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Showing 81 to 100 of 914 Records
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2020 (4) TMI 834 - MADHYA PRADESH HIGH COURT
Permission for withdrawal of appeal - Compounding of duty under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- The present appeal is dismissed as withdrawn - Application allowed.
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2020 (4) TMI 833 - CESTAT CHENNAI
Process amounting to manufacture or not - repacking of goods (DVDs) and affixing MRP stickers on them - denial of credit by invoking extended period of limitation - denial of CENVAT Credit subsequently on the ground that the there was no manufacture in the first place - HELD THAT:- The packing and repacking, labelling or relabelling amounts to ‘manufacture’ in respect of the goods which are listed in the Third Schedule to the Central Excise Tariff Act, 1985. This is a legal fiction created by the statute and applies only to such goods which are listed in the third schedule and not to others - In the present case, the DVDs which they have imported were classified under 85234080. This tariff heading is not included in the third schedule. Evidently labelling or relabelling these DVDs will not make them classifiable under a different heading (8708) as has been done by the appellant.
Demand of CENVAT Credit by invoking extended period of limitation - HELD THAT:- The excise duty paid by the appellant treating this activity as manufactured is clearly not supported by law. Since the final product is not chargeable to excise duty, cenvat credit cannot be availed on the imported DVDs. However, the appellant has filed the returns which were legally required, with the department. Scrutiny of such returns and calling for any further information would have disclosed this fact that appellant was paying the central excise duty wrongly. The department could have directed them not to pay central excise duty accordingly but the department has not done so. Therefore, the erroneous payment of the appellant made as central excise duty was not detected by the department despite the appellant disclosing in their returns the details which they were mandatorily required to disclose. Under these circumstances, the demand for reversal of CENVAT credit invoking extended period of limitation does not sustain at all - The period in dispute is October 2009 to September 2012 while the SCN was issued well beyond the normal period on 21.02.2015 when this action of the appellant came to light during the audit. It was equally possible for the assessing officers to have scrutinized returns and found that excise duty was being paid wrongly after availing CENVAT credit.
If the assessee has treated the activity of manufacture and paid excise duty thereon and availed cenvat credit can cenvat credit be subsequently denied by the department holding that the activity was not manufacture in the first place? - HELD THAT:- The Hon’ble High Court of Karnataka in the case of Vishal Precision Steel Tubes & Strips Pvt. Ltd. [2017 (3) TMI 1287 - KARNATAKA HIGH COURT] has held that cenvat credit cannot be denied under such circumstances. This ratio of this judgement of the Hon’ble High Court of Karnataka binds us to hold that cenvat credit cannot be recovered from the appellant even on this count - As the cenvat credit cannot be denied and recovered from the appellant the demand of interest thereon as well as proposed penalties do not survive.
Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 832 - TELANGANA HIGH COURT
Withholding of refund - refund arising out of change in Rate of tax - packing material - Cement - APGST Act - HELD THAT:- In the instant case, the respondents had withheld the refund for 11 years on ground of ‘want of cross-verification details’ which is not a ground mentioned in Sec.33-C for withholding the refund due to petitioner. Admittedly no proceeding such as an appeal or revision was pending against the petitioner. So Sec.33 F(2) of the APGST Act is also inapplicable - Also a refund withholding order must invariably specify (as per Sec.33C) the period of time during which it will be in force and a refund cannot be withheld indefinitely as has been done in the instant case.
Sec.33-E and 33-F of the APGST Act give 6 months time to the respondents to complete the verification and the authorities cannot with hold the refund beyond the said period - Thus there has been an ex-facie abuse of power by the respondents 1 and 2 in denying refund to the petitioners of the sum of ₹ 28,10,432/-.
Petition allowed with costs.
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2020 (4) TMI 831 - SUPREME COURT
Arbitration application - adjudication of dispute between the parties - permanent injunction restraining the appellant from relying on the arbitration clauses contained in the agreements - HELD THAT:- In the present case the arbitration in question is a domestic and an institutional arbitration where CIAA was empowered to and did nominate the Arbitrator. It is not as if there were completely different mechanisms for appointment of Arbitrator in each of the agreements. The only distinction is that according to one of the agreements the venue was to be at Kolkata. The specification of “place of arbitration” may have special significance in an International Commercial Arbitration, where the “place of arbitration” may determine which curial law would apply. However, in the present case, the applicable substantive as well as curial law would be the same.
It was possible for the respondent to raise submissions that arbitration pertaining to each of the agreements be considered and dealt with separately. It was also possible for him to contend that in respect of the agreement where the venue was agreed to be at Kolkata, the arbitration proceedings be conducted accordingly. Considering the facts that the respondent failed to participate in the proceedings before the Arbitrator and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections.
The High Court was in error in setting aside said Order. In any case, the fact that the cause title showed that the present appellant was otherwise amenable to the jurisdiction of the Alipore Court, could not be the decisive or determining criteria - Appeal allowed.
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2020 (4) TMI 830 - SUPREME COURT
Registration of FIR - locus standi of the complainant - Mr. M. Subramaniam and Mr. R.V. Prasanna Venkatesan who were not even made parties to the criminal petition, have filed present petition - HELD THAT:- While it is not possible to accept the contention of the appellants on the question of locus standi, we are inclined to accept the contention that the High Court could not have directed the registration of an FIR with a direction to the police to investigate and file the final report in view of the judgment of this Court in SAKIRI VASU VERSUS STATE OF U.P. AND OTHERS [2007 (12) TMI 485 - SUPREME COURT].
The direction of the High Court for registration of the FIR and investigation into the matter by the police, is set aside. At the same time, our order would not be an impediment in the way of the first respondent filing documents and papers with the police pursuant to the complaint dated 18.09.2008 and the police on being satisfied that a criminal offence is made out would have liberty to register an FIR - appeal allowed in part.
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2020 (4) TMI 829 - DELHI HIGH COURT
Permission for withdrawal of application - Stay of operation of impugned order - validity of provisional attachment orders - utilization of amount lying in the attached accounts for payment of current GST liabilities - HELD THAT:- Application is dismissed as withdrawn with liberty as sought for by learned counsel for the petitioner.
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2020 (4) TMI 828 - MADHYA PRADESH HIGH COURT
Validity of enactment of Central Goods and Service Tax Act, 2017 and the law framed by the Madhya Pradesh Outdoor Advertising Media Rules, 2017 - vires of Rule 4 - HELD THAT:- The prayer seems to be reasonable and accordingly it is hereby allowed.
The petitioner is directed to deposit the amount before the Registry of this Court in the form of fixed deposit within a period of 30 days from today and the respondents shall not take any coercive action against the petitioner - List the matter on 26.03.2020 as prayed for.
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2020 (4) TMI 827 - SUPREME COURT
Doctrine of mutuality - Exemption from taxability - excess of income over expenditure - Common Identity - Oneness with the members / contributors - Completeness of Identity - Non-profiteering and Obedience to Mandate - assessee incorporated by YRIPL as its fully owned subsidiary after having obtained approval from the Secretariat for Industrial Assistance (for short “SIA”) for the purpose of economisation of the cost of advertising and promotion of the franchisees as per their needs - HELD THAT:- What is prohibited is the infusion of a participant in the transaction who does not become a ‘member’ of the common fund, at par with other members, and yet participates either in the contribution or surplus without subjecting itself to mutual rights and obligations. The principle of common identity prohibits any one dimensional alteration in the nature of participation in the mutual fund as the transaction fructifies. Any such alteration would lead to the non-uniform participation of an external element or entity in the transaction, thereby opening the scope for a manifest or latent profitbased dealing in the transaction with parties outside the closed circuit of members. It would be amenable to income tax as per Section 2(24) of the 1961 Act.
In the present case, it is indisputable that Pepsi Foods Ltd. is a contributor to the common pool of funds. However, it does not participate in the surplus as a beneficiary for at least two reasons first, Pepsi is not a member of the purported mutual concern as the Tripartite Agreement as well as the terms of SIA approval permit only ‘franchisees’ to become members of the mutual concern. Notably, Pepsi Foods Ltd. is not a franchisee and thus, it cannot participate in the surplus. Second, Pepsi does not enjoy any right of participation in the surplus or any right to receive back the surplus which are mandatory ingredients to sustain the principle of mutuality.
The contention of the assessee company that Pepsi Foods Ltd., in fact, does benefit from the mutual operations by virtue of its exclusive contracts with the franchisees is tenuous, as the very basis of mutuality is missing as far as Pepsi Foods Ltd. is concerned, as discussed hitherto. Even if any remote or indirect benefit is being reaped by Pepsi Foods Ltd., the same cannot be said to be in lieu of it being a member of the purported mutual concern and therefore, cannot be used to fill the missing links in the chain of mutuality
Surplus of a mutual operation is meant to be utilised by the members of the mutual concern as members enjoy a proximate connection with the mutual operation. Non-members, including Pepsi Foods Ltd., stand on a different footing and have no proximate connection with the affairs of the mutual concern. The exclusive contract between the franchisees and Pepsi Foods Ltd. stands on an independent footing and YRIPL as well as the assessee company are not responsible for implementation of this contract. Resultantly, the first limb of the three pronged test stands severed.
In the present case, even if any surplus is remaining in a given assessment year, it is unlikely to reduce the liability of the franchisees in the following year as their liability to the extent of 5 per cent is fixed and non-negotiable, irrespective of whether any funds are surplus in the previous year. The only entity that could derive any benefit from the surplus funds is YRIPL, i.e. the parent company. This is antithetical to the third test of mutuality.
Exemption granted to a mutual concern is premised on the assumption that the concern is being run for the mutual benefit of the contributors and the contributions made by the members ought to be directed in that direction. Contrary to this fundamental tenet, clause 8.1 of the Tripartite Agreement relieves the assessee company from any specific obligation of spending the amounts received by way of contributions for the benefit of the contributors. It explicates that the assessee company does not hold such amount under any implied trust for the franchisees
The doctrine of mutuality bestows a special status to qualify for exemption from tax liability. It is a settled proposition of law that exemptions are to be put to strict interpretation. The appellant having failed to fulfil the stipulations and to prove the existence of mutuality, the question of extending exemption from tax liability to the appellant, that too at the cost of public exchequer, does not arise.
Difference between purported mutual concern (assessee company) and clubs - Held that:- In the case of clubs, the operations are exempted from taxability because of the underlying notion that they operate for the common benefit of the members wishing to enter into a social exchange with no commercial intent. Further, all the members of the club not only have a common identity in the concern but also stand on an equal footing in terms of their rights and liabilities towards the club or the mutual undertaking. Such clubs are a means of social intercourse, as rightly observed by CIT (A) in the present case, and are not formed for the facilitation of any commercial activity. On the contrary, the purported mutual concern in the present case undertakes a commercial venture wherein contributions are accepted both from the members as well as non-members, as discussed earlier. Moreover, one member is vested with a myriad set of powers to control the functioning and interests of other members (franchisees), even to their detriment. Such an assimilation cannot be termed as a case of ordinary social intercourse devoid of commerciality.
Once it is conclusively determined that the assessee company had not operated as a mutual concern, there would be no question of extending exemption from tax liability.
Application of income by overriding title - It is urged that once the incoming amount is earmarked for an obligation, it does not become “income” in the hands of the assessee as no occasion for the application of such income arises. - Held that:- the question of diversion by overriding title was neither framed nor agitated in the appeal memo before the High Court or before this Court (except a brief mention in the written submissions), coupled with the fact that neither the Tribunal nor the High Court has dealt with that plea and that the rectification application raising that ground is still undecided and stated to be pending before the Tribunal - Argument rejected.
Decided against the assessee.
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2020 (4) TMI 826 - MADHYA PRADESH HIGH COURT
Deferred Revenue expenditure disallowance - deferred revenue expenditure’ on account of advertisement, publicity, holding conferences, market research, subsidy, various launch schemes, selling and distribution etc.- AO held that the expenses were incurred for the accounting year below the line in the books of account but the assessee had claimed in full for computing the total income as revenue expenditure incurred during the year - HELD THAT:-In the present case, the expenditure on advertisement and sales promotion has been claimed for deduction as revenue expenditure. The advertisement and sales promotion is the necessity of the business and thus, an integral part of the business activity. Therefore, the expenses incurred on advertisement etc. are not for acquisition of an asset or right of a permanent character, therefore, cannot be said to be a capital expenditure. It is but a revenue expenditure.
Whether the expenses on account of advertisement, publicity and sales promotion in relation to the business are in the nature of deferred revenue expenditure and although the benefit of such expenses would be availed by the assessee over a number of years but should it be allowed for the relevant assessment year for which assessee claims exemption, also came up for consideration before a Division Bench of Punjab and Haryana High Court in Commissioner of Income Tax vs. M/s Glen Appliances Pvt. Ltd.D. [2011 (5) TMI 1108 - PUNJAB AND HARYANA HIGH COURT] accepting the plea of the assessee had held that the expenses incurred by the assessee on the aforesaid activities were revenue in nature and the entire amount was admissible in the year in which it was incurred. - Decided in favour of the assessee.
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2020 (4) TMI 825 - MADHYA PRADESH HIGH COURT
Addition on loose papers impounded during the survey proceedings - case was selected for scrutiny - HELD THAT:- In the case in hand, once it was found that there was double addition on same papers for two assessment years for a single project, it cannot be said that the assessee had failed to explain the loose papers despite the onus was placed upon him to prove the loose papers. No benefit can be derived by the Revenue from the judgment in Chuharmals case [1988 (5) TMI 1 - SUPREME COURT] which is distinguishable on facts and is not applicable in the present case.
No force in the submission advanced by the appellant that at the time of survey more than one project was in progress.
CIT(A) specifically observed that the AO had failed to prove that the seizure was in respect of site different from Shanti Residency project and no effort was made by him to make spot inspection to prove that at the time of survey other projects of the assessee were also running. AO had also not been able to substantiate that there was really any other project running at the same time, otherwise the Assessing Officer ought to have subjected them to tax in the assessment year 2009-10 as well, which had not been done.
Addition on the basis of the expenditure made out of books of accounts - CIT(A) deleted the said addition accepting the plea of the assessee that the papers pertaining to the expenses shown in those papers were not part of his accounts but were related to the sub-contractors and the sub-contractors had also filed ITRs showing 8% NP - CIT(A) also deleted the addition on the ground that the Revenue failed to substantiate that the papers pertained to project other than Shanti Residency and there was reason to believe that when the profit was calculated on the basis of the NP/GP rate then there was nothing to separate the expenses therefrom - HELD THAT:- In view the findings recorded by the CIT(A) which have been affirmed by the learned Tribunal and considering the same on the touchstone and anvil of the arguments advanced by the learned counsel for the appellant/Revenue, we find no reason to differ as no illegality or perversity has been pointed out by learned counsel for the Revenue in the aforesaid findings of fact, which may warrant interference by this Court.
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2020 (4) TMI 824 - MADHYA PRADESH HIGH COURT
Deduction u/s 80-IA - Assessee not filed form No.10CCB alongwith return of income in original assessment proceedings - AO fails to file the audit report under Section 80-IA(7) along with the original return of income filed under Section 139 but presents the same during the course of assessment proceedings u/s 143 - Whether Unit-II was eligible for claiming deduction u/s 80-IA of the Act, when the profits shown by the Unit-II in respect of sales to consumption of raw material clearly showed that the profit claimed by Unit-II for deduction u/s 80-IA of the Act was erroneous? - HELD THAT:- In a decision reported in Commissioner of Income Tax vs. Punjab Financial Corporation) [2001 (12) TMI 50 - PUNJAB AND HARYANA HIGH COURT] section 32AB(5) of the Act is not mandatory and the Assessing Officer has the discretion to entertain the audit report even though the same has not been filed with the return but presented during the course of assessment proceedings and give benefit of the deduction to the assessee in terms of Section 32AB(1) - provision under Section 139 of the Act which provides for filing of revised return and rectification of defect in the return and, therefore, the requirement of filing the duly audited report along with the return was held to be not mandatory. Be it noted, the provision under Section 32AB(5) of the Act is similar to Section 80-IA(7) of the Act.
Therefore, we are unable to take any different view in the matter than the one arrived at by the Punjab and Haryana High Court in Punjab Financial Corporation (supra).
First point under issue No.(a) is held in affirmative. Where the assessee files the audit report in Form No.10CCB before completion of the assessment, we do not find any reason to hold that the condition envisaged under Section 80-IA of the Act had not been fulfilled.
Benefit as admissible in case of reassessment proceedings - Basic purpose of Section 148 of the Act is merely to empower the Assessing Authority with the machinery for assessment. Fundamentally, both the assessment and reassessment need the same machinery. In other words, the provisions relating to regular assessments shall apply to the assessment made pursuant to the notice of reassessment.
Once that is so, all the essential traits and requirements of procedure embodied for framing of regular assessment under the Act would also apply to reassessment proceedings as well. Therefore, the audit report furnished at the time of reassessment proceedings could not be ignored by the Assessing Officer while adjudicating the issue of admissibility of deduction under Section 80-IA of the Act. The point No.(ii) noticed above is decided accordingly.
At the time of passing of the order, there was material before the Assessing Officer to rely upon the audit report duly filed by the assessee in Form No.10CCB as contemplated under Section 80-IA(7) of the Act. Once the accounts of the assessee for the relevant year were examined and the audit report was submitted at the time of reassessment proceedings, it could not have been discarded by the Assessing Officer on the ground that no separate audited financial statements were attached in the original assessment proceedings. There is nothing to show that the Assessing Officer had doubted the correctness of the said audit report so as to make it necessary for the assessee to have submitted separate audited financial statements of Unit No.II and in absence of which the audit report had been incomplete.
Admittedly, since the audit report in Form No.10CCB was ultimately filed before completion of the reassessment, we do not find any reason to hold that condition under Section 80-IA(7) of the Act had not been satisfied. Consequently, question No.(A) is answered in favour of the assessee and against the Revenue.
Deduction u/s 80IA - Once the assessee was maintaining separate accounts for both the units and product manufactured was different and raw material used was also different then it was not open to the Assessing Officer to compare the value of sales of Unit-II by combining the accounts of Unit-I and Unit-II. Thus, we do not find any force in the submission of the learned counsel for the appellant that profit shown by Unit-II in respect of sales to consumption of raw material was erroneous and therefore, deduction under Section 80-IA of the Act was not allowable to the Unit-II. Accordingly, the question No.(B) is also answered against the Revenue.
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2020 (4) TMI 823 - ITAT DELHI
Nature of expenditure - treatment of non-compete fee - capital or revenue expenditure - assessee has raised that in case expenditure is held to be capital in nature then depreciation is to be allowed on the same - HELD THAT:- Payment of non-compete fee was capital expenditure in the hands of the assessee, on which the assessee is not entitled to claim depreciation u/s 32 of the Act. The Tribunal had relied on the decision of Jurisdictional High Court in the case of Sharp Business System vs CIT [2012 (11) TMI 324 - DELHI HIGH COURT] and applied the same. We decide both the main issues and alternate grounds against the assessee.
Disallowance of expenses incurred on ice boxes provided to dealers - whether expenditure incurred towards ice boxes and dealer sign board provided to hawkers/dealers carrying on brand names of the assessee was capital in nature? - HELD THAT:- The assessee explained that since the product sold by it were to be sold on particular temperature, the ice boxes were used by the hawkers for selling the items at aforesaid temperature.
As in CIT vs Honda Siel Power Products Ltd. [2007 (8) TMI 251 - DELHI HIGH COURT] while deciding the issue of advances made for ownership of tools and dies which remained with the manufacturer, had allowed the same as revenue expenditure as it facilitated the trading operations of the assessee.
Despite the non-allowance of expenditure in Assessment Year 2002-03, the Assessing Officer himself has allowed the expenditure in Assessment Year 200-3-04,2004-05 and 2005-06. In the totality of the above said facts and circumstances and following the consistency approach, we are of the view that the expenditure incurred on ice boxes, merits to be allowed as deduction in the hands of the assessee. Hence, the claim of the assessee is allowed in entirety. - Decided in favour of assessee.
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2020 (4) TMI 822 - ITAT DELHI
Assessment u/s 153A - Addition u/s 68 - incriminating material found in search or not ?- HELD THAT:- Assessee has already filed original return of income accompanied by P & L A/c, balance-sheet. In the original return of income, the assessee has disclosed the receipt of ₹ 7 lakhs from Shri Praveen Kumar as per balance-sheet.
Copy of the ledger account shows that it is already disclosed in the books of account of the assessee. Therefore, receipt of ₹ 7 lakhs from Shri Praveen Kumar as advance was already disclosed in the original return of income. Further, on the date of search, the return was not pending as same was completed because no proceedings were initiated against the assessee for passing the original assessment.
Further the original assessment order were passed in the Group cases in which the Ld. CIT, Central-(2), New Delhi, has invoked jurisdiction under section 264 of the I.T. Act, 1961 and all the matters were restored to the file of A.O. for passing the Order afresh, as per Law. Thus, all the facts with regard to receipt of ₹ 7 lakhs from Shri Praveen Kumar was disclosed to the Revenue Department in the original return of income. therefore, mere recovery of the Agreement to Sell, through which, advance of ₹ 7 lakhs was received by assessee from Shri Praveen Kumar could not be treated as incriminating material found in search.
Thus, there is no recovery of any incriminating material during the course of search against the assessee so as to make any of the additions against the assessee. The issue is, therefore, covered by Judgments of Hon’ble jurisdictional High Court in the cases of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT]. Identical issue have considered and decided in the Group cases of M/s. Alankar Saphire Developers and following the reasons for decision in the same case of the Group, we set aside the Orders of the authorities below and delete all the additions. The additional ground is, therefore, allowed - Decided in favour of assessee.
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2020 (4) TMI 821 - ITAT CHENNAI
Computation of capital gains - A.O. adopted the sale consideration as full value of consideration while computing the capital gains on transfer of land - HELD THAT:- Assessee disclosed the capital gains by adopting the sale consideration at ₹ 19,85,000/-. This sale consideration figure was sought to be substituted by the Ld. A.O with ₹ 37,92,600/- being the consideration figure mentioned in the agreement for sale. A.O also recorded a statement from the purchaser of the land Smt.R.Pushpavalli on 23.11.2011 wherein on oath, she had categorically confirmed that she had paid actual consideration of ₹ 37,92,600/- to the assessee in cash in three installments. This fact when confronted with the assessee, the assessee was not able to counter the same.A.O. adopted the sale consideration figure of ₹ 37,92,600/- as full value of consideration while computing the capital gains on transfer of land. This action was upheld by the learned CIT(A). We do not find any infirmity in the said action of learned CIT(A) upholding the Ld. A.O’s order with regard to adoption of sale consideration.
Cost of improvement - Claim made said sum was incurred by her towards cost of development and assessee had incurred this expenditure through a mason Shri C.Vasudevan. - A.R. argued that without incurring of development cost on the said land, the sale of land could not have happened - HELD THAT:- Except merely making a bald statement, the Ld. A.R. was not able to furnish any other evidence before us to substantiate the claim. However, as the last opportunity in the process of identifying truth behind the transfer of land by the assessee, we deem it fit and appropriate, in the interest of justice and fair play, to remit this aspect of the issue to the file of Assessing Officer for denovo adjudication i.e only with respect to amount of deduction towards cost of improvement of ₹ 5 lakhs while computing the capital gains. We hold that the assessee should furnish all necessary evidences in support of her claim before the Assessing Officer and the Assessing Officer should also make cross verification with Shri C.Vasudevan or any other person through whom the development work has been carried out to identify the truth involved thereon. Hence this aspect of the issue is remitted back to the file of A.O. for afresh adjudication.
Exemption under Section 54F denied - reinvestment in new property has been made by the assessee in the name of her husband instead of in her name - HELD THAT:- As relying on C.I.T Vs. V.Natarajan [2006 (2) TMI 136 - MADRAS HIGH COURT] we hold that even though the new property has been invested in the name of assessee’s husband, exemption under Section.54F cannot be denied to the assessee. - Decided in favour of assessee.
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2020 (4) TMI 820 - ITAT HYDERABAD
Deemed dividend addition u/s 2(22)(e) - assessee is having substantial interest in M/s. Kasani Hotels and Resorts Pvt Ltd., by holding more than 20% shares or not? - HELD THAT:- Apparently, the business transaction is only between the assessee and his family members with M/s.Amsri group of concerns. In this situation, the explanation presented by the assessee cannot be simply brushed aside. If the assessee has withdrawn the amount from M/s. Kasani group of Companies which was received from Amsri Group of business entities due to the business transaction between the assessee and his family members with Amsri Group of business entities then it cannot be said that M/s. Kasani group of Companies has extended loan to the assessee.
There is nothing on record to suggest that there is any business relationship between M/s. Amsri Group of entities and M/s. Kasani Group of Companies other than the business transaction between M/s. Amsri group of companies with the assessee and his family members. Hence it is obvious that M/s. Kasani Group of Companies had been only used as a conduit by M/s. Amsri Group of companies to deliver the money to the assessee and his family. In such situation, the financial transaction between the M/s. Kasani Hotels and Resorts Pvt Ltd., and the assessee cannot be treated as loan transaction. Therefore, the provisions of section 2(22)(e) of the Act shall have no application in the case of the assessee. - Decided in favour of assessee.
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2020 (4) TMI 819 - ITAT DELHI
Deduction u/s 80IB (8A) - royalty income on cotton hybrid seeds AND miscellaneous income - whether assessee company has not carried out any research activities during the year under assessments rather merely surviving on insect tolerance technology for BT Cotton created by Mahyco Monsanto Biotech (I) Ltd. (MMB) on payment of “trait value” and has been receiving royalty from the parties by merely passing on the technology of MMB as has been held by AO/CIT(A) in AY 2010-11? - HELD THAT:- When we refer to clauses 4 & 5 of the Tripartite Agreement, it is clear that the payment of trait value by SBGIL to MMB is only on behalf of assessee company which is required to be accounted for in the books of account of the assessee company. From this arrangement, it is safely concluded that when SBGIL claimed to have used parent seeds developed by the assessee company then why the payment of trait value has been made by SBGIL to MMB.
When we examine aforesaid facts which have come on record from sub-licencee agreement and tripartite agreement in the light of the arguments addressed by the ld. AR for the assessee that “assessee is an approved research company by the Department of Scientific and Industrial Research, Ministry of Science & Technology since AY 2004-05.
Matter is required to be remitted back to the AO who shall examine afresh if the assessee company has carried out any scientific research and development activities during the year under assessment independent of the technology purchased from MMB in the light of Agreement (supra) between assessee company and MMB an tripartite agreement between assessee company, MMB and SBGIL, keeping in view the observations made herein before by providing an opportunity of being heard to the assessee, hence the appeals filed by the assessee as well as Revenue are allowed for statistical purposes.
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2020 (4) TMI 818 - ITAT DELHI
Unexplained money u/s 69A - assessee had not maintained books of account that is why he opted for 8 per cent income as per section 44AD - CIT-A rejected the transactions declared u/s 44AD as turnover - HELD THAT:- If 8 per cent of gross receipts are 'deemed' income of the assessee, the remaining 92 per cent are also 'deemed' expenditure of the assessee. Meaning thereby that actual expenditure may not be 92 per cent of gross receipts, only for the purposes of taxation, it is considered to be so. Expenditure may be less than 92 per cent or it may also be more than 92 per cent of gross receipts.
On the reading of the substantive part of the provision, it is quite clear that an assessee availing the benefit of such presumptive taxation can claim to have earned income at the rate of 8 per cent or above of the gross receipts. In that case, the provisions of sub-section (5) of the said section will be applicable to it.
From the combined reading of sub-section (1) and sub-section (5), it is apparent that the obligation to maintain the books of account and get then audited is only on the assessee who opts to claim the income being less than 8 per cent of the gross receipts.
Argument of the revenue that the turnover of the assessee has been doubted by the Assessing Officer is totally ill-found, in view of the overwhelming evidences proving contra. Further, it is a fact on record that the assessee had not maintained books of account that is why he opted for 8 per cent income as per section 44AD of the Act. The section also does not put obligation on the assessee to maintain books of account, more so, in view of the fact that his income has been assessed as per section 44AD of the Act, he cannot be punished for not maintaining the same. The argument of the revenue that the assessee was in fact, not in the eligible business untenable.
Confirmations of the parties, having proved their sources and creditworthiness, the entries in the bank statement, the payments made for purchase of material and keeping in view, the place of execution of the work, we hold that the addition made by the Assessing Officer is liable to be deleted. - Decided in favour of assessee.
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2020 (4) TMI 817 - ITAT DELHI
Long-term capital gain on sale of the property - Addition invoking of the provisions of section 50C - mandation of referring the property for valuation to the DVO - value adopted by the stamp valuation authority as deemed sale consideration received/accrued as a result of the transfer - HELD THAT:- We find that in the instant case, the Assessing Officer in the assessment order has specifically mentioned that such a request for making reference to the DVO was not maintainable.
As relying on M/S. ADITYA NARAIN VERMA [HUF] [2017 (6) TMI 542 - ITAT DELHI] AO is barred from invoking provision of section 50C of the Act for computation of the long-term capital gain on the sale transactions carried out by the assessee. AO is required to compute the long-term capital gain on the sale consideration declared by the assessee in the sale deed in respect of the portion of the property sold by the assessee. Accordingly, we restore the issue of computation of the long-term capital gain on sale of the properties to the Learned Assessing Officer with the direction to compute the long-term capital gain keeping in view of our finding above.
Deduction u/s 54 - admitting any claim of the assessee, otherwise then made in the return of income - HELD THAT:- As decided in in the case of CIT vs. R. L. Sood [1999 (9) TMI 27 - DELHI HIGH COURT]wherein it is held that when the assessee has made substantial payments of the property purchase, then the assessee become owner of the property and merely because registered sale deed is exhibited at a later stage, the assessee cannot be denied the benefit of section 54
We are of the opinion that claim of the assessee for deduction under section 54 is admissible if the assessee is found to satisfy all the conditions laid down under section 54 of the Act. Accordingly, we restore the issue in dispute to the file of the AO for considering the claim of the assessee for deduction under section 54 in accordance with the law. Appeal of the assessee is allowed for statistical purposes.
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2020 (4) TMI 816 - ITAT CHENNAI
Higher rate of depreciation on the UPS, printers and scanners @ 60% as relying on own case [2017 (8) TMI 167 - ITAT CHENNAI]
TDS u/s 195 - addition u/s 40(a)(ia) - Payment to non residents for agency commission, professional consultancy charges, warehousing charges, emballage cost, tool development charges etc - HELD THAT:- As decided in own case [2017 (8) TMI 167 - ITAT CHENNAI]The logistics service rendered was essentially warehousing facility. In our opinion, this cannot be equated with managerial, technical or consultancy services. Even if it is considered as technical service, the fee was payable only for services utilized by the assessee in the business or profession carried on by the said non-residents outside India. Such business or profession of the non-residents, earned them income outside India.
Thus, it would fall within the exception given under sub-clause (b) of Section 9(1) of the Act. In any case, under Section 195 of the Act, assessee is liable to deduct tax only where the payment made to non-residents is chargeable to tax under the provisions of the Act. In the circumstances mentioned above, assessee was justified in having a bonafide belief that the payments did not warrant application of Section 195 of the Act. In such circumstances, we are of the opinion that it could not have been saddled with the consequences mentioned under Section 40(a)(i) of the Act. Disallowances were rightly deleted by the ld. CIT(Appeals).
Disallowance u/s 43B - delay in payment - Employees contribution to the ESI after 5 days from the due date specified - HELD THAT:- M/S. INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. LTD [2015 (7) TMI 1063 - MADRAS HIGH COURT] if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003.
Disallowance u/s 14A - As per assessee assessee had huge interest free funds in the form of capital, reserves, surplus etc and hence no interest disallowance could be made and for the purposes of quantifying the average value of investments , only those investments which yielded exempt income alone should be considered etc - HELD THAT:- We find that the assessee’s plea that it had huge interest free funds in the form of capital, reserves, surplus etc and hence no interest disallowances could be made in its case remain unexamined and hence we deem it fit to remit this issue back to the AO for a fresh examination.
The assessee shall lay relevant material in support of its contentions and comply with the requirements of the A O in accordance with law.
AO shall after affording effective opportunity to the assessee shall decide this issue in accordance with law. The assessee’s plea that for the purposes of quantifying the average value of investments, only those investments which yielded exempt income alone should be considered is in accordance with the decision of the special bench of the ITAT decision in the case of Vireet Investments P Ltd [2017 (6) TMI 1124 - ITAT DELHI] and hence we direct the AO to recompute the disallowance in accordance with that decision.
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2020 (4) TMI 815 - ITAT CHENNAI
Rectification u/s 254 - non adjudication of grounds of appeal and additional grounds of appeal filed before the Tribunal - HELD THAT:- On perusal of the impugned order, it is clear that above grounds of appeal and additional grounds of appeal filed before the Tribunal were not adjudicated by this Tribunal. It is settled proposition of law that non adjudication of grounds of appeal and additional grounds of appeal filed before the Tribunal constitute mistake apparent from the records capable of being rectified in exercise of the powers vested with Tribunal u/s.254 (2) of the Income Tax Act, 1961. Thus, we recall the appeals for limited purpose for adjudicating the mentioned grounds of appeal and additional grounds.
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