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Showing 421 to 440 of 1558 Records
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2017 (2) TMI 1140
Reversal of CENVAT credit - whether appellant is required to reverse Cenvat Credit on inputs in a situation where at the time availing Cenvat Credit, the final product is dutiable but on later stage, the final product become exempted or not? - Held that: - The said issue came up before Hon’ble High Court of Punjab & Haryana in the case of CCE, Panchkula Vs. HMT (TD) [2010 (4) TMI 1036 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that at the time of availment of Cenvat Credit on inputs, the final product is dutiable, later on the final product became exempt, in such a situation, Cenvat Credit is not required to be reversed - the appellant is entitled for refund claim - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 1139
Shortage of goods - demand - CENVAT credit on raw material found short - duty on finished goods found short - penalty - the finished goods manufactured on a particular day was not entered in RG-1 even after same were loaded in the tankers meant for clearances for such goods - Held that: - there is shortage of inputs and during the process there are some process losses to the tune of 0.5% to 0.9%. This Tribunal in appellants own case CASTROL INDIA LTD. Versus COMMISSIONER OF C. EX [2007 (10) TMI 91 - CESTAT, MUMBAI] allowed the process loss up to the 0.5% and appellant has also intimated to the department with regard to the processes loss in 1999 itself - the duty has been paid on losses beyond permissible limits. In that circumstances, it cannot be alleged that the appellant has availed excess Cenvat credit with intent to evade payment of duty - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 1138
Clandestine removal - no panchnama was drawn while physical verification of the stock - Held that: - As panchnama is the prime document to record the stock verification and the same has not been drawn in the case. Therefore, it is doubted that whether any physical verification of stock done or not. In the absence of the panchnama, adverse inference cannot be drawn against the respondent - further, the computer prints have been relied upon to alleged clandestinal removal of goods but no procedure prescribed u/r 36 (B) CEA, 1944 has been followed. Therefore, the computer prints out are not reliable documents - the charge of the clandestinal removal of goods is not sustainable - appeal dismissed - decided against Revenue.
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2017 (2) TMI 1137
Refund claim - unjust enrichment - Held that: - as appellant has been able to prove that buyer of the goods has issued certificate, they have not availed excess duty on the appellant. In that circumstances, on the strength of credit notes, the appellant is entitled for refund claim - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 1136
Reversal of CENVAT credit - Rule 3(5) of the CCR, 2004 - clearance of inputs as such - interest - penalty - Held that: - on realisation that the appellant has wrongly availed the credit of SAD has reversed the same. Later on, the SCN was issued. In that circumstances, mala-fide intention of the appellants are missing, therefore, no penalty is imposable on the appellant.
Interest - Held that: - The fact that whether the appellant was having sufficient balance in their cenvat credit account or not is to be verified by the adjudicating authority, therefore, the matter is remanded back to the adjudicating authority to verify the fact that during the impugned period the appellant was maintaining sufficient balance in their cenvat credit account. If there was sufficient balance in their cenvat credit account, the demand of interest is not sustainable.
Appeal allowed by way of remand.
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2017 (2) TMI 1135
Classification of imported goods - LCD Panels for CTV - classified under CTH 9013 80 10 or under Chapter SH 8529? - Held that: - this Tribunal in the case of appellant, M/s Samsung India Electronics Pvt Ltd, M/s Moser Baer India Ltd Versus Commissioner of Customs, Noida [2015 (10) TMI 2258 - CESTAT NEW DELHI] have decided the classification of impugned LCD Panels to be under Tariff Item No. 9013 80 10 of Customs Tariff Act, 1975 - appeal allowed - decided in favor of appellants.
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2017 (2) TMI 1134
Refund claim - unjust enrichment - nexus between the import price and the purchase order price negotiated with the Department of Telecommunication/ MTNL - excess payment of customs duty because of wrongly invoiced consignments from the supplier - Held that: - the assessments were made provisionally subject to SVB clearance of the invoice values at which the appellant has undertaken imports from their principals. In fact, it is further on record that the refund claim originally filed by the appellant on 21.4.1997 was returned to them by the departmental officers with the direction to re-file it after the finalisation of the provisional assessments. In any case, it is settled law that once an assessment is provisional, it is provisional for all purposes and not necessarily provisional in respect of the particular ground considered as has been held by the Hon’ble High Court of Madras in the case of Collector Central Excise vs. India Tyre & Rubber Co. Ltd. [1997 (1) TMI 100 - HIGH COURT OF JUDICATURE AT MADRAS] - Refund allowed.
However, the CVD component of the excess duty is to be deducted from the total refund claim since the same has already been availed as CENVAT credit by the appellant in their manufacturing process - appeal allowed - decided partly in favor of appellant.
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2017 (2) TMI 1133
Release of C and F Forms - whether Section 43 of PVAT is confined to issuance of statutory and declaration forms under the PVAT, as contended by the petitioner or, would it extend to C and F Forms, which are, admittedly, issued under the CST Act and/or the Rules framed thereunder - Held that: - The respondents will treat the present Writ Petition as a representation and, accordingly, pass orders qua the request of the petitioner, for issuance of C and F Forms - appeal disposed off - matter on remand.
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2017 (2) TMI 1132
Interpretation of statute - Section 9(2)(g) of of DVAT Act - The input credit claims were disallowed by the VATO with the rationale that the firm’s registrations had been cancelled and default assessment of tax and interest under Section 32 of the Act were completed - Held that: - The proviso creates an exception where tax is deferred or deferrable under any Package Scheme of Incentives implemented by the State Government. In that event a deeming fiction is created by the proviso under which the tax is deemed to have been received in the Government treasury for the purposes of the subsection. In all other cases, an actual deposit of taxes is mandated before a set off is allowed” - In the present case, the VAT Act is silent; Section 9(2) (g) was introduced only with effect from 1-4-2010 - Section 9(1) which grants input credit to purchasing dealers to an extent is controlled by Section 9(2) that lists specific situations where benefit can be denied - appeal dismissed - decided against Revenue.
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2017 (2) TMI 1131
Scheme of Demerger allowed - Board of Directors of Applicant Company-I, Applicant Company-IV and the Applicant Company-V in their separate meetings held on 28.07.2016; and the Board of Directors Applicant Company-II and Applicant Company-III in their separate meetings held on 27.07.2016, have approved the proposed scheme. Rest all the requirement of convening the meetings accordingly convened.
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2017 (2) TMI 1130
Scheme of Amalgamation - Held that:- Considering the approval accorded by the shareholders of the Transferor Company and shareholders, secured and unsecured creditors of the Transferee Company to the proposed scheme; the affidavit filed by the Regional Director, Northern Region and the report filed by the Official Liquidator, not raising any objection to the proposed scheme, there appears to be no impediment to the grant of sanction to the proposed scheme. Consequently, sanction is hereby granted to the proposed scheme under the provisions of the Act.
The Petitioner Companies shall comply with all the statutory requirements in accordance with law.
A certified copy of this order, sanctioning the proposed scheme, be filed with the ROC, within thirty (30) days of its receipt.
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2017 (2) TMI 1129
Unexplained cash credit u/s.68 - Held that:- Assessee has in its permissible limit has proved beyond doubt the identity, genuineness and creditworthiness of the loan creditors and it could not be disputed by the Revenue at any stage nor any enquiry was made in case of any other loan creditor, which could disprove the evidence placed by assessee. We therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) deleting the impugned addition on account of unexplained cash credit - Decided in favour of assessee
Disallowance on account of interest expenses on cash credit - Held that:- As we have already decided adjudicating ground no.1 of Revenue wherein we have confirmed the order of ld. Commissioner of Income Tax(A) deleting the impugned addition u/s 68 and as have accordingly held that assessee has proved the identity, genuineness and creditworthiness of the cash creditors. Therefore, the interest paid on such genuine loan creditors cannot be treated as non-genuine. - Decided in favour of assessee
TDS u/s 194A - disallowance u/s.40(a)(ia) - non deduction of tds on interest expenses - submission of Form No. 15 G - Held that:- We are of the view that as the assessee has filed form no.15G in the cases of 9 parties to whom interest of ₹ 3,00,348/- was paid there was no liability of deducting tax at source at assesse’s behest and, therefore, ld. Commissioner of Income Tax(A) has rightly deleted the disallowance. We find no substance in this ground raised by Revenue against ld. Commissioner of Income Tax(A)’s order for admitting additional evidence in violation of Rule 46A as from the perusal of the assessment order it is well evident that the details, names and addresses, PAN, bank statement, income-tax returns were all placed before the assessing authority and as regards form no.15G in relation to non-payment of ₹ 3,00,348/- record was very much available with the assessing authority as these forms were filed on 4.4.2009 with ITO, TDS-3, Ahmedabad. Therefore, we find that ld. Commissioner of Income Tax(A) has not admitted any additional evidence in violation of Rule 46A. We, therefore, dismiss this ground of Revenue.- Decided in favour of assessee
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2017 (2) TMI 1128
Addition on bogus purchases - AO received an information from DGIT(Investigation), Mumbai that the assessee has entered into bogus transactions from three hawala parties without taking actual delivery of goods - Held that:- The assessee filed before the AO complete books of accounts, items wise stock register evidencing the receipts of gift materials and issue thereof as attached in the paper book page 56 to 78. In order to prove the use of gift items in the promotional activities, photographs of the functions and promotional activities and also confirmations from the shop keepers were also produced before the AO which were disbelieved by the AO on the ground that the confirmations were not bearing the PAN of the persons confirming the consumptions of gift materials. The assessee has also produced copies of bank statements of Punjab National Bank and Axis Bank evidencing the payments through banking channels by account payee cheques to the suppliers filed at pages no. 32 to 51 of the paper book. Having considered all these facts which were before the AO as well as FAA, we find that the assessee has discharged its onus by producing the books of accounts, stock register, stock tally and also filing various documentary evidences such as statements of banks etc, confirmations and photographs of the promotional events before us.
The purchase made by the assessee could not be disbelieved merely on the basis of information received from the third party without carrying out any meaningful enquiry and further verification on the various records and information filed during the course of assessment proceedings. We are not in agreement with conclusion drawn by the FAA upholding the action of the AO. - Decded in favour of assessee.
Allowance of auditors fees and legal and profession expenses - eligible revenue expenditure - Held that:- We find that the assessee has debited a sum on account of yearly provisions for internal audit and tax audit fee and legal and professional charges payable to Mr.K A Pandit for “Actuarial valuation for determining gratuity and leave encashment provision for staff” . The said expenses are in the nature of routine and regular expenses which are incurred and provided at the end of each year and were accordingly accounted for by the assessee on the basis of mercantile system of accounting. Further, the FAA has rightly came to the conclusion that the assessee has rightly accounted for these expenses by following the mercantile system of accounting and the same could not be disallowed by treating as provision for expenses and in the nature of contingent expenses. The FAA also noted that the said expenses are not based upon the guess work or adhoc and were provided in the same manner as in the earlier years on the basis of mercantile system of accounting. Moreover, the liability was very much ascertained and foreseeable due to regular nature of expenses. We are, therefore, inclined not to interfere with the reasoned order of the ld.CIT(A) on this issue and accordingly uphold the same by dismissing the ground raised by the revenue.
Disallowance of proportionate interest - Held that:- We find that the assessee has advanced money to M/s Tracstar Investment Pvt Ltd during the year to the tune of ₹ 5,00,62,122/- which accordingly to the assessee was a business advances wholly given out of commercial expediency and business considerations as the said company bottled the liquor manufactured by the assessee and was given in that connection. The FAA also recorded the findings of facts in his appellate order that no disallowance of proportionate interest was made by the AO in the earlier years. Moreover, the assessee’s own funds were more than ₹ 124 crores and the ld. CIT(A) further recorded the finding of facts that the said advances was not given out of borrowed funds. In our opinion, the order passed by the ld. CIT(A) ,after considering the contention and submissions that the advances were given out of business consideration and commercial expediency as M/s Tracstar Investment Pvt.Ltd was providing bottling services to the assessee, does not contain any infirmities and conclusion drawn by the ld. CIT(A) is supported by the decision of the jurisdictional High Court in the case of Reliance Utilities ([2009 (1) TMI 4 - BOMBAY HIGH COURT ]) in which it has been held that the assessee’s own funds are more than the borrowed funds then no disallowance on account of interest is called for.
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2017 (2) TMI 1127
Penalty u/s 271(1)(c) - Whether the notice issued u/s. 274 r.w.s. 271[1][c] of the Act in printed form without specifying grounds of initiation of penalty proceeding is valid, legal and tenable in law? - Held that:- Since in the impugned notice, there is no clear indication about the concealment of the particulars of the income, nor there is clear indication for furnishing of inaccurate particulars of the income on application of mind. In any case as there is no specific ground, hence there would be breach of principles of natural justice and ultimately the order imposing penalty even otherwise also cannot be sustained.
Under the circumstances, the question formulated needs to be answered in the negative and in favour of the Assessee and against the Revenue.
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2017 (2) TMI 1126
Unexplained cash credit - proof of creditworthiness - failure in discharging the onus of proving the creditworthiness - additional evidence taken on record at the appellate stage to deleted additions - Held that:- In the matter of permitting additional evidence and thereafter in considering the same at the appellate stage, the Department through the assessing officer was granted reasonable opportunity to rebut the same and after considering various aspects of the matter, concurrent findings have been recorded by both the appellate authorities namely; Commissioner (Appeals) and the ITAT.
Finding no error in not only accepting the additional evidence on record, but, also in analyzing the same and holding that the creditworthiness, trustworthiness of the credit transaction have been proved beyond reasonable doubt. The aforesaid is a concurrent findings of fact recorded by the both the appellate authorities, they are reasonable in nature and we find no reason to interfere into the aforesaid concurrent finding of fact. In our considered opinion, no substantial question of law arises for consideration. The judgments relied upon by Revenue are distinguishable on facts. They were cases where additional evidence was taken on record without granting proper opportunity to the assessing officer to rebut the same, whereas in these cases,we find that the additional evidence were placed to the notice of the assessing officer. The assessing officer did give his remand report on the same, did not raise any objection to its admissibility and it is only after granting of opportunity to the assessing officer that the orders in question have been passed. Accordingly, the judgments relied upon may not apply in the facts and circumstances of the present case. - Decided against revenue
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2017 (2) TMI 1125
Penalty u/s 271(1)(c) - whether the payment of transportation charges and claiming the same as deduction constituted concealment of income or filing inaccurate particulars of income? - Held that:- The penalty cannot be imposed merely on the basis that the assessee has not filed any appeal against the quantum addition and more so when the tribunal decision upholding the claim of the assessee to claim the payments of charges to Iraqi regime as admissible which stands upheld by the jurisdictional high court. The penalty proceedings are independent proceedings which are to be decided on the basis of merits of each case. In the present case, the Calcutta Bench of the Tribunal in Rajrani Exports (P) Ltd [2012 (6) TMI 62 - ITAT, Kolkata] has already decided that the payment made on account of transportation charges as admissible which cannot be disallowed on the basis of Volcker Committee report and hence penalty on such disallowance which is wrong and against the spirit of the Act cannot be sustained . Accordingly, we set aside the order of ld.CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee.
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2017 (2) TMI 1124
Disallowance of deduction u/s 80IB(10) - development of commercial property by Raj Chandra Commercial Co-operative Housing Society limited was a sham and the artificial bifurcation of residential and commercial project was only to claim deduction under section 80IB(10) - Held that:- As decided in the case of Shri Umeya Corporation vs. ITO [2015 (9) TMI 108 - ITAT AHMEDABAD ] it is not even the case of the Assessing Officer that the assessee did not assume the entrepreneurship risks of the housing project. The format of arrangements for transfer of built up unit, and business model of the assessee for that purpose, is not decisive factor for determining eligibility of deduction under section 80 IB (10), but that is all that the authorities below have found fault with. The objections of the authorities below are thus devoid of legally sustainable merits. In view of the above discussions, and bearing in mind entirety of the case, we are of the considered view that the stand of the authorities below, in declining deduction under section 80IB (10) and on the facts of this case, is incorrect. We vacate the same and direct the Assessing Officer to delete the disallowance.
As regards the points raised by the learned CIT(A) with regard to commercial construction by some other society, it is difficult to understand and as to what it has to do with the present claim. The approval is given to the housing project and the assessee has claimed deduction in respect of projects of the same. The objections taken by the learned CIT(A) are purely on the field of surmises and conjectures. Thus reject the same. Thus deduction under section 80IB(10) allowed - Decided in favour of assessee
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2017 (2) TMI 1123
Validity of reopening of assessment - ingenuine loans - Held that:- At the time of scrutiny assessment under Section 143 [3] and at the time of filing the return of income, the assessee specifically claimed that he had taken loans from the family members during the year under consideration. Alongwith the return of income/computation of income, it appears that the assessee also placed reliance upon materials such as return filed by Dr. Rajivram R Choudhry [HUF] stating that the said HUF sold ancestral property at Panipat in the FY 2005-2006. That thereafter, the Assessing Officer framed scrutiny assessment under Section 143 [3] of the Act and accepted the case of the assessee that he had taken loans from the aforesaid three persons and did not make any amount towards undisclosed cash investment. Thus the entire issue as such was gone into by the Assessing Officer while framing the scrutiny assessment under Section 143 [3] and it cannot be said that there was any failure on the part of the assessee in not disclosing the true and correct facts necessary for the assessment.
It is required to be noted that the case of the assessee from the very beginning was that the aforesaid HUF sold the ancestral property in F.Y 2005-2006. It was never the case of the assessee that the said HUF sold the property in F.Y2008-2009. Necessary documents of Shri Rajivram R Choudhry [HUF] to show that the ancestral properties were sold in F.Y 2005-2006 were already produced on record at the time of scrutiny assessment under Section 143 [3] of the Act. Even a certificate issued by DDIT [Inv.], Panipat was issued with respect to altogether another property for which the sale proceeds were not received in FY 2008-2009. That, the property which was sold in FY 2005-2006 by HUF and others were altogether different properties for which the sale deeds were produced on the record. Under the circumstances, formation of opinion by the Assessing Officer doubting genuineness of the claim of the assessee with respect to the loans taken from the aforesaid three persons is on the wrong premise and the facts.
So far as the second reason to reopen the assessment which is based on the Valuation Report of D.V.O, it is required to be noted that on DVO's report, the Assessing Officer has formed a belief that the assessee had concealed the investment to the extent of ₹ 9,21,148/= during the year under consideration. However, it is required to be noted that at the time when scrutiny assessment was framed under Section 143 [3] of the Act on 29th December 2011, there was no DVO's report. Even in the reasons recorded, it is specifically mentioned that the valuation report of DVO was received after completion of scrutiny assessment on 30th November 2012. The claim of the assessee with respect to the investment in construction of Hospital building of ₹ 2,74,,93,923/= came to be accepted by the Assessing Officer while framing the scrutiny assessment under Section 143 [3] of the I.T Act. Even otherwise, it is required to be noted that there is hardly a difference of ₹ 9,21,148/= ie., approximately of 3% of the total investment in construction of hospital building. As per the catena of decisions, DVO's valuation report can be said to be its opinion and there might be some variation in the calculation. In any case, it cannot be said that there was any failure on the part of the assessee in not disclosing true and correct facts necessary for assessment which warrants reopening beyond the period of four years. - Decided in favour of assessee
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2017 (2) TMI 1122
Computation of income of an assessee by AO under a head of income other than what was claimed - Held that:- AO is competent to compute the income of an assessee under a head of income, other than what was claimed by the assessee, of course, after marshalling the facts properly and furnishing proper reasons. Merely by computing the interest accrued as income of the assessee instead of non taxable as claimed,, the inter-se rights of the assessee under any other statutory framework does not get affected. There is no requirement under the Income Tax Act that the AO has to get an order of the court for income determination. The requirement u/s 281 of the Act to get a suit initiated to annul a transfer of property before effecting attachment is totally different and has no connection to this issue. The Income Tax Act is a self-contained Act and the AO is entitled to determine the head of income under which the income of a particular assessee is to be assessed. The decision of the Hon'ble Supreme Court in the case of Southern Technologies Ltd (2010 (1) TMI 5 - SUPREME COURT OF INDIA ) squarely applies to the facts of this case. The assessee's appeal on this issue is dismissed.
Validity of trust - Holding the trust to be not a valid trust and consequently that section 161(l) of the Act is not applicable - whether all the transactions related to securitization are a facade worked out by the Bank and the assessee trust is not a valid trust? - Held that:- That the procedures and processes involved in the formation of a trust have been followed is not in doubt. RBI Guidelines itself contemplate the securitization process to be carried out by the originator; Yes Bank in this case. Therefore, no adverse inference can be drawn of the point strenuously put forth by the Revenue that the originator has been the guiding force of the securitization process. Most of the infirmities/defects pointed out in the documents by the Revenue is mainly on the point that all the securitization transactions were carried out between 16.05.2008 and 20.05.2008 whereas the loan agreement was signed on 21.05.2008. The agreement between HPCL and Yes Bank was first signed on 15.05.2008, which provided that the standard format agreement will be signed. The standard format agreement was signed on 21.05.2008. All the procedures and documents related to the securitization process was carried out on 20.05.2008. The insistence of Revenue that only the standard format agreement has to be reckoned and not the agreement dated 15.05.2008 does not appear to be tenable. Even assuming that the agreement dated 15.05.2008 was only in the nature of a letter of intent, it cannot be disputed that the lender, Yes Bank had full knowledge of the loan and had disbursed the amount. Therefore, it is very likely that Yes Bank had initiated the securitization process, pending signing of the standard format agreement. These are all standard documents that are signed up in such transactions. The reference to the agreement in the documents related to the securitization process needs to be understood in this perspective. Even assuming that minor infirmities exist in the documents, those can at best be characterized as procedural defects and this alone is not enough to disregard the documents totally. It is a settled principle that a legal document has to be viewed in its entirety and mistakes in some of the clauses cannot, by itself, negate the existence of the documents.
CIT(A) was wrong in holding that the assessee trust was not a valid trust. In our considered view all the necessary ingredients for the formation and existence of the trust have been fulfilled and all these documents, processes and money trail cannot be disregarded, only due to the marginal mistakes in the clauses in the documents and also the timing of signing of these documents. Accordingly we hold that the assessee Trust is a valid Trust. Ground of appeal No. 1 decided in favour of the assessee.
Holding the trust was not a revocable trust/ contribution by beneficiaries was not a revocable transfer - Held that:- In view of the discussion above and respectfully following the principles laid down in the above referred decision in the case of India Advantage Fund-VII (2015 (4) TMI 259 - ITAT BANGALORE) and Milestone Army Navy Trust (2015 (12) TMI 1647 - ITAT MUMBAI) 1703785 we hold that the assessee Trust is a revocable Trust and contribution by beneficiaries is a revocable transfer. Having held thus, it follows that the income shall be taxed in the hands of the beneficiaries, i.e. the Mutual Funds who purchase the PTCs from the assessee trust. In this view of the matter, we allow this ground of appeal No. II raised by the assessee
Diversion by overriding title - assessee’s contention is that the amounts received by the assessee from Yes Bank under the Deed of Assignment dated 20th May, 2008 are diverted at source by an overriding title to the PTC holders (Mutual Funds) and therefore the amount of ₹ 21,49,72,486 /- handed over to the assessee and paid to the PTC holders in proportion to their respective investments is not income of the assessee for the A.Y. 2009-10 - Held that:- As held by the Hon'ble Apex Court in the case of CIT vs. Tollygunge Club Ltd. (1977 (3) TMI 1 - SUPREME Court ) every receipt in the hands of the assessee need not be its income and it is only when it bears the character of income at the time when it reaches the hands of the assessee that it becomes exigible to tax. In the case on hand, even at the initial stage, even before the money flows to the assessee, it was always clearly intended to be passed on to and only to the beneficiaries, i.e., the PTC holders in proportion to their interest in the receivables (underlying assets). Thus merely because the moneys flow through the assessee, it cannot be automatically inferred that it is income in the hands of the assessee. The money was always intended to be passed on to the PTC holders and therefore, it can be said that only the PTC holders had a claim on the money, if not an absolute charge. Hence, in our considered view, the principle of diversion of income at the source by overriding title is attracted in this case. In view of the above finding of fact rendered by us, we are of the considered opinion that by the principle of diversion of income by overriding title, the receivables are the income of the PTC holders, in this case the beneficiaries of the assessee trust and therefore, whether the status of the trust is to be characterized as Trust or AOP, the income passes on to the beneficiaries. In this view of the matter, the ground of appeal at III raised by the assessee is allowed.
Treating the status of the assessee as "AOP" - Revenue’s main contention is that all the players in the securitization process have acted together and in unison and have carried out an adventure in the nature of trade to earn income, which is in the nature of “business”, thus all the stake holders have to be assessed together as “AOP”. - Held that:- All the Mutual Funds beneficiaries are shown to have purchased the PTCs separately and not together by a concerted action to earn income jointly. We find that the various averments made by the learned counsel for Revenue that there has been some concerted and coordinated action on the part of the beneficiaries in completing the securitization process, has not travelled beyond the stage of suspicion and surmise and therefore in our view Revenue has not discharged the onus of establishing the existence of an AOP in the case on hand. Even otherwise, since we have already held that the assessee trust is a valid trust, the controversy regarding treating the assessee as AOP does not arise. Consequently, this ground No. IV raised by the assessee is allowed.
Invalidity of assessment and the confirmation by the CIT(A)- Held that:- Since we have held the assessee to be a valid Trust, there is no question of the assessee being assessed in the capacity of an ‘AOP’, and therefore there is no requirement for adjudicating this ground No. V as the same has been rendered infructuous and is accordingly dismissed.
Enhancement of Income - Held that:- Para 3.5 of the Loan Agreement states that interest has to be computed on number of day basis using 365 days as a year basis. The above wordings cannot be stretched to mean that the interest has to be charged on day to day basis. Also, the Deed of Assignment under which the assessee is to receive the amount clearly provides that the assessee is entitled to receive the amounts on the 1st of the next month and to be passed on to the PTC holders in the proportion to the amount of their investments on the very next day. In view of the above clear provisions laid out in para 3.5 of the Loan Agreement and Deed of Assignment, we are of the considered view and hold that it is crystal clear that the interest for a particular month accrues on the first day of the next month as laid out in para 3.5 of the Loan Agreement and recital in the Deed of Assignment. Accordingly, ground No. VI of assessee’s appeal is allowed.
Disallowance of expenses on accrual basis (if enhancement is upheld) - Held that:- In this ground, the assessee has raised an alternate ground that if the enhancement to the income is allowed, then the corresponding outgo (expenditure) for March, 2009 be allowed. Since we have already held that the enhancement of the assessee’s income on the interest income made by the learned CIT(A) is not tenable, the claim for disallowance of expenses on actual basis is now rendered infructuous, as it does not survive for consideration. The ground of appeal No. VII being infructuous is accordingly dismissed.
Charge of interest under section 234B & 234C - Held that:- The charging of interest is consequential and mandatory and the AO 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 AO in charging the said interest. The AO is, however, directed to re-compute the interest chargeable under section 234B and 234C of the Act
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2017 (2) TMI 1121
Reopening of assessment - arrangement to the sale of shares undisclosed - Held that:- Proviso appended to section 147 puts an embargo upon the powers of the AO for reopening of the assessment in case where an assessment was made under section 143(3) of the Income Tax Act for relevant assessment year and four years have expired from the end of the assessment year. In such cases, no action shall be taken under section 147 unless it is established that income chargeable to tax has escaped on account of failure of the assessee to disclose fully and truly all the material facts necessary for his assessment. Thus the AO was bound to demonstrate that the assessee has failed to disclose material facts fully and truly which has resulted escapement of income. If he fails to demonstrate this aspect, then, in the case where scrutiny assessment has been made and four years have expired, he cannot take action under section 147 of the Income Tax Act. A perusal of the reasons would indicate that the AO has nowhere demonstrated this fact. Apart from the above, a perusal of the assessment order passed under section 143(3) would indicate that all these facts have duly been considered and the AO has accepted the stand of the assessee.
Allegation of the AO in the reasons is that in the memorandum of arrangement to the sale of shares shows that a sum of ₹ 28,90,500/- was to be received by the assessee from M/s.Manish Multi Packfilms Pvt. Ltd. It was a sum advanced by the assessee to the company. The AO has observed that a perusal of the balance sheet for the F.Y.2002-03 i.e. 31.3.2003 does not discern that the assessee has advanced any amount. The stand of the assessee is that this sum was advanced after 31.3.2003 and it was repaid during the F.Y.2003-04 itself. Therefore, it will not reflect in the balance sheet of Manish Multi Packingfilms Pvt. Ltd. in F.Y.2002-03. The AO has sought to reopen the assessment after expiry of four years without establishing nexus of the details. He has not analytically examined the alleged advance given by the assessee and his belief that this amount should be available in the balance sheet for F.Y.2002-03. When the assessee has not paid any amount in F.Y.2002-03 to the company how it will appear in the balance sheet. Without looking to the accounts, he simply recorded the reasons. Thus, there is no basis for reopening of the assessment and the ld.CIT(A) has rightly quashed it. We do not find any error in the order of the ld.CIT(A). It is upheld - Decided against revenue.
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