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2018 (7) TMI 1967
Title: Supreme Court of India dismisses special leave petition
Summary: The Supreme Court of India, with judges Mr. A.M. Khanwilkar and Dr. D.Y. Chandrachud, declined to interfere with the High Court's order. The special leave petition was dismissed, and any pending interlocutory application was also disposed of.
Citation: 2018 (7) TMI 1967 - SUPREME COURT OF INDIA
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2018 (7) TMI 1966
Revision u/s 263 - patent error in the assessment order passed by the AO u/s 143(3) r.w.s. 153A allowing legally wrong claim of additional depreciation - Tribunal was justified in law in quashing the order passed by the Pr.CIT u/s 263 - HELD THAT:- Tribunal allowed the Respondent Assessee's appeal before it by following the decisions of this Court in CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT] and CIT (Central), Nagpur v. Murli Agro Products Ltd. [2010 (10) TMI 1052 - BOMBAY HIGH COURT] . Therefore, the issue so far as this Court is concerned, the question on merits would stand concluded favour of the Respondent Assessee and against the Appellant Revenue. However, it is his submission that Karnataka High Court has in Canara Housing Development v. DCIT Circle 1(1) [2014 (8) TMI 642 - KARNATAKA HIGH COURT] has taken a different view. But even if it so, that is of no avail. The Authorities within the State of Maharashtra are bound by the decisions of this Court and, therefore, the impugned order of the Tribunal cannot be found fault with. No substantial question of law
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2018 (7) TMI 1965
Transfer of shares - validity concerning transfer of shares belonging to petitioner No. 1 to his mother-respondent No. 2 Mrs. Smiti Golyan - Whether 466600 equity shares of ₹ 10/- each held by Yash Golyan have been illegally transferred at the instance of Respondent No. 3 & Others to Mrs. Smiti Golyan-respondent No. 2?
HELD THAT:- When the facts of the present case are examined, it becomes evident that no transfer deed was presented to the registrar. Respondent has miserably failed to show the existence of any transfer deed by adducing in any evidence. Therefore, the mandatory provisions of Section 108 of the Act have been followed. Photocopies of 19 certificates (duplicate) have been produced by the respondent. It appears that the original were not produced before the Registrar of Companies. The backside of the certificate showing transfer endorsement in favour of respondent No. 2 on 14.02.2014 has not been endorsed by the Registrar of Company. It is further doubtful that after the silver jubilee marriage anniversary was celebrated at Kou Samui, Thailand then how on 14.02.2014, these shares certificates duly signed by Mrs. Smiti Golyan were available in Delhi with respondent No. 1 company.
No transfer of shares belonging to petitioner No. 1 has ever taken place in accordance with the provisions of Section 108 (1) (a) of Companies Act. It has also been established that so-called gift deed and the writings prepared on 23.01.2014 with a manipulated document cannot be regarded as an expression of free Will to gift 466600 shares to respondent No. 1 company reflected through 19 share certificates and the same is vitiated in the eyes of law.
Petition allowed.
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2018 (7) TMI 1964
Assessment u/s 144C - whether final order of assessment was not passed within the time limits prescribed by law and therefore the same being bad in law is liable to be quashed? - HELD THAT:- In the case on hand, the DRP issued its directions on 17.12.2015 and while the same were admittedly received by the Assessing Officer on 29.12.2015, the final order of assessment was passed on 18.02.2016. According to the assessee, this final order of assessment for Assessment Year 2011-12 is bad in law since it was not passed within one month from the end of the month in which the DRP directions were received. This ground was considered and decided against the assessee by a co-ordinate bench of this Tribunal in the assessee's own case for the very same Assessment Year 2011-12 [2017 (8) TMI 409 - ITAT BANGALORE] as held the proceedings cannot be declared as null and void simply because the AO passed the assessment order beyond the period prescribed there under. In the circumstances, grounds relating to limitation, raised by the assessee-company are dismissed
TP adjustment - selection of MAM - TP Study / documentation done adopting TNMM as the Most Appropriate Method (MAM) and the TPO’s adoption of CPM as the MAM in place of TNMM - HELD THAT:- In the case on hand, the net margin earned by the assessee in respect of personal care division in the domestic segment at 11.30% was compared to the net margin from exports to AEs at 15.80%. Since the net margin from exports to AEs was higher than the net margin from domestic sales to unrelated parties, the assessee concluded that its exports to AEs were at arm’s length. The TPO has taken AE sales comprising of both pharma and personal care products and compared the same with the personal care products of the domestic segment. Since the products compared are different, consequently the gross profits are also different.
The number of differences and adjustments to be carried out for comparison purposes of the TPO’s order are large in number and therefore where differences are many, CPM cannot be considered as MAM. CPM adopted by the TPO is incorrect and contrary to the facts of the instant case and that the assessee is justified in adopting TNMM for determining the ALP in respect of finished goods exported to AEs. Transfer Pricing Adjustment made by the TPO by adopting CPM is accordingly deleted. - Decided in favour of assessee.
TP adjustment on Advertisement, Marketing & Sales Promotion (AMP) Expenses - TPO has made the Transfer Pricing Adjustment in respect of AMP expenses on the ground that the said expenditure has resulted in promotion of the brand ‘Himalaya’ owned by M/s. Himalaya Global Holdings Ltd., Cayman Islands and has applied the ‘Bright Line Test’ for this purpose - HELD THAT:- Neither the TPO nor the Assessing Officer has brought on record any material evidence to substantiate the existence of any agreement or arrangement, either express or implied between the assessee and ‘HGH’, Cayman Islands for promotion of its brand. The Hon'ble High Court of Delhi in a series of decisions, inter alia, including the case of Maruti Suzuki India Ltd. Vs. CIT [2015 (12) TMI 634 - DELHI HIGH COURT] emphasized the importance of Revenue having to first discharge the initial burden upon it with regard to showing the existence of an international transaction between the assessee and the AE.
Requirement of there being an international transaction has not been satisfied in the case on hand - the net margin from exports to AEs at 15.80% is more than the net margin earned by the assessee in respect of personal care product division in the domestic argument at 11.30%. In the factual matrix of the case, as discussed above, the ALP of the assessee's international transactions with its AEs were at Arm’s Length and therefore no separate adjustment for AMP expenditure is called for. Transfer Pricing Adjustment made by the TPO in respect of AMP expenditure is to be deleted. - Decided in favour of assessee.
Charging of Interest u/s. 234B & 234C is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala [2001 (10) TMI 4 - SUPREME COURT] and we therefore uphold the action of the Assessing Officer in charging the said interest in the case on hand.
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2018 (7) TMI 1963
Initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:-- In the present appeals, as the principle amount has already been paid and as per agreement no interest was payable, the applications under Section 9 on the basis of claims for entitlement of interest, were not maintainable. If for delayed payment Appellant(s) claim any interest, it will be open to them to move before a court of competent jurisdiction, but initiation of Corporate Insolvency Resolution Process is not the answer.
Appeal dismissed.
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2018 (7) TMI 1962
Deduction u/s 80IC - substantial expansion - manufactures and undertakes substantial expansion during the eligible period - HELD THAT:- The issue raised in this appeal squarely covered by the decision of the Tribunal in the case of M/s Security Products Pvt. Ltd. vs. DCIT, Circle, Parwanoo [2018 (2) TMI 163 - ITAT CHANDIGARH] wherein the Tribunal while relying upon the decision of the Hon'ble Himachal Pradesh High Court in the case of M/s Stovekraft India Vs. Commissioner of Income Tax, [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] wherein held the Revenue has not disputed, (a) the units having carried out substantial expansion within the definition of the Section, (b) their entitlement and extent of deduction would be dependent upon interpretation of the relevant provisions.
No justification at this stage to give the Assessing officer a second innings to re-examine undisputed facts. - Decided against revenue
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2018 (7) TMI 1961
Initiation of Corporate Insolvency Resolution Process - Section 7 of I&B Code - eligibility criteria regrading requirement of minimum tangible net worth for one or other category of Resolution Applicants - HELD THAT:- The question of eligibility criteria regrading requirement of minimum tangible net worth for one or other category of Resolution Applicants and other criteria are matter which can be dealt with by expert committee like Committee of Creditors, we hold that the Adjudicating Authority has no jurisdiction to sit in appeal over the decision of expert bodies relating to eligibility criteria till it is not shown that the same is perverse or against any of the provisions of I&B Code or existing law.
The impugned order set aside and the Resolution Professional and the Committee of Creditors is directed to complete the process immediately.
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2018 (7) TMI 1960
Penalty u/s 271(1)(c) - addition towards 14A, claim for membership fees and interest on late payment - HELD THAT:- It is evident from the discussion made above that such penalty has been imposed on making disallowance of certain expenses. But for that, there is nothing on record to show that the assessee lodged bogus claims in respect of these expenses. That apart, the expenses were claimed by the assessee in a bona fide manner. The mere fact that the above disallowances have been made do not bring a case within the parameters set out in section 271(1)(c)
Hon’ble Supreme Court in CIT vs. Reliance PetroProducts Private Ltd. [2010 (3) TMI 80 - SUPREME COURT] has held that a mere making of a claim which is not sustainable in law, by itself will not attract penalty 271(1)(c) when the assessee furnishes all the relevant particulars in his return which are not found to be inaccurate. There is no dearth of decisions holding that penalty under section 271(1)(c) cannot be imposed on disallowance of expenses, which were not otherwise bogus. Penalty deleted - Decided in favour of assessee.
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2018 (7) TMI 1959
TDS u/s 195 - Disallowance u/s. 40(a)(i) - TDS was not made on the commission paid to foreign entity for the services rendered abroad - DTAA between India and USA - HELD THAT:- Provisions of Section 195 would not be applicable to the commission payments made by assessee to non-resident agent who has not done any service in India and as such income is not chargeable to tax under the provisions of the Act as there is no requirement to do any TDS u/s. 195, the disallowance made u/s. 40(a)(i) is also not survive.
CIT(A) without understanding the international law has simply held that a foreign agent and the Indian company are sister concerns and accordingly the amounts are taxable. Even if one were to consider that other company is a sister concern of assessee, how the provisions of Section 195 or Section 5 and Section 9 are applicable has not been discussed by CIT(A) at all.
The provisions of DTAA between India and USA also gives the right to tax the amount in the hands of foreign assessee if the same is considered as business income when there is no permanent establishment in India. Since the non- resident has no permanent establishment in India, the question of taxing the amount does not arise as the provisions of DTAA which over rides the provisions of Income Tax Act. In view of that, the order of CIT(A) cannot be upheld. Similar view was also expressed by the Co-ordinate Bench in the case of Dy.CIT Vs. M/s. Linkwell Telesystems (P.) Ltd. [2014 (1) TMI 1863 - ITAT HYDERABAD] wherein also commission was paid to non-residents for the services rendered abroad and was held not taxable. In view of that, we cannot uphold the orders of AO disallowing the amount u/s. 40(a)(i). - Decided in favour of assessee.
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2018 (7) TMI 1958
Disallowance of deduction u/s 35(1)(ii) - donation made to School of Human Genetics & Pollution Health - Addition based on statements recorded from key persons of the Trust - opportunity of crossexamination has not been provided in this case - denial of naural justice - HELD THAT:- The statement recorded from Shri Avijit Sinha Roy u/s 131 of the Act, on 13/04/2015 he states that after the month of February, 2011, he left this bogus donation work. On the other hand, he has signed a declaration on 30/07.2015. The list prepared by the revenue was signed with a remark that he has seen the list. There is a contradiction in these two. In such circumstances, it has to be seen as to which is correct.
No opportunity of cross-examining Shri Avijit Sinha Roy has been provided to the assessee. Hence the declaration as well as the statement cannot be the basis of addition. Similarly, the statement of the key persons of the trust cannot be the basis of addition as no cross-examination of witness was provided. No proof of money being returned is available with the revenue. As relying on TUSHAR CHAWDA VERSUS I.T.O., WARD-31 (4) , KOLKATA [2018 (3) TMI 1405 - ITAT KOLKATA] we delete this addition and allow this appeal of the assessee.
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2018 (7) TMI 1957
Project import - CENVAT Credit - time limitation - credit denied on the ground that since the capital goods were imported after 1.3.1997, credit was available only to an extent of 75% of the duty paid as against 100% credit availed - HELD THAT:- Rule 57U of the erstwhile Central Excise Rules, 1944 specifically deals with the eventuality in cases where no return in terms of sub-rule (10) of Rule 57T is filed - In the present case the SCN was issued beyond the period of six months from the relevant date i.e. date of filing of return of November 1997. Hence, the finding of the Commissioner (Appeals) that due date for filing return only is to be taken for computing the period of limitation cannot be faulted with.
Appeal dismissed - decided against Revenue.
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2018 (7) TMI 1956
Adjustment of ALP by TPO in respect of guarantee fee in respect of corporate guarantee provided to the assessee’s foreign subsidiary - HELD THAT:- Rate adopted was in the range of 0.25% - 0.50%. These rates were in case of corporate guarantee whereas in case of assessee, it is issuance of SBLC. Hence, the said rates are not applicable in case of the assessee. We observe that the assessee has been charged a rate of 0.9% by an Indian bank for SBLC. This is a clear case of internal CUP. Further, in this case, the DR has not raised any objection on adoption of internal CUP of 0.9% p.a. Hence, in our opinion since the internal CUP is available with the assessee, the said rate of commission of 0.9% p.a. should be considered as arm’s length rate of commission. Accordingly, AO is directed to compute guarantee fees @0.9%.
Addition on account of interest charged - loan advanced to AE - HELD THAT:- Issue under consideration is squarely covered by the decision of Delhi High Court in the case of Cotton Naturals (I) Pvt. Ltd. [2015 (3) TMI 1031 - DELHI HIGH COURT] wherein it was held that arm’s length interest rate for loan advanced to foreign subsidiary by the Indian company should be computed based on market determined interest rate applicable to currency in which loan has to be repaid. Respectfully following the proposition laid down by Delhi High Court, we direct the AO to compute interest as per the interest rates applicable to currency in which loan was required to be repaid by the assessee.
Claim of deduction u/s.35D and depreciation u/s.32(1)(ii)(a) - appellate authority power to accept the additional grounds - HELD THAT:- We found that issue is now squarely covered by the decision of Bombay High Court in case of Godrej & Boyce Mfg. Ltd., [2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein it was held that appellate authority has the power to accept the additional grounds. Accordingly, we accept the ground raised and restore the matter back to the file of the AO for deciding afresh after giving due opportunity to the assessee. Accordingly, both the issues regarding revised claim of deduction u/s.35D and additional depreciation u/s.32(1)(a) of the Act is restored back to the file of the AO for deciding afresh.
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2018 (7) TMI 1955
TP adjustment - international transactions pertaining to intra-group services received by the assessee (i.e. MSU charges, G&A charges, payroll expenses and joint acquisition and development of IT infrastructure and software) were benchmarked by the assessee applying Transactional Net Margin Method ('TNMM') - HELD THAT:- As decided in own case [2017 (4) TMI 1145 - ITAT DELHI] we deem it necessary to remand this issue to ld. DRP to decide afresh to benchmark the international transactions undertaken by the taxpayer by applying the TNMM as MAM by providing an opportunity of being heard to the taxpayer
TP adjustment on account of interest on payment of loan - assessee submitted that in terms of the PSC, the assessee is required to contribute its share of the funds for the planned activities under the work program - HELD THAT:- As decided in own case [2017 (4) TMI 1145 - ITAT DELHI] whatever has been stated by the Ld. Transfer Pricing Officer without applying the provisions of law to the facts of the case before them. In view of this we set aside the whole matter of determination of ALP of interest paid by the Assessee to its associated enterprise back to the file of the Ld. Transfer Pricing Officer with a direction to examine the computation of ALP by the Assessee of above transaction strictly in accordance with the provisions of section 92C of the Income Tax Act considering the evidences placed by the Assessee before him and then decide the issue of adjustment, if any, on merits.
Disallowance of branch office expenditure by treating the same as preoperative expenditure - expenses allowable under section 37(1) - HELD THAT:- We find identical issue had come up before the Tribunal in assessee’s own case as held Assessing Officer nor the Ld. Departmental Representative could press any other judicial precedent which shows that amount spent by the assessing is not allowable as revenue expenditure under section 37 (1) of the act. It is also not the argument of the revenue that such expenditure incurred by the Assessee is capital in nature. Furthermore, the Ld. AR has also pressed into several decisions which say that that expenses incurred towards extension of business which was subsequently abandon or did not fructify, are allowable. Therefore in view of the above decisions wherein it is been held that the expenses for purchase of this kind of data is unnecessary revenue expenditure required to be incurred by the Assessee for the purpose of its business and hence is allowable as revenue expenditure, we also direct the Ld. Assessing Officer to allow the expenditure incurred by the Assessee on purchase of data and other relevant expenses
Disallowance of expenditure incurred on non-producing PSC - HELD THAT:- Taxpayer has brought on record the complete details of the expenditure incurred and there is no dispute between the parties to the appeal that all the expenses have been incurred for furtherance of its business, though incurred in support to the PSC contracts executed by the taxpayer, the same cannot be disallowed merely on the ground that it is not shared by others, particularly, when it is not disputed that these expenses have been incurred wholly and exclusively for the purpose of business of taxpayer.
AO has not disputed the incurrence of expenses for the purpose of business. Even otherwise, the expenses incurred by the taxpayer for furtherance of its business cannot be disallowed merely on the ground that the other party in the joint venture has not agreed to share the particular cost incurred by one party to the joint venture. So, following the decision rendered by the coordinate Bench of the Tribunal in taxpayer’s own case for AY 2010-11 , the disallowance made by the AO/DRP is not sustainable in the eyes of law
Disallowance of expenses paid by the assessee to BGIL - expenses not borne by the operator board of the PSC and, therefore, cannot be allowable as deduction to the extent of 5% of adjusted total income in terms of section 44C - HELD THAT:- identical issue had come up before the Tribunal in assessee’s own case in the immediately preceding assessment year and the Tribunal has allowed the claim of the assessee at para 31 of the order holding that cost of services availed by the assessee from its group company cannot be disallowed in the hands of the assessee merely because the said expenditure has not been borne by the J.V. Partners. It is an admitted fact that the Assessing Officer/TPO/DRP had not the benefit the order of the Tribunal which was passed subsequent to the orders passed by them. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the Assessing Officer/TPO for adjudication of the issue afresh.
Disallowance of depreciation of Panna Well Cost - HELD THAT:- We deem it proper to restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate his case as per the direction of the DRP. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly.
Disallowance of depreciation on the IT infrastructure and software - HELD THAT:- Since the assessee in the instant case has not filed the documentary evidences before the Assessing Officer substantiating that the assets were put to use for the business of the assessee, therefore, we in the interest of justice deem it proper to restore the issue to the file of the Assessing Officer/TPO to adjudicate the issue afresh after giving due opportunity of being heard to the assessee. While doing so, the Assessing Officer/TPO shall keep in mind the order of the Tribunal in assessee’s own case in the immediately preceding assessment year.
Disallowance of interest expenses as capital in nature - HELD THAT:- This issue should be restored to the file of the Assessing Officer for proper verification. We therefore restore the issue to the file of the Assessing Officer/TPO with a direction to verify the details and adjudicate the issue afresh after giving due opportunity of being heard to the assessee
Additional depreciation u/s 32(1)(iia) on the new plant and machinery purchased and put to use during the relevant assessment year - AO and the DRP did not admit the claim of the assessee on the ground that such claim can be made only by way of filing a revised return of income - HELD THAT:- CIT(A) having coextensive power over the assessment could deal with the claim made for the first time during the course of assessment proceedings and (b) it is open to the assessee to enlarge the claim before the Assessing Officer through a letter filed during the course of assessment proceedings without filing a revised return of income. In view of the same, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to verify the allowability of the claim and if the assessee is otherwise eligible for such additional depreciation then allow the same.
Short credit of TDS - HELD THAT:- We restore the issue to the file of the Assessing Officer with a direction to verify the same and allow the TDS credit as per law.
Interest charged u/s 234B - HELD THAT:- The Finance Act, 2012 w.e.f. 1.4.2012 added proviso below section 209(1)(d) , the said proviso in our opinion is applicable from assessment year 201314 and is, therefore, prospective in operation. The insertion of the proviso cannot be construed to have retrospective effect so to expose a non-resident company to levy of interest u/s 234B of the Act for assessment years prior to assessment year 2013-14, where tax was deductible at source on the income payable to the non-resident, if such income is held to be chargeable to tax in India. Accordingly, this ground raised by the assessee is allowed.
Interest u/s 234C - same is leviable only on the returned income and not on the assessed income as held in various decisions. We therefore direct the Assessing Officer to compute the interest u/s 234C on the basis of the returned income.
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2018 (7) TMI 1954
TP Adjustment - Erroneous rejection of Transactional Net Margin Method ("TNMM") - selection of Comparable Uncontrolled Price ("CUP") Method - TPO has rejected the TNMM as MAM used by the taxpayer to benchmark its international transactions qua intra group services and business support services - HELD THAT:- following the decision rendered by the coordinate Bench of the Tribunal in taxpayer’s own case for AY 2010-11 [2017 (4) TMI 1145 - ITAT DELHI] we deem it necessary to remand this issue to ld. DRP to decide afresh to benchmark the international transactions undertaken by the taxpayer by applying the TNMM as MAM by providing an opportunity of being heard to the taxpayer, in the light of the decision rendered by the coordinate Bench of the Tribunal in AY 2010-11.
Disallowance of exploration and business development expenses incurred by the Branch Office by treating the same as pre-operative in nature - Allowable expenses u/s 37 - expenses incurred for sustenance of the business - HELD THAT:- Neither the AO nor the DR could press any other judicial precedent which shows that amount spent by the assessing is not allowable as revenue expenditure under section 37 (1) of the act. It is also not the argument of the revenue that such expenditure incurred by the Assessee is capital in nature. Furthermore, AR has also pressed into several decisions which say that that expenses incurred towards extension of business which was subsequently abandon or did not fructify, are allowable. Therefore in view of the own case [2017 (4) TMI 1145 - ITAT DELHI] wherein it is been held that the expenses for purchase of this kind of data is unnecessary revenue expenditure required to be incurred by the Assessee for the purpose of its business and hence is allowable as revenue expenditure, we also direct AO to allow the expenditure incurred by the Assessee on purchase of data and other relevant expenses
AO is directed to allow the expenditure incurred by the taxpayer on cost of purchase of seismic data, general and administrative expenses in connection with proposed NELP-VIII and staff cost and project management and consultancy charges
Disallowance of expenditure incurred by the taxpayer on non-producing block - the expenditure incurred by the taxpayer in other PSCs prior to commercial production shall be aggregated and claimed only from the year of commercial production - expenses incurred by the taxpayer concerning oil blocks where commercial productions has not yet started has to be amortized and carried over and can be set off only when revenue is earned from such oil blocks after commencement of commercial production - AO invoked section 42 to disallow the expenses - HELD THAT:- Taxpayer has brought on record the complete details of the expenditure incurred and there is no dispute between the parties to the appeal that all the expenses have been incurred for furtherance of its business, though incurred in support to the PSC contracts executed by the taxpayer, the same cannot be disallowed merely on the ground that it is not shared by others, particularly, when it is not disputed that these expenses have been incurred wholly and exclusively for the purpose of business of taxpayer. AO has not disputed the incurrence of expenses for the purpose of business. The expenses incurred by the taxpayer for furtherance of its business cannot be disallowed merely on the ground that the other party in the joint venture has not agreed to share the particular cost incurred by one party to the joint venture. So, following the decision rendered by the coordinate Bench of the Tribunal in taxpayer’s own case for AY 2010-11 (supra), the disallowance made by the AO/DRP is not sustainable in the eyes of law
Addition of sum claimed by the taxpayer @ 6% as loss on transportation of gas - the provision for transportation loss can be equated to the provision of expenses paid at the year end - HELD THAT:- As admitted case of the taxpayer that during the AY 2016-17, independent expert appointed by the joint venture partners had determined the loss on condensate at 1.7% and without prejudice, the taxpayer also made a prayer for allowing the loss of transport of condensate @ 1.7% during the year under assessment, we are of the considered view that when undisputedly as per settlement agreement entered into between the taxpayer, ONGC and Reliance Industries Limited with ONGC (transporter) for transportation of gas and condensate, the loss is to be determined by the expert appointed by the joint venture partners, there is no question to resort to the estimation to claim such loss. In AY 2016-17, loss has been determined by the expert appointed as per settlement agreement @ 1.7%. So, we are of the considered view that the matter is required to be remanded back to the AO to decide afresh after providing an opportunity of being heard to the taxpayer by following the rule of consistency.
Write back of provisions of doubtful debts - AO taxed write back amount of ₹ 20,67,360/- on the ground that the taxpayer has not given any reason for writing back provisions for doubtful debts and claiming the same as expenditure in the computation of income - as contended by AR that the AO has failed to appreciate that provisions for doubtful debts credited in the preceding year has not been claimed as deduction in the year in which such provision was credited - HELD THAT:- The contention raised by ld. AR for the taxpayer is sustainable because when the provisions of doubtful debts of ₹ 20,67,360/- credited in the preceding year has not been claimed in the year in which such provisions were credited, the write back of the same in the subsequent year i.e. year under assessment is not taxable as it would amount to double taxation. So, we are of the considered view that it is merely an arithmetic calculation and AO to verify the same and to decide accordingly
Disallowance of exchange loss on interest on BG Asia Pacific Pte Ltd. loan - loan itself is being treated as a colourable device used by the taxpayer to increase its cost and reduce profits - AR contended that when the exchange loss is incurred by the taxpayer debited to the profit & loss account as per PSC where foreign exchange loss is considered as an allowable deduction, AO has erred in disallowing the same - HELD THAT:- As relying on case of ENRON OIL AND GAS INDIA LTD. [2008 (1) TMI 319 - UTTARAKHAND HIGH COURT] foreign exchange loss incurred by the taxpayer has been debited to the profit and loss account as per specific provisions of PSC, wherein foreign exchange loss is treated as an allowable deduction but AO/DRP have erred in disallowing the same. So, we order to delete the disallowance
Addition of head office expenses - restricting allowability of these expenditure to 5% of the adjusted total income of the taxpayer by invoking the provisions contained u/s 44C - HELD THAT:- Following the decision rendered by the coordinate Bench of the Tribunal in taxpayer’s own case for AY 2010-11, we are of the considered view that the cost of services availed of by the taxpayer required by PSC with regard to its standard of operation including the quality of execution of work, access to latest industry information and global updates, safety of its employees and the environment etc., cannot be disallowed merely on the ground that the said expenses have not been borne by the joint venture partner, particularly when it is not disputed by the Revenue that the expenditure were made for commercial expediency. So, we hereby order to allow the claim of the taxpayer for deduction of the expenses incurred by the taxpayer.
Disallowance of inventory written off - certain internal documents furnished by the taxpayer are not enough for allowing of theses expenditure - AR contended that the expenditure has been claimed as per method of write off obsolete inventory in accordance with the system of accounting regularly followed and relied upon Note-II of Financial Statements - HELD THAT:- When the taxpayer has prepared obsolete inventory in accordance with the system of accounting regularly followed by it in compliance to section 211 (3C) of the Companies (Accounting Standards) Rules, 2006 as amended and other relevant provisions of the Companies Act, 1956 and has duly got prepared audited report of an independent auditor on the basis of physical verification and in view of the maintenance of inventory, the disallowance made by the AO/DRP is not sustainable in the eyes of law. See ALFA LAVAL (INDIA) LIMITED. [2007 (11) TMI 281 - SUPREME COURT] - when complete details about the inventory written off has been given sufficient to identify items of inventory to be written off in the books of account, the same is required to be allowed. AO is directed to allow the amount on account of inventory written off after due verification
Disallowance of depreciation and depletion - addition being the difference of depreciation/ depletion amount between the tax audit report and the computation - HELD THAT:- When the taxpayer has duly explained that the difference of depreciation of ₹ 48,70,14,075/- is due to the fact that in previous year, the amount of Global IT&T cost paid to BGIL was considered as capital in nature by the taxpayer and the same was capitalized on which taxpayer had claimed depreciation, but tax auditor report has considered this as revenue in nature, no disallowance can be made on account however subject to the verification by the AO.
As following the decision rendered in Melm ould Corporation vs. CIT [1993 (2) TMI 82 - BOMBAY HIGH COURT] AO is directed to accept the opening WDV of assets furnished by the taxpayer in the schedule for computation of income arrived from the closing WDV of fixed assets of previous year and after due verification to delete the disallowance in accordance with the computation and income and tax audit report.
Additional depreciation on new plant and machinery purchased by the taxpayer put to use during the year under assessment claimed by the taxpayer during the course of assessment proceedings - HELD THAT:- in order to explain the additional deduction claimed comprehensive submission dated 29.01.2016 were filed before the AO who has merely declined the claim on the ground that the additional claim can only be made by way of revised return of income. We are of the considered view that AO is required to decide the claim in view of the provisions contained u/s 32(1)(iia) of the Act in the light of the decision rendered in CIT vs. Hindustan Petroleum Corp. Ltd. [2017 (8) TMI 197 - SUPREME COURT OF INDIA], M/S. HLS INDIA LTD. [2011 (5) TMI 322 - DELHI HIGH COURT], SESA GOA LTD. [2004 (11) TMI 14 - SUPREME COURT], MERCANTILE CONSTRUCTION CO. [1993 (7) TMI 335 - CALCUTTA HIGH COURT] and ALUMINIUM CORPORATION OF INDIA VERSUS COAL BOARD [1958 (9) TMI 81 - CALCUTTA HIGH COURT] on merits after providing an opportunity of being heard to the taxpayer - remanded for statistical purposes.
Disallowing interest on the ground that the same has not been claimed as deduction - HELD THAT:- Since the amount has not been claimed by the taxpayer while computing its profit in the year under assessment, the issue is required to be sent back to the AO for verification and to decide accordingly after providing an opportunity of being heard to the taxpayer
Difference in revenue as per Form 26AS and profit & loss account - as contended by ld. AR that the difference was on account of difference in foreign exchange rate which is to be governed by the terms of PSC and relied on Article 15 – Taxes, royalties, rentals, etc. of the PSC for Mid and South Tapti Field and the Revenue from petroleum operations shall be determined in accordance with Article 19 of the PSC. - HELD THAT:- In view of the law laid down by the Hon’ble Apex Court in case of CIT vs. Enron Oil & Gas Limited [2008 (9) TMI 3 - SUPREME COURT] we are of the considered view that the income earned by the taxpayer in foreign currency pursuant to the PSC entered into with Government of India is governed by the agreement of PSC and the foreign exchange losses on account of foreign currency translation is an allowable deduction while computing the total income of the taxpayer. In such circumstances, provisions of PSC are to be applied and the disallowance made by AO/DRP on account of difference in revenue is not sustainable, hence allowable subject to verification by the AO.
Credit of tax deducted at sourceDenied - HELD THAT:- TDS stated to have been deposited by the taxpayer. AO is directed to grant the credit of the TDS claimed by the taxpayer subject to verification.
Interest to the taxpayer u/s 234B - AR contended that the interest u/s 234B is not chargeable to taxpayer it being a non-resident whose income is subject to tax deduction at source and further contended that this issue has already been determined in favour of the taxpayer in its own case for AY 2010-11 - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in taxpayer’s own case for AY 2010-11 which is on the basis of decision rendered in CIT vs. Maersk Company Limited [2011 (4) TMI 886 - UTTARKHAND HIGH COURT] and GE PACKAGED POWER INC. AND OTHERS [2015 (1) TMI 1168 - DELHI HIGH COURT] we are of the considered view that the taxpayer cannot be charged to tax u/s 234B on the income earned which is otherwise subject to tax deducted at source. So, we hereby direct the AO to recompute the interest u/s 234B accordingly.
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2018 (7) TMI 1953
CIT(A)' s order exparte in the absence of the assessee - HELD THAT:- A reasonable opportunity is given to the assessee to place its defense before the CIT(A) to enable the First Appellate Authority to pass speaking order after taking cognizance of the merits of the case as may be advanced on behalf of the assessee.
Therefore, we consider it appropriate to set aside the order of the CIT(A) and restore all the issues back to the file of the CIT(A) in larger interest of justice with a view to enable the assessee to avail opportunity once more. Appeal of the assessee is allowed for statistical purposes.
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2018 (7) TMI 1952
Distribution of Credit - filing of the TRAN-1 forms (revised) - transition to GST regime - HELD THAT:- Revision as of present is not permissible and as a consequence has not been fully accepted which has resulted in a demand of ₹ 16.80 crores. It is submitted that such demand is not based on any tax liability.
List on 17.09.2018.
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2018 (7) TMI 1951
Business Auxiliary services - services of promoting sale of goods - agent-principal relationship - demand of service tax - HELD THAT:- The sub-brokers and stock-brokers are agent and principal. Asking the appellants to pay Service Tax shall amount to double taxation since as per the declarations of the mutual fund distributors, the asset management companies have made the payment of commissions to the mutual fund distributors after deduction of Service Tax at source.
Revenue has not suffered any loss due to discharge of tax liability by the asset management companies. There shall be no levy of tax on the present appellants.
Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1950
CENVAT Credit - input services - GTA Services for bringing their inputs i.e. Iron and Coal - coal fines of 5 mm in size which is not suitable for use in klin are being sold as such - Rule 3 (5) of Cenvat Credit Rules, 2004 - HELD THAT:- Rule 3 (5) of Cenvat Credit Rules, 2004 provides that when “Inputs or Capital Goods” on which Cenvat Credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule “9”. It is clear from the above that Rule 3 (5) ibid, is not covering the input service.
Hon’ble High Court of Punjab and Haryana in the case of COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS PUNJAB STEELS [2010 (7) TMI 252 - PUNJAB AND HARYANA HIGH COURT] has decided the issue in favour of the assessee on similar facts and circumstances.
Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1949
Valuation - chassis of commercial vehicles cleared by the appellant to body builders - deduction of the discount from the Ex-Factory Dealer Net Price - Section 4(1)(a) of the Central Excise Act, 1944 - appellant has adopted the comparable price of the same goods sold to independent customers which is net of discount - HELD THAT:- Once the sale price of the chassis to independent buyers (net of discount) was available and satisfied all the requirements of Section 4(1)(a) of the Central Excise Act, 1944, the same price can be adopted for valuing the chassis cleared to the body builders. The Larger bench of this Tribunal in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [2007 (2) TMI 5 - CESTAT, MUMBAI] has held that when sale price to independent customer is available, the same price can be adopted for valuation of the goods stock transferred.
Hon’ble Supreme Court in the various decisions has held that once comparable price of the similar goods to unrelated buyer is available the same can be adopted for valuation of the goods cleared for captive use - reliance placed in the case of COMMISSIONER OF C. EX., CHANDIGARH VERSUS BHARTI TELECOM. LTD. [2008 (4) TMI 41 - SUPREME COURT].
Scope of SCN - HELD THAT:- The Show Cause Notices propose to demand duty by applying the provisions of Rule 7 or 8 of the Valuation Rules. However, the demand proposed in the notice and confirmed by the impugned order is on totally different grounds i. e. by taking into account the amounts of discounts and demanding duty thereon. The provision of Rule 7 or 8 of the Central Excise Valuation Rules does not empower the department to determine duty liability in this manner. Thus, the entire case made out by the department, is totally erroneous and does not have the support of any provisions of law.
Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1948
Supply of stores for consumption on board a vessel of the Indian Navy - benefit of N/N. 70/77 dated 07.05.77 (Upto 15.03.1995) and 64/95 dated 16.03.1995 - Time limitation - HELD THAT:- There is no element of suppression of facts, mis-statement etc. with an intent to evade payment of duty.
Reliance placed in the decision in the case of ASIAN PAINTS (I) LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [2012 (12) TMI 350 - CESTAT, MUMBAI] where it was held that As the revenue was aware that goods in question have been cleared to M/s Mazgaon Dock Ltd. by claiming the benefit of notification, hence, the allegation of suppression with intent to evade payment of duty is not sustainable in the present case.
Appeal allowed - decided in favor of appellant.
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