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Showing 481 to 500 of 2364 Records
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2018 (7) TMI 1885
Appointment of the petitioner in the category of died-in-harness - financial hardship - rejection of appointment of the petitioner on the basis that the income of the family of the deceased was more than the initial gross salary of the Group - "D" staff at the material point of time - Held that:- In the case of Shashank Goswami [2012 (5) TMI 810 - SUPREME COURT OF INDIA], the Apex Court had deliberated on the matter at hand and had come to a conclusion that the appointment on compassionate grounds cannot be claimed as a matter of right.
The Supreme Court, in the case of Sundeep Kumar Bafna -v- State of Maharashtra [2015 (8) TMI 724 - SUPREME COURT], held that when two mutually irreconcilable decisions by the Supreme Court are cited at the Bar, the High Court should follow the view laid down by the earlier judgement as the latter judgement which was delivered without consideration of the previously pronounced judgement by a Bench of co-equal or larger strength should be read as per incuriam.
In the instant matter, it is to be noted that the District Inspector had rejected the application of the petitioner on the basis that the family pension received by the petitioner is exceeding the salary of the Group D staff post at the relevant point of time. This fact remains undisputed and the petitioner has not challenged the validity of the Rules, 2009 either. It logically follows that the petitioner is bound by these Rules, 2009 and has to be eligible for appointment in consonance with the Rules, 2009. The petitioner cannot claim appointment on compassionate grounds if he is ineligible to receive such appointment by the Rules, 2009 - In order to compute family income, the D.I. of Schools considered the provisions contained in Schedule V and, more importantly, the explanation that categorically defines the expression 'financial hardship' (provided above). The impugned order passed by the D. I. of Schools is in accordance with the definition of 'financial hardship'.
There are no reason to interfere with the order passed by the D.I. of Schools, which is in accordance with Schedule V of the Rules, 2009 - application dismissed.
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2018 (7) TMI 1884
Penalty u/s 271(1)(c) - Held that:- Copy of the order of the Tribunal is placed of the compilation of the assessee and the order of the AO giving effect to the order of the Tribunal. These facts were not disputed by the Revenue.
Having carefully examined the order of the Tribunal and the order of the lower authorities, we find that the additions for which penalty under section 271(1)(C) was levied has already been deleted by the Tribunal. Therefore, the penalty under section 271(1)(C) is not sustainable in the eyes of law. Accordingly, we set aside the order of the CIT(A) and delete the penalty. - decided in favour of assessee
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2018 (7) TMI 1883
TDS u/s 271(1)(c) - wrong claim of deduction u/s 80IB which had resulted in under assessment of its income - wrong claim of computer software expenses which though was in the nature of capital expenditure, but was claimed as a revenue expenditure by the assessee - wrong claim of expenditure on account of gift articles which were incurred for non-business purposes - reduction of penalty imposed pursuant to an application filed by the assessee u/s 154 - Held that:- We find from a perusal of the order of the CIT(A) that the entitlement of the assessee for claim of deduction under Sec. 80IB in respect of the aforesaid other incomes had always been the subject matter of debate between the assessee and the department since A.Y. 1995-96 onwards, and the same had always been decided in favour of the assessee. The revenue had accepted the said order of the Tribunal and had not carried the same in further appeal before the High Court.
We are of the considered view that in the backdrop of the aforesaid factual position and the fact that the assessee had furnished complete details as regards its claim of deduction under Sec. 80IB(4) of the Act, thus merely for the reason that the said claim of deduction did not find favour with the A.O would not justify imposition of penalty under Sec. 271(1)(c) in the hands of the assessee.
re-characterization of the computer software expenditure as a capital expenditure by the A.O, as against the claim of the same as a revenue expenditure by the assessee, though would justify the disallowance of the said expenditure, but keeping in view the fact that the assessee had made a complete disclosure of the details of the said expenditure and claim of the same as a revenue expenditure in its return of income, thus no penalty under Sec. 271(1)(c) could have been imposed in the hands of the assessee.
We are persuaded to subscribe to the view of the CIT(A) that no penalty was called for in the hands of the assessee in respect of the adhoc 15% disallowance of the gift articles expenses as was finally sustained by the CIT(A). Though an unproved claim of expenditure would justify an addition/disallowance, however nothing short of a disproved claim would justify imposition of penalty under Sec 271(1)(c). We find that our view that no penalty under Sec. 271(1)(c) on either of the aforesaid counts could have validly been imposed in the hands of the assessee - decided in favour of assessee
Disallowance of Sales Promotion Expenses in order u/s 154 - Held that:- A.O had merely rectified a clerical mistake in quantification of the sales promotion expenses and had not taken any new decision on merits in respect of the disallowance of the sales promotion expenses. We thus, find ourselves to be in agreement with the view taken by the CIT(A) that it was not permissible for the assessee to assail the merits of the disallowance of the sales promotion expenses in his appeal filed against the order passed by the A.O under Sec. 154 of the Act. Though the assessee in its appeal against the order passed by the A.O under Sec. 154 would be well within its right to challenge any infirmity emerging from the rectification carried out by the A.O, but it was not permissible on its part to traverse beyond the subject matter of the appeal and challenge the merits of the disallowance of the sales promotion expenses, as the latter could have only been assailed by way of an appeal against the order of assessment passed by the A.O under Sec. 143(3) of the Act.
A.O had passed the order under Sec. 154 without affording a reasonable opportunity of being heard to the assessee, set aside the matter to the file of the A.O, who shall after verifying the veracity of the aforesaid claim of the Ld. A.R that the order of rectification was passed by the A.O without affording a reasonable opportunity of being heard to the assessee, and finding the same in order, shall pass a fresh order under Sec. 154 after affording a reasonable opportunity of being heard to the assessee
Disallowance of sales promotion expense - expenditure incurred for distribution of costly articles (exceeding ₹ 750/- each article) as freebies to doctors and professionals - allowable business expenses - violation of CBDT circular no. 5/2012 dated 01.08.2012 and against regulations issued by Medical Counsel of India - Held that:- despite an absence of enlargement of the scope of the regulations issued by the MCI under the Medical Council Act, 1956, therein bringing within the sweep of its code of conduct the pharmaceutical companies and allied health sector industry, the CBDT had however in all its wisdom provided that in case a pharmaceutical or allied health sector industry incurs any expenditure in providing any gift, travel facility, cash, monetary grant or similar freebies to medical practitioners and their professional associations in violation of the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, the same shall be disallowed in the hands of such pharmaceutical or allied health sector industry. We are unable to persuade ourselves to subscribe to the burden imposed by the CBDT vide its aforesaid Circular No. 5/2012, dated 01.08.2012 on the pharmaceutical or allied healthcare sector industries, which as observed by us hereinabove, despite there being an absence of any enabling provisions under the Income Tax law or the Indian Medical Council Regulations, therein contemplating an authority to regulate the conduct of the pharmaceutical and allied health sector industries, had clearly impinged on the conduct of business by the latter. We thus, in the absence of any sanction or authority of law on the basis of which it could safely be concluded that the assessee company which is engaged in the business of manufacturing and sale of pharmaceuticals and allied products, had in the garb of sales promotion expenses incurred expenditure in respect of articles distributed to the stockists, distributors, dealers, customers and doctors, for a purpose which is either an offence or prohibited by law, are thus of the considered view that such expenditure incurred by the assessee would not be hit by the Explanation to Sec. 37(1) of the Act.
We thus, conclude that the assessee was duly entitled for claim of sales promotion expenses incurred on the distribution of articles to the stockists, distributors, dealers, customers and doctors. Thus, the order of the CIT(A) sustaining the disallowance of the sales promotion expenses is set aside. - Decided in favour of assessee.
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2018 (7) TMI 1882
Levy of penalty u/s 271AAB - AO has not specified the grounds for levy of penalty and even has not specified the clause of Section 271AAB for levy of penalty equivalent 10% or 20% or 30% of the undisclosed income - assessee surrendered undisclosed income consequent to search and seizure proceeding - Held that:- Levy of penalty U/s 271AAB is not mandatory but the AO has discretion to take a decision and the same shall be based on judicious decision of the AO.
As regards the validity of notice U/s 274 for want of specifying the ground and default of the assessee the Tribunal has held that the AO is required to specifically state in the show cause notice the ground and the default committed by the assessee as to attract the penalty U/s 271AAB of the Act @ 10% 20% or 30% of the undisclosed income. In the absence of specifying the default and charge against the assessee for which the penalty was proposed to be levied the show cause notice issued by the AO and initiation of proceeding for levy of penalty U/s 271AAB are not valid. Hence, following the earlier order of this Tribunal we hold that the show cause issued by the AO in the case assessee is not sustainable and liable to the quashed.
AO has accepted the explanation of the assessee regarding substantiation of the manner for earning the undisclosed income in question. The details of the entries in the seized material disclose certain amounts are recorded as advance to the persons, expenditure on construction of house and expenditure on the marriage of daughter. Thus, measure amount of undisclosed income consisted the sundry advances. All these transactions do not pertain to the business activity of the assessee but these are either advances given by the assessee or expenditure incurred on construction of the house or expenditure on the marriage of the daughter. Therefore, the entries in the seized material are not the transactions generating income except some interest income.
When the assessee is not required to maintain the books of account as per section 44AA, then the matter is required to be examined whether the alleged undisclosed income is recorded in the other documents maintained in the normal course as per clause (c) to Explanation to section 271AAB. Undisputedly the alleged income was found recorded in the diary which is nothing but the other record maintained in the normal course, thus the same would not fall in the definition of undisclosed income. Once the said income is found as recorded in the other documents maintained in the normal course, then it cannot be presumed that the assessee would not have disclosed the same in the return of income to be filed after about one year from the date of search. Thus we hold that the penalty levied under section 271AAB is not sustainable and the same is deleted . See SHRI RAVI MATHUR, VERSUS THE DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-4, [2018 (6) TMI 1128 - ITAT JAIPUR] - decided in favour of assessee
For assessment year 2014-15 - disclosure was made by the assessee on the basis of the valuation of the stock as per the valuation report of the department valuer apart from a disclosure of ₹ 20 lacs on account of interest income - Held that:- In the absence of any discrepancy in the quantity of stock the valuation of the stock is purely a question of assessment and cannot be held as undisclosed income detected during the course of search and seizure proceeding. Therefore, to the extent of excess stock based on the valuation report the disclosure of the income by the assessee would not fall in the category of undisclosed income as per explanation to Section 271AAB. It is not the case of the Revenue that any stock of jewellery was found which is not recorded in the books of account but the value of stock is computed based on the valuation report of the departmental valuer. Once the difference in the value of stock is only due to market price as against the cost of the said stock, the same will not fall in the ambit of undisclosed income as defined under clause-(c) of explanation -1 of section 271AAB of the Act.
Similarly the accrued interest is also only estimated and not based on any incriminating documents. This amount was estimated as there were advances as per the entries of the seized material. Even otherwise accrued interest is dependent on the outcome of the levy of penalty in respect of advances given by the assessee. We have considered the issue of advances for the assessment year 2013-14 and accordingly in view of our finding on the said issue the penalty U/s 271AAB of the Act is not sustainable in respect of the surrender amount - Decided in favour of assessee.
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2018 (7) TMI 1881
Valuation of imported goods - Prim Hot Roll Coils - enhancement of declared value - Held that:- The imported goods namely HR Coils cannot be compared with HR Plates as has been done by both the lower authorities for enhancement of the declared transaction values. The learned Counsel for the appellant has also pointed out that at para 8.3 of the order-in-original were a table of contemporaneous import with description of goods etc. shows that in respect of HR Coils the lowest value declared was USD 385 PMT and the values declared by the appellant are higher than the said values - the rejection of transaction value and enhancement of the same by the lower authority is not legally sustainable - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1880
Whether for filing an application under Section 10 of the Insolvency and Bankruptcy Code, 2016 the Board of Director of ‘Corporate Debtor’ is required to place the matter before the shareholders and creditors in its Extra ordinary General Meeting (EoGM) or Annual General Meeting (AGM)? - Held that:- Similar issue fell for consideration before this Appellate Tribunal in “Gaja Trustee Company Pvt. Ltd. & Ors. Vs. Haldia Coke and Chemicals Pvt. Ltd. & Ors. [2018 (8) TMI 1270 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] wherein this Appellate Tribunal has held that Board of Directors is required to place the matter before the shareholders and creditors and to take its approval for filing application under Section 10 of the I&B Code.
The appellant sought permission to withdraw the appeal to enable the Board of Directors to place the matter before the shareholders in EOGM and AGM, if they intend to file another application under Section 10 of the I&B Code - Liberty is granted - appeal disposed of as withdrawn.
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2018 (7) TMI 1879
Disallowance on account of agricultural income - CIT(A) admitting the additional evidence with respect to the assessee’s claim of agricultural income without giving an opportunity to the AO to examine the same - Held that:- When on one hand the Revenue is accepting continuously an agricultural income for the last more than 10 years and even during search, no evidence is there to the contrary and no inquiry is being made to show that the evidence in the form of Khasra Khatoni is not correct, in these circumstances the AO’s action in treating the agricultural income as income from undisclosed sources, appears to be against the principle of consistency, notwithstanding the fact, that the principle of estoppels and resjudicata have not application to tax proceedings. Therefore, CIT(A) has rightly relied upon the decision in the case of Radhaswami Satsang vs. CIT [1991 (11) TMI 2 - SUPREME COURT] and accordingly treated the AO’s action in treating the agricultural income declared by assessee as income from undisclosed sources is not correct, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A).
Unexplained cash credits u/s. 68 - all the partners were regularly filing their returns of income and had sufficient funds to invest in the AOP - Held that:- CIT(A) has rightly held that the assessee had duly discharged the onus of proving the source of said cash received from M/s Veerandra Kumar (AOP) deposited in the bank account. As regards the amount received from M/s Triveni Motors and Triveni Media Ltd., the assessee duly submitted the PAN details of both these parties, along with the financial statements before the AO.
A perusal of the financial statements of M/s Triveni Motors clearly shows that the party had sufficient own funds available with it. This fact has also been appreciated by the Ld. CIT(A). Therefore, in view of above submissions and evidences filed by the assessee, the assessee has duly established along with evidences the source of cash deposited by the assessee, and thus, the Ld. CIT(A) has rightly deleted the addition.
Allowing the claim of business loss - loss of ₹ 3,62,384/- comprises of depreciation on JCB (Rs. 36,494/-) and loss on business transactions (Rs. 3,70,890) - Held that:- From the perusal of computation sheet of the previous assessment years i.e. 2005-06 and 2006-07, the AO himself has been allowing depreciation in earlier years and there is no reason why the same should not be allowed in the year under consideration i.e. AY 2007-08. As regards the loss on business transaction (Rs. 3,70,890), we note that the income and expenditure account and cash flow statement were filed with the AO on 22.3.2013 and after that no query has been raised by the AO. Therefore, the AO’s action in not allowing the business loss of ₹ 3,62,384/- does not appear to be correct especially when business transactions are duly been reflected in the cash book statement and income and expenditure account which were available with him, therefore, the Ld. CIT(A) has rightly allowed the loss of ₹ 3,62,384/-, which does not need any interference on our part. - decided against revenue
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2018 (7) TMI 1878
TPA - Comparable selection - functinal similarity - Held that:- Assessee has rendered Software Development Services to its AE thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Adherence to filters such as export earnings less than 25%, employee cost less than 25%, RPT more than 25%, Onsite revenue more than 60%.
Some companies also lacks comparability based on scale of operations.
Disallowing the claim of deduction u/s 10A - Disallowance of expenditure - allocation of expenditure between 10A units and non 10A unit - Held that:- disallowance has been made on an adhoc basis without pointing out any particular item of expenditure which is relatable to the non PSE division. It is also emerging from the record that the action of the Assessing Officer is based on similar addition made in assessment year 2008- 09. Before us, nothing has been brought out to show the finality of the addition made in preceding assessment year 2008-09. However, additions made on mere conjectures and surmises are unsustainable. Be that as it may, considering the entirety of circumstances, we deem it fit and proper to restore the matter back to the file of Assessing Officer, who shall reconsider the aforesaid addition afresh as per law
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2018 (7) TMI 1877
TPA - comparable selection - Functional similarity - Held that:- The assessee is basically providing Software Development Services (SDS), Information Technology Enabled Services (ITES) and Consultancy Services (CS) to its group entities worldwide, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Exclusion of comparable if it fails the employee cost filter of less than 25% applied by the Transfer Pricing Officer himself.
Addition on account of shortfall in price charged to the A.E. towards services rendered under the Intellectual Property Services Agreement (IPSA) - Held that:- Content development or animation and website services are coming within the ambit of I.T. enabled products or services. Thus, keeping in view the aforesaid fact, it has to be concluded that the services rendered under IPSA are to be treated as ITES. As could be seen from the order of the Transfer Pricing Officer, though, he has treated the revenue earned of ₹ 8.47 crores as ITES, however, he has benchmarked it separately without aggregating it with all services rendered ITES segment. The DRP has also failed to rectify the error committed by the Transfer Pricing Officer by benchmarking it separately. Since, the Transfer Pricing Officer has not benchmarked this particular transaction by aggregating it with other ITES, we are inclined to restore the issue to the Assessing Officer for undertaking the necessary exercise of benchmarking the transaction by aggregating with other ITES and determine the arm's length price by applying the average margin of the comparables selected under the ITES segment, subject to our direction contained in this order with regard to the comparables under ITES segment.
Mode of computation of deduction under section 10A and section 10AA of the Act after reducing / setting-off of losses in some other STP / SEZ unit - Held that:- The issue now stands settled by the decision of the Hon'ble Supreme Court in Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] wherein, held that even after amendment made to section 10A of the Act by making it a deduction provision instead of exemption provision, there is no material change in the nature of deduction claimed by the assessee which has to be allowed from the gross total income before set-off of loss. Therefore, in view of the ratio laid down by the Hon'ble Supreme Court as discussed above, assessee's claim of deduction under section 10A of the Act unit-wise is allowable. The Assessing Officer is directed to compute the deduction accordingly.
Disallowance of deduction under section 10A in respect of income / profit derived under the intellectual property services agreement - Held that:- When the Transfer Pricing Officer has classified the income received under IPSA agreement to be of the nature of ITES and has also benchmarked it as such, the AO cannot take a contrary view by stating that it is not in the nature of ITES only for disallowing assessee's claim of deduction under section 10A of the Act. The Department cannot be permitted to take contrary view with regard to the nature of a particular item of income for its own advantage. Once, the income under the IPSA has been classified to be in the nature of ITES, assessee's claim of deduction under section 10A of the Act have to be allowed. In view of the above, we direct the Assessing Officer to allow assessees claim of deduction under section 10A of the Act in respect of income earned from IPSA. However, we make it clear such deduction has to be computed on the amount of ₹ 90,41,87,522 as claimed in the return of income and as per grounds raised before us.
Disallowance u/s 40(a)(ia) - Held that:- If the expenditure claimed by the assessee pertains to STPI / SEZ unit, on disallowance of such deduction the profit of STPI / SEZ unit will get enhanced, hence, the assessee will be eligible to avail deduction under section 10A of the Act to that extent. We direct the Assessing Officer to examine the aforesaid claim of the assessee having regard to the facts and material brought on record and allow the same after factual verification. Further, the assessee has submitted that the provision made has been reversed on 1st April 2008, in the books of account of the assessee. In this context, a certificate dated 20th April 2018, issued by the Chartered Accountant was submitted before us. Obviously, this is a fresh claim made by the assessee before us. Therefore, in all fairness, this claim of the assessee is also required to be examined by the Assessing Officer.
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2018 (7) TMI 1876
Accrual of income - Income recognition - interest on accounts classified as NPA has in fact accrued or not? - Held that:- Reasonable certainty, on the basis of objective material and available information, as to the ultimate realizability of the income, is a pre-condition for recognition of income, for which reference may be made to Accounting Standard (AS) 9 issued by the ICAI, also adverted to in Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - DELHI HIGH COURT]. The same being missing, there is no accrual of income, i.e., on facts, the obligation to pay interest under the loan contract notwithstanding. We say so as the Revenue has not at any stage challenged the said uncertainty or contended of the income recognition norms stated to be followed by the assessee as either not relevant or not having a direct bearing on the said uncertainty. Rather, we find it queer that, on one hand, the Revenue itself notifies accounting standards which provide primacy to ‘prudence’, while, on the other, objects when the assessee, in pursuance to those norms, refrains from booking income!
No hesitation in, accepting the assessee’s claim, directing the deletion of the amount of interest income. There is, we may though add, no question of the Revenue being not entitled to proceed in the matter in the absence of non-rejection of accounts. - Decided in favour of assessee
Disallowance of fuel and hire charges u/s. 37(1) - Held that:- The (statutory) obligation was by itself not sufficient if the purpose of the expenditure was not for the benefit of or the running of the assessee’s business. In the instant case, we find neither of these two conditions being satisfied; the former being in fact incidental in-as-much as a voluntary expenditure, shown to be for the purpose of the assessee’s business, would qualify for deduction. In our considered view, therefore, the impugned expenditure does not meet the test of section 37(1), and stands rightly disallowed by the Revenue. We decide accordingly, and the Revenue succeeds.
Income from other sources on account of non payment of dividend distribution tax by the assessee-company, which in fact claims to be not liable for the said tax - CIT-A deleted the addition - Held that:- We find no basis for the said addition. Even assuming, for the sake of argument, that the dividend distribution tax was indeed payable by the assessee-company, the Revenue can only proceed under law to exact the same. It does not in any manner lead to the inference of any income having accrued to the assessee as a result. Rather, the said tax, where paid, would stand to be debited to its operating statement (P&L A/c) for the year. We decide accordingly.
Disallowance of the provision on standard assets, made by the assessee-bank at the rate of 0.25%, on the ground it being only a contingent liability - CIT-A deleted the addition - Held that:- The assessee has not been shown to us as falling within the excluded categories, which we note to be the same as those saved u/s. 80P(4). As such, clearly either of the two sections, i.e., 36(1)(viia) or section 80P, shall apply to the assessee, who cannot take an ambivalent stand with regard to its status. The parameters of a primary agricultural credit society or a primary cooperative agricultural and rural development bank, i.e., two specified excluded categories, are well settled. The AO shall accordingly examine the matter, and decide the same issuing definite findings of fact, of course, after hearing the assessee in the matter. In fact, as it appears, the assessee has not claimed deduction u/s. 80P, for otherwise this itself would have been the subject matter of dispute between the parties, with the AO clearly adverting to section 80P(4), excluding the assessee from the purview of section 80P. Why, in that case, i.e., of the assessee being considered as eligible for deduction u/s. 80P even for AY 2007-08 onwards, all the other issues would get subsumed therein as the assessee’s entire income from banking business would get deducted u/s. 80P(1) r.w.s. 80P(2)(a)(i). As such, it is rather the AO who appears to be ambivalent by denying the assessee deduction u/s. 36(1)(viia) as well as u/s. 80P. We decide accordingly.
Addition of interest - assessee Under-charged as well as over-charged interest to its customers (i.e., on loans) as well as its depositors - Held that:- AO added the entire excess interest, i.e., at ₹ 1,27,980. He, as apparent, has taken only a part of the auditor’s observation per their report. Taken in totality, it would imply that the income would stand reduced by ₹ 48,691. The ld. CIT(A) accordingly held that there was no ground for making the impugned addition, and directed its deletion. The facts are not in dispute, and we find no infirmity in the adjudication by the ld. CIT(A). We decide accordingly, and the assessee succeeds
Disallowance of provision (at the rate of 0.25% on standard loans) - Held that:- for AY 2007-08, accepted the assessee’s claim as, in his view, there was nothing to show that the claim was not covered by the provision of section 36(1)(viia). The provision against standard loans being only a provision for bad and doubtful debts, would stand to be covered u/s. 36(1)(viia). That being the case, we find no reason for the Revenue impugning the provision against standard assets. Thus, subject to the limit prescribed u/s. 36(1) (viia), i.e., 7.5% of the income, being not breached, the assessee would be entitled to the provision against standard assets.
Assessee’s claim u/s. 36(1)(viia) - Held that:- assessee has to specify the provision where-under the said claim is admissible. Why, the ld. AR, on being queried by the Bench during hearing in this regard, was unable to specify the same or even the nature of the articles, stated to have since perished, or even if the said article stood included in the assessee’s block of assets. That is, their accounting treatment. While, therefore, no case for a set aside is made out, we, yet, in the interest of justice, consider it proper to allow the assessee a final opportunity to present its case before the AO in the appeal effect giving proceedings. The AO shall, where a case duly substantiated, is made out by the assessee, consider the assessee’s contention and adjudicate per a speaking order. Without doubt, the onus to prove its claim, both on facts and in law, would be on the assessee.
Provision for bad and doubtful debts - assessee’s claim is that the interest, booked as income for fy. 2006-07 (AY 2007-08), being not realized even during fy. 2007-08 (AY 2008-09), was reversed - Held that:- The assessee bank, following accrual system of accounting, had booked income for AY 2007-08 even as the interest was pending realization. The same having not been realized even during AY 2008-09, the current year, the same was reversed. The assessee has itself claimed this reversal as a provision for bad and doubtful debts. If the income had been, as claimed, already booked as income (for AY 2007-08), all that needs to be done is to the debit the provision (for bad and doubtful debts) account, with a corresponding credit to the respective debtors account/s, whose account/s would have been debited on charge of interest for fy. 2006-07 (AY 2007-08). We find nothing wrong in the adjudication by the ld. CIT(A), nor could the ld. AR during hearing point out to any.
Provision u/s. 36(1)(viia) at the rate of 7.5% of income working he provision, it needs to be appreciated, is against an asset, i.e., recognizes the risk associated with its realisability and, therefore, is valid only with reference to the extant assets, i.e., as obtaining at the relevant time. The provision as on 31.03.2008 (asset) would therefore have to be reckoned with reference to the advances (by rural branches of the bank, speaking in the context of section 36(1)(viia)) as on 31.03.2008. The said provision may include that made during the earlier years, i.e., where not reversed, which thus would have to be taken into account while computing the upper limit specified qua rural advances u/s. 36(1)(viia). And in which case, therefore, the provision based on income (for each year u/s. 36(1)(viia) would have to be made, accounted for and reckoned (for the breach of the limit specified in its respect) separately. The argument aforesaid appealing at first blush, does not hold.
Disallowance u/s. 37(1) - deposits in a scheme framed by LIC of India - assessments are to be proceeded with and framed on the basis that section 43B(f) - Held that:- Exception is made for liabilities accruing during the relevant year, where paid by the due date of filing the return of income u/s. 139(1) for that year. It is in this context that the ld. counsel was enquired by the Bench as to how the payment of premium stands accounted for, which ought to be therefore adjusted against (debited to) the provision account. As it appears, the assessee has made a provision of ₹ 200 lacs on account of liability toward staff leave encashment, also paying this amount to the LIC of India (during the year). The assessee, making the payment to LIC is in fact discharging its liability toward leave encashment. As such, to the extent of payment the assessee’s claim shall not be hit by section 43B(f). The matter, for factual verification, is restored back to the file of the AO who, upon satisfaction, shall allow the assessee’s claim qua the said expenditure to the extent of payment made to LIC of India during the year, i.e., in terms of section 43B. We say so as the provision made is not for the liability accruing during the year, but that since accrued, so that the deduction shall be restricted to the amount paid/discharged during the year. We decide accordingly.
Disallowance of a payment of Annual Maintenance Charges (AMC) - Held that:- True, once a liability has accrued, in terms of the liability to pay, on the basis of a contract, it cannot be said that the expenditure had not accrued. The expenditure, however, is for the purpose of the assessee’s business, i.e., for maintenance of CCTV cameras installed at the different branch offices of the bank. As such, the payee is obliged under the contract to provide support services as envisaged under the contract for full one year, i.e., a period of 365 days, beginning 27.03.2010. The probability of this services being required, which would be for regular (periodic) maintenance or on breakdown, etc. spreads evenly throughout the year.
It would be a different matter, we may add, where the benefit that stands to be derived from the expenditure incurred is tenuous or not liable to be suitably quantified. This is not so in the instance case, as without doubt, the contract is time based, so that the benefit there-under inures only during the said period. It is in that sense similar to the estimate for liability to pay interest under a contract, which arises only at the end of the account (contract) period. Interest expenditure, over the period for which the interest bearing loan (liability) outstands during the relevant year, can only be said to have accrued during the relevant year. That is, the liability to interest, irrespective of the contractual obligation in its respect, arises on lapse/efflux of time. The assessee’s having availed the ‘benefit’ of the loan for a definite period of time during the year, interest liability to the corresponding extent would, independent of the contractual obligation as to payment, be deductible on matching principle basis. We therefore find no infirmity in the orders by the Revenue Authorities on this issue. Why, however, we fail to understand, should not the Revenue allow the balance amount (Rs.18.85 lacs) as deduction for the following year, i.e., AY 2011-12, also in appeal before us. Though no ground in its respect has been taken by the assessee, who does not appear to have raised this issue by way of rectification application u/s. 154, that would not detain us to state that the assessment for AY 2011-12, subject to verification by the AO, the Revenue should have allowed the assessee’s claim for the balance amount in the following year (AY 2011-12).
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2018 (7) TMI 1875
Maintainability of Application under section 7 of the Insolvency and Bankruptcy Code, 2016 - the Bank has neither acted in terms of circular and guidelines issued by the Reserve Bank of India nor in terms of the Reserve Bank of India Act - Held that:- Such ground cannot be accepted to reject the application preferred by the ‘Financial Creditor’ under Section 7 of the ‘I&B Code’, there being admitted default.
Rejection of application also on the ground that amount due is barred by ‘limitation’ - Held that:- Such submission cannot be accepted in view of the fact that there is a continuous cause of action. Even if it is accepted that Limitation Act is applicable, in such case Article 137 of Part II of the Limitation Act will be applicable whereunder three years’ period from the date of right to apply accrued will be applicable - In the present case, the right to apply under Section 7 accrued to ‘Punjab National Bank’ on 1st December, 2016, when ‘I&B Code’ came into force. Before the same, it had no right to apply under Section 7 of the ‘I&B Code’. Therefore, even if the Limitation Act is made applicable, the application being not barred by limitation, interference is not called for.
There is no merit in the appeal - appeal dismissed.
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2018 (7) TMI 1874
Power and jurisdiction to withdraw the approval granted u/s 10(23C)(vi) - validity of show cause notice that it was not signed by the competent authority - Held that:- It is settled proposition of law that the notice issued by the authority other than the prescribed authority is not valid and consequential order passed by the ld. CIT(E) is without jurisdiction. The show cause notice confers the jurisdiction to proceed and to pass the order. In case the notice itself is not valid then the jurisdiction assumed by the prescribed authority based on the invalid notice become invalid and consequential order passed by the authority is invalid and void abinitio for want of jurisdiction. Further, invalid show cause notice vitiates the proceeding and consequential order. Hence, we are of the considered opinion that the impugned order passed by the ld. CIT(E) is invalid and liable to quash on this ground.
Even on merits, the trip which was conducted was an educational trip and only the Director was picked up. In that view of the matter, no substantial question of law arises.
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2018 (7) TMI 1873
Enforcement of a foreign award - Section 48 of the Arbitration and Conciliation Act - Held that:- It cannot be said that the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. It has to be remembered that in spite of repeated opportunity given to the petitioner to participate in the arbitration proceeding the petitioner has avoided participation and cannot be allowed to raise objection with regard to the enforcement of the award on any other grounds not covered under Section 48 of the Arbitration and Conciliation Act.
It is a settled law that interpretation of the contract and appreciation of the evidence by the arbitral tribunal cannot be reopened by arguing that the foreign award is contrary to the contract and, therefore, its enforcement would offend public policy of India. A party who has consciously and deliberately avoided a proceeding knowing fully well that the result of the proceeding may be adverse to its interest cannot complain of violation of natural justice. The petitioner was under no disability and nothing has prevented the petitioner to file its statement of defence along with documents. The petitioner is in effect seeking a review of the foreign award on merit which is not permitted in this proceeding.
Even under the domestic award, a possible view by the arbitrator on acts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers is arbitral award. Thus, an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, and then he is the last word on facts.
Appeal dismissed with costs.
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2018 (7) TMI 1872
Grant of Interim Bail - entitlement to regular bail - Held that:- It is informed that the petitioner/Mr. Pradeep Garg in SLP(Crl.)No. 2513/2018 had already deposited the said amount. Interim bail granted to both the petitioners is thus converted into regular bail - SLP disposed off.
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2018 (7) TMI 1871
TPA - AMP expenses - Held that:- Directions given in paragraph 8 of the impugned order should not be construed as if the AO/Transfer Pricing Officer (TPO) would examine Advertisement Marketing and Sales Promotion (AMP) expenses as a separate international transaction. AMP expenses were part and parcel of the expenses incurred of the distribution. While determining Arms Length Price, the said aspect would be taken into consideration by the Assessing Officer/TPO.
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2018 (7) TMI 1870
Levy of fee under Section 234E - processing the TDS statement furnished by the assessee u/s 200A - Fee for default in furnishing statements - Held that:- Prior to 01.06.2015, there was no enabling provision in Section 200A of the Act for making adjustment in respect of the statement filed by the assessee with regard to tax deducted at source by levying fee under Section 234E of the Act. The Parliament for the first time enabled the Assessing Officer to make adjustment by levying fee under Section 234E of the Act with effect from 01.06.2015. See SMT. G. INDHIRANI, SALEM, RAJAGURU SPINNING MILLS LTD., A. DHAKSHINAMURTHY , PADMA TEXTILES & MURTHY LUNGI COMPANY VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CPC – TDS, TDS – CPC, UTTAR PRADESH [2015 (7) TMI 640 - ITAT CHENNAI]
As held by this ITAT, the intimation sent to the assessee u/s. 200A dated 16.01.2014 raising the demand of ₹ 9,000/- u/s. 234E towards levy of late filing fee is invalid as there was no enabling provision in section 200A, viz., clause (1)(C) of section 234E, prior to 01.06.2015 for levy of fees u/s. 234E while processing the statement of tax deducted at source. It was open for the AO to pass separate order u/s. 234E levying the fee, provided the limitation for such a levy did not expire. However, in this case, the AO has not passed any order u/s. 234E independently within 31.03.2015 and hence, the impugned order is set aside. - Decided in favour of assessee.
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2018 (7) TMI 1869
TPA - international transaction - Held that:- This Court and other High Courts which the assessee would like to rely upon. It is open for assessee to rely upon the said ratios. Equally, Revenue will be entitled to defend their stand. Revenue submits as the order of the Tribunal has been set aside, Revenue would raise all pleas and contentions when the appeals are taken up for hearing. It will be open to the Revenue to rely upon judgments and ratios which they feel are in their favour. Counsel for the assessee states that he would have no objection but would contest the contention of the Revenue on merits.
Entitlement to depreciation under Section 32 - balance written down value relating to Daru Hera unit, forming part of the block of assets - Held that:- The issue is covered in favour of the assessee and against the Revenue as relying on Sony India Pvt. Ltd. v. CIT. [2017 (1) TMI 1442 - DELHI HIGH COURT]
Depreciation at the rate of 60% on UPS, printers and switches - Held that:- The said issue is covered against the Revenue vide decision CIT vs. BSES Yamuna Power Ltd., (2010 (8) TMI 58 - DELHI HIGH COURT). Accordingly, this substantial question of law is answered against the revenue
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2018 (7) TMI 1868
Disallowance of interest expenditure u/s 14A - Held that:- After going through the judgment in the case of Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COURT] section 14A will not apply if no exempt income is received or receivable during the relevant previous year.” We, therefore hold that since during the year, under consideration, no exempt income has been earned by the assessee, no disallowance u/s 14A of the Act was called for. - Decided in favour of assessee
Disallowance of interest on advances made to directors - Held that:- Assessing Officer has not brought out sufficient details on record for alleged interest disallowance whereas the assessee has been successful in demonstrating that in view of having sufficient interest free capital and reserve, disallowance of interest expenditure was not called for. We accordingly delete the interest disallowance - Decided in favour of assessee
Disallowance invoking provisions of section 14A read with Rule 8D on the purchase of agriculture land - Held that:- No interest disallowance was called for. We, however, confirm the disallowance of ₹ 69,056/- being 0.5% of the investment in agricultural land as there are certain expenditure which gets inter-mingled with administrative expenditure incurred by the assessee during the year are for the purpose of earning agricultural income. This ground of the assessee is, therefore, partly allowed.
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2018 (7) TMI 1867
Weighted deduction u/s 35(2AB) on the clinical trials conducted outside the ‘in-house R & D facility’ - claim disallowed by A.O. on the reason that the same was not certified by Prescribed Authority (DSIR) in Form 3CL - Held that:- In the decision of Concept Pharmaceuticals Ltd [2010 (11) TMI 147 - ITAT, MUMBAI] the Coordinate Bench did not allow the expenditure spent outside the R & D unit but the Bench has not considered the explanation introduced with reference to ‘Clinical Trials’. By very nature, the Clinical Trials cannot alone be done within research facility as they require cooperation from the Medical Doctors, Hospitals, Volunteers and patients, therefore such expenditure has to be necessarily spent outside the facility, but for the purpose of ‘in-house’ research.
This issue was examined by the Coordinate Bench which was subject matter of appeal before the Gujarat High Court and Gujarat High Court in CADILA HEALTHCARE LTD [2013 (3) TMI 539 - GUJARAT HIGH COURT] has approved the same. As seen from the order of the Supreme Court [2015 (11) TMI 496 - SUPREME COURT] the grievance of Revenue with reference to non-framing of three questions were considered as those three questions are considered to be ‘substantial question of law’ and referred to the Hon’ble High Court to hear the aforesaid three questions of law. However, the judgment already passed by the Gujarat High Court has not been set-aside. As Ld. CIT(A) has followed the Coordinate Bench decision, which was approved by the Gujarat High Court and as no contrary High Court judgment has been placed on record, we approve the order of the CIT (A) and reject the Revenue contentions. - Decided in favour of assessee.
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2018 (7) TMI 1866
Petitioner directed to surrender before the Investigating Officer - petitioner submits that due to some personal reasons, the petitioner could not appear before the Investigating Officer - Held that:- Without expressing any opinion on merits, the petitioner is allowed time to surrender and join investigation by tomorrow i.e. 19.7.2018. List on 30.8.2018.
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