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Showing 61 to 80 of 1653 Records
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2017 (4) TMI 1597
TP Adjustment - Arm’s Length Price (ALP) in respect of advertisement expenditure incurred by the assessee to the Associate Enterprises (AEs) - HELD THAT:- This issue is squarely covered by the decision of co-ordinate bench of this Tribunal in assessee's own case [2016 (5) TMI 1589 - ITAT CHENNAI] All the risks associated with the sales of AEs, is to be borne by AE only. In such circumstances, assessee is not required to incur any expenditure towards sales. More so, when there is no stipulation by way of any agreement between the assessee and the AE, it is to be borne in mind that if the assessee had sold similar goods to other non-AE, assessee would not have incurred such expenditure. The benefit derived from the impugned expenditure is not at all for the assessee and it goes directly to the AE only. In our opinion, services in connection with such advertisement cost which was incurred in abroad, benefit accrued to AE and the assessee cannot claim any of such expenditure as the AE is in different tax jurisdiction constituted distinct and independent entity subject to the law of the respective countries and the parent company cannot claim the benefits of their AE’s business or may claim a beneficial ownership treating the AE as virtually non entities - investment of expenditure to AE is very much a transaction as per section 92F(v) and consequently it is a international transaction as per sec.92B of the Act requiring consideration u/s.92 - we are inclined to dismiss the ground taken by the assessee.
Transfer Pricing addition on account of interest in respect of interest free advertisement advances made by the assessee to it’s A.Es. - HELD THAT:- Relying on assessee's own case[2016 (5) TMI 1589 - ITAT CHENNAI], we are inclined to dismiss the ground taken by the assessee.
Disallowance u/s.14A - HELD THAT:- For assessment year 2006-07, Rule-8D is not applicable as it was inserted with effect from 24.03.2008. Accordingly, in our opinion for these assessment years we direct the A.O to disallow 2% of the exempted income on -This ground raised by the assessee is partly allowed.
Apportionment of the common expenses on the basis of turnover for the purpose of deduction u/s.80-IC - HELD THAT:- As decided in own case [2016 (5) TMI 1589 - ITAT CHENNAI] profit from Euro Watch Division to be worked out on standalone basis by apportioning of necessary expenditure in proportionate to the turnover to this division and ascertained the true profit of the Euro Watch Division. The market value of product of the Euro Watch Division is to be determined on the average price to be paid, or paid by the assessee to the other parties in the open market, had it been purchased from the outsiders which would be in terms of Sec.80-IA(8) r.w.sec.80-IB(13) of the Income Tax Act. Accordingly, the issue in dispute is remitted to the file of the AO for re-computation of the profit of Euro Watch Division and considered the claim of assessee for deduction u/s.80-IB in the case of West Coast Paper Mills Ltd. [2006 (4) TMI 184 - ITAT BOMBAY-I].
Provision for doubtful advances - A.R pleaded that the assessee has already disallowed while computing the income of assessee in the assessment year under consideration while determining the tax liability and the same cannot be offered to tax twice in the hands of the assessee - HELD THAT:- After hearing both the sides, we are of the opinion that the assessee has not produced any evidence before us to substantiate this argument. Accordingly, we remit the issue in dispute to the file of AO with a direction to assessee to place necessary evidence to support of its claim before the AO. Therefore, this issue is remitted to the file of AO for fresh consideration.
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2017 (4) TMI 1596
Disallowance on account of interest expenses to Naksha Impex - A.O. was of the opinion that the interest paid to Naksha Impex was quite higher than the rate of interest paid to bank as well as paid on other unsecured loans. Accordingly, the assessee was asked to justify the claim of interest - CIT-A deleted the addition - HELD THAT:- Before us, the ld. D.R. simply relied upon the findings of the A.O. without bringing any factual error in the findings of the ld. CIT(A). There is no dispute that the A.O. has not given any adverse findings so far as utilization of borrowed money from M/s. Naksha Impex is concerned. It is also true that Naksha Impex is not a related party and, therefore, provisions of Section 40A(2)(b) of the Act are not applicable. We agree with the First Appellate Authority that for the purposes of the allowance of interest u/s. 36(1)(iii) of the Act, all that the A.O. has to consider is whether the money borrowed is utilized for the purposes of business or not. Since, no adverse findings is given, we decline to interfere with the findings of the ld. CIT(A).
Nature of expenditure - payment paid to Vishnu & Company Trade Mark Pvt. Ltd. for use of trade mark - revenue or capital expenditure - HELD THAT:- There is no dispute that the “Vimal” Trade Mark is owned by Vishnu & Company Trade Mark Pvt. Ltd. It is also true that the assessee has paid the royalty as per the terms and conditions of the registered agreement. It is equally true that the CBDT circular No. 10/69/61-IT(AI) dated 04.09.1962 is not applicable in the instant case. We further find that in the immediately preceding assessment year, similar payments were allowed by the A.O. in scrutiny assessment. Considering the facts in totality, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground no. 2 is accordingly
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2017 (4) TMI 1595
Seeking restraint on petitioner and R4 from making any related party transactions, till the matter is taken up for final hearing - HELD THAT:- Keeping in view the submissions of the counsel, we order status quo as on this date. In case there may be any need for related party transactions, the same shall not be carried out without the leave of this Bench. PCS representing the respondents submitted that a direction be given to the Petitioner/Management of RI to supply the required information to the respondents. His prayer is allowed. Petitioner/Management of RI is directed to provide the relevant information as may be desired by the respondents.
Put up on 14.06.2017 at 10.30 A.M.
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2017 (4) TMI 1594
Valuation of Toffees - whether sugar content in the candies is 90% or not? - HELD THAT:- As against 05 samples initially sent for chemical analysis, in four of them sugar content was found around 90%. Upon objection of the assessee, fifth sample also has reported sugar content of 90% in re-analysis. The manufacturing of candies was otherwise not discontinued. In such circumstances, if the Tribunal has proceeded to treat the sugar content at 90% for the fifth sample also, no perversity could be shown. This Court in exercise of revisional jurisdiction is not required to re-appraise facts.
Revision disposed off.
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2017 (4) TMI 1593
Assessment u/s 153A - Bogus purchases - D.R submitted that the orders passed by the AO in the hands of Shri Atul Sanghavi and Shri Dilip Shah has been revised by the Ld CIT and the additions have been made in their hands on protective basis - HELD THAT:- We are of the view that all the additions made by the AO require re-examination at the end of Ld CIT(A) in the light of subsequent developments that happened in the assessments of two brokers and the other parties. Accordingly we set aside the common order passed by Ld CIT(A) and restore all the matters to his file for considering them afresh by duly considering the relevant facts and subsequent developments. Appeals of the revenue and the assessee are treated as allowed for statistical purposes.
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2017 (4) TMI 1592
Violation of principles of natural justice - opportunity of personal hearing not provided - Validity of assessment order - non-payment of tax - allegation is that the other end dealers from whom, the petitioner effected the purchase have not paid tax - whether the petitioner can be fastened with the liability of the selling dealer? - HELD THAT:- The Assessing Officer, without affording the personal hearing, passed the orders of assessment only by stating that the petitioner did not take any effort to prove that the selling dealer has paid the tax. When a personal hearing is sought for by the petitioner, the Assessing Officer, before coming to a conclusion that the petitioner did not prove the payment of tax by the selling dealer, ought to have given an opportunity to the petitioner to appear in person and satisfy as to how such conclusion is either factually wrong or legally not sustainable, as it is specifically contended by the petitioner that they cannot be fastened with such liability.
The matter has to go back to the Assessing Officer to redo the assessment once again, after giving an opportunity of hearing to the petitioner - Petition allowed by way of remand.
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2017 (4) TMI 1591
Reopening of assessment u/s 147 - assumption of jurisdiction under Section 147 - HELD THAT:- As in the present case, it is more than apparent that the Assessee never intended to question the assumption of jurisdiction under Section 147 at any stage from the time of assessment or even thereafter. It is only at the stage of admission of the Tax Case (Appeal) that the issue was raised, even then, as an additional issue. When, from December 2008 the Assessee has accepted and was quite content with the jurisdiction assumed under Section 147, we do not think it fit to permit the Assessee to raise the question now, merely for the asking.
The provisions of Section 260 A read with the proviso thereto, no doubt empower the Court to consider any question, even one not raised before it, upon the Court recording its satisfaction that the case ‘involves’ such an issue. The use of the word 'involves' does not in our view extend to all and every legal issue arising in a case, but only those that the assessee demonstrates, has been contested by it at a stage proximate to the raising of the said issue by the department. Acceptance of jurisdiction without demur at every single stage of the proceeding, assessment and appeals, has to be taken to be final and inviolable.
In the facts and circumstances as we have noticed above, we reject the prayer of the appellant to contest the issue of re-opening under Section 147 of the Act raised before us by way of revised substantial question of law.
Business expenditure - as per revenue Appellant has not set up or commenced the business and accordingly expenditure incurred are not allowable as business expenditure - HELD THAT:- The stage wise activities engaged in by the assessee over the relevant previous year indicates that it has traversed beyond the stage of exploratory activity and was, in fact, engaged in activity that was integral to the profit earning apparatus and we hold so.
Yet another aspect is that the stand of the assessee for the previous year to the effect that it had already commenced business, was accepted by the department. The fact that such acceptance was only by way of Intimation u/s 143(1) and has not been confirmed under scrutiny, is, in our view, not material for the reasons set out in para 18 of this order. The definition of 'previous year' as extracted earlier is applicable to, and leads to the inference that the assessee had in fact, commenced business in the Financial year 2003-04, Assessment year 2004-05.
One cannot countenance a situation where there is a consecutive 'setting-up of business' year after year, which would be the absurd consequence that the stand taken by the department in the present year will lead to. - Decided in favour of assessee.
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2017 (4) TMI 1590
Levy of penalty under section 271(1)(c) - Validity of notice u/s 274 - HELD THAT:- No contrary decision of the Hon'ble Apex Court or the Hon'ble Bombay High Court has been brought to our notice or placed before us for consideration. Therefore, respectfully following case of Manjunatha Cotton & Ginning Factory[ [2013 (7) TMI 620 - KARNATAKA HIGH COURT] decision in the case of CIT Vrs Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] we hold that the notice issued under section 274 r.w.s. 271 of the Act dated 29.11.2007 for A.Y. 2005-06 for initiating penalty proceedings under section 271(1)(c) of the Act in the case on hand is invalid and consequently, the penalty proceedings are also invalid. In this view of the matter, the additional grounds raised by the assessee are allowed. The very basis for the levy of penalty under section 271(1)(c) of the Act has been held to be invalid - Decided in favour of assessee.
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2017 (4) TMI 1589
Seeking return of passport - seeking permission to go abroad - HELD THAT:- For deciding the issue at hand, Section 6(2)(f) will be relevant. A reading of the said provisions shows that the power of the Passport Authority to refuse issuance of passport under Section 5(2)(c) is governed by Section 6(2). Thus, for any of the reasons given in Clause (a) to (i) of Section 6(2), the Passport Authorities can refuse to issue a passport in exercise of power under Section 5(2)(c). The Parliament, in its wisdom, has conferred the aforesaid power, which is administrative in nature, on the Passport Authority. The Central Government has issued the following Notification dated 25.08.1993, for regulating the exercise of power by the Passport Authority under Section 6(2 (f).
From a reading of Notification dated 25.08.1993, in the opinion of this Court, the expression 'concerned Court' will mean the Court before whom the person is facing the prosecution. In this case, had there not been a quash petition pending, the 'concerned Court' would be the learned Judicial Magistrate No.V, Trichy before whom the petitioner is facing trial in C.C.No.21 of 2015. However, this Court, in exercise of its power under Section 482 of Cr.P.C., has admitted Crl.O.P.(MD)No.3533 of 2017 and has granted stay of all further proceedings in C.C.No.21 of 2015 on the file of Judicial Magistrate No.V, Trichy. Under such circumstances, the expression 'concerned Court' in the context of the present case will mean the High Court and not the Judicial Magistrate No.V, Trichy.
Whether, this Court can permit the petitioner to go abroad? - HELD THAT:- Since, this Court was prima facie satisfied that the transaction is purely civil in nature, this Court had admitted Crl.O.P.(MD)No.3533 of 2017 and had granted stay of the prosecution in C.C.No.21 of 2015. The police have filed a report before this Court, in which it is stated that the petitioner is a permanent resident of Trichy and has been doing furniture business. It is the case of the petitioner that to fulfil his business commitments, he is required to go to China for procuring furniture items as well as farm equipments.
This Court is of the view that this is a fit case for which permission should be granted to the petitioner to go abroad. Under such circumstances, this Court permits the petitioner to depart from India and return on 30th May 2017. In view of the permission granted by this Court, the Passport authorities are directed to exempt the petitioner from the operation of the provisions of Clause (f) of sub-Section (2) of Section 6 of the Passports Act - Petition allowed.
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2017 (4) TMI 1588
Deduction u/s 54-F - qualify as 'a residential house' occurring in Section 54-F - HELD THAT:- The issue raised in the appeal is covered by the judgment of the Division Bench dated 03.03.2017, passed in T.C.A.No.33 of 2017 titled : Commissioner of Income Tax, Non Corporate Ward – 10(2) Vs. Shri Gumanmal Jain, to which one of us i.e., Rajiv Shakdher J. was a party.
Revenue has brought to our notice the fact that in the judgment rendered by the Division Bench in the case of Commissioner of Income Tax, Non Corporate Ward – 10(2) Vs. Shri Gumanmal Jain, it was observed albeit, based on information furnished to said Bench by the Revenue, that no intra-Court appeal had been preferred in the case concerning, one, Mr.G.Chinnadurai. As would be evident from the cause title of the captioned appeal it concerns the said Mr.G.Chinnadurai. We are informed by the counsel for Revenue that, inadvertently, this fact was overlooked.
As, however, conceded by the learned counsel for the Revenue that this aspect will not impact the judgment rendered by the Division Bench of this Court in the matter of : Commissioner of Income Tax, Non Corporate Ward – 10(2) Vs. Shri Gumanmal Jain. Having regard to what is submitted before us, by the learned counsel for the Revenue, the appeal is dismissed.
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2017 (4) TMI 1587
Recovery proceedings - attachment orders - HELD THAT:- In the counter affidavit, the facts that were narrated in the affidavit filed in support of the writ Petition are not disputed. It is the case of the respondents that the property in question was earlier mortgaged by the petitioner to the Tamil Nadu Mercantile Bank Limited, Tuticorin and that the petitioner was prohibited from dealing with the property mortgaged in favour of the Tamil Nadu Mercantile Bank Limited. Hence, the respondent could not proceed with the same. Since, the respondents were prohibited by law from proceeding with the sale, the respondents are entitled to exclude the time during which the respondent could not proceed with the sale of the property.
Only on this premise, the respondents wanted this Court to dismiss the writ petition. The perusal of the records discloses that the facts narrated by the petitioner with regard to the dates are admitted. The assessment order though passed on 28.09.1998 and the amount was determined long back, the property was attached in the year 2003. Despite the fact that there was an order of attachment even in the year 2003, there was no attempt to bring the property for sale. The period that can be excluded is also enumerated in Rule 68 (B) (2). The reason for the delay cannot be accepted as the property can also be sold subject to any mortgage. Further, it is not a ground to extend the period of limitation.
Rule 68 (B) as extracted above give a clear indication that no sale of immovable property shall be made after the expiry of three years from the end of the financial year, in which the order giving rise to a demand of any tax, interest, fine or penalty. The provision has been clarified by the judgment of this Court in a number of cases.
This Court has no hesitation to allow the writ petition with the following direction:-
9(i) The impugned order of attachment passed by the first respondent dated 27.01.2003 and the consequential proceeding of the third respondent dated 31.12.2014 are quashed. Consequently the third respondent is directed to remove the endorsement of encumbrance made in respect of the petitioner's property in Door No.316A, 316B, Vittalapuram Village, Ottapidaram Taluk. Though, the respondents are not permitted to bring the property for sale in view of the limitation standing in the way, it is the duty of the petitioner to pay the tax due to the respondent.
The right of the respondents to recover the tax from the petitioner by any other modes cannot be curtailed. The third respondent is directed to remove the endorsement for recording of encumbrance in the relevant books within a period of four weeks from the date of receipt of a copy of this order.
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2017 (4) TMI 1586
Penalty u/s 271C - appellant treated as defaulter u/s.194A/201(1) - HELD THAT:- The issue is squared covered by the decision of this Court in the case of Sr. Divisional Manager, National Insurance Co. Ltd., 61, Aerodrum Road, Alwar [2017 (2) TMI 1515 - RAJASTHAN HIGH COURT] for none of the years under consideration, the interest income exceeded ₹ 50,000/-. In fact, this Court in case of Smt. Hansagauri Prafulchandra Ladhani and ors vs. The Oriental Insurance Company Ltd [2006 (10) TMI 383 - GUJARAT HIGH COURT] provided for further splitting up of this ceiling of ₹ 50,000/- per claimant basis. Looked from any angle, the insurance company was not justified in deducting tax at source while depositing the compensation in favour of the claimants. It therefore, cannot avoid liability of depositing such amount with the Claims Tribunal. The Claims Tribunal had committed no error in insisting on the insurance company in making good the shortfall - Decided in favour of assessee.
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2017 (4) TMI 1585
TP Adjustment - disallowance of customs duty payment - contention of the ld.A.R is that TPO erred in including 30% of the customs duty as part of the operating cost of the assessee to determine the ratio of operating profit to sales - contention of the assessee company is that it is in initial year of operations has been considered and the customs duty adjustment was provided to the assessee company - HELD THAT:- It has to be noted that the assessee has not excluded the customs duty in the comparables. To bring in uniformity, the customs duty was eliminated in the comparable also. The import percentage in the Comparables comes to 30% and this 30% was excluded from the assessee’s customs duty to weed out the difference between the assessee company and the comparables.
TPO observed that while requesting for customs duty adjustment, the assessee had stated that they need to import because their customers are into highly engineered products and find applications in automobiles and they require an exact made to specification product and hence good calendaring process is required and the assessee company is in initial year of operations. The price reduction claimed for such high engineered products cannot be believable because from the submissions it can be gathered that the assessee company is operating in a special niche zone. The assessee company has not submitted any competitive factors that compelled them to sell their products at lesser price, than their production cost.
The higher production of the assessee company than that of the comparables would also be one of the reasons for such price reduction since normally any company would not like to store the goods for longer time, which will affect their working capital. The fact that the assessee company had imported the calendared product from their AE has to be taken into account in this regard.
Even though the assessee company argues that their profitability had reduced due to the sales factors, actually it is not so. The assessee has not submitted any valid documentary evidences to substantiate their claim. Hence, the TPO rejected the claim of assessee.DRP observed that the assessee submitted the computation of the ratio of operating profit to sales to arrive at the profit level indicator of the assessee. In the same, the assessee excluded the customs duty of ₹ 4.31 crores as this was a variation with materially different facts listed below and hence excluded.A.R submitted that 90% of the raw materials of the assessee are imported as such customs duty adjustments to be made and it includes ₹ 4.31 crores pertained to the customs duty in the manufacturing segment. In principle the customs duty adjustments is allowed in view of the Co-ordinate Bench decision in the case of Motonic India Automotive (P.) Ltd.[2016 (8) TMI 1423 - ITAT CHENNAI]
Hence, to bring uniformity, the customs duty was to be eliminated from the comparable price also to arrive at correct PLI. Accordingly, we remit the isuse to the file of AO for fresh consideration.
Excluding Forex gain from the Profit Level Indicator (PLI) by the assessee - According to TPO, as per assessee, forex loss arises only due to sales or purchase activities which are revenue in nature are not classified as a part of the operating expenses - Now the assessee is coming with the fresh submissions that their import percentage is higher and their export percentage is lower than that of the comparables - HELD THAT:- In our opinion, forex fluctuations loss in the operating cost of the assessee and also forex gains in the operating income of assessee, both to be excluded from the operating expenses as well as operating income respectively in view of the Order of Tribunal in the case of Motonic India Automotive Pvt. Ltd.[2016 (8) TMI 1423 - ITAT CHENNAI] Accordingly, this issue is remitted to the file of AO for fresh consideration.
Rejection of certain comparables - HELD THAT:- We are of the opinion that if the product of the comparables selected by the TPO is not comparable with the assessee’s product, it cannot be considered. In the case of Gujarat Reclaims and Rubber Products Ltd., the raw material used by the assessee is a re-cycled from worn out tyres and tread peelings. Being so, the product of that comparable is inferior to the assessee’s product, hence it cannot be compared to the assessee’s case.
Regarding Victor Gaskets India Ltd., the assessee wants to include it. Its annual report shows that the company exited out of asbestos based products in totality at its manufacturing location, thus completing a strategic plan to go asbestos free. Being so, it cannot be considered as comparable to assessee’s case. Rejection is justified.
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2017 (4) TMI 1584
Disallowance of commission expenses u/s 37(1) - AO stated that the sale of the assessee increased by merely 10.25% whereas the sale commission has been increased by 87% - HELD THAT:- We have gone through the material on record and paper book through the assistance of the representatives. We have noticed that the case of the assessee was set aside by the ITAT [2010 (10) TMI 1236 - ITAT AHMEDABAD] because the assessee had not furnished any evidence of services rendered by agents, to whom commission had been paid.
ITAT Coordinate Bench vide order supra had directed the learned CIT(A) to pass a speaking order, keeping in mind, inter alia, the mandate of provisions of sec. 250(6) of the Act, bringing out clearly the nature of services rendered by each of the recipient of commission.
We have noticed from the findings of the Ld.CIT(A) that the assessee failed to establish with the relevant documentary evidence that any services had been rendered by those persons to whom commission was paid. We find that part of the compliance regarding the services were actually rendered by commission recipients could not be established in spite of giving further opportunity in the set aside proceeding as per the order of Coordinate Bench of ITAT. In view of these facts and findings, we do not find any reason to interfere in the findings of the ld. CIT(A). Appeal of the assessee is dismissed.
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2017 (4) TMI 1583
Clandestine removal - perusal of evidences - brushing aside the vital evidences in the form of voluntary statements of the Director of the assessee respondent Company which was corroborated by the reports of the test samples, by the Tribunal - HELD THAT:- The appeal is admitted on the substantial question of law.
Issue notice to the respondent - List for final hearing on 9-8-2017.
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2017 (4) TMI 1582
Deduction u/s 10(23C)(vi) - Income Tax Appeal is admitted on the following substantial question of law -
ii. Whether on the facts and in the circumstances of the case, the order of the ITAT was erroneous in law in so far as its finding that there was no material to controvert the conclusion of CIT(A) was perverse, having been arrived at without any evidence and in total disregard, inter alia of the written submission filed by the Department.
iii. Whether on the facts and in the circumstances of the case, the order of the learned ITAT was erroneous in law in failing to take judicial notice of the fact that the order of CIT(A) upheld by it, referred to and relied on provisions of Sec.10(23C)(vi) introduced only w.e.f. 1. 4.1999.
iv. Whether on the facts and in the circumstances of the case, the order of the ITAT was erroneous in law in upholding the order of the CIT(A) without taking due judicial notice of the fact that the order of CIT(A) did not give any findings on the merit of the order u/s 158BC when passing of such an order was mandatory for the AO in view of the Chapter XIV-B. Issue notice to the opposite party by speed post with A.D., requisites for which shall be filed by 25.4.2017.
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2017 (4) TMI 1581
Assessment of Assessee trust as private specific trust - Exemption u/s 10(23FB) - income of a venture capital company or venture capital fund - Taxation of income arising from a recoverable transfer of assets - assessee venture capital fund is governed by SEBI guidelines as per SEBI Regulations, 1996 and the income earned by it is allocated among the beneficiaries in specified ratio - as per AO assessee has invested more than 25% of corpus in one venture capital fund - assessee claimed that the contributions made by investors in terms of trust deed and contribution agreements are regarded as revocable transfer under the provisions of Income Tax Act, 1961. Therefore, as per above sections it makes clear that the assessee trust is a revocable trust - HELD THAT:- The contribution agreement is an important document and trust deed which clearly accruing to the trust has ultimately to be transferred to the beneficiary in ratio of their investments. Sections 61 to 63 clarify that when a transferor can unilaterally resume the power of over assets, the income is to be taxed in its hands only as if the transfer never happened. The clause 15.1 of the trust deed clearly mandates the contribution made by contributor can be revoked any time during the term of scheme. CIT(A) is justified in his action.
We also find similar capital venture found in Bangalore in the case of CIT vs. India Advantage Fund [2014 (10) TMI 614 - ITAT BANGALORE] wherein has considered the applicability of section 164(1) of the Income Tax Act and held that section 164(1) applies shall be deemed as being not specifically receivable on behalf or for the benefit of any one person unless the person on whose behalf or for whose benefit such income or such part thereof is receivable during the previous year is expressly stated in the order of the Court or the instrument of trust or wakf deed as the case may be and is identifiable as such order, instrument or deed. The individual shares of the persons on whose behalf or for whose benefit such income received shall be deemed to be indeterminate unless the individual shares of the persons on whose behalf or for whose benefit such income stated in the order of the court. Section 161(1) applies in the case of the trust received the income from representative assessee and the High Court has gone to the extent that real test is whether shares are determinable even when after the trust is formed or may be in future when the trust is in existence. Therefore, in this case the beneficiaries’ agreement has been made and trust deed has been executed in the shares are determined. Therefore, assessee cannot be taxed.
We find that the similar financial company had been registered under Companies Act and the trust of the company was formed by trust deed and they were treated as private specific trust The similar trust has also been formed by a government company and they were treated as private specific trust. The similar trust was formed in Bangalore. In the decision M/S. INDIA ADVANTAGE FUND-VII [2014 (10) TMI 614 - ITAT BANGALORE] wherein the similar trust was executed by the limited company and their beneficiaries were government and semi government companies and they were treated as the private specific trust by the Tribunal. Hon’ble Karnataka High Court [2017 (2) TMI 722 - KARNATAKA HIGH COURT] has also upheld the order of Tribunal in the case of CIT vs. Indian Advantage Fund.
We are of the view that the Ld. CIT(A) is justified in holding that assessee trust is private specific trust and our interference is not required. The assessee has not claimed the deduction under section 10(23FB) of the Act. - Decided against revenue.
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2017 (4) TMI 1580
Validity of assessment orders - Section 84 in Tamil Nadu VAT Act - HELD THAT:- Though these writ petitions are filed challenging the orders of assessment dated 21.11.2014 and 22.12.2014 in respect of the assessment years 2011-12 and 2012-13 respectively, the learned counsel for petitioner submitted that suffice a direction is issued to the respondent to consider the application filed by the petitioner under Section 84 of the said Act and pass orders on the same on merits. It is seen that the petitioner has filed such application under section 84 of the said Act on 25.01.2017 and that the application is still pending for consideration before the respondent.
Therefore, without expressing any view on the merits of the matter, these writ petitions are disposed of, only with a direction to the respondent to consider the application filed by the petitioner under section 84 of the said Act and pass orders on merits and in accordance with law - application disposed off.
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2017 (4) TMI 1579
Oppression and mismanagement - implementation with the terms and conditions of MOU or not - fixation of fair market value of the shares of the first respondent company - Whether affairs of the first respondent company have been conducted in a manner prejudicial to public interest or prejudicial to the petitioner group members or in a manner prejudicial to the interest of the company? - Whether any material change which is not in the interest of the company or creditors or shareholders or debenture holders have taken place in the management or in the control of the company which is likely that affairs of the company could be conducted in a manner prejudicial to the interest of the company or its members or classified members? - Whether it is just equitable to wind up the company or not with a view to end the controversies agitated and if so instead of passing winding up order this Tribunal under section 402 of the Companies Act, 1956 pass any other equitable order?
HELD THAT:- Even as per the MOU, petitioner has agreed to sell his shares to respondents 2 and 6. Value fixed in the MOU is face value of shares. It is not the case of the parties to the MOU that it has been completely acted upon. On the ground that respondent 6 and Mrs. Monika Ruchandani transfer or agree to transfer their shares it cannot be said the petitioner has to follow the same course of action - Finding of the Tribunal is that there are acts of oppression and mismanagement by the respondents 2 to 5 on the petitioner's group who are minority shareholders of the first respondent company and on the petitioner who is director of the company.
Section 402 gives power to this Tribunal to pass such orders or directions. In the case on hand, there is finding of oppression and mismanagement. Petitioner himself came forward to sell out his shares for a value determined by the independent valuer. Petitioner's group and respondents are members of the same family and it is their family owned Company. There exists dispute between petitioner's group and respondents' group since death of Bhagwandas Ruchandani and at one point of time it was sought to be resolved by entering into MOU which was not implemented. Therefore, function of the Company Law Tribunal is first to see interest of the company vis-à-vis shareholders are saved. The Company Law Tribunal must find out whether any remedy is available other than winding up. The Tribunal may not shut out its powers only on sheer technicality.
The petitioner and respondents belong to same family, instead of straight away appointing an independent valuer to assess the value of shares, it is just and expedient to direct the petitioner and respondents 2 to 5 to come to an understanding regarding fair value of the shares of the first respondent company as on the date of filing of petition at which the same can be sold. Petitioner and his group persons, if they are willing, they can sell their shares to respondents as per the value fixed by mutual agreement - In case no mutual agreement on the fair value of the shares of the first respondent company is arrived and the sale of shares did not complete within a period of 90 days from the date of this order, petitioner, if he is willing to sell his shares, he is at liberty to file an application before this Tribunal to appoint an independent valuer to fix fair value of shares of the first respondent company as on the date of filing the petition and, in such application this Tribunal shall pass necessary orders regarding appointment of independent valuer and regarding the manner and mode of sale of shares of petitioner group to respondents 2 to 5 and transfer of such shares.
Petition disposed off.
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2017 (4) TMI 1578
Unverified purchases - non production of books of accounts - Whether Tribunal was justified on one hand in confirming the finding of unverified purchases shown by the assessee and consequent rejection of books of accounts u/s.145(3) and on the other hand reducing the addition made by the Assessing Officer, to merely ₹ 4,00,000/- only without giving any justification for the same? - HELD THAT:- As one of the partner of the assessee firm was brother of the assessee and even he himself has not produced books of accounts before the Additional Commissioner which has been one of the finding arrived at by both the authorities below. We were inclined to remit the case back in view of the settled law of this Court, however, counsel for the assessee insisted us at behest of respondent to hear the appeals on merits and therefore, we have heard both these appeals on merits.
It is well settled that the Tribunal while considering the case and reversing the view taken by the CIT(A) has to justify the reasons for reversing the order of CIT(A). The CIT(A) while considering the case has relied upon the judgment of M/s Gem Paradise [2016 (11) TMI 1400 - RAJASTHAN HIGH COURT] which has not been referred by the Tribunal.
Apart from that, in our considered opinion, the decision of Gujarat High Court was rightly relied by the Assessing Officer and will apply in the facts of the case.
We are of the considered opinion that the Tribunal has seriously committed an error in reversing the view taken by the CIT(A). No doubt, the contention raised by Mr. Singhi counsel for the department, that the view taken by the CIT(A) also requires to be modified, but while framing the issues this court has framed only one issue. We are of the opinion that the view taken by the CIT(A) is required to be reversed but looking to our limitation we are going back to the order of CIT(A) and the order of the Tribunal is reversed and the view taken by the CIT(A) is confirmed. - Decided against assessee.
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