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Showing 61 to 80 of 1498 Records
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2015 (1) TMI 1446
Calculation of credit of MAT u/s 115JAA - MAT credit deduction from the tax payable and Surcharge and Education Cess to be calculated thereon - HELD THAT:- As decided in WYETH LIMITED [2015 (1) TMI 1299 - ITAT MUMBAI] as relying on M/S. VACMENT INDIA AGRA [2014 (10) TMI 787 - ALLAHABAD HIGH COURT] as taken into account the order of entries in the form ITR-6 for the A.Y. 2011-12 in the said case and held that as per form ITR-6, the MAT credit has to be given against the gross tax payable exclusive of surcharge /cess and only after the MAT credit tax liability, the surcharge and cess has to be calculated for the purpose of working out the grand tax liability.
Merit and substance in the alternative contention of the assessee that if the MAT credit is taken into account without including the surcharge and education cess then the surcharge and education cess on the tax liability has to be calculated only after allowing the MAT credit. Alternatively, the amount of MAT credit should also include surcharge and education cess for the purpose of allowing the credit against the tax liability inclusive of surcharge and education cess.
MAT as well as normal tax before allowing the MAT credit has to be taken on parity either exclusion of surcharge and education cess or inclusive of surcharge and education cess or inclusive of surcharge and education cess - Direct the AO to allow the MAT credit against the tax liability payable before surcharge and education cess or alternatively the amount of MAT credit should also be inclusive of surcharge and education cess and then allow the credit against the tax payable inclusive of surcharge and education cess. - Decided against revenue
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2015 (1) TMI 1445
Deduction u/s 10A - disallowance of business expenditure/marketing service charges - reduction of tele-communication charges from the export turnover - disallowance u/s 40(a)(i) - HELD THAT:- We find that the assessee has furnished the copies of the agreement between the assessee and its AE for rendering of marketing services and the invoices raised by the AE before the AO but the AO has not verified the genuineness or reasonableness of the same but has only made the disallowance on a proportionate basis of the increase in revenue to sales. This, in our view, is not sustainable in view of the decision of the Hon’ble Delhi High Court in the case of EKL Appliances [2012 (4) TMI 346 - DELHI HIGH COURT ]
We also find that the assessee has made the same plea before the CIT(A) and has also filed the above details and documents but the CIT(A) also has neither called for a remand report nor has verified the genuineness or reasonableness of the payment made by the assessee to its AE but has only confirmed the addition made by the AO by further holding that the said payment is chargeable to tax in India and since the assessee has failed to deduct tax at source, the disallowance u/s 40(a)(i) is called for. This, in our view, is not justified without verification of facts. In view of the same, we deem it fit and proper to remand the issues to the file of the AO for de novo consideration of the issue as regards the genuineness and also the reasonableness of the expenditure claimed by the assessee. It is made clear that the AO cannot make disallowance on the ground that the assessee has not generated revenue in proportion to the expenditure. This ground of appeal is accordingly allowed for statistical purposes.
Exclusion of tele-communication expenses from the export turnover for the purpose of deduction u/s 10A - We find that the alternate prayer of the assessee is covered in favour of the assessee by the decision of the jurisdictional High Court in the case of CIT vs. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] which has been followed by the CIT(A) in directing the AO to exclude the same from the total turnover also for the purpose of computation of deduction us 10A. Therefore, we see no reason to interfere with the order of the CIT(A) on this issue. This ground of appeal is rejected.
Deduction u/s 10A should be granted on ‘the profits and gains as are derived by an undertaking from the export of articles or things or computer software’ as assessed by the AO - We find that the AO is bound to first compute the income from export of articles or things or computer software, as the case may be, and thereafter allow the deduction u/s 10A in accordance with law. Therefore, the AO is directed to grant the deduction u/s 10A in accordance with law.
Interest u/s 234B and 234C are consequential in nature and therefore the AO is directed to give consequential relief to the assessee, if any.
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2015 (1) TMI 1444
Disallowance u/s 14A - Non recoding of satisfaction - HELD THAT:- It is an undisputed fact that the assessee itself has offered 0.5% of dividend income on account of other expenses. It is also an undisputed fact that the AO has not pointed out any defect in the calculation made by the assessee nor AO has recorded any dissatisfaction with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income. Considering all these facts in the light of the provisions of Sec. 14A of the Act, we set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition. Ground No. 1 is accordingly allowed.
Addition being securities transaction tax to the book profit computed u/s. 115JB - HELD THAT:- The said provision shows that it refers the amount of expenditure relatable to any income to which Sec. 10 other than the provisions contained in clause-38 thereof or section 11 or section 12 apply. In the case in hand the assessee has claimed exemption u/s. 10(38) of the Act therefore the assessee is covered by the exclusion provided in clause (f) to explanation-1 to Sec. 115JB of the Act. Therefore, we direct the AO to exclude addition being securities transaction tax from the book profit. Ground No. 3 is accordingly allowed.
Addition wrongly accounted in the books of account of the assessee being charged to book profit u/s. 115JB - HELD THAT:- It is not in dispute that the assessee has made book entries of speculation gain which it has not actually earned during the year. Since the speculation gains were credited to the profit and loss account, it can be said that the profit and loss account are not prepared in accordance with part-II of Schedule- VI and for the purpose of Sec. 115JB. Every company has to prepare its accounts in the manner provided in part-II and Part-III of Schedule-VI to the Companies Act 1956. Since the assessee’s profit and loss account is not prepared in accordance with the relevant provisions of the Companies Act, the notional profit shown by the assessee has to be reduced while computing the book profit u/s. 115JB - See BOMBAY DIAMOND CO. LTD. MUMBAI [2009 (11) TMI 903 - ITAT MUMBAI] - we direct the AO to re-work the Book Profit by amount wrongly accounted in the books of account of the assessee - Decided in favour of assessee.
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2015 (1) TMI 1443
Review application - it was held that even if it is taken that the decision of this Court is binding upon the parties, it will not help the applicant because no positive view condoning the delay has been taken by this Court and matter has been remanded back for reconsideration.
HELD THAT:- Appeal dismissed.
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2015 (1) TMI 1442
Negative cash balance - assessee’s main argument was that as per the cash book in “blue colour bind” there was introduction of cash in the name of Anwar Ali H. Lakhani which has covered up the discrepancy which was found in the original cash book - assessee had not shown the transfer of cash tallied with the books of the assessee firm - whether the cash book in “blue colour” which was later on placed before the AO can be considered as an evidence to determine the correct income of the Assessee? - HELD THAT:- Cash book which was submitted by the assessee subsequently was required to be examined by the AO. The AO is free to confirm the veracity of that cash book so that the question of negative cash can be decided in an authenticated manner. The cash book stated to be in blue colour should not therefore be disregard in summarily manner merely on the ground that it was prepared after the inquiries were raised by the Department.
We are not able to satisfy ourselves that there was a regular transfer of fund from the books of account of the partner to the accounts of the assessee-firm or in the books of R.H. Patel & Co. and that there was no shortage of the cash balance in the books of the assessee-firm. Rather, this is a factual aspect which can be ascertained at any point of time by examining the relevant books of accounts; hence, for this limited purpose we hereby refer this issue back to the stage of the AO so that the assessee can demonstrate that there was genuine transfer of funds introduced by the partner and that there was no shortage of the cash as alleged by the Revenue Department. For this limited purpose the matter is restored back; hence this ground of the Revenue may be treated as allowed for statistical purpose only.
Unexplained cash credits - stand taken by the assessee of having made sales to the said parties in the next year is nothing but an afterthought by the assessee to furnish his self servicing submission /details in the appellate proceedings - HELD THAT:- AR has explained that there was some parties who came forward with advance with a guarantee from the assessee to supply the iron in the subsequent years; therefore, the assessee has received the advance and duly credited in its books of account. In the subsequent year sales were executed and duly reflected in the books of account. Since, the said amount has already been taxed by the assessee in the next year; therefore, there was no justification on the part of the AO to disbelieve the action of the assessee. Impugned addition was made on a wrong premise, especially when the assessee has demonstrated that the sales were executed in the subsequent year. - Decided against revenue
Addition on account of low gross profit - as argued assessee’s sales have increased by more than 65%, which has also resulted into a better net profit on which the assessee had paid the tax - HELD THAT:- Marginal decrease in the gross profit ratio was properly explained by the assessee; hence the AO was not justified in making the impugned addition. The admitted factual position is that the turnover had gone up from 5.39 crore of the last year to the turnover of the year under consideration at 8.91 crore. Further, during the course of hearing, we have inquired from learned DR about the assessment record, specifically the position of the notices issued u/s.133(6) of IT Act to certain parties. Learned DR has placed before us a separate folder of the notices issued u/s.133(6) of IT Act and on perusal we have noted that there were few compliances made by those parties to whom the sales were executed by the assessee. Hence, according to us the allegation of non verification of sales was not absolutely corrected.
Earning of profit generated through unaccounted purchases and sales thereon detected by the sales tax department - HELD THAT:- compilation an English translation of the sales tax assessment order is placed. According to which an investigation was carried out at the business premises in the presence of partners, Sri Anwar Lakhani. Further it was noted that the Trader i.e., the Assessee was not able to explain cash in hand of ₹ 25,282/-, stock in trade of ₹ 6,39,239/- and suspense sales of ₹ 3,35,335/-. In that order, it was also held that there was existence of unaccounted purchases which were not proved. After applying gross profit margin the unaccounted purchase amounting to ₹ 12,87,102/- was taxed. We are of the view that in a situation when an another authority has given a finding that there were unaccounted purchases then it is not fair to disregard those finding of the Sales Tax Department.
Sales tax penalty - HELD THAT:- a penalty was imposed by the Sales Tax Department; hence, the expenditure being penal in nature is not admissible as per law. We are not convinced by the argument of learned AR; that it was compensatory in nature as it was paid as an advance payment of tax; because no such evidence was placed before us.
TDS u/s 194C - Addition u/s 40(a)(i)(ia) - HELD THAT:- Situation when there was no evidence of existence of any contract between the assessee and those transporters and the goods were transported to the assessee at the behest of the supplier then the assessee was not under an obligation to deduct the tax at source at the time of payment to truck drivers/owners. We, therefore, reverse the findings of the authorities below and direct to delete the addition.
Addition on account of excess claim of salary and wages and kharajat expenses made - HELD THAT:- Merely on the basis that the some of the amounts or names were not recorded in the salary register, the impugned disallowance should not have been made. The AO was required to investigate the basis of the total salary paid as claimed in the profit and loss account. The assessee’s explanation was that the salary register was maintained for “office staff” but in addition to that the salary was also paid to other staff such as accounting staff, etc, hence the total expenditure was claimed in the profit and loss account. This fact has not been contradicted by Revenue Department before us. Likewise, in the case of payment of Wages etc we have seen that the AO as well as CIT(A) both have made the disallowance merely on an estimation without appreciating the explanation of the assessee. According to us, such an estimation was uncalled for, hence we hereby reverse the same.
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2015 (1) TMI 1441
Exemption u/s 11 - Refusing registration to the assessee trust u/s.12AA - charitable activity u/s 2(15) - HELD THAT:- The main objects of the trust are - to breed the cattle and endeavour to improve the quality of the cows and oxen in view of the need of good oxen as India is prominent agricultural country; to produce and sale the cow milk; to hold and cultivate agricultural lands; to keep grazing lands for cattle keeping and breeding; to rehabilitate and assist Rabaris and Bharwads; to make necessary arrangement for getting informatics and scientific knowledge and to do scientific research with regard to keeping and breeding of the cattle, agriculture, use of milk and its various preparations, etc,; to establish other allied institutions like leather work and to recognize and help them in order to make the cow keeping economically viable; to publish study materials, books, periodicals, monthlies, etc., in order to publicize the objects of the trust as also to open schools and hostels for imparting education in cow keeping and agricultural having regard to the trust objects. The Hon'ble High Court held in Sabarmati Ashram Gaushala Trust [2014 (1) TMI 1539 - GUJARAT HIGH COURT] that all these objects of the trust were of the general public utility and would squarely fall under section 2(15) of the Act.
Recently, ITAT Mumbai Bench in the case of Shree Nashik Panchvati Panjarpole v. DIT (Exemption) [2014 (9) TMI 267 - ITAT MUMBAI] held that the assessee trust was established for the purpose of cow breeding and protection of cows and oxen. In this case, the Tribunal held that the trust can be considered as one created for charitable purpose. The dominant function of the trust was to provide asylum for old, maimed, sock, dry, weak, disabled and stray animals and birds, more particularly cows and other such cattle milk and to bring about improvement in breeding cattle for the beneficial promotion, upkeep, maintenance and propagation of cows and other types of cattle. Thus, the dominant object of the trust is to run Panjrapole and activities related to it. The Tribunal held that these objects constitute charitable purposes. While holding so, the Tribunal relied on the judgment in the case of CIT v. Swastik Textile Trading Co.(P) Ltd.,[1977 (7) TMI 30 - GUJARAT HIGH COURT] wherein, held that establishing and maintaining Gaushalas and Panjrapole constitutes charitable purpose.
We hold that the ld CIT was not justified in refusing grant of registration to the assessee -trust on this count.
Following clause was not incorporated in the trust - "Expressly prohibiting the distribution of assets/immovable property in the event of dissolution of the trust/institution among the trustees" - In view of clause 26 of the trust deed, above objection of the ld CIT is not sustainable. It appears that the Ld CIT has passed the impugned order in a hurry without looking into the express provisions of clause 26 of the trust deed. Accordingly, we hold that the objection raised by ld CIT is not correct and, hence liable to be rejected.
Objects and activities of the trust is not for any particular caste, creed, community or religion is not clearly mention - Above objection of ld CIT is irrelevant, particularly when nowhere in the trust deed, it is stated that the trust is created for the benefit of a particular caste, creed, community or religion. When there is no such clause in the trust deed, it is obvious that the trust is not created for the benefit of any particular caste, creed, community or religion.
Objections raised by ld CIT for not allowing the registration to the assessee trust are not tenable and hence, we reject the same. - Decided in favour of assessee
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2015 (1) TMI 1440
Reopening of assessment u/s 147 - unexplained share purchases - HELD THAT:- Earlier also for the same assessment year AO framed the assessment u/s 143(3)/147 of the Act vide assessment order dated 16.12.2005. The said assessment was framed after proper verification and scrutiny and no new material was brought on record to justify the action for issuing the notice u/s 148 again on 27.03.2009.
AO issued the notice only on the basis of information received from the DIT(Investigation), however, he did not consider this vital fact that the amount mentioned by him in the reasons recorded for reopening, in fact was the closing debit balance in the account of M/s R. K. Investments and was pertaining to the preceding assessment year 2001-02 and not the year under consideration - It is not clear as to how and in what manner the debit balance in the name of M/s R. K. Investments was treated as the escaped income of the assessee particularly when the amount was paid for purchasing the shares so it was not an entry provided by M/s R. K. Investments if it had been so then the amount was to be shown as credit in the name of M/s R. K. Investments and not the debit.
Reasons recorded by the AO for reopening the assessment u/s 148 of the Act was not valid. We, therefore, considering the totality of the facts of the present case and by keeping in view the ratio laid down by the Hon’ble Jurisdictional High Court in the case of M/s Signature Hotels Pvt. Ltd. Vs ITO [2011 (7) TMI 361 - DELHI HIGH COURT] set aside the impugned order by holding that the reopening u/s 147 of the Act by issuing the notice u/s 148 was not valid - Decided in favour of assessee.
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2015 (1) TMI 1439
Contempt petition - wilful disobedience of the order passed - appellant submitted that admittedly, the appellant was not a party to the order passed, there is neither a wilful disobedience nor non compliance of the order passed - HELD THAT:- Admittedly, the appellant was not a party to the order passed. There is no difficulty in appreciating the principle of law that a contempt would lie even against the person, who is not a party to the order alleged to have been violated. However, in the case on hand, the appellant has not violated the order passed. In other words, the order passed was based on a misrepresentation, for which, the appellant cannot be held responsible. He merely made an attempt to remedy the mistake committed on registering the complaint said to have been given by the first respondent. In other words, the appellant made an attempt to comply with the order passed though he was not a party to it. Such an attempt cannot be termed as wilful or deliberate and contravention of the said order.
In such view of the order, it can also be termed either as a civil or criminal contempt. He has not interfered with the flow of justice. Though it can be said that the approach of the appellant is over zealous, it cannot be termed as an act in violation of the order passed. The appellant may be wrong in his conclusion for which, the remedy for the first respondent lies elsewhere. The submission made by the learned Senior Counsel appearing for the first respondent on the non compliance of the provisions of the Original Side Rules has got no bearing on the contempt petition. But, the appellant has complied with the order passed. In any case, the said issue cannot be a ground to haul the appellant for a contempt.
The first respondent has not proved a wilful and deliberate violation of the order passed on the part of the appellant. The learned single Judge has also not given any specific findings on the same. Though certain procedural irregularities were pointed out, we are not concerned with this in these proceedings - the order passed in contempt petition is hereby set aside.
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2015 (1) TMI 1438
Assessment of trust - Carry forward and set off of deficit of earlier years - Whether as per the accounting norms, capital expenditure is not to be debited to income and expenditure account and hence no occasion arises when a deficit can be computed while allowing claim of application of income by way of capital expenditure as deduction? - HELD THAT:- Although the issue stands covered by the decision of this court in Institution of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY HIGH COURT] the fact is that revenue is aggrieved by it, however, Revenue did not challenge it in the higher forum in view of low tax effect. Be that as it may, no fault can be found with the order of the tribunal giving rise to the substantial question of law.
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2015 (1) TMI 1437
Exemption u/s.11 - assessee claims that the activities carried on by it do not fall within the definition of the term ‘charitable purpose’ u/s. 2(15) - Registration u/s 12A - HELD THAT:- We find that the Tribunal in [2014 (5) TMI 733 - ITAT MUMBAI ] has set aside the order of the DIT (Exemption) and restored the registration to the assessee granted u/s. 12A of the Act. Since the registration has been restored by the Tribunal, we do not find any reason why exemption should not be allowed to the assessee. We, set aside the findings of the Ld. CIT(A) and direct the AO to allow the exemption to the assessee. Appeal filed by the assessee is allowed.
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2015 (1) TMI 1436
Disallowance u/s. 14A r.w. Rule 8D - HELD THAT:- The Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs DCIT& Another [2010 (8) TMI 77 - BOMBAY HIGH COURT] has held that sub-section (2) of Sec. 14A does not enable the AO to apply the method prescribed by Rule 8D without determining in the first instance the correctness of the claim of the assessee in respect of expenditure incurred in relation to income which does not form part of the total income under the Act, that he can proceed to make a determination under the Rules. Taking a leaf out of these observations of the Hon’ble Jurisdictional High Court, we restore the issue to the file of the AO. The AO is directed to verify the correctness of the claim of the assessee and decide the issue afresh as per provisions of the law. Ground No. 1 is allowed for statistical purpose.
Denial of the deduction of suo-motu disallowance made by the assessee out of the total disallowance computed by the AO - HELD THAT:- As we restored the issue of computing the disallowance to the file of the AO, the AO is directed to decide this issue also afresh after computing the disallowance u/s. 14A r.w. Rule 8D. This ground is allowed for statistical purpose.
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2015 (1) TMI 1435
Appointing respondents 3, 4 and 5 be taken on the Board of Directors of the Company with immediate effect - grant of recognition to an association - main contention urged by the petitioners was that the 2nd respondent did not have any power under the Forward Contracts (Regulation) Act, 1952 to issue such an order - HELD THAT:- A reading of Section 6(1) of Forward Contracts (Regulation) Act shows that the grant of recognition to an association shall be subject to such conditions as may be prescribed or specified. In Ext.R3(b) notification dated 23/1/09 also, recognition granted to the petitioner Company has been made subject to the condition that "said exchange shall comply with such directions as may, from time to time be given by the Forward Markets Commission". Therefore, on the strength of the enabling provision contained in Section 6(1), while issuing Ext.R3(b) notification, the Central Government specified that the first petitioner shall comply with such directions as may be issued from time to time by the Commission.
Similarly, Section 14A(1) obliges the association to carry on business relating to forward contracts only under a certificate of registration and in accordance with the conditions specified therein. In Ext.R3(c) certificate of registration, various conditions have been specified and the first condition is that "the said association shall comply with such directions as may from time to time, be given by the Forward Markets Commission".
Therefore, both in Ext.R3(b) and in Ext.R3(c) and in Sections 6 and 14A of the Act, enabling provisions have been incorporated entitling the Forward Markets Commission to issue directions from time to time and the first petitioner Company is obliged to comply with such directions.
These statutory provisions and the scheme of the Act thus show that pervasive control has been conferred on the Central Government and the Forward Markets Commission and there is nothing in the Act which suggests that the Central Government or the Commission cannot direct induction of members to the Director Board of the 1st petitioner Company in the circumstances as pointed out in Ext.P15.
Thus, it was perfectly within the jurisdiction of the 1st respondent to have issued Ext.P15 - interim prayer sought for by the petitioners declined.
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2015 (1) TMI 1434
Power and duties Judicial Magistrate - Dishonor of cheque - learned Magistrate has refused to entertain the complaint and has ordered to return the same to the petitioner on the ground that in view of the Judgment of the Hon'ble Supreme Court of India in the matter of DASHRATH RUPSINGH RATHOD VERSUS STATE OF MAHARASHTRA & ANOTHER [2014 (8) TMI 417 - SUPREME COURT], the learned Magistrate could not have heard the said complaint - HELD THAT:- The issue decided in the case of GEETA MARINE SERVICES PVT. LTD. VERSUS STATE AND ORS [2008 (9) TMI 1011 - HIGH COURT OF BOMBAY] where it was held that now the Apex Court is seized of matters involving the said issues and therefore if any modification is made by the Apex Court in the view taken by this Court naturally the learned Magistrates will have to abide by the law laid down by the Apex Court.
Thus, it is abundantly clear that the Magistrate has to follow the judgment of this Court unless and until it is set aside by the Apex Court.
Petition disposed off.
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2015 (1) TMI 1433
Cessation of the liability - shown in parts by the assessee and not bringing the whole amount in to the net of taxation under section 41(1) - HELD THAT:- A perusal of the assessment order clearly shows that the assessee has shown the liability of ₹ 27,10,883/- as a liability in its accounts. The amount of ₹ 33,37,011/- clearly is the balance as on 01.04.2006. This is not an amount received by the assessee during the relevant assessment year. A perusal of the modification to the agreement dated 02.04.2001 vide letter dated 18.12.2006 clearly shows that M/s. Rudgormach, Russia has categorically directed the assessee to adjust the necessary expenses required for the marketing, promotional and liasioning work including commission on behalf of M/s. Rudgormach against the outstanding lying with the account. This clearly shows that there is no cessation of liability.
In the present case, the amount has any way not been written off. It remains as a liability in the books of the assessee. In these circumstances, we are of the view that the finding of the ld. CIT(Appeals) is on right footing and does not call for any interference. - Decided against revenue
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2015 (1) TMI 1432
Grant of Arbitral award - termination of contract by the State - HELD THAT:- The award was challenged under Section 34 of the Arbitration and Conciliation Act, 1996 before the Commercial Court, Ranchi. The Presiding Officer of the Commercial Court found no reason to interfere with the award.
The reviewing Court exercising its jurisdiction under Section 34 of the 1996 Act cannot undertake the exercise of re-appreciation of evidence except on very limited ground specified in the case of OIL & Natural Gas Corporation Ltd. versus Saw Pipes Ltd, [2003 (4) TMI 438 - SUPREME COURT] and further elaborated by a subsequent authority, Associate Builders Versus Delhi Development Authority [2014 (11) TMI 1114 - SUPREME COURT].
We do not find involvement of any grave violation of public policy by the Arbitral Tribunal in passing the award. The facts narrated in the award do not project any gross misuse of jurisdiction which could shock the conscience of the Court. What the appellant really wants from this Court exercising jurisdiction under Section 37 of the 1996 Act is to enter into re-appreciation of evidence. We also find that reasons were given by the Arbitral Tribunal for rejecting the counterclaim by the learned Arbitrator.
Appeal disposed off.
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2015 (1) TMI 1431
Notice u/s 143(2) not to the correct address - whether the Assessing Officer rightly assumed jurisdiction when he issued statutory noticed to the address as given in the PAN records (BKC Address) and not the address as per the return of income i.e., Prabhadevi address - HELD THAT:- During assessment proceedings, the appellant vide letter dated 28.11.2008 brought to the notice of the Assessing Officer that the notice u/s 143(2) dated 5.10.2007 was not served o the appellant and therefore, the proceedings u/s 143(2) were bad in law. In view of the appellant’s raising such objections during assessment proceedings, the provisions of section 292BB were not applicable and section 292BB could not have given validity to the illegality / irregularity of the notices.
In view of discussion made above, it is held that the Assessing Officer completed assessment u/s 143(3) of the Act without assuming valid jurisdiction u/s 143(2) of the Act. Appeal of the Revenue is dismissed.
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2015 (1) TMI 1430
TP Adjustment - adjustment in respect of the international transaction pertaining to the transaction of business support services - TPO did not accept TNMM method and applied internal CUP being the price/commission received by GESA from HLAG under 1993 agreement - HELD THAT:- Purchase price of the goods exported cannot be applied as CUP for sale price charged to the AE. Accordingly considering the price received by GESA as CUP is contrary to the transfer pricing regulation. We do not rule out the CUP as most appropriate method for determination of ALP of international transaction in question. However, the comparable uncontrolled price must be a proper uncontrolled price in compliance of provisions of transfer pricing.
There is one more fallacy in the TPO’s order regarding bifurcating the international transactions into two segments for determining the ALP. TPO accepted the price charged by the assessee in respect of services provided through subagency, but while computing the ALP it had ignored the CUP and took the price charged by the assessee as ALP. Further, the services provided by the assessee on its own were compared with CUP. Therefore, two separate ALP were determined by the TPO for the same service provided by the assessee to AE. Even if the CUP is adopted as most appropriate method ALP cannot be more than price received by GESA. Whereas the TPO has taken into consideration the price charged by the assessee with 10% mark-up. Hence, the computation of ALP is otherwise not based on correct uncontrolled price.
We may clarify that the international transaction in question should be considered as one and price received by the assessee in total has to be compared with the ALP. The assessee received the price for providing the service as per the agency agreement. Therefore, the service provided by the assessee to the AE are closely interlinked and price of one part is dependent on the price of the other part. Therefore, the entire services provided by the assessee has to be treated as one international transaction for the purpose of determining the ALP.
Depreciation on computer hardware - assessee claimed depreciation @ 60% on computer including printer, scanner and electronic token display system all part of block of asset of computer - AO held that the peripherals item do not fall under the definition of computer and allowed depreciation only @ 15% - HELD THAT:- Allowability of depreciation @ 60% on the computer accessories and peripherals is no more res-integra. In the case of BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] we allow the claim of depreciation on printer, scanner, electronic token display system @ 60%.
Depreciation on software - HELD THAT:- We allow the claim of 60% of depreciation on software.
Proportionate disallowance of depreciation on computer and software, based on the number of employees of the assessee - HELD THAT:- It is clear from the directions of the DRP that the proportionate disallowance of depreciation was directed only in respect of software cost allocated by AE and not on any other asset. Therefore, the AO has not followed the directions correctly while passing the impugned order whereby he disallowed the proportionate depreciation on the entire computer block of asset.
Proportionate disallowance based on the number of employees is concerned, we are of the view that the personal computers in any establishment/organization are not restricted to the number of employees at any given point of time. The strength of the employees may vary depending upon the capacity at which the company is working. Further, keeping extra computer for meeting any emergent situation of non-functional computer or under repair computer is not an unusual practice. Therefore, when the number of computer is not disputed then software installed on the existing computer cannot be treated as excess or not for business use of the assessee. Hence, we do not find any logic or substance in the directions of the DRP in restricting the depreciation of software licence to the extent of number of employees working with the assessee. Accordingly, the orders of the authorities below qua this issue are set aside and claim of the assessee is allowed in full.
Interest u/s 234D - AR has submitted that there is a calculation mistake in computing interest under section 234D - HELD THAT:- We direct the AO to verify the alleged working mistake in computation of interest under section 234D.
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2015 (1) TMI 1429
Addition u/s. 41(1) - cessation of liability on account of sundry creditors and advance from customers - HELD THAT:- In the present case, it is an admitted fact that assessee was showing the impugned liabilities year after year in its balance sheets which were accepted by the Department and there was no new liability during the year under consideration. The assessee was also making the payments whenever funds were available with it but due to want of funds amount could not be repaid after 31st March 2005.
In the instant case, the assessee reflected the liabilities in its books of account when those were incurred, those liabilities were accepted as genuine by the Department in the earlier years, assessee did not write off liabilities to its profit and loss account and there was no cessation of liability.
Therefore the provisions of Sec. 41(1) were not applicable because the liabilities ceases only when the assessee equivocally expresses its intention not to honour of the liability as and when demanded. In the present case, nothing was brought on record to substantiate that the assessee expressed its intention not to honour the liability when the creditors demanded the same, rather the assessee had continued to acknowledge its liability which who evident from its audited balance sheets furnished along with returns of income for the earlier years which were accepted as genuine by the Department. No valid ground to interfere with the findings of Ld. CIT(A). Accordingly, we do not see any merit in the appeal of Department.
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2015 (1) TMI 1428
Sporting frauds - Match fixing and betting - Regulation 6.2.4 of the IPL Regulations - Exclusion from its operation events like IPL and Champions' League twenty-20.
HELD THAT:- Amendment to Rule 6.2.4 whereby the words ‘excluding events like IPL or Champions League Twenty 20’, were added to the said rule is hereby declared void and ineffective.
The Committee shall, before taking a final view on the quantum of punishment to be awarded, issue notice to all those likely to be affected and provide to them a hearing in the matter. The order passed by the Committee shall be final and binding upon BCCI and the parties concerned subject to the right of the aggrieved party seeking redress in appropriate judicial proceedings in accordance with law - The three-member Committee constituted in terms of Para (II) above, shall also examine the role of Mr. Sundar Raman with or without further investigation, into his activities, and if found guilty, impose a suitable punishment upon him on behalf of BCCI.
The constitution of the Committee or its deliberations shall not affect the ensuing elections which the BCCI shall hold within six weeks from the date of this order in accordance with the prevalent rules and regulations subject to the condition that no one who has any commercial interest in the BCCI events (including Mr. N. Srinivasan) shall be eligible for contesting the elections for any post whatsoever - The Committee shall be free to fix their fees which shall be paid by the BCCI who shall, in addition, bear all incidental expenses such as travel, hotel, transport and secretarial services, necessary for the Committee to conclude its proceedings. The fees will be paid by the BCCI to the members at such intervals and in such manner as the Committee may decide. The venue of the proceedings shall be at the discretion of the Committee.
These appeals shall stand disposed of in the above terms with the direction that the relevant record received from Justice Mudgal Committee shall be forwarded to the Chairman of the newly appointed Committee without any delay.
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2015 (1) TMI 1427
Rectification u/s 254 (2) - no satisfaction was recorded in respect of quantum and penalty which resulted in an error apparent on record warranting rectification - HELD THAT:- The evidence of satisfaction being recorded is communication dated 21st August, 2000 addressed by the AO of the person searched to the AO of the petitioner. The petitioner also does not dispute communication dated 21st August, 2000 which is being relied upon by the revenue was a part of the record but submit that the same was considered by the Tribunal before passing the order dated 29th December, 2010. No fault in the impugned order concluding that there was an error apparent on record in the order dated 29th December, 2010 as it does not deal with/or consider the communication dated 21st August, 2000 and deal with the revenue's contention that satisfaction in terms of section 158BD of the Act was recorded.
A similar situation arose before the Supreme Court in HONDA SIEL POWER PRODUCTS LTD [2007 (11) TMI 8 - SUPREME COURT] and SAURASHTRA KUTCH STOCK EXCHANGE LTD [2008 (9) TMI 11 - SUPREME COURT] Tribunal had in exercise of its powers under section 254 (2) of the Act had recalled its earlier order as it had by mistake not considered a binding decision of the jurisdictional High Court. This recall by the Tribunal was upheld by the Apex Court on the fundamental principle of law that no prejudice should be caused to either of the parties appearing before the Tribunal by its decision based on a mistake apparent from the record. The Apex Court negatived the contention that such recall of an order would amount to review of its earlier orders. The Supreme Court held that mistake is a valid reason to recall an order. In the circumstances,the objections of the petitioner that the impugned order recalling the order dated 29th December 2010 is without jurisdiction is not sustainable.
We find that the impugned order after correctly holding that there is an error apparent from the record recalling its earlier order dated 10th December 2010 proceeded further to make observations on the scope of the satisfaction dated 21st August 2000. In fact the concluding paragraph of the impugned order seeks to suggest that the issue of jurisdiction is decided and it is only on merits that the appeal is being placed before the regular bench of the Tribunal. This is impermissible as it would foreclose an issue which is to be heard and decided by the bench rehearing the appeal. Thus the impugned order is unsustainable to the extent it decides and/or makes observations on the satisfaction note dated 21st August 2000 is the context of jurisdiction.
Tribunal would certainly be entitled to recall an order u/s 254 (2) of the Act as it suffers from mistakes apparent from record, while recalling the order and placing it before a regular bench to adjudicate/decide the merits of the appeal it was not entitled/justified to observe on the merits of adjudication. Once an order is recalled and the appeal is to be placed before a regular bench for fresh consideration in a manner of speaking it restores status quo ante. At the hearing of the appeal all the issues are bound to be urged by the petitioner and considered by the Tribunal hearing the appeal. In this case, the impugned order while recalling the order dated 29th December, 2010 places the appeal before a regular bench to be decided on merits yet concludes that jurisdictional requirement to proceed against the petitioner is satisfied. The aforesaid decision and observations on the jurisdictional issue in the impugned order is unsustainable.
While we uphold the impugned order to the extent it holds that there is an error apparent on the record in the order dated 29th December, 2010 in not having considered the letter dated 21st August, 2000, we do not uphold the other observations made by the Tribunal in the impugned order with regard to the exact nature, scope, effect and consequences of the communication dated 21st August, 2000. The regular Bench of the Tribunal to whom the revenue's appeals both on quantum and penalty are restored for hearing would not be influenced in any manner by the observations made in the impugned order on the merits of the controversy.
When the original order dated 29th December, 2010 was passed the petitioner was allowed to make submissions under rule 27 of the Income Tax Rules in the absence of having filed a separate appeal. The benefit of the above direction of the Tribunal would be extended to the petitioner at the hearing of the appeal by the regular Bench of the Tribunal hearing the revenue's appeal consequent to the recall of the earlier order dated 10th December, 2010. This is particularly so as the revenue had consented when the appeals were originally heard to the petitioner making its submissions under Rule 27 of the Income Tax Rules in the absence of having filed a substantial appeal.
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