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Showing 401 to 420 of 2121 Records
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2019 (2) TMI 1724
Cessation of liability addition u/s 41(1) - claim of sundry creditors liability in books of account since 2009-10 - HELD THAT:- Then is no dispute between the parties the very amount stood allowed as a liability in the past very many assessment years involving both summary as well as regular assessments. The assessee’s books have also not indicated the impugned sum as a case of cessation of liability.
Hon'ble Gujarat high court’s judgment in CIT vs. Nitin S Garg [2012 (5) TMI 30 - GUJARAT HIGH COURT has placed reliance on much a celebrate judgment of hon'ble apex court in CIT vs. Sugauli Sugar Works (P) Ltd. [1999 (2) TMI 5 - SUPREME COURT] to hold that the mere fact of a liability having continued to be shown for very many years would not attract section 41(1) since it is for the Assessing Officer has who has to show that concerned assessee has drawn any benefit by way of cessation or remission thereof. We further make it clear that CIT(A)’s above extracted detailed discussion has examined all the facts as well as the relevant legal position at length which has nowhere been rebutted from the Revenue side. We therefore conclude that the CIT(A) has rightly reversed the assessment findings holding the amount in question to be a case of cessation of liability u/s 41(1) - Decided in favour of assessee.
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2019 (2) TMI 1723
Reassessment proceedings u/s 147/148 - Whether reasons to re-open the assessment proceedings for AY 2002-03 amounted to a second opinion or review of the previous view expressed? - HELD THAT:- Reassessment proceedings were initiated on the premise that the scrutiny assessment originally completed, was in ignorance of a binding decision of Supreme Court in Southern Switchgears Ltd. v. CIT [1997 (12) TMI 105 - SC ORDER] . The reassessment was completed and the amounts were added back.
The assessee appealed, both on merits and on the issue of reopening. The CIT(A) concurred with the view of the Assessing Officer (AO). However, the Tribunal, following the decision of the Supreme Court in CIT v. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] and other decisions was of the view that since this scrutiny assessment had gone into the taxability of amounts in question, the AO could not have revisited the same issue on the pretext that a binding decision was overlooked.
This Court is of the opinion that the impugned order is sound and reasonable and in accord with the judgment of the Supreme Court. Further, in somewhat circumstances, where reassessment proceedings were sought to be initiated on the ground of expenditure wrongly allowed in ignorance or overlooking Southern Switchgears [1997 (12) TMI 105 - SC ORDER] , this Court in Xerox Modicorp Ltd. v. DCIT [2013 (1) TMI 160 - DELHI HIGH COURT] held that reassessment proceedings were unauthorised by law
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2019 (2) TMI 1722
Extension of Stay - HELD THAT:- It is evident from the records that the assessee is not responsible for the delay in disposal of the appeal. Therefore, we are of the view that it is a fit case for Extension of Stay. Therefore, we are extending the Stay for further period of 6 months or till the disposal of the appeal whichever is earlier. We would also like to make it clear that on the fixed date of hearing of the appeal the assessee will not seek any adjournment for any reason, if any adjournment is sought by the assessee the Stay granted will automatically stand vacated.
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2019 (2) TMI 1721
Education cess disallowed u/s 40(a)(ii) - HELD THAT:- We are inclined to agree with the contentions of ld. Departmental Representative that education cess is a ‘surcharge’ on income tax hence not allowable as a deduction. We prefer to follow the proposition of law laid down in the case of M/s. Kalimati Investment Company Limited [2012 (5) TMI 705 - ITAT MUMBAI] AND in the case of Sesa Goa Ltd versus JCIT [2013 (9) TMI 233 - ITAT PANAJI] on this issue. Hence we dismiss this ground of the assessee.
MAT Applicability - As appellant, being a company engaged in Non-Banking Finance Business and governed by the Reserve Bank of India Act, 1934 r.w. Prudential Norms issued thereafter, it is not maintained its books of accounts strictly in terms of Part II & Part III of the Schedule VI of the Companies Act, 1956 and hence the provisions of Section 115JB is not applicable - HELD THAT:- Assessee submission that, due to the mandatory directions issued by the RBI u/s 45J of the RBI Act 1934, the assessee had to make certain provisions in the accounts and consequently, the accounts cannot be said to have been drawn up under the Companies Act 1956 but should be held that the accounts was a mixture of the requirements of the Companies Act and the requirements of the RBI Act and hence the provisions of Section 115JB of the At does not apply is not tenable.
The assessee prepares its accounts as required under the Companies Act 1956. While doing so, it follows, at its own discretion, the Accounting Standards prescribed by the Institute of Chartered Accountants of India, guidance notes issued by Institute of Chartered Accountants of India on various issues, Accounting Standards prescribed under the Income Tax Act 1961 and in case of Non-banking Financial Companies, it additionally follows at its discretion the requirements suggested by the RBI. These requirements, suggestions and prescriptions are not in conflict with the requirements under the Companies Act. The auditors have not, in their audit report, alleged so. There is no dispute that the Balance Sheet and Profit & Loss accounts are drawn up in accordance with Part II & III of Schedule VI of the Companies Act, 1956. Hence, this additional ground is dismissed as devoid of merit.
Disallowance u/s 14A - contentions of the assessee company that the AO has not recorded reasons for applying Rule 8D - HELD THAT:- Though the AO was wrong in holding that Rule 8D is procedural in nature, the fact is that the claim of the assessee, that it had not incurred any expenditure for earning exempt income, has been rejected by the Assessing Officer. This to our mind is sufficient satisfaction that was arrived at by the Assessing Officer that the claim of the assessee is not correct. This was prior to the Assessing Officer invoking Rule 8D of the I.T. Rules 1962. Hence this argument of the assessee is rejected.
Disallowance under Section 14A r.w. Rule 8D(2)(ii) - The assessee has not furnished any calculation that it had interest free funds which can be presumed to have been invested in non-interest bearing investments. In the absence of such details been filed either before the Assessing Officer or before the ld. CIT(A) or before us, the argument of the ld. Counsel for the assessee cannot be entertained. Unless some prima facie facts and figures are brought on record, we cannot restore the issue to file of the Assessing Officer for verification and fresh adjudication as requested by the ld. Counsel for the assessee. Thus we find no infirmity in the order of the ld. CIT(A). Hence, we dismiss this ground of the assessee.
Income recognition - Disallowance of provision for Non-performing assets (NPA) made in accordance with the prudential norms of the RBI in computation of income under the normal provisions of the Act - HELD THAT:- Departmental Representative correctly submitted that the judgment of Southern Technologies [2010 (1) TMI 5 - SUPREME COURT] covers the issue and that in the judgment of Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - DELHI HIGH COURT] , the Hon’ble High Court has considered all these aspects including the decision in the case of TRO v. Custodian [2007 (8) TMI 343 - SUPREME COURT] and came to our conclusion that under the real income theory, interest income on Non-Performing Assets (NPA’s) need not to be recognized as income.
Provision of leave encashment - HELD THAT:- This issue is set aside to the file of the Assessing Officer to adjudicate the issue de novo, after considering the final judgment of Exide Industries Limited & Anr. Vs. Union of India & Ors. [2007 (6) TMI 175 - CALCUTTA HIGH COURT] read with CIT vs. M/s Exide Industries Ltd. & Anr. [2009 (5) TMI 894 - SC ORDER]
Addition of profit on sale of fixed assets/investments in the computation of book profits u/s 115JB - HELD THAT:- This issue is admittedly covered against the assessee by the decision of the Special Bench of the Hyderabad ITAT in the case of Rain Commodities Ltd. vs. DCIT; [2010 (7) TMI 794 - ITAT HYDERABAD] . Hence this ground is dismissed.
MAT computation - addition of “Provision made for Nonperforming Assets (NPA)” in computing book profits u/s 115JB - HELD THAT:- We agree with the submissions of the ld. Counsel for the assessee that the provision in question is not made for meeting liabilities. But we are of the view that the amount in question is set aside as a provision for diminution in the value of assets, hence covered by the Explanation 1(i) to section 115JB of the Act. This amendment was held as retrospective in nature. The effect of this provision is reduction in the value of the assets of the company. Hence we find no infirmity in the order of the ld. CIT(A).
Disallowance u/s 14A - CIT(A) has restricted the disallowance to the dividend income earned by the assessee - HELD THAT:- CIT(A) applied this proposition of law laid down in the case of Joint Investment Pvt. Ltd. vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT] .Hence we find no infirmity in the order of the ld. CIT(A) on this issue.
Addition on account of disallowance u/s 14A r.w.r 8D while computing book profit u/s 115JB - HELD THAT:- This issue is covered by the decision of the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] . Respectfully following the same we dismiss this ground of the revenue.
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2019 (2) TMI 1720
Grant of Regular Bail - offence under Sections 132(1)(b)(c)(d)(f)(i) & (i) of the Central Goods and Service Tax Act, 2017 read with Section 132(1), (i) & (iv) of Central Goods and Service Tax Act, 2017 - HELD THAT:- As per the prosecution story, accused in connivance with each other had created thirty five fake firms and after making fake entries had issued invoices involving tax amount of more than Rupees ten crores. The firms were misused for evading G.S.T input taxes by the petitioners.
Since, bail petition filed by the co-accused has been dismissed by this court, this petition is also liable to be dismissed.
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2019 (2) TMI 1719
Offence under Section 132(1)(B), (C) & (D) of Central Goods and Services Tax (CGST) Act, 2017 - Service of notice - HELD THAT:- Petitioner was summoned in terms of Section 70 of the Act. Petitioner appeared and was duly interrogated and his statement was recorded and thereafter, he was arrested. Under the Act show cause notice is to be served to the company with regard to the amount due. However, in the present case, no such notice has been issued to the company. The amount required to be paid by the company has not been determined so far. Company has a remedy to file an appeal against the determined amount. Company has already deposited ₹ 4 crores with the concerned authority which would have been required to be paid by the company in case of filing of appeal against the assessment order. In-fact, no further amount is required to be deposited by the company with the concerned authority in the present case. Offence under the Act is compoundable. Petitioner is merely an employee of the company.
The offence committed by the accused is serious in nature. In-fact, the accused had issued bogus invoices without actual movement of goods which led to involvement of fraudulent input taxes amounting to ₹ 40.58 crores. Admittedly, company has deposited ₹ 6.95 crores with the concerned authority towards non-payment of G.S.T. Case is still under investigation.
Keeping in view the seriousness of the allegations levelled against the petitioner, no ground for grant of bail to him is made out - petition dismissed.
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2019 (2) TMI 1718
Addition u/s. 68 - unexplained cash credit as the assessee failed to prove the identity, creditworthiness and genuineness of the said loan - genuineness of the claim, identity and creditworthiness of the lender - HELD THAT:- CIT(A) has took into the note of the reply of the assessee in which it was found that in response to the notice u/s.133(6) of the Act, the assessee filed the explanation in view of the letter dated 03.12.2015 in which it was certain evidence was filed such as the lender’s confirmation, copy of ITR and balance sheet and copy of his bank statement.
The case of the assessee was examined on the basis of genuineness of the claim, identity and creditworthiness of the lender. AO raised the addition only on the basis of the information given by the Investigation Wing. AO nowhere conducted the inquiry on the basis of the information given by the Investigation Wing. Moreover, we noticed that the loan was repaid to M/s. Falak Trading Co. Pvt. Ltd. and in this regard the evidence lies at page 18 and 19 of the paper book. - Decided in favour of the assessee.
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2019 (2) TMI 1717
Maintainability of application - initiation of CIRP - Corporate Debtor having defaulted repaying of the petitioner - Existence of dispute or not - HELD THAT:- We believe that it is not a financial debt and the petitioner tried to masquerade it as financial debt when reply came to section 8 Notice from the corporate debtor - this Bench having felt that this petitioner should not have concealed the facts and tried to metamorphose this petition as petition u/s 7 of the Code, this Company Petition is hereby dismissed by imposing costs of payable to the Corporate Debtor within 15 days hereof.
Petition dismissed.
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2019 (2) TMI 1716
Money Laundering - confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto - whether after amendment of Section 45 of the Act and deletion of Sub-section "(a) every offence punishable under this act shall be cognizable", the offences under the Act have become non-cognizable?
HELD THAT:- From the investigation done by the Enforcement Directorate, it is revealed that the petitioners in connivance with Syndicate Bank's Officials opened two current accounts in the name of World Trade Park Ltd. for receiving the tainted money of Bharat Bomb and instead of depositing in the sale proceed in the escrow accounts, as per the terms and conditions of finance, got the amount deposited in the current account opened at Syndicate Bank. It is also revealed from the investigation that the sale consideration of the property sold to Bharat Bomb and his associates was shown as ₹ 37.9/- crores to the banks, whereas, actual sale consideration was ₹ 78.99/- crores. The total sale consideration received by the petitioners and his companies i.e. M/S World Trade Park Ltd., M/S R.F. Trading and Properties and M/S Sincere Infrastructure Pvt. Ltd. was more than ₹ 160/- crores, whereas, the sale consideration was ₹ 78.99/- crores. It is also revealed from the investigation that even after execution of the last sale deed in August, 2015, 27 crores was received by the petitioners. The amount received was the tainted money of Bharat Bomb.
It is also revealed from the investigation that the persons who have appeared on behalf of the firms for getting the properties registered have categorically stated that they have no concern with the properties and firms in which they are shown as partners, the properties actually belong to Bharat Bomb.
From investigation done by the Enforcement Directorate, it is also revealed that petitioners opened two accounts and had transferred amount directly to those accounts and had thus utilized the proceeds of crime and offence under the Money Laundering Act is made out.
The writ petitions are dismissed with cost of ₹ 50,000/-.
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2019 (2) TMI 1715
Loss due to revaluation of forward exchange contracts being mark to market loss was only notional and contingent in nature - set off against taxable income as per CBDT instruction 03/2010 dated 23.03.2010 - HELD THAT:- It is an agreed position between the parties that the issue raised herein stands concluded against the Appellant Revenue by the decision of this Court in CIT v/s. M/s. D. Chetan & Co. [2016 (10) TMI 629 - BOMBAY HIGH COURT]
Revenue states that in view of the Instruction No.3 of 2010 dated 23rd March, 2010, the issued by the CBDT contend that, loss in such case is notional and contingent in nature and same should be added but for the purpose of computing taxable income. The aforesaid submission was the basis of the order of the Assessing Officer and not accepted by this Court in M/s. D. Chetan & Co., (supra). Therefore, the above Circular/ Instruction would not have any application in the face of the decision of this Court in M/s. D.Chetan &Co., (supra). No substantial question of law
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2019 (2) TMI 1714
TP adjustment on interest on unrealised export proceeds - Interest on receivable as an international transaction - direction of computing interest for the receivable which remains outstanding for more than 60 days subject to verification whether the loan is being repaid in US dollar or in Indian rupees respectively - HELD THAT:- DRP in arriving at the decision that interest on receivable is an international transaction, has followed the decision of the Hon’ble Delhi High Court in the case of CIT vs. Cotton Naturals [2015 (3) TMI 1031 - DELHI HIGH COURT]. We do not find any error in the finding of the Ld. DRP on the issue and accordingly we reject the contention of the Ld. Counsel that interest receivable is not an international transaction.
DRP, following the Hon’ble Delhi High Court in the case of Cotton Naturals (supra) has also rejected the contention of the assessee that the interest subsumed in the sale price of the assessee and no separate benchmarking for interest is required. Before us also nothing has been demonstrated that margin of the assessee is better than the margin of such comparables also having receivables and thus we do not find any error in the finding of the Ld. DRP on this issue.
Not charging of the interest on two invoices raised on Shan Jewellers Corporation Counsel has not brought on record comparability of the transactions carried out with Associated Enterprises like country to which exported, agreement with parties etc. and thus these transactions cannot be considered for benchmarking the interest on receivables from the Associated Enterprises.
Allowing credit of 90 days - We find that this period of 60 days adopted by the Ld. TPO or 90 days requested by the assessee depend on the prevalent business practice in the trade. The Ld. Counsel has pointed out before us that in assessment year 2015- 16 the Ld. TPO himself as considered the receivables beyond the period of 90 days for the purpose of transfer pricing adjustment. We have verified this fact from the order of the Ld. TPO for assessment year 2015-16 available on page 254 to 277 of the paper book. We find from the Annexure-1 to the order of the TPO that receivables beyond 90 days have been considered for transfer pricing adjustment.
In view of the rule of consistency, the period of 90 days credit is found to be reasonable in the trade of the assessee and accordingly we direct the Ld.AO/TPO to compute the transfer pricing adjustment for receivables having delay in receipt of payment more than 90 days. Accordingly the ground of the appeal raised by the assessee in respect of transfer pricing adjustment for interest on receivables are partly allowed for statistical purposes.
LIBOR rate selection - DRP has observed that the foreign currency involved in the case of receivables from AE is Great Britain Pound and thus directed to apply the LBOR of that currency. But while giving effect to the order of the Ld. DRP, the TPO has applied the LIBOR rate of US dollar observing that invoices have been raised in US dollar. We find that the Ld. DRP given direction following the decision of the Hon’ble Delhi High Court in the case of Cotton Naturals (supra) where in the Hon’ble High Court has observed that interest rates should be the market determine interest-rate applicable to the currency concerned in which the loan has to be repaid and interest-rate should not be computed on the basis of the interest payable on the currency of the legal tender of the place of the country of residence of the either party. Accordingly, we feel it appropriate to direct the Ld. AO/TPO to verify the currency in which invoices have been raised by the assessee on the Associated Enterprises and apply the LIBOR of the said currency. Accordingly ground No. 1 of the Revenue is allowed for statistical purposes.
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2019 (2) TMI 1713
Disallowance @ 0.5% of the average investments u/s 14A read with rule 8D2(iii) towards administrative and other expenses - HELD THAT:- The co-ordinate bench of the Tribunal in assessee’s own case [2017 (11) TMI 1854 - ITAT MUMBAI] decide the issue in favour of the assessee by holding that no disallowance under section 14A is called for. The AO is directed accordingly. Thus the assessee’s appeal is allowed and ground no.1 of the revenue appeal is dismissed.
Disallowance of amortization of Employee Stock Plan (ESOP) expenses - Addition made by the AO without appreciating the fact that it is a capital expenditure incurred for the purpose of business being employee compensation cost - HELD THAT:- We are of the opinion that the issue needs further verification about the terms and conditions of ESOP issue by the assessee .Therefore, in the interest of justice the matter is restored back to the file of AO for fresh adjudication, who would afford a reasonable opportunity of hearing to the assessee
Disallowance on account of broken period interest which was treated as capital expenditure by the AO - HELD THAT:- CIT(A) allowed the issue in favour of the assessee by following the order of his predecessor in assessee’s own case for A.Y. 2007-08, 2008-09 & 2009-10 by following the decision of the Hon’ble Supreme Court in the case of CIT vs. Citi Bank [2008 (8) TMI 766 - SUPREME COURT]
Fresh issue admitted before the appellate authority - New claim of deduction under section 35D can be admitted first time which was not raised before the AO at all - HELD THAT:- After perusing the appellate order, we find that the appellate authority has passed the order after following the decisions of the Hon’ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] and Grasim Industries Ltd. [2016 (2) TMI 1124 - BOMBAY HIGH COURT] wherein the decisions of the Hon’ble Supreme Court in the case of Goetz India Ltd. [2006 (3) TMI 75 - SUPREME COURT] has been considered and it was held that the fresh issue can be admitted before the appellate authority. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) and accordingly the same is upheld.
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2019 (2) TMI 1712
Disallowance u/s 35AD(5)(aa) - Whether assessee had completed necessary formalities in terms of obtaining licenses from different authorities were obtained by the assessee? - CIT-A allowed the claim - HELD THAT:- As per provisions of section, any capital expenditure incurred by the assessee prior to commencement of operation of the new unit shall be allowed as deduction in the previous year in which the assessee commences the operation of hotel business. Sec. 35AD(5)(aa) is regarding deduction in respect of expenditure on specified business:- “on or after 1s t day of April, 2010, where the specified business is in the nature of building and operating a new hotel of Two Star or above category as classified by the Central Government.”
In respect of its contention assessee submi ted copy of permission granted by the Ministry of Tourism letter dated 30/08/2010 wherein approval of three star hotel has been granted by the Ministry and assessee has filed Building House Permission issued by the municipal authority dated 18/10/2011 for granting the permission of hotel and assessee submitted details with the AO for following documents along with copies of assessee submitted letter dated 09/02/2015.
CIT(A) in our view, has rightly come to the conclusion in favour of the assessee. Thus we dismiss the appeal of the Revenue.
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2019 (2) TMI 1711
Prayer for withdrawal of application - Vacation of attachment order passed by the Adjudicating Authority under PMLA over the assets of the corporate debtor - HELD THAT:- When the Resolution Professional counsel herself has reported that the RP has no objection for dismissal of this application as withdrawn with liberty to come before this Bench with same cause of action, this Bench with a view to avoid appearance of a Government Authority before this Bench without any purpose, this application as sought by the Resolution Professional is hereby dismissed with liberty to file afresh in the event her appeal has been allowed by the Hon'ble ATML.
Application dismissed as withdrawn.
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2019 (2) TMI 1710
Release of provisional attachment of all the assets and properties of the company and hand over the charge to the Resolution Professional - whether properties were acquired out of proceeds of crime - HELD THAT:- The attachment order dated 29.05.2018 and the Corrigendum dated 14.06.2018 issued by Respondent and as confirmed Adjudicating Authority under PMLA Court is a nullity and nonest in law in view of Sections 14(1)(a), 63 and 238 of IBC and the Resolution Professional can proceed to take charge of the properties and deal with them under IBC as if there is no attachment - The concerned sub-registrars are directed to give effect to this order and remove their notings of attachment, if any, in their file in respect of properties belonging to the Corporate Debtor. It is needless to mention that the attachments in respect of the properties of the Corporate Debtor only are covered in this order.
Application disposed off.
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2019 (2) TMI 1709
Permission for withdrawal of appeal - availability of alternative remedy before appropriate forum - attachment of property in Goa - petitioner seeks to avail of remedies, if any, before the appropriate Court - HELD THAT:- The petition is dismissed as withdrawn with the aforesaid liberty.
If an appeal is filed before the appellate tribunal within a period of four weeks, the same would be considered uninfluenced by the question of delay.
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2019 (2) TMI 1708
Reopening of assessment - unexplained cash deposit - sufficient reasons for forming ‘reason to believe’ that income has escaped assessment - HELD THAT:- On perusal of the reasons, it is clear that with regard to the cash deposit in F.Y.2007-08 relevant to assessment year 2008-09, the letter of verification of financial transaction was issued on 26/12/2014 to verify the genuineness of the transaction but the assessee has not responded to the same.
On this aspect, the Ld. AR stated that there was change of address and the assessee did not receive any notice or letter as such and therefore, was not able to respond. Re-enquired whether the change of address was communicated by the assessee to the Department, the Ld. AR submitted that change of address was not communicated to the Department by the assessee. Furthermore, coming back to the reasons recorded, the assessee was required to furnish details of sources of the financial transaction along with copies of documents in support of his claim. This was also not done by the assessee. Further, in the reasons recorded, it is stated on verification of AST data, that the assessee has not furnished his return of income for the assessment year 2008-09. The assessee has not offered the amount of ₹ 16.04 Lakh for taxation. In view of above, the Assessing Officer has reason to believe the amount of ₹ 16,04,400/- escaped the assessment within the meaning of section 147 of the Act.
So far as the grounds on merits are concerned, the assessee contends that the entire receipts/cash deposits are considered as income, without considering the income/profit embedded in the receipts/cash deposits. The fact that the assessee has carried two businesses in that year has not been considered by the CIT(Appeals).
CIT(Appeals)/Ld. AO has not brought any material on record to justify that the above receipts are net income of the assessee. That for verification of this aspect, it was prayed by the Ld. AR of the assessee that the matter may be restored to the file of the Ld. CIT(Appeals).
We are of the considered view that the grounds on merits needs to be adjudicated after detailed factual verification through a speaking order by the Ld. CIT(Appeals). - Appeal of the assessee is partly allowed for statistical purposes.
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2019 (2) TMI 1707
Computation of deduction u/s. 10A - reducing the expenditure incurred in foreign currency both from the export turnover as well as the total turnover - HELD THAT:- We find that so long as the judgment of Hon'ble jurisdictional High Court holds the field, all subordinate authorities are supposed to follow the same. Therefore, we find no infirmity in the order of the DRP, which has adjudicated the issue following the judgment of the Hon'ble jurisdictional High Court in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] . We accordingly confirm the order of DRP.
TP Adjustment - comparable selection - assessee submitted that the TPO having chosen lower turnover filter ought to have excluded companies whose turnover was less than ₹ 200 crores - HELD THAT:- As rightly submitted by the assessee, the decision rendered by the Hon'ble High Court of Karnataka in the case of Acusis Software (I) P. Ltd. [2018 (8) TMI 1885 - KARNATAKA HIGH COURT] does not positively say that for a company to be excluded on the basis of high turnover, the tolerance range of turnover of 10 times on both the sides of assessee's turnover has to be seen. Even the Tribunal in the order against which the appeal was filed, did not proceed on application of turnover filter with any such condition. Therefore, it is not correct to say that for application of turnover filter, tolerance range of turnover of 10 times on both the sides of assessee's turnover has been laid down by the Hon'ble High Court. The Hon'ble High Court held that the order of Tribunal is correct and calls for no interference and further held that no question of law arose for consideration. The decision rendered in the case of Autodesk (I) P. Ltd. [2018 (7) TMI 1862 - ITAT BANGALORE] of the Tribunal after analysing every conflicting views has ultimately concluded that the law laid down in the case of Genesis Integrated Systems (I) P. Ltd. [2011 (8) TMI 952 - ITAT BANGALORE] has to be followed.
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2019 (2) TMI 1706
Disallowance u/s 14A - HELD THAT:- Question in this case is squarely covered by the decision of this court in ACB India v. Assistant Commissioner of Income Tax [2015 (4) TMI 224 - DELHI HIGH COURT] . Furthermore, the disallowance calculated exceeded the value of investment itself and is therefore, contrary to the ruling in Cheminvest Ltd. v. Commissioner of Income Tax [ 2015 (9) TMI 238 - DELHI HIGH COURT] . As such, no question of law arises in the present appeal.
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2019 (2) TMI 1705
Disallowance on account of prior period expenses under the provisions of normal as well as MAT computation of income - AO made disallowance on the ground that prior period expenses cannot be allowed as a deduction against the current year income - HELD THAT:- Regarding the normal computation of income, a specific query was raised from the Bench to the Ld. AR, to substantiate his claim that the prior period expenses were added in the computation of income. But the Ld. AR failed to substantiate his claim by any documentary evidence. However, the Ld. AR, before us, pleaded that the matter could be remanded back to the AO for the limited purpose of verifying whether the assessee has made disallowance of prior period expenses in the computation of income.
DR, did not raise any objection if the matter is restored to the AO for verification as discussed above. Thus in the interest of Justice and fair play we are inclined to restore the impugned issue to the file of AO to verify whether the assessee has made the disallowance of prior period expenses amounting to ₹ 2.32 lacs under normal computation of income and accordingly adjudicate the issue afresh as per the provisions of Law.
Computation of income under the provisions of MAT - We note that the assessee has to take the profit as shown in its financial statement prepared as per the prescribed schedule under the Companies Act and make the addition and subtraction only of those items specified u/s 115JB. As such, there is no mention under the provision of MAT for making any adjustment on account of prior period expenses.
On a specific query from the bench to the Ld. DR, regarding the claim of prior period expenses while computing book profit under section 115JB of the Act. The Ld. DR, has not advanced any argument on this aspect. Therefore, we are not inclined to concur with the view of the Ld. CIT(A). Accordingly, we reverse the order of the authorities below and direct the AO to delete the addition made by him while computing book profit u/s 115JB of the Act
Increase in the amount of profit on account of MODVAT credit - HELD THAT:- There is no ambiguity that the assessee has been following the exclusive method of accounting. Thus, we can safely conclude that though the assessee is following the exclusive method of accounting which is contrary to the provisions of section 145A of the Act, but the effect of the same will remain NIL. Thus, there cannot be any fault of the assessee merely on the reasoning that the assessee has not valued its closing stock as per the provisions of section 145A of the Act in the given facts & circumstances.
In view of the above, we do not concur with the view of the Ld. CIT(A) and accordingly reverse the same. The AO accordingly is directed to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.
Denial of deduction u/s 80IA(4) - AO was of the view that the assessee was not eligible for deduction in respect of its power generation unit - HELD THAT:- Deduction u/s 80IA(4) is available to the appellant in respect ,of electricity generated by it for captive consumption, subject to fulfillment of other conditions u/s 80IA. In Section 80IA(8) of the Act what is required to be ascertained is the market value of the goods transferred by the eligible business, when such transfer is by eligible business to another non eligible business of the same assessee and the consideration recorded in the accounts of the eligible business does not correspond to market value of such goods.
Disallowances u/s 14A while computing book profit u/s 115JB - AO was of the view that the expenditure incurred in relation to the exempted income needs to be disallowed as per the clause ‘’f’’ of explanation 1 to section 115JB - HELD THAT:- It is settled law that the amount of disallowance made by the AO u/s 14A of the Act cannot be imported while determining the profit u/s 115JB of the Act. In this regard, we rely on the judgment cited by the ld AR for the assessee in the case of Alembic Ltd. [2017 (1) TMI 513 - GUJARAT HIGH COURT] - Also in the case of ACIT vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the book profit u/s 115JB of the Act
Disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. [2014 (11) TMI 1169 - CALCUTTA HIGH COURT]
Determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - there is no mechanism given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the disallowance. Therefore in the given facts & circumstances, we feel that adhoc disallowance will service the justice to the Revenue and assessee. We, therefore, are directing for the ad-hoc disallowance to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the assessee is partly allowed.
Lease rent paid in respect of capital asset - HELD THAT:- As decided in own case [2016 (10) TMI 1281 - GUJARAT HIGH COURT] once the expenditure is held to be in revenue in nature incurred wholly and exclusively for the purpose of business, it can be allowed in its entirety in the year in which it is incurred. - Decided in favour of assessee.
Addition on account of replacement of re-membrane cells - HELD THAT:- As decided in own case [2016 (8) TMI 1462 - GUJARAT HIGH COURT ] attempt to contend that life of membrane would be spread over from 3 to 5 years or that the amount involved for replacement of membrane is huge and, therefore, the departure on the part of the Revenue could be said as justified, in our view, cannot be countenance for two reasons. One is that the amount involved would not make difference for chargability of the tax but the nature of expenditure would be relevant for the chargability of tax. It hardly matters whether the amount is more or less. Further, on the aspect of life of the membrane, nothing is referred to by the A.O. nor by C.I.T. (Appeals) that earlier, such aspect, namely, life of the membrane spread over from 3 to 5 years was not considered or it had missed or otherwise. - Decided against revenue
Depreciation claim of the assessee at the rate of 60% on Chlorine tonners - HELD THAT:- As decided in own case [2014 (2) TMI 77 - GUJARAT HIGH COURT] Gas cylinders including valves and regulators were entitled to depreciation at the rate of 60% - Any vessel that contains such gas and is used either for transportation or storage would satisfy the requirement of being a gas cylinder - Chlorine toners used by the assessee are essentially and in substance nothing but gas cylinders - CIT(A) has rightly treated them as gas cylinders and accordingly allowed depreciation at the rate of 60% - Certificate of the experts also indicated that the same was a gas cylinder - Decided against revenue
Additional depreciation on the computers installed in the factory premises - HELD THAT:- As decided in own case [2014 (2) TMI 77 - GUJARAT HIGH COURT] There cannot be universal preposition of law that computers are used only in offices and not for manufacturing activities - There may be number of ways in which installation of a computer may enhance and improve the efficiency - There is nothing on record to suggest that the computers were part of the plant and machinery - CIT(Appeals) and the Tribunal treating the same as simplicitor computers and granting depreciation at the rate prescribed under the law calls for no interference – Decided against Revenue.
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