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Showing 81 to 100 of 1817 Records
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2017 (5) TMI 1743 - SUPREME COURT
Grant of Bail - Validity of Detention order - four offences of criminal conspiracy, cheating, kidnapping and extortion - case of Appellant is that the grounds of detention are stale, they are based on the incidents which are said to have occurred between the period from 2002 to 2007 and are relied on by the detaining authority while forming its opinion and recording its satisfaction that the detenu needs to be detained on 23.11.2016 - HELD THAT:- The detention order in this case is vitiated by taking into account incidents so far back in the past as would have no bearing on the immediate need to detain him without a trial. The satisfaction of the authority is not in respect of the thing in regard to which it is required to be satisfied. Incidents which are stale, cease to have relevance to the subject matter of the enquiry and must be treated as extraneous to the scope and purpose of the statute - In this case, the authority has come to a conclusion so unreasonable that no reasonable authority could ever reach. A detaining authority must be taken to know both, the purpose and the procedure of law. It is no answer to say that the authority was satisfied.
The influence of the stale incidents in the detention order is too pernicious to be ignored, and the order must therefore go; both on account of being vitiated due to malice in law and for taking into account matters which ought not to have been taken into account - There is another reason why the detention order is unjustified. It was passed when the Accused was in jail in Crime No. 221 of 2016. His custody in jail for the said offence was converted into custody under the impugned detention order. The incident involved in this offence is sometime in the year 2002-2003. The detenu could not have been detained preventively by taking this stale incident into account, more so when he was in jail.
Appeal allowed.
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2017 (5) TMI 1742 - ITAT CHENNAI
Disallowance u/s.14A - CIT-A deleted addition - whether earning of exempt income is not the criteria for 14A disallowance, and once exempt income bearing investments are made by the assessee, disallowance u/s.14A becomes mandatory in such cases? - HELD THAT:- The issue is settled by the Hon’ble jurisdictional High Court in the case of Redington (India) Ltd. [2017 (1) TMI 318 - MADRAS HIGH COURT] that where there is no exempted income in the relevant year, there cannot be disallowance of expenditure u/s.14A in relation to exempted income. - Decided against revenue.
Addition of foreign exchange fluctuation loss - AO disallowed the foreign exchange loss arising on account of forward contracts as speculation loss - HELD THAT:- In the present case, we find that the assessee has incurred loss relating to its business only and in view of the decision in the case of CIT v. Panchmahal Steel Ltd. [2013 (5) TMI 686 - GUJARAT HIGH COURT] this ground of appeal raised by the Revenue is dismissed.
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2017 (5) TMI 1741 - ITAT SURAT
On-money receipt - material found during the course of survey is to be taxed intoto or income is to be determined by applying a specific rate of profit out of this “on-money receipt” - HELD THAT:- Survey team was well aware about this aspect and that is why net income of ₹ 15 crores was accepted as a declaration on behalf of the assessee. Had that not been in the knowledge of the Department, then the survey team would have emphasized the assessee to declare ₹ 36.53 crores. Consistently approach of the Revenue was to work out profit element embedded in those on-money receipts.
Tribunal has also considered this aspect in the case of Jay Builders [2010 (9) TMI 1194 - ITAT AHMEDABAD]. Thus, there was no clinching evidence with the Department to demonstrate that gross-receipts of on-money calculated out of impounded material found during the course of survey is deserved to be considered as net profit. As far as statement of Shri Murarilal Agarwal, that statement has duly been considered by the ld.First Appellate Authority.
Reply to question no.7 has been specifically dealt by the ld.CIT(A) on pages 8, 9 and 10 of the impugned order. In other words, it is a cumulative analysis of all the facts at the end of the First Appellate Authority to demonstrate that alleged calculation of gross on-money at the end of AO was not the income of the assessee. It contained certain expenditure also which are noted on those very pages and credit of those expenditure are also to be considered. Taking into consideration these aspects, books were not considered as reliable and profit element embedded in the receipts has been added. This profit has been calculated at the rate of 16%. Therefore, we do not find any error in the order of the ld.CIT(A), and first ground of appeal is rejected.
Applying net profit rate at 16% - HELD THAT:- As applied at the rate of 42%. We find that this rate has been applied by the ld.CIT(A) after taking into consideration comparable cases of eight assessees. Specific example has been given on page no.16 of the impugned order. Thus, in our opinion, the ld.CIT(A) has exercised his discretion after taking into consideration various other factors.
Disallowance u/s 40A - HELD THAT:- Once income of the assessee has been estimated after rejection of the books of accounts, there cannot be other disallowance specifically under section 40A(2), 40A(3) etc. We do not find any error in the observation of the ld.CIT(A) in this regard. Therefore, this ground of appeal is also rejected.
Profit from unaccounted business on the money attributable to the sale of flats during the year - According to the CIT(A), the income of the assessee would be assessed on the method of accountancy followed by the assessee and the revenue would be recoginised in the year in which the sales have been made by the assessee - HELD THAT:- After taking into consideration finding of the ld.CIT(A), we do not find any error because the assessee itself has offered an income of ₹ 15 crores in different years and recognized this income on sale of flats. In this year, the project was not completed. It was under construction, therefore, it cannot be said that the income has accrued to the assessee. In a given case, booking of flats may be canceled, advance taken by the assessee including on-money could be returned, therefore, the ld.CIT(A) has took a view in right perspective. We do not find any error in the finding of the ld.CIT(A) on this issue.
Addition of investment added u/s 69/69C and u/s 68 - HELD THAT:- Once the receipts are accounted, expenditure cannot be added. The source of expenditure is on-money receipts. Out of the on-money receipts, the income would be assessed in the year when the flats would be sold. Similarly, the ld.CIT(A) has observed that ₹ 36.49 lakhs cannot be considered as cash credit because the assessee has already explained that these are on-money receipts. The assessee has also identified flat numbers against which such amounts have been received.
CIT(A) has entertained additional evidence in violation of Rule, 46A of the Income Tax Rules - AO was not provided an opportunity of hearing on this issue - income of the assessee embedded in on-money receipts is to be estimated, then this should be estimated at the rate of 42% and not at the rate of 16.25% as done by the ld.CIT(A) - HELD THAT:- CIT(A) has not entertained any additional evidence, rather reappreciated existing material available on the file of the AO. Thus, there is no force in such ground.
We find that the ld.CIT(A) has adopted rates after taking into consideration relevant material and comparable cases. The ld.CIT(A) made reference to eight comparable cases before adopting percentage of 16% required to be applied on on-money receipts. Similarly, thereafter, the ld.CIT(A) made reference to order of the ITAT in different cases. Thus, we are of the view that the ld.CIT(A) has appreciated the facts and circumstances in right perspective and has applied pragmatic rate of profit on-money receipts. We do not find any merit in these grounds of appeal. They are rejected.
Unexplained investment plus expenditure - HELD THAT:- The assessee has pointed out that entry of ₹ 1,14,12,000/- in the Asstt.Year 2009-10 has been made twice by the AO in table no.3 on page 36-38 of the assessment order. This aspect has been appraised from the seized material also. CIT(A) has considered it an error at the end of the AO. No material was brought to our notice pointing out as to how the ld.CIT(A) has erred in construing this figure. Therefore, after going through the order of the ld.CIT(A), we do not see any error in it.
As far assessment of income from the on-money receipt is concerned, we have already adjudicated this issue in the Asstt.Year 2008-09, wherein we have upheld the finding of the ld.CIT(A) that gross-receipt of on-money cannot be taxed. Only income part embedded on this receipt is to be taxed. In view of our finding in the Asstt.Year 2008-09, we do not find any merit in other alternative arguments of the Revenue.
Addition u/s 68 - share application money received during the F.Y.2007-08 that is relevant to Asstt.Year 2008-09 - AO treated this amount as unexplained cash credit and made addition - CIT(A) has deleted the addition on the ground that perusal of ledger account as well as bank account statement would indicate that these amounts have been received by the assessee in the accounting year relevant to A.Y.2008-09 and cannot be taxed in the Asstt.Year 2009-10 - HELD THAT:- Since this amount has not been received in this year and is not taxable in this year, therefore, the ld.CIT(A) has rightly deleted the addition.
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2017 (5) TMI 1740 - NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD
Oppression and Mismanagement - appointment of Director - It is the case of the petitioner that he was away from the management and affairs of the 1st respondent company from 2012, of course, according to the petitioner, on account of non-cooperation from respondents. According to the respondents, on 08.10.2013, in the meeting of Board of Directors of the 1st respondent company, respondent 3 was appointed as Director.
Whether appointment of respondent 3 as Director of the company as per resolution passed in the Board of Directors meeting held on 8th October, 2013 is valid?
HELD THAT:- From the material available on record it is clear that petitioner himself stayed away from affairs of the company from 2012. Admittedly petitioner changed his residence which is recorded in the register of company - It is only on 20.10.2016 petitioner informed 1st respondent company about change of his address from 4A, Anupam Bungalows, New City Light Road, Surat to B/202, Dreamworld Residency, Canal Road, Near G.D. Goenka School, Surat. It is the duty of the petitioner to inform the change in his address and it is not for the company or other shareholders to find out the change in address of the petitioner. Therefore, petitioner has no right to say that he was not served with notice.
Without placing any material on record by merely filing form MGT-7 it cannot be concluded that petitioner attended five Board meetings. Therefore, from the facts and the material available on record it appears that the petitioner was not involved in the management affairs of the company from 2012 to 2016.
Considering the powers of this Tribunal under section 242(2) of the Companies Act, 2013 in order to do substantial justice to the parties and smooth conducting of business and affairs of the company, this Tribunal under section 242(2) of the Companies Act, 2013 can pass an order even in absence of finding of oppression. Petitioner being one of the promoters of the company and being a technical person would certainly have rights and expectation, which would submerge in corporate structure. Legitimate expectations of the petitioner in the business of the company shall also be safeguarded and at the same time the interest of the company and inputs given by the respondents shall also be taken into consideration.
The appointment of respondent 3 as director is set aside. Allotment of shares as per resolution dated 26.12.2016 is set aside. Petitioner is not entitled for any other reliefs in this petition.
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2017 (5) TMI 1739 - GUJARAT HIGH COURT
Revised working of capital gains in respect of transaction of BSE shares - Claim denied on the ground that the same was not prayed either in return or in the revised return - HELD THAT:- The issue involved in the aforesaid proposed question is squarely covered against the Revenue in light of the decision of the Division Bench of this Court in the case of Commissioner of Income Tax vs. Mitesh Impex [2014 (4) TMI 484 - GUJARAT HIGH COURT] as held by the Division Bench of this Court that if the revised working of capital gain is brought on record during the course of the assessment, the same is permissible and the same was required to be allowable. Under the circumstances, no error has been committed by the learned ITAT in allowing the revised working of capital gains in respect of transaction of BSE shares. Under the circumstances, present Tax Appeal qua question No.(1) stands dismissed.
Disallowance of deduction u/s 40(a)(ia) - reimbursement of expenses - HELD THAT:- The said proposed question of law is also answered against the Revenue by the Division Bench of this Court in the case of Commissioner of Income tax-III vs. Gujarat Narmada Valley Fertilizers Co. Ltd. [2014 (4) TMI 235 - GUJARAT HIGH COURT] wherein as held that on the amount which is reimbursed the TDS is not required to be deducted. The aforesaid is not disputed by Shri Bhatt, learned Counsel appearing on behalf of the Revenue. Under the circumstances, present Tax Appeal qua proposed question No.(3) stands dismissed.
Appeal is ADMITTED to consider the following question of law - “Whether on the facts and circumstances of the case, the Appellate Tribunal was justified in deleting the disallowance of deduction u/s 40(a)(ia) of ₹ 30,68,705/in respect of office management and maintenance expenses?”
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2017 (5) TMI 1738 - ITAT MUMBAI
TP Adjustment - benchmarking the Direct Sales Compensation (‘DSC’) - commission @ 2% for the indenting services received by the assessee from its AEs - HELD THAT:- Aassessee while arriving at the average commission rate of 3.62% in respect of the aforesaid two concerns, viz. M/s Sumitomo Corporation India Pvt. Ltd. and M/s Bayer Material Science Pvt. Ltd., for the year under consideration, viz. A.Y. 2008-09, had in respect of M/s Bayer Material Science Pvt. Ltd.[2011 (12) TMI 393 - ITAT MUMBAI] adopted the commission rate of 5% that was upheld by the Tribunal in the assesses own case for A.Y. 2006-07 and A.Y. 2007-08, as there was no transfer pricing adjustment in the hands of the said concern during the year under consideration.
We have given a thoughtful consideration to the aforesaid facts and are of the considered view that the contention of the assessee in the light of the order passed by the Tribunal in its own case for the preceding years, therein warrants acceptance. We, thus in the light of our aforesaid observations direct the A.O. to adopt 3.62% as the appropriate rate for benchmarking the Direct Sales Compensation (‘DSC’) received by the assessee from its AEs. The Ground of appeal No. 1 to 1.3 raised by the assessee before us are thus allowed.
Addition @10% of the expenses incurred on Global Work Space Solutions/Facilities Management - HELD THAT:- Now when the assessee had substantiated its claim towards the expenses on the basis of material made available on the record, then the disallowance of any part of such expense on adhoc basis stood ruled out. We are further not persuaded to accept the observations of the lower authorities that the disallowance of 10% of GWS expenses were carried out in conformity with adhoc disallowance carried out by the A.O in the immediately preceding year, viz. A.Y. 2007-08, which thereafter had been sustained by the Tribunal vide its order [2015 (12) TMI 1838 - ITAT MUMBAI] of the assessee. We find that unlike the case of the assessee for the year under consideration, the disallowance of ₹ 2.98 crores, i.e @10% of the expenses was upheld by the Tribunal in A.Y. 2007-08, for the reason that the assessee had failed to substantiate its claim of expenses on the basis of supporting bills, which therein justified carrying out of adhoc disallowance @ 10.21% in the hands of the assessee. We thus in light of our aforesaid observations, are thus of the considered view that the half hearted approach of the A.O , which can safely be held to be based on misconceived facts, thus cannot be sustained. We thus direct the A.O to delete the addition/disallowance - Decided in favour of assessee.
Disallowance of write off of earnest money deposit - claim of assessee as a revenue loss under Sec. 37 r.w Sec. 28 - HELD THAT:- Advance by the assessee at the start of the project, and thus was never taken into account by the assessee as its income during the year under consideration, or in any of the previous years, therefore, the same did not satisfy the conditions contemplated u/s 36(1)(vii) r.w.s. 36(2) of the ‘Act’, and as such could not be allowed as a ‘bad debt’ in the hands of the assessee - assessee had alternatively claimed that as the said loss had been suffered by the assessee in the normal course of its business, therefore, the same was allowable under Sec. 37 r.w Sec. 28 of the ‘Act’. We are of the considered view that as the said claim of the assessee requires to be tested against the facts of the case, therefore, we restore the issue to the file of the A.O who shall verify the entitlement of the assessee towards claim of the aforesaid amount as a revenue loss under Sec. 37 r.w Sec. 28 of the ‘Act’ - Issue allowed for statistical purposes.
Non granting of credit of TDS - HELD THAT:- If it emerges from the records that a short credit of TDS had been given to the assessee, then the requisite remedial action be taken and the balance credit of the TDS be allowed in the hands of the assessee. We further direct the A.O. to verify the contention of the assessee that no refund had been received by the assessee, while for a fact to the contrary had been recorded by the A.O. The A.O. is herein directed to verify the factual position in respect of both of the aforesaid contentions of the assessee and give the necessary consequential effect, as per law.
Disallowance of bad debts - ‘bad debts’ written off as part of the operating expenses of the CoEE segment, which had been benchmarked by the assessee applying TNMM - HELD THAT:- Characterizing of the writing off of the debt by the assessee as an operating expense by the DRP, would in no way adversely affect the operating margin of the assessee, as the PLI of the assessee, as claimed by the Ld. A.R continues to remain within the parameters of +/-5% variation, as a result whereof no TP adjustment would be called for in the hands of the assessee in respect of the CoEE segment to which such ‘bad debts’ so pertain, wherein the benchmarking for the said segment had been carried out by adopting TNMM. We thus not being impressed by the aforesaid observations of the lower authorities are thus not persuaded to subscribe to the same, and as such direct the A.O to delete the addition/disallowance so made in the hands of the assessee.
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2017 (5) TMI 1737 - ITAT DELHI
Disallowance u/s. 40(a)(ia) - Amount of free airtime given to distributors on sale of prepaid sim-cards by holding the same to be in the nature of 'commission' liable for deduction of lax at source u/s 194H - Scope of amended provision - first contention of the assessee is that as in case of CIT v. Kotak Security Ltd. [2011 (10) TMI 24 - BOMBAY HIGH COURT] has held that disallowance u/s. 40(a)(ia) was not at all warranted as the applicant was under bona fide belief that tax was not deductible at source - HELD THAT:- The revenue has not controverted that the belief of the assessee regarding non-deduction of tax at source was not bona fide. Therefore, respectfully following the decision of the Bombay High Court in Kotak Securities Ltd. (supra) we also hold that in such circumstances no action could be taken u/s. 40(d)(ia) of the Act. In the result, this contention of the assessee is allowed.
Alternative plea that disallowance, if any, for non-deduction of tax should be restricted to 30% of the expenditure - By Finance (No. 2) Act, 2015 as amended the provisions of section 40(a)(ia) w.e.f. 01.04.2015 though the Finance Minister explained the amendment that earlier disallowance of 100% of such expenditure has caused undue hardship to the assessee particularly where the rate of taxes only 1% to 10%. Therefore, only 30% of such payment instead of 100% will be disallowed. In the explanatory memorandum, the reasons were also given of reducing the hardship. However, it was stated that these amendment will take effect from 1st April, 2015 and accordingly apply for A.Y. 2015-16 onwards. We are not inclined to accept the contention of the Ld. AR that rate of disallowance reduced from 100% to 30% of the expenditure by the Finance Act, 2014 applies retrospectively -In the result this contention of assessee is rejected and we hold that amendment to section 40(a)(ia) with effect from 1-4-2015 of reduction in rate of disallowance coupled with the increase in scope of the disallowance is not retrospective in nature.
Disallowance u/s. 40(a)(ia) should have if at all been restricted to the amount remaining payable at on the last date of the previous year - We have come across the recent decision in M/s. Palam Gas Services v. CIT [2017 (5) TMI 242 - SUPREME COURT] wherein has held that disallowance u/s. 40(a)(ia) cannot be restricted to amount payable at the end of the year only but also applies to the amount paid during the year also. In view of this, above argument of the assessee is rejected.
AO could not have disallowed the amount to the extent of no order u/s. 201 passed treating the assessee to be 'assessee in default' - On reading of both the provisions it is apparent that there was twin consequences applicable in case assessee fails to deduct tax at source and after deducting fails to pay, (i) such amount shall not be allowed as deduction and (ii) further the assessee may be asked to pay the tax along with interest and probable penalty.
The above argument can also be tested that in case if the amount is disallowed u/s. 40(a)(ia) of the Act, does it prohibit the Ld. Assessing Officer in recovering the tax and interest from the assessee by passing an order u/s. 201 of the Act. The obvious answer is No. The second proviso to section 40(a)(ia) of the Act inserted with effect from 1.4.2013 by the Finance Act, 2012 also visualizes a situation that when the assessee is not 'deemed to be in default' u/s. 201 of the Act, and if the payee has filed the return, the disallowance u/s. 40(a)(ia) shall not be made. - we do not agree with the contention of the assessee that unless there is an order u/s. 201 of the Act the impugned amount cannot disallowed u/s. 40(a)(ia) of the Act.
Admission of additional ground - assessee ought to be allowed deduction of liability borne by the assessee in pursuance of order(s) passed under section 201(1) of the Income-tax Act, 1961 - HELD THAT:- As relying on assessee own case [2017 (1) TMI 172 - ITAT DELHI] we set aside the above additional ground of appeal after admission to the file of the Ld. Assessing Officer to decide the claim of the assessee afresh after considering the provisions of section 40(a)(ii) and section 37(1) read with Explanation 1 of that section or any other provisions of the Income-tax Act. The miscellaneous application of the assessee is accordingly disposed off.
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2017 (5) TMI 1736 - ITAT CHENNAI
Penalty levied u/s 271(1)(c) - non-disclosure of particulars of LTCG & STCG - HELD THAT:- CIT(A) has observed that the Chartered Accountant who has quantified the accounts of the assessee company has not disclosed the aforesaid sale of capital assets, as evidenced by the relevant column in Form No. 3CD, Sl. No. 14. The Chartered Accountant has reported capital gains as “NIL” in the said column which clearly indicates that there was deliberate concealment in reporting substantial capital gains, which arose to the assessee above ₹.21 crores. True disclosure means, disclosing in the return of income and in Form 3CD, which are filed during the filing of return of income. The assessee has not made any disclosure relating to capital gains in the return of income filed.
Unintentional, honest mistake, commission of bonafide error, or typographical error, if corrected immediately upon discovery, normally, it does not warrant levy of penalty. In this case, the assessee filed the return of income on 26.09.2012 and notice under 143(2) was issued on 13.08.2013.
To agree with the contention of the assessee that the mistake was bonafide and inadvertent, the assessee should have filed revised return of income by incorporating the LTCG and STCG, which arose due to sale of landed properties as well as sale of windmill immediately when it was noticed by the assessee before service of notice under section 143(2) of the Act, which was not done so in this case. Therefore, the contention of the assessee that the mistake was bonafide and inadvertent, is not acceptable.
Non-disclosure of particulars of LTCG & STCG with the AR of the assessee during the course of assessment proceedings and thereafter filing of computation of LTCG & STCG, cannot be held as voluntary disclosure of particulars. In this case, if scrutiny assessment was not done, the true and complete facts of sale of landed properties as well as sale of windmill would not have come to the light and substantial capital gains would have totally suppressed. It is a clear cut case of concealment of true and complete particulars in the return of income, which warrant penalty under section 271(1)(c) - Decided against assessee.
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2017 (5) TMI 1735 - ITAT DELHI
TP Adjustment - Determination of arm's length price of international transaction of provision of infrastructure support services - comparability analysis of the assessee‟s international transaction with an uncontrolled transaction - HELD THAT:- BNR Udyog Limited, it is carrying on medical transcription, construction, and financial activities. It is also the member of the National commodities and derivatives exchange Ltd and multi commodity exchange of India. This company has assumed geographical risk, human resources risk as well as foreign exchange risk.
On looking at the functional profile of the assessee company with respect to integrated support service agreement, services, which are the necessary for the day to day operations of the service recipients business, are provided. The natures of services are also described in the order of TPO . The above services do not envisage employment of highly qualified professionals such as doctors, but operates as back-office functions. Therefore, there is a functional differentiation in the activities of the comparable vis-à-vis services of appellant assessee, hence, specific characteristics of the property transferred and functional profile according to us differs. Therefore, this comparable deserves to be rejected from comparability analysis.
Cross domain solutions private limited - Looking to the functional profile of the comparable company as made available in judicial precedents for the same AY , this comparable is held to be KPO and the functional profile of the assessee with respect to the infrastructure support services do not lead to such a conclusion that it is also a KPO. Therefore, based on incomplete information, we direct the Ld. Transfer Pricing Officer to exclude this comparable from the comparability analysis.
Deduction u/s 10 A - allocation of common expenditure for working out deduction - whether the allocation key should be turnover as applied by the ld AO or they should be specific to the nature of the expenditure incurred, as applied by assessee, as stated before us? - HELD THAT:- Turnover is a general allocation key, which can be employed in the end only after testing specific allocation keys, such as for salary and wages, etc, the man hours devoted, for travelling purposes wise, etc. TPO has adopted the turnover as the allocation key, which we reject because we are of the opinion that allocation key should be specific with respect to the nature of expenditure incurred. As per page No. 432 of the paper book it is not clear what kind of allocation key has been used by the assessee for the purpose of allocation of expenditure - assessee was not asked during the course of assessment proceedings that how the allocation of expenditure have been made as according to the assessee this issue has not been raised and additional evidence submitted before the Ld. dispute resolution panel were also not considered due to paucity of time. In view of this we set aside the issue of verification of allocation key with respect to allocation of expenditure to the file of the Ld. Assessing Officer and then to determine the profit derived by the eligible undertaking for working out deduction under section 10 A.
Disallowance of provision for product support and services (i.e. provision for warranty) - Addition on the basis that the said expenditure is in the nature of unascertained liability - HELD THAT:- This issue is squarely covered by the decision of the coordinate bench in assessee‟s own case for the previous year for assessment year 2008 – 09 wherein coordinate bench has set aside the issue back to the file of the Ld. Assessing Officer for verifying the provision in view of the decision in case of Rotork controls India private limited [2009 (5) TMI 16 - SUPREME COURT]. In view of this, we also set aside this ground of appeal to the file of the Ld. Assessing Officer to decide accordingly.
Disallowance of depreciation on fixed assets acquired by the appellant from NCR Corporation India private limited - HELD THAT:- In view of the decision of the coordinate bench in the assessee‟s own case for assessment year 2008 – 09, we also set aside this ground of appeal of the assessee to the file of the Ld. assessing officer, as the depreciation will always depend upon the written down value of the assets in earlier year.
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2017 (5) TMI 1734 - SC ORDER
Notification dated 17th September, 2015 - date of notification coming into force - When did the notification dated 17th September, 2015 issued under Section 25(1) of the Customs Act come come into force? - HELD THAT:- Leave granted.
The bank guarantee be kept alive till the disposal of the appeal.
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2017 (5) TMI 1733 - ITAT BANGALORE
Computation of ALP - Foreign Exchange Gain as operating income - HELD THAT:- We find force in the submissions of the learned DR of the revenue that even after holding that the Foreign Exchange Gain is operating income, it has to be seen that such gain is in respect of the turnover of the present year or an earlier year and then only, it can be considered for computing ALP of the present year if the said gain is in respect of the turnover of the present year. Since, there is no finding of any of the lower authorities on this aspect, we feel it proper that this matter should go to the A.O. for a fresh decision with amended direction that the assessee should establish that the foreign exchange gain earned by the assessee in the present year which the assessee wants to include in the operating income of the present year is arising in respect of the turnover of the present year because in T. P. study, operating profit is worked out to arrive at the Profit percentage on turnover of the present year and therefore, only that gain which is relatable to the turnover of the present year has to be taken into account - assessee should establish that the foreign exchange gain earned by the assessee in the present year which the assessee wants to include in the operating income of the present year is arising in respect of the turnover of the present year because in T. P. study, operating profit is worked out to arrive at the Profit percentage on turnover of the present year and therefore, only that gain which is relatable to the turnover of the present year has to be taken into account. A. O./TPO should decide this issue afresh - Appeal of the revenue is allowed for statistical purposes.
Disallowance u/s 14A - HELD THAT:- We find force in the submissions of the learned AR of the assessee that this issue should go back to the A.O. for a fresh decision because the figure of opening investment has to be taken being the investment on 01.04.2008 and not on 31.03.2008 and since the company M/s Raman Boards Limited got merged with the assessee company w.e.f. 01.04.2008, the investment in that company has become nil on that date and there is no other investment on that date and as a result, for computing disallowance u/s 14A, the average investment amount has to be worked out by adopting the opening investment at NIL and closing investment at ₹ 73.29 Lacs. Hence, we set aside the order of CIT (A) on this issue and restore this matter back to the A.O.
Comparable selection - HELD THAT:- Since the assessee is rendering only software development services to its AE, who may be doing Product Development, it has to be accepted that the assessee is engaged in rendering software development services to AE and Product Development by AE is of no relevance because the assessee is not the owner of those products. Companies functionally dissimilar with that of assessee need to deselected from final list . Companies with more than 15% RPT % need to be excluded.
Working Capital Adjustment - HELD THAT:- We restore the matter to AO/TPO for a fresh decision by following the tribunal order rendered in the case of NOVELL SOFTWARE DEVELOPMENT (INDIA) P. LTD [2016 (3) TMI 1256 - ITAT BANGALORE] because it was held by the tribunal in this case that AO/TPO should recomputed the working capital adjustment by taking the actual data without putting any upper limit. In the present case also, the AO/TPO should recompute the working capital adjustment by taking the actual data without putting any upper limit.
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2017 (5) TMI 1732 - MADRAS HIGH COURT
Whether the assessment made on the supply of printing material under Section 3-B of the Tamil Nadu General Sales Tax Act, 1959, could be sustained? - HELD THAT:- The issue decided in the case of STATE OF TAMIL NADU VERSUS PREMIER LITHO WORKS AND ANOTHER [2009 (7) TMI 1159 - MADRAS HIGH COURT] where it was held that The assessing officer had no evidence before him to come to a conclusion that the labels printed by the first respondent are marketable, though not actually marketed. There was also no evidence on record to show that the printing of labels is not incidental, but primary.
Revision dismissed.
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2017 (5) TMI 1731 - ITAT KOLKATA
Addition on account of settlement compensation for closed units - AO has treated the payment made to the employees of Chennai unit in addition to the payment of VRS in the nature of VRS AND applied the provisions of section 35DDA and accordingly allowed 1/5th of such expenses and remaining expenses were disallowed - CIT-A deleted the addition made by the AO by observing that the additional payment is not covered under section 35DDA - HELD THAT:- In the instant case the assessee was having several units and few of them were close down. All the units of the assessee constitute a single business. In consequence to the closure of the units based in the Chennai, the assessee had to pay certain compensation over and above the VRS to the employees, therefore in our considered view the extra payment is eligible for deduction under section 37(1) of the Act. In view of above we do not find any reason to interfere in the order of ld CIT(A). We hold accordingly and this ground of appeal of the Revenue is dismissed.
Addition on account of advance written off - CIT-A delete the addition - HELD THAT:- From the details furnished by the assessee in the paper book it is found that the assessee had given full details of each item of the advances. The amounts represented advances given to the parties for the purchase of raw materials, advance to employees, security deposited with the landlord, electricity and telephones etc. The advances were given during the course of business. The amount became irrecoverable from the parties to whom the advances were made. Thus, the advances were totally connected with the business activities of the assessee. The learned CIT (Appeals) was justified in observing that the amount of advance was a trading loss. After seeing the details of amounts, it is observed that the assessee was not required to take a lengthy litigation for recovering the small amounts. In our opinion, therefore, the approach of the learned CIT (Appeals) is justified. claim of deduction is allowable as trading loss u/s 37 of the Act. AO is directed accordingly. Ground taken by the Revenue is, therefore, dismissed.
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2017 (5) TMI 1730 - SC ORDER
Refund claim - service tax paid on the transport of goods by road (GTA) services - HELD THAT:- Delay Condoned.
Issue Notice.
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2017 (5) TMI 1729 - THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI
Cancellation of shares of 1st Respondent - Respondents not only wants to get rid of Section 100 to 104 of the Companies Act, 1956 but also in the other provisions made under the SEBI Act - HELD THAT:- The present case is not that of statute incorporated into another statute, while enacting or amending or by repeal.
It is true that SEBI Act is a special law, complete code in itself containing elaborate provisions to protect interest of investors. The Companies Act, 1956 or Companies Act, 2013 is not in conflict with the SEBI Act. Therefore, the SEBI Act is required to be followed by all parties, including 1st and 2nd Respondents. Regulation 37 of LODR merely reiterates and adopts Section 101 of the Companies Act, 1956 and Section 66 of Companies Act, 2013 apart from other provisions such as Section 391 to 394 of the Companies Act, 1956 and Section 230 to 234 of the Companies Act, 2013.
Admittedly, the Company Petition is pending before the Tribunal and no deliberation or finding has been given about 'oppression and mismanagement' by one or other respondents to the Company Petition. After final hearing the Company Petition may be allowed or may be dismissed or disposed off with certain observations. In such a situation whether the Tribunal was competent to pass the orders dated 24th August 2016 or not is to be doubted. The order passed on 24th August, 2016 in true sense may not be called to be an interim order for regulating the conduct of the affairs of the company. The said order has nothing to do with the affairs of the company - However, as the order dated 24th August 2016 is not under challenge, expressing some doubt about the order, we do not intend to interfere with the said order as the order dated 24th August 2016 has reached finality.
Thus, No case was made out by Respondents asking for interim order under sub section (4) of Section 242 of the Companies Act, 2013. Such interim order can be passed only for regulating the conduct of the affairs of the company if so necessary.
Whether compliance of Section 100 to 104 of Companies Act, 1956 is to be followed? - HELD THAT:- The Central Government issued notification w.e.f. 1st June 2016 transferring all cases from the Company Law Board to Tribunal. By another notification dated 7th December 2016, the cases pending before the Hon'ble High Courts have been transferred to the Tribunal, except the cases where certain order (s) have been passed by the Hon'ble High Courts. Since 7th December, 2016, the Hon'ble High Courts have no jurisdiction to entertain any petition under Section 100 of the Companies Act, 1956. Therefore now onward, the question of confirmation by the Hon/ble High Court of a special resolution for reduction of the share capital, as stipulated under Section 100 of the Companies Act, 1956 does not arise. The provision of Section 100 has become redundant.
The question of order of High Court confirming the reduction of share capital of the company as mentioned in clause (a) or delivering to him a certified copy of the order or a minute approved by the High Court, as mentioned in clause (b) of sub-Section (1) of Section 103 of the Companies Act, 1956 does not arise - As SEBI Act is a special law, a complete code which is to be read in harmony with the provisions of Companies Act is required to be complied with by companies, including the Respondents. Similarly, the Regulations and circulars issued by SEBI are also required to be followed as they not in conflict with the Companies Act, 1956 or Companies Act, 2013 but are supplementary. Therefore, the Respondents are bound to follow all the Rules, Regulations and Circulars, except to the extent of Section 100, 101 and 102 of Companies Act, 1956 which are not feasible to comply, the power of the High Court having been divested.
The Respondents are directed to follow the mandatory provisions of SEBI Act, Regulations and directions, except Section 100 to 102 of Companies Act, 1956 for giving effect to Tribunal's order dated 24th August, 2016 - appeal allowed.
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2017 (5) TMI 1728 - ITAT DELHI
TP Adjustment - Comparable selection - Kals Information Systems Ltd. - HELD THAT:- Once inventory was there, it cannot be said that Kals Information Systems Ltd., was not having any revenue from products. DR has submitted that the principal items do not contain any item code number. This information is only with reference to principal products and not with reference to the entire spectrum of products/services dealt by the company. Consistent with the decisions relied upon by the assessee, we direct for the exclusion of company.
Denial of working capital adjustment - The reason for denial is that the assessee had not submitted the details as has been observed by ld. TPO in para 7.1 of his order. Assessee had made submissions in this regard before the ld. DRP in regard to all the four comparables selected by ld. DRP. We, therefore, restore this issue to the file of ld. TPO to consider the information furnished by the assessee in regard to its claim for working capital adjustment. Assessee appeal allowed for statistical purposes.
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2017 (5) TMI 1727 - ITAT INDORE
Reopening of assessment u/s 147 - satisfaction of conditions laid down in the statute for the issuance of notice under section 148 - HELD THAT:- We find to the AO had applied his independent mind on the basis of material available on record for A.Y. 2008-08 and also for assessment year under consideration and find that the information pointed out by the audit was on factual error. AO has formed his opinion about reason to believe that income chargeable to tax had escaped assessment.
Reopening of assessment is perfectly in accordance with law hence same is upheld. This ground of appeal of the assessee is therefore dismissed.
Disallowance of claim of additional depreciation u/s 32 (1) (iia) on Wind Electric Generator - assessee's case is that by using "windmill" the assessee is producing an article or a thing as define under section 32 (1) (iia) hence, it is entitled to additional depreciation - HELD THAT:- In the instant case, it is not in dispute that new machinery or plant has been acquired and installed after the 31st March 2005. It is also not in dispute that the assessee has claimed depreciation u/s 32(1)(ii) of the Act. Once the AO has accepted the assessee's claim u/s 32(1)(ii) of the Act, we do not see a reason why the assessee should be denied the claim of additional depreciation on the same assets u/s 32(1)(iia) of the Act.
We find that it is now a settled proposition as held by the Hon'ble Supreme Court and the various Co-ordinate Benches of the Tribunal that the process of generation of electricity is akin to manufacture of an article or thing, the assessee in the instant case satisfy the requirement that it is engaged in the business of manufacture or production of an article or thing.
Coming to the amendment which has been brought-in by the Finance Act 2012 w. e. f. A.Y. 2013-14 whereby the assessee engaged in the business of generation or generation & distribution of power have specifically been included and held eligible for claim of additional depreciation. In our view, the said amendment cannot be held to disentitle the assessee to claim of the additional depreciation. Various Coordinate Benches have held that even prior to the amendment brought in by the Finance Act 2012, that the assessees engaged in generation or generation and distribution of electricity were held eligible for additional depreciation.
The said amendment cannot be read to negate the settled legal position that generation of electricity is akin to manufacture or production of an article or thing. As held by Coordinate Bench in M Satishkumar [2012 (11) TMI 215 - ITAT CHENNAI ] the said amendment by the Finance Act 2012 gives an impetus to the view that generation of electricity is a manufacturing process. Assessee is held entitled to the additional claim of depreciation on the power plant and the windmill installed during the year. Hence, the ground of the assessee is allowed.
Charge of interest u/s. 234B (3) - HELD THAT:- We find that the charging of interest under section 234B(3) is mandatory as held in the case of CIT v. Anjum M. H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] - Interest would be chargeable as per law laid down by Vijay Kumar Saboo (HUF) v. Asstt. CIT[2011 (7) TMI 135 - KARNATAKA HIGH COURT]. However, as we allowed the main ground of appeal on favour of the assessee it becomes academic in nature and consequential in nature and not required adjudication. However, we held the assessee is entitled to consequential relief if any as arise out on giving effect to this order in a case with law.
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2017 (5) TMI 1726 - SUPREME COURT
Interpretation of statute - Section 26 of the Protection of Women from Domestic Violence Act, 2005 qua the Provincial Small Cause Courts Act, 1887 - bar on entertainment on counter claim - whether counter claim by the Appellant seeking right Under Section 19 of Act, 2005 can be entertained in a suit filed against her Under Section 26 of Act, 1887 seeking a mandatory injunction directing her to stop using the suit flat and to remove her belongings therefrom?
HELD THAT:- The Protection of Women from Domestic Violence Act, 2005 has been enacted to provide for more effective protection of the rights of women guaranteed under the Constitution who are victims of violence of any kind occurring within the family and for matters connected therewith or incidental thereto. Act, 2005 was enacted by the Parliament to give effect to various international conventions - There cannot be any dispute that proceeding before the Judge, Small Causes Court is a legal proceeding and the Judge, Small Causes Court is a civil court. On the strength of Section 26 any relief available Under Section 18 to 22 of Act, 2005, thus, can also be sought by the aggrieved person.
When the suit filed by the Plaintiff for determination or enforcement of his right as a licensor can be taken cognizance by Judge, Small Causes Court we fail to see that why the relief claimed by the Appellant in the Court of Small Causes within the meaning of Section 26 of Act. 2005 cannot be considered by the Judge, Small Causes Court. In facts of the present case, the bar and embargo under Item No. 11 of Schedule II read with Section 15 of Act, 1887 stand whittled down and engulfed by virtue of Section 26 Sub-section (1) as applicable in Maharashtra.
Section 26 of the Act, 2005 has to be interpreted in a manner to effectuate the very purpose and object of the Act. Unless the determination of claim by an aggrieved person seeking any order as contemplated by Act, 2005 is expressly barred from consideration by a civil court, this Court shall be loath to read in bar in consideration of any such claim in any legal proceeding before the civil court - When the proceeding initiated by Plaintiff in the Judge, Small Causes Court alleged termination of gratuitous licence of the Appellant and prays for restraining the Appellant from using the suit flat and permit the Plaintiff to enter and use the flat, the right of residence as claimed by the Appellant is inter-connected with such determination and refusal of consideration of claim of the Appellant as raised in her counter claim shall be nothing but denying consideration of claim as contemplated by Section 26 of the Act, 2005 which shall lead to multiplicity of proceeding, which can not be the object and purpose of Act, 2005.
The counter claim filed by the Appellant before Judge, Small Causes Court in Civil Suit was fully entertainable and courts below committed error in refusing to consider such claim - Appeal allowed.
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2017 (5) TMI 1725 - ITAT AHMEDABAD
Capital gain computation - valuation of the property - assessee was one third owner of agriculture land - application of provisions of section 50C - HELD THAT:- Co-ordinate Bench, Ahmedabad, in the case of Shri Dharamshibhai Sonani Vs. ACIT [2016 (9) TMI 1259 - ITAT AHMEDABAD] wherein it was held that the proviso inserted u/s.50C of the Act, by the Finance Act 2016 with effect from 01/04/2017 is curative in nature and the assessee should not be denied the benefit for the issues prior to the date of amendment.
Assessee entered into the agreement to sale on 10/12/2007 and received advance of ₹ 12,00,000/- out of which ₹ 7,00,000/- was by account payee cheque of Vijaya Bank as appearing in the copy of agreement to sale at page 4 and 5 of the paper books. It is also not disputed by the Revenue that value of the property as per the provision of section 50C by applying Jantri rate as on 10/12/2007 is ₹ 64,73,250/- which is less than the agreed sale consideration of ₹ 80,00,000/-. We are therefore of the view that Ld.AO erred in making addition by applying the provisions of section 50C of the Act, taking the basis of date of sale deed rather than date of agreement to sale. We accordingly, set aside the order of Ld.CIT(A) and allow the assessee’s appeal.
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2017 (5) TMI 1724 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI
Principles of natural justice - Admission of application for CIRP - appellant, corporate debtor, submitted that the impugned order has been passed by the Adjudicating Authority in violation of principle of natural justice i.e. without giving any notice to the corporate debtor prior to admission of the application - HELD THAT:- The appointment of Interim Resolution Professional, order declaring moratorium, freezing of account and all other order passed by Adjudicating Authority pursuant to impugned order and action taken by the Interim Resolution Professional including the advertisement published in the newspaper calling for applications are declared illegal. The Adjudicating Authority is directed to close the proceeding. The appellant is released from the rigour of law and allow the appellant company to function independently through its Board of Directors with immediately effect.
Appeal disposed off.
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