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Showing 421 to 440 of 2028 Records
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2019 (5) TMI 1608
Interest payable for delayed payment of GST - erroneous calculation - HELD THAT:- It is pointed out that against the total tax liability of ₹ 3.31 crores the interest liability works out to 8.19 crores which makes it unreasonable and erroneous.
Notice. Mr. Harpreet Singh, Advocate accepts notice for the Respondents - Till the next date, no coercive action be taken against the Petitioner for non-payment of the interest amount.
List the matter before the Registrar on 5th August, 2019 for completion of pleadings - List the matter before the Court on 30th September, 2019.
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2019 (5) TMI 1607
Profiteering - purchase of a flat in the Respondent's project “East Crest” - benefit of Input Tax Credit (ITC) and reduction in price of flat had not been passed on - contravention of section 171 of CGST Act, 2017 - HELD THAT:- The Respondent has denied the benefit of the ITC to the buyer of the flats being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017, where he had not only collected more price than the entitled amount but also collected more GST on the increased amount. The Respondent though aware of the fact that the net benefit of ITC had to be passed on to his buyers had not passed on the entire benefit till the completion of the investigation by the DGAP. The above act of the Respondent appears to be deliberate and conscious violation of the provisions of the CGST Act, 2017, thus he has committed an offence under Section 122 (1) of the CGST Act, 2017 and therefore he is liable for imposition of penalty.
Imposition of penalty - HELD THAT:- Perusal of the notice dated 29.08.2018 issued to the Respondent shows that he has been intimated that it was proposed to impose penalty under Section 122-127 of the CGST Act, 2017 read with Rule 133 of the CGST Rules, 2017 and also to cancel his registration if the allegation of profiteering was proved against him, however, no specific instances of violation of the above Sections have been mentioned in the above Notice - Therefore, the proposed imposition of penalty under the above Sections and cancellation of his registration is not sustainable unless specific allegations how he had violated the provisions of the above Sections are levelled against him. Therefore, the above notice is ordered to be withdrawn to the extent that it proposes to impose penalty on him as per the provisions of the above Sections and the Rule.
A fresh notice be issued to him as to why the penalty prescribed under Section 122 (1) of the CGST Act, 2017 read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him as he had issued incorrect tax invoices to the flat buyers by charging more amount than what he could have charged and further charged additional GST on this amount. The Respondent would have sufficient opportunity to state his defence on the above charge and he can also raise his other objections during the course of the hearing on the issue of imposition of penalty.
A copy each of this order be supplied to the Applicants, the Respondent and Commissioners CGST/SGST of Karnataka state for necessary action. File be consigned after completion.
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2019 (5) TMI 1606
Revision u/s 263 by CIT - fundamental requirement for assumption of jurisdiction u/s 263 - No enquiry by CIT undertaken - ITAT set aside the impugned order by the Pr. CIT. - HELD THAT:- Order of the Pr. CIT only contains the conclusion arrived at by the Pr. CIT that the order of the AO is erroneous but gives no indication that the Pr. CIT undertook any enquiry before arriving at such conclusion. Indeed the jurisdictional requirement of Section 263 of the Act does not appear to have been kept in mind in the present case by the Pr. CIT.
Consequently, the Court finds no error having been committed by the ITAT in setting aside the said order of the Pr. CIT. No substantial question of law arises
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2019 (5) TMI 1605
Gain on sale of shares - correct head of income - capital gains or income from business - buy back of shares by the borrowers - AO held that the basic intention of holding equity shares by the assessee was to earn interest on the loans advanced and therefore held that the transaction could not be classified as capital gain and further held that it was in the ordinary course of business of the assessee and related to its primary object of financing and was therefore clearly business profit of the assessee.
HELD THAT:- On identical issue, it was held by this Court in CIT vs. Punjab Agro Industries Corporation Limited [2014 (1) TMI 490 - PUNJAB & HARYANA HIGH COURT] that the Tribunal rightly considered the facts that investment made in the shares of companies which were jointly promoted by the assessee alongwith the private entrepreneurs, was with the basic object of promoting agro/horticulture based industry in the State of Punjab and not as a dealer in shares with the object of trading. Infact, the object of trading in shares was lacking in as much as the financial collaboration agreement itself prescribed that the shares shall be bought back by the private promoter after a specified period at a defined consideration. Therefore, realization from such investments was liable to be taxed under the head “Capital gains” and not as business activity.
Disallowance on account exempt income - dividend claimed exempt by holding the activity of the assessee as investment and not trading in shares - HELD THAT:- Tribunal after examining the matter recorded that the Finance Act, 2003 inserted clause (34) to section 10 which deals with income which is exempt from taxation and does not form part of the total income at all excluding the income by way of dividend from the purview of taxation. At the same time, Section 115-O was inserted in the Act making the companies distributing dividend to pay tax at a specified rate thereon. Thus, taxation of dividend changed hands from the recipient to the payer of dividend by virtue of this amendment brought about in the Act.
The case of Brook Bond India Limited [1986 (9) TMI 2 - SUPREME COURT] did not apply to the present case since it related to the assessment years 1955-56 when the position of law vis a vis taxation of dividend was governed by the Income Tax Act, 1922 which taxed dividend in the hands of the recipient. It was further recorded that since the dividend income was exempt from tax, the provisions of Section 14A of the Act disallowing expenses incurred for earning the same were attracted. For that limited purpose, the issue was restored back to the AO to decide the same in accordance with law after giving due opportunity of hearing to the assessee.
The findings recorded by the Tribunal on all the issues are findings of facts which have not been shown to be illegal or perverse by the learned counsel for the appellant-revenue, warranting interference by this Court. Thus, no substantial question of law arises.
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2019 (5) TMI 1604
Assessment u/s 153C - absence of any incriminating material found or seized - date on which the books of accounts or documents or assets seized during the course of search proceedings - computation of the block of six years preceding the AY relevant to the previous year /in which the search was conducted - HELD THAT:- The ‘satisfaction’ of the A.O of the assessee i.e the person other than the searched person was recorded on 15.01.2014. As such, the period of six years was to be reckoned from the date of recording of such ‘satisfaction’, which would thus take within its sweep the period relevant to Assessment Years: 2008-2009 to 2013-2014. Accordingly, as per the ld. A.R, the case of the assessee for the year under consideration i.e. A.Y.2007-2008 would not fall within the scope and gamut of the period for which assessment proceedings u/s153C could be framed.
As per the facts stated by the ld. A.R before us, we find substantial force in his contention that the year under consideration viz. A.Y 2007-08 does not fall within the period for which assessment u/s 153C could be framed. Accordingly, we direct the A.O to verify the factual position as regards the date on which the books of accounts or documents or assets seized during the course of search proceedings were delivered by the A.O of the searched person to the A.O of the assessee i.e the person other than the searched person.
Apart there from, in case the A.O of the searched person and that of the assessee is the same person, then the date of recording of ‘satisfaction’ by the A.O in the file of the assessee i.e the person other than the searched person, shall be taken as the relevant date for reckoning the period of six assessment years for which assessments could have been framed u/s 153C. In case, the claim of the assessee that the year under consideration vis. A.Y.2007-2008 falls beyond the scope of six assessment years from the aforementioned date of recording of satisfaction or receiving of documents or assets seized or books of accounts by the A.O of the assessee, as the case may be, then the assessment framed by the A.O shall stand vacated. The “Additional Ground of appeal” raised by the assessee is allowed in terms of our aforesaid observations.
Additions based on contents lying in the locker - HELD THAT:- We find that the assessee in his ‘statement’ which was initially recorded during the course of the search & seizure proceedings u/s.132(4), dated 20.11.2012, had specifically stated that the contents lying in the locker were belonging to him. In fact, a perusal of the assessment order reveals, that the assessee on being confronted with the aforesaid documents viz. Annexure-A/1 to A/4 had specifically admitted that the same were required by him in the course of his business to get orders from the customers to prove the genuinenity of the supplier parties.
On a perusal of the specific replies to the queries as regards the seized documents viz Annexure-A/1 to A/4, it can safely or rather inescapably be concluded that the said documents belonged to the assessee. As such, we are not inclined to accept the contention of the ld.A.R that the assessee was in no way connected with the documents which were found and seized during the course of search proceedings from his locker No.596 with M/s Gold Sukh Safety Vaults Ltd., 65 Vithalwadi, Mumbai-400002.
Computing the commission income of the assessee @3% of the aggregate of the turnovers of the respective 53 concerns - Assessee was involved in the business of providing/arranging accommodation entries for third parties - HELD THAT:- The lower authorities have failed to prove on the basis of any irrefutable documentary evidence that all the 53 parties on whose turnovers for the respective years the commission income of the assessee as a facilitator/bogus entry provider had been worked out were involved in the business of providing accommodation entries. The very basis for working out the brokerage income in the hands of the assessee cannot be accepted on the very face of it. Further, as observed by us hereinabove, as the basis for working the commission @3%/0.05% by the AO/CIT(A), is also not backed by any supporting material, therefore, the same does not inspire much of confidence as regards the estimation of the commission income of the assessee, and thus cannot be summarily accepted on the very face of it.
The matter has not been appreciated by the lower authorities in the right perspective. Admittedly, we though are in agreement with the observations of the lower authorities that the assessee was engaged in the business of facilitating/providing of accommodation entries, however, the very basis for quantifying the estimation of such commission income does not find favour with us. Be that as it may, in our considered view, the matter requires to be restored to the file of the A.O with certain specific directions.
Undisclosed silver weighing 11.2 Kgs and cash - undisclosed income of the assessee for the previous six assessment years - HELD THAT:- As we have restored the issue as regards the quantification of the ‘undisclosed income’ of the assessee to the file of A.O for fresh adjudication for the year under consideration and the preceding years, therefore, in all fairness the said issue is also restored to his file for adjudicating the same afresh. In case, the assessee is able to substantiate in the course of ‘set aside’ proceedings that he had sufficient funds available with to explain the investment made towards the value of 11.2 kg of silver jewellery and the cash of ₹ 11,00,000/- found from his locker no. 596 during the course of the search proceedings, then the addition to the said extent towards unexplained investment shall stand deleted.
We do not find favour with the claim of the ld. A.R that the lower authorities had not given any basis for taking the value/upholding the value of the seized silver at ₹ 7,23,060/-. Rather, as is discernible from the records, we find that the assessee had categorically stated in his statement recorded during the course of the search proceedings that the 11.2 kg of silver jewellery that was found and seized from his locker No. 596 during the course of the search proceedings, was of a value of ₹ 7,23,060/-. We thus reject the contention of the ld. A.R that there is no basis for taking the value of the aforesaid 11.2 kg of silver jewellery by the A.O at ₹ 7,23,060/-.
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2019 (5) TMI 1603
Speculation loss u/s 73 - according to the AO short term capital loss and long term capital loss is a speculation loss - according to the assessee the provisions of section 73 does not apply to the assessee as assessee is falling into the exception - no part of the business of the assessee company consists of purchase and sale of the shares - HELD THAT:- On looking at the computation of total income filed by the assessee before the learned assessing officer it has business income of loss, long-term capital gain exempt u/s 10(38) and exempt dividend income. The long-term capital gain which is exempt under section 10 (38) as well as the exempt dividend income which is also exempt under section 10 (34) of the income tax act does not enter into the computation of the total income but is an exempt income.
Therefore the only income which is chargeable is under the business income. Therefore it is apparent that no part of the business of the assessee company consists of purchase and sale of the shares. Merely indulging in purchase and sale of shares for investment is not business activity in sale and purchase of shares of other companies for the purpose of this section. Such is the mandate in case of Standipack P Ltd V CIT [2012 (10) TMI 131 - CALCUTTA, HIGH COURT] . In view of this we reverse the orders of the lower authorities and hold that explanation to section 73 does not apply to the assessee company - Decided in favour of assessee.
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2019 (5) TMI 1602
TDS u/s 195 - commission paid to foreign commission agent - Addition u./s 40(a)(ia) - as per assessee foreign agents rendered services out of India for procurement of the orders from the overseas buyers and for getting approval of the goods - PE in India - HELD THAT:- There is no dispute that the agents being located outside India and not resident of India were canvassing sales for the assessee for customers abroad. It is an admitted position by the AO himself that the agents are not resident in India further to make disallowance AO did not establish that they have any permanent establishment in India.
Therefore it is not a case where the non-resident agents are carrying on any business activity in India. Assessee has engaged the services of non-resident agents outside India on pure commercial considerations for its sales outside India and also to pursue the payments to be made by the purchasers as located abroad.
AO has also not established that what is the business connection of those agents in India in terms of provisions of section 9(1) (i).
AO has merely mentioned these section but the criteria for satisfying them have also not been established. Even Otherwise Section 9(1)(i) is applicable on the net the profits of a non - resident which can reasonably be attributed to operations carried out in India. In the prsesnt case the agents have not carried out any operations in India.
He also did not specify that what kind of services in the nature of Managerial, Technical or consultancy rendered by these agents to assessee to fall the services under the definition of Fees for technical services u/s 9 (1) (vii) .
The principle still holds good that the payments to non-resident are liable for tax in India only if they satisfy the test of chargeability in India. In the present case the ld AO has not established it. - Decided in favour of assessee
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2019 (5) TMI 1601
Penalty u/s 271(1)(c) - income for taxation in India - income accrued in India - payments received by the appellant from Prasar Bharti were in nature of fees for technical services - DTAA between India and Singapore - debatable issue - Whether the payments received by the appellant from Prasar Bharti be treated as business receipts?’ - CIT-A deleted the penalty levied - HELD THAT:- On looking at the assessment order passed u/s 143 (3) of the income tax act the assessing officer has treated the same income as fees for technical services as per page number 7 of the assessment order. The total income accrued to the assessee of INR 5 2626383/– is taxable at the rate of 20% as held by the assessing officer.
Nothing in the assessment order itself that AO has recorded any satisfaction with regard to the fact that the assessee has furnished inaccurate particulars of income or has concealed the income. The learned assessing officer has merely stated that the penalty proceedings u/s 271 (1)( c) may be initiated separately. Therefore, there is no specific charge in the assessment order with respect to the satisfaction about the fault committed by the assessee.
The quantum appeals have been admitted by the honourable Delhi High Court [2013 (8) TMI 1108 - DELHI HIGH COURT] , therefore even if the lower authorities have concurrently decided an issue taking same view, the issue becomes debatable. On such a debatable issue penalty cannot be levied. We also found that the ld CIT (A) has correctly relied up on the decision of Honourable supreme court in case of Reliance petro products Limited [2010 (3) TMI 80 - SUPREME COURT] in deleting the penalty as held that otherwise it would be that in every case of return where the claim made by the assessee is not accepted by the assessing officer for any reason it will invite the penalty u/s 271 (1) (C) which is not the intention of the legislature. Therefore we confirm the order of the learned CIT – A in deleting the penalty levied u/s 271 (1) ( C ) - Decided in favour of assessee.
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2019 (5) TMI 1600
Addition on account of undeclared commission income - accommodation entry provider - HELD THAT:- The commission income with respect to the transaction entered into by the assessee are required to be taxed in the hands of the assessee company, provided the same have already not been taxed in the hands of Sri SK Jain.
We direct the assessee to show before the learned assessing officer that commission income earned by Sri SK Jain on these transactions of the accommodation entries have already been offered by him as income in his hands. If the assessee shows that same have been already taxed in the hands of Sri SK Jain, then commission with respect to the above accommodation entries will not be added in the hands of the assessee as it will amount to double addition. If the assessee fails to show that commission income has been offered by Sri SK Jain on these accommodation entries as income in his hands , then the assessing officer is directed to retain the addition of INR 12,000,000 in the hands of the assessee company. Accordingly ground number 1 and 2 of the appeal of the AO is allowed with above direction.
Addition u/s 14A - there being no dividend income earned by the assessee during the year - HELD THAT:- As found that assessee has not earned any exempt income during the year and therefore there is no question of making any disallowance u/s 14 A of the income tax act. Therefore we find no infirmity in the order of the learned CIT – A in deleting disallowance. Accordingly ground of the appeal of the AO is dismissed.
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2019 (5) TMI 1599
Gain on Sale of pent house - LTCG or STCG - co-ownership in property - period of holding of the pent house has to be reckoned from the date of allotment of the property i.e 13.10.2005 and not from the date of possession in 2012 - HELD THAT:- Possession of the flat is flowing from the terms and conditions mentioned in the buyer’s agreement itself. Thus, in our opinion the date of possession cannot be reckoned as a date of the acquisition of the flat for the purpose of computing the period of short term or long term. We are in tandem with the contention of Mr. Ajay Wadhwa that, even if the date of allotment is not to be treated as the date of acquisition, but the date of buyer’s agreement dated 8.3.2006 is the date in which the assesee has acquired the rights in the property. Accordingly we direct the AO to treat the date of acquisition of the flat / property on 8.3.2006.
As never in dispute by the revenue that assessee did not had a valuable right in the property which is a capital asset under the Income Tax Act and it is this capital asset which has been sold by the assessee in this year. Thus, we hold that, firstly it is a transfer of a long term capital gain; and secondly, the same has to be taxed as long term capital gain. Consequently ground No. 1 to 6 is allowed.
Allowability of Interest expenses - interest paid on loan borrowed to the extent of the assessee’s share in the property up to the date of possession - HELD THAT:- Both the authorities have tried to co-relate the ownership of the property way back in 8.3.2006 for which he has made fully payment after taking loan from the bank. The Act which provides that any expenditure incurred wholly and exclusively in acquisition of asset or cost of any improvement therein has to be allowed by deducting from the full value consideration received or agreed as a result of transfer of the capital asset. If the capital asset has been transferred in this year , then up to the date of transfer, the cost of acquisition and improvement has to be allowed. This issue is also covered by the other decision of the Hon’ble Delhi High Court in the case of CIT vs. Mithlesh Kumari [1973 (2) TMI 11 - DELHI HIGH COURT] wherein the Hon’ble High Court has allowed the full interest paid from the period up to the date of sale and therefore, the ratio will apply as binding precedence. Thus, we direct the AO to allow the interest up to the date of sale.
Allowability of other expenses - expenses incurred by the assessee over the period of time which has been claimed towards cost of acquisition - HELD THAT: - From the perusal of the above expenses, we find that certain expenses are directly related to the cost of the improvement for example Govt. Tax , cost of electric meter, cost of BTU meter, HVAC charges, service charges, stamp duty charges. However charges like maintenance charges, electricity charges and other charges cannot be held to be any expenditure incurred wholly and exclusively connected with the transfer of cost of acquisition. Therefore, AO has directed to examine these expenses and allowed the same u/s 48 in the computation of long term capital gain.
Allowability of penalty, Commission and maintenance charges - AO has disallowed the said expenses on the ground that they are in relation to the capital asset and not in the business account - HELD THAT: - In so far as penalty in concerned Ld. Counsel admitted that same has already been disallowed by the assesee in the computation of income, therefore, further disallowance leads to total addition on the same amount. We find the contention of the Ld. Counsel is correct and therefore, we direct the AO to remove the disallowance because assessee has already added back in the computation of income.
Commission addition - Ld. Counsel pointed out AO while computing the short term capital gain has reduced the commission and therefore, if income is to be computed as long term capital gain then same treatment should be given. We find substance in the arguments of the Ld. Counsel , if the nature of commission has is in relation to the transfer of capital asset then while computing the long term capital same should be allowed. However, in respect to maintenance expenses which were for the upkeep of the flat the same would not be allowed as a part of cost of acquisition of capital asset and therefore, same cannot be allowed. Appeal of the assessee is partly allowed.
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2019 (5) TMI 1598
TP adjustment - analysis of advertisement, marketing and sales promotion (AMP) expenses by applying Bright Line Test - international transaction or not ? - TPO held that AMP expenses of sales in case of assessee was at 8.43% which was higher than average AMP expenses incurred by comparables, thereby making an adjustment - HELD THAT:- Since basis on which adjustment has been made being Bright Line Test itself has been rejected in case of Sony Ericson India P.Ltd [2015 (3) TMI 580 - DELHI HIGH COURT] and no further interference is called for at this stage.
On perusal of TP order it is observed that Ld.TPO made an effort to analyse whether AMP expenditure is an international transaction or not. It is very interesting to note that Ld.TPO observes that assessee has been licensed the brand “Adidas” by its domestic AE (Adidas India Pvt. Ltd). He also reproduces relevant extract from the agreement, wherein it is recorded that Adidas India Pvt. Limited is the exclusive owner of trademark “Adidas” and enjoys all proprietary rights related thereto.
We cannot ignore the submission of the learned DR that the matter is pending before Hon'ble Apex Court and the decision of Hon'ble Apex Court would be binding upon all the authorities. In view of the above, we set aside the orders of authorities below and restore the matter to the file of the Assessing Officer. We hold that as per the facts of the case and the legal position as of now and discussed above in this order, the adjustment made by the TPO/DRP/AO in respect of AMP expenses is not sustainable. However, if the above decisions of Hon'ble Jurisdictional High Court in Soney Ericson Mobile Communications (supra) and Maruti Suzuki Inida Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] which are under consideration before the Hon’ble Apex Court is modified or reversed by the Hon’ble Apex Court, then the Assessing Officer would pass the order afresh considering the decision of Hon’ble Apex Court. Ground allowed for statistical purposes.
TP adjustment with relation to export of goods - HELD THAT:- As observed that assessee had imported finished goods amounting to ₹ 13,76,26,854/- out of which, goods worth ₹ 45,64,209/- has been exported back due to its slow moving nature. The percentage of goods exported is approximately 3.3%. In our opinion as the percentage of goods that was returned back as slow moving is within the permissible limits of less than 10%. Even otherwise the gross margin earned by assessee from imported goods is in excess of 40% vis-à-vis the margin earned by assessee from imported goods is in excess of 40% vis-à-vis the margin earned by AE from sale with third party in case of slow moving goods exported by assessee.We are therefore of considered opinion that no adjustment is called for in this regard.
Deduction of bad debts written off being disallowed - HELD THAT:- There are plethora of decisions by various Courts and Hon’ble Supreme Court wherein it has been held that a legitimate claim of assessee should be allowed even if it is raised during assessment proceedings.
There is no dispute with the Department that said amount has been written off in accounts of assessee. However merely because it was not claimed in return of income, will not vitiate right of assessee to claim it during pendency of assessment proceedings. Ld.TPO is directed to allow the claim of assessee as per law.
Disallowance of interest expenditure u/s 36(1) - HELD THAT:- Assessee has submitted that during year under consideration a sum of ₹ 2,08,31,000/- was shown recoverable as opening balance as on 01/04/2006 from AE.
As observed that Ld.AO blindly made addition without appreciating the fact that interest was not charged due to commercial expediency. Respectfully applying ratio laid down by Hon’ble Supreme Court in case of S.A.Builders vs. CIT [2006 (12) TMI 82 - SUPREME COURT] we do not find any infirmity in the view taken by Ld.CIT(A) and the same is upheld.
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2019 (5) TMI 1597
Reopening of assessment u/s 148 - information received from DDIT Investigation - Borrowed information - unexplained sources of funds from which the assessee has made donations for his daughter - HELD THAT:- A perusal of the certificate shows that the tuition fees for the first year is ₹ 4 lacs and the total tuition fees for the entire course of four and half years is 18 lacs. I find that neither the A.O nor the CIT(A) has made any enquiry from the Institution regarding this certificate.
Thus, the AO has acted mechanically and without any independent application of mind. It is also evident that while alleging cash payment , it is not even known or stated on which date and on what basis such sums was allegedly paid by assessee; the reasons recorded are therefore vague, highly non specific and reflect complete non-application of mind. That reasons recorded are 'reason to suspect' and, is a mere attempt to carry out fishing and roving expedition. It is also noted that in the absence of specific and incriminating material much less tangible and, relevant material to form even prime facie belief that there was alleged payment is also apparent from the fact that the alleged document found and seized during the course of search/survey action u/s 132/133A does not reflect any figure and in the absence of any independent enquiry or examination of facts on record or noticing the content of alleged documents in the reasons recorded and, reasons being silent as to the specific facts, the vague allegation shows that action has been taken mechanically on the basis of alleged report of investigation wing, and, not on independent application of mind and therefore on this ground too, the proceedings are without jurisdiction.
It is also noted that there is no live link or direct nexus between alleged material and, inference. It is a case of investigation in the garb of action u/s 148 on the basis that proceedings have been initiated on the basis of no material much less any tangible and, relevant material and as such reasons record do not constitute valid reason to believe for initiating proceedings u/s 147.
Therefore, respectfully following the findings of the Co-ordinate Benches SHRI SHIV CHARAN GOEL VERSUS ITO [2018 (6) TMI 884 - ITAT DELHI] and MEGHA GUPTA VERSUS ITO [2018 (3) TMI 1767 - ITAT DELHI] , I am of the considered view that the proceedings initiated by invoking provisions of Section 147 of the Act are non east of law and without jurisdiction. Hence, the assessment is quashed. - Decided in favour of assessee
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2019 (5) TMI 1596
Disallowance of business promotion expenses u/s 37(1) - club membership fees of Appellant's representative - addition holding the same as expense not related to the business of Appellant - HELD THAT:- On being asked by the Bench whether said Mrs Lata Vaswani has rendered any consultancy/professional services to the assessee for which any bills/invoices were raised by her in favour of the assessee, the Ld. Counsel for the assessee replied in negative. The assessee also could not bring on record any agreement entered into between said Mrs. Lata Vasvani and the assessee to define commercial relationship of the assessee with said Mrs Lata Vaswani which could have proved that Mrs. Lata Vasvani was working for the assessee in any capacity to promote business of the assessee.
It is also not demonstrated by the assessee that any business were infact generated by said Mrs. Lata Vasvani in favour of the assessee. It could also not been explained by the assessee reasons /justification for taking this club membership with MCA in the name of Mrs Lata Vaswani instead of taking the same in the name of the assessee or its directors/employees.
Thus there is a complete failure on the part of the assessee to prove genuineness of these expenses and there is a failure to prove that these expenses were incurred wholly and exclusively for the purpose of business of the assessee. The assessee had failed to discharge the onus as was casted on the assessee by virtue of Section 37(1) and in our considered view, there is no merit in the appeal filed by the assessee which stood dismissed. - Decided against assessee
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2019 (5) TMI 1595
Assessment u/s 153C - no recording satisfaction during the assessment proceedings or thereafter of the searched party i.e., Jugal Kajaria (individual) - addition/disallowance made on the ground that no TDS has been made u/s 40(a)(ia) - HELD THAT:- No addition/disallowance can be made in an assessment made u/s 153C r.w.s. 143(3) , in the absence of any incriminating material being found during the course of search. The undisputed fact is that there was no incriminating material found during the course of search. The addition/disallowance made for both the assessment years are on the ground that no TDS has been made and hence, the provisions of Section 40(a)(ia), are attracted and on the ground that part of the expenditure claimed could not be substantiated with evidence. Both these disallowances are not based on any material found during the course of search. The assessments for both the Assessment Year have not abated. Accordingly, this ground of cross-objection of the assessee is allowed. - Decided in favour of assessee.
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2019 (5) TMI 1594
Rectification u/s 254 - Low tax effect - maintainability of appeal - monetary limit - HELD THAT:- One of the ground to dismissed the appeal is tax effect whereas the other ground is that the case of the assessee was duly covered by Hon’ble ITAT by assessee’s own case for the A.Y. 2010-11 [2018 (8) TMI 1813 - ITAT MUMBAI] . Since the matter of controversy has been adjudicated not only the based on Circular No.03/2018 dated 11.07.2018 but also based upon on merits being duly covered by decision of Hon’ble ITAT in the assessee’s own case for the A.Y. 2010-11 therefore, in the said circumstances, we are of the view that there is no mistake apparent on record. Hence, the contention of the Revenue nowhere came within the ambit of provisions u/s 254(2) of the Act, hence, the present miscellaneous application is dismissed.
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2019 (5) TMI 1593
Disallowance of foreign currency exchange loss treating speculative - loss on account of forward contracts in US Dollar-Rupee to hedge the export receivable in USD - AO alleged that claimed expenses is for buying and selling of US Dollar and the settlement is not by way of physical delivery - CIT-A deleted the addition - HELD THAT:- There was a direct and proximate nexus between the business operations of the import and export of goods and loss on forward contracts, because the hedging of foreign currency was done on the basis of confirmed orders with the customers and past export performance of the assessee which the bankers have duly verified and thereafter the forward contract were entered before the actual delivery of goods based on the purchase orders.
Clearly the hedging contracts entered were incidental to the business of the assessee and were intended to guard against losses through future price fluctuations. As pointed out that in the earlier years in scrutiny proceedings such losses have been treated to be a business loss. CIT (A) has categorically noted that it was a complete party wise details of the purchase orders against which exports were made in USD during the year and also perused the copy of purchase orders exceeding USD 25,000. In fact assessee has exported goods during the year under consideration amounting to USD 19,67,954 as against availability of purchase orders amounting to USD 22,13,453.
It cannot be held that the future contracts were not connected to the assessee’s export and was a separate transactions de-hors the export of the assessee. Once the forward contracts for foreign currency was directly related to export and import and incidental to the business of assessee, then it cannot be held that it is in the nature of speculative transaction within the scope of ambit of section 43(5). See BADRIDAS GAURIDU (P.) LTD. [2003 (1) TMI 61 - BOMBAY HIGH COURT] - decided against revenue
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2019 (5) TMI 1592
Revision u/s 263 - notice issued alleging that AO had not examined the financial worth, genuineness and creditworthiness of transactions relating to introduction of share capital - assessee has not received any money in form of cash or cheque in lieu of share application or share premium; rather the assessee had received investments in form of equity shares - HELD THAT:- Here in this case, once there is no transaction in terms of any money, then there could be no question of seeing the creditworthiness by way of their annual revenue or income. The reason being, all these companies were holding investments right from the earlier years in the form of equity shares of various companies and the shares held as investment by them has been transferred to the assessee in consideration for allotment of equity shares. Thus, the source of shares received by the assessee is flowing from investments held by them in their balance sheet which have been part of their assessment records. Under the peculiar facts and circumstances of the case, we do not find any reason that there was any lack of enquiry done by the AO or non-application of mind qua the creditworthiness or genuineness of the transaction.
Once, the Assessing Officer has found that a transaction is not in terms of any money after the detailed inquiry and getting the entire records from these 15 companies, then we are unable to appreciate as to how the CIT had reached to a conclusion that the Assessing Officer has failed to investigate the genuineness and creditworthiness of source of funds credited in the books of account of the assessee company.
Here in this case, firstly, identity of the parties cannot be in dispute; secondly, the genuineness of the transaction is fully proven by the fact that these companies have given shares to the assessee in lieu of shares allotted to them; and lastly, there is no requirement to examine the creditworthiness of any sum advanced or invested by these companies because there is no transaction in terms of cash/money. The source of investment which has been transferred to the assessee company is flowing from their balance sheets as these shares were held by these companies as investment duly reflected in their balance sheets in earlier years. We do not find it a fit case wherein the Revisionary jurisdiction u/s. 263 could have been exercised in the light of the fact that the Assessing Officer had carried out detailed inquiry and examination directly from the parties in the course of assessment proceedings.
Otherwise also, it is trite law that, if the ld. Pr. CIT was not satisfied with the inquiry conducted by the Assessing Officer, then at least he should have carried out some prima facie enquiry himself so as to reach to a conclusion that the inquiry conducted by the Assessing Officer was deficient or lacking. Without conducting any inquiry, Ld. PCIT cannot hold that the either the inquiry conducted by the Assessing Officer was insufficient or there is no verification of the evidences.
Under these facts and circumstances the assessment order cannot be set aside on the ground that no inquiry has been made or such an order is erroneous and prejudicial to the interest of revenue.
Accordingly, we quash the impugned revisionary order u/s. 263 and restore the assessment order. - Decided in favour of assessee.
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2019 (5) TMI 1591
TDS u/s 195 - disallowance of payments made outside India u/s 40(a)(i) - render services for handling all operations including co-ordinating with Indian teams for maintaining, rectifying problems testing, upgrading/supporting customers, content providers, etc., at Uganda - independent personnel services or professional services - DTAA provisions - HELD THAT:- As held that article 14 of the Double Taxation Avoidance Agreement is more specific as it applies specifically to professional services provided by the individual resident whereas article 12 provides for residents of foreign countries and therefore article 12 is broader in scope and general in nature compared to article 14 of the Double Taxation Avoidance Agreement.
We hold that in the facts of present case, the services received by the assessee from these three persons is covered by article 14 and therefore, the same cannot be included in article 12 because as per article 12(3)(b), it is specifically provided that the term 'fees for technical services does not include payments for services mentioned in articles 14 and 15 of this convention.
In the present case, article 14 is applicable and therefore, the receipt of these three persons cannot be considered under article 12(3)(b) and as a consequence, the same is taxable in the country of resident, i. e., Uganda and therefore, no TDS was deductible u/s 195 and consequently, disallowance u/s 40(a)(i) is not justified
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2019 (5) TMI 1590
Depreciation on exclusive business rights (good will) - HELD THAT:- As decided in assessee's own case [2016 (3) TMI 590 - ITAT DELHI] AO is directed to grant the depreciation on the consideration for the purchase of the exclusive business rights which are to be treated as intangible assets - Decided in favour of assessee
TP Adjustment - selection of MAM - Resale Price Method (“RPM”) OR Transactional Net Margin Method (“TNMM”) - Expenses directly attributable to the manufacturing activity - HELD THAT:- Only airconditioners are imported from AE and water cooler plus air cleaners are manufactured and no sales are made to the AE.
The bench marking done by the TPO is on erroneous facts. Unless a proper bench marking is done the dispute cannot be decided.
We find that the TPO has adopted TNMM as the most appropriate method by saying that the comparables are not clear and their operating profit margin is not capable of applying RPM as most appropriate method though the same comparables have been used for bench marking by applying TNMM. This contradiction needs to be examined once again.
We restore this issue to the files of the AO/ TPO with a direction that the manufacturing activity should not be considered as part of international transaction. Expenses directly attributable to the manufacturing activity should be ignored and the comparables should be once again examined to decide whether RPM is the most appropriate method. The assessee is free to raise any other issue relating to the bench marking and the TPO is also free to decide the issue after giving a reasonable opportunity of being heard to the assessee. Ground treated as allowed for statistical purpose.
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2019 (5) TMI 1589
Restraint from encashing the bank Guarantee -deemed exports - goods imported by PEL (steel plates) for supply to NTPC who agreed to pay the duties leviable on the said imports - HELD THAT:- The learned counsel appearing for the respondents states that the said amount was paid by NTPC under protest and since the Export Obligation Discharge Certificate has not been provided, the bank guarantee ought not to be released. This Court finds the aforesaid contention unmerited. Concededly, the bank guarantee was submitted by PEL to secure the revenue to the extent of ₹8,15,00,000/-. As against the said bank guarantee, NTPC has paid a sum of ₹19,91,83,067/-, as quantified by the concerned authority.
There is no justification for respondent no.1 now to continue to withhold the bank guarantee. The respondents cannot continue to withhold the bank guarantee after accepting the said amount of ₹19,91,83,067/- - respondent no.1 is directed to forthwith return the bank guarantee to NTPC - Petition disposed off.
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