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Showing 401 to 420 of 1482 Records
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2023 (6) TMI 1082
Non/short payment of service tax - incentives/discounts received from MSIL on various promotional schemes implemented for promoting the sales of Maruti vehicles - short declaration of taxable value in the ST-3 return in comparison to the books of accounts for the impugned period - extended period of limitation.
Demand of service tax on incentives and other discounts received from MSIL by the Appellant - HELD THAT:- The issue is no longer res integraand is squarely covered by the judgment of the Tribunal in the case of BM AUTOLINK VERSUS C.C.E. -KUTCH (GANDHIDHAM) [2022 (12) TMI 12 - CESTAT AHMEDABAD], wherein the Tribunal had referred to the judgement of M/S ROSHAN MOTORS PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, CENTRAL GOODS AND SERVICE TAX, JAIPUR, RAJASTHAN [2022 (8) TMI 1254 - CESTAT NEW DELHI] and held that The vehicle manufacturer M/s. Maruti Suzuki India Ltd. on the basis of yearly performance of sale grants the discount to the dealer, this discount is nothing but a discount in the sale value of the vehicle sold throughout the year therefore, these sales discount in the course of transaction of sale and purchase of the vehicles hence, the same cannot be considered as service for levy of service tax - thus, the demand of service tax of Rs.3,86,36,400/- cannot survive and is set aside.
Demand of service tax on the basis of difference in ledgers of income and value shown in ST 3 for such services rendered - HELD THAT:- The Appellant has produced a CA certificate being the statutory auditor of the Appellant and the main reason for such difference was because the department has only taken the credit side of income by ignoring the debit entries for reversal etc. and hence the value as per ledger is inflated.
Extended period of limitation - HELD THAT:- Since there had been service tax audit conducted prior to the DGGI investigation covering the period under dispute, the suppression cannot be alleged by the department for income reconciliation of books and ST 3 returns as no such allegation was raised during department audit. Hence, extended period of limitation also cannot be invoked to raise any demand.
The entire demand of service tax has to go and the order of the Ld. Adjudicating authority is set aside - Appeal allowed.
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2023 (6) TMI 1081
Scope/levy of Taxable Service - sponsorship services - amount paid by the appellant towards sponsorship of cricket tournaments namely, ICC Cricket World Cup and Indian Premier League (IPL) - provisions created as well as the taxability of certain portions of services received in view of the provisions of Section 65(105)(zzzn) of the Act, prior to 01.07.2010 - penalty u/s 77 and 78 of FA, 1994 - extended period of limitation.
Whether the sponsorship received is relating to sponsorship of sports events or not? - HELD THAT:- The appellant has sponsored IPL Cricket tournament and ICC Cricket World Cup during the impugned period. Thus, whether sponsoring of IPL and ICC Cricket World Cup can be equated with sponsoring of sports events or not is the issue involved for resolution of dispute in this appeal - the issue is no longer res integra and is settled in favour of the appellant. In many decisions of the Tribunal, it has been held that no Service Tax is payable on sponsorship of IPL and ICC cricket tournaments during the impugned period.
In the case of M/S HERO MOTOCORP LTD VERSUS COMMISSIONER OF SERVICE TAX, DELHI [2013 (6) TMI 447 - CESTAT NEW DELHI], the Tribunal, Delhi has held that the expression “in relation to” has a very wide connotation and the assessee’s activity of sponsorship was in relation to sports events and so, not liable to Service Tax.
The above decision has been affirmed by the Hon’ble Supreme court vide its order in COMMISSIONER VERSUS HERO MOTOCORP LIMITED [2015 (7) TMI 1163 - SC ORDER] and subsequently, followed by the Tribunal, Mumbai in VODAFONE CELLULAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2017 (2) TMI 1152 - CESTAT MUMBAI] wherein it has been held that, for the period under dispute, no Service Tax demand on sponsorship of sports events can be fastened on the appellant.
Thus, the issue in dispute in this appeal is squarely covered by the decisions discussed, the impugned order ordered to be set aside - the provisions made in the books of account by the appellant as per the GAAP towards sharing the expenditure on account of receipt of sponsorship services cannot be subjected to tax as the ingredients for levy of tax are not fulfilled in the absence of any provision of service and when payments were made only in relation to sponsorship of the IPL Cricket tournament.
Extended period of limitation - penalties - HELD THAT:- As the appeal succeeds on merits, there is no need to examine the issue of invoking the extended period or imposition of penalties.
Appeal allowed.
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2023 (6) TMI 1080
Classification of services - manpower recruitment or supply agency service or not - cane harvesting labourers and execution of the agreement and other related work.
Allotting certain agricultural areas for procurement of sugar cane cultivated by the agriculturists within the said jurisdiction - farmers within the earmarked areas who intend to cultivate sugar cane shall sell their sugar cane to the above factory only - Wherever harvesting labourers were arranged by the factory, the cane cutting charges will be recovered from the cost of the sugar cane supplied.
HELD THAT:- The facts indicate that Kankhanis / Gang Leaders who supervise the work of cane harvesting labourers are registered with the appellant and it is seen that as per the requirements of the farmers, the services were made available for cane harvesting. However, utilisation of these services of the Kankhanis / Gang Leaders is optional as all the sugar cane farmers though registered with the factory for supply of sugar cane, have not utilized the services of the Kankhanis / Gang Leaders for cane harvesting. Even the service charges that are payable to these cane harvesting labourers is determined by the farmers in negotiation with the Kankhanis / Gang Leaders.
There is nothing on record to suggest that the cane cutting labourers are the employees of the appellant. No employer and employee relationship exists between the appellants and the Kankhanis / Gang Leaders. The labourers are not supplied on per hour or per day basis. Cane harvesting charges are reportedly negotiated with the Kankhanis / Gang Leaders by the farmers themselves. Reportedly, some farmers are not utilizing the services of the appellant for obtaining the labourers. As such, the demand raised on the appellant under manpower supply is not maintainable.
In a catena of decisions rendered by the Tribunal Chennai, the issue was decided in favour of the appellants holding that the supply of cane harvesting labourers, in similar facts, would not be falling under the manpower recruitment or supply agency service - reliance can be placed in M/S. ARIGNAR ANNA SUGAR MILLS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, TRICHY [2018 (9) TMI 387 - CESTAT CHENNAI] where it was held that Being a Government undertaking, it can be seen that all appointments are to be made in the muster roll of the sugar mill. From the facts on record, it cannot be said that the appellants have provided harvesting labourers to the sugarcane growers for harvesting the sugarcane.
The services of the appellant would not be classifiable under ‘manpower recruitment or supply agency’ service - Appeal allowed.
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2023 (6) TMI 1079
Deletion of penalty - failure to appreciate Rule 15(1) of CCR, 2004 which clearly states that it is a mandatory penalty thereunder to be imposed whenever CENVAT Credit is availed wrongly - requirement of any malafide or mens-rea required to be proved for invoking the said Rule or not - HELD THAT:- Reliance placed in the decision of a Larger Bench of the Tribunal in the case of M/S. SOUTH INDIAN BANK VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-CALICUT [2020 (6) TMI 278 - CESTAT BANGALORE]. In such order, this Court observed that in view of the decision rendered by the Larger Bench of the Tribunal, the order as impugned in the appeals filed by the assessees, (being the very same order as impugned in the present proceedings) could not be sustained and the same was required to be set aside, with a further direction that the appeals of the assessees on remand be decided afresh in the light of the decision rendered by the larger bench of the Tribunal in South Indian Bank. It is not in dispute that on the appeals filed by the respondents/assessees, similar orders were passed by a coordinate Bench of this Court.
The principal order subject matter of challenge in the present proceedings itself is set aside in the assessee’s appeals and that such appeals are remanded to the Tribunal and are subject matter of reconsideration before the Tribunal - Appeal disposed off.
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2023 (6) TMI 1078
Maintainability of appeal - monetary limit involved in the appeal - Interpretation of statute - Validity of sub-section 7(A) of Section 11 A of the Central Excise Act, 1944 - demand for a particular period for which Show Cause Notice was issued and not for the subsequent period - HELD THAT:- Paragraph 3 of the circular dated 17 August, 2011 states that adverse judgments relating to the following should be contested irrespective of the amount involved:
(a) Where the constitutional validity of the provisions of an Act or Rule is under challenge.
(b) Where Notification/ Instruction/Order or Circular has been held illegal or ultra vires.
It is thus clear from the above circulars which are binding on the revenue that the monetary limit for the revenue to approach this Court in an appeal would be when the claim amount is of Rs. 1 Crore and above. Thus in respect of a claim for an amount involving Rs. 1 Crore and below would not be maintainable as per the said circulars.
The appeal would not deserve adjudication and/or is not maintainable - Appeal dismissed.
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2023 (6) TMI 1077
Bogus purchases - Consequent bogus sales - as per HC as confirming ITAT and CIT(A) order addition is without any basis - Also as purchases made are not bogus purchases, the sales made out of such purchases cannot be treated as bogus sales - Disallowance of interest paid to Hawala operators be deleted as when the loan was received had not disallowed same as not genuine, having not disallowed the principal as not genuine, there is no justification for making any disallowance of interest paid to the above parties.
HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. The special leave petition(s) stand(s) dismissed accordingly.
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2023 (6) TMI 1076
Validity of assessment order - Jurisdiction to AO to adjudicate the assessment u/s 143(3) - While quashing the notice, High Court has granted the liberty to the department to initiate proceedings afresh as per law - Revenue contended that assessee is precluded from challenging the jurisdiction beyond the period of 30 days of the receipt of notice u/s 142(1) - HELD THAT:- As records also reveals that the assessee had participated pursuant to the notice issued u/s 142 (1) and had not questioned the jurisdiction of the assessing officer. Section 124(3)(a) of the Income Tax Act precludes the assessee from questioning the jurisdiction of the assessing officer, if he does not do so within 30 days of receipt of notice u/s 142 (1).
In the present case, the facts did not warrant the order made by the High Court. At the same time, this Court notices that the High Court had granted liberty to the concerned authority to issue appropriate notice.
AO is free to complete the assessment (in case the assessment order has not been issued) within the next 60 days. In such event, the question of limitation shall not be raised by the assessee.
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2023 (6) TMI 1075
Benami Property Transactions - Retrospective application of law enacted in the year 2016 - HELD THAT:- The issues raised in these petitions is squarely covered by the judgment of this Court in Union of India & Anr. Vs. Ganpati Dealcom Pvt. Ltd. (2022 (8) TMI 1047 - SUPREME COURT]
As petitioner(s) contends that review of the said judgment is pending. Since as of now the issue stands covered by the judgment in the case of Ganpati Dealcom Pvt. Ltd. case (supra), we dismiss these special leave petitions for the same reasons and ground.
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2023 (6) TMI 1074
Income deemed to accrue or arise in India - Taxability of amount received - PE in India - HELD THAT:- The issue raised by the Revenue in the present special leave petitions is covered against them vide judgment “Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT]
Ld' Additional Solicitor General states that a Review Petition has been filed against this judgment, which is currently pending and the right of the Revenue to revive the present special leave petitions may be reserved, in case the Review Petition is allowed.
Special leave petition is dismissed, as the same is covered by the said decision of this Court.
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2023 (6) TMI 1073
Maintainability of Writ Petition simultaneously while filing the statutory appeal before the CIT(A) - Rejection of application for rectification u/s 154 - Denial of full TDS credit - there is shortfall in the grant of tax credit that ought to have been as per Form 26AS available at that point in time - HELD THAT:- As petitioner has availed statutory remedies and rectification as well as appeal and as on date, the appeal filed by it challenging the very order impugned in this Writ Petition, is pending.
No justification for the petitioner to be permitted to ride multiple horses for the same cause of action. Hence, let the petitioner pursue the appeal filed before the first appellate authority. While disposing the appeal, the appellate authority, will needless to say, consider the full TDS available to the petitioner's credit at the relevant point in time.
Writ Petition stands dismissed in terms of the above order.
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2023 (6) TMI 1072
Assessment made u/s 147 r.w.s. 144 and 144B - Role of AO as adjudicator in making the computation - Petitioner submits, his client never had taxable income and this was the first assessment, consequent upon she having sold her property and it was land and building - HELD THAT:- As demand of tax and interest etc. was made consequent to discovery by revenue that there had been a high value transaction entered into by petitioner, on having sold her property. There is no other allegation or particulars of otherwise income had or concealed by petitioner, as appearing from impugned assessment order.
Here we must be mindful that the AO may, u/s 147 assess income having escaped assessment. In impugned assessment order, also stands invoked is section 144, providing for best judgment assessment. It is clear that the Parliament intended the AO to be both investigator, for purpose of detecting income having escaped assessment and adjudicator, for making the best judgment assessment. There does not appear to be any dispute that the property consisted of land and building and there is absence of enquiry on relief under section 148, the revenue was mandated to give.
In the present case the Assessing Officer abdicated his role as adjudicator in making the computation. In the circumstances, we are inclined to accept that petitioner deserves a further opportunity to file a return.
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2023 (6) TMI 1071
Validity of reopening of assessment - order passed u/s 148A(d) holding it to be a fit case for issuance of notice u/s 148 - AO as been stated that the earlier notice was set aside by this Court on the ground that mandatory provision of allowing not less than 7 days time to submit reply to the notice u/s 148A(b) was not afforded to her and, accordingly, in the light of the Court’s order, the assessee was allowed reasonable time of 15 days to submit her reply to the notice u/s 148A(b) dated 05.07.2022.
HELD THAT:- Statement referred to in the report of the Investigation Wing was not supplied to the petitioner, despite repeatedly demanded - Here is not a case where the AO did not have any information based on which a notice was issued to the petitioner under Clause (b). It is not in dispute that the copy of the report of the Investigation Wing available to the AO in the form of “not on J.M. Balanced Fund- Annual Dividend Option beneficiaries” was provided to the petitioner well in advance on 08.08.2022. It is not the petitioner’s case that the said information/report was wholly irrelevant for exercise of power u/s 147 of the Act. We reiterate that at the stage of taking decision under Section 148 AO is required to form an opinion based on information available before him, other materials on record and reply of an assessee submitted under Clause (b) of Section 148A of the Act, regarding “fitness of a case” for issuance of notice under Section 148A.
It would have been different matter had there been no information at all or information available with the Assessing Officer were though irrelevant, still the Assessing Officer reached a conclusion that it was a fit case for issuance of notice under Section 148 of the Act.
We, accordingly, do not find it a fit case for interference in exercise of writ jurisdiction under Article 226 of the Constitution of India. In any event, the petitioner is at liberty to raise all the aspects which are being raised in the present writ application before proceeding, consequent upon issuance of notice under Section 148 of the Act.
Whether there was no prior approval of the specified authority taken under Section 148(d) of the Act and the approval which was taken was under the proviso to Section 148 of the Act and for the said reason also, the impugned order is bad? - On comparative examination of Sections 148 and 148A of the Act, it can be easily culled out that Section 148A lays down the requisite conditions before issuance of a notice under Section 148 of the Act. The proviso to Section 148 restricts the Assessing Officer from issuance of a notice without prior approval of the specified authority. Section 148A lays down a procedure as a condition precedent for issuance of a notice under Section 148. The condition of prior approval of specified authority u/s 148 is satisfied once prior approval of specified authority is granted under Clause (d) of Section 148A of the Act, in our considered opinion.
We do not find breach of any mandatory requirement stipulated under Section 148A of the Act which would require this Court’s interference at the stage of issuance of notice, in exercise of extraordinary writ jurisdiction under Article 226 of the Constitution of India.
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2023 (6) TMI 1070
Exemption u/s 10(37) - interest received by the assessee on enhanced compensation u/s 28 of the Land Acquisition Act, 1984 - whether taxable being part of compensation? - HELD THAT:- As authorities below have treated interest received by the assessee on enhanced compensation u/s 28 of the Land Acquisition Act, 1984 as ‘Income from other sources’ and denied exemption u/s 10(37) of the Act.
The facts and circumstances of the present case are identical and similar to the case of Ram Kishan I [2020 (12) TMI 1244 - ITAT DELHI] wherein Tribunal categorically held that the interest received by the assessee u/s 28 of the Land Acquisition Act, 1984 on enhanced compensation is part and parcel of the compensation, if the agricultural land of the assessee has been acquired under compulsory acquisition and, thus, the same is exempt income u/s 10(37) of the Act. Appeal of the assessee is allowed.
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2023 (6) TMI 1069
Penalty u/s 271B - delayed filing of audit report u/s 44AB - HELD THAT:- As submitted that the assessee was unable to file the ROI along with tax audit report within the date stipulated in the notice u/s 148 due to Covid pandemic lock down and income tax portal was under maintenance, and the assessee has filed the tax audit report u/s 44AB during the course of assessment proceedings, which was also considered by the AO before concluding the assessment.
Thus, when the Tax Audit Report was made available to the AO before completion of assessment proceedings, then for venial technical breach without any mala fide intention of the assessee, the penalty cannot be levied u/s 271B.
Respectfully following the above decision of case of Balaji Logistics v. ACIT [2022 (9) TMI 1432 - ITAT CHENNAI] it is not a fit case for levy of penalty u/s 271B and penalty levied u/s 271B stands deleted - Decided in favour of assessee.
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2023 (6) TMI 1068
Denial of Registration u/s. 12AB - Assessee claimed that it has furnished all the details - CIT(E) noted that assessee did not furnish proper evidence in support of its reply and whatever was furnished was cryptic, inadequate and non-verifiable - HELD THAT:- The prescription of section 12AB(1)(b)(i) is that where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or subclause (v) of the said clause, CIT(E) may call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about - (A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects.
Having seen all the documents furnished by the assessee as called for by him, CIT(E) failed to point out anything adverse either against the genuineness of the activities of the trust or the compliance of other laws.
In our considered opinion, when the Trust Deed was there before the CIT(E) and the assessee furnished all the necessary details of the activities carried out up to the stipulated date, there was no reason for the ld. CIT(E) to deny the benefit of registration u/s. 12AB without specifically pointing out the nonfulfillment of the requisite condition(s) for the grant of registration. We, therefore, overturn the impugned order and direct to grant the registration u/s. 12AB of the Act.
The facts and circumstances for the other appeal in respect of rejection of approval u/s. 80G(5) are mutatis mutandis similar. CIT(E) has given the same reasons for denial of approval u/s. 80G(5) as were given in his order rejecting the grant of registration u/s. 12AB. Appeal against registration u/s. 12AB, we overturn the impugned order and direct to grant approval u/s. 80G of the Act. Appeal of assessee allowed.
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2023 (6) TMI 1067
Altogether new claim of capital losses in the revised return - Return filed within the due date prescribed u/s 139(5) but subsequent to the due date prescribed u/s 139(1) - whether the assessee is entitled to carry forward such capital losses claimed in the revised return? - Whether the loss claimed in the revised return meets requirement of S. 139(5)? - HELD THAT:- To be entitled to carry forward the business loss or capital loss, the assessee is required to file the return u/s 139(1) - Section 80 by a non obstante clause prohibits claim of carry forward of such losses unless determined u/s 139(3) - Section 139(3) in turn, makes the mandate of the law clear that the loss return must be filed within time limit permissible u/s 139(1) - The revision of return u/s 139(5) is also circumscribed by expression discovers any omission or any wrong statement in the original return.
In the instant case, the original return filed u/s 139(1) does not make reference to existence of any capital loss at all. The loss has been claimed for the first time in the revised ROI beyond the time limit prescribed under S. 139(1) - provision of S. 80 thus comes into play. The law codified thus is plain and concrete and does not admit of any ambiguity. The revenue authorities, in our view, have thus rightly held that the capital loss claimed beyond the time limit u/s 139(1) thus can not be carried forward u/s 74 of the Act in the factual matrix. We do not find any reason to think differently.
In the instant case, an altogether fresh claim of capital loss has been made in the revised return filed beyond 139(1) time limit. It is not a case of mere correction or modification in the existing claim of capital loss. The capital loss claimed when seen qua revised return filed under s. 139(5), the claim of carry forward thereof, clearly does not pass the muster of law. No error in the action of the revenue in denial of carry-forward of capital losses claimed in the revised return.
Whether Section 139(5) permits an assessee to file a revised return only if he discovers any omission or any wrong statement in the original return filed by him? - How and where the accounting entries in this regard has been made in the financial statement is totally unknown. How an inadvertent omission to account for such whopping losses has resulted, is not answered despite specific opportunity. The propriety of such capital loss itself is thus under cloud.
It is quite difficult to affirm that the omission or wrongful statement in the original return towards such colossal loss is sheer inadvertence and not deliberate or willful. Such claim of loss in the revised return without showing inadvertence even at the stage of second appeal thus has been rightly denied.
A reference to case of Kumar Jagdish Chandra Sinha[1996 (4) TMI 5 - SUPREME COURT] is quite apt to the facts of the case where was held that revised return can not be filed to cover up deliberate omission etc. in the original return. Thus, from this perspective also, phraseology of S. 139(5) does not permit claim of capital loss by way of a revised return. The claim of the Assessee towards incurring impugned capital loss and carry-forward thereof fails on this count too.
Assessee has failed to furnish any explanation whatsoever on the nature and character of transactions resulting in such capital loss. An unsubstantiated and uncorroborated claim is thus, in any case, untenable in law. Hence, on this score too, the claim does not meet the ingredients of provisions of S. 139(5) of the Act. Appeal of the assessee dismissed.
Disallowance of interest/financial charges - As per AO cash flow statement furnished by the assessee proves that interest expenses were incurred for the loans taken by it which was utilized for making investment in shares of NDTV Ltd. and hence it has nothing to do with the earning of interest income which was earned subsequently on fixed deposits made out of sale proceeds by a part of investment in shares - HELD THAT:- The interest income has arisen independently out of fixed deposits fixed with bank, the source of which in turn is sale of investments. The interest expenditure on the other hand has been incurred on borrowers utilized for investment in acquisition of shares of NDTV Ltd. Thus, apparently the assessee has failed to discharge the onus which lays upon it to show that incurring of expenditure has resulted in corresponding income taxable under the head ‘income from other sources’.
In the absence of any live nexus between the expenditure and the corresponding income, the Revenue Authorities have rightly disallowed the claim of interest expenses having regard to the narrower scope of deductions eligible u/s 57(iii) - We thus decline to interfere with the action of the Assessing Officer and the First Appellate Authority.
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2023 (6) TMI 1066
Reopening of assessment u/s 147 - Unexplained cash credit u/s 68 - assessment proceedings were initiated beyond 4 years - concept of “change of opinion” - whether assessee was not able to establish the genuineness of transactions and creditworthiness of creditors? - HELD THAT:- As during the scrutiny proceedings u/s 143(3) Assessee had already disclosed all the details and facts regarding the share application money on the specific query and considering the fact that the assessment proceedings were initiated on satisfaction borrowed from report of Investigation Wing, in the absence of any whisper or allegation on the Assessee regarding non disclosure of fully and truly all material facts in the reasons, in our considered opinion the proceedings initiated u/s 148 of the Act cannot be sustained.
It is well settled law that the AO cannot invoke the provisions of Section 147 & 148 of the Act merely on the change of opinion wherein the original assessment u/s 143(3) of the Act was completed after due consideration of the facts.
Thus reassessment proceedings initiated by the A.O. u/s 147/148 on mere change of opinion and reviewing the completed assessment is contrary to the settled position of law - Decided in favour of assessee.
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2023 (6) TMI 1065
Nature of expenditure - Machinery repairs – consumption of spares - revenue v/s capital expenditure - HELD THAT:- AO in the remand report has not given any specific findings as to how the said expenditure has given any enduring benefit to the assessee - no infirmity in the order of Ld. CIT(Appeals) while holding that machinery repairs / consumption of spares crores qualifies as revenue expenditure.
With respect to payment to NUOVO PIGNONE, in our view, CIT(A) has correctly observed that the same does not qualify as capital expenditure and further, on perusal of the details of expenditure, it is seen that these are annual maintenance charges paid by the assessee company and hence they are not on capital account.
Finally, with respect to plant repairs and maintenance expenditure expenses it is seen that majority of the expenses are below 25,000/-. Even CIT(Appeals) has not given any specific finding as to why the aforesaid expenditure should be treated on capital account and what enduring benefit has accrued to the assessee by way of the aforesaid expenditure.
We further observe that the aforesaid expenditure towards plant repairs and maintenance constitutes only 2.48% of the Gross Block of Plant and Machinery and further this percentage is lower as compared to the previous two assessment years i.e. AY 2006-07 (2.63%) and AY 2007-08 (2.62%). Accordingly, we are of the considered view that the aforesaid expenditure is allowable as revenue expenditure.
Loss accrued on foreign exchange derivatives - assessee entered into contracts to convert its export realization in Euro into USD to pay for its imports in USD.held that losses of foreign exchange derivatives on outstanding contracts are “notional and contingent” in nature and cannot be allowed as per Instruction No. 2/2020 issued by CBDT on 23.03.2010 - HELD THAT:- We observe that this issue is directly covered in favour of the assessee by order of ITAT Ahmedabad in assessee’s own case for A.Y. 2009-10, 2010-11 and 2011-12 in [2021 (11) TMI 766 - ITAT AHMEDABAD] wherein the ITAT has allowed the assessee’s appeal.
Disallowance on account of expenses claimed in respect of turnkey project - AO held that the assessee has only claimed the expenses on an estimated basis on “percentage of completion” of project and therefore, the said expenses were required to be capitalized since the assessee is following project completion method - HELD THAT:- The assessee has been consistently following the percentage completion method in earlier assessment years and also in the subsequent assessment years, and no defects have been pointed out in such method of accounting. During the course of assessment proceedings, the assessee has given complete details regarding income earned from such project and which was also accepted by Assessing Officer as taxable income on current year basis upon method of accounting regularly followed by the assessee. Accordingly, considering the facts of the instant case we are of the considered view that CIT(Appeals) has not erred in facts and in law in holding that the aforesaid expenditure is allowable as revenue expenditure.
Disallowance u/s 14A - assessee earned exempt dividend income and made a suo moto disallowance - HELD THAT:- CIT(Appeals) has not erred in facts and in law in restricting the addition made under section 14A of the Act to the amount of exempt income earned by the assessee.
Addition u/s 115JB - AO disallowed the expenditure computed u/s 14A while calculating book profit u/s 115JB - HELD THAT:- It is a well settled principle that the amounts disallowed under Section 14A r.w.r. 8D cannot be added to net profit while computing books profits under Section 115JB of the Act.
Recently, in the case of Atria Power Corporation Ltd. [2022 (8) TMI 1322 - SC ORDER] dismissed the SLP of the Department against High Court ruling that disallowance made u/s14A could not be added in assessee-company's income for purpose of computation of income under section 115JB
Also in the case of J.J. Glastronics (P.) Ltd. [2022 (4) TMI 1187 - KARNATAKA HIGH COURT] held that amounts disallowed under section 14A could not be added to net profit while computing book profit under section 115JB of the Act. Also in the case of Vireet Investment (P.) Ltd [2017 (6) TMI 1124 - ITAT DELHI] held that computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A read with rule 8D.
Addition u/s 41(1) as deemed income of the assessee - HELD THAT:- Since there was noting on record to indicate that there was cessation of liability during the year under consideration. Therefore, this ground of appeal of the revenue is dismissed.
Disallowance u/s 40(a)(i) - sales commission expenses and recruitment expenses on the ground that assessee has not deducted TDS on the aforesaid payments - HELD THAT:- We observe that with respect to payments towards recruitment charges similar issue has been decided in favour of the assessee, in assessee’s own case [2021 (11) TMI 766 - ITAT AHMEDABAD] by ITAT Ahmedabad for A.Ys. 2009-10, 2010-11, 2011-12 as held since the Assessing Officer has not disproved the fact that assessee has made payment on account of reimbursement of expenditure on which no TDS is deductable. Therefore, this ground of appeal of the Revenue stands dismissed.
No TDS was required to be deducted on payments made towards reimbursement of recruitment charges.
With respect to commission paid to various parties for services carried out outside of India and is related to earning of income outside of India and hence, such payment falls within the Exceptions provided in Section 9(1)(vii)(b) of the Act. We observe that the Ld. D.R. has not brought anything to controvert the findings given by Ld. CIT(Appeals). It is a well settled law that sales commission paid to agents outside of India, who are having no permanent establishment in India, in respect of services rendered outside of India and related to earning of income outside of India by the assessee cannot be subject to TDS under the Act. Accordingly, CIT(Appeals) has not erred in facts and in law in deleting the aforesaid addition.
Disallowance u/s 92CA - assessee had granted loans to various Associated Enterprises and assessee had calculated arms’ length interest of LIBOR plus 2.5% i.e. 7.69% in USD terms and notional interest income was offered to tax - HELD THAT:- In the instant case, the assessee has worked out the ALP at LIBOR plus 2.5%. Further, the Ld. CIT(Appeals) has also not appreciated the fact that the mark-up of 3.72% computed by the TPO works out to nearly 72% of LIBOR which in our view, is quite excessive. Accordingly, we are of the considered view that the assessee is justified in computing the ALP at 7.69% (i.e. at LIBOR plus 2.5%) and the appeal of the assessee is allowed with respect to this Ground of Appeal.
Disallowance in respect of late payment of employees’ contribution to PF & ESI - HELD THAT:- As in the case of Checkmate Services (P.) Ltd. [2022 (10) TMI 617 - SUPREME COURT] wherein the Supreme Court held that for assessment years prior to AY 2021-22, non obstante clause under section 43B could not apply in case of amounts which were held in trust as was case of employee's contribution which were deducted from their income and was held in trust by assessee-employer as per section 2(24)(x), thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction.
Where assessee-company failed to pay employees’ contribution towards EPF and ESI within due date prescribed in respective Acts, deduction under section 36(1)(va) was not allowable.The issue is decision in case of Gujarat State Road Transportation Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT] wherein it was held that where assessee did not deposit employees' contribution to employees' account in relevant fund before due date prescribed in Explanation to section 36(1)(va), no deduction would be admissible even though he deposits same before due date under section 43B of the Act.
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2023 (6) TMI 1064
Deduction of club membership fees paid to Cricket Club of India - Membership in the name of Director - Business Expenditure or not - Business was closed / wounded up as the company was converted to LLP - HELD THAT:- The facilities of the Club would be utilized by the director/partner for meeting and interacting with other members of Cricked Club of India and thus would ultimately benefit the assessee (even though converted to LLP).
The Kolkata Tribunal in the case of M/s. MKJ Tradex Ltd [2018 (3) TMI 1172 - ITAT KOLKATA] has succinctly described the advantage of assessee company/its employees becoming members of a club which is not repeated again for the sake of brevity. Since the assessee company functions through the director/share-holders and even though converted to LLP, still will be functioning through the key persons; and it is noted that membership was for Shri. Anand Didwania, who was a director & later partner of LLP and so, is a key person of assessee company/LLP.
So entrance fees paid by the assessee on behalf of Shri Anand Didwania for becoming member of the Cricket Club of India would inure benefits for the business of the assessee/LLP. And therefore, in the light of decision in the case of United Glass MFG Co. Ltd. [2012 (9) TMI 914 - SUPREME COURT] it is held to be an allowable deduction in the facts and circumstances of this case. Therefore, AO is directed to delete addition - Appeal of the assessee is allowed.
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2023 (6) TMI 1063
TP adjustment towards payment of central services - inter group services - HELD THAT:- The assessee has submitted evidences not only demonstrating the rendition of central services but also commensurate benefits derived from such services to the assessee.
The assessee has done the bench marking analysis similar to AY 2015-16 and 2016-17 for the year under consideration also and therefore the impugned issue is squarely covered by the above decision of the coordinate bench and therefore respectfully following the same we direct the AO/TPO to delete the addition made towards inter group services.
Disallowance u/s 14A r.w.r. 8D - AR submitted that the assessee’s suo-moto disallowance is appropriate and scientific - HELD THAT:- For the year under consideration assessee has investments the details of which has already been furnished before the AO. As noticed that that AO has applied Rule 8D without having recorded his satisfaction or examining the nature of investments whether they have yielded any exempt income or not. Therefore respectfully following the above decision of the coordinate bench in assessee's own case we delete the disallowance made by the assessing officer.
Disallowance of ESOP expenditure - ESOP expenses has not crystalised and that the same is capital in nature - HELD THAT:- As decided in assessee own case [2023 (3) TMI 1376 - ITAT MUMBAI] we hold that the addition made by the AO towards ESOP expenses be deleted.
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