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Showing 61 to 80 of 2075 Records
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2019 (3) TMI 2022
Appointment of Arbitrator in exercise of power Under Section 11(6) of the Arbitration and Conciliation Act, 1996 - whether the discharge in the present case upon acceptance of the compensation and signing of the discharge letter was voluntary or under coercion or undue influence and the Respondent was justified in invoking Section 11(6) of the Act? - HELD THAT:- It is true that execution of full and final agreement, receipt or a discharge voucher in itself cannot be a bar to arbitration and it has been observed by this Court in NATIONAL INSURANCE CO. LTD. VERSUS M/S. BOGHARA POLYFAB PVT. LTD. [2008 (9) TMI 864 - SUPREME COURT] that mere execution of a full and final settlement receipt or a Discharge Voucher is a bar to arbitration, even when the validity thereof is challenged by the claimant on the ground of fraud, coercion or undue influence. Nor do they lay down a proposition that even if the discharge of contract is not genuine or legal, the claims cannot be referred to arbitration.
It is true that there cannot be a Rule of thumb and each case has to be looked into on its own facts and circumstances, taking note of the broad principles, it was observed by this Court in UNION OF INDIA (UOI) AND ORS. VERSUS MASTER CONSTRUCTION CO. [2011 (4) TMI 1471 - SUPREME COURT] where it was held that Where the dispute raised by the claimant with regard to validity of the discharge voucher or no-claim certificate or settlement agreement, prima facie, appears to be lacking in credibility, there may not be a necessity to refer the dispute for arbitration at all.
From the proposition which has been laid down by this Court, what reveals is that a mere plea of fraud, coercion or undue influence in itself is not enough and the party who alleged is under obligation to prima facie establish the same by placing satisfactory material on record before the Chief Justice or his Designate to exercise power Under Section 11(6) of the Act - It is true that there cannot be a Rule of its kind that mere allegation of discharge voucher or no claim certificate being obtained by fraud/coercion/undue influence practised by other party in itself is sufficient for appointment of the arbitrator unless the claimant who alleges that execution of the discharge agreement or no claim certificate was obtained on account of fraud/coercion/undue influence practised by the other party is able to produce prima facie evidence to substantiate the same, the correctness thereof may be open for the Chief Justice/his Designate to look into this aspect to find out at least prima facie whether the dispute is bonafide and genuine in taking a decision to invoke Section 11(6) of the Act.
The discharge and signing the letter of subrogation was not because of any undue influence or coercion as being claimed by the Respondent and we find no difficulty to hold that upon execution of the letter of subrogation, the claim was settled with due accord and satisfaction leaving no arbitral dispute to be examined by an Arbitrator to be appointed Under Section 11(6) of the Act.
In the instant case, prima facie no dispute subsisted after the discharge voucher being signed by the Respondent without any demur or protest and claim being finally settled with accord and satisfaction and after 11 weeks of the settlement of claim a letter was sent on 27th July, 2016 for the first time raising a voice in the form of protest that the discharge voucher was signed under undue influence and coercion with no supportive prima facie evidence being placed on record in absence thereof, it must follow that the claim had been settled with accord and satisfaction leaving no arbitral dispute subsisting under the agreement to be referred to the Arbitrator for adjudication.
The High Court has committed a manifest error in passing the impugned order and adopting a mechanical process in appointing the Arbitrator without any supportive evidence on record to prima facie substantiate that an arbitral dispute subsisted under the agreement which needed to be referred to the arbitrator for adjudication - Appeal allowed.
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2019 (3) TMI 2021
Refusal to register the second sale agreement - refusal on the ground that the earlier agreement is still in force - HELD THAT:- This Court wanted to know from the learned Government Advocate that if there is any specific provision which enables the Sub Registrar of the Registration Department to deny registration in such cases. The learned Government Advocate brings it to my attention that a circular bearing No.18223/C1/2013-3 dated 08.11.2013 issued by the Inspector General of Registration, calling upon the Registering Authority to satisfy himself that there is no doubt on the title of the executant. But the said circular does not state that the Registering Authority should refuse registration if a prior agreement is still in force.
The second respondent cannot deny registration of the petition mentioned document on the ground that the writ petitioner’s earlier agreement with Ganesan has not been cancelled.
Petition allowed.
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2019 (3) TMI 2020
Refund of the service tax paid for services used for authorized operations of SEZ - denial on the ground of nexus with authorized operations - HELD THAT:- The service tax paid on services used by the appellants for authorized operations are exempted by N/N. 2/2013 and the precursor Notification No.40/2012 on fulfillment of the conditions stated therein. Para 3(1) states that the services are to be approved by Approval Committee - In the present case all the services listed in the table above have been approved by the Approval Committee. In such circumstances, the department cannot reject the refund claim stating that these are used only for facilitation of employees and not for authorized operations.
The Tribunal in the case of COMMISSIONER OF SERVICE TAX PUNE VERSUS EATON TECHNOLOGIES PVT LTD. [2016 (1) TMI 1191 - CESTAT MUMBAI] had occasion to analyze the very same issue and dismissed the department’s appeal filed against sanction of refund.
The rejection of refund is unjustified. The impugned order to the extent of rejecting the refund in respect of the five services given in the table above is set aside - Appeal allowed.
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2019 (3) TMI 2019
Civil suit against the respondents for a declaration, damages and for grant of injunction etc. in the High Court at Calcutta - territorial jurisdiction - HELD THAT:- Since in this case the respondents did not file any written statement and instead raised the plea of territorial jurisdiction by filing the application for revocation of leave, the High Court should not have entertained the said application and instead should have granted liberty to the respondents(defendants) to file the written statement in the suit and to raise therein a plea of territorial jurisdiction of the Court.
A plea of territorial jurisdiction is essentially a mixed question of law and fact. It is for this reason, the respondents(defendants) should be allowed to raise such plea in the written statement to enable the Court to try it on its merits in accordance with law in the light of the requirements of Order 14 of the Code of Civil Procedure, 1908 and other relevant provisions governing the issue on merits.
The impugned orders are set aside - appeal allowed.
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2019 (3) TMI 2018
Suit for recovery alongwith interest - scope and intent of Order XII Rule 6 CPC and Order XIII-A of the Commercial Courts Act, 2015 - HELD THAT:- The Commercial Courts Act, 2015, has been enacted with the intent to amend the CPC so as to improve the efficiency and reduce delays in disposal of the commercial cases - Rule 3 of Order XIII-A empowers the Court to give a summary judgment against a defendant on a claim if it considers that it has no real prospect of succeeding or successfully defending the claim, and there is no other compelling reason why the claim should not be disposed of before recording of oral evidence.
The Supreme Court in KARAM KAPAHI & OTHERS VERSUS M/S LAL CHAND PUBLIC CHARITABLE TRUST & ANOTHER [2010 (4) TMI 1120 - SUPREME COURT] has held that the principle behind Order XII Rule 6 is to give the plaintiff a right to speedy judgment. Under this Rule either party may get rid of so much of the rival claims about 'which there is no controversy'.
Sale in a public auction does not render the performance of clause 5 of the second agreement impossible as the defendants elected to waive their right to purchase the modular kitchens. The defendants could not infact have taken delivery of the modular kitchens as admittedly their apartments were not ready - This Court is further of the view, that even if Clause 5 of the Second Agreement contemplated reciprocal obligations on both parties, the sale of the Modular Kitchens in a public auction does not render the performance of Clause 5 of the Second Agreement infructuous/impossible as the defendants elected to waive their right to purchase the Modular Kitchens. When the plaintiff filed an application for sale of the kitchens, the defendants never offered to purchase the same or take delivery of the same from the plaintiff.
In fact, in the opinion of this Court, the defendants could not have taken delivery of the Modular Kitchens as their apartments were not ready for installation of the Modular Kitchens admittedly.
In the present case, the determination of precise quantum of loss is difficult and that is why there is a clause for a reasonable pre-estimate of costs. In fact, Clauses 2, 3 and 5 provide for admitted cost price and not damages or loss of profit or penalty - This Court is also of the opinion that the plaintiff does not have to prove the base price of 2012 of Modular Kitchens as the said price had been admitted by the defendants in both the First and Second Agreements.
Since the defendants have admitted the execution of the aforesaid agreements, they have also admitted the cost price of the kitchens. It is pertinent to mention that the defendants themselves had paid Rs. 2,53,125/- to the plaintiff for a sample kitchen installed by it. The said fact has been recorded in Clause 1(b) of the Second Agreement executed between the parties - Consequently, as the plaintiff in the present suit is only seeking recovery of admitted costs of 2012 of the Modular Kitchens without any element of profit and/or penalty or damages, this Court is of the view that there is no triable issue which arises for consideration, the defences raised by the defendants are moonshine and sham and there is no compelling reason why the claim should not be disposed of before recording of oral evidence.
The plaintiff is entitled to a summary judgment without a trial - Application allowed.
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2019 (3) TMI 2017
Seeking permission to withdraw the special leave petition - whether the amendment made by the Central Government vide Notification dated 25th November, 2018 substituting Section 4(b) of the SICA Repeal Act, 2003 was within jurisdiction or not? - HELD THAT:- Learned counsel for the parties submit that the appellant cannot move before the Hon’ble High Court of Delhi in view of the decision of in RABINDRA KUMAR WALIA VERSUS UNION OF INDIA & ORS. [2019 (2) TMI 2063 - SC ORDER]. However, from the order dated 4th February, 2019, it is found that the learned counsel for the petitioner sought permission to withdraw the special leave petition. So the SLP was dismissed as withdrawn in the aforesaid background, the order passed being not binding on any of the party, following the decision in M/s. Spartek Ceramics India Ltd. [2018 (6) TMI 350 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] we are of the view that the Writ Petition preferred by the appellant stands revived before the Hon’ble High Court of Delhi and in terms of the liberty given by the Hon’ble Supreme Court in the case of M/s. Spartek Ceramics India Ltd. [2018 (10) TMI 1660 - SUPREME COURT], the appellant may also seek to amend the Writ Petition within four weeks.
Appeal disposed off.
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2019 (3) TMI 2016
Addition u/s. 68 - information received from the DGIT (Inv.) that the assessee is one of the beneficiaries of the accommodation entries provided by various entities being operated by Praveen Kumar Jain Group - burden of proving the identity, genuineness and creditworthiness of the creditors - HELD THAT:- In the case on hand also the assessee has discharged its initial burden by providing all the necessary details in respect of the loan transactions and thus the assessee has discharged identity, genuineness of the transactions and creditworthiness of the parties. Thus, hold that there is no valid reason for the AO to treat the loan transactions has not proved by the assessee. Hence, direct the AO to delete the addition made u/s. 68 in all these Assessment Years. Appeals of the assessee are allowed
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2019 (3) TMI 2015
Criminal Conspiracy - distribution of coal to the consumers as per the agreement terms and conditions or not - case of petitioner is that petitioner has played no role in carrying out the obligations under the said agreement as the marketing agent of the OCCF in the direction of commission of offence as alleged and, therefore, issuance of process against the petitioner in the criminal proceeding for the offences is illegal.
HELD THAT:- The duties and responsibilities of the petitioner as such find mention at Clause-2 of the terms of reference, a document which has been relied upon by the prosecution to fasten the criminal liability upon the petitioner. It is pertinent to mention here that the OCCF had entered into an agreement called Fuel Supply Agreement with M/s. MCL in furtherance of that New Coal Distribution Policy of Government of India as has been earlier referred to. The marketing agent is to function under the authority and management of the OCCF. The terms and reference make it obligatory on the part of the marketing agent to take necessary step to obtain trading licence for the OCCF for sale of coal, ex-colliery against 'G' Form and submit the list of MSMEs in whose favour bills and 'G" Forms would be issued from the ex-colliery of MCL - There stands no such allegation that the petitioner, acting on behalf of the marketing agent as engaged by the OCCF, has done any such manipulation in the list of MSMEs or to have made any such departure by bringing in any new MSME or reading a new MSME into the list so supplied, as" also on any such other aspect as to the quantity of coal allowed to be lifted and supplied and etc.
There is no allegation or material on record to the effect that the coal has not been physically lifted by the MSMEs and it is not stated that this petitioner misappropriated the coal from that MCL for illegal use or distribution or sale at his end or that he himself directly did anything for that purpose by creating any false documents and putting those on record. It is also not the prosecution case that the petitioner himself used any document as genuine knowingly and having reason to believe the same to be forged. The very list of MSMEs forming the basis of supply of coal at the final round of the exercise is being said to have been made knowing fully well that those MSMEs were non-existent or non-functional or we may say having no such requirement of coal: But in that, this petitioner appears to have nothing to do.
The prosecution case is that the persons associated in the process at the commencement point of the process of distribution of coal by preparing the list of MSMEs and all other accused persons including the petitioner have conspired amongst themselves and have committed the offence and as such are liable. In so far as this petitioner is concerned, the case against him is conspiracy under section 120-B IPC and it is said that this petitioner finally facilitated the process of supply of coal to those listed MSMEs, which are non-existent. The prosecution has not specially come up with the stand as to which of the MSMEs are not there in the place so as to say that those are non-existent and as such the supply is fake or which in terms of the guidelines are not eligible.
The prosecution case against the petitioner is that he entered into a criminal conspiracy with others in finally distributing coal to the non-existent or non-functional MSMEs as given in the list prepared by the persons other than the petitioner as required under the policy. Once the persons preparing the list are kept out of the arena of the case to face trial for offence in relation to conspiracy as also all other offences, the petitioner cannot be proceeded with for the conspiracy. Moreover, in the absence of the persons preparing the list of MSMEs where the petitioner has no role and that very list of those MSMEs which were said to be non-existent or non-functional having no requirement of user of coal and it is said that such distribution was thus to make gain by selling in open market at higher price which has been done, in the trial no such fault can be found with those two personnel of the DIC as to have prepared the bogus list of MSMEs. In view of that issuance of process against the petitioner to face the criminal proceeding for entering into conspiracy with them, who are said to have been involved at the very source and are not within the arena of the case, is not sustainable.
Application allowed.
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2019 (3) TMI 2014
Benefit of deduction u/s 35(2AB) - approval for the R & D activities were given in the subsequent assessment years and not for assessment year under consideration - HELD THAT:- As decided in assessee own case [2019 (2) TMI 535 - BOMBAY HIGH COURT l High Courts have held that such research and development activity once approved by the competent authority, the approval would relate back to the date of application. Reference in this respect can be made to the decision of CIT Vs. Claris Lifesciences Ltd. [2008 (8) TMI 579 - GUJARAT HIGH COURT] and the decision of Sandan Vikas (India) Ltd. [2011 (2) TMI 66 - DELHI HIGH COURT] We are informed that the decision of Delhi High Court in case of Sandan Vikas (India) Ltd. (Supra) was carried in appeal before the Supreme Court and the SLP came to be dismissed by an order dated [2012 (1) TMI 408 - SC ORDER] 09th January, 2012. This question is therefore not entertained.
Disallowance u/s 36(1)(va) being employee's contribution to provident fund and ESI - same were not deposited in the respective fund within the stipulated time - We notice that similar questions came up for consideration before this Court in Income Tax Appeal [2013 (2) TMI 922 - BOMBAY HIGH COURT ](L) No. 2111 of 2012 in case of this very assessee where by order while dismissing the Revenue's Appeal, these questions came up for consideration. These questions in the present appeal, therefore are not entertained.
Disallowance u/s 36(1)(iii) - interest on loans borrowed for advancing to its subsidiary companies in India and Overseas - HELD THAT:- We notice that the Tribunal has held that the assessee had sufficient own interest free funds and therefore, the disallowance was not justified.
Deduction u/s 80HHC - whether the additional proceeds of export sales due to foreign exchange rate fluctuation would also qualify for deduction under Section 80HHC? - The Assessing Officer was of the opinion that the said amount cannot be said to have arisen out of the assessee's export business. The CIT(A) and the Tribunal, however, reversed the decision of the Assessing Officer holding that the amount in question was part of the assessee's export sales proceeds. This issue is considered by this Court on earlier occasions in cases of CIT Vs. Amber Exports (India) [2009 (2) TMI 427 - BOMBAY HIGH COURT] and CIT Vs. Gem Plus Jewellery India Ltd [2010 (6) TMI 65 - BOMBAY HIGH COURT].
Income Tax Appeal is dismissed.
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2019 (3) TMI 2013
Maintainability of appeal - Jurisdiction of Adjudicating Authority to decide the claim or counter claim - Initiation of Corporate Insolvency Resolution Process - Material belonging to the Corporate Debtor - direction to Corporate Debtor to hand over custody of the Materials - restraining Insolvency Resolution Professional from alienating and/or creating any third-party interest in the Materials - HELD THAT:- There are no reason to interfere with the impugned order dated 30.01.2019 passed by the National Company Law Appellate Tribunal, New Delhi.
The appeal is dismissed.
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2019 (3) TMI 2012
TP Adjustment - comparable selection - Tribunal excluding one M/s. Bodhtree Consulting Limited - HELD THAT:- This issue had come up before this Court earlier in case of Tata Power Solar Systems Ltd. [2016 (12) TMI 1600 - BOMBAY HIGH COURT] a party is not barred in law from withdrawing from its list of comparables, a company, if the same is found to have been included on account of mistake as on facts, it is not comparable.
Transfer Pricing Mechanism requires comparability analysis to be done between like companies and controlled and uncontrolled transactions. This comparison has to be done between like companies and requires carrying out of FAR analysis to find the same. Assessee's submission in arriving at the ALP is not final. It is for the TPO to examine and find out the companies listed as comparables which are, in fact comparable. Appeal is dismissed.
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2019 (3) TMI 2011
Disallowing of loss claimed on account of trading in commodity derivative - transactions were carried on NCDEX - treating the transactions carried on by the assessee between the period 21.05.2013 to 22.08.2013 as speculative transaction - as transactions on which the assessee suffered a loss to be speculative transactions and hence impugned loss was not allowed to be set off with normal business income - HELD THAT:- A perusal of notification dated 27.11.2013 notifying NCDEX as recognized association, the language employed therein was similar to the language employed in notification dated 25.01.2006 whereby National Stock Exchange of India Ltd., Bombay and Bombay Stock Exchange Ltd., Bombay where notified as recognized stock exchange for the purpose of clause (d). Therefore, respectfully following the above decision of NASA Finelease Pvt. Ltd [2013 (9) TMI 733 - DELHI HIGH COURT], we hold that the notification will take effect during the entire previous year 2013-14 relating to assessment year 2014-15.
No Commodity Transaction Tax (CTT) paid in respect of trading transaction of the assessee under consideration and therefore, the same does not quantify for being treated as non-speculative - The Second proviso which has been inserted by the Finance Act 2018 is curative and therefore is to be treated as came into force from the date from which clause (5) itself was inserted in the statute i.e. with effect from 01.04.2014. Our above view finds support from the decision of the Hon’ble Supreme Court in the case of Allied Motors Pvt. Ltd. [1997 (3) TMI 9 - SUPREME COURT] wherein it was held that a proviso which is designed to eliminate unintended consequence which may cause undue hardship to the assessee and unjust in a specific situation is to be read as retrospective with effect from which the main section was inserted.
To the same effect is the decision of Ansal Land Mark Township Pvt. Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] wherein decision of the Agra Bench of the Tribunal in the case of Rajeev Kumar Agarwal [2014 (6) TMI 79 - ITAT AGRA] was confirmed wherein it was held that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically by the statue. It was held that Second proviso to Section 40(a)(ia) of the Act must be given retrospective effect of the point of time when the related legal provision was introduced. Thus, in view of the above discussion as in the instant case, it is not in dispute that the assessee’s transactions in agricultural commodity derivative were otherwise eligible transaction within the meaning of Section 43(5)(e) of the Act, we set aside the orders of the lower authorities on this issue and direct the AO to treat the loss in said transaction as nonspeculative business loss and accordingly allow set off of the same from other business income as per law. Thus, this ground of appeal of the assessee is allowed.
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2019 (3) TMI 2010
Loss as incurred by the company because of fire - Loss of raw materials in fire which was rejected - HELD THAT:- As allowed by the AO. The balance amount of R.4,24,29,060/- was not allowed. It is brought on record that the assessee had received insurance claim to the extent of that amount and offered to tax during A.Y. 2008-09. The claim of the balance loss of Rs.4,24,29,060/- for the assessment year 2006-07 was not allowed by the AO on the reason that the assessee had not claimed it in the revised return. The same was allowed by the CIT(A) as the assessee had offered the receipt of insurance claim during the subsequent year, i.e., 2008-09. Being so, it is revenue neutral. We find no infirmity in the order of the CIT(A) in allowing the claim of loss of the assessee, though there was no revised return of income filed by the assessee. Thus, this ground of appeal of the Revenue is dismissed.
Disallowance of claim of deduction made on the profits of gas turbine boiler - HELD THAT:- We find that this issue is covered in favour of the assessee by the decision in the case of West Coast Paper Mills Ltd. [2014 (7) TMI 554 - ITAT MUMBAI] wherein it was held that deduction u/s. 80IA is allowable in respect of captive power consumption units and generation of steam amounts to generation of power for the purpose of deduction u/s. 80IA. We do not find any infirmity in the order of the CIT(A) and confirm the same. Accordingly, this ground of appeal of the Revenue is dismissed.
Disallowance of amount being club expenses - HELD THAT:- The observation made by the CIT(A) is justified. AO had given only two days to produce the requisite vouchers and bills. The assessee has also not produced any documents. More so, there was no disallowance in the subsequent year on this count. Considering the totality of the facts and circumstances of the case, the CIT(A) disallowed Rs. 20 lakhs and balance Rs.30,09,299/- was deleted. Hence, we do not find any infirmity in the order of the CIT(A) and confirm the same. This ground of appeal of the Revenue is dismissed.
Disallowance of claim of reduction u/s. 35(2AB) - As found that the DSIR approval was not there for 2006-07 - HELD THAT:- As rightly observed by the CIT(A), the assessee was not granted DSIR approval for the assessment year 2006-07. Hence, there is no question of granting reduction u/s. 35(2AB) - Hence, this ground of appeal of the assessee is dismissed.
Disallowance u/s. 35(2AB) - expenditure incurred by it for its in-house R&D facility - HELD THAT:- Allowability of expenditure u/s. 37(1), we are of the opinion that this issue was already settled in the case of Brooke Bond India Ltd [1997 (2) TMI 11 - SUPREME COURT] wherein it was held that expenditure incurred by a company in connection with issue of shares, with a view to increase its share capital, is directly related to the expansion of the capital base of the company, and is capital expenditure, even though it may incidentally help in the business of the company and in the profit making. Being so, we are inclined to reverse the finding of the CIT(A) on this issue. Accordingly, we allow the ground taken by the Revenue.
Allowability of expenditure u/s. 35D - assessee claimed expenditure on issue of shares and incurred on ROC fees and submitted that it should be allowed u/s. 35D - HELD THAT:- This issue was raised for the first time before us. The Assessing Officer had no occasion to examine the same. Hence, we remit this issue to the file of the AO for fresh consideration and decide the issue in accordance with law after giving reasonable opportunity of hearing to the assessee. The additional ground raised by the assessee is allowed for statistical purposes.
Disallowance of claim of deduction made on the profits of gas turbine boiler - HELD THAT:- As discussed earlier the assessee is entitled to deduction u/s. 80IA on captive power consumption units and generation of steam amounts to generation of power for the purpose of deduction u/s. 80IA. We do not find any infirmity in the order of the CIT(A) and confirm the same. Accordingly, this ground of appeal of the Revenue is dismissed.
Final order without passing the draft assessment order u/s. 144C - HELD THAT:- As when the final assessment order is passed without passing the draft assessment order, it is illegal and without jurisdiction. Accordingly, we quash the assessment orders for both the assessment years.
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2019 (3) TMI 2009
Disallowance of depreciation on the assets purchased by the assessee by application of funds - CIT(A) deleted the same by following the decision of Vishwa Jagriti Mission[2013 (1) TMI 157 - DELHI HIGH COURT] - HELD THAT:- - In assessee’s own case also, Hon’ble jurisdictional High Court in DIT vs Indraprastha Cancer Society,[2014 (11) TMI 733 - DELHI HIGH COURT] considered the question whether after claiming deduction in respect of the cost of the assets u/s 35(1) of the Act, assessee again claimed deduction on account of depreciation in respect of the same asset. Hon’ble jurisdictional High Court held the issue in favour of the assessee. No nreasonableness in the order of the ld. CIT(A). We, therefore, confirm the order of the ld. CIT(A) and dismiss Ground Nos. 1 & 2.
Disallowing the loss on sale of assets - Plea of the assessee is that the assets were sold at a price lesser than the WDV of the assets and when the depreciation is allowed following the commercial principle, there is no bar to consider the loss and the learned AO committed error in taking the sale proceeds as income and ignoring the loss - CIT(A) considered the plea of the assessee and satisfied that the assessee could demonstrate that the income u/s 11 had to be determined on commercial principles - HELD THAT:- We are also of the considered opinion that the income u/s 11 has to be determined on commercial principles and to determine the same, the losses arising on sale of assets of the society shall be considered. Therefore, the capital loss of Rs.2,14,310/- has to be considered while calculating the income of the assessee. With this view of the matter, we uphold the finding of the ld. CIT(A) on this ground and dismiss Ground No.3.
Disallowing the provisions relating to the gratuity, leave encashment and cancer care scheme - HELD THAT:- We are satisfied that such a provision was made on scientific basis inasmuch as the explanation of the assessee is that the employees accrue a right of gratuity on their continuous service for five years and the society has to pay them the gratuity as and when they retire, so also the leave encashment, which are ascertain amounts but the time of payment is unknown and, therefore, as a prudent employer, the assessee has to make provision for payment of such ascertained amounts but at an unascertained time.
CIT(A) drew strength from the judgment of DIT(E) vs NASSCOM [2012 (5) TMI 204 - DELHI HIGH COURT] wherein it was held that the income available for charitable purpose to be computed in accordance with commercial principles, provision for bad and doubtful debts could be created, and observed that the ratio of this judgment applies to this case also as the provisions has been made to meet the ascertained liability likely to be incurred during the course of carrying out its object. This reasoning given by the learned CIT(A) does not appear to be suffering from any illegality or irregularity - ground no.4 has to be dismissed.
Disallowing the advance amount paid by the assessee for purchase of assets like machinery - HELD THAT:- . It is the submission of the learned AR that it is the practice of the assessee that whenever the advances are paid to the vendors, in the year when the machinery is supplied and the expenditure is booked, only the balance amount is taken cognizance and not the entire amount. This is an aspect which requires verification at the end of the learned AO as to whether the expenditure is booked for the entire expenditure or only for the balance amount of the cost of the machinery. We, therefore, set aside this issue to the file of the learned AO to verify whether the advance amount is excluded from the cost of the machinery or the capital assets in the year in which the expenditure is taken cognizance of and if the advance amount is excluded while booking the expenditure to allow this advance amount for this year. Ground No.5 is, therefore, allowed for statistical purposes.
Addition made on account of the earmarked funds received by the assessee - AR submitted that in respect of the receipt or spending of the alleged earmarked funds, there is evidence available with the assessee in the shape of resolutions or correspondence creating such obligation to spend the amount in a specific way - HELD THAT:- We are, therefore, of the considered opinion that in the interest of justice, this issue has to be set aside to the file of the learned AO and it is for the assessee to prove their claim with reference to any material available in their custody. Learned AO will cause the factual verification in respect of any such material to be produced by the assessee and to take a fresh view at the matter. This is more particularly in view of the fact that according to the assessee, learned AO allowed these funds quite for a long term both priorand alsosubsequent years. We direct the assessee to produce the material before the AO and to substantiate their claim. We, therefore, allow this ground for statistical purposes.
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2019 (3) TMI 2008
Penalty u/s 271(1)(c) - income so surrendered and offered for taxation - return of income filed in response to notice U/s 153A wherein assessee declared the total income and agricultural income including the surrendered income as admitted in the statement U/s 132(4) - in statement recorded U/s 132(4) of the Act, the assessee declared and surrendered the said long term capital gain on sale of shares as undisclosed income and offered the same for taxation - HELD THAT:- As in the case of the assessee, the income was assessed only because the assessee surrendered the same but it would not have otherwise sustained the test of the legal requirement of the assessment of the income without any incriminating material. There are binding precedents on the issue that in the proceedings U/s 153A AO cannot reassess the income in absence of any incriminating material found and seized during the course of search or post search enquiry.
In the case in hand, we find that the entire basis of the additional income assessed to tax in the proceedings U/s 153A of the Act is the statement of the assessee U/s 132(4) of the Act and subsequent surrender of the said income to tax without any incriminating material found or seized. Since the income and transaction relating to the income are already part of the books of account not only for the year under consideration but also for the preceding years and therefore, except surrender made by the assessee, the addition if any made by the Assessing officer of this income based on the statement would not have survived or sustained.
In the case of Jai Steel (India)[2013 (6) TMI 161 - RAJASTHAN HIGH COURT] has laid down the proposition that the addition made in absence of incriminating material in the proceedings U/s 153A where the assessment was not pending on the date of search is not sustainable.
Once the assessee has raised all these contentions and explained during the penalty proceedings that the transactions of purchase and sale of shares and consequential long term capital gain are genuine based on the documentary evidence and further all these were part of the books of account and disclosed in the return of income filed U/s 139 consequently the addition itself would not have survived had the assessee not surrendered the income then this explanation of the assessee would certainly lead to the conclusion that the penalty is not leviable U/s 271(1)(c) - Appeal of the revenue is dismissed.
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2019 (3) TMI 2007
Addition as income from business or house property u/s. 23 - income derived was stock - alternatively ALV is to be computed by taking 6% as the average rate of investment as against 8% of average rate of investment adopted by the AO - HELD THAT:- CIT(A) has sustained the addition made by the AO after placing reliance on the decision of Ansal Housing Properties [2012 (11) TMI 323 - DELHI HIGH COURT] wherein as decided that the assessee engaged in business of construction and house property would be liable to pay of ALV of flats laying unsold during the year as income from house property.
Also noticed that an amendment has been made by the Finance Act in sub-section (5) of section 23 of the act w.e.f. 01-04-2018. This amendment is not applicable for the year under consideration. With the assistance of ld. representatives, we have gone through the decision CIT vs. Neha Builder Pvt. Ltd. [2006 (8) TMI 105 - GUJARAT HIGH COURT] wherein it is held that if property is used as stock in trade, then, such property would become or partake character of stock and any income derived from stock would be income from business and not income from property. We have also gone through the judgment in the case of ACIT vs. Haware Construction Pvt. Ltd. [2018 (10) TMI 1523 - ITAT MUMBAI]
As in the case of Neha Builder Pvt. Ltd [2006 (8) TMI 105 - GUJARAT HIGH COURT] and after considering the decision of ITAT Mumbai Bench as cited above, we set aside the order of the CIT(A) and consider that in the case of the assessee any income derived was stock would be income from business and not income from property.
Thus we set aside the order of the CIT(A) and consider that in the case of the assessee any income derived was stock would be income from business and not income from property, therefore, allow the appeal of the assessee. Accordingly the appeal of the assessee is allowed.
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2019 (3) TMI 2006
TP Adjustment - upward adjustment made on international transactions - threshold limit of Rs 15 crores - HELD THAT:- No document was cited before us showing a threshold limit of Rs 15 crores being in force at the relevant point of time. As far the Calance Software case [2018 (3) TMI 1310 - ITAT DELHI] that was a case in which the value of transactions was less than Rs 5 crores and the CBDT circular holding the threshold limit, for reference to the TPO, was placed on record.
There is nothing before us to suggest the threshold limit of Rs 15 crore in such cases being in force at the relevant point of time. In any case, the plea of the assessee is not disposed of by way of a speaking order. In this view of the matter, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the CIT(A) for adjudication on this short point by way of a speaking order, in accordance with the law and by way of a speaking order. As the matter is being remitted to the file of the CIT(A) on this technical plea, it will be premature to deal with grievances raised by the AO.
Disallowance on account of interest expenses u/s 36(1)(iii) - once the funds are put into business they lose their identity - CIT-A deleted the addition - HELD THAT:- We see no reasons to interfere in the matter as learned CIT(A)’s order for the assessment year 2009-10, based on which impugned relief was given, has since been confirmed by a coordinate bench vide order [2016 (9) TMI 1500 - ITAT AHMEDABAD] and the learned Departmental Representative has not been able to point out any material difference in the facts of the case of the said assessment year vis-à-vis the facts of the case of this year. As a matter of fact, there is no dispute that material facts of the case are same. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter.
Addition on account of royalty payment - payment was made for the use of landmark - Capital expenditure - CIT-A deleted the addition - HELD THAT:- We see no reasons to interfere in the matter as learned CIT(A)’s order for the assessment year 2009-10, based on which impugned relief was given, has since been confirmed by a coordinate bench [2016 (9) TMI 1500 - ITAT AHMEDABAD] and the learned Departmental Representative has not been able to point out any material difference in the facts of the case of the said assessment year vis-à-vis the facts of the case of this year. As a matter of fact, there is no dispute that material facts of the case are same. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter.
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2019 (3) TMI 2005
Money Laundering - scheduled offences - Seeking suspension of sentence as well as payment of fine pending consideration of appeal - HELD THAT:- The learned trial Court has indisputably kept the trial pending, so far as offences punishable under scheduled offences of the Act is concerned and separately conducted the trial under Section 4 of the Prevention of Money Laundering Act 2002.
This Court deems it appropriate to suspend the sentence as well as fine imposed upon the present applicant till pending consideration and final disposal of appeal. It appears that the present application requires consideration and prayer in terms of bail is allowed. The sentence imposed by judgment and order dated 29.1.2019 passed by learned Principal District & Sessions Judge and Designated Special Judge( PMLA), Ahmedabad (Rural) in PMLA Case No.2 of 2011 is hereby suspended pending hearing and final disposal of the present criminal appeal. The applicant shall be released on regular bail by executing fresh bond of Rs.15,000/- and one surety of like amount to the satisfaction of trial Court on condition that he shall proceed with the criminal appeal as and when it may be listed, and he shall surrender his passport, if having, before the learned trial Court and shall not leave India without prior permission of this Court.
Application disposed off.
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2019 (3) TMI 2004
Bogus LTCG - unexplained cash credit u/s 68 - denying exemption u/s 10(38) - HELD THAT:- On the issue of claim of exemption u/s.10(38) in respect of long term capital gains, it is noticed that the assessee has not been given any opportunity to prove the genuineness but the assessment has been made based on the evidences collected by the Revenue in the course of the investigation conducted by them on brokers / share broking entities etc. This is not permissible.
This being so, in the interest of natural justice, the issue of the genuineness of the transactions require re-adjudication. Since, the right to exemption must be established by those who seek it, the onus therefore lies on the assessee. In order to claim the exemption from payment of income tax, assessee had to put before the Income Tax authorities proper materials which would enable to come to a conclusion.
AO must keep in mind that the onus of proving the exemption rests on the assessee. If the A O does have any evidence to the contrary, it is to be put to the assessee for his rebuttal. The internal communications of the Revenue are evidences for drawing an opinion on possible wrong claims but they are not the final evidence.
AO shall require the assessee; to establish who, with whom, how and in what circumstances the impugned transactions were carried out etc., to prove that the impugned transactions are actual , genuine etc. The assessee shall comply to the A O’s requirements as per law. On appreciation of all the above aspects, the AO would decide the matter in accordance with law.
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2019 (3) TMI 2003
Seeking grant of Succession Certificate to the 1st petitioner with power to collect the Securities and to receive interest and dividends on and negotiate and transfer the securities - HELD THAT:- The first petitioner has been examined herself as P.W.1, he has produced the death certificate of the deceased R. Kapanipathi Rao as Ex.P1 and the legal heirship certificate as Ex.P2. A perusal of the legal heirship certificate shows that the petitioners are the legal heirs of the deceased R. Kapanipathi Rao.
The original petition is allowed granting succession certificate in respect of the securities mentioned in the schedule to the petition in favour of the petitioners.
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