore, it is possible that the actual number of allottees and amount mobilized could be more than 4,191 allottees and ₹ 5,46,48,000/- respectively.
Therefore conclude that OIL came out with an Offer of RPS as outlined above.
Securities to more than 49 persons - public issue and the provisions of Section 56 not followed - Violation of Section 56, Section 60 and Section 73 of Companies Act, 1956 - HELD THAT:- OIL assessee has issued RPS to more than 50 persons and it is noted that in financial years 2011-12 and 2012-13 RPS has been issued to 4,191 allottees. It may be noted that even in cases where the issue is made in tranches and any one of the tranche has not exceeded forty nine people, reference may be made to the in Neesa Technologies Ltd. v. SEBI [2017 (4) TMI 1500 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] which lays down that "In terms of Section 67(3) of the Companies Act any issue to '50 persons or more' is a public issue and all public issues have to comply with the provisions of Section 56 of Companies Act and ILDS Regulations. Accordingly, in the instant matter the appellant has violated these provisions and their argument that they have issued the NCDs in multiple tranches and no tranche has exceeded 49 people has no meaning". Therefore, I hold that even if one or more of the tranche is 49 or less, in view of this judgment, the issue qualifies as deemed public issue.
OIL has allotted RPS to more than forty-nine allottees, I find the offer of RPS is a "public issue" within the first proviso of Section 67(3) of Companies Act. Hence, the Offer of RPS are deemed to be public issues and OIL was mandated to comply with the 'public issue' norms as prescribed under the Companies Act.
Since the Offer of RPS is a public issue of securities, such securities shall also have to be listed on a recognized stock exchange, as mandated under section 73 of the Companies Act. As per section 73(1) and (2) of the Companies Act, a company is required to make an application to one or more recognized stock exchanges for permission for the shares or debentures to be offered to be dealt with in the stock exchange and if permission has not been applied for or not granted, the company is required to forthwith repay with interest all moneys received from the applicants.
Allegations of non-compliance of the above provisions were not denied by OIL or its directors. I also find that no records have been submitted to indicate that it has made an application seeking listing permission from stock exchange or refunded the amounts on account of such failure. Therefore, I find that OIL has contravened the said provisions. Moreover, the allegations of non-compliance of the above provisions are not denied by the Directors of the company. OIL has contravened the provisions of sections 73(1) and (2) of the Companies Act.
No material is available on record or submitted by the aforesaid Directors of OIL to show that the amount collected by the company was kept in a separate bank account. OIL has also not complied with the provisions of section 73(3) which mandates that the amounts received from investors shall be kept in a separate bank account.
As the Offer of RPS was a deemed public issue of securities, OIL was required to register a prospectus with the RoC under section 2(36) read with Section 60 of the Companies Act. OIL has not submitted any record to indicate that it has registered a prospectus with the RoC, in respect of the Offer of RPS. OIL has not complied with the provisions of Section 60 of the Companies Act, 1956.
As per section 56(3) of the Companies Act, 1956, no one shall issue any form of application for shares in a company, unless the form is accompanied by abridged prospectus, containing disclosures as specified. Neither OIL nor its directors produced any record to show that it has issued Prospectus containing the disclosures mentioned in section 56(1) of the Companies Act, 1956, or issued application forms accompanying the abridged prospectus. Therefore, OIL has not complied with sections 56(1) and 56(3) of the Companies Act, 1956.
OIL was engaged in fund mobilizing activity from the public, through the Offer of RPS and has contravened the provisions of sections 56(1), 56(3), 2(36) read with 60, 73(1), 73(2), 73(3) of the Companies Act, during the financial years 2011-2012 and 2012-2013.
Liability for violations committed - A person cannot assume the role of a Director in a company in a casual manner. The position of a 'Director' in a company comes along with responsibilities and compliances under law associated with such position, which have to be fulfilled by such director or face the consequences for any violation or default thereof. The aforesaid Directors cannot therefore wriggle out from liability. A Director who is part of a company's Board shall be responsible and liable for all acts carried out by a company. Accordingly, I note that aforesaid Directors are responsible for all the deeds/acts of the company during the period of their directorship and are obligated to ensure refund of the money collected by the company to the investors as per the provisions of Section 73 of Companies Act.
Natural consequence of not adhering to the norms governing the issue of securities to the public and making repayments as directed under section 73(2) of the Companies Act, is to direct OIL and its Directors, viz., Md Mahfuz Alam, Parwez Alam, Md Kamal Koshar, Mohammad Salimuddin Ansari, Manzur Alam, Punam Bharati to refund the monies collected, with interest to such investors. Further, in view of the violations committed by the Company and its Directors, to safeguard the interest of the investors who had subscribed to such RPS issued by the Company, to safeguard their investments and to further ensure orderly development of securities market, it also becomes necessary for SEBI to issue appropriate directions against the Company and the other Noticees.
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2020 (5) TMI 365
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- Though the purchase orders were placed with amendments from time to time, post inspection of the said machines, the machines were not delivered to the Corporate Debtor. The Corporate Debtor's email dated 5-8-2019 establishes the fact that the Petitioner was informed about the cancellation of the contract and that the order was closed. Hence, there is no debt and default committed by the Corporate Debtor.
Application dismissed.
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2020 (5) TMI 364
Best Judgement Assessment - addition towards suppressed turnover - rejection of VAT-100 Form - validity of proceedings initiated by the revisional authority under Section 64(1) of KVAT Act - HELD THAT:- Where the accounts are acceptable as genuine and substantially correct, the assessment could be made on the basis of the accounts maintained. Indisputably, the assessee has compounded the offence by accepting the suppression at the time of inspection and discharged the tax liability of ₹ 75,180/- towards suppressed turnover of ₹ 5,56,982/-. It is obvious that the pattern of maintaining the account books was not in order. On rejecting the accounts and the VAT-100 Form submitted by the assessee, the prescribed authority has made best judgment assessment by adding the turnover equal to the suppressed turnover over and above detection made. It is imperative that no suppression would have come to light in the absence of inspection - There being rationale behind estimation of the turnover, same cannot be held to be untenable. The appellate authority has merely proceeded to set-aside the addition of turnover without examining the applicability of the judgments referred to supra in the right perspective.
At any stretch of imagination, it cannot be held that the 3rd respondent had no jurisdiction to invoke the revisional power under Section 64(1) of the Act. The twin conditions i.e., the appellate order being erroneous and prejudicial to the interest of the revenue being satisfied, the 3rd respondent was justified in setting aside the order of the appellate authority and restoring the order of the prescribed authority - the questions of law are answered against the assessee and in favour of the Revenue.
Appeal dismissed.
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2020 (5) TMI 363
Grant of refund - Direction to refund the amount due to the Petitioner within four weeks along with the applicable interest - HELD THAT:- Directions contained in the order dated 17th January, 2020 envisages that in case the respondents have no impediments in granting the refund, the same may be refunded. In the absence of specific directions contained in the aforesaid order with regard to income refund under the Income Tax Act, 1961, we do not see any violation of the directions of this Court much less any wilful disobedience by the respondents of the said order dated 17th January, 2020.
Learned counsel for the respondent submitted that the refund claim of the petitioner has been processed and the same will be credited in the beneficiary account within a week. Statement made by the learned counsel for the respondent regarding processing of refund, this contempt petition is dismissed.
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2020 (5) TMI 362
Difference in the net profit ratio as compared to the preceding - invoking the provisions of Section 145(3) - ITAT upholding the order of Ld. CIT(A) in deleting the addition - HELD THAT:- Books of Accounts of the assessee were found to be doubtful on the ground that Net Profit rate had dropped drastically in the preceding years. Subsequently, a remand was ordered and in the remand report the Books of Accounts produced were checked but no finding of any discrepancy was ascertained. It was in these circumstances that the Commissioner allowed the appeal of the assessee and that finding was upheld by the Tribunal.
The questions proposed are pure questions of fact and not questions of law much less substantial questions of law.
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2020 (5) TMI 361
Depreciation on the golf course - Whether depreciation should be allowed considering it as ‘plant and machinery’ ? - HELD THAT:- As in assessee’s own case for Assessment Year 2005-06 to 2011-12 [2019 (9) TMI 148 - ITAT DELHI] wherein, the coordinate bench has held that the golf course is a plant and machinery and assessee is eligible for depreciation thereon @15% - Allow ground No. 1 of the appeal directing the ld AO to grant depreciation on cost of developing golf course on land considering it as plant and machinery.
Addition on account of security deposit and membership fees - Revenue receipt or capital receipt - HELD THAT:- In Gulmohar Green Golf and country club Ltd [2016 (12) TMI 1559 - GUJARAT HIGH COURT] wherein it was been held that the security deposit recovered from the members at the time of their enrolment as a member is refundable on occurrence of the contingency mentioned in the rules and regulation and bylaws, therefore it is required to be treated as a deposit, thus, a capital receipt. Therefore, it was held that it is not an income of the assessee.
As in the case of the assessee also the security deposit is refundable hence respectfully following the decision of GULMOHAR GREEN GOLF AND COUNTRY CLUB LTD.[2016 (12) TMI 1559 - GUJARAT HIGH COURT] we also hold that the sum of refundable security deposit received from the members of the assessee is a capital receipt and cannot be charged to tax as income. Accordingly, we direct the learned assessing officer to delete the addition to the extent of refundable deposit received from the members. Addition on account of security deposit and membership fees received.
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2020 (5) TMI 360
Revision u/s 263 - Reopening of assessment u/s 147 - disallow expenditure on purchases from overseas in terms of Section 40(a)(i) for non deduction of tax at source from such payment - HELD THAT:- Reassessment order was passed on 26.03.2015 after making disallowance of purchase. Aggrieved thereto petitioner has filed appeal before CIT(Appeals) under Section 246A(1)(b), which is pending.
PCIT has issued impugned notice dated 08.06.2016 under Section 263 on the ground that assessment order dated 26.03.2015 passed u/s 143(3) was erroneous and prejudicial to the interest of Revenue inasmuch as sales tax subsidy accruing to petitioner under scheme of Government of Maharashtra had not been brought to tax as “revenue receipt”.
As contended that aforesaid notice dated 08.06.2016 is barred by limitation u/s 263. As the issue of taxability of sales tax subsidy as per Maharashtra Government was not at all an issue of reopening of the assessment, Hon court held that limitation for 263 proceedings will start from the original assessment order.
Issues subject to revision were pertaining to original assessment and not the reopened assessment; the limitation should also start from the original assessment. In this case as original assessment order u/s 143(3) of the act was passed on 16.01.2014, the revision thereof could have been taken up to 31.3.2016. Impugned order u/s 263 of the act was passed on 26/2/2019, therefore it is clearly beyond the limitation prescribed u/s 263 (2) of the act. Thus the impugned order is barred by limitation and hence quashed. - Decided in favour of assessee.
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2020 (5) TMI 359
Disallowance u/s 14A - no tax exempt income - HELD THAT:- Undisputed facts of this case that there was no tax exempt income in the relevant previous year, we hold that no disallowance under section 14A could have been made, on the facts of this case and in the year before us. We, therefore, uphold the plea of the assessee and delete the disallowance.
Once we uphold the plea of the assessee that no disallowance under section 14A could have been made on the facts of this case, grievances of the Assessing Officer, against learned CIT(A)’s partially deleting the disallowance under section 14A, become infructuous.
Pronouncement of orders not within 90 days - pedantic view - Covid-19 epidemic - HELD THAT:- We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force.
Even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.
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2020 (5) TMI 358
Maintainability of appeal - low tax effect - computation of tax effect - HELD THAT:- As relying on KESHAV POWER LTD. [2019 (8) TMI 811 - SC ORDER] since the tax effect involved in the matter is less than threshold limit going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The Special Leave Petition is dismissed.
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2020 (5) TMI 357
Profit on sale of investment as profit in the Life Insurance Business - not treating the profit disclosed in shareholder’s account - applicability of provision of section 44 of the Act read with 1st Schedule - HELD THAT:- As decided in own case [2018 (1) TMI 845 - ITAT DELHI] and [2019 (4) TMI 1769 - ITAT DELHI] direct the assessing officer to take profit shown in shareholders' profit and loss account i.e. Form A-PL to be part of the income derived from life insurance business. Thus these grounds are allowed.
Non considering surplus actuarial valuation done in accordance with the Insurance Act, 1938 as per old Form No. 1 - AO has held that after the commencement of IRDA Act. 1999 and the taxable income should be equivalent to the actuarial valuation as per the new regulation and not as per old From in From No. G, H and I - HELD THAT:- As decided in own case [2018 (1) TMI 845 - ITAT DELHI] in the submissions of the learned Sr. Advocate that CBDT Circular has limited application to a situation where the insurance benefits are assigned to third parties, where the benefits are to be paid/reserved/expended on behalf of the policy holder or the assignee. As the term "on behalf of" implies agency relationship and when the benefits are assigned to third parties, insurance company acts as agent of the policy holder.
Even otherwise, if we go to the explanatory note as given under para 40.2 of the Circular 202, according to this bonus paid to the policy holder will also be taxed but that is not the case of the Revenue. The Revenue has only contested the bonus declared and the incremental FFA. 89.
No such disallowance has been made by the Revenue in the earlier assessment years i.e. up to A.Y.2009-10 and it is for the first time that the CIT(A) has enhanced the assessment . We are of the view, even on the ground of consistency, the Revenue cannot discard the consistent and regular method followed for determining the taxable income without there being any change or otherwise, the bonus declared and the incremental FFA has been allowed as deduction by the Revenue.
Addition on account of funds for further appropriation and bonus allocated to the policyholders to the taxable income of the appellant - treating the same as part of the actuarial surplus liable to be taxed u/s 44 of the Act read with Rule 2 - HELD THAT:- As decided in own case [2018 (1) TMI 845 - ITAT DELHI] for all legal purposes, the property must be treated as belonging to the assessee and perhaps the Legislature would remedy the hardship of the assessee in such cases if it wants. Even though the assessee had a mere husk of title and as against the vendee no reality of title, as against the world he was still the legal owner and the real owner.
In case the Revenue is of the opinion that due to the language of Rule 2, the companies carrying on life insurance business will be paying unjustifiably tax at a lower rate, the Revenue can approach the Parliament for making the necessary amendment in the Income Tax Act.
We even noted upto Assessment Year 2009-10, the Revenue has consistently excluded amount appropriated for FFA out of the available surplus for the purpose of ascertaining acturial surplus while computing profit and gains of life insurance business of the assessee. Therefore, following principle of consistency as has been held by Hon'ble SC in the case of Radhasaomi Satsang Baug [1991 (11) TMI 2 - SUPREME COURT] and that of Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] we set aside the order of CIT(A) and delete the enhancement made by CIT(A) in this regard.
Disallowance incurred on account of donation - donation was made by the assessee to the concern in which the directors of the appellate company are trustees - HELD THAT:- Respectfully following the decision of the coordinate bench [2018 (1) TMI 845 - ITAT DELHI] with respect to disallowance of donation made u/s 37(1) of the Act is the ground is confirmed against assessee.
Claim of the assessee is that though donation is disallowable u/s 37(1) of the Act, if it fulfills the condition of the allowability of the donation under chapter VI A of the Act it should be allowed to the assessee - HELD THAT:- Direction to verify the claim of the assessee u/s 80G.
Exemption of claim by the assessee u/s 10(34) for the dividend income - issue raised by the assessee as an additional ground before the ld CIT(A) - CIT(A) rejected the same on the ground that since the claim was not made in the return of income or before the ld AO, he does not have the power to entertain the additional claim - applicability of S. 14A for disallowance of expenditure in respect of income not forming part of Total Income - HELD THAT:- This issue is duly covered by decision of Mumbai Bench of this Tribunal in case of ICICI Prudential Insurance Co. Ltd. [2012 (11) TMI 13 - ITAT MUMBAI] in which under para 47 while dealing with similar issue following decision of General Insurance Corp of India [1999 (9) TMI 3 - SUPREME COURT]gave clearcut finding that assessee is entitled to exemption u/s 10(34) for the dividend income.
No contrary decision for applicability of S. 10(34) & S. 14A was brought to our knowledge. We accordingly allow the additional ground and dismiss the plea of learned DR that directions be given in case exemption is granted u/s 10(34) to disallow be expenditure u/s 14A of the Income Tax Act.
Direction of the ld CIT(A) to the ld AO to re-compute the losses assessed in earlier assessment years as per section 44 of the Act and further the grant set off u/s 72 of the Act only in respect of income covered u/s 115B(ii) of the Act and that too against the loss as re-compute in earlier years.
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2020 (5) TMI 356
Disallowance on account of Sham Agreement - AO found that the transaction is with a related party - revenue has been transferred to its holding company - assessee is not eligible for deduction of expenditure incurred towards services obtained from its holding company at the 25% of the revenue - HELD THAT:- A compulsion at source imposed by a third party is necessary to create a superior title. Just because diverted income is collected by the assessee himself for and on behalf of the beneficiary; it cannot be inferred that it was only an application and not diversion.
In the instant case, the assessee has been obligated by virtue of the agreement to divert the income at source and also for the contributions made by the holding company. Revenue sharing agreement entered with the holding company by the assessee is diversion of income by overriding title. The revenue's contention that the entire transaction is sham and aimed at only to divert the income to EMLL cannot be said to be correct based on the facts and the judicial pronouncements.
In case of assessee [2020 (1) TMI 458 - ITAT DELHI] itself based on the same agreement, we do not find any merit in the appeal of the assessee in deleting the addition made by the learned CIT – A holding that the agreement between the holding company as well as the assessee was not sham agreements. Accordingly, we dismiss the appeal of the learned assessing officer.
Payment of the disbursement income to the holding company - diversion of income by overriding title or merely on application of income - HELD THAT:- As decided in case of assessee [2020 (1) TMI 458 - ITAT DELHI] payment made to the holding company is obligated the in diversion of income by overriding title. The coordinate bench also after considering the contribution made by the holding company and keeping in view the amounts that have been already offered for taxation in the hands by the respective entities the above expenditure is allowable in the hands of the company. The relevant paragraphs as cited above that the revenue sharing agreement entered with the holding company by the assessee is a diversion of income by overriding title, we allow ground number one of the appeal following the reasoning given by the coordinate bench.
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2020 (5) TMI 355
TP Adjustment - Comparable selection - Software Development Service Segment - HELD THAT:- No infirmity in excluding Infosys Ltd., Larson & Tubro Infotech Ltd., Mindtree Ltd., Persistent Systems Ltd., Sasken Technologies Ltd., Infosys Ltd., and TATA Elxsi Ltd., for having high turnover as compared to a captive service provider like assessee.
Risk adjustment at 1% on ad hoc basis - HELD THAT:- Risk adjustment has been provided at risk adjustment on ad hoc basis at 1%. Ld.CIT DR submitted that there is no scientific manner which has been applied by DRP. Assessee is a low risk bearing company for SWD and ITES segment. Therefore while computing risk adjustment, risk assumed by comparables for earning revenue under particular segment needs to be analysed. Assessee is directed to provide for necessary details in respect of all comparables finally selected. If that information is insufficient, and it is beyond the power of Assessee to produce correct information about comparable companies. Revenue on the other hand has sufficient powers u/s.133(6) to compel production of required details from comparable companies. If this power is not exercised to find and get information required, then it is no defense to say that Assessee has not furnished required details to deny any adjustment on account of working capital/risk differences. Ld.AO/TPO shall then compute risk as adjustment in accordance with law. Revenue’s appeal stands allowed for statistical purposes.
Computing deduction under section 10A - excluding band width expense and travel expense incurred in foreign currency from export turnover - HELD THAT:- DRP while considering the issue referred to view of Hon’ble Karnataka High Court in case of Tata Elxsi Ltd vs CIT [2011 (8) TMI 782 - KARNATAKA HIGH COURT] correctly directed Ld.AO to follow the view taken therein, while computing deduction under section 10 A.
In the absence of segmental details companies need to be rejected.
Inclusion of companies functionally comparable with assessee that is rendering captive services to its associated enterprises.
Exclusion of companies as undergone acquisition which is an extraordinary event and can impact the profits for the year under consideration.
Working capital adjustment - claim denied since assessee did not filed requisite details in respect of comparables - HELD THAT:- As held by various decisions of coordinate benches of this Tribunal, we direct Ld.TPO to recompute working capital adjustment in actual, and to consider the same for purposes of computing arm’s length margin as per the view expressed by this Tribunal in case of Huawei Technologies India Pvt. Ltd vs JCIT [2018 (10) TMI 1796 - ITAT BANGALORE]
Assessee is directed to provide for necessary details in respect of all the comparables finally selected. If that information is insufficient, it is beyond the power of Assessee to produce correct information about comparable companies. Revenue on the other hand has sufficient powers u/s.133(6) to compel production of required details from comparable companies. If this power is not exercised to find to get information required, then it is no defence to say that Assessee has not furnished required details to deny any adjustment on account of working capital. Ld.AO/TPO shall then compute working capital adjustment in accordance with law.
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