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Showing 41 to 60 of 1387 Records
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2016 (2) TMI 1353
Nature of expenses - addition of business development expenses - revenue or capital expenditure - HELD THAT:- We find that the issue relating to business development expenses to be treated as business expenditure and not capital expenditure, has been dealt and decided by the Co-ordinate Bench [2010 (11) TMI 1128 - ITAT AHMEDABAD] - Decided against revenue.
Addition of depreciation claimed on plant and machinery given to Rajasthan State Electricity Board (in short RSEB) under sale and lease back transaction - HELD THAT:- After considering the facts of the case and material on record, we find that the issue involved in this ground is that the assessee company bought certain assets from RSEB in previous years and the same were leased back to RSEB. The assessee has been showing income from lease from RSEB and also claiming depreciation on the assets leased to RSEB. This fact that depreciation has not been claimed by RSEB and only claimed by assessee is not controverted by the Revenue. Further on perusal of the records, we find that the co-ordinate bench in assessee’s own case has decided similar issue [2010 (11) TMI 1128 - ITAT AHMEDABAD] confirm the order of the CIT (A) in vacating the disallowance of depreciation on sale and lease back transactions and dismiss the grounds of appeal of the revenue for all the years under consideration.
Disallowance u/s 14A r.w.r. 8D - proportionate disallowance of interest expenditure u/s 14A - HELD THAT:- As per provisions of section 14A of the Act the duty is cast upon the Assessing Officer to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act.
We find that average investments of the assessee are approximately 40% of the total share capital and reserve & surplus, addition in the reserve and surplus is arising mainly due to the exempted income earned by the assessee in previous years as well as during Asst. Years 2005-06 to 2007-08 which gives a holistic view that the company’s main business activities of sale of newspapers and printing material is not giving considerable profits to the company and its overall revenue from the main business activity is also going at the same pace without any major increase in revenue and the major contributory to the profits of the company is from profit from sale of investments and also from going through the assessment orders and details of capital gains we find that a considerable amount of purchase and sale activities of equity shares and mutual funds have been undertaken by the assessee.
Also there has been a considerable movements of funds from bank account of the assessee and these funds are being used for the working capital as well as funds for the purpose of investments. There is no separate bank account maintained by the assessee to show that tax free funds have only been used for the purpose of investment and for this reason proportionate disallowance was made by the Assessing Officer which was corrected by by ld. CIT(A).
Therefore, applying the ratio of the decision taken by the coordinate bench in assessee’s own case upholding the decision of ld. CIT(A) and looking to the facts of the present case as discussed above we are of the opinion that there is no reason to interfere with the order of ld. CIT(A). Accordingly, these grounds of appeals of Revenue are dismissed.
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2016 (2) TMI 1352
TDS deducted by this petitioner from the amount paid to the sub contractor, but the same has not been deposited with the respondent no.1 i.e. State of Jharkhand - it is also alleged that after deducting the TDS by this petitioner, the necessary certificates have not been issued - bonafide reason for non-submission of TDS or not - HELD THAT:- Notice to the newly joined parties. Notice will be served by the petitioner upon its Directors and upon its Chartered Accountant/Chartered Accountants. They will show cause to the Court that why criminal prosecution should not be initiated upon him and the Chartered Accountants will show cause why his licence/certificate of practice should not be forfeited or suspended and why the complaint should not be made to the Institute of Chartered Accountants - Notice to the Registrar of Companies also, which will be served by this petitioner.
Necessary amendment shall be carried out by 2nd March, 2016 - this matter is adjourned on 15th March, 2016.
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2016 (2) TMI 1351
Security Deposit of expenditure on development - expenditure the assessee incurred towards "Neighbourhood Apartments" - HELD THAT:- Commissioner had not referred to any material brought on record in support of the contention that refund of security deposit of Rs.13 crores by M/s. Fortune Constructions has nothing to do with the expenditure incurred on the project, which is abandoned in favour of M/s. Fortune Constructions Ltd. CIT(A) had not discussed the circumstances under which the project was abandoned in favour of the said company.
CIT(A) also failed to examine whether the refund of deposit of Rs.13 crores had anything to do with the expenditure incurred. Without discussing any material, he simply accepted the written submissions filed by the respondent-assessee before him, which amounts to total non-application of mind, and therefore, fails to fulfil the requirements of a reasoned/speaking order. We are of the considered opinion that interests of justice would be met, if the matter is restored to the file of the CIT(A) for de novo disposal of the appeal in accordance with law.
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2016 (2) TMI 1350
Notification dated 13th May, 2013 - power to fix a rate without any power to revise - prohibited goods - whether the revision effected by the impugned notification dated 13th May, 2013 from ₹ 75/- to ₹ 110/- was valid in law? - HELD THAT:- If the Central Government was authorised to fix the value at ₹ 75/- then they were also authorised to revise it. Power to fix a rate without any power to revise the same does not amount to any power, to fix the rates, any more than there can be a power to appoint without a corresponding power to dismiss. The learned Trial Court has held “the DGFT functions as a limb of the Central Government and not as a delegatee and mere non-mentioning of the specific source of power does not invalidate the entire executive action.” Having done so it could not have been held that the impugned notification was not an act of the Central Government under section 5 of the Foreign Trade (Development and Regulation) Act, 1992. Reliance placed by the learned Trial Court upon paragraph 2.6 of the Foreign Trade Policy, quoted above, is altogether misplaced for the simple reason that the impugned policy, at page 104 of the Paper Book, is deemed to have been issued by the Central Government which is the policy making body whereas DGFT, in para 2.6 of the Foreign Trade Policy, is a mere implementing authority. Any restrain on the power of implementing authority cannot be treated also as a restrain or limitation on the power of Central Government. Therefore, both the grounds assigned by the learned Trial Court are without any merit and therefore cannot be sustained.
The proper order shall be to set aside the order as regards the legality of the aforesaid notification dated 13th May, 2013 and to remand the matter for re-hearing on all the points pertaining thereto agitated by the writ petitioners - the writ petition is remanded for re-hearing except as regards the validity of the Customs notification which has attained finality.
Petition allowed by way of remand.
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2016 (2) TMI 1349
Smuggling - conscious possession of two gunny bags containing poppy husk - non- examination of Ajaib Singh, a person from the public, would not lead this Court to assume that whole case of the prosecution was false - framing of charges - Section 15 of the NDPS Act - HELD THAT:- This Court finds that the samples were not drawn while mixing the whole contents properly. If the investigating officer had effected the recovery from the upper part of the gunny bags, then it cannot be said that the samples drawn were representative samples of the whole bulk. This issue would assume importance when the report of the Chemical Examiner (Ex. PG) is perused, in which percentage of Morphine has not been described by the Chemical Examiner. No doubt, the Court cannot and should not through the whole case of the prosecution on that score and the Court has to take into consideration the overall issues involved in the case.
The Court is not much impressed from the argument raised with regard to non-putting a question relating to conscious possession of the contraband to the appellant in his statement recorded under Section 313, Cr.P.C., and, as such, that argument is not accepted in favour of the appellant. However, it has been put to the appellant that he was seen sitting on the gunny bags - It is settled proposition that if sentence to be awarded is severe like minimum rigorous imprisonment for ten years in addition to a minimum fine of rupees one lac, then the Court has to look for qualitative prosecution evidence.
This Court on the overall scanning of the case of the prosecution and the evidence led in defence, has arrived at the conclusion that there are severe latches in the prosecution case and the benefit of the same has to be extended to the appellant - while accepting the appeal the impugned judgment of conviction and the order of sentence passed by learned Judge, Special Court, Sangrur, is hereby set aside. The appellant/accused is hereby acquitted of the charge levelled against him - Application disposed off.
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2016 (2) TMI 1348
Confirmation of the levy of penalty u/s 27(3) of TNVAT Act - main contention of assessee/petitioner is that there was no order of assessment made in the case on hand, so as to enable the Assessing Officer to come to the conclusion that there was wilful non-disclosure of turnover - Admission of suppression of facts - retraction of statements or not - HELD THAT:- Under Section 27(1)(a) of the Act, where for any reason, the whole or any part of the turn over of business of a dealer has escaped assessment to tax, the Assessing Authority may within a period of five years from the date of assessment order, determine to the best of his judgment, the turnover which has escaped assessment. But, Section 27(1)(a) is made subject to the provisions of Sub-section (3) - Sub-section (3) makes it clear that if the Assessing Authority is satisfied, in making an assessment under Sub-section (1)(a) that the escape from assessment is due to wilful non-disclosure of assessable turnover by the dealer, he may impose a penalty at the rates indicated in clauses (a), (b) or (c).
In the case on hand, the assessee has filed monthly returns. In the monthly returns filed, for the period from 01.10.2008 to 09.7.2010, the total quantity of purchases was indicated as 2060 MT and the total quantity of sales was indicated as 1464 MT. Therefore, on the date of the inspection, namely 09.7.2010, the assessee should have had a stock of 596 MT. But, no stock was available on the date of inspection. Therefore, the difference between the purchases and sales was taken to be suppressed sales turnover.
In a statement recorded from the Accounts Officer of the petitioner company, by name Rajagopal, he had admitted to the suppression - Till date, the above statements have not been retracted. There was nothing more needed to show suppression of turnover in this case. There was no variation in the quantity of stock available and the quantity of stock arrived at on the basis of returns. As per the returns, the petitioner ought to have had a stock of 596 MT, but they had none.
Lastly, it is contended by the learned counsel for the petitioner that at least the rate of penalty should be reduced. But, unfortunately, clauses (a), (b) and (c) of Sub-section (3) of Section 27 do not vest any discretion either upon the respondent or upon this Court to interfere with the rate of penalty. Therefore, the questions of law raised by the petitioner, are to be answered against him in the facts and circumstances of the case.
Revision dismissed.
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2016 (2) TMI 1347
Validity of assessment u/s. 153A r.w.s. 143(3) - failure on the part of the AO to issue notice as per provisions contained in section 143(2) - HELD THAT:- Admittedly in the present case, a valid notice u/s. 153A was issued to the assessee. The ratio laid down in the case of ACIT vs. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] relied upon by the assessee is not applicable to the facts of the present case as the issue raised therein was pertaining to the issuance of notice u/s. 143(2) of the Act in the case of block assessment u/s. 158BC of the Act and not u/s. 153A of the Act. U/s. 158BC, there is a specific requirement of issuance of notice u/s. 143(2) of the Act which is not the case u/s. 153A of the Act.
An identical issue came up before case of Smt. Sumanlata Bansal vs. ACIT [2015 (5) TMI 1031 - ITAT MUMBAI] held that question raised for consideration is answered that non-issuance of notice under sub-section (2) of section of the Act is not mandatory. As a consequence, the second question is also answered against the assesse. Assessment proceedings u/s. 153A cannot be held as null and void, for non-issuance of notice u/s. 143(2) of the Act, as this provision is not attracted to proceedings u/s. 153A of the Act - Decided in favour of revenue.
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2016 (2) TMI 1346
Assesment u/s 153A - Completed Assessment - Whether additions made to the income of the Assessee for the AYs were not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search?
SLP tagged with the case of MGF AUTOMOBILES LTD [2016 (7) TMI 1448 - SC ORDER]
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2016 (2) TMI 1345
Seeking sanction of scheme of demerger - Section 391/394 of the Companies Act, 1956 - HELD THAT:- No one is opposing the scheme and the matter is non-contentious in nature - The scheme does not appear to be against the interest of the public or against the policy of the nation.
The scheme is sanctioned - petition allowed.
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2016 (2) TMI 1344
Depreciation on a sale and lease back transaction relating to wind electric generators - Claim denied where the assessee itself is not the owner of the land on which the generators have been installed, and hence cannot be treated as owner of the windmills - HELD THAT:- As assessee is in the business of hire purchase finance, leasing and allied activities and it is a non-banking finance company. The owner of the land on which the windmills were erected and installed wanted to set up a wind power generation unit. The owner approached the respondent/assessee for finance.
There are two options available to a finance company under such circumstances. One option is to allow the borrower to purchase the machinery and install it in his own land and pay the cost of the machinery on condition that the amount financed for the purchase of the machinery is repaid together with interest in equal monthly instalments.The second option available to a financier is to buy the plant and machinery in their own name and lease it out to the borrower.
If the first option is exercised, the land owner gets title to the plant and machinery and the interest component of the equated monthly instalments is treated as revenue income for the financier. But the owner will claim depreciation on the machinery. If the second option is exercised, the financier claims depreciation, but treats the lease rentals as revenue income and pays tax.
Therefore, in either of the two options the borrower and financier are placed on different sides of the same table. In such circumstances, the question of the revenue losing something does not arise.
As rightly pointed out by the Commissioner of Income Tax (Appeals), the question of ownership of the land has nothing to do with the claim for depreciation. Depreciation is claimed in respect of the plant and machinery installed on the land.
Unfortunately, the Assessing Officer was misguided by the fact that the Electricity Authority granted permission only to the land owner to run the windmills. It is not the case of the Department or the respondent herein that the respondent was in the business of generating power through windmills. There is no restriction by the Electricity Board that unless the applicant for the generation of wind power also owns the plant and machinery he would not be entitled to a license.
Assessing Officer as well as the Tribunal misdirected themselves to the actual issue on hand, without realizing what is the income either from the land owner or from the financier depending each side of the table as per the terms of the financing agreement. The Revenue cannot claim revenue from both. Therefore, the question of law is answered against the Revenue.
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2016 (2) TMI 1343
Addition u/s 69B - difference in value of stock as per bank statement and as per the balance sheet furnished to the Department - Difference in figures of closing stock submitted to the Bank and balance sheet - HELD THAT:- We find that the above issue is squarely covered against the Revenue and in favour of the assessee by the consolidated order in the case of Dy. Commr. of Income Tax, Circle-1, Bathinda vs. Ishar Infrastructure Developer (P) Ltd; Bathinda [2015 (6) TMI 766 - ITAT AMRITSAR] as held addition on account of difference furnished to the bank as per books of account u/s 69B of the Act can not be sustained. - Decided in favour of assessee.
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2016 (2) TMI 1342
Non-compliance of the terms and conditions of the auction by the petitioner - Acceptance of highest bid - seeking production of original receipt by the petitioner, so that the excess amount deposited by him may be returned - HELD THAT:- The writ petition is pending since 2012.
If the petitioner has any grievance in the matter, he is at liberty to approach the State Government under Section 41(3) of U.P. Urban Planning and Development Act, at the first instance - Petition dismissed.
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2016 (2) TMI 1341
TDS u.s 194A in respect of the interest paid to the owners of the land acquired - payment of interest for belated payment of compensation for the land acquired - deduction of the payment of interest at source under section 194-A by the Land Acquisition Collector - HELD THAT:- While issuing notice in these appeals, the following order was passed on February 22, 2010 [2010 (2) TMI 1303 - SC ORDER]- "Issue notice as to why the matters should not be remitted - In the impugned order, no reasons have been given by the High Court. Hence, matters need to be sent back. This is prima facie opinion."
In view of the said position reflected in the aforesaid order, Learned Counsel for the Respondent was confronted therewith. He submitted that he has no objection if the matters are remitted to the High Court for fresh consideration.
The impugned orders passed by the High Court are, accordingly, set aside and all these cases are remitted back to the High Court for deciding the issue afresh by giving detailed reasons after hearing the counsel for the parties.
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2016 (2) TMI 1340
TP Adjustment - ALP determination - whether rate approved by the RBI prior to 1994 and cannot be considered for the purpose of Arms Length Price? - HELD THAT:- Commissioner of Income Tax (Appeals) has directed the Assessing Officer to calculate royalty at Arms Length Price @0.75% rejecting the determination by TPO. The ld. Authorised Representative explained the provisions and conditions of agreements and approval of the RBI - We on perusal of the documentary evidence filed by the Authorised Representative and also judicial decisions approving the royalty payments which the RBI prescribed, found the approval of Government of India and RBI was in 1994 and as per the terms royalty rate is calculated. The assessee company substantiated their grounds with financial statements and comparable statements. We perused the RBI letter and follow the decision in the case of Owens Corining Industries (India) Ltd . [2014 (10) TMI 651 - ITAT HYDERABAD] where it has been held that RBI approval of the royalty rates paid by assessee itself implies that the payments were at Arm’s Length. So considering the apparent facts and circumstances the ld. Commissioner of Income Tax (Appeals) has examined the issue and verified the statements and material filed and viz a viz explanations of the assessee. We, therefore are not inclined to interfere with the order of the CIT(A) on this ground. Accordingly, this ground of the Revenue is dismissed.
Price variation of Arms Length Price transaction is at higher and volatile - HELD THAT:- Revenue has not brought any evidence to show that price variation is on higher side and impact on the Arms Length Price. Though ld. Authorised Representative justified his arguments with the submissions and judicial decisions. Considering the summary of module and agreements entered by the assessee company with Associated Enterprise, we find the order of Commissioner of Income Tax (Appeals) is in order and we do not interfere with the findings and uphold the findings of the Commissioner of Income Tax (Appeals) and direct the Assessing Officer to delete the addition. This ground of the Revenue is dismissed.
TDS u/s 195 - addition on account of foreign sales commission as assessee failed to deduct TDS - HELD THAT:- As perused the material on record and judicial decisions and Double Taxation Avoidance Agreements. The assessee has paid foreign commission to outside foreign agencies who do not have business establishment in India and liable for taxation in their respective countries. We rely on the Coordinate Bench decision in the case of ACIT vs. Euro Leder Fashions Ltd [2016 (1) TMI 75 - ITAT CHENNAI] as held assessee has not established the facts on record that the non-resident has rendered services at abroad and there is no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or correspondence took between the parties. Without examining these details, we are not in a position to decide the nature of services rendered by the non-resident agent. Therefore, it is appropriate to remit the entire issue back to the file of the AO with direction to the assessee to prove that it was sales commission towards procurement of orders from abroad. Accordingly, the entire issue is remitted back to the file of the AO for fresh consideration and the AO is directed to make necessary enquiry regarding the nature of services rendered by the non-resident agent and the payments made there of - we remit the issue to the file of Assessing Officer for verification and examination and the appeal of the Revenue is partly allowed for statistical purpose.
Lab analysis fees paid to non residents of US, UK and Germany - HELD THAT:- Since the services rendered outside India and payments made outside Country and does not attract TDS provisions. Alternatively u/sec.9(1)(vii) fees for technical services, the lab analysis fees will not fall into category of technical fees and also there is no permanent establishment in India to charge such income to tax. The ld. Authorised Representative demonstrated the DTAA clauses with USA, UK and Germany and such payments are outside the purview and not chargeable as per provisions of DTAA. On the other hand, the ld. Departmental Representative relied on the findings of the Commissioner of Income Tax (Appeals) that the know how was available and there was site inspection and reference was made in Audit Report on verification of training programme. We after considering the matrix of facts, judicial decisions and Audit report observed in assessment order which indicates the services are rendered in India and report was obtained in India. Therefore, we remit the issue to the Assessing Officer for limited purpose to verify the working system of Audited and consultancy work or inspection was carried by the Auditors on lab analysis and we set aside the order of the Commissioner of Income Tax (Appeals) and direct the Assessing Officer to consider the issue and pass the order after providing adequate opportunity of hearing before passing the order on merits. In the result, the appeal of the assessee is partly allowed for statistical purpose.
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2016 (2) TMI 1339
TDS u/s 195 - Disallowance u/s 40(a)(ia) - services rendered and expenditure incurred is in the nature of commission - HELD THAT:- It is not in dispute that the assessee firm is engaged in the business of manufacturing and export of readymade garments and in connection with the exports, the assessee has incurred an amount. On perusal of the agreement with M/s Arjoo J. Ltd. the CIT(A) has given a clear finding that the services rendered and expenditure incurred is in the nature of commission. Given the fact that the commission has been paid in relation to export of garments outside India and the fact that the no services have been rendered in India we are unable to accede to the arguments of the ld. DR that the subject payments are taxable in India.
Similar is the position in respect of payment to M. Ishikawa who has been paid commission in relation to export of garments as apparent from the agreement as well as working of the commission payments. Accordingly, provisions of section 195 are not attracted in the instant case, hence the disallowance of expenditure u/s 40(a)(i) is hereby deleted. - Decided in favour of assessee.
Delayed employees contribution to PF and ESI - HELD THAT:- CIT(A) has given a categorical finding that the employees contribution to ESI and PF has been paid before filing of the return of income u/s 139(1) of the Act. In view of the consistent stand taken by this Bench and respectfully following the decision of the Hon’ble Rajasthan High Court in the case of State Bank of Bikaner & Jaipur.and others [2014 (5) TMI 222 - RAJASTHAN HIGH COURT] ground taken by the Revenue is dismissed .
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2016 (2) TMI 1338
Dishonor of Cheque - petitioner is legal heir of the original accused - liability of fine amount or compensation, on the self acquired property of the petitioner - HELD THAT:- Here in the case, property which has come into the hands of petitioner was admittedly owned by original accused Saifuddin, by virtue of will deed executed by Saifuddin on 6.10.2010, said property is received by the petitioner naturally, with all liabilities attached therewith. In view of section 70 of IPC, amount of fine and compensation is recoverable from the said property. The trial Court has considered all these legal aspects of the case and thereafter passed the impugned order.
Petition dismissed.
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2016 (2) TMI 1337
Claim of compensation for the death of one Raj Kumar Gautam, who died in a vehicular accident - Sections 140 and 166 of the Motor Vehicles Act, 1988 - HELD THAT:- The powers of the first appellate Court while deciding the first appeal are indeed well defined by various judicial pronouncements of this Court and are, therefore, no more res integra.
A three-Judge Bench decision of this Court in MADHUKAR AND OTHERS VERSUS SANGRAM AND OTHERS [2001 (4) TMI 922 - SUPREME COURT], wherein it was reiterated that sitting as a court of first appeal, it is the duty of the High Court to deal with all the issues and the evidence led by the parties before recording its findings.
An appeal under Section 173 of the M.V. Act is essentially in the nature of first appeal alike Section 96 of the Code and, therefore, the High Court is equally under legal obligation to decide all issues arising in the case both on facts and law after appreciating the entire evidence.
As a first appellate Court, it was the duty of the High Court to have decided the appeal keeping in view the powers conferred on it by the statute - appeal allowed in part.
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2016 (2) TMI 1336
Dishonor of Cheque - insufficiency of funds - leading of evidence - cross-examination of witnesses - section 313 of the Cr.P. C. - HELD THAT:- It appears that if a person commits an offence under Section 138 of the NI Act, then the court has the power to punish him with imprisonment for a term which may extend to 2 years or with fine which may extend twice to the amount of the cheque or with both.
In the instant case, the accused petitioner did not deny that he had issued the cheque of ₹ 4,50,000/- in favour of the complainant respondent and the said cheque was dishonoured for insufficiency of fund in his account. His only plea was that he had taken a loan of ₹ 5000/- from the complaint-respondent and repaid the same by signing a blank cheque. Now question arises, if the convict petitioner did not take any loan from the respondent complainant, then why he had issued the cheque for an amount of ₹ 4,50,000/-. It is also not the case of the petitioner that the complainant respondent did not comply with the statutory requirements before lodging the complaint.
In the instant case, admittedly the cheque amount is ₹ 4,50,000/-. The learned trial Court found the convict petitioner guilty for the offence under Section 138 of the N.I. Act and sentenced him to suffer R.I. for six months and to pay a fine of ₹ 4,50,000/-, i.d. to suffer for further one month.
The instant criminal revision petition is dismissed.
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2016 (2) TMI 1335
Treatment to profits on sale / redemption of investments (including amortization of securities) as taxable - HELD THAT:- The year under appeal before us is assessment year 2008-09 i.e. the year in which the said provisions of Rule 5 of First Schedule were not on Statute. Similar claim was made by the assessee that the profit / loss arising on sale / redemption of securities, investment was not taxable and even the loss on account of amortization of securities was to be reduced from the taxable income of the year, arose before the Tribunal in assessee’s own case in assessment year 2003-04 [2009 (8) TMI 810 - ITAT PUNE-A]
Following the same parity of reasoning, we hold that while computing the income from insurance business under section 44 and First Schedule of the Act, there is no merit in holding the profit / loss on sale / redemption of securities / investments amounting to about ₹ 50 crores as taxable and the loss on amortization of securities is to be reduced from the taxable income of the assessee. The order of Tribunal in assessment year 2003-04 has been subsequently followed by the Tribunal in assessment year 2004-05 [2010 (12) TMI 1191 - ITAT PUNE] Appeal of assessee allowed.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- The issue arising before us is identical to the issue before the Tribunal for assessment year 2003-04 [2009 (8) TMI 810 - ITAT PUNE-A] and in the absence of any contrary material brought to our knowledge by the learned Departmental Representative for the Revenue, we find no merit in the orders of authorities below. The disallowance as made by the assessee under section 14A of the Act at ₹ 49,42,631/- as assessee itself had worked out the expenses disallowable under section 14A is upheld and the balance disallowance worked out by the Assessing Officer and DRP is thus, deleted. The ground of appeal No.2 raised by the assessee is thus, allowed.
TDS u/s 195 - Disallowance computed by invoking the provisions of section 40(a)(i) - payment made to Allianz Reinsurance Asia Pacific Branch Singapore (ARAP) on account of re-insurance premium and payment of survey fees was also paid to non-resident surveyors - HELD THAT:- Applying the said ratio laid down by the Hon’ble Supreme Court in GE India Technology Centre P. Ltd.[2010 (9) TMI 7 - SUPREME COURT] we hold that merely because remittance has been made to a foreign company, the same would not be liable to tax deduction at source, where the whole or part of the said payment is not liable to be taxed in India in the hands of recipient nonresident company. The provisions of section 195(1) of the Act postulates that the remittance should be chargeable under the provisions of the Act and where the same is not liable to tax in India, there is no requirement for tax deduction at source and the provisions of section 195(1) of the Act are not attracted and further the provisions of section 40(a)(i) of the Act are not to be applied.
Payment of re-insurance premium to ARAP is not to be allowed in the hands of assessee as the assessee had not made any application under section 195(2) - The reading of sub-section itself show that the provisions of the said sub-section are applicable where the person who is responsible for making the payment to a non-resident is sure that such sum was chargeable under the Act. The first step to be fulfilled is that the payment paid to non-resident company is chargeable under the Act. We have already in the paras hereinabove, have come to a finding that sum paid by the assessee is not chargeable in the hands of non-resident company, as income arising in India. In view thereof, where the amount is not chargeable in the hands of non-resident company, the provisions of subsection (2) to section 195 of the Act cannot be invoked and we find no merit in the order of Assessing Officer in this regard.
Determination of tax deductible by the assessee in respect of various payments made during the year under consideration - Before the DRP, the case of assessee was that in the proceedings under section 201(1) of the Act for the period up to 31.12.2008, all foreign remittances including re-insurance premium payments were subjected to assessment and after evaluating the transactions, the ADIT (International Transaction)-II, had passed consolidated order from assessment years 2005-06 to 2009-10, wherein it was concluded that the taxes were required to be withheld only on payment of certain survey fees paid to the non-residents. In view thereof, where the Revenue authorities have given a finding that no tax was required to be deducted out of reinsurance premium paid by the assessee to ARAP, we find no merit in the order of Assessing Officer in holding that the assessee should have made the application under section 195(2) of the Act.
In order to fulfil the conditions of having PE by an agent acting on behalf of an enterprise of other contracting state, it is provided that such an enterprise would deemed to have PE in the first mentioned state, if this person has habitually exercised an authority to conclude the contracts on behalf of the enterprise and / or maintains stock of goods on merchandise, which he regularly delivers on behalf of the enterprise, in the first mentioned state or habitually secures orders wholly or almost wholly for the enterprise itself or for other enterprises, etc. The assessee claims that it was not acting on behalf of the foreign company. Further, it was not dependent on the foreign company and had no authority to conclude any contract on behalf of the foreign company. Where in such circumstances, there was no merit in the order of DRP in applying the approach of ‘look through’.
Similar issue of providing re-insurance in India and whether in the absence of any PE in India, the entire business income was not taxable in India, arose before Mumbai Bench of Tribunal in Swiss re-insurance Co. Ltd. [2015 (4) TMI 905 - ITAT MUMBAI] considered the aspect of PE of the said company within purview of Article 5 of Swiss Treaty and held that the conditions laid down in Article 5 were not fulfilled to treat the Indian entity as PE. Further, reference was made to the OECD guidelines. It was observed that in the absence of any business connection and in the absence of any agency, it was held that the said foreign entity had no PE in India. - Appeal of assessee allowed.
Disallowance on account of risk inspection charges - AO had treated the claim of the assessee as bogus - HELD THAT:- As we are aware that as against the insurance charges paid by the respective insurer in case of the damages being compensated by the insurance company, the volumes are very high. In such circumstances, it was the responsibility of the assessee to take the requisite steps to protect itself from future losses, if any, in this regard. The risk inspection was the necessary tool in the hands of the assessee. However, in view of the evidence collected by the Revenue Department and in the totality of the facts and circumstances, we hold that the entire expenditure is not allowable in the hands of the assessee. It is not correct to make estimated disallowance of expenses. However, in view of the evidence filed against the assessee and in the absence of complete details available before us and to prevent leakage of revenue, we are constrained to disallow 25% of the said expenditure in the hands of assessee.
The disallowance would be worked out by taking net expenditure of ₹ 11.91 crores i.e. total expenditure of ₹ 14.62 crores minus ₹ 2.17 crores allowed by the Assessing Officer. Further, the assessee himself had withdrawn the claim of expenditure of ₹ 32,67,497/- and has further furnished evidence of ₹ 68,07,042/-. The Assessing Officer shall verify the additional evidence filed by the assessee and if the same is found to be in order, the said expenditure would be allowed in the hands of the assessee. Then out of balance remaining, the Assessing Officer shall disallow 25% of the expenditure. The ground of appeal No.4 raised by the assessee is thus, partly allowed.
Addition on account of income from software consultancy charges - international transactions undertaken by the assessee - assessee had during the year shown international transactions with its associated enterprises on account of provision of software consultancy charges. The TPO while benchmarking the international transactions of the assessee found it not to be at arm’s length in view of the arithmetic mean of the comparable companies taken at 42.30% and proposed an addition - HELD THAT:- Admittedly, in case the said receipts are taxed in the hands of assessee for the year under consideration, there is enhancement of income, for which the requirement of law is that enhancement notice should be issued to the assessee before such an addition is made in the hands of the assessee. Further, in the case of the assessee, no such enhancement notice was issued to the assessee either by DRP or by Assessing Officer. Further, the plea of the assessee of recognition of revenue was in respect of determination of arm's length price of international transactions and the same was recognized for working out the margins of the assessee as compared to the margins of comparables. DRP has directed the Assessing Officer not to consider the said revenue of as receipts of assessment year 2009-10 for the purpose of TP adjustment, if any, to be made in assessment year 2009-10. The said amount does not result in addition as income in the hands of assessee for the captioned assessment year. Accordingly, we find no merit in the order of Assessing Officer in this regard and the addition of ₹ 3.01 crores is deleted. Before parting with the issue, we may also mention that the said receipts have been shown as part of the income of assessee in assessment year 2009-10. The ground of appeal No.5 raised by the assessee is thus, allowed.
Deduction in respect of amount collected towards environmental relief fund which was disallowed under section 43B of the Act - HELD THAT:- We find an identical issue arose before the Tribunal in assessee’s own case in assessment year 2006-07 the matter was set-aside to the file of Assessing Officer with a direction to decide the issue afresh and in accordance with law. The issue arising before us is identical to the issue before the Tribunal and in view thereof, we remit this issue back to the file of Assessing Officer to decide the same in line with the directions of the Tribunal in earlier year after affording reasonable opportunity of the hearing to the assessee. The ground of appeal No.6 raised by the assessee is thus, allowed for statistical purposes.
Non-granting of credit for self assessment tax paid by the assessee and non-credit of TDS allowed - assessee pointed out that the assessee has made an application for rectification under section 154 of the Act, which till date has not been disposed of - HELD THAT:- Accordingly, we direct the Assessing Officer to allow the claim of the assessee in accordance with law after verifying the claim of the assessee while computing income and tax payable thereon, pursuant to the order of Tribunal. The grounds of appeal raised by the assessee are thus, allowed.
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2016 (2) TMI 1334
Dishonor of Cheque - petitioners-complainant submits that the complaint was at post summoning stage and fixed for evidence of respondents-accused - section 142 of NI Act - HELD THAT:- Undisputedly, keeping in view the judgment passed by Hon’ble Apex Court in Dashrath Rup Singh Rathod’s case [2014 (8) TMI 417 - SUPREME COURT], complaint was ordered to be returned to the complainant for its presentation before the competent Court of jurisdiction. Subsequent thereto, the Ministry of Law and Justice (Legislative Department) issued the Negotiable Instruments (Amendment) Ordinance, 2015, which came into force on 15th June, 2015.
A perusal of section 142, transpires that after issuance of the Ordinance, 2015, offence under Section 138 of the Act shall be inquired into and tried only by a Court within whose local jurisdiction, if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated or if the cheque is presented for payment by the payee or holder in due course otherwise through an account, the branch of drawee bank where the drawer maintains the account, is situated. The aforesaid amendment appears to have been carried out to overcome the judgment captioned as Dashrath Rup Singh Rathod’s case.
Hon’ble Apex Court in para 20 of Dashrath Rup Singh Rathod’s case, has held that the cases where, post the summoning and appearance of the alleged accused, the recording of evidence has commenced as envisaged in Section 145(2) of the Act, will proceed to continue at the place where they are filed.
The impugned order is not sustainable in the eyes of law - Petition allowed.
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