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Showing 461 to 480 of 1398 Records

2020 (10) TMI 938

Disallowance u/s. 14A r.w.r. 8D - interest on partners’ capital treated as exempt for the purpose of making disallowance or not? - assessee is claiming that there are no borrowed funds and no expenditure can be directly attributed to earn the exempt income and the AO has not recorded his satisfaction for not accepting the assessee’s claim - HELD THAT:- Respectfully following the decision of ITAT Pune in the case of Quality Industries [2016 (10) TMI 56 - ITAT PUNE] we hold that payment of interest to the partners towards the use of the partner’s capital as per the provisions of partnership deed is held not subject to disallowance under section 14A read with Rule 8D(ii).

Interest is simultaneously be subjected to tax in the hands of its partners is merely in the nature of contract items in the hands of the firms-partners. Therefore, the investment in Mutual funds by the assessee generating tax free income bears the characteristic of and is attributable to its capital where, no disallowance u/s.14A r.w Rule 8D(ii) is warranted.

Disallowance u/r 8D(iii) - no specific ground or plea has been taken by the ld A.R. on behalf of the assessee, therefore, we hold it sustainable in view of express mandate of law - Keeping in view the facts related to the remaining issue of mandatory disallowance u/s.14A r.w. Rule 8D(2)(iii), we are consistently following the view expressed in the case of NALCO [2019 (10) TMI 124 - ITAT CUTTACK] wherein as held average of only such investments have to be taken into account, which yielded the income not forming part of the total income. AO was required to work out the average of such investment, the income from which did not form part of the total income instead of total value of investment. For this view, our stand is fortified by the decision of Special Bench in the case of ACIT vs. Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI].

We, therefore, restore the issue to the file of the AO for limited purpose i.e. for calculation of the disallowance u/s.14A r.w. Rule 8D(2)(iii) of the Rules, in the light of our conclusions recorded hereinabove.
2020 (10) TMI 937

Application u/s 80G(5)(vi) rejected - charitable activity u/s 2(15) - assessee has been granted registration u/s 12AA - HELD THAT:- From the registration granted u/s 12AA that objects of the assessee were charitable in nature and assessee has been doing some activities. On the last date of hearing the CIT(E) called for certain explanation and details with regard to activities which according to Assessee have been sent vide letter dated 27.12.2017 through email on 29.12.2017.

CIT(E) has passed the impugned order prior to it on 28.12.2017. Thus, it would show that assessee was interested in pursuing the matter and there was no justification for the Ld. CIT(E) to hold that assessee is not interested in pursuing the matter. Copy of the email of the O/o. Ld. CIT(E) dated 22.12.2017 is filed at page-128 of the PB in which even no date have been given for making the compliance.

There were no justification to pass the impugned order on 28.12.2017 before waiting for the reply of the assessee which assessee has ultimately filed on 29.12.2017. The facts clearly show that the matter requires re-consideration at the level of the CIT(E) because the documentary evidence or record have not been considered and appreciated by him. In view of the above discussion, we set aside the impugned order. Appeal of the Assessee is allowed for statistical purposes.
2020 (10) TMI 936

Income accrued in India - taxability of receipts from the sale of software as royalty - receipts of royalty income being in nature of payment for use of copyright in a process and transfer of information of commercial or industrial nature - Copyright vs Copyrighted Article - India-Sweden DTAA - HELD THAT:-Since the facts of the instant assessment year are identical to the facts of the two preceding assessment years decided by the Tribunal in assessee’s own case relying on INFRASOFT LTD. [2013 (11) TMI 1382 - DELHI HIGH COURT] and NOKIA NETWORKS OY [2012 (9) TMI 409 - DELHI HIGH COURT]we set aside the order of the Ld. CIT(A) and hold that consideration received by the assessee for sale of software cannot be treated as royalty under the provision of section 9(1)(vi) of the Act as well as Article 12 of the India-Sweden DTAA and that the sale of software products by the assessee to its Indian distributors for further sale to end users is not in the nature of transfer of “copyright” and therefore not taxable in the hands of the assessee as “royalty” under the provision of section 9 (1)(vi) of the Act as well as Article 12 of the India-Sweden DTAA. - Decided in favour of assessee.
2020 (10) TMI 935

Penalty u/s 271D and 271E - loans were taken and repayment were made in cash, thereby violating the provisions of section 269SS and 269T - HELD THAT:- Majority of loans / deposits are taken from relatives, viz., wife, son and daughters.

Bangalore Tribunal in the case of Smt.Deepika v. Addl.CIT [2017 (10) TMI 1405 - ITAT BANGALORE] had held that transactions between family members would not attract penalty u/s 271D.

Also in the case of Sunil Kumar Goel [2009 (3) TMI 131 - PUNJAB AND HARYANA HIGH COURT] wherein it has been held that the family transactions would fall within the meaning of “reasonable cause” u/s 273B.

Loans / deposits accepted from other than relatives, viz., Sri.Hiren Kumar Patel - On a query from the Bench whether there is a business understanding in writing between the assessee and Sri.Hiren Kumar Patel, the learned AR submitted in the affirmative and requested the matter may be examined by the A.O - For the imposition of penalty u/s 271D and 271E in context of transaction the assessee had with Sri.Hiren Kumar Patel, the matter is restored to the A.O. The assessee shall cooperate with the A.O. and shall not seek unnecessary adjournment. The assessee shall prove his case that the transaction he had with Sri.Hiren Kumar Patel is a business transaction and not a loan / deposit. It is ordered accordingly.

Cash paid by Sri.Hiren Kumar Patel to a builder for the purchase of a flat on behalf of the assessee - passing of journal entry without actual receipt of cash - HELD THAT:- Assessee had recorded in her books of account, by passing a journal entry by crediting Sri.Hiren Kumar Patel’s accounts and debiting the flat purchase account. However, only the ledger account of Sri.Hiren Kumar Patel in the books of account of the assessee alone is placed on record. To understand whether it is a journal entry, the ledger account of the developer in the books of account of the assessee also needs to be perused.

In absence of the same, in the interest of justice, we restore the issue to the files of the A.O. The A.O. shall examine whether the assessee in her books of account only passed a journal entry and was not in receipt of money from Sri.Hiren Kumar Patel. In view of the dictum laid down by the Hon’ble Delhi High Court in the case of CIT v. Noida Toll Bridge Co. Ltd. [2003 (1) TMI 46 - DELHI HIGH COURT]if the assessee had passed only a journal entry, the provisions of section 269SS would not be attracted and penalty u/s 271D.
2020 (10) TMI 934

Dependent Agent PE of the assessee company in India - Income accrued in India - HELD THAT:- Since the lower authorities following the orders of the preceding years [2020 (9) TMI 922 - ITAT DELHI] have held that M/s. Mitsui & Co. Ltd. has been constituted as Dependent Agent PE of the assessee company in India , therefore, following the consistent decisions of the Tribunal in assessee’s own case in the preceding assessment years and in absence of any contrary material brought to our notice against the decision of the Tribunal we hold that MIPL is not a Dependent Agency Permanent Establishment of the assessee.

No attribution of income should be made to MIPL

Attribution of profits to DAPE [Dependent Agency Permanent Establishment]- HELD THAT:- Respectfully following the consistent decisions of the Tribunal in assessee’s own case [2020 (9) TMI 922 - ITAT DELHI] also relying decision of the preceding assessment years [2020 (2) TMI 1053 - ITAT DELHI ] and in absence of any contrary material brought to our notice we hold that no further profit could be attributed since assessee is not a Dependent Agency Permanent Establishment.

Commission on the total sale - CIT(A) deleted the addition made by the AO observing that TPO has accepted the payment being at arm’s length - HELD THAT:- We do not find any infirmity in the order of the Ld. CIT(A) on this issue.

First of all this issue becomes academic in nature in view of our finding that MIPL is not dependent agency PE and therefore no income is attributable to the assessee and therefore when there is no income there is no question on any disallowance - such commission claimed by the assessee has been accepted in earlier years by the Ld. CIT(A) and the revenue had not preferred any appeal although they had filed appeal against the order on other issues decided by the Ld. CIT(A) in favour of the assessee.

Merit in the arguments advanced by the Ld. Counsel for the assessee that once the department has accepted the view taken by the Ld. CIT(A) in the preceding years the said view cannot be disputed in the current year in view of the principles of rule of consistency.
2020 (10) TMI 933

TP Adjustment - MAM selection - TNMM or RPM - TPO computing the arm length price in respect of ‘Import of Material’ and ‘Export of finished goods’ by applying Transactional Net Margin Method and rejecting resale Price Method as the most appropriate method, thereby making a TP adjustment - HELD THAT:- In the present case before us the issue is whether the assessee is a distributor or a manufacturer and whether resale price method is applicable to the international transactions entered into by the assessee. It is not the case that assessee has resold the same goods with only minor modifications to justify the adoption of RPM as the most appropriate method. In the present case the assessee has assembled the goods partly purchased from its associated enterprise and partly developed by its own vendor. Therefore, the decision relied upon by the learned authorised representative MSS INDIA (P) LIMITED. [2009 (5) TMI 600 - ITAT PUNE-A]does not help the case of the assessee.

In view of the above facts we do not find any infirmity in the order of the learned assessing officer/transfer pricing officer as well as the direction of the learned dispute resolution panel in rejecting the resale price method adopted by the assessee and adopting transactional net margin method as the most appropriate method. - Decided against assessee.
2020 (10) TMI 932

Penalty u/s 271(1)(c) - defective notice - AO has not specified under which limb penalty is being initiated - HELD THAT:- Failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty u/s 271(1)(c) was sought to be imposed on it in the ‘SCN’, dated 10.11.2014, had left the assessee guessing of the default for which it was being proceeded against.

As the two defaults viz. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ as contemplated in Sec.271(1)(c) are separate and distinct defaults which operate in their exclusive and independent fields, we, are unable to subscribe to the view taken by the CIT(A) that the A.O had validly imposed penalty for concealment of income/filing inaccurate particulars of income in respect of the aforesaid addition/disallowance made in the hands of the assessee. We not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set aside the order of the CIT(A) who had upheld the same. The penalty imposed by the A.O under Sec.271(1)(c) is quashed in terms of our aforesaid observations. - Decided in favour of assessee.
2020 (10) TMI 931

TDS u/s 195 - Non deduction of TDS on subscription charges - demand raised u/s 201(1) and 201(1A) - as per AO payment so made by the assessee for getting the license to use data base of M/s Gartner group is in the nature of royalty - HELD THAT:- As decided in M/S. ACER INDIA PRIVATE LTD. case [2020 (10) TMI 450 - ITAT BANGALORE] assessee cannot be treated as an assessee in default in respect of payments made for purchase of licensed software prior to 15.10.2011, being the date of pronouncement of the decision in the case of Samsung Electronics Co. Ltd [2009 (9) TMI 526 - KARNATAKA HIGH COURT].

Accordingly, the demand raised in the hands of the assessee u/s 201(1) and 201(1A) for assessment years 2009-10 to 2011-12 could not be sustained and the demands raised in respect of payments made prior to 15.10.2011 in assessment year 2012-13 could also not be sustained. - Decided in favour of assessee.
2020 (10) TMI 930

Disallowance u/s 14A r.w.r. 8D - recording satisfaction - assessee’s objection that there is absence of satisfaction recorded by the Assessing Officer - HELD THAT:- We note that the AO has categorically stated that “Hence, having regard to the accounts of the assessee-company, I am satisfied that the claim of the assessee in respect of expenditure in relation to income which does not form part of the total income under the Income Tax Act, 1961 is not correct.”

Plea that the AO has not recorded any satisfaction regarding assessee’s claim fails and in this view of the matter the case laws referred by assessee for the proposition that the disallowance in this regard on the touchstone of Rule 8D would fails in the absence of necessary satisfaction by the AO are not applicable, in as much as satisfaction of the AO is very much evident in the assessment order. Accordingly, this limb of claim of assessee’s argument is not correct.

We note that the exempt income earned is only ₹ 3,99,270/- and the disallowance for administrative expenses incurred in this regard is ₹ 2,36,733/-. This at glance is not in accordance with principles of proportionality. Hence, we remit this issue to the file of the AO with the direction to assessee to submit its details of direct and indirect expenses which has been incurred in incurring exempt income.

Addition being the interest income reflected in the AIR information not credited in the profit and loss account - HELD THAT:- Contention of assessee is that the said income did not belong to the assessee and it was mistake on the part of IL&FS Securities Ltd. to show the above sum as income of the assessee was not made before the AO nor the assessee had asked the Assessing Officer to issue/make any inquiry from the concerned entity. Hence matter is remitted to the file of the Assessing Officer. AO is directed to examine the assessee’s plea that the said income reflected in AIR information is wrong in as much as some does not belong to the assessee.

Disallowance u/s 36(l)(ii) - Payment of bonus to its directors shareholders - HELD THAT:- AO in this case if he wants to invoke provisions of section 36(1)(ii) on the touchstone of M/S. DALAL BROACHA STOCK BROKING PVT. LTD. [2011 (6) TMI 251 - ITAT, MUMBAI].

AO will have to give clear cut finding as to what was tax avoidance or tax evasion involved in this case. For this purpose the AO will need to examine the amount of dividend which the assessee-company would have declared under the provisions of relevant payment of dividend as per the Company’s Act. He shall also compute tax sought to be avoided by the assessee company by the so called scheme of the company.

In this regard the decision in the case of Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] is also relevant here as expounded that if the tax effect is revenue neutral, the proposition need not be disturbed. Here Assessing Officer shall examine the assessee’s submission that both the share holder directors or owners of the company have filed their individual return and have been taxed at the highest bracket in the context of this Hon'ble Supreme Court decision. So the tax impact and the emerging tax neutrality if any, needs to be evaluated on the touchstone of this decision also. The claim in this regard was duly submitted, as noted by learned CIT(A) himself in his order.

Accordingly, we set aside the issue of allowability of payment of bonus to the director shareholders in accordance with our direction and the decisions quoted above
2020 (10) TMI 929

Disallowance u/s 14A r.w.r. 8D - Non recording of satisfaction before making disallowance - HELD THAT:- As decided in own case AO [2019 (4) TMI 1436 - ITAT DELHI] at the first instance should have examined the correctness of the statement made by the assessee that no expenses were incurred for earning the exempt income during the year and if and only if the Ld. AO is not satisfied on this account after making reference to the accounts, he is entitled to adopt the method under Rule 8D of the Rules. We, therefore, while allowing the plea of the assessee direct AO to delete the addition made on this score.

Interest on Car Loans - AO held that income and expenditure account of the assessee for the year under consideration, it was seen that the assessee has debited interest paid on account of vehicle loan - HELD THAT:- As decided in own case [2019 (4) TMI 1436 - ITAT DELHI] it is not the case of the Ld. Assessing Officer that the car loan was diverted for any other purpose, because there is no denial of the statement of the assessee that the loan amount was directly disbursed to the seller of the car. Inasmuch as the loan was for the purpose of business and no question of diversion of such funds had taken place, merely because the assessee placed his own funds and also the interest free loans for some other purposes, is not open for the Ld. Assessing Officer to disallow the interest on the amount taken for business purpose. We, therefore, direct the Assessing Officer to delete this addition.

Software Expenses - AO has disallowed the claim of the assessee of treating software expenses as revenue expenses and treated it as capital expenditure and depreciation @ 60 % was allowed and 40% of the expenses were disallowed on account of software expenses being capital in nature - HELD THAT:- The issue of depreciation of the software and the computer accessories has been adjudicated a number of cases by this Tribunal wherein depreciation @60 % has been allowed - since the AO and the ld. CIT ( A) have categorically mentioned that the assessee did not produce the relevant evidences for the purchase of software, we, accordingly, set aside the orders of the authorities below and restore this issue to the file of AO with direction to re-decide the issue after giving an opportunity of being heard to the assessee, after verifying the bills and vouchers produced on this issue. This ground is allowed for statistical purposes.

Disallowance of Personal Expenditure - AO noted that assessee has claimed telephone and telex, vehicle running and maintenance expenses and depreciation on vehicle in profit and loss account - HELD THAT:- We are of the view that the entire addition is wholly unjustified. The AO has not pointed out on which items personal element was involved in claiming the aforesaid expenses. AO has not pointed out any specific item which is used by the assessee for personal purposes. It is ad hoc addition made by the AO by disallowing 1/10th out of these expenditures. It is well settled law that ad hoc addition cannot be sustained unless AO has pointed out any specific item in which personal element is involved. There was thus, no justification to make any disallowance out of these expenditures. We, accordingly, set aside the orders of the authorities below and delete the entire addition. Appeal of the assessee is allowed
2020 (10) TMI 928

Addition u/s 56(2)(viib) - allegation of Share premium received by assessee was in excess of Fair Market Value of shares - Method of valuation - adopting the prescribed method at the choice of the assessee or revenue - HELD THAT:- Once the assessee has produced all the valuation reports based on Discounted Free Cash Flow method as well as the fair market value of the assets as on the date of issue of the shares, then this observation of the ld. CIT (A) that the assessee has failed to exercise an option of adopting the method is contrary to the record.

Despite the fact that all the valuations are available on record, the ld. CIT (A) has again failed to give the credit to the extent of the valuation being the fair market value of the shares based on Net Assets Value method at least. Failure on the part of the ld. CIT (A) to allow the credit to the extent of the fair market value even based on the Net Assets Value method, it appears that the ld. CIT (A) was not functioning as an independent appellate authority but reflecting as an authority to collect the maximum revenue. Accordingly, in the facts and circumstances of the case when the assessee has substantiated the value of the shares issued at a price of ₹ 200/- by a fair market value of ₹ 230/- which is more than the issue price, then no addition is called for under section 56(2)(viib)

As decided in M/S. RAMESHWARAM STRONG GLASS (P) LTD. VERSUS THE ITO, WARD 2 (1) , AJMER [2018 (9) TMI 403 - ITAT JAIPUR] Authorities below wanted to impose upon the method of valuation of their own choice, completely disregarding the legislative intent which has given an option to the assessee to choose any one of the two methods of valuation of his choice.

When the law has specifically provided a method of valuation and the assessee exercised an option by choosing a particular method (DCF here), changing the method or adopting a different method would be beyond the powers of the revenue authorities. Permitting the revenue to do so will render the clause (b) of Rule. 11UA(2) as nugatory and purposeless. Thus, to this extent the action of the authorities below is not justified and it is held that the assessee has got all the right to choose a method which, cannot be changed by the AO.

AO can scrutinize the valuation report only if some arithmetical mistakes are found, he may make necessary adjustments. It is not open for the AO to challenge or change the method of valuation, once opted by the assessee and to modify the figures as per his own whims and fancies. In any case, the revenue could not ask to prepare the valuation report based on actual which is not contemplated in Rule 11UA(2)(b) - Decided in favour of assessee.
2020 (10) TMI 927

Extension of stay granted - grant stay beyond 365 days - HELD THAT:- Payments made by the assessee is already much in excess of 20% of the disputed demand of tax, interest, fee, penalty, etc., and in this manner, the amended first proviso to section 254(2A) gets satisfied in the present case. In view of the above discussion, we grant extension of stay up to 19.03.2021 in order to ensure that the total stay granted by the Tribunal does not exceed 365 days because the original stay was granted by the Tribunal on 20.03.2020.

We do not mean and hold that the Tribunal cannot grant stay beyond 365 days but that aspect we are leaving open for a decision in some other appropriate case because in the present case, even by granting extension of stay up to 19.03.2021, total stay granted by the Tribunal does not exceed 365 days and therefore, in the present case, we feel that we are not required to adjudicate this aspect of the matter i.e. amended second proviso to section 254 (2A). Stay Petitions filed by the assessee are allowed.
2020 (10) TMI 926

Late fee u/s 234E - intimation u/s 200A - Late filing of TDS returns / statement - dispute is regarding filing of Form 26Q and therefore, sub-rule 1 is applicable and not sub-rule 4A - HELD THAT:- As relying on Meghna Gupta [2018 (10) TMI 355 - ITAT DELHI] this is the observation of the Tribunal that fees under section 234E is leviable only when the statement is not filed as prescribed u/s 200(3) which in turn provides that the statement is to be filed after payment of the TDS to the prescribed authorities. In the present case, the TDS was deposited on 21.10.2015 and the actual date of filing of Form 26Q is 02.11.2015 and hence, as per this Tribunal order, the delay in filing of statement is to be counted from the date of payment of TDS because before the payment of TDS, the quarterly statement cannot be filed and if we compute the delay in this manner, the delay is of 12 days only as per the working provided by the assessee on page 5 of the Paper Book. Accordingly, we uphold the levy of fees under section 234E to this extent i.e., ₹ 2,400/- and delete the balance amount of fees levied by the AO and confirmed by learned CIT(A) under section 234E of the Income Tax Act, 1961.
2020 (10) TMI 925

Exemption u/s 54F - Denial of exemption possession of the property was not taken by assessee and registered sale deed was not executed in favour of assessee - CIT(A) allowed exemption claimed by assessee to the extent as deposited into capital gains account scheme maintained with Indian overseas bank and state bank of India and disallowed exemption claimed in respect of investment made in residential property by holding that, investment in residential property was made prior to date of sale of original asset, and construction of residential property was not completed within stipulated time -

HELD THAT:- There is no strict requirement regarding completion of construction under section 54F(1) to be entitled for availing exemption. The passport to derive benefit under sec.54F(1) is investment in construction of property within the period required u/s 54(1)F or to invest in residential property within the stipulated time for enabling deduction under section 54F.

Once it is demonstrated that the consideration received on transfer of capital asset has been invested in or construction of residential house, even though the construction is not complete in all respect as required under law, assessee cannot be denied benefit under section 54F. Further on a plain reading of case of CIT Vs. Sambandam [2012 (3) TMI 80 - KARNATAKA HIGH COURT] reveals that, there is no particular stage of completion of construction, that is contemplated. AR submitted that, the construction was later on completed and the sale deed was registered in favour of assessee on 05/07/2019 in respect of transfer of ownership of residential property. There is nothing placed by revenue on record to demonstrate any other violation in support of their arguments.

In present facts we are of the view that assessee has substantially fulfilled all necessary conditions to be entitled for liberal interpretation of sec.54F. We hold that assessee is eligible for exemption u/s 54F. - Decided in favour of assessee.
2020 (10) TMI 924

TP Adjustment - adjustment to arm’s length price in respect of AMP expenditure - whether Advertising, Marketing and Promotion (AMP) expenditure could be construed as an international transaction? - HELD THAT:- As decided in own case [2016 (8) TMI 608 - ITAT MUMBAI] AMP expenditure is not an international transaction and hence, no ALP adjustment could be made thereon.

Unabsorbed depreciation carried forward and adjusted in view of Section 32(2) - HELD THAT:- Issue decided in favour of the assessee by the decision of General Motors India Pvt. Ltd. [2012 (8) TMI 714 - GUJARAT HIGH COURT]. Also in case of Times Guarantee Ltd.[2010 (6) TMI 516 - ITAT, MUMBAI] on identical issue, by placing reliance on the decision of CIT vs. Hindustan Unilever Pvt. Ltd. [2016 (7) TMI 1245 - BOMBAY HIGH COURT]and several other Bombay High Court decisions, had dismissed the claim of the revenue - Decided in favour of assessee.
2020 (10) TMI 923

Addition u/s 56 (2)(vii)(b) - difference in purchase consideration between sub-registrar value and purchase price - difference between fair market value of the property and actual consideration - whether the third proviso to section 50C(1) can be applied to section 56(2)(vii)(b) in the absence of such proviso in that section? - HELD THAT:- Parliament has introduced third proviso in section 50C(1) of the Act, as per which the difference in stamp duty valuation and actual consideration should be ignored, if it is less than 5%/10%. Even though the said provision has come into effect from 1.4.2019/1.4.2021, we notice that the Kolkata Bench of Tribunal has held it to be curative in nature in the case of Chandra Prakash Jhunjhunwala [2019 (8) TMI 1192 - ITAT KOLKATA]and accordingly held that the proviso shall apply since the date of insertion of sec.50C of the Act. Accordingly, the above said reasoning given by the Kolkata bench of ITAT also supports the contentions of the assessee.

We find merit in the prayer of the assessee. We notice that the addition sustained by Ld CIT(A) works out to less than 10% of the actual consideration paid by the assessee. Accordingly, we modify the order passed by Ld. CIT(A) and direct the A.O. to ignore the difference between fair market value determined by CIT(A) and the actual consideration as the same is less than 10% of the actual consideration. - Decided in favour of assessee.
2020 (10) TMI 922

Disallowance of prior period expenses - reasons for claiming these expenses one by one under each head which has been reproduced by the AO in the assessment order - whether expenditures are crystallized during the year under consideration? - HELD THAT:- When the liability is crystallized during the year under consideration and the assessee has been regularly and consistently following the same method of accounting and system of approval of the payments, then the claim of expenditures would not affect the tax liability of the assessee. Accordingly, in the facts and circumstances of the case and following the earlier order of this Tribunal, the disallowance made by the AO and sustained by the ld. CIT(A) is deleted.

Disallowance of Business Promotion and Social Welfare Expenses - payments made to Federation of Mining Association of Rajasthan, District Police Welfare Fund, District Weight Lifting Association, West Zone Culture Centre, District Vikas Samiti for construction of Community Centre for Police Department, Rose Society, Sangeet Parishad, Mahila Samiti, Government Adarsh Higher Primary School - AO has disallowed the said amount on the ground that these expenses are in the nature of donation and not incurred for the purpose of business of the assessee - HELD THAT:- Maintaining a cordial relations with the Police Department and District Administration is in the interest of business of the assessee and hence the said payment of the assessee for the welfare of the Police Department, particularly Community Centre as well as Welfare Fund of the Police Department is an allowable expenditure having regard to the nature of business activity in the mining field which requires police help for maintaining law and order situation and uninterrupted functions of the assessee. Similarly the other contributions to the various Societies, Samitis and Sangeet Parishad including the Government Adarsh Higher Primary School for sponsorship of the sports tournaments are certainly for the publicity and business promotion of the assessee. Even otherwise, such type of contributions are participations of the assessee and monetary help in conducting the social welfare activity in the area would bring a good reputation and image of the assessee's business which is nothing but a business promotion activity of the assessee.

Expenditures incurred by the assessee under the head Business Promotion and Welfare Activities is allowed. Addition made by the AO is deleted. - Decided in favour of assessee.
2020 (10) TMI 921

Validity of release order under Section 110A of the Customs Act - Betel Nuts - fulfilment of condition precedent for the release of the subject betel nuts - Circular dated 16-08-2017 - HELD THAT:- In the light of the decision of the Division Bench of Delhi High Court in AGYA IMPORT LIMITED VERSUS COMMISSIONER OF CUSTOMS, NEW CUSTOM HOUSE, NEW DELHI [2018 (10) TMI 573 - DELHI HIGH COURT] where under it is held that Circular dated 16-08- 2017 is directory and not mandatory and also that the conditions for said Circular are merely guidance coupled with the order dated 20-02-2020 issued by the Superintendent (Adjn.) under which the betel nuts were provisionally released on deposit of 25% of the seizure value, I am of the considered view that the impugned order cannot be sustained especially when it is the specific case of the petitioner that the seizure value of the subject betel nuts is ₹ 52.23 lakh and under the impugned order the petitioner was asked to deposit an amount of ₹ 70.51 lakh.

The matter is remanded back to the Commissioner of Customs (Prev.), NER, Shillong to reconsider the provisional release of the subject betel nuts belonging to the petitioner in the light of the decision of Delhi High Court in Agya Import Ltd and the order of the Superintendent (Adjn.) dated 20-02-2020 on which petitioner relied upon.
2020 (10) TMI 920

Oppression and mismanagement - non-service of notice - main issue raised by the appellant that he has not received notice for Board Meeting to be held on 20th January, 2020 at 4 PM and in the said meeting two directors have been appointed - Section 421 of the Companies Act, 2013 - HELD THAT:- As the subject matter on the validity of the meeting held with due notice or not will be decided over a period of time. We have also notice alleged two Board Meeting are allegedly held on 20th January, 2020 at 12 Noon and after that, on the same day at 4.00 PM. The Appellant contends that he has received notice of only one Board Meeting scheduled to be held 12 Noon on 20th January, 2020. However, service of notice of a second board meeting is disputed, which can be decided finally along with the petition. Meanwhile we think it proper to stay the operation on the Resolution passed in the alleged Board Meeting held at 4 PM on 20th January, 2020.

We further expect that hencefortgh the Company and its Director will communicate with each other with e-mail in addition to communication by normal channel made by the Company. This will end the controversy regarding service of notice. We also direct that till the decision of this case account of the Respondent Company will be operated by all the four directors, who were operating the account before the alleged board meeting dated 20th January, 2020.

Appeal disposed off.
2020 (10) TMI 919

Approval of Scheme of Arrangement - Sections 230-232 of Companies Act, 2013 - HELD THAT:- The proposed scheme of compromise and arrangement should not be violative of any provisions of law and is not contrary to public policy. It is apparent from the records that there were irregularities and non-compliances from a very long time due to which Stock Exchange took action against the Respondent No. 1 Company and suspended the trading of its securities in the year 2002. Nothing has been brought on record that the Respondent No. 1 Company have taken any serious actions to make the requisite compliances so that trading of the shares of the company can be resumed. Non action of the Respondent No. 1 Company have serious impact on the investors who have invested their hard money in the company. These non-compliances and irregularities or any illegal act already committed cannot be ratified under the umbrella of “scheme” as envisaged under Section 230-232 of Companies Act, 2013.

We have also gone through the observations made by the Regional Director, Western Region, Mumbai. These objections raised by the regional directors clearly points out the irregularities and non-compliances that were present at the time of sanctioning of scheme by the NCLT. The Company must be in compliance of the provision of law and cannot act just on the basis of a legal opinion. The respondent No. 1 Company should have instantly rejected the application money for 10,375 shares as the Application applied were for less than the minimum lot size i.e. 100 shares. The assertion of the Respondent No. 1 Company that it was unaware of the BSE Rejection Letter dated 6th May, 1999 until in the year 2012 is not tenable as the company was listed and must be in touch with the Exchange for various compliances. The scheme appears to be used as a course of action to rectify the irregularities previously done/committed by the Respondent No. 1 Company. Therefore, the grounds raised by the Regional Director for dismissing the petition seems to be just and reasonable - NCLT has overruled the objections raised by the Regional Director on the ground that the objections are mere on the procedural aspects and do not raise any illegality in the scheme or that it is against public policy. Even if the objections are procedural but it is the jurisdiction of the Tribunal that such procedural aspects need to be duly complied with before sanctioning of the scheme, as it would lay down a wrong precedent which would allow companies to do whatever acts without the compliances and confirmation of the Court and other sectoral and regulatory authorities and thereafter get it ratified by the Court under the Umbrella of “scheme”. It should have been contemplated that compliance of law in itself is a part of public policy. It is the duty of the Tribunal or any court that their Orders should encourage compliances and not defaults.

The Scheme under section 230 of Companies Act, 2013 cannot be used as a method of rectification of the actions already taken. Before the scheme gets approved, the company must be in compliance with all the public authorities and should come out clean. There must be no actions pending against the company by the public authorities before sanctioning of a scheme under section 230 of the Companies Act, 2013.

Appeal allowed.