TDS u/s 195 - payment made for rendering of any managerial or consultancy service rendered by non resident agent without TDS - Addition u/s. 40(a)(ia) - whether or not the payments in question can be treated as managerial or consultancy service rendered by non-resident? - HELD THAT:- The facts of the present case are akin to the facts of the decision in Toshoku Ltd.'s case [1980 (8) TMI 2 - SUPREME COURT]. In the instant case also the assessee engaged the services of non-resident agent to procure export orders and paid commission. The assessee is not liable to deduct tax at source when the non-resident agent provides services outside India on payment of commission.
Services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services, we are the firm view that section 9 of the Act is not applicable to the case on hand and, consequently, section 195 of the Act does not come into play. In view of the above finding, the decision of the Supreme Court in Transmission Corporation of A.P. Ltd.'s [1999 (8) TMI 2 - SUPREME COURT]relied upon by the learned standing counsel for the Revenue is not applicable to the facts of the present case. We find no infirmity in the order of the Tribunal in confirming the order of the Commissioner of Income-tax (Appeals).' - Decided against revenue.
TDS u/s 194C - CIT(A) held that the definition of goods carriage as provided in section 44AE(7) also applicable u/s 194C(6) since the payment have been made to the agencies not to persons who plied the trucks - HELD THAT:- CIT(A) has correctly observed that the inference drawn by the AO that for the purpose of claiming the benefit of sub section (6) of section 194C, the assessee is required to satisfy the ownership criteria mentioned in Explanation (b) below section 44AE(7) is not correct.
Reference of Explanation to section 44AE(7) in section 194C is only in the context of definition of ‘goods carriage’. Clause (a) of Explanation to Section 44AE(7) defines ‘goods carriage’ and clause (b) defines ‘deemed ownership’. CIT(A) has correctly held that clause (a) is applicable to both sections i.e. section 194C and 44 AE, clause (b) is applicable only to section 44AE, since for the benefit of presumptive taxation the assessee should not own more than ten goods carriages.
Assessee is not required to satisfy the ownership criteria as mentioned in clause (b) of Explanation to section 44AE (7). On a perusal of section 194C (6) read with Explanation (II) to section 194C, it is crystal clear that the transport contractor is not required to be the owner of goods carriage for applicability of section 194C(6) - At this stage, we may observe here that an amendment has been made vide Finance Act, 2015 in section 194C (6) wherein it is specifically stated that w.e.f. 1.6.2015, the benefit of non deduction of tax on payment made to transport contractors would be applicable only if the transport contractor owns ten or less goods carriages at any time of the previous year and a declaration to this effect is furnished.
Legislature has intentionally inserted the ownership condition for claiming the benefit of non deduction of tax which was not existing in the erstwhile section 194C(6) - Assessee (Person responsible) cannot be treated as ‘assessee in default’ for not deducting tax on the payments made to the Bilaspur District Truck Operators Co-operative Society thus, we do not find any infirmity in the order of CIT(A) and accordingly we uphold the same. The appeal of the Revenue is dismissed.
Payment of salary and perquisites to the Respondent - HELD THAT:- The impugned order of the CLB dated 26 March 2004 is set aside and the matter is remanded to the CLB for a fresh hearing in accordance with law on the question of payment of salary and perquisites to the Respondent, who is the original Petitioner before the CLB.
Transfer of right to use - Levy of KVAT - Deemed sale - treatment by respondents of the petitioners as dealers for the purposes of the KVAT Act - HELD THAT:- It will be apparent from a consideration of the various clauses in the Master Services Agreement that, what is contemplated therein is the provision of certain infrastructural facilities by the petitioner, which could be tapped into by various mobile services operators, who have entered into an agreement with the petitioners, on payment of a fee as consideration. What is evident from a perusal of the various clauses is that the ownership of the infrastructural facility continues to be with the petitioners. The obligation to maintain and control the passive infrastructure is also retained with the petitioners. The risk attached to the maintenance of the infrastructural facility continues to lie with the petitioners and for this reason, the obligation to take out an insurance in respect of the passive infrastructure is also with the petitioners. The mobile service operators are given only a limited permission to use the infrastructural facility in accordance with the terms and conditions in the agreement.
Applying the said test, a Division Bench of Karnataka High Court in the case of INDUS TOWERS LTD. VERSUS DEPUTY COMMR. OF COMMERCIAL TAXES, BANGALORE [2013 (6) TMI 81 - KARNATAKA HIGH COURT], considered the scope and ambit of a Master Services Agreement, identical to the agreements entered into in the instant writ petitions, and found that the terms of the said agreement could not be construed as having transferred a right to use passive infrastructure to the mobile service operators.
The Master Services Agreement was found to have merely permitted access to the sharing telecom operators to the passive infrastructure to the extent it was necessary for the proper functioning of the active infrastructure - The possession of the passive infrastructure was found to have always remained with the provider of the passive infrastructural services and therefore, the sharing telecom operators did not have any right to use the passive infrastructure.
There is no transfer of the right to use the passive infrastructure, that is made available by the petitioner to the various mobile service operators. As already noted above, the petitioners retained control over the passive infrastructure that was maintained by them and this degree of control, that was exercised by the petitioners over the passive infrastructure, ensured that the mobile service operators, who were given permission to use the infrastructural facility, obtained only a licence to access the infrastructural facilities offered by the petitioner, and did not get a right to use the goods transferred to them in the process - there is no transfer of the right to use the infrastructural facilities, from the petitioners to the mobile services operators, that could be brought to tax under the KVAT Act.
Maintainability of appeal - requirement of pre-deposit - input tax credit - levy of tax and interest - HELD THAT:- Since the appellant has not pressed his challenge for disallowance of input tax credit and consequent levy of tax and interest, there is no need to decide the said issue.
However, so far as the retention of the balance penalty of ₹ 74,573/- is concerned, there are substance in the submission of Mr.Shukla and the authorities below have failed to justify the levy and / or retention of penalty as per the settled legal position and following the consistent practice of this Tribunal to delete the penalty if tax and interest have been paid by the appellant, we deem it fit to delete the entire penalty levied and / or retained by the learned Deputy Commissioner.
Condonation of delay - extraordinary delay of 795 days in re-filing this appeal - HELD THAT:- Turning to the application the Court finds that the reasons adduced for the delay of 795 days (i.e. over two years and one month) is not convincing at all. The only explanation is that delay occurred in curing the defects pointed out by the Registry. By no stretch of imagination, can a delay of over two years and one month in curing defects be countenanced.
The Court is, therefore, not inclined to condone the delay of 795 days in re-filing the appeal. This is one of several instances of the Revenue's appeals being re-filed with extraordinary delay ranging between one and three years. This Court has in certain other cases issued detailed directions on this aspect and it is expected that the Revenue will take corrective steps without delay.
Search and seizure operation - Whether mere surrender of undisclosed income by Mr. Brij Mohan Gupta did not automatically establish the liability in the hands of the Assessee “unless he is evidently linked with the accounts of certain "M.P. Gupta" in a third party search - HELD THAT:- Concurrent findings of fact have been rendered by the CIT (A) as well as by the ITAT. Nothing has been pleaded in the memorandum of appeal to persuade the Court to hold that those findings are perverse or contrary to the facts on record. Secondly, there is not a whisper in the order of the AO about any bag recovered from the premises of the Assessee during the search of the Assessee's premises on 22nd March 2006. There is no such averment even in the memorandum of appeal filed before this Court. The material referred to in the order of the AO is that which was recovered from the premises of Mr. Brij Mohan Gupta and nothing else. That material has been discussed threadbare in the order of the CIT (A). Detailed reasons have been given as to why that material was insufficient to link the Assessee with "MP Gupta" whose name finds mention in the diary and the documents seized from the premises of Mr. Brij Mohan Gupta.
The Court is not persuaded to permit the Revenue, for the first time, before this Court to set up an entirely different case of there having been a bag seized from the premises of the Assessee which according to the Revenue contained incriminating material against the Assessee.
As regards the second plea, it is trite that the Revenue has to make out a case against each Assessee separately. The mere fact that the Revenue's appeal against Atul Gupta, the son of the Assessee, has been admitted cannot ipso facto mean that the appeal against the Assessee should also be admitted. The Revenue's case against the Assessee has to be substantiated by the material seized. For the reasons already noted, the Court finds no case made out for interference with the factual findings on the basis of the analysis of the said material in the impugned orders of the ITAT and the CIT (A).
No substantial question of law arises for determination by the Court.
Benami purchase of property - purchase of property by a husband in the name of his wife is a specie of Benami purchase - Did the suit property belong to Jagannath Joshi or his wife Moni Debi? - HELD THAT:- High Court was perfectly justified in coming to the conclusion that the property though purchased from the funds of Jagannath was really for the benefit of his widow Moni Debi and therefore Moni Debi was the real owner of the property. In this regard the entries of the name of Moni Debi in Municipal and Land Revenue records; the fact that the brothers of Jagannath were no longer alive (according to the plaintiff the property was purchased by Jagannath in the name of his wife to protect the same from his brothers) are relevant facts that have been rightly taken into account by the High Court. The fact that the property was managed by Jagannath which fact accords with the practice prevailing in a Hindu family where the husband normally looks after and manages the property of the wife, is another relevant circumstance that was taken note of by the High Court to come to the conclusion that all the said established facts are wholly consistent with the ownership of the property by Moni Debi.
We have no reason to disagree with the conclusion of the High Court that the property was owned by Moni Debi although consideration money for the same may have been made available by her husband, Jagannath.
Validity of the adoption of Sitaram, the husband of the original plaintiff, as claimed by the plaintiff in the suit - The letter dated 20.7.1945 (Exb.2) does not lead to any clear/firm conclusion with regard to the adoption of Sitaram and had been rightly discarded by the High Court. In the above conspectus of facts the evidence of the plaintiff regarding the adoption of her husband stands isolated and cannot, on its own, sustain a positive conclusion that her husband Sitaram was adopted by Jagannath. If the suit property was owned by Moni Debi and not by Jagannath and Sitaram was not the adopted son of Moni Debi and Jagannath it must be held that the suit property devolved on Gomati on the death of Moni Debi. The claim of the defendant No.1 to be the adopted son of Gomati could have been challenged only by such legal heirs on whom the property would have devolved following the death of Gomati in the event the adoption of the defendant No. 1 is to be held to be invalid. In this context, the next legal heir who would have been entitled to succeed to the property of Gomati Debi if the adoption of defendant No.1 is to be treated as invalid would not be the original plaintiff inasmuch there was another heir who could have claimed a better title in such a situation, namely, one Chouthamal Sharma, the son of one of the brother’s of Sitaram. No such challenge was made by the aforesaid legal heir who had a better/preferential claim.
In view of the above position demonstrated by the evidence on record the High Court was fully justified in not entering into the issue of validity of the adoption of defendant No.1 or the gift deed executed in his favour by Gomati as the said issues had become redundant/inconsequential for the reasons noted above.
We have to hold that these appeals are without any merit.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We find that the assessee had received dividend of ₹ 1.06 lakhs during the year hat the AO and FAA had applied the provisions of section 14A of the Act r.w. Rule 8D hat the arguments of strategic investment and availability of funds were not dealt with. If the shares were not purchased from the borrowed funds then there was no justification in making disallowance of interest expenditure. The provisions of section 14A were brought in to Act to prevent the mischief of claiming expenses against the exempt income. But that does not mean that whenever an assessee claims exempt income automatic disallowance has to be made. The AO and the FAA have without considering the relevant facts made the disallowance. - Decided in favour of assessee.
TDS u/s 194J or 192 - TDS on fee paid to the directors - disallowance made u/s. 40(a)(ia) - HELD THAT:- sitting fees paid to the directors does not amount to fees paid for any professional services as has been mentioned in the explanation to section 194J(1). We further find from the memorandum explaining to provisions of the Finance Bill 2012 that as per clause No.71 it was specifically mentioned that there was no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary. We find the provisions of section 194J(1)(ba) speaks of any remuneration or fees or commission by whatever name called other than those on which tax is deductible u/s.192 to a director of a company on which tax has to be deducted at the applicable rate and the above provision has been inserted by the Finance Act, 2012 w.e.f., 01-07-2012. We, therefore, find force in the submission of the learned counsel for the assessee that no tax is required to be deducted u/s.194J out of such director's sitting fees for the A.Y. 2007-08. In this view of the matter, the order of the CIT(A) is set-aside and the ground raised by the assessee on the issue of TDS on sitting fees paid to Directors is allowed.
Disallowance of bad debts written off u/s 36(2) - HELD THAT:- We find that the assessee had claimed bad debts of ₹ 57.73 lacs only in the books of accounts and the AO and the FAA had not considered the amounts added back by it that it had written off only net amount receivable from BEST Undertaking. In our opinion he assessee is the right person to decide as to whether a particular amount has become bad or not. The AO/FAA cannot decide the issue referring to the entity from whom money is to be received. If the assessee had in its books of accounts written off an amount he revenue authorities cannot disallow in light of the judgment of the Hon’ble Apex Court delivered in the case of TFR Ltd.[2010 (2) TMI 211 - SUPREME COURT] - There is no doubt about the writing off the amount in question in the books of accounts. So, reversing the order of the FAA, we decide ground in favour of the assessee.
Provision for doubtful debts written back - HELD THAT:- We find that the assessee and added back the two sums i.e. ₹ 7.17 lacs and ₹ 5.91 lacs under the head provisions for doubtful debts and service tax payable respectively. Therefore, we are of the opinion that the action of the AO/FAA has resulted in taxing the same sum twice. Reversing the order of the FAA ground decided in favour of the assessee .
Disallowance of interest on interest free loan granted - HELD THAT:- We find that assessee had advanced money to Ferrari on account of purchase of shares of Radio Midday, that in the date wise summary a credit entry is appearing on 30th June 2008, that from the said entry it is clear that the shares of Radio (West) were bought by the assessee from Ferrari. Considering these facts we are of the opinion that money advanced by the assessee to M/s. Ferrari was solely for the purpose of buying the shares and that the transactions could not be termed as advance of interest free loan. Therefore, reversing the order of the FAA, we decide the last ground of appeal in favour of the assessee.
Disallowance on tax free investment u/s 14A rw. rule 8D - HELD THAT:- It is true that Rule 8D is not applicable for assessment year 2007-08. To the above extent, the Ld. CIT(A) is absolutely correct.
We set aside the findings of the Ld. CIT(A) on this issue and remand the matter to CIT(A) with the direct ion to decide the same afresh keeping in view the observations of the Hon'ble Bombay High Court in the case of Godrej and Boyce Manufacturing. Co. Ltd Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. The CIT(A) shall provide an opportunity of being heard to the assessee in the matter. For statistical purposes, the ground No.1 of the appeal is allowed.
Disallowing the claim of the assessee u/s 80IC on job work - Whether income from job charges cannot be treated to have been derived by the undertaking by manufacturing or producing any article or thing not prohibited by 13th Schedule - HELD THAT:- We by our order of even date in the case of ACIT Vs. M/s Cremica Agro Foods Pvt Ltd., Ludhiana [ 2015 (10) TMI 2703 - ITAT CHANDIGARH] have set aside the order of CIT(A) and remanded the identical issues to the file of the CIT(A) for a fresh decision in accordance with law. For the detailed reasons given therein, we set aside the order of CIT(A) and remand the issues to the file of CIT(A) with a direction to decide the same afresh in accordance with law after affording due and reasonable opportunity of being heard to the assessee.
Investments in shares and mutual funds which was exempt u/s 10(34) - HELD THAT:- It is apparent from the order of the CIT(A) that assessee earned dividend income of ₹ 53,11,447/- which was claimed exempt u/s 10(34) & 10(35) of the Act, during the course of assessment proceedings. It was shown as taxable in the return of income as the assessment has been made u/s 115JB, it did not affect any taxability of the income. Considering the entire facts and circumstances of the present case, we are satisfied that the assessee was prevented by sufficient cause from filing the present appeal. At the same time, it is also well settled law that length of delay is not to matter in the context of condonation of delay. The jurisdiction to condone delay should be exercised liberally. The matter relating to Condonation of Delay should be judged broadly and not in a pedantic manner. In the case of Collector, Land Acquisition Vs. Mst. Katji [1987 (2) TMI 61 - SUPREME COURT] the Hon'ble Supreme Court held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay. It is also well settled that ordinarily, a litigant does not stand to benefit by lodging an appeal late. In fact, he runs a serious risk. In view of the above, we condone the delay in filing the appeal.
Since we have restored the main issue to the CIT(A) and, therefore, we think it appropriate to remand this issue also to the CIT(A) with the direction to consider the content ion of the assessee and dispose of the same in accordance with law.
Disallowance of loss claimed on cancellation of forward exchange contracts - HELD THAT:- On a perusal of the list of forward contract and related transactions it is noticed that all such contracts were cancelled after maturity. Only in respect of two contracts, dated 11th April 2007 and 26th April 2007, which are for export of goods, the contracts were cancelled before maturity but the assessee has booked profit.
Forward contract dated 23rd August 2007, for import was also cancelled before maturity but the assessee has again booked profit. Thus, from the aforesaid fact, it is very much clear that forward contracts, except the above referred three contracts were cancelled after maturity. Therefore, the allegation of the Department that forward contracts were cancelled prematurely is without any basis. That being the case, the principle laid down by the Hon'ble Jurisdictional High Court in Badridas Gauridu India Ltd. [2003 (1) TMI 61 - BOMBAY HIGH COURT] clearly applies. Therefore, factually as well as by applying the principle of law, we are of the view that the loss claimed by the assessee cannot be treated as speculative loss and as a consequence it has to be allowed
Assessment u/s 153A - whether the proviso to Section 153C (1) of the Act is confined to the second proviso to Section 153A (1) of the Act, and therefore, applies on to cases of abatement of pending assessments? - HELD THAT:- In decision in SSP Aviation Limited v. Deputy Commissioner of Income Tax [2012 (4) TMI 335 - DELHI HIGH COURT] it was categorically held that, in the case of the other person, the question of both pendency and abatement of the proceedings of assessment or reassessment would be examined with reference to the date of handing over the books of account or documents or Assessing Officer having jurisdiction over such other person.
No substantial question of law arises in the facts and circumstances of the present case.
Jurisdiction - power of Company Law Board lacked authority in receiving the petition - time limitation - whether the Company Law Board lacked authority in receiving the petition under Section 58 of the Companies Act, 2013 beyond the period envisaged in sub-section (4) thereof? - HELD THAT:- Section 58(4) of the Act permits an application to be filed by a person within the time stipulated in such provision. The provision is for the benefit of the transferees of shares in a public company and the time-limits are 60 days from the date of the refusal to register the transfer or 90 days of the delivery of the instrument for transfer to the company without any intimation as to its fate - Though the provision sets the time-limits as above, nothing therein prevents the Company Law Board from receiving a petition or application thereunder beyond the stipulated period.
Since it is now judicially recognised that the principles contained in the Limitation Act, 1963 would be applicable to matters before the Company Law Board, irrespective of the use of the word “appeal” in the relevant provision, it would appear that the Company Law Board would have the authority to receive a petition after the expiry of the specified period, by applying the principles of the Limitation Act as may be applicable - The question of law sought to be raised is of no consequence since the provision does not prohibit the receipt of a petition or application thereunder after the expiry of the time limits indicated therein.
Deduction u/s. 80IA(4) - Whether erection of foot over bridges and installation of road signage can be construed as “infrastructure facility” within the meaning of Explanation to section 80IA(4) ? - HELD THAT:- In the instant case, the assessee has constructed three foot over bridges and has installed road signage for the Indore Municipal Corporation. The major part of income during the year was received on account of execution of work of road signage. Thus, the facts in the present case are identical to the one adjudicated by the Co-ordinate Bench in the group concern of the assessee. Respectfully following the same, we hold that the activities carried on by the assessee do not fall within the ambit of “infrastructure facility” defined in Explanation to section 80IA(4). Thus, the assessee is not eligible to claim deduction u/s. 80IA(4). - Decided against assessee.
Validity of proceedings u/s. 263 - HELD THAT:- We find the Hon’ble Madras High Court in the case of Sakti Charities [2000 (2) TMI 75 - MADRAS HIGH COURT] has held that revisional power is not meant to correct every error of fact. The power of revision should not be exercised for purpose of directing the AO to hold another investigation. When the order of the CIT does not indicate as to how the order of the ITO was erroneous and prejudicial to the interest of the revenue, the CIT lacks the jurisdiction to revise the order of the AO.
Since the assessee in the instant case has furnished full details as called for by the AO during the course of assessment proceedings and since the order of the CIT is silent as to how the order of the AO is erroneous and prejudicial to the interest of the revenue, therefore, in view of the above decisions cited we are of the considered opinion that the Ld.CIT was not justified in setting aside the order passed u/s.143(3) r.w.s. 144C(13) of the I.T. Act by invoking the provisions of section 263. We, therefore, set aside the same. The grounds raised by the assessee are allowed.
Disallowance of business loss treating the same as speculation loss arising out of foreign exchange contracts - HELD THAT:- We are of the view when the assessee is not a dealer in foreign exchange but an exporter of commodities and assessee had entered into forward contracts with banks in respect of foreign exchange but some of these contracts could not be honoured by the assessee for which it has to pay and which was debited to the P&L Account and claimed the same as business loss/hedging loss.
In order to hedge against losses, the assessee had booked foreign exchange in the forward market with the bank but the export contract entered into by the assessee for export of commodities in some cases failed, the assessee is entitled to claim for deduction of loss as a business loss. Accordingly, respectfully following Hon’ble jurisdictional High court in the case of Soorajmull Nagarmull [1980 (9) TMI 69 - CALCUTTA HIGH COURT] we allow the claim of the assessee. This issue of assessee’s appeal is allowed.
Disallowance on account of mark to market loss - CIT(A) allowed assessee’s claim - HELD THAT:- As found from the record that forward contracts were hedged against the debtors. Accordingly resultant loss was claimed as mark to market loss. The issue under consideration is squarely covered in the case of Bank of Bahrain and Kuwait, [2010 (8) TMI 578 - ITAT, MUMBAI] which have been elaborately dealt by the CIT(A) while reaching to the conclusion that mark to market loss on account of foreign contract done to hedge the risk of exchange fluctuations is allowable as business loss and which has been determined as per accounting method regularly followed by the assessee. Accordingly, we do not find any merit in the order of CIT(A). - Decided against revenue
Disallowance u/s.14A - HELD THAT:- We have been informed that the AO has not passed fresh order so far in pursuance to the order of the Tribunal. in AY 2006-07. In our considered opinion, before this issue can be decided in the impugned year i.e. A.Y. 2007-08, it is imperative that it is first decided by Assessing Officer in A.Y. 2006-07.
In case, we decide this issue first, it may pre-empt the order of Assessing Officer for A.Y. 2006-07, and it may also close the gates for the AO to make proper examination of facts and circumstances in A.Y. 2006-07. Therefore, to avoid this situation, we deem it proper to send this issue of disallowance u/s 14A, in totality, to the file of Assessing Officer. He shall re-decide this issue, after giving adequate opportunity of hearing to the assessee and after considering the facts and circumstances of the case and the law available at the time of deciding this issue.
Expenditure for the ‘in-house’ research facility - Disallowance of deduction u/s 35(2AB) and u/s 37(1), by treating the same as capital expenditure - HELD THAT:- Since we have received order of Department of Scientific & Industrial Research (DSIR) dt. 24.08.2010, in which the DSIR while approving our R & D facilities for the purpose of section 35(2AB) has not considered clinical trial expenditure incurred by us as a part of "in-house R & D expenditure" on the ground that by definition these expenditure were incurred outside of approved R & D facility. This is the stand taken by DSIR for all pharma R & D companies.
Accordingly, we withdraw our claim for weighted deduction of the aforesaid expenditure u/s.35(2AB). However, we submit that the aforesaid expenditure should be allowed as an expenditure u/s 37(1) (without weightage of 150%).
With respect to alternate claim made by the assessee u/s 37(1) of the Act, it is noted that the invoice of M/s. Reliance Clinical Research Services Pvt. Ltd. dated 31.03.2007 is enclosed at page no. 3 of the paper book, showing that payment has been made to the said company under the head “Clinical Trial Fees” – for the month of March, 2007 for time spent on 1st March to 31st March, 2007 for conducting clinical trials, in support of to all ‘K projects’, for a sum of ₹ 57,65,564/-. It is further noted that on the back side of the invoice, complete details have been given with respect to time spent by 22 employees of RCRS, also giving particulars of the studies done by these employees. Names of these employees have been given along with their rates per hour. It is further noted that ld. Assessing Officer has shown no doubts about the genuineness of these expenses. It was held by Ld. CIT(A) that since claim of assessee with respect to deduction u/s.35(2AB) has been denied, therefore, these expenses are capital in nature. It was further observed by ld. CIT(A) that Assessing Officer, as well as assessee, have treated these expenses as capital in nature. In our view, the observations of Ld. CIT(A) are misplaced and without any basis. We have gone through details of these expenses. In our considered view, these expenses are apparently revenue in nature. Ld DR also could not point out as to which expenses are capital in nature. Thus, in our view, these expenses are of revenue nature.
TDS u/s 194J - Disallowance of software expenses incurred by treating the same as capital expenditure - Counsel has submitted that injustice has been done by the Ld. CIT(A) by not examining the facts and evidences placed by assessee - HELD THAT:- It is noted that full co-operation has been extended by the assessee at all times i.e. during course of assessment proceeding, and also during appellate proceeding before the ld. CIT(A). If the CIT(A) wanted to have one separate petition under Rule 46A, the same could have been very well pointed out to the assessee. Without affording opportunity to the assessee, the valid claim of the assessee should not have been denied to it, merely for some technical reasons. Under these circumstances, we find it appropriate to send this issue back to the file of ld. CIT(A) who shall give opportunity to the assessee to file all the evidences as may be considered appropriate, along with petition under Rule 46A etc.
Partition of immovable property - admissibility of evidence - Whether the Courts below were right in holding that Exhibits B21 and B22 are not admissible in evidence as they are compulsorily registerable documents? - Whether Exhibits B-21 and 22 are admissible in evidence for collateral purpose?
HELD THAT:- Section 17 (1) (b) of the Registration Act mandates that any document which has the effect of creating and taking away the rights in respect of an immovable property must be registered and Section 49 of the Act imposes bar on the admissibility of an unregistered document and deals with the documents that are required to be registered u/s 17 of the Act.
It is well settled that the nomenclature given to the document is not decisive factor but the nature and substance of the transaction has to be determined with reference to the terms of the documents and that the admissibility of a document is entirely dependent upon the recitals contained in that document but not on the basis of the pleadings set up by the party who seeks to introduce the document in question. A thorough reading of both Exhibits B-21 and B-22 makes it very clear that there is relinquishment of right in respect of immovable property through a document which is compulsorily registerable document and if the same is not registered, becomes an inadmissible document as envisaged under Section 49 of the Registration Act - Hence, Exhibits B-21 and B-22 are the documents which squarely fall within the ambit of section 17 (i) (b) of the Registration Act and hence are compulsorily registerable documents and the same are inadmissible in evidence for the purpose of proving the factum of partition between the parties.
Whether these can be used for any collateral purpose? - HELD THAT:- In a suit for partition, an unregistered document can be relied upon for collateral purpose i.e. severancy of title, nature of possession of various shares but not for the primary purpose i.e. division of joint properties by metes and bounds. An unstamped instrument is not admissible in evidence even for collateral purpose, until the same is impounded. Hence, if the appellants/defendants want to mark these documents for collateral purpose it is open for them to pay the stamp duty together with penalty and get the document impounded and the Trial Court is at liberty to mark Exhibits B-21 and B- 22 for collateral purpose subject to proof and relevance.
Exhibits B-21 and B-22 are admissible in evidence for collateral purpose subject to payment of stamp duty, penalty, proof and relevancy.
Addition u/s 40A(2)(b) towards interest paid on loans - whether the interest paid @ 15% to related parties can be considered as excessive and unreasonable to invoke the provisions of section 40A(2)? - HELD THAT:- As per the provisions of section 40A(2) of the Act the Assessing Officer has to establish on record that the payment made by the assessee is unreasonable and excessive compared to the market rate. Nowhere in the assessment order, has the Assessing Officer brought any material to establish the market rate of interest on such types of loan.
Commissioner (Appeals) has also ignored this aspect. Therefore, there is no reason why interest payment to related party should be confined to 12.6%. More so, when the loans are not secured against any asset unlike bank loans and the lender always runs a risk of recovery of loan, therefore, charges interest at a bit higher rate. The decision cited by the learned Authorised Representative also supports this view. Moreover, it is a fact on record that the assessee has paid interest @ 15% even to unrelated parties. That being the case, interest paid @ 15% to related parties should be allowed. Ground raised by the assessee is allowed and grounds raised by the Revenue are dismissed.
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