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Showing 81 to 100 of 1719 Records
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2020 (1) TMI 1643
Classification of services - manpower recruitment and supply agency service or renting of immovable property service - mobilizing, arranging and supply of manpower and the payments that were made to the gangs - HELD THAT:- Brief facts of engaging the gangs for cutting the sugarcane is explained by the ld. counsel for the appellants. From such facts, it is not found that the appellants are engaging labourers for cutting the sugarcane. In fact, there is also no evidence to show that the appellants are receiving any consideration for providing manpower recruitment and supply agency service.
The decision rendered by the Tribunal in the case cited by the ld. counsel for the appellant in M/S. THE AMARAVATHI CO-OPERATIVE SUGAR MILLS LTD VERSUS CCE & ST, COIMBATORE [2018 (7) TMI 1837 - CESTAT CHENNAI] has analysed the very same issue and held in favour of the assessee.
Appeal allowed.
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2020 (1) TMI 1642
Interest income earned towards the surplus funds lying with it - business income or income from other source - AO had brought amounts to tax – As decided by HC on question of treatment of the amounts derived as to whether they are business income or income from other source judgment in NTPC SAIL Power Co. Pvt. Ltd. [2012 (10) TMI 524 - DELHI HIGH COURT] is conclusive and averse to the Revenue.
HELD THAT:- As petitioner, on instructions issued by the Department of Revenue, Ministry of Finance vide F.No.390/Misc./116/2017-JC dated 22.08.2019, seeks permission to withdraw this special leave petition along with pending applications therein due to low tax effect.
Permission granted, subject to just exceptions.
SLP and pending applications are dismissed as withdrawn, leaving question(s) of law open.
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2020 (1) TMI 1641
TDS u/s 195 - Disallowance u/s. 40(a)(i) - payment of ‘Software Maintenance charges’ - payment of Software charges made by the assessee for the year was excessive - assessee reported certain international transactions in Form No. 3CEB which included `Payment of Software Maintenance charges’ to CMA CGM, France - HELD THAT:- CMA CGM, France received the amount from the assessee in order to facilitate its shipping business. As such, the amount will rightly qualify as profit derived from shipping business in the international traffic.
Interest arising on funds connected with the operation of ships shall be regarded as profits derived from the operation of such ships, and such interest will be dealt with as per Article 9 and not Article 12 (which specifically deals with Interest income). Thus, it is ostensible that an item of income, which is not only directly connected with the shipping business but also indirectly connected with the shipping business, such as, interest on funds connected with the operation of ships, has also been understood as profits derived from shipping business under the DTAA.
When we examine the nature of income of CMA CGM, France under consideration, it becomes unequivocal that the same, being, directly concerned with the operation of ships, cannot be considered as anything other than profits derived from operation of ships and hence covered under Article 9 of the DTAA. As such, it would not magnetize any taxation in the hands of CMA CGM, France. Ex-consequenti, there will be no obligation on the part of the assessee to deduct tax at source and the fortiori is that there will not be any disallowance u/s.40(a)(i) of the Act.
Assessee was allowed the use of the software for its own business purpose and there was no permission to sub-licence the same. There is a specific bar on the assessee in not sub-licensing the software, which were to be used for its sole business needs. In other words, the consideration was for the use of software for its own business purpose and not for the use of, or the right to use, any copyright of software. As the consideration payable by the assessee for use of LARA, DIVA and Ocean was only for the use of the software for its own business purpose and not having right to copyright, the same will not constitute ‘Royalties’ within Article 13(3) of the DTAA.
Thus held that payment for use of software made by the assessee to CMA CGM, France does not satisfy the requirement of `use of, or the right to use, any copyright of software’.
Once it is held that para 3 of Article 12 is not attracted, as a sequitur, the application of clause (a) of para 4 of Article 12 of the DTAA with Portuguese would automatically be ousted, thereby making the amount paid by the assessee to CMA CGM, France for use of LARA, DIVA and Ocean software as immune from taxation in India. Going by the beneficial provision in the DTAA vis-à-vis the Act, it is held that there was no requirement on the part of the assessee to deduct tax at source which should have called for any disallowance u/s. 40(a)(i) of the Act. We, therefore, order to delete the addition. Decided in favour of assessee.
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2020 (1) TMI 1640
Effective date of notification - Notification No.13/2016CE( NT) dated 01.03.2016 (effective from 01.04.2016) issued by the Government of India, Ministry of Finance, Department of Revenue, amending the provision of Rule 6 of CENVAT Credit Rules, 2004 - retrospective effect or not - amendment to rule 6(3A) by Notification No.13/2016CE(NT) dated 01.03.2016 of the CENVAT Credit Rules, 2004 is clarifactory in nature - HELD THAT:- The appeal admitted on these two substantial questions of law - The appeal stands dismissed so far as the other questions are concerned.
Post the tax appeal for final hearing on 13/02/2020. On the returnable date, notify the matter on top of the board.
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2020 (1) TMI 1639
Addition u/s 68 - share capital and share premium - HELD THAT:- We find that the issue involved in the present appeal is squarely covered in favour of the assessee by the decision of ITAT in assessee’s own group company case where under identical set of facts, the Tribunal has deleted additions made by the Ld. AO towards share capital and share premium u/s 68
Thus as identity, genuineness of transaction and creditworthiness of subscribers has been proved as required u/s 68 of the Act. We, therefore, direct the Ld. AO to delete additions made towards share capital and consequent commission u/s 68 of the I.T.Act, 1961. - Decided in favour of assessee.
Assessment u/s 153A - Disallowances of expenditure incurred in relation to exempt income u/s 14A of the Act r.w.Rule 8D - HELD THAT:- Addition to be deleted made by the Ld. AO u/s 14A r.w.s.Rule 8D of I.T.Rules, 1962, on the ground that in absence of incriminating material found as a result of search no additions could be made in the assessments framed u/s 143(3) r.w.153A - Decided in favour of assessee.
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2020 (1) TMI 1638
Addition u/s 14A - Assessee has disallowed being 0.5% on an average investment - HELD THAT: - When no funds are used in investment, then no disallowance of interest expenses under section 14A is applicable. The amount of net investment was same in the preceding assessment year as well as in assessment year under appeal.
Assessee has specifically submitted before the CIT(A) that he made non-cash investment in subsidiary and associated companies as joint venture to revive certain closed mills. No funds are used to make investments. The net investment in assessment year under appeal is same as were in preceding A.Y. 2013-2014. These facts are same as have been considered in earlier year. In earlier year, the Ld. CIT(A) has deleted the addition, but, no appeal have been filed by the Department except in A.Y. 2009-2010 before the Tribunal and the Tribunal [2014 (11) TMI 1174 - ITAT DELHI] for the A.Y. 2009-2010 dismissed the Departmental appeal on the same ground and on same facts. Therefore, this issue is also covered by the Order of ITAT (supra).
Prior period expenditure disallowance - HELD THAT:- As is admittedly covered by the Order of ITAT [2014 (11) TMI 1174 - ITAT DELHI] Dated 19.11.2014 (supra). Following the same reasons for decision for the A.Y. 2009-2010 on identical facts, we do not find any merit in the Departmental appeal and the same is accordingly dismissed.
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2020 (1) TMI 1637
Disallowance of depreciation on the cost of know how and intangibles - goodwill as acquired during business acquisition/amalgamation - Assets acquired by the Appellant from ORG of their division of Adex Business purchased along with all assets and liabilities merely because the amount was shown in the balance sheet under the compendious heading of goodwill - as per CIT-A amount paid by the assessee over and above the value of “net assets” of “Adex Business” was to be treated to have been paid towards “goodwill”
HELD THAT:- Claim of depreciation on “goodwill” in the case before us falls within the four corners of the judgement of CIT, Kolkata Vs. Smifs Securities Limited [2012 (8) TMI 713 - SUPREME COURT] - As is discernible from the financial statements of the assessee company before us, the excess consideration paid by the assessee company over and above the value of the “net assets” on acquisition of “Adex Business” had been considered as “goodwill” by the assessee company in its books of account.
Be that as it may, the assesses claim of depreciation on the excess payment had been declined by the CIT(A), for the reason, that no depreciation was allowable on “goodwill”.
As pursuant to the judgment of Smifs Securities Limited the issue as regards allowability of depreciation on “goodwill” is no more res integra. As such, the claim of depreciation raised by the assessee on the amount of excess payment which was capitalised in its “books of account” as “goodwill”, is found to be in order.
We direct the A.O to allow depreciation on the “goodwill” that was capitalised by the assessee in its financial statements. Decided in favour of assessee.
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2020 (1) TMI 1636
Gambling or not - wagering - appellant contends that law permits a game of skills with wagering - Section 176 of the Karnataka Police Act, 1963 - HELD THAT:- The question of permitting wagering under any circumstance in law is impermissible. Gambling cannot be permitted under any law. A reading of the order of the learned Single Judge does not permit any kind of wagering even for a game of skill. Therefore, the aforesaid order passed by the learned Division Bench is being misread and we clarify by reiterating that even though it is a game of skill, there can be no wagering under any circumstance whatsoever. If the law permits playing of all games with skills or otherwise, even then playing any of these games with stakes or wagering is impermissible. Hence, there are no grounds to interfere with the impugned order passed by the learned Single Judge.
Appeal dismissed.
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2020 (1) TMI 1635
Rental income - Income from Business / House Property - whether the income arising on the leasing of the property was business of the assessee? - as per HC lease rentals are assessable as business income only - HELD THAT:- As Petitioner(s), on instructions issued by the Department of Revenue, Ministry of Finance vide F.No.390/Misc./116/2017-JC dated 22.08.2019, seeks permission to withdraw these special leave petition(s) along with pending applications therein due to low tax effect.
Permission granted, subject to just exceptions.
SLP and pending applications are dismissed as withdrawn, leaving question(s) of law open.
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2020 (1) TMI 1634
Non-allowability of deduction on account of investment in subsidiary company written off - As argrued by Additional Solicitor General, that the Order of the High Court is non-speaking inasmuch as it has not given its own reasons - High Court has only extracted the order of the Tribunal and whole consideration is only reflected in para 5 of the judgment - HELD THAT:- From the judgment of the High Court, it is clear that the High Court has not adverted to relevant issues and there does not appear appropriate consideration.
We are of the view that ends of justice be served if the matter is heard again by the High Court. In result, the impugned judgment is set aside and Income Tax Appeal [2017 (11) TMI 1864 - RAJASTHAN HIGH COURT] is revived on the file of the High Court which may be heard afresh. We make it clear that we have not expressed any opinion on the merits of the case. It is for the High Court to consider and take a decision afresh.
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2020 (1) TMI 1633
Real income - Difference between the value of the shares and cost of acquisition on conversion of shares from stock-in-trade into investment - whether such conversion in the year under consideration would result into income in the hands of the assessee? - HELD THAT:- We find that the Ld. CIT(A) has relied on the ratio laid down in various judgments discussed in the impugned order. We find that in the case of Kikabhai Premchand [1953 (10) TMI 5 - SUPREME COURT] concluded that withdrawal of the stock-in-trade for non-business purpose does not result in income and it can be valued at cost price, where assessee normally valued its stock at cost price.
In the instant case, there is no real income in the hands of the assessee as the shares in reference have not either sold or transferred by the assessee in the year under consideration. There is no express or specific provision during relevant period in the Act to deal with the event of conversion of stock-in-trade into investment. In absence of specific provision, notional income if any, cannot be taxed in the year under consideration. We find that CIT(A) has followed the ratio of the above decision of the Hon’ble Supreme Court along with other decisions. In view of the binding precedents followed by the Ld. CIT(A), we do not find any error in the order of the Ld. CIT(A) on the issue in dispute, and thus, we uphold the same. Accordingly, Grounds No. 2 & 2.1 of the appeal of the Revenue are dismissed.
We find that the Ld. CIT(A) has given detailed reasoning for not considering the contention of the assessee that it was holding three shares as investment from very beginning - Before us, the learned counsel failed to adduce any evidence other then submitted before the Ld. CIT(A) to establish that the shares were inadvertently characterized as a stock-in-trade. In view of the reasoning given by the Ld. CIT(A), we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The cross objection No. 2 of the assessee is dismissed.
Disallowance u/s 14A - addition of administrative expenses under rule 8D(2)(iii) - according to the assessee the disallowance under rule 8D(2)(iii) of Rules, cannot exceed the amount expenditure actually incurred by the assessee - HELD THAT:- We agree with the finding of the Ld. CIT(A), that no disallowance is required for indirect expenses for earning exempt income, when the assessee has followed direct nexus method and already made disallowance under Rule 8D(2)(i) of the Income-tax Rules, 1962.
Disallowance under rule 8D(2)(iii) - As we find that in view of the decision of the Hon’ble Jurisdictional High Court in the case of joint investment Private Limited [2015 (3) TMI 155 - DELHI HIGH COURT] disallowance towards administrative expenses cannot be exceeded the exempted income - Thus we restrict the disallowance of administrative expenses
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2020 (1) TMI 1632
Eligible assessee u/s.144C - Reference to DRP - Necessity of passing of the draft assessment order - AO found that the assessee is not the beneficial owner of the royalties, hence, the assessment order is passed within the time frame consequent to the direction of the DRP - Assessee is aggrieved only by the observation of the Assessing Officer that the assessee is not a beneficial owner of the royalty - HELD THAT:- As passing of the draft assessment order itself is not warranted. Section 144C(1) of the Act mandates the AO to pass draft assessment order after first day of October 2009, in case there was any variation in the income or loss returned which is prejudicial to the interests of the assessee. In this case, there was no variation in the income or loss returned by the assessee. Admittedly, the income returned by the assessee was accepted by the AO. Therefore, there is no question of any prejudice to the assessee. Hence the Assessing Officer is not expected to pass any draft assessment order.
As rightly submitted by Assessing Officer has to pass an order within 33 months from the end of the relevant assessment order. Admittedly 33 months from the end of the assessment order falls on 31.12.2016. In this case, admittedly the assessment order was passed on 28.09.2017, which is beyond the period of limitation.
When the DRP was clear in their mind that the objection of the assessee could not be adjudicated, then there cannot be any question of making further observation with regard to beneficial ownership of the royalty. Therefore this Tribunal is of the considered opinion that the DRP has exceeded its jurisdiction in making such an observation with regard to beneficial ownership of the royalty. Therefore the observation with regard to beneficial ownership of the royalty cannot be a binding precedent in the subsequent years to come. Accordingly the finding / observation of the DRP that the assessee is not a beneficial owner of the royalty and the assessee is not eligible for the benefit of Indo Cyprus DTAA are set aside. However the issue whether the assessee is eligible for benefits of Indo Cyprus DTAA and whether the assessee is a beneficial owner of royalty or not are kept open to be decided by the appropriate authorities in the year in which the variations in the international transactions are to be made. With the above observation, the appeal of the assessee stands allowed.
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2020 (1) TMI 1631
Infringement of trademark - privity of contract - Injunction on Appellants from selling the goods of the Respondents, who claim to be Direct Selling Entities ('DSEs') in terms of the Model Framework for Guidelines on Direct Selling dated 26th October, 2016 - commercial disputes, falling within the purview of the Commercial Courts Act, 2015 or not - Lifting the corporate veil - whether the DSGs were 'law' and whether suits could have been filed by the Plaintiffs for enforcing the DSGs?
Are Direct Selling Guidelines (DSGs) law? - HELD THAT:- Since this Court is of the view that the learned Single Judge was in error in overlooking the aforementioned legal position, and in holding the DSGs to be law, the Court does not consider it necessary to examine the further question whether the DSGs are violative of any fundamental right under Article 19 (1) (g) of the Constitution and whether the restriction placed on the said right by them are beyond the purview of Article 19 (6) of the Constitution - The Court, therefore, leaves it open to the Appellants/Defendants to challenge the Direct Selling Rules under the CPA, once they are notified, as being violative of Section 30 of the TM Act and Sections 419 and 420 of the Sale of Goods Act, 1930 ('SOGA'), Sections 23 and 27 of the Indian Contract Act, 1872 ('ICA') and the Competition Act, 2002. There is no occasion for the Court in the present case to further examine these issues - The Court sets aside the findings of the learned Single Judge on the first issue that the DSGs are 'law' and that, as such, they are enforceable.
Trademark issues - Whether sale of Amway, Oriflame and Modicare products on e-commerce platforms amounted to infringement of trademark, passing off and misrepresentation, etc.? - HELD THAT:- Under Section 19 of the SOGA, upon a contract for sale for a specific property, the property and the goods are transferred to the buyer. The "Code of Ethics" framed by Amway itself states that once the sale takes place, the title in the products is transferred to the buyer i.e. the ABOs, on its first sale. Once the title passes to the ABO, no condition could be further imposed upon the buyer. Clause 7 (6) of the DSGs imposes one such condition on the buyer that the buyer cannot resell the product online. With such a condition not being an enforceable law vis-a-vis the third party, even if it were to be considered binding as such, by means of the contract between Amway and the ABO, Amway can at best seek to proceed against the ABO for breach of such condition. This is because there is no privity of contract between Amway, or for that matter between Oriflame and Modicare, with the online platforms.
Lifting the corporate veil - HELD THAT:- There could not have been a presumption that Cloudtail and Amazon are one and the same entity and that the obligations of the Cloudtail would bind Amazon and vice versa. There is merit in the contention of Amazon that by permitting private entities like Amway to restrict downstream distribution of genuine goods, by enforcing contractual stipulations against third parties, the judgment of the learned Single Judge recognizes a monopoly that can be exercised in perpetuity.
The decision in Kapil Wadhwa [2012 (10) TMI 1246 - DELHI HIGH COURT] - HELD THAT:- The above passages in Kapil Wadhwa v Samsung Electronics (supra) are a complete answer to many of the contentions raised by Amway, Modicare and Oriflame in the present case, where it was held that, "the principle of exhaustion cannot be invoked by the Appellants/Defendants"
In the considered view of this Court, the learned Single Judge was in error in distinguishing the decision in Kapil Wadhwa v Samsung Electronics (supra) by holding that the principle of exhaustion cannot be invoked by the Appellants/Defendants.
Reports of the LC - HELD THAT:- Where there are multiple sellers, the details of the offers of all such sellers are said to be available. Such information, it is submitted, is generated directly by the said sellers and not modified by the Defendants in any manner. Only the buyer's information is withheld from the seller until after the sale has concluded, a policy which is in the interest of the buyers insofar as it prevents the misuse of the buyers' information by the sellers. These aspects do not appear to have been considered by the learned Single Judge. These too are matters in respect of which clearer answers would emerge hopefully at the conclusion of the trial - The Court is, therefore, unable to concur with the view expressed by the learned Single Judge that the Defendants could not invoke the principle of exhaustion in terms of Section 30 (3) read with Section 30 (4) of the TM Act, or that the sale of the Plaintiffs' products on e-commerce platforms violates their trademark rights, constitutes misrepresentation and passing off, and results in the dilution and tarnishing of the goodwill and reputation of the Plaintiffs' brand. These findings are outside the purview and scope of pleadings in the suits and unsustainable in law.
Are the Appellants intermediaries? - HELD THAT:- The exemption under Section 79 (1) of the IT Act from liability applies when the intermediaries fulfil the criteria laid down in either Section 79 (2) (a) or Section 79 (2) (b), and Section 79 (2) (c) of the IT Act. Where the intermediary merely provides access, it has to comply with Section 79 (2) (a), whereas in instances where it provides services in addition to access, it has to comply with Section 79 (2) (b) of the IT Act.
Under Section 79 (2) (c) of the IT Act, the obligation of the intermediary is that, in terms of the Intermediary Guidelines, it publishes its policies for the information and convenience of its users. The enforcement of such a policy is another matter. Clause 17 of Amazon's policy prohibits sale, on its platform, of "unauthorised" products. This Clause 17 was put forth with the object of enabling Amazon to refuse listing of a product where, for instance, it originates from a country that does not follow international exhaustion. Amazon seeks to point out that this does not apply to India where the principle of international exhaustion is in fact followed. It is contended that Clause 17 cannot be interpreted to empower Amway to seek restrictions on the sale of its products on Amazon's online platform.
This Court is unable to concur with the learned Single Judge that Amazon, Snapdeal and Cloudtail would have to meet the diligence requirement, failing which the benefit of the safe harbour provision i.e. Section 79 of the IT Act would not be available to them.
Tortious interference - whether the platforms are guilty of tortious interference with a contractual relationship, which incidentally is the central plank of Modicare's case? - HELD THAT:- In the first place, the tort of inducement to breach of contract necessitates that there be a contract in the first place between the online platforms and the DSEs. The mere fact that the online platforms may have knowledge of the Code of Ethics of the DSEs, and the contractual stipulation imposed by such DSEs on their distributors, is insufficient to lay a claim of tortious interference. It was incumbent on the part of the Plaintiffs to demonstrate active efforts on the part of or contracts entered into by the Appellants/Defendants to make a viable case for tort of inducement to breach of contract.
No case for interim injunction - HELD THAT:- Of the three elements to be considered for the grant of interim injunction, the Plaintiffs, in the considered view of this Court, failed to establish that they have a prima facie case particularly since the DSGs could not be considered to be binding law. Interestingly, the ABOs/direct sellers alleged to have committed the breach of the DSGs were not impleaded as Defendants - Even on the test of balance of convenience, the learned Single Judge has only returned such a conclusion, without actually examining whether the grant of injunction would have an adverse impact on online marketing. What was not considered is whether the requirement of online marketing entities to seek prior consent of the DSEs would not deprive the consumer of exercising the choice to buy such products on online platforms, while ensuring free flow of trade.
As regards irreparable loss and injury, there was no empirical data placed before the learned Single Judge by the Plaintiffs in support of their contention that they had suffered huge losses. This again was a matter of evidence and not inference - the Court is unable to concur with the learned Single Judge that the three elements for the purposes of grant of interim injunction have been fulfilled in the present case.
The impugned judgment of the learned Single Judge is hereby set aside. The applications seeking interim injunction in the suits stand dismissed - Appeal allowed.
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2020 (1) TMI 1630
Assessment of tax under the Kerala Land Tax Act, 1961 - Declining the request made by the writ petitioner to make necessary additional entries in the revenue records consequent, to the order passed by the Revenue Divisional Officer permitting the writ petitioner for utilisation of the property in question for other purposes other than paddy cultivation, under clause 6(2) of the land Utilisation Order, 1967.
HELD THAT:- The ratio laid down by Apex Court in THE LOCAL LEVEL MONITORING COMMITTEE AND ORS. VERSUS MARIUMMA AND ORS. [2015 (4) TMI 1353 - KERALA HIGH COURT] was that even though the classification of the land in the Basic Tax Register cannot be altered, addition can be made taking into account the changed condition of the paddy field and then assess tax in accordance with Section 6A of the Kerala Land Tax Act, 1961.
Therefore, the assessment of the land tax on conversion of the nature of the property prior to the introduction of Section 27A to Act, 2008, was guided by the provisions of the Land Utilisation order and the law laid down by the Division Bench in Mariyumma. Therefore, when the provisions of the statute are clear and unambiguous, there is no power vested with the statutory authority to expand the scope of the provisions of law by issuing directions against the mandate of law. This is exactly happened in the case at hand. Taking into account the legal and factual circumstances, the definite view is that the learned single Judge was right in quashing Ext.P7 order passed by the Tahsildar, Thodupuzha Taluk, Idukki District directing the writ petitioner to secure further orders from the Revenue Divisional Officer under Section 27A of Act, 2008 in order to assess the tax as per the provisions of Section 27C of the Act, 2008, as amended by the Amendment Act, 2018.
Appeal dismissed.
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2020 (1) TMI 1629
Maintainability of appeal before HC - low tax effect - tribunal held amalgamation is a reality, amounts received by the assessee from the amalgamated company from even before the amalgamation cannot be brought to tax -whetherTribunal was right in holding that interest on the amounts agreed to be paid by the amalgamated company cannot be brought to tax? - whether Tribunal was right in holding that the block assessment order passed under section 158BC in the assessee's case is bad in law as the material seized was not books of account or other documents but loose sheets of paper? - HELD THAT:- When the matters are taken up for hearing, learned Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed ₹ 1,00,00,000/- (Rupees One Crore).
In the instant cases, the tax effect is said to be less than the monetary limit imposed and therefore, the Appeals filed by the Revenue are dismissed, as withdrawn, keeping open the substantial questions of law for determination in appropriate cases.
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2020 (1) TMI 1628
TP Adjustment - selection of MAM - CUP or TNMM - HELD THAT:- Both the parties agreed that the Tribunal need not adjudicate the issue whether CUP or TNMM is the MAM for determination of ALP for the assessee company’s international transactions in this appeal and that the issue may be left open for adjudication in an appropriate year.
Inclusion and exclusion of companies from the list of comparable companies determined by the TPO for the determination of the ALP - Axit IT & T Ltd company be excluded from the list of comparable companies for the reason that this company provides software services. The RPT is 43.18% of the operating revenue while a filter of 20% has been applied by the TPO. Moreover, we also note that this company has stopped its software business from December, 2010. Therefore this company is any way functionally different for this assessment year.
Zylog Systems (India) Ltd. company be excluded from the list of comparable companies for the reason that this company provides broadband services and wireless internet-based communication services as well as enterprise computing, mobile computing. Employee cost filter of 25% is not met as the assessee’s employee cost percentage is only 20.14%.
E-infochips Bangalore Ltd.this company is primarily engaged in software development and IT enabled services and products and no further segmental break up between two functions is provided in the annual report and it is also involved in the R&D activities. This company has incurred significant expenditure of approximately ₹2 crores on account of research and development activities. Therefore it is directed to be excluded.
Thirdware Solutions Ltd was engaged in the provision of software development services and also involved in the provision of other information technology enabled services. The segmental break up of revenue attributable to software development services and ITeS is not available in the case of Thirdware - segmental break up not available has been taken note of and the said company was excluded from the comparables. Therefore we also direct this exclusion of this company from the comparables.
Infinite Computer Solutions (India) Ltd company is involved in the provision of information technology services of Application management, Infrastructure management, Product engineering services, Next-generation messaging platforms, Enterprise mobility solutions to the telecom, Healthcare and Financial services sectors, R&D and Intellectual property leveraged solutions and related IT services. Therefore this company is functionally different and also it fails in the RPT percentage on total operating revenue of 47.01%.
Working capital adjustment - We note that the DRP has directed the AO/TPO to provide the benefit of working capital adjustment to the assessee. As brought to our notice while giving effect the DRP order to AO/TPO has not given effect to it. It is well settled that the direction of DRP is binding on the TPO and we direct the TPO to implement the DRP direction and the assessee to provide the necessary input data necessary to the TPO in this regard. In the result this ground of the appeal is allowed for statistical purposes.
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2020 (1) TMI 1627
Assessment u/s 153A - Addition made qua unabated assessment - Whether where no assessment proceeding for the year under consideration is pending, in that eventuality, in the absence of any incriminating material found during the course of search and seizure proceedings, whether the addition can be made qua unabated assessment for the said year? - HELD THAT:- From the orders passed by the authorities below there is nothing to suggest as to what incriminating material has been found on dated 11.02.2016 during the search u/s 132(1) of the Act from the assessee's possession or premises, on the basis of which the additions have been made.
As the issue involved in the instant case is squarely covered by the decisions of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and CIT vs. Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT] and case of Smt. Sanjana Mittal[2019 (3) TMI 1757 - ITAT AMRITSAR] wherein also the dictum laid down in Kabul Chawla case supra) has been followed, hence we are inclined to delete the addition made by the AO and sustained by the Ld. CIT(A). Decided in favour of assessee.
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2020 (1) TMI 1626
Valuation - disbursement of Capital Subsidy to the appellant industry, by way of Form 37-B (vouchers) - utilization of such vouchers in discharge of their sales tax liability - amount received from the State Government by way of capital subsidy is required to be added in the assessable value of the excisable goods cleared or not?
HELD THAT:- The said issue is no longer res integra and the Division Bench of this Tribunal in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI], has held that the view of the Revenue that VAT liability discharged by utilising the investment subsidy granted through Form 37B vouchers cannot be considered as VAT not paid for the purpose of valuation under Section 4 of the Central Excise Act, 1944. The State Government has, instead of disbursing the capital investment subsidy by cash or cheque, issued Form 37B vouchers, which could be used for the purpose of payment of sales tax liability. It was also held that after setting up of the industry initially the assessee was required to remit the VAT to the Government.
As per eligible criteria, the capital investment subsidy is disbursed in Form 37B Challan/Vouchers. Such challans are as good as cash, but can only be used for payment of VAT/Sales Tax in the subsequent period. Such capital investment subsidy cannot form part of the assessable value under Section 4 of the Central Excise Act for calculation of the duty.
The impugned order is set aside - Appeal allowed.
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2020 (1) TMI 1625
Validity of Arbitral Award - loss allegedly incurred in the risk sale - petitioner's bid for purchase of 250 MT of the goods @ ₹ 42,810/- per MT was accepted - respondent contended that the petitioner had failed to lift the goods, as a result of which it was compelled to sell the material to third parties at the risk and cost of the petitioner.
The principal legal ground urged by petitioner, was that the proceedings of the arbitration themselves were vitiated by an improper invocation of the arbitration.
HELD THAT:- The petitioner's contention is that it had not received any notice of commencement of arbitration in terms of Section 21 of the Act, and Rule 15 of the ICA Rules. This contention must be examined in the context of the correspondence between the parties - In the present case, however, although the petitioner did not formally participate in the arbitral proceedings, its communications to the ICA did highlight the objection under Section 21. The petitioner's challenge on this ground must be examined on its merits in this petition, and the respondent's preliminary objection is rejected.
The petitioner's contention on the basis of Section 21 of the Act is wholly unmerited. The provision requires a party to send a request to the counter-party for the dispute to be referred to arbitration. The respondent's communication dated 14.12.2012 meets that requirement - The petitioner's reliance on Rule 15 of the ICA Rules also does not take its case much further. Rule 15(i) requires a notice of request for arbitration to be sent to the ICA and to the other party. The respondent herein had already given the notice of request for arbitration to the petitioner as aforesaid. Its communication dated 16.04.2013 to the Registrar of the ICA included all the documents contemplated by Rule 15(ii). The Rules, on a plain reading, require compliance of Rule 15(ii) in the communication addressed to the Registrar. Rule 15(i) requires that the proposed respondent in the arbitration also be given notice of the request for arbitration, but does not necessitate that the same communication be addressed both to the Registrar and the respondent. It is, in fact, specifically contemplated by Rule 18 that the statement of claim and attached documents would be sent subsequently by the Registrar to the respondent.
It has been held in several judgments of the Supreme Court, including Associate Builders vs. Delhi Development Authority, [2014 (11) TMI 1114 - SUPREME COURT], that re-appreciation of evidence is not open to the Court under Section 34. It is evident from the above extract of the award itself that this is not a case where the award was entirely unsupported by evidence, or where the arbitrator failed to consider any material evidence. The petitioner chose not to participate in the arbitration proceedings or to bring its own evidence and arguments before the arbitrator. The learned arbitrator therefore rightly proceeded on the evidence led by the respondent.
The petitioner has failed to make out any grounds for interference with the impugned award under Section 34 of the Act - The petition is dismissed with costs assessed at ₹ 50,000/-.
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2020 (1) TMI 1624
Maintainability of appeal - existence of substantial questions of law or not - Appellant seeks to canvass that dismissal of Central Excise Appeal No.6/2017 would not automatically mean that the present appeal does not give rise to any substantial question of law - HELD THAT:- The questions of law framed in the present appeal and the Central Excise Appeal No.6/2017 are the same. If it is the endeavour of the Appellant to distinguish this appeal by presenting reframed questions of law, the same shall be done by the concerned Officer by filing an affidavit. Stand over to 4 February 2020.
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