Advanced Search Options
Case Laws
Showing 81 to 100 of 1397 Records
-
2016 (10) TMI 1317
Capital gain computation - Fair Market Value (FMV) as on 01.04.1981 of the property as capital asset - FMV ₹ 4,500/- per acre as per CIT-A as against ₹ 6,000/- per acre claimed by the assessee - valuation report obtained from a Chartered Engineer relied by assessee - HELD THAT:- CIT(A) had considered the average of registered valuer and Sub-Registrar valuation for determining the FMV of the property as on 01.04.1981. This decision of Ld.CIT(A) is based on the order of the Tribunal, Chennai Bench in the case of M/s.Kutty Flush Doors [2014 (10) TMI 1027 - ITAT CHENNAI]. Being so, we do not find any infirmity in the order of Ld.CIT(A). The same is confirmed.
Denial of loan liability from the cost of acquisition as deduction in the computation of long term capital gains - AO has denied the claim of deduction as impugned capital asset was settled by the grandmother of the assessee in his favour vide Settlement Deed wherein no narration of the pre-existing change/mortage in the capital asset and loan liability was related to a partnership firm M/s.S.Albert & Co., taken for the business purposes of the aforesaid firm - HELD THAT:- Property was given as a collateral security for the loan availed by other than the assessee, which is a M/s.S.Albert & Co., as pointed out by the AO in his assessment order and neither the assessee nor the assessee’s grandmother who settled the property in favour of the assessee, is borrower nor a party to the suit, the mortgage debt cannot be considered as a cost of acquisition of property so as to give deduction while computing the capital gains from the transfer of the property. If the consideration of sale of property apportioned towards the outstanding debt in bank, the assessee is having very well right to claim from the borrower of the bank whose debt was settled. No infirmity in the order of the Ld.CIT(A). The same is confirmed. - Decided against assessee.
-
2016 (10) TMI 1316
Assessment u/s 153A - absence of any incriminating material in search - unexplained share application money u/s 68 - HELD THAT:- From the CIT(A)’s order there is a clear finding that no incriminating document or material was found related to the property which corroborates the allegation made by the AO. In Para 3.2, the CIT(A) clearly mentioned that the documents were filed before the AO. Thus, besides these documents there was nothing incriminating found by the Assessing Officer. The CIT(A) also observed that during the course of search at the appellants’ premises nothing incriminating was found reference to the impugned share application money.
There is no need to interfere with the order of the CIT(A). The present case is also squarely covered by the judgment of the Hon’ble Delhi High Court in case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]. - Decided in favour of assessee.
-
2016 (10) TMI 1315
Set off unabsorbed deprecation - As per AO under the old provision unabsorbed depreciation could be considered only for eight years - As per CIT (Appeals) amendment made by Finance Act, 2001 w.e.f. 01.04.2002 reinstated the old provision and according to him, the assessee was eligible for carried forward depreciation for the assessment year 1997-1998 that amended provisions would apply - HELD THAT:- In our opinion, the issue stand settled by virtue of jurisdictional High Court judgment in the case of CIT vs. Pioneer Asia Packing P. Ltd [2007 (11) TMI 285 - MADRAS HIGH COURT] as held Tribunal has rightly come to the conclusion that the assessee is entitled to the unabsorbed depreciation brought forward as on April 1, 1997, and could be set off against the business profits and in order to give effect to that finding, the case was remitted to the file of the Assessing Officer for verification as to how much depreciation was available up to April 1, 1997, that could be included in the income of the assessee.
Accordingly, we are of the opinion that ld. Commissioner of Income Tax (Appeals) is justified in taking a view that assessee was eligible for carried forward deprecation for the assessment year 1997-1998.
Addition u/s.43B (b) or u/s.40A(7)(b) - provision made for gratuity - HELD THAT:- As in the case of CIT vs. Common Wealth Trust (P) Ltd & Anr [2004 (4) TMI 51 - KERALA HIGH COURT] and CIT vs. Bechtel India (P) Ltd [2007 (11) TMI 2 - HIGH COURT , DELHI] had held that harmonious construction of Sec. 40A(7) (b) and Sec. 43B(b) of the Act could clearly indicate that the legislature never intended to take away the benefit conferred under clause (b) of Sec. 40A(7) of the Act through the provisions of Sec. 43B(b) .
So far as additional depreciation is concerned, balance of additional depreciation remaining after the claim of 50% in one year could be allowed in succeeding year by virtue of judgment in the case of Rittal India Pvt. Ld [2016 (1) TMI 81 - KARNATAKA HIGH COURT]. We, therefore of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in allowing the claim of the assessee in both years.
Appeals of the Revenue stand dismissed.
-
2016 (10) TMI 1314
Validity of the orders passed by the Government in G.O.Ms.No.181, dated 11.7.2011 - constitution of fresh committee with the Chief Secretary as Chairperson and with some other members for the purpose of suggesting the factors to be considered while fixing or increasing the rates of tickets in various classes of Cinema Theatres - main grievance of the petitioners herein is that the rates fixed by the Government by the impugned G.O. to the areas like Corporation, Municipalities and Grampanchayats are discriminative in nature since the expenditure in all the theatres in Corporations, Municipalities and Grampanchayats is one and the same.
HELD THAT:- It is pertinent to note that there are many changed circumstances coupled with the conversion of some of the theatres to that of multi complexes by raising advanced infrastructure and by meeting the highest maintenance of theatres and in view of the same, the G.O. does not appear to be proportionate, so that it warrants revision in consonance with the changed circumstances as well as the provisions of A.P. Cinema (Regulation) Act 1955. Hence, the present G.O. challenged in the writ petitions can be set aside.
Considering the facts and circumstances of the case and the interim orders passed by this Court earlier in some of the writ petitions, this Court is of the view that the present writ petitions can be disposed of with the directions imposed:
i) G.O.Ms.No.100, Home (General.A1) Department, dated 26.4.2013 is set aside.
ii) Both the Governments are directed to constitute their respective committees headed by the respective Principal Secretaries for Home. Insofar as the other members of the Committees are concerned, it is left open to the respective Principal Secretaries for Home to choose the exhibitors, distributors and other members to participate in the committee so as to adjudicate the issues involved in all the writ petitions.
iii) While taking decision, the committees are directed to consider the welfare of the cine-goers primarily and also the grievance of the exhibitors and distributors and frame the rules in accordance with law on or before 30.3.2017; iv) If any decisions are taken and any G.O, is issued prior to 30.3.2017, the same shall become operative in nature.
iv) The petitioners-theatres are permitted to run their respective theatres by collecting their proposed fares. However, it is made clear that the petitioners shall inform to the Authorities concerned as to the ticket rates, which they intend to collect in respect of all classes till adjudication of the issues in question by the respective committees.
v) In some of the writ petitions, this Court issued interim orders permitting the petitioners therein to collect the rates as proposed in their applications, and to maintain separate account with regard to the difference amount in the rates collected by them. Those interim orders passed by this Court earlier in some of the writ petitions shall stand superseded.
Petition disposed off.
-
2016 (10) TMI 1313
TP Adjustment - comparable selection - HELD THAT:- Acropetal Technologies Ltd. - Rejection of this company as comparable to low end BPO service providers on the reasoning that this company is providing KPO services.
R. Systems International ltd. - Remit the issue of comparability of this company to the AO/TPO for examining afresh in the light of the relevant judicial precedents and of course after due opportunity of being heard to the assessee.
Aditya Birla Minacs Word Wide Ltd. and Tata communication transformation Ltd. - Assessee’s contention in relation to application of RPT filter to these two comparables needs to be looked into fresh keeping in view the observations of the ITAT in case of Nokia India (P) Ltd. v/s DCIT [2014 (11) TMI 101 - ITAT DELHI] - We, therefore, remit the issue of comparability of the aforesaid two comparables to the Assessing Officer / Transfer Pricing Officer for deciding afresh after due opportunity of being heard to the assessee.
-
2016 (10) TMI 1312
Directions to collect the certified copies of the registration certificate from the concerned RTO - HELD THAT:- From the order dated 03.10.2016 it appears that no next date of hearing is given. The aforesaid reports are directed to be taken on record.
Before any further order is passed, at the request of Mr.Devang Vyas, learned Assistant Solicitor General of India appearing on behalf of the Union of India, S.O. to 06.10.2016.
-
2016 (10) TMI 1311
TP Adjustment - addition to the arm’s length price of its international transaction pertaining to the import of edible oil from the Assessee’s associated enterprise by using the Comparable Uncontrolled Price (‘CUP’) method
HELD THAT:- Learned counsel for the petitioner to get instruction as to whether comparable uncontrolled price method (CUP) is accepted by Transfer Pricing Officer in subsequent assessment years by accepting quotation for benchmarking international transaction.
Post after four weeks.
-
2016 (10) TMI 1310
Draft assessment order u/s 143(3) r.w.s. 144C - maintainability of th objection filed by the assessee under Form No. 35A - curable defect u/s 292B - DRP dismissing the application filed by the appellant in Form 35A in limine by holding that the application is invalid and non-est - Form No. 35A filed by the assessee is only a scanned copy containing the signature of the concerned person - HELD THAT:- Revenue's only objection is regarding furnishing of the application in scanned copy. Otherwise, the said scanned copy is meant for the assessee and for the purposes of the Act in all respects. Further, we find it is undisputed fact that, in response to the show cause notice, the assessee attempts to file the Form No 35A in original and however, the same was not successfully allowed by the DRP. Rather, the DRP preferred to act on the said scanned copy of Form No 35A unfairly and considered the said the scanned application as non-est. Further, it is relevant to mention that the DRP failed to provide the written reasons for rejecting the Original Application attempted to be filed by the assessee in response to the show cause notice.
Thus, in our opinion, the expression 'other proceedings' is wider enough to cover the present defect or omission of replacing the scanned copy with the original in time. We order AO accordingly.
As per assessee original Form No.35A could not be furnished to replace the scanned copy which is already with DRP, within the prescribed time of 30 days for the reasons as the assessee geographically located in Singapore; the signed original application could not be received in India in time; to meet the dead lines, assessee filed the application with colour scanned copy of Form No.35 with the intention to replace the same with the original one at the time of hearing before the DRP; and there was a change in the tax consultant / AR of the assessee and the responsibility of replacing the scanned copy with the original application has missed inadvertently.
As discussed above, we find, the same is not without reason and the same being the change in the Representative. As such, the furnishing of the scanned papers and replacing them with hard copies or soft copies, if any, is now not new to the Department. Further, now, the Revenue started accepting the e-filing of application / appeals these days. Why not this also should not be deemed as such but for the procedural defects, if any.
Both decisions of the first appellate authority in treating the application non-est and dismissing the same as in limine are unsustainable in law. We order accordingly. Thus, grounds no.1 to 4 raised by the assessee are allowed.
-
2016 (10) TMI 1309
Disallowance of interest expenses - addition being 2/3rd of interest expenditure claimed by the assessee - HELD THAT:- Assessee has failed to comply with the express directions of Tribunal. The question for adjudication has been whether deduction of the interest expenditure claimed by assessee was justified or not in terms of section 36(1)(iii) of the Act and in the attending facts and circumstances of the case.
Assessee was to justify the business expediency under which he had to pay interest on the borrowed funds at the rate more than the interest received on the same funds advanced by the assessee. Several opportunities were given by the AO by issuing notices u/s. 143(2) along with questionnaire in terms of Tribunal’s directions but the assessee did not bother to comply with the notices issued to him. One of the submissions of the assessee has been that the loan was advanced at lower rate to Merlin Resources Pvt. Ltd. for a long period whereas the loan raised from Silverline Technologies Pvt. Ltd. was repaid in a short period.
Assessee could not submit any evidence or any loan agreement before us in support of such contention nor could he lay any evidence to justify any business prospects by borrowing the funds at higher rate of interest and lending the said borrowed funds at lower rate of interest, particularly when the assessee was engaged in the business of financial services. There are also no previous or subsequent instances on record to prove such business practice of the assessee.
Assessee failed to prove the business expediency, under which he chose to suffer loss in the business by paying much more interest on borrowed funds and by earning lesser interest on advancing the said borrowed funds. No justification to discard the conclusions of the authorities below regarding admissibility of inordinate interest expenditure claimed by assessee on borrowed funds. - Decided against assessee.
-
2016 (10) TMI 1308
Fraudulent and Unfair Trade Practices relating to Securities Market - synchronized order placement and circular trading - Violation of the PFUTP Regulations - Difference between buy order time and sell order time was less than 60 seconds and there was no difference between buy order rate and sell order rate as well as there was no difference between buy order quantity and sell order quantity - HELD THAT:- Finding recorded by the Adjudicating Officer that the pattern of synchronized order placement and circular trading clearly establish that the transactions were carried out with the intension that the orders of participating entities should match and that there was prior arrangement with respect to those of transactions cannot be faulted. The Adjudicating Officer is justified in holding that the very fact that the Vishvas group entities were trading continuously among themselves by placing orders in such pattern thereby contributing significantly to the total volume in the market cannot be faulted.
Argument advanced by the counsel for the appellant that having common address and having shares of Vishvas Securities Ltd. could not be a ground to infer that the appellant was connected with the Vishvas Group is without any merit. In the present case, the Adjudicating Officer has not only established the connection of the appellant with the Vishvas Group but also demonstrated that the trading pattern among themselves resulted in synchronized trades and circular trades which were in violation of the PFUTP Regulations.
Appellant had incurred loss by executing the trades in question cannot be a ground to infer that the said trades were not in violation of the PFUTP Regulations. Having violated the PFUTP Regulations, the appellant cannot escape the penal liabilities merely because the appellant chose to incur losses on account of the trades in question.
Violations committed by the appellant fall under Section 15HA of SEBI Act and the penalty imposable thereunder was ₹ 25 crore, the Adjudicating Officer has imposed a penalty of ₹ 25 lac against the appellant which cannot be said to be exorbitant or excessively high. It is a matter of record that SEBI has proceeded against various entities of the Vishvas group entities for violating the PFTUP Regulations and has imposed varying penalties up to the extent of ₹ 1crore. In these circumstances, no fault can be found with the decision of the Adjudicating Officer in imposing penalty of ₹ 25 lac as against the appellant on ₹ 25 crore imposable under section 15ha of the SEBI act for violating the PFUTP Regulations.
-
2016 (10) TMI 1307
Addition u/s 41(1) towards subsidy - accrual of subsidy / receipt of subsidy - Year of assessment - assessee had shown a sum being 75% of sales Tax / VAT as Sales Tax Incentive Receivable under the scheme of State Government. This sum was correspondingly credited to General Reserve of the assessee - quantification of subsidy was in the form of reimbursement of sales tax / VAT paid by the assessee on sale of its finished products to the extent of 75 % of the same after the commencement of production - CIT -A deleted the additions on the ground that the subsidy was actually released / sanctioned to the assessee which falls in the financial year 2008-09 relevant to Asst Year 2009-10 and hence the accrual of subsidy / receipt of subsidy had to be seen only in that year - HELD THAT:- Assessee had to first set up its project in the State of West Bengal and start manufacturing operations. The finished goods manufactured should be sold after payment of sales tax / VAT. The assessee has to produce the evidence for payment of sales tax / VAT. Thereafter, WBIDCL on satisfactory compliance made by the assessee in this regard, would release the subsidy by reimbursing 75% of the sales tax / VAT paid by the assessee. We have gone through the relevant pages of the paper book of the assessee containing the evidence in the form of tax paid challans for sales tax / VAT. Hence we hold that the ld AO had factually erred in stating that the sales tax / VAT were not paid by the assessee.
AO had erred in invoking the provisions of section 41(1) of the Act. It is well settled that the said provision could be invoked only when the assessee had claimed deduction in earlier years at the time of creation of liability and if the said liability ceases to exist, then the provisions of section 41(1) of the Act could be invoked. In the instant case, admittedly, the assessee had not claimed any deduction in the earlier years towards the sales tax portion of the subsidy. Hence, the provisions of section 41(1) of the Act could be invoked in the facts of the instant case.
Keeping in view the objects of the West Bengal Incentive Scheme 2000 and various judicial precedents relied upon hereinabove, we hold that the subsidy is to be treated as capital receipt not chargeable to tax in the hands of the assessee and not in the years under appeal - Subsidy cannot be the subject matter of taxation in the years under appeal as the same got released / sanctioned only in the financial year 2008-09 relevant to Asst Year 2009-10. Accordingly, the grounds raised by the revenue for both the years are dismissed.
-
2016 (10) TMI 1306
Agricultural income - CIT(A) restricting 50% of the agricultural income computed by AO - Since the assessee has not carried out any agricultural operation, the AO treated the above income as “income from unexplained sources” and brought to tax - main dispute of the Department is with regard the income from the lands at Kolli Hills and Ulagankathan village - HELD THAT:- Location of the land holdings are not situated in metro city so that the lease-holder can execute agreement or of any kind and the assessee can produce the same before the authorities below. When the agricultural land held by the assessee was not disputed, it cannot be held that there was no income from the above said agricultural land holdings. Since the ld. CIT(A) restricted the disallowance on estimated basis in the absence of material evidence for the income earned by the assessee, we are of the considered opinion that the disallowance sustained by the ld. CIT(A) is on higher side and it has to be reasonably reduce the disallowance sustained by the ld. CIT(A). Accordingly, we allow 75% of the income as income derived from the said land holdings and the Assessing Officer is directed to disallow the balance 25%. Thus, the ground raised by the assessee is partly allowed.
Addition of cash deposit with UTI Bank - HELD THAT:- If it is the withdrawal from bank account as claimed by the assessee then, the assessee should have made entry in the cash book. In the absence of suitable explanation offered by the assessee, we are inclined to accept the mere submission of assessee that it was a technical mistake. As contended by the ld. DR, on perusal of the assessment order, we find that the AO has made similar addition when the assessee has given same reply with regard to the amount deposited in the Axis Bank account and not shown in the cash book. In view of the above facts and circumstances, we sustain the addition made by the Assessing Officer and the ground raised by the assessee is dismissed.
Addition of differential amount of cash deposit - HELD THAT:- On appeal, the assessee has failed to give any convincing explanation with regard to the source for ₹.66,520/-. Therefore, the ld. CIT(A) confirmed the addition made by the Assessing Officer. Even before us, assessee has not given any details with regard to the source for ₹.66,520/- except reiterating the submissions as was made before the Assessing Officer. Hence, we find no reason to interfere with the order of the ld. CIT(A) on this issue and thus, the ground raised by the assessee is dismissed.
Disallowance of the claim of interest payments - whether payment of interest on loans taken for payment of tax cannot be considered as expenditure incurred for the purpose of business? - HELD THAT:- CIT(A) has observed that as the payment of interest on loans taken for payment of tax cannot be considered as expenditure incurred for the purpose of business, he sustained the addition made by the AO. On further appeal before the Tribunal, the ld. Counsel for the assessee relied on the grounds of appeal and has not filed any explanation with regard to the claim of the assessee - no reason to interfere with the order of the ld. CIT(A) on this issue. Thus, the ground raised by the assessee is dismissed.
-
2016 (10) TMI 1305
Acquisition of shares without making the required public announcement - new acquisition went beyond the creeping acquisition limit of 5% - violation of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“SAST Regulations”) - HELD THAT:- It is an undisputed fact that in the year 2000-2001, the Appellants cumulatively acquired 5.0346% of the shareholding of APIL. This fact has indeed been admitted by the Appellants as far back as the personal hearing conducted before the Ld. Adjudicating Officer. At the personal hearing, the Appellants admitted that inadvertently they had not made a public announcement when their newly acquired shareholding went beyond the limit of 5% as prescribed in Regulation 11(1).
Categorical admission by the Appellants it is evident that the Appellants understand the import and underlying philosophy of Regulation 11(1). Participants in the securities market are allowed to actively indulge in trading and other related activities because SEBI as the market regulator is given assurances by these market players that they understand the law and regulations as laid down by the Legislature and SEBI respectively. If the Legislature and SEBI, acting on such assurances, give companies and other market participants the right to execute their business decisions in the manner these entities deem fit, it goes without saying that there is a corresponding duty placed on the market participants to ensure that such mistakes as acquiring more than the creeping acquisition limit of 5% without making the necessary public announcement are not made.
There is no provision in the SEBI Act, which may have the effect of prohibiting SEBI from taking action beyond a particular period of time in a given case. However, it goes without saying that the regulator should always make an endeavor to take prompt action against the defaulting companies to render speedy and timely justice. In the present case, however, action was taken immediately after SEBI came to know about the violations. Therefore, delay, in itself, cannot defeat the ends of justice in the facts and circumstances of the case in hand. Moreover, there is nothing on record to suggest that the admission made by the appellants before the A.O. that the acquisition made by them exceeded the prescribed limit was erroneous. In these circumstances, no fault can be found with decision of the A.O. in holding that the appellants are guilty of violating the Takeover Regulations and, accordingly, imposing penalty on the appellants.
As rightly brought to our notice by the Appellants that at the time the misconduct was committed and the shares acquired by the Appellants, the maximum penalty for the default of acquiring more than the prescribed limit of shareholding without making the required public announcement was ₹ 5 lac. The penalty of ₹ 15 lac was introduced later when the Act was amended. SEBI cannot be allowed to retrospectively apply the law in this situation.
In our considered opinion the penalty of ₹ 15 lac imposed by SEBI in one of the orders is more than what was applicable in 2000-2001 and is therefore reduced to ₹ 5 lac.
-
2016 (10) TMI 1304
Unexplained investment in the hospital building u/s. 69 - Admission made by the assessee in statement recorded u/s. 133A - HELD THAT:- In the present case, we find that although the assessee during survey proceedings had admitted as additional income during the period relevant to assessment year 2009-10, however, subsequently vide letter dated 04-03-2009 the assessee has retracted from said admission. Apart from the statement of assessee there is no other documentary evidence which suggest undisclosed income of the assessee. Rather the assessee has furnished credible evidence to substantiate source of funds. In such circumstances addition on the basis of statement recorded u/s. 133A cannot sustain. We find merit in the appeal of the assessee. Accordingly, impugned order is set aside and the appeal of the assessee is allowed.
-
2016 (10) TMI 1303
Recomputation of deduction claimed by the assessee u/s 80IB - CIT(A) had summarily rejected the claim of the assessee that R&D activities carried on had no bearing with Pondicherry Unit - HELD THAT:- As stated in the annual report for financial year 2004-05 that R&D carried out by the assessee was to absorb the technology for air assisted direct injection for two stroke engines, and product launch was proceeding as per schedule, for Indian three wheeler application. It is not disputed by the lower authorities that products manufactured at Pondicherry Unit and Maraimalainagar Unit though similar were not identical. That the products were different is clear from the list enumerated in paper book page 110 - products were different - R&D unit itself as such was situated in Maraimalainagar Unit. This is evident from letter dated 15.4.2004 of Ministry of Science and Technology of New Delhi, giving recognition to the R&DRP Unit, placed at paper book page 62. When the assessee asserted that R&D was exclusively for Maraimalainagar Unit and for its products, in our opinion, without any evidence being brought on record the lower authorities should not have taken a view that such expenditure was also relatable to Pondicherry Unit - reallocation of R&D expenditure was not called for in the facts and circumstances of the case. Such reallocation of R&D expenditure and the consequent reduction in claim u/s 80IB of the Act stands deleted.
Benefit of deduction u/s 80IB denied - Foreign exchange fluctuation gain/loss - HELD THAT:- . Rule of consistency requires that when foreign exchange loss is considered as expenditure for calculating deduction u/s 80IB of the Act in earlier years, when there is a surplus in a subsequent year, it should not be excluded. When a similar set of facts permeates through a number of years and there is nothing on record to show that a different view was required to be taken on such set of facts, though rule of res judicata does not apply to income tax proceedings, rule of consistency has to be applied unless there is a gross violation of law which calls for a deviation. We are of the opinion that the lower authorities erred in not allowing the claim of deduction u/s 80IB of the Act on foreign exchange gains.
Reallocation of electricity and rental expenditure incurred for the Head Office to the Pondicherry Unit while working out deduction u/s 80IB - HELD THAT:- As decided in own case [2011 (4) TMI 1342 - ITAT CHENNAI] it was held by this Tribunal that assessee could not show why the Head Office expenditure ought not have been allocated in proportion to total turnover. The facts and circumstances being the very same, we do not find any reason to interfere with the order of the CIT(A) in this regard. Ground Nos. 9 & 10 are dismissed.
Claim of deduction by the R&D Unit of Maraimalainagar Unit disallowed - HELD THAT:- Assessee being already into the line of manufacturing fuel injection systems, developing the technology for an improved version of fuel injection system cannot be considered as a new venture at all. In taking this view, we are just fortified by the judgment of Apex Court in Alembic Chemical Works Co. Ltd [1989 (3) TMI 5 - SUPREME COURT] - We also note from the break-up of expenditure given by the assessee in page 64 of the paper book that these were salaries, travel and administrative expenditure, technical guidance, components, consumables and tools, preliminary fee etc. These payments do not give any enduring benefit to the assessee nor result in acquisition of any capital asset. In the circumstances, we are of the opinion that the disallowance was not called for. Such disallowance stands deleted.
Upward adjustment for notional interest calculated on the advances given by the assessee to its wholly owned subsidiary called M/s Amtec Precision Products Inc, in USA - HELD THAT:- Finding a comparable uncontrolled transaction, where a loan was given to an entity which was subsidiary to the tested party, and whose capital stood completely eroded due to loss was not practical or feasible. The simple reason is that no other person would have given any loan to such an entity, whatever might be the interest rate since the chances of recovery was negligible. In such a situation, when there could have been no reasonably identifiable comparable uncontrolled transaction, computation of comparable uncontrolled price by applying of Rule 10B(1), fell at the threshold.
Section 92C(1) prescribes computation of ALP by comparable uncontrolled price method, resale price method, cost plus method, profit split method, transactional net margin method and any other method prescribed by the Board could have been applied. In our opinion, the question of benchmarking the transaction of the nature mentioned, applying any of the methodology prescribed in sec.92C(1) did not arise at all due to the particular facts and circumstances. According to us, fastening of an interest rate on the assessee when there was no comparable uncontrolled rate that could have been identifiable was incorrect. We, therefore, have no hesitation in deleting the addition made by the Assessing Officer/TPO.
Interest u/s 234A - HELD THAT:- We are of the opinion that this matter can be looked into by the Assessing Officer and if there was no delay in filing the return, question of levy of interest u/s 234A of the Act would not arise. Accordingly, this ground is allowed for statistical purposes.
Addition based on TDS certificates - payment to the assessee fell u/s 194J of the Act and sec. 194C was mentioned by mistake - HELD THAT:- Assessee had placed before the Assessing Officer letter dated 5.6.2013 issued by M/s Visteon Climate Systems India Ltd where they had mentioned that they had received some testing service from the assessee on which it had made a provision of ₹ 32 lakhs in its accounts. It was also mentioned by the said party that the payment to the assessee fell u/s 194J of the Act and sec. 194C was mentioned by mistake. It is also not disputed that Form 16A was updated by the deductor. In such circumstances, we are of the opinion that the addition ought not have been made just for a reason that a mistake was committed by the deductor in the TDS certificate issued. In addition there was nothing on record to show that assessee had rendered any services which could earn it income of ₹ 1.6 crores. In our opinion, the addition was not called for. Such addition stands deleted. Ground of allowed.
Deduction u/s 80IA claimed on windmill division - HELD THAT:- We find that the issue raised by the assessee is squarely covered in its favour by the judgment of the Jurisdictional High Court in the case of Velayudhaswamy Spinning Mills P. Ltd. [2010 (3) TMI 860 - MADRAS HIGH COURT] - The SLP filed by the Department against the said judgment was dismissed by the Apex Court. In such circumstances, we are of the opinion that prior year depreciation could not have been forcibly set off against the income of the assessee when the initial assessment year for which the assessee preferred the claim was different. We, therefore, allow Ground raised by the assessee.
-
2016 (10) TMI 1302
Penalty u/s 271(1)(c) - Defective notice - Addition u/s. 68 on account of unexplained cash credit - HELD THAT:- Notice u/s.274 r.w.s.271 of the Income Tax Act issued by the AO. It is a printed form with so many clauses. This notice does not specifically point out as to whether there is any concealment of particulars of income or furnishing any inaccurate particulars of such income but across the printed line, there is a big tick mark.
The show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we hold that the order imposing penalty has to be held as invalid and consequently penalty imposed is cancelled. - Decided in favour of assessee.
-
2016 (10) TMI 1301
Benefit of deduction u/s 80P - return of income was not furnished within the time limit prescribed u/s 139 - Assessee is primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 - HELD THAT:- Belated filing of return of income by the assessee does not disentitle it from the benefit of deduction u/s 80P(2) of the Act. Further, the assessee, in the instant case, is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record.
The Hon’ble High Court, in assessee’s own case and [2014 (11) TMI 843 - ITAT COCHIN] had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, I hold that the assessee is entitled to the benefit of deduction u/s 80P(2) - Decided in favour of assessee.
-
2016 (10) TMI 1300
Implementation of order under challenge before CESTAT - appeal directed against the order of refund is pending before a higher forum/CESTAT - HELD THAT:- Merely because an appeal directed against the order of refund is pending before a higher forum/CESTAT, does not mean that the order under challenge before CESTAT is incapable of implementation and enforcement. If that is not stayed then the enforcement is permissible. While enforcing that order and making any payment, all that can be clarified is that the said act would be subject to the outcome of the appeal which is raising a substantive challenge.
Appeal dismissed.
-
2016 (10) TMI 1299
Penalty u/s 221 - failure on the part of the assessee to remit the TDS in time - HELD THAT:- Levy made under section 221 is in accordance with law and hence the Department’s ground is sustained in this regard
Non-payment of TDS in time is a serious violation of the Trust reposed by the Government on the deductor. Such an action causes serious problems to the payees as they were not getting credit for the tax paid by them by way of TDS. In fact the AO records that the Department received complaint from the assessee for not issuing TDS certificates despite repeated request. The delay in remittances are in the range of four months to fifteen months.
As in Relience industries Ltd v CIT & others [2015 (7) TMI 812 - BOMBAY HIGH COURT] held that “the obligation to deduct and pay tax upon the assessee is unconditional under the Act. It is the responsibility of the assessee to deduct taxes and to pay to the Revenue within the period provided under the Act. Financial stringency would not justify deducting tax from the amount paid to the payee and not paying it to the Revenue. Otherwise, it would amount to using somebody else's money for the purposes of one's business. In such circumstances, the question of financial stringency, to our mind, hardly gives rise to a good and sufficient reason for not depositing tax which was an amount otherwise payable to the payee or on behalf of the payee to the Revenue.”
Assessee’s plea cannot be accepted as good and sufficient reason for not depositing tax within time - levy made by the AO at the rate of 5% per month on the defaulted TDS is unreasonable. We consider that levy of penalty u/s.221 @ 10% on the unpaid TDS at ₹ 2,05,55,731/- would meet the ends of justice. Hence the AO is directed to restrict the levy to ₹ 20,55,573/- in the place of ₹ 77,95,155/-. - Decided partly in favour of revenue
-
2016 (10) TMI 1298
Unexplained expenditure u/s 69C - unexplained expenditure of payment of kickbacks - assessee's name appears in the list mentioned in the Volcker Committee Report as a result of Independent Enquiry Committee (IEC) appointed by the United Nations Security Council to investigate the administration and management of Oil-for-Food Programme in Iraq - onus of proving such expenditure is actually incurred - HELD THAT:- Observations of VCR cannot be the basis for invoking the provisions of section 69C especially in the facts of the present case, where majority of the contracts were prior to the period mentioned in VCR. Secondly, the assessee already had subsisting contract with KME under which in respect of all exports to various others countries including Iraq commission was paid @ upto 12.5%, wherein the said agent had to provide after sales service also. No extra commission was paid in respect of exports to Iraq. The assessee has time and again stressed that the payments were made through normal banking channel through authorized foreign exchange dealers and not through the banks which are listed in the VCR. Accordingly, we hold that there is no merit in application of provisions of section 69C of the Act in the present facts of the case and accordingly, we direct the Assessing Officer to delete the addition made on account of unexplained expenditure
Disallowance u/s 37(1) - payments as ASSF and ITF were in the nature of kickbacks - HELD THAT:- Assessee claims to have made payments to Al Azhar and KME in assessment year 2002-03 and where the assessee has failed to establish whether any services have been rendered by the said concerns and in view of the documents, evidences referred to by us with regard to these transactions, where admittedly, the amount was paid for service charges, the same are hit by Explanation to section 37(1) of the Act. With regard to Alia, the payments are made against transportation services. The assessee has filed the copies of invoices which are CIF, Baghdad and where it was its duty of assessee to deliver the goods at Baghdad, the remuneration paid to Alia @ 10% of the value of contract, which finds clear mention in VCR is payment by way of kickbacks to the IG and is covered by Explanation to section 37(1) of the Act and the same is not allowable as deduction to the assessee. This is a case where the persons were aware that the payments as ASSF and ITF were in the nature of kickbacks and were thus, willing parties to the illegal gratification and hence, are thus, hit by Explanation to section 37(1) of the Act. Since the assessee has failed to establish its case of KME has given its services in the absence of any distribution agreement, the payment made to KME is disallowed under section 37(1) of the Act. In this regard, we refer to the findings of CIT(A) in assessment years 2002-03 and 2003-04 and do not reproduce the same for the sake of brevity. Another aspect to be kept in mind is that the name of present assessee finds place in Table 7 and 8 of VCR and Table 7 refers actual expenditure and not projected expenditure. The plea of the assessee that the payment has made through normal banking channels does not help the case of assessee in view of discussion made in the paras above regarding the discrepancy in different communications.
Commission paid to Indian concern for liaison work was not allowed since the assessee failed to discharge its onus to establish that the said person had rendered any services to the assessee - Onus was upon the assessee to establish that the said persons had rendered services which necessitated the payment of commission to the said concern. Further, VCR in this regard reported that the persons making supplies to Iraq were indulging in payment of kickbacks stands established against the assessee and applying the said ratio, we uphold the disallowance made in the case of assessee relating to assessment years 2002-03 and 2003-04.
Eligibility to claim deduction under section 80IA allowed.
........
|