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2021 (6) TMI 1132 - ITAT BANGALORE
TP Adjustment - comparable selection - Application of on-site revenue filter - HELD THAT:- We found the submissions by Ld.AR to be true and accordingly direct Ld.AO to include R.S Software Ltd. ,Evoke Technologies Ltd., CG-Vak Software and Exports Ltd. to the final list of comparables.
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2021 (6) TMI 1131 - AUTHORITY FOR ADVANCE RULING, CHHATTISGARH
Levy of GST - pure services or not - Abhivahan Shulk collected by the Government of Chhattisgarh - applicability of reverse charge mechanism - Whether as each transaction is separate transaction and Abhivahan Shulk charged is always less than Rs 5000/- per transactions and is not covered by the definition of continuous supply of service u/s 2(33) of the CGST Act 2017, hence exempt under sl.no No 9 of the Notification No 12/2017?
HELD THAT:- The contention put forth by the applicant that the activity involved herein is in relation to a function entrusted to a State Government / Municipality under Article 243W of the Constitution is misplaced and not sustainable under law Accordingly it is held that the afore discussed activity of granting permission by the Forest Department of the State of Chhattisgarh and the said “Abhivahan permission shuck” paid for the same is not eligible for NIL rate of GST, provided under Sr. no. 4 & 5 of Notification No. 1212017-Central/State Tax (Rate), dated 28-6-2017.
The coal mined / raised in the said allotted mine located at Gore Palma, Raigarh was for the intended purpose of utilization at the End Use Plant viz. Marwa Thermal Power Plant located at Marwa, Janjgir Champa, Chhattisgarh having configuration / capacity of 2 x 500 MW. It is further evident from the letter no. 04-02/Coal Block/GP-111/221 dated 22.5.2020 by the applicant, available in public domain, addressed inter-alia to the Department of Forest, Government of Chhattisgarh citing reference to F.No. 8-91/2010-FC dated 18.4.2017 vide which lease has been transferred to CSPGCL., informed about the compliance status regarding the conditions of transfer of lease in respect of diversion of Forest land - The applicant's contention that each transaction is a separate transaction and Abhivahan Shulk charged is always less than Rs 5000/- per transaction and is not covered by the definition of continuous supply of service u/s 2(33) of the CGST Act 2017, hence exempt under sl.No. No 9 of the Notification No 12/2017 is not tenable, in as much as, the coal block has been allocated by virtue of the above cited allotment order dated 14.9.2015 for generation of power at their Marwa Thermal power plant and consequent to mining of coal from the coal blocks supra, this coal mined are moved from Forest to their place of business and for this movement of coal a permission is granted by the Forest department of the Chhattisgarh Government and a transit fee is being paid by the applicant for the transit pass issued in this regard by the said Forest department of Chhattisgarh.
On going through the contents at Sl.No. 9 of Notification no. 12/2017-Central/State Tax (Rate), dated 28-6-2017 claimed by the applicant, that the exclusion clause mentions that nothing contained in this entry shall be applicable for “transport of goods”. It is worth notable that the said entry does not refer to “any service relating to transport of goods”, rather it simply specifies only about non applicability of the said exemption in respect of “transport of goods” - In the case in hand it is ultimately for the movement / transport of coal from the allotted coal block located in a Forest place to the Thermal Power Plant, permission is granted by the Forest Department of Chhattisgarh and for which the impugned “Abhivahan permission shulk” or transit fees is being paid by the applicant - the applicant is not eligible for exemption as provided under sr. no. 9 of Notification no. 12/2017-Central Tax (Rate), dated 28-6-2017, claimed by the applicant.
There is no doubt as regards the fact that CSPGCL, the applicant is a business entity and from the said entry at sr. no. 6 of Notification no. 12/2017-Central/State Tax (Rate), dated 28-6-2017, it becomes very evident that if any services, including the three services excluded in clauses (a) to (c), are provided by the Central Government, State Government or local authority to any business entity, they would not be eligible for Nil rate of GST provided therein.
The Abhivahan permission Shulk for the permission granted by the Forest Department merits classification under the residuary Heading 9997 for other services with the tax rate of CGST@ 9% and CGGST@ 9% and the applicant is liable for GST on the said “Abhivahan permission Shulk”, under reverse charge basis in terms of Serial No. 5 of the Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017 (as amended).
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2021 (6) TMI 1130 - AUTHORITY FOR ADVANCE RULING, CHHATTISGARH
Classification of goods - rate of GST - Waterproof Trellis support for climbing plants manufactured by using bamboo and High-Density Polyethylene - HELD THAT:- Only those tools, implements, etc., made of base metals are classifiable under Chapter 82 of the Tariff and items whose working part is not one of the base metals are to be classified according to the constituent material of the working part - in Chapter 8201, the specifics are spades, shovels, mattocks, picks, hoes, forks and rakes, axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and the subsequent phrase “and other tools of a kind used in agriculture” is a general expression following the specific enumeration. The specifics mentioned are all of which has a working edge as required for a tool to be classified under Chapter 82. Thus only those hand tools which are of base metal and has a working edge, used as a hand tool in agriculture merits classification under this residual entry.
The product at hand is definitely not made of base metal nor it has a working edge as required of a tool under this Chapter and therefore the applicant's product by no stretch of imagination could be classified under Chapter 8201, as claimed by the applicant. Classification under a Heading is to be governed only by the relevant Tariff-entries, Heading-description, etc. Heading 8201, does not envisage that all items used in an agriculture field would be covered therein. The instant product can also not be classified under 8201 as Hand tools, such as spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in agriculture, horticulture or forestry - The impugned product is purely a support made of bamboo for creeper vegetables/ crops. Thus the conclusion that the applicant is not eligible for exemption from tax on the said waterproof Trellis support for climbing plants using Bamboo and High-Density Polyethylene', provided under Notification no. 2/2017-Central Tax (Rate), dated 28-6-2017.
Section II CHAPTER 14 of Customs Tariff covers Vegetable plaiting materials; vegetable products not elsewhere specified or inducted. Tariff item 14011000 covers “Bamboos” in its ambit. Chapter note 2 of Chapter 14 specifies that Heading 1401 applies, inter alia, to bamboos (whether or not split, sawn lengthwise, cut to length, rounded at the ends, bleached, rendered non-inflammable, polished or dyed), split osier, reeds and the like, to rattan cores and to drawn or split rattans. Accordingly, the subject item is classifiable under CTH 14011000.
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2021 (6) TMI 1129 - ITAT DELHI
Recruitment and training expenditure and retention bonus expenditure - Allowable revenue expenditure - staff recruitment expenses have been incurred mainly for payment to third party recruitment agency and access to various job sites like Naukri.com and the referral books - HELD THAT:- As respectfully following decision of coordinate bench in assessee's own case [2018 (4) TMI 638 - ITAT DELHI] we allow grounds of appealand direct ld AO to treat Training, staff Recruitment and retention bonus as revenue expenditure.
TP Adjustment - comparable selection - Thirdware solutions Pvt Ltd - HELD THAT:- This comparable has been considered in the case of assessee by Coordinate bench in WIPRO LIMITED C/O WIPRO ENERGY IT SERVICES INDIA PRIVATE LIMITED (FORMERLY KNOWN AS, SAIC INDIA PRIVATE LIMITED) [2018 (4) TMI 638 - ITAT DELHI] and has excluded the same. There is no change in facts and FAR of assessee or comparable shown to us.
Exclusion is Wipro technology services Ltd. - DRP though held that Wipro technology services Ltd is functionally comparable however not dealt with the argument of the assessee with respect to its transactions with Citigroup. In view of this, we find that there is controlled transaction in this company and therefore it cannot be included. We direct the learned AO/TPO to exclude the same.
E Info chips Bangalore Ltd - AO tried to draw the support for deriving the conclusion that this company passes the employee cost filter by showing the profit and loss of financial year 2010 – 11 however, the learned assessing officer has not given the profit and loss account schedules for the year ended on 31st of March 2010 of this comparable. The learned departmental representative could not show us any reason that why this schedules of the profit and loss account are not provided to the assessee. Even the learned DRP as we have already held is silent on this aspect. When the complete information about the comparable is not available in a reasonable manner, it cannot be considered for the comparability analysis of an international transaction of the assessee by including it. For this reason only, we direct the learned transfer-pricing officer to exclude this comparable.
Accordingly all the above three comparables i.e. Third ware Techonlogies Solutions Limited, Wipro technologies Ltd and E Infochips Banglore Limited are directed to be excluded from the comparability analysis. To this extent, the transfer pricing grounds of the appeal of the assessee are allowed.
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2021 (6) TMI 1128 - GUJARAT HIGH COURT
Seeking permission for withdrawal of petition - petiitoner does not press for the present petition at this stage with a view to file an appropriate application filed by the Partnership Firm in which the present petitioner is the partner.
HELD THAT:- Without expressing any opinion on the merits of the present petition, learned Advocate Mr. Mansuri is permitted to withdraw the present petition. It is needless to say that the application that may be filed by the petitioner in Special Civil Application No.23250/2019 shall be considered in accordance with law.
The present petition stands dismissed as withdrawn.
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2021 (6) TMI 1127 - KERALA HIGH COURT
Grant of permission to an accused to go abroad for employment - offence punishable under Sections 498A and 506(i) of the Indian Penal Code - HELD THAT:- The normal rule is that evidence in a case shall be taken in the presence of the accused. However, even in the absence of the accused, evidence can be taken but then his counsel must be present in the court, provided the accused has been granted exemption from attending the court. If the progress of the trial can be achieved even in the absence of the accused, the court can certainly take into account the magnitude of the sufferings which a particular accused person may have to bear with in order to make himself present in the court. However, one precaution which the court should take in such a situation is that the said benefit need be granted only to an accused who gives an undertaking to the satisfaction of the court that he would not dispute his identity as the particular accused in the case, and that a counsel on his behalf would be present in court and that he has no objection in taking evidence in his absence.
In the instant case, the offences alleged against the petitioner are punishable under Sections 498A and 506(i) of the Indian Penal Code. There will not be any need for the prosecution witnesses to identify him in the court as the offender. If the petitioner undertakes that he would appear before the trial court on all hearing dates as may be specifically directed by that court, he can be exempted from personal appearance before the court and he can be allowed to be represented through counsel and permission can be granted to him to leave the country for employment.
The petitioner is granted permission to go abroad for employment purposes on the condition that he shall file an undertaking in the form of affidavit in the Magistrate's Court concerned that he would appear before that court as and when required by that court - Petition allowed.
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2021 (6) TMI 1126 - ITAT PUNE
TP Adjustment - Comparable selection - inclusion of MPS Limited in the final set of comparables - ALP of the international transaction of rendering `Information Technology Support Services’ - HELD THAT:- MPS Limited is not only engaged in rendering ITES but is also into Software Products business. In the absence of any segmental information relating to ITES, this company loses comparability with the assessee company, which is engaged in rendering only ITES. We, therefore, direct to exclude this company from the list of comparables.
To sum up, the impugned order is set-aside and the matter is restored to the file of the AO/TPO for re-computing the ALP of the international transaction of rendering `Information Technology Support Services’ in the light of our above discussion. Needless to say, the assessee will be allowed reasonable opportunity of hearing.
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2021 (6) TMI 1125 - ITAT DELHI
TP Adjustment - correct functional profile of the assessee - HELD THAT:- TPO, in the year under consideration has not properly appreciated the functional profile of the assessee. From the facts on record, it is discernible that the assessee is mainly providing passengers and baggage handling services to its AE and is not providing other specialized airport services as alleged by the TPO.
For rendering such services, the assessee has a Net Gross Asset Base of Rs 31,22,65,835/- which comprises of Know How/ Royalty, Temporary Structures, Office equipment, safety equipment's, air-conditioners, data processing equipment, electrical equipment, furniture and fittings, Motor Car, and Plant and Machinery. In the year under consideration, the assessee has incurred total expenditure of Rs 34,73,49,275/- out of which Personnel Expenditure incurred is Rs 20,16,09,112/- which is 60% of the total expense. Therefore, clearly the assessee is a service oriented company deriving its sole stream of income from providing passengers and baggage handling services at the airport.
Comparable selection - Companies M/s Container Corpn. Of India Ltd and M/s Sanco Trans Ltd cannot be selected as comparable being functionally dissimilar with that of assessee.
TPO had computed the PLI of companies selected by him by presuming that FBT expense is a non-operating item - We have perused the material on record and it is seen that there is no adjudication by the Ld DRP on this issue. We, therefore, direct the TPO to adopt a uniform policy. Once FBT expense is taken as non-operating while computing the PLI of comparable companies, a similar effect should also be given while computing PLI of the tested party. We, therefore, direct the TPO to re-compute the PLI of assessee excluding FBT expense.
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2021 (6) TMI 1124 - NATIONAL COMPANY LAW TRIBUNAL, DELHI BENCH III
Rejection of Resolution Plan - Section 60(5) read with 31(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is seen that the present IA has been filed by 14 applicants. The counsel for RP has been able to prove that effectively (after excluding the applicants under joint names and those being not FC) there are only 7 applicants who had opposed to the approval of Resolution Plan, and this constitutes a miniscule proportion of the total number of FCs in class. This has not been controverted by the Counsel for Applicants herein. It is also seen that the Resolution Plan has been approved by 99.97 % of voting share of CoC. On this count we agree with submission of Counsel for RP that the applicants herein do not have locus standi to file the instant application - the Plan of Resolution Applicant was received on 15.10.2019, which is within the time frame fixed by CoC in the RFRP. However, the plan as received can always be subject to negotiations between RA and the CoC in the best commercial wisdom of CoC. Therefore, the contention of Applicant on this count, being devoid of merit, is rejected.
Seeking approval of Resolution Plan - section 31(1) of IBC - HELD THAT:- The resolution plan filed with the Application meets the requirements of section 30 and 31 of IBC, 2016 and Regulation 37, 38, 38(1A) and 39(4) of the IBBI(CIRP) Regulations, 2016. The provisions of Section 29A of IBC are not attracted as declared by the resolution applicant. The RP has also verified that the “Resolution Plan” approved by the CoC does not contravene any of the provisions of the law for the time being in force. The RP has filed compliance certificate in Form H as required under regulation 39(4) of the IBBI (CIRP) Regulations, 2016.
The Resolution Plan for Copia, Sapphire and Techone is hereby approved and the objection raised by the HDFC Bank against the Resolution Plan stands rejected, shall be binding on the corporate debtor and its employees, members, creditors, guarantors, other stakeholders including statutory authorities and the Resolution Applicant - Application allowed.
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2021 (6) TMI 1123 - ITAT SURAT
Additions made under the head salary u/s 143(1) based on entry in Form-26AS - additions were made in the hand of assessee on the basis of TDS shown in Form-26AS - assessee contended that she has not earned such income nor any work was performed by her - HELD THAT:- We find that both the authorities below acted in a mechanical way. There is no consideration of the contentions raised by the assessee that she has not worked or earned any income from such deductor. In our view once the assessee denied that she has not earned such income as reflected in her Form-26 AS, the onus shift on the revenue authorities to prove such income of the assessee.
The addition is based solely on the basis of TDS shown in Form-26AS, ignoring the submissions of the assessee. The ld. AR for the assessee vehemently argued before us that the deductor if more than 1000 KM away from the place of practice of assessee.
We find merit in the submissions of assessee that the assessee had entered into any such transactions and the lower authorities have not made any verification or effort to verify such transactions and there is certain mistake of entering the wrong PAN, which belongs to the assessee and the addition made in the income is uncalled for.
As decided in Ravindra Pratap Thareja case [2015 (10) TMI 1487 - ITAT JABALPUR] that merely because a payment was reflected in Form-26AS and was shown to have been made to the assessee, it could not be brought to tax as it could not be established that the assessee was actual beneficiary of said payments and the additions was liable to be deleted. As no purpose would serve to restore the matter back to the file of assessing officer or to Income–tax Officer (TDS), as prayed by ld Sr.DR for the revenue. In the result, the grounds of appeal raised by the assessee are allowed.
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2021 (6) TMI 1122 - ITAT DELHI
Direct Tax Vivad Se Vishwas Act scheme - HELD THAT:- Assessee requested Withdrawal of the appeal filed by him and stated that the assessee has opted to settle the dispute relating to the tax arrears for the assessment year under consideration under the Vivad Se Vishwas Scheme, 2020. A certificate to this effect u/s 5(1) of The Direct Tax Vivad Se Vishwas Act, 2020 has also been filed.
DR has no objection. We accept the request of the assessee for withdrawal of the appeal. Appeal of the assessee is dismissed as withdrawn.
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2021 (6) TMI 1121 - GUJARAT HIGH COURT
Notified SEZ Area or not - 34 Acres on which the CWC constructed godown formed part of notified SEZ Area which was developed by APSEZL as Developer in terms of Special Economic Zone Act, 2005 or not - Rule 11(5) and 11(7) of the SEZ Rules - HELD THAT:- The CWC in the present case, is not only in this spree of litigation against the private Respondent - APSEZL but also against its own parent, namely, the Central Government challenging its action of not agreeing with the CWC to exclude its existing area of Warehouse from the SEZ Area, which was allotted to the private Respondent - APSEZL and is being developed by them in accordance with the provisions of SEZ Act, 2005 and Rules made thereunder just because under a sub-lease given by APSEZL to CWC, it had already constructed a Warehouse there, before a much larger area of more than 5000 Acres including that warehouse area of 34 Acres was declared as a SEZ area under the special and overriding law.
There are considerable force in the submission made by Mr. Kamal Trivedi, learned Senior Counsel for the Private Respondent that even though the Respondent No.3 APSEZL was not under any kind of legal obligation or contractual obligation, it made an offer to Appellant - CWC to construct at the cost of APSEZL an equal size Warehouse, outside the SEZ Area for CWC for its warehousing facility which was not permitted within the SEZ Area as per the over riding legal provisions of the SEZ Act 1951 and Rules which has over riding effect as per Section 51 of the SEZ Act - The Proposal No.3 in letter dated 9.3.2019 was also conditional and it was given only if new warehouse outside SEZ area was provided by APSEZL to CWC by taking such a warehouse on rent, purportedly to facilitate immediate shifting out of CWC from the existing warehouse within SEZ area.
Section 51 of the Act provides that nothing inconsistent in any other law or even in any instrument having effect by virtue of any other law shall override the provisions of this Act. The Board for Approval has been constituted under Chapter III of the said Act to approve the proposals for creating SEZ areas, while a lower authority in the form of Development Commissioner has also been created in Chapter IV of the Act to oversee the operations of each SEZ Area - both the parties can now start working upon the mutually agreed first two proposals, namely, providing of land of the same size by the Respondent - APSEZL to Appellant – CWC outside the SEZ zone at the cost of APSEZL and to construct a Warehouse of the same size at the cost of APSEZL and provide the same to CWC on mutually agreed terms and conditions, as a valid contract between the two parties on these two proposals can be deemed to have already come into existence vide letter dated 9.3.2019 and follow up letter of APSEZL and CWC Board Resolution dated 12.6.2019.
Following directions are issued after considering all issues:-
(i) That Appellant – CWC is allowed three months time from today either:-
(a) to seek and obtain approval as a SEZ compliant Unit from the competent authority under the SEZ Act in respect of its Warehouse facility situated in 34 acres of land in question within SEZ Area developed by Respondent – APSEZL;
or
(b) to obtain a waiver of the conditions to comply with the provisions of SEZ Act as a SEZ Unit and the Competent Authority while considering any such application of CWC, if any filed by it, will provide opportunity of hearing to both the parties;
(ii) If CWC fails to get such approval as a SEZ compliant Unit or waiver as aforesaid within aforesaid period of three months, the Respondent - APSEZL may acquire the land of the same size of approximately 34 Acres outside SEZ area as already identified and selected by CWC, for the construction of a Warehouse facility for the Appellant – CWC of approximately same size as agreed between the parties under Proposal Nos.1 and 2 in the letter dated 9.3.2019 and affirmed by subsequent correspondence and Board Resolution dated 12.6.2019 of CWC and the Affidavits of the parties filed in this Court. Such acquisition of land and construction of warehouse by the Respondent - APSEZL may be completed within a period of one year after the expiry of aforesaid period of three months in Clause (i) above and same may be offered to CWC to be occupied by the Appellant - CWC on such terms and conditions in consonance with the previous Agreement between the parties vide Lease Agreement dated 2.6.2004 or under such mutually agreed terms as may be agreed afresh between the parties.
(iii) Once the completed construction on the land outside the SEZ Area, already identified and selected by CWC, is offered to the Appellant - CWC, the Appellant - CWC shall vacate the existing premises of the warehousing facility on the said 34 acres of land situated within SEZ area within three months of such communication of the Respondent - APSEZL and the Appellant - CWC shall be bound to hand over the peaceful and vacant possession of existing warehousing facility and land of 34 Acres in question to the Respondent - APSEZL within such period of three months of the communication of the Respondent - APSEZL that new warehousing facility on the land situated outside the SEZ area is ready to be taken in possession and occupied by CWC.
(iv) If the Appellant – CWC fails to hand over the vacant and peaceful possession to the Respondent, even thereafter, the Respondent - APSEZL shall be free to approach this Court or the concerned Development Commissioner or the learned Single Judge or other authorities of the State for appropriate execution of these directions of this Court.
(v) That regarding Proposal No.3 about underwriting of the future business loss of CWC on the basis of published tariffs or market tariffs or otherwise, the parties are left free to make efforts for amicable settlement of this issue between themselves with the help of Development Commissioner or the Mediation process under Section 89 of Civil Procedure Code in the High Court annexed Mediation Centre, where services of Senior Trained Mediators can be made available to the parties at the appropriate point of time.
(vi) For the aforesaid period of 18 months of timeline involved in the aforesaid directions namely, three months under Clause (i) and one year or 12 months under Clause (ii) and three months for handing over the vacant possession under Clause (iii) aforesaid, the interim order granted by the coordinate bench of this Court on 11.1.2017 shall continue to operate between both the parties.
(vii) That if the extension of the aforesaid time period(s) becomes very necessary for compelling reasons, both the parties shall be at liberty to apply to the learned Single Judge in the pending Writ Petition; being Special Civil Application No.184 of 2017 and the learned Single Judge keeping in view the conduct of the applicant-party may grant such further time as may be considered expedient and necessary by the learned Single Judge.
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2021 (6) TMI 1120 - ITAT BANGALORE
TP adjustment made in respect of sourcing commission - assessee claimed that the payment of commission is at arm’s length - TPO determined the ALP of commission payment as Nil and accordingly made transfer adjustment of entire claim - HELD THAT:- We notice that an identical issue has been examined in the assessee’s own case by the coordinate bench in A.Y. 2014-15 [2020 (10) TMI 1049 - ITAT BANGALORE] and the matter has been restored to the file of the AO/TPO for examining it afresh.
TP adjustment made in respect of payment of interest on debentures - HELD THAT:- As decided in own case for assessment year 2012-13 & 2014-15 [2020 (10) TMI 1049 - ITAT BANGALORE] TPO has been taking different stand in different years. While he accepted the CCD as debentures in AY 2012-13 and reduced the rate of interest only, the TPO treated CCD as equity in AY 2014-15. However, in AY 2015-16, the TPO has accepted the rate of interest of 12% to be at arms length. We notice that the TPO has made certain enquiries in AY 2015-16 and accordingly came to the conclusion that the interest payment is at arms length. The benefit of those enquiries was not available with the TPO in the two years under consideration. Since the issue is the same in all the years and further, in view of the conflicting stands taken by TPO, we are of the view that this issue requires fresh examination at the end of TPO. Accordingly, we restore this issue in both the years under consideration to the file of AO/TPO for examining it afresh
TP adjustment in respect of reimbursement of expenses - HELD THAT:- Identical issue in assessment year 2005-06 and 2006-07 and has held that the nature of these expenses is such that they cannot be attributed solely and exclusively incurred by parent company for distribution business of the assessee. Accordingly, the TPO, following the decision of ITAT, determined the ALP of reimbursement of expenses at NIL.
Tribunal following the decision rendered by the coordinate bench in A.Y. 2005-06 & 2006-07 [2013 (11) TMI 355 - ITAT BANGALORE] has decided this issue against the assessee.
TP adjustment in respect of royalty payment - HELD THAT:- We notice that an identical issue has been examined by the coordinate bench in A.Y. 2014-15 [2020 (10) TMI 1049 - ITAT BANGALORE] as held that onus to prove that the expenses incurred by the AE was towards sale of products and not for purpose of creating brand awareness lies upon the assessee. We notice that this onus has not been discharged by the assessee. The basic details like the agreement if any for reimbursing this expenses, RBI approval, business necessity/expediency in making the payment, the basis of calculation etc., have not been furnished. Hence, the TPO has taken the view that this expenditure is not related to the business of the assessee and accordingly he has determined the ALP at NIL.
Before us also, no further details were furnished. In view of the above, we are of the view that there is no infirmity in the order so passed by the TPO/AO - Decided against assessee.
TP adjustment made in respect of Advertisement, Marketing and Promotion expenses (AMP expenses) - HELD THAT:- We notice that the AMP expenses incurred by the assessee in the years, other than the year in which there was partial reimbursement of expenses by A.E. of the assessee, has been held to be fully allowable by the coordinate bench. Since the facts available in the present year is akin to A.Y. 2009-10 and since it is stated that there is no agreement between the assessee and its A.E. for reimbursement of expenses, we are of the view that the decision rendered by Hon’ble Delhi High Court in the case of Maruti Suzuki Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] is applicable to the facts of the present case.
Accordingly, following the decision rendered by the coordinate bench in other years, we hold that the TP adjustment made in respect of AMP expenses is not justified. Accordingly, we direct the A.O. to delete the same.
Disallowance of claim of purchase of samples - allowable business expenses or not? - HELD THAT:- When the transaction is between related parties, the Act places more burden on the shoulders of the assessee to prove that the expenditure is related to the business of the assessee. Further, in trade circles also, it is known fact that the expenditure on samples are borne by the manufacturers only. Hence this claim of expenditure is against the trade practice and the assessee appears to have borne the expenses only on the reasoning that the same was charged upon it by its parent company. Hence, we are of the view that the AO was justified in holding that the burden to incur this expenditure is that of parent company and is not related to the business activities of the assessee - As relying on previous years we decide this issue against the assessee and accordingly, confirm the disallowance made by the A.O. on this issue.
Disallowance u/s 40(a)(i/ia) of the Act for non-deduction of tax at source - A.R. submitted that the assessee could not fully furnish the relevant details before the AO/DRP in respect of expenses which were disallowed in earlier years in respect of which TDS was remitted during the year - HELD THAT:- Having regard to the submissions made by the Ld. A.R., we are of the view that, in the interest of natural justice, the assessee may be provided with an opportunity in this regard. Accordingly, we restore this issue to the file of AO for examining the same afresh in accordance with law.
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2021 (6) TMI 1119 - SUPREME COURT
Applicability of time limitation to arbitration proceedings initiated Under Section 18(3) of Micro, Small and Medium Enterprises Development Act, 2006 - maintainability of counter claim in such arbitration proceedings - HELD THAT:- Applicability of Limitation Act, 1963 to the arbitrations is covered by Section 43 of the 1996 Act - The High Court, while referring to abovesaid provisions and the judgment of this Court in the case of Andhra Pradesh Power Coordination Committee and Ors. v. Lanco Kondapalli Power Ltd. and Ors. [2015 (11) TMI 1005 - SUPREME COURT] has held that the Limitation Act, 1963 is applicable to the arbitrations covered by Section 18(3) of the 2006 Act. A reading of Section 43 itself makes it clear that the Limitation Act, 1963 shall apply to the arbitrations, as it applies to proceedings in court. When the settlement with regard to a dispute between the parties is not arrived at Under Section 18 of the 2006 Act, necessarily, the Micro and Small Enterprises Facilitation Council shall take up the dispute for arbitration Under Section 18(3) of the 2006 Act or it may refer to institution or centre to provide alternate dispute resolution services and provisions of Arbitration and Conciliation Act 1996 are made applicable as if there was an agreement between the parties Under Sub-section (1) of Section 7 of the 1996 Act.
In view of the express provision applying the provisions of the Limitation Act, 1963 to arbitrations as per Section 43 of the Arbitration and Conciliation Act, 1996, the High Court has rightly relied on the judgment in the case of Andhra Pradesh Power Coordination Committee (2016) 3 SCC 468 and held that Limitation Act, 1963 is applicable to the arbitration proceedings Under Section 18(3) of the 2006 Act - no further elaboration is necessary on this issue and it is held that the provisions of Limitation Act, 1963 will apply to the arbitrations covered by Section 18(3) of the 2006 Act.
Maintainability of counter claim in the arbitration proceedings initiated as per Section 18(3) of the 2006 Act - HELD THAT:- From a reading of Section 18(3) of the 2006 Act it is clear that when the conciliation initiated Under Sub-section (2) of Section 18 of the said Act is not successful, the Council shall either itself take up the dispute for arbitration or refer to any institution for arbitration. Further Section 18(3) of the said Act also makes it clear that the provisions of 1996 Act are made applicable as if there is an agreement between the parties Under Sub-section (1) of Section 7 of the 1996 Act. Section 23 of the 1996 Act deals with the statement of claim and defence. Section 23(2A), which gives a right to Respondent to submit a counter claim or plead set-off with regard to claims within the scope of the arbitration agreement, is brought into Statute by Amending Act 3 of 2016 - When there is a provision for filing counter-claim and set-off which is expressly inserted in Section 23 of the 1996 Act, there is no reason for curtailing the right of the Respondent for making counter-claim or set-off in proceedings before the Facilitation Council.
MSMED Act, being a special Statute, will have an overriding effect vis-à-vis Arbitration and Conciliation Act, 1996, which is a general Act. Even if there is an agreement between the parties for resolution of disputes by arbitration, if a seller is covered by Micro, Small and Medium Enterprises Development Act, 2006, the seller can certainly approach the competent authority to make its claim. If any agreement between the parties is there, same is to be ignored in view of the statutory obligations and mechanism provided under the 2006 Act. Further, apart from the provision Under Section 23(2A) of the 1996 Act, it is to be noticed that if counter-claim is not permitted, buyer can get over the legal obligation of compound interest at 3 times of the bank rate and the "75% pre-deposit" contemplated Under Sections 16 and 19 of the MSMED Act.
On a harmonious construction of Section 18(3) of the 2006 Act and Section 7(1) and Section 23(2A) of the 1996 Act, it can be held that counter-claim is maintainable before the statutory authorities under MSMED Act.
It is also not in dispute that the Appellant approached the District Industrial Centre and filed entrepreneur memorandum Under Section 8 of the MSMED Act 2006 only on 25.03.2015 and later has approached the Council invoking the provisions of MSMED Act by filing application Under Section 18 of the Act. It is the specific case of the Respondent that the Appellant has abandoned the incomplete work having made deficient and defective supplies in the month of February/March 2015 - Further, as it is also not in dispute that there is an agreement for arbitration between the parties for resolution of disputes pursuant to their contract, as such, the High Court has rightly allowed the application filed by the Respondent Under Section 11(6) of the 1996 Act.
Appeal dismissed.
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2021 (6) TMI 1118 - ITAT HYDERABAD
Delayed payment/contribution of employees’ share made to the PF & ESI authority - scope of amendment - HELD THAT:- We notice in the factual backdrop that the legislature has not only incorporated necessary amendment in Sections 36(va) as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1.4.2021 only. It is further not an issue that the foregoing legislative amendments have proposed employers’ contribution/ disallowance u/s 43B as against employee’s contribution u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1.4.2021, we hold that the impugned disallowance is not sustainable. See M/S MERCHEM LIMITED [2015 (9) TMI 560 - KERALA HIGH COURT], GUJARAT STATE ROAD TRANSPORT CORPORATION [2014 (1) TMI 502 - GUJARAT HIGH COURT], GTN. TEXTILES LTD. [2002 (10) TMI 9 - KERALA HIGH COURT], SOUTH INDIA CORPORATION LTD. [1999 (10) TMI 44 - KERALA HIGH COURT] and JAIRAM AND SONS. [2003 (10) TMI 16 - KERALA HIGH COURT]
The impugned ESI/PF disallowance is directed to be deleted therefore. - Decided in favour of assessee.
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2021 (6) TMI 1117 - DELHI HIGH COURT
TDS u/s 195 - India-Swiss DTAA - HELD THAT:- Respondent-Revenue, cannot but accept that the issue raised in the present petition is covered by the judgment of this court dated April 22, 2021, passed in Concentrix Services Netherlands B. V. [2021 (4) TMI 1051 - DELHI HIGH COURT]
Accordingly, the impugned orders dated January 4, 2021 and March 11, 2021 are set aside. The writ petition is disposed of in the aforesaid terms.
Consequently, a certificate under section 197 will be issued in favour of the petitioner, indicating therein, that the rate of tax, on dividend, as applicable qua the petitioner is 5 per cent. under the India-Swiss Double Taxation Avoidance Agreement.
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2021 (6) TMI 1116 - CHHATTISGARH HIGH COURT
Levy of tax which was claimed under Form SVLDRS-1 - seeking waiver from interest and penalty as was promised under the Scheme - Form SVLDRS-1 submitted by the petitioner was summarily rejected, without giving any opportunity of hearing to the petitioner - HELD THAT:- According to the Scheme, once the assessee avails the Scheme and files the return by declaration, the verification of declaration by the designated committee was prescribed under Section 126 of the SVLDRS Scheme and the issue of statement by the designated committee is covered under Section 127 of the SVLDRS Scheme.
The order which is on record whereby the declaration of the petitioner was rejected, meaning thereby he would be liable to pay the additional amount, which would be a levy imposed. In order to impose such levy, the designated committee was duty bound to hear the petitioner by giving him an opportunity of hearing. Considering the benevolent scheme which has been set into motion by the respondents, the petitioner was required to be heard even otherwise under the statutory mandate.
The order whereby the Form SVLDRS-1 was rejected by the designated committee which is embodied in the remarks column is setaside. The cases are remanded back to the designated committee with a direction to give an opportunity of hearing to the petitioner by adhering to the rules of natural justice - Petition allowed by way of remand.
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2021 (6) TMI 1115 - ITAT PUNE
TP addition - addition u/s 92CA(3) in respect of Information Technology Enabled Services ("ITes") provided by the Assessee to its Associated Enterprise ("AE') - comparable selection - HELD THAT:- Manipal Digital Systems Private Limited - As per Indian Council for Advertising, the online advertising has to be published on true and honest disclosure basis and therefore, when proper documentation of activities are not physically available, in such scenario, referring the website for information is correct option and the information therein cannot be doubted. These are all multi-national companies and certain amount of honesty has to be attributed to them since all are functioning as per relevant rules and laws. With these observations and respectfully, following the judgment of RAMPGREEN SOLUTIONS PVT LTD VERSUS COMMISSIONER OF INCOME TAX [2015 (8) TMI 931 - DELHI HIGH COURT] we direct the AO/TPO to exclude this company i.e. Manipal Digital Systems Private Limited from the final set of comparables with that of the assessee company.
CES limited - Segregation of ITes services has to be categorically conducted before classifying as functionally comparable with another. In this case Revenue Authorities have only looked into the revenue earning from ITes segment and included this company as comparable. The facts remains both these companies are functionally different. We therefore, direct the AO/TPO to exclude CES Limited from the final set of comparables with that of the assessee company.
MPS Limited - Having gone through the annual report of the company, findings of the Sub-ordinate Authorities and the submissions of the assessee placed on record along with judicial pronouncements, it is evident that MPS Limited is functionally different from that of the assessee company in more-so that high end activities of MPS Ltd. is akin to IT services and not ITes - we direct the AO/TPO to exclude MPS Limited from final list of comparable companies.
Domex E-Data Pvt. Ltd. - If two companies performing ITes are to be considered as comparable then the specific business of the said two companies has to be analyzed and then decide upon whether they are at all comparable or not. In this case, we do not find such exercise was conducted neither by TPO nor by the Ld. DRP. Therefore, we are of the considered view that in the given set of facts, this company is functionally not comparable with that of the assessee company. We, therefore, direct the AO/TPO to exclude this company i.e. Domex E-Data Pvt. Ltd. from the final set of comparables.
e4e Healthcare Business Services Pvt. Ltd - As decided in M/S MERCER CONSULTING (INDIA) PVT. LTD. GURGAON [2016 (8) TMI 1163 - PUNJAB AND HARYANA HIGH COURT] miniscule difference cannot result in the rejection of the case if it is otherwise comparable. However, it had not laid down any specific percentage as to the deviation permissible. We find, the Ld. DRP stated the permissible deviation is at 0.5% but this is not appearing anywhere in the said judgment. That further, the Sub-ordinate Authorities have rejected this company as it failed on the RPT filter which according to the assessee was not correct. Now before us, the Ld. Counsel for the assessee has prayed that the issue may be restored to the file of AO/TPO for factual verification of functional Compatibility to which the Ld. DR also has not objected. Therefore, in the interest of justice, we set aside the order of the Ld. DRP on this issue i.e. e4e Healthcare Business Services Pvt. Ltd. and remand this matter back to the file of AO/TPO for verification of functional compatibility of this company with that of the assessee while complying with the principles of natural justice.
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2021 (6) TMI 1114 - MADRAS HIGH COURT
Assessment u/s 153 - Period of limitation for proceedings for making a reference under Section 92CA(1) - HELD THAT:- Admittedly in the present case, the proceedings for making a reference under Section 92CA(1) of the Income Tax Act, 1961 by the 3rd respondent/Additional Commissioner of Income Tax to the Jurisdictional Commissioner of Income Tax started prior to expiry of normal period of limitation under the 1st proviso to Section 153(1) of the Income Tax Act, 1961 and during the course of assessment.
The permission was also granted by the CIT on 18.11.2008 to make a reference under Section 92CA(1) though the actual reference was made only on 17.02.2009. Since the case of the petitioner falls under Chapter X of the Income Tax Act, 1961, special period of limitation under the 2ndproviso to Section 153(1) was attracted for completing the assessment.
On perusing the records, it is noticed that the petitioner has wholeheartedly participated in the proceedings before the 2nd respondent/Transfer Pricing Officer pursuant to the reference made on 17.02.2009 by the 3rd respondent/Additional Commissioner of Income Tax. Before the 2nd respondent/Transfer Pricing Officer also no objection was raised by the petitioner regarding limitation.
After, the 2nd respondent/Transfer Pricing Officer passed a Transfer Pricing Order dated 30.10.2009 under Section 92CA (2) of the Income Tax Act, 1961, the petitioner was also issued with a Show Cause Notice dated 23.11.2009 by the 3rd respondent/Additional Commissioner of Income Tax. Even before the 3rd respondent, before the Draft Assessment Order was passed on 31.12.2009, the petitioner did not raise any objection regarding limitation.
It is for the first time before the 1st respondent/Dispute Resolution Panel, the Petitioner raised the objection regarding the limitation to proceed with the assessment for the first time which has been rightly overruled by the 1st respondent/Dispute Resolution Panel.
Therefore, it is not open for the petitioner to challenge the jurisdiction of the 3rd respondent/Additional Commissioner of Income Tax to refer to the 2nd respondent/Transfer Pricing Officer to pass a Transfer Pricing Order after 31.12.2008. Since the petitioner had also not questioned the jurisdiction of the 2nd respondent/Transfer Pricing Officer when the reference was made on 17.02.2009, there was also acquisence by the petitioner to the reference to the 2nd respondent/Transfer Pricing Officer. The petitioner is therefore estopped form questioning the aforesaid reference made to the 2nd respondent/Transfer Pricing Officer.
Both 1st and the 2nd proviso to Section 153(1) of the Income Tax Act, 1961 only specify the time-limit within which assessment has to be completed. Both operate under different circumstances. Former applies in the case of normal assessment while the later applies where Chapter X is attracted. The 2nd proviso to Section 153(1) of the Income Tax Act, 1961 does not state that the reference also should be made before the expiry of 21 months where chapter X of the Income Tax Act, 1961 are attracted for completing the assessment. Therefore, there is no merits in the present writ petition.
The present Writ Petition is therefore liable to be dismissed.
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2021 (6) TMI 1113 - KARNATAKA HIGH COURT
Dishonor of Cheque - direction to petitioner to deposit 20% of the cheque amount in accordance with Section 143A of NI Act - HELD THAT:- Section 143A was inserted in the Negotiable Instruments Act by Act No.20 of 2018 with effect from 01.09.2018. The complaint was filed on 11.10.2019. Therefore the amendment is very much applicable to the present case.
According to Section 143A(a), if the accused does not plead guilty, the Court may pass an order directing him to pay interim compensation to the complainant and this amount shall not exceed 20% of the cheque amount. Sub-section(4) of Section 143 makes it very clear that if the accused is acquitted, the Court will direct the complainant to re-pay the amount with interest. Therefore it is very clear from the language of the Section that the accused may be directed to pay interim compensation if he pleads not guilty. In the case on hand, having noticed that the petitioner pleaded not guilty, the Court below directed him to pay interim compensation to the complainant.
Petition is dismissed.
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